Exhibit 10.6
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “ Agreement ”) is made
and entered into this 19th day of December 2008, by and between
Exar Corporation, a Delaware corporation (the “
Company ”), and Pedro (Pete) P. Rodriguez, an
individual (the “ Executive ”).
RECITALS
THE PARTIES ENTER INTO THIS
AGREEMENT on the basis of
the following facts, understandings and intentions:
A. The Company desires that the Executive be
employed by the Company to carry out the duties and
responsibilities described below, all on the terms and conditions
hereinafter set forth, effective as of April 28, 2008 (the
“ Effective Date ”).
B. The Executive desires to accept such employment
on such terms and conditions.
C. This Agreement shall govern the employment
relationship between the Executive and the Company from and after
the Effective Date and supersedes and negates all previous
agreements with respect to such relationship.
NOW, THEREFORE
, in consideration of the above
recitals incorporated herein and the mutual covenants and promises
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged,
the parties agree as follows:
1. Retention and Duties
.
1.1 Retention . As of the Effective
Date, the Company does hereby hire, engage and employ the Executive
for the Period of Employment (as defined in Section 2) on the
terms and conditions expressly set forth in this Agreement. As of
the Effective Date, the Executive does hereby accept and agree to
such hiring, engagement and employment, on the terms and conditions
expressly set forth in this Agreement.
1.2 Duties . During the Period of
Employment, the Executive shall serve the Company as its President
and Chief Executive Officer and shall have the powers, duties and
obligations of management usually vested in the offices of
president and chief executive officer of a corporation, subject to
the directives of the Company’s Board of Directors (the
“ Board ”). Executive shall comply with the
corporate policies of the Company as they are in effect from time
to time throughout the Period of Employment (including, without
limitation, the Company’s employee handbook, personnel
policies, and business conduct and ethics policies, as they may
change from time to time). The Executive will remain a member of
the Board after the Effective Date and may serve as an officer
and/or member of the board of directors of one or more of the
Company’s subsidiaries or affiliates (and this Agreement
shall provide the exclusive compensation for all such services).
During the Period of Employment, the Executive shall report solely
to the Board. In connection with any termination of the
Executive’s employment, unless otherwise requested by the
Board, the Executive shall concurrently resign from the Board and
from the Board (or other similar body) of any other members of the
Company Group (as defined below) on which he then
serves.
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1.3 No Other Employment;
Minimum Time Commitment . During the Period of Employment, the Executive
shall both (i) devote substantially all of the
Executive’s business time, energy and skill to the
performance of the Executive’s duties for the Company, and
(ii) hold no other employment; provided, however, that the
Company acknowledges that the Executive is a member of the U.S.
Navy Reserve and agrees that nothing herein shall prohibit the
Executive from performing any legally required Naval Reserve Duty.
The Executive’s service on the boards of directors (or
similar body) of other business entities, or the provision of other
services thereto, is subject to the prior written approval of the
Board, which may not be unreasonably withheld. The Company shall
have the right to require the Executive to resign from any board or
similar body on which he may then serve if the Board determines
that the Executive’s service on such board or body interferes
with the effective discharge of the Executive’s duties and
responsibilities to the Company or that any business related to
such service is then in competition with any business of the
Company or any of its affiliates, successors or assigns. Nothing in
this Section 1.3 shall be construed as preventing Executive
from engaging in the investment of his personal assets.
1.4 No Breach of Contract
. The Executive hereby
represents to the Company that: (i) the execution and delivery
of this Agreement by the Executive and the Company and the
performance by the Executive of the Executive’s duties
hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any other agreement or policy to which the
Executive is a party or otherwise bound; (ii) the Executive
has no information (including, without limitation, confidential
information and trade secrets) relating to any other person or
entity which would prevent, or be violated by, the Executive
entering into this Agreement or carrying out his duties hereunder;
and (iii) that, except as set forth on Exhibit A
hereto, the Executive is not bound by any confidentiality, trade
secret or similar agreement with any other person or
entity.
1.5 Location .
The Executive acknowledges that the
Company’s principal executive offices are currently located
in Fremont, California. The Executive’s principal place of
employment shall be the Company’s principal executive
offices. The Executive agrees that he will be regularly present at
the Company’s principal executive offices. The Executive
acknowledges that he may be required to travel from time to time in
the course of performing his duties for the Company.
2. Period of Employment . The “
Period of Employment ” shall be a period of two
(2) years commencing on the Effective Date and ending at the
close of business on the two-year anniversary of the Effective Date
(the “ Termination Date ”); provided, however,
that this Agreement shall be automatically renewed, and the Period
of Employment shall be automatically extended for one
(1) additional year on the Termination Date and each
anniversary of the Termination Date thereafter, unless either party
gives notice, in writing, at least sixty (60) days prior to
the expiration of the Period of Employment (including any renewal
thereof) of such party’s desire to terminate the Period of
Employment (a “ Notice of Non-Renewal ”). The
phrase “Period of Employment” shall include any
extension thereof pursuant to the preceding sentence. Providing a
Notice of Non-Renewal shall not constitute a breach of this
Agreement or a termination for “Good Reason” for
purposes of this Agreement. Notwithstanding the foregoing, the
Period of Employment is subject to earlier termination as provided
below in this Agreement.
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3. Compensation .
3.1 Base Salary . The
Executive’s base salary (the “ Base Salary
”) shall be paid in accordance with the Company’s
regular payroll practices in effect from time to time, but not less
frequently than in monthly installments. The Executive’s Base
Salary for the first twelve (12) months of the Period of
Employment shall be at an annualized rate of Four Hundred Thousand
Dollars ($400,000). The Company will review the Executive’s
Base Salary at least annually and may adjust the Executive’s
Base Salary from the rate then in effect based on such
review.
3.2 Incentive Bonus . During the
Period of Employment, the Executive shall be eligible to receive an
annual incentive bonus (“ Incentive Bonus ”) in
an amount to be determined by the Board in its sole discretion,
based on the performance objectives established by the Board for
that particular period. The Executive’s target Incentive
Bonus amount for the 2009 and 2010 fiscal years shall be 87.5% of
the Executive’s Base Salary, unless the Board or the
Compensation Committee of the Board (the “ Compensation
Committee ”) sets a higher target Incentive Bonus for
those years. For fiscal year 2009, the Incentive Bonus shall be pro
rated based on the number of days Executive is employed by the
Company in fiscal year 2009 divided by 365. In order to earn the
Incentive Bonus for any particular fiscal year, the Executive must
remain actively and continuously employed through the end of the
Company’s fiscal year. The Incentive Bonus shall be paid,
subject to applicable withholdings and authorized deductions, as
soon as practicable after the end of such fiscal year (and in all
events within the applicable period prescribed for the payment of
“short-term deferrals” as provided in Treasury
Regulation Section 1.409A-1(b)(4)).
The Executive’s Incentive
Bonus shall be payable in accordance with the Company’s
Fiscal Year 2009 Executive Incentive Compensation Program. The
Executive will participate in establishing his individual
performance goals under such program, which he and the Board (or
the Compensation Committee of the Board) shall endeavor to agree
upon prior to the Effective Date.
3.3 Sign-Up Bonus
. Subject to the
obligation of the Executive to repay the Signing Bonus (as defined
below) under certain circumstances described in this
Section 3.3, the Executive shall be eligible to receive a
one-time signing bonus in the amount of One Hundred Thousand
Dollars ($100,000), less applicable withholdings and deductions
(“ Signing Bonus ”). The Executive must repay
the Signing Bonus to the Company within seven (7) days of the
Severance Date (as defined below in Section 5.3) if
Executive’s employment is terminated (i) by the
Executive prior to the earlier of the two-year anniversary of the
Effective Date and a Change of Control, (ii) by the Executive
after a Change of Control but prior to the two-year anniversary of
the Effective Date other than for Good Reason, or (iii) by the
Company for Cause.
The Signing Bonus shall be paid to
Executive on the Company’s first regularly scheduled payroll
date following the Effective Date.
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3.4 Stock Option Grants
. Subject to this
Section 3.4, the Company will grant to the Executive an option
(the “ Option ”) to purchase 560,000 shares of
the Company’s Common Stock, effective on the first date
following the Effective Date on which the Company’s normal
option grant policy would result in grants being
effective.
The exercise price per share for the
Option will be equal to the fair market value of a share of the
Common Stock on the date the Option is granted. The Option will be
intended to qualify as an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “ Code ”), to the
maximum extent possible within the limitations of the Code. The
Option will vest as follows: 25% of the shares subject to the
Option shall vest upon Executive’s completion of one year of
active and continuous service to the Company following the
Effective Date, and 1/48 of the shares subject to the Option shall
vest in 36 equal monthly installments upon completion of each month
of active and continuous service thereafter such that Executive
shall be fully vested in the Option after four years of continuous
service from the Effective Date. The vesting of each installment of
the Option will occur only if such vesting date occurs during the
Executive’s continued employment by the Company through the
respective vesting date. The maximum term of the Option will be
seven (7) years from the date of grant of the Option. The
Option shall be granted under the Company’s 2006 Equity
Incentive Plan (the “ Plan ”), a copy of which
has been provided to the Executive, and shall be subject to such
further terms and conditions as set forth in a written stock option
agreement to be entered into by the Company and the Executive to
evidence the Option (the “ Option Agreement ”).
The Option Agreement shall provide that Executive shall vest in
100% of the then unvested shares subject to the Option in the event
Executive’s employment is terminated by the Company without
Cause or by Executive for Good Reason within 12 months following a
Change of Control. The Option Agreement shall be in substantially
the form as may be used by the Company to evidence stock option
grants for other senior executives made under the Plan at the time
of grant.
3.5 Director Compensation . Commencing
on the Effective Date, the Executive shall no longer be entitled to
receive cash or equity compensation paid to outside directors of
the Company and, instead, the Executive shall be compensated
exclusively in accordance with the terms of this Agreement.
Notwithstanding the foregoing, during the Period of Employment,
Executive’s grant of 4,500 restricted stock units issued to
Executive in his capacity as a director on October 11, 2007
and any other outstanding equity grants made to the Executive prior
to the date hereof shall continue to vest in accordance with, and
be subject to, the terms and conditions of the such grants, the
grant agreements related thereto (the “ Prior Grant
Agreements ”) and any equity incentive plan pursuant to
which each such grant was made.
4. Benefits
.
4.1 Retirement, Welfare and Fringe
Benefits . During the Period of Employment, the Executive
shall be entitled to participate in all employee pension and
welfare benefit plans and programs, and fringe benefit plans and
programs, made available by the Company to the Company’s
employees generally, in accordance with the eligibility and
participation provisions of such plans and as such plans or
programs may be in effect from time to time; provided, however,
that the Executive shall not be entitled to a duplication of
benefits or payments provided to the Executive pursuant to this
Agreement.
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4.2 Reimbursement of Business Expenses
. The Company shall reimburse Executive for all reasonable
business expenses that Executive incurs during the Period of
Employment in connection with carrying out the Executive’s
duties for the Company, subject to the Company’s expense
reimbursement policies (including submission of any documentation
of such expenses required by such policies) in effect from time to
time and provided that in all events any such reimbursement shall
be made not later than the end of the calendar year following the
year in which the related expense was incurred.
4.3 Vacation and Other Leave . During
the Period of Employment, the Executive shall accrue and be
entitled to take paid vacation in accordance with the
Company’s vacation policies in effect from time to time,
including the Company’s policies regarding vacation accruals;
provided that the Executive’s rate of vacation accrual during
the Period of Employment shall be no less than three (3) weeks
per year. The Executive shall also be entitled to all other holiday
and leave pay generally available to other executives of the
Company.
4.4 Naval Reserve Duty Leave . The
Company acknowledges that the Executive is a member of the U.S.
Navy Reserve and from time to time will be required to perform
legally required Naval Reserve Duty. Subject to any additional
requirements imposed on the Company by applicable law from time to
time, the Executive shall be entitled to take up to three
(3) weeks of paid leave per year to fulfill his Naval Reserve
Duty obligations, provided that (i) the Executive submits to
the Company’s human resources department a true and correct
copy of the Naval Reserve Duty orders for any such leave;
(ii) the Executive will exercise best efforts to perform his
duties as the Company’s President and Chief Executive Officer
while he is on Naval Reserve Duty leave; and (iii) the
Executive will exercise best efforts to cause the Naval Reserve
Duty leave to be taken in increments of seven days or
less.
5. Termination
.
5.1 Termination by the Company . The
Executive’s employment by the Company, and the Period of
Employment, may be terminated at any time by the Company:
(i) with Cause (as defined in Section 5.5), or
(ii) with no less than sixty (60) days advance notice to
the Executive, without Cause, or (iii) in the event of the
Executive’s death (which shall occur automatically upon such
death), or (iv) in the event that the Board determines in good
faith that the Executive has a Disability (as defined in
Section 5.5).
5.2 Termination by the Executive . The
Executive’s employment by the Company, and the Period of
Employment, may be terminated by the Executive with no less than
sixty (60) days advance notice to the Company; provided,
however, that in the case of a termination for Good Reason, the
Executive may provide immediate written notice upon the Company
failing to cure the event that constitutes Good Reason after the
Executive has provided the Company written notice of the event
constituting Good Reason and at least a 30-day period to
cure.
5.3 Benefits Upon Termination . If the
Executive’s employment by the Company is terminated during
the Period of Employment for any reason by the Company or by the
Executive, or upon or following the expiration of the Period of
Employment (in any case, the date that the Executive’s
employment by the Company terminates is referred to herein as the
“ Severance Date ”), the Company shall have no
further obligation to make or provide to the Executive, and the
Executive shall have no further right to receive or obtain from the
Company, any payments or benefits except as follows:
(a) The Company shall pay the Executive (or, in the
event of his death, the Executive’s estate) any Accrued
Obligations (as defined in Section 5.5);
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(b) If, during the Period of Employment, the
Executive’s employment with the Company terminates as a
result of an Involuntary Termination (as defined in
Section 5.5) or the Executive’s employment with the
Company terminates upon the expiration of the Period of Employment
pursuant to a Notice of Non-Renewal given by the Company, and in
either case subject to the Executive signing, delivering and not
revoking a general release as set forth in Section 5.4, the
Company shall provide the following severance benefits to
Executive:
(i) The Company shall pay the Executive (in addition
to the Accrued Obligations) an amount equal to 100% of the
Executive’s Base Salary at the annual rate in effect on the
Severance Date. Subject to Section 24.2, the Company shall pay
such amount to the Executive in substantially equal installments,
less tax withholdings and other authorized deductions, in
accordance with the Company’s normal payroll practices then
in effect over a period of twelve (12) consecutive months,
with the first installment payable in the month following the month
in which the Executive’s Separation from Service (as such
term is defined in Section 5.5) occurs.
(ii) The Company shall pay the cost of the
Executive’s premiums charged to continue medical coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“ COBRA ”), at the same or reasonably
equivalent medical coverage for Executive (and, if applicable,
Executive’s eligible dependents) as in effect immediately
prior to the Severance Date, for a period commencing on the
Severance Date and ending on the earlier to occur of (A) the
date the Executive becomes eligible for medical coverage with
another employer and (B) the 6-month anniversary of the
Severance Date. To the extent that the payment of any COBRA
premiums pursuant to this Section 5.3(b)(ii) are taxable to
Executive, any payment due to Executive pursuant to this section
shall be paid to Executive on or before the last day of
Executive’s taxable year following the taxable year in which
the related expense was incurred. Executive’s right to
payment of such premiums is not subject to liquidation or exchange
for another benefit and the amount of such benefits that Executive
receives in one taxable year shall not affect the amount of such
benefits that Executive receives in any other taxable
year.
(iii) In the event that Executive’s employment
with the Company terminates as a result of an Involuntary
Termination or a Notice of Non-Renewal delivered by the Company (or
its successor) within twelve (12) months following a Change of
Control, the Company shall, in addition to the amounts in
(i) and (ii) of this Section 5.3(b), (A) pay
Executive an amount equal to a pro rated portion of
Executive’s target Incentive Bonus for the fiscal year in
which the termination occurs (such payment to be made, subject to
Section 24.2 and less tax withholdings and other authorized
deductions, in a lump sum in the month following the month in which
Executive’s Separation from Service occurs); and (B) in
accordance
