SEPARATION AND GENERAL RELEASE AGREEMENT
This Separation and General Release Agreement (this “Agreement”) is entered into by and between Roubik Gregorian (“Gregorian”) and Exar Corporation, on behalf of itself and each of its subsidiaries (collectively, the “Company”).
WHEREAS, Gregorian is currently employed by the Company as its Chief Executive Officer and President pursuant to the terms of an Employment Agreement, dated August 2, 2005 (the “Employment Agreement”);
WHEREAS, Gregorian’s employment with the Company terminated, effective February 22, 2007;
WHEREAS, the Company and Gregorian agree that, subject to Gregorian entering into this Agreement, Gregorian is entitled to receive the severance benefits provided for under Section 4.1 of the Employment Agreement;
WHEREAS, any capitalized terms that are not defined herein shall have the meaning set forth in the Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Company and the Gregorian agree as follows:
1. Effective Date : This Agreement shall become effective on the eighth day after Gregorian delivers to the Company a fully-executed version of this Agreement without modification or revocation (the “Effective Date”).
2. Separation from Employment and Resignation from Board of Directors : The parties agree that Gregorian’s employment with the Company terminated, effective February 22, 2007 (the “Separation Date”). As of the Separation Date, by executing this Agreement, Gregorian agrees that he no longer holds the title of, or performs services as, the Company’s Chief Executive Officer, President or in any other position of employment with the Company. By executing this Agreement, Gregorian hereby confirms his resignation effective as of the Separation Date from his position as a member of the Company’s Board of Directors (the “Board”) and, to the extent applicable, as a member of the Board of Directors or as an officer of the Company’s subsidiaries.
3. Severance Benefits : Provided that Gregorian complies with the terms and conditions of this Agreement and his Proprietary Rights and Nondisclosure Agreement dated April 10, 1995 (the “Proprietary Rights Agreement” ) attached hereto as Exhibit A , Gregorian shall be entitled to receive the following severance benefits (collectively, the “Severance Benefits”):
a. Severance Pay . The Company shall pay Gregorian severance pay in the amount of $910,000, less standard withholdings and authorized deductions (the “Severance
Pay”). In accordance with Section 4.7 of the Employment Agreement, the Severance Pay will be paid to Gregorian on the first business day following the six month anniversary of the Separation Date.
b. Health and Welfare Benefits : Gregorian shall have the option to convert and continue health and dental insurance for himself and his eligible dependents after the Separation Date, as may be required or authorized by law under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). In the event Gregorian timely exercises his right to convert his health and dental insurance for himself and his eligible dependents, Gregorian will be responsible for paying the COBRA premiums and the Company shall reimburse Gregorian for the COBRA premiums for the period commencing on the Effective Date and ending on the earlier of: (i) the twenty-four (24) month anniversary of the Separation Date, or (ii) the maximum period of time the Company is required to provide Gregorian and his eligible dependants health continuation coverage under COBRA. Reimbursement shall be made as follows: (x) with respect to COBRA premiums paid by Gregorian and submitted to the Company for reimbursement during the first six months following the Separation Date, the Company shall reimburse Gregorian for all such premiums on the first business day following the six month anniversary of the Separation Date; and (y) following the six month anniversary of the Separation Date, the Company shall reimburse Gregorian for all COBRA premiums paid by Gregorian within fifteen (15) days of Gregorian submitting his invoice for paid COBRA premiums to the Company.
c. Stock Option Extended Exercise Period . As more fully described in Section 13 below, the exercise period of vested Options shall be extended until and expire on December 31,2007.
d. Mitigation : Gregorian will not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor will the amount of any payment provided for under this Agreement be reduced by any compensation earned by Gregorian as a result of employment by another employer or otherwise.
4. Termination Of Contractual Relationship : Except as arising out of this Agreement, the Proprietary Rights Agreement, [the Indemnity Agreement, dated September 30, 2002, (the “Indemnity Agreement”), the Restricted Stock Purchase Right Agreement, dated March 25, 2005 (the “RSPR Agreement”), and the Stock Option Agreements (the “Stock Option Agreements”) for the stock option grants, dated March 28, 2005, October 7,2004, September 10, 2003, April 15, 2003, February 20, 2003, September 5, 2002, May 18, 2002, January 17, 2002, April 24, 2001 and April 26, 2000 (collectively, the “Stock Option Grants”), the parties have no further contractual relationship and Gregorian will have no right to reinstatement with the Company or any subsidiary.
5. Transition Services : In accordance with Section 4.4 of the Employment Agreement, the parties agree that, for a period commencing on the day after the Separation Date and ending three months thereafter (the “Consulting Term”), Gregorian agrees that he will perform consulting services as reasonably requested from time to time by the Company’s Board
of Directors or an executive officer of the Company to help transition his job duties and responsibilities to his successor. Nothing in this Agreement will in any way be construed to constitute Gregorian as an agent, employee or representative of the Company during the Consulting Term, and Gregorian will perform all services hereunder during the Consulting Term as an independent contractor. Gregorian acknowledges and agrees that Gregorian is obligated to report as income all compensation received by Gregorian pursuant to this Agreement during the Consulting Term, and Gregorian agrees (and acknowledges the obligation) to pay all self-employment and other taxes thereon. During the Consulting Term, the Company will pay Gregorian $1,000 per month for his services. In addition, all of Gregorian’s outstanding options, awards of restricted stock and other equity awards will continue to vest (to the extent not already vested and to the extent they would otherwise vest pursuant to the agreements relating to such awards) and in all other respects will remain subject to the terms and conditions of the agreements relating to such awards. During the Consulting Term, Gregorian acknowledges that Gregorian will no longer be entitled to participate in the employee benefit plans currently and hereafter maintained by the Company and will not receive any additional benefits from the Company, except for the payments and benefits provided for in Sections 3, 5 and 13 of this Agreement.
6. No Other Compensation or Benefits : Except as expressly set forth herein in Sections 3, 5 and 13 of this Agreement, Gregorian acknowledges that he will not receive, and is not entitled to receive, any additional compensation, severance or benefits after the Separation Date. On the Separation Date or within 24 hours thereof, the Company shall pay Gregorian in full for all of his accrued wages and paid-time off that he earned through the Separation Date. Gregorian agrees to submit any business expenses that he incurred in the scope of his employment within fifteen (15) days following the Separation Date. The Company will reimburse Gregorian for all outstanding business expenses in accordance with the Company’s expense reimbursement policy.
7. No Admission of Liability Or Wrongdoing : This Agreement does not constitute an admission by the Company or Gregorian of any violation of federal, state or local law, ordinance or regulation or of any violation of the Company’s policies or procedures or of any liability or wrongdoing whatsoever. Neither this Agreement nor anything in this Agreement shall be construed to be or shall be admissible in any proceeding as evidence of liability or wrongdoing by the Company or Gregorian. This Agreement may be introduced, however, in any proceeding to enforce the Agreement.
8. Releases :
a. Release by Gregorian . Except for those obligations of the Company created by or arising out of this Agreement, the Indemnity Agreement, the RSPR Agreement, the Proprietary Rights Agreement, and the Stock Option Agreements, Gregorian, on his own behalf and on behalf of his descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby covenants not to sue and fully releases and discharges the Company and each of its and their subsidiaries, parent, or affiliated partnerships and corporations, past and present, as well as each of its and their directors, officers, trustees, shareholders, members, partners, representatives, attorneys, assignees, successors, agents and
employees, past and present, and each of them (individually and collectively, “Company Releasees”), from and with respect to any and all claims, wages, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected (collectively, “Claims”), arising out of or in any way connected with any acts or omissions committed or omitted by Company Releasees prior to the date of this Agreement, including but not limited to Gregorian’s employment and termination of employment with the Company, membership and termination of membership on the Board of Directors of the Company, or any other relationship with, interest in or termination of relationship with any Company Releasees, including without limiting the generality of the foregoing, any claim for wages, vesting, overtime, salary, severance pay, director compensation, commissions, bonus or similar benefit, car allowance, sick leave, pension, retirement, vacation pay, paid time off, life insurance, health or medical insurance, including coverage under the Company’s Executive Health Plan, or any other fringe benefit, or disability, or any Claim pursuant to any federal, state or local law, statute or cause of action including, but not limited to: the federal Civil Rights Act of 1964, as amended; the federal Americans with Disabilities Act of 1990; the federal Age Discrimination in Employment Act of 1967, as amended (the “ADEA”); the California Fair Employment and Housing Act, as amended; the California Family Rights Act; the California Labor Code; the Sarbanes-Oxley Act; tort law; contract law; wrongful discharge; discrimination; retaliation; harassment; fraud; defamation; emotional distress; breach of the implied covenant of good faith and fair dealing; or breach of the Executive Officer’s Change of Control Severance and Benefit Plan. Notwithstanding any provision of this Section 8, you shall not hereby release any right you may otherwise have to (i) vested benefits, if any, under the Company’s 401(k) plan, in accordance with the terms of that Plan, COBRA health care and dental care continuation coverage, life insurance conversion rights, unemployment compensation, workers’ compensation or disability insurance, or to (ii) indemnification by the Company pursuant to the Company’s certificate of incorporation, by-laws, and applicable law.
b. Release by the Company . Except for those obligations created or confirmed by or arising out of this Agreement, and except as provided below, the Company hereby covenants not to sue and releases and discharges Gregorian and his descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them (“Gregorian Releasees”) from and with respect to any and all claims, agreements, obligations, losses, damages, injuries, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with Gregorian’s employment, membership on the board of directors of the Company, or any other relationship with, interest in or termination of relationship with any Company Releasees with the Company, or any other occurrences, actions, omissions or claims whatsoever, known or unknown, suspected or unsuspected, which the Company now owns or holds or has at any time heretofore owned or held as against Gregorian, provided, however, that such release of Gregorian shall not extend to any claims, known or unknown, suspected or unsuspected, against Gregorian that arise out of facts which demonstrate that Gregorian engaged in reckless, fraudulent or intentional acts or omissions that (i) constitute a breach of fiduciary duty, (ii) constitute a crime under any federal, state, or local statute, law, ordinance or regulation, or (iii) give rise to a right of recovery by the Company under any applicable policies of insurance and as to which the insurer has a right to subrogation against Gregorian; and provided further, that the foregoing release shall not be