Exhibit 10.5
(FAIRCHILD LOGO) [b57410fsb5741000.gif]
Fairchild Semiconductor Stock Plan
Performance Unit Award Agreement

         
PARTICIPANT: Kirk Pond
  EMPLOYEE ID:   GLOBAL ID:

         
GRANT DATE:
  July 18, 2005
 
       
TARGET NUMBER OF PERFORMANCE UNITS:
  11,591    
 
       
PERFORMANCE YEAR:
  Fiscal Year Ending December 25, 2005

THIS AGREEMENT, effective as of the Grant Date set forth above, is between
Fairchild Semiconductor International, Inc., a Delaware corporation (the
“Company”, “we”, “our” or “us”) and the Participant named above (“you” or
“yours”), pursuant to the provisions of the Fairchild Semiconductor Stock Plan
(the “Plan”) with respect to the award of the number of performance units
(“Performance Units”) specified above. Capitalized terms used and not defined in
this Agreement shall have the meanings given to them in the Plan.
By accepting this Grant, you irrevocably agree, on your own behalf and on behalf
of your heirs and any other person claiming rights under this Agreement, to all
of the terms and conditions of the Performance Unit Award as set forth in or
pursuant to this Agreement and the Plan (as such may be amended from time to
time). You and the Company agree as follows:

         
1.
  Application of Plan; Administration   This Agreement and your rights under
this Agreement are subject to all the terms and conditions of the Plan, as it
may be amended from time to time, as well as to such rules and regulations as
the Committee may adopt. It is expressly understood that the Committee that
administers the Plan is authorized to administer, construe and make all
determinations necessary or appropriate to the administration of the Plan and
this Agreement, all of which shall be binding upon you to the extent permitted
by the Plan. Any inconsistency between this Agreement and the Plan shall be
resolved in favor of the Plan.
 
       
2.
  Performance Goal   The issuance of Performance Units pursuant to this
Agreement shall be subject to the Company achieving earnings before interest and
taxes, as determined by the Committee pursuant to the Plan, (“EBIT”) for the
Performance Year set forth above equal to at least the 50% EBIT Target
established by the Committee and set forth in the table below. If EBIT for the
Performance Year does not equal or exceed the 50% EBIT Target threshold, the
right to receive any Performance Units pursuant to this Agreement shall expire
without consideration.
 
       
 
      Subject to the foregoing paragraph and provided that you have remained in
the full time employment or service of the Company or an Affiliate from the
Grant Date set forth above, the number of Performance Units issued to you under
this Agreement (such units, the “Granted Performance Units”) shall be determined
in accordance with the following schedule:

              EBIT Required to     Percentage EBIT   Achieve Percentage   Number
of Granted Target   EBIT Target   Performance Units If Percentage EBIT Goal
Achieved
50% EBIT Target
      0.50 x the Target Number of Performance Units
 
       
100% EBIT Target
      1.00 x the Target Number of Performance Units
 
       
150% EBIT Target
      1.50 x the Target Number of Performance Units
 
       
200% EBIT Target
      2.00 x the Target Number of Performance Units

         
 
      In the event that the Company’s EBIT for the Performance Year falls
between two of the Percentage EBIT Targets listed in the table above, the number
of Granted Performance Units shall be determined by linear interpolation.
Notwithstanding anything herein to the contrary, in no event shall more that
2.00 times the Target Number of Performance Units be issued under this
Agreement.

 

--------------------------------------------------------------------------------

 

         
 
      Following the end of the Performance Year and the collection of relevant
data necessary to determine the extent to which the performance goal set forth
in this Paragraph 2 has been satisfied, the Committee will determine: (a) the
extent to which the performance goal was achieved by the Company for the
Performance Year; and (b) the percentage of the Target Number of Performance
Units to be issued pursuant to the Performance Unit Award program for the
Performance Year. The Committee shall make these determinations in its sole
discretion. The number and kind of shares subject to or issued under the
Performance Unit Award shall be subject to adjustment as provided for in
Section 3(c) of the Plan. The achievement of the performance goal (or lack
thereof) shall be evidenced by the Committee’s written certification. For the
avoidance of doubt, the right to receive up to 200% of the Target Number of
Performance Units shall expire without consideration to the extent that such
units do not become Granted Performance Units.
 
       
3.
  Vesting   The Granted Performance Units will vest in full (becoming “Vested
Performance Units”) on February 15, 2006 (the “Vesting Date”) provided that you
have remained in the full time employment or service of the Company or an
Affiliate from the Grant Date set forth above until the Vesting Date, provided
that in no case shall the units vest before the date of the Committee’s written
certification of the performance goal achievement under Paragraph 2.
 
       
4.
  Termination of Employment   Except as otherwise provided in Paragraph 8 of
this Agreement, the right to issuance of Performance Units and the rights under
any Granted Performance Units that have not become Vested Performance Units at
the time your employment or service with the Company terminates for any reason
will be forfeited without consideration as of the date of termination.
 
       
5.
  Settlement of Granted Performance Units and Issuance of Shares   Each Vested
Performance Unit will be settled by the delivery of one share of Common Stock
(subject to adjustment under Section 3(c) of the Plan, a “Share”) to you or, in
the event of your death, to your designated beneficiary, promptly following the
Vesting Date with respect to such Shares, subject to your satisfaction of any
tax withholding obligations as described in Paragraph 10 of this Agreement. You
hereby authorize any brokerage service provider determined acceptable to the
Company, to open a securities account for you to be used for the settlement of
Vested Performance Units. The date on which Shares are issued may include a
delay in order to provide the Company such time as it determines appropriate to
address tax withholding and other administrative matters.
 
       
6.
  Rights as Stockholder   Except as otherwise provided in this Agreement, you
will not be entitled to any privileges of ownership of the shares of Common
Stock underlying your Performance Units unless and until Shares are actually
delivered to you under this Agreement.
 
       
7.
  Dividends   From and after the date a number of Granted Performance Units are
issued to you under Paragraph 2 or Paragraph 8, you will be credited with
additional Performance Units having a value equal to declared dividends, if any,
with record dates that occur prior to the settlement of any Granted Performance
Units as if such Granted Performance Units had been actual shares of Common
Stock, based on the Fair Market Value of a share of Common Stock on the
applicable dividend payment date. Any such additional Performance Units shall be
considered Granted Performance Units under this Agreement and shall also be
credited with additional Performance Units as dividends, if any, are declared,
and shall be subject to the same restrictions and conditions (including the risk
of forfeiture under Paragraph 4) as Granted Performance Units with respect to
which they were credited. Notwithstanding the foregoing, no such additional
Performance Units will be credited with respect to any dividend in connection
with which Granted Performance Units are adjusted pursuant to Section 3(c) of
the Plan.
 
       
8.
  Change in Control   Notwithstanding anything to the contrary in this
Agreement, the Granted Performance Units shall be subject to acceleration of
vesting upon a Change in Control as provided with respect to restricted stock
under Section 11(a)(ii) of the Plan, and shall be settled as if pursuant to
Paragraph 5 of this Agreement, provided that if a Change in Control occurs
during the Performance Year, a number of Performance Units equal to 100% of the
Target Number of Performance Units shall be issued to you (and become Granted
Performance Units) immediately prior to the Change in Control.

2

--------------------------------------------------------------------------------

 

             
9.
  Transferability   (a)   Your Performance Units are not transferable, whether
voluntarily or involuntarily, by operation of law or otherwise, except as
provided in the Plan. Any assignment, pledge, transfer, or other disposition,
voluntary or involuntary, of your Units made, or any attachment, execution,
garnishment, or lien issued against or placed upon the Units, other than as so
permitted, shall be void.
 
           
 
      (b)   You acknowledge that, from time to time, the Company may be in a
“blackout period” and/or subject to applicable securities laws that could
subject you to liability for engaging in any transaction involving the sale of
the Company’s shares. You further acknowledge and agree that, prior to the sale
of any Shares, it is your responsibility to determine whether or not such sale
of Shares will subject you to liability under insider trading rules or other
applicable securities laws.  
10.
  Taxes   (a)   General. You are ultimately liable and responsible for all taxes
owed by you in connection with your Performance Units, regardless of any action
the Company takes or any transaction pursuant to this Paragraph 10 with respect
to any tax withholding obligations that arise in connection with the Performance
Units. The Company makes no representation or undertaking regarding the
treatment of any tax withholding in connection with the grant, issuance, vesting
or settlement of the Performance Units or Granted Performance Units or the
subsequent sale of any of the Shares underlying the Granted Performance Units
that vest. The Company does not commit and is under no obligation to structure
this Agreement to reduce or eliminate your tax liability.
 
           
 
      (b)   Taxes. You will be subject to federal and state income and other tax
withholding requirements on a date (generally, the Vesting Date) determined by
applicable law (any such date, the “Taxable Date”), based on the Fair Market
Value of the Shares underlying the Granted Performance Units that vest. You will
be solely responsible for the payment of all U.S. federal income and other
taxes, including any state, local or non-U.S. income or employment tax
obligation that may be related to the Shares, including any such taxes that are
required to be withheld and paid over to the applicable tax authorities (the
“Tax Withholding Obligation”). You will be responsible for the satisfaction of
such Tax Withholding Obligation in a manner acceptable to the Company in its
sole discretion, including through payroll withholding.
 
           
 
          (i) By Sale of Shares. Your acceptance of this Agreement constitutes
your instruction and authorization to the Company and any brokerage firm
determined acceptable to the Company for such purpose to sell on your behalf a
whole number of shares from those Shares issuable to you as the Company
determines to be appropriate to generate cash proceeds sufficient to satisfy the
applicable Tax Withholding Obligation. Such shares will be sold on the Taxable
Date or as soon thereafter as practicable. You will be responsible for all
brokers’ fees and other costs of sale, which fees and costs may be deducted from
the proceeds of the foregoing sale of Shares, and you agree to indemnify and
hold the Company and any brokerage firm selling such Shares harmless from any
losses, costs, damages, or expenses relating to any such sale. To the extent the
proceeds of such sale exceed your Tax Withholding Obligation, such excess cash
will be deposited into the securities account established with the brokerage
service provider for the settlement of your Vested Performance Units. Such
Shares will be sold through the broker at market prices; however the price you
receive will reflect a weighted average sales price based on the sales price of
Shares on behalf of you and others for whom the designated broker may be selling
shares on the relevant day(s), and you acknowledge that the Company or its
designee is under no obligation to arrange for such sale at any particular
price, and that the proceeds of any such sale may not be sufficient to satisfy
your Tax Withholding Obligation. Accordingly, you agree to pay to the Company as
soon as practicable, including through additional payroll withholding, any
amount of the Tax Withholding Obligation that is not satisfied by the sale of
shares described above. Unless otherwise authorized by the Committee in its sole
discretion, the sale of shares will be the primary method used by the Company to
satisfy the applicable Tax Withholding Obligation, and accordingly you represent
and warrant to the Company as follows:

             
 
      A.   You are accepting this Agreement during a permitted trading period,
and at the time of accepting this Agreement you are not aware of any Material
Nonpublic Information (as defined in the Company’s Corporate Legal Insider
Trading and Tipping Policy) concerning the Company.
 
           
 
      B.   You will not exercise any subsequent influence over the amount of
Shares to be sold hereunder to generate funds for the Tax Withholding Obligation
or the price, date or time of such sale.
 
           
 
      C.   You are entering into this Agreement in good faith and have a bona
fide intention to carry out the terms of this Agreement, and you will not enter
into or alter a corresponding or

3

--------------------------------------------------------------------------------

 

             
 
          hedging transaction or position with respect to the Shares.
 
           
 
      (ii) By Share Withholding. If so elected in the sole discretion of the
Committee, then in lieu of a market sale pursuant to Paragraph 10(b)(i) you
authorize the Company to withhold from the Shares issuable to you the whole
number of shares with a value equal to the Fair Market Value of the Shares on
the Taxable Date or the first trading day before the Taxable Date, sufficient to
satisfy the applicable Tax Withholding Obligation. You acknowledge that the
withheld shares may not be sufficient to satisfy your Tax Withholding
Obligation. Accordingly, you agree to pay to the Company as soon as practicable,
including through additional payroll withholding, any amount of the Tax
Withholding Obligation that is not satisfied by the withholding of Shares
described above.
 
           

         
11.
  Data Privacy   As an essential term of this Agreement, you consent to the
collection, use and transfer, in electronic or other form, of personal data as
described in this Agreement for the exclusive purpose of implementing,
administering and managing your participation in the Plan.

By entering into this Agreement and accepting the Performance Units, you
acknowledge that the Company holds certain personal information about you,
including, but not limited to, your name, home address and telephone number,
date of birth, social insurance number or other identification number, salary,
tax rates and amounts, nationality, job title, any shares of stock or
directorships held in the Company, details of all awards or any other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or
outstanding, for the purpose of implementing, administering and managing the
Plan (“Data”). You acknowledge that Data may be transferred to any third parties
assisting in the implementation, administration and management of the Plan, that
these recipients may be located in jurisdictions that may have different data
privacy laws and protections, and you authorize the recipients to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the
purposes of implementing, administering and managing the Plan, including any
requisite transfer of such Data as may be required to a broker or other third
party with whom you or the Company may elect to deposit any shares of stock
acquired under this Agreement. You acknowledges that Data may be held only as
long as is necessary to implement, administer and manage your participation in
the Plan as determined by the Company, and that you may request additional
information about the storage and processing of Data, require any necessary
amendments to Data or refuse or withdraw the consents herein, in any case
without cost, provided however, that refusing or withdrawing your consent may
adversely affect your ability to participate in the Plan.
 
       
12.
  Electronic
Delivery   The Company may, in its sole discretion, decide to deliver any
documents related to any awards granted under the Plan by electronic means or to
request your consent to participate in the Plan by electronic means. You hereby
consent to receive such documents by electronic delivery and, if requested, to
agree to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company, and such consent shall remain in effect throughout your term of
employment or service with the Company and thereafter until withdrawn in writing
by you.

4

--------------------------------------------------------------------------------

 

             
13.
  Miscellaneous   (a)   This Agreement shall not confer upon you any right to
continue as an employee, or otherwise in the service of, the Company or any
Affiliate, nor shall this Agreement interfere in any way with the Company’s or
such Affiliate’s right to terminate your employment or service at any time.
 
           
 
      (b)   Without limiting the generality of Paragraph 13(a) above, this
Agreement and the Plan may be amended without your consent to the extent
provided in Section 14(b) of the Plan.
 
           
 
      (c)   This Agreement will be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or stock
exchanges as may be required. The Company may impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and
manner of any resales by you or other subsequent transfers by you of any shares
of Common Stock issued as a result of or under this Agreement, including without
limitation (i) restrictions under an insider trading policy, (ii) restrictions
that may be necessary in the absence of an effective registration statement
under the Securities Act of 1933, as amended, covering the Performance Units and
(iii) restrictions as to the use of a specified brokerage firm or other agent
for such resales or other transfers. Any sale of shares of Common Stock issued
pursuant to this Agreement must also comply with other applicable laws and
regulations governing the sale of such shares.
 
           
 
      (d)   To the extent not preempted by U.S. federal law, this Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware.
 
           
 
      (e)   Any question concerning the interpretation of this Agreement or the
Plan, any adjustments required to be made under the Plan, and any controversy
that may arise under the Plan or this Agreement shall be determined by the
Committee (including any person(s) to whom the Committee has delegated its
authority) in its sole and absolute discretion. Such decision by the Committee
shall be final and binding.

         
14.
  Signatures   By the signatures below, you and the authorized representative of
the Company acknowledge agreement to this Performance Unit Award Agreement as of
the Grant Date specified above.

                      PARTICIPANT:       FAIRCHILD SEMICONDUCTOR INTERNATIONAL,
INC.
 
               
 
  /s/ Kirk P. Pond       /s/ Paul D. Delva                      
 
  Kirk P. Pond       Paul D. Delva                 Vice President, General
Counsel and Secretary

To accept your Performance Unit grant:

  (a)   Sign BOTH copies of this Performance Unit Award Agreement;
    (b)   Retain one copy of each for your records;     (c)   Return one copy of
each in the enclosed envelope by August 22, 2005.

5