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Exhibit 10.01
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as
of
February 27, 2006 (the "EFFECTIVE DATE") between Mark S. Frey (the
"EXECUTIVE")
and Fairchild Semiconductor Corporation (the "COMPANY"), a Delaware
corporation.
For ease of reference, this Agreement is divided into the
following
parts:
PART 1 --
DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
(Sections 1-4)
-
Position and Duties
-
Salary
-
EFIP Bonus
-
Equity Awards
-
Other
PART 2 --
COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR CONSTRUCTIVE
TERMINATION (Sections 5-6)
-
Termination
PART 3 --
COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
(Section 7)
PART 4 --
CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL
PROPERTY, NON-SOLICITATION, REMEDIES, SUCCESSORS,
MISCELLANEOUS PROVISIONS, SIGNATURE PAGE (Sections 8-14)
-
Confidentiality and Non-Disclosure
-
Forfeiture in Case of Certain Events
-
Non-Solicitation
-
Miscellaneous
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TERMS
For good
and valuable consideration, the adequacy and receipt of which
are
hereby acknowledged, the Company and the Executive, intending to be
legally
bound, agree as follows:
PART 1 DUTIES AND
SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
SECTION 1. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT
(a) Unless
sooner terminated as provided in this Agreement, the term of
this
Agreement
will begin on the Effective Date and will end on the first
anniversary of the Start Date defined in Section 2(a) below (the
"INITIAL
TERM"). At
the end of the Initial Term or any Renewal Term, this Agreement
shall be
automatically renewed for additional, successive terms of one
year (each
a "RENEWAL TERM") unless either the Company or the Executive
gives the
other written notice of non-renewal at least 180 days before
the
end of the
Initial Term or Renewal Term, as the case may be. Such notice
of
non-renewal given by the Company shall be treated as a
termination
without
Cause hereunder effective as of the termination date specified
by
the
Company in such notice (or, if no date is specified, the date
notice
is given),
which date must be on or after the giving of such notice and on
or before
the last day of the Term. The Initial Term and any Renewal
Terms
are
collectively referred to as the "TERM".
(b) Subject to
the other terms of this Agreement, including those in Part 2,
on or
following the Start Date either the Company or the Executive
may
terminate
the Executive's employment with the Company at any time and for
any reason
or no reason upon written notice to the other party, with
effect as
of a subsequent date specified in such notice. Prior to the
Start Date
either the Company or the Executive may terminate this
Agreement
for any reason or no reason upon written notice to the other
party,
provided that any such termination shall be deemed a termination
of
employment
for all purposes under this Agreement, and will be subject to
the other
terms of this Agreement, including those in Part 2.
SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT
(a) Position.
Beginning on March 20, 2006, or such other date which is agreed
in writing
by the Executive and the Company and which falls within 30 days
after the
Effective Date (the "START DATE"), and for the remainder of the
Term, the
Company will employ the Executive in the position of Executive
Vice
President, Chief Financial Officer, based in the Company's San
Jose,
California, office, reporting directly to the President and
Chief
Executive
Officer. For the avoidance of doubt, the parties agree that
this
Agreement
shall be effective as of and following the Effective Date, but
that the
Executive will not become an employee of the Company until the
Start
Date.
(b) Obligations.
From and after the Start Date and while employed hereunder,
the
Executive shall have such duties, responsibilities and authority
as
customarily held or exercised by a chief financial officer of a
public
corporation, including but not limited to general supervision over
all of
the global
finance organization of the Company. During the Term,
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the
Executive shall devote the Executive's full business efforts and
time
to the
business and affairs of the Company as needed to carry out his
duties and
responsibilities hereunder. The foregoing shall not preclude
the
Executive from engaging in appropriate civic, charitable, religious
or
other
non-profit activities or from devoting a reasonable amount of
time
to private
investments or from serving on the boards of directors of other
entities,
provided that those activities do not interfere or conflict
with
the
Executive's duties or responsibilities to the Company.
SECTION 3. BASE COMPENSATION
From and after the Start Date and while employed hereunder, the
Company shall
pay the Executive, as compensation for services, a base salary of
at least
$325,000 per year. Salary increases will be considered after the
first
anniversary of the Effective Date, or sooner in the discretion of
President and
CEO and consistent with Company policies.
SECTION 4. OTHER COMPENSATION
(a) EFIP. While
employed hereunder, the Executive will be enrolled in the
Enhanced
Fairchild Incentive Plan (EFIP), at a participation level of at
least 90%.
By way of example only, if an EFIP bonus is paid at the 100%
target
level, the Executive would receive a bonus equal to 90% of his
qualified
earnings under EFIP during the measurement period. Payments are
subject to
the terms and conditions of the EFIP.
(b) Equity
Awards.
(1)
Grants. The
Executive shall receive a grant of 20,000 Fairchild
Semiconductor International, Inc. ("FSII") restricted stock
units
("RSUS"), a grant of 20,000 FSII performance units
("PERFORMANCE
UNITS") and a grant of options to purchase 75,000 shares of
FSII
common stock ("OPTIONS"), subject to the following terms
(collectively, the "EQUITY GRANTS"). The Equity Grants will not
be
made under any stock or option plan of the Company or FSII, but
will
be granted, administered and interpreted as if such grants had
been
made under, and subject to, the Fairchild Semiconductor Stock
Plan
and standard forms of executive agreements (the "EQUITY AWARD
AGREEMENTS") as in effect on the date hereof and as such plan may
be
amended from time to time (the "PLAN"). The Plan and Equity
Award
Agreements are hereby incorporated in this Agreement as if fully
set
forth herein. The grant date for the Equity Grants will be the
Start
Date. The RSUs and Options will vest in 25% increments on each
of
the first four anniversaries of the grant date, if in each case
the
Executive remains employed by the Company on such anniversary.
The
actual number of shares of stock issued under the Performance
Units,
and
the vesting provisions relating to those units and shares
received thereunder, will be determined in accordance with the
Plan
and terms generally applicable to 2006 performance unit grants
to
executive officers of the Company. The Executive will be solely
responsible for any taxes associated with the receipt, vesting,
exercise or delivery of shares or cash under the Equity Grants,
and
the Company will make appropriate withholdings from any
distributions of shares or cash thereunder.
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(2)
No Eligibility
for Other Grants in 2006. The Equity Grants are made
in lieu of any that would otherwise be made to the Executive as
part
of the Company's annual grant program for 2006, and,
accordingly,
the Executive shall not receive any grants of RSUs, performance
units or options under such program in 2006, other than the
Equity
Grants. The Executive will be eligible to receive additional
awards
that the Company may undertake under any other program, with
respect
to the Executive or otherwise, in 2006.
(3)
Additional
Grants After 2006. So long as he is employed by the
Company after 2006, the Executive shall receive grants of stock
options, performance shares and other equity-based awards,
subject
to the applicable Company plans governing such awards, and
covering
a number of shares determined consistent with Company policies
and
practices for executive officers. Since the Equity Grants are
made
in connection with the Executive's recruitment, future annual
awards
may be smaller than the Equity Grants.
(c) Recruitment
Bonus. The Company will pay the Executive a one-time
recruitment bonus of $80,000, on a tax-assisted or fully grossed-up
basis,
within 10
days after the Start Date. If the Executive terminates his
employment
with the Company for any reason other than Good Reason (or his
death or
disability) within one year after the Start Date, the Executive
will repay
the foregoing recruitment bonus to the Company on a prorated
basis
reflecting the portion of such one-year period that the Executive
is
not
employed by the Company. Such repayment will include amounts paid
by
the
Company in respect of tax assistance that are not recovered by
the
Company as
a result of such repayment.
(d) Tax and
Financial Planning Assistance. The Executive will be entitled
to
receive up
to $8,000 per year in personal tax and financial planning
services
at the Company's expense and on a tax-assisted (or "fully
grossed-up")
basis.
(e) Other
Benefits. While employed hereunder, the Executive will be
entitled
to
participate in Company-paid executive long-term disability
insurance,
Company-paid executive long-term care insurance, and Company-paid
basic
life
insurance programs, and to participate in the Company's health
insurance,
dental insurance, vision care, short-term disability and
personal
savings (including 401(k) and 401(k) benefit restoration)
plans,
as well as
other benefit plans and fringe benefits and perquisites
available
to senior executives of the Company.
(f) Paid
Vacation. While employed hereunder, the Executive shall be
entitled
to a
minimum of four weeks paid vacation per calendar year, such
vacation
to extend
for such periods and to be taken at such intervals as shall be
appropriate and consistent with Company policies and the proper
performance of the Executive's duties hereunder.
(g) Business
Expenses and Travel. While employed hereunder, the Executive
shall be
authorized to incur and shall be reimbursed for all necessary
and
reasonable
travel, entertainment and other business expenses in connection
with the
Executive's duties hereunder.
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(h) Legal Fee
Reimbursement. The Company agrees to directly pay Executive's
reasonable
advisory and legal fees associated with entering into this
Agreement,
up to $5,000, upon receiving invoices for such services. Such
amounts
will be paid on a tax-assisted or "fully grossed-up" basis, to
the
extent
such payments are taxable to the Executive for U.S. federal or
state
income tax purposes.
(i)
Indemnification. Executive shall receive indemnification as a
corporate
officer
and director of the Company to the maximum extent extended to
the
other
officers and directors of the Company. Following the termination
of
Executive's employment or directorship for any reason, the Company
agrees
to honor
the indemnification agreement previously entered into with
Executive.
PART 2 COMPENSATION
AND BENEFITS IN CASE OF TERMINATION WITHOUT CAUSE OR FOR
GOOD REASON OUTSIDE OF A CHANGE OF CONTROL
SECTION 5.
TERMINATIONS AND RELATED DEFINITIONS
Part 2 of the Agreement, consisting of Sections 5 and 6, describes
the benefits
and compensation, if any, payable in case of certain terminations
of employment
prior to six months before a Change in Control and more than twelve
months after
a Change in Control.
In this Agreement,
(a) "CAUSE"
means (1) a willful failure by the Executive to substantially
perform
the Executive's duties under this Agreement, other than a
failure
resulting
from the Executive's complete or partial incapacity due to
physical
or mental illness or impairment, (2) a willful act by the
Executive
that constitutes gross misconduct and that is materially
injurious
to the Company, (3) a willful breach by the Executive of a
material provision of
this Agreement (including Sections 8 or 10) or (4) a
material
and willful violation of a federal, state or foreign law or
regulation
applicable to the business of the Company that is materially
and
demonstrably injurious to the Company, provided that no act, or
failure to
act, by the Executive shall be considered "willful" unless
committed
without good faith and without a reasonable belief that the act
or
omission was in the Company's best interest; and provided,
further,
that, if
the failure, act, breach or other basis for finding Cause under
this
Agreement is capable of being cured without material injury to
the
Company,
then no finding of Cause shall be made unless the Executive has
failed to
cure such failure, act, breach or other basis within 30 days
after
receiving written notice thereof from the Company, and
(b) "DISABILITY"
means that the Executive, at the time the notice is given,
has been
unable to perform the Executive's duties under this Agreement
for
a period
of not less than six consecutive months as a result of the
Executive's incapacity due to physical or mental illness, and
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(c) "GOOD
REASON" means any of the following or as otherwise provided in
this
Agreement:
(1) a reduction in the Executive's base salary other than as
part of a
broader executive pay reduction, (2) a reduction in the
Executive's incentive compensation (EFIP) participation level other
than
as part of
a broader executive reduction, (3) a material change in the
employment
benefits available to the Executive, if such change does not
similarly
affect all employees of the Company eligible for such benefits,
(4) a
material reduction in Executive's duties, responsibilities or
authority
as then in effect or (5) a requirement to relocate, except for
office
relocations that would not increase the Executive's one-way
commuting
distance by more than 35 miles.
SECTION 6. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR
GOOD REASON
(a) Severance.
If, during the Term, the Company terminates the Executive's
employment
for any reason other than Cause (including as a result of the
Executive's death or Disability), or if the Executive terminates
his
employment
for Good Reason, then, provided the Executive (or his legal
representative, if applicable) executes the release of claims
described in
Section
6(b), and subject to Section 6(c), the Company will promptly
pay
the
Executive, in a lump sum, an amount equal to the sum of (i) the
Executive's base annual salary in effect on such termination date
and (ii)
the amount
of the bonus the Executive would receive under the Company's
Enhanced
Fairchild Incentive Program (EFIP), assuming a 100% payout
based
on the
Executive's base salary and EFIP incentive level in effect
immediately prior to such termination (whether or not such a bonus
has
been or is
expected to be paid to other executives or employees of the
Company
for the fiscal period in which such termination occurs). If
EFIP
bonuses
are later paid to EFIP participants at a level higher than 100%
in
respect of
the last fiscal period during which the Executive had been
employed
by the Company, then the Company shall pay the Executive the
difference
between the amount that would have been paid to the Executive
had the
Executive remained employed by the Company, and been entitled
to
receive
such bonus, and the amount determined under clause (ii) above.
If
at the
time of such a termination the EFIP program has been
discontinued
or
replaced, then the amount payable under clause (ii) above shall be
the
target or
actual amount that the Executive is entitled to receive under
any
incentive bonus program in which he is then participating. The
Executive
will be responsible for all taxes relating to such payments and
the
Company will make all required withholdings of all such taxes. At
the
time of
such termination, the Company shall pay the Executive in cash
for
all
accrued and unused vacation time.
(b) Release of
Claims. As a condition to the receipt of the payments described
in Section
6(a), the Executive (or his legal representative, if
applicable) shall be required to execute a release of all claims
arising
out of the
Executive's employment or the termination thereof, including
any claim
of discrimination under U.S. state or federal law or any
non-U.S.
law, but excluding claims for indemnification from the Company
under any
indemnification agreement with the Company, its certificate of
incorporation or
bylaws, claims under applicable directors' and officers'
insurance
policies, or claims for indemnification under Section 2802 of
the
California Labor Code or similar statutes.
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(c) Conditions
to Receipt of Payments. Without limiting the Company's other
rights or
remedies in the event of the Executive's breach of any
provision
of this
Agreement, th
