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Exhibit 10.3  

2900
Semiconductor Drive

Santa Clara, CA 95052-8090

408 721-5000 Tel 

August    ,
2002 

Mr. Michael
G. Fung

12585 Miraloma Way

Los Altos Hills, California 94024 

Dear
Mr. Fung: 

        This
addendum to your Employment Agreement ("Addendum") supplements certain provisions of the Option and Agreement and Plan of Merger entered into by and among National Semiconductor
Corporation ("National"), Nintai Acquisition Sub, Inc. DigitalQuake, Inc. ("DigitalQuake"), Paul A. Lessard and Michael G. Fung dated as of February 8, 2002, as amended as of the
date hereof, and as same may be subsequently amended from time to time (the "Merger Agreement") solely as such provisions relate to National and each Principal Employee as an employee of National.
Capitalized terms used in this letter have the meanings assigned to them in the Merger Agreement. 

	1.
	Section 3.5
of the Merger Agreement provides that you will receive the second installment payment and the third installment payment due under the Merger Agreement with respect
to your DigitalQuake Options and DigitalQuake Common Stock in cash. This Addendum supplements the Merger Agreement to give you the option to receive all or a portion of the second and third
installment payments in cash or in shares of National Common Stock as set forth below. As used herein, the "National Common Stock" means the common stock, par value $.50 per share, of National.

	(a)
	You
may elect to receive all or a part of the second installment payment in cash or shares of National Common Stock by delivering notice of such
election to National in the form attached hereto as Exhibit A and in the manner set forth for notices in Section 14.3 of the Merger Agreement (an "Election Notice") at least fifteen
(15) but no more than thirty (30) days prior to August 24, 2003, provided you have been continuously employed by National in its Displays Group from the Effective Time through
August 24, 2003. Such notice shall specify the portion of the second installment to be paid in cash and the portion to be paid in shares of NSC Common Stock. The number of shares of National
Common Stock shall be determined in accordance with Section 3 below; and

	(b)
	You
may elect to receive all or a part of the third installment payment in cash or shares of National Common Stock by delivering notice of such election
to National an Election Notice at least fifteen (15) but no more than thirty (30) days prior to August 29, 2004, provided you have been continuously employed by National in its
Displays Group through August 29, 2004. Such notice shall specify the portion of the third installment to be paid in cash and the portion to be paid in shares of NSC Common Stock. The number of
shares of National Common Stock shall be determined in accordance with Section 3 below. 

	2.
	The
form of the Election Notice is attached hereto as Exhibit A If you do not provide an Election Notice under Section 1(a) or Section 1(b), you will be deemed to
have elected to receive the applicable installment payment entirely in cash.

	3.
	The
number of shares of National Common Stock to be issued to you upon your election to receive all or a portion of the second or third installment payment in shares of National Common
Stock shall equal the quotient of (x) the dollar amount of the applicable installment payment payable to you which you have elected to receive in National Common Stock on the Election Notice
form divided by (y) the opening price of the National Common Stock as 

reported
on the New York Stock Exchange Composite Tape on the Closing Date (or if there shall be no trading on such date, then on the first subsequent date on which there is trading). In the event
National changes the number of shares of National Common Stock issued and outstanding as a result of a stock split, stock dividend or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to
August 29, 2004, the number of shares of National Common Stock issuable pursuant to Section 1(a) or Section 1(b) above shall be proportionately adjusted. National shall
file a registration statement with the U.S. Securities and Exchange Commission on Form S-8 or other appropriate form with respect to the shares of National Common Stock
issuable pursuant to this letter prior toAugust 24, 2003. 

	4.
	Your
right to receive the second installment payment and third installment payment in whole or in part in shares of National Common Stock is contingent upon your being continuously
employed by National in its Display Group from the Effective Time through August 24, 2003 and through August 29, 2004, respectively. Accordingly, you acknowledge that your right to
receive the second and third
installment payment in whole or in part in shares of National Common Stock, with the number of shares to be determined by reference to a fixed and determined price, is a benefit to which you would not
otherwise be entitled if you had not become an employee of National upon the completion of the merger contemplated by the Merger Agreement.

	5.
	All
of the shares of National Common Stock issuable pursuant to Section 1(a) or Section 1(b) above will be validly issued, fully paid and nonassessable and free of and
not subject to any preemptive rights or rights of first refusal created by statute or by National's Second Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws upon their
issuance pursuant to this Addendum.

	6.
	You
understand that you may suffer adverse tax consequences in the event you elect to receive all or part of the second or third installment payments in shares of National Common
Stock. You represent that you have consulted with any tax consultants you deem advisable in connection with your option to exercise such election and that you are not relying on National for any tax
advice. 

        Please
sign below to confirm your agreement with the items set forth above. 

	 	 	Very truly yours,
	

 	
 	

NATIONAL SEMICONDUCTOR CORPORATION
	

 	
 	

By:	
 	

//s// D A HANDORF

	

ACCEPTED AND AGREED TO AS OF
 8/29/02:	
 	

 	
 	

 
	

//s// MICHAEL G. FUNG	
 	

 	
 	

 
	
	 	 	 	 
	Michael G. Fung

	 	 	 	 

 
 

Exhibit A
  
  Notice of Election to Receive Installment Payment in Cash or Stock    
  

To:
National Semiconductor Corporation 

From:
Michael G. Fung 

Re:
Election to Receive Installment Payment in Cash or Stock 

        Pursuant
to the Option and Agreement and Plan of Merger entered into by and among National Semiconductor Corporation ("National"), Nintai Acquisition Sub, Inc. and
DigitalQuake, Inc. ("DigitalQuake"), Paul A. Lessard and Michael G. Fung dated as of February 8, 2002, as amended (the "Merger Agreement") and the Addendum to the Employment Agreement
dated August    , 2002 between National and the undersigned, notice is hereby given that the undersigned hereby elects to receive the installment payment set forth below contemplated by
Section 3.5 of the Merger Agreement in the form set forth below:. 

Check
as applicable: 

	

      	
 	

o	

Second Installment Payment
	

      	
 	

o	

Third Installment Payment

Form
of Payment 

	

      	
 	

o	

All in cash, payable by check or wire transfer
	

      	
 	

o	

All in shares of National Common Stock
	

      	
 	

o	

A combination of cash and National Common Stock, with $            to be paid in cash and
$                        to be paid in shares of National Common Stock

	Dated:	 	 	 	 
	 	 	
	 	 
	 	 	 	 	

	 	 	 	 	Michael G. Fung

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Letter Agreement with Michael G. Fung

Exhibit A Notice of Election to Receive Installment Payment in Cash or StockQuickLinks
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Exhibit 10.4  

2900
Semiconductor Drive

Santa Clara, CA 95052-8090

408 721 5000 Tel 

August    ,
2002 

Mr. Anil
Kumar

14566 Carnelian Glen Court

Saratoga, California 95070 

Dear
Mr. Kumar: 

        This
addendum to your Employment Agreement ("Addendum") supplements certain provisions of the Option and Agreement and Plan of Merger entered into by and among National Semiconductor
Corporation ("National"), Nintai Acquisition Sub, Inc. DigitalQuake, Inc. ("DigitalQuake"), Paul A. Lessard and Michael G. Fung dated as of February 8, 2002, as amended as of the
date hereof, and as same may be subsequently amended from time to time (the "Merger Agreement") solely as such provisions relate to National and each Principal Employee as an employee of National.
Capitalized terms used in this letter have the meanings assigned to them in the Merger Agreement. 

	1.
	Section 3.5
of the Merger Agreement provides that you will receive the second installment payment and the third installment payment due under the Merger Agreement with respect
to your DigitalQuake Options and DigitalQuake Common Stock in cash. This Addendum supplements the Merger Agreement to give you the option to receive all or a portion of the second and third
installment payments in cash or in shares of National Common Stock as set forth below. As used herein, the "National Common Stock" means the common stock, par value $.50 per share, of National.

	(a)
	You
may elect to receive all or a part of the second installment payment in cash or shares of National Common Stock by delivering notice of such
election to National in the form attached hereto as Exhibit A and in the manner set forth for notices in Section 14.3 of the Merger Agreement (an "Election Notice") at least fifteen
(15) but no more than thirty (30) days prior to August 24, 2003, provided you have been continuously employed by National in its Displays Group from the Effective Time through
August 24, 2003. Such notice shall specify the portion of the second installment to be paid in cash and the portion to be paid in shares of NSC Common Stock. The number of shares of National
Common Stock shall be determined in accordance with Section 3 below; and

	(b)
	You
may elect to receive all or a part of the third installment payment in cash or shares of National Common Stock by delivering notice of such election
to National an Election Notice at least fifteen (15) but no more than thirty (30) days prior to August 29, 2004, provided you have been continuously employed by National in its
Displays Group through August 29, 2004. Such notice shall specify the portion of the third installment to be paid in cash and the portion to be paid in shares of NSC Common Stock. The number of
shares of National Common Stock shall be determined in accordance with Section 3 below. 

	2.
	The
form of the Election Notice is attached hereto as Exhibit A If you do not provide an Election Notice under Section 1(a) or Section 1(b), you will be deemed to
have elected to receive the applicable installment payment entirely in cash.

	3.
	The
number of shares of National Common Stock to be issued to you upon your election to receive all or a portion of the second or third installment payment in shares of National Common
Stock shall equal the quotient of (x) the dollar amount of the applicable installment payment payable to you which you have elected to receive in National Common Stock on the Election Notice
form divided by (y) the opening price of the National Common Stock as 

reported
on the New York Stock Exchange Composite Tape on the Closing Date (or if there shall be no trading on such date, then on the first subsequent date on which there is trading). In the event
National changes the number of shares of National Common Stock issued and outstanding as a result of a stock split, stock dividend or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to
August 29, 2004, the number of shares of National Common Stock issuable pursuant to Section 1(a) or Section 1(b) above shall be proportionately adjusted. National shall
file a registration statement with the U.S. Securities and Exchange Commission on Form S-8 or other appropriate form with respect to the shares of National Common Stock
issuable pursuant to this letter prior to August 24, 2003. 

	4.
	Your
right to receive the second installment payment and third installment payment in whole or in part in shares of National Common Stock is contingent upon your being continuously
employed by National in its Display Group from the Effective Time through August 24, 2003 and August 29, 2004, respectively. Accordingly, you acknowledge that your right to receive the
second and third installment
payment in whole or in part in shares of National Common Stock, with the number of shares to be determined by reference to a fixed and determined price, is a benefit to which you would not otherwise
be entitled if you had not become an employee of National upon the completion of the merger contemplated by the Merger Agreement.

	5.
	All
of the shares of National Common Stock issuable pursuant to Section 1(a) or Section 1(b) above will be validly issued, fully paid and nonassessable and free of and
not subject to any preemptive rights or rights of first refusal created by statute or by National's Second Restated Certificate of Incorporation, as amended, or Amended and Restated Bylaws upon their
issuance pursuant to this Addendum.

	6.
	You
understand that you may suffer adverse tax consequences in the event you elect to receive all or part of the second or third installment payments in shares of National Common
Stock. You represent that you have consulted with any tax consultants you deem advisable in connection with your option to exercise such election and that you are not relying on National for any tax
advice. 

        Please
sign below to confirm your agreement with the items set forth above. 

	 	 	Very truly yours,
	

 	
 	

NATIONAL SEMICONDUCTOR CORPORATION
	

 	
 	

By:	
 	

/s/  D A HANDORF      

	

ACCEPTED AND AGREED TO AS OF
 Aug. 28, 02:	
 	

 	
 	

 
	

/s/  ANIL KUMAR      	
 	

 	
 	

 
	
	 	 	 	 
	Anil Kumar

	 	 	 	 

 
 

Exhibit A
  
  Notice of Election to Receive Installment Payment in Cash or Stock    
  

To:
National Semiconductor Corporation 

From:
Anil Kumar 

Re:
Election to Receive Installment Payment in Cash or Stock 

        Pursuant
to the Option and Agreement and Plan of Merger entered into by and among National Semiconductor Corporation ("National"), Nintai Acquisition Sub, Inc. and
DigitalQuake, Inc. ("DigitalQuake"), Paul A. Lessard and Michael G. Fung dated as of February 8, 2002 as amended (the "Merger Agreement") and the Addendum to the Employment Agreement
dated August    , 2002 between National and the undersigned, notice is hereby given that the undersigned hereby elects to receive the installment payment set forth below contemplated by
Section 3.5 of the Merger Agreement in the form set forth below:. 

Check
as applicable: 

	

      	
 	

o	

Second Installment Payment
	

      	
 	

o	

Third Installment Payment

Form
of Payment 

	

      	
 	

o	

All in cash, payable by check or wire transfer
	

      	
 	

o	

All in shares of National Common Stock
	

      	
 	

o	

A combination of cash and National Common Stock, with $            to be paid in cash and
$                        to be paid in shares of National Common Stock

	Dated:	 	 	 	 
	 	 	
	 	 
	 	 	 	 	

	 	 	 	 	Anil Kumar

QuickLinks

Letter Agreement with Anil Kumar

Exhibit A Notice of Election to Receive Installment Payment in Cash or Stock

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