EXAR CORP, S-3, 1995-05-03

EXAR CORP
S-3, 1995-05-03
SEMICONDUCTORS & RELATED DEVICES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
EXAR CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 3674 94-1741481
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of
incorporation or Classification Code Number) Identification Number)
organization)
</TABLE>

------------------------
2222 QUME DRIVE SAN JOSE, CALIFORNIA 95131
(408) 434-6400

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
THOMAS R. MELENDREZ, ESQ.
EXAR CORPORATION
2222 Qume Drive
San Jose, California 95131
(408) 434-6400

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:

PETER F. STONE, ESQ.
COOLEY GODWARD CASTRO
Huddleson & Tatum
Five Palo Alto Square
Palo Alto, California 94306
(415) 843-5000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
------------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
REGISTERED REGISTERED PER SHARE (1) (1) FEE
<S> <C> <C> <C> <C>
Common Stock, $.0001 par
value........................ 356,547 $24.25 $8,646,264.75 $2,981.49
</TABLE>

(1) Estimated solely for the purpose of calculating the amount of the
registration fee based on the average of the high and low sales prices on
the Nasdaq National Market on April 26, 1995.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 3, 1995

PROSPECTUS
356,547 SHARES
EXAR CORPORATION
COMMON STOCK

---------------------

This Prospectus relates to 356,547 shares of Common Stock, par value $.0001
(the "Common Stock") which are being offered and sold by certain stockholders
(the "Selling Stockholders") of Exar Corporation (the "Company"), of which 1,764
are issuable upon the exercise of an outstanding warrant and 5,176 are issuable
upon the exercise of outstanding options. The Selling Stockholders, directly or
through agents, broker-dealers or underwriters, may sell the Common Stock
offered hereby from time to time on terms to be determined at the time of sale,
in transactions on the Nasdaq National Market or in privately negotiated
transactions. The Selling Stockholders and any agents, broker-dealers or
underwriters that participate in the distribution of the Common Stock may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Act"), and any commission received by them and any profit on the
resale of the Common Stock purchased by them may be deemed to be underwriting
discounts or commissions under the Act. The Company will not receive any
proceeds from the sale of shares by the Selling Stockholders. See "Selling
Stockholders" and "Plan of Distribution."

The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "EXAR." The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on May 2, 1995 was $26.50 per share.

------------------------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS."

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $30,981.49. The aggregate proceeds to the
Selling Stockholders from the Common Stock will be the purchase price of the
Common Stock sold less the aggregate agents' commissions and underwriters'
discounts, if any. See "Plan of Distribution."

The Company has agreed to indemnify the Selling Stockholders and the Selling
Stockholders have agreed to indemnify the Company against certain liabilities,
including liabilities under the Act.

, 1995
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the Commission's Public Reference Section, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as at the Commission's Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W. Washington, D.C. 20006.

ADDITIONAL INFORMATION

A registration statement on Form S-3 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Act. This Prospectus does not contain all of the information contained
in such Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other documents are not
necessarily complete and, in each instance, reference is hereby made to the copy
of such contract or document filed as an exhibit to the Registration Statement.
The Registration Statement, including exhibits thereto, may be inspected without
charge at the Securities and Exchange Commission's principal office in
Washington, D.C., and copies of all or any part thereof may be obtained from the
Public Reference Section. Securities and Exchange Commission, Washington, D.C.,
20549, upon payment of the prescribed fees.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, filed or to be filed with the Commission under the
Exchange Act are hereby incorporated by reference into this Prospectus:

(a) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1994;

(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1994, September 30, 1994 and December 31, 1994; and

(c) The Company's Proxy Statement for its annual meeting of stockholders
held on September 1, 1994 (other than the portions thereof identified as not
deemed filed with the Commission) and the Company's Proxy Statement for its
special meeting of stockholders held on January 18, 1995.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such request may be directed to Exar Corporation, Attention:
Thomas R. Melendrez, Esq., 2222 Qume Drive, San Jose, California 95131,
telephone (408) 434-6400.
--------------------------

2
<PAGE>
THE COMPANY

The Company was incorporated in California in 1971 and reincorporated in
Delaware in October 1991. Unless the context otherwise requires, references in
this Prospectus to the "Company" or "Exar" refer to Exar Corporation and its
subsidiaries. The Company's executive offices are located at 2222 Qume Drive,
San Jose, California 95131, and its telephone number is (408) 434-6400.

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CONSIDER THE FOLLOWING FACTORS IN EVALUATING THE COMPANY AND
ITS BUSINESS BEFORE PURCHASING ANY SHARES OF THE COMMON STOCK HEREBY OFFERED.

INTEGRATION OF OPERATIONS. Exar has recently acquired Startech
Semiconductor, Inc. ("Startech") through the merger (the "Merger") of Startech
with and into a wholly-owned subsidiary of Exar ("Merger Sub") pursuant to that
certain Agreement and Plan of Reorganization among Exar, Merger Sub, Startech
and certain officers of Startech (the "Plan of Reorganization"). If Exar is to
realize the anticipated benefits of the Merger, the operations of the two
companies must be integrated and combined efficiently. The process of
rationalizing supply and distribution channels, computer and accounting systems
and other aspects of operations, while managing a larger entity, will present a
significant challenge to the management of Exar. There can be no assurance that
the integration process will be successful or that the anticipated benefits of
the business combination will be fully realized. The dedication of management
resources to such integration may detract attention from the day-to-day business
of Exar. The difficulties of integration may be increased by the necessity of
integrating personnel with disparate business backgrounds and combining
different corporate cultures. There can be no assurance that there will not be
substantial costs associated with such activities or that there will not be
other material adverse effects of these integration efforts. Such effects could
materially reduce the short-term earnings of Exar. Exar expects to incur a
charge in its fourth quarter ended March 31, 1995, currently estimated to be
$10.0 million to $13.0 million, to reflect the write-off of purchased Startech
in-process research and development. This amount is a preliminary estimate only
and is therefore subject to change. In addition, there can be no assurance that
Exar will not incur additional charges in subsequent quarters to reflect costs
associated with the Merger. The integration and efficient combination of the
operations of the two companies will present increased challenges to Exar's
management due to Exar's obligations under the Plan of Reorganization to operate
Startech in a number of fundamental respects as a separate business entity until
September 30, 1996. Exar has agreed to maintain Startech as a separate business
segment, subject to the control of its board of directors (which will be
composed of a majority of Exar representatives) following the Merger. Exar has
also agreed to operate Startech's business in a manner designed to maximize the
amount of contingent payments to the former shareholders of Startech under the
Plan of Reorganization, consistent with Startech's business plan and to the
extent consistent with the long-term best interests of Startech. In addition, in
the event there is a change of control of Exar prior to the distribution of any
contingent payments, such undistributed contingent payments will accelerate
unless assumed by the acquiror of Exar. Such restrictions on Exar's ability to
completely integrate the operations of Startech may present unforseen business
difficulties, for example, by further complicating the rationalization of supply
and distribution channels, accounting systems and other aspects of the two
companies' operations. Moreover, such restrictions may further tax management's
resources and detract attention from the day-to-day business of Exar. There can
be no assurance that there will not be additional costs associated with such
efforts or that other material adverse effects will not result. Such effects
could further reduce the short-term earnings of Exar.

FACTORS AFFECTING OPERATING RESULTS. Exar believes its future operating
results will be subject to quarterly and annual variations based on a wide
variety of factors, including customer demand for Exar's products, changes in
product mix, competitive pressures on prices and prices charged by Exar's
suppliers. The semiconductor industry has historically been characterized by
business cycles, with economic downturns resulting in diminished product demand
and erosion of average selling prices.

3
<PAGE>
Exar's future operating results could be adversely affected by a downturn in
this market or by the failure of one or more of its customers to compete
successfully in such market. The markets for components used in personal
computer and consumer electronics products are extremely price competitive.

DEPENDENCE ON NEW PRODUCTS. Exar's operating results will depend to a
significant extent on its ability to continue to introduce new products. In
particular, the consumer and disk drive markets being addressed by Exar are
characterized by shorter product life cycles and more rapid technological change
than the markets traditionally addressed by Exar. The success of Exar's new
products will depend on several factors, including the ability to anticipate
customer requirements, timely introduction of new products to the market and
market acceptance. There can be no assurance that Exar's new products will be
successfully developed, or will receive or maintain substantial market
acceptance.

DEPENDENCE ON OUTSIDE FABRICATION FACILITIES. All of the semiconductor
wafers used in the manufacture of Exar's products are processed to Exar's
specifications by outside suppliers. In particular, Rohm Corporation ("Rohm") is
Exar's primary source of CMOS wafers and BiCMOS wafers and Exar's sole source of
bipolar wafers. Exar has generally received adequate deliveries of wafers and
adequate yield and quality of product. Rohm is contractually obligated to supply
Exar with bipolar wafers pursuant to a long-term agreement and has committed to
provide Exar with wafers at a price that is commercially favorable. However, if
for any reason wafer shipments were delayed or its suppliers encountered yield
or quality problems in the future, Exar's operating results would be adversely
affected. In addition, because Exar has not qualified second sources for many of
its products, Exar would encounter lengthy delays if for any reason it was
forced to establish alternative manufacturing arrangements.

While Exar believes that it has an adequate wafer supply to meet its
currently anticipated needs, there can be no assurance that in the future Exar
will receive sufficient quantities of wafers at favorable prices on a timely
basis. If the wafer manufacturers which Exar currently uses to manufacture its
products suffer a material curtailment of their manufacturing operations, Exar
could incur manufacturing delays of between three and six months. Although Exar
believes that there is an adequate level of high quality wafer manufacturing
capacity available world-wide which could perform manufacturing for Exar in
those circumstances, there is no assurance that Exar would be able to arrange
sufficient alternative manufacturing capacity on comparable terms or within that
time period if its current suppliers curtailed or halted manufacturing. Should
wafer capacity limitations occur because of increased demand for Exar's products
or otherwise, Exar may be unable to meet demand for its products in a timely
fashion, which could result in customer dissatisfaction and decreased revenues.

Startech currently obtains all its integrated circuit wafer products from
Orbit Semiconductor, Inc. ("Orbit"). Orbit provides full service manufacturing
for others, including competitors of Startech. Startech is in the process of
qualifying additional wafer manufacturers, from which it anticipates purchasing
integrated circuits in the future. While Startech believes that it has an
adequate wafer supply to meet its currently anticipated needs, there can be no
assurance that in the future Startech will receive sufficient quantities of
wafers at favorable prices on a timely basis. If Orbit were to suffer a material
curtailment of its manufacturing operations, Startech could incur manufacturing
delays of between three and six months. Although Startech believes that there is
an adequate level of high quality wafer manufacturing capacity available
world-wide which could perform manufacturing for Startech in those
circumstances, there is no assurance that Startech would be able to arrange
sufficient alternative manufacturing capacity on comparable terms or within that
time period if its current supplier curtailed or halted manufacturing.

LITIGATION AND PATENTS. As is typical in the semiconductor industry, Exar
has from time to time received, and may in the future receive, communications
from third parties asserting patent rights, copyrights or other intellectual
property rights covering Exar's products or processes. There can be no assurance
that other intellectual property claims will not be made against Exar, or that
any such

4
<PAGE>
claims or litigation proceedings will not be decided against Exar. In order to
continue using the technologies subject to such claims, Exar may be required to
obtain licenses and make royalty payments. There can be no assurance that Exar
will be able to obtain such licenses on commercially reasonable terms.

KEY PERSONNEL. Exar's future success depends in large part on the continued
service of certain of Exar's and Startech's key technical and management
personnel and on Exar's ability to continue to attract and retain qualified
employees, particularly those highly skilled design, process and test engineers
involved in the manufacture of existing products and the development of new
products and processes. The competition for such personnel is intense, and the
loss of key employees, none of whom is subject to an employment agreement for a
specified term or a post-employment non-competition agreement, could have a
material and adverse effect on Exar.

ENVIRONMENTAL REGULATIONS. Exar is subject to a variety of federal, state
and local governmental regulations relating to the purchase, storage, use,
release and disposal of toxic, volatile or otherwise hazardous chemicals.
Although Exar believes that it has all permits necessary to conduct its
business, the failure to comply with present or future regulations could result
in the imposition of fines on Exar. Exar and certain other parties are currently
involved in a dispute with Siemens Components, Inc. arising out of alleged
groundwater releases of environmental contaminants by Exar at a Santa Clara site
formerly occupied by Exar in Sunnyvale, California. Exar is also involved in a
groundwater contamination and clean-up matter relating to a Santa Clara site
that is presently occupied by Micro Power Systems, Inc., a wholly-owned
subsidiary of Exar. Although Exar does not believe that these matters will have
a material adverse effect on Exar's business, there can be no assurance that
there will not be such an adverse effect.

DEPENDENCE ON ASSEMBLY SUBCONTRACTORS. Exar's products are currently
assembled to Exar's specifications by independent subcontractors. Exar's
reliance on subcontractors to assemble its products involves significant risks,
including reduced control over delivery schedules, the potential lack of
adequate capacity and potential misappropriation of proprietary intellectual
property. Failure to obtain products on a timely basis could delay product
delivery to Exar's customers, thereby materially adversely affecting Exar's and
Startech's businesses. In addition, Exar and Startech presently utilize
international semiconductor assembly contractors located throughout Asia.
International assembly operations entail certain political and economic risks,
including political instability and expropriation, currency controls and changes
in tax laws, tariffs and freight rates. Exar's operations could be materially
adversely affected if the operations of any major supplier are interrupted, or
if air transportation from Asia is disrupted, for a substantial period of time.

VARIATION IN PRODUCTION YIELDS. The manufacture and assembly of
semiconductor products is highly complex and sensitive to a wide variety of
factors, including the level of contaminants in the manufacturing environment,
impurities in the materials used and the performance of manufacturing personnel
and production equipment. No assurance can be given that Exar or its suppliers
will not experience yield problems in the future, which could result in a
material adverse effect on Exar's results of operations. See "-- Dependence on
Assembly Subcontractors."

INTENSE COMPETITION. The semiconductor industry is intensely competitive
and is characterized by price erosion, rapid technological change and heightened
international competition in many markets. Exar competes with major domestic and
international semiconductor companies, many of which have substantially greater
financial and other resources than Exar with which to pursue engineering,
manufacturing, marketing and distribution of their products. New entrants may
also increase competition in the semiconductor market. The ability of Exar to
compete successfully in the rapidly evolving area of integrated circuit
technology depends on factors both within and outside of its control, including
success in designing and subcontracting the manufacture of new products that
implement new technologies, adequate sources of raw materials such as wafers and
plastics, protection of Company products by effective utilization of
intellectual property laws and other security measures,

5
<PAGE>
product quality, reliability, price, efficiency of production, the pace at which
customers incorporate Exar's integrated circuits into their products, success of
competitors' products and general economic conditions. There is no assurance
that Exar will be able to compete successfully in the future.

FOREIGN TRADE AND CURRENCY EXCHANGE. Approximately 70% of Exar's revenues
in fiscal 1993 and approximately 74% in fiscal 1994, were derived from sales to
foreign customers. In addition, although a majority of Exar's manufacturing is
done domestically, Exar purchases its assembly services from foreign
subcontractors. Both the manufacture and sale of Exar's products may be
adversely affected by political or economic conditions abroad. Protectionist
trade legislation in either the United States or foreign countries could
adversely affect Exar's ability to manufacture or to sell in foreign markets.
Even though Exar primarily transacts business internationally in United States
currency (except for Japan, where Exar transacts business in Japanese Yen),
currency exchange fluctuations in countries in which Exar does business (other
than Japan) could materially adversely affect Exar by resulting in pricing that
is not competitive with prices denominated in local currencies.

POSSIBLE VOLATILITY OF STOCK PRICE. Since the initial public offering of
Exar Common Stock in 1985, the market value of Exar Common Stock has been
subject to significant fluctuation. The market price of Exar Common Stock may
continue to be subject to significant fluctuations in response to operating
results and other factors. In addition, the stock market in recent years has
experienced price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of companies. These fluctuations,
as well as general economic and market conditions, may adversely affect the
market price of Exar Common Stock.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders in the offering.

6
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth the names of the Selling Stockholders, the
number of shares of Common Stock owned beneficially by each of them as of April
30, 1995 and the number of shares which may be offered pursuant to this
Prospectus. This information is based upon information provided by the Selling
Stockholders. The Selling Stockholders may offer all, some or none of their
Common Stock.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING (1) SHARES OFFERING (1)(3)
---------------------- BEING ----------------------
NAME NUMBER PERCENT (2) OFFERED NUMBER PERCENT (2)
- --------------------------------------------------------- --------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Ram K. Reddy and Pratibha Reddy, JT (4).................. 87,948 * 87,948 0 *
Advanced IC Consulting (5)............................... 43,388 * 1,816 41,572 *
Roubik Gregorian (5)..................................... 61,988 * 1,816 60,172 *
Futurtec L.P............................................. 37,877 * 37,877 0 *
Ido Klear (6)............................................ 43,053 * 43,053 0 *
Jetop Electronics, Ltd. (7).............................. 39,211 * 39,211 0 *
Gary Kennedy (8)......................................... 36,780 * 36,780 0 *
ESS Technology, Inc. (9)................................. 36,759 * 36,759 0 *
Steve Kam (10)........................................... 24,232 * 24,232 0 *
Joseph K. Wai (10)....................................... 24,232 * 24,232 0 *
Arjun Reddy and Sandhya Reddy, JT........................ 17,700 * 17,700 0 *
Glenn Satterthwaite...................................... 15,292 * 15,292 0 *
Glenn A. Wegner (11)..................................... 15,010 * 2,540 12,470 *
Art Khachaturian (12).................................... 8,574 * 1,524 7,050 *
Myra E. Lewin (13)....................................... 7,058 * 7,058 0 *
Kevin H. Andersen (14)................................... 6,282 * 6,282 0 *
Sreejaya Reddy........................................... 5,900 * 5,900 0 *
Ron Lee (15)............................................. 2,116 * 1,732 384 *
Srirama Raja (16)........................................ 4,766 * 1,016 3,749 *
Gail B. Katzman (17)..................................... 4,234 * 1,247 2,987 *
Susan E. Lindley (18).................................... 2,825 * 461 2,364 *
Silicon Valley Bank (19)................................. 1,764 * 1,764 0 *
<FN>
- ------------------------
* Less than one percent.

(1) Unless otherwise indicated below, the persons named in the table have sole
voting and investment power with respect to all shares beneficially owned
by them, subject to community property laws where applicable.

(2) Applicable percentage of ownership is based on 9,324,076 shares of Common
Stock outstanding on April 28, 1995.

(3) Assumes the sale of all shares offered hereby.

(4) Mr. Reddy is co-president and co-chief executive officer of Startech and
was formerly a director, chief executive officer and chief financial
officer of Startech. Ms. Reddy was formerly a director and corporate
secretary of Startech.

(5) Includes 1,816 shares beneficially owned by Advanced IC Consulting, which
is owned by Dr. Gregorian, options to purchase 18,600 shares of Common
Stock held by Dr. Gregorian and options to purchase 41,572 shares of Common
Stock held by Advanced IC Consulting, all of which options are fully
exercisable. Dr. Gregorian is co-president, co-chief executive officer and
a director of Startech and was formerly president, chief operating officer
and a director of Startech.
</TABLE>

7
<PAGE>
<TABLE>
<S> <C>
(6) Includes 37,877 shares held by Futurtec L.P., the general partner of which
is a corporation which is owned by Mr. Klear, and options to purchase 5,176
shares of Common Stock held by Mr. Klear which are fully exercisable.

(7) Jetop was a 10% shareholder of Startech and purchased its shares from
Messrs. Wai and Kam, officers of Orbit.

(8) Mr. Kennedy was a director of Startech and is an officer of Orbit.

(9) ESS Technology, Inc. was a 10% shareholder of Startech.

(10) Messrs. Kam and Wai are officers of Orbit.

(11) Includes 12,470 shares of Common Stock subject to options that are fully
exercisable.

(12) Includes 7,050 shares of Common Stock subject to options that are fully
exercisable.

(13) Ms. Lewin is the ex-wife of Mr. Kennedy, a former director of Startech.

(14) Mr. Anderson is Vice President, Sales of Startech.

(15) Includes 384 shares of Common Stock subject to options that are fully
exercisable.

(16) Includes 3,749 shares of Common Stock subject to options that are fully
exercisable.

(17) Includes 2,987 shares of Common Stock subject to options that are fully
exercisable.

(18) Includes 2,364 shares of Common Stock subject to options that are fully
exercisable.

(19) Includes 1,764 shares of Common Stock subject to a warrant that is fully
exercisable.
</TABLE>

DESCRIPTION OF CAPITAL STOCK

Exar's authorized capital stock consists of 25,000,000 shares of common
stock ("Common Stock"), par value $.0001, and 5,000,000 shares of Preferred
Stock, par value $.0001 ("Preferred Stock").

COMMON STOCK

At the close of business on April 28, 1995, there were 9,324,076 shares of
Common Stock outstanding. The holders of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of
stockholders. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. In the event of a liquidation, dissolution, or winding up of
Exar, holders of Common Stock are entitled to share ratably all assets remaining
after payment of liabilities and the liquidation preference of any outstanding
Preferred Stock.

Holders of Common Stock have no preemptive rights and have no rights to
convert their shares into any other securities. All of the outstanding shares of
Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Exar Board of Directors is authorized to determine the dividend rights,
dividend rates, conversion rights, voting rights, rights and terms of
redemption, liquidation preferences, sinking fund terms and other rights,
preferences, privileges and restrictions of any wholly unissued series of
Preferred Stock, the number of shares constituting any such series, and the
designation thereof without any further action by the stockholders. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of Exar without any further action by the stockholders. The
Exar Board of Directors, without stockholder approval, can issue Preferred Stock

8
<PAGE>
with voting and conversion rights which could adversely affect the voting power
of the holders of Common Stock. At present, Exar has authorized 1,650,000 shares
of Series B Preferred Stock ("Series B Preferred"), with none outstanding.

The Series B Preferred has no entitlement to any dividends. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of Exar, the Series B Preferred shares are entitled to receive, prior
and in preference to any distribution of any assets or surplus funds of Exar to
the holders of the Common Stock, $8.00 for each share of Series B Preferred. In
addition, Exar has the right, at its option, to redeem the Series B Preferred at
any time after June 1, 1995, for $8.00 per share. At any time on or after June
1, 1993 and before June 1, 1995, any outstanding share of Series B Preferred
stock has the right to compel Exar to redeem such outstanding Series B Preferred
shares for $8.00 per share in cash. Shares of the Series B Preferred are not
convertible into Common Stock or any other securities of Exar. The Series B
Preferred has no voting rights except as otherwise required by law.

PLAN OF DISTRIBUTION

The shares of Common Stock offered by the Selling Stockholders may be sold
from time to time to purchasers directly by any of the Selling Stockholders
acting as principal for its own account in one or more transactions at a fixed
price, which may be changed, or at varying prices determined at the time of sale
or at negotiated prices. Alternatively, any of the Selling Stockholders may from
time to time offer the Common Stock through underwriters, dealers or agents who
may receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Stockholders and/or the purchasers of shares for
whom they may act as agent. Sales may be made on the Nasdaq National Market or
in private transactions. In addition to sales of Common Stock pursuant to the
Registration Statement of which this Prospectus is a part, the Selling
Stockholders may sell such Common Stock in compliance with Rule 144 promulgated
under the Act.

The Selling Stockholders and any agents, broker-dealers or underwriters that
participate in the distribution of the Common Stock offered hereby may be deemed
to be underwriters within the meaning of the Act, and any discounts, commissions
or concessions received by them and any profit on the resale of the Common Stock
purchased by them might be deemed to be underwriting discounts and commissions
under the Act.

In order to comply with the securities laws of certain states, if
applicable, the Common Stock may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.

Of the 356,547 shares of Common Stock offered hereby, 1,764 are issuable
upon exercise of an outstanding warrant at an exercise price of $1.00 for each
"Option A Unit," consisting of 0.04619151 of a share of Common Stock and
approximately $0.27 in cash, and for each "Option B Unit," consisting of the
right to receive approximately $2.36 in certain contingent, performance-based
payments, payable in Common Stock or cash. In addition, 5,176 of the shares
offered hereby are issuable upon exercise of outstanding options at an exercise
price of $6.49 per share.

Pursuant to the Plan of Reorganization, the Company has agreed to register
the Selling Stockholders' Common Stock under applicable Federal and state
securities laws under certain circumstances and at certain times. The Company
will pay substantially all of the expenses incident to the offering and sale of
the Common Stock to the public, other than commissions, concessions and
discounts of underwriters, dealers or agents. Such expenses (excluding such
commissions and discounts) are estimated to be $30,981.49. The above-referenced
agreement provides for cross-indemnification of the Selling Stockholders and the
Company to the extent permitted by law, for losses, claims, damages, liabilities
and expenses arising, under certain circumstances, out of any registration of
the Common Stock.

9
<PAGE>
The Company's obligation to register the Common Stock under the Plan of
Reorganization was conditioned upon each Selling Stockholder's agreeing that (i)
all sales made pursuant to the Registration Statement will be made through
Prudential Securities Incorporated or Alex. Brown & Sons Incorporated, (ii)
prior to the 121st day after the effective date of the Registration Statement,
each Selling Stockholder will not sell more than 15% of the shares of Common
Stock that such Selling Stockholder received in the Merger, or has the right to
receive upon the exercise of options or warrants, during any 30-day trading
period, and (iii) from the 121st day after the effective date of the
Registration Statement until April 30, 1996, each Selling Stockholder who owns,
or has the right to receive upon the exercise of options or warrants, at least
50,000 shares of Common Stock will not sell more than 35% of such shares of
Common Stock during any 30-day trading period.

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward Castro Huddleson & Tatum, Palo
Alto, California.

EXPERTS

The financial statements and schedules of Exar Corporation as of March 31,
1994 and 1993 and for each of the years in the three-year period ended March 31,
1994 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, Independent
Certified Public Accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

10
<PAGE>
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Additional Information......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Risk Factors................................... 3
Use of Proceeds................................ 6
Selling Stockholders........................... 7
Description of Capital Stock................... 8
Plan of Distribution........................... 9
Legal Matters.................................. 10
Experts........................................ 10
</TABLE>

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee.

<TABLE>
<S> <C>
Registration fee....................................................... $ 2,981.49
Printing and engraving expenses........................................ 3,000.00
Legal fees and expenses................................................ 20,000.00
Accounting Fees and Expenses........................................... 5,000.00
----------
Total.............................................................. $30,981.49
----------
----------
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

The Registrant's Certificate of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware
Law") and (ii) require the Registrant to indemnify its directors and officers to
the fullest extent permitted by Section 145 of the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. Pursuant to
Section 145 of the Delaware Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of a corporation, and,
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate liability for breach of the director's duty of
loyalty to the Registrant or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit or for
any willful or negligent payment of any unlawful dividend or any unlawful stock
purchase agreement or redemption.

The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its listed enterprises, subject to certain limitations set
forth in such agreements. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder.

The Registrant has purchased an insurance policy covering the officers and
directors of the Registrant with respect to certain liabilities arising under
the Securities Act or otherwise.

II-1
<PAGE>
ITEM 16. EXHIBITS

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ----------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated March 19, 1995 among Exar Corporation, Startech
Semiconductor, Inc., Moon Acquisition, Inc. and certain Principal Officers.
2.2 Agreement of Merger dated March 30, 1995 between Startech Semiconductor, Inc. and Moon
Acquisition, Inc.
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum.
23.1 Consent of KPMG Peat Marwick LLP. Reference is made to page II-5.
23.2 Consent of Cooley Godward Castro Huddleson & Tatum. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
<FN>
- ------------------------
</TABLE>

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's

II-2
<PAGE>
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 or
Regulation S-X are not set forth in the Prospectus, to deliver, or cause to be
delivered to each person to whom the Prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
Prospectus to provide such interim financial information.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Jose,
County of Santa Clara, State of California, on April 28, 1995.

EXAR CORPORATION

By: /s/ RONALD W. GUIRE

--------------------------------------
Ronald W. Guire
Senior Vice President, Chief
Financial
Officer and Secretary

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints George D. Wells and Ronald W. Guire and each or
any one of them, as his true and lawful attorney-in-fact and agents 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.

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------ -------------------------------------------- -----------------

<C> <S> <C>
/s/ GEORGE D. WELLS
-------------------------------------- President, Chief Executive Officer and April 28,1995
George D. Wells Director (PRINCIPAL EXECUTIVE OFFICER)

/s/ RONALD W. GUIRE Senior Vice President, Chief Financial
-------------------------------------- Officer, Secretary and Director (PRINCIPAL April 28,1995
Ronald W. Guire FINANCIAL AND ACCOUNTING OFFICER)

/s/ RAIMON L. CONLISK
-------------------------------------- Chairman of the Board and Director April 28,1995
Raimon L. Conlisk

/s/ JAMES E. DYKES
-------------------------------------- Director April 28,1995
James E. Dykes

/s/ GEORGE E. GREGA
-------------------------------------- Director April 28,1995
George E. Grega
</TABLE>

II-4
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Palo Alto, California
May 2, 1995

II-5
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ----------- ------------------------------------------------------------------------------------------- -------------
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated March 19, 1995 among Exar Corporation, Startech
Semiconductor, Inc., Moon Acquisition, Inc. and certain Principal Officers................
2.2 Agreement of Merger dated March 30, 1995 between Startech Semiconductor, Inc. and Moon
Acquisition, Inc..........................................................................
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum.........................................
23.1 Consent of KPMG Peat Marwick LLP. Reference is made to page II-5.
23.2 Consent of Cooley Godward Castro Huddleson & Tatum. Reference is made to Exhibit 5.1.......
24.1 Power of Attorney. Reference is made to page II-4..........................................
</TABLE>

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

AMONG

EXAR CORPORATION

MOON ACQUISITION, INC.

STARTECH SEMICONDUCTOR, INC.

AND THE PRINCIPAL OFFICERS

MARCH 19, 1995

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE 1 DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . 1
1.1 Merger of Startech into Merger Sub . . . . . . . . . . . . . . . 1
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing; Effective Time. . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Startech Stock . . . . . . . . . . . . . . . . . . 2
1.5 Election Procedures. . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Closing of Startech Transfer Books . . . . . . . . . . . . . . . 4
1.7 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . 5
1.8 Stock Subject to Conditions. . . . . . . . . . . . . . . . . . . 6
1.9 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.12 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . 7
1.13 Certificate of Incorporation.. . . . . . . . . . . . . . . . . . 7
1.14 Bylaws.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.15 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.16 Officers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.17 Startech Options . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF STARTECH . . . . . . . . . . . 9
2.1 Due Organization; Qualification; Corporate Documents . . . . . . 9
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Corporate Authority; Authorization . . . . . . . . . . . . . . . 11
2.4 Governmental Approvals; No Conflicts . . . . . . . . . . . . . . 11
2.5 Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . 14
2.8 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.10 Litigation and Claims; Compliance with Law . . . . . . . . . . . 19
2.11 Environmental Provisions . . . . . . . . . . . . . . . . . . . . 19
2.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 21
2.14 Receivables; Major Customers.. . . . . . . . . . . . . . . . . . 23
2.15 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.16 Sale of Products; Performance of Services. . . . . . . . . . . . 24
2.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.18 Major Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . 26
2.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.20 Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.21 Transactions with Affiliates.. . . . . . . . . . . . . . . . . . 26
2.22 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . 27

<PAGE>

2.23 Startech Action. . . . . . . . . . . . . . . . . . . . . . . . . 27
2.24 Shareholder Representations. . . . . . . . . . . . . . . . . . . 27

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EXAR AND MERGER SUB. . . . . . 27
3.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . 27
3.2 Corporate Authority; Authorization. . . . . . . . . . . . . . . 27
3.3 Governmental Approvals; No Conflicts.. . . . . . . . . . . . . . 28
3.4 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . 28
3.5 SEC Filings; Financial Statements. . . . . . . . . . . . . . . . 28
3.6 Offering Valid . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.7 Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.8 Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ARTICLE 4 COVENANTS OF STARTECH. . . . . . . . . . . . . . . . . . . . . . 29
4.1 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 5 COVENANTS OF EXAR AND MERGER SUB . . . . . . . . . . . . . . . . 35
5.1 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 35
5.2 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF EXAR AND MERGER SUB . . . 36
6.1 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.2 Compliance with Covenants and Conditions; Representations and
Warranties Correct . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . 37
6.4 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . 37
6.5 Consents of Others . . . . . . . . . . . . . . . . . . . . . . . 37
6.6 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.7 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.8 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . 37
6.9 Continuity of Interest Certificates. . . . . . . . . . . . . . . 37
6.11 Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . 38
6.12 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.13 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . 38
6.14 Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . 38
6.15 Startech's Shareholders Approval . . . . . . . . . . . . . . . . 38
6.16 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.17 FIRPTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.18 Orbit Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.19 Orbit Manufacturing. . . . . . . . . . . . . . . . . . . . . . . 38
6.20 Startech Options and Warrants. . . . . . . . . . . . . . . . . . 39
6.21 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . 39
6.22 Section 280G Payments. . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF STARTECH. . . . . . . . . 39

<PAGE>

7.1 Compliance with Covenants and Conditions; Representations and
Warranties Correct . . . . . . . . . . . . . . . . . . . . . . . 39
7.2 Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . 39
7.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.4 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Absence of Restraint . . . . . . . . . . . . . . . . . . . . . . 39
7.6 Startech Shareholders' Approval. . . . . . . . . . . . . . . . . 40
7.7 Key Employee Deferred Compensation Plan. . . . . . . . . . . . . 40

Article 8 Indemnity by Securityholders . . . . . . . . . . . . . . . . . . 40
8.1 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Satisfaction of Indemnification. . . . . . . . . . . . . . . . . 41
8.3 Claim Procedure. . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Objections to Claims . . . . . . . . . . . . . . . . . . . . . . 41
8.5 Resolution of Conflicts. . . . . . . . . . . . . . . . . . . . . 41
8.6 Committee of the Securityholders . . . . . . . . . . . . . . . . 43
8.7 Third-Party Claims. . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.9 Survival of Representations and Warranties . . . . . . . . . . . 45

ARTICLE 9 INDEMNITY BY EXAR. . . . . . . . . . . . . . . . . . . . . . . . 45
9.1 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.2 Claim Procedures . . . . . . . . . . . . . . . . . . . . . . . . 46
9.3 Objections to Claims . . . . . . . . . . . . . . . . . . . . . . 46
9.4 Resolution of Conflicts. . . . . . . . . . . . . . . . . . . . . 47
9.5 Charter and Bylaw Indemnifications . . . . . . . . . . . . . . . 47
9.6 Survival of Representations and Warranties.. . . . . . . . . . . 47
9.7 Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE 10 EARN-OUT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.1 Calculation of Earn-Out Payments . . . . . . . . . . . . . . . . 48
10.2 Distributions of Earn-Out Payments.. . . . . . . . . . . . . . . 50
10.3 Post-Closing Covenants of Exar.. . . . . . . . . . . . . . . . . 51

ARTICLE 11 REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . 52
11.1 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . 52
11.2 Piggyback Registration.. . . . . . . . . . . . . . . . . . . . . 53
11.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 55
11.4 Current Public Information.. . . . . . . . . . . . . . . . . . . 56
11.5 Termination of Registration Rights.. . . . . . . . . . . . . . . 56
11.6 Transferability of Registration Rights.. . . . . . . . . . . . . 56

ARTICLE 12 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . 56
12.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 57
12.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 57

iii

<PAGE>

12.4 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . 57
12.5 Extension of Time; Waivers . . . . . . . . . . . . . . . . . . . 57

ARTICLE 13 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.2 Entire Agreement; Counterparts; Applicable Law . . . . . . . . . 58
13.3 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . 58
13.4 Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.7 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.8 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.9 Third Party Beneficiary Rights . . . . . . . . . . . . . . . . . 60
13.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

<PAGE>

EXHIBITS:

EXHIBIT 1.3: Agreement of Merger

EXHIBIT 4.2(s): Form of Continuity of Interest Certificate

EXHIBIT 6.6(a): Form of Opinion of Battle Fowler LLP

EXHIBIT 6.6(b): Form of Opinion of Brobeck, Phleger & Harrison

EXHIBIT 6.7(a): Form of Tax Opinion of Cooley Godward Castro Huddleson & Tatum

EXHIBIT 6.7(b): Form of Tax Opinion of Battle Fowler LLP

EXHIBIT 7.3: Form of Opinion of Cooley Godward Castro Huddleson & Tatum

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
March 19, 1995 by and among EXAR CORPORATION, a Delaware corporation ("Exar"),
MOON ACQUISITION, INC., a Delaware corporation ("Merger Sub"), STARTECH
SEMICONDUCTOR, INC., a California corporation ("Startech") and Ram K. Reddy, an
individual, and Dr. Roubik Gregorian, an individual (Messrs. Reddy and Gregorian
collectively the "Principal Officers").

RECITALS

A. Exar has formed Merger Sub as a wholly owned subsidiary in order to
effect the merger of Startech with and into Merger Sub (the "Merger") in
accordance with the General Corporation Law of the State of California (the
"California Law") and the Delaware General Corporation Law (the "Delaware Law")
and this Agreement;

B. This Agreement has been approved by the respective Boards of
Directors of Exar, Merger Sub and Startech;

C. The Merger is intended to qualify as a reorganization within the
meaning of the provisions of Section 368 of the Internal Revenue Code of 1986,
as it may be amended from time to time (the "Code") and to be accounted for as a
purchase; and

D. Ram K. Reddy is the Chairman of the Board and Chief Executive
Officer and a securityholder of Startech, and Dr. Roubik Gregorian is the
President and Chief Operating Officer and a securityholder of Startech.

AGREEMENT

Exar, Merger Sub and Startech agree as follows:

ARTICLE 1

DESCRIPTION OF TRANSACTION

1.1 MERGER OF STARTECH INTO MERGER SUB. Upon the terms and subject to
the conditions set forth in this Agreement, Startech shall be merged with and
into Merger Sub and the separate existence of Startech shall cease. Merger Sub
shall be the surviving corporation in the Merger under the corporate name of
Startech, and Exar shall own all of the issued and outstanding shares of capital
stock of Merger Sub. Merger Sub, in its capacity as the corporation surviving
the Merger, is sometimes referred to herein as the "Surviving Corporation."

1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in Section 1107 of the California Law and Section 252 of the Delaware Law.

<PAGE>

1.3 CLOSING; EFFECTIVE TIME. Consummation of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
Cooley Godward Castro Huddleson & Tatum, Five Palo Alto Square, Palo Alto,
California, on the second business day following the day on which the closing
conditions contained in Articles 6 and 7 hereof have been satisfied or waived,
or at such other date, time and place as Exar and Startech may mutually select
(the "Closing Date"). At the Closing, Merger Sub and Startech will each carry
out the procedures specified under the applicable provisions of the California
Law and the Delaware Law, including duly executing and filing an Agreement of
Merger in the form attached hereto as Exhibit 1.3 (the "Agreement of Merger")
with the Secretary of State of the State of California and the Secretary of
State of the State of Delaware, to the end that the Merger shall become
effective. The Merger shall become effective (the "Effective Time") on the last
to occur of (a) the date the Agreement of Merger is duly filed with the
Secretary of State of the State of Delaware or (b) such later date as may be
specified in the Agreement of Merger.

1.4 CONVERSION OF STARTECH STOCK. At the Effective Time, each then
outstanding share of common stock, no par value, of Startech (the "Startech
Common Stock") and each then outstanding share of Series A preferred stock, no
par value, of Startech (the "Startech Preferred Stock") other than Dissenting
Shares (as defined in Section 1.12)) shall cease to be an existing and issued
share and shall become and be converted into, by virtue of the Merger and
without any action on the part of Exar, Merger Sub, Startech or the holder
thereof, one of the following, at the shareholder's election (subject to and in
accordance with Section 1.5 below):

(a) a unit (an "Option A Unit") consisting of 0.04619151 of a
share of common stock, $0.001 par value, of Exar (the "Exar Common Stock"); PLUS
an amount in cash equal to (x) the Total Cash Consideration (as defined below)
MULTIPLIED BY (y) the Option A Participation Percentage; or

(b) the right to participate in the Earn-Out Payments (as defined
below) (an "Option B Unit") in amounts determined by MULTIPLYING (x) the
Option B Participation Percentage BY (y) the aggregate amount distributed at
each Distribution Date (as defined below) as and to the extent provided in
Article 10.

"Closing Shares" shall mean 500,000 shares of Exar Common Stock.

"Option A Participation Percentage" shall mean one DIVIDED BY
10,824,500.

"Option B Participation Percentage" shall mean one DIVIDED BY
5,093,883.

<PAGE>

1.5 ELECTION PROCEDURES.

(a) Not fewer than nine days prior to the day (the "Meeting Date")
of the Shareholders Meeting (as defined below), Startech shall mail to the
holders of Startech Common Stock, Startech Preferred Stock, Startech Options (as
defined below) and Startech Warrants (as defined below): (i) an election
agreement in such form and containing such provisions as Exar shall reasonably
specify ("Election Agreement"); and (ii) instructions for use of the Election
Agreement to effect an election to receive in the Merger Option A Units or
Option B Units, or a combination thereof; PROVIDED, HOWEVER, that no
securityholder of Startech may elect to receive a number of Option B Units equal
to more than 50% of the total number of shares of Startech Common Stock and
Startech Preferred Stock and shares subject to Startech Options and Startech
Warrants owned by such securityholder (the securityholder's "Fully Diluted
Shares"). All shares of Startech Common Stock, Startech Preferred Stock,
Startech Options and Startech Warrants in respect of which a complete and
validly executed Election Agreement is not received by Startech on or prior to
12:00 Noon, California Time, on the second day before the Meeting Date shall be
deemed to have elected to receive: (i) a number of Option A Units equal to (x)
68% MULTIPLIED BY (y) the number of shares with respect to which the holder
thereof has made no election (rounded to the nearest whole unit); and (ii) a
number of Option B Units equal to (x) the number of shares with respect to which
such holder has made no election LESS (y) the number of Option A Units to be
received by such holder pursuant to clause (i). Startech securityholders who
together constitute a "group" for purposes of Rule 13d under the Exchange Act
(as defined below) may, at their discretion, make an election pursuant to this
Section 1.5 as if such securityholders were a single securityholder by
completing and having each such securityholder execute a single Election
Agreement.

(b) In the event the securityholders of Startech elect to convert
shares of Startech Common Stock, Startech Preferred Stock, Startech Options and
Startech Warrants into more than 10,824,500 Option A Units pursuant to this
Section 1.5, then: (i) the aggregate number of Option A Units that shall be
issued to such securityholders shall be 10,824,500; (ii) such Option A Units
shall be issued, first, to each securityholder of Startech that number of Option
A Units elected by such securityholder up to (x) 68% TIMES (y) such
securityholder's Fully Diluted Shares and, second, to each securityholder of
Startech who has elected to receive a number of Option A Units greater than (x)
68% TIMES (y) such securityholder's Fully Diluted Shares, that number of Option
A Units determined on a pro rata basis according to such securityholder's Fully
Diluted Shares compared to the total number of Fully Diluted Shares held by all
securityholders electing to convert more than 68% of their respective Fully
Diluted Shares into Option A Units (up to the maximum number of Option A Units
elected by such securityholder); and (iii) each share of Startech Common Stock
and Startech Preferred Stock and each share subject to a Startech Option and a
Startech Warrant held by Startech securityholders that is not converted into an
Option A Unit as a result of the pro rata cutback described in clause (ii) above
shall be converted into an Option B Unit or, in the case of a Startech Option or
Startech Warrant, the right to receive upon exercise thereof an Option B Unit.

<PAGE>

number of Option B Units that shall be issued to such securityholders shall be
5,093,883; (ii) such Option B Units shall be issued, first, to each
securityholder of Startech that number of Option B Units elected by such
securityholder up to (x) 32% TIMES (y) such securityholder's Fully Diluted
Shares and, second, to each securityholder of Startech who has elected to
receive a number of Option B Units greater than (x) 32% TIMES (y) such
securityholder's Fully Diluted Shares, that number of Option B Units determined
on a pro rata basis according to such securityholder's Fully Diluted Shares
compared to the total number of Fully Diluted Shares held by all securityholders
electing to convert more than 32% of their respective Fully Diluted Shares into
Option B Units (up to the maximum number of Option B Units elected by such
securityholder); and (iii) each share of Startech Common Stock and Startech
Preferred Stock and each share subject to a Startech Option and a Startech
Warrant held by Startech securityholders that is not converted into an Option B
Unit as a result of the pro rata cutback described in clause (ii) above shall be
converted into an Option A Unit or, in the case of a Startech Option or Startech
Warrant, the right to receive upon exercise thereof an Option A Unit.

(d) Exar and Startech are each authorized to make adjustments that
are not material regarding the allocation of Option A Units and Option B Units
to Startech securityholders to the extent required for rounding purposes, and
such determinations shall be final and binding upon all Startech
securityholders; PROVIDED that, in any event, each Startech securityholder shall
receive (or, in the case of Startech Options and Startech Warrants, have the
right to receive upon exercise thereof) a total number of Option A Units and
Option B Units equal to such securityholder's Fully Diluted Shares.

(e) Except as otherwise specified in a Startech securityholder's
Election Agreement, the aggregate Option A Units and Option B Units that such
Startech securityholder is entitled to receive pursuant to this Section 1.5
shall be allocated among such securityholder's Startech Common Stock, Startech
Preferred Stock, Startech Options and Startech Warrants such that the Option A
Units (up to the maximum number of Option A Units such securityholder is
entitled to receive) are allocated: first, to such securityholder's Startech
Common Stock and Startech Preferred Stock, in order of ascending per share
original issue price from Startech; and, second, to such securityholder's
Startech Options and Startech Warrants in order of ascending per share exercise
price. Any Startech Common Stock, Startech Preferred Stock, Startech Options
and Startech Warrants to which Option A Units are not allocated will be
allocated Option B Units.

1.6 CLOSING OF STARTECH TRANSFER BOOKS. At the Effective Time, holders
of certificates representing shares of Startech Common Stock and Startech
Preferred Stock shall cease to have any rights as shareholders of Startech, and
the stock transfer books of Startech shall be closed with respect to all shares
of Startech Common Stock and Startech Preferred Stock outstanding immediately
prior to the Effective Time. No further transfer of any such shares of Startech
Common Stock or Startech Preferred Stock shall thereafter be made on such stock
transfer books. If, after the Effective Time, a valid certificate previously
representing any of such shares of Startech Common Stock (a "Startech Common
Stock Certificate") or Startech Preferred Stock (a "Startech Preferred Stock
Certificate") is presented to the Surviving Corporation or Exar, such Startech
Common Stock Certificate or Startech Preferred Stock Certificate, as the case
may be, shall be canceled and exchanged as provided in Section 1.7.

<PAGE>

1.7 EXCHANGE OF CERTIFICATES.

(a) As soon as practicable after the Effective Time, Exar will
mail to the holders of Startech Common Stock Certificates and Startech Preferred
Stock Certificates (i) a letter of transmittal in such form and containing such
provisions as Exar may reasonably specify ("Letter of Transmittal") and
(ii) instructions for use in effecting the surrender of Startech Common Stock
Certificates and Startech Preferred Stock Certificates in exchange for cash and
certificates representing Exar Common Stock. Upon surrender of a Startech
Common Stock Certificate or Startech Preferred Stock Certificate to Exar for
exchange, together with a duly executed Letter of Transmittal and such other
documents as may be reasonably required by Exar, the holder of such Startech
Common Stock Certificate or Startech Preferred Stock Certificate shall be
entitled to receive in exchange therefor cash and a certificate representing the
number of whole shares of Exar Common Stock that such holder has the right to
receive pursuant to the provisions of this Article 1, and the Startech Common
Stock Certificate or Startech Preferred Stock Certificate so surrendered shall
be canceled. Until surrendered as contemplated by this Section 1.7, each
Startech Common Stock Certificate and each Startech Preferred Stock Certificate
shall be deemed, from and after the Effective Time, to represent only the right
(i) to receive upon such surrender cash and a certificate representing shares of
Exar Common Stock (and cash in lieu of any fractional share of Exar Common
Stock) as contemplated by this Article 1 and, (ii) with respect to Option B
Units, to participate in future distributions of the Earn-Out Payments (as
defined below), if any (collectively, with respect to each shareholder of
Startech, the "Merger Consideration").

(b) No dividends or other distributions declared or made with
respect to Exar Common Stock with a record date after the Effective Time, and no
distributions of cash or Exar Common Stock in connection with Earn-Out Payments
(as defined below), shall be paid to the holder of any unsurrendered Startech
Common Stock Certificate or Startech Preferred Stock Certificate with respect to
the shares of Startech Common Stock or Startech Preferred Stock represented
thereby, and no cash payment in lieu of any fractional share shall be paid to
any such holder, until such holder surrenders such Startech Common Stock
Certificate or Startech Preferred Stock Certificate in accordance with this
Section 1.7.

(c) No certificates or scrip for fractional shares of Exar Common
Stock shall be issued, but in lieu thereof each holder of shares of Startech
Common Stock and Startech Preferred Stock who would otherwise be entitled to
receive a certificate or scrip for a fraction of a share of Exar Common Stock
shall receive from Exar a cash amount equal to the market value of one share of
Exar Common Stock (based on the Exar Common Stock Price) multiplied by the
fraction of a share of Exar Common Stock to which such holder would otherwise be
entitled.

(d) Neither Exar nor the Surviving Corporation shall be liable to
any holder or former holder of shares of Startech Common Stock, Startech
Preferred Stock or Exar Common Stock with respect to any shares (or dividends or
distributions with respect thereto) or cash amounts delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.

<PAGE>

(e) The shares of Exar Common Stock to be issued pursuant to this
Article 1 and Article 11 shall not have been registered and shall be
characterized as "Restricted Securities" under the federal securities laws, and
under such laws such shares may be resold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), only in certain
limited sets of circumstances. Each certificate evidencing shares of Exar
Common Stock to be issued pursuant to this Article 1 shall bear the following
legend:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE CORPORATION."

(f) To the extent that any former holder of Startech Common Stock,
Startech Preferred Stock, Startech Options and Startech Warrants would otherwise
be entitled to receive a fraction of a cent ($.01) with respect to any cash
payment in respect of Option A Units or Option B Units, whether payable at
Closing or on a Distribution Date, such amount shall be rounded up to the
nearest whole cent.

(g) The rights of Startech shareholders who receive Option B Units
to participate in distributions of the Earn-Out Payments shall not be
transferable, except by will or descent.

1.8 STOCK SUBJECT TO CONDITIONS. If any shares of Startech Common Stock
or Startech Preferred Stock outstanding immediately prior to the Effective Time
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition, or are subject to an escrow, under any applicable stock purchase
agreement, restriction agreement or other agreement with Startech, then (unless
such condition or escrow terminates by virtue of the Merger pursuant to the
express terms of such agreement) the shares of Exar Common Stock issued in
exchange for such shares of Startech Common Stock or Startech Preferred Stock
will also be unvested or subject to the same repurchase option, risk of
forfeiture or other condition or escrow and the certificates evidencing such
shares of Exar Common Stock may accordingly be marked with appropriate legends
or retained in escrow.

1.9 ACCOUNTING TREATMENT. The parties intend that the Merger will be
treated as a purchase for accounting purposes.

1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368(a) of
the Code.

<PAGE>

1.11 FURTHER ACTION. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with the full right, title and possession to
all assets, property, rights, privileges, immunities, powers and franchises of
either or both of the Constituent Corporations, the officers and directors of
the Surviving Corporation are fully authorized in the name of either or both of
the Constituent Corporations or otherwise to take all such action.

1.12 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Startech Common Stock and Startech Preferred Stock that are
issued and outstanding immediately prior to the Effective Date and that are held
by shareholders who have not voted such shares in favor of the Merger
("Dissenting Shares") shall not be canceled and converted into Exar Common Stock
unless and until such holder shall have failed to perfect, or shall have
effectively withdrawn or lost, such holder's right to purchase and payment under
the California Law. If such holder shall have so failed to perfect, or shall
have effectively withdrawn or lost such right, such holder's shares of Startech
Common Stock or Startech Preferred Stock shall thereupon be deemed to have been
canceled and converted as described in Section 1.4 at the Effective Time, and
each such share shall represent solely the right to receive the Merger
Consideration. From and after the Effective Time, no shareholder who has
exercised dissenters' rights as provided in Chapter 13 of the California Law
shall be entitled to vote such holder's shares for any purpose or to receive
payment of dividends or other distributions with respect to such holder's shares
(except dividends and other distributions payable to shareholders of record at a
date which is prior to the Effective Time).

1.13 CERTIFICATE OF INCORPORATION. From and after the Effective Time and
until thereafter amended as provided by law, the Certificate of Incorporation of
Merger Sub shall be the Certificate of Incorporation of the Surviving
Corporation.

1.14 BYLAWS. From and after the Effective Time, the Bylaws of Merger Sub
shall be the Bylaws of the Surviving Corporation until amended as provided by
law.

1.15 DIRECTORS. From and after the Effective Time, the directors of
Merger Sub shall be the directors of the Surviving Corporation, and they shall
continue to hold office as provided in the Bylaws of the Surviving Corporation.

1.16 OFFICERS. From and after the Effective Time, the officers of Merger
Sub shall be the officers of the Surviving Corporation, and they shall continue
to hold office as provided in the Bylaws of the Surviving Corporation.

1.17 STARTECH OPTIONS AND STARTECH WARRANTS.

(a) CONVERSION OF STARTECH OPTIONS. At the Effective Time, each
then outstanding option to purchase Startech Common Stock (the "Startech
Options") (including all outstanding options granted under Startech's 1993
Incentive Stock Option Plan (the "Startech Plan") and any individual options
granted outside of the Startech Plan) shall become and be converted into, by
virtue of the Merger and without any action on the part of Exar, Merger Sub,
Startech or the holder thereof, an option (an "Exar Option") to purchase that
number of Option

<PAGE>

A Units and Option B Units that the holder thereof would have been entitled to
receive had such option been exercised immediately prior to the Effective Time
(determined pursuant to Section 1.5), at an exercise price per Option A Unit or
Option B Unit equal to the exercise price per share of such option immediately
prior to the Effective Time. If the foregoing calculation results in an Exar
Option being exercisable for a fraction of a share of Exar Common Stock, then
the number of shares of Exar Common Stock subject to such option will be rounded
down to the nearest whole number of shares with no cash being payable for such
fractional shares. The term, exercisability, vesting schedule and all other
terms and conditions of the Startech Options will otherwise be unchanged.
Continuous employment with Startech will be credited to an optionee of Startech
for purposes of determining the number of shares of Exar Common Stock subject to
exercise under an Exar Option after the Effective Time.

(b) REGISTRATION. Exar will cause the Exar Common Stock issuable
upon exercise of the Exar Options to be registered on Form S-8 promulgated by
the Securities and Exchange Commission ("SEC") promptly after the Effective Time
and will use reasonable efforts to maintain the effectiveness of such
registration statement or registration statements for so long as any such Exar
Options shall remain outstanding. Such registration shall be conditioned on
each holder of a Startech Option whose shares will be registered thereunder
agreeing (the "Trading Restrictions") that (i) all sales made pursuant to such
registration statement shall be made to or through two brokerage firms
designated by Exar in its discretion and identified in writing to such holders,
(ii) prior to the 121st day after the effective date of such registration
statement, such holder will not sell more than 15% of the aggregate of the
Closing Shares and the shares of Exar Common Stock that such holder is entitled
to receive upon exercise of Exar Options and Exar Warrants held by such Selling
Shareholder during any trailing 30-day period and (iii) from the 121st day after
the effective date of such registration statement until April 30, 1996, each
holder who owns Closing Shares and has the right to acquire upon exercise of
Exar Options and Exar Warrants an aggregate of 50,000 or more shares of Exar
Common Stock, will not sell more than 35% of the aggregate of the Closing Shares
and the shares of Exar Common Stock that such holder is entitled to receive upon
exercise of Exar Options and Exar Warrants held by such holder during any
trailing 30-day period. Exar will reserve a sufficient number of shares of Exar
Common Stock for issuance upon exercise of the Exar Options.

(c) CONVERSION OF STARTECH WARRANTS. At the Effective Time, each
then outstanding warrant to purchase Startech Common Stock (the "Startech
Warrants") shall become and be converted into, by virtue of the Merger and
without any action on the part of Exar, Merger Sub, Startech or the holder
thereof, a warrant (an "Exar Warrant") to purchase that number of Option A Units
and Option B Units that the holder thereof would have been entitled to receive
had such warrant been exercised immediately prior to the Effective Time
(determined pursuant to Section 1.5), at an exercise price per Option A Unit or
Option B Unit equal to the exercise price per share of such warrant immediately
prior to the Effective Time. If the foregoing calculation results in an Exar
Warrant being exercisable for a fraction of a share of Exar Common Stock, then
the number of shares of Exar Common Stock subject to such option will be rounded
down to the nearest whole number of shares with no cash being payable for such
fractional shares. The terms and conditions of the Startech Warrants will
otherwise be unchanged.

<PAGE>

(d) EXERCISE OF STARTECH OPTIONS AND STARTECH WARRANTS. In the
event that following the Merger a Startech Option or a Startech Warrant is
exercisable for a combination of Option A Units and Option B Units, then, in the
event of a partial exercise thereof, the holder thereof shall be entitled to
designate (by delivering written notice together with a notice of exercise)
whether the holder is exercising his or her Startech Option or Startech Warrant
for Option A Units, Option B Units or a specified combination thereof (up to the
maximum number of each that may be acquired upon exercise of such Startech
Option or Startech Warrant). The holder of a Startech Option or a Startech
Warrant may, by delivering written notice to Exar together with a notice of
exercise, specify that any cash portion of the Merger Consideration that is
payable to the holder by Exar immediately upon exercise of such Startech Option
or Startech Warrant shall be applied to the exercise price of such Startech
Option or Startech Warrant, with the holder paying to Exar the balance of the
exercise price, or Exar paying to the holder the balance of such Merger
Consideration, as the case may be.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF STARTECH

Except as set forth in the disclosure schedules delivered to Exar on
March 17, 1995, and signed by the Chief Executive Officer of Startech (the
"Startech Disclosure Schedule"), the schedules of which are numbered to
correspond to the subsection numbers of this Agreement, Startech and the
Principal Officers represent and warrant to Exar and Merger Sub as of the date
of this Agreement and as of the Effective Time as follows:

2.1 DUE ORGANIZATION; QUALIFICATION; CORPORATE DOCUMENTS.

(a) Startech is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. Startech has all
necessary power and authority under applicable corporate law and its
organizational documents to own or lease its properties, to perform its
obligations under all Contracts (as defined below) and to carry on its business
as presently conducted and as proposed to be conducted. Startech does not own
or hold, directly or indirectly, any debt or equity securities of, nor has any
other interest in, any corporation, partnership, joint venture or other entity,
nor has Startech entered into any agreement to acquire any such interest.

(b) Startech is qualified to do business as a foreign corporation,
and is in good standing, under the laws of all jurisdictions where the nature of
its business requires such qualification and where the failure to so qualify
would have a "Material Adverse Effect." For the purposes of this Agreement,
"Material Adverse Effect" as it applies to Startech or Exar means an adverse
effect on the business, operations, condition (financial or otherwise), assets
of Startech, or Exar and its subsidiaries (taken as a whole), respectively,
which is material. For purposes of this Agreement, documents, objects, effects,
conditions, events or occurrences shall be deemed "material" as they relate to
Startech if they involve amounts, or could reasonably be expected to result in
loss, expense, liability or other damages, including reasonable costs of
investigation, interest, penalties and attorneys' and accountants' fees
(collectively, "Damages")

<PAGE>

in excess of $150,000. For purposes of this Agreement, documents, objects,
effects, conditions or occurrences shall be deemed "material" as they relate to
Exar if they involve amounts, or could reasonably be expected to result in
Damages that, upon public disclosure, would be viewed by a reasonable investor
as significantly altering the total mix of information then available concerning
Exar and its subsidiaries, taken as a whole.

(c) Startech has delivered to Exar copies of its Articles of
Incorporation and Bylaws, as amended, and minutes of all meetings of its
directors and shareholders, including meetings of committees thereof, and
actions by written consent of such directors and shareholders, and committees
thereof, and the stock records of Startech. There have been no meetings or
other proceedings of the shareholders of Startech, the board of directors of
Startech or any committee of the board of directors of Startech that are not
fully reflected in such minutes or other records. There has not been any
violation of any of the provisions of Startech's Articles of Incorporation or
Bylaws or of any resolution adopted by Startech's shareholders, Startech's Board
of Directors or any committee of Startech's Board of Directors; and no event has
occurred, and no condition or circumstance exists, that might (with or without
notice or lapse of time) constitute or result directly or indirectly in such a
violation. The books of account, stock records, minute books and other records
of Startech are accurate, up-to-date and complete, and have been maintained in
accordance with sound and prudent business practices. All of the records of
Startech are in the actual possession and direct control of Startech. Startech
has in place an adequate and appropriate system of internal controls which is at
least as comprehensive and effective as the systems of internal controls
customarily maintained by companies similar to Startech.

2.2 CAPITALIZATION. The authorized capital stock of Startech consists of
22,000,000 shares of Common Stock, of which 8,457,133 shares are issued and
outstanding; and 1,000,000 shares of Preferred Stock, of which 668,750 shares
have been designated Series A Preferred Stock, of which 668,750 shares are
issued and outstanding. All of the issued and outstanding shares of Startech are
validly issued, fully paid and nonassessable and are free of preemptive rights
and were issued in compliance with federal and state securities laws and any
other applicable law, statute, legislation, constitution, principle of common
law, resolution, ordinance, code, edict, decree, proclamation, treaty,
convention, rule, regulation, ruling, directive, pronouncement, requirement,
specification, determination, decision, opinion or interpretation that is or has
been issued, enacted, adopted, passed, approved, promulgated, made, implemented
or otherwise put into effect by or under the authority of any Governmental
Authority (as defined below) ("Legal Requirements"). The Startech Disclosure
Schedule sets forth a list of all shareholders including their names and
addresses, the number of shares they hold and the series and/or class held.
Each of the shareholders of Startech listed on the Startech Disclosure Schedule
pursuant to the preceding sentence is an "Accredited Investor" as defined in
Regulation D under the Securities Act. The Startech Disclosure Schedule sets
forth the identity of each holder of Startech Common Stock and Startech
Preferred Stock whose shares are subject to vesting and the number of vested and
unvested shares of Startech Common Stock and Startech Preferred Stock held by
such holder. As of the date hereof, Startech has outstanding options to
purchase Startech Common Stock ("Startech Options") to purchase a total of
6,742,500 shares of Startech Common Stock pursuant to Startech's stock option
plans and agreements, and outstanding warrants to purchase Startech Common
("Startech Warrants") to

<PAGE>

purchase a total of 50,000 shares of Startech Common Stock. The Startech
Disclosure Schedule sets forth, with respect to the Startech Options, the name
of each optionee, the number of shares of Startech Common Stock subject to each
Startech Option and the date of grant and exercise price of each Startech
Option. The Startech Disclosure Schedule sets forth each option plan and
agreement under which Startech Options have been granted, and Startech has
delivered to Exar copies of all such plans and agreements. The Startech
Disclosure Schedule sets forth, with respect to the Startech Warrants, the
number of shares of Startech Common Stock issuable upon exercise, the exercise
price per share and the expiration date of each Startech Warrant. Except as set
forth above (a) there are no shares of capital stock of Startech authorized,
issued or outstanding, (b) there are no outstanding subscriptions, options,
warrants, stock appreciation right plans, calls, rights, convertible securities,
shareholder rights plans or other agreements or commitments of any character
relating to issued or unissued capital stock or other securities of Startech, or
obligating Startech or any other party to issue, transfer or sell any shares of
the capital stock or other securities of Startech, and (c) there are no other
outstanding securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of the capital stock or other securities of
Startech or any successor corporation or controlling person of such successor
corporation. Startech has never repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities.

2.3 CORPORATE AUTHORITY; AUTHORIZATION. Startech has full corporate
power and authority to execute, deliver and perform this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Startech, no other corporate proceedings on the part of
Startech are necessary for Startech to authorize this Agreement, and no such
proceedings (other than the approval by a majority vote of each class of stock
of Startech) are necessary to enable Startech to perform or consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by duly authorized officers of Startech. This Agreement constitutes a
legal, valid and binding obligation of Startech enforceable against it in
accordance with its terms (except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws, both state
and federal, affecting the enforcement of creditors' rights or remedies in
general as from time to time in effect and the exercise by courts of equity
powers).

2.4 GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as may be required by
the Securities Act, state securities laws, or the California Law, there is no
Legal Requirement that Startech make any filing with, or obtain any permit,
authorization, consent or approval of, any federal, state, local or foreign
governmental or regulatory authority (a "Governmental Authority") as a condition
to the lawful consummation by Startech of the transactions contemplated by this
Agreement. Startech does not know of any reason why any required permit,
authorization, consent or approval will not be obtained. Neither the execution
and delivery of this Agreement by Startech nor the consummation by Startech of
the Merger or any of the other transactions contemplated by this Agreement will
(i) contravene, conflict with or result in any breach of any provision of the
Articles of Incorporation or Bylaws of Startech or any resolution adopted by the
shareholders or Startech's Board of Directors, (ii) result in a default (or with
notice or lapse of time or both would result in a default) under, or impair the
rights of Startech or alter the rights or obligations of any third party under,
or require Startech

<PAGE>

to make any payment or become subject to any liability to any third party under,
or give rise to any right of termination, amendment, cancellation, acceleration,
repurchase, put or call under, any of the terms, conditions or provisions of any
Contract (as defined below) or other note, bond, mortgage, indenture, license
agreement, lease or other contract, instrument or obligation to which Startech
is a party or by which Startech or any of its assets may be bound, (iii) violate
any Legal Requirement, order, writ, injunction, decree or arbitration award
applicable to Startech or its assets, or (iv) result in the creation of any
material (individually or in the aggregate) liens, charges or encumbrances on
any of the assets of Startech. Except as expressly set forth in this
Section 2.4, Startech neither was, is nor will be required to make any filing
with or give any notice to, or to obtain any consent from, any person in
connection with the execution of this Agreement, the Agreement of Merger and the
transactions contemplated thereby.

2.5 FINANCIAL.

(a) The audited financial statements of Startech for the fiscal
years ended September 30, 1994, 1993 and 1992 (collectively, the "Audited
Financial Statements"), and the unaudited balance sheet of Startech as of
December 31, 1994 (the "Balance Sheet") and the unaudited statements of
operations, changes in shareholders' equity and cash flows of Startech for the
three-month period ended December 31, 1994 (together with the Audited Financial
Statements, the "Startech Financial Statements"), have been prepared in
accordance with the books and records of Startech (which books and records are
complete, maintained on a consistent basis and correctly reflect its income,
expenses, assets and liabilities), are complete and accurate and present fairly
the financial position of Startech as of the dates thereof and the results of
operations of Startech for the periods then ended in accordance with generally
accepted accounting principles ("GAAP") consistently applied, except as
otherwise disclosed therein and except, in the case of unaudited statements, for
normally recurring year-end adjustments, which adjustments will not be material
either individually or in the aggregate.

(b) Startech has no Liabilities, except for any Liability which
(i) is accrued or fully reserved against in the Balance Sheet or disclosed in
the notes included in the Audited Financial Statements for the year ended
September 30, 1994; or (ii) is of a normally recurring nature, was incurred
after September 30, 1994 in the ordinary course of business consistent with past
practice and is not material. As used herein, "Liabilities" shall mean any
liability or obligation of any kind or nature, secured or unsecured (whether
absolute, accrued, contingent or otherwise, and whether due or to become due).

2.6 TAX MATTERS.

(a) Startech has filed or will file or cause to be filed, within
the time and in the manner prescribed by law, all material returns, declaration,
reports, estimates, information returns and statements, including information
returns and reports ("Returns"), required to be filed by Startech under
applicable Legal Requirements for all Returns due on or prior to the Closing
Date, and all Returns so filed complied in all material respects with the laws,
rules and regulations applicable to such Returns.

<PAGE>

(b) Startech has within the time and in the manner prescribed by
law, paid (and until the Closing will, within the time and in the manner
prescribed by law, pay) all material Taxes (as defined below) that are due and
payable on or prior to the Closing Date.

(c) Startech has established (and until the Closing will
establish) on its books and records reserves that are adequate for the payment
of all Taxes not yet due and payable, and there is (and until the Closing shall
be) no material difference between the amounts of the book basis and the tax
basis of assets (net of liabilities) that is not accounted for by an accrual on
the books for federal income tax purposes or, if not required to be so accrued
under GAAP, is not described in the Startech Disclosure Schedule.

(d) There are no liens for Taxes upon the assets of Startech
except liens for Taxes not yet due.

(e) Startech has not filed (and will not file prior to the Closing
Date) any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of the subsection (f)
asset (as such term is defined in Section 341(f)(4) of the Code) owned by
Startech.

(f) No deficiency or adjustment for any Taxes has been proposed or
asserted or assessed against Startech or any of its subsidiaries and, to the
best of Startech's knowledge, no foreign, federal, state or local audits,
examination or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes, and no waiver or consent extending
any statute of limitations for the assessment or collection of any Taxes, which
waiver or consent remains in effect, has been executed by (or on behalf of)
Startech nor are any requests for such waiver or consent pending.

(g) No federal income tax returns of Startech have been examined
by the Internal Revenue Service (the "IRS").

(h) Startech is not a party to any tax-sharing or allocation
agreement, nor does Startech owe any amount under any tax-sharing or allocation
agreement.

(i) The acquisition of Startech by Exar will not result in the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code and there is no agreement, plan or arrangement covering any employee or
independent contractor of Startech that would give rise to any payment that
would not be deductible pursuant to Section 280G.

(j) Startech has not made any election under Section 338(g) of the
Code with respect to any acquisition and no outstanding debt obligation of
Startech is "corporate acquisition indebtedness" within the meaning of
Section 279(b) of the Code.

(k) Startech is not a United States Real Property Holding
Corporation as defined under Section 897(c)(2) of the Code.

<PAGE>

(l) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross receipts,
sales, use, value-added, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp, net
worth, environmental, occupancy or property taxes, customs duties, fees,
assessments or charges of any kind whatsoever (together with any interest and
any penalties, additions to tax or additional amounts) imposed by any taxing
authority (domestic or foreign) upon or payable by Startech.

2.7 CONDUCT OF BUSINESS. Since September 30, 1994, Startech has not:

(a) Made any material purchase, sale or disposition of any asset
or property other than in the ordinary course of business consistent with past
practices or mortgaged, pledged, subjected to a lien or otherwise encumbered any
of its properties or assets;

(b) Suffered any material loss, or material interruption in use,
of any asset or property (whether or not covered by insurance);

(d) Waived any material rights arising out of the conduct of, or
with respect to, its business or operations;

(e) Borrowed money or incurred new or additional indebtedness
(other than accounts payable or trade payables incurred in the ordinary course
of business), incurred any contingent liability as a guarantor or otherwise with
respect to the obligation of any person or entity, lent money to any person
(other than travel and similar advances to employees in the ordinary course of
business), or incurred Liabilities in connection with the leasing of property,
equipment or other assets;

(f) Amended its Articles of Incorporation or Bylaws;

(g) Issued any of its capital shares or granted any options,
warrants or rights to acquire any capital shares, or modified the terms or
waived any rights under any options, warrants or other securities currently
outstanding; or declared, set aside or paid any dividend or made any other
distribution in respect of its capital shares, or made any direct or indirect
redemption, purchase or other acquisition of its capital shares;

(h) Made any change in the compensation payable or to become
payable to any of its officers or employees or entered into, amended or
terminated any employment or consulting agreements or waived any rights
thereunder;

(i) Made any loans to or engaged in transactions with any of its
shareholders, officers, directors or employees other than in the ordinary course
of business;

<PAGE>

(j) Undertaken any stock split, recapitalization or
reorganization;

(k) Incurred any material obligation other than in the ordinary
course of business;

(l) Made any investment in any other business or entity through
purchase of stock or securities, contribution to capital, property transfer,
purchase of property or assets or otherwise;

(m) Made any change in accounting methods, principles or practices
except as required by GAAP;

(n) Revalued any of its assets, including without limitation
writing down the value of inventory or accounts receivable other than in the
ordinary course of business consistent with past practice;

(o) Made any material tax election except in the ordinary course
of business consistent with past practice, changed any material tax election
already made, adopted any material tax accounting method except in the ordinary
course of business consistent with past practice, changed any material tax
accounting method, entered into any material closing agreement, settled any tax
claim or assessment or consented to any material tax claim or assessment or any
waiver of the statute of limitations for any such claim or assessment; or

(p) agreed to do any of the foregoing.

2.8 CONTRACTS.

(a) Startech is not a party to, or bound by, any:

(i) contract for the employment for any period of time
whatsoever, or restricting the employment, of any employee;

(ii) consulting agreement;

(iii) contract or agreement restricting in any manner
Startech's right to compete with any other person or restricting Startech's
right to sell to or purchase from any other person;

(iv) agreement with any affiliate of Startech or person
controlled by an affiliate of Startech for or with respect to the purchase or
sale of goods or the performance of services;

(v) contract for the payment or receipt of license fees or
royalties to or from any person, firm or corporation;

<PAGE>

(vi) contract of agency, representation, distribution or
franchise which cannot be canceled without payment or penalty upon notice of
thirty (30) days or less;

(vii) service contract;

(viii) guaranty, performance, bid or completion bond, or
surety or indemnification agreement;

(ix) contract relating to the purchase, sale, use or
license of technology except licenses for third party software generally
available to the public;

(x) contracts relating to the sale, transfer or
disposition of Startech's securities;

(xi) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of real or personal property or intangibles;

(xii) contracts relating to the purchase, sale or margining
of securities;

(xiii) warranty or service contracts;

(xiv) joint venture, partnership or other contract involving
a sharing of profits, losses, costs or liabilities; or

(xv) except for purchase orders for raw materials in the
ordinary course of business, any other contract which provides for the receipt
or expenditure by Startech of more than $25,000.

All contracts, leases, subleases and other instruments of the type
referred to in this Section 2.8(a) and all other material contracts, leases,
subleases and instruments (collectively "Contracts"), are in full force and
effect and are valid and binding upon Startech and, to the best of Startech's
knowledge, are binding on the other parties thereto, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws, both state and federal, affecting the enforcement of
creditors' rights or remedies in general from time to time in effect and the
exercise by courts of equity powers. No material default by Startech has
occurred thereunder and, to the best of Startech's knowledge, no material
default by the other contracting parties has occurred thereunder and no event
has occurred which with the giving of notice or the lapse of time, or both,
would constitute a material default, give any person the right to declare a
material default or exercise any remedy under any Contract, give any person the
right to accelerate the maturity or performance of any Contract or give any
person the right to cancel, terminate or modify any Contract. Startech has not
received any notice or other communication (in writing or otherwise) regarding
any actual, alleged, possible or potential violation or breach of, or default
under, any Contract. Startech has delivered to Exar copies of each contract,
lease, sublease, or other instrument of the type referred to in clauses (i)
through (xv) of this Section 2.8(a).

<PAGE>

(b) The Startech Disclosure Schedule contains a list of every
material license, permit or governmental approval, order, directive and
agreement applied for, pending, issued, rejected or given to Startech with
respect to its conduct of its business or operations. Startech possesses all
licenses, permits, and governmental approvals and authorizations which are
required in order to operate its business as presently conducted or as proposed
to be conducted, and Startech is in compliance with all such licenses, permits,
approvals and authorizations.

(c) The Startech Disclosure Schedule contains a list of all claims
made or threatened against Startech under each Contract.

2.9 EMPLOYEES.

(a) The Startech Disclosure Schedule contains a true and complete
list of each material bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program or agreement (collectively,
the "Plans"), sponsored, maintained or contributed to or required to be
contributed to by Startech for the benefit of any current employee of Startech
("Employee").

(b) Startech neither has nor, to the best of Startech's knowledge,
has had at any time in the past any employee pension benefit plan (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not excluded from coverage under specific Titles or
Subtitles of ERISA) for the benefit of Employees or former Employees (a "Pension
Plan").

(c) Startech maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Subtitles of ERISA) for the
benefit of Employees or former Employees which are described in the Startech
Disclosure Schedule (the "Welfare Plans"), none of which is a multiemployer plan
(within the meaning of Section 3(37) of ERISA).

(d) With respect to each of the Plans, Startech has heretofore
delivered to Exar and its counsel true and complete copies of each of the
following documents:

(i) a copy of each such Plan (including all amendments
thereto);

(ii) a copy of the annual report, if required under ERISA,
with respect to each such Plan for the last two years;

(iii) a copy of the most recent Summary Plan Description,
together with each Summary of Material Modifications, if required under ERISA,
with respect to each such Plan;

(iv) if such Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof;

<PAGE>

(v) all material contracts relating to the Plans,
including, without limitation, service provider agreements, insurance contracts,
investment management agreements, subscription and participation agreements and
recordkeeping agreements; and

(vi) the most recent determination letter received from the
IRS with respect to each such Plan that is intended to be qualified under
Section 401(a) of the Code (a "401(a) Plan") or the most recent opinion letter
received from the IRS National Office with respect to any 401(a) Plan adopted in
the form of a standardized prototype plan.

(e) Startech does not have and, to the best of Startech's
knowledge, has never had any affiliates as determined under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code nor has Startech ever
been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. To best of Startech's knowledge, Startech has never
made a complete or partial withdrawal from a multiemployer plan, as such term is
defined in Section 3(37) of ERISA, resulting in material "withdrawal liability,"
as such term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208 of
ERISA).

(f) Startech does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan, other than changes to comply with applicable law, that would
affect any Employee and would result in a material liability to Startech.

(g) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to current or former Employees after any
such Employee's retirement or other termination of service (other than
(i) benefit coverage mandated by applicable law, including, without limitation,
coverage provided pursuant to Section 4980B of the Code, (ii) deferred
compensation benefits accrued as liabilities on the books of Startech,
(iii) benefits the full cost of which are borne by the current or former
Employee (or the employee's beneficiary)).

(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 162(i) of the Code, the provisions of
Section 4980B of the Code have been complied with in all material respects.

(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.

(j) Neither the execution of this Agreement, nor the consummation
of the transactions contemplated hereby, will result in any material payment
(including, without limitation, any bonus, golden parachute, or severance
payment) to any current or former director or employee (whether or not under any
Plan), or materially increase the benefits payable under any Plan, or result in
any acceleration of the time of payment or vesting of any such benefits.

(k) The Startech Disclosure Schedule contains a list of all
salaried employees of Startech as of the date indicated on such Schedule. The
Startech Disclosure Schedule

<PAGE>

correctly reflects, in all material respects, their salaries, any other
compensation other than under the Welfare Plans or any 401(a) Plan (E.G., bonus
or commission arrangements), dates of employment and positions.

(l) The Startech Disclosure Schedule identifies all employees of
Startech as of the date thereof who are not available fully to perform work
because of disability or other leave and sets forth the basis of such leave and
the anticipated date of return to full service.

2.10 LITIGATION AND CLAIMS; COMPLIANCE WITH LAW.

(a) Except for litigation or proceedings relating to the
environment (which are exclusively provided for in Section 2.11 below) or to
Taxes (which are exclusively provided for in Section 2.6), there is no
arbitration, suit, litigation, or proceeding, in law or in equity, pending, or,
to the best of Startech's knowledge, threatened before any Governmental
Authority in which Startech is a party or otherwise involved or to which its
business or property is subject ("Proceeding"). To the best of Startech's
knowledge (i) there are no preliminary proceedings or governmental
investigations before any commission or other administrative authority pending
or threatened against Startech, and (ii) Startech has not committed any act (or
omitted to commit any act) that would give rise to any such preliminary
proceeding or investigation.

(b) Startech is not a party to any order, writ, injunction, decree
or arbitration award (or agreement entered into in any Proceeding with any
Governmental Authority) with respect to its properties, assets, personnel or
business activities.

(c) Except for Environment Laws (as defined below), which are
exclusively provided for in Section 2.11 below, Startech is not, and has not
been at any time since September 30, 1992, in violation of, or delinquent in
respect to, any order, writ, injunction, decree or arbitration award or Legal
Requirement, or agreement with, or any license, permit or governmental approval
from, any Governmental Authority to which Startech or any of its properties,
assets, personnel or business activities are subject, including, without
limitation, laws, rules and regulations relating to the provision of
occupational health and safety, equal employment opportunities, fair employment
practices, and sex, race, religious and age discrimination, except where such
violation could not have a Material Adverse Effect. Startech has not received
any notice of noncompliance or other material violation of any such Legal
Requirement.

2.11 ENVIRONMENTAL PROVISIONS.

(a) For the purposes of this Section 2.11:

(i) "Environmental Claim" means any claim, action, cause
of action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (A) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned

<PAGE>

or operated by Startech, or (B) circumstances forming a reasonable basis for any
violation, or alleged violation, of any Environmental Law.

(ii) "Environmental Laws" means all federal, state, local
and foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.

(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products.

(b) To the best of Startech's knowledge, Startech is in compliance
in all material respects with all applicable Environmental Laws, which
compliance includes, but is not limited to, the possession by Startech of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof.
Startech has not received any communication (written or oral), whether from a
Governmental Authority, citizens group, employee or otherwise, that alleges that
it is not in such full compliance, and, to the best of Startech's knowledge,
there are no circumstances that may prevent or interfere with such material
compliance in the future. To the best knowledge of Startech, no current or
prior owner of any property owned or leased by Startech has received any
communication (written or oral), whether from a Government Authority, citizens
group, employee or otherwise, that alleges that it, or Startech, is not in such
full compliance. All permits and other governmental authorizations currently
held by Startech pursuant to the Environmental Laws are identified in the
Startech Disclosure Schedule.

(c) There is no Environmental Claim pending or, to the best of
Startech's knowledge, threatened against Startech or against any person or
entity whose liability for any Environmental Claim Startech has or may have
retained or assumed either contractually or by operation of law.

(d) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that could form the basis for any Environmental Claim
against Startech or, to the best of Startech's knowledge, against any person or
entity whose liability for any Environmental Claim Startech has or may have
retained or assumed either contractually or by operation of law.

(e) Without in any way limiting the generality of the foregoing,
(i) all on-site and off-site locations where, to the best of Startech's
knowledge, Startech has stored, disposed of or arranged for the disposal of,
Materials of Environmental Concern are identified in the Startech Disclosure
Schedule, (ii) all underground storage tanks (whether or not in use by
Startech), and the capacity and contents of such tanks, located on property
owned or leased by Startech, are identified in the Startech Disclosure Schedule,
(iii) there is no asbestos contained

<PAGE>

in or forming part of any building, building component, structure or office
space owned or leased by Startech, and (iv) no polychlorinated biphenyls (PCBs)
are used or stored at any property owned or leased by Startech.

2.12 PROPERTIES.

(a) Startech has previously delivered to Exar and its counsel
copies of all leases pursuant to which Startech leases real or personal property
(the "Leases"). Each of the Leases is a legal, valid and binding obligation of
Startech enforceable against it in accordance with its terms (except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, both state and federal, affecting the enforcement
of creditors rights or remedies in general as from time to time in effect and
the exercise by courts of equity powers) and is in full force and effect.
Startech is not in material default under any term of any Lease, nor to the best
of Startech's knowledge is any other party thereto in default thereunder and no
event has occurred which (whether with or without notice, lapse of time or both)
would constitute a default by Startech. The transactions contemplated by this
Agreement will not constitute a breach of any Lease. The properties subject to
the Leases and the conditions of the Leases are suitable for the business
currently being conducted thereon by Startech. There are no condemnation
proceedings pending or, to the best of Startech's knowledge, threatened with
respect to any portion of the property subject to the Leases.

(b) Startech has good, valid and marketable title to its assets
reflected in the Balance Sheet (as well as all its properties and assets which
have been fully depreciated and are not reflected therein) or acquired after
that date. As of the date of the Balance Sheet Startech has, and as of the
Closing Startech will have, good, valid and marketable title to its assets, free
and clear of any mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances or charges of any kind (collectively,
"Liens"), other than (i) Liens shown on the Balance Sheet as securing specified
liabilities (with respect to which no default exists), (ii) Liens for current
taxes not yet due and (iii) any minor imperfections of title and encumbrances,
if any, which do not individually or in the aggregate impair the operations of
Startech in any material respect (collectively, "Permitted Liens"). All of the
assets of Startech are in all material respects fit for the purposes for which
intended and in good operating condition and repair, ordinary wear and tear
excepted. The assets of Startech constitute all of the properties, rights and
assets necessary for the conduct of the business of Startech as presently
conducted or proposed to be conducted.

(d) Startech is not a "foreign person" as that term is defined in
the Code and in applicable regulations.

2.13 INTELLECTUAL PROPERTY.

(a) The Startech Disclosure Schedule lists all domestic and
foreign patents and patent applications owned or licensed by Startech (the
"Patents") and all agreements relating thereto. Startech owns the Patents and
all related patent rights free and clear of all liens, claims

<PAGE>

or encumbrances and may assign or license them free and clear of any liens,
claims or encumbrances. There are no Proceedings, and to the best of Startech's
knowledge, there are no claims, threats or other communications, which challenge
the validity of any claim of any Patent. All such Patents are currently in
compliance with formal legal requirements (including payment of filing,
examination and maintenance fees and proofs of working or use), and Startech has
no reason to believe that any of the Patents is not, or upon issuance will not
be, valid and enforceable. No Patent has been or is now involved in any
interference proceeding or has been challenged in any way and Startech is not
aware of any interfering patent or patent application. Startech is not aware of
any information that is material to the examination of an application for any
Patent that has not been disclosed to the United States Patent and Trademark
Office pursuant to the disclosure requirements of 37 C.F.R. 1.56. Startech has
delivered to Exar copies of all opinions and memoranda of counsel received by it
and relating to (i) the validity and patentability of the Patents, (ii)
infringement by third parties of the Patents and (iii) Startech's freedom to
operate. The Startech Disclosure Schedule lists all agreements including
licenses relating to the Patents granted to third parties by Startech. Subject
to any right of Startech to conduct an audit of its licensees, all royalties and
other payments due under said agreements have been paid and no party to those
agreements is in default in any manner respecting its obligations under those
agreements. Except for any license implied by the sale of a product, no other
license, covenant, or agreement has been granted or entered into by Startech
with respect to the Patents.

(b) The Startech Disclosure Schedule lists all domestic and
foreign registered and unregistered copyrights ("Copyrights"), trademarks and
trademark applications, service marks and service mark applications
("Trademarks") and registered maskworks and maskwork applications ("Maskworks")
owned or licensed by Startech from or to third parties indicating in each case
whether the Trademark, Maskwork or Copyright is owned or licensed, registered or
unregistered. Startech owns free and clear of all liens, claims or encumbrances
the Trademarks, Maskworks and Copyrights which are so designated as owned by it.
All registered Trademarks, Maskworks and Copyrights are in material compliance
with all formal legal requirements (including, in the case of Trademarks, the
timely post registration filing of affidavits of use and incontestability and of
renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within 180 days after the
Effective Time. There are no interference, opposition or cancellation
proceedings or infringement suits pending or, to the best of Startech's
knowledge, threatened, with respect to any of the Trademarks, Maskworks or
Copyrights. Startech has not been advised and Startech has no reason to believe
that Startech is infringing a Trademark, Maskwork or Copyright held by another
person.

(c) Startech owns or has in its possession certain information,
know-how and show-how (including, without limitation, data, documents, drawings,
software, procedures, customer lists and other proprietary materials) relating
to, without limitation, the specification, examination, simulation, design,
implementation, processing, manufacture, procurement of materials, ingredients
and the like from suppliers or subcontractors, quality control and testing, use
and delivery of its products, in each case of the sort typically considered as
trade secrets in the semiconductor industry (the "Trade Secrets"). Startech has
taken all reasonable precautions to maintain Trade Secrets in confidence and to
prevent their disclosure to unauthorized persons, including having each of its
Employees execute and deliver its standard proprietary information

<PAGE>

protection and assignment agreement (a copy of which has been delivered to
Exar), has had each third party to which Trade Secrets are revealed (other than
banks or other third parties with whom confidentiality agreements are typically
not executed) sign a confidentiality agreement (a copy of which has been
delivered to Exar) and to the best of Startech's knowledge has not publicly
revealed any trade secret. Startech has good title and an absolute (though not
necessarily exclusive) right to use all Trade Secrets, and, to the best of
Startech's knowledge, the use of the Trade Secrets does not infringe the rights
of any third party. The Startech Disclosure Schedule sets forth a list of all
agreements relating to the Trade Secrets. To the extent that the Trade Secrets
are not available in documentary or fixed form, disclosure shall be made to Exar
to permit Exar to make full use of the Trade Secrets to operate the business of
Startech as it is presently conducted and proposed to be conducted.

(d) To the best of Startech's knowledge, no person is infringing
upon any Patent, Maskwork, Trademark or any Copyright or is misappropriating any
Trade Secret owned by Startech. To the best of Startech's knowledge, none of
the products manufactured or sold or licensed by, nor any processes or know-how
used or proposed to be used by Startech, infringes any patent, maskwork,
trademark or copyright of any third party. There is no intellectual property,
in any form, whether patent, trademark, maskwork, tradename, trade secret,
copyright or otherwise, necessary for the operation of Startech's business as
conducted or as proposed to be conducted which Startech does not currently own
or license on commercially reasonable terms.

2.14 RECEIVABLES; MAJOR CUSTOMERS.

(a) The Startech Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of Startech as of February 28, 1995.

(b) All existing accounts receivable of Startech (including those
accounts receivable reflected on the Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since December 31, 1994
in the ordinary course of business and have not yet been collected): (i)
represent valid obligations of customers of Startech arising from BONA FIDE
transactions entered into in the ordinary course of business consistent with
past practices; and (ii) are current and, except as fully reserved in the
Balance Sheet, Startech has no reason to believe they will not be collected in
full (without any counterclaim or setoff) on or before September 30, 1995.

(c) The Startech Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other person since September 30, 1993. Startech has not received
any notice or other communication (in writing or otherwise), and has not
received any other information, indicating that any customer or other person
identified in the immediately preceding sentence may cease dealing with Startech
or may otherwise reduce the volume of business transacted by such Person with
Startech below historical levels.

<PAGE>

2.15 INVENTORY. The Startech Disclosure Schedule provides an accurate
and complete breakdown of all inventory (including raw materials, work in
process and finished goods) of Startech as of February 28, 1995. All of
Startech's existing inventory (including all inventory that is reflected on the
Balance Sheet and that has not been disposed of by Startech since December 31,
1994): (a) is of such quality and quantity as to be usable and saleable by
Startech in the ordinary course of business consistent with past practices; (b)
has been priced at the lower of cost or market value using the first-in, first-
out method; and (c) is free of any defect or deficiency. The inventory levels
maintained by Startech: (a) are not excessive in light of Startech's normal
operating requirements; and (b) are adequate for the conduct of Startech's
operations in the ordinary course of business consistent with past practices.

2.16 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.

(a) Each product that has been sold by Startech to any person: (i)
conformed and complied in all material respects with the terms and requirements
of any applicable warranty or other Contract and with all applicable Legal
Requirements; and (ii) was free of any design defects, construction defects or
other defects or deficiencies at the time of sale. All repair services and
other services that have been performed by Startech were performed properly and
in full conformity with the terms and requirements of all applicable warranties
and other Contracts and with all applicable Legal Requirements.

(b) Startech has no reason to believe that it will incur or
otherwise become subject to any Liability arising directly or indirectly from
any product manufactured or sold, or any repair services or other services
performed by, Startech on or at any time prior to the Effective Time.

(c) No product manufactured or sold by Startech has been the
subject of any recall or other similar action; and no event has occurred, and
Startech has no reason to believe that any condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for any such recall or other similar action relating
to any such product.

(d) No customer or other person has ever asserted or, to the best
of Startech's knowledge, threatened to assert any claim against Startech
(i) under or based upon any warranty provided by or on behalf of Startech or
(ii) under or based upon any other warranty relating to any product sold by
Startech or any services performed by any of the Companies. To the best of
Startech's knowledge, no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for the assertion of any such claim.

(e) Startech has, and, to the best of Startech's knowledge, Orbit
Semiconductor, Inc. ("Orbit") has, in place and has at all times had in place,
an adequate and appropriate quality control system that is at least as
comprehensive and effective as the quality control systems customarily
maintained by companies similar to Orbit and Startech, respectively.

<PAGE>

2.17 INSURANCE.

(a) The Startech Disclosure Schedule accurately sets forth, with
respect to each insurance policy maintained by or at the expense of, or for the
direct or indirect benefit of, Startech: (i) the name of the insurance carrier
that issued such policy and the policy number of such policy; DPLA whether such
policy is a "claims made" or an "occurrences" policy; (iii) a description of the
coverage provided by such policy and the material terms and provisions of such
policy (including all applicable coverage limits, deductible amounts and
co-insurance arrangements and any non-customary exclusions from coverage); (iv)
the annual premium payable with respect to such policy, and the cash value (if
any) of such policy; and (v) a description of any claims pending, and any claims
that have been asserted in the past, with respect to such policy. The Startech
Disclosure Schedule also identifies (i) each pending application for insurance
that has been submitted by or on behalf of Startech and (ii) each self-insurance
or risk-sharing arrangement affecting Startech or any of its assets. Startech
has delivered to Exar copies of all of the insurance policies identified in the
Startech Disclosure Schedule (including all renewals thereof and endorsements
thereto) and all of the pending applications identified in the Startech
Disclosure Schedule.

(b) Each of the policies identified in the Startech Disclosure
Schedule is valid, enforceable and in full force and effect. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis. The nature, scope and dollar amounts
of the insurance coverage provided by such policies are sufficient to adequately
insure Startech's business, assets, operations, key employees, services and
potential liabilities; and such insurance coverage is at least as comprehensive
as the insurance coverage customarily maintained by companies similar to
Startech.

(c) There is no pending claim under or based upon any of the
policies identified in the Startech Disclosure Schedule; and, to the best of
Startech's knowledge, no event has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any such claim.

(d) Startech has not received: (i) any notice or other
communication (in writing or otherwise) regarding the actual or possible
cancellation or invalidation of any of the policies identified in the Startech
Disclosure Schedule or regarding any actual or possible adjustment in the amount
of the premiums payable with respect to any of said policies; (ii) any notice or
other communication (in writing or otherwise) regarding any actual or possible
refusal of coverage under, or any actual or possible rejection of any claim
under, any of the policies identified in the Startech Disclosure Schedule; or
(iii) any indication that the issuer of any of the policies identified in the
Startech Disclosure Schedule may be unwilling or unable to perform any of its
obligations thereunder.

<PAGE>

2.18 MAJOR SUPPLIERS.

(a) The Startech Disclosure Schedule: (i) provides an accurate and
complete breakdown and aging of Startech's accounts payable as of February 28,
1995; (ii) provides an accurate and complete breakdown of all customer deposits
and other deposits held by Startech as of the date of this Agreement; and (iii)
provides an accurate and complete breakdown of Startech's long-term debt as of
the date of this Agreement.

(b) The Startech Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other person that received (i) more than $50,000 from Startech in
the year ended September 30, 1993, (ii) more than $50,000 from Startech in the
year ended September 30, 1994, or (iii) more than $50,000 from Startech in the
first fiscal quarter of the year ending September 30, 1995.

2.19 DISCLOSURE.

(a) The copies of all documents furnished by Startech pursuant to
the terms of this Agreement are complete and accurate. Startech has provided
Exar and its counsel with full and complete access to all of Startech's records
and other documents and data.

(b) For purposes of this Agreement and the transactions
contemplated hereby, none of (i) the representations and warranties made by
Startech in this Agreement, (ii) the Startech Disclosure Schedules or (iii) any
statement by Startech or, to the best of Startech's knowledge, any other person,
contained in any document, certificate or other writing furnished by Startech to
Exar in connection with this Agreement, the Merger or the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make the
statements made herein or therein, in light of the circumstances in which they
were made, not misleading.

(c) To the best of Startech's knowledge, there is no fact that (i)
may have an adverse effect on Startech's business, operations, condition
(financial or otherwise) or assets or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering with the Merger.

2.20 FINDERS. Except for Startech's engagement of Alex. Brown & Sons
Incorporated pursuant to that certain Engagement Letter dated January 20, 1995
(a copy of which has been provided to Exar), Startech has not dealt with any
person, firm or corporation who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for arranging the
transaction contemplated hereby or introducing the parties to each other.

2.21 TRANSACTIONS WITH AFFILIATES. Except for compensation of employees,
since September 30, 1992, there have been no transactions between Startech and
any of its "affiliates" or their "associates" (as such terms are defined in the
rules and regulations of the Securities and Exchange Commission ("SEC")).

<PAGE>

2.22 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the outstanding shares of Startech Common Stock and the majority of outstanding
shares of Startech Preferred Stock is the only vote of the holders of any class
or series of Startech's capital stock necessary to adopt and approve the Merger,
this Agreement and the transactions contemplated thereby.

2.23 STARTECH ACTION. The Board of Directors of Startech (at a meeting
duly called and held) has by the requisite vote of all directors present (a)
determined that the Merger is advisable and fair and in the best interests of
Startech and its shareholders, (b) approved this Agreement and the Merger in
accordance with the provision of Section 1200 of the California Law and (c)
recommended the adoption and approval of this Agreement and the Merger by the
holders of Startech Common Stock and Startech Preferred Stock and directed that
the Merger be submitted for consideration by Startech's shareholders at the
Shareholders Meeting (as defined below).

2.24 SHAREHOLDER REPRESENTATIONS. Each of the representations and
warranties made by shareholders of Startech and contained in the Continuity of
Interest Certificates (as defined below) to be delivered to Exar pursuant to
Section 6.9 will be true and correct.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF EXAR AND MERGER SUB

Except as set forth in the disclosure schedules delivered to Startech on
March 17, 1995, and signed by an executive officer of Exar (the "Exar Disclosure
Schedule"), the schedules of which are numbered to correspond to the subsection
numbers of this Agreement, Exar and Merger Sub represent and warrant to Startech
as of the date of this Agreement and as of the Effective Time as follows:

3.1 DUE ORGANIZATION. Exar is a corporation duly organized, existing
and in good standing under the laws of the State of Delaware. Merger Sub is a
corporation duly organized, existing and in good standing under the laws of the
State of Delaware. Each of Exar and Merger Sub has all necessary power and
authority under applicable corporate law and its organizational documents to own
or lease its properties and to carry on its business as presently conducted.

3.2 CORPORATE AUTHORITY; AUTHORIZATION. Each of Exar and Merger Sub has
full corporate power and authority to execute, deliver and perform this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of each of Exar and Merger Sub, and no other corporate
proceedings on the part of Exar or Merger Sub (other than the approval of Merger
Sub's sole shareholder) are necessary for Exar and Merger Sub to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by duly authorized officers of Exar and
Merger Sub. This Agreement constitutes a legal, valid and binding obligation of
Exar and Merger Sub, enforceable

<PAGE>

against each of them in accordance with its terms (except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws, both state and federal, affecting the enforcement of creditors'
rights or remedies in general from time to time in effect and the exercise by
courts of equity powers).

3.3 GOVERNMENTAL APPROVALS; NO CONFLICTS. Except as may be required by
the Securities Act, state securities laws, the California Law and the Delaware
General Corporation Law, there is no material Legal Requirement that Exar or
Merger Sub make any filing with, or obtain any permit, authorization, consent or
approval of, any Governmental Authority as a condition to the lawful
consummation by Exar and Merger Sub of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by Exar and
Merger Sub nor the consummation by Exar and Merger Sub of the transactions
contemplated by this Agreement will (i) conflict with or result in any breach of
any provision of the Certificate of Incorporation or Bylaws of Exar or the
Articles of Incorporation or Bylaws of Merger Sub, or (ii) violate any Legal
Requirement, order, writ, injunction, decree or arbitration award applicable to
Exar or Merger Sub or their respective assets which violation could have an
Material Adverse Effect on Exar.

3.4 CORPORATE DOCUMENTS. Exar has delivered to Startech copies of
Exar's Certificate of Incorporation and Bylaws and Merger Sub's Articles of
Incorporation and Bylaws, each as amended.

3.5 SEC FILINGS; FINANCIAL STATEMENTS.

(a) Exar has made available to Startech a complete and accurate
copy of each report, schedule, registration statement and definitive proxy
statement filed by Exar with the SEC on or after March 31, 1994 and prior to the
date of this Agreement (the "Exar SEC Reports"), which are all the forms,
reports and documents required to be filed by Exar with the SEC since March 31,
1994. The Exar SEC Reports (i) complied with the requirements of the Securities
Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
the case may be, at the times they were filed (or if amended or superseded by a
filing prior to the date of this Agreement then or the date of such filing), and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

(b) Each of the sets of consolidated financial statements
(including, in each case, any notes thereto) contained in the Exar SEC Reports
was prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and
fairly presents the consolidated financial position of Exar and its material
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.

<PAGE>

(c) Exar has previously furnished to Startech a complete and
correct copy of any amendments or modifications that have not yet been filed
with the SEC but that are required to be filed to agreements, documents or other
instruments which previously had been filed by Exar with the SEC pursuant to the
Securities Act or the Exchange Act.

3.6 OFFERING VALID. Assuming that on the Closing Date no more than
thirty-five (35) shareholders of Startech will fail to qualify as "Accredited
Investors" as defined in Regulation D under the Securities Act, the issuance of
the shares of Exar Common Stock pursuant to Section 1.4 hereof will be exempt
from the registration requirements of the Securities Act and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.

3.7 DISCLOSURE.

(a) The copies of all documents furnished by Exar pursuant to the
terms of this Agreement are complete and accurate.

(b) For purposes of this Agreement and the transactions
contemplated thereby, none of (i) the representations and warranties made by
Exar and Merger Sub in this Agreement, (ii) the Exar Disclosure Schedule or,
(iii) any statement by Exar and Merger Sub or, to the best of Exar's knowledge,
any other person, contained in any document, certificate or other writing
furnished by Exar to Startech specifically identified as supplemental disclosure
in connection with this Agreement or the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the statements made
herein or therein, in light of the circumstances in which they were made, not
misleading.

3.8 FINDERS. Except for Exar's engagement of Prudential Securities
Incorporated pursuant to that certain Engagement Letter dated February 16, 1995
(a copy of which has been provided to Startech), neither Exar nor Merger Sub has
dealt with any person, firm, or corporation who, as a result, is or may be
entitled to a broker's commission, finder's fee, investment banker's fee, or
similar payment from Exar or Merger Sub for arranging the transactions
contemplated hereby or introducing the parties to each other.

ARTICLE 4

COVENANTS OF STARTECH

Startech hereby covenants and agrees as follows:

4.1 NEGATIVE COVENANTS. Between the date of this Agreement and the
Effective Time, unless Exar shall otherwise consent in writing, except as
provided hereunder Startech will not do any of the following or commit to do so:

<PAGE>

(a) Make any purchase, sale or disposition of any asset or
property other than in the ordinary course of business consistent with past
practices or mortgage, pledge, subject to a lien (other than liens for Taxes not
yet due and payable) or otherwise encumber any of its properties or assets;

(b) Incur any indebtedness for borrowed money or incur any
contingent liability as a guarantor or otherwise with respect to the obligations
of any person or entity;

(c) Take any action, or permit any action within Startech's
control, which would prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code and Startech will prevent any of its officers
or directors from taking or permitting any such action;

(d) Amend its Articles of Incorporation or Bylaws as previously
delivered to Exar;

(e) Issue any of its capital shares (except with respect to the
exercise of Startech Options and Startech Warrants outstanding on the date of
this Agreement) or grant any options, warrants or rights to acquire any capital
shares, or modify the terms or waive any rights under any options, warrants or
other securities currently outstanding; or declare, set aside or pay any
dividend or make any other distribution in respect of its capital shares, or
make any direct or indirect redemption, purchase or other acquisition of its
capital shares;

(f) Waive any material rights arising out of the conduct of, or
with respect to, its business or operations;

(g) Make any change in the compensation payable or to become
payable to any of its officers or employees or enter into, amend or terminate
any employment or consulting agreements or waive any rights thereunder;

(h) Make any loans to or engage in transactions with any of its
shareholders, officers, directors or employees other than in the ordinary course
of business;

(i) Enter into, amend or terminate any sales agency or
distribution agreement, any management or employment or consulting agreement,
any lease, license or royalty agreement, or any other material agreement or
Contract or waive any rights thereunder;

(j) Undertake any stock split, recapitalization or reorganization;

(k) Solicit, encourage, negotiate, provide information for, or
otherwise cooperate in any way with, assist, or facilitate, and will use its
best efforts to prevent any of its officers and directors, employees,
representatives and agents from soliciting, encouraging or negotiating or
providing information for or otherwise cooperating in any way with, assisting or
facilitating, any of the following (an "Acquisition Proposal"):

<PAGE>

(i) any merger or consolidation of Startech with any
person other than Exar or Merger Sub,

(ii) any sale of assets of Startech except the sale of
inventory in the ordinary course of business to any person other than Exar or
Merger Sub,

(iii) any equity or debt investment (other than on terms
approved by Exar) in Startech by any person, or

(iv) any purchase of outstanding securities of Startech by
any person;

(l) Undertake a course of action inconsistent with this Agreement
or which would cause any representation or warranty in this Agreement to become
inaccurate or which would prevent any condition precedent to its obligations
under this Agreement from being satisfied at or prior to the Effective Time;

(m) Provide or publish to its shareholders any material which
might constitute an unauthorized "prospectus" within the meaning of the
Securities Act or any impermissible solicitation under the applicable state law;

(n) Incur any material obligation other than in ordinary course of
business;

(o) Borrow money (other than on terms approved by Exar) or incur
new or additional indebtedness (other than accounts payable or trade payables
incurred in the ordinary course of business) or lend money to any person (other
than travel and similar advances to employees in the ordinary course of
business);

(p) Incur liabilities in connection with the leasing of property,
equipment or other assets;

(q) Issue any press release or public disclosure, either written
or oral, of the transactions contemplated by this Agreement without the prior
knowledge and written consent of Exar;

(r) Make any investment in any other business or entity through
purchase of stock or securities, contribution to capital, property transfer,
purchase of property or assets or otherwise;

(s) Alter the manner of keeping its books and accounts or their
accounting practices and procedures;

(t) Revalue any of its assets, including without limitation
writing down the value of inventory or accounts receivable other than in the
ordinary course of business consistent with past practice;

<PAGE>

(u) Make any material Tax election except in the ordinary course
of business consistent with past practice, change any material Tax election
already made, adopt any Tax accounting method except in the ordinary course of
business consistent with past practice, change any Tax accounting method (except
as required by applicable tax law), enter into any closing agreement, settle any
Tax claim or assessment or consent to any Tax claim or assessment or any waiver
of the statute of limitations for any such claim or assessment;

(v) Commence any Proceeding except for routine collection of bills
or for a breach of this Agreement;

(w) Impair any of its patents, maskworks, copyrights, trademarks
or other intellectual property rights; or

(x) Fail to maintain its qualifications to do business in every
state in which such qualification is required, or fail to maintain any other
permit, license, authorization or approval required or useful to the operations
of its business.

4.2 AFFIRMATIVE COVENANTS. Between the date of this Agreement and the
Effective Time, Startech will do each of the following:

(a) Use its best efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out;

(b) Use its best efforts to obtain all authorizations, consents
and permits of others (including the Continuity of Interest Certificates
described in Section 6.9) required to permit the consummation by Startech of the
transactions contemplated by this Agreement and the continuation of Startech's
business after the consummation of the Merger;

(c) Promptly advise Exar in writing of (i) any Material Adverse
Effect on Startech; (ii) the occurrence of any event which causes the
representations and warranties made by Startech in this Agreement or the
information included in the Startech Disclosure Schedule to be incomplete or
inaccurate in any material respect; and (iii) the receipt of any inquiry
relating to an Acquisition Proposal from a third party, including the identity
of the third party and a copy of the inquiry;

(d) Conduct the business of Startech only in the ordinary course
and refrain from changing or introducing any method of management or operations
except in the ordinary course of business and consistent with prior practices or
as requested in writing by Exar;

(e) Use its best efforts to keep intact the Startech organization,
to keep available its present officers, agents and employees and to preserve the
goodwill of all suppliers, customers and others having business relations with
it;

(f) Permit Exar and its authorized representatives to have full
access to all of its properties, assets, records, Returns, contracts and
documents and furnish to Exar and its

<PAGE>

authorized representatives such financial and other information with respect to
its business and properties as Exar may from time to time reasonably request for
purposes of making a review of the business of Startech;

(g) As promptly as reasonably practicable after the date of this
Agreement, file with any Governmental Authorities all notices, reports and other
documents required by law, with respect to this Agreement and the transactions
contemplated hereby and promptly submit any additional information or
documentary material properly requested by any such Governmental Authorities;

(h) In the event that between the date hereof and the Effective
Time, any Governmental Authority shall commence any examination, review,
investigation, action or Proceeding against Startech with respect to the
transactions contemplated hereby, give prompt notice thereof to Exar, keep Exar
informed as to the status thereof, and (except as may be prohibited by such
Governmental Authority or by any court order or decree in an action or suit
instituted by a person other than Startech or an affiliate of Startech) permit
Exar to observe and be present at each meeting, conference or other proceeding
and have access to and be consulted in connection with any document filed or
provided to such Governmental Authority in connection with such examination,
review, investigation, action, or Proceeding;

(i) Promptly provide Exar with (i) copies of all written materials
and communications furnished by Startech to its shareholders after the date of
this Agreement, and (ii) copies of all notices, reports or other documents filed
with any government agency or department pursuant to Section 2.10 and 4.2(h)
hereof;

(j) Promptly provide Exar copies of all material operating and
financial reports prepared by Startech, including copies of Startech's balance
sheet and related statements of operations, cash flows, changes in financial
position and changes in shareholders' equity for each month commencing March 31,
1995 through the Effective Time. In addition, Startech shall provide Exar an
accounts receivable aging report, an accounts payable aging report and an
inventory valuation report as of the end of each monthly period. Such monthly
financial statements shall be prepared in conformity with GAAP applied on a
consistent basis and shall fairly present (subject to immaterial year-end audit
adjustments) the financial condition, results of operations, cash flows and
changes in financial position of Startech as of the dates and for the periods
covered by such statements and shall be delivered promptly after preparation,
but in no event later than 25 days after the end of the month. Startech shall
in addition provide Exar with such other operating and financial reports as Exar
shall reasonably request;

(k) Mail to its shareholders in a timely manner, for the purpose
of considering and voting upon the Merger at the Shareholders Meeting (as
defined below), an information statement to be prepared in connection with the
Shareholders Meeting and the issuance of the Merger Consideration (the
"Information Statement");

(l) Promptly provide to Exar all information relating to
Startech's business or operations for inclusion in the Information Statement
that is necessary to satisfy all applicable requirements of state and federal
securities laws; and ensure that information relating to Startech

<PAGE>

(or, to the best of Startech's knowledge, any other person contained in any
document, certificate or other writing furnished or to be furnished by Startech)
included in the Information Statement, at the time the Information Statement is
mailed and at the time of the Shareholders Meeting and at the Effective Time, as
then amended or supplemented, will not contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein,
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading or necessary to correct any statement which has
become false or misleading in any earlier communication with respect to the
solicitation of proxies for the Shareholders Meeting;

(m) Ensure that the Information Statement as it relates to
Startech will comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulation thereunder in effect at the
time the Information Statement is mailed;

(n) Take all such actions as Exar may request in order that the
issuance of the Merger Consideration shall qualify as an offering and sale under
Regulation D under the Securities Act, including, without limitation, appointing
a "Purchaser Representative" (as defined in Regulation D under the Securities
Act);

(o) Provide to Exar, and use its best efforts to cause Startech's
independent auditors to provide to Exar, such financial statements and
information and such accountant's consents as may be required to be provided by
Exar in any filing required by the Securities Act, the Exchange Act or any state
securities or Blue Sky law;

(p) Prior to the Closing Date, prepare an updated Startech
Disclosure Schedule under the signature of its Chief Executive Officer setting
forth (i) all information (including information not previously disclosed)
necessary to make all representations and warranties of Startech accurate as of
the Closing Date and (ii) Startech's good faith estimate of the Transaction
Fees. "Transaction Fees" shall mean (i) all fees and expenses incurred by
Startech in connection with the transactions contemplated hereby, including all
fees and expenses of Startech's investment bankers, attorneys, accountants and
other consultants, agents and representatives performing services for Startech
in connection with the transactions contemplated hereby PLUS (ii) $25,000 in
respect of the Loan Agreement (as defined below) PLUS (iii) $50,000 in prepaid
fees and expenses in connection with the registration of the Closing Shares
pursuant to Article 11;

(q) Promptly take all action necessary in accordance with
applicable law to call and convene a meeting of the holders of Startech Common
Stock and Startech Preferred Stock (the "Shareholders Meeting") to consider, act
upon and vote upon the adoption and approval of this Agreement and the Merger;
cause Startech's Board of Directors to recommend that the holders of Startech
Common Stock and Startech Preferred Stock vote in favor of and adopt and approve
this Agreement and the Merger at the Shareholders Meeting; and ensure that the
Shareholders Meeting is called, held and conducted, and that all proxies
solicited in connection with Shareholders Meeting are solicited, in compliance
with applicable law;

<PAGE>

(r) Consult with Exar before issuing, or permitting any of
Startech's representatives to issue, any press release or otherwise making, or
permitting any of Startech's representatives to make, any public statements with
respect to the Merger;

(s) Use its best efforts to obtain and deliver to Exar a
Continuity of Interest Certificate in the form attached hereto as Exhibit 4.2(s)
(a "Continuity of Interest Certificate") signed by each holder of more than 5%
of the outstanding shares of Startech Common Stock and Startech Preferred Stock.

ARTICLE 5

COVENANTS OF EXAR AND MERGER SUB

Exar and Merger Sub covenant and agree as follows:

5.1 NEGATIVE COVENANTS. From the date of this Agreement until the
Effective Time, Exar and Merger Sub will not, except as otherwise contemplated
by this Agreement or unless Startech shall otherwise consent in writing:

(a) Take any action which would cause any of its representations
or warranties in this Agreement to become inaccurate (except for such actions as
would not individually or in the aggregate have a Material Adverse Effect on
Exar) or which would prevent any conditions precedent to its obligations under
this Agreement from being satisfied at or prior to the Effective Time; or

(b) Take or permit any action which would prevent the Merger from
qualifying as a tax-free reorganization under Section 368 of the Code and Exar
will use its best efforts to prevent any of its officers or directors from
taking or permitting any such action.

5.2 AFFIRMATIVE COVENANTS. Prior to the Effective Time, Exar will do
the following:

(b) Use its best efforts to obtain all authorizations, consents
and permits of others required to permit the consummation by Exar and Merger Sub
of the transactions contemplated by this Agreement;

(c) As promptly as reasonably practicable after the date of this
Agreement, file with any Governmental Authorities all notices, reports and other
documents required by law with respect to the Merger and promptly submit any
additional information or documentary material properly requested by any such
Governmental Authorities;

<PAGE>

(d) Prepare the Information Statement, and provide to Startech
copies thereof, as promptly as practicable;

(e) Ensure that information relating to Exar or Merger Sub (or, to
the best of Exar's knowledge, any other person contained in any document,
certificate or other writing furnished or to be furnished by Exar) included in
the Information Statement, at the time the Information Statement is mailed and
at the time of the Shareholders Meeting and at the Effective Time, as then
amended or supplemented, will not contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein,
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading or necessary to correct any statement which has
become false or misleading in any earlier communication with respect to the
solicitation of proxies for the Shareholders Meeting;

(f) Ensure that the Information Statement as it relates to Exar
and Merger Sub will be complete as to form in all material respects with the
requirements of the Securities Act and the rules and regulation thereunder in
effect at the time the Information Statement is mailed;

(g) Promptly advise Startech in writing of the occurrence of any
event which causes the representations or warranties made by Exar in this
Agreement or the information contained in the Exar Disclosure Schedules to be
incomplete or inaccurate in any material respect; and

(h) In the event that between the date hereof and the Effective
Time, any Governmental Authority shall commence any examination, review,
investigation, action, suit or proceeding against Exar with respect to the
Merger, give prompt notice thereof to Startech, keep Startech informed as to the
status thereof, and (except as may be prohibited by such governmental authority
or by any court order or decree in an action or suit instituted by a person
other than Exar or an affiliate of Exar) permit Startech to observe and be
present at each meeting, conference or other proceeding and have access to and
be consulted in connection with any document filed or provided to such
governmental authority in connection with such examination, review,
investigation, action, suit or proceeding.

ARTICLE 6

CONDITIONS PRECEDENT TO OBLIGATIONS OF EXAR AND MERGER SUB

The obligations of Exar and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, prior to or upon
the Closing, of the following conditions precedent:

6.1 DUE DILIGENCE. Exar shall have received all documents it may
reasonably request related to Startech. Exar shall have satisfactorily
completed its investigation and review of Startech's business, assets,
liabilities, operations, financial performance and prospects including, but not
limited to, regulatory matters, and shall be satisfied with the results of that
investigation and review.

<PAGE>

6.2 COMPLIANCE WITH COVENANTS AND CONDITIONS; REPRESENTATIONS AND
WARRANTIES CORRECT. Startech shall have complied with and performed in all
material respects each covenant and condition contained in this Agreement to be
performed by it at or prior to the Closing Date; the representations and
warranties of Startech contained in this Agreement shall have been true and
correct as of the date hereof and shall be true and correct as of the Closing
Date with the same effect as though made on the Closing Date.

6.3 NO MATERIAL ADVERSE EFFECT. After the date hereof, there shall have
been no Material Adverse Effect on Startech.

6.4 OFFICER'S CERTIFICATE. Startech shall have delivered to Exar a
certificate of Ram Reddy, Chief Executive Officer and Chief Financial Officer of
Startech, (i) evidencing compliance with the conditions set forth in Sections
6.2 and 6.3 and (ii) setting forth the allocation of Option A Units and Option B
Units among the Startech securityholders.

6.5 CONSENTS OF OTHERS. The consent to the Merger of each third party
whose consent is required for Startech to consummate the transactions
contemplated hereby shall have been received, including, without limitation, the
parties to the contracts listed on the Startech Disclosure Schedule. Such
consents shall include, without limitation, the approval of the shareholders of
this Agreement and the transactions contemplated hereby in accordance with the
California Law at the Shareholders Meeting.

6.6 LEGAL OPINION. Exar shall have received opinions of Battle Fowler
LLP and Brobeck, Phleger & Harrison, counsel to Startech, dated the Effective
Time, substantially to the effect of Exhibits 6.6(a) and 6.6(b) hereto,
respectively.

6.7 TAX OPINION. Each of Exar and Startech shall have received a
written opinion from its counsel dated the Closing Date substantially to the
effect of Exhibits 6.7(a) and 6.7(b) hereto, respectively. For purposes of
rendering such opinions, counsel shall be entitled to rely upon, and, to the
extent reasonably required, the parties shall make, representations related
thereto.

6.8 DISSENTERS' RIGHTS. Holders of at least 95% of the outstanding
shares of Startech Common Stock shall not be, and shall not have the right to
become, entitled to dissenters' rights pursuant to Sections 1300 through 1312 of
the California Law.

6.9 CONTINUITY OF INTEREST CERTIFICATES. Exar shall have received prior
to the Closing Date a Continuity of Interest Certificate signed by each holder
of more than 5% of the outstanding shares of Startech Common Stock and Startech
Preferred Stock.

6.10 REGULATION D OFFERING. The issuance of the Exar Common Stock to the
shareholders of Startech in accordance with this Agreement shall be a valid
offering under Regulation D under the Securities Act, subject to the filing of a
Form D in accordance therewith.

<PAGE>

6.11 ABSENCE OF RESTRAINT. No Proceeding shall be pending or threatened
before any Governmental Authority to restrain, enjoin or otherwise prevent the
consummation of, or which questions the validity or legality of, this Agreement
or the transactions contemplated hereby, and no Legal Requirement, order, writ,
injunction or decree shall have been enacted, entered, issued or promulgated by
any court or Governmental Authority which prohibits or materially restricts the
consummation of this Agreement and the transactions contemplated hereby, and no
such Proceeding shall be threatened.

6.12 NO PROCEEDINGS. No Proceedings shall have commenced against
Startech which could have a Material Adverse Effect on Startech.

6.13 REQUIRED APPROVALS. Exar, Merger Sub and Startech shall have
received all such governmental approvals, consents, authorizations or
modifications as may be required to permit the performance by Exar, Merger Sub
and Startech, of their respective obligations under this Agreement, the
consummation of the transactions herein contemplated and the continuation of
Startech's business after the consummation of the transactions contemplated
herein.

6.14 LEGAL REQUIREMENTS. All permits, licenses, consents and approvals
necessary under any Legal Requirements relating to the sale of securities shall
have been issued or given, and no such permit, license, consent or approval
shall have been revoked, canceled, terminated, suspended or made the subject of
any stop order or proceeding therefor.

6.15 STARTECH'S SHAREHOLDERS APPROVAL. The approval and adoption of this
Agreement by the affirmative vote of a majority of the outstanding shares of
Startech Common Stock and a majority of the outstanding shares of Startech
Preferred Stock shall have occurred and be continuing and remain in full force
and effect.

6.16 RESIGNATIONS. Exar shall have received the written resignation,
effective as of the Effective Time, of each director and officer of Startech.

6.17 FIRPTA. Exar, as agent for the shareholders of Startech, shall have
received a properly executed "FIRPTA" Notification Letter, in form and substance
reasonably acceptable to Exar, which states that shares of Startech do not
constitute "United States Real Property Interests" under Section 897(c) of the
Code for purposes of satisfying Exar's obligations under Treasury Regulations
Section 1.1445-2(c)(3).

6.18 ORBIT LOAN. Startech shall have amended that certain Loan
Agreement, dated August 1, 1994, by and between Startech and Orbit (the "Loan
Agreement") to provide that the Loan Agreement shall not be terminated by Orbit
prior to March 31, 1996 and that the interest rate shall be fixed at 7.5% simple
interest, PROVIDED that such Loan Agreement is assumed or guaranteed by Exar.

6.19 ORBIT MANUFACTURING. Startech shall have entered into an agreement
with Orbit pursuant to which Orbit shall have agreed to manufacture and supply
integrated circuits to Startech for a period of eighteen months following the
Closing on terms satisfactory to Exar.

<PAGE>

6.20 STARTECH OPTIONS AND WARRANTS. Each of the Startech Options and
Startech Warrants shall have been amended to provide that each Startech Option
and Startech Warrant will terminate if not exercised prior to December 31, 1996,
such amendments to be in a form reasonably satisfactory to Exar and executed and
delivered to Exar prior to the Effective Time.

6.21 REGISTRATION RIGHTS. Any rights to require that Startech or any
successor register any of its securities, or rights to participate in any
registration of Startech securities or securities of any successor shall have
been terminated prior to Closing and be of no further force or effect.

6.22 SECTION 280G PAYMENTS. The transactions contemplated hereby shall
not be, in the opinion of Exar, reasonably expected to result in the payment of
any "excess parachute payment" within the meaning of Section 280G of the Code.

ARTICLE 7

CONDITIONS PRECEDENT TO OBLIGATIONS OF STARTECH

The obligation of Startech to consummate the transactions contemplated
herein is subject to the fulfillment, prior to or upon the Closing, of the
following conditions precedent:

7.1 COMPLIANCE WITH COVENANTS AND CONDITIONS; REPRESENTATIONS AND
WARRANTIES CORRECT. Exar and Merger Sub shall have performed in all material
respects each covenant and condition contained in this Agreement to be performed
by them at or prior to the Effective Time; the representations and warranties of
Exar and Merger Sub contained in this Agreement shall be true and correct as of
the Effective Time with the same effect as though made on the Effective Time.

7.2 OFFICERS' CERTIFICATE. Exar shall have delivered to Startech a
certificate of the Chief Executive Officer and Chief Financial Officer of Exar
evidencing compliance with the conditions set forth in Section 7.1.

7.3 LEGAL OPINION. Startech shall have received an opinion of Cooley
Godward Castro Huddleson & Tatum, counsel to Exar, dated the Effective Time,
substantially to the effect of Exhibit 7.3 hereto.

7.4 TAX OPINION. Each of Exar and Startech shall have received a
written opinion from its counsel dated the Closing Date substantially to the
effect of Exhibits 6.7(a) and 6.7(b) hereto, respectively. For purposes of
rendering such opinions, counsel shall be entitled to rely upon, and, to the
extent reasonably required, the parties shall make, representations related
thereto.

7.5 ABSENCE OF RESTRAINT. No order, statute, rule, regulation,
executive order, decree, judgment, injunction or court order shall have been
enacted, entered, issued, or promulgated by any court or governmental authority
which prohibits or materially restricts the consummation of this Agreement or
the transactions contemplated hereby.

<PAGE>

7.6 STARTECH SHAREHOLDERS' APPROVAL. The approval and adoption of this
Agreement by the affirmative vote of a majority of the outstanding shares of
Startech Common Stock and a majority of the outstanding shares of Startech
Preferred Stock shall have occurred and be continuing and remain in full force
and effect.

7.7 KEY EMPLOYEE DEFERRED COMPENSATION PLAN. The Board of Directors of
Exar shall have adopted a Key Employee Deferred Compensation Plan in the form
separately agreed to by Exar and Startech.

ARTICLE 8

INDEMNITY BY SECURITYHOLDERS

8.1 INDEMNITY.

(a) The Principal Officers and the holders of Startech Common
Stock, Startech Preferred Stock, Startech Options and Startech Warrants
immediately prior to the Effective Time (the "Securityholders") shall, on the
terms and conditions set forth herein, jointly and severally indemnify, hold
harmless, reimburse and defend Exar, Merger Sub and Startech against any Damages
incurred in connection with, or arising from, or attributable to (i) any breach
or inaccuracy in any representation made by Startech, the Principal Officers or
the Securityholders under this Agreement or any schedule, disclosure document or
certification referenced herein, (ii) any breach or failure to perform any
covenant or agreement of Startech, the Principal Officers or the
Securityholders, (iii) enforcement of this Article 8 and (iv) the amount, if
any, by which the actual Transaction Fees, as determined in good faith by Exar
after the Closing Date, exceed the Transaction Fees set forth in the updated
Disclosure Schedule delivered by Startech pursuant to Section 4.2(p). The term
Damages as used here in (and the indemnification provided in Articles 8 and 9)
shall apply to Damages incurred or sustained by Exar, Merger Sub, Startech and
the Securityholders, as the case may be, in the absence of third party Claims
and shall not be limited to Claims asserted by third parties.

(b) Except as provided in Section 8.8, the indemnification
provisions of this Article 8 shall be the exclusive remedy of Exar, Merger Sub
and Startech for any Damages incurred in connection with, or arising from, or
attributable to the transactions contemplated by this Agreement.

(d) The indemnification provided pursuant to this Article 8 shall
apply only to claims for which an "Officer's Certificate" (as defined below for
Article 8 and Article 9) has been given to the Committee (as defined below) in
accordance with the provisions of Section 13.5 on or prior to November 15, 1996.

<PAGE>

(e) The indemnification provided in this Article 8 shall apply to
all Damages incurred in connection with or arising from or attributable to a
Claim.

8.2 SATISFACTION OF INDEMNIFICATION. Indemnification under this Article
8 shall be satisfied jointly and severally by the Principal Officers and the
Securityholders (including, without limitation, by right of setoff against any
Earn-Out Payments (as defined below)). However, (i) no Securityholder (other
than the Principal Officers) shall be liable for Damages except pursuant to
right of setoff against any Earn-Out Payments in accordance with Article 10,
(ii) no Principal Officer shall be liable for Damages in excess of the amount
received by such Principal Officer for his Startech Common Stock, Startech
Preferred Stock, Startech Options and Startech Warrants hereunder, (iii) any
Principal Officer or Securityholder making payment to Exar for such breaches
shall be entitled to contribution from the other Principal Officers and
Securityholders in proportion to the Merger Consideration received by each of
them and, (iv) except for Damages incurred in connection with, arising from or
attributable to clause (iv) of Section 8.1(a), the Principal Officers and the
Securityholders shall not be liable for Damages unless and until the aggregate,
cumulative Damages exceed $150,000, PROVIDED that if aggregate, cumulative
Damages exceed such amount, the Principal Officers and the Securityholders shall
be liable, jointly and severally, for the entire amount of such Damages from the
first dollar, provided further, that all materiality, Material Adverse Effect
and dollar qualifications contained in this Agreement shall be disregarded in
calculating the amount of aggregate, cumulative Damages.

8.3 CLAIM PROCEDURE. Upon delivery to the members of the Committee in
accordance with Section 13.5 on or before the last day of the period set forth
in Section 8.1(d) above of a certificate (an "Officer's Certificate") signed by
any officer of Exar: (a) stating that Exar, Merger Sub or Startech has paid or
properly accrued or reasonably anticipates that Exar, Merger Sub or Startech
will have to pay or accrue Damages in an aggregate stated amount, and stating
that Exar, Merger Sub or Startech is entitled to indemnity pursuant to this
Agreement with respect to such amount, and (b) specifying in reasonable detail
the individual items of Damages included in the amount so stated, the date each
such item was paid or properly accrued, or the basis for such anticipated
liability, the Committee shall, subject to the provisions of Section 8.4 hereof,
deliver to Exar from the Principal Officers as promptly as practicable, an
amount sufficient to indemnify fully Exar, Merger Sub and Startech against such
Damages.

8.4 OBJECTIONS TO CLAIMS. Within 45 days of the Committee's receipt of
an Officer's Certificate from Exar, the Committee shall make delivery to Exar of
the amount requested in the Officer's Certificate in accordance with Section 8.3
hereof; provided that no such payment or delivery need be made if the Committee
shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to Exar prior to the
expiration of such 45-day period.

8.5 RESOLUTION OF CONFLICTS.

(a) For purpose of this Article 8, in case the Committee shall so
object in writing to the indemnity of Exar or Startech or, for purposes of
Article 9, in case Exar shall so object in writing to the indemnity of the
Securityholders in respect of any Claim or Claims made

<PAGE>

in any Officer's Certificate, the Committee and Exar (acting on its own behalf
or on behalf of Merger Sub or Startech) shall attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claims.
If the Committee and Exar should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties, and the Committee or
Exar, as the case may be, shall thereupon pay the agreed upon amount of the
claim.

(b) If no such agreement can be reached after good faith
negotiation, the Claim shall be submitted to non-binding mediation under the
rules then in effect under the American Arbitration Association, or such other
forum as the parties may select. Each party shall have in attendance at such
mediation persons who have actual authority to bind the party to any settlement
reached. If the matter cannot be settled through mediation, then the Claim
shall be submitted to binding arbitration under the following rules:

(i) Unless otherwise agreed by the parties, all such
Claims shall be decided in San Jose, California by a single arbitrator, acting
under the Commercial Rules of the American Arbitration Association except as
modified herein. Either party may initiate the arbitration following failure of
mediation to resolve the issue by filing a Demand for Arbitration with the
American Arbitration Association, and simultaneously delivering a copy of such
demand to the other party.

(ii) Unless the parties agree to a mutually acceptable
arbitrator within 30 days of a Demand for Arbitration, the arbitrator shall be
selected by the American Arbitration Association.

(iii) Unless otherwise agreed by the parties, the arbitrator
shall be a business attorney in practice for at least 10 years, with substantial
experience in the negotiating and drafting of business acquisition agreements.

(iv) It is the intent of the parties that the arbitration
be held in an efficient, economical and expeditious manner. Accordingly, the
parties shall meet in a pre-hearing conference as promptly as practicable after
selection of the arbitrator to establish the scope and extent of all discovery
and the schedule of the arbitration. Discovery shall be limited to that
necessary to resolve the disputed issues, in the judgment of the arbitrator. If
any party wishes to take discovery, including document productions,
interrogatories or depositions, a request to do so must be submitted to the
arbitrator in accordance with the procedures determined at the pre-hearing
conference. The arbitrator in his sole discretion may allow limited discovery,
all of which must be completed within 20 business days of the arbitrator's
directive unless extended for good cause by the arbitrator. Subject to the
arbitrator's decisions relating to the scope and extent of discovery, the
Committee and its attorneys, accountants and other representatives shall have
reasonable access upon reasonable notice to the pre-Merger books and records of
Startech for the purpose of defending the Securityholders against any Claim.

(v) The arbitrator shall not be bound by rules of evidence
or judicial procedures regarding the conduct of the hearing and shall be
obligated to follow California substantive law.

<PAGE>

(vi) The arbitrator's authority shall be limited to
determining whether the Claim gives rise to a right to indemnification under the
provisions of Sections 8.1 and 8.2 above and, if so, the amount of Damages as to
such Claim. No other issue involving interpretation of this Agreement shall be
submitted to the arbitrator without the consent of both parties. The arbitrator
shall have no authority to assess punitive damages.

(vii) The decision of the arbitrator as to the validity and
amount of damages as to any Claim shall, subject to the above limitations, be
binding and conclusive upon the parties of this Agreement. The arbitrator shall
issue such decision, including a brief statement of the reasons for the award
and the calculation of damages awarded, within 25 days after completion of the
arbitration hearing.

(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. The Non-Prevailing Party shall pay
the reasonable expenses (including attorneys' fees) of the Prevailing Party and
the arbitrator fees and administrative expenses associated with the arbitration,
which expenses and fees, in the event the Exar is the Prevailing Party, shall
constitute Damages. For purpose of this Section 8.5(c), in any arbitration
hereunder in which any Claim or any portion of a Claim stated in the Officer's
Certificate is at issue, (i) with respect to a Claim submitted to the Committee
by Exar, Exar shall be deemed to be the "Non-Prevailing Party" in the event that
the arbitrators award Exar less than 75% of the amount of the Claim at issue;
otherwise, the Securityholders shall be deemed to be the "Non-Prevailing Party;
and (ii) with respect to a Claim submitted to Exar by the Committee, the
Securityholders shall be deemed to be the "Non-Prevailing Party" in the event
that the arbitrators award the Securityholders less than 75% of the amount of
the Claim at issue; otherwise Exar shall be deemed to be the "Non-Prevailing
Party."

8.6 COMMITTEE OF THE SECURITYHOLDERS.

(a) The Principal Officers and the Securityholders shall be
represented hereunder by a committee (the "Committee") which shall consist of
three members. The initial members of the Committee shall be Ram K. Reddy, Dr.
Roubik Gregorian and a third member to be designated in writing by Startech no
later than the Effective Time. Each of the Securityholders, by adoption of this
Agreement at the Shareholders Meeting, by the execution of the Letter of
Transmittal or by exercise of an Exar Option or Exar Warrant (and each of the
Principal Officers by the execution of this Agreement), will, effective as of
the Effective Time, be deemed to have irrevocably appointed the Committee as the
agent, proxy and attorney-in-fact for such Principal Officer or Securityholder
for all purposes of this Agreement, including full power and authority on such
Securityholder's behalf (i) to take all actions which the Committee considers
necessary or desirable in connection with the defense, pursuit or settlement of
any Claims for indemnification pursuant to Article 8 and Article 9 hereof,
including to sue, defend, negotiate, settle, compromise and otherwise handle any
such Claims for indemnification made by or against, and other disputes with,
Exar, Merger Sub and Startech pursuant to Article 8 and Article 9, (ii) to
engage and employ agents and representatives (including accountants, legal
counsel and other professionals) and to incur such other expenses as it shall
deem necessary or prudent in connection with the administration of the
foregoing, (iii) to provide for all expenses incurred in connection with the
administration of the foregoing to be paid by the

<PAGE>

Principal Officers and the Securityholders, (iv) to disburse all indemnification
payments received from Exar, Merger Sub and Startech under Article 9 to the
Securityholders, (v) to accept and receive notices pursuant to this Agreement,
(vi) to amend and grant consents and waivers after the Closing under this
Agreement and (vii) to take all other actions and exercise all other rights
which the Committee (in its sole discretion) considers necessary or appropriate
in connection with this Agreement. Each of the Securityholders by executing the
Letter of Transmittal or by exercise of an Exar Option or Exar Warrant (and each
of the Principal Officers by the execution of this Agreement) will agree that
such agency and proxy are coupled with an interest, and are therefore
irrevocable without the consent of the Committee and shall survive the death,
incapacity, bankruptcy, dissolution or liquidation of any Principal Officer or
Securityholder. All decisions and acts by the Committee shall be binding upon
all of the Principal Officers and the Securityholders, and no Principal Officer
or Securityholder shall have the right to object, dissent, protest or otherwise
contest the same.

(b) Neither the Committee or its members nor any agent employed by
it shall be liable to any Principal Officer or Securityholder relating to the
performance of its duties under this Agreement for any errors in judgment,
negligence, oversight, breach of duty or otherwise except to the extent it is
finally determined in a court of competent jurisdiction by clear and convincing
evidence that the actions taken or not taken by the Committee constituted fraud
or were taken or not taken in bad faith. The Committee shall be indemnified and
held harmless by the Principal Officers and the Securityholders and by each
other all in the amounts determined by applying the procedures specified herein,
against all expenses (including attorneys' fees), judgments, fines and other
amounts paid or incurred in connection with any action, suit, proceeding or
claim to which the Committee is made a party by reason of the fact that it was
acting as the Committee pursuant to this Agreement, PROVIDED, HOWEVER, that the
Committee shall not be entitled to indemnification hereunder to the extent it is
finally determined in a court of jurisdiction by clear and convincing evidence
that the actions taken or not taken by the Committee constituted fraud or were
taken or not taken in bad faith. The Committee shall be protected in acting
upon any notice, statement or certificate believed by it to be genuine and to
have been furnished by the appropriate person and in acting or refusing to act
in good faith or any matter.

(c) In the event that any member of the Committee shall die or
resign or otherwise terminate his status as such, his successor shall be elected
by the remaining members of the Committee or, if there shall have been failure
to select a successor after a vacancy has existed for more than 90 days, by the
vote or the consent of the majority in interest of the Securityholders. All
Committee decisions shall be by majority vote or agreement. The Committee shall
receive no compensation for its services.

(d) A decision, act, consent or instruction of the Committee shall
be made in writing and shall constitute a decision of all the Principal Officers
and the Securityholders, and shall be final, binding and conclusive upon each of
the Principal Officers and the Securityholders, and Exar, Merger Sub and
Startech may rely upon any decision, act, consent or instruction of the
Committee as being the decision, act, consent or instruction of each and all of
the Principal Officers and the Securityholders. Exar, Merger Sub and Startech
are hereby

<PAGE>

relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Committee.

8.7 THIRD-PARTY CLAIMS. In the event Exar becomes aware of a
third-party claim which Exar believes may result in a demand under this Article
8, Exar shall notify the Committee of such claim, and the Committee shall be
entitled, at its expense, to participate in any defense of such claim. Exar
will use its best efforts to defend such third party claim and the Committee
shall be kept fully informed of such claim at all stages thereof. Exar will not
consent to the entry of any judgment or enter into any settlement with respect
to any such claim without the prior written consent of the Committee (not to be
unreasonably withheld), and in any event, (i) any such settlement shall not be
determinative of the amount of Damages or liability for indemnification
hereunder and (ii) if the Claim so settled is submitted to arbitration pursuant
to Section 8.5, the terms, conditions and circumstances of such settlement shall
be provided to the arbitrator only to the extent relevant to the computation of
Damages which may be subject to indemnification hereunder.

8.8 FRAUD. Notwithstanding any provision of this Agreement to the
contrary, (i) liability of any Principal Officer or Securityholder for common
law fraud, intentional misrepresentation or other claim involving intentional
misconduct shall not be limited in amount, procedure for dispute resolution or
as to the time during which a claim may be made and (ii) no Principal Officer or
Securityholder shall be personally liable for the fraud, intentional
misrepresentation or intentional misconduct of another Principal Officer or
Securityholder.

8.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No disclosure by
Startech, any Principal Officer or any Securityholder nor any investigation by
or on behalf of Exar with respect to Startech shall be deemed to affect
Startech's, Merger Sub's or Exar's reliance on the representations, warranties,
covenants or agreements contained herein or to waive Startech's or Exar's rights
to indemnity as provided herein for the breach or inaccuracy or failure to
perform or comply with any representation, warranty, covenant or agreement of
Startech, any Principal Officer or any Securityholder. The indemnity
obligations of the Principal Officers and the Securityholders under this
Article 8 (and the representations, warranties, covenants and agreements of
Startech, the Principal Officers and the Securityholders under this Agreement)
shall survive the Closing and shall terminate as provided in Section 8.1(d)
(with such representations and warranties terminating concurrently with the
termination of such indemnity obligations).

ARTICLE 9

INDEMNITY BY EXAR

9.1 INDEMNITY.

(a) Exar shall, on the terms and conditions set forth herein,
indemnify, hold harmless, reimburse and defend the Shareholders against any
Damages incurred in connection with, or arising from, or attributable to (i) any
breach or inaccuracy in any representation made

<PAGE>

by Exar under this Agreement or any schedule, disclosure document or
certification referenced herein, (ii) any breach or failure to perform any
covenant or agreement of Exar under this Agreement, (iii) the amount, if any, by
which the Transaction Fees set forth in the updated Disclosure Schedule
delivered by Startech pursuant to Section 4.2(p) exceed the actual Transaction
Fees, as determined in good faith by Exar after the Closing Date and
(iv) enforcement of this Article 9.

(b) Except as provided in Section 9.7, the indemnification
provisions of this Article 9 shall be the exclusive remedy of the Shareholders
for any Damages incurred in connection with, or arising from, or attributable to
the transactions contemplated by this Agreement.

(d) The indemnification provided pursuant to this Article 9 shall
apply only to claims for which an Officer's Certificate has been given to Exar
in accordance with the provisions of Section 13.5 on or prior to the first
anniversary of the Effective Time.

(e) The indemnification provided in this Article 9 shall apply to
all Damages incurred in connection with or arising from or attributable to a
Claim.

(f) Except for Exar's failure to pay to each of Startech's
securityholders the Merger Consideration (including the Earn-Out Payments when
due and payable) to which such securityholder is entitled hereunder, and except
for a material breach by Exar of its obligations under Section 10.3 or under
Article 11, Exar shall not be liable for Damages in excess of $3,000,000, and
Exar shall not be liable for Damages unless and until the aggregate, cumulative
Damages exceed $150,000, PROVIDED that if aggregate, cumulative Damages exceed
such amount, Exar shall be liable for the entire amount of such Damages from the
first dollar.

9.2 CLAIM PROCEDURES. Upon delivery to Exar in accordance with
Section 13.5 on or before the last day of the period set forth in Section 9.1(d)
of an Officer's Certificate signed by any member of the Committee: (a) stating
that the Shareholders or any Shareholder has paid or properly accrued or
reasonably anticipates that the Shareholders or any Shareholder will have to pay
or accrue Damages in an aggregate stated amount, and stating that the
Shareholders or any Shareholder is entitled to indemnity pursuant to this
Agreement with respect to such amount, and (b) specifying in reasonable detail
the individual items of Damages included in the amount so stated, the date each
such item was paid or properly accrued, or the basis for such anticipated
liability, Exar shall, subject to the provisions of Section 9.3 hereof, deliver
to the Committee as promptly as practicable, an amount sufficient to indemnify
fully the Shareholders or any Shareholder for such Damages (provided that Exar
shall deliver such minimum number of shares of Exar Common Stock as is required
to preserve the qualification of the Merger as a reorganization under Section
368(a) of the Code).

9.3 OBJECTIONS TO CLAIMS. Within 45 days of Exar's receipt of an
Officer's Certificate from the Committee, Exar shall make delivery to the
Committee (on behalf of the

<PAGE>

Shareholders or any Shareholder claiming indemnification) of the amount
requested in the Officer's Certificate in accordance with Section 9.2 hereof;
provided that no such payment or delivery need be made if Exar shall object in a
written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Committee prior to the expiration of
such 45-day period.

9.4 RESOLUTION OF CONFLICTS. Any conflict that may arise in respect of
any Claim or Claims made in any Officer's Certificate delivered to Exar by the
Committee (on behalf of the Shareholders or any Shareholder) shall be resolved
in the manner set forth in Section 8.5, except that if Exar and the Committee
shall agree upon the rights of the respective parties with respect to each of
the Claims identified in such Officer's Certificate pursuant to Section 8.5(a),
a memorandum shall be prepared and signed by both parties and Exar shall
thereupon pay the agreed upon amount of the claim.

9.5 CHARTER AND BYLAW INDEMNIFICATIONS. For a period of six years from
and after the Effective Time, Exar and Startech agree that the directors and
officers of Startech shall be entitled to such rights to indemnification and
advancement of expenses for actions taken in their capacities as officers and
directors of Startech prior to the Effective Time as provided under the Articles
of Incorporation and Bylaws of Startech in effect on the date of this Agreement
(the "Indemnification Rights"). Such Indemnification Rights shall be deemed to
be binding contractual rights which shall not be affected by any repeal,
amendment or modification of the Articles of Incorporation or Bylaws of Startech
after the Effective Time, and shall not be deemed exclusive of any other rights
to indemnification or advancement of expenses under this Agreement, any other
agreement, any provision of law or otherwise. This Section 9.5 shall in no way
affect the rights of Startech or Exar to indemnification under Article 8 hereto.

9.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No disclosure by Exar
nor any investigation by or on behalf of any Shareholder with respect to Exar
shall be deemed to affect any Shareholder's reliance on the representations,
warranties, covenants or agreements contained herein or to waive any
Shareholder's rights to indemnity as provided herein for the breach or
inaccuracy or failure to perform or comply with any representation, warranty,
covenant or agreement of Exar. The indemnity obligations of Exar under this
Article 9 (and the representations, warranties, covenants and agreements of Exar
and Merger Sub under this Agreement) shall survive the Closing and shall
terminate as provided in Section 9.1(d) (with such representations and
warranties terminating concurrently with the termination of such indemnity
obligations), provided that the indemnification provided in Section 9.1(iii) and
the provisions of Section 9.5 shall continue without regard to the passage of
time.

9.7 FRAUD. Notwithstanding any provision of this Agreement to the
contrary, liability of Exar, Merger Sub and Startech for common law fraud,
intentional misrepresentation or other claim involving intentional misconduct
shall not be limited in amount, procedure for dispute resolution or as to the
time during which a claim may be made.

<PAGE>

ARTICLE 10

EARN-OUT

10.1 CALCULATION OF EARN-OUT PAYMENTS.

(a) FIRST EARN-OUT PAYMENT. As soon as practicable following
completion of the audit of Exar's consolidated financial statements by Exar's
independent auditors for the fiscal year ending March 31, 1996, the "First Earn-
Out Payment" shall be determined as follows:

(i) if Startech's Gross Margin Contribution Percentage (as
defined below) for the fiscal year ending March 31, 1996 (the "First Measurement
Period") is less than 85%, then the First Earn-Out Payment shall be zero (0);

(ii) if Startech's Gross Margin Contribution Percentage for
the First Measurement Period equals or exceeds 85%, but is less than 100%, then
the First Earn-Out Payment shall equal $1,000,000 PLUS the product of (A)
$5,000,000 and (B) the number obtained by DIVIDING (x) the difference between
Startech's Gross Margin Contribution Percentage for the First Measurement Period
and 85% BY (y) 15%; and

(iii) if Startech's Gross Margin Contribution Percentage for
the First Measurement Period equals or exceeds 100%, then the First Earn-Out
Payment shall be $6,000,000.

(b) SECOND EARN-OUT PAYMENT. As soon as practicable following the
completion of Exar's preparation of its consolidated financial statements for
the six-month period ending September 30, 1996, the "Second Earn-Out Payment"
shall be determined as follows:

(i) if Startech's Gross Margin Contribution Percentage for
the six-month period ending September 30, 1996 (the "Second Measurement Period")
is less than 75%, then the Second Earn-Out Payment shall be zero (0);

(ii) if Startech's Gross Margin Contribution Percentage for
the Second Measurement Period equals or exceeds 75%, but is less than 100%, then
the Second Earn-Out Payment shall equal $1,000,000 PLUS the product of (A)
$5,000,000 and (B) the number obtained by DIVIDING (x) the difference between
Startech's Gross Margin Contribution Percentage for the Second Measurement
Period and 75% BY (y) 25%; and

(iii) if Startech's Gross Margin Contribution Percentage for
the Second Measurement Period equals or exceeds 100%, the Second Earn-Out
Payment shall be $6,000,000.

<PAGE>

to reduction if Exar elects pursuant to Section 8.2(a) to set off against one or
more of the Distributions an amount equal to the amount of any Damages.

(d) DEFINITIONS. "Gross Margin Contribution Percentage" for
each measurement period shall mean the percentage obtained by dividing
Startech's Gross Margin Dollar Contribution (as defined below) for such
measurement period by Startech's projected gross margin dollar contribution
("Projected Gross Margin Dollar Contribution") for the corresponding measurement
period as set forth below:

(i) for the First Measurement Period, Startech's Projected
Gross Margin Dollar Contribution shall be $11,600,000; and

(ii) for the Second Measurement Period, Startech's
Projected Gross Margin Dollar Contribution shall be $10,400,000.

"Gross Margin Dollar Contribution" shall mean the gross margin of
the Startech Business included in Exar's consolidated financial statements,
before consolidating elimination entries, prepared in accordance with GAAP on a
basis consistent with Exar's audited financial statements for the year ended
March 31, 1994 as certified by the independent accountants of Exar.

For purposes of measuring Gross Margin Dollar Contribution, Exar
shall account for the Startech Business (as defined below) as a separate
business segment. Any accrual, deduction or allocation made or taken for any
management, service, overhead or other charge shall be applied against the
Startech Business only when Startech elects, because it expects to realize a
cost advantage thereby, to utilize services or facilities of Exar in lieu of
procuring such services or facilities from another source. Any such allocation
or charge shall be applied by Exar at rates or deemed prices that are no less
favorable to the Startech Business than those that Exar applies to its other
independent business units. Capital expenditures shall be allocated to the
Startech Business if and only if such expenditures either were contemplated in
the business plan provided by Startech to Exar prior to the Closing (the
"Startech Plan") or are approved by the Startech Board of Directors after the
Closing (the "Startech Post-Closing Board") with the favorable vote of the
Startech Representative Director (as hereinafter defined). The "Startech
Business" shall mean all revenues (together with the associated costs) derived
from the sale of products designed and developed by Startech or from the
licensing of any such designs or elements of such designs, whether developed
before or after the Closing, and regardless of the brand name under which such
products may be sold.

The Committee in its sole discretion may challenge the calculation
of the Gross Margin Dollar Contribution and shall use an independent auditor
(the "Shareholders' Auditor") to assist it in reviewing the calculation and
proposing an alternative calculation. If the Committee's calculation for the
First Measurement Period or the Second Measurement Period exceeds Exar's
calculation of the Gross Margin Dollar Contribution for such period by more than
1%, then the Committee may deliver a notice to Exar disagreeing with Exar's
calculation and setting forth the Committee's calculation of such amount. If a
notice of disagreement shall have been delivered to Exar by the Committee
pursuant to the preceding sentence, Exar and the

<PAGE>

Committee shall, during the 20 days following such delivery, use all
commercially reasonable efforts to reach agreement. If during such period the
parties are unable to reach agreement regarding the Gross Margin Dollar
Contribution for such period, Exar and Committee shall promptly thereafter
select an Accounting Referee (as defined below) and cause such Accounting
Referee promptly to review this Agreement and the respective parties'
calculations for the purpose of calculating the Gross Margin Dollar
Contribution. The Accounting Referee shall deliver to Exar and the Committee as
promptly as practicable a report setting forth such calculation. Such report
shall be final and binding upon Exar and the shareholders. The cost of such
review and report shall be borne by (i) Exar if the Committee's calculation of
the Gross Margin Dollar Contribution is closer to the Accounting Referee's
calculation, or (ii) the shareholders if the Exar's calculation of the Gross
Margin Dollar Contribution is closer to the Accounting Referee's calculation, or
(iii) both parties equally if each party's calculation differs from the
Accounting Referee's calculation by the same amount. The "Accounting Referee"
shall mean a reputable firm of independent auditors of national standing other
than Exar's or the shareholders' independent auditors.

10.2 DISTRIBUTIONS OF EARN-OUT PAYMENTS. On each of the dates set forth
below (each, a "Distribution Date") Exar shall distribute cash or Exar Common
Stock or a combination thereof, with the form of such consideration to be at
Exar's election in the amounts set forth below, reduced by any amounts specified
in Section 10.1(c), to the Shareholders as follows: there shall be distributed
with respect to each share of Startech Common Stock and Startech Preferred Stock
held immediately prior to the Effective Time that was converted into an Option B
Unit that amount of cash and/or Exar Common Stock equal to (i) the aggregate
amount of cash and/or Exar Common Stock to be distributed on such Distribution
Date, MULTIPLIED BY (ii) the Option B Participation Percentage. Holders of Exar
Options and Exar Warrants shall be entitled to participate in Distributions as
and to the extent provided in Section 1.17.

In order to preserve the status of the Merger as a reorganization (within
the meaning of Section 368(a) of the Code), no Earn-Out Payment shall be made in
cash to the extent that such payment (net of the amount of such payment treated
as interest under Section 1272 of the Code) would cause Total Shareholder Boot
to exceed an amount equal to fifty percent (50%) of Total Shareholder
Consideration. The term "Total Shareholder Boot" shall mean the sum of
(i) Total Cash Consideration paid to shareholders of Startech in the Merger,
(ii) cash payments made for Dissenting Shares, (iii) cash paid to shareholders
of Startech in the Merger in lieu of fractional Closing Shares, and (iv) Earn-
Out Payments made in cash (net of the amount of such payments treated as
interest under Section 1272 of the Code) to shareholders of Startech in the
Merger. The term "Total Shareholder Consideration" shall mean the sum of:
(i) Total Shareholder Boot and (ii) the fair market value of the Exar Common
Stock (net of the amount of such payments treated as interest under Section 1272
of the Code) paid to shareholders of Startech in the Merger. The provisions of
this paragraph are intended to illustrate Exar's rights and obligations to make
the Earn-Out Payments with the minimum number of shares of Exar Common Stock as
is required to preserve the treatment of the Merger as a reorganization within
the meaning of Section 368(a) of the Code, and shall not be interpreted as
limiting such rights and obligations.

<PAGE>

(a) As soon as practicable following the calculation of the First
Earn-Out Payment, an amount equal in value to one-third of the First Earn-Out
Payment.

(b) As soon as practicable following the calculation of the Second
Earn-Out Payment, an amount equal in value to one-third of the Second Earn-Out
Payment.

(c) On March 31, 1997, an amount equal in value to the sum of (i)
one-third of the First Earn-Out Payment and (ii) one-third of the Second Earn-
Out Payment.

(d) On March 31, 1998, an amount equal in value to the sum of (i)
one-third of First Earn-Out Payment and (ii) one-third of the Second Earn-Out
Payment.

For purposes of calculating the value of shares of Exar Common
Stock, if any, distributed to the Shareholders on each of the Distribution
Dates, the price per share of Exar Common Stock shall be deemed to be the
average of the closing prices of Exar Common Stock, as reported by the national
edition of THE WALL STREET JOURNAL on the Nasdaq National Market (or such other
principal securities exchange or quotation system on which Exar's Common Stock
shall be traded or quoted, or if Exar Common Stock shall not then be so traded
or quoted, then the fair market value of the Exar Common Stock as agreed to by
Exar and the Committee), for the 30 trading days prior to each such Distribution
Date.

10.3 POST-CLOSING COVENANTS OF EXAR.

(a) Exar shall maintain the Startech Business as a separate
business segment, the financial results for which can be reported as an
independent business unit. Exar shall operate the Startech Business in a manner
that will maximize the return to the holders of Option B Units, consistent with
the Startech Plan, so long as such operations are reasonable, prudent and
consistent with the long-term best interests of Startech as determined by the
Startech Post-Closing Board in the exercise of its fiduciary judgment. If the
operation of the Startech Business in accordance with the Startech Plan is
determined by the Startech Post-Closing Board not to be reasonable, prudent and
consistent with the long-term best interests of Startech as so determined, then
the Startech Post-Closing Board may modify the Startech Plan and thereafter
conduct the Startech Business in accordance with the Startech Plan as so
modified, provided, that any such modification to the Startech Plan will be
designed so as to continue to maximize the return to the holders of Option B
Units, consistent with the operation of the Startech Business in a manner that
is reasonable, prudent and in the long-term best interests of Startech as
determined by the Startech Post-Closing Board. From the Closing Date until
September 30, 1996, Exar shall designate and elect as a member (the "Startech
Representative Director") of the Startech Post-Closing Board either Ram K. Reddy
or Dr. Roubik Gregorian at Exar's discretion.

(B) In the event there is a Change of Control (as defined below)
of Exar, either (i) the third party acquiring Exar pursuant to such Change of
Control shall agree to assume the obligations of Exar under this Article 10, or
(ii) if such third party does not agree to assume Exar's obligations under this
Article 10, the maximum amount of Earn-Out Payments to which the shareholders of
Startech are entitled under this Article 10 (less any Earn-Out payments
previously distributed to the shareholders or any amounts to which the
shareholders shall not be

<PAGE>

entitled under this Article 10 as a result of Startech's failure to achieve the
Gross Margin Contribution Percentages set forth in Section 10.1) shall become
due and payable by Exar upon such Change of Control and shall be distributed in
accordance with Section 10.2 promptly thereafter. "Change of Control" shall
mean the consummation of a reorganization, merger or consolidation, in each
case, with respect to which persons who were the stockholders of Exar
immediately prior to such reorganization, merger, consolidation, or a purchase
or exchange of Shares do not immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merger or consolidated company's then outstanding voting
securities, or a liquidation or dissolution of Exar or of the sale or all of
substantially all of the assets of Exar.

ARTICLE 11

REGISTRATION RIGHTS

11.1 REGISTRATION RIGHTS.

(a) Exar shall file with the SEC a registration statement on Form
S-3 (or any successor form to Form S-3) for a public resale offering of the
Closing Shares and shall use all commercially reasonable efforts to cause the
Closing Shares to be registered for the offering on such form and to be
qualified in such jurisdictions as the Selling Shareholders (as defined below)
shall reasonably request, and shall use all commercially reasonable efforts to
cause such registration statement to become and remain effective for the period
commencing on the 90th day after the Closing Date (or such earlier practicable
date) and ending on April 30, 1996 or, if earlier, on the date the distribution
described in the registration statement is complete. Such registration shall be
conditioned on each Selling Shareholder agreeing to the Trading Restrictions.

(b) Exar shall file with the SEC a registration statement or
registration statement on Form S-3 (or any successor form to Form S-3) for a
public resale offering of any shares of Exar Common Stock that may be issued
pursuant to Article 11 ("Earn-Out Shares") and shall use all commercially
reasonable efforts to cause the Earn-Out Shares to be registered for the
offering on such form and to be qualified in such jurisdictions as the Selling
Shareholders shall reasonably request, and shall use all commercially reasonable
efforts to cause such registration statement or registration statements to
become and remain effective for the periods commencing on each Distribution Date
and ending on the 180th day after such Distribution Date or, if earlier, on the
date the distribution described in the registration statement is complete. Such
registration shall be conditioned on each Selling Shareholder agreeing that all
sales made pursuant to such registration statement or registration statements
shall be made to or through two brokerage firms designated by Exar in its
discretion and identified in writing to the Selling Shareholder.

(c) In the case of any registration pursuant to this Section 11.1,
Exar shall keep each person whose securities are to be registered thereunder (a
"Selling Shareholder") advised of the initiation and completion of such
registrations. At its expense, Exar will promptly:

<PAGE>

(i) Prepare and file with the SEC the registration
statements described in Sections 11.1(a) and (b) above and thereafter use its
best efforts to cause such registration statements to become effective;

(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectuses used in
connection with such registration statements as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statements;

(iii) Furnish to the Selling Shareholders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the securities
covered by such registration statements;

(iv) Use all commercially reasonable efforts to register
and qualify the securities covered by such registration statements under such
other securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Selling Shareholders, PROVIDED that Exar shall not be required
in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions;

(v) Notify each Selling Shareholder covered by such
registration statements at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statements, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

(vi) Cause all such shares of Exar Common Stock to be
listed on each securities exchange or market system on which similar securities
issued by the Exar are then listed; and

(vii) Provide a transfer agent and registrar for all such
shares of Exar Common Stock not later than the effective dates of such
registration statements.

11.2 PIGGYBACK REGISTRATION.

(a) If (but without any obligation to do so) Exar proposes to
register any of its securities under the Securities Act (other than a
registration effected solely to implement an employee benefit plan, a
transaction to which Rule 145 of the SEC is applicable or any other form or type
of registration in which the Closing Shares and the shares of Exar Common Stock
that may be issued pursuant to Article 10 (collectively the "Registrable
Securities") cannot be included pursuant to SEC rule of practice), including for
this purpose a registration effected by Exar for stockholders other than the
holders of Registrable Securities (the "Holders"), Exar will promptly give
written notice to all Holders of such registration. If such registration is
proposed to be on a form which permits inclusion of the Registrable Securities,
upon the written request (stating the intended method of disposition of such
securities) of any Holders given within ten

<PAGE>

(10) days after transmittal by Exar to the holders of such notice, Exar will,
subject to the limits contained in Section 11.2(b), use all commercially
reasonable efforts to cause all such Registrable Securities of said requesting
holders to be registered under the Securities Act.

(b) If the registration of which Exar gives notice pursuant to
Section 11.2(a) is for a registered public offering involving an underwriting,
Exar shall so advise the Holders as a part of the written notice given pursuant
to Section 11.2(a). In such event the right of any Holder to registration
pursuant to this Section 11.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with Exar and the other holders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by Exar.
Notwithstanding any other provision of this Section 11.2, if the underwriter
managing such registration determines that marketing or economic conditions
require a limitation of the number of securities to be underwritten, the
underwriter may exclude some or all Registrable Securities from such
registration and underwriting. Exar shall so advise all Holders (except those
Holders who have indicated to Exar their decision not to distribute any of their
Registrable Securities through such underwriting), and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among such Holders in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities owned by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. If any Holder disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by written notice
to Exar and the underwriter. The Registrable Securities so withdrawn from such
underwriting shall also be withdrawn from such registration; PROVIDED, HOWEVER,
that, if by the withdrawal of such shares a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then Exar shall offer to
all Holders who have included Registrable Securities in the registration the
right to include additional Registrable Securities in the same proportion used
above in determining the underwriter limitation.

(c) All underwriting discounts and selling commissions applicable
to the sale of Registrable Securities pursuant to this Section 11.2 shall be
borne by the Holders of the securities so registered pro rata on the basis of
the number of shares so registered and, all other expenses incurred in
connection with any registration under Section 11.2 shall be borne by Exar.

(d) The Holder or Holders of Registrable Securities included in
any registration shall furnish to Exar such information regarding such Holder or
Holders and the distribution proposed by such Holder or Holders as Exar may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 11.

<PAGE>

11.3 INDEMNIFICATION.

(a) Exar agrees to indemnify, to the extent permitted by law, each
holder of Exar Common Stock with rights under this Article 11, against all
Damages caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to Exar by such holder
expressly for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after Exar has furnished such holder with a sufficient number of copies of the
same.

(b) In connection with any registration statement in which a
holder of Exar Common Stock with rights under this Article 11 is participating,
each such holder will furnish to Exar in writing such information and affidavits
as Exar reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify
Exar, its directors and officers and each Person who controls Exar (within the
meaning of the Securities Act) against all Damages resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; PROVIDED that the obligation to indemnify will be several, not joint and
several, among such holders and the liability of each such holder will be in
proportion to and limited to the net amount received by such holder from the
sale of Exar Common Stock with rights under this Article 11, pursuant to such
registration statement.

(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any consent to the
entry of any judgment or any settlement made by the indemnified party without
its consent (but such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.

(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the

<PAGE>

transfer of securities and the Merger. Exar also agrees to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event Exar's indemnification is unavailable
for any reason.

11.4 CURRENT PUBLIC INFORMATION. Until the rights specified in Sections
11.1(a) and (b) are fully exercised or expire, Exar will timely file all reports
required to be filed by it under the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations adopted by the SEC
thereunder, and will take such further action as any holder or holders of Exar
Common Stock with rights under Section 11.1 may reasonably request, all to the
extent required to enable such holders to sell their shares pursuant to Form S-3
or similar registration form hereafter adopted by the SEC. Upon written
request, Exar will deliver to such holders a written statement as to whether it
has complied with such requirements.

11.5 TERMINATION OF REGISTRATION RIGHTS. Notwithstanding the foregoing
provisions of this Article 11, Exar's obligations pursuant to this Article 11
shall terminate upon (a) March 31, 2000, or (b) if earlier, with respect to a
given Holder, at the time such Holder may sell his or her shares of Exar Common
Stock in compliance with Rule 144 under the Securities Act.

11.6 TRANSFERABILITY OF REGISTRATION RIGHTS. The rights under this
Article 11 are not transferable except in connection with (a) a transfer by will
or intestacy and (b) estate planning transfers consisting of gifts to the spouse
or issue of the transferee and transfers to trusts for the benefit of the spouse
or issue of the transferee.

ARTICLE 12

TERMINATION OF AGREEMENT

12.1 TERMINATION. At any time prior to the Effective Time, this
Agreement may be terminated:

(a) by mutual consent of all the parties;

(b) by Exar if (i) there has been a material breach by Startech of
any covenant, representation or warranty contained in this Agreement, Exar has
notified Startech in writing of the existence of such breach and Startech has
failed to cure such breach within 10 days after receiving such notice, or (ii)
the Closing shall not have occurred prior to March 31, 1995, and Exar is not, at
the time of termination, in default of the observance of or the due and timely
performance of any of its covenants and agreements contained in this Agreement;

(c) by Startech if (i) there has been a material breach by Exar of
a covenant, representation or warranty contained in this Agreement, Startech has
notified Exar in writing of the existence of such breach and Exar has failed to
cure such breach within 10 days after receiving such notice, or (ii) the Closing
shall not have occurred prior to April 30, 1995, and Startech is not, at the
time of termination, in default of the observance of or the due and timely
performance of any of its covenants and agreements contained in this Agreement;
or

<PAGE>

(d) by either Exar or Startech if (i) there shall be a non-
appealable order of a federal or state court in effect preventing consummation
of the Merger, (ii) there shall be any action taken, or any statute, rule,
regulations or order enacted, promulgated, issued or deemed applicable to the
Merger by any Governmental Authority that would make consummation of the Merger
illegal or (iii) Startech Shareholders' Meeting shall have been held and this
Agreement and the Merger shall not have been adopted and approved at such
meeting by the requisite vote of holders of Startech Common Stock and Startech
Preferred Stock.

12.2 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided in Section 12.1, this Agreement shall be of no further force or effect
(except as otherwise provided in Section 12.3) and:

(a) there shall be no liability on the part of any party hereto to
any other party except for (i) payment of expenses, fees and payments pursuant
to Section 12.4, (ii) if appropriate, payment of legal fees pursuant to
Section 13.3 and (iii) any damages for breach of this Agreement; and

(b) each party shall redeliver all documents, work papers or other
materials of the other party relating to the transaction contemplated hereby,
whether obtained before or after the execution of this Agreement, to the party
furnishing the same, and all confidential information received by any party
shall be treated in accordance with Section 12.3 and the Confidentiality
Agreement referred to therein, and all filings, applications or other
submissions made pursuant to this Agreement shall, at Startech's or Exar's
option, respectively be withdrawn from the agency or other person to which made.

12.3 CONFIDENTIALITY. In the event this Agreement is terminated or the
Merger is not consummated for any reason, the Confidentiality Agreement dated
December 22, 1994 and signed by Exar and Startech shall continue in full force
and effect.

12.4 FEES AND EXPENSES. All fees and expenses incurred in connection
with this Agreement will be paid by the party incurring such expense.

12.5 EXTENSION OF TIME; WAIVERS. At any time prior to the Effective
Time:

(a) Exar (on behalf of itself and Merger Sub) may (i) extend the
time for the performance of any of the obligations or other acts of Startech,
and (ii) waive compliance with any of the agreements or conditions contained
herein to be performed by Startech. Any agreement on the part of Exar to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of Exar and Merger Sub; and

(b) Startech may (i) extend the time for the performance of any of
the obligations or other acts of Exar or Merger Sub, and (ii) waive compliance
with any of the agreements or conditions contained herein to be performed by
Exar or Merger Sub. Any agreement on the part of Startech to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of Startech.

<PAGE>

ARTICLE 13

MISCELLANEOUS

13.1 AMENDMENT. This Agreement may be amended with the approval of the
Board of Directors of Exar, Merger Sub and Startech at any time before or after
approval hereof by the shareholders of Startech, but, after any such shareholder
approval, no amendment shall be made which would change the principal terms of
this Agreement without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.

13.2 ENTIRE AGREEMENT; COUNTERPARTS; APPLICABLE LAW. This Agreement and
the agreements contemplated hereby and by the exhibits hereto (a) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
except the Confidentiality Agreement dated December 22, 1994 executed by Exar
and Startech with respect to the transactions contemplated herein, shall remain
in full force and effect, (b) may be executed in several counterparts, each of
which will be deemed an original and all of which shall constitute one and the
same instrument and (c) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California as applied to
contracts entered into and to be performed entirely within California, except,
in the case of the agreements contemplated by the Exhibits hereto, where such
agreements provide for a different choice of law.

13.3 ATTORNEYS' FEES. In any action at law or suit in equity to enforce
this Agreement or the rights of the parties hereunder, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.

13.4 ASSIGNABILITY. This Agreement shall be binding upon, and shall be
enforceable by and inure to the benefit of, the parties named herein and their
respective successors; PROVIDED, HOWEVER, that without the prior written consent
of the other parties, this Agreement may not be assigned by any party except
(a) to a successor in interest through merger, consolidation, reorganization,
sale of substantially all assets or similar transaction for any party that is an
entity or (b) a transfer to another entity that is a member of the same
affiliated group. Any attempted assignment in violation of this Section 13.4
shall be void and of no effect.

13.5 NOTICES. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

<PAGE>

To Startech: with a copy to:

Startech Semiconductor, Inc. Battle Fowler LLP
1219 Bordeaux Drive 75 East 55th Street
Sunnyvale, CA 94089 New York, NY 10022
Attn: Chief Executive Officer Attn: Gerald A. Eppner, Esq.
Telephone: (408) 745-0801 Telephone: (212) 856-7077
Fax: (408) 745-1269 Fax: (212) 856-7811

To Exar or Merger Sub: with a copy to:

Exar Corporation Cooley Godward Castro Huddleson & Tatum
2222 Qume Drive Five Palo Alto Square
San Jose, CA 95161 Palo Alto, CA 94306
Attn: Chief Financial Officer Attn: Peter F. Stone, Esq.
Telephone: (408) 434-6400 Telephone: (415) 843-5000
Fax: (408) 435-1712 Fax: (415) 857-0663

To Principal Officers and
and Committee: with a copy to:

Ram K. Reddy Battle Fowler LLP
c/o Startech Semiconductor, Inc. 75 East 55th Street
1219 Bordeaux Drive New York, NY 10022
Sunnyvale, CA 94089 Attn: Gerald A. Eppner, Esq.
Telephone: (408) 745-0801 Telephone: (212) 856-7077
Fax: (408) 745-1269 Fax: (212) 856-7811

All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally-
recognized, overnight courier, on the business day following dispatch and (d) in
the case of mailing, on the fifth business day following such mailing.

13.6 SEVERABILITY. If any provision of this Agreement is declared
invalid in a court proceeding between the parties, such invalidity shall not
invalidate this Agreement, and this Agreement shall be construed as if the
invalid part were not contained herein, and the rights and obligations of the
parties shall be construed and enforced accordingly.

13.7 TITLES. The titles and captions of the sections and paragraphs of
this Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.

<PAGE>

13.8 COOPERATION. Exar, Merger Sub and Startech each agree to execute
and deliver such other documents, certificates, agreements and other writings
and to take such other actions as may be necessary or desirable in order to
consummate expeditiously or implement the transactions contemplated by this
Agreement.

13.9 THIRD PARTY BENEFICIARY RIGHTS. Except as expressly set forth in
Section 9.5, no provision of this Agreement is intended, or will be interpreted,
to provide or create for any third party beneficiary rights or any other rights
of any kind in any client, customer, affiliate, shareholder, employee, or any
party hereto or any other person or entity, and all provisions hereof will be
personal solely among the parties hereto.

13.10 PUBLICITY. Subject to Exar's obligations under applicable
securities laws, the issuance of any reports, statements or press releases
pertaining to this Agreement or the transactions contemplated hereby prior to
the Effective Time will be subject to the mutual approval of Exar and Startech.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Reorganization as of the date first written above.

EXAR CORPORATION

By: /s/ Ronald W. Guire
--------------------------------------------
Ronald W. Guire
Senior Vice President
Chief Financial Officer

MOON ACQUISITION, INC.

By: /s/ Ronald W. Guire
--------------------------------------------
Ronald W. Guire
Senior Vice President
Chief Financial Officer

STARTECH SEMICONDUCTOR, INC.

By: /s/ Ram K. Reddy
--------------------------------------------
Ram K. Reddy
Chief Executive Officer

PRINCIPAL OFFICERS

/s/ Ram K. Reddy
-------------------------------------------------
Ram K. Reddy

/s/ Dr. Roubik Gregorian
-------------------------------------------------
Dr. Roubik Gregorian

<PAGE>

AGREEMENT OF MERGER

THIS AGREEMENT OF MERGER, dated as of March 30, 1995 (the "Merger
Agreement"), is made and entered into by MOON ACQUISITION, INC., a Delaware
corporation ("Sub" or "Surviving Corporation") and STARTECH SEMICONDUCTOR, INC.,
a California corporation ("Startech"). (Startech and Sub are hereinafter
collectively referred to as the "Constituent Corporations.")

RECITALS

A. Exar Corporation, a Delaware corporation ("Exar"), Startech and Sub
have entered into an Agreement and Plan of Reorganization, dated as of March 19,
1995 (the "Reorganization Agreement"), providing, among other things, for the
execution and filing of this Merger Agreement and the merger of Startech with
and into Sub upon the terms set forth in the Reorganization Agreement and this
Merger Agreement (the "Merger").

B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations and their respective stockholders that Startech be merged with and
into Sub.

AGREEMENT

NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement,the Constituent Corporations hereby agree
that Startech shall be merged with and into Sub in accordance with the
provisions of the laws of the State of Delaware, upon the terms and subject to
the conditions set forth as follows:

ARTICLE 1

THE MERGER

1.1 FILING. This Merger Agreement, together with the officers'
certificates of each of the Constituent Corporations required by the General
Corporation Law of the State of Delaware (the "Delaware Law"), shall be filed
with the Secretary of State of the State of Delaware on the date specified in
the Reorganization Agreement.

1.2 EFFECTIVENESS. The Merger shall become effective on the date this
Merger Agreement is duly filed with the Secretary of State of the State of
Delaware (the "Effective Time").

1.3 MERGER. At the Effective Time, Startech shall be merged with and
into Sub and the separate existence of Startech shall cease. Sub shall be the
Surviving Corporation in the Merger and the separate corporate existence of Sub,
with all of its purposes, objects, rights,

<PAGE>

privileges, powers, immunities and franchises, shall continue unaffected and
unimpaired by the Merger. Sub's Certificate of Incorporation is hereby amended
to read:

"I.

The name of this corporation is Startech Semiconductor, Inc."

1.4 FURTHER ACTION. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either or both of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the name of
either or both of the Constituent Corporations or otherwise to take all such
action.

ARTICLE 2

CORPORATE GOVERNANCE MATTERS

2.1 CERTIFICATE OF INCORPORATION. From and after the Effective Time and
until thereafter amended as provided by law, the Certificate of Incorporation of
the Surviving Corporation, as amended pursuant to Section 1.3 hereof, shall be
the Certificate of Incorporation of Sub.

2.2 BYLAWS. From and after the Effective Time, the Bylaws of Sub shall
be the Bylaws of the Surviving Corporation unless and until amended as provided
by law.

2.3 DIRECTORS. From and after the Effective Time, the directors of Sub
shall be the directors of the Surviving Corporation, and they shall continue to
hold office as provided in the Bylaws of the Surviving Corporation.

2.4 OFFICERS. From and after the Effective Time, the officers of Sub
shall be the officers of the Surviving Corporation; and they shall continue to
hold office as provided in the Bylaws of the Surviving Corporation.

ARTICLE 3

MANNER OF CONVERTING SHARES OF THE CONSTITUENT CORPORATIONS

3.1 CONVERSION OF STARTECH STOCK. At the Effective Time, each then
outstanding share of common stock, no par value, of Startech (the "Startech
Common Stock") and each then outstanding share of Series A preferred stock, no
par value, of Startech (the "Startech Preferred Stock") other than Dissenting
Shares (as defined in Section 3.7) shall cease to be an existing and issued
share and shall become and be converted into, by virtue of the Merger and
without any action on the part of Exar, Sub, Startech or the holder thereof, one
of the following, at the shareholder's election (subject to and in accordance
with Section 3.4 below):

<PAGE>

"Closing Shares" shall mean 500,000 shares of Exar Common Stock.

"Option A Participation Percentage" shall mean one DIVIDED BY
10,824,500.

"Option B Participation Percentage" shall mean one DIVIDED BY
5,093,883.

"Total Cash Consideration" shall mean an amount of cash equal to
(x) $3,750,000 LESS (y) the Transaction Fees (as defined below) as set forth in
the updated Startech Disclosure Schedule to be delivered by Startech pursuant to
the Reorganization Agreement. "Transaction Fees" shall mean (i) all fees and
expenses incurred by Startech in connection with the transactions contemplated
hereby, including all fees and expenses of Startech's investment bankers,
attorneys, accountants and other consultants, agents and representatives
performing services for Startech in connection with the transactions
contemplated hereby PLUS (ii) $25,000 PLUS (iii) $50,000 in prepaid fees and
expenses in connection with the registration of the Closing Shares pursuant to
Article 11.

3.2 CALCULATION OF EARN-OUT PAYMENTS.

<PAGE>

(iii) if Startech's Gross Margin Contribution Percentage for
the First Measurement Period equals or exceeds 100%, then the First Earn-Out
Payment shall be $6,000,000.

(iii) if Startech's Gross Margin Contribution Percentage for
the Second Measurement Period equals or exceeds 100%, the Second Earn-Out
Payment shall be $6,000,000.

(c) REDUCTIONS IN EARN-OUT PAYMENTS. Any one or more
distributions (such distributions collectively, the "Distributions") of the
First Earn-Out Payment and the Second Earn-Out Payment (together, the "Earn-Out
Payments") pursuant to Section 3.3 shall be subject to reduction if Exar elects
to set off against one or more of the Distributions an amount equal to the
amount of any indemnifiable damages.

(d) DEFINITIONS. "Gross Margin Contribution Percentage" for each
measurement period shall mean the percentage obtained by dividing Startech's
Gross Margin Dollar Contribution (as defined below) for such measurement period
by Startech's projected gross margin dollar contribution ("Projected Gross
Margin Dollar Contribution") for the corresponding measurement period as set
forth below:

(i) for the First Measurement Period, Startech's Projected
Gross Margin Dollar Contribution shall be $11,600,000; and

(ii) for the Second Measurement Period, Startech's Projected
Gross Margin Dollar Contribution shall be $10,400,000.

"Gross Margin Dollar Contribution" shall mean the gross margin of
the Startech Business included in Exar's consolidated financial statements,
before consolidating elimination entries, prepared in accordance with generally
accepted accounting principles on a basis consistent with Exar's audited
financial statements for the year ended March 31, 1994 as certified by the
independent accountants of Exar.

<PAGE>

For purposes of measuring Gross Margin Dollar Contribution, Exar
shall account for the Startech Business (as defined below) as a separate
business segment. Any accrual, deduction or allocation made or taken for any
management, service, overhead or other charge shall be applied against the
Startech Business only when Startech elects, because it expects to realize a
cost advantage thereby, to utilize services or facilities of Exar in lieu of
procuring such services or facilities from another source. Any such allocation
to the Startech Business or charge shall be applied by Exar at rates or deemed
prices that are no less favorable than those that Exar applies to its other
independent business units. Capital expenditures shall be allocated to the
Startech Business if and only if such expenditures either were contemplated in
the business plan provided by Startech to Exar prior to the Closing (the
"Startech Plan") or are approved by the Startech Board of Directors after the
Closing (the "Startech Post-Closing Board") with the favorable vote of the
member designated and elected to the Startech Post-Closing Board by Exar
initially to be either Ram K. Reddy or Dr. Roubik Gregorian. "Startech
Business" shall mean all revenues (together with the associated costs) derived
from the sale of products designed and developed by Startech or from the
licensing of any such designs or elements of such designs, whether developed
before or after the Closing, and regardless of the brand name under which such
products may be sold.

A committee of three securityholders, initially consisting of Ram K.
Reddy, Dr. Roubik Gregorian and Ron Lee (the "Committee"), in its sole
discretion may challenge the calculation of the Gross Margin Dollar Contribution
and shall use an independent auditor (the "Shareholders' Auditor") to assist it
in reviewing the calculation and proposing an alternative calculation. If the
Committee's calculation for the First Measurement Period or the Second
Measurement Period exceeds Exar's calculation of the Gross Margin Dollar
Contribution for such period by more than 1%, then the Committee may deliver a
notice to Exar disagreeing with Exar's calculation and setting forth the
Committee's calculation of such amount. If a notice of disagreement shall have
been delivered to Exar by the Committee pursuant to the preceding sentence, Exar
and the Committee shall, during the 20 days following such delivery, use all
commercially reasonable efforts to reach agreement. If during such period the
parties are unable to reach agreement regarding the Gross Margin Dollar
Contribution for such period, Exar and Committee shall promptly thereafter
select an "Accounting Referee" (as defined below) and cause such Accounting
Referee promptly to review this Agreement and the respective parties'
calculations for the purpose of calculating the Gross Margin Dollar
Contribution. The Accounting Referee shall deliver to Exar and the Committee as
promptly as practicable a report setting forth such calculation. Such report
shall be final and binding upon Exar and the shareholders. The cost of such
review and report shall be borne by (i) Exar if the Committee's calculation of
the Gross Margin Dollar Contribution is closer to the Accounting Referee's
calculation, or (ii) the shareholders if the Exar's calculation of the Gross
Margin Dollar Contribution is closer to the Accounting Referee's calculation, or
(iii) both parties equally if each party's calculation differs from the
Accounting Referee's calculation by the same amount. The Accounting Referee
shall mean a reputable firm of independent auditors of national standing other
than Exar's or the shareholders' independent auditors.

3.3 DISTRIBUTIONS OF EARN-OUT PAYMENTS. On each of the dates set forth
below (each, a "Distribution Date") Exar shall distribute cash or Exar Common
Stock or a combination

<PAGE>

thereof, with the form of such consideration to be at Exar's election in the
amounts set forth below, reduced by any amounts specified in Section 3.2(c), to
the Shareholders as follows: there shall be distributed with respect to each
share of Startech Common Stock and Startech Preferred Stock held immediately
prior to the Effective Time that was converted into an Option B Unit that amount
of cash and/or Exar Common Stock equal to (i) the aggregate amount of cash
and/or Exar Common Stock to be distributed on such Distribution Date, MULTIPLIED
BY (ii) the Option B Participation Percentage. Holders of Exar Options and Exar
Warrants shall be entitled to participate in Distributions as and to the extent
provided in Section 3.8.

In order to preserve the status of the Merger as a reorganization (within
the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code"),
no Earn-Out Payment shall be made in cash to the extent that such payment (net
of the amount of such payment treated as interest under Section 1272 of the
Code) would cause Total Shareholder Boot to exceed an amount equal to fifty
percent (50%) of Total Shareholder Consideration. The term "Total Shareholder
Boot" shall mean the sum of (i) Total Cash Consideration paid to shareholders of
Startech in the Merger, (ii) cash payments made for Dissenting Shares,
(iii) cash paid to shareholders of Startech in the Merger in lieu of fractional
Closing Shares, and (iv) Earn-Out Payments made in cash (net of the amount of
such payments treated as interest under Section 1272 of the Code) to
shareholders of Startech in the Merger. The term "Total Shareholder
Consideration" shall mean the sum of: (i) Total Shareholder Boot and (ii) the
fair market value of the Exar Common Stock (net of the amount of such payments
treated as interest under Section 1272 of the Code) paid to shareholders of
Startech in the Merger. The provisions of this paragraph are intended to
illustrate Exar's rights and obligations to make the Earn-Out Payments with the
minimum number of shares of Exar Common Stock as is required to preserve the
treatment of the Merger as a reorganization within the meaning of Section 368(a)
of the Code, and shall not be interpreted as limiting such rights and
obligations.

(a) As soon as practicable following the calculation of the First
Earn-Out Payment, an amount equal in value to one-third of the First Earn-Out
Payment.

(b) As soon as practicable following the calculation of the Second
Earn-Out Payment, an amount equal in value to one-third of the Second Earn-Out
Payment.

(c) On March 31, 1997, an amount equal in value to the sum of (i)
one-third of the First Earn-Out Payment and (ii) one-third of the Second Earn-
Out Payment.

(d) On March 31, 1998, an amount equal in value to the sum of (i)
one-third of First Earn-Out Payment and (ii) one-third of the Second Earn-Out
Payment.

<PAGE>

the fair market value of the Exar Common Stock as agreed to by Exar and the
Committee), for the 30 trading days prior to each such Distribution Date.

3.4 ELECTION PROCEDURES.

(a) Not fewer than nine days prior to the day (the "Meeting Date")
of the Shareholders Meeting (as defined below), Startech shall mail to the
holders of Startech Common Stock, Startech Preferred Stock, Options to purchase
Startech Common Stock ("Startech Options") and Warrants to purchase Startech
Common Stock ("Startech Warrants"): (i) an election agreement in such form and
containing such provisions as Exar shall reasonably specify ("Election
Agreement"); and (ii) instructions for use of the Election Agreement to effect
an election to receive in the Merger Option A Units or Option B Units, or a
combination thereof; PROVIDED, HOWEVER, that no securityholder of Startech may
elect to receive a number of Option B Units equal to more than 50% of the total
number of shares of Startech Common Stock and Startech Preferred Stock and
shares subject to Startech Options and Startech Warrants owned by such
securityholder (the securityholder's "Fully Diluted Shares"). All shares of
Startech Common Stock, Startech Preferred Stock, Startech Options and Startech
Warrants in respect of which a complete and validly executed Election Agreement
is not received by Startech on or prior to 12:00 Noon, California Time, on the
second day before the Meeting Date shall be deemed to have elected to receive:
(i) a number of Option A Units equal to (x) 68% MULTIPLIED BY (y) the number of
shares with respect to which the holder thereof has made no election (rounded to
the nearest whole unit); and (ii) a number of Option B Units equal to (x) the
number of shares with respect to which such holder has made no election LESS (y)
the number of Option A Units to be received by such holder pursuant to clause
(i). Startech securityholders who together constitute a "group" for purposes of
Rule 13d under the Exchange Act (as defined below) may, at their discretion,
make an election pursuant to this Section 3.4 as if such securityholders were a
single securityholder by completing and having each such securityholder execute
a single Election Agreement.

(b) In the event the securityholders of Startech elect to convert
shares of Startech Common Stock, Startech Preferred Stock, Startech Options and
Startech Warrants into more than 10,824,500 Option A Units pursuant to this
Section 3.4, then: (i) the aggregate number of Option A Units that shall be
issued to such securityholders shall be 10,824,500; (ii) such Option A Units
shall be issued, first, to each securityholder of Startech that number of Option
A Units elected by such securityholder up to (x) 68% TIMES (y) such
securityholder's Fully Diluted Shares and, second, to each securityholder of
Startech who has elected to receive a number of Option A Units greater than (x)
68% TIMES (y) such securityholder's Fully Diluted Shares, that number of Option
A Units determined on a pro rata basis according to such securityholder's Fully
Diluted Shares compared to the total number of Fully Diluted Shares held by all
securityholders electing to convert more than 68% of their respective Fully
Diluted Shares into Option A Units (up to the maximum number of Option A Units
elected by such securityholder); and (iii) each share of Startech Common Stock
and Startech Preferred Stock and each share subject to a Startech Option and a
Startech Warrant held by Startech securityholders that is not converted into an
Option A Unit as a result of the pro rata cutback described in clause

<PAGE>

(ii) above shall be converted into an Option B Unit or, in the case of a
Startech Option or Startech Warrant, the right to receive upon exercise thereof
an Option B Unit.

(c) In the event the securityholders of Startech elect to convert
shares of Startech Common Stock, Startech Preferred Stock, Startech Options and
Startech Warrants into more than 5,093,883 Option B Units pursuant to this
Section 3.4, then: (i) the aggregate number of Option B Units that shall be
issued to such securityholders shall be 5,093,883; (ii) such Option B Units
shall be issued, first, to each securityholder of Startech that number of Option
B Units elected by such securityholder up to (x) 32% TIMES (y) such
securityholder's Fully Diluted Shares and, second, to each securityholder of
Startech who has elected to receive a number of Option B Units greater than (x)
32% TIMES (y) such securityholder's Fully Diluted Shares, that number of Option
B Units determined on a pro rata basis according to such securityholder's Fully
Diluted Shares compared to the total number of Fully Diluted Shares held by all
securityholders electing to convert more than 32% of their respective Fully
Diluted Shares into Option B Units (up to the maximum number of Option B Units
elected by such securityholder); and (iii) each share of Startech Common Stock
and Startech Preferred Stock and each share subject to a Startech Option and a
Startech Warrant held by Startech securityholders that is not converted into an
Option B Unit as a result of the pro rata cutback described in clause (ii) above
shall be converted into an Option A Unit or, in the case of a Startech Option or
Startech Warrant, the right to receive upon exercise thereof an Option A Unit.

(e) Except as otherwise specified in a Startech securityholder's
Election Agreement, the aggregate Option A Units and Option B Units that each
Startech securityholder is entitled to receive pursuant to this Section 3.4
shall be allocated among such securityholder's Startech Common Stock, Startech
Preferred Stock, Startech Options and Startech Warrants such that the Option A
Units (up to the maximum number of Option A Units such securityholder is
entitled to receive) are allocated: first, to such securityholder's Startech
Common Stock and Startech Preferred Stock, in order of ascending per share
original issue price from Startech; and, second, to such securityholder's
Startech Options and Startech Warrants in order of ascending per share exercise
price. Any Startech Common Stock, Startech Preferred Stock, Startech Options
and Startech Warrants to which Option A Units are not allocated will be
allocated Option B Units.

3.5 EXCHANGE OF CERTIFICATES.

(a) As soon as practicable after the Effective Time, Exar will
mail to the holders of Startech Common Stock certificates ("Startech Common
Stock Certificates") and

<PAGE>

Startech Preferred Stock certificates ("Startech Preferred Stock Certificates")
(i) a letter of transmittal in such form and containing such provisions as Exar
may reasonably specify ("Letter of Transmittal") and (ii) instructions for use
in effecting the surrender of Startech Common Stock Certificates and Startech
Preferred Stock Certificates in exchange for cash and certificates representing
Exar Common Stock. Upon surrender of a Startech Common Stock Certificate or
Startech Preferred Stock Certificate to Exar for exchange, together with a duly
executed Letter of Transmittal and such other documents as may be reasonably
required by Exar, the holder of such Startech Common Stock Certificate or
Startech Preferred Stock Certificate shall be entitled to receive in exchange
therefor cash and a certificate representing the number of whole shares of Exar
Common Stock that such holder has the right to receive pursuant to the
provisions of this Article 3, and the Startech Common Stock Certificate or
Startech Preferred Stock Certificate so surrendered shall be canceled. Until
surrendered as contemplated by this Section 3.5, each Startech Common Stock
Certificate and each Startech Preferred Stock Certificate shall be deemed, from
and after the Effective Time, to represent only the right (i) to receive upon
such surrender cash and a certificate representing shares of Exar Common Stock
(and cash in lieu of any fractional share of Exar Common Stock) as contemplated
by this Article 3 and, (ii) with respect to Option B Units, to participate in
future distributions of the Earn-Out Payments, if any (collectively, with
respect to each shareholder of Startech, the "Merger Consideration").

(b) No dividends or other distributions declared or made with
respect to Exar Common Stock with a record date after the Effective Time, and no
distributions of cash or Exar Common Stock in connection with Earn-Out Payments,
shall be paid to the holder of any unsurrendered Startech Common Stock
Certificate or Startech Preferred Stock Certificate with respect to the shares
of Startech Common Stock or Startech Preferred Stock represented thereby, and no
cash payment in lieu of any fractional share shall be paid to any such holder,
until such holder surrenders such Startech Common Stock Certificate or Startech
Preferred Stock Certificate in accordance with this Section 3.5.

(e) The shares of Exar Common Stock to be issued pursuant to this
Article 3 shall not have been registered and shall be characterized as
"Restricted Securities" under the federal securities laws, and under such laws
such shares may be resold without registration under

<PAGE>

the Securities Act of 1933, as amended (the "Securities Act"), only in certain
limited sets of circumstances. Each certificate evidencing shares of Exar
Common Stock to be issued pursuant to this Article 3 shall bear the following
legend:

(g) The rights of Startech shareholders who receive Option B Units
to participate in distributions of the Earn-Out Payments shall not be
transferable, except by will or descent.

3.6 CLOSING OF STARTECH TRANSFER BOOKS. At the Effective Time, holders
of certificates representing shares of Startech Common Stock and Startech
Preferred Stock shall cease to have any rights as shareholders of Startech, and
the stock transfer books of Startech shall be closed with respect to all shares
of Startech Common Stock and Startech Preferred Stock outstanding immediately
prior to the Effective Time. No further transfer of any such shares of Startech
Common Stock or Startech Preferred Stock shall thereafter be made on such stock
transfer books. If, after the Effective Time, a valid certificate previously
representing any of such shares of Startech Common Stock (a "Startech Common
Stock Certificate") or Startech Preferred Stock (a "Startech Preferred Stock
Certificate") is presented to the Surviving Corporation or Exar, such Startech
Common Stock Certificate or Startech Preferred Stock Certificate, as the case
may be, shall be canceled and exchanged as provided in Section 3.5.

3.7 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Startech Common Stock and Startech Preferred Stock that are
issued and outstanding immediately prior to the Effective Date and that are held
by shareholders who have not voted such shares in favor of the Merger
("Dissenting Shares") shall not be canceled and converted into Exar Common Stock
unless and until such holder shall have failed to perfect, or shall have
effectively withdrawn or lost, such holder's right to purchase and payment under
the California Law. If such holder shall have so failed to perfect, or shall
have effectively withdrawn or lost

10.

<PAGE>

such right, such holder's shares of Startech Common Stock or Startech Preferred
Stock shall thereupon be deemed to have been canceled and converted as described
in Section 3.1 at the Effective Time, and each such share shall represent solely
the right to receive the Merger Consideration. From and after the Effective
Time, no shareholder who has exercised dissenters' rights as provided in
Chapter 13 of the California Law shall be entitled to vote such holder's shares
for any purpose or to receive payment of dividends or other distributions with
respect to such holder's shares (except dividends and other distributions
payable to shareholders of record at a date which is prior to the Effective
Time).

ARTICLE 4

TERMINATION AND AMENDMENT

4.1 TERMINATION. Notwithstanding the approval of this Merger Agreement
by the shareholders of Startech, this Merger Agreement shall terminate forthwith
in the event that the Reorganization Agreement shall be terminated as therein
provided.

4.2 AMENDMENT. This Merger Agreement may be amended by the parties
hereto at any time before or after approval hereof by the shareholders of
Startech, but, after any such approval, no amendment shall be made, which
without the further approval of such shareholders would (i) have an adverse
effect on the shareholders of Startech, (ii) change any of the principal terms
of the Merger Agreement, or (iii) change any term of the Certificate of
Incorporation of the Surviving Corporation. This Merger Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.

IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement
as of the date first written above.

Attest: MOON ACQUISITION, INC., a Delaware
corporation

By: /s/ Ronald W. Guire By: /s/ George D. Wells
---------------------------------- ------------------------------
Its Secretary
Title: President
-----------------------------

Attest: STARTECH SEMICONDUCTOR, INC., a
California corporation

By: /s/ Prathiba K. Reddy By: /s/ Ram K. Reddy
---------------------------------- -----------------------------
Its Secretary
Title: Chief Executive Officer
-----------------------------

11.

<PAGE>

CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
OF
MOON ACQUISITION, INC.
(SURVIVING CORPORATION)

George D. Wells and Ronald W. Guire hereby certify that:

1. They are the President and the Secretary, respectively, of Moon
Acquisition, Inc., a Delaware corporation (the "CORPORATION").

2. The Agreement of Merger between the Corporation and Startech
Semiconductor, Inc., a California corporation ("Startech"), attached
hereto was duly approved by the Board of Directors of the
Corporation.

3. There is only one class of shares of stock of the Corporation
outstanding, designated "Common Stock," of which 100 shares were
outstanding and entitled to vote on the merger.

4. The principal terms of the Agreement of Merger were approved by the
Corporation by a vote of a number of shares which equaled or
exceeded the vote required. The approval of a majority of the
outstanding shares of Common Stock entitled to vote on the merger
was required.

We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.

Dated: March 30, 1995 By: /s/ George D. Wells
-------------------------------
George D. Wells
President

By: /s/ Ronald W. Guire
-------------------------------
Ronald W. Guire
Secretary

<PAGE>

CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
OF
STARTECH SEMICONDUCTOR, INC.
(DISAPPEARING CORPORATION)

Ram K. Reddy and Prathiba K. Reddy hereby certify that:

1. They are the President and the Secretary, respectively, of Startech
Semiconductor, Inc., a California corporation (the "CORPORATION").

2. The Agreement of Merger between the Corporation and Moon
Acquisition, Inc., a Delaware corporation, attached hereto was duly
approved by the Board of Directors of the Corporation.

3. The Corporation has two classes of shares of stock outstanding,
designated "Common Stock" and "Preferred Stock," respectively, of
which 8,457,133 shares of Common Stock and 668,750 shares of
Preferred Stock were outstanding and entitled to vote on the merger.

4. The principal terms of the Merger Agreement were approved by the
Corporation by a vote of a number of shares which equaled or
exceeded the vote required. The approval of (i) a majority of the
shares of Startech Common Stock outstanding and entitled to vote,
voting as a class; and (ii) a majority of the shares of Startech
Preferred Stock (on an as-converted basis) outstanding and entitled
to vote, voting as a class, was required.

We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.

Dated: March 30, 1995 By: /s/ Ram K. Reddy
-------------------------------
Ram K. Reddy
Chief Executive Officer

By: /s/ Prathiba K. Reddy
-------------------------------
Prathiba K. Reddy
Secretary

<PAGE>

[COOLEY GODWARD LETTERHEAD]

May 3, 1995

Exar Corporation
2222 Qume Drive
San Jose, CA 95131

Ladies and Gentlemen:

You have requested our opinion with respect to certain matters in connection
with the filing on May 3, 1995 by Exar Corporation (the "Company") of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission, with respect to the offer and sale of
356,547 shares of the Company's Common Stock, $.0001 par value (the "Common
Stock"), by certain former shareholders of Startech Semiconductor, Inc.
("Startech").

In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company's Certificate of Incorporation, as amended,
and Bylaws, the Agreement and Plan of Reorganization dated as of March 19, 1995
by and among the Company, Startech, Moon Acquisition, Inc. and certain officers
of Startech and the related Merger Agreement, and the originals or copies
certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below.

On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the shares of Common Stock are validly issued, fully paid and
nonassessable.

We consent to the reference to our firm under the caption "Legal Matters" in the
Registration Statement and to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

COOLEY GODWARD CASTRO
HUDDLESON & TATUM

By: /s/ Peter F. Stone
--------------------------
Peter F. Stone