Exhibit 10.3

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January 5, 2009

Mr. Bentley Long

[Address]

Dear Bentley:

This letter sets forth the terms of the agreement between you and Exar
Corporation (“Exar”) with respect to severance benefits you may be entitled to
receive upon certain terminations of your employment following a change in
control of Exar.

In the event there is a Change of Control and your employment is terminated
within twelve (12) months following the Change of Control date either by Exar
without Cause or by you for Good Reason, (i) all options, restricted stock unit
awards and other equity-based awards granted to you by Exar, to the extent then
outstanding and otherwise unvested, will immediately vest, and (ii) you will be
entitled to receive, within sixty (60) days following your termination and
subject to all applicable withholdings, a lump sum severance payment equal to
three months base salary plus one month base salary for each year of completed
service with Exar, to a maximum aggregate severance payment equal to six months
base salary; provided, however, that Exar’s obligation to provide such
accelerated vesting and such severance payment shall be contingent upon your
providing to Exar, upon or promptly following your last day of employment with
Exar, a valid, executed general release agreement in a form acceptable to Exar,
and such release agreement not having been revoked by you pursuant to any
revocation rights afforded by applicable law.

As used herein, the term “Cause” means (i) your conviction of any felony or
conviction of any crime involving moral turpitude or dishonesty; (ii)
participation in a fraud or act of dishonesty against Exar; (iii) conduct by you
which, based upon a good faith and reasonable factual investigation and
determination by Exar, demonstrates gross incompetence; or (iv) intentional,
material violation by you of any contract between you and Exar or any statutory
duty of you to Exar that is not corrected within thirty (30) days after written
notice to you thereof Physical or mental disability shall not constitute
“Cause.”

As used herein, the term “Good Reason” means, without your express written
consent, (i) a material diminution in your authority, duties or responsibilities
or (ii) a material diminution in your base compensation, provided that any such
diminution shall not constitute “Good Reason” unless both (x) you provide
written notice to Exar of the condition claimed to constitute Good Reason within
ninety (90) days of the initial existence of such condition, and (y) Exar fails
to remedy such condition within thirty (30) days of receiving such written
notice thereof; and provided, further, that in all events the termination of
your employment with Exar shall not be treated as a termination for “Good
Reason” unless such termination occurs not more than six (6) months following
the initial existence of the condition claimed to constitute “Good Reason.”

As used herein, the term “Change of Control” means (i) a dissolution or
liquidation of Exar; (ii) consummation of a merger or consolidation in which
Exar is not the surviving

 

 

EXAR Corporation    —    48720 Kato Road    —    Fremont, CA 94538    —    Main
510-668-7000    —     Fax 510-668-7001    —    www.exar.com

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corporation; (iii) consummation of a reverse merger in which Exar is the
surviving corporation but the shares of Exar’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 thirty-five percent (35%) of the
shares of Exar 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 Exar; (v) consummation of a transaction or group of related transactions
involving the sale of all or substantially all of Exar’s assets; or (vi) the
acquisition by any person, entity or group (excluding any employee benefit plan,
or related trust, sponsored or maintained by Exar or any Exar subsidiary) of the
beneficial ownership, directly or indirectly, of securities of Exar representing
more than thirty-five percent (35%) of the combined voting power in the election
of directors. For purposes of this paragraph, acquisition of ownership interests
by any employee of Exar or its subsidiaries, whether through a “management
buy-out” or otherwise, shall not constitute a “Change of Control.”

Please sign and date in the space provided below to indicate your acceptance of
the terms set forth herein and return one copy to Diane Hill, fax (510)
668-7011.

 

Sincerely,         Agreed and Accepted:

/s/    Diane Hill

   

/s/    BentleyLong                                 
                                      01/22/09

Diane Hill     Bentley Long                                         
                                    Date Vice President     Human Resources    

 

    Start Date

 

 

EXAR Corporation    —    48720 Kato Road    —    Fremont, CA 94538    —    Main
510-668-7000    —    Fax 510-668-7001    —    www.exar.com