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                                                                   Exhibit 10.12

                   FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
                        2000 EXECUTIVE STOCK OPTION PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

      Fairchild Semiconductor International, Inc., a Delaware corporation (the
"Company"), hereby grants an Option to purchase shares of its Class A Common
Stock, par value $.01 per share (the "Shares"), to the Optionee named below. The
terms and conditions of the Option are set forth in this cover sheet, in the
attachment and in the Company's 2000 Executive Stock Option Plan (the "Plan").

<TABLE>
<S>                                   <C>
Date of Option Grant:                 September 15, 2000

Name of Optionee:                     John M. Watkins, Jr.

Number of Shares Covered by Option:   75,000

Exercise Price per Share:             $42.75
</TABLE>

Vesting Schedule:

      Subject to all the terms of the attached Agreement, your right to purchase
Shares under this Option vests in full on April 5, 2005, or earlier as follows:
20% of the Option shall vest at the time the Share price reaches or exceeds
$55.00 on each of any 20 trading days during any period of 30 consecutive
trading days; an additional 20% of the Option shall vest at the time the Share
price reaches or exceeds $64.00 on each of any 20 trading days during any period
of 30 consecutive trading days; an additional 30% of the Option shall vest at
the time the Share price reaches or exceeds $77.00 on each of any 20 trading
days during any period of 30 consecutive trading days; and the remaining 30% of
the Option shall vest at the time the Share price reaches or exceeds $90.00 on
each of any 20 days during any period of 30 consecutive trading days.

      BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS ALSO
ENCLOSED.

Optionee:  /s/ John M. Watkins, Jr.
           -----------------------------------------------------
                                 (Signature)

Company:   /s/ Joseph R. Martin
           -----------------------------------------------------
                                 (Signature)

           Title: Exec. V.P. & CFO
                  ----------------------------------------------

Attachment

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                   FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
                        2000 EXECUTIVE STOCK OPTION PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

THE PLAN AND                            The text of the Plan is incorporated in
OTHER AGREEMENTS                        this Agreement by reference. Certain
                                        capitalized terms used in this Agreement
                                        are defined in the Plan.

                                        This Agreement and the Plan constitute
                                        the entire understanding between you and
                                        the Company regarding this Option. Any
                                        prior agreements, commitments or
                                        negotiations concerning this Option are
                                        superseded.

NONSTATUTORY STOCK OPTION               This Option is not intended to be an
                                        Incentive Stock Option under section 422
                                        of the Internal Revenue Code and will be
                                        interpreted accordingly.

VESTING                                 This Option is only exercisable before
                                        it expires and then only with respect to
                                        the vested portion of the Option. This
                                        Option will vest according to the
                                        Vesting Schedule on the attached cover
                                        sheet.

TERM                                    Your Option will expire in any event at
                                        the close of business at Company
                                        headquarters on the day before the 10th
                                        anniversary of the Date of Option Grant,
                                        as shown on the cover sheet. Your Option
                                        may expire earlier if your Service
                                        terminates, as described below.

TERMINATION OF SERVICE                  If your Service with the Company
                                        terminates, you shall immediately
                                        forfeit all rights to the unvested
                                        portion of your Option, and your right
                                        (or the right of your estate, executor
                                        or representative) to exercise the
                                        vested portion of your Option after
                                        termination shall be governed by the
                                        terms of the Company's Employee Stock
                                        Option Plan as if the Option had been
                                        granted under that plan.

CHANGE IN CONTROL                       In the event that you are employed by
                                        the Company at the time of a Change in
                                        Control, as defined below, your Option
                                        shall fully vest upon the effective date
                                        of the Change in Control, unless the
                                        Change in Control is initiated by the
                                        Company and you remain employed by the
                                        successor corporation in a position of
                                        equal rank and responsibility to your
                                        position in the Company on the Date of
                                        Option Grant.

                                        "Change in Control" means the occurrence
                                        of any of the following events:

                                        (i) Any "person" (as such term is used
                                        in Sections 13(d) and 14(d) of the
                                        Exchange Act), other than (x) Sterling
                                        Holding Company, LLC and/or Citicorp
                                        Venture Capital Ltd. (either, for
                                        purposes of this definition, "CVC"), (y)
                                        any officer, employee or director of CVC
                                        or any trust, partnership or other
                                        entity established solely for the
                                        benefit


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                                        of such officers, employees or directors
                                        or (z) any officer, employee or director
                                        of the Company or any subsidiary of the
                                        Company or any trust, partnership or
                                        other entity established solely for the
                                        benefit of such officers, employees or
                                        directors (any of such persons
                                        identified in clauses (x), (y) and (z),
                                        a "Permitted Holder"), is or becomes the
                                        beneficial owner (as such term is
                                        defined in Rules 13d-3 and 13d-5 under
                                        the Exchange Act), directly or
                                        indirectly, of more than 35% of the
                                        total voting power of the voting stock
                                        of the Company, provided, however, that
                                        the Permitted Holders beneficially own
                                        (as defined above), directly or
                                        indirectly, in the aggregate a lesser
                                        percentage of the total voting power of
                                        the voting stock of the Company than
                                        such other person and do not have the
                                        right or ability by voting power,
                                        contract or otherwise to elect or
                                        designate for election a majority of the
                                        board of directors of the Company;

                                        (ii) during any period of two
                                        consecutive years, individuals who at
                                        the beginning of such period constituted
                                        the board of directors of the Company
                                        (together with any new directors whose
                                        election by such board of directors or
                                        whose nomination for election by the
                                        stockholders of the Company was approved
                                        by a vote of a majority of the directors
                                        of the Company then still in office who
                                        were either directors at the beginning
                                        of such period or whose election or
                                        nomination for election was previously
                                        so approved) cease for any reason to
                                        constitute a majority of the board of
                                        directors of the Company then in office;
                                        or

                                        (iii) the merger or consolidation of the
                                        Company with or into another corporation
                                        or entity or the merger of another
                                        corporation or entity with or into the
                                        Company, or the sale of all or
                                        substantially all the assets of the
                                        Company to another corporation or entity
                                        (in any of such cases, other than a
                                        corporation or entity that prior to such
                                        merger, consolidation or sale is
                                        controlled by Permitted Holders), if the
                                        securities of the Company that are
                                        outstanding immediately prior to such
                                        transaction and which represent 100% of
                                        the aggregate voting power of the voting
                                        stock of the Company are changed into or
                                        exchanged for cash, securities or
                                        property, unless pursuant to such
                                        transaction such securities are changed
                                        into or exchanged for, in addition to
                                        any other consideration, securities of
                                        the surviving corporation or entity or
                                        transferee that represent, immediately
                                        after such transaction, at least a
                                        majority of the aggregate voting power
                                        of the voting stock of the surviving
                                        corporation, entity or transferee.

LEAVES OF ABSENCE                       For purposes of this Option, your
                                        Service does not terminate when you go
                                        on a bona fide leave of absence that was
                                        approved by the Company in writing, if
                                        the terms of the leave provide for
                                        continued Service crediting, or when
                                        continued Service crediting is required
                                        by applicable law. Your Service
                                        terminates in any event when the
                                        approved leave ends unless you
                                        immediately return to active work.

                                        The Company determines which leaves
                                        count for this purpose, and


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                                        when your Service terminates for all
                                        purposes under the Plan.

NOTICE OF EXERCISE                      When you wish to exercise this Option,
                                        you must notify the Company by filing
                                        the proper "Notice of Exercise" form at
                                        the address given on the form. Your
                                        notice must specify how many Shares you
                                        wish to purchase. Your notice must also
                                        specify how your Shares should be
                                        registered (in your name only or in your
                                        and your spouse's names as community
                                        property or as joint tenants with right
                                        of survivorship). The notice will be
                                        effective when it is received by the
                                        Company.

                                        If someone else wants to exercise this
                                        Option after your death, that person
                                        must prove to the Company's satisfaction
                                        that he or she is entitled to do so.

FORM OF PAYMENT                         When you submit your notice of exercise,
                                        you must include payment of the Option
                                        price for the Shares you are purchasing.

                                        Payment may be made in one (or a
                                        combination) of the following forms:

                                        -   Your personal check, a cashier's
                                            check or a money order.

                                        -   Shares which have already been owned
                                            by you for more than six months and
                                            which are surrendered to the
                                            Company. The value of the Shares,
                                            determined as of the effective date
                                            of the Option exercise, will be
                                            applied to the Option price.

                                        -   By delivery (on a form prescribed by
                                            the Company) of an irrevocable
                                            direction to a securities broker to
                                            sell Shares and to deliver all or
                                            part of the sale proceeds to the
                                            Company in payment of the aggregate
                                            exercise price.

WITHHOLDING TAXES                       You will not be allowed to exercise this
                                        Option unless you make acceptable
                                        arrangements to pay any withholding or
                                        other taxes that may be due as a result
                                        of the Option exercise or sale of Shares
                                        acquired under this Option.

RESTRICTIONS ON EXERCISE AND RESALE     By signing this Agreement, you agree not
                                        to exercise this Option or sell any
                                        Shares acquired under this Option at a
                                        time when applicable laws, regulations
                                        or Company trading policies prohibit
                                        exercise, sale or issuance of Shares.
                                        The Company will not permit you to
                                        exercise this Option if the issuance of
                                        Shares at that time would violate any
                                        law or regulation. The Company shall
                                        have the right to designate one or more
                                        periods of time, each of which shall not
                                        exceed one hundred eighty (180) days in
                                        length, during which this Option shall
                                        not be exercisable if the Company
                                        determines (in its sole discretion) that
                                        such limitation on exercise could in any
                                        way facilitate a lessening of any
                                        restriction on transfer pursuant to the
                                        Securities Act or any state securities
                                        laws with respect to any issuance of
                                        securities by the Company, facilitate
                                        the registration or qualification of any
                                        securities by the Company under the
                                        Securities Act or any state securities
                                        laws,


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                                        or facilitate the perfection of any
                                        exemption from the registration or
                                        qualification requirements of the
                                        Securities Act or any applicable state
                                        securities laws for the issuance or
                                        transfer of any securities. Such
                                        limitation on exercise shall not alter
                                        the vesting schedule set forth in this
                                        Agreement other than to limit the
                                        periods during which this Option shall
                                        be exercisable.

                                        If the sale of Shares under the Plan is
                                        not registered under the Securities Act,
                                        but an exemption is available which
                                        requires an investment or other
                                        representation, you shall represent and
                                        agree at the time of exercise that the
                                        Shares being acquired upon exercise of
                                        this Option are being acquired for
                                        investment, and not with a view to the
                                        sale or distribution thereof, and shall
                                        make such other representations as are
                                        deemed necessary or appropriate by the
                                        Company and its counsel.

TRANSFER OF OPTION                      You shall not assign, alienate, pledge,
                                        attach, sell, transfer or encumber this
                                        Option. If you attempt to do any of
                                        these things, this Option will
                                        immediately become invalid. You may,
                                        however, dispose of this Option in your
                                        will or it may be transferred by the
                                        laws of descent and distribution.

                                        Notwithstanding the preceding paragraph,
                                        if the Company consents, you may
                                        transfer this Option, by gift, to a
                                        Family Member. For purposes of this
                                        section, "Family Member" is defined to
                                        include any child, stepchild,
                                        grandchild, parent, stepparent,
                                        grandparent, spouse, former spouse,
                                        sibling, niece, nephew, mother-in-law,
                                        father-in-law, son-in-law,
                                        daughter-in-law, brother-in-law, or
                                        sister-in-law, including adoptive
                                        relationships, any person sharing your
                                        household (other than a tenant or
                                        employee), a trust in which these
                                        persons have more than fifty percent of
                                        the beneficial interest, a foundation in
                                        which these persons (or you) control the
                                        management of assets, and any other
                                        entity in which these persons (or you)
                                        own more than fifty percent of the
                                        voting interests. A Family Member
                                        transferee is hereafter referred to as a
                                        "Permitted Transferee." Before any such
                                        transfer of this Option is effectuated,
                                        however, the Company must be notified in
                                        advance in writing of the terms and
                                        conditions of the proposed transfer and
                                        the Company must determine that the
                                        proposed transfer complies with
                                        applicable law and the requirements of
                                        the Plan and this Option. Any purported
                                        assignment, alienation, pledge,
                                        attachment, sale, transfer or
                                        encumbrance that does not qualify
                                        hereunder shall be void and
                                        unenforceable against the Company.

                                        The terms of this Option (including the
                                        post-termination of Service exercise
                                        periods) shall apply to your
                                        beneficiaries, executors, administrators
                                        and Permitted Transferees (including the
                                        beneficiaries, executors and
                                        administrators of the Permitted
                                        Transferees), including the right to
                                        agree to any amendment of this Option,
                                        except that Permitted Transferees shall
                                        not transfer this Option other than by
                                        will or by the laws of descent and
                                        distribution. The Company is under no
                                        obligation to provide notice to a
                                        Permitted Transferee of your


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                                        termination of Service.

                                        This Option shall be exercised only by
                                        you (including, in the case of a
                                        transferred Option, by a Permitted
                                        Transferee), or, in the case of your
                                        death, by your executor or administrator
                                        (including, in the case of a transferred
                                        Option, by the executor or administrator
                                        of the Permitted Transferee). Before a
                                        Permitted Transferee will be allowed to
                                        exercise this option, you must make
                                        acceptable arrangements to pay any
                                        withholding or other taxes that may be
                                        due as a result of exercising this
                                        option.

                                        Regardless of any marital property
                                        settlement agreement, the Company is not
                                        obligated to honor a notice of exercise
                                        from your spouse, nor is the Company
                                        obligated to recognize your spouse's
                                        interest in your Option in any other
                                        way.

RETENTION RIGHTS                        Your Option or this Agreement does not
                                        give you the right to be retained by the
                                        Company (or any Parent or any
                                        Subsidiaries or Affiliates) in any
                                        capacity. The Company (or any Parent and
                                        any Subsidiaries or Affiliates) reserve
                                        the right to terminate your Service at
                                        any time.

STOCKHOLDER RIGHTS                      You, or your estate or heirs, have no
                                        rights as a stockholder of the Company
                                        until a certificate for your Option's
                                        Shares has been issued. No adjustments
                                        are made for dividends or other rights
                                        if the applicable record date occurs
                                        before your stock certificate is issued,
                                        except as described in the Plan.

ADJUSTMENTS                             In the event of a stock split, a stock
                                        dividend or a similar change in the
                                        Company stock, the number of Shares
                                        covered by this Option and the exercise
                                        price per Share may be adjusted (and
                                        rounded down to the nearest whole
                                        number) pursuant to the Plan. Your
                                        Option shall be subject to the terms of
                                        the agreement of merger, liquidation or
                                        reorganization in the event the Company
                                        is subject to such corporate activity.

APPLICABLE LAW                          This Agreement will be interpreted and
                                        enforced under the laws of the State of
                                        Maine.

      BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
      TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.


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