PARENT PLEDGE AGREEMENT
THIS PARENT PLEDGE AGREEMENT (this " Pledge Agreement "), dated as of July 18, 2005, among UNITED INDUSTRIAL CORPORATION, a Delaware
corporation (the " Pledgor "), in favor of SUNTRUST BANK, a Georgia banking corporation, as Administrative Agent (the " Administrative Agent "), on its
behalf and on behalf of the other banks and lending institutions (the " Lenders ") from time to time party to the Revolving Credit Agreement, dated as of the date hereof, by and among the Pledgor,
AAI Corporation, a Maryland corporation (the " Borrower "), the Administrative Agent, the Lenders, and SunTrust Bank, as Issuing Bank and as Swingline Lender (as amended, restated, supplemented,
or otherwise modified from time to time, the " Credit Agreement ").
W I T N E S S E T H:
WHEREAS , pursuant to the Credit Agreement, the Lenders have agreed to establish a revolving credit facility to the Borrower;
WHEREAS, it is a condition precedent to the obligations of the Administrative Agent, the Issuing Bank, the Swingline Lender, and the Lenders under the Credit Agreement that the Pledgor grant to Administrative Agent a security interest in all of
its Pledged Collateral (as defined below), and the Pledgor wishes to fulfill said condition precedent;
WHEREAS , the Pledgor is the record and beneficial owners of all of the issued and outstanding shares of common stock listed on Part A of Schedule I attached hereto (the " Pledged
Shares ") and are the record and beneficial owners of all membership interests listed on Part B of Schedule I attached hereto (the " Pledged Membership Interests "), such Pledged
Shares and Pledged Membership Interests being all of the Capital Stock of the Pledgor92s Domestic Subsidiaries (excluding the Capital Stock of Detroit Stoker Company, a Michigan corporation) and 65% of the voting Capital Stock and 100% of the non-voting
Capital Stock of the Pledgor92s Non-U.S. Subsidiaries;
WHEREAS , the Pledgor is the record and beneficial owners of the promissory notes and instruments described on Schedule II attached hereto (the " Pledged Notes "); and
NOW, THEREFORE , in order to induce Lenders to extend the Loans and the Issuing Bank to issue Letters of Credit and to make the financial accommodations as provided for in the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms . All capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement.
2. Pledge . The Pledgor hereby pledges to the Administrative Agent, for its benefit and the benefit of Lenders and each party to a Hedging Transaction incurred to limit interest rate or fee fluctuation with
respect to the Loans and Letters of Credit if at the date of entering into such Hedging Transaction such person was a Lender or an Affiliate of a Lender and such person executes and delivers to the Administrative Agent a letter agreement in form and substance
acceptable to the Administrative Agent pursuant to which such person (i) appoints the Administrative Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Article IX and X of the Credit Agreement
(each such person a " Specified Hedge Provider ", the Administrative Agent, the Lenders and the Specified Hedge Providers, collectively, referred to herein as the "
Secured Parties " and each a " Secured Party ") and grants to the Administrative Agent, for its benefit and the benefit of the Secured Parties, a first priority security interest in all
of the Pledgor92s right, title and interest in, to and under the following property, whether now owned by or owing to, or hereafter acquired by or arising in favor of the Pledgor (collectively, the "
Pledged Collateral "):
(a) The Pledged Shares and the certificates representing the Pledged Shares, and, except as expressly provided for in Section 8 hereof,
all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares;
(b) Any stock or other securities acquired by the Pledgor or its designees with respect to, incident to or in lieu of the Pledged Shares or with respect to, incident to or
in lieu of the Pledged Collateral (x) due to any dividend, stock-split, stock dividend or distribution on dissolution, or partial or total liquidation, or for any other reason, (y) in connection with a reduction of capital, capital surplus or paid-in-surplus
or (z) in connection with any spin-off, split-off, reclassification, readjustment, merger, consolidation, sale of assets, combination of shares or any other plan of distribution affecting of the those companies listed on Schedule I;
(c) Any subscription or other rights or options issued in connection with the Pledged Shares, and, if exercised by the Pledgor, all new shares or other securities so acquired
by the Pledgor, which shall promptly be assigned and delivered to the Administrative Agent and held under the terms of this Pledge Agreement in the same manner as the Pledged Shares originally pledged hereunder;
(d) Any and all proceeds, monies, income and benefits arising from or by virtue of, and all dividends and distributions (cash or otherwise) payable or distributable with
respect to, all or any of the Pledged Shares or other securities and rights and interests described in this Section 2 , except as expressly provided for in Section 8 hereof;
(e) The Pledged Membership Interests, if any, and any certificates at any time representing the Pledged Membership Interests, [it being understood that the Pledged Membership
Interests are, as of the date hereof, uncertificated,] and all cash, securities, dividends, rights, and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged
(f) All of the Pledgor92s right, title and interest as a member in each limited liability company listed on Part B
of Schedule I (the " LLCs "), whether now owned or hereafter acquired, including all of the Pledgor92s right, title and interest in, to and under the limited liability company agreements described on Part B of
Schedule I (as such agreements have heretofore been and may hereafter be amended, restated, supplemented or otherwise modified from time to time, collectively, the " LLC Agreements ") to which
it is a party (including, the right to vote with respect to and to manage and administer the business of such LLCs) together with all other rights, interests, claims and other property of the Pledgor in any manner arising out of or relating to its membership
interest in the LLCs, whatever their respective kind or character, whether they are tangible or intangible property, and wheresoever they may exist or be located, and further including, without limitation, (1) all rights of the Pledgor to receive distributions
of any kind, in cash or otherwise, due or to become due under or pursuant to each such LLC Agreement or otherwise in respect of such LLCs, (2) all rights of the Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to each such LLCs, (3) all claims of the Pledgor for damages arising out of, or for the breach of, or for a default under, each such LLC Agreement, (4) any certificated or uncertificated security evidencing any of the foregoing issued by such LLCs to
the Pledgor, (5) any interest of the Pledgor in the entries on the books of any financial intermediary pertaining to the Pledgor92s interest as a member in the LLCs and (6) to the extent not included in the foregoing, all proceeds of any and all of
the foregoing; provided , however , that notwithstanding anything herein to the contrary;
(i) The Pledgor shall remain liable under the LLC Agreements to the extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Pledge Agreement had not been executed;
(ii) The exercise by the Administrative Agent of any of its rights hereunder shall not release the Pledgor from any of its duties or obligations under the LLC Agreements
(other than to the extent the Pledgor is precluded from performing such duties solely as a result of the Administrative Agent92s having exercised such rights or remedies);
(iii) The Administrative Agent shall not have any obligation or liability under the LLC Agreements by reason of this Pledge Agreement, nor shall the Administrative Agent be obligated
to perform any of the obligations or duties of the Pledgor thereunder, to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by the Pledgor or the sufficiency of any performance by any party under any such LLC
Agreement, or to take any action to collect or enforce any claim for payment assigned hereunder; and
(iv) Without limiting the generality of the foregoing, neither the grant of the security interest in the Pledged Collateral in favor of the Administrative Agent as provided herein
nor the exercise by the Administrative Agent of any of its rights hereunder nor any action by the Administrative Agent in connection with a foreclosure on the Pledged Collateral shall be deemed to constitute the Administrative Agent or any other Secured
Party a member of any limited liability company;
(g) The Pledged Notes and the instruments and other documents representing the Pledged Notes, and all interest, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for the Pledged Notes; and
(h) All additional promissory notes from time to time acquired by the Pledgor in any manner and the instruments and other documents representing such promissory notes and
all interest, cash, instruments and other property, or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such promissory notes.
3. Security For Secured Obligations . This Pledge Agreement and the Pledged Collateral secure the prompt payment, in full when due, whether at stated maturity, by acceleration or otherwise, and performance of
(i) all obligations of the Pledgor under the Credit Agreement, the Parent Guaranty Agreement and all other Loan Documents to which the Pledgor is a party to (whether for principal, interest, fees, expenses, indemnity or reimbursement payments, or otherwise,
as provided in the Credit Agreement or such other Loan Documents), (ii) all renewals, extensions, refinancings and modifications thereof, and (iii) all interest, charges, expenses, fees, attorneys92 fees and other sums required to be paid by the Pledgor
under the Credit Agreement, under this Pledge Agreement or under any of the other Loan Documents (collectively, the " Secured Obligations ").
4. Delivery Of Pledged Collateral . All certificates, promissory notes and instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Administrative Agent pursuant hereto.
All Pledged Shares and Pledged Membership Interests shall be accompanied by duly executed, undated instruments of transfer or assignment endorsed in blank, all in form and substance satisfactory to the Administrative Agent and, if the Administrative
Agent so requests, with signatures guaranteed by a member of a registered national securities exchange or the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States.
All Pledged Notes shall be endorsed by the Pledgor. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right, at any time in its discretion and without notice to the Pledgor, to transfer to
or to register in the name of the Administrative Agent or any of its nominees any or all of the Pledged Shares or Pledged Membership Interests. In addition, the Administrative Agent shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Shares or Pledged Membership Interests for certificates or instruments of smaller or larger denominations.
5. Representations and Warranties . The Pledgor represents and warrants to the Secured Parties as follows:
(a) The Pledgor is, and at the time of delivery of the Pledged Shares and Pledged Membership Interests to the Administrative Agent pursuant to
Section 4 hereof will be, the sole holder of record and the sole beneficial owner of the Pledged Collateral pledged by the
Pledgor, free and clear of any Lien thereon or affecting the title thereto except for Permitted Encumbrances.
(b) All of the Pledged Shares and Pledged Membership Interests have been duly authorized, validly issued and are fully paid and non-assessable and all documentary, stamp,
or other taxes or fees owing in connection with the issuance, transfer and/or pledge thereof hereunder have been paid and will be hereafter paid by the Pledgor as same becomes due and payable.
(c) No dispute, counterclaim or defense exists with respect to all or any part of the Pledged Collateral.
(d) The Pledgor has the requisite corporate authority to pledge, assign, transfer, deliver, deposit and set over its Pledged Collateral to the Administrative Agent as provided
(e) There are no restrictions, other than applicable laws and regulations affecting the offering and sales of securities generally, upon the transfer, hypothecation or
pledge of any of the Pledged Collateral.
(f) None of the Pledged Shares or Pledged Membership Interests have been issued or transferred in violation of the securities registration, securities disclosure or
similar laws of any jurisdiction to which such issuance or transfer may be subject.
(g) Part A of Schedule I hereto lists the authorized shares of common stock, the par value thereof and the number of issued and outstanding shares of common stock
of each issuer of Pledged Shares. As of the date hereof, (i) no subscription, warrant, option or other rights to purchase or acquire any shares of any class of capital stock of any issuer of Pledged Shares is authorized and outstanding, and (ii) there
is no commitment by any issuer of Pledged Shares to issue any such shares, warrants, options or other such rights or securities.
(h) Part B of Schedule I hereto lists all of the issued and outstanding membership interests of each issuer of Pledged Membership Interests. As of the date hereof,
(i) no subscription, warrant, option or other rights to purchase or acquire any membership interests of any issuer of Pledged Membership Interests is authorized and outstanding, and (ii) there is no commitment by any issuer of Pledged Membership Interests
to issue any such warrants, options or other such rights or securities.
(i) The pledge by the Pledgor of its Pledged Collateral is not in contravention of any law or of any agreement to which the Pledgor is party or by which the Pledgor
is otherwise bound, and no consent, approval, authorization or other order of, or other action by, any Person or notice to or filing with, any Person is required (x) for the pledge by the Pledgor of the Pledged Collateral pursuant to this Pledge Agreement
or for the execution, delivery or performance of this Pledge Agreement by the Pledgor or (y) for the exercise by the Administrative Agent of the voting or other rights provided for in this Pledge Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Pledge Agreement (except as may be required in connection
with any disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities generally).
(j) The pledge, assignment and delivery of the Pledged Collateral together with duly executed, undated instruments of transfer or assignment endorsed in blank pursuant
to this Pledge Agreement will create a valid first priority Lien on and a first priority perfected security interest in the Pledged Collateral and the proceeds thereof, securing the payment of the Secured Obligations and no filing or other action is necessary
to perfect or protect such security interest, except that (i) the filing of a financing statement, the taking of possession or some other action may be required under Section 9-315 of the Uniform Commercial Code as in effect
in the State of New York (the " UCC ") to perfect a security interest in certain proceeds of the Pledged Collateral that do not constitute Pledged Shares or other securities or instruments and (ii) the filing of a
financing statement under Sections 9-312 and 9-314 of the UCC may be required to perfect a security interest in any Pledged Collateral that constitutes "investment property" (other than the Pledged Shares) with respect to which the Administrative
Agent does not have "control" (as such terms are defined in the UCC).
(k) All of the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects, are incorporated
herein by this reference and deemed to be made herein by the Pledgor for purposes of this Pledge Agreement.
(l) Each of the Pledged Notes purported to be pledged hereunder is the legal, valid and binding obligation of the obligor thereof, enforceable in accordance with
its terms; each of the Pledged Notes has been duly authorized, authenticated or issued and delivered by the issuer thereof, and no such issuer is in default thereunder. Except as disclosed on Schedule II hereto, none of the Pledged Notes are
subordinated in right of payment to other indebtedness (except for the Secured Obligations) or subject to the terms of an indenture.
(m) This Pledge Agreement has been duly authorized, executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor enforceable against
the Pledgor in accordance with its terms.
The representations and warranties set forth in this Section 5 shall survive the execution and delivery of this Pledge Agreement.
6. Covenants . The Pledgor covenants and agrees that from and after the date of this Pledge Agreement and until the payment and performance in full of all of the Secured Obligations of the