October 21, 1994
Mr. Michael T. Alcox
The Fairchild Corporation
300 West Service Road
P.O. Box #10803
Chantilly, VA 22021
Dear Mike:
This letter agreement supersedes the letter agreement dated
October 23, 1991 between The Fairchild Corporation (Fairchild) and
you and any other agreements between you and Fairchild relating to
severance and change of control payments, each of which shall be
deemed terminated, effective upon your acceptance hereof.
In exchange for your continued services as an executive of
Fairchild, and subject to your having been, on the date of
termination, an employee of Fairchild for at least five years and
an officer of Fairchild for at least three years, Fairchild hereby
agrees that, in the event Fairchild terminates your employment
without cause during a three year period, commencing on the date of
this letter, you shall receive on date of termination a severance
payment consisting of one year of then current base salary. In
addition, if, but for such termination, a bonus would have been
earned by you for the year in which termination takes place, you
shall be entitled at year-end to such bonus, pro-rated, however,
from the beginning of the fiscal year to date of termination. Any
portion of the bonus that is based on individual goals shall be
deemed to be fully earned.
In addition, and notwithstanding whether the conditions for
severance pay have been met, if a change of control (as defined in
the attached Exhibit A) of Fairchild occurs during a three year
period from the date of this letter while you are still an employee
of Fairchild, you shall be entitled to receive a sum equal to two
times your then current total annual compensation (including base
salary and incentive compensation target, earned or unearned),
payable one-half on the date of change of control (the first change
payment) and, as long as your employment continues, one-half over
a one year period in four equal quarterly installments,
Mr. Michael T. Alcox
October 21, 1994
Page 2
commencing three months after the date of change of control (the
second change payments), except that in the event your employment
is terminated without cause during said one year period (or in the
event you terminate your employment during said one year period for
good reason as defined below), you shall be entitled to receive
immediately the first change payment (if not already paid), any
second change payments accrued to date of termination but not yet
paid, and the severance payment, if applicable, referred to in the
preceding paragraph of this letter, but shall not be entitled to
any further second change payments not then due and payable. Good
reason includes any action by Fairchild (or a successor company)
which results in a reduction in your compensation, position,
authority, duties or responsibilities such that your senior
management opportunities are substantially lessened, or which
results in your primary place of employment being relocated more
than 35 miles from the current Dulles Airport location. No sum
payable to you upon change of control shall limit or affect your
entitlement to base salary or incentive compensation for all
periods during which you are employed by Fairchild.
Please acknowledge your agreement with the terms of this
letter agreement by signing the attached copy and returning same to
this office, which shall be effective as of the date of your
acceptance.
Very truly yours,
THE FAIRCHILD CORPORATION
By: John D. Jackson
ACCEPTED AND AGREED:
By: Michael T. Alcox
December 16, 1994
EXHIBIT A
"Change of Control" means the occurrence of any of the
following events;
(i) any "Person", other than one or more "Permitted Holders",
is or becomes the "Beneficial Owner", directly or indirectly, of
more than 20% of the total voting power (the "Vote") of the "Voting
Stock" of the Company, and the Permitted Holders "beneficially
own", directly or indirectly, in the aggregate a lesser percentage
of the Vote of all the Voting Stock of the Company than such other
Person; provided, however, such other person shall be deemed to
beneficially own all Voting Stock of a corporation held by any
other corporation (the "parent corporation"), if such other Person
"beneficially owns", directly or indirectly, more than 20% of the
Vote of the Voting Stock of such parent corporation, and the
Permitted Holders "beneficially own", directly or indirectly, in
the aggregate a lesser percentage of the Vote of the Voting Stock
of such parent corporation;
(ii) during any period of two consecutive years, individuals
who at the beginning of any such period constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of
the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Company then in office;
(iii) The Company consolidates with or merges with or into
another Person, pursuant to a transaction (a) in which the
outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property (other than any
such transaction where the outstanding Voting Stock of the Company
is changed into or exchanged for Voting Stock of the surviving
corporation), and (b) in which the holders of the Vote of the
Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, less than a majority of the Vote of
the Voting Stock of the surviving Person immediately after such
transaction, and (c) by which an event described in Section (i)
shall have occurred ; or
(iv) the Company is liquidated or dissolved, or all or
substantially all of its directly or indirectly held assets are
sold or otherwise conveyed to a third party other than one or more
Permitted Holders.
"Beneficial Owner" has the meaning set forth in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be
deemed to be the Beneficial Owner of all shares that any such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time; and the terms
"beneficial ownership" and "beneficially owns" have meanings
correlative to the foregoing.
"Permitted Holders" means Jeffrey J. Steiner and his
"associates" (as defined in Rule 12b-2 under the Exchange Act) or
any other Person directly or indirectly controlled by Jeffrey J.
Steiner.
"Person" shall be as defined in Section 13(d) and 14(d) of
the Exchange Act.
"Voting Stock" means, with respect to a corporation, (i) all
classes of capital stock then outstanding of such corporation
normally entitled to vote in elections of directors, and (ii) any
security which may, at the option of the holder, be converted into
or exchanged for Voting Stock.
December 21, 1994
Mr. Michael T. Alcox
The Fairchild Corporation
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Dear Mike:
By letter dated October 21, 1994, The Fairchild Corporation
agreed to make certain payments to you in the event a "change of
control" occurred under certain conditions ("letter agreement").
In order to avoid excess parachute payments that would have
adverse tax consequences under Section 280G of the Internal Revenue
Code, the letter agreement is hereby amended to include the
following paragraph just prior to the last paragraph of the letter
agreement:
"In no event shall any amounts payable pursuant to this letter
agreement which are deemed to constitute 'parachute payments' (as
defined in Section 280G of the Internal Revenue Code, as amended by
the Tax Reform Act of 1986, and as thereafter amended ('the
Code')), when added to any other payments which are deemed to
constitute 'parachute payments,' as defined in the Code, exceed
2.99 times your 'base amount' (as defined in the Code)."
Except as modified by the terms set forth above, the terms of
the letter agreement shall remain in full force and effect.
Please acknowledge your agreement with the terms set forth
above by signing the attached copy and returning same to this
office, which shall be effective as of the date of your acceptance.
Very truly yours,
THE FAIRCHILD CORPORATION
By: John D. Jackson
ACCEPTED AND AGREED:
By: Michael T. Alcox
Date: January 4, 1995