EXHIBIT 99.1
July 21, 2003
Ralph V. Whitworth
Relational Investors, L.P.
11975 El Camino Real, Suite 300
San Diego, CA 92130
Dear Mr. Whitworth:
Upon receipt of an executed counterpart hereof, this letter will be an agreement
(the "Agreement") between Relational Investors, L.P. (the "Partnership"),
Relational Investors LLC ("Relational Investors," and together with the
Partnership and their respective "affiliates," as such term is defined or used
in Rule 145 of the Securities Act of 1993, as amended, "Relational") and
National Semiconductor Corporation (the "Company"), with respect to the
following matters:
1. WITHDRAWAL OF THE NOTICE OF NOMINATION. By letter dated June 19, 2003,
Relational provided written notice of its intention to nominate Ralph V.
Whitworth ("Whitworth") and David H. Batchelder for election to the Board
of Directors of the Company (the "Board") at the Company's 2003 annual
stockholders meeting. Effective upon the execution and delivery of the
Agreement by all parties hereto, Relational irrevocably withdraws such
nominations.
2. MEETING WITH THE BOARD.
(a) Relational will be entitled to attend the regularly scheduled meeting
of the Board that most closely precedes the expiration of the notice
period provided in Article II Section 9(a)(2) of the Company's by-laws
for making nominations of persons for election to the Board at the
Company's 2004 annual meeting. At such meeting of the Board,
Relational shall be entitled to discuss with the Board Relational's
concerns and recommendations, if any, regarding the Company. It is
expected that Relational's presentations and discussion at the meeting
would last for approximately one and one-half hours, and that
Relational would not attend the entire meeting.
(b) Until the 2004 annual meeting of stockholders, representatives of
senior management and the Board of the Company will make themselves
available to meet with representatives of Relational at reasonable
times and intervals; provided, however, that representatives of senior
management will be available for such meetings at least once per
fiscal quarter if requested by Relational.
(c) Relational acknowledges and agrees that the meetings with the Board
and management contemplated by this Section 2 will be conducted in
compliance with Regulation FD and other applicable federal securities
law, so as not to trigger a requirement that the Company disclose any
material non-public information regarding the Company.
3. 2004 ANNUAL MEETING.
(a) If Relational reasonably does not believe that the performance of the
Company was satisfactory, Relational shall have the right in its sole
discretion, upon providing written notice that complies as to timing
and substance as set forth under Article II Section 9(a) of the
Company's by-laws, to nominate Whitworth for election to the Board, in
which case the Company shall include Whitworth's name and the
information required by the federal securities laws both in the
Company's 2004 annual meeting proxy statement and on the Company's
proxy card relating to the Company's 2004 annual meeting; provided,
however, that the Company reserves its right to oppose the election of
Whitworth to the Board at such annual meeting. The Company hereby
acknowledges and agrees that the materials submitted by Relational to
nominate Relational's two nominees for election at the 2003 annual
meeting of stockholders are acceptable instruments of nomination and
that nominating materials substantially in the same form (with factual
information updated to the extent necessary to reflect changes or new
information) will be accepted by the Company in connection with
Relational's nomination of Whitworth for election at the 2004 annual
meeting.
(b) If Relational nominates Whitworth for election at the 2004 annual
meeting pursuant to Section 3(a) above, Relational shall not nominate
any other candidates for election to the Board at the Company's 2004
annual meeting, or participate in any solicitation of proxies for the
election of directors other than Whitworth or other candidates
recommended for election by the Board.
(c) If Relational elects to nominate Whitworth for election pursuant to
Section 3(a), the Company and Relational shall each have the right to
include a statement of no more than 500 words in the Company's proxy
statement in support of their respective positions regarding the
election of Whitworth.
(d) Notwithstanding Section 3(c), each of the Company and Relational would
have the independent right to publish or distribute any other
additional proxy solicitation materials (subject to Section 3(b)
above) regarding the Whitworth nomination and their respective
positions concerning the election of directors.
(e) Relational will have the reasonable right to review all preliminary
and definitive proxy materials filed by the Company. In addition, the
Company covenants and agrees that the proxy statement and all proxy
cards used by the Company with respect to the 2004 annual meeting of
stockholders will feature Whitworth's name in the same font size,
style and leading as used for the Company's nominees. In addition, the
Company and Relational shall consult with each other in designing the
proxy card such that it accords fair and comparable treatment to
Whitworth as is accorded to the other Company nominees, including with
respect to withholding authority and other relevant matters. (f)
Relational represents that all statements and information regarding
Whitworth provided for inclusion in the Company's proxy materials will
be accurate and complete in all material respects and will comply with
all applicable law.
4. 2005 ANNUAL MEETING. If Whitworth is elected to the Board at the Company's
2004 annual meeting and if Relational so requests, (i) the Company shall
include Whitworth as a nominee to the Board on the slate of nominees
recommended by the Board in the Company's proxy statement and on its proxy
card relating to the Company's 2005 annual meeting of stockholders,
(ii) Relational shall be entitled to review and reasonably approve the
statements made regarding Whitworth in the Company's proxy materials, (iii)
Whitworth's name and the information regarding Whitworth will receive
comparable treatment (as to prominence, location and appearance) as the
Company's nominees in the Company's proxy statement and proxy cards for the
2005 annual meeting, and (iv) if Whitworth is included in the Company's
proxy statement and proxy card, Relational shall not nominate any other
candidates for election to the Board at the Company's 2005 annual meeting,
or participate in any solicitation of proxies for the election of directors
other than Whitworth or other candidates recommended for election by the
Board.
5. 5% OWNERSHIP. If Relational ceases to own 5% or more of the currently
outstanding common stock of the Company at any time, this Agreement
automatically shall terminate and be of no further force or effect, without
any further action by the Company or Relational.
6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
7. INJUNCTIVE RELIEF; SPECIFIC PERFORMANCE. The parties acknowledge and agree
that an action for breach of contract and an award of monetary damages
alone would not be adequate to compensate the non-breaching party for the
substantial harm which would result from any such breach or violation of
this Agreement. Accordingly, the parties hereby unconditionally and
irrevocably agree that in the event of such a breach or violation, the
non-breaching party shall be entitled to injunctive relief and other
remedies (including, without limitation, seeking specific performance of
the terms of this Agreement), in addition to any other rights or remedies
available at law or in equity, all of which shall be deemed to be
cumulative and not alternative or exclusive.
8. COMPLETE AGREEMENT; AMENDMENT; WAIVER; GOVERNING LAW; EXECUTION; AUTHORITY.
This Agreement represents the complete and final agreement of the parties
with respect to its subject matter and supersedes all prior negotiations,
discussions, agreements or understandings with respect to such subject
matter. The parties further acknowledge that each party is not executing
this Agreement in reliance on any promise, representation or warranty not
contained in this Agreement. This Agreement may be amended only by a
written agreement executed by each of the parties thereto. No breach of any
provision herein may be waived unless such waiver is in writing and signed
by the party to be bound. This document may be executed by facsimile
signature and in multiple counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
If you are in agreement with the foregoing, please so signify by signing in the
space provided below.
Very truly yours,
NATIONAL SEMICONDUCTOR CORPORATION
By: //S// JOHN M. CLARK III
John M. Clark, III
Senior Vice President, General
Counsel and Secretary
Accepted and agreed as of the date set forth above.
RELATIONAL INVESTORS, L.P.,
a Delaware limited partnership
By: RELATIONAL INVESTORS LLC,
a Delaware limited liability company
Its: General Partner
By: //S// RALPH V. WHITWORTH
Ralph V. Whitworth
Principal
RELATIONAL INVESTORS LLC,
a Delaware limited liability company
By: //S// RALPH V. WHITWORTH
Ralph V. Whitworth
Principal