Document:

Exhibit
10.3

 

AMENDMENT TO SUCCESS
BONUS AGREEMENT

 

AMENDMENT
(this “Amendment”) dated October 7, 2007, by and between United
Industrial Corporation, a Delaware corporation (“Company”) and James H.
Perry (“Employee”).

 

W I T N E S S
E T H :

 

WHEREAS, the parties
hereto are parties to that certain Success Bonus Agreement dated as of April
10, 2002 (the “Success Bonus Agreement”) and they desire to amend the Success
Bonus Agreement as provided herein.

 

NOW THEREFORE,
in consideration of the premises and mutual covenants hereinafter contained,
the parties hereto agree as follows:

 

1.             Section 1 of the
Success Bonus Agreement shall be amended by adding the following provisions at
the end thereof:

 

“The foregoing
single sum payment (the “Success Bonus”) shall also be paid to the
Employee if, prior to the Change in Control, his employment is terminated by
the Company without “Cause” or by the Employee for “Good Reason,” each as
defined below. Such payment of the Success Bonus shall only be made after expiration
of the 409A Delay Period, as set forth in Section 8 below.

 

For purposes
of this Agreement, the term “Change in Control” shall mean (i) any person or
other entity (other than any of the Company’s subsidiaries), including any
person as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, becomes the beneficial owner, as defined in Rule 13d-3 of such Act,
directly or indirectly, of more than fifty percent (50%) of the total combined
voting power of all classes of capital stock of the Company normally entitled
to vote for the election of directors of the Company (the “Voting Stock”),
(ii) the sale of all or substantially all of the property or assets of the Company,
(iii) the consolidation or merger of the Company with another corporation
or other entity (other than with any of the Company’s subsidiaries), the
consummation of which would result in the stockholders of the Company
immediately before the occurrence of the consolidation or merger owning, in the
aggregate, less than 50% of the Voting Stock of the surviving entity, or (iv) a
change in the Board of Directors of the Company occurs with the result that the
members of such Board of Directors on April 8, 2004 (the “Incumbent
Directors”) are replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the Incumbent
Directors prior to the date of such appointment or election, provided
that any person becoming a director whose election or nomination for election
was supported by a majority of the Incumbent Directors shall be considered an
Incumbent Director for purposes hereof.”

 

2.             The Success Bonus
Agreement shall be further amended by adding the following new Section 8 to the
end thereof:

 

 

“8.           In the event that the Employee is deemed to be a “specified
employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code of 1986, as amended (“Code”)) in accordance with procedures
set by the Company at the time of Employee’s termination hereunder, payment of
the Success Bonus described in Section 1 hereof shall be delayed for a period
of six months immediately following the Employee’s termination of employment
(the “409A Delay Period”). In such event, the Success Bonus shall be
paid to the Employee on the day immediately following the expiration of the
409A Delay Period. The Employee shall not be entitled to any interest on or in
respect of any amount not paid during the 409A Delay Period. Notwithstanding
anything herein to the contrary, if the Success Bonus is payable to the
Employee as a result of his termination of employment, the Employee shall only
be entitled to receive such payment if the Employee has incurred a “separation
from service” within the meaning of the regulations issued under Code Section
409A.

 

It is intended that this Agreement comply
with the provisions of Section 409A of the Code and this Agreement shall be
limited, construed and interpreted in a manner consistent with this intent.”

 

3.             Except as amended
hereby, the Success Bonus Agreement shall remain in full force and effect and
is hereby ratified and confirmed.

 

4.             This Amendment may be
executed in one or more counterparts, each of which shall constitute an
original and all of which together shall constitute one agreement.

 

IN WITNESS
WHEREOF, this Amendment has been duly executed by the parties hereto as of the
day and year first above written.

 

	
   

  	
  UNITED INDUSTRIAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anna-Maria G. Palmer

  	
   

  
	
   

  	
  Name:  Anna-Maria G. Palmer

  
	
   

  	
  Title: Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ JAMES H. PERRY

  	
   

  
	
   

  	
  JAMES H. PERRY

  	
   

  

 

2Exhibit
10.4

 

October 7, 2007

 

Personal and Confidential

 

Frederick M. Strader

501 Whithorn Court

Timonium, MD 21093

 

	
  Re:

  	
  Designation
  of Eligibility for Retention Payment under the

  
	
   

  	
  AAI
  Corporation Change in Control Retention and Severance Plan

  

 

Dear Fred:

 

We are pleased
to inform you that AAI Corporation (the “Company”) has selected you to be
eligible to receive a Retention Payment, described below, under the AAI
Corporation Change in Control Retention and Severance Plan (the “Plan”). All
terms and conditions for payment of the Retention Payment are described in this
letter agreement and the Plan (copy enclosed). Since this letter agreement and
the Plan memorialize your right to receive the Retention Payment (assuming all
conditions are satisfied), we encourage you to retain these materials with your
other important papers.

 

Retention Payment.

 

If you have
been continuously employed by the Company or any affiliate from September 1, 2007
(the Plan’s effective date) until December 31, 2008 (“Payment Date”), the
Company will pay you a Retention Payment in a lump sum, less applicable taxes, in
an amount equal to (A÷36)xB, where:

 

•      (A) equals your maximum cash award at 1X
target under the Company’s Long Term Incentive Plan (“LTIP”); and

 

•      (B) equals the number of full and partial
months (prorated on the basis of days in the applicable partial month) between  the date of the Change in Control and the
Payment Date.

 

The Retention
Payment will be paid to you in a single sum cash payment within 15 days after the
Payment Date.

 

Except as
described below, you must be employed by the Company to receive your Retention
Payment.

 

 

Impact of Separation from Service Prior to Payment Date.

 

If, after a Change in Control but prior to the date (or dates) your
Retention Payment is payable, you incur a Separation from Service with the
Company, either without Cause or by you for Good Reason, you will still be entitled
to receive the Retention Payment, as described below. If your Separation from
Service is due to “Disability” (as defined in the Company’s long-term
disability plan), you will still be eligible to receive your Retention Payment but
it will be offset (reduced), to the extent not otherwise offset against any
other amounts owed to you, by amounts payable to you under the Company’s short
or long-term disability plans. However, you will not be entitled to receive
a Retention Payment under the Plan if your Separation from Service is: (i) for
Cause, (ii) by you without Good Reason, or (iii) on account of your death.

 

If you are a “Specified Employee,” i.e., one of
the top 50 “officers” (which is broadly defined) of the Company and its
affiliates having annual compensation in excess of $145,000 for 2007 or as
adjusted thereafter, payment of your Retention Payment will be delayed for six
months after the date of your Separation from Service unless your separation is
due to Disability. As soon as administratively feasible following the end of
the delay period, the Retention Payment will be paid to you in a single sum
cash payment.

 

If you are not a Specified Employee (or you are a Specified Employee
and your separation is due to Disability), the delay period will not apply to
you, and your Retention Payment will be paid to you in a single sum cash
payment within ten days after your Separation from Service.

 

Other Important Terms.

 

The Company is extending participation in the Plan to only selected
employees. For this reason, we ask and you agree that you will keep the terms
of the Plan and this letter agreement completely confidential.

 

This letter agreement is not an employment agreement or guarantee of
continued employment by the Company. In addition, the agreement is personal to
you: you may not assign this agreement or the benefits provided by it to anyone.

 

This letter agreement may not be amended, except in a writing signed by
you and the Company. This letter agreement will be construed and enforced in
accordance with the laws of the State of Maryland  (without
regard to the principles of conflicts of law).

 

This letter agreement sets forth the whole agreement between you and
the Company concerning the subject matter described herein and supersedes any
other discussions, representations or agreements concerning the subject matter
described herein; provided, however, this letter agreement does not supersede,
alter or amend, in any manner, the terms and conditions of your Employment
Agreement with the Company dated August 16, 2006, and as amended and restated
effective as of October 7, 2007, and such agreement shall continue in full
force and effect.

 

2

 

You are hereby advised by the Company to consult your own legal counsel
and/or your own personal financial or tax advisors before signing this letter
agreement. By signing below, you acknowledge that you have carefully read this
letter agreement in its entirety; that you have had an adequate opportunity to
consider it and to consult with any advisors of your choice about it; that you
understand the terms of this letter agreement and their significance; that you
knowingly and voluntarily assent to all the terms and conditions contained in
this agreement; and that you are signing this letter agreement voluntarily and
of your own free will.

 

Please indicate your agreement to the terms of this letter by signing
it in the space provided below and returning a hard copy to me confidentially. Please
do not hesitate to contact me if you have any questions.

 

 

	
   

  	
  Very truly yours

  
	
   

  	
   

  
	
   

  	
  AAI CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anna-Maria G. Palmer

  	
   

  
	
   

  	
  Name: Anna-Maria G. Palmer

  
	
   

  	
  Title: Vice President, Human Resources

  

 

The undersigned accepts the above letter agreement and agrees that it
contains the entire agreement of the parties relating to the subject matter
hereof.

 

	
  Accepted and Agreed:

  
	
   

  
	
   

  
	
  /s/ Frederick M. Strader

  	
   

  
	
  Frederick M. Strader

  
	
   

  
	
  Dated: October 7, 2007

  

 

3

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