Exhibit 10.21

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between Brian
McDonald (“Executive”) and Advanced Analogic Technologies, Inc. (the “Company”)
(collectively referred to as the “Parties” or individually referred to as a
“Party”).

RECITALS

WHEREAS, Executive was employed by the Company as its Chief Financial Officer;

WHEREAS, Executive signed an offer letter with the Company on June 21, 2004 (the
“Offer Letter”);

WHEREAS, the Company and Executive entered into an Amended and Restated Change
of Control Agreement (the “Change of Control Agreement”) as of February 3, 2009;

WHEREAS, Executive signed an Executive Proprietary Information Agreement with
the Company on June 21, 2004 (the “Confidentiality Agreement”);

WHEREAS, the Company and Executive have entered into stock option agreements
(the “Option Agreements”), with grant dates of October 26, 2005; November 6,
2006; October 31, 2007; October 29, 2008; February 10, 2009; July 27, 2009; and
February 9, 2010 each granting Executive non-statutory stock options to purchase
shares of the Company’s common stock (the “Options”), subject to the terms and
conditions of the Company’s 2005 Equity Incentive Plan (the “2005 Plan”);

WHEREAS, the Company and Executive have entered into restricted stock unit award
agreements (the “RSU Agreements”), with grant dates of July 27, 2010 and
October 20, 2010, respectively, each granting Executive the right to receive
Restricted Stock Units (the “RSUs”, and together with the Options, the “Equity
Awards”), subject to the terms and conditions of the 2005 Plan (together with
the Option Agreements and the Company’s 1998 Stock Plan, the “Stock
Agreements”);

WHEREAS, the Company terminated Executive’s employment with the Company,
effective March 31, 2011 (the “Termination Date”); and

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions, and demands that Executive may have
against the Company and any of the Releasees as defined below, including, but
not limited to, any and all claims arising out of or in any way related to
Executive’s employment with or separation from the Company.

 

Page 1 of 14

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

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company
and Executive hereby agree as follows:

COVENANTS

1. Consideration. In consideration of Executive’s execution of this agreement,
the Company agrees as follows:

a. Severance. The Company agrees to pay Executive a lump sum amount equal to
$392,333.44, less applicable withholdings, which is approximately equal to 16
months of Executive’s base salary as of the Termination Date. This payment will
be made to Executive within ten (10) business days after the Effective Date of
this Agreement.

b. Laptop, Cellular Phone, iPad. The Company agrees to give Executive a new
laptop computer, cellular phone, and iPad purchased by the Company, with the
express understanding that Executive will promptly return the laptop computer,
cellular phone, and iPad that are currently in Executive’s possession, and that
he shall not otherwise maintain any confidential or proprietary information
belonging to the Company. The Company shall report as income to Executive the
fair market value of the laptop computer, cellular phone and iPad and shall
withhold from the other cash payments specified in the Agreement such required
tax withholding. The Company will not pay for or provide service for Executive’s
Cellular Phone or iPad.

c. Target Bonus. The Company agrees to pay Executive a lump sum of $110,343.78,
less applicable withholdings, which is equal to 50% of the target bonus which
Executive would have been eligible to receive had his employment continued
through the 2011 fiscal year. The bonus payment will be made to Executive on the
6 month anniversary of the Termination Date. For the avoidance of any doubt,
Executive agrees and acknowledges that he shall not be entitled to receive
payment with respect to any remaining portion of his 2011 target bonus,
regardless of whether the performance goals are later achieved, because as of
the Termination Date, no other portion of this bonus amount has been earned.

d. One-Time Bonus. The Company agrees to pay an amount equal to $31,600, less
applicable withholdings, which is intended to cover certain miscellaneous
expenses, including costs related to Executive’s personal automobile, costs
related to the preparation of Executive’s personal income tax returns for the
2011 taxable year, and legal fees incurred by Executive in connection with the
review of this Agreement. This payment will be made to Executive within 10
business days after the Effective Date of this Agreement.

e. [***]

 

 

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE SEC

 

Page 2 of 14

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

[***]

 

 

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE SEC

 

Page 3 of 14

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

[***]

f. Equity Award Acceleration. Executive and the Company agree that Executive
shall be entitled to accelerated vesting equal to 100% of the unvested portion
of his Equity Awards as of immediately prior to the Termination Date.

g. Extension of Option Exercise Period. Executive and the Company agree that the
period of time in which Executive, Executive has to exercise the shares subject
to the Options shall be extended until the earlier of (i) the expiration of the
original term of each Option or (ii) second anniversary of the Termination Date.
Notwithstanding the foregoing, in no event shall any Option remain outstanding
or exercisable: (i) more than 10 years following the date of grant of the
Option; or (ii) following termination of the Option (i.e., such Option’s
original expiration date).

 

 

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE SEC

 

Page 4 of 14

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

h. COBRA. The Company shall reimburse Executive for the cost of coverage under
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) for Executive and his eligible dependents for a period of up
to 12 months, provided Executive and/or his eligible dependents timely elect
continuation coverage under COBRA within the time period prescribed pursuant to
COBRA, and otherwise qualify for continued coverage (the “COBRA Premiums”).
COBRA Premiums shall be reimbursed by the Company to Executive consistent with
the Company’s normal expense reimbursement policy; provided that Executive
submits documentation to the Company substantiating his payments for COBRA
coverage. Notwithstanding anything to the contrary under this Agreement, if the
Company reasonably determines, at any time and in its sole discretion, that it
cannot reimburse the COBRA Premiums to Executive, without violating applicable
law (including, without limitation, Section 2716 of the Public Health Service
Act), Executive will not receive such reimbursements.

Executive specifically acknowledges and agrees that the consideration provided
to him hereunder fully satisfies any obligation that the Company had to pay
Executive wages or any other compensation for any of the services that Executive
rendered to the Company, that the amount paid is in excess of any disputed wage
claim that Executive may have, that the consideration paid shall be deemed to be
paid first in satisfaction of any disputed wage claim with the remainder
sufficient to act as consideration for the release of claims set forth herein,
and that Executive has not earned and is not entitled to receive any additional
wages or other form of compensation from the Company.

2. Stock. The Parties agree that for purposes of determining the number of
shares of the Company’s common stock that Executive is entitled to purchase from
the Company pursuant to the exercise of outstanding Options, and the number of
RSUs that will be settled to Executive upon vesting, Executive will be
considered to have vested only up to the Termination Date (after applying the
accelerated vesting described in Section 1(c) above with respect to Options and
RSUs). Executive acknowledges that as of the Termination Date, Executive will
have vested in the number of shares subject to his outstanding Options, and the
number of RSUs, as is set forth on Exhibit A attached hereto, and no more.
Except as otherwise provided in Section 1(e) and Section 1(f), the exercise of
Executive’s vested Options, and shares resulting from any such exercises shall
continue to be governed by the terms and conditions of the Stock Agreements, as
applicable. The settlement of Executive’s vested RSUs shall continue to be
governed by the terms and conditions of the Stock Agreements, as applicable.

3. Benefits. Executive’s health insurance benefits shall cease on the last day
of March 2011, subject to Executive’s right to continue his health insurance
under COBRA. Executive’s participation in all benefits and incidents of
employment, including, but not limited to, vesting in stock options, and the
accrual of bonuses, vacation, and paid time off, ceased as of the Termination
Date.

4. Payment of Salary and Receipt of All Benefits. Executive acknowledges and
represents that, other than the consideration set forth in this Agreement, the
Company has paid or provided all salary, wages, bonuses, accrued vacation/paid
time off, premiums, leaves, housing allowances, relocation costs, interest,
severance, outplacement costs, fees, reimbursable expenses, commissions, stock,
stock options, vesting, and any and all other benefits and compensation due to
Executive.

 

Page 5 of 14

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

5. Release of Claims. Executive agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Executive
by the Company and its current and former officers, directors, Executives,
agents, investors, attorneys, shareholders, administrators, affiliates, benefit
plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and
predecessor and successor corporations and assigns (collectively, the
“Releasees”). Executive, on his own behalf and on behalf of his respective
heirs, family members, executors, agents, and assigns, hereby and forever
releases the Releasees from, and agrees not to sue concerning, or in any manner
to institute, prosecute, or pursue, any claim, complaint, charge, duty,
obligation, demand, or cause of action relating to any matters of any kind,
whether presently known or unknown, suspected or unsuspected, that Executive may
possess against any of the Releasees arising from any omissions, acts, facts, or
damages that have occurred up until and including the Effective Date of this
Agreement, including, without limitation:

a. any and all claims relating to or arising from Executive’s employment
relationship with the Company and the termination of that relationship;

b. any and all claims relating to, or arising from, Executive’s right to
purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable state corporate law, and securities fraud
under any state or federal law;

c. any and all claims for wrongful discharge of employment; termination in
violation of public policy; discrimination; harassment; retaliation; breach of
contract, both express and implied; breach of covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; fraud; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; conversion; and disability benefits;

d. any and all claims for violation of any federal, state, or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964; the
Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with
Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the
Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the
Older Workers Benefit Protection Act; the Employee Retirement Income Security
Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family
and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the California Family
Rights Act; the California Labor Code; the California Workers’ Compensation Act;
and the California Fair Employment and Housing Act;

e. any and all claims for violation of the federal or any state constitution;

f. any and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;

g. any claim for any loss, cost, damage, or expense arising out of any dispute
over the nonwithholding or other tax treatment of any of the proceeds received
by Executive as a result of this Agreement; and

 

Page 6 of 14

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

h. any and all claims for attorneys’ fees and costs.

Executive agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement. This release does not release claims that cannot be released as a
matter of law, including, but not limited to, Executive’s right to file a charge
with or participate in a charge by the Equal Employment Opportunity Commission,
or any other local, state, or federal administrative body or government agency
that is authorized to enforce or administer laws related to employment, against
the Company (with the understanding that any such filing or participation does
not give Executive the right to recover any monetary damages against the
Company; Executive’s release of claims herein bars Executive from recovering
such monetary relief from the Company). Notwithstanding the foregoing, Executive
acknowledges that any and all disputed wage claims that are released herein
shall be subject to binding arbitration in accordance with Paragraph 17.
Executive represents that he has made no assignment or transfer of any right,
claim, complaint, charge, duty, obligation, demand, cause of action, or other
matter waived or released by this Section.

6. Acknowledgment of Waiver of Claims under ADEA. Executive acknowledges that he
is waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and
voluntary. Executive agrees that this waiver and release does not apply to any
rights or claims that may arise under the ADEA after the Effective Date of this
Agreement. Executive acknowledges that the consideration given for this waiver
and release is in addition to anything of value to which Executive was already
entitled. Executive further acknowledges that he has been advised by this
writing that: (a) he should consult with an attorney prior to executing this
Agreement; (b) he has twenty-one (21) days within which to consider this
Agreement; (c) he has seven (7) days following his execution of this Agreement
to revoke this Agreement; (d) this Agreement shall not be effective until after
the revocation period has expired; and (e) nothing in this Agreement prevents or
precludes Executive from challenging or seeking a determination in good faith of
the validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties, or costs for doing so, unless specifically authorized by
federal law. In the event Executive signs this Agreement and returns it to the
Company in less than the 21-day period identified above, Executive hereby
acknowledges that he has freely and voluntarily chosen to waive the time period
allotted for considering this Agreement. Executive acknowledges and understands
that revocation must be accomplished by a written notification to the person
executing this Agreement on the Company’s behalf that is received prior to the
Effective Date. The parties agree that changes, whether material or immaterial,
do not restart the running of the 21-day period.

7. California Civil Code Section 1542. Executive acknowledges that he has been
advised to consult with legal counsel and is familiar with the provisions of
California Civil Code Section 1542, a statute that otherwise prohibits the
release of unknown claims, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

Page 7 of 14

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

Executive, being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well as under any other statute or common law
principles of similar effect.

8. No Pending or Future Lawsuits. Executive represents that he has no lawsuits,
claims, or actions pending in his name, or on behalf of any other person or
entity, against the Company or any of the other Releasees. Executive also
represents that he does not intend to bring any claims on his own behalf or on
behalf of any other person or entity against the Company or any of the other
Releasees.

9. Application for Employment. Executive understands and agrees that, as a
condition of this Agreement, Executive shall not be entitled to any employment
with the Company, and Executive hereby waives any right, or alleged right, of
employment or re-employment with the Company. Executive further agrees not to
apply for employment with the Company and not otherwise pursue an independent
contractor or vendor relationship with the Company.

10. Confidentiality. Executive agrees to maintain in complete confidence the
existence of this Agreement, the contents and terms of this Agreement, and the
consideration for this Agreement (hereinafter collectively referred to as
“Separation Information”). Except as required by law, Executive may disclose
Separation Information only to his immediate family members, the Court in any
proceedings to enforce the terms of this Agreement, Executive’s attorney(s), and
Executive’s accountant and any professional tax advisor to the extent that they
need to know the Separation Information in order to provide advice on tax
treatment or to prepare tax returns, and must prevent disclosure of any
Separation Information to all other third parties. Executive agrees that he will
not publicize, directly or indirectly, any Separation Information.

Executive acknowledges and agrees that the confidentiality of the Separation
Information is of the essence. The Parties agree that if the Company proves that
Executive breached this Confidentiality provision, the Company shall be entitled
to an award of its costs spent enforcing this provision, including all
reasonable attorneys’ fees associated with the enforcement action, without
regard to whether the Company can establish actual damages from Executive’s
breach, except to the extent that such breach constitutes a legal action by
Executive that directly pertains to the ADEA. Any such individual breach or
disclosure shall not excuse Executive from his obligations hereunder, nor permit
him to make additional disclosures. Executive warrants that he has not
disclosed, orally or in writing, directly or indirectly, any of the Separation
Information to any unauthorized party.

11. Trade Secrets and Confidential Information/Company Property. Executive
reaffirms and agrees to observe and abide by the terms of the Confidentiality
Agreement, specifically including the provisions therein regarding nondisclosure
of the Company’s trade secrets and confidential and proprietary information, and
nonsolicitation of Company Executives. Executive’s signature below constitutes
his certification under penalty of perjury that he has returned all documents
and other items provided to Executive by the Company, developed or obtained by
Executive in connection with his employment with the Company, or otherwise
belonging to the Company, including but not limited to his current laptop
computer, cellular phone and iPad.

12. No Cooperation. Executive agrees that he will not knowingly encourage,
counsel, or assist any attorneys or their clients in the presentation,
prosecution or defense of any disputes, differences, grievances, claims,
charges, or complaints between any third party and any of the

 

Page 8 of 14

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

Releasees, unless under a subpoena or other court order to do so or as related
directly to the ADEA waiver in this Agreement. Executive agrees both to
immediately notify the Company upon receipt of any such subpoena or court order,
and to furnish, within three (3) business days of its receipt, a copy of such
subpoena or other court order. If approached by anyone for counsel or assistance
in the presentation, prosecution or defense of any disputes, differences,
grievances, claims, charges, or complaints involving any of the Releasees,
Executive shall state no more than that he cannot provide counsel or assistance.
Executive agrees that the restrictions contained in this section shall include,
but not be limited to, serving as an expert witness in any legal proceeding for
a party adverse to any of the Releasees and to encouraging, counseling, or
assisting, in any manner, any stockholder, group of stockholders, or advisors
thereto, in an effort to influence any decisions, actions, or policies of any of
the Releasees.

13. Nondisparagement. Executive agrees to refrain from any disparagement,
defamation, libel, or slander of any of the Releasees, including, without
limitation, the business, products, intellectual property, financial standing,
future, or employment/compensation/benefit practices of the Company, and agrees
to refrain from any tortious interference with the contracts and relationships
of any of the Releasees. Executive shall direct any inquiries by potential
future employers to the Company’s human resources department.

14. Breach. In addition to the rights provided in the “Attorneys’ Fees” section
below, Executive acknowledges and agrees that any material breach of this
Agreement, unless such breach constitutes a legal action by Executive
challenging or seeking a determination in good faith of the validity of the
waiver herein under the ADEA, or of any provision of the Confidentiality
Agreement shall entitle the Company immediately to recover and/or cease
providing the consideration provided to Executive under this Agreement and to
obtain damages, except as provided by law.

15. No Admission of Liability. Executive understands and acknowledges that this
Agreement constitutes a compromise and settlement of any and all actual or
potential disputed claims by Executive. No action taken by the Company hereto,
either previously or in connection with this Agreement, shall be deemed or
construed to be (a) an admission of the truth or falsity of any actual or
potential claims or (b) an acknowledgment or admission by the Company of any
fault or liability whatsoever to Executive or to any third party.

16. Costs. Except as set forth in Paragraph 1(d), the Parties shall each bear
their own costs, attorneys’ fees, and other fees incurred in connection with the
preparation of this Agreement.

17. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE
TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN
RELEASED, SHALL BE SUBJECT TO ARBITRATION IN SANTA CLARA COUNTY, BEFORE JUDICIAL
ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT
ARBITRATION RULES & PROCEDURES (“JAMS RULES”). THE ARBITRATOR MAY GRANT
INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE ARBITRATOR SHALL ADMINISTER
AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE
CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE
AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY
CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION. TO THE EXTENT THAT THE JAMS
RULES CONFLICT WITH

 

Page 9 of 14

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

CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE. THE DECISION OF THE
ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE
ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION
SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO
ENFORCE THE ARBITRATION AWARD. THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN
EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL
SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER,
THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING
PARTY, EXCEPT AS PROHIBITED BY LAW. THE PARTIES HEREBY AGREE TO WAIVE THEIR
RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR
JURY. NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY
FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT
HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE
RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE.
SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH
CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES
AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

18. Tax Consequences. The Company makes no representations or warranties with
respect to the tax consequences of the payments and any other consideration
provided to Executive or made on his behalf under the terms of this Agreement.
Executive agrees and understands that he is responsible for payment, if any, of
local, state, and/or federal taxes on the payments and any other consideration
provided hereunder by the Company and any penalties or assessments thereon.
Executive further agrees to indemnify and hold the Company harmless from any
claims, demands, deficiencies, penalties, interest, assessments, executions,
judgments, or recoveries by any government agency against the Company for any
amounts claimed due on account of (a) Executive’s failure to pay or delayed
payment of federal or state taxes, or (b) damages sustained by the Company by
reason of any such claims, including attorneys’ fees and costs.

19. Section 409A.

(a) It is intended that the payment of all severance benefits pursuant to
Section 1(a) through Section 1(c) of this Agreement be exempt from Section 409A
of the Internal Revenue Code, as amended (the “Code”) and the regulations
promulgated thereunder (“Section 409A”) due to (i) the involuntary termination
exception as set forth in Section 1.409A-1(b)(9)(iii) of the final regulations
issued under Section 409A or such other exemption as may apply, (ii) the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the final
regulations issued under Section 409A, or (iii) such other exemption as may
apply.

(b) It is intended that the payment of all benefits pursuant to Section 1(d) of
this Agreement be exempt from Section 409A due to (i) the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the final regulations issued under
Section 409A, or (ii) such other exemption as may apply. Notwithstanding the
foregoing, to the extent any payments under this Agreement are subject to (and
not exempt from) Section 409A, it is intended that such payments will comply
with Section 409A

 

Page 10 of 14

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

as amounts payable on the earlier of a “fixed schedule” in accordance with
Section 1.409A-3(i)(1)(i) of the final regulations issued under Section 409A, on
a “change in the ownership or effective control of a control of a corporation,
or a change in the ownership of a substantial portion of the assets of a
corporation” in accordance with Section 1.409A(3)(i)(5) of the final regulations
issued under Section 409A, or a “separation from service” as set forth in
Section 1.409A-1(h) of the final regulations issued under Section 409A, such
that no portion of the payments will be subject to the additional tax imposed
under Section 409A, and any ambiguities herein will be interpreted to so comply.

(c) Each payment and benefit payable under this Agreement is intended to
constitute separate payments for purposes of Section 1.409A-2(b)(2) of the final
regulations issued under Section 409A. With respect to reimbursements (whether
such reimbursements are for business expenses or, to the extent permitted under
the Company’s policies, other expenses) and/or in-kind benefits, in each case,
that constitute deferred compensation subject to Section 409A (as determined by
the Company in its sole discretion), each of the following shall apply: (1) no
reimbursement of expenses incurred by Executive during any taxable year shall be
made after the last day of the following taxable year of the Executive, (2) the
amount of expenses eligible for reimbursement, or in-kind benefits provided,
during a taxable year of Executive shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, to Executive in any other
taxable year, and (3) the right to reimbursement of such expenses or in-kind
benefits shall not be subject to liquidation or exchange for another benefit.
The Company and Executive agree that this Agreement and the rights granted to
Executive hereunder are intended to meet the requirements of paragraphs (2),
(3) and (4) of Section 409A(a)(1)(A) of the Code.

This Paragraph 19 is intended to comply with the requirements of Section 409A of
the Code so that none of the severance payments and benefits to be provided
hereunder will be subject to either (1) the six (6) month delay which may
otherwise be required with respect to payments of deferred compensation to
“specified Executives” as defined in Section 409A, and (b) any additional tax
imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. The Company and Executive agree to work together in good faith to
consider amendments to this Agreement and to take such reasonable actions which
are necessary, appropriate or desirable to avoid imposition of any additional
tax or income recognition prior to actual payment to Executive under
Section 409A.

20. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who
may claim through it to the terms and conditions of this Agreement. Executive
represents and warrants that he has the capacity to act on his own behalf and on
behalf of all who might claim through him to bind them to the terms and
conditions of this Agreement. Each Party warrants and represents that there are
no liens or claims of lien or assignments in law or equity or otherwise of or
against any of the claims or causes of action released herein.

21. No Representations. Executive represents that he has had an opportunity to
consult with an attorney, and has carefully read and understands the scope and
effect of the provisions of this Agreement. Executive has not relied upon any
representations or statements made by the Company that are not specifically set
forth in this Agreement.

 

Page 11 of 14

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

22. Severability. In the event that any provision or any portion of any
provision hereof or any surviving agreement made a part hereof becomes or is
declared by a court of competent jurisdiction or arbitrator to be illegal,
unenforceable, or void, this Agreement shall continue in full force and effect
without said provision or portion of provision.

23. Attorneys’ Fees. Except with regard to a legal action challenging or seeking
a determination in good faith of the validity of the waiver herein under the
ADEA, in the event that either Party brings an action to enforce or effect its
rights under this Agreement, the prevailing Party shall be entitled to recover
its costs and expenses, including the costs of mediation, arbitration,
litigation, court fees, and reasonable attorneys’ fees incurred in connection
with such an action.

24. Entire Agreement. This Agreement, along with the Confidentiality Agreement
and the Stock Agreements, represents the entire agreement and understanding
between the Company and Executive concerning the subject matter of this
Agreement and Executive’s employment with and separation from the Company and
the events leading thereto and associated therewith, and supersedes and replaces
any and all prior agreements and understandings concerning the subject matter of
this Agreement and Executive’s relationship with the Company, including but not
limited to Executive’s Offer Letter and Change of Control Agreement.

25. No Oral Modification. This Agreement may only be amended in a writing signed
by Executive and the Company’s Chief Executive Officer.

26. Governing Law. This Agreement shall be governed by the laws of the State of
California, without regard for choice-of-law provisions. Executive consents to
personal and exclusive jurisdiction and venue in the State of California.

27. Effective Date. Executive understands that this Agreement shall be null and
void if not executed by him within twenty one (21) days of March 31, 2011 (the
“Execution Deadline”). Each Party has seven (7) days after that Party signs this
Agreement to revoke it. This Agreement will become effective on the eighth
(8th) day after the Execution Deadline, so long as it has been signed by the
Parties and has not been revoked by either Party before that date (the
“Effective Date”).

28. Counterparts. This Agreement may be executed in counterparts and by
facsimile, and each counterpart and facsimile shall have the same force and
effect as an original and shall constitute an effective, binding agreement on
the part of each of the undersigned.

29. Voluntary Execution of Agreement. Executive understands and agrees that he
executed this Agreement voluntarily, without any duress or undue influence on
the part or behalf of the Company or any third party, with the full intent of
releasing all of his claims against the Company and any of the other Releasees.
Executive acknowledges that:

 

  (a) he has read this Agreement;

 

  (b) he has been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of his own choice or has elected not to retain
legal counsel;

 

Page 12 of 14

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

  (c) he understands the terms and consequences of this Agreement and of the
releases it contains; and

 

  (d) he is fully aware of the legal and binding effect of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

 

    BRIAN MCDONALD, an individual Dated: March 31, 2011  

/s/ Brian McDonald

  Brian McDonald   ADVANCED ANALOGIC TECHNOLOGIES, INC. Dated: March 31, 2011  
By  

/s/ Richard K. Williams

    Richard K. Williams     President & Chief Executive Officer

 

Page 13 of 14

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

EXHIBIT A

The chart below shows the number of shares subject to Executive’s outstanding
Equity Awards that are vested as of the Termination Date, in all cases,
including amounts that vested in accordance with the accelerated vesting
provisions described in Section 1(c) above.

 

Grant Date

 

Type of Award

 

Vested

10/26/05

  NSO   110,000

11/6/05

  NSO   100,000

10/31/07

  NSO   100,000

10/29/08

  NSO   125,000

02/10/09

  NSO   17,500

07/29/09

  NSO   60,000

02/09/10

  NSO   60,000

7/27/10

  RSU   50,000

10/20/10

  RSU   60,000

 

Page 14 of 14