Nll/secmtrs/10kexhpjsagr
Exhibit 10.6
AGREEMENT
This Agreement is made and entered into as of May 17, 1995, by and between
National Semiconductor Corporation, a Delaware corporation (the "Company") and
Peter J. Sprague ("Sprague").
Recitals
Sprague has served as Chairman of the Board of Directors of the Company
since 1965. Sprague now intends to retire as a member of the Board of Directors
and as Chairman of the Board.
In recognition of his many years of service as a member of the Board of
Directors and as Chairman, the Company wishes to compensate Sprague in his
retirement and to retain him as an independent consultant to the Company.
Agreement
Now, therefore, it is agreed as follows:
1. Retirement: Sprague hereby resigns as a member of the Board of Directors
of the Company and as Chairman of the Board of Directors immediately effective
as of the date of this Agreement.
2. Compensation: In recognition of Sprague's many years of service as a
member of the Board of Directors of the Company and as Chairman of the Board,
the Company hereby agrees to the following compensation for such retirement and
for services rendered to the Company as an independent consultant as provided in
paragraph 4 hereof:
a. The Company shall pay to Sprague an annual amount of $250,000, payable
in equal monthly installments, for a period of ten (10) years (the last
payment to be made in May 2005).
b. The outstanding indebtedness (principal and interest) of Sprague to the
Company as a result of the loan made by the Company to Sprague and
evidenced by that certain Promissory Note dated April 20, 1989, (the
"Note"), with a balance currently outstanding of approximately $450,000, is
hereby canceled and forgiven and deemed paid in full as of the date hereof.
c. To the extent that the forgiveness of the Note and the outstanding
balance thereunder as provided above, gives rise to state and federal
income tax, the Company agrees to make a payment to Sprague in an amount
sufficient to cover such tax on the forgiveness as well as the resulting
tax on such payment (the "Tax Gross Up"). The Tax Gross Up shall be
calculated in accordance with the Company's standard practice and shall be
paid by the Company directly to Sprague within 30 days of the date of this
Agrement. The Company shall have no further obligation with respect to
taxes arising from forgiveness of the Note and the Tax Gross Up, and
payment of such taxes shall be solely the responsibility of Sprague.
d. As provided in paragraph 3 hereof, the Company shall grant to Sprague an
option to purchase 300,000 shares of the Company's Common Stock at an
exercise price per share equal to the opening price of the Common Stock on
the New York Stock Exchange on the date of grant (the "Option"). The date
of grant of the Option shall be the next business day following the date of
execution of this Agreement.
Except as provided by the Tax Gross Up, all compensation and benefits
(including the Option) to Sprague under this agreement shall be reduced by all
federal, state, local and other withholdings and similar taxes and payments
required by applicable law.
3. The Option. The Option shall be evidenced by an option agreement in the
form attached hereto as Exhibit A (the "Option Agreement"). The Option Agreement
shall be executed simultaneously with the execution of this Agreement. Among
other things, the Option Agreement provides for the following:
a. The Option shall be exercisable in installments to the extent of 25% of
the total number of shares subject to the Option after each anniversary of
the date of the Option Agreement.
b. The Option shall have a term of ten (10) years.
c. The Option and any shares of Common Stock purchased upon exercise of the
Option shall be acquired for investment and not with a view towards
distribution.
d. The Company shall use its reasonable efforts to register the Option and
the underlying shares of Common Stock on Form S-8 as promptly as
practicable, but only to the extent that Form S-8 is available and the
Option is eligible for such registration.
e. The Option shall be non-transferable by Sprague.
4. Consultant. During the term of the consulting arrangement as set forth
below, Sprague agrees to provide consulting services to the Company upon the
reasonable request of the Chief Executive Officer at the Company, but at such
places and times as shall be reasonably convenient to Sprague in his sole
discretion.
a. Sprague shall devote such of his business time and skill to the
provision of such services as shall, in his sole discretion, be reasonably
necessary.
b. Sprague agrees that the compensation provided by paragraph 2 and the
Option provided by paragraph 3 above shall be the full and complete
compensation due and payable to Sprague for services as such consultant.
c. The term of the consulting arrangement shall be from the date hereof
through May 5, 1999, or such later date as may be agreed to in writing by
the Company and Sprague.
d. During the term of the consulting arrangement, Sprague shall be deemed
to be an independent contractor and not an employee or other representative
or agent of the Company.
e. At all times during and after the term of the consulting arrangement,
Sprague shall keep and treat as confidential all information relating to
the business or operations of the Company, except information which is in
the public domain or comes within the public domain without any breach of
this Consulting Agreement.
f. The consulting arrangement shall not limit or prohibit Sprague from
engaging in other business activities or services.
g. The Company shall have the right to terminate the consulting arrangement
with Sprague at any time after May 5, 1996, upon written notice; provided,
however, that any such termination of the arrangement, for any reason
whatsoever, shall not affect nor diminish the Option nor the compensation
to be paid by the Company to Sprague as provided in this Agreement.
5. Representations of Sprague: Sprague hereby represents to the Company as
follows:
a. That he is acquiring the Option and the underlying shares of Common
Stock upon exercise of the Option for investment and not with a view
towards distribution thereof. In the event the Option is not registered on
Form S-8, Sprague acknowledges that any Common Stock purchased upon
exercise of the Option shall be deemed "restricted" securities within the
meaning of Rule 144 under the Securities Act of 1933.
b. Sprague shall comply with the terms of the Option Agreement.
c. Sprague is not aware of any claims or causes of action which he, or any
entity of which he is an officer, director, or a 1% shareholder or
affiliate, has or may have against the Company, any subsidiary of the
Company, or any officer or director of the Company or a Company subsidiary.
d. Although nothing in this Agreement shall limit or prohibit Sprague from
engaging in other business activities or services, whether or not
competitive to the Company, Sprague does agree that during the term of the
Option, Sprague will use reasonable efforts not to disparage the Company or
its officers and directors nor engage in conduct (other than competition in
the normal course of business) materially adverse to the interests of the
Company.
6. Indemnification. Notwithstanding Sprague's retirement from the Board,
Sprague shall remain entitled to indemnification by the Company for acts during
the time he served as a member of the Company's Board of Directors to the extent
permitted by the Company's governing documents.
7. Miscellaneous:
a. This Agreement represents the entire understanding between the parties
with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings or agreements, written or oral, with
respect to the subject matter hereof, including without limitation, any
understanding, agreements or obligations respecting any past or future
compensation or other payments to Sprague by the Company.
b. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
c. This Agreement shall be binding upon and enure to the benefit of the
executors, administrators, heirs, successors and assigns of the parties
hereto.
d. This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one and the same agreement.
e. The waiver by either party of any breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other
subsequent breach of the same or other provision hereof.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and
year first above written.
NATIONAL SEMICONDUCTOR CORPORATION
BY: //s// GILBERT F. AMELIO
Gilbert F. Amelio
President and Chief Executive
Officer
//s// PETER J. SPRAGUE
PETER J. SPRAGUE