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AMENDMENT OF WARRANT AGREEMENT
BETWEEN THE FAIRCHILD CORPORATION AND
STINBES LIMITED
FOR 375,000 SHARES OF CLASS A OR CLASS B COMMON STOCK
This Amendment of Warrant Agreement (the "Amendment"), dated
December 28, 1998, effective retroactively as of September 17,
1998, is made for the purpose of modifying (as provided below)
the Warrant Agreement dated as of March 13, 1986 (the "Warrant
Agreement"), between The Fairchild Corporation, p/k/a Banner
Industries, Inc., a Delaware corporation (the "Company"), and
Stinbes Limited. Capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to them in the Warrant
Agreement. This amendment was approved (as a form of
compensation to Jeffrey Steiner) by the Company's shareholders at
the 1998 Annual Meeting held on November 19, 1998.
RECITALS
A. On March 13, 1986, the Company entered into the Warrant
Agreement with Drexel Burnham Lambert ("DBL"), and (pursuant
to the terms of the Warrant Agreement) issued to DBL
warrants to purchase up to an aggregate of 200,000 shares of
either Class A or Class B common stock of the Company (the
"Warrants"). The Warrants were issued in conjunction with
DBL acting as the underwriter for the public offering of
certain of the Company's debentures.
B. Pursuant to a Purchase and Sale Agreement dated as of
January 4, 1989, Jeffrey J. Steiner ("Steiner"), DBL and the
Company, Steiner purchased 187,500 Warrants from DBL
(subject to all the benefits and obligations under the
Warrant Agreement).
C. Section 5.1 of the Warrant Agreement provides that the
Warrant Price and the number of Warrant Shares are subject
to adjustment upon the occurrence of certain events pursuant
to the terms of Section 9 of the Warrant Agreement. In
June, 1989, as a result of a two-for-one stock split (an
adjustable event as defined in Section 9 of the Warrant
Agreement) the number of Warrant Shares in favor of Steiner
was increased to 375,000, and the Warrant Price was
decreased to $7.67 per share.
D. On September 12, 1991, the Board of Directors of the Company
voted to renew the Warrants issued in favor of Steiner,
which had expired on March 13, 1991, for an extended term to
expire on March 13, 1993. On March 8, 1993, the Board of
Directors of the Company voted to extend the Expiration Date
of the Warrants to March 13, 1995. On February 16, 1995,
the Board of Directors of the Company voted to extend the
Expiration Date of the Warrants to March 13, 1997.
E. On March 22, 1993, Steiner assigned the Warrants to Bestin
Ltd. On May 31, 1993, Bestin Ltd. assigned the Warrants to
Stinbes Limited. Stinbes Limited is an affiliate of
Steiner.
F. By Board action taken on February 21, 1997, and again on
September 11, 1997, and September 26, 1997, the Board of
Directors of the Company voted to extend the Expiration Date
of the Warrants to March 13, 2002, subject to the following
modifications: (i) effective as of February 21, 1997, the
Expiration Date of any issued Warrants, outstanding and
unexpired on that date, shall be March 13, 2002; (ii)
effective as of February 21, 1997, the Warrant Price shall
be $7.67 per share, increased by two tenths of one cent
($.002) for each day subsequent to March 13, 1997, but fixed
at $7.80 per share after June 30, 1997.
G. On February 9, 1998, the Board voted to modify the Warrant
Agreement to: (i) revise the window periods during which the
Warrants may be exercised; and (ii) to provide that the
payment of the Warrant Price may be made in shares of the
Company's Class A or Class B Common Stock.
H. On September 17, 1998, subject to shareholder approval, in
recognition of services performed by Mr. Steiner, the
Compensation Committee and the Board voted to modify the
Warrant Agreement to: (i) revise the window period during
which the Warrants may be exercised; (ii) to revise the
Warrant Price; and (iii) to provide that these amendments to
the Warrants shall be deemed additional compensation to the
Chief Executive Officer;
I. Section 17 of the Warrant Agreement provides that the
Company and the Holder may, from time to time, supplement or
amend the Warrant Agreement in any manner which "the Company
may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which
shall not adversely affect the interest of the Holders."
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein, and for other good and valuable consideration
(the receipt and adequacy of which are hereby acknowledged), the
parties hereto agree as follows:
1. Effective as of September 17, 1998, the Warrants may not be
exercised except within any one of the following window
periods: (a) Window Period One: at any time on or prior to
March 9, 2000 (two years from the date of the merger of
Shared Technologies Fairchild, Inc. with Intermedia
Communications, Inc.); (b) Window Period Two: within 365
days after a change of control of the Company, as defined in
the Fairchild Holding Corp. Credit Agreement with Citicorp
et. al.; or (c) Window Period Three: within 365 days after
a change of control of Banner Aerospace, Inc., as defined in
the Banner Aerospace, Inc. Credit Agreement with Citicorp.
et. al. In no event may the Warrants be exercised after
March 13, 2002.
2. Effective as of September 17, 1998, the Warrant Price at
which the Warrants may be exercised during Window Period One
shall be $7.80 per share, plus two tenths of one cent
($.002) for each day subsequent to March 9, 1999. The
Warrant Price at which the Warrants may be exercised during
Window Periods Two and Three shall be $7.80 per share.
3. The amendments made to the Warrants effective as of
September 17, 1998 (outlined above) are made in recognition
of the services performed by Mr. Jeffrey Steiner in
connection with the extraordinary transactions during fiscal
1998 and are intended to be deemed additional compensation.
The amendments were approved by the Company's shareholders
at the 1998 Annual Meeting (held on November 19, 1998).
4. Each reference in the Warrant Agreement to "this Agreement"
"hereunder", "hereof", "herein", or words of like import
shall mean and be a reference to the Warrant Agreement, as
amended, extended or modified previously or hereby, and each
reference to the Warrant Agreement and any other document,
instrument or agreement executed and/or delivered in
connection with the Warrant Agreement shall mean and be a
reference to the Warrant Agreement as amended, extended, or
modified previously or hereby.
5. Except as specifically modified herein, the Warrant
Agreement shall remain in full force and effect and is
hereby ratified and confirmed.
6. This Amendment may be executed in multiple counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly
authorized as of the date first written above.
THE FAIRCHILD CORPORATION
By: ___________/s/_______________
Donald E. Miller
Executive Vice President and Corporate
Secretary
STINBES LIMITED
By: __________/s/___________________
David Faust
Vice President