**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 September 4, 2003**

**Amended and Restated June 13, 2005**

**Amended and Restated March 22, 2006**

**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 theCompany. 

(b) The word “Affiliate” as used in the Plan means any parent corporation or subsidiary corporation of the Company asthose 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 toa committee, as provided in subparagraph 2(b). 

(b) The Board may delegate administration of the Plan to a committee composed of not fewerthan 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. 

**3. SHARES SUBJECT TO THE PLAN.**

(a) Subject to the provisions of paragraph 11 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 one million twohundred fifty thousand (1,250,000) 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 suchoption shall again become available for the Plan. 

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought onthe 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 initialelection as a Non-Employee Director by the Board or shareholders of the Company, automatically be granted an option to purchase fifty four thousand (54,000) shares of the Company’s common stock (subject to adjustment as provided inparagraph 10 hereof) on such date upon the terms and conditions set forth herein (the “Initial Grant”). 

(b) On the date of eachAnnual 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 twenty two thousand five hundred (22,500) shares of the Company’scommon stock (subject to adjustment as provided in paragraph 11 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-EmployeeDirector 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 theCompany’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 afterSeptember 11, 1997, that had not vested as of September 11, 1998. Notwithstanding the foregoing, with respect to the Chairman of the Board (non-employee), the Annual Grant shall be for twice the number of shares as are granted to otherNon-Employee Directors, or forty five thousand (45,000) 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 inparagraph 11 hereof) on April 13, 2000 upon the terms and conditions set forth in 

 

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paragraph 6 with the exception that the option will become exercisable and fully vested in six months from the date ofgrant, namely October 13, 2000; provided that the Chairman of the 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 thedate 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 shallterminate 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 theforegoing, 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 theCompany 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 datesuch 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 satisfyingthe 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 transfereepursuant 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 thereafterbe entitled to exercise the option. 

(e) An option granted in an Initial Grant shall become exercisable in annual installments over aperiod of three (3) years from the date of grant, with thirty-three and one third percent (33 1/3%) becomingexercisable on the date of each annual meeting of stockholders 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 orconsultant 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 periodof twelve (12) months from the date of grant, with eight and one-third percent (8 1/3%) becoming exercisableat 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 anyAffiliate 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 immediatesubsequent 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 theCompany 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 suchperson’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 uponthe 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 madeby 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 Companyhas 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 stockrequired to satisfy such options. 

(b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction overthe 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 thePlan, 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 theCompany 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 bedeemed 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 serviceof 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 anyright, 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 transfershares 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 maybe 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 optiongranted 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 corporatestructure 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 outstandingoptions. 

(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a merger or consolidation in which theCompany 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 themerger 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 eachcase 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 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. 

 

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**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 thestockholders 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 Companyrequests the consent of the person to whom the option was granted and (ii) such person consents in writing. 

**12. TERMINATION OR SUSPENSION OF THEPLAN.**

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

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

**13. EFFECTIVE DATE OF PLAN; CONDITIONS OFEXERCISE.**

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

 

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