AMENDMENT NO. 1 dated as of November 29, 1999 to CREDIT AGREEMENT Dated as of April 20, 1999 THIS AMENDMENT NO. 1 ("Amendment") is entered into as of November 29, 1999 by and among The Fairchild Corporation, a Delaware corporation (the "Borrower"), and the institutions identified on the signature pages hereof as Lenders. Capitalized terms used herein but not defined herein shall have the meanings provided in the Credit Agreement (as defined below). W I T N E S S E T H: WHEREAS, the Borrower and the Lenders and Issuing Banks are parties to that certain Credit Agreement dated as of April 20, 1999 (together with the Exhibits and Schedules thereto, the "Credit Agreement"), pursuant to which the Lenders and Issuing Banks have agreed to provide certain financial accommodations to the Borrower; and WHEREAS, the Borrower has requested the consent of the Collateral Agent to certain actions not otherwise permitted under Article X of the Credit Agreement and certain amendments to Article X of the Credit Agreement and the Collateral Agent has identified certain provisions of the Credit Agreement which require clarification and amendment; NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Amendment to Credit Agreement. Effective as of November 29, 1999, upon satisfaction of the conditions precedent set forth in Section 3 below, the Credit Agreement is hereby amended as follows: 1.1 Section 1.01 is amended to delete the definitions of "Banner Companies", "Net Cash Proceeds of Sale", and "Net Cash Proceeds of Sale of Banner Companies" in their entirety and substitute the following therefor: "Banner Companies" means , collectively, Banner and those Persons and investments in Persons identified on Schedule 1.01.5 under the heading "Banner Aerospace, Inc." and their respective Capital Stock and assets; and "Banner Company" means any of the Banner Companies, individually. "Net Cash Proceeds of Sale" means: i) cash proceeds (including cash, equivalents readily convertible into cash, and such proceeds of any notes received as consideration or any other non-cash consideration) from the sale, assignment or other disposition of (but not the lease or license of) any Property other than sales of property permitted under Sections 10.02(d) and 10.09, net of (a) the costs of sale, assignment or other disposition, (b) any income, franchise, transfer or other tax liability arising from such transaction and (c) amounts applied to the repayment of Indebtedness (other than the Obligations) secured by a Lien permitted by Section 10.03 on the asset disposed of, whether such net proceeds arise from any individual sale, assignment or other disposition or from any group of related sales, assignments or other dispositions received by: (1) the Borrower or any Restricted Subsidiary other than proceeds of sales of Permitted Dispositions, provided however that sales of Technologies Companies and Banner Companies shall be subject to the provisions of clauses (2) and (3) below; (2) the Borrower, any Restricted Subsidiary, or the Technologies Companies upon the completion of full liquidation of all Technologies Companies; and (3) the Borrower, any Restricted Subsidiary or any Banner Company (whether or not a Restricted Subsidiary) as Net Cash Proceeds of Sale of Banner Companies net of the amount of Net Cash Proceeds of Sale of Banner Companies required to be paid under Section 4.01(b)(i)(B); and (ii) to the extent provided in Section 9.07(b), proceeds of insurance on account of the loss of or damage to any such Property or Properties, and payments of compensation for any such Property or Properties taken by condemnation or eminent domain. "Net Cash Proceeds of Sale of Banner Companies" means cash proceeds (including cash, equivalents readily convertible into cash, and such proceeds of any notes received as consideration or any other non-cash consideration) from the sale, assignment or other disposition of (but not the lease or license of) any Property or Capital Stock of the Banner Companies, or any of them, other than sales of property permitted under Sections 10.02(d) and 10.09, net of (a) the costs of sale, assignment or other disposition, (b) any income, franchise, transfer or other tax liability arising from such transaction and (c) amounts applied to the repayment of Indebtedness (other than the Obligations) secured by a Lien permitted by Section 10.03 on the asset disposed of, whether such net proceeds arise from any individual sale, assignment or other disposition or from any group of related sales, assignments or other dispositions. and to add the following definitions thereto: "Farmingdale Guaranty"means that certain Guaranty executed and delivered by the Borrower in favor of Morgan Guaranty Trust Company of New York in connection with the Indebtedness incurred by Warthog, Inc., as the owner of the Farmingdale Property, and permitted under Section 10.01(f). "Farmingdale Security Instrument"means that certain Mortgage and Security Agreement of even date with the Farmingdale Guaranty executed and delivered by Warthog, Inc., as the owner of the Farmingdale Property, in connection with the Indebtedness permitted under Section 10.01(f) in favor of Morgan Guaranty Trust Company of New York. 1.2 Section 4.01(b)(i)(B) and (C) are amended to delete the provisions thereof in their entirety and substitute the following therefor: (B) The Borrower shall make or cause to be made a mandatory prepayment of the Obligations upon the Borrower's or any Subsidiary of the Borrower's receipt of Net Cash Proceeds of Sale of Permitted Dispositions and Net Cash Proceeds of Sale of Banner Companies in an amount equal to (1) one hundred percent (100%) of the first $25,000,000 of Net Cash Proceeds of Sale of Permitted Dispositions and Net Cash Proceeds of Sale of Banner Companies received and (2) fifty percent (50%) of the next $50,000,000 of Net Cash Proceeds of Sale of Permitted Dispositions and Net Cash Proceeds of Sale of Banner Companies received. (C) Notwithstanding the foregoing, upon the written request of the Borrower to the Collateral Agent that the mandatory prepayment with respect to Net Cash Proceeds of Sale of Banner Companies otherwise required under Section 4.01(b)(i)(A) and (B) be waived, an amount equal to such Net Cash Proceeds of Sale of Banner Companies so received shall be remitted to the Collateral Agent for deposit in the Cash Collateral Account and the Collateral Agent shall hold the same in such Cash Collateral Account (absent the occurrence of any Event of Default) until the earlier to occur of (Y) the date which is 225 days after the Borrower's or any of its Subsidiaries' receipt of such Net Cash Proceeds of Sale of Banner Companies or (Z) the date on which the Requisite Lenders shall have authorized the release of the amount so deposited (or a portion thereof) to the Borrower. In the event the amount so deposited to the Cash Collateral Account has not been released to the Borrower as referenced in clause (Z) above, the Collateral Agent shall withdraw such amount from the Cash Collateral Account on the date specified in clause (Y) above and apply the same as set forth in Section 4.01(b)(vii). 1.3 Section 8.01(c) is amended to delete the reference therein to "Exhibit I" and substitute therefore a reference to "Exhibit J". 1.4 Section 10.01(c) is amended to delete the language "Indebtedness arising from the following intercompany loans:" in its entirety and substitute therefor the language "Indebtedness arising from the following intercompany loans and other actions:", to delete the word "and" at the end of clause (iv) thereof, and add the following as clause (vi) and clause (vii) thereof: (vi) intercompany loans made after the Closing Date to Banner Capital Ventures, Inc., a Delaware corporation and Wholly-Owned Subsidiary of RHI, in addition to Permitted Existing Investments in Banner Capital Ventures, Inc., in an aggregate amount not to exceed $1,000,000; and (vii) the payment by any Subsidiary of the Borrower of dividends or other distributions on its Capital Stock which are permitted under Section 10.05(a); 1.5 Section 10.01(f) is amended to delete the reference therein to "October 3, 1999" and substitute therefor "January 31, 2000". 1.6 Section 10.04 is amended to (i) delete the provisions of clause (d) thereof in their entirety and substitute the following therefor: (d) Investments made by the Borrower and Restricted Subsidiaries in connection with acquisitions of assets or equity Securities of any Person (other than the Technologies Companies) in an aggregate amount not to exceed: (i) $17,500,000 in cash or assumed Indebtedness until such time as the outstanding principal balance of the Term Loans has been reduced by $25,000,000 in the aggregate under Section 4.01(b)(vii) from Net Cash Proceeds of Sale of Permitted Dispositions and Net Cash Proceeds of Sale of Banner Companies or (ii) thereafter (and when combined with Investments made as permitted under the foregoing clause (i), Investments made as permitted under clauses (j) and (k) below, and Indebtedness incurred as permitted under Section 10.01(c)(vi)), $35,000,000 in cash or assumed Indebtedness; provided that : (A) no Event of Default or Potential Event of Default has occurred and is continuing unwaived or, after giving effect to the making of any such Investment, no Potential Event of Default or Event of Default would occur and (B) on a pro forma basis, determined for the four (4) Fiscal Quarters immediately preceding any such Investment, giving effect to such Investment as though it occurred at the commencement of such four (4) Fiscal Quarter period, no breach of any covenant included in Article XI would have occurred; and provided further that the aforesaid limitations specified in clauses (i) and (ii) above shall: (1) be increased by the amount of the Net Cash Proceeds of Sale of Permitted Dispositions (other than Net Cash Proceeds of Sale received in connection with the sale or other disposition of Capital Stock of WatkinsJohnson Company held by the Borrower or any Subsidiary of the Borrower) net of the amount of such Net Cash Proceeds of Sale of Permitted Dispositions applied to the Obligations as provided under Section 4.01(b)(vii) and (2) include payments of cash made to Robert Edwards in accordance with the Third Amendment and Plan of Merger dated as of September 17, 1998 by and among the Borrower, Special-T Fasteners, Inc., and Robert Edwards, executed and delivered in connection with the Borrower's acquisition of Special-T Fasteners, Inc., and any related agreement entered into after the Closing Date, only to the extent the same exceed $2,000,000 in the aggregate; (ii) delete the word "and" at the end of clause (h) thereof, (iii) delete the "." at the end of clause (i) thereof and substitute a ";" therefor, and (iv) add the following clauses (j),(k), and (l) thereto: (j) Investments by the Borrower or Subsidiaries of the Borrower in the form of loans or advances to employees of the Borrower and its Subsidiaries in an aggregate amount not to exceed $750,000 at any time outstanding; provided that the same are evidenced by promissory notes delivered to the Collateral Agent as part of the Collateral; (k) Investments in the form of capital contributions by the Borrower, directly or through Wholly-Owned Subsidiaries of the Borrower, in Banner Investments UK in an amount not to exceed $3,000,000 in the aggregate; provided that no Event of Default shall have occurred and be continuing unwaived; (l) Investments in the form of intercompany loans permitted under Section 10.01 and not otherwise prohibited by this Section 10.04. 1.7 Section 10.05(a) is amended to insert after the words "dividends or distributions" therein the phrase ", whether in cash or evidenced by a promissory note,". 1.8 Section 10.06(a)(ii) is amended to delete the word "and" before clause (D) thereof and delete the provisions of clause (D) thereof in their entirety and substitute the following therefor: (D) any Technologies Company with or into any other Technologies Company or any Person which is not an Affiliate of the Borrower; and (E) any Subsidiary of the Borrower not described in clauses (A), (B), (C) or (D) above with and into any other such Subsidiary of the Borrower; provided that the prior written consent thereto of the Collateral Agent has been obtained; and 1.9 Section 10.14 is amended to delete the references therein to "Subsidiaries" and substitute therefor references to "Restricted Subsidiaries". 1.10 Section 12.01 is amended to add the following provision thereto as clause (o): (o) Farmingdale Guaranty. A demand shall have been made on the Borrower under the Farmingdale Guaranty or the obligations guaranteed under the Farmingdale Guaranty shall, as a result of a breach or default under clauses (a), (b), (c), (d), (e), (f), (g), (i), (k), (m), (o), (p) or (t) of Section 4.3 of the Farmingdale Security Instrument or of Section 8.2 of the Farmingdale Security Instrument or a breach or default under clause (h), (j), (l), (n), (q), (r) or (v) of Section 4.3 of the Farmingdale Security Instrument or the Farmingdale Property, or any part thereof, becoming an asset in a voluntary bankruptcy or insolvency proceeding, include the unpaid balance of the "Debt" as defined in the Farmingdale Security Instrument. 1.11 Schedules 1.01.4, 1.01.5 and 1.01.8 are deleted in their entirety and Schedules 1.01.4, 1.01.5 and 1.01.8 attached hereto and made a part hereof substituted therefor. The Borrower is hereby authorized and directed to update Schedule 1.01.4 as and when Investments or transfers are made in accordance with the terms of the Credit Agreement which would render such Schedule incomplete or inaccurate in any respect and to deliver copies of such updates of Schedule 1.01.4 to the Collateral Agent and Lenders promptly after the making of any such Investments or transfers, whereupon the updated Schedule will be substituted for the prior Schedule as part of the Credit Agreement. 2. Collateral Agent Consents. The Collateral Agent hereby consents to the following: a. As required by Section 10.02(b)(ii), the transfer of Kaynar Technologies Ltd., a U.K. company ("Kaynar UK") or its Subsidiary, Recoil (Europe) Ltd., a U.K. company ("Recoil"), to Camloc (U.K.) or liquidation or dissolution of Kaynar UK and/or Recoil into Camloc (U.K.); b. As required by Section 10.04, the formation of a new Wholly-Owned Subsidiary of Banner Energy Corporation of Kentucky, Inc. under the laws of Delaware and the name Fairchild Environmental Liability Management, Inc. ("ELMI"), the Capital Stock of which will consist of 1,000 authorized, issued and outstanding shares of common stock and 1,000 authorized, issued and outstanding shares of preferred stock subject to the terms described on Schedule 2-B attached hereto and made a part hereof ; provided that such Capital Stock held by the Borrower or any Restricted Subsidiary is pledged as part of the Collateral and ELMI becomes a Guarantor, whereupon the Borrower causes the same to execute and deliver the Loan Documents required under Section 9.14; c. As required by Section 10.02(b)(ii), the transfer of the Property described on Schedule 2-C attached hereto and made a part hereof by Banner Energy Corporation of Kentucky, Inc., a Subsidiary of the Borrower, to ELMI; d. As required by Section 10.04, the formation under the laws of Delaware by FHC of two new WhollyOwned Subsidiaries; provided that, promptly upon formation of the same, they become Guarantors, whereupon the Borrower causes the same to execute and deliver the Loan Documents required under Section 9.14 and provided further that such Subsidiaries otherwise comply with all applicable provisions of the Credit Agreement; e. As required by Section 10.06(a)(ii), the merger of Technico S.A. with and into Societe Nouvelle DEB SA. 3. Conditions to Effectiveness. The provisions of this Amendment shall become effective as of November 29, 1999, upon receipt by the Collateral Agent, by no later than 5:00 p.m. (New York time) on December 1, 1999, of executed counterparts of this Amendment signed on behalf of the Borrower, the Requisite Lenders, and the Collateral Agent. 4. Representations, Warranties and Covenants. 4.1 The Borrower hereby represents and warrants that this Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms. 4.2 The Borrower hereby represents and warrants that, before and after giving effect to this Amendment, no Event of Default or Potential Event of Default has occurred and is continuing. 4.3 The Borrower hereby reaffirms all agreements, covenants, representations and warranties made in the Credit Agreement, to the extent the same are not amended hereby, and made in the other Loan Documents to which it is a party; and agrees that all such agreements, covenants, representations and warranties shall be deemed to have been remade as of the effective date of this Amendment. To the extent the Credit Agreement is amended hereby to modify or add agreements, covenants and/or representations and warranties, such agreements, covenants and/or representations and warranties are made as of the date on which this Amendment becomes effective with respect thereto. 5. Reference to and Effect on the Credit Agreement. 5.1 Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import shall mean and be a reference to the Credit Agreement as amended hereby. 5.2 Except as specifically amended above, the Credit Agreement shall remain in full force and effect, and is hereby ratified and confirmed. 5.3 The execution, delivery, and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Collateral Agent or Lenders, or constitute a waiver of any provision of any of the Loan Documents. 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 8. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written. THE FAIRCHILD CORPORATION CITICORP USA, INC., as Collateral Agent By: Karen L. Schneckenburger By: Suzanne Crymes Vice President & Treasurer Vice President Lenders: ALLIANCE INVESTMENT AVALON CAPITAL LTD. OPPORTUNITIES FUND, L.L.C. By_________________________ By_____________________ BANK OF AMERICA, N.A. BOEING CAPITAL CORPORATION By: Michael R. Heredia By: Daniel O. Anderson Senior Vice President Vice- President-Commercial CIBC, INC. CITIBANK, N.A. By: Koren Volk By: Claudio Phillips Authorized Signatory Vice President/Managing Director CITICORP, USA, INC. COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE By: Suzanne Crymes By: Brian O'Leary Vice President Vice President By: Sean Mounier First Vice President CREDIT AGRICOLE INDOSUEZ CREDIT SUISSE FIRST BOSTON By: Raymond A. Feelkenberg By: Bill O'Daly Vice President Vice President Senior Relationship Manager By: Gerard M. Russell By: Joel Glodowski Vice President, Manager Managing Director CRESCENT/MACH I PARTNERS, L.P. FLOATING RATE PORTFOLIO By__________________________ By____________________________ Name: Name: Title: Title: HIGHLAND CLO 1999-1 LTD. HIGHLAND LEGACY LIMITED By___________________________ By: James Bondero Name: President Title: KZH SHOSHONE LLC KZH WATERSIDE LLC By: Peter Ching By: Peter Chin Authorized Agent Authorized Agent MERRILL LYNCH PRIME RATE MERRILL LYNCH SENIOR FLOATING PORTFOLIO RATE FUND, INC. By___________________________ By____________________________ Name: Name: Title: Title: MERILL LYNCH SENIOR FLOATING ML CBO IV (CAYMAN) LTD. RAE FUND II, INC. By Highland Capital Management Company as Collateral Manager By___________________________ By: James Bondero Name: President Title: MORGAN STANLEY DEAN WITTER NATEXIS BANK By: Sheila Finnerty By: Peter J. van Tulder Vice President President and Manager Multinational Group By: Christine Dirringer Assistant Treasurer NUVEEN SENIOR FLOATING RATE OAK MOUNTAIN LIMITED FUND By: Lisa M. Mincheski By_____________________________ Managing Director Name: Title: PROVIDENT BANK OF MARYLAND RIGGS BANK By: Robert L. Smith By: Douglas H. Klamfoth Vice President Vice President SENIOR DEBT PORTFOLIO SRV-HIGHLAND, INC. By Boston Management and Research By Highland Capital Management, as as Investment Adviser Investment Advisor By___________________________ By: Kelly C. Walker Name: Vice President Title: THE FIRST NATIONAL BANK OF TYLER TRADING, INC. CHICAGO By___________________________ By_____________________________ Name: Name: Title: Title: VAN KAMPEN FLOATING RATE VAN KAMPEN PRIME RATE INCOME PORTOFOLIO TRUST By: Darvin D. Pierce By: Darvin D. Pierce Vice President Vice President SEQUILS I, LTD. By__________________________ Name: Title: CERTIFICATE OF INCORPORATION OF FAIRCHILD ENVIRONMENTAL LIABILITY MANAGEMENT, INC. FIRST. The name of the Corporation is Fairchild Environmental Liability Management, Inc. SECOND. The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purpose to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 1,100 shares, consisting of 1,000 shares of Common Stock, par value $1.00 per share, and 100 shares of Preferred Stock, par value $1.00 per share. The following is a statement of the designations, preferences, voting powers, qualifications, and special or relative rights or privileges in respect of each class of capital stock of the Corporation. A. COMMON STOCK 1. General. There shall be one class of common stock of the Corporation (the "Common Stock"). The voting dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of outstanding shares of Preferred Stock of any class or series as may be designated herein or by the Board of Directors of the Corporation. 2. Voting. The Common Stock shall have one vote per share, and, except as may be otherwise provided in this Article FOURTH or by law, the Common Stock shall vote as a single class on all actions to be taken by the stockholders of the Corporation. 3. Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend rights of any then outstanding Preferred Stock. 4. Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential, and participation rights of any then outstanding Preferred Stock. B. PREFERRED STOCK 1. Number of Shares. There shall be one class of Preferred Stock of the Corporation (the "Preferred Stock"). 2. Voting. Except as may be otherwise provided by law, the Preferred Stock shall be non-voting stock. 3. Dividends. The holders of Preferred Stock shall be entitled to receive a cumulative dividend at the rate of eight percent (8%) of the issue price per annum. The Corporation shall not declare or pay any dividend or distribution on the Common Stock, or redeem or purchase any shares of Common Stock (except dividends or other distributions payable solely in Common Stock), unless and until all cumulative dividends on the Preferred accrued to the date of such payment or distribution to holders of Common Stock have been declared and paid in full. 4. Liquidation. (a) Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the shares of Preferred Stock shall be entitled, before any distribution or payment is made upon any stock ranking on liquidation junior to the Preferred Stock, to be paid any amount equal to the fair market value of such Preferred Stock, but not, in any event, more than $300 per share or less than 1.00 per share, plus any other dividends accrued but unpaid thereon, computed to the date payment thereof, such amount payable with respect to one share of Preferred Stock being sometimes referred to as the "Liquidation Preference Payment" and with respect to all shares of Preferred Stock being sometimes referred to as the "Liquidation Preference Payments." The Liquidation Preference Payment shall equal the book value for each share of Preferred Stock on the date of the liquidation, dissolution or winding up of the Corporation. The book value of each share of Preferred Stock shall be equal to the net assets of the Corporation divided by the number of shares of capital stock, all of which shall be deemed to be a single class of stock. Such book value shall be determined from the books of the Corporation in accordance with generally accepted accounting principles, consistently applied, and adjusted upward or downward, as the case may be, to the extent necessary to: (i) value any debt obligations of affiliated corporations to the Corporation at an amount equal to the unpaid principal amount of such obligations; (ii) provide an accrual and reserve for the Corporation's Liability assigned from affiliated corporations and assumed by the Corporation at an amount determined by the Corporation; (iii) provide appropriate accruals and reserves for all taxes (including, but not limited to, all taxes based on income); bonuses and other employee compensation (including, but not limited to, compensation payable after the end of the then-current fiscal year); reserves for contingent liability and such other reserves as the Board of Directors may deem proper; and such other items of income and expense attributable to any period prior to the date as of which the determination is made as the Board of Directors may deem proper; (iv) exclude any value for goodwill relating to the business of the Corporation or any of its subsidiaries or affiliates; (v) reflect the book value (as adjusted in the manner set forth in this subparagraph) of any subsidiary of the Corporation; (vi) provide for the effect on book value of the exercise of outstanding options, warrants or other rights to acquire any capital stock of the Corporation; (v) reflect corrections or errors. If, upon such liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, the assets to be distributed amount the holders of Preferred Stock shall be insufficient to permit payment to the holders of such Preferred Stock of the amount distributable as aforesaid, then the entire assets of the Corporation to be so distributed shall be distributed ratably among the holders of Preferred Stock. (b) Written notice of such liquidation, dissolution or winding up, stating a payment date, the amount of the Liquidation Preference Payments, and the place where such payments shall be payable, shall be delivered in person, mailed by certified or registered mail, return receipt requested, or sent by telecopier of telex, not less than 20 days prior to the payment date stated therein, to the holders of record of Preferred Stock, such notice to be addressed to each such holder at its address as shown on the books of the Corporation. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof (other than a merger to reincorporate the Corporation in a different jurisdiction), and the sale, lease, abandonment, transfer, or other disposition by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution, or winding up of the Corporation within the meaning of the provisions of this paragraph 4. FIFTH. The Corporation is to have perpetual existence. SIXTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware: A. The Board of Directors of the Corporation is expressly authorized to adopt, amend, or repeal the By-Laws of the Corporation. B. Election of Directors need not be by written ballot unless the By-Laws of the Corporation shall so provide. C. The books of the Corporation may be kept at such place within or without the State of Delaware as the By-Laws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation. SEVENTH. The Corporation eliminates the personal liability of each member of its Board of Directors to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that, to the extent provided by applicable law, the foregoing shall not eliminate the liability of a director (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts and omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which such director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director prior to such amendment or repeal. EIGHTH: The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation, in any manner now or hereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation. NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, upon the application of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement , the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. IN WITNESS WHEREOF, the undersigned have executed this Certificate this 2nd day of December, 1999. By: Donald E. Miller Sole Incorporator Schedule 1.01.4 to Credit Agreement Dated as of April 20, 1999 OPERATING UNITS Fairchild Fasteners Group Special-T Fasteners, Inc., a Delaware corporation Kaynar Technologies Inc., a Delaware corproation Kaynar Technologies Ltd., a U.K. corporation Recoil (Europe) Ltd., a U.K. corporation KTI Femipari Kft, a Hungarian corporation M&M Machine & Tool Co., a Delaware corporation KTI International Sales Corp., a Barbados corporation Marcliff Corporation, a Delaware corporation Marson Creative Fastener, Inc., a Delaware corporation Recoil Holdings, Inc., a Delaware corporation Recoil PTY, an Australian corporation Recoil Inc., a Delaware corporation Recoil Australia Holdings, Inc., a Delaware corporation Recoil Pte Ltd., a Singapore corporation Recoil Marketing BVBA, a Belgium corporation Recoil Thailand, a Thai corporation Fairchild Holding Corp., a Delaware corporation, manufacturing plants in California and sales offices throughout the U.S. Mairoll, Inc., a Delaware corporation, manufacturing plant in California until it is dividended up to Fairchild Holding Corp. Fairchild Fasteners Europe - Camloc GmbH, a German corporation Camloc (U.K.) Ltd., a U.K. corporation, U.K. customer team located in sales office in Leicester, England Fairchild Fasteners Europe - VSD GmbH, a German corporation Fairchild Fasteners Europe - Simmonds S.A.R.L., a French corporation SNEP SA, a French corporation Simmonds S.A., a French corporation Mecaero SNC, a French corporation Transfix S.A., a French corporation Eurosim Componentes Mecanicos de Seguranca, Lda., a Portugese corporation Simmonds Mecaero Fasteners, Inc., a Delaware corporation Fairchild AS+C oHG Aviation Supply + Consulting (GmbH & Co.), a German partnership Fairchild Technologies Optical Disc Equipment Group GmbH, a German corporation, after the Optical Disc assets are transferred and sold (see footnote 1 below) Fairchild Fasteners Corp. Technico SA Societe Nouvelle DEB SA SCI de La Praz Gas Spring Division Camloc (U.K.) Ltd., a U.K. corporation, Gas Spring Division Fairchild Technologies Group Fairchild Technologies USA, Inc., a California corporation Fairchild Technologies Optical Disc Equipment Group GmbH, a German corporation1 Convac France S.A., a French corporation Fairchild Technologies Europe Limited, a U.K. corporation Fairchild Technologies Korea Limited, a Korean corporation Fairchild Technologies Semiconductor Equipment Group GmbH, a German corporation Fairchild Germany, Inc., a Delaware corporation Snails, Inc., a Delaware corporation Fairchild CDI S.A., a French corporation MediaDisc SA, a French corporation, 41% investment Cutek Research, Inc., a California corporation, 20.77% investment-fully diluted Banner Aerospace, Inc. Aero International, Inc., an Ohio corporation Banner Aero (Australia) Pty. Ltd., an Australian corporation Banner Aerosoace Foreign Sales Corporation, U.S. Virgin Islands Banner Aerospace Services, Inc., an Ohio corporation Banner Aerospace-Singapore, Inc., a Delaware corporation BAR DE, Inc., a Delaware corporation D A C International, Inc., a Texas corporation Discontinued Aircraft, Inc., a Texas corporation Discontinued Services, Inc., a Delaware corporation GCCUS, Inc., a California corporation Georgetown Jet Center, Inc., a Delaware corporation Harco Northern Ireland Limited, a N. Ireland corporation Matrix Aviation, a Kansas corporation Nasam Incorporated, a California corporation Dallas Aerospace, Inc., a Texas corporation PB Herndon Aerospace, Inc., a Missouri corporation Professional Aviation Associates, Inc., a Georgia corporation Professional Aircraft Accessories, Inc., a Florida corporation _______________________________ 1The Optical Disc business will be transferred to a new subsidiary yet to be formed and sold to Fairchild Technologies USA. The remaining entity will become part of the Fairchild Fasteners Group Operating Unit and may be renamed. SCHEDULE 1.01.5 to Credit Agreement Dated as of April 20, 1999 as amended by Amendment No. 1 and Consent Dated as of November 29, 1999 PERMITTED DISPOSITIONS I Technologies Companies: Fairchild Technologies Semiconductor Equipment Group GmbH Convac France S.A. Fairchild Technologies Europe Limited Fairchild Technologies Optical Disc Equipment Group GmbH1 Fairchild Germany, Inc. Fairchild Technologies Korea Limited Fairchild Technologies USA, Inc. Fairchild CDI S.A. Mediadisc S.A.2 CuTek Research, Inc.3 Snails, Inc. II Nacanco Paketleme Sanayi Ve Ticaret A.S. III Eagle Environmental4: Banner Capital Ventures, Inc., a Subsidiary of RHI Note Receivable ($9,371,909 as of 3/28/99) held by Banner Capital Ventures, Inc. and payable by Eagle Environmental, L.P. Recycling Investments, Inc., a Subsidiary of RHI Equity Investment in Eagle Environmental, L.P. held by Recycling Investments, Inc. Recycling Investments II, Inc., a Subsidiary of RHI which holds an investment in "Eagle Environmental" for Royal Oaks Landfill IV Investments: Holder Investment TFC Billecart Expansion Euroactividade State of Israel - 12 year Variable Rate Bonds Teuza Fund Rotlex Nevatim Triangle Venture Oramir Semiconductor Equipment Ltd.5 Technical Devices Note Receivable ($863,363 as of 3/28/99) Stelfast Fasteners Note Receivable ($137,923 as of 3/28/99) Banner Industrial Products, Inc.6 Plymouth Leasing Company7 Banner Energy Corporation of Kentucky,Inc. ("BECK")8 Faircraft Sales Ltd.9 Fairchild Export Sales Corporation Aircraft Tire Corporation Fairchild Titanium Technologies, Inc.10 RHI Medical Resources, Inc. S.A.R.L. Soustiel 2000 Bolshoi Fund (Antiques) Celtronix Ltd. Visionix Ltd. Fairchild Scandinavian Bellyloading Company - Royalty Agreement with Teleflex Gobble Gobble, Inc. MISAT Ltd.11 Northking Insurance Company Limited, a Bermuda corporation (re-insurance collateral and guaranty) Tutor Time Learning Systems, Inc. Turkiye Is Bankasi GDRs Recycling Investments, Inc. ("RII") Recycling Investments II, Inc. ("R-II") Banner Capital Ventures, Inc. Sovereign Air Limited - Bristol Holdings Banner Industrial Distribution, Inc. F.F. Handels GmbH Aero International, Inc. FHC S.S.E. Telecom, Inc. common stock & warrants Colt Royalty Agreement Teuza Management and Development (1991) Limited12 A10 Inc.13 Mairoll, Inc. (exclusive of Fastener Business assets/liabilities) Fairchild Arms International Ltd. Suchomimous Terensis, Inc. Fairchild Data Corporation D-M-E Iberica S.A. Quack Quack, Inc. Banner Investments (UK) Limited JJS Limited StarLine Communications Fairchild Fastener Group Ltd. Mairoll, Inc. (FHC) V&V Redondo Beach Limited Partnership, a California partnership (49% interest)14 Hartz-Rex Associates, a New Jersey partnership (49% interest)15 Warthog, Inc. A10 Inc. (FHC) Fairchild Retiree Medical Services, Inc. Camloc (U.K.) (FHC) Camloc (U.K.) Gas Spring Division RII (RHI) Eagle Environmental, Limited Partnership, a Delaware partnership (49.9% limited partnership interest)16 R-II (RHI) Eagle Environmental II, Limited Partnership (49.9% limited partnership interest)17 BECK (TFC) Jenkins Coal Dock Company, Inc. (shell corporation; 80% owned)18 KenCoal Associates, an Ohio partnership (80% interest; inactive entity with no assets or liabilities)19 Snails, Inc. Fairchild CDI S.A. Mediadisc S.A. CuTek Research, Inc. Boussugue Note Receivable (FF 2,799,400) Banner Companies Kellstrom Warrants (Banner) Shared Technologies Cellular, Inc. (BAR DE, Inc.) CICI Preferred B Stock (BAR DE, Inc.) Net Holdings, Inc. Note in principal amount of $5,000,000 V Farmingdale Property: See attached description by parcel. VI Other Real Estate: Owner Real Estate Location Mairoll, Inc. (FHC) Sloane Street Real Property (London) Chatsworth, California Real Property Temple City, California Real Property RHI (TFC) West Milwaukee Real Property (Wisconsin) Corporate Office Building (Virginia) Watermann St. Real Property (Rhode Island) Plymouth Leasing Company20 Trucking terminals located in Huron,Ohio (leased to Conway Freight) and Mansfield, Ohio (unoccupied) BECK (TFC) 700 acres of unimproved land in Kentucky Faircraft Sales 50 acres including a coal mine in Vincennes, Indiana Ltd. (TFC) V&V Redondo Beach Partnership (FHC) Real Property located in Redondo Beach, California Hartz-Rex Associates Hasbrouck Heights Real Property (NJ) (FHC) Bristol Holdings (RHI) Rhode Island Real Property VII Fairchild Finance Company VIII Banner Aerospace, Inc. Investments in: Watkins-Johnson Company (Banner) Subsidiaries21: Dallas Aerospace, Inc. Aero International, Inc. Banner Aero (Australia) Pty Ltd. Banner Aerospace Foreign Sales Corporation Banner Aerospace-Singapore, Inc. Discontinued Aircraft, Inc. Discontinued Services, Inc. Harco Northern Ireland Limited Banner Aerospace Services, Inc. BAR DE, Inc. DAC International, Inc. GCCUS, Inc. Georgetown Jet Center, Inc. Matrix Aviation, Inc. NASAM Incorporated PB Herndon Aerospace, Inc. Professional Aviation Associates, Inc. Professional Aircraft Accessories, Inc. IX Other Non-Fasteners Businesses Investments in non-fasteners businesses received in exchange for any Permitted Disposition _______________________________ 1 Until optical disc business transferred out 2 Equity interest of 41% held by Snails, Inc. 3 20.77% equity interest, on a fully diluted basis, held by Snails, Inc. 4 Individual items reflected below are also reflected elsewhere in this Schedule, but grouped here to encompass all of "Eagle Environmental" as well 5 Israel corporation; 28.26% interest held by TFC 6 Wholly-owned subsidiary of TFC required to continue in existence for 7 years; held assets of Roanoke Locomotive, Inc. 7 See entry under Real Estate below 8 Wholly-owned subsidiary of TFC 9 Wholly-owned subsidiary of TFC 10 Holds 50% interest in Normvest, a Russian venture 11 Israel corporation; 43.78% interest held by RHI 12 Israel corporation; 40% interest held by FHC 13 Wholly-owned subsidiary of FHC 14 51% interest held by Vestar California II Limited 15 49% interest held by Hartz Hasbrouck Limited Partnership; 2% interest held by Dudley Godfrey 16 50.1% interest held by Khodara Environmental, Inc. 17 50.1% interest held by Khodara Environmental II, Inc. 18 20% interest held by Kinemotive Energy Corporation 19 20% interest held by Kinemotive Energy Corporation 20 Wholly-owned subsidiary of TFC 21 Capital Stock and Assets of the Subsidiaries are Permitted Dispositions Schedule 1.01.8 to Credit Agreement Dated as of April 20, 1999 PERMITTED EXISTING INVESTMENTS Fairchild Holding Corp. D-M-E Iberica S.A. (Spain) (46%) Teuza Management & Development Ltd. (Israel) (40%) Fairchild Arms International Ltd. (Canada) Simmonds Mecaero Fasteners, Inc. Fairchild Finance Company (Republic of Ireland) Fairchild Data Corporation Quack Quack, Inc. A10, Inc. Fairchild Retiree Medical Services, Inc. Mairoll, Inc. V&V Redondo Beach Limited Partnership (49%) Hartz-Rex Associates (49%) Warthog, Inc. Banner Investments (U.K.) Limited (United Kingdom) JJS Ltd. (United Kingdom) Fairchild Fastener Group Limited (United Kingdom) Camloc (U.K.) Limited (United Kingdom) Fairchild Germany, Inc. Fairchild Technologies Korea Limited (Korea) (50%) Fairchild Technologies USA, Inc. Fairchild Technologies Europe Limited (United Kingdom) Fairchild Technologies Korea Limited (Korea) (50%) Fairchild Technologies Semiconductor Equipment Group GmbH (Germany) Convac France SA (France) Snails, Inc. Fairchild CDI S.A. (France) MediaDisc S.A. (France) (41%) Cutek Research, Inc. (California) (20.77% on a fully diluted basis, Preferred A and B Stock) Loan to Roger Boussugue et.al. FF 2,799,400 Suchomimous Terensis, Inc. VSI Holdings, Inc. Fairchild Fasteners Europe - VSD GmbH (Germany) (1%) Camloc Holdings Fairchild Fasteners Europe - Camloc GmbH (1%) Fairchild Technologies Optical Disc Equipment Group GmbH (Germany) Fairchild Fasteners Europe - VSD GmbH (99%) Fairchild AS+C oHG Aviation Supply + Consulting (GmbH & Co.) (Germany) (50%) Aviation Full Service (Hong Kong) Limited (Hong Kong) (99.9%) Fairchild Fasteners Europe - Camloc GmbH (99%) Fairchild AS+C oHG Aviation Supply + Consulting (GmbH & Co.) (Germany) (50%) Aviation Full Service (Hong Kong) Limited (Hong Kong) (99.9%) Fairchild Fasteners Corp. Fairchild Fasteners Europe - Simmonds S.A.R.L. (10%) Meow, Inc. Fairchild Fasteners Europe - Simmonds S.A.R.L. (90%) SNEP S.A. (France) Simmonds S.A. (France) Mecaero SNC (France) Eurosim Componentes Mecanicos de Seguranca, Lda. (Portugal) (99.85%) Transfix S.A. (France) (99.98%) Kaynar Technologies Inc. Fairchild Technologies GmbH Investment in Fairchild Technologies USA, Inc. - Preferred Stock DM 5,000,000 Officer Loan Program designed to encourage officer stock ownership in the Company $ 173,938 Officer Loan Program designed to encourage officer stock ownership in the Company $ 750,000 Loan to Robert Sharpe $ 200,000 Loan to Mel Borer $ 300,000 S.S.E. Telecom, Inc. Common Stock & Warrants $ 1,047,735 Starline Communications FF 999,272 RHI Holdings, Inc. Banner Industrial Distribution, Inc. F.F. Handels GmbH (Germany) Fairchild France, Inc. Northking Insurance Company Limited (Bermuda) Sovereign Air Limited Fairchild Holding Corp. Aero International, Inc. (19%) Gobble Gobble, Inc. Nacanco Paketleme Sanayi Ve Ticaret A.S. (Turkey) (31.86%) MISAT Ltd. (Israel) (43.78%) Banner Capital Ventures, Inc., plus an estimated future commitment to fund Eagle Environmental for $1,000,000 Recycling Investments, Inc. Eagle Environmental, L.P. (49.9%) Recycling Investments II, Inc. Eagle Environmental II, L.P. (49.9%) Visionix Ltd. (Israel) (22 to 23%) Medical Resources, Inc. S.A.R.L. Soustiel 2000 Turkiye IS Bankasi Celtronix Ltd. Bolshoi Fund (Antiques) Loan to Peter Levine Tutor Time Learning Systems, Inc. Investment in Stock of The Fairchild Corporation The Fairchild Corporation Faircraft Sales Ltd. Banner Industrial Products, Inc. Banner Aerospace Holding Company I, Inc. Banner Aerospace Holding Company II, Inc. Banner Energy Corporation of Kentucky, Inc. Jenkins Coal Dock Company, Inc. KenCoal Associates (Ohio) (Partnership) Fairchild Export Sales Corporation (Barbados) Aircraft Tire Corporation Fairchild Titanium Technologies, Inc. Normvest (USSR)(50%) Plymouth Leasing Company Special-T Fasteners, Inc., plus contingent cash purchase price adjustments to be paid to Robert E. Edwards up to $2,000,000 RHI Holdings, Inc. Banner Aerospace, Inc. Billecart Expansion Euroactividade State of Israel - 12 year Variable Rate Bonds Teuza Fund Rotlex Oramir Semiconductor Equipment Ltd. Nevatim Triangle Venture Note Receivable - Technical Devices Note Receivable - Stelfast Fasteners Banner Aerospace, Inc. Aero International, Inc. (Ohio) (81%) Banner Aero (Australia) Pty. Ltd. (Australia) Banner Aerospace Foreign Sales Corporation (U.S. Virgin Islands) Banner Aerospace Services, Inc. (Ohio) BAR DE, Inc. (0.9%) Banner Aerospace-Singapore, Inc. BAR DE, Inc. (98.6%) D A C International, Inc. (Texas) Discontinued Aircraft, Inc. (Texas) Discontinued Services, Inc. GCCUS, Inc. (California) Georgetown Jet Center, Inc. Harco Northern Ireland Limited (N. Ireland - U.K.) Matrix Aviation, Inc. (Kansas) Nasam Incorporated (California) Dallas Aerospace, Inc. (Texas) PB Herndon Aeropace, Inc. (Missouri) BAR DE, Inc. (0.5%) Professional Aviation Associates, Inc. (Georgia) Professional Aircraft Accessories, Inc. (Florida) Kellstrom Warrants Watkins-Johnson Company Shared Technologies Cellular, Inc. Common Stock Investment in CICI Preferred B Stock Note Receivable - Net Holdings, Inc. Kaynar Technologies Inc. Kaynar Technologies Ltd. (United Kingdom) Recoil (Europe) Ltd. (United Kingdom) K.T.I. Fempari Kft (Hungary) KTI International Sales Corporation (Barbados) Marcliff Corporation Marson Creative Fastener, Inc. Edson Manufacturing, Inc. note payable to Marson Creative Fastener, Inc. $231,237.26 M&M Machine & Tool Co. Recoil Holdings, Inc. Recoil PTY (Australia) (99%) Recoil Marketing BVBA (Belgium) (0.13%) Recoil Pte Ltd. (Singapore) (50%) Recoil Thailand (Thailand) (0.1%) Recoil Inc. Recoil Thailand (Thailand) (0.1%) Recoil Australia Holdings, Inc. Recoil PTY (Australia) (1%) Recoil Pte Ltd. (Singapore) (50%) Recoil Thailand (Thailand) (0.1%) Recoil Marketing BVBA (Belgium) (99.87%) Recoil Thailand (Thailand) (74.3%) Shares in Pacific Horizon Funds