THIRD AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER
dated as of September 17, 1998 ("Third Amendment") is made by
and among The Fairchild Corporation, a Delaware corporation
("Fairchild"), Special-T Fasteners, Inc., a Delaware
corporation ("Fairchild Subsidiary") as the surviving
corporation of the merger with Edwards & Lock Management Corp.
("Fasteners") and Robert Edwards, a California resident
("Edwards"), amending certain provisions of the Agreement and
Plan of Merger dated as of January 28, 1998 (including the
exhibits and schedules thereto, the "Merger Agreement"), as
amended to date, by and among Fairchild, Fairchild Subsidiary,
Fasteners and Edwards. Terms used but not otherwise defined
herein shall have the respective meanings ascribed thereto in
the Merger Agreement.
WHEREAS, Fairchild, Fairchild Subsidiary and Edwards
have agreed to modify certain terms and conditions as
specifically set forth in this Third Amendment.
NOW, THEREFORE, in consideration of the premises and
mutual agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS TO THE MERGER AGREEEMENT
1.1 The first sentence of Section 3.3(a) of the
Merger Agreement is revised in its entirety to read as follows:
(a) During the period commencing on the Effective
Date and ending upon the earlier of (a) the
second anniversary of the Effective Date or
(b) the date Edwards or an Edwards Affiliate (as
defined below) no longer owns at least 50% of
the 1,055,141 shares of Fairchild Common Stock
received by Edwards in connection with the
Merger (as adjusted for any stock split or
reclassification) (the "Edwards' Shares"),
Edwards will be paid the amount, if any, (the
"Additional Merger Consideration") by which
(i) 10% of the aggregate EBITD (as defined
below) of the Surviving Corporation (the
"Earnings Share") for the period commencing on
the Effective Date and ending June 30, 1998 and
thereafter for all completed fiscal quarters
(for which Edwards or an Edwards Affiliate owned
at least 50% of the Edwards' Shares for such
entire fiscal quarter) exceeds (ii) $520,000 per
year (the "Amount") (pro rated on a per diem
basis for any period less than 12 calendar
months); provided, however, that if during the
period commencing on the Effective Date and
ending one year later the Earnings Share accrued
for such period is less than the Amount, then
the difference between the Amount and the
Earnings Share accrued for such period shall be
subtracted from any Additional Merger
Consideration accruable for the next fiscal
quarter and thereafter from each subsequent
fiscal quarter until such difference shall be
consumed.
1.2 The next to last sentence of Section 3.3(b) is
revised in its entirety to read as follows:
The "Adjustment Date" shall be the last day of
each fiscal year of the Surviving Corporation;
provided that if Edwards or an Edwards Affiliate
no longer owns at least 50% of the Edwards'
Shares, the Adjustment Date shall be the date
Edwards or an Edwards Affiliate no longer owns
at least 50% of the Edwards' Shares.
1.3 An additional sentence is added to Section
3.3(b) as the last sentence of such section to read as follows:
"For purposes of this Agreement, an Edwards
Affiliate shall be any of Edwards' family
members, any trust for the benefit of any of
Edwards' family members, or any corporation,
limited liability company or other entity
controlled by Edwards, any of Edwards' family
members or any such trust."
1.4 The last sentence of Section 3.3(a) is revised
in its entirety to read as follows:
"EBITD" means the consolidated net income of a
person for any period plus, to the extent
deducted in determining consolidated net income,
the Amount, consolidated interest expense,
federal, state, local and foreign income tax
expense and depreciation expense of such person
for such period, in each case as determined in
accordance with generally accepted accounting
principles in the United States as in effect
from time to time.
ARTICLE II
AMENDMENT OF REGISTRATION RIGHTS AGREEMENT
2.1 Section 3 of the Registration Rights Agreement
attached to the Merger Agreement as Exhibit A, shall be deleted
in its entirety to read as follows: "INTENTIONALLY OMITTED."
ARTICLE III
PROVISIONS OF GENERAL APPLICATION
3.1 Except as otherwise expressly provided by this
Third Amendment, all of the terms, conditions and provisions to
the Merger Agreement remain unaltered. The Merger Agreement
and this Third Amendment shall be read and construed as one
agreement.
3.2 If any of the terms of this Third Amendment
shall conflict in any respect with any of the terms of the
Merger Agreement, the terms of this Third Amendment shall be
controlling. This Third Amendment will be effective as of
March 2, 1998.
IN WITNESS WHEREOF, the parties hereto have caused
this Third Amendment to be executed by their duly authorized
officers, all as of the day and year first above written.
THE FAIRCHILD CORPORATION
By: John L. Flynn
Title: Senior Vice President
Tax
SPECIAL-T FASTENERS, INC.
By: John L. Flynn
Title: Vice President
Robert Edwards (i) (1)