THE FAIRCHILD CORPORATION
DIRECTOR AND OFFICER LOAN PLAN
Dated August 12, 1999
The Fairchild Corporation, a Delaware corporation (the
"Company"), hereby adopts the following loan plan (the "Plan")
for non-employee directors and executive officers of the Company
and presidents or other senior executive officers of operating
divisions ("Participants"):
1. Objective.
The objective of the Plan is to provide additional incentive
to Participants 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 Participants 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 Participants who have made significant
contributions to the Company in the past, and (iv) further
identify the interests of such Participants 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. Funds for all loans must be exclusively from
Fairchild Technologies USA, Inc.
2.8 "Loan Availability Period" means the one-year period in
which Loans will be available, commencing on the
Effective Date and ending one year thereafter. Such
period may be extended or renewed by the Committee in
its sole discretion.
2.9 "Participant" means any non-employee director and 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 non-employee
directors and 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 cause Fairchild Technologies USA, Inc. to
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 Fairchild
Technologies USA, Inc. and evidenced by a promissory note
(the "Note") in form and substance acceptable to the Company
and Fairchild Technologies USA, Inc. 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 or Fairchild Technologies USA, Inc. 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 service 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 $2,000,000.
8. Term of Plan.
This Plan will be effective until December 31, 2004.
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 August 12, 1999
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