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Exhibit 10.1
TRUST UNDER THE EMPLOYMENT AGREEMENTS BETWEEN
FAIRCHILD SEMICONDUCTOR CORPORATION AND
KIRK P. POND, JOSEPH R. MARTIN, AND DANIEL E. BOXER
(a) THIS
AGREEMENT, made this 8 day of September, 2004, by and
between FAIRCHILD SEMICONDUCTOR
CORPORATION, a corporation organized under the
laws of the State of Delaware ("Company"),
and H.M. PAYSON & CO., a Maine
nondepository trust company
("Trustee");
(b) WHEREAS,
Company has entered into the Employment Agreements
with Kirk P. Pond, Joseph R. Martin, and
Daniel E. Boxer ("Executives") listed
in Appendix A, under which it is obligated
to provide lifetime health coverage
(hereinafter called the "Agreements");
(c) WHEREAS,
Company has incurred or expects to incur liability
under the terms of such Agreements with
respect to each Executive and his family
members who would be eligible dependents
under the Company's group health plan
("Covered Individuals");
(d) WHEREAS,
Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the
Trust assets that shall be held
therein, subject to the claims of Company's
creditors in the event of Company's
Insolvency, as herein defined, until paid
to or for the benefit of Covered
Individuals in such manner and at such
times as specified herein and in the
Agreements;
(e) WHEREAS,
it is the intention of the parties that this Trust
shall constitute an unfunded arrangement
and shall not affect the status of each
of the Agreements as an unfunded
arrangement maintained for the purpose of
providing welfare benefits for a member of
a select group of management or
highly compensated employees for purposes
of Title I of the Employee Retirement
Income Security Act of 1974 ("ERISA");
(f) WHEREAS,
it is the intention of Company to make contributions
to the Trust to provide itself with a
source of funds to assist it in the
meeting of its liabilities under the
Agreements;
NOW, THEREFORE, the parties do hereby establish the Trust and
agree
that the Trust shall be comprised, held and
disposed of as follows:
SECTION 1
ESTABLISHMENT OF TRUST
(a) Company
hereby deposits with the Trustee in trust Two Million
Two Hundred and Fifty Thousand Dollars
($2,250,000), which shall become the
principal of the Trust to be held,
administered and disposed of by Trustee as
provided in this Trust Agreement.
(b) The Trust
hereby established shall be irrevocable, subject to
Section 12(b) below.
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(c) The Trust
is intended to be a grantor trust, of which Company
is the grantor, within the meaning of
subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be
construed accordingly.
(d) The
principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of
Company and shall be used
exclusively for the uses and purposes of
Covered Individuals and general
creditors as herein set forth. Covered
Individuals shall have no preferred claim
on, or any beneficial ownership interest
in, any assets of the Trust. Any rights
created under the Agreements and this Trust
Agreement shall be mere unsecured
contractual rights of Covered Individuals
against Company. Any assets held by
the Trust will be subject to the claims of
Company's general creditors under
federal and state law in the event of
Insolvency, as defined in Section 3(a)
herein.
(e) Company,
in its sole discretion, may at any time, or from time
to time, make additional deposits of cash
or other property in trust with
Trustee to augment the principal to be
held, administered, and disposed of by
Trustee as provided in this Trust
Agreement. Neither the Trustee nor any Covered
Individual shall have any right to compel
such additional deposits.
(f) Upon a
Change in Control, Company shall, as soon as possible,
but in no event longer than 90 days
following the Change in Control, as defined
herein, make an irrevocable contribution to
the Trust in an amount that is
sufficient to provide each Covered
Individual with the health coverage to which
he or she would be entitled pursuant to the
terms of the Agreements and this
Trust Agreement ("Health Coverage") as of
the date on which the Change in
Control occurred. Company shall promptly
provide written notice of a Change in
Control to the Trustee.
An amount is "sufficient," within the meaning of the preceding
sentence
if, when added to any cash or other
property previously contributed to the Trust
by the Company, the fair market value of
the Trust assets as of the date the
contribution is made equals or exceeds the
sum of (1) the actuarial present
value of the future premium and
"out-of-pocket expense" cost of the Health
Coverage, and future compensation and
expenses of the Trustee, as of the date
the Change in Control occurred, and (2) the
unpaid current premium and
"out-of-pocket expense" cost of such
coverage, and all compensation owed and
expenses incurred but unpaid of the
Trustee, pursuant to Section 9, as of such
date. All calculations and determinations
required under this paragraph shall be
made by an independent actuary or
accountant selected by the Trustee.
SECTION 2
PAYMENT TO OR FOR THE BENEFIT OF COVERED INDIVIDUALS
(a)
Company
shall deliver to Trustee a schedule (the "Payment
Schedule"), from time to time, that
indicates the amounts payable for Health
Coverage in respect of each Covered
Individual, or that provides a formula or
other instructions acceptable to Trustee
for determining the amounts so payable,
the payee, and the time for payment of such
amounts. Such amounts shall include
payment for the following types of health
insurance: medical, dental and vision
care for each Covered Individual, and
long-term care for the Executive and his
spouse. Except as otherwise provided
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herein, Trustee shall make payments to one
or more health insurance carriers in
accordance with such Payment Schedule.
Unless payment is made by the Company pursuant to Section 2(c)
below,
the Trustee shall reimburse each Covered
Individual for any out-of-pocket
expense, as defined herein, of the Covered
Individual. For purposes of this
Trust Agreement, an "out-of-pocket expense"
is a deductible, co-payment or
coinsurance amount required to be paid by a
Covered Individual under the benefit
design of the Health Coverage; and any
premium paid by a Covered Individual for
any Medicare coverage, including Part B
hospital coverage, Part D prescription
drug coverage, and supplemental (Medigap)
coverage, shall be deemed an
out-of-pocket expense that is reimbursable
in accordance with the procedures
described in this Section 2(a). Expenses
which are not insured due to
limitations or exclusions under the benefit
design of the Health Coverage or
under Medicare and Medigap coverage,
whichever is applicable, shall not be an
"out-of-pocket expense" under the Trust. On
or before March 11, 2005, the
Trustee shall transfer, on behalf of each
Executive, to Benefit Concepts (or
such other agent or vendor designated by
the Company) the amount of Five
Thousand Dollars ($5,000) to fund a
separate account for the payments to be made
under this paragraph. Thereafter, the
Trustee shall on a quarterly basis make
transfers to such accounts based on actual
experience as reported to the Trustee
by the Company or its designated agent. The
Company or its designated agent
shall provide the Trustee with instructions
regarding the reporting and
withholding of any federal, state, or local
taxes that may be required to be
withheld by the Trustee with respect to the
payment of benefits pursuant to the
terms of the Agreements and this Trust
Agreement, and the Trustee shall report
and pay such amounts to the appropriate
taxing authorities as instructed by the
Company or its designated agent.
(b) The
entitlement of any person to Health Coverage under the
Agreements shall be determined by Company
or such party as it shall designate,
but any claim for benefits shall be
considered and reviewed by the insurance
carrier or claims administrator under the
procedures set out in the applicable
insurance policy or other applicable
coverage document. The Company shall
appoint a third party administrator to
receive and process claims from Covered
Individuals, to the extent such claims are
not processed by the insurance
carrier. The Trustee shall be entitled to
rely on such determinations made by
the Company, the insurance carrier, or
claims administrator.
(c)
Company may make
the payments to a health insurance carrier
described in Section 2(a) directly to such
carrier, or the payments to reimburse
for out-of-pocket expenses (described in
such section) directly to a Covered
Individual, as they become due under the
terms of the Agreements or this Trust
Agreement. Company shall notify Trustee of
its decision to make such payments
directly prior to the time amounts are
payable under Section 2(a). In addition,
if the principal of the Trust, and any
earnings thereon, are not sufficient to
make payments in accordance with the terms
of the Agreements and this Trust
Agreement, Company shall make the balance
of each such payment as it falls due.
Trustee shall notify Company where
principal and earnings are not sufficient.
(d) The
Trustee shall purchase individual policies to secure the
medical insurance component of Health
Coverage for Covered Individuals upon the
first to occur of the following events:
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(1) the
Company ceases to maintain a comprehensive group
health plan covering major medical expenses for the Covered
Individuals, or
(2) the
favorable tax treatment of health coverage or
health benefits
under the Internal Revenue Code ceases to be available
to Covered Individuals under the Company group health plan
covering
them, or
(3) the
Company directs the Trustee to purchase an
individual policy.
The Trustee shall not be obligated to
purchase individual policies to secure the
medical insurance component of Health
Coverage for Covered Individuals before it
has received written notice of an event
described in (d)(1) or (d)(2) above from
the Company or a Covered Individual. The
Trustee may engage or consult with an
independent broker to assist it in
purchasing individual policies, and may rely
on the advice of such broker. If the
principal of the Trust, and any earnings
thereon, are not sufficient to purchase the
individual policies required to be
purchased under this Section 2(d), Company
shall provide the additional amounts
necessary to make such purchase. Trustee
shall notify the Company if principal
and earnings are not sufficient.
Notwithstanding Section 2(d)(2) to the
contrary, Trustee shall not purchase
individual policies if notified by the
Company that it will, through additional
(estimated) payments to Covered
Individuals, put them in substantially the
same place they would have been in
had the favorable tax treatment remained
available.
(e) If the
Company does not deliver a Payment Schedule or provide
a formula or other instructions providing
for payment of Health Coverage
pursuant to Section 2(a), the Trustee shall
be authorized to provide for such
payment. The Trustee shall pay the entire
premium due for Health Coverage,
except to the extent the Company makes such
payment as provided in Section 2(c).
SECTION 3
TRUSTEE
RESPONSIBILITY REGARDING PAYMENTS TO
TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT
(a) Trustee
shall cease payments to or for the benefit of Covered
Individuals if Company is Insolvent.
Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i)
Company is unable to pay its debts as
they become due, or (ii) Company is subject
to a pending proceeding as a debtor
under the United States Bankruptcy
Code.
(b) At all
times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and
income of the Trust shall be subject
to claims of general creditors of Company
under federal and state law as set
forth below.
(1) The Board
of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in writing
of
Company's Insolvency. If a person claiming to be a creditor of
Company
alleges in writing to Trustee that Company has become
Insolvent,
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Trustee shall determine whether Company is Insolvent and, pending
such
determination, Trustee shall discontinue payments to or for the
benefit
of Covered Individuals.
(2) Unless
Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to
be a creditor alleging that Company is Insolvent, Trustee shall
