Document:

Exhibit 10.2

NONQUALIFIED STOCK
OPTION AGREEMENT

United Industrial
Corporation 2006 Long Term Incentive Plan

THIS AGREEMENT (this “Agreement”)
is made as of                                                 ,
2006 by and between United Industrial Corporation, a Delaware corporation (the “Company”),
and                                                                         (the “Participant”).

Preliminary Statement

The Board of Directors of
the Company (the “Board”), or a committee appointed by the Board (the “Committee”)
to administer the United Industrial Corporation 2006 Long Term Incentive Plan
(the “Plan”), has authorized this grant of a non-qualified stock option
(the “Option”) on                                                    ,
2006 (the “Grant Date”) to purchase the number of shares of the Company’s
common stock, par value $1.00 per share (the “Common Stock”) set forth
below to the Participant, in accordance with the provisions of Article XIII
of the Plan. Unless otherwise indicated, any capitalized term used but not
defined herein shall have the meaning ascribed to such term in the Plan. A copy
of the Plan has been delivered to the Participant. By signing and returning
this Agreement, the Participant acknowledges having received and read a copy of
the Plan and agrees to comply with it, this Agreement and all applicable laws
and regulations.

Accordingly, the parties hereto agree as follows:

1.             Tax Matters. No part of the Option
granted hereby is intended to qualify as an “incentive stock option” under
section 422 of the Code.

2.             Grant of Option. Subject in all
respects to the Plan and the terms and conditions set forth herein and therein,
the Participant is hereby granted an Option to purchase from the Company  5,000 shares of Common Stock, at a price per
share of $[•], which is the
Fair Market Value of a share of Common Stock on the Grant Date (the “Option
Price”).

3.             Vesting and Exercise.

(a)   General. Subject to the provisions of Section 3(b) hereof,
the Option shall vest and become exercisable on the date of the next Annual
Meeting of Shareholders of the Company that occurs following the Grant Date
(the “Vesting Date”) in accordance with the provisions of Section 13.3(c) of
the Plan, provided that the Participant has not incurred a Termination of
Directorship prior to the Vesting Date. There shall be no proportionate or
partial vesting in the period prior to the Vesting Date and all vesting shall
occur on the Vesting Date, subject to the provisions of Section 3(b) hereof.
To the extent that the Option has become vested and exercisable as provided
herein, the Option may thereafter be exercised by the Participant, in whole or
in part, at any time or from time to time prior to the expiration of the Option
as provided herein and in accordance with Sections 13.3(c) and 13.3(d) of
the Plan, including, without limitation, by the filing of any written form of
exercise notice as may be required by the Committee and payment in full of the
Option Price multiplied by the number of shares of 

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Common Stock underlying the portion of the
Option exercised. Upon expiration of the Option, the Option shall be canceled
and no longer exercisable.

(b)   Acceleration of Vesting. Notwithstanding the foregoing, in
the event of a Change in Control of the Company while the Option remains
outstanding, the Option shall become fully and immediately vested and
exercisable in accordance with the provisions of Section 13.5 of the Plan.

4.             Option Term. In accordance with the
provisions of Section 13.3(b) of the Plan, the term of the Option
shall be ten (10) years from the Grant Date, subject to earlier
termination in the event of the Participant’s Termination of Directorship as
specified in Section 5 hereof.

5.             Termination of Directorship.

Subject to the terms of the Plan and this
Agreement, the Option, to the extent vested at the time of the Participant’s
Termination of Directorship, shall remain exercisable as follows, in accordance
with the provisions of Section 13.4 of the Plan:

(a)   Termination due to Death, Disability, Retirement or Otherwise.
Except as provided in Section 5(c) hereof, in the event of the
Participant’s Termination by reason of death, Disability, Retirement or
otherwise, the vested portion of the Option shall remain exercisable until the
earlier of (i) one (1) year from the date of such Termination, and (ii) the
expiration of the stated term of the Option pursuant to Section 4 hereof.

(b)   Termination for Cause. In the event of the Participant’s
Termination for Cause, the Participant’s entire Option (whether or not vested)
shall terminate and expire as of the date of such Termination.

(c)   Treatment of Unvested Options upon Termination. Any portion
of the Option that is not vested as of the date of the Participant’s
Termination for any reason shall terminate and expire as of the date of such
Termination.

6.             Restriction on Transfer of Option. No
part of the Option shall be Transferred other than by will or by the laws of
descent and distribution and during the lifetime of the Participant, may be
exercised only by the Participant or the Participant’s guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (except as provided by law or herein), and
the Option shall not be subject to execution, attachment or similar process. Upon
any attempt to Transfer the Option or in the event of any levy upon the Option
by reason of any execution, attachment or similar process contrary to the
provisions hereof, such transfer shall be void and of no effect and the Company
shall have the right to disregard the same on its books and records and to
issue “stop transfer” instructions to its transfer agent.

7.             Rights as a Stockholder. The
Participant shall have no rights as a stockholder with respect to any shares
covered by the Option unless and until the Participant has become the holder of
record of the shares, and no adjustments shall be made for dividends in cash or
other property, distributions or other rights in respect of any such shares,
except as otherwise specifically provided for in the Plan.

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8.             Provisions of Plan Control; Entire Agreement.
This Agreement is subject to all of the terms, conditions and provisions of the
Plan, including, without limitation, the amendment provisions thereof, and to
such rules, regulations and interpretations relating to the Plan as may be
adopted by the Committee and as may be in effect from time to time. The Plan is
incorporated herein by reference. If and to the extent that this Agreement
conflicts or is inconsistent with the terms, conditions and provisions of the
Plan, the Plan shall control, and this Agreement shall be deemed to be modified
accordingly. This Agreement and the Plan contain the entire understanding of
the parties with respect to the subject matter hereof and thereof (other than
any exercise notice or other documents expressly contemplated herein or in the
Plan) and supersedes any prior agreements between the Company and the Participant
with respect to the subject matter hereof.

9.             Notices. Any notice hereunder by the Participant shall be given to the Company
in writing and such notice shall be deemed duly given only upon receipt thereof
by the Director of Fiscal or the Accounting Manager of the Company. Any notice hereunder by the
Company shall be given to the Participant in writing and such notice shall be
deemed duly given only upon receipt thereof at such address as the Participant
may have on file with the Company.

10.           No Obligation to Continue Directorship.
This Agreement does not guarantee that the Company will retain the Participant
as a director for any specific time period, nor does it modify in any respect
the Company’s right to terminate or modify the Participant’s services as a
director or the Participant’s compensation at any time.

[SIGNATURES ON
FOLLOWING PAGE]

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IN WITNESS WHEREOF, the
parties have executed this Agreement on the date and year first above written.

	
  

  	
  UNITED INDUSTRIAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  

 

 4Exhibit 10.3

UNITED
INDUSTRIAL CORPORATION

2006
LONG TERM INCENTIVE PLAN

Name of Optionee:                                                               

Grant Date:                                                                            

Number of Shares:                                                               

Exercise Price:                                                       

Re: Grant of Incentive Stock Option

Dear                                        :

On May 18, 2006, the shareholders of United
Industrial Corporation (the “Company”) authorized and approved the
Company’s 2006 Long Term Incentive Plan (the “Plan”), which was
previously adopted by the Board of Directors. A copy of the Plan is annexed
hereto and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, capitalized terms used herein but not defined
shall have the meanings set forth in the Plan.

1.             Grant
of Option. Effective [GRANT
DATE], the Compensation and Stock
Option Committee (the “Committee”) of the Board of Directors authorized
this grant, as incentive compensation and not in lieu of any salary or other
compensation for your services, of an option (the “Option”) to purchase,
in accordance with the terms and conditions set forth in the Plan, but subject
to the terms and conditions set forth in this agreement (this “Agreement”)
and in the Plan, an aggregate of ________ shares of common stock of the
Company, $1.00 par value per share (the “Common Stock”), at a price of
$________ per share, which is the fair market value of a share of Common Stock
on [GRANT DATE], as determined under the Plan.

2.             Tax
Matters. The Option is intended to qualify as an “incentive stock option”
within the meaning of section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), but it is specifically understood that no warranty
is made to you as to such qualification. Notwithstanding the foregoing, the
Option shall not qualify as an “incentive stock option,” among other events, (i) if
you dispose of the shares of Common Stock acquired pursuant to the Option at
any time during the two (2) year period following the grant date of the
Option or the one (1) year period following the date on which the Option
is exercised; (ii) except in the event of your death or disability (as
defined in section 22(e)(3) of the Code), if you are not employed by
the Company at all times during the period beginning on the grant date of the
Option and ending on the day three (3) months before the date of exercise
of the Option; or (iii) to the extent that the aggregate fair market value
(determined as of the time the Option is granted) of the shares of Common Stock
subject to “incentive stock options” which become 

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exercisable for the first
time in any calendar year exceeds $100,000. To the extent that the Option does
not qualify as an “incentive stock option,” it shall not affect the validity of
the Option and shall constitute a separate non-qualified stock option.

3.             Vesting
and Exercisability; Option Term. Subject to the condition that you do not
experience a Termination of Employment and subject to the provisions of Section 4
hereof, the Option may be exercised by you, on a cumulative basis, during a
period of five (5) years commencing on the date of grant of the Option and
terminating at the close of business on [EXPIRATION
DATE], as follows:

(a)           up
to _____ of the total number of shares subject to the Option may be purchased
by you commencing _____ year(s) after the grant date;

(b)           up
to an additional _____ of the total number of shares subject to the Option may
be purchased by you commencing _____ years after the grant date; and

(c)           the
balance of the total number of shares subject to the Option may be purchased by
you commencing _____ years after the grant date.

In no event
shall the Option be exercised for a fraction of a share or for less than one
hundred (100) shares (unless the number purchased is the total balance for
which the Option is then exercisable). The unexercised portion of the Option
granted herein shall automatically and without notice terminate and become null
and void upon the expiration of five (5) years from the date of the grant
of the Option.

4.             Termination of
Employment. If, prior to the expiration of five (5) years from the
date of grant of the Option, you experience a Termination of Employment, the
Option shall terminate on the applicable date specified in this Section 4;
provided, however, that none of the events described in this Section 4
shall extend the period of exercisability of the Option beyond five (5) years
from the date of grant of the Option.

(a)           Termination
for Cause; Resignation. The Option shall terminate upon the date of your
Termination of Employment, if you experience a Termination of Employment by the
Company for Cause, by you as a result of your resignation for any reason (other
than Retirement), or by you as a result of your Retirement after the occurrence
of an event that would constitute grounds for a termination by the Company for
Cause.

(b)           Termination
by Reason of Death. The Option shall terminate upon the expiration of one (1) year
after your death if your death occurs either during your employment or within
the one-year or three-month period after a Termination of Employment specified
in Sections 4(c) and 4(d) hereof, except that the Option shall be
exercisable during the one-year period after your death only to the extent that
it would have been exercisable on the date of your death.

(c)           Termination
by Reason of Disability. The Option shall terminate upon the expiration of
one (1) year after your Termination of Employment by reason of your
Disability, 

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except that the Option
shall be exercisable during such one-year period only to the extent that it
would have been exercisable immediately prior to such Termination of
Employment.

(d)           Termination
Without Cause; Retirement. The Option shall terminate upon the expiration
of three (3) months from the date of your Termination of Employment, if
you experience a Termination of Employment by the Company without Cause or by
you as a result of your Retirement (other than as described in Section 4(a) hereof),
except that the Option shall be exercisable during such three-month period only
to the extent that it would have been exercisable immediately prior to such
Termination of Employment.

(e)           Unvested
Portion of the Option. In addition, any portion of the Option that is not
vested and exercisable as of the date of your Termination of Employment for any
reason shall terminate and expire as of the date of such termination.

5.             Method
of Exercise. The Option may be exercised by notice to the Company in a form
required by the Committee addressed to the Director of Fiscal or the Accounting
Manager of the Company at the principal place of business of the Company,
together with payment of the aggregate exercise price. Payment of the exercise
price shall be made, in accordance with the provisions of Section 6.3(d) of
the Plan, (i) in cash or by check, (ii) to the extent permitted under
applicable law, through an open market, broker-assisted transaction authorized
by the Committee and consistent with the provisions of Section 6.3(d)(ii) of
the Plan, or (iii) on such other terms and conditions as may be acceptable
to the Committee.

6.             Restrictions
on Transfer. The Option is not transferable by you otherwise than by will or
the laws of descent and distribution, and is exercisable, during your lifetime,
only by you. The Option may not be assigned, transferred (except by will or the
laws of descent and distribution), pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment or similar proceeding. Any attempt to so assign, transfer, pledge or
hypothecate the Option or subject the Option to execution, attachment or
similar proceeding contrary to the provisions hereof, shall be null and void
and without any force or effect.

7.             Limitation
of Rights. The Option shall not confer upon you any privileges of a
shareholder of the Company with respect to any shares of Common Stock issuable
upon exercise hereof, including without limitation any right to vote such
shares of Common Stock or to receive dividends or other distributions in
respect thereof, until the date of the issuance to you of a stock certificate
evidencing the shares of Common Stock. In addition, nothing in this Agreement
shall confer upon you any right to continued employment with the Company or any
Subsidiary or to interfere in any way with the right of the Company to
terminate your employment with the Company or any Subsidiary at any time.

8.             Legends.
If the Company, in its sole discretion, shall determine that it is necessary in
order to comply with applicable securities laws, the certificate or
certificates representing the shares purchased pursuant to the exercise of the
Option shall bear an appropriate 

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legend in form and
substance, as determined by the Company, giving notice of applicable
restrictions on transfer under or in respect of such laws.

9.             Investment
Representations. It shall be a condition of the exercise of the Option that
if, at the time of exercise of the Option, there does not exist a registration
statement on an appropriate form under the Securities Act of 1933, as mended
(the “Act”), which registration statement shall have become effective
and shall include a prospectus which is current with respect to the shares
subject to the Option, you shall execute and deliver to the Company a written
statement, in a form satisfactory to the Committee, in which you represent and
warrant (i) that you are purchasing the shares for your own account and
not with a view to the resale or distribution thereof and (ii) that any
subsequent offer for sale or sale of any such shares shall be made either
pursuant to (x) a registration statement on an appropriate form under the
Act, which registration statement shall have become effective and shall be
current with respect to the shares being offered and sold, or (y) a
specific exemption from the registration requirements of the Act, but in
claiming such exemption, you shall, prior to any offer for sale or sale of such
shares, obtain a favorable written opinion from counsel for or approved by the
Company as to the applicability of such exemption.

10.           Withholding
Taxes. As provided in the Plan, the Company may withhold from sums due or
to become due to you from the Company an amount necessary to satisfy its
obligation to withhold taxes incurred by reason of the disposition of the
shares acquired by exercise of the Option in a disqualifying disposition
(within the meaning of Section 421(b) of the Code), or may require
you to reimburse the Company in such amount. The Company may hold the stock
certificate to which you are entitled upon the exercise of the Option as
security for payment of the withholding tax liability, until cash sufficient to
pay such liability has been accumulated.

11.           Disqualifying
Dispositions. In the event that you dispose of the shares issued upon
exercise of the Option within either two (2) years following the date of
grant or one year following the date of exercise of the Option, you must deliver
to the Company, within seven (7) days following such disposition, a
written notice specifying the date on which the shares were disposed of, the
number of shares disposed, and, if such disposition was by a sale or exchange,
the amount of consideration received.

12.           Prohibited
Activities. It shall be a condition of the grant of the Option that, and
upon exercise of the Option you shall be deemed to have certified that:

(a)           Non-Solicitation.
For a period of three (3) years from and after your Termination of
Employment, you shall not:

(i)            directly or indirectly solicit,
entice or induce any employee of the Company or of any of its Subsidiaries or
affiliated companies to be employed by any person, firm or corporation which
is, directly or indirectly, in competition with the business or activities of
the Company or any of its Subsidiaries or affiliated companies; or

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(ii)           directly or indirectly approach any
such employee for these purposes; or

(iii)          authorize or knowingly approve the
taking of such actions by other persons on behalf of any such person, firm or
corporation, or assist any such person, firm or corporation in taking such
action; or

(iv)          directly or indirectly solicit, raid,
entice or induce any person, firm or corporation (other than the U.S. Government
or its agencies) who or which on the date hereof is, or at any time during the
period hereunder shall be, a customer of the Company or of any of its
Subsidiaries or affiliated companies to become a customer for the same or
similar products which it purchased from the Company or any of its Subsidiaries
or affiliated companies, or any other person, firm or corporation, and you
shall not approach any such customer for such purpose or authorize or knowingly
approve the taking of such actions by any other person.

(b)           Non-Disclosure.
You shall not divulge, furnish or make available to anyone at any time, except
as part of your employment by the Company or any of its Subsidiaries or
affiliated companies either during or subsequent to such employment, any knowledge
or information with respect to confidential or proprietary information,
methods, processes, plans or materials of the Company or any of its
Subsidiaries or affiliated companies, or with respect to any other confidential
or proprietary aspects of the business of the Company or any of its
Subsidiaries or affiliated companies (the activities prohibited by Section 12(a) hereof
and this Section 12(b) are collectively referred to herein as the “Prohibited
Activities”).

(c)           Forfeiture;
Remedies; Enforcement.

(i)            Upon the exercise of the Option, you
shall be deemed to have certified and agreed that you are in compliance with
the terms and conditions of the Plan and that you have not engaged in and do
not intend to engage in any of the Prohibited Activities. In the event that you
engage in any of the Prohibited Activities (i) prior to any exercise of
the Option, the Committee shall have the right to immediately terminate the
Option (whether or not vested and exercisable), and the Option shall thereupon
immediately terminate and expire, and/or (ii) during the one-year period
following the later of (x) your Termination of Employment and (y) the
date on which the Option was exercised, the Committee shall have the right, as
applicable, to immediately terminate the Option (whether or not vested and
exercisable), and the Company shall be entitled to recover from you at any time
within one year after the later of (x) and (y), and you shall pay over to
the Company, an amount equal to any gain realized as a result of the exercise
of the Option (whether at the time of exercise or thereafter).

(ii)           You acknowledge and agree that the
Committee’s and the Company’s remedies at law for a breach or threatened breach
of the foregoing provisions of the Option in respect of the Prohibited
Activities would be inadequate and, in recognition of this fact, you agree
that, in the event of such a breach or threatened breach, in addition to 

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any remedies at
law, the Committee and/or the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.

(iii)          If it is determined by a court of
competent jurisdiction in any state that any restriction in this Agreement in
respect of the Prohibited Activities is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the laws of that
state.

(d)           Survival.
The terms and provisions of this Section 12 shall survive your Termination
of Employment and the expiration of the Option and this Agreement as set forth
herein.

13.           Provisions
of the Plan Control. This Agreement and the Option are subject to all of
the terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling in the event of any conflicting or inconsistent
provisions.

14.           Entire
Agreement. This Agreement and the Plan constitute the entire agreement
between you and the Company with respect to the subject matter hereof and
thereof, merging any and all prior agreements.

[SIGNATURES ON FOLLOWING PAGE]

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Please indicate your acceptance of all of the terms
and conditions of the Option, this Agreement and the Plan by signing in the
space provided below and returning the original of this letter to me.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UNITED INDUSTRIAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Jonathan A. Greenberg

  
	
   

  	
  Title:

  	
  Vice President, General Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
  ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

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