Exhibit 10.6

 

EXAR CORPORATION

 

1996 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

 

ADOPTED JULY 23, 1996

 

APPROVED BY STOCKHOLDERS AUGUST 29, 1996

AMENDED AND RESTATED MARCH 20, 1997

AMENDED AND RESTATED JUNE 12, 1997

AMENDED AND RESTATED SEPTEMBER 18, 1997

AMENDED AND RESTATED SEPTEMBER 10, 1998

AMENDED AND RESTATED SEPTEMBER 11, 1998

AMENDED AND RESTATED APRIL 13, 2000

AMENDED AND RESTATED JUNE 13, 2005

 

  1. Purpose.

 

(a) The purpose of the Exar Corporation 1996 Non-Employee Directors’ Stock
Option Plan (the “Plan”) is to provide a means by which each director of Exar
Corporation, a Delaware corporation (the “Company”) who is not otherwise an
employee of the Company or of any Affiliate of the Company (each such person
being hereafter referred to as a “Non-Employee Director”) will be given an
opportunity to purchase stock of the Company.

 

(b) The word “Affiliate” as used in the Plan means any parent corporation or
subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the “Code”).

 

(c) The Company, by means of the Plan, seeks to retain the services of persons
now serving as Non-Employee Directors of the Company, to secure and retain the
services of persons capable of serving in such capacity, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.

 

  2. Administration.

 

(a) The Plan shall be administered by the Board of Directors of the Company (the
“Board”) unless and until the Board delegates administration to a committee, as
provided in subparagraph 2(b).

 

(b) The Board may delegate administration of the Plan to a committee composed of
not fewer than two (2) members of the Board (the “Committee”). If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.

 

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  3. Shares Subject to The Plan.

 

(a) Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate two hundred fifty thousand (250,000)
shares of the Company’s common stock. If any option granted under the Plan shall
for any reason expire or otherwise terminate without having been exercised in
full, the stock not purchased under such option shall again become available for
the Plan.

 

(b) The stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

 

  4. Eligibility.

 

Options shall be granted only to Non-Employee Directors of the Company.

 

  5. Non-Discretionary Grants.

 

(a) Each person who is elected for the first time to be a Non-Employee Director
after the effective date of the Plan shall, on the date of initial election as a
Non-Employee Director by the Board or shareholders of the Company, automatically
be granted an option to purchase eighteen thousand (18,000) shares of the
Company’s common stock (subject to adjustment as provided in paragraph 10
hereof) on such date upon the terms and conditions set forth herein (the
“Initial Grant”).

 

(b) On the date of each Annual Meeting of the Stockholders of the Company (or
the next day that the Company’s stock is traded should the stock not trade on
such date), an option to purchase seven thousand five hundred (7,500) shares of
the Company’s common stock (subject to adjustment as provided in paragraph 10
hereof) shall automatically be granted to such person provided that such person
(i) is at that time a Non-Employee Director, and (ii) has served continuously as
a Non-Employee Director since the date of the previous Annual Meeting of the
Stockholders of the Company (the “Annual Grant”); PROVIDED, HOWEVER, that the
Annual Grant for 1998 shall be made on September 11, 1998, and the number of
shares of the Company’s Common Stock subject to such Annual Grant shall equal
seven thousand five hundred (7,500) minus the number of shares for which an
option to purchase was granted to such person under this Section 5(b) on or
after September 11, 1997, that had not vested as of September 11, 1998.
Notwithstanding the foregoing, with respect to the Chairman of the Board, the
Annual Grant shall be for twice the number of shares as are granted to other
Non-Employee Directors, or fifteen thousand (15,000) shares of the Company’s
common stock (subject to adjustment as provided in paragraph 10 hereof.

 

(c) In addition, the Chairman of the board shall be granted an option to
purchase eleven thousand two hundred fifty (11,250) shares of the Company’s
common stock (subject to adjustments as provided in paragraph 10 hereof) on
April 13, 2000 upon the terms and conditions set forth in paragraph 6 with the
exception that the option will become exercisable and fully vested in six months
from the date of grant, namely October 13, 2000; provided that the Chairman of
the

 

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Board remain in the service of the Company from April 13, 2000 continuously
until October 13, 2000.

 

  6. Option Provisions.

 

Each option shall be subject to the following terms and conditions:

 

(a) The term of each option commences on the date it is granted and, unless
sooner terminated as set forth herein, expires on the date (“Expiration Date”)
seven (7) years from the date of grant. If the optionee’s service as a
Non-Employee Director terminates for any reason or for no reason, the option
shall terminate on the earlier of the Expiration Date or the date twelve (12)
months following the date of termination of such service; PROVIDED, HOWEVER,
that if a Non-Employee Director becomes an employee or consultant of the Company
while holding an option issued under the Plan, the option shall terminate on the
earlier of the Expiration Date or the date twelve (12) months after the date on
which both the directorship and the employment or consulting relationship of the
optionee with the Company terminate. Notwithstanding the foregoing, if such
termination is due to the optionee’s death or permanent and total disability,
within the meaning of Section 422(c)(6) of the Code, the option shall terminate
on the earlier of the Expiration Date or twelve (12) months following
termination of such directorship or service. In any and all circumstances, an
option may be exercised following termination of the optionee’s service as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate only as to that number of shares as to which it was exercisable on the
date of termination of such service under the provisions of subparagraph 6(e).

 

(b) The exercise price of each option shall be one hundred percent (100%) of the
fair market value of the stock subject to such option on the date such option is
granted.

 

(c) Payment of the exercise price of each option is due in full in cash at the
time of exercise.

 

(d) An option shall not be transferable except by will or by the laws of descent
and distribution, or pursuant to a domestic relations order satisfying the
requirements of Rule 16(a)-12 under the Securities Exchange Act of 1934 and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person (or by his guardian or legal representative) or
transferee pursuant to such an order. Notwithstanding the foregoing, the
optionee may, by delivering written notice to the Company in a form satisfactory
to the Company, designate a third party who, in the event of the death of the
optionee, shall thereafter be entitled to exercise the option.

 

(e) An option granted in an Initial Grant shall become exercisable in annual
installments over a period of three (3) years from the date of grant, with
thirty-three and one third percent (33-1/3%) becoming exercisable at the end of
each anniversary of the date of grant, provided that the optionee has, during
the entire period prior to such vesting date, continuously served as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate of the Company, whereupon such option shall become fully exercisable
in accordance with its terms with respect to that portion of the shares
represented by that installment.

 

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(f) An option granted in an Annual Grant shall become exercisable in monthly
installments over a period of twelve (12) months from the date of grant, with
eight and one-third percent (8-1/3%) becoming exercisable at the end of each
full month following the date of grant, provided that the optionee has, during
the entire period prior to such vesting date, continuously served as a
Non-Employee Director or employee of or consultant to the Company or any
Affiliate of the Company, whereupon such option shall become fully exercisable
in accordance with its terms with respect to that portion of the shares
represented by that installment.

 

(g) If a Non-Employee Director’s term as a Director of the Company expires and
the Non-Employee Director is not elected or appointed to an immediate subsequent
term as a Director of the Company, any option then held by such Non-Employee
Director shall become fully vested and exercisable in accordance with its terms.

 

(h) The Company may require any optionee, or any person to whom an option is
transferred under subparagraph 6(d), as a condition of exercising any such
option: (i) to give written assurances satisfactory to the Company as to the
optionee’s knowledge and experience in financial and business matters; and (ii)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the option for such person’s own account and
not with any present intention of selling or otherwise distributing the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
option has been registered under a then-currently-effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”),
or (ii), as to any particular requirement, a determination is made by counsel
for the Company that such requirement need not be met in the circumstances under
the then-applicable securities laws.

 

(i) Notwithstanding anything to the contrary contained herein, an option may not
be exercised unless the shares issuable upon exercise of such option are then
registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.

 

  7. Covenants of The Company.

 

(a) During the terms of the options granted under the Plan, the Company shall
keep available at all times the number of shares of stock required to satisfy
such options.

 

(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock upon exercise of the options granted under the Plan;
PROVIDED, HOWEVER, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options.

 

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  8. Use of Proceeds From Stock.

 

Proceeds from the sale of stock pursuant to options granted under the Plan shall
constitute general funds of the Company.

 

  9. Miscellaneous.

 

(a) Neither an optionee nor any person to whom an option is transferred under
subparagraph 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms.

 

(b) Nothing in the Plan or in any instrument executed pursuant thereto shall
confer upon any Non-Employee Director any right to continue in the service of
the Company or any Affiliate or shall affect any right of the Company, its Board
or shareholders or any Affiliate to terminate the service of any Non-Employee
Director with or without cause.

 

(c) No Non-Employee Director, individually or as a member of a group, and no
beneficiary or other person claiming under or through him, shall have any right,
title or interest in or to any option reserved for the purposes of the Plan
except as to such shares of common stock, if any, as shall have been reserved
for him pursuant to an option granted to him.

 

(d) In connection with each option made pursuant to the Plan, it shall be a
condition precedent to the Company’s obligation to issue or transfer shares to a
Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax that
may be required to be withheld with respect to such sale or transfer, or such
removal or lapse, is made available to the Company for timely payment of such
tax.

 

  10. Adjustments Upon Changes in Stock.

 

(a) If any change is made in the stock subject to the Plan, or subject to any
option granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding options will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding options.

 

(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
merger or consolidation in which the Company is not the surviving corporation;
(3) 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; or (4) 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, then all
outstanding options shall become exercisable in full for a

 

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period of at least ten (10) days prior to such event. Outstanding options which
have not been exercised prior to such event shall terminate on the date of such
event unless assumed by a successor corporation.

 

  11. Amendment of The Plan.

 

(a) The Board at any time, and from time to time, may amend the Plan. Except as
provided in paragraph 10 relating to adjustments upon changes in stock, no
amendment shall be effective unless approved by the stockholders of the Company
where stockholder approval is necessary for the Plan to comply with the
requirements of Rule 16b-3 or Nasdaq or securities exchange listing
requirements.

 

(b) Rights and obligations under any option granted before any amendment of the
Plan shall not be impaired by such amendment unless (i) the Company requests the
consent of the person to whom the option was granted and (ii) such person
consents in writing.

 

  12. Termination or Suspension of The Plan.

 

(a) The Board may suspend or terminate the Plan at any time. No options may be
granted under the Plan while the Plan is suspended or after it is terminated.

 

(b) Rights and obligations under any option granted while the Plan is in effect
shall not be impaired by suspension or termination of the Plan, except with the
consent of the person to whom the option was granted.

 

  13. Effective Date of Plan; Conditions of Exercise.

 

The Plan shall become effective on the date approved by the Board, provided that
no options may be exercised unless and until the Plan is approved by the
stockholders of the Company.

 

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Notice of Grant of Stock Options

and Option Agreement

 

Exar Corporation

48720 Kato Road

Fremont, CA 94538

   

Option Number:

Plan:

ID:

 

Effective             , you have been granted a(n) [Incentive
Stock/Non-Qualified Stock] Option to buy              shares of Exar Corporation
(the Company) stock at $             per share.

 

The total option price of the shares granted is $            .

 

Shares in each period will become fully vested on the date shown.

 

Shares

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Vest Type

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Full Vest

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   Expiration

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By your signature and the Company’s signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company’s Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.

 

         

Exar Corporation

     

Date

                 

Date

       

Date:

Time:

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EXAR CORPORATION

Irrevocable Notice of Option Exercise/Payment Authorization

 

NAME _________________________________________________________     PHONE
________________________

 

HOME ADDRESS __________________________________________________    ZIP CODE
____________________

 

Option Exercise Request

 

This constitutes irrevocable notice under my stock option that I elect to
purchase the following number of shares for the price set forth below:

 

Option No.

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Option Date

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No. Shares

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   Option Price

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_______________

 

_______________

 

_______________

   _______________

_______________

 

_______________

 

_______________

   _______________

_______________

 

_______________

 

_______________

   _______________

 

I hereby request __________________, (“the Broker”), to assist me in exercising
the aforementioned option(s). I understand that it is my responsibility to
notify the Broker of my specific selling instructions.

 

Payment Authorization

 

I hereby request the Broker to issue a check payable to Exar Corporation in the
amount of $ from my account as payment for purchase of the above stock options.
Please deliver payment to Exar via:

 

¨        WIRE TRANSFER

  

¨        JOURNAL (To account:)

  for credit to EXAR Corporation

  

  EXAR Corp.

  Wells Fargo Bank

  

  Stock Plan Account

  Account No.

    

 

I hereby authorize taxes be witheld from all non-qualified options and
designated ISO’s at the following rates and that the Broker issue a check to
EXAR Corporation for the total dollar amount :

 

Federal:______________ %             State:
_________________________%             FICA: _________________________%

 

I hereby irrevocably authorize EXAR to deliver stock from the aforementioned
option exercise to the Broker and registered in the name of the Broker. I hereby
acknowledge that the aforementioned disbursement from my brokerage account is in
payment of the amount due to EXAR upon the exercise of option(s) for the stock
granted to me by EXAR, plus applicable taxes. Further, I understand that the
Broker may charge interest on funds advanced to EXAR.

 

The balance of the proceeds, less applicable commissions or fees, should be:

 

¨     paid directly to me by check                             ¨     deposited
in my brokerage account

 

In consideration of the Broker and EXAR acting in accordance with my above
authorizations, I hereby indemnify both parties and further grant a security
interest in the stock to the Broker.

 

Signature of Optionee        Date      Social Security Number            

 

 

Company Acknowledgement

 

Upon written confirmation of exercise, EXAR will promptly direct the Transfer
Agent to immediately deliver/transfer to the Broker the number of shares being
exercised as indicated by Optionee above. The options represented are fully
vested and available for exercise and simultaneous sale. The above employee’s
options are registered pursuant to an S-8 Registration Statement and Exar is
current with all SEC filings.

 

(Signed)        Date:      Title:       / x EXAR CORPORATION (Rev. 8/16/00)