EXAR CORP
EX-10.1
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>a2038035zex-10_1.txt
<DESCRIPTION>EX-10.1
<TEXT>

<PAGE>

                                                                   EXHIBIT 10.1

                         EXECUTIVE EMPLOYMENT AGREEMENT


         This EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
as of the _____ day of December, 2000 (the "Effective Date"), by and between
EXAR CORPORATION, a Delaware corporation (the "Company"), and DONALD L. CIFFONE,
JR. ("Executive").

         WHEREAS, the Company desires to continue to employ Executive to provide
executive management services to the Company and wishes to provide Executive
with certain compensation and benefits in return for Executive's continued
services; and

         WHEREAS, Executive wishes to continue to be employed by the Company and
provide executive management services to the Company in return for certain
compensation and benefits;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:

                                    ARTICLE 1

                                   DEFINITIONS

         For purposes of the Agreement, the following terms are defined as
follows:

         1.1 "BOARD" means the Board of Directors of the Company.

         1.2 "CAUSE" means misconduct, including: (i) conviction of any felony
or any crime involving moral turpitude or dishonesty; (ii) participation in a
fraud or act of dishonesty against the Company; (iii) willful breach of the
Company's policies; (iv) intentional damage to the Company's property; (v) a
material breach of the Proprietary Rights and Nondisclosure Agreement dated
October 21, 1996, between the Company and Executive; or (vi) conduct which in
the good faith and reasonable determination of the Board demonstrates
unacceptable job performance or unfitness to serve. Physical or mental
disability shall not constitute "Cause."

         1.3 "CHANGE OF CONTROL" means (i) a merger or consolidation in which
the Company is not the surviving corporation; (ii) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise; (iv) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged,
excluding in each case a capital reorganization in which the sole purpose is to
change the state of incorporation of the Company, and in each case Executive is
not offered a similar executive level position with the surviving entity.

         1.4 "CHANGE OF CONTROL PLAN" means the Exar Corporation Executive
Officers' Change of Control Severance Benefit Plan, adopted effective as of June
24, 1999 by the Company for the benefit of certain of its eligible executive
employees.

         1.5 "CODE" means the Internal Revenue Code of 1986, as amended.

                                       1.
<PAGE>

         1.6 "COMMON STOCK" means the common stock of the Company.

         1.7 "COMPANY" means Exar Corporation, a Delaware corporation, or,
following a Change of Control, the surviving entity resulting from such
transaction.

         1.8 "CONSULTING AGREEMENT" means the Consulting Agreement entered into
by and between the Company and Executive, substantially in the form attached
hereto as Exhibit A. Service under the Consulting Agreement shall commence as of
the termination of Executive's employment with the Company, provided that such
termination is not for Cause, and further provided that such termination is not
covered by Section 4.2 hereof.

         1.9 "EXECUTIVE INCENTIVE PROGRAM" means the Executive Incentive
Compensation Program maintained by the Company for the benefit of its eligible
executive employees.

         1.10 "FISCAL YEAR" means the twelve (12) month period ending on each
March 31.

         1.11 "GOOD REASON" means any one of the following events which occurs
within thirteen (13) months after the effective date of a Change of Control: (i)
any reduction of Executive's rate of total compensation (including base salary
and stock options); (ii) any material reduction in the package of welfare
benefit plans, taken as a whole, provided to Executive (except that the terms of
benefits, including without limitation employee contributions, may be changed to
the extent required by third party providers) or any action by the Company that
would materially adversely affect Executive's participation or materially reduce
Executive's benefits under any of such plans; (iii) any material change in
Executive's responsibilities, duties, authority, title, reporting relationship
or offices resulting in any diminution of position (including, but not limited
to, a change of responsibility from company-wide responsibility to
division-level responsibility); (iv) request that Executive relocate to a
worksite that is both more than thirty-five (35) miles from Executive's prior
worksite and more than thirty-five (35) miles from Executive's personal
residence (as of the Effective Date), unless Executive accepts such relocation
opportunity; (v) failure or refusal of a successor to the Company to assume the
Company's obligations under this Agreement; or (vii) material breach by the
Company or any successor to the Company of any of the material provisions of
this Agreement.

                                    ARTICLE 2

                            EMPLOYMENT BY THE COMPANY

         2.1 POSITION AND DUTIES. Subject to the terms set forth herein, the
Company agrees to continue to employ Executive in the position of President and
Chief Executive Officer, and Executive hereby accepts such employment. Executive
shall serve in an executive capacity, shall continue to perform such duties as
are customarily associated with the position of President and Chief Executive
Officer and such other duties as are assigned to Executive by the Board, and
shall report solely and directly to the Board. During the term of this
Agreement, Executive shall devote his best efforts and substantially all of his
business time and attention (except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by the Company's
general employment policies or as otherwise set forth in this Agreement) solely
to the business of the Company.

                                       2.
<PAGE>

         2.2 TERM. The term of this Agreement shall commence on the Effective
Date and shall continue until the earlier of (i) the termination of Executive's
employment with the Company or (ii) March 31, 2004. Within a reasonable period
of time prior to September 30, 2003, provided that Executive's employment has
not then terminated, Executive and the Company shall commence negotiations in
order to determine, no later than September 30, 2003, whether to renew this
Agreement immediately following its scheduled termination date on March 31, 2004
or to continue Executive's employment without a written agreement; PROVIDED,
HOWEVER, that a failure to renew this Agreement shall in no way prevent either
the continuation of this Agreement through March 31, 2004 or the continuation of
the employment relationship beyond such date without a written agreement.
Executive's service under the Consulting Agreement shall commence as of the
termination of Executive's employment with the Company, provided that his
employment is not terminated for Cause, and further provided that such
termination is not covered by either Section 4.1 or 4.2 hereof.

         2.3 EMPLOYMENT AT WILL. Executive's employment is at will, and both the
Company and Executive shall have the right to terminate, with written notice,
Executive's employment with the Company at any time, and for any reason, with or
without Cause. If Executive's employment with the Company is terminated,
Executive shall be eligible to receive severance benefits only to the extent
provided in Article 4 of this Agreement.

         2.4 EMPLOYMENT POLICIES. The employment relationship between the
parties shall also be governed by the general employment policies and practices
of the Company, including those relating to protection of confidential
information and assignment of inventions, except that to the extent that the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement shall control.

                                    ARTICLE 3

                                  COMPENSATION

         3.1 BASE SALARY. Executive shall receive for continued employment with
the Company, during the term of this Agreement, a base salary at an annual (July
1 - June 30) rate of six hundred fifteen thousand dollars ($615,000), payable in
equal installments on the regular payroll dates of the Company, which payroll
dates shall occur at least twice monthly, subject to applicable tax withholding.
Such base salary (the "Annual Base Salary") shall be subject to increase as
determined by the Board during the annual focal review period.

         3.2 INCENTIVE COMPENSATION PAYMENT. During the term of this Agreement,
Executive shall be eligible to receive an annual target incentive compensation
payment for each Fiscal Year, beginning with the Fiscal Year ending March 31,
2002, and continuing through and including the Fiscal Year ending March 31,
2004, the amount of which incentive compensation payment shall be determined
pursuant to the terms and conditions of the Company's Executive Incentive
Program based on a target award percentage equal to seventy-five percent (75%).

         3.3 STOCK OPTION GRANT. The Board shall grant to Executive (i) on the
Effective Date an option to purchase three hundred thousand (300,000) shares of
Common Stock with an exercise price to be determined by the Board equal to the
fair market value of Common Stock on


                                       3.
<PAGE>

the Effective Date, which option shall vest on each monthly anniversary date of
the Effective Date as to 1/36 of the shares of Common Stock, and (ii) on each
April 1 following the Effective Date, beginning with April 1, 2001, and
continuing through and including April 1, 2003, an option to purchase one
hundred thousand (100,000) shares of Common Stock with an exercise price to be
determined by the Board equal to the fair market value of Common Stock on the
relevant April 1, which option shall vest on each monthly anniversary date of
the relevant April 1 as to 1/36 of the shares of Common Stock subject to the
option. Grants pursuant to the preceding clause (ii) shall be subject to
appropriate adjustment in the event of a change to the Company's Common Stock
without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transactions not involving the receipt of consideration by
the Company). Options granted pursuant to this Section 3.3 shall be granted
under, and shall be subject to the terms of, the Company's 2000 Equity Incentive
Plan and Executive's Stock Option Agreement thereunder.

         3.4 PROFESSIONAL SERVICES. The Company shall, during the term of this
Agreement, reimburse Executive in an amount not to exceed ten thousand dollars
($10,000) per Fiscal Year for documented costs incurred by Executive for
obtaining professional services, including, but not limited to, legal, tax
planning, accounting and investment services.

         3.5 STANDARD COMPANY BENEFITS. During the term of this Agreement,
Executive shall be entitled to all rights and benefits for which he is eligible
under the terms and conditions of the standard Company benefits and compensation
practices that may be in effect from time to time and are provided by the
Company to its executive employees generally, including health, disability, life
and accidental death insurance coverage. In addition, Executive shall be
entitled to receive the following benefits during the term of this Agreement:

                  (a) the Company shall provide Executive with four (4) weeks'
paid vacation for each Fiscal Year (plus paid holidays), which Executive may
take in accordance with the Company's standard policy regarding vacation time;

                  (b) the Company shall provide Executive with life insurance
coverage pursuant to a term life insurance policy in an amount equal to one
million dollars ($1,000,000).

                  (c) the Company shall provide Executive with a monthly
automobile allowance equal to three thousand dollars ($3,000); and

                  (d) the Company, pursuant to the terms and conditions of the
Company's Executive Health Plan, shall reimburse Executive up to ten thousand
dollars ($10,000) for each Fiscal Year for the documented cost of covered
medical expenses, without the need for any contribution by Executive.

         3.6 EMPLOYMENT BEYOND TERMINATION DATE OF THIS AGREEMENT. Sections 3.4
and 3.5 shall continue to apply to Executive for so long as he is employed by
the Company, whether or not pursuant to this Agreement.

                                       4.
<PAGE>

                                    ARTICLE 4

                    SEVERANCE AND CHANGE OF CONTROL BENEFITS

         4.1 SEVERANCE BENEFITS FOR CERTAIN TERMINATIONS WITHOUT REGARD TO
CHANGE OF CONTROL. If Executive's employment is terminated by the Company
without Cause during the term of this Agreement and prior to the effective date
of a Change of Control, Executive shall, within thirty (30) days following the
date on which the Release described in Section 4.3 becomes effective in
accordance with its terms, receive the following severance benefits: (i) a lump
sum payment equal to the sum of Executive's Annual Base Salary as in effect
during the last regularly scheduled payroll period immediately preceding the
termination of Executive's employment plus an additional amount equal to (A) if
Executive's employment is terminated prior to October 1, the greater of the
incentive compensation payment actually paid to Executive under the Executive
Incentive Program for the last Fiscal Year ending with or prior to the
termination date of Executive's employment or the target incentive compensation
payment for such last Fiscal Year, or (B) if Executive's employment is
terminated on or after October 1, the greater of the target incentive
compensation payment that Executive could become entitled to receive under the
Executive Incentive Program for the Fiscal Year in which Executive's employment
is terminated or the incentive compensation payment actually paid to Executive
under the Executive Incentive Program for the last Fiscal Year ending with or
prior to the termination date of Executive's employment, such lump sum payment
to be subject to applicable tax withholding; and (ii) Executive shall be
credited with twelve (12) months of additional vesting under all unvested
outstanding options to purchase Common Stock then held by Executive, and all
options held by Executive shall be exercisable for up to fifteen (15) months
following the termination of Executive's employment. For purposes of clause (ii)
in the preceding sentence, Executive shall receive the option vesting credit and
continued option exercisability therein provided only if Executive has executed
the Consulting Agreement, and in the event of termination of the Consulting
Agreement for any reason, such vesting credit shall cease and continued option
exercisability shall be determined solely in accordance with the terms of grant
of the then outstanding vested options.

         4.2 SEVERANCE BENEFITS FOR CERTAIN TERMINATIONS WITHIN THIRTEEN (13)
MONTHS FOLLOWING CHANGE OF CONTROL.

                  (a) SEVERANCE BENEFITS. If Executive's employment is
terminated by the Company without Cause or by the Executive for Good Reason, in
either case within thirteen (13) months following the effective date of a Change
of Control and during the term of this Agreement, Executive shall, within thirty
(30) days following the date on which the Release described in Section 4.3
becomes effective in accordance with its terms, receive the following severance
benefits: (i) a lump sum payment equal to two (2) times the sum of Executive's
Annual Base Salary as in effect during the last regularly scheduled payroll
period immediately preceding the termination date of Executive's employment plus
an additional amount equal to (A) if Executive's employment is terminated prior
to October 1, the greater of the incentive compensation payment actually paid to
Executive under the Executive Incentive Program for the last Fiscal Year ending
with or prior to the termination date of Executive's employment or the target
incentive compensation payment for such last Fiscal Year, or (B) if Executive's
employment is terminated on or after October 1, the greater of the target
incentive compensation

                                       5.
<PAGE>

payment that Executive could become entitled to receive under the Executive
Incentive Program for the Fiscal Year in which Executive's employment is
terminated or the incentive compensation payment actually paid to Executive
under the Executive Incentive Program for the last Fiscal Year ending with or
prior to the termination date of Executive's employment, such lump sum payment
to be subject to applicable tax withholding; and (ii) the vesting and
exercisability of all unvested outstanding options to purchase Common Stock then
held by Executive shall be fully accelerated.

                  (b) TAX GROSS-UP PAYMENT. In the event it shall be determined,
either by the Company or by a final determination of the Internal Revenue
Service, that any payment, distribution or benefit by or from the Company to or
for the benefit of Executive pursuant to Section 4.2(a) or otherwise (the
"Payment") would cause Executive to become subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then the Company shall pay to or
for the benefit of Executive, within the later of ninety (90) days of the
termination date of Executive's employment or ninety (90) days of the date of
determination referred to above, an additional amount (the "Gross-Up Payment")
in an amount that shall fund the payment by Executive of any Excise Tax on the
Payment, as well as any income taxes imposed on the Gross-Up Payment, any Excise
Tax imposed on the Gross-Up Payment and any interest or penalties imposed with
respect to taxes on the Gross-Up Payment or any Excise Tax. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal, state and local income taxes at the highest nominal marginal rate of
such federal, state and local income taxation in the calendar year in which the
Gross-Up Payment is due, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the
event that the Excise Tax is subsequently determined to be less than the amount
taken into account to determine the amount of the Gross-Up Payment, then
Executive shall repay to the Company at that time the portion of the Gross-Up
Payment attributable to such reduction (plus an amount equal to any tax
reduction, whether of the Excise Tax, any applicable income tax, or any
applicable employment tax, which Executive has received as a result of such
initial repayment). In the event that the Excise Tax is subsequently determined,
whether by the Company or by a final determination of the Internal Revenue
Service, to be more than the amount taken into account to determine the amount
of the Gross-Up Payment, then the Company shall pay to Executive an additional
amount, which shall be determined using the same methods as were used for
calculating the Gross-Up Payment, with respect to such excess. For purposes of
this Section 4(b), a determination of the Internal Revenue Service as to the
amount of Excise Tax for which an Executive is liable shall not be treated as
final until the time that either (i) the Company agrees to acquiesce to the
determination of the Internal Revenue Service or (ii) the determination of the
Internal Revenue Service has been upheld in a court of competent jurisdiction
and the Company decides not to appeal such judicial decision or such decision is
not appealable. If the Company chooses to contest the determination of the
Internal Revenue Service, then all costs, attorneys' fees, charges assessed and
other expenses shall be borne and paid when due by the Company.

         4.3 RELEASE. Upon the occurrence of a termination that would entitle
Executive to receive severance benefits pursuant to Sections 4.1 or 4.2 that are
conditioned upon the execution of an effective release, and prior to the receipt
of such severance benefits, Executive shall execute a release (the "Release") in
the form attached hereto as Exhibit B or Exhibit C, as appropriate. Such Release
shall specifically relate to all of Executive's rights and claims in

                                       6.
<PAGE>

existence at the time of such execution and shall confirm Executive's
obligations under the Company's standard form of proprietary information
agreement. It is understood that Executive has a certain period to consider
whether to execute such Release, and Executive may revoke such Release within
seven (7) days after execution. In the event Executive does not execute such
Release within the applicable period, or if Executive revokes such Release
within the subsequent seven (7) day period, none of the aforesaid benefits shall
be payable under this Agreement.

         4.4 MITIGATION. Executive shall not be required to mitigate damages or
the amount of any payment provided under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by Executive as a result of
employment by another employer or otherwise.

         4.5 OTHER TERMINATIONS. Only terminations of employment described in
the foregoing provisions of this Article 4 shall entitle Executive to severance
benefits pursuant to the terms of this Agreement. Accordingly, terminations for
any reason not so described (such as, without limitation, on account of
Executive's disability or death) shall not entitle Executive to such severance
benefits; PROVIDED, HOWEVER, that the provisions of this Article 4 shall
continue to apply to Executive with respect to terminations of employment with
the Company described in Sections 4.1 and 4.2 even if, at the time of such
termination, Executive is not employed pursuant to this Agreement.

                                    ARTICLE 5

                               OUTSIDE ACTIVITIES

         During the term of Executive's employment by the Company and continuing
through the term of the Consulting Agreement, except on behalf of the Company,
Executive shall not directly or indirectly, whether as an officer, director,
employee, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever that was known
by Executive to compete directly with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company.
Notwithstanding the foregoing, Executive may own, as a passive investor,
securities of any competitor corporation, so long as Executive's direct holdings
in any one such corporation shall not in the aggregate constitute more than 1%
of the voting stock of such corporation. In addition, Executive may, with
approval of the Board, serve as a director on the boards of directors of other
corporations and business entities so long as such corporations or business
entities do not compete directly with the Company, in any area of the world, in
any line of business engaged in (or planned to be engaged in) by the Company,
and so long as such service does not materially interfere with the performance
of Executive's duties hereunder. Executive also may engage in civic and
not-for-profit activities so long as such activities do not materially interfere
with the performance of Executive's duties hereunder.

                                       7.
<PAGE>

                                    ARTICLE 6

                                 NONINTERFERENCE

         While employed by the Company, and for one (1) year immediately
following the date on which Executive terminates employment or otherwise ceases
providing services to the Company, Executive agrees not to interfere with the
business of the Company by soliciting or attempting to solicit any employee of
the Company to terminate such employee's employment in order to become an
employee of or a consultant or independent contractor to or for any person,
corporation, firm, partnership or other entity whatsoever. Executive's duties
under this Article 6 shall survive termination of Executive's employment with
the Company and the termination of this Agreement.

                                    ARTICLE 7

                               GENERAL PROVISIONS

         7.1 NOTICES. Subject to the remaining provisions of this Section 7.1,
any notices provided hereunder must be in writing and shall be deemed effective
upon the earlier of personal delivery (including personal delivery by telex) or
the third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed on the Company
payroll. Any termination by the Company, whether or not for Cause, or by
Executive for Good Reason, shall be communicated by a Notice of Termination to
the other party hereto given by hand delivery or by registered or certified
mail, return receipt requested, postage prepaid, if to the Executive, then to
Executive at his address as set forth in the Company's records, and, if to the
Company, to Exar Corporation, 48720 Kato Road, Fremont, California 94538
Attention: Law Department. For purposes of this Agreement, a Notice of
Termination means a written notice which (i) indicates the specific termination
provision in the Agreement relied upon and (ii) if the termination date of
Executive's employment is other than the date of receipt of such notice,
specifies such termination date (which date shall be not more than fifteen (15)
days after the giving of such notice). The failure by the Company or Executive
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Cause or of Good Reason shall not waive any right of
the Company or of Executive, respectively, or preclude the Company or Executive,
respectively, from asserting such fact or circumstance in enforcing its or his
rights under this Agreement.

         7.2 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.

         7.3 WAIVER. If either party should waive any breach of any provisions
of this Agreement, they shall not thereby be deemed to have waived any preceding
or succeeding

                                       8.
<PAGE>

breach of the same or any other provision of this Agreement, unless such waiver
is agreed to in writing by both parties.

         7.4 COMPLETE AGREEMENT. As of the Effective Date, this Agreement wholly
supersedes and renders without further force or effect the letters dated
September 9, 1996 and September 10, 1996 from the Company to Executive (which
letters set forth, respectively, the terms of Executive's employment by the
Company and Executive's severance benefits following either a Change of Control
or the termination of his employment without cause), the Change of Control Plan,
to the extent that it may apply to Executive, and all other agreements relating
to compensation and benefits between the Company and Executive, constitutes the
entire agreement between Executive and the Company and is the complete, final,
and exclusive embodiment of their agreement with regard to this subject matter.
This Agreement is entered into without reliance on any promise or representation
other than those expressly contained herein or therein, and it cannot be
modified or amended except in a writing signed by Executive and by an officer of
the Company.

         7.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.

         7.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.

         7.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that (i) Executive may not assign any of Executive's duties hereunder and
Executive may not assign any of Executive's rights hereunder, without the
written consent of the Company, which shall not be withheld unreasonably and
(ii) the Company may assign its rights and duties hereunder only to a parent or
subsidiary of the Company or to a corporation or other entity that will become
the Company's successor in interest due to a merger, consolidation, acquisition
or similar transaction.

         7.8 ARBITRATION. Unless otherwise prohibited by law or specified below,
all disputes, claims and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by final and binding
arbitration held in Santa Clara County, California through Judicial Arbitration
& Mediation Services/Endispute ("JAMS") under the then existing JAMS arbitration
rules. However, nothing in this section is intended to prevent either party from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. Each party in any such arbitration shall be
responsible for its own attorneys' fees, costs and necessary disbursement;
PROVIDED, HOWEVER, that if one party refuses to arbitrate and the other party
seeks to compel arbitration by court order, if such other party prevails, it
shall be entitled to recover reasonable attorneys' fees, costs and necessary
disbursements. Pursuant to California Civil Code Section 1717, each party
warrants that it was represented by counsel in the negotiation and execution of
this Agreement, including the attorneys' fees provision herein.

                                       9.
<PAGE>

         7.9 ATTORNEYS' FEES. If either party hereto brings any action to
enforce rights hereunder, each party in any such action shall be responsible for
its own attorneys' fees and costs incurred in connection with such action.

         7.10 CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California without regard to its principles of conflicts of law.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                                     EXAR CORPORATION



                                                     By:
                                                         -----------------------

                                                     Date:
                                                          ----------------------


ACCEPTED AND AGREED THIS
_____ DAY OF DECEMBER, 2000



----------------------------
DONALD L. CIFFONE, JR.




Exhibit A:        Consulting Agreement
Exhibit B:        Release (Individual Termination)
Exhibit C:        Release (Group Termination)



                                      10.
<PAGE>

                                    EXHIBIT A
                              CONSULTING AGREEMENT



         This CONSULTING AGREEMENT (the "Agreement") is made as of the ____ day
of __________, 200_, by and between EXAR CORPORATION, including its affiliates
and wholly owned subsidiaries, a Delaware corporation, with its principal place
of business at 48720 Kato Road, Fremont, California 94538 (the "Company"), and
DONALD L. CIFFONE, JR., an individual residing at
_____________________________________________________ (the "Consultant").

         FOR AND IN CONSIDERATION of the mutual promises and conditions set
forth below, the Company and Consultant agree as follows:

1.       SERVICES

         The Company agrees to retain Consultant for the term specified in
Section 2 to render services to the Company in the field of Consultant's
expertise for the purpose of providing executive management services. Consultant
shall exercise his best skill and judgment in performing such services under
this Agreement.

2.       TERM

         The Effective Date of this Agreement shall be the date on which
Consultant's employment with the Company is terminated pursuant to the Executive
Employment Agreement entered into as of December 6, 2000 between the Company and
Executive (the "Employment Agreement"); provided, however, that the Effective
Date shall not occur and this Agreement shall have no force or effect in the
event that Consultant's employment with the Company is terminated by the Company
for Cause, as such term is defined in the Employment Agreement, or on account of
Consultant's death or disability. Consultant's service under this Agreement
shall continue until the one (1) year anniversary of the Effective Date, unless
terminated earlier as provided in Section 5, although the parties hereto may
agree in writing to extend the term of Consultant's service under this
Agreement. Consultant's commencement and continuation of service under this
Agreement shall constitute continuous service with the Company for purposes of
continued vesting and exercisability of any outstanding Company stock options or
Company restricted stock held by Consultant as of the Effective Date.

3.       CONSULTING FEES

         The Company will pay Consultant consulting fees in an amount equal to
one thousand dollars ($1,000) per month during the term of this Agreement,
payable within thirty (30) days of the Company's receipt from Consultant of an
invoice for the relevant month, which invoice shall be in a form acceptable to
the Company. Payment to Consultant shall be mailed to his address, as listed in
Section 10.

                                       1.
<PAGE>

4.       RELATIONSHIP

         Consultant's relationship with the Company during the term of this
Agreement is that of an independent contractor, and nothing stated or implied
herein shall be construed to make Consultant an employee (common law or
otherwise) of the Company (or any affiliated company) within the meaning or
application of any national or state unemployment insurance law, old age benefit
law, workmen's compensation or industrial accident law, or other industrial or
labor law, any tax law, or any employee benefit plan maintained by the Company.
Consultant hereby acknowledges his status as an independent contractor, and not
as an employee (common law or otherwise), of the Company during the term of this
Agreement. Consultant hereby waives, during the term of this Agreement, any
claim for benefits or rights extended to employees of the Company to the extent
that such benefits or rights are not provided to Consultant under this
Agreement.

         While Consultant shall control the detail, manner, and method of
performing the services to be rendered, it is understood that all services
performed under this Agreement shall be subject to inspection by and approval of
the Company.

5.       TERMINATION

         (a) Either party may, at its option, terminate this Agreement if the
other party: (i) defaults in the performance of a material obligation hereunder,
provided such default has not been corrected within thirty (30) days after
receipt of notice describing such default; (ii) becomes a party to any
proceeding involving his or its bankruptcy or other insolvency; or (iii) ceases
to be actively engaged in business or financially incapable of fulfilling its
obligations under this Agreement.

         (b) Nothing contained herein shall limit any other remedies that either
party may have for the default of the other party under this Agreement.

6.       CONFIDENTIALITY

         The nature of the work performed and any information belonging to the
Company or any third party with which Consultant may become familiar will be
treated as confidential and may not be disclosed without the written consent of
the Company, except as provided herein. Consultant agrees to keep in strictest
confidence all information relating to the business affairs of the Company which
may be acquired in connection with or as a result of this Agreement. During the
term of this Agreement and at any time thereafter, without the prior written
consent of the Company, Consultant will not publish, communicate, divulge,
disclose or use any of such information which has been designated as secret,
confidential or proprietary, or from the surrounding circumstances of which
ought to be treated as secret or confidential.

7.       NON-SOLICITATION/HIRE

         During the term of this Agreement, and for one (1) year following the
date on which Consultant's services under this Agreement are terminated,
Consultant agrees not to interfere with the business of the Company by
soliciting or attempting to solicit any employee of the Company to terminate
such employee's employment in order to become an employee of or a

                                       2.
<PAGE>

consultant or independent contractor to or for any person, corporation, firm,
partnership or other entity whatsoever. Consultant's duties under this Section 7
shall survive termination of Consultant's services for the Company and the
termination of this Agreement.

8.       NONCOMPETE

         During the term of this Agreement, except on behalf of the Company,
Consultant shall not directly or indirectly, whether as an officer, director,
employee, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever that was known
by Consultant to compete directly with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company.
Notwithstanding the previous sentence, Consultant may own, as a passive
investor, securities of any competitor corporation, so long as Consultant's
direct holdings in any one such corporation shall not in the aggregate
constitute more than 1% of the voting stock of such corporation. In addition,
Consultant may, with approval of the Board of Directors of the Company, serve as
a director on the boards of directors of other corporations and business
entities so long as such corporations or business entities do not compete
directly with the Company, in any area of the world, in any line of business
engaged in (or planned to be engaged in) by the Company, and so long as such
service does not materially interfere with the performance of Consultant's
duties hereunder.

9.       TAXES

         Consultant shall be solely responsible for the payment, wherever
payable, of any income taxes or other taxes, contributions or insurance premiums
that pertain to the compensation received hereunder.

10.      NOTICES

         Any notice or other communication required to be given under the terms
of this Agreement shall be deemed to have been given upon personal delivery or
upon the lapse of three (3) days following deposit for delivery by certified or
registered United States mail, postage fully prepaid and addressed to the party
at the Company's or Consultant's respective address as shown herein (or at such
other address to which one party gives the other by the same means of notice).

         Notice and payment to Consultant shall be sent to the following
address:

         -------------------------

         -------------------------

         -------------------------

         -------------------------

                                       3.
<PAGE>

Notice to the Company shall be sent to the following address:

         EXAR CORPORATION
         48720 Kato Road
         Fremont, California 94538
         Attn:  Legal Department

11.      GENERAL

         (a) This Agreement constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings between them relating to
the subject matter hereunder (with the exception of the Employment Agreement,
certain provisions of which, by their terms, may continue in effect during the
term of this Agreement), and no modification of this Agreement shall be binding
on either party unless it is in writing and signed by both parties.

         (b) The rights and obligations of the parties to this Agreement shall
be governed by and construed in accordance with the laws of the State of
California. The parties hereto subject themselves to the jurisdiction of the
state and federal courts of the State of California residing within the County
of Alameda with respect to any dispute, disagreement or claim arising hereunder,
and agree that any such dispute, disagreement or claim shall be exclusively
resolved by such California state or federal court.

         (c) The prevailing party in any legal, arbitration or dispute
resolution action brought by one party against the other regarding the
performance, interpretation, enforcement or with respect to any matter arising
out of or in connection with this Agreement shall be entitled, in addition to
any other rights and remedies it may have, to reimbursement for its expenses
incurred thereby, including court costs and reasonable attorneys' fees.

         (d) Neither party shall assign this Agreement or any rights hereunder
without the prior written consent of the other. Subject to this restriction,
this Agreement shall benefit and bind the successors and assigns of the parties.

         The parties hereto have caused this Agreement to be executed as of the
date first above written.

        EXAR CORPORATION                           DONALD L. CIFFONE, JR.

By:                                         By:
        -------------------------                  -----------------------------

Title:                                      Title:
        -------------------------                  -----------------------------

Date:                                       Date:
        -------------------------                  -----------------------------


                                       4.
<PAGE>

                                    EXHIBIT B

                                     RELEASE
                            (INDIVIDUAL TERMINATION)


         Certain capitalized terms used in this Release are defined in the
Executive Employment Agreement (the "Agreement") which I have executed and of
which this Release is a part.

         I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.

         Except as otherwise set forth in this Release, in consideration of
benefits I will receive under the Agreement, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys' fees, damages, indemnities and obligations
of every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company or any claim to severance benefits
pursuant to the terms of the Agreement), arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the date
I execute this Release, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including,
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing; PROVIDED, HOWEVER, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify me pursuant to the Company's indemnification obligation
pursuant to agreement or applicable law.

         I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA. I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof is in addition to anything of value to which I was already entitled. I
further acknowledge that I have been

                                      1.
<PAGE>

advised by this writing, as required by the ADEA, that: (A) my waiver and
release do not apply to any rights or claims that may arise on or after the date
I execute this Release; (B) I have the right to consult with an attorney prior
to executing this Release; (C) I have twenty-one (21) days to consider this
Release (although I may choose to voluntarily execute this Release earlier); (D)
I have seven (7) days following my execution of this Release to revoke the
Release; and (E) this Release shall not be effective until the date upon which
the revocation period has expired, which shall be the eighth (8th) day after
this Release is executed by me.


                                                   DONALD L. CIFFONE, JR.


                                                   -----------------------------

                                                   Date:
                                                         -----------------------




                                      2.
<PAGE>

                                    EXHIBIT C

                                     RELEASE
                               (GROUP TERMINATION)


         Certain capitalized terms used in this Release are defined in the
Executive Employment Agreement (the "Agreement") which I have executed and of
which this Release is a part.

         I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.

         Except as otherwise set forth in this Release, in consideration of
benefits I will receive under the Agreement, I hereby release, acquit and
forever discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys' fees, damages, indemnities and obligations
of every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification I may have as a result of any third party action against me
based on my employment with the Company or any claim to severance benefits
pursuant to the terms of the Agreement), arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the date
I execute this Release, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with my
employment with the Company or the termination of that employment, including,
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement
Income Security Act of 1974, as amended; the federal Americans with Disabilities
Act of 1990; the California Fair Employment and Housing Act, as amended; tort
law; contract law; statutory law; common law; wrongful discharge;
discrimination; fraud; defamation; emotional distress; and breach of the implied
covenant of good faith and fair dealing; PROVIDED, HOWEVER, that nothing in this
paragraph shall be construed in any way to release the Company from its
obligation to indemnify me pursuant to the Company's indemnification obligation
pursuant to agreement or applicable law.

         I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA. I also acknowledge that the consideration
given under the Agreement for the waiver and release in the preceding paragraph
hereof is in addition to anything of value to which I was already entitled. I
further acknowledge that I have been

                                      1.
<PAGE>

advised by this writing, as required by the ADEA, that: (A) my waiver and
release do not apply to any rights or claims that may arise on or after the date
I execute this Release; (B) I have the right to consult with an attorney prior
to executing this Release; (C) I have forty-five (45) days to consider this
Release (although I may choose to voluntarily execute this Release earlier); (D)
I have seven (7) days following my execution of this Release to revoke the
Release; (E) this Release shall not be effective until the date upon which the
revocation period has expired, which shall be the eighth day (8th) after this
Release is executed by me; and (F) I have received with this Release a detailed
list of the job titles and ages of all employees who were terminated in this
group termination and the ages of all employees of the Company in the same job
classification or organizational unit who were not terminated.


                                                DONALD L. CIFFONE, JR.


                                                --------------------------------

                                                Date:
                                                      --------------------------



                                      2.
</TEXT>
</DOCUMENT>
