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THE FAIRCHILD CORPORATION
OFFICER LOAN PLAN??
The Fairchild Corporation, a Delaware corporation (the
"Company"), hereby adopts the following loan plan (the
"Plan") for executive officers of the Company and presidents
or other senior executive officers of operating divisions
("Executive Officers"):
1. Objective.
The objective of the Plan is to provide additional
incentive to Executive Officers by granting loans
("Loans") to such persons, the proceeds of which are to
be used by such persons for the sole purpose of
purchasing Class A Common Stock of The Fairchild
Corporation ("Common Stock") in the open market. The
acquisition of Common Stock with Loans is intended to
(i) provide an increased incentive for Executive
Officers to exert their best efforts on behalf of the
Company, (ii) strengthen the ability of the Company to
recruit and retain those persons possessing outstanding
competence and the ability to contribute significantly
to the Company's success, (iii) award those Executive
Officers who have made significant contributions to the
Company in the past, and (iv) further identify the
interests of such Executive Officers with those of the
Company and its stockholders by increasing the desire
of such officers to maximize the value of the Company.
2. Definitions.
2.1 "Acceptance Date" means the date when a Participant
accepts the offer by the Company to loan the Participant the
purchase price to purchase Shares in the open market.
2.2 "Board" means the Board of Directors of the Company
provided that if any action taken by the Board relates to a
Participant who is a director of the Company, the majority
of the directors approving such action shall be
disinterested directors.
2.3 "Committee" means the Compensation and Stock Option
Committee of the Board. The Committee shall consist of
three or more of the members of the Board, all of whom shall
be Non-Employee Directors (as that term is defined in Rule
16b-3 of the General Rules and Regulations promulgated under
the Exchange Act.
2.4 "Common Stock" means shares of Class A Common Stock of
The Fairchild Corporation.
2.5 "Effective Date of the Plan" is defined under Section
11 hereof.
2.6 "Exchange Act" means the Securities and Exchange Act of
1934 as amended.
2.7 "Loan" means a loan made to a Participant to purchase
Shares under the Plan.
2.8 "Loan Availability Period" means the following two
periods:
(a) Up to $750,000 in Loans will be available for
a period of ten (10) days, commencing on the
Effective Date and ending ten (10) days
thereafter. Such period may be extended or
renewed by the Committee in its sole
discretion.
(b) The balance of funds available for Loans
under this Plan shall not be available until
after the Company's senior lender consents to
such Loans. The Committee shall determine
the Loan Availability Period for such balance
after such consent is obtained.
2.9 "Participant" means any executive officer of the
Company or any president or other senior executive officer
of an operating division who has accepted to receive a Loan
pursuant to this Plan for the purpose of purchasing Shares
in the open market.
2.10 "Shares" means shares of Common Stock purchased by a
Participant pursuant to the Plan.
3. Eligibility.
Participation in the Plan shall be limited to executive
officers of the Company and presidents or other senior
executive officers of significant operating divisions.
All Participants shall be required to complete an
"accredited investor questionnaire," or such other
documents as the Company may require to establish that
such Participants are aware of the risks of investment,
and to comply with applicable private placement
exemptions.
Participation in the Plan shall be limited to 15
persons, aggregate.
Participants shall be designated by the Board from time
to time upon the recommendation of the Committee.
Eligibility confers no vested right to the grant of any
Loans under this Plan.
4. Grant of Loans.
During the Loan Availability Period, the Committee may
make recommendations to the Board concerning the
granting of Loans under the Plan to Participants. The
Board will meet to consider the recommendations of the
Committee (or will act by written consent in lieu of
such a meeting) and will make a final determination as
to the granting of Loans under the Plan to
Participants. The Board's determination may vary from
the Committee's recommendations and the Board may
choose to make no Loans at all. Immediately after the
action of the Board, the Committee will notify
individuals to whom the Loans have been granted and
will permit such Participants to borrow money upon the
execution and delivery of a Loan Agreement and a
Promissory Note (as defined in Paragraph 5 herein).
5. Terms of Loans.
The Company shall make a Loan to a Participant in an
amount not to exceed $100,000 per Participant, for
100% of the purchase price for Shares to be purchased
by a Participant during the Loan Availability Period.
Each Loan will be made pursuant to the terms and
conditions of a loan agreement (the "Loan Agreement")
in form and substance acceptable to the Company and
evidenced by a promissory note (the "Note") in form and
substance acceptable to the Company. No funds will be
advanced until the Participant has executed and
delivered copies of such Loan Agreement and Note to the
Committee.
Each Note shall be payable thirty (30) days after the
Company makes demand for payment and will be non-
interest bearing. The Board will have sole discretion
concerning when demand for payment of the Loans will be
made, but the Board will consider the following
factors:
A. Whether the Company's needs for cash flow or financing
make the calling of the Loans advisable.
B. Whether the Participant has terminated employment with
the Company, and
C. Whether the Participant is able to repay the Loan
without undue difficulty.
Upon direction from the Board, the Committee will make
demand for payment and will seek to collect on each
Loan not later than five (5) years from the date funds
are advanced under such Loan.
6. Conditions to Loans.
As a condition to the granting of any Loan to a
Participant, the Participant shall represent and
warrant that he/she shall use the proceeds for the sole
purpose of purchasing Shares. The Board may require
the Participant to execute and deliver to the Company
any appropriate or necessary agreements,
representations, or documents in this regard.
7. Limitation on Loans.
The total amount of Loans outstanding at any time under
this Plan and at any time during the term of this Plan
will not exceed $1,000,000, of which: (a) Up to
$750,000 shall be available on the date of this Plan,
and (b) the balance shall be available after the
Company's senior lender consents to such Loans.
8. Term of Plan.
This Plan will be effective until December 31, 2003.
Determination of when demand for payment of the Loans
will be made will be vested in the Board (subject to
the restriction that all Loans must be paid within five
(5) years from the date funds are advanced, as set
forth in Paragraph 5 above).
9. Disinterested Persons.
All actions by the Committee regarding a Loan to a
member of the Committee will be taken without the
participation of the Committee member and all actions
by the Board regarding a Loan to a member of the Board
will be taken without the participation of the Board
member, but the Committee member and the Board member,
respectively, may be counted for purposes of a quorum.
10. Administration.
The Plan will be administered by the Board upon the
recommendations of the Committee.
11. Effective Date of Plan.
The "Effective Date" of this Plan shall be February 5,
1999.
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