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                                                              EXHIBIT 10(iii)(E)


                                  May 20, 1999



Mr. Michael L. Bolan
Vice President - Marketing and Product Development
Dallas Semiconductor Corporation
4401 South Beltwood Parkway
Dallas, Texas  75244

Dear Mr. Bolan:

         Dallas Semiconductor Corporation (the "Company") considers it essential
to the best interests of its stockholders to foster the continuous employment of
key management personnel. In this connection, should the Company receive a
proposal from a third party, whether solicited by the Company or unsolicited,
concerning a possible business combination with, or the acquisition of a
substantial share of the equity or voting securities of, the Company, the Board
of Directors of the Company (the "Board") has determined that it is imperative
that it and the Company be able to rely upon your continued services without
concern that you might be distracted by the personal uncertainties and risks
that such a proposal might otherwise entail.

         Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including you, to their assigned duties
without distraction in the face of potentially disturbing circumstances that
could arise out of a possible change in control of the Company.

         In order to induce you to remain in the employ of the Company and its
subsidiaries, the Company agrees that you shall receive the benefits set forth
in this letter agreement ("Agreement") in the event of a Change in Control (as
defined in Section 1.3 hereof).


SECTION ONE -- DEFINITIONS

         1.1 "Annual Compensation" shall mean the sum of: (i) your annualized
base salary, as determined by the payroll records of the Company, in effect on
the date that immediately precedes a Change in Control; plus (ii) (solely for
purposes of Section 3.1(b) the amounts payable to you under any Deferred
Compensation Plan determined as if, upon a Change in Control, you were fully
vested and entitled to payment of all deferred compensation earned or accrued by
you under any Deferred Compensation Plan; plus (iii) a bonus, as determined by
the payroll records of the Company, equal to the greater of (a)


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any bonus paid or payable to you for personal services rendered during the
Company's fiscal year in which a Change in Control occurs, or (b) the highest
annual bonus paid to you for personal services rendered for any of four (4)
fiscal years of the Company preceding the Company's fiscal year in which a
Change in Control occurs.

         1.2 "Beneficiary" shall mean the person(s) described in Section 5 of
this Agreement.

         1.3 "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 15% or more of the
combined voting power of the Company's then outstanding securities; (ii) during
any period of two consecutive years (not including any period prior to the
execution of this Agreement), individuals who at the beginning of such period
constitute the Board and any new director, whose election to the Board or
nomination for election to the Board by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; (iii) the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, except that a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 15% of the combined voting
power of the Company's then outstanding securities shall not constitute a Change
in Control of the Company; (iv) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or (v) the election of any person other than C. V. Prothro as Chief Executive
Officer of the Company.

         1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.

         1.5 "Deferred Compensation Plan" shall mean any of the Company's
nonqualified deferred compensation plans, programs or arrangements in which you
are a participant upon a Change in Control.


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         1.6 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

         1.7 "Stock Option Plans" shall mean, collectively, any stock option
granted to you by the Company, the Company's 1987 Stock Option Plan, the
Company's 1993 Officer and Director Stock Option Plan, and such other Company
stock option plans under which grants of options are made to you during the term
of this Agreement.


SECTION 2 -- TERM AND TERMINATION

         Subject to the provisions of Section 6 below, this Agreement shall
commence on the date set forth above and shall terminate on the earlier of:

         (a)  the tenth (10th) anniversary of the date of execution of this
         Agreement; or

         (b)  the date on which the Board designates as long as a Change in
         Control shall not have occurred.



SECTION THREE - BENEFITS

         3.1 Upon the occurrence of a Change in Control, you shall be entitled
to the benefits provided below:

                  (a) Compensation. No later than the tenth (10th) calendar day
         following the Change in Control or such earlier date as may be approved
         by the Board, the Company shall pay you (or your Beneficiary, if
         applicable) your full base salary through the date immediately
         preceding a Change in Control at the rate in effect at such time, plus
         all other amounts to which you are entitled under any benefit or
         compensation plan of the Company applicable to you, including those
         benefits and compensation payable pursuant to Section 3.1(c) - (g)
         below;

                  (b) Severance Payment. You (or your Beneficiary, if
         applicable) shall receive from the Company a cash lump sum payment
         equal to 299% of your Annual Compensation, payable within ten (10)
         calendar days after the Change in Control or such earlier date as may
         be approved by the Board. The Severance Payment shall not be reduced by
         the amount of any other payment or the value of any benefit received or
         to be received by you (whether payable pursuant to the terms of this
         Agreement or any other agreement, plan or arrangement with the Company
         or an affiliate, predecessor or successor of the Company or any person
         whose actions result in a Change in Control of the Company or an
         affiliate of such person).


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                  (c) Incentives and Awards.

                           (i) You (or your Beneficiary, if applicable) shall
         own and be immediately vested in all incentives, awards and perquisites
         previously made available to you by the Company. To the extent that an
         incentive, award or perquisite subject to this paragraph is based upon
         other than stock, you shall receive an amount in cash equal to the fair
         market value, as determined by you and the Company as of the first
         business day immediately preceding the Change in Control, of such
         non-stock based incentive, award or perquisite determined as if such
         incentive, award or perquisite were payable under the respective plan
         as of the Change in Control, which amount shall be payable in a single
         lump sum payment within ten (10) calendar days after the Change in
         Control or such earlier date as may be approved by the Board; (or at
         your sole option, you may retain all such non-cash incentives, awards
         and perquisites.)

                           (ii) Your stock-based incentives or awards subject to
         this Section 3.1(c) shall be exercisable upon the Change in Control to
         the extent and manner and within the time period, provided by the
         respective Stock Options and awards;

                  (d) Employee Benefit Plans. Within ten (10) calendar days of
         the Change in Control or such earlier date as may be approved by the
         Board, you (or your Beneficiary, if applicable) shall also be paid an
         additional lump sum payment equal to the sum of: (1) any accrued,
         unpaid vacation pay which you have earned under any of the Company's
         vacation policies and (2) the amounts payable to you under the terms of
         any Deferred Compensation Plan determined as if, upon the Change in
         Control, you were fully vested and entitled to payment to all deferred
         compensation earned or accrued by you under any Deferred Compensation
         Plan. If upon the Change in Control, any Deferred Compensation Plan has
         not been amended by the Company to provide for vesting and payment as
         provided in this Agreement, you shall have the choice, in your sole
         discretion and without objection by the Company, (A) to consider this
         Agreement as having amended the respective Deferred Compensation Plan
         (and related documents) to make the changes to the respective Deferred
         Compensation Plan (and related documents) that are described in this
         Agreement, or (B) to receive from the Company a cash lump sum payment
         in lieu of any payments which he would be entitled to receive in the
         future under any Deferred Compensation Plan. If an election is made
         under subsection (B) above, you shall forfeit any and all of your
         rights to receive payment of benefits from any Deferred Compensation
         Plan, and in lieu of that forfeited right, you shall receive an amount
         equal to the fair market value, as determined by the Company and you,
         as of the first business day immediately preceding the Change in
         Control, of the vested and earned or accrued amount thereunder, in a
         cash lump sum payment payable within ten (10) calendar days after the
         Change in Control or such earlier date as may be approved by the Board;


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                  (e) Welfare Benefit Plans and Life Insurance. From and after
         the Change in Control, you (for your lifetime) and your spouse (for her
         lifetime) shall, in your sole discretion, continue to participate, at
         no cost to you or your spouse, in all health, dental, disability,
         accident and life insurance plans or arrangements of the Company in
         which you or your spouse were participating immediately prior to the
         Change in Control as if you continued to be an employee of the Company;

                  (f) Retirement Benefit. (i) Within ten (10) calendar days of
         the Change in Control or such earlier date as may be approved by the
         Board, and on each anniversary date of the Change in Control until your
         death, the Company shall pay to you the sum of $90,000; or (ii) at your
         sole election, made within three (3) business days following the Change
         in Control, you may require the Company to pay to you a lump sum of
         money equal to the actuarial equivalent of the total annual payments
         provided for in subsection (f)(i) above, such lump sum to be paid
         within ten (10) calendar days after such election, if any, or such
         earlier date as may be approved by the Board.

                  (g) Legal Fees. The Company shall also pay to you all legal
         fees and expenses incurred by you as a result of the Change in Control
         (including all such fees and expenses, if any, incurred in seeking to
         obtain or enforce any right or benefit provided by this Agreement).

                  (h) Mitigation. You shall not be required to mitigate the
         amount of any payment provided for in this Section 3 by seeking other
         employment or otherwise, nor shall the amount of any payment or benefit
         provided for in this Section 3 be reduced by any compensation earned by
         you as the result of employment by another employer or by retirement
         benefits after the Change in Control, or otherwise except as
         specifically provided in this Section 3.

         3.2 Tax Liability Gross Up.

         (a) In the event that any amount paid under this Agreement is
determined to be an "excess parachute payment" under section 280G of the Code
(or any successor provision), which is subject to the excise tax imposed by
section 4999 of the Code (or any successor provision) (the "Excise Tax"), the
Company agrees to pay to you an additional sum (the "Excise Tax Gross Up") in an
amount such that the net amount retained by you, after both (i) receiving all
payments under Section Three of this Agreement other than under this paragraph
("Payment") and the Excise Tax Gross Up, and (ii) paying (y) any Excise Tax on
the Payment and (z) any Federal, state and local income taxes on the Excise Tax
Gross Up, equals the amount of the Payment.

         (b) For purposes of determining the Excise Tax Gross Up, you shall be
deemed to pay Federal, state and local income taxes at the highest marginal rate
of taxation in your filing status for the calendar year in which the Payment is
to be made, based upon your domicile at the time of the Change in Control. The
determination of whether such


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Excise Tax is payable and the amount of such Excise Tax shall be based upon the
opinion of tax counsel selected by you and the Company. If such opinion is not
finally accepted by the Internal Revenue Service, then appropriate adjustments
shall be calculated (with an additional Excise Tax Gross Up, if applicable) by
such tax counsel based upon the final amount of Excise Tax so determined,
together with any applicable penalties and interest.

         (c) You shall not have any obligation to pay the Company any sums
allegedly due to the Internal Revenue Service by reason of excise tax or
otherwise.

SECTION FOUR -- RESTRICTIONS UPON FUNDING

         4.1 The Company shall have no obligation to set aside or entrust any
money with which to pay its obligations under this Agreement; however, the
Company shall take and maintain all actions as are necessary to insure the
payment and performance of all of the benefits and obligations provided for in
Section 3 above.

         4.2 The Company intends that this Agreement not be subject to ERISA. If
this Agreement is deemed subject to ERISA, it is intended to be an unfunded
arrangement for the benefit of a select member of management who is a highly
compensated employee of the Company, for the purpose of qualifying this
Agreement for the "top hat" plan exception under sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.

         4.3 Should the Company elect to purchase life insurance, mutual funds,
disability policies or annuities pursuant to this Agreement, the Company
reserves the absolute right, in its sole discretion, to terminate such
investments at any time, in whole or in part. At no time shall you have, or be
deemed to have, any lien, right, title or interest in or to any specific
investment or to any assets of the Company as a result of this Agreement;
rather, you shall remain a general unsecured creditor of the Company.

         4.4 If the Company elects to invest in a life insurance, disability or
annuity policy upon your life, you shall assist the Company by freely submitting
to a physical examination and supplying such additional information necessary to
obtain such insurance or annuities.


SECTION FIVE -- DESIGNATION OF BENEFICIARY

         5.1 Should you die prior to full payment of amounts due under Section
Three, payment shall be made to your Beneficiary. Your written designation of
one or more persons or entities as your Beneficiary shall operate to designate
your Beneficiary under this Agreement. You shall file with the Company a copy of
your Beneficiary designation on the form supplied to you by the Company. The
last such designation form received by the Company shall be controlling, and no
designation, or change or revocation of a designation shall be effective unless
received by the Company prior to your death.


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         5.2 If no Beneficiary designation is in effect at the time of your
death, if no designated Beneficiary survives you or if the otherwise applicable
Beneficiary designation conflicts with applicable law, your estate shall be the
Beneficiary.


SECTION SIX -- INTERPRETATION, AMENDMENT AND TERMINATION

         6.1 Prior to the occurrence of a Change in Control, the Board shall
have exclusive authority to amend, suspend or terminate this Agreement, as
determined in its sole discretion. After the occurrence of a Change in Control,
other than as provided in Section Two, this Agreement may be amended, suspended
or terminated, in whole or in part, only by a written instrument signed by both
a duly authorized officer of the Company other than you, and by you.


SECTION SEVEN -- MISCELLANEOUS

         7.1 Alienability and Assignment Prohibition. Neither you, your spouse
nor any other Beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber in advance any of the benefits payable under this Agreement
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by you or your
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise.

         7.2 Gender. Whenever in this Agreement words are used in the masculine
or neuter gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.

         7.3 Effect on Other Corporate Benefit Plans. Nothing contained in this
Agreement shall affect your right to participate in or be covered by any
qualified or non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part of the
Company's existing or future compensation structure.

         7.4 Headings. Headings and subheadings in this Agreement are inserted
for reference and convenience only and shall not be deemed a part of this
Agreement.

         7.5 No Employment Agreement. No provision of this Agreement shall be
deemed or construed to create specific employment rights to you or limit the
right of the Company to discharge you at any time with or without cause. In a
similar fashion, no provision shall limit your rights to voluntarily sever your
employment at any time.

         7.6 Withholding of Taxes. Except as may otherwise be specifically
provided for in this Agreement, the Company shall deduct from the amount of any
payment made pursuant to this Agreement any amounts required to be paid or
withheld by the Company


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with respect to applicable Federal income, Federal Insurance Contributions Act
or Federal Unemployment Tax Act taxes or applicable state taxes. By executing
this Agreement, you agree to all such deductions.

         7.7 Successors; Binding Agreement.

         (a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms as you would be entitled hereunder upon a Change in Control. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any such successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

         (b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

         7.8 Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Chief
Executive Officer with a copy to the Chief Financial Officer, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.

         7.9. Miscellaneous. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior to subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. The obligations of the Company under Section 3 shall survive the
expiration of the term of this Agreement.


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         7.10 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

         7.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.

                                        Very truly yours,

                                        DALLAS SEMICONDUCTOR CORPORATION



                                        By:  /s/ C. V. Prothro
                                           ---------------------------------
                                             C. V. Prothro
                                             Chairman of the Board, President
                                              and Chief Executive Officer

/s/ Michael L. Bolan
--------------------------------
Michael L. Bolan



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