-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MS4b2Z9dxoRVVlrhTWFv4mntZevOUrJ4ZEUK866zPb+ZRRnG6p5V5P2RPovucEMN pd9mIrVGqiqJ0whOvV3j1Q== /in/edgar/work/20001103/0000929624-00-001522/0000929624-00-001522.txt : 20001106 0000929624-00-001522.hdr.sgml : 20001106 ACCESSION NUMBER: 0000929624-00-001522 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001103 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TELCOM SEMICONDUCTOR INC CENTRAL INDEX KEY: 0000917415 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 943186995 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-47417 FILM NUMBER: 752937 BUSINESS ADDRESS: STREET 1: 1300 TERRA BELLA AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94039 BUSINESS PHONE: 4129689252 MAIL ADDRESS: STREET 1: 1300 TERRA BELLA AVE STREET 2: 1300 TERRA BELLA AVE CITY: MOUNTAIN VIEW STATE: CA ZIP: 94039 FORMER COMPANY: FORMER CONFORMED NAME: TELCOM UNIVERSAL INC DATE OF NAME CHANGE: 19950627 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MICROCHIP TECHNOLOGY INC CENTRAL INDEX KEY: 0000827054 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 860629024 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2355 W CHANDLER BLVD CITY: CHANDLER STATE: AZ ZIP: 85224-6199 BUSINESS PHONE: 4807867200 MAIL ADDRESS: STREET 1: 2355 WEST CHANDLER BLVD CITY: CHANDLER STATE: AZ ZIP: 85224-6199 SC 13D 1 0001.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 TELCOM SEMICONDUCTOR, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.001 PER SHARE (Title of Class of Securities) 87921P107 (CUSIP Number) Mary K. Simmons Microchip Technology Incorporated 2355 W. Chandler Boulevard Chandler, Arizona 85224-6199 (480) 792-7200 Copies to: Michael J. Kennedy Wilson Sonsini Goodrich & Rosati Professional Corporation One Market, Spear Tower San Francisco, CA 94105 (415) 947-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 26, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. - -------------------------------------------------------------------------------- *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 87921P107 - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Microchip Technology I.R.S. Identification No. 86-0629024 Incorporated - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b) N/A - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e). N/A - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION State of Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES 3,644,587 shares of Common Stock (1) BENEFICIALLY --------------------------------------------------------- OWNED BY EACH 8 SHARED VOTING POWER REPORTING PERSON 2,269,947 shares of Common Stock (2) WITH --------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 3,644,587 (1) --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER N/A - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,914,534 shares of Common Stock (1)(2) - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 32.2% (3) - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- * See Instructions. (1) 3,644,587 shares of TelCom Semiconductor, Inc. ("TelCom") common stock ("TelCom Common Stock") are subject to a stock option agreement between Microchip Technology Incorporated ("Microchip") and TelCom. This option is exercisable under certain circumstances in connection with a termination of the Merger Agreement discussed in Items 3 and 4 below. Were it to be exercised, based on the number of shares of TelCom Common Stock outstanding as of October 26, 2000, the Option shares would represent approximately 19.9% of the outstanding TelCom Common Stock subsequent to the exercise of the Option. (2) 2,269,947 shares of TelCom Common Stock are subject to voting agreements entered into by Microchip and certain stockholders of TelCom (discussed in Items 3 and 4 below). Microchip expressly disclaims beneficial ownership of any of the shares of TelCom Common Stock covered by the Voting Agreements. Based on the number of shares of TelCom Common Stock outstanding as of October 26, 2000, the number of shares of TelCom Common Stock covered by the Voting Agreements represents approximately 12.5% of the outstanding TelCom Common Stock. (3) Assuming the exercise of all shares subject to the stock option described above. ITEM 1. SECURITY AND ISSUER. - -------------------------------------------------------------------------------- This statement relates to the common stock, par value $0.001 per share (the "TelCom Common Stock"), of TelCom Semiconductor, Inc., a Delaware corporation ("TelCom"). The principal executive offices of TelCom are located at 1300 Terra Bella Avenue, Mountain View, California 94043. ITEM 2. IDENTITY AND BACKGROUND. The name of the corporation filing this statement is Microchip Technology Incorporated, a Delaware corporation ("Microchip"). Microchip is a developer and manufacturer of semiconductor products. Microchip's principal business address is 2355 W. Chandler Boulevard, Chandler, Arizona 85224-6199. The address of Microchip's executive offices is the same as the address of its principal business. Set forth on Schedule A is the name of each of the directors and executive officers of Microchip along with the present principal occupation or employment of such directors and executive officers and the name, principal business and address if any corporation or other organization in which such employment is conducted, as of the date hereof to Microchip's knowledge. To Microchip's knowledge, each of the individuals identified on Schedule A is a citizen of the United States. During the last five years neither Microchip nor, to the best of Microchip's knowledge, any of the other entities or individuals referred to in Schedule A has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the last five years neither Microchip nor, to the best of Microchip's knowledge, any of the other entities or individuals referred to in Schedule A was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to an Agreement and Plan of Merger dated as of October 26, 2000 (the "Merger Agreement"), among Microchip, Matchbox Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Microchip ("Merger Sub") and TelCom Semiconductor, Inc. ("TelCom"), and subject to the conditions set forth therein (including approval by stockholders of TelCom), Merger Sub will merge with and into TelCom and TelCom will become a wholly-owned subsidiary of Microchip (such events constituting the "Merger"). Once the Merger is consummated, Merger Sub will cease to exist as a corporation and all of the business, assets, liabilities and obligations of Merger Sub will be merged into TelCom with TelCom remaining as the surviving corporation (the "Surviving Corporation"). - -------------------------------------------------------------------------------- As a condition and inducement for Microchip to enter into the Merger Agreement and in consideration thereof, TelCom granted to Microchip an option (the "Option") to acquire up to 3,644,587 shares of TelCom Common Stock at a purchase price of $15.00 per share pursuant to a stock option agreement (the "Stock Option Agreement"). The Stock Option Agreement was entered into between Microchip and TelCom on October 26, 2000, and the Option becomes exercisable if the Merger Agreement is terminated under certain circumstances. Microchip did not pay any additional consideration to TelCom in connection with the Stock Option Agreement. As a condition and inducement for Microchip to enter into the Merger Agreement and in consideration thereof, certain stockholders of TelCom entered into individual voting agreements with Microchip (collectively the "Voting Agreements") whereby each such stockholder (collectively, the "TelCom Voting Agreement Stockholders") agreed, severally and not jointly, to vote all of the shares of TelCom Common Stock (plus any additional shares of TelCom Common Stock acquired upon the exercise of options, warrants and other rights to acquire shares of TelCom Common Stock) beneficially owned by him at every TelCom stockholders meeting and every written consent in lieu of such a meeting in favor of the adoption of the Merger Agreement. Microchip did not pay additional consideration to any Voting Agreement Stockholder in connection with the execution and delivery of the Voting Agreements. References to, and descriptions of, the Merger and the Merger Agreement as set forth in this Schedule 13D are qualified in their entirety by reference to the copy of the Merger Agreement included as Exhibit 2.1 to the Form 8-K filed by Microchip on October 30, 2000. References to, and descriptions of, the Stock Option Agreement and the Voting Agreements as set forth in this Schedule 13D are qualified in their entirety by reference to copies of the forms of the Stock Option Agreement and Voting Agreement included as Exhibits 2 and 3 to this Schedule 13D. ITEM 4. PURPOSE OF TRANSACTION. (a) Not applicable. (b) The information set forth in Item 3 is incorporated by reference herein. As described in Item 3 above, this statement relates to the Merger of Merger Sub, a wholly-owned subsidiary of Microchip, with and into TelCom in a statutory merger pursuant to the applicable provisions of Delaware Law. At the effective time of the Merger (the "Effective Time"), the separate existence of Merger Sub will cease and TelCom will continue as the Surviving Corporation and as a wholly-owned subsidiary of Microchip. Each holder of outstanding TelCom Common Stock will receive, in exchange for each share of TelCom Common Stock held by such holder, a number of shares of Microchip Common Stock equal in value to $15.00 divided by the average closing price - -------------------------------------------------------------------------------- of Microchip common stock for the ten trading days preceding the closing of the Merger (the "Exchange Ratio"); provided that if such average closing price is less than $28.30 per share, the holders of TelCom common stock will receive .53 shares of Microchip common stock for each share of TelCom common stock, and, provided further, that if such average closing price is greater than $32.61 per share, the holders of TelCom common stock will receive .46 shares of Microchip common stock for each share of TelCom common stock. Microchip will assume each outstanding option to purchase TelCom Common Stock under TelCom's stock option plans. Furthermore, all rights to purchase shares of TelCom Common Stock under TelCom's Employee Stock Purchase Plan shall be converted into rights to purchase shares of Microchip Common Stock and shall be assumed by Microchip. Pursuant to the Stock Option Agreement, TelCom agreed to grant Microchip an option to acquire up to 3,644,587 shares of TelCom Common Stock at a purchase price of $15.00 per share. The Stock Option Agreement becomes exercisable if the Merger Agreement is terminated under certain circumstances. The Stock Option Agreement expires upon the earliest of (i) the Effective Time, (ii) twelve (12) months following the date on which the Merger Agreement is terminated pursuant to Section 7.01(b) (by either Microchip or TelCom as a result of the Merger not being consummated by April 30, 2001) or 7.01(d)(i) (by either Microchip or TelCom as a result of the stockholders of TelCom not approving the Merger), if no event causing the "Termination Fee" (as that term is defined in the Merger Agreement) to become payable pursuant to Section 7.03(b)(ii) of the Merger Agreement has occurred, (iii) twelve (12) months following the date on which the Merger Agreement is terminated by Microchip as a result of a "Triggering Event" (as that term is defined in the Merger Agreement), (iv) in the event the Merger Agreement has been terminated pursuant to Section 7.01(b) or 7.01(d)(i) thereof and the Termination Fee became payable pursuant to Section 7.03(b)(ii) thereof, twelve (12) months after payment of the Termination Fee; and (v) the date on which the Reorganization Agreement is terminated other than pursuant to Sections 7.01(b), 7.01(d)(i) or as a result of a Triggering Event. Pursuant to the Voting Agreements, the TelCom Voting Agreement Stockholders have agreed to vote the shares of TelCom Common Stock (plus any additional shares of TelCom Common Stock acquired upon the exercise of options, warrants and other rights to acquire shares of TelCom Common Stock) beneficially owned by them at every TelCom stockholders meeting and every written consent in lieu of such a meeting in favor of the adoption of the Merger Agreement. A Voting Agreement terminates upon the earlier to occur of (i) such date and time as the Merger Agreement shall have been terminated pursuant to its terms, or (ii) the Effective Time. In connection with the Merger Agreement, certain stockholders of TelCom (each a "TelCom Affiliate") have each entered into an affiliate agreement with Microchip (collectively, the "TelCom Affiliate Agreements") pursuant to which each TelCom Affiliate has agreed not to sell, transfer, or otherwise dispose of or reduce such TelCom Affiliate's risk with respect to any shares of TelCom stock or shares of Microchip stock - -------------------------------------------------------------------------------- during the period commencing thirty days prior to the Effective Time and ending at such time as financial results covering at least 30 days of combined operations of TelCom and Microchip have been published by Microchip. Pursuant to the TelCom Affiliate Agreements, each TelCom Affiliate has also agreed that any sale, transfer or other disposition of TelCom Common Stock by such Affiliate will be made in accordance with Rule 145 promulgated by the Commission under the Securities Act of 1933, as amended. The foregoing summary of the Affiliate Agreements is qualified in its entirety by reference to the copy of a form of the TelCom Affiliate Agreement included as Exhibit 4 to this Schedule 13D and incorporated herein in its entirety by reference. The purpose of the transactions under the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements is to enable TelCom and Microchip to consummate the transactions contemplated under the Merger Agreement. (c) Not applicable. (d) Not applicable. (e) Other than as a result of the Merger described in Item 3 above, not applicable. (f) Not applicable. (g) In connection with the Merger, TelCom has amended the TelCom Rights Plan (as defined in the Merger Agreement) so that the Merger Agreement, the Stock Option Agreement and the Voting Agreement, and any transactions contemplated thereby (including the acquisition of shares pursuant to exercise of the Option) will not result in the grant of rights to any person under the TelCom Rights Plan. (h) - (i) Not applicable. (j) Not applicable. References to, and descriptions of, the Merger and the Merger Agreement as set forth in this Schedule 13D are qualified in their entirety by reference to the copy of the - -------------------------------------------------------------------------------- Merger Agreement included as Exhibit 2.1 to the Form 8-K filed by Microchip on October 30, 2000. References to, and descriptions of, the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements as set forth in this Schedule 13D are qualified in their entirety by reference to the copies of the forms of the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements included as Exhibits 2-5 to this Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) - (b) The information set forth and incorporated by reference in Items 3 and 4 is incorporated by reference herein. If pursuant to the Stock Option Agreement the Option becomes exercisable, Microchip would have the right to acquire up to 3,644,587 shares of TelCom Common Stock, which constitutes approximately 19.9% of the issued and outstanding shares of TelCom Common Stock based on the number of shares of TelCom Common Stock outstanding as of October 26, 2000. In the event that Microchip exercises the Option, it would have the sole power to vote the shares acquired under the Option and would then be entitled to all rights as a stockholder of TelCom as to the shares. Microchip disclaims any beneficial ownership of the shares of TelCom Common Stock which are covered by the Stock Option Agreement. As a result of the Voting Agreements, Microchip may be deemed to be the beneficial owner of at least 2,269,947 shares of TelCom Common Stock. Such TelCom Common Stock constitutes approximately 12.5% of the issued and outstanding shares of TelCom Common Stock based on the number of shares of TelCom Common Stock outstanding as of October 26, 2000. Microchip may be deemed to have the shared power to vote such shares with respect to those matters described above. However, Microchip (i) is not entitled to any rights as a stockholder of TelCom as to the shares and (ii) disclaims any beneficial ownership of the shares of TelCom Common Stock which are covered by the Voting Agreements. To Microchip's knowledge, no person listed in Schedule A has an ownership interest in TelCom. Set forth on Schedule B are the names of the stockholders of TelCom that have entered into a Voting Agreement with Microchip, and their present principal occupation or employment, including the name, principal business and address of any corporation or other organization in which such employment is conducted, to Microchip's knowledge. (c) To the knowledge of Microchip, no transactions in the class of securities reported have been effected during the past sixty days by any person named pursuant to Item 2. - -------------------------------------------------------------------------------- (d) To the knowledge of Microchip, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of shares of TelCom Common Stock obtainable by Microchip upon exercise of the Option. (e) Not applicable. References to, and descriptions of, the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements as set forth in this Schedule 13D are qualified in their entirety by reference to the copies of the forms of the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements included as Exhibits 2-5 to this Schedule 13D. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The information set forth and incorporated by reference in Items 3, 4 and 5 is incorporated by reference herein. Other than the Merger Agreement and the exhibits thereto, including the Stock Option Agreement, the Voting Agreements and the Affiliate Agreements described herein, to the knowledge of Microchip, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 and between such persons and any person with respect to any securities of TelCom, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangement, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. The following documents are filed as exhibits: 1. *Agreement and Plan of Reorganization, dates as of August 8, 2000, by and among Microchip Technology Incorporated, Matchbox Acquisition Corp. and TelCom Semiconductor, Inc. 2. Form of Stock Option Agreement, dated as of October 26, 2000, between Microchip Technology Incorporated and TelCom Semiconductor, Inc. 3. Form of Voting Agreement, dated as of October 26, 2000, between Microchip Technology Incorporated and certain stockholders of TelCom Semiconductor, Inc. 4. Form of Affiliate Agreement, dated as of October 26, 2000, between Microchip Technology Incorporated and certain stockholders of TelCom Semiconductor, Inc. * Incorporated by reference to the 8-K filed by Microchip on October 30, 2000. - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 3, 2000 MICROCHIP TECHNOLOGY INCORPORATED By: /s/ Steve Sanghi ---------------------------- Steve Sanghi Chief Executive Officer - -------------------------------------------------------------------------------- Schedule A DIRECTORS AND EXECUTIVE OFFICERS OF MICROCHIP TECHNOLOGY INCORPORATED The following table sets forth the name, business address and present principal occupation or employment of each director and executive officer of Microchip. Except as indicated below, the address of each such person is c/o Microchip Technology Incorporated, 2355 W. Chandler Boulevard, Chandler, Arizona 85224-6199. To Microchip's knowledge, each of the individuals identified below is a citizen of the United States. Name and Title in Microchip Present Principal Occupation and Technology Incorporated Name of Employer - -------------------------------------------------------------------------------- Director of Microchip: Steve Sanghi Chief Executive Officer, President and Chairman of the Board of Directors Albert J. Hugo-Martinez Business Advisor/Consultant Director Hugo-Martinez & Associates 1378 Via Alta Del Mar, CA 92014 L.B. Day President Director L.B. Day & Co. 806 S.W. Broadway Floor 11 Portland, OR 97205 Matthew W. Chapman President, Chief Executive Director Officer and Chairman Global Services Networks, Inc. 400 SW 6th Avenue Portland, OR 97204 Wade F. Meyercord Senior Vice President and Director Chief Financial Officer RioPort.com, Inc. 2895 Zanker Road San Jose, CA 95134 - -------------------------------------------------------------------------------- Executive Officers of Microchip (who do not also serve as Directors of Microchip): Gordon W. Parnell Chief Financial Officer Timothy B. Billington Vice President, Manufacturing and Technology Groups George P. Rigg Vice President, Advanced Microcontroller and Systems Group Mitchell R. Little Vice President, Worldwide Sales - -------------------------------------------------------------------------------- Schedule B The following table sets forth the name and present principal occupation or employment of each TelCom stockholder that entered into a voting agreement with Microchip. Except as indicated below, the business address of each such person is c/o TelCom Semiconductor, Inc., 1300 Terra Bella Avenue, Mountain View, CA 94043.
Name and Business Address Present Principal Occupation Shares Beneficially Owned or Employment - ------------------------------------------------------------------------------------------------- Directors of TelCom: Phillip M. Drayer Chairman of the Board of Directors 865,331 Robert T. Gargus President and Chief Executive 404,465 Officer Frank Gill 28,000 3000 Sandhill Road Building 2, Suite 290 Menlo Park, CA 94025 Donald E. Fowler Consultant 70,000 10 Ohlone Portola Valley, CA 94025 T. Peter Thomas General Partner, Institutional 90,933 Venture Partners Executive Officers of TelCom (who do not also serve as Directors of TelCom): Edward D. Mitchell Executive Vice President and Chief 250,500 Technical Officer Mark M. Brown Vice President, Finance and Chief 100,000 Financial Officer Thomas J. Grune Vice President, Sales 136,520 Edward Browder Vice President, Operations 203,413 Kenneth Rose Chief Accounting Officer and 120,785 Corporate Controller
- -------------------------------------------------------------------------------- EX-99.2 2 0002.txt FORM OF STOCK OPTION AGREEMENT EXHIBIT 2 FORM OF STOCK OPTION AGREEMENT THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as --------- of October 26, 2000, among MICROCHIP TECHNOLOGY INCORPORATED, a Delaware corporation ("Parent"), and TELCOM SEMICONDUCTOR, INC., a Delaware corporation ------ (the "Company"). Capitalized terms used but not otherwise defined herein will ------- have the meanings ascribed to them in the Reorganization Agreement (as defined below). RECITALS -------- A. The Company, Merger Sub (as defined below) and Parent have entered into an Agreement and Plan of Reorganization (the "Reorganization Agreement") which ------------------------ provides for the merger (the "Merger") of a wholly-owned subsidiary of Parent ------ ("Merger Sub") with and into the Company. Pursuant to the Merger, all - ------------ outstanding capital stock of the Company will be converted into the right to receive Parent Common Stock. B. As a condition to Parent's willingness to enter into the Reorganization Agreement, Parent has requested that Company agree, and Company has so agreed, to grant to Parent an option to acquire shares of Company's Common Stock, $0.001 par value per share (the "Company Shares"), upon the terms and subject to the -------------- conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein and in the Reorganization Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant of Option. Subject to the terms and conditions set forth --------------- herein, the Company hereby grants to Parent an irrevocable option (the "Option") to acquire up to a number of Company Shares equal to 19.9% of the ------ issued and outstanding shares as of the date of this Agreement (the "Option ------ Shares"), in the manner set forth below by paying cash at a price per share - ------ of $15.00 (the "Exercise Price"). The Exercise Price and the number of Option -------------- Shares granted hereunder shall be subject to adjustment as set forth herein. 2. Exercise of Option. ------------------ (a) The Option may be exercised by Parent, in whole or in part, at any time or from time to time (i) after termination of the Reorganization Agreement pursuant to Section 7.01(g) thereof or (ii) upon the occurrence of any event causing the Termination Fee to become payable pursuant to Section 7.03(b)(ii) of the Reorganization Agreement (any of the events described in clause (i) and (ii) of this sentence being referred to herein as an "Exercise -------- Event"). In the event Parent wishes to exercise the Option, Parent will deliver - ----- to the Company a written notice (each an "Exercise Notice") specifying the --------------- total number of Option Shares it wishes to acquire. Each closing of a purchase of Option Shares (a "Closing") will occur on a date and at a ------- time prior to the termination of the Option designated by Parent in an Exercise Notice delivered at least two (2) business days prior to the date of such Closing, which Closing will be held at the principal offices of the Company. (b) The Option will terminate upon the earliest of (i) the Effective Time, (ii) twelve (12) months following the date on which the Reorganization Agreement is terminated pursuant to Section 7.01(b) or 7.01(d)(i) thereof, if no event causing the Termination Fee to become payable pursuant to Section 7.03(b)(ii) of the Reorganization Agreement has occurred, (iii) twelve (12) months following the date on which the Reorganization Agreement is terminated pursuant to Section 7.1(g) thereof, (iv) in the event the Reorganization Agreement has been terminated pursuant to Section 7.01(b) or 7.01(d)(i) thereof and the Termination Fee became payable pursuant to Section 7.03(b)(ii) thereof, twelve (12) months after payment of the Termination Fee; and (v) the date on which the Reorganization Agreement is terminated other than pursuant to Sections 7.01(b), 7.01(d)(i) or 7.01(g); provided, however, that if the Option -------- ------- cannot be exercised by reason of any applicable government order or because the waiting period related to the issuance of the Option Shares under the HSR Act will not have expired or been terminated, then the Option will not terminate until the tenth business day after such impediment to exercise will have been removed or will have become final and not subject to appeal. 3. Conditions to Closing. The obligation of Company to issue Option --------------------- Shares to Parent hereunder is subject to the conditions that (A) any waiting period under the HSR Act applicable to the issuance of the Option Shares hereunder will have expired or been terminated; (B) all material consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any Federal, state or local administrative agency or commission or other Federal state or local governmental authority or instrumentality, if any, required in connection with the issuance of the Option Shares hereunder will have been obtained or made, as the case may be; and (C) no preliminary or permanent injunction or other order by any court of competent jurisdiction prohibiting or otherwise restraining such issuance will be in effect. It is understood and agreed that at any time during which the Option is exercisable, the parties will use their respective best efforts to satisfy all conditions to Closing, so that a Closing may take place as promptly as practicable. 4. Closing. At any Closing, (A) the Company will deliver to Parent a ------- single certificate in definitive form representing the number of Company Shares designated by Parent in its Exercise Notice, such certificate to be registered in the name of Parent and to bear the legend set forth in Section 10 hereof, against delivery of (B) payment by Parent to the Company of the aggregate purchase price for the Company Shares so designated and being purchased by delivery of a certified check or bank check. 5. Representations and Warranties of the Company. Company represents and --------------------------------------------- warrants to Parent that (A) Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder; (B) the execution and delivery of this Agreement by the Company and consummation by the Company of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this -2- Agreement or any of the transactions contemplated hereby; (C) this Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company and, assuming this Agreement constitutes a legal, valid and binding obligation of Parent, is enforceable against the Company in accordance with its terms; (D) except for any filings required under the HSR Act, the Company has taken all necessary corporate and other action to authorize and reserve for issuance and to permit it to issue upon exercise of the Option, and at all times from the date hereof until the termination of the Option will have reserved for issuance, a sufficient number of unissued Company Shares for Parent to exercise the Option in full and will take all necessary corporate or other action to authorize and reserve for issuance all additional Company Shares or other securities which may be issuable pursuant to Section 8(a) upon exercise of the Option, all of which, upon their issuance and delivery in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable; (E) upon delivery of the Company Shares and any other securities to Parent upon exercise of the Option, Parent will acquire such Company Shares or other securities free and clear of all material claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever, excluding those imposed by Parent; (F) the execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any of its subsidiaries, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties is bound or affected or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company's or any of its subsidiaries' rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any of the properties or assets of the Company or any of its subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound or affected; and (G) the execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with, or notification to, any Governmental Entity except pursuant to the HSR Act. 6. Put Right. --------- (a) Parent Put. At the request of and upon notice by Parent (the "Put ---------- --- Notice"), at any time during the period during which the Option is exercisable - ------ pursuant to Section 2 (the "Purchase Period"), the Company (or any successor -------- ------ entity thereof) will purchase from Parent all or any portion of the Option, to the extent not previously exercised, at the price set forth below at: The difference between the "Market/Tender Offer Price" for the Company ------------------------- Shares as of the date Parent gives notice of its intent to exercise its rights under this Section 6(a) (defined as the higher of (A) the highest price per share offered as of such date pursuant to any Acquisition Proposal which was made prior to such date and (B) the average closing sale price of Company Shares then on the Nasdaq National Market during the five (5) trading days ending on the trading day immediately preceding such date) and the Exercise Price, multiplied by the number of Company Shares purchasable pursuant to the Option, but only if the Market/Tender Offer Price is greater than -3- the Exercise Price. For purposes of determining the highest price offered pursuant to any Acquisition Proposal which involves consideration other than cash, the value of such consideration will be equal to the higher of (x) if securities of the same class of the proponent as such consideration are traded on any national securities exchange or by any registered securities association, a value based on the closing sale price or asked price for such securities on their principal trading market on such date and (y) the value ascribed to such consideration by the proponent of such Acquisition Proposal, or if no such value is ascribed, a value determined in good faith by the Board of Directors of the Company. (b) Payment and Redelivery of Option or Shares. In the event Parent ------------------------------------------ exercises its rights under Section 6(a) by delivery of a Put Notice, the Company will, within twenty (20) business days after Parent delivers such notice, pay the required amount to Parent in immediately available funds and Parent will surrender to the Company all or such portion of the Option with respect to which the Put Notice relates and the certificates evidencing the Company Shares purchased by Parent pursuant to such Put Notice. 7. Registration Rights. ------------------- (a) Following the termination of the Reorganization Agreement, Parent (sometimes referred to herein as the "Holder") may by written notice (a ------ "Registration Notice") to the Company (the "Registrant") request the Registrant ------------------- ---------- to register under the Securities Act all or any part of the shares acquired by the Holder pursuant to this Agreement (such shares requested to be registered, the "Registrable Securities") in order to permit the sale or other disposition ----------- ---------- of any or all shares of the Registrable Securities that have been acquired by or are issuable to Holder upon exercise of the Option in accordance with the intended method of sale or other disposition stated by Holder, including a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision. Holder agrees to cause, and to cause any underwriters of any sale or other disposition to cause, any sale or other disposition pursuant to such registration statement to be effected on a widely distributed basis so that upon consummation thereof no purchaser or transferee will own beneficially more than 5.0% of the then-outstanding voting power of Registrant. Upon a request for registration, the Registrant will have the option exercisable by written notice delivered to the Holder within ten (10) business days after the receipt of the Registration Notice, irrevocably to agree to purchase all or any part of the Registrable Securities for cash at a price (the "Option Price") ------------ equal to the product of (i) the number of Registrable Securities so purchased and (ii) the per share average of the closing sale prices of the Registrant's Common Stock on the Nasdaq National Market for the ten (10) trading days immediately preceding the date of the Registration Notice. Any such purchase of Registrable Securities by the Registrant hereunder will take place at a closing to be held at the principle executive offices of the Registrant or its counsel at any reasonable date and time designated by the Registrant in such notice within ten business days after delivery of such notice. The payment for the shares to be purchased will be made by delivery at the time of such closing of the Option Price in immediately available funds. (b) If the Registrant does not elect to exercise its option to purchase pursuant to Section 7(a) with respect to all Registrable Securities, the Registrant will use all reasonable efforts to effect, as promptly as practicable, the registration under the Securities Act of the unpurchased Registrable Securities requested to be registered in the Registration Notice and to keep such -4- registration statement effective for such period not in excess of 90 calendar days from the day such registration statement first becomes effective as may be reasonably necessary to effect such sale or other disposition; provided, -------- however, that the Holder will not be entitled to more than an aggregate of - ------- two (2) effective registration statements hereunder. The obligations of Registrant hereunder to file a registration statement and to maintain its effectiveness may be suspended for up to 120 calendar days in the aggregate if the Board of Directors of Registrant shall have determined that the filing of such registration statement or the maintenance of its effectiveness would require premature disclosure of material nonpublic information that would materially and adversely affect Registrant or otherwise interfere with or adversely affect any pending or proposed offering of securities of Registrant or any other material transaction involving Registrant. If consummation of the sale of any Registrable Securities pursuant to a registration hereunder does not occur within 90 days after the filing with the SEC of the initial registration statement therefor, the provisions of this Section 7 will again be applicable to any proposed registration. The Registrant will use all reasonable efforts to cause any Registrable Securities registered pursuant to this Section 7 to be qualified for sale under the securities or blue sky laws of such jurisdictions as the Holder may reasonably request and will continue such registration or qualification in effect in such jurisdictions; provided, -------- however, that the Registrant will not be required to qualify to do business in, - ------- or consent to general service of process in, any jurisdiction by reason of this provision. If Registrant effects a registration under the Securities Act of Company Common Stock for its own account or for any other stockholders of Registrant (other than on Form S-4 or Form S-8, or any successor form), it will allow Holder the right to participate in such registration by selling its Registrable Securities, and such participation will not affect the obligation of Registrant to effect demand registration statements for Holder under this Section 7; provided that, if the managing underwriters of such offering advise -------- Registrant in writing that in their opinion the number of shares of Company Common Stock requested to be included in such registration exceeds the reasonable number which can be sold in such offering, Registrant will include the shares requested to be included therein by Holder pro rata with the shares intended to be included therein by Registrant. (c) The registration rights set forth in this Section 7 are subject to the condition that the Holder will provide the Registrant with such information with respect to the Holder's Registrable Securities, the plan for distribution thereof, and such other information with respect to the Holder as, in the reasonable judgment of counsel for the Registrant, is necessary to enable the Registrant to include in a registration statement all facts required to be disclosed with respect to a registration thereunder. (d) A registration effected under this Section 7 will be effected at the Registrant's expense, except for underwriting discounts and commissions and the fees and expenses of counsel to the Holder, and the Registrant will provide to the underwriters such documentation (including certificates, opinions of counsel and "comfort" letters from auditors) as are customary in connection with underwritten public offerings and as such underwriters may reasonably require. In connection with any registration, the Holder and the Registrant agree to enter into an underwriting agreement reasonably acceptable to each such party, in form and substance customary for transactions of this type with the underwriters participating in such offering. -5- (e) Indemnification. --------------- (i) The Registrant will indemnify the Holder, each of its directors and officers and each person who controls the Holder within the meaning of Section 15 of the Securities Act, and each underwriter of the Registrant's securities, with respect to any registration, qualification or compliance which has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Registrant of any rule or regulation promulgated under the Securities Act applicable to the Registrant in connection with any such registration, qualification or compliance, and the Registrant will reimburse the Holder and, each of its directors and officers and each person who controls the Holder within the meaning of Section 15 of the Securities Act, and each underwriter for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action; provided, that the -------- Registrant will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Registrant by such Holder or director or officer or controlling person or underwriter seeking indemnification. (ii) The Holder will indemnify the Registrant, each of its directors and officers and each underwriter of the Registrant's securities covered by such registration statement and each person who controls the Registrant within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Holder of any rule or regulation promulgated under the Securities Act applicable to the Holder in connection with any such registration, qualification or compliance, and will reimburse the Registrant, such directors, officers or control persons or underwriters for any legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Registrant by the Holder for use therein; provided, that in no event -------- will any indemnity under this Section 7(e) exceed the net proceeds of the offering received by the Holder. (iii) Each party entitled to indemnification under this Section 7(e) (the "Indemnified Party") will give notice to the party required ----------------- to provide indemnification (the "Indemnifying Party") promptly after such ------------ ----- Indemnified Party has actual knowledge of any claim as -6- to which indemnity may be sought, and will permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided, that counsel for the Indemnifying Party, who will conduct the - -------- defense of such claim or litigation, will be approved by the Indemnified Party (whose approval will not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense; provided, however, -------- ------- that the Indemnifying Party will pay such expense if representation of the Indemnified Party by counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding, and provided further, however, that the failure of any Indemnified -------- ------- ------- Party to give notice as provided herein will not relieve the Indemnifying Party of its obligations under this Section 7(e) unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation will, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. No Indemnifying Party will be required to indemnify any Indemnified Party with respect to any settlement entered into without such Indemnifying Party's prior consent (which will not be unreasonably withheld). 8. Adjustment Upon Changes in Capitalization. ----------------------------------------- (a) In the event of any change in the Company Shares by reason of stock dividends, stock splits, reverse stock splits, mergers (other than the Merger), recapitalizations, combinations, exchanges of shares and the like, the type and number of shares or securities subject to the Option, and the Exercise Price will be adjusted appropriately, and proper provision will be made in the agreements governing such transaction so that Parent will receive, upon exercise of the Option, the number and class of shares or other securities or property that Parent would have received in respect of the Company Shares if the Option had been exercised immediately prior to such event or the record date therefor, as applicable. (b) Without limiting the parties' relative rights and obligations under the Reorganization Agreement, if the number of outstanding shares of Company Common Stock increases after the date of this Agreement (other than pursuant to an event described in Section 8(a)), the number of shares of Company Common Stock subject to the Option (including those Option Shares which may have already been exercised) will be adjusted so that it equals 19.9% of the number of shares of Company Common Stock then issued and outstanding, without giving effect to any Option Shares. 9. Profit Limitation. ----------------- (a) Notwithstanding any other provision in this Agreement or the Reorganization Agreement, in no event shall Parent's Total Profit (as defined below) exceed $12,000,000 (the "Maximum Profit") and, if Parent's Total Profit -------------- otherwise would exceed the Maximum Profit, Parent, at its sole discretion shall either (i) reduce the number of Option Shares subject to the Option, (ii) pay cash to the Company, or (iii) any combination of the foregoing, so that Parent's actual realized Total Profit shall not exceed the Maximum Profit after taking into account the foregoing -7- actions; provided, however, that to the extent the payment by the Company of -------- ------- cash to Parent in satisfaction of the Termination Fee pursuant to Section 7.03 of the Reorganization Agreement would cause Parent's Total Profit to exceed the Maximum Profit (after Parent has had an opportunity to reduce Parent's Total Profit pursuant to this Section 9(a)), then the Company need not pay such cash portion of the Termination Fee. (b) For purposes of this Agreement, "Total Profit" shall mean: (i) the ------------ aggregate amount (before taxes) of (i) (A) any amounts received by Parent on the repurchase of the Option by the Company pursuant to Section 6, plus (B) any Termination Fee paid by the Company and received by Parent pursuant to the Reorganization Agreement, minus (ii) the amounts of any cash previously paid by Parent to the Company pursuant to Section 2. (c) For purposes of Section 9(a) and clause (i) of Section 9(b), the value of any Option Shares delivered by Parent to the Company shall be the Market/Tender Offer Price of such Options Shares. 10. Restrictive Legends. Each certificate representing Option Shares ------------------- issued to Parent hereunder will include a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF OCTOBER 26, 2000, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER. It is understood and agreed that (i) the reference to restrictions arising under the Securities Act in the above legend will be removed by delivery of substitute certificate(s) without such reference if such Option Shares have been registered pursuant to the Securities Act, such Option Shares have been sold in reliance on and in accordance with Rule 144 under the Securities Act or Holder has delivered to Registrant a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Registrant and its counsel, to the effect that such legend is not required for purposes of the Securities Act and (ii) the reference to restrictions pursuant to this Agreement in the above legend will be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference. 11. Listing and HSR Filing. The Company, upon the request of Parent, will ---------------------- promptly file an application to list the Company Shares to be acquired upon exercise of the Option for quotation on the Nasdaq National Market (or any other national securities exchange or quotation system or which the Company Common Stock is then listed) and will use its best efforts to obtain approval of such listing as soon as practicable. Promptly after the date hereof, each of the parties hereto will promptly file with the Federal Trade Commission and the Antitrust Division of the United States -8- Department of Justice all required premerger notification and report forms and other documents and exhibits required to be filed under the HSR Act to permit the acquisition of the Company Shares subject to the Option at the earliest possible date. 12. Binding Effect. This Agreement will be binding upon and inure to the -------------- benefit of the parties hereto and their respective successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto and their respective successors and permitted assigns any rights or remedies of any nature whatsoever by reason of this Agreement. Any shares sold by a party in compliance with the provisions of Section 7 will, upon consummation of such sale, be free of the restrictions imposed with respect to such shares by this Agreement and any transferee of such shares will not be entitled to the rights of such party. Certificates representing shares sold in a registered public offering pursuant to Section 7 will not be required to bear the legend set forth in Section 10. 13. Specific Performance. The parties hereto recognize and agree that if -------- ----------- for any reason any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy. Accordingly, each party hereto agrees that in addition to other remedies the other party hereto will be entitled to an injunction restraining any violation or threatened violation of the provisions of this Agreement or the right to enforce any of the covenants or agreements set forth herein by specific performance. In the event that any action will be brought in equity to enforce the provisions of the Agreement, neither party hereto will allege, and each party hereto hereby waives the defense, that there is an adequate remedy at law. 14. Entire Agreement. This Agreement and the Reorganization Agreement ------ --------- (including the appendices thereto) constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. 15. Further Assurances. Each party hereto will execute and deliver all ------- ---------- such further documents and instruments and take all such further action as may be necessary in order to consummate the transactions contemplated hereby. 16. Validity. The invalidity or unenforceability of any provision of this -------- Agreement will not affect the validity or enforceability of the other provisions of this Agreement, which will remain in full force and effect. In the event any Governmental Entity of competent jurisdiction holds any provision of this Agreement to be null, void or unenforceable, the parties hereto will negotiate in good faith and will execute and deliver an amendment to this Agreement in order, as nearly as possible, to effectuate, to the extent permitted by law, the intent of the parties hereto with respect to such provision. 17. Notices. All notices and other communications pursuant to this ------- Agreement shall be in writing and deemed to be sufficient if contained in a written instrument 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 address (or at such other address for a party as shall be specified by like notice): -9- (a) if to Parent, to: Microchip Technology Incorporated Microchip Technology Incorporated 2355 West Chandler Boulevard Chandler, Arizona 85224 Attention: General Counsel Telecopy No.: (480) 899-9210 with a copy to: Wilson, Sonsini, Goodrich & Rosati, Professional Corporation One Market, Spear Tower Suite 3300 San Francisco, CA 94105 Attention: Michael J. Kennedy, Esq. Telecopy No.: (415) 947-2099 (b) if to the Company, to: Telcom Semiconductor, Inc. 1300 Terra Bella Avenue Mountain View, California 94043 Attention: Chief Executive Officer Telecopy No.: (650) 940-9633 with a copy to: Jenkens & Gilchrist, a Professional Corporation 1445 Ross Avenue Suite 3200 Dallas, TX 75202 Attention: John R. Holzgraefe, Esq. Gregory J. Schmitt, Esq. Telecopy No.: (214) 885-4300 18. Governing Law. This Agreement will be governed by and construed in --------- --- accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within such State. 19. Expenses. Except as otherwise expressly provided herein or in the -------- Reorganization Agreement, all costs and expenses incurred in connection with the transactions contemplated by this Agreement will be paid by the party incurring such expenses. -10- 20. Amendments; Waiver. This Agreement may be amended by the parties ----------- ------ hereto and the terms and conditions hereof may be waived only by an instrument in writing signed on behalf of each of the parties hereto, or, in the case of a waiver, by an instrument signed on behalf of the party waiving compliance. 21. Assignment. Neither of the parties hereto may sell, transfer, ---------- assign or otherwise dispose of any of its rights or obligations under this Agreement or the Option created hereunder to any other person, without the express written consent of the other party, except that the rights and obligations hereunder will inure to the benefit of and be binding upon any successor of a party hereto. 22. Counterparts. This Agreement may be executed in counterparts, each of ------------ which will be deemed to be an original, but both of which, taken together, will constitute one and the same instrument. [The remainder of this page has been intentionally left blank] -11- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written. MICROCHIP TECHNOLOGY INCORPORATED By: ______________________________________ Name: ____________________________________ Title: ___________________________________ TELCOM SEMICONDUCTOR, INC. By: ______________________________________ Name: ____________________________________ Title: ___________________________________ [Signature Page to Stock Option Agreement] EX-99.3 3 0003.txt FORM OF COMPANY VOTING AGREEMENT EXHIBIT 3 FORM OF COMPANY VOTING AGREEMENT AND IRREVOCABLE PROXY THIS COMPANY VOTING AGREEMENT (this "Agreement") is made and entered into --------- as of October 26, 2000, among MICROCHIP TECHNOLOGY INCORPORATED., a Delaware corporation ("Parent"), and the undersigned stockholder (the "Stockholder") of ------ ----------- TELCOM SEMICONDUCTOR, INC., a Delaware corporation ("Company"). ------- RECITALS -------- A. The Company, Merger Sub (as defined below) and Parent have entered into an Agreement and Plan of Reorganization of even date herewith (the "Reorganization Agreement"), which provides for the merger (the "Merger") of ------------------------ ------ Matchbox Acquisition Corp., a wholly-owned subsidiary of Parent ("Merger Sub"), ---------- with and into the Company. Pursuant to the Merger, all outstanding common stock of the Company, par value $0.001 per share ("Company Common Stock"), -------------------- shall be converted into common stock of Parent, as set forth in the Reorganization Agreement; B. Stockholder is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of such ------------ number of shares of the outstanding capital stock of the Company and shares subject to outstanding options as is indicated on the signature page of this Agreement; and C. In consideration of the execution of the Reorganization Agreement by Parent, Stockholder (in his or her capacity as such) agrees to vote the Shares (as defined below) and other such shares of capital stock of the Company over which Stockholder has voting power so as to facilitate consummation of the Merger. NOW, THEREFORE, intending to be legally bound, the parties hereto agree as follows: 1. Certain Definitions. Capitalized terms not defined herein shall have ------------------- the meanings ascribed to them in the Reorganization Agreement. For purposes of this Agreement: (a) "Expiration Date" shall mean the earlier to occur of (i) such --------------- date and time as the Reorganization Agreement shall have been terminated pursuant to Article VII thereof, or (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Reorganization Agreement. (b) "Person" shall mean any (i) individual, (ii) corporation, limited ------ liability company, partnership or other entity, or (iii) governmental authority. (c) "Shares" shall mean: (i) all securities of the Company (including ------ all shares of Company Common Stock and all options, warrants and other rights to acquire shares of Company Common Stock) owned by Stockholder as of the date of this Agreement; and (ii) all additional securities of the Company (including all additional shares of Company Common Stock and all additional options, warrants and other rights to acquire shares of Company Common Stock) of which Stockholder acquires ownership during the period from the date of this Agreement through the Expiration Date. (d) Transfer. A Person shall be deemed to have effected a "Transfer" -------- -------- of a security if such person directly or indirectly: (i) sells, pledges, encumbers, grants an option with respect to, transfers or disposes of such security or any interest in such security; or (ii) enters into an agreement or commitment providing for the sale of, pledge of, encumbrance of, grant of an option with respect to, transfer of or disposition of such security or any interest therein. 2. Transfer of Shares. ------------------ (a) Transferee of Shares to be Bound by this Agreement. Stockholder -------------------------------------------------- agrees that, during the period from the date of this Agreement through the Expiration Date, Stockholder shall not cause or permit any Transfer of any of the Shares to be effected unless each Person to which any of such Shares, or any interest in any of such Shares, is or may be transferred shall have: (a) executed a counterpart of this Agreement and a proxy in the form attached hereto as Exhibit A (with such modifications as Parent may reasonably request); --------- and (b) agreed in writing to hold such Shares (or interest in such Shares) subject to all of the terms and provisions of this Agreement. (b) Transfer of Voting Rights. Stockholder agrees that, during the ------------------------- period from the date of this Agreement through the Expiration Date, Stockholder shall not deposit (or permit the deposit of) any Shares in a voting trust or grant any proxy or enter into any voting agreement or similar agreement in contravention of the obligations of Stockholder under this Agreement with respect to any of the Shares. 3. Agreement to Vote Shares. At every meeting of the stockholders of the ------------------------ Company called, and at every adjournment thereof, and on every action or approval by written consent of the stockholders of the Company, Stockholder (in his or her capacity as such) shall cause the Shares to be voted in favor of adoption of the Reorganization Agreement. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict Stockholder from acting in Stockholder's capacity as a director or officer of Company (it being understood that this Agreement shall apply to Stockholder solely in Stockholder's capacity as a stockholder of Company) or voting in Stockholder's sole discretion on any matter other than those matters referred to in the preceding sentence. 4. Irrevocable Proxy. Concurrently with the execution of this Agreement, ----------------- Stockholder agrees to deliver to Parent a proxy in the form attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest extent - --------- ----- permissible by law, with respect to the Shares. -2- 5. Representations and Warranties of the Stockholder. Stockholder (i) is ------------------------------------------------- the beneficial owner of the shares of Company Common Stock and the options to purchase shares of Company Common Stock indicated on the signature page of this Agreement, which are free and clear of any liens, adverse claims, charges or other encumbrances (except any such encumbrances arising under securities laws); (ii) does not beneficially own any securities of the Company other than the shares of Company Common Stock and options to purchase shares of Company Common Stock indicated on the signature page of this Agreement; and (iii) has full power and authority to make, enter into and carry out the terms of this Agreement and the Proxy. 6. Additional Documents. Stockholder (in his or her capacity as such) and -------------------- Parent hereby covenant and agree to execute and deliver any additional documents necessary or desirable, in the reasonable opinion of Parent, to carry out the intent of this Agreement. 7. Legending of Shares. If so requested by Parent, Stockholder agrees ------------------- that the Shares shall bear a legend stating that they are subject to this Agreement and to an irrevocable proxy. 8. Termination. This Agreement and the Proxy delivered in connection ----------- herewith shall terminate and shall have no further force or effect as of the Expiration Date. 9. Miscellaneous. ------------- (a) Severability. If any term, provision, covenant or restriction of ------------ this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. (b) Binding Effect and Assignment. This Agreement and all of the ----------------------------- provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by either of the parties without prior written consent of the other. (c) Amendments and Modification. This Agreement may not be modified, --------------------------- amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. (d) Specific Performance; Injunctive Relief. The parties hereto --------------------------------------- acknowledge that Parent shall be irreparably harmed and that there shall be no adequate remedy at law for a violation of any of the covenants or agreements of Stockholder set forth herein. Therefore, it is agreed that, in addition to any other remedies that may be available to Parent upon any such violation, Parent shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to Parent at law or in equity. -3- (e) Notices. All notices and other communications pursuant to this ------- Agreement shall be in writing and deemed to be sufficient if contained in a written instrument 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 address (or at such other address for a party as shall be specified by like notice): If to Parent: Microchip Technology Incorporated 2355 West Chandler Boulevard Chandler, Arizona 85224 Attention: General Counsel Telecopy No.: (480) 899-9210 with a copy to: Wilson Sonsini Goodrich & Rosati, Professional Corporation One Market, Spear Tower San Francisco, CA 94105 Attention: Michael J. Kennedy, Esq. Telecopy No.: (415) 947-2099 If to Stockholder: To the address for notice set forth on the signature page hereof. (f) Governing Law. This Agreement shall be governed by the laws of ------------- the State of Delaware, without reference to rules of conflicts of law. (g) Entire Agreement. This Agreement and the Proxy contain the entire ---------------- understanding of the parties in respect of the subject matter hereof, and supersede all prior negotiations and understandings between the parties with respect to such subject matter. (h) Effect of Headings. The section headings are for convenience ------------------ only and shall not affect the construction or interpretation of this Agreement. (i) Counterparts. This Agreement may be executed in several ------------ counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. (j) No Obligation to Exercise Options. Notwithstanding any provision --------------------------------- of this Agreement to the contrary, nothing in this Agreement shall obligate Stockholder to exercise any option, warrant or other right to acquire shares of Company Common Stock. [The remainder of this page has been intentionally left blank] -4- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written. MICROCHIP TECHNOLOGY STOCKHOLDER INCORPORATED By: ____________________________________ By: ________________________________ Signature of Authorized Signatory Signature Name: __________________________________ Name: ______________________________ Title: _________________________________ Title: _____________________________ ____________________________________ ____________________________________ Print Address ____________________________________ Telephone ____________________________________ Facsimile No. Share beneficially owned: _______ shares of Company Common Stock _______ shares of Company Common Stock issuable upon exercise of outstanding options [Signature Page to Company Voting Agreement] IRREVOCABLE PROXY The undersigned stockholder (the "Stockholder") of Telcom Semiconductor, ----------- Inc., a Delaware corporation (the "Company"), hereby irrevocably (to the fullest ------- extent permitted by law) appoints the directors on the Board of Directors of Microchip Technology Incorporated, a Delaware corporation ("Parent"), and each ------ of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights (to the full extent that the undersigned is entitled to do so) with respect to all of the shares of capital stock of the Company that now are or hereafter may be beneficially owned by the undersigned, and any and all other shares or securities of the Company issued or issuable in respect thereof on or after the date hereof (collectively, the "Shares") in accordance ------ with the terms of this Proxy until the Expiration Date (as defined below). Upon the undersigned's execution of this Proxy, any and all prior proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies with respect to the Shares until after the Expiration Date. This Proxy is irrevocable (to the fullest extent permitted by law), is coupled with an interest and is granted pursuant to that certain Company Voting Agreement of even date herewith by and among Parent and the undersigned stockholder, and is granted in consideration of Parent entering into that certain Agreement and Plan of Reorganization of even date herewith (the "Reorganization Agreement"), among Parent, Matchbox Acquisition Corp., a - ------------------------- Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and ---------- the Company. The Reorganization Agreement provides for the merger of Merger Sub with and into the Company in accordance with its terms (the "Merger"). As used ------ herein, the term "Expiration Date" shall mean the earlier to occur of (i) such --------------- date and time as the Reorganization Agreement shall have been validly terminated pursuant to Article VII thereof or (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Reorganization Agreement. The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Date, to act as the undersigned's attorney and proxy to vote the Shares, and to exercise all voting, consent and similar rights of the undersigned with respect to the Shares (including, without limitation, the power to execute and deliver written consents) at every annual, special or adjourned meeting of stockholders of the Company and in every written consent in lieu of such meeting in favor of adoption of the Reorganization Agreement. The attorneys and proxies named above may not exercise this Proxy on any other matter. The undersigned stockholder may vote the Shares on all other matters. Any obligation of the undersigned hereunder shall be binding upon the successors and assigns of the undersigned. This Proxy is irrevocable (to the fullest extent permitted by law). This Proxy shall terminate, and be of no further force and effect, automatically upon the Expiration Date. Dated: October 26, 2000 Signature of Stockholder: __________________________ Print Name of Stockholder: _________________________ [Signature Page to Irrevocable Proxy] EX-99.4 4 0004.txt FORM OF COMPANY AFFILIATE AGREEMENT EXHIBIT 4 FORM OF COMPANY AFFILIATE AGREEMENT THIS COMPANY AFFILIATE AGREEMENT (this "Agreement") is made and entered --------- into as of October 26, 2000, between MICROCHIP TECHNOLOGY INCORPORATED, a Delaware corporation ("Parent"), and the undersigned stockholder of TELCOM ------ SEMICONDUCTOR, INC., a Delaware corporation ("Company"), who may be deemed an ------- affiliate ("Affiliate") of Company. Capitalized terms used but not otherwise --------- defined herein shall have the meanings ascribed to them in the Reorganization Agreement (as defined below). RECITALS -------- A. The Company, Merger Sub (as defined below) and Parent have entered into an Agreement and Plan of Reorganization (the "Reorganization Agreement") which ------------------------ provides for the merger (the "Merger") of Matchbox Acquisition Corp., a wholly- ------ owned subsidiary of Parent ("Merger Sub"), with and into the Company. Pursuant ---------- to the Merger, all issued and outstanding capital stock of the Company (the "Company Capital Stock") as of the Effective Time (as defined in the - ---------------------- Reorganization Agreement) will be converted into common stock of Parent, par value $0.001 per share ("Parent Common Stock") as set forth in the ------------------- Reorganization Agreement; B. The execution and delivery of this Agreement by Affiliate is a material inducement to Parent to enter into the Reorganization Agreement; and C. Affiliate has been advised that Affiliate may be deemed to be an "affiliate" of Parent after the Merger as the term "affiliate" is used (i) for purposes of Rule 144 of the Rules and Regulations (the "Rules and Regulations") --------------------- of the Securities and Exchange Commission (the "Commission") and (ii) in ---------- Accounting Series Releases 130 and 135, as amended, although nothing contained herein shall be construed as an admission by Affiliate that Affiliate is in fact an "affiliate" of Parent. NOW, THEREFORE, intending to be legally bound, the parties hereto agree as follows: 1. Acknowledgments by Affiliate. Affiliate acknowledges and understands ---------------------------- that the representations, warranties and covenants by Affiliate set forth herein will be relied upon by Parent, the Company and their respective affiliates, counsel and accounting firms for purposes of determining Parent's eligibility to account for the Merger as a "pooling of interests." Affiliate has carefully read this Agreement and the Reorganization Agreement and has had the opportunity to discuss the requirements of this Agreement with Affiliate's professional advisors, who Affiliate believes are qualified to advise Affiliate with regard to such matters. 2. Beneficial Ownership of Company Capital Stock. The Affiliate is the --------------------------------------------- sole beneficial owner of the number of shares of Company Capital Stock set forth next to its name on the signature page hereto (the "Shares"). There are no options, warrants, calls, rights, ------ commitments or agreements of any character, written or oral, to which the Affiliate is party or by which it is bound obligating the Affiliate to issue, deliver, sell or redeem prior to the end of the Restricted Period (as defined in Section 3 below), or cause to be issued, delivered, sold or redeemed prior to the end of the Restricted Period, any Shares or obligating the Affiliate to grant or enter into any such option, warrant, call, right, commitment or agreement prior to the end of the Restricted Period. The Affiliate has the sole right to transfer such Shares. The Shares constitute all shares of Company Capital Stock owned, beneficially or of record, by the Affiliate. The Affiliate has not engaged in any sale or other transfer of the Shares in contemplation of the Merger. All shares of Company Capital Stock and Parent Common Stock acquired by Affiliate subsequent to the date hereof (including shares of Parent Common Stock acquired in the Merger) shall be subject to the provisions of this Agreement, to the extent such provisions are then still applicable, as if held by Affiliate as of the date hereof. 3. Covenants Related to Pooling of Interests. In accordance with Staff ----------------------------------------- Accounting Bulletin No. 65, during the period from the date 30 days prior to the Effective Time until the day Parent publicly announces financial results covering at least 30 days of combined operations of Parent and the Company (the "Restricted Period"), Affiliate shall not sell, exchange, transfer, pledge, ----------------- distribute, make any gift or otherwise dispose of or grant any option, establish any "short" or put-equivalent position with respect to or enter into any similar transaction (through derivatives or otherwise) intended or having the effect, directly or indirectly, to reduce Affiliate's risk relative to any shares of Parent Common Stock or Company Capital Stock (including the Shares). Parent may, at its discretion, place a stock transfer notice consistent with the foregoing, with respect to Affiliate's shares of Parent Common Stock provided that such notice shall be countermanded as soon as practicable upon expiration of the necessity therefor. 4. Compliance with Rule 145 and the Securities Act. ----------------------------------------------- (a) Affiliate has been advised that (i) the issuance of shares of Parent Common Stock in connection with the Merger is expected to be effected pursuant to a registration statement on Form S-4 promulgated under the Securities Act of 1933, as amended (the "Securities Act"), and the resale of such shares -------------- shall be subject to restrictions set forth in Rule 145 under the Securities Act, and (ii) Affiliate may be deemed to be an affiliate of the Company. Affiliate accordingly agrees not to sell, transfer or otherwise dispose of any Parent Common Stock issued to Affiliate in the Merger unless (i) such sale, transfer or other disposition is made in conformity with the requirements of Rule 145(d) promulgated under the Securities Act, (ii) such sale, transfer or other disposition is made pursuant to an effective registration statement under the Securities Act or an appropriate exemption from registration, (iii) Affiliate delivers to Parent a written opinion of counsel, reasonably acceptable to Parent in form and substance, that such sale, transfer or other disposition is otherwise exempt from registration under the Securities Act or (iv) an authorized representative of the Commission shall have rendered written advice to Affiliate to the effect that the Commission would take no action, or that the staff of the Commission would not recommend that the Commission take any action, with respect to the proposed disposition if consummated (the "No Action Correspondence"). ------------------------ (b) Parent shall give stop transfer instructions to its transfer agent with respect to any Parent Common Stock received by Affiliate in the Merger and there shall be placed on the -2- certificates representing such Common Stock, or any substitutions therefor issued prior to the end of the Restricted Period, a legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY WITH RULE 145(d), OR (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (C) IN ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED." The legend set forth above shall be removed (by delivery of a substitute certificate without such legend) and Parent shall instruct its transfer agent to remove such legend, if Affiliate delivers to Parent (i) satisfactory written evidence that the shares have been sold in compliance with Rule 145 (in which case, the substitute certificate shall be issued in the name of the transferee), (ii) the No Action Correspondence, (iii) an opinion of counsel, in form and substance reasonably satisfactory to Parent, to the effect that public sale of the shares by the holder thereof is no longer subject to Rule 145, or (iv) a written request for removal of such legend after the first anniversary of the Effective Time. 5. Termination. ----------- (a) This Agreement shall be terminated and shall be of no further force and effect in the event of the termination of the Reorganization Agreement pursuant to Article VII of the Reorganization Agreement. 6. Miscellaneous. ------------- (a) Waiver; Severability. No waiver by any party hereto of any -------------------- condition or of any breach of any provision of this Agreement shall be effective unless in writing and signed by each party hereto. In the event that any provision of this Agreement, or the application of any such provision to any person, entity or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to persons, entities or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law. (b) Binding Effect and Assignment. This Agreement and all of the ----------------------------- provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by either of the parties without prior written consent of the other party hereto. -3- (c) Amendments and Modification. This Agreement may not be modified, --------------------------- amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. (d) Injunctive Relief. Each of the parties acknowledge that (i) the ----------------- covenants and the restrictions contained in this Agreement are necessary, fundamental, and required for the protection of Parent and the Company and to preserve for Parent the benefits of the Merger; (ii) such covenants relate to matters which are of a special, unique, and extraordinary character that gives each of such covenants a special, unique, and extraordinary value; and (iii) a breach of any such covenants or any other provision of this Agreement shall result in irreparable harm and damages to Parent and the Company which cannot be adequately compensated by a monetary award. Accordingly, it is expressly agreed that in addition to all other remedies available at law or in equity, Parent and the Company shall be entitled to the immediate remedy of a temporary restraining order, preliminary injunction, or such other form of injunctive or equitable relief as may be used by any court of competent jurisdiction to restrain or enjoin any of the parties hereto from breaching any such covenant or provision or to specifically enforce the provisions hereof. (e) Governing Law. This Agreement shall be governed by and construed ------------- in accordance with the laws of the state of Delaware, without reference to rules of conflicts of law. (f) Entire Agreement. This Agreement sets forth the entire ---------------- understanding of Affiliate and Parent relating to the subject matter hereof and supersedes all prior agreements and understandings between Affiliate and Parent relating to the subject matter hereof. (g) Attorneys' Fees. In the event of any legal actions or proceeding --------------- to enforce or interpret the provisions hereof, the prevailing party shall be entitled to reasonable attorneys' fees, whether or not the proceeding results in a final judgment. (h) Further Assurances. Affiliate shall execute and/or cause to be ------------------ delivered to Parent such instruments and other documents and shall take such other actions as Parent may reasonably request to effectuate the intent and purposes of this Agreement. (i) Third Party Reliance. Counsel to and independent auditors for -------------------- Parent and the Company shall be entitled to rely upon this Affiliate Agreement. (j) Survival. The representations, warranties, covenants and other -------- provisions contained in this Agreement shall survive the Merger. (k) Notices. All notices and other communications pursuant to this ------- Agreement shall be in writing and deemed to be sufficient if contained in a written instrument 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 address (or at such other address for a party as shall be specified by like notice): -4- If to Parent: Microchip Technology Incorporated 2355 West Chandler Boulevard Chandler, Arizona 85224 Attention: General Counsel Telecopy No.: (480) 899-9210 with a copy to: Wilson Sonsini Goodrich & Rosati, Professional Corporation One Market, Spear Tower Suite 3300 San Francisco, CA 94105 Attention: Michael J. Kennedy, Esq. Telecopy No.:(415) 947-2099 If to Affiliate: To the address for notice set forth on the signature page hereof. (l) Counterparts. This Agreement shall be executed in one or more ------------ counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. [The remainder of this page has been intentionally left blank] -5- IN WITNESS WHEREOF, the parties have caused this Affiliate Agreement to be duly executed on the day and year first above written. MICROCHIP TECHNOLOGY AFFILIATE INCORPORATED By:_________________________ By:_________________________ Name:_______________________ Affiliate's Address for Notice: Title:______________________ ____________________________ ____________________________ ____________________________ Shares beneficially owned: _______ shares of Company Common Stock _______ shares of Company Common Stock issuable upon exercise of outstanding options _______ shares of Parent Common Stock [Signature Page to Company Affiliate Agreement] -----END PRIVACY-ENHANCED MESSAGE-----