S-8

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

Under

The Securities Act of 1933

EXAR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	9 4-1741981
(State of Incorporation)	(I.R.S. Employer Identification No.)

48720 Kato Road

Fremont, CA 94538-1167

(Address of principal executive offices) (Zip Code)

2000 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED

(Full title of the plans)

Donald L. Ciffone, Jr.

Chairman of the Board, Chief Executive Officer and President

Exar Corporation

48720 Kato Road

Fremont, CA 94538-1167

(Name and address of agent for service)

(510) 668-7000

(Telephone number, including area code, of agent for service)

Copies to:

Matthew W. Sonsini, ESQ.

Wilson Sonsini Goodrich & Rosati, P. C.

650 Page Mill Road

Palo Alto, CA 94304

(650) 493-9300

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share(1)		Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee
Stock Options and Common Stock (par value $.001)	1,500,000	$	17.91	$	26,857,500	$	2,470.89

(1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(h). The price per share and aggregate offering price are based upon the average of the high and low prices of Registrant’s Common Stock on July 19, 2002 as reported on the Nasdaq National Market.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The contents of Registration Statements on Form S-8 No. 333-48226 filed with the Securities and Exchange Commission on October 19, 2000 are incorporated by reference herein.

EXHIBITS

Exhibit Number	Description
5.1	Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1	Consent of PriceWaterhouseCoopers, L.L.P.
23.2	Consent of Deloitte & Touche, L.L.P.
23.3	Consent of Wilson Sonsini Goodrich & Rosati, P.C., is contained in Exhibit 5.1 to this Registration Statement.
24	Power of Attorney is contained on the signature page.
99.1	2000 Equity Incentive Plan, as amended and restated.
99.2	Form of Stock Option Grant Notice.
99.3	Nonstatutory Stock Option Agreement.

In accordance with the requirements of Item 8(b) of Part II of Form S-8, the Registrant will submit or has submitted the Plan, and any amendments thereto, to the Internal Revenue Service (the “IRS”) in a timely manner and has made or will make all changes required by the IRS to qualify the Plan.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fremont, State of California, on July 19, 2002.

EXAR CORPORATION
By:	/s/    DONALD L. CIFFONE, JR.
	Donald L. Ciffone, Jr. Chairman of the Board, Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Donald L. Ciffone, Jr and.Ronald W. Guire, and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

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Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    DONALD L. CIFFONE JR.         Donald L. Ciffone Jr.	Chairman of the Board, Chief Executive Officer and President	July 19, 2002
/s/    RONALD W. GUIRE         Ronald W. Guire	Executive Vice President, Chief Financial Officer, Assistant Secretary and Director (Principal Financial and Accounting Officer)	July 19, 2002
/s/    RAIMON L. CONLISK         Raimon L. Conlisk	Vice Chairman and Director	July 19, 2002
/s/    JAMES E. DYKES         James E. Dykes	Director	July 19, 2002
/s/    FRANK P. CARRUBBA         Frank P. Carrubba	Director	July 19, 2002
/s/    RICHARD PREVITE         Richard Previte	Director	July 19, 2002

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EXHIBIT INDEX

Exhibit Number	Description
5.1	Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1	Consent of PriceWaterhouseCoopers, L.L.P.
23.2	Consent of Deloitte & Touche, L.L.P.
23.3	Consent of Wilson Sonsini Goodrich & Rosati, P.C., is contained in Exhibit 5.1 to this Registration Statement.
24	Power of Attorney is contained on the signature page.
99.1	2000 Equity Incentive Plan, as amended and restated.
99.2	Form of Stock Option Grant Notice.
99.3	Nonstatutory Stock Option Agreement.

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EX-5.1

EXHIBIT 5.1

LEGAL OPINION

July 19, 2002

Exar Corporation

48720 Kato Road

Fremont, CA 94538-1167

Ladies and Gentlemen:

You have requested our opinion with respect to certain matters in connection with the filing by Exar Corporation (the “Company”) of a Registration Statement on Form S-8 (the “Registration Statement”) with the Securities and Exchange Commission covering the offering of up to 1,500,000 shares of the Company’s Common Stock, $.001 par value, (the “Shares”) pursuant to its 2000 Equity Incentive Plan, as amended and restated, (the “Plan”).

In connection with this opinion, we have examined the Registration Statement and related Prospectus, your Certificate of Incorporation and By-laws, as amended, and such other documents, records, certificates, memoranda and other instruments as we deem necessary as a basis for this opinion. We have assumed the genuineness and authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies thereof, and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof.

On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Plan, the Registration Statement and related Prospectus, will be validly issued, fully paid, and nonassessable (except as to shares issued pursuant to certain deferred payment arrangements, which will be fully paid and nonassessable when such deferred payments are made in full).

We consent to the filing of this opinion as an exhibit to the Registration Statement.

Very truly yours, WILSON SONSINI GOODRICH & ROSATI, P.C.
By:	/s/    MATHEW W. SONSINI
	Matthew W. Sonsini

Palo Alto, Ca

July 19, 2002

EX-23.1

EXHIBIT 23.1

CONSENT OF PRICEWATERHOUSECOOPERS LLP, INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated April 24, 2002 relating to the financial statements, which appears in Exar Corporation’s Annual Report on Form 10-K for the year ended March 31, 2002. We also consent to the incorporation by reference of our report dated April 24, 2002 relating to the financial statement schedule, which appears in such Annual Report on Form 10-K.

/s/    PRICEWATERHOUSECOOPERS, LLP       

PricewaterhouseCoopers LLP

San Jose, CA

July 22, 2002

EX-23.2

EXHIBIT 23. 2

CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders

Exar Corporation:

We consent to the incorporation by reference in this Registration Statement on Form S-8 of Exar Corporation of our report dated April 23, 2001, appearing in the Annual Report on Form 10-K of Exar Corporation for the year ended March 31, 2002.

/s/    DELOITTE & TOUCHE, LLP         

Deloitte & Touche, LLP

San Jose, CA

July 19, 2002

EX-99.1

EXHIBIT 99.1

EXAR CORPORATION

2000 EQUITY INCENTIVE PLAN

Adopted September 7, 2000

Amended and Restated Effective December 6, 2000

Amended and Restated Effective January 26, 2001

Amended and Restated Effective June 21, 2001

Amended and Restated Effective March 21, 2002

Stockholder Approval Not Required

1.    PURPOSES.

The persons eligible to receive Stock Awards are the Employees and Consultants of the Company. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of (i) Nonstatutory Stock Options, (ii) stock bonuses and (iii) rights to purchase restricted stock, all as described below. The Plan is also intended to provide a means by which the Company may grant Stock Awards to persons not previously employed by the Company as an inducement essential to those persons entering employment contracts with the Company. Such inducement grants may be made to persons who ultimately are employed by the Company as Officers.

The Company, by means of the Plan, seeks to retain the services of persons who are or will become Employees of or Consultants to the Company or an Affiliate, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

The Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof or (ii) stock bonuses or rights to purchase restricted stock granted pursuant to Section 8 hereof.

2.    DEFINITIONS.

(a)  “Affiliate” means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code.

(b)  “Board” means the Board of Directors of the Company.

(c)  “Code” means the Internal Revenue Code of 1986, as amended.

(d)  “Committee” means a committee or subcommittee appointed by the Board in accordance with subsection 3(c) of the Plan.

(e)  “Company” means Exar Corporation, a Delaware corporation.

(f)  “Consultant” means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services.

(g)  “Continuous Service” means that the service of an individual to the Company, whether as an Employee, Officer, Director or Consultant, is not interrupted or terminated. The Board or the Committee may determine, in that party’s sole discretion, whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by the Board or the Committee, including sick leave, military leave, or any other personal leave. Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which a person renders service to the Company or an Affiliate, whether such service is as an Employee,

Officer, Director or Consultant or a change in the entity for which the person renders such service, provided that there is no interruption in the person’s service relationship with the Company or an Affiliate.

(h)  “Director” means a member of the Board.

(i)  “Employee” means any person employed by the Company or any Affiliate of the Company. Mere service as a Director or payment of a Director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.

(j)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k)  “Fair Market Value” means, as of any date, the lower of (1) the last quoted per share selling price for the Company’s Common Stock on the Nasdaq National Market on the relevant date; or (2) the arithmetic mean of the highest and lowest quoted selling prices on the Nasdaq National Market on the relevant date. If there were no sales on such date, then “Fair Market Value” means on the nearest trading day before the lower of (1) the last quoted per share selling price for the Company’s Common Stock on the Nasdaq National Market; or (2) the arithmetic mean of the highest and lowest quoted selling prices on the Nasdaq National Market.

Notwithstanding the preceding, for federal, state, and local income tax purposes, fair market value shall be determined by the Board (or its delegate) in accordance with uniform and nondiscriminatory standards adopted from time to time.

(l)  “Non-Employee Director” means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

(m)  “Nonstatutory Stock Option” means a stock option not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(n)  “Officer” means a person who possesses the authority of an “officer” as that term is used in Rule 4460(i)(1)(A) of the Rules of the National Association of Securities Dealers, Inc. For purposes of the Plan, a person in the position of “Vice President” or higher shall be classified as an “Officer” unless the Board or Committee expressly finds that such person does not possess the authority of an “officer” as that term is used in Rule 4460(i)(1)(A) of the Rules of the National Association of Securities Dealers, Inc.

(o)  “Option” means a Nonstatutory Stock Option granted pursuant to the Plan.

(p)  “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(q)  “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

(r)  “Plan” means this 2000 Equity Incentive Plan.

(s)  “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect with respect to the Company at the time discretion is being exercised regarding the Plan.

(t)  “Securities Act” means the Securities Act of 1933, as amended.

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(u)  “Stock Award” means any right granted under the Plan, including any Option, any stock bonus, and any right to purchase restricted stock.

(v)  “Stock Award Agreement” means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

3.    ADMINISTRATION.

(a)  The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c).

(b)  The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(1)  To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; whether a Stock Award will be an Option, a stock bonus, a right to purchase restricted stock, or a combination of the foregoing; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; and the number of shares with respect to which a Stock Award shall be granted to each such person.

To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

To amend the Plan or a Stock Award as provided in Section 13.

To terminate or suspend the Plan as provided in Section 14.

Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

(c)  The Board may delegate administration of the Plan to a committee of the Board composed of two (2) or more members (the “Committee”), all of the members of which Committee may be, in the discretion of the Board, Non-Employee Directors. 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, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), 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. In addition, notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a subcommittee of one or more members of the Board the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

4.    SHARES SUBJECT TO THE PLAN.

(a)  Subject to the provisions of Section 12 relating to adjustments upon changes in stock, the stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate five million seven hundred thousand (5,700,000) shares of the Company’s Common Stock. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan.

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

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5.    ELIGIBILITY.

(a)  Stock Awards may be granted only to Employees or Consultants.

(b)  The aggregate number of shares issued pursuant to Stock Awards granted to Officers shall not exceed forty percent (40%) of the number of shares reserved for issuance under the Plan, as determined at the time of each such issuance to an Officer, except that there shall be excluded from this calculation shares issued to Officers not previously employed by the Company pursuant to Stock Awards granted as an inducement essential to such individuals entering into employment relationships with the Company.

(c)  A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.

6.    OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

(a)  Term.    No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

(b)  Price.    Except as otherwise provided in Section 7 of the Plan, the exercise price of each Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date of grant.

(c)  Consideration.    The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of the grant of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment arrangement (however, in the event the Company is then incorporated in the state of Delaware, then payment of the common stock’s “par value” as defined in the Delaware General Corporation Law shall not be made by deferred payment), or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d) or (C) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of common stock of the Company acquired pursuant to an Option that is paid by delivery to the Company of other Company common stock acquired directly or indirectly from the Company, shall be paid only by shares of common stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

(d)  Transferability.    An Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person; provided, however, that an Option may be transferred to the extent provided in the Option Agreement. The person to whom the Option is granted may, but need not, designate, by delivering written notice of the same to the Company (in a form acceptable to the Company) during such person’s lifetime, a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option and receive any and all proceeds thereof.

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If no such designation is made during the Optionholder’s lifetime, the estate or the person to whom the Option is transferred by will or by the laws of descent and distribution shall, in the event of the death of the Optionholder, thereafter be entitled to exercise the Option and receive any and all proceeds thereof.

(e)  Vesting.    The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). From time to time during each of such installment periods, the Option may become exercisable (“vest”) with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option was not fully exercised. During the remainder of the term of the Option (if its term extends beyond the end of the installment periods), the Option may be exercised from time to time with respect to any shares then remaining subject to the Option. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised.

(f)  Termination of Employment or Relationship as a Director or Consultant.    In the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or disability), the Optionholder may exercise the Option (to the extent that the Optionholder was entitled to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service (or such longer or shorter period as specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement; provided, however, if the Optionholder is terminated for cause, then the Option shall terminate on the date Optionholder’s Continuous Service ceases. If, at the date of termination, the Optionholder is not entitled to exercise the entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionholder does not exercise the Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

An Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or disability) would result in liability under Section 16(b) of the Exchange Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the last date on which such exercise would result in such liability under Section 16(b) of the Exchange Act. Finally, an Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the Optionholder’s death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the first paragraph of this subsection 6(f), or (ii) the expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during which the exercise of the Option would not be in violation of such registration requirements.

(g)  Disability of Optionholder.    In the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s disability, the Optionholder may exercise the Option (to the extent that the Optionholder was entitled to exercise it as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionholder is not entitled to exercise the entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionholder does not exercise the Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(h)  Death of Optionholder.    In the event of the death of an Optionholder during, or within a period specified in the Option Agreement after the termination of, the Optionholder’s Continuous Service, the Option may be exercised (to the extent the Optionholder was entitled to exercise the Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionholder was not entitled to exercise the entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the

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Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

7.    DEFERRED SALARY GRANTS.

(a)  Any Employee who is selected by the Board or Committee (“Deferral Participant”) may elect to apply a portion of his or her base salary, in an amount equal to at least five thousand dollars ($5,000) but in no event more than fifty thousand dollars ($50,000), to the acquisition of an Option to purchase shares of the Company’s common stock pursuant to the terms of this Section 7 (“Deferred Salary Option”). Such election is irrevocable and must be filed with the Company prior to the commencement of the calendar year in which the base salary to be deferred is earned. Notwithstanding the foregoing, a newly hired, elected or appointed Deferral Participant may file an irrevocable election with the Company within thirty (30) days of the date the Deferral Participant commences employment with the Company.

Each Deferral Participant who files such a timely election shall automatically be granted an Option under this Section 7 on (i) the first trading day in January of the calendar year for which the deferral election is to be in effect; or (ii) for a newly hired Deferral Participant, the first trading day of the month following the month the Deferral Participant files such election.

(b)  The number of shares of Company common stock subject to a Deferred Salary Option shall be determined pursuant to the following formula (rounded down to the nearest whole number):

X= A / (B x 66-2/3%), where

X is the number of Option shares,

A is the maximum amount of base salary subject to the deferral election, and

B is the Fair Market Value per share of the common stock on the Option grant date.

(c)  The purchase price per share of common stock of the Company for the shares to be purchased pursuant to the exercise of any Deferred Salary Option shall be thirty three and one third percent (33-1/3%) of the fair market value of the Company’s common stock on the date such Deferred Salary Option is granted.

(d)  Each Deferred Salary Option shall vest (become exercisable) equally over the twelve (12) month period that is the calendar year in which salary is deferred, and shall terminate on the earlier of (i) ten (10) years from the date the Option was granted, or (ii) three (3) years following termination of the Deferral Participant’s employment with the Company or an Affiliate. If the Deferred Salary Option is not exercised during the applicable period, it shall be deemed to have been forfeited and of no further force or effect.

8.    TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or the Committee shall deem appropriate. The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each stock bonus or restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions as appropriate:

(a)  Purchase Price.    The purchase price under each restricted stock purchase agreement shall be such amount as the Board or Committee shall determine and designate in such Stock Award Agreement. Notwithstanding the foregoing, the Board or the Committee may determine that eligible participants in the Plan may be awarded stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

(b)  Transferability.    No rights under a stock bonus or restricted stock purchase agreement shall be transferable by any participant under the Plan, either voluntarily or by operation of law, except where such assignment is required by law or expressly authorized by the terms of the applicable Stock Award Agreement.

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(c)  Consideration.    The purchase price of stock acquired pursuant to a stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or the Committee, according to a deferred payment arrangement or other arrangement with the person to whom the stock is sold; or (iii) in any other form of legal consideration that may be acceptable to the Board or the Committee in its discretion. Notwithstanding the foregoing, the Board or the Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit.

(d)  Vesting.    Shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board or the Committee.

(e)  Termination of Employment or Relationship as a Director or Consultant.    In the event an Optionholder’s Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of stock held by that person which have not vested as of the date of termination under the terms of the stock bonus or restricted stock purchase agreement between the Company and such person.

9.    COVENANTS OF THE COMPANY.

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

(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 Stock Award; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Stock Award granted under the Plan or any stock issued or issuable pursuant to any such Stock Award. 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 Stock Awards unless and until such authority is obtained.

10.    USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the Company.

11.    MISCELLANEOUS.

(a)  The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

(b)  No Employee, Director or Consultant or any person to whom a Stock Award is transferred under subsection 6(d) or 8(b) 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 Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

(c)  Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Employee or Consultant or other holder of Stock Awards any right to continue to serve the Company or any Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or any Affiliate to terminate (i) the employment of any Employee with or without cause, or (ii) the service of a Consultant subject to the terms of such Consultant’s agreement with the Company or any Affiliate. In the event that a holder of Stock Awards is permitted or otherwise entitled to take a leave of absence, the Board or Committee shall have the unilateral right to (i) determine whether such leave of absence will be treated as a termination of employment or relationship as consultant for purposes of the Plan and corresponding provisions of any outstanding Stock Awards, and (ii) suspend or otherwise delay the time or times at which the shares subject to the Stock Awards

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would otherwise vest. The status of any person as an eligible Employee or Consultant shall not be construed as a commitment that any Stock Award will be granted under the Plan to such eligible Employee or Consultant, or to eligible Employees or Consultants generally.

(d)  Payments and other benefits received by an Optionholder under the Plan or under an Option granted pursuant to the Plan shall not be deemed a part of an Optionholder’s regular, recurring compensation for purposes of the termination, indemnity or severance pay law of any country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or a Group Company, unless expressly so provided by such other plan, contract or arrangement, or unless the Board expressly determines that an Option or portion of an Option should be included to reflect competitive compensation practices or to recognize that an Option has been granted in lieu of a portion of competitive cash compensation.

(e)  The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred pursuant to subsection 6(d) or 8(b), as a condition of exercising or acquiring stock under any Stock Award, (1) to give written assurances satisfactory to the Company as to such person’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Stock Award for such person’s own account and not with any present intention of selling or otherwise distributing the stock. The foregoing 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, 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.

(f)  To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise or acquisition of stock under the Stock Award; or (3) delivering to the Company owned and unencumbered shares of Company common stock. Notwithstanding the foregoing, the Company shall not be authorized to withhold shares of Common Stock at rates in excess of the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes.

12.    ADJUSTMENTS UPON CHANGES IN STOCK.

(a)  If any change is made in the stock subject to the Plan, or subject to any Stock Award (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan shall automatically be adjusted as appropriate in the type(s) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the outstanding Stock Awards will be appropriately adjusted in the type(s) and number of securities and price per share of stock subject to such outstanding Stock Awards. (The conversion of any convertible securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.”)

(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 Stock Awards shall become vested and exercisable in full for a period of at least ten (10) days. Outstanding Stock Awards that 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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13.    AMENDMENT OF THE PLAN AND STOCK AWARDS.

(a)  The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Rule 16b-3 of the Exchange Act or any Nasdaq or securities exchange listing requirements.

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

(c)  The Board at any time, and from time to time, may amend the terms of any one or more Stock Award; provided, however, that the rights and obligations under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing.

14.    TERMINATION OR SUSPENSION OF THE PLAN.

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

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

15.    EFFECTIVE DATE OF PLAN.

The Plan shall become effective on the date on which it is adopted by the Board.

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EX-99.2

EXHIBIT 99.2

Notice of Grant of Stock Options and Option Agreement	Exar Corporation ID:  941741481 48720 Kato Road Fremont, CA 94538
	Option Number: Plan:  00EE ID:

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

The total option price of the shares granted is $xx,xxx.xx.

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

Shares	Vest Type	Full Vest	Expiration
xxxx	On Vest Date	xx/xx/xx	xx/xx/xx
xxxx	On Vest Date	xx/xx/xx	xx/xx/xx
xxxx	On Vest Date	xx/xx/xx	xx/xx/xx
xxxx	On Vest Date	xx/xx/xx	xx/xx/xx

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
NAME	Date

EX-99.3

EXHIBIT 99.3

TERMS OF SUPPLEMENTAL STOCK OPTION

The details of your option are as follows:

1.  This option is not intended to qualify and will not be treated as an “incentive stock option” within the meaning of Section 422 of the Internal revenue Code of 1986, as amended from time to time (the “Code”).

2.  The total number of shares of Common Stock subject to this option is set forth in the Supplemental Stock Option Agreement. Subject to the limitations contained herein, this option shall be exercisable with respect to each installment indicated in the Vesting Schedule in the Supplemental Stock Option Agreement on or after the date of vesting applicable to such installment.

3.  (a) The Exercise Price of this option is set forth in the Supplemental Stock Option Agreement and is not less than the fair market value of the Common Stock on the date of grant of this option.

     (b)  Payment of the exercise price per share is due in full in cash (including check and including cash (or check) delivered pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company prior to the issuance of Common Stock) upon exercise of all or any part of each installment which has become exercisable by you; provided, however, that, if at the time of the exercise the Company’s Common Stock is publicly traded and quoted regularly in the Wall Street Journal, payment of the exercise price, to the extent permitted by applicable statutes and regulations, may be made by delivery of already-owned shares of Common Stock owned by you for at least six (6) months and owned free and clear of any liens, claims, encumbrances or security interest or a combination of cash and already-owned Common Stock. Such Common Stock shall be valued (i) if listed on a national securities exchange or quoted on the NASDAQ National Market System, at the closing price on the trading day immediately preceding the date of exercise; or (ii) otherwise at the average of the closing bid and ask quotations published in the Wall Street Journal for the trading day immediately preceding the date of exercise.

4.  The minimum number of shares with respect to which this option may be exercised at any one time is one hundred (100), except (a) as to an installment subject to exercise, as described in paragraph 2, which amounts to fewer than one hundred (100) shares, in which case, as to the exercise of that installment, the number of shares in such installment shall be the number of shares, and (b) with respect to the final exercise of this option this minimum shall not apply. In no event may this option be exercised for any number of shares which would require the issuance of anything other than whole shares.

5.  Notwithstanding anything to the contrary contained herein, this option may not be exercised unless the shares issuable upon exercise of this option are then registered under the Securities Act of 1933, as amended (the “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 Act.

6.  The term of this option commences on the date hereof and, unless sooner terminated as set forth below or in the Plan, terminates on the Expiration Date as set forth in the Supplemental Stock Option Agreement. In no event may this option be exercised on or after such date on which it terminates. This option shall terminate prior to the expiration of its term as follows: three (3) months after the termination of your employment with the Company or an affiliate of the Company (as defined in the Plan) for any reason or for no reason unless:

(a)  such termination of employment is due to your permanent and total disability (within the meaning of Section 422(c)(6) of the Code), in which event the option shall terminate on the earlier of the termination date set forth above or one (1) year following such termination of employment; or

(b)  such termination of employment is due to your death, in which event the option shall terminate on the earlier of the termination date set forth above or eighteen (18) months after your death; or

(c)  during any part of such three (3) month period the option is not exercisable solely because of the condition set forth in paragraph 5 above, in which event the option shall not terminate until the earlier of the

termination date set forth above or until it shall have been exercisable for an aggregate period of three (3) months after termination of employment; or

(d)  exercise of the option during such three (3) month period would result in liability under Section 16(b) of the Securities Exchange Act of 1934, in which case the option will terminate on the earlier of (i) the termination date set forth above; (ii) the tenth (10th) day after the last date upon which exercise would result in such liability; or (iii) six (6) months and ten (10) days after the termination of your employment with the Company.

However, this option may be exercised following termination of employment as to that number of shares as to which it was exercisable on the date of termination of employment under the provisions of paragraph 2 of this option.

7.  (a) This option may be exercised, to the extent specified above, by delivering a notice of exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require pursuant to subparagraph 5(f) of the Plan.

     (b) By exercising this option you agree that the Company may require you to enter an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of this option; (2) the lapse of any substantial risk of forfeiture to which the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such exercise.

8.  This option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.

9.  This option is not an employment contract and nothing in this option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company, or of the Company to continue your employment with the Company.

10.  Any notices provided for in this option of the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the address specified below or at such other address as you hereafter designate by written notice to the Company.

11.  This option is subject to all the provisions of the Plan, a copy of which is attached hereto, and its provisions are hereby made a part of this option, including without limitation the provisions of paragraph 5 of the Plan relating to option provisions, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of this option and those of the Plan, the provisions of the Plan shall control.

12.  Capitalized terms used herein and not other wise defined shall have the meanings given them in the Supplemental Stock Option Agreement.

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