Document:

FIFTH AMENDMENT TO
                  REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
                      LOAN AGREEMENT AND SECURITY AGREEMENT

      THIS FIFTH AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM LOAN
AGREEMENT AND SECURITY AGREEMENT (the "Fifth Amendment") is made as of November
14, 2000, by and among United Industrial Corporation, a Delaware corporation,
having an address of 570 Lexington Avenue, New York, New York 10022, and AAI
Corporation, AAI Engineering Support, Inc., AAI/ACL Technologies, Inc., AAI/ACL
Technologies Europe Limited, Detroit Stoker Company, Midwest Metallurgical
Laboratory, Inc., UIC Products Co., and AAI MICROFLITE Simulation International
Corporation (collectively, the "Borrowers"), and First Union Commercial
Corporation, a North Carolina corporation, having an address of 1970 Chain
Bridge Road, McLean, Virginia 22101 ("Lender").

                                    RECITALS

      A. United Industrial Corporation and certain of its subsidiaries and the
Lender are parties to a Revolving Line of Credit Loan Agreement, Term Loan
Agreement and Security Agreement, dated as of June 11, 1997 (the "Loan
Agreement"), as amended by First Amendment to Revolving Line of Credit Loan
Agreement, Term Loan Agreement and Security Agreement (the "First Amendment")
made as of October 1, 1998, by Second Amendment to Revolving Line of Credit Loan
Agreement, Term Loan Agreement and Security Agreement (the "Second Amendment")
made as of December 31, 1998, by Third Amendment to Revolving Line of Credit
Loan Agreement, Term Loan Agreement and Security Agreement (the "Third
Amendment") made as of March 31, 2000, and by Fourth Amendment to Revolving Line
of Credit Loan Agreement and Security Agreement, dated as of September 21, 2000
(the "Fourth Amendment") (said agreement, as so amended, being hereinafter
called the "Loan Agreement").

      B. The Borrowers' obligations to repay advances under the Loan Agreement
is evidenced by a Revolving Note, dated as of July 11, 1997, as amended by a
First Amendment to Revolving Note, made as of March 31, 2000, and by a Second
Amendment of Revolving Note, of even date herewith (said Revolving Note, as so
amended, being hereinafter called the "Note").

      C. The parties desire further to amend the Loan Agreement to extend the
Ending Date (as defined in the Loan Agreement) to June 30, 2001.

                                   AGREEMENTS

      NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the Lender
hereby agree as follows:

1. The recitals are incorporated herein by reference. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Loan
Agreement.
<PAGE>

2. Section 1.1 of the Loan Agreement is amended by deleting the definition of
"Ending Date" in its entirety and replacing it with the following:

      "Ending Date" means June 30, 2001.

3. To induce the Lender to enter into this Fifth Amendment, the Borrower
warrants and represents to the Lender that:

      a.    The Borrower's books and record properly reflect the Borrower's
            financial condition, and no material adverse change in the
            Borrower's financial condition has occurred since the last date that
            the Borrower provided financial reports to the Lender; and

      b.    No litigation is pending or, to the Borrower's knowledge, threatened
            against the Borrower which could materially adversely affect the
            Borrower or which involves a claim against the Borrower in an amount
            equal to or greater than $500,000 of which the Borrower has not
            informed the Lender in writing; and

      c.    The Borrower is in compliance with all provisions of the Loan
            Agreement and is in compliance in all material respects with all
            applicable laws and regulations; and

      d.    Borrower has the power and authority to enter into this Fifth
            Amendment, to perform its obligations hereunder, to execute all
            documents being executed and delivered in connection herewith, and
            to incur the obligations provided for herein, all of which have been
            duly authorized and approved in accordance with the Borrower's
            organizational documents; and

      e.    This Fifth Amendment, together with all documents executed in
            connection herewith or pursuant hereto, constitute the valid and
            legally binding obligations of the Borrower in accordance with their
            respective terms; and

      f.    The Borrower's obligations under the Loan Documents remain valid and
            enforceable obligations, and the execution and delivery of this
            Fifth Amendment and the other documents executed in connection
            herewith shall not be construed as a novation of the Loan Agreement
            or the other Loan Documents.

4. The Borrower promises to pay, upon execution of this Fifth Amendment, all
costs (including attorneys fees) incurred by the Lender in connection with the
preparation of this Fifth Amendment. The Borrower authorizes the Lender to
advance funds to itself or to third parties to pay the fees and costs mentioned
in this paragraph, which shall be deemed to be Advances to the Borrower under
the Loan Agreement and which shall be repayable in accordance with the Note.

5. ARBITRATION. UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE

                                       2
<PAGE>

BEFORE OR AFTER INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CONTROVERSY OR CLAIM
ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS BETWEEN PARTIES HERETO (A
"DISPUTE") SHALL BE RESOLVED BY BINDING ARBITRATION CONDUCTED UNDER AND GOVERNED
BY THE COMMERCIAL FINANCIAL DISPUTES ARBITRATION RULES (THE "ARBITRATION RULES")
OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA") AND THE FEDERAL ARBITRATION ACT.
DISPUTES MAY INCLUDE, WITHOUT LIMITATION, TORT CLAIMS, COUNTERCLAIMS, A DISPUTE
AS TO WHETHER A MATTER IS SUBJECT TO ARBITRATION, CLAIMS BROUGHT AS CLASS
ACTIONS, OR CLAIMS ARISING FROM DOCUMENTS EXECUTED IN THE FUTURE. A JUDGMENT
UPON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. NOTWITHSTANDING
THE FOREGOING, THIS ARBITRATION PROVISION DOES NOT APPLY TO DISPUTES UNDER OR
RELATED TO SWAP AGREEMENTS. ALL ARBITRATION HEARINGS SHALL BE CONDUCTED IN THE
CITY OR COUNTY WHERE THE LENDER'S OFFICE, AS FIRST STATED ABOVE, IS LOCATED, OR
AT SUCH OTHER PLACE AS THE PARTIES MAY IN WRITING AGREE. A HEARING SHALL BEGIN
WITHIN 90 DAYS OF DEMAND FOR ARBITRATION AND ALL HEARINGS SHALL CONCLUDE WITHIN
120 DAYS OF DEMAND FOR ARBITRATION. THESE TIME LIMITS MAY NOT BE EXTENDED UNLESS
A PARTY SHOWS CAUSE FOR EXTENSION AND THEN FOR NO MORE THAN A TOTAL OF 60 DAYS.
THE EXPEDITED PROCEDURES SET FORTH IN RULE 51, ET SEQ., OF THE ARBITRATION RULES
SHALL APPLY TO DISPUTES IN WHICH THE CLAIM IS LESS THAN $1,000,000.00.
ARBITRATORS SHALL BE LICENSED ATTORNEYS SELECTED FROM THE COMMERCIAL FINANCIAL
DISPUTE ARBITRATION PANEL OF THE AAA. THE PARTIES DO NOT WAIVE APPLICABLE
FEDERAL OR STATE SUBSTANTIVE LAW EXCEPT AS PROVIDED HEREIN. NOTWITHSTANDING THE
PRECEDING BINDING ARBITRATION PROVISIONS, THE PARTIES AGREE TO PRESERVE WITHOUT
DIMINUTION, CERTAIN REMEDIES THAT ANY PARTY MAY EXERCISE BEFORE OR AFTER AN
ARBITRATION PROCEEDING IS BROUGHT. THE PARTIES SHALL HAVE THE RIGHT TO PROCEED
IN ANY COURT OF PROPER JURISDICTION OR BY SELF HELP TO EXERCISE OR PROSECUTE THE
FOLLOWING REMEDIES, AS APPLICABLE: (1) ALL RIGHTS TO FORECLOSE AGAINST ANY REAL
OR PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF SALE OR UNDER
APPLICABLE LAW BY JUDICIAL FORECLOSURE INCLUDING A PROCEEDING TO CONFIRM THE
SALE; (2) ALL RIGHTS OF SELF HELP, INCLUDING WITHOUT LIMITATION, PEACEFUL
OCCUPATION OF REAL PROPERTY AND COLLECTION OF RENTS, SETOFF, AND PEACEFUL
POSSESSION OF PERSONAL PROPERTY; (3) OBTAINING PROVISIONAL OR ANCILLARY REMEDIES
INCLUDING INJUNCTIVE RELIEF, SEQUESTRATION, GARNISHMENT, ATTACHMENT, APPOINTMENT
OF RECEIVER AND FILING AN INVOLUNTARY BANKRUPTCY PROCEEDING; AND (4) WHEN
APPLICABLE, A JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY WITH
REGARD TO ANY PARTY'S ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE. THE PARTIES
AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST
OTHER PARTIES IN

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<PAGE>

ANY DISPUTE, AND THEY HEREBY WAIVE ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY NOW HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH
ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR JUDICIALLY.

6. Except as modified by this Fifth Amendment, the Loan Agreement remains in
full force and effect and unmodified. Borrower warrants and represents that it
has no offsets or defenses to its obligations under the Loan Documents, as so
modified. The Borrower hereby releases and waives any and all claims of any kind
that it may have against the lender as of the date of this Fifth Amendment
arising out of or relating to the Revolving Note or the Loan Agreement, as
amended by this Fifth Amendment.

7. This Fifth Amendment may be signed in several counterparts which, when
executed, shall constitute a single agreement. A counterpart containing a
facsimile signature shall be effective to the same extent as if it were a
counterpart containing an original signature, but shall be confirmed promptly
with a counterpart containing an original signature.

      IN WITNESS WHEREOF, the undersigned have duly executed this Fifth
Amendment, or have caused this Fifth Amendment to be duly executed on their
behalf, as of the day and year first hereinabove written.

                                    UNITED INDUSTRIAL CORPORATION

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    AAI CORPORATION

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    AAI ENGINEERING SUPPORT, INC.

                                    By: /s/ Richard Erkeneff
                                       --------------------------------
                                          Richard Erkeneff, President

                                       4
<PAGE>

                                    AAI/ACL TECHNOLOGIES, INC.

                                    By: /s/ Thomas E. Wurzel
                                       --------------------------------
                                         Thomas E. Wurzel, President

                                    AAI/ACL TECHNOLOGIES EUROPE LIMITED

                                    By: /s/ Thomas E. Wurzel
                                       --------------------------------
                                         Thomas E. Wurzel, President

                                    DETROIT STOKER COMPANY

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    MIDWEST METALLURGICAL LABORATORY,
                                    INC.

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    UIC PRODUCTS CO.

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                       5
<PAGE>

                                    AAI MICROFLITE Simulation International
                                    Corporation

                                    By: /s/ Stanley J. Mecinski, Jr.
                                       --------------------------------
                                          Stanley J. Mecinski, Jr.
                                          Assistant Secretary and Assistant
                                          Treasurer

                                    FIRST UNION COMMERCIAL CORPORATION

                                    By: /s/ Scott Santa Cruz
                                       --------------------------------
                                          Scott Santa Cruz, Vice President

                                       6SIXTH AMENDMENT TO
                  REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
                      LOAN AGREEMENT AND SECURITY AGREEMENT

      THIS SIXTH AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM LOAN
AGREEMENT AND SECURITY AGREEMENT (the "Sixth Amendment") is made as of January
24, 2001, by and among United Industrial Corporation, a Delaware corporation,
having an address of 570 Lexington Avenue, New York, New York 10022, and AAI
Corporation, AAI Engineering Support, Inc., AAI/ACL Technologies, Inc., AAI/ACL
Technologies Europe Limited, Detroit Stoker Company, Midwest Metallurgical
Laboratory, Inc., and AAI MICROFLITE Simulation International Corporation
(jointly and severally, the "Borrowers"), and First Union Commercial
Corporation, a North Carolina corporation, having an address of 1970 Chain
Bridge Road, McLean, Virginia 22101 ("Lender").

                                    RECITALS

      A. United Industrial Corporation and certain of its subsidiaries and the
Lender are parties to a Revolving Line of Credit Loan Agreement, Term Loan
Agreement and Security Agreement, dated as of June 11, 1997 (the "Loan
Agreement"), as amended by that certain First Amendment to Revolving Line of
Credit Loan Agreement, Term Loan Agreement and Security Agreement (the "First
Amendment") made as of October 1, 1998, by that certain Second Amendment to
Revolving Line of Credit Loan Agreement, Term Loan Agreement and Security
Agreement (the "Second Amendment") made as of December 31, 1998, by that certain
Third Amendment to Revolving Line of Credit Loan Agreement, Term Loan Agreement
and Security Agreement (the "Third Amendment") made as of March 31, 2000, by
that certain Fourth Amendment to Revolving Line of Credit Loan Agreement, Term
Loan Agreement and Security Agreement, dated as of September 21, 2000 (the
"Fourth Amendment"), and by that certain Fifth Amendment to Revolving Line of
Credit Loan Agreement, Term Loan Agreement and Security Agreement dated as of
November 14, 2000 (the "Fifth Amendment")(said agreement, as so amended, being
hereinafter called the "Loan Agreement").

      B. The Borrowers' obligations to repay advances under the Loan Agreement
is evidenced by a Revolving Note, dated as of July 11, 1997, as amended by a
First Amendment to Revolving Note, made as of March 31, 2000, and by a Second
Amendment of Revolving Note, made as of November 14, 2000 (said Revolving Note,
as so amended, being hereinafter called the "Note").

      C. In accordance with the application of AAI Corporation ("AAI") evidenced
by that certain Application and Agreement for Letter of Credit executed by
United Industrial Corporation and AAI Corporation dated September 25, 2000 (the
"LOC Agreement"), a certain irrevocable standby letter of credit was issued for
the benefit of the Office of Deputy CNO for Intelligence and Operations,
Republic of Korea Navy Headquarters, Bunamri, Dumamyun, Nonsan City,
Chungchongnamdo, Republic of Korea (hereafter, the "Beneficiary"), number
SM414053C, in the original amount of Six Million Six Hundred Thousand and 00/100
Dollars ($6,600,000.00), as thereafter amended (the "Korean Navy LOC"). The
Korean Navy LOC was
<PAGE>

issued in accordance with and subject to the terms, provisions and conditions of
the LOC Agreement and the Loan Agreement.

      D. The Borrowers have requested an increase in the amount of the Korean
Navy LOC, such that the maximum amount of the Korean Navy LOC will be Fifteen
Million Eight Hundred Fourteen Thousand Two Hundred Thirty Eight and 00/100
Dollars ($15,814,238.00), comprised of a principal component of Thirteen Million
Two Hundred Thousand and 00/100 Dollars ($13,200,000.00) and an interest
component of Two Million Six Hundred Fourteen Thousand Two Hundred Thirty Eight
and 00/100 Dollars ($2,614,238.00). The increase in the Korean Navy LOC to
$15,814,238.00 would cause, among other things, (1) the aggregate amount of the
LOC Obligations to exceed the sublimit maximum of Sixteen Million Five Hundred
Thousand and 00/100 Dollars ($16,500,000.00) for letters of credit issued under
the Loan Agreement, and (2) the maximum outstanding aggregate principal amount
of the Advances to exceed the Maximum Revolving Commitment Amount, less the
amount of LOC Obligations, and (3) the principal amount outstanding under the
Revolving Note to exceed the Allowed Amount of Advances; therefore, Borrowers
have also requested that the Loan Agreement be modified to allow for the
amendment to and increase in the Korean Navy LOC requested by Borrowers.

      E. Lender has agreed to modify the Korean Navy LOC to increase the maximum
amount of the Korean Navy LOC to Fifteen Million Eight Hundred Fourteen Thousand
Two Hundred Thirty Eight and 00/100 Dollars ($15,814,238.00), subject to the
terms and provisions of the Amendment Dated 26DEC00 to Irrevocable Standby
Letter of Credit, a copy of which is attached hereto (the "LOC Amendment"), and
to modify the Loan Agreement to accommodate the increase in the Korean Navy LOC,
subject to the provisions and agreements hereinafter set forth, including
without limitation, the Borrowers' deposit of cash (U.S. Dollars) as and when
paid by the Beneficiary under the Korean Navy LOC, into an account established
by Borrowers with Lender, to secure the amount of the increase in the Korean
Navy LOC.

      F. Contemporaneously herewith, the Note is being modified pursuant to that
certain Third Amendment to Revolving Note of even date herewith (the "Note
Modification") to reflect a one-time increase in the maximum principal amount of
the Revolving Loan from Seventeen Million Five Hundred Thousand and 00/100
Dollars ($17,500,000.00) to Twenty Five Million Three Hundred Forty Two Thousand
and 00/100 Dollars ($25,342,000.00) , payable by Borrowers to Lender, and to
accommodate the increase in the principal amount of the Korean Navy LOC.

                                   AGREEMENTS

      NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the Lender
hereby agree as follows:

1. Recitals. The recitals are incorporated herein by reference. Capitalized
terms used but

                                       2
<PAGE>

not defined herein shall have the meanings ascribed to them in the Loan
Agreement.

2. Modification of Korean Navy LOC. The Korean Navy LOC shall be modified in
accordance with the LOC Amendment, such LOC Amendment to remain inoperative and
ineffective until the conditions of the LOC Amendment and this Sixth Amendment
are fully complied with and performed, including without limitation, the
delivery by Borrowers to Lender of the sum of Six Million Six Hundred Thousand
and 00/100 Dollars ($6,600,000.00), in cash (the "Cash Deposit"), for deposit
into an account established with Lender (the "Account") as security for the
Korean Navy LOC. The Cash Deposit and all amounts in the Account shall
constitute Collateral as defined under the Loan Agreement, and shall be subject
to the security interests, terms and provisions of the Security Agreement.

3. LOC Obligations Under the Loan Agreement. Subject to the terms and provisions
of the LOC Amendment and the Loan Agreement as modified hereby, Lender agrees to
increase the Korean Navy LOC by the amount of Seven Million Eight Hundred Forty
One Thousand Five Hundred Eighty One and 00/100 Dollars ($7,841,581.00)(the
"Korean Navy LOC Increase"), the result of which will be that the total amount
of the Korean Navy LOC will be Fifteen Million Eight Hundred Fourteen Thousand
Two Hundred Thirty Eight and 00/100 Dollars ($15,814,238.00). Lender's consent
is a one-time waiver of Borrowers' compliance with the requirements of the Loan
Agreement that (a) the amount of the LOC Obligations not at any time exceed
Sixteen Million Five Hundred Thousand and 00/100 Dollars ($16,500,000.00) and
(b) the maximum outstanding aggregate principal amount of the Advances not at
any time exceed the Maximum Revolving Commitment Amount, less the amount of the
LOC Obligations. In addition, the one-time waiver of Lender set forth above
shall not extend the Ending Date under the Loan Agreement, nor shall such waiver
extend Borrowers' obligation to deliver full and timely payment of all amounts
owing on the Revolving Loan, and under the Revolving Note, the Loan Agreement as
modified by this Sixth Amendment and the other Loan Documents.

Clause (i) of Section 2.1, paragraph (d) of the Loan Agreement is hereby
modified to provide that the aggregate amount of LOC Obligations, less the
Korean Navy LOC Increase, plus the Korean Navy LOC Shortfall (as defined in
paragraph 5 of this Sixth Amendment) shall at no time exceed Sixteen Million
Five Hundred Thousand and 00/100 Dollars ($16,500,000.00). Any reduction in the
amount of the Korean Navy LOC shall be treated as a reduction in that portion of
the Korean Navy LOC other than the Korean Navy LOC Increase, until such time as
only that portion of the Korean Navy LOC consisting of the Korean Navy LOC
Increase remains.

4. Security Agreement and Financing Statements. Contemporaneous with the
execution and delivery of this Sixth Amendment, Borrowers shall execute and
deliver to Lender a Security Agreement, in form and substance satisfactory to
Lender (the "Security Agreement"), thereby, among other things, granting to
Lender a perfected security interest in all sums now or hereafter on deposit in
the Account or in any other account with or possessed by Lender. In addition,
Borrowers shall, upon request of Lender, execute and deliver to Lender, such
financing statements, continuation statements and other documents with respect
to the amounts on deposit in the Account or in any other account with or
possessed by Lender pursuant to the Uniform

                                       3
<PAGE>

Commercial Code or otherwise, in form and substance satisfactory to Lender, and
Borrowers will pay the costs, taxes, fees and charges incurred as a result of
the filing of such financing statements and other documents in all public
offices wherever the Lender deems filing to be necessary or desirable. Borrowers
grant the Lender the right, at the Lender's option, to file any or all such
financing statements, continuation statements and other documents pursuant to
the Uniform Commercial Code and otherwise, without Borrowers' signature, and
irrevocably appoints the Lender as Borrowers' attorney-in-fact to execute any
such statements and documents in Borrowers' name and to perform all other acts
which the Lender deems appropriate to perfect and to continue the security
interests conferred by the Loan Agreement, as modified by this Sixth Agreement,
and/or the Security Agreement.

5. Additional Cash Security. In addition to the Cash Deposit, Borrowers shall
deliver to Lender, contemporaneous with the execution of this Sixth Amendment,
an additional cash deposit in the sum of Three Hundred Thousand and 00/100
Dollars ($300,000.00), for deposit into the Account, as additional security for
the Korean Navy LOC and other obligations of Borrowers under the Loan Agreement
as modified by this Sixth Amendment (the "Additional Cash Deposit"). The
Additional Cash Deposit shall constitute Collateral as defined under the Loan
Agreement, and shall be subject to the security interests, terms and provisions
of the Security Agreement. Furthermore, in the event that the amount on deposit
in the Account is at any time less than the total amount which may be drawn
under or owing in connection with the Korean Navy LOC Increase (as a contingent
obligation or otherwise), or which may be owing under the LOC Agreement with
respect to the Korean Navy LOC Increase (the "Korean Navy LOC Shortfall"),
Borrowers shall immediately deliver to Lender, upon demand of Lender, payment in
immediately available funds, in United States dollars, in an amount equal to the
Korean Navy LOC Shortfall.

6. Definition of Revolving Note. The definition of Revolving Note under the Loan
Agreement shall be modified to mean the Borrowers' promissory note, dated as of
July 11, 1997, as amended by a First Amendment to Revolving Note, made as of
March 31, 2000, and by a Second Amendment of Revolving Note, made as of November
14, 2000, and as modified by a Third Amendment of Revolving Note of even date
herewith, in the amount of Twenty Five Million Three Hundred Forty Two Thousand
and 00/100 Dollars ($25,342,000.00), payable to the order of Lender, and
evidencing Borrowers' obligation to repay the Revolving Loan. Upon the
expiration and termination of the Korean Navy LOC, and there being no amounts
owing by Borrowers to Lender in conjunction with the Korean Navy LOC and it no
longer being an LOC Obligation, the principal amount of the Revolving Note shall
be immediately modified and reduced to Seventeen Million Five Hundred Thousand
and 00/100 Dollars ($17,500,000.00), at Borrowers' sole expense.

7. Definition of Maximum Revolving Commitment Amount. The definition of Maximum
Revolving Commitment Amount shall be modified to mean Twenty Five Million Three
Hundred Forty Two Thousand and 00/100 Dollars ($25,342,000.00), or such lesser
amount as Borrowers may request and as may be allowed for advance under the Loan
Agreement as modified by this Sixth Amendment; provided, that the Maximum
Revolving Commitment Amount shall be

                                       4
<PAGE>

reduced by the amount of any portion of the Korean Navy LOC that expires and
terminates, and that no longer constitutes an LOC Obligation, effective on the
date that such portion of the Korean Navy LOC expires and terminates and no
longer constitutes an LOC Obligation, until the Maximum Revolving Commitment
Amount shall be reduced to Seventeen Million Five Hundred Thousand and 00/100
Dollars ($17,500,000.00), at which point, Maximum Revolving Commitment Amount
shall mean Seventeen Million Five Hundred Thousand and 00/100 Dollars
($17,500,000.00), or such lesser amount as Borrowers may request and as may be
allowed for advance under the Loan Agreement as modified by this Sixth
Amendment.

8. Definition of Allowed Amount of Advances. The definition of Allowed Amount of
Advances is hereby modified to mean that the aggregate principal amount of
Advances outstanding under the Revolving Note at any time shall not exceed the
lesser of:

      i.    the difference between the Maximum Revolving Commitment Amount (as
            determined in accordance with paragraph 7 of this Sixth Amendment),
            and the LOC Obligations; or

      ii.   the amount equal to (i) the Borrowing Base, less (ii) the LOC
            Obligations, plus (iii) the amount of the Korean Navy LOC Increase,
            less (iv) the amount of any Korean Navy LOC Shortfall.

9. Mandatory Payment. Should the maximum aggregate principal amount of all
Advances under the Revolving Loan at any time exceed the amount of Advances to
which Borrowers are entitled under the Loan Agreement as modified by this Sixth
Amendment, Borrowers shall immediately deliver to Lender a mandatory principal
payment in an amount sufficient to reduce the outstanding principal balance to
the amount permitted under the Loan Agreement as modified by this Sixth
Amendment.

10. Representations and Warranties. To induce the Lender to enter into this
Sixth Amendment, the Borrowers warrant and represent to the Lender that:

      a.    The Borrowers' books and records properly reflect the Borrowers'
            financial condition, and no material adverse change in the
            Borrowers' financial condition has occurred since the last date that
            the Borrowers provided financial reports to the Lender; and

      b.    No litigation is pending or, to the Borrowers' knowledge, threatened
            against the Borrowers' which could materially adversely affect the
            Borrowers or which involves a claim against the Borrowers in an
            amount equal to or greater than Five Hundred Thousand and 00/100
            Dollars ($500,000.00) of which the Borrowers have not informed the
            Lender in writing; and

      c.    The Borrowers are in compliance with all provisions of the Loan
            Agreement and are in compliance in all material respects with all
            applicable laws and regulations;

                                       5
<PAGE>

            and

      d.    Borrowers have the power and authority to enter into this Sixth
            Amendment, to perform their obligations hereunder, to execute all
            documents being executed and delivered in connection herewith, and
            to incur the obligations provided for herein, all of which have been
            duly authorized and approved in accordance with the Borrowers'
            organizational documents; and

      e.    This Sixth Amendment, together with all documents executed in
            connection herewith or pursuant hereto, constitute the valid and
            legally binding obligations of the Borrowers in accordance with
            their respective terms; and

      f.    The Borrowers' obligations under the Loan Documents remain valid and
            enforceable obligations, and the execution and delivery of this
            Sixth Amendment and the other documents executed in connection
            herewith shall not be construed as a novation of the Loan Agreement
            or the other Loan Documents.

11. Lender's Fees and Costs. The Borrowers promise to pay, upon execution of
this Sixth Amendment, all costs (including attorneys fees) incurred by the
Lender in connection with the preparation of this Sixth Amendment and any other
documents related thereto, and a loan fee (in addition to all other fees and
costs owing under the Loan Agreement as modified by this Sixth Amendment) in the
amount of Ten Thousand and 00/100 Dollars ($10,000.00). The Borrowers authorize
the Lender to advance funds to itself or to third parties to pay the fees and
costs mentioned in this paragraph, which shall be deemed to be Advances to the
Borrowers under the Loan Agreement and which shall be repayable in accordance
with the Notes.

12. ARBITRATION. UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE BEFORE OR AFTER
INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CONTROVERSY OR CLAIM ARISING OUT OF
OR RELATING TO THE LOAN DOCUMENTS BETWEEN PARTIES HERETO (A "DISPUTE") SHALL BE
RESOLVED BY BINDING ARBITRATION CONDUCTED UNDER AND GOVERNED BY THE COMMERCIAL
FINANCIAL DISPUTES ARBITRATION RULES (THE "ARBITRATION RULES") OF THE AMERICAN
ARBITRATION ASSOCIATION ("AAA") AND THE FEDERAL ARBITRATION ACT. DISPUTES MAY
INCLUDE, WITHOUT LIMITATION, TORT CLAIMS, COUNTERCLAIMS, A DISPUTE AS TO WHETHER
A MATTER IS SUBJECT TO ARBITRATION, CLAIMS BROUGHT AS CLASS ACTIONS, OR CLAIMS
ARISING FROM DOCUMENTS EXECUTED IN THE FUTURE. A JUDGMENT UPON THE AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. NOTWITHSTANDING THE FOREGOING, THIS
ARBITRATION PROVISION DOES NOT APPLY TO DISPUTES UNDER OR RELATED TO SWAP
AGREEMENTS. ALL ARBITRATION HEARINGS SHALL BE CONDUCTED IN THE CITY OR COUNTY
WHERE THE LENDER'S OFFICE, AS FIRST STATED ABOVE, IS LOCATED, OR AT SUCH OTHER
PLACE AS THE PARTIES MAY IN WRITING AGREE. A HEARING SHALL BEGIN WITHIN 90 DAYS
OF DEMAND FOR ARBITRATION AND ALL

                                       6
<PAGE>

HEARINGS SHALL CONCLUDE WITHIN 120 DAYS OF DEMAND FOR ARBITRATION. THESE TIME
LIMITS MAY NOT BE EXTENDED UNLESS A PARTY SHOWS CAUSE FOR EXTENSION AND THEN FOR
NO MORE THAN A TOTAL OF 60 DAYS. THE EXPEDITED PROCEDURES SET FORTH IN RULE 51,
ET SEQ., OF THE ARBITRATION RULES SHALL APPLY TO DISPUTES IN WHICH THE CLAIM IS
LESS THAN $1,000,000.00. BE LICENSED ATTORNEYS SELECTED FROM THE COMMERCIAL
FINANCIAL DISPUTE ARBITRATION PANEL OF THE AAA. THE PARTIES DO NOT WAIVE
APPLICABLE FEDERAL OR STATE SUBSTANTIVE LAW EXCEPT AS PROVIDED HEREIN.
NOTWITHSTANDING THE PRECEDING BINDING ARBITRATION PROVISIONS, THE PARTIES AGREE
TO PRESERVE WITHOUT DIMINUTION, CERTAIN REMEDIES THAT ANY PARTY MAY EXERCISE
BEFORE OR AFTER AN ARBITRATION PROCEEDING IS BROUGHT. THE PARTIES SHALL HAVE THE
RIGHT TO PROCEED IN ANY COURT OF PROPER JURISDICTION OR BY SELF HELP TO EXERCISE
OR PROSECUTE THE FOLLOWING REMEDIES, AS APPLICABLE: (1) ALL RIGHTS TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF
SALE OR UNDER APPLICABLE LAW BY JUDICIAL FORECLOSURE INCLUDING A PROCEEDING TO
CONFIRM THE SALE; (2) ALL RIGHTS OF SELF HELP, INCLUDING WITHOUT LIMITATION,
PEACEFUL OCCUPATION OF REAL PROPERTY AND COLLECTION OF RENTS, SETOFF, AND
PEACEFUL POSSESSION OF PERSONAL PROPERTY; (3) OBTAINING PROVISIONAL OR ANCILLARY
REMEDIES INCLUDING INJUNCTIVE RELIEF, SEQUESTRATION, GARNISHMENT, ATTACHMENT,
APPOINTMENT OF RECEIVER AND FILING AN INVOLUNTARY BANKRUPTCY PROCEEDING; AND (4)
WHEN APPLICABLE, A JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY
WITH REGARD TO ANY PARTY'S ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE. THE
PARTIES AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES
AGAINST OTHER PARTIES IN ANY DISPUTE, AND THEY HEREBY WAIVE ANY RIGHT OR CLAIM
TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY NOW HAVE OR WHICH MAY ARISE IN THE
FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.

13. No Offsets or Defenses; Release of Claims. Except as modified by this Sixth
Amendment, the Loan Agreement remains in full force and effect and unmodified.
Borrowers warrant and represent that they have no offsets or defenses to their
obligations under the Loan Documents, as so modified. The Borrowers hereby
release and waive any and all claims of any kind that they may have against the
Lender as of the date of this Sixth Amendment arising out of or relating to the
Note, as modified by the Note Modification, or the Loan Agreement, as amended by
this Sixth Amendment.

14. Execution in Counterparts. This Sixth Amendment may be signed in several
counterparts which, when executed, shall constitute a single agreement. A
counterpart containing a facsimile signature shall be effective to the same
extent as if it were a counterpart containing an original signature, but shall
be confirmed promptly with a counterpart containing an original signature.

                                       7
<PAGE>

      IN WITNESS WHEREOF, the undersigned have duly executed this Sixth
Amendment, or have caused this Sixth Amendment to be duly executed on their
behalf, as of the day and year first hereinabove written.

                                    UNITED INDUSTRIAL CORPORATION

                                    By  /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    AAI CORPORATION

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    AAI ENGINEERING SUPPORT, INC.

                                    By: /s/ Richard Erkeneff
                                       --------------------------------
                                          Richard Erkeneff, President

                                    AAI/ACL TECHNOLOGIES, INC.

                                    By: /s/ Thomas E. Wurzel
                                       --------------------------------
                                          Thomas E. Wurzel, President

                                    AAI/ACL TECHNOLOGIES EUROPE LIMITED

                                    By: /s/ Thomas E. Wurzel
                                       --------------------------------
                                          Thomas E. Wurzel, President

                                       8
<PAGE>

                                    DETROIT STOKER COMPANY

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    MIDWEST METALLURGICAL LABORATORY,
                                    INC.

                                    By: /s/ James Perry
                                       --------------------------------
                                          James Perry, Vice President

                                    AAI MICROFLITE Simulation International
                                    Corporation

                                    By: /s/ Stanley J. Mecinski, Jr.
                                       --------------------------------
                                          Stanley J. Mecinski, Jr.
                                          Assistant Secretary and Assistant
                                          Treasurer

                                    FIRST UNION COMMERCIAL CORPORATION

                                    By: /s/ Barbara Van Meerten
                                       --------------------------------
                                          Barbara Van Meerten, Vice President

STATE OF MARYLAND        )
COUNTY/CITY OF HARTFORD  )To Wit:

      I Diane Richardson, a Notary Public in and for the jurisdiction
aforesaid, do certify that James Perry, whose name is signed to the writing
above, bearing date as of January 26, 2001, as Vice President of United
Industrial Corporation, Vice President of AAI Corporation, Vice President of
Detroit Stoker Company, and Vice President of Midwest Metallurgical Laboratory,
Inc., has acknowledged the same before me in my jurisdiction aforesaid.

      Given under my hand and seal this 26th day of January, 2001.

                                          /s/ Diane Richardson
                                          --------------------
                                          Notary Public

My Commission Expires: September 28, 2004

                                       9
<PAGE>

STATE OF MARYLAND        )
COUNTY/CITY OF HARTFORD  )To Wit:

      I Diane Richardson, a Notary Public in and for the jurisdiction
aforesaid, do certify that Richard Erkeneff, whose name is signed to the writing
above, bearing date as of January 26, 2001, as President of AAI Engineering
Support, Inc., has acknowledged the same before me in my jurisdiction aforesaid.

      Given under my hand and seal this 26th day of January, 2001.

                                          /s/ Diane Richardson
                                          --------------------
                                          Notary Public

My Commission Expires: September 28, 2004

STATE OF MARYLAND        )
COUNTY/CITY OF HARTFORD  )To Wit.

      I Diane Richardson, a Notary Public in and for the jurisdiction
aforesaid, do certify that Thomas E. Wurzel, whose name is signed to the writing
above, bearing date as of January 26, 2001, as President of AAI/ACL
Technologies, Inc., and President of AAI/ACL Technologies Europe Limited has
acknowledged the same before me in my jurisdiction aforesaid.

      Given under my hand and seal this 26th day of January, 2001.

                                          /s/ Diane Richardson
                                          --------------------
                                          Notary Public

My Commission Expires: September 28, 2004

STATE OF MARYLAND        )
COUNTY/CITY OF HARTFORD  )To Wit

      I Diane Richardson, a Notary Public in and for the jurisdiction
aforesaid, do certify that Stanley J. Mecinski, Jr., whose name is signed to the
writing above, bearing date as of January 26, 2001, as Assistant Secretary and
Assistant Treasurer of AAI MICROFLITE Simulation International Corporation has
acknowledged the same before me in my jurisdiction aforesaid.

      Given under my hand and seal this 26th day of January, 2001.

                                          /s/ Diane Richardson
                                          --------------------
                                          Notary Public

My Commission Expires: September 28, 2004

                                       10

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