Document:

AMENDMENT TO EXCHANGE AGENCY AGREEMENT

SECOND

AMENDMENT TO RIGHTS AGREEMENT

 

 

1.                                       General Background.  In accordance with Section 27,

“Supplements and Amendments” of the Rights Agreement between Fleet National

Bank f/k/a BankBoston, N.A., (the “Rights Agent”) and Exar Corporation (“Exar”)

dated December 15, 1995 (the “Agreement”), the Rights Agent and Exar desire to

amend the Agreement to appoint EquiServe Trust Company, N.A.

 

2.                                       Effectiveness.  This Amendment shall be effective as of

December 5, 2001 (the “Amendment”) and all defined terms and definitions in the

Agreement shall be the same in the Amendment except as specifically revised by

the Amendment.

 

3.                                       Revision.   Section 21

in the Agreement entitled “Change of Rights Agent” is hereby deleted in its

entirety and replaced with the following:

 

Change of Rights Agent. 

The Rights Agent or any successor Rights Agent may resign and be

discharged from its duties under this Agreement upon 30 days’ notice in writing

mailed to the Company and to each transfer agent of the Common Shares or

Preferred shares by registered or certified mail and to the holders of the

Right Certificates by first-class mail. 

The Company may remove the Rights Agent or any successor Rights Agent

upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights

Agent, as the case may be, and to each transfer agent of the Common Shares or

Preferred Shares by registered or certified mail, and to the holders of the

Right Certificates by first-class mail. 

If the Rights Agent shall resign or be removed or shall otherwise become

incapable of acting, the Company shall appoint a successor to the Rights

Agent.  If the Company shall fail to

make such appointment within a period of 30 days after giving notice of such

removal or after it has been notified in writing of such resignation or

incapacity by the resigning or incapacitated rights Agent or by the holder of a

Right Certificate (who shall, with such notice, submit such holder’s Right

Certificate for inspection by the company), then the registered holder of any

Right Certificate may apply to any court of competent jurisdiction for the

appointment of a new Rights Agent.  Any

successor Rights Agent, whether appointed by the Company or by such a court,

shall be a corporation or trust company organized and doing business under the

laws of the United States or of any state, in good standing, which is

authorized under such laws to exercise corporate trust or stock transfer powers

and is subject to supervision or examination by federal or state authority and

which has individually or combined with an affiliate at the time of its

appointment as Rights Agent a combined capital and surplus of at least $100

million dollars.  After appointment, the

successor Rights Agent shall be vested with the same powers, rights, duties and

responsibilities as if it had been originally named as Rights Agent without

further act or deed; but the predecessor Rights Agent shall deliver and

transfer to the successor Rights Agent any property at the time held by it

hereunder, and execute and deliver any further assurance, conveyance, act or

deed necessary for the purpose.  Not

later than the effective date of any such appointment the Company shall file

notice thereof in writing with the predecessor Rights Agent and each transfer

agent of the Common Shares or Preferred Shares, and mail a notice thereof in

writing to the registered holders of the Right Certificates.  Failure to give any notice provided for in

this Section 21, however, or any defect therein, shall not affect the legality

or validity of the resignation or removal of the Rights Agent or the

appointment of the successor Rights Agent, as the case may be.

 

1

 

4.             Except as amended

hereby, the Agreement and all schedules or exhibits thereto shall remain in

full force and effect.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be

executed in their names and on their behalf by and through their duly

authorized officers, as of this 5th day of December, 2001.

 

	

  Exar Corporation

  	

  Fleet National Bank

  
	

   

  	

   

  	

  f/k/a BankBoston, N.A.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  Ronald W. Guire

  	

  By:

  	

  Carol Mulvey-Eori

  
	

  Title:

  	

  Executive Vice

  President & CFO

  	

  Title:

  	

  Managing Director,

  
	

   

  	

   

  	

   

  	

  Client Administration

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  EquiServe Trust

  Company, N.A.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  Carol Mulvey-Eori

  
	

   

  	

   

  	

  Title:

  	

  Managing Director,

  
	

   

  	

   

  	

   

  	

  Client AdministrationPLAN DOCUMENT

PLAN DOCUMENT

Key Employee

Stock Option Based Incentive Program

Fiscal Year 2003

(“Incentive Program”)

 

 

 

 

Contents

 

 

A.      Purpose

 

B.      Effective Date

 

C.      Incentive Program Changes

 

D.      Incentive Program Administration

 

E.                    Participation

 

F.                    Overall

Incentive Program Concepts and Definitions

 

G.                   Example

 

H.      Procedure

 

I.        Interpretation Of Incentive Program

Terms

 

 

 

 

Attachment:   Letter Acknowledging Participation

 

A.                    Purpose

 

The purpose of the Key

Employee Stock Option Based Incentive Program for Fiscal Year 2003 (“Incentive

Program”) is to encourage and reward performance which contributes to the

Company’s success.  Stock option incentives

which complement base salary will be awarded to eligible Exar employees.

 

 

B.                  Effective Date

 

The period April 1, 2002

through March 31, 2003 is considered the “Incentive Program Year”.

 

 

C.                  Incentive

Program Changes

 

The Company, at its sole

discretion, with the approval of the Board of Directors, may amend, alter, or

cancel this Incentive Program at any time.

 

 

D.                  Incentive

Program Administration

 

The Incentive Program

will be administered by the Incentive Program Committee consisting of the

President/CEO and the Executive Vice President/CFO with the staff support of

the Human Resources Director.  The role

of the Incentive Program Committee is to interpret the provisions and intent of

the plan, evaluate and determine eligibility, amend and modify the plan

administration, and communicate the Incentive Program provisions to

participants, as necessary. The President/CEO will approve the final

recommendations to be submitted for Board of Directors’ approval.

 

 

E.                    Participation

 

Eligibility in this

Incentive Program is determined by the recommendations of senior management and

the approval of the President/CEO and the Board of Directors.

 

1.                     New

Hires

 

(a)          Employees hired after

the beginning of the Incentive Program Year who are approved as participants

will have prorated stock option awards, and the grant date will be the date of

hire.

 

(b)         Employees hired in the

final quarter of the Incentive Program Year (January 1, 2003 through March 31,

2003) are not eligible to participate in the Incentive Program.

 

2

 

2.                     This is a

Incentive Program has been adopted only for FY2003.  Participants in previous year(s) are not automatically included

in the incentive Program or in any similar incentive compensation programs that

may be adopted by the Company.  A number

of factors may change from year to year, such as: business conditions,

individual employee contribution, criticality of certain positions, etc.

 

3.                     Inclusion in

the Incentive Program does not constitute a guarantee of employment, or specific

award of future stock options.

 

F.                    Overall

Incentive Program Concepts and Definitions

 

1.                     Base

Salary:  Projected base salary as of

March 31, 2002.

2.                     Target

Cash Incentive:  A percentage of the

projected base salary used to calculate the stock option award, as determined

by senior management.

3.                     Stock

Option Award:  The number of options

awarded will be calculated using the employee’s Target Cash Incentive (see

section G), divided by $10.00.  The

options granted are “non-qualified” and therefore subject to applicable taxes

at time of exercise.

4.                     Stock

Option Price:  $22.925 per share (fair

market value of Exar stock as of December 5, 2001).

5.                     Option

Grant Date:  December 5, 2001.

6.                     Vesting

Schedule:  Stock options granted for

this Incentive Program will vest in equal amounts over a twelve month period

beginning April 5, 2002 and ending March 5, 2003.

7.                     Expiration

of Grant:  Seven (7) years from the date

of grant, or three (3) months from the 

employee’s date of termination, whichever is sooner.

G.            Example:

 

	

  Employee

  projected base salary on 3/31/02

  	

   

  	

  $

  	

  104,000

  	

   

  
	

  Target Cash

  Incentive @ 15%

  	

   

  	

  $

  	

  15,600

  	

   

  
	

  Possible gain

  estimate

  	

   

  	

  $

  	

  10

  	

   

  

 

Stock Option Award (divided by $10 gain/share)

 

	

   

  	

  $15,600

  	

  =

  	

  1,560 options

  	

   

  
	

   

  	

  $10

  	

   

  	

   

  	

   

  

 

H.                  Procedure

 

Employees selected for

inclusion in this Incentive Program will be notified in writing and provided a

copy of the Incentive Program.  Any

changes in the Incentive

 

3

 

Program or the

measurement criteria must be approved in writing by the President/CEO and the

Board of Directors.

 

Participants are eligible

to exercise their options at any time once they are vested. Designated insiders

have different requirements for exercising.

 

I.                       Interpretation

of Incentive Program Terms

 

                              The

Incentive Program Committee, with the approval of the Board of Directors, is

responsible for the interpretation of the Incentive Program.  Any resolution or dispute regarding

eligibility, determination of procedures, measurements, or awards is the sole

responsibility of the Incentive Program Committee with the Board of Directors’

approval.

 

4

 

Attachment

 

 

 

 

 

I

acknowledge receiving a copy of the Incentive Program “Key Employee Stock Based

Incentive Program” for the period April 1, 2002 through March 31, 2003.  I have read and understand the terms of this

Incentive Program, and also understand that this Incentive Program neither

constitutes a contract of employment nor a representation as to my future

earnings or award of stock options.  The

Letter of Notification and the Incentive Program constitute the entire

agreement and supersede any prior written and oral agreements. Further, I

understand that the Incentive Program Committee and the Board of Directors have

the sole discretionary authority for interpreting the provisions of the

Incentive Program and determining eligibility.

 

 

 

 

	

   

  	

   

  
	

   

  	

  Employee Name (Please

  Print)

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Employee Signature

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  Date

  

 

 

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