Document:

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

      THIS FIRST AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM LOAN
AGREEMENT AND SECURITY AGREEMENT (the "First Amendment") is made as of October
1, 1998, by and between United Industrial Corporation, a Delaware corporation,
having an address of 18 E. 48th Street, New York, New York 10017, and the other
Persons signing below as the Borrower (collectively, the "Borrower"), and FIRST
UNION COMMERCIAL CORPORATION, a North Carolina corporation, having an address of
1970 Chain Bridge Road, McLean, Virginia 22101 ("Lender").

                                    RECITALS

      A. The Borrower 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"), whereby Lender is providing certain credit
facilities to the Borrower.

      B. The Borrower has requested that the Lender agree to amend two of the
covenants contained in the Loan Agreement, and the Lender has agreed to the
Borrower's request.

                                   AGREEMENTS

      NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consid eration, the receipt and
sufficiency of which are hereby acknowl edged, the Borrower and the Lender
hereby agree as follows:

1. Paragraph d of Section 6.14 of the Loan Agreement is amended by revising the
Tangible Net Worth requirements for the quarters ending September 30, 1998 and
thereafter as follows:

      Borrower shall maintain a minimum Tangible Net Worth of Eighty Million
      Dollars ($80,000,000.00) as of September 30, 1998; provided, that the
      required minimum Tangible Net Worth shall increase by One Million, Five
      Hundred Thousand Dollars ($1,500,000.00) on the last day of each calendar
      quarter commencing December 31, 1998 and continuing on the last day of
      each subsequent calendar quarter to and including March 31, 2000.
<PAGE>

2. Clause (i) of the second sentence of Section 7.7 of the Loan Agreement is
deleted in its entirety and replace with the following:

      Borrower may make investments in or loans to ETI, provided that the
      aggregate amount of all of Borrower's loans to or investments in ETI shall
      at no time exceed the sum of Fifteen Million Dollars ($15,000,000.00) and
      provided, further, that any guaranty of an indebtedness of ETI or other
      contingent contractual obligations arising out of an obligation of ETI
      shall be considered an investment in ETI for purposes of the foregoing
      limitation, but contingent liabilities incurred under indemnity agreements
      given to induce a surety to issue a performance or payment bond required
      of ETI in connection with a contract to provide goods or services to one
      of ETI's customers shall not be considered an investment in ETI for
      purposes of the foregoing limitation;

3. The Borrower covenants to take all actions necessary to assure that the
Borrower's computer based systems are able to operate and effectively process
data including dates for after January 1, 2000. At the request of Bank, Borrower
shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.

4. The Borrower warrants and represents to the Lender that:

      a.    Borrower has the power and authority to enter into this First
            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;

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

      c.    The Borrower's obligations under the Loan Documents remain valid and
            enforceable obligations, and the execution and delivery of this
            First 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.

5. Except as modified by this First Amendment, the Loan Agreement remains in
full force and effect and unmodified. Borrower warrant and represent that it has
no offsets or defenses to its obligations under the Loan Documents, as so
modified.

                                       2
<PAGE>

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

                                          UNITED INDUSTRIAL CORPORATION

                                          By: /s/ James Perry
                                             ---------------------------------
                                                James Perry, Treasurer &
                                                Chief Financial Officer

                                          AAI CORPORATION

                                          By: /s/ Paul J. Michaud
                                             ----------------------------
                                                Paul J. Michaud, Vice President,
                                                Chief Financial Officer &
                                                Treasurer

                                          AAI ENGINEERING SUPPORT, INC.

                                          By:  /s/ Paul J. Michaud
                                              ---------------------------
                                                Paul J. Michaud, Vice President,
                                                Chief Financial Officer &
                                                Treasurer

                                          AAI SYSTEMS MANAGEMENT, INC.

                                          By:  /s/ Paul J. Michaud
                                              ---------------------------
                                                Paul J. Michaud, Vice President,
                                                Chief Financial Officer &
                                                Treasurer

                                          AAI/ACL TECHNOLOGIES, INC.

                                          By:  /s/ Paul J. Michaud
                                              ---------------------------
                                                Paul J. Michaud, Vice President
                                                & Chief Financial Officer

                                       3
<PAGE>

                                          DETROIT STOKER COMPANY

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

                                          MIDWEST METALLURGICAL
                                          LABORATORY, INC.

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

                                          NEO PRODUCTS CO.

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

                                          SYMTRON SYSTEMS, INC.

                                          By:  /s/ James Perry
                                              ---------------------------
                                                James Perry, Chief Financial
                                                Officer, Asst. Treasurer & Asst.
                                                Secretary

                                          UIC-Del. CORPORATION

                                          By:  /s/ Paul J. Michaud
                                              ---------------------------
                                                Paul J. Michaud
                                                President & Treasurer

                                       4
<PAGE>

                                          AAI MICROFLITE Simulation
                                          International Corporation

                                          By:  /s/ Paul J. Michaud
                                              ---------------------------
                                                Paul J. Michaud
                                                President

                                          FIRST UNION COMMERCIAL
                                          CORPORATION

                                          By:  /s/ Michael Landini
                                              ---------------------------
                                                Michael Landini
                                                Vice President

                                       5SECOND AMENDMENT TO
                  REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
                      LOAN AGREEMENT AND SECURITY AGREEMENT

      THIS SECOND AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
LOAN AGREEMENT AND SECURITY AGREEMENT (the "Second Amendment") is made as of
December 31, 1998, by and between United Industrial Corporation, a Delaware
corporation, having an address of 18 E. 48th Street, New York, New York 10017,
and the other Persons signing below as the Borrower (collectively, the
"Borrower"), and FIRST UNION COMMERCIAL CORPORATION, a North Carolina
corporation, having an address of 1970 Chain Bridge Road, McLean, Virginia 22101
("Lender").

                                    RECITALS

      A. The Borrower 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 (said agreement, as so amended, being
hereinafter called the "Loan Agreement").

      B. The Borrower has requested that the Lender agree to amend certain of
the covenants contained in the Loan Agreement, and the Lender has agreed to the
Borrower's request.

                                   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 Borrower and the Lender hereby
agree as follows:

1. Paragraph d of Section 6.14 of the Loan Agreement is amended by revising the
Tangible Net Worth requirements for the quarters ending December 31, 1998 and
thereafter as follows:

      Borrower shall maintain a minimum Tangible Net Worth of Seventy Million
      Dollars ($70,000,000.00) as of December 31, 1998; provided, that the
      required minimum Tangible Net Worth shall increase by One Million, Five
      Hundred Thousand Dollars ($1,500,000.00) on the last day of each calendar
      quarter commencing March 31, 1999 and continuing on the last day of each
      subsequent calendar quarter to and including March 31, 2000.

2. The second sentence of Section 7.5 of the Loan Agreement is deleted in its
entirety and replaced with the following:

      Notwithstanding the foregoing: (i) Borrower may make investments in or
      loans to
<PAGE>

      ETI, provided that the aggregate amount of all of Borrower's loans to or
      investments in ETI shall at no time exceed the sum of Seventeen Million
      Dollars ($17,000,000.00) and provided, further, that any guaranty of an
      indebtedness of ETI or other contingent contractual obligations arising
      out of an obligation of ETI shall be considered an investment in ETI for
      purposes of the foregoing limitation, but contingent liabilities incurred
      under indemnity agreements given to induce a surety to issue a performance
      or payment bond required of ETI in connection with a contract to provide
      goods or services to one of ETI's customers shall not be considered an
      investment in ETI for purposes of the foregoing limitation; (ii) Borrower
      may make investments in or loans to PUI, provided that the aggregate
      amount of all of Borrower's loans to or investments in PUI shall at no
      time exceed the sum of Five Million Dollars ($5,000,000.00) and provided,
      further, that any guaranty of an indebtedness of PUI or other contingent
      contractual obligations arising out of an obligation of PUI shall be
      considered an investment in PUI for purposes of the foregoing limitation;
      (iii) Borrower may make investments in repurchase obligations with a term
      of not more than seven days entered into with First Union Commercial
      Corporation or with any commercial bank chartered in the United States and
      having its deposits insured by the Federal Deposit Insurance Corporation;
      and (iv) Borrower may make investments in marketable securities regularly
      traded on a national stock exchange or on NASDAQ.

3. For the quarters ending December 31, 1998, through September 30, 1999, clause
(i) of the definition of Debt Service Coverage Ratio contained in Section 1.1 of
the Loan Agreement shall read as follows:

      (i) the sum of EBIT plus non-cash expenses (i.e., depreciation and
      amortization), less cash dividends, less Ten Million Dollars
      ($10,000,000.00) and less cash taxes,

however, the foregoing amendment to the definition of Debt Service Coverage
Ratio shall not apply to any quarter prior to the quarter ending December 31,
1998 or after the quarter ending September 30, 1999. For calendar quarters
ending December 31, 1999, and thereafter, the definition of Debt Service
Coverage Ratio shall remain as stated initially in the Loan Agreement.

4. The Borrower warrants and represents to the Lender that:

      a.    Borrower has the power and authority to enter into this Second
            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;

      b.    This Second Amendment, together with all documents executed in
            connection herewith or pursuant hereto, constitute the valid and
            legally binding obligations of

                                       2
<PAGE>

            the Borrower in accordance with their respective terms;

      c.    The Borrower's obligations under the Loan Documents remain valid and
            enforceable obligations, and the execution and delivery of this
            Second 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.

5. Except as modified by this Second Amendment, the Loan Agreement remains in
full force and effect and unmodified. Borrower warrant and represent that it has
no offsets or defenses to its obligations under the Loan Documents, as so
modified.

      IN WITNESS WHEREOF, the undersigned have duly executed this Second
Amendment, or have caused this Second 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, Treasurer & Chief
                                       Financial Officer

                                 AAI CORPORATION

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                       Paul J. Michaud, Vice President,
                                       Chief Financial Officer & Treasurer

                                 AAI ENGINEERING SUPPORT, INC.

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                       Paul J. Michaud, Vice President,
                                       Chief Financial Officer & Treasurer

                                       3
<PAGE>

                                 AAI SYSTEMS MANAGEMENT, INC.

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                       Paul J. Michaud, Vice President,
                                       Chief Financial Officer & Treasurer

                                 AAI/ACL TECHNOLOGIES, INC.

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                       Paul J. Michaud, Vice President &
                                       Chief Financial Officer

                                 DETROIT STOKER COMPANY

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

                                 MIDWEST METALLURGICAL
                                 LABORATORY, INC.

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

                                 NEO PRODUCTS CO.

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

                                       4
<PAGE>

                                 SYMTRON SYSTEMS, INC.

                                 By: /s/ James Perry
                                    ---------------------------------
                                       James Perry, Chief Financial Officer,
                                       Asst. Treasurer & Asst. Secretary

                                 UIC-Del. CORPORATION

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                       Paul J. Michaud
                                       President & Treasurer

                                 AAI MICROFLITE Simulation International
                                 Corporation

                                 By: /s/ Paul J. Michaud
                                    ---------------------------------
                                    Paul J. Michaud
                                    President

AGREED TO BY LENDER:

                                 FIRST UNION COMMERCIAL
                                 CORPORATION

                                 By: /s/ Michael J. Landini
                                    ---------------------------------
                                       Michael J. Landini
                                       Vice President

                                       5

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