Exhibit 10.6
NATIONAL SEMICONDUCTOR CORPORATION
DIRECTOR STOCK OPTION PLAN
(as amended effective September 24, 1999)
(adjusted to reflect the 2-for-1 stock split paid May 13, 2004)
1. PURPOSE
The purposes of the Director Stock Option Plan (the "Plan") of National
Semiconductor Corporation (the "Corporation") are to promote the recruiting and
retention of highly qualified individuals to serve in the capacity of
non-employee members of the Board of Directors of the Corporation ("Directors")
and to strengthen the commonality of interest between Directors and
stockholders.
2. NON-QUALIFIED OPTIONS
It is intended that options to purchase shares of the Corporation's $.50
par value common stock (the "Common Stock") granted under this Plan shall
constitute non-qualified or non-statutory stock options, and not incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of 1986,
as amended.
3. STOCK SUBJECT TO THE PLAN
There will be reserved for issue upon the exercise of options granted under
the Plan 2,000,000 shares of the Corporation's Common Stock, subject to
adjustment as provided in Paragraph 7, which may be unissued shares, reacquired
shares, or shares bought on the market. If any option which shall have been
granted shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares shall again become available for the purposes of
the Plan (unless the Plan shall have been terminated).
4. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the
Corporation, whose construction and interpretation of the terms and provisions
of the Plan shall be final and conclusive. Grants of options under the Plan and
the amount and nature of the awards to be granted shall be automatic and
non-discretionary in accordance with Paragraph 6.
5. ELIGIBILITY
Options may be granted only to non-employee Directors.
6. TERMS OF OPTION AND OPTION AGREEMENTS
Each option shall be evidenced by a written agreement in such form as the
Board of Directors shall from time to time approve, which agreements shall
comply with and be subject to all of the applicable following provisions:
(a) The purchase price under each option granted shall be 100% of fair
market value on the date of grant. The fair market value on the date of grant
shall be the opening price of the Common Stock on the New York Stock Exchange on
such date (or if there shall be no trading on such date, then on the first
previous date on which there was such trading).
(b) Options shall be granted automatically and without further action by
the Board of Directors to all eligible Directors as follows: (i) on the date of
the adoption of the Plan by the Corporation's stockholders, each eligible
Director shall be granted an option to purchase 10,000 shares of Common Stock;
(ii) each person who becomes an eligible Director after the date of adoption of
the Plan shall be granted an option to purchase 10,000 shares of Common Stock on
the date of the appointment of such person to the Board of Directors; and (iii)
each eligible Director shall be granted an additional option to purchase 10,000
shares of Common Stock on the date of each subsequent election of such person to
the Board of Directors by the stockholders.
(c) The term of the non-qualified stock options granted under this Plan
shall be ten years and one day from the date the option was granted.
(d) Options shall become fully exercisable six months after the date of
grant.
(e) An option may not be exercised to any extent, either by the person to
whom it was granted, or by any person after his death, unless the person to whom
the option was granted has remained as a Director of the Corporation for not
less than six months from the date when the option was granted.
(f) The Corporation, during the terms of options granted under the Plan, at
all times will keep available the number of shares of stock required to satisfy
such options.
(g) The Corporation will seek to obtain from each regulatory commission or
agency having jurisdiction such authority as may be required to issue and sell
shares of stock to satisfy such options. Inability of the Corporation to obtain
from any such regulatory commission or agency authority which counsel for the
Corporation deems necessary for the lawful issuance and sale of its stock to
satisfy such options shall relieve the Corporation from any liability for
failure to issue and sell stock to satisfy such options pending the time when
such authority is obtained or is obtainable.
(h) Neither a person to whom an option is granted nor his legal
representative, heir, legatee, or distributee, shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such option unless and until he has exercised his option pursuant to the
terms thereof.
(i) An option shall not be transferable except by will or by the laws of
descent and distribution, and during the lifetime of the person to whom the
option is granted he alone may exercise it.
(j) An option shall terminate and may not be exercised if the person to
whom it is granted ceases to be a Director of the Corporation, except (subject
nevertheless to the last sentence of this subparagraph (j)): (1) if his status
as a Director is terminated for any reason other than (i) retirement, (ii)
permanent disability, or (iii) death, he may exercise his option to the extent
that he was entitled to exercise such option at the date of such termination at
any time within a period of three (3) months following the date of such
termination, or if he shall die within the period of three (3) months following
the date of such termination without having exercised such option, his option
may be exercised within a period of one year following his death by the person
or persons to whom his rights under the option pass by will or by the laws of
descent or distribution but only to the extent exercisable at the date of such
termination; or (2) if his status as a Director is terminated by (i) retirement,
(ii) permanent disability, or (iii) death, his option may be exercised in
accordance with its terms and conditions at any time within a period of five (5)
years following the date of such termination by him, or in the event of his
death, by the persons to whom his rights under the option shall pass by will or
by the laws of descent or distribution. Nothing contained in this subparagraph
(j) is intended to extend the stated term of the option and in no event may an
option be exercised by anyone after the expiration of its stated term.
(k) Nothing in this Plan or in any option granted hereunder shall confer on
any optionee any right to continue as a Director of the Corporation.
(l) If an option agreement is not executed by the optionee and returned to
the Corporation on or prior to ninety (90) days after the date the option is
granted, such option shall terminate.
(m) The following definitions shall apply for purposes of this Plan:
(1) "retirement": termination as a Director after reaching age
sixty-five (65) or after reaching age fifty-five (55) and the
optionee's age plus years of service as a Director is sixty-five
(65) or more;
(2) "permanent disability": a permanent and total incapacity to
perform any services as a Director.
7. ADJUSTMENT IN NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of the Corporation through
the declaration of stock dividends or a stock split-up, or through
recapitalization resulting in share split-ups, or combinations or exchanges of
shares, or otherwise, the number of shares available for option, as well as the
shares subject to any option and the option price thereof, shall be
appropriately adjusted, provided that the number of shares subject to any option
shall always be a whole number.
8. PAYMENT OF PURCHASE PRICE AND WITHHOLDING TAXES
(a) The purchase price for all shares purchased pursuant to options
exercised must be either paid in full in cash, or paid in full in Common Stock
of the Corporation and valued at fair market value on the date of exercise or a
combination of cash and Common Stock. Fair market value on the date of exercise
is the opening price of the Common Stock on the New York Stock Exchange on such
date, or if there shall be no trading on such date, then on the first previous
date on which there was such trading.
(b) All or part of required withholding taxes that may be due upon the
exercise of an option, up to the highest marginal rates then in effect, may be
paid by the withholding of shares otherwise issuable upon exercise of the
option. Option shares withheld in payment of such taxes shall be valued at the
fair market value of the Corporation's Common Stock on the date of exercise as
defined herein.
9. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN
(a) The Board may amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in legal requirements or for any
other purpose permitted by law; provided, however, that the provisions of
Paragraphs 5, 6(a), 6(b), 6(c), 6(d), 6(e) and 6(j) of the Plan may not be
amended more than once every six months, other than to comport with changes in
the Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act, or the rules thereunder. The Board will seek stockholder approval
of an amendment if determined to be required by or advisable under regulations
of the Securities and Exchange Commission or the Internal Revenue Service, the
rules of any stock exchange on which the Corporation's stock is listed or other
applicable law or regulation.
(b) The Plan shall continue in effect unless sooner terminated. An option
may not be granted while the Plan is suspended or after it is terminated.
(c) Subject to the limitations of Paragraph 9, the rights and obligations
under any options granted while the Plan is in effect shall not be altered or
impaired by amendment, suspension or termination of the Plan, except with the
consent of the person to whom the option was granted or to whom rights under an
option shall have passed by will or by the laws of descent and distribution.
10. EFFECTIVE DATE
The Plan shall become effective on June 26, 1997, subject to approval by
the stockholders of the Corporation within twelve months after such date. No
option shall be granted under the Plan until the Plan has been approved by the
stockholders of the Corporation.