Document:

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                                                                       EXHIBIT D

                      INTEGRATED CIRCUIT SYSTEMS, INC.

                     2000 LONG-TERM EQUITY INCENTIVE PLAN

1.   Purpose.

          This plan shall be known as the Integrated Circuit Systems, Inc. 2000
Long-Term Equity Incentive Plan (the "Plan").  The purpose of the Plan shall be
to promote the long-term growth and profitability of Integrated Circuit Systems,
Inc. (the "Company") and its Subsidiaries by (i) providing certain directors,
officers and employees of, and certain other individuals who perform services
for, or to whom an offer of employment has been extended by, the Company and its
Subsidiaries with incentives to maximize shareholder value and otherwise
contribute to the success of the Company and (ii) enabling the Company to
attract, retain and reward the best available persons for positions of
responsibility.  Grants of incentive or non-qualified stock options, stock
appreciation rights ("SARs"), either alone or in tandem with options, restricted
stock, performance awards, or any combination of the foregoing may be made under
the Plan.

2.   Definitions.

          (a)  "Board of Directors" and "Board" mean the board of directors of
the Company.

          (b)  "Cause" means the occurrence of one or more of the following
events:

               (i)   conviction of a felony or any crime or offense lesser than
a felony involving the property of the Company or a Subsidiary; or

               (ii)  conduct that has caused demonstrable and serious injury
to the Company or a Subsidiary, monetary or otherwise; or

               (iii) willful refusal to perform or substantial disregard of
duties properly assigned, as determined by the Company; or

               (iv)  breach of duty of loyalty to the Company or a Subsidiary or
other act of fraud or dishonesty with respect to the Company or a Subsidiary.

          (c)  "Change in Control" means the occurrence of one of the following
events:

               (i)   if any "person" or "group" as those terms are used in
Sections 13(d) and 14(d) of the Exchange Act or any successors thereto, other
than an Exempt Person, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act or any successor thereto), directly or indirectly,
of securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities;
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               (ii)  during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by the Company's shareholders
was approved by at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election was
previously so approved, cease for any reason to constitute a majority thereof;

               (iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation (A) which would result in all or a portion of 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 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) by which the corporate
existence of the Company is not affected and following which the Company's chief
executive officer and directors retain their positions with the Company (and
constitute at least a majority of the Board); or

               (iv)  the shareholders 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 the Company's assets.

          (d)  "Code" means the Internal Revenue Code of 1986, as amended.

          (e)  "Committee" means the Compensation Committee of the Board, which
shall consist solely of two or more members of the Board.

          (f)  "Common Stock" means the common stock, par value $0.01 per share,
of the Company, and any other shares into which such stock may be changed by
reason of a recapitalization, reorganization, merger, consolidation or any other
change in the corporate structure or capital stock of the Company.

          (g)  "Competition" is deemed to occur if a person whose employment
with the Company or its Subsidiaries has terminated obtains a position as a
full-time or part-time employee of, as a member of the board of directors of, or
as a consultant or advisor with or to, or acquires an ownership interest in
excess of 5% of, a corporation, partnership, firm or other entity that engages
in any of the businesses of the Company or any Subsidiary with which the person
was involved in a management role at any time during his or her last five years
of employment with or other service for the Company or any Subsidiaries.

          (h)  "Disability" means a disability that would entitle an eligible
participant to payment of monthly disability payments under any Company
disability plan or as otherwise determined by the Committee.

          (i)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

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          (j)  "Exempt Person" means any employee benefit plan of the Company or
a trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Company.

          (k)  "Family Member" has the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
and any successor thereto.

          (l)  "Fair Market Value" of a share of Common Stock of the Company
means, as of the date in question, the officially-quoted closing selling price
of the stock (or if no selling price is quoted, the bid price) on the principal
securities exchange on which the Common Stock is then listed for trading
(including for this purpose the Nasdaq National Market) (the "Market") for the
applicable trading day or, if the Common Stock is not then listed or quoted in
the Market, the Fair Market Value shall be the fair value of the Common Stock
determined in good faith by the Board; provided, however, that when shares
received upon exercise of an option are immediately sold in the open market, the
net sale price received may be used to determine the Fair Market Value of any
shares used to pay the exercise price or applicable withholding taxes and to
compute the withholding taxes.

          (m)  "Incentive Stock Option" means an option conforming to the
requirements of Section 422 of the Code and any successor thereto.

          (n)  "Non-Employee Director" has the meaning given to such term in
Rule 16b-3 under the Exchange Act and any successor thereto.

          (o)  "Non-qualified Stock Option" means any stock option other than an
Incentive Stock Option.

          (p)  "Other Company Securities" mean securities of the Company other
than Common Stock, which may include, without limitation, unbundled stock units
or components thereof, debentures, preferred stock, warrants and securities
convertible into or exchangeable for Common Stock or other property.

          (q)  "Retirement" means retirement as defined under any Company
pension plan or retirement program or termination of one's employment on
retirement with the approval of the Committee.

          (r)  "Subsidiary" means a corporation or other entity of which
outstanding shares or ownership interests representing 50% or more of the
combined voting power of such corporation or other entity entitled to elect the
management thereof, or such lesser percentage as may be approved by the
Committee, are owned directly or indirectly by the Company.

3.   Administration.

          The Plan shall be administered by the Committee; provided that the
Board may, in its discretion, at any time and from time to time, resolve to
administer the Plan, in which case the

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term "Committee" shall be deemed to mean the Board for all purposes herein.
Subject to the provisions of the Plan, the Committee shall be authorized to (i)
select persons to participate in the Plan, (ii) determine the form and substance
of grants made under the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be made, (iii) certify
that the conditions and restrictions applicable to any grant have been met, (iv)
modify the terms of grants made under the Plan, (v) interpret the Plan and
grants made thereunder, (vi) make any adjustments necessary or desirable in
connection with grants made under the Plan to eligible participants located
outside the United States and (vii) adopt, amend, or rescind such rules and
regulations, and make such other determinations, for carrying out the Plan as it
may deem appropriate. Decisions of the Committee on all matters relating to the
Plan shall be in the Committee's sole discretion and shall be conclusive and
binding on all parties. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with applicable federal and state laws and rules and regulations promulgated
pursuant thereto. No member of the Committee and no officer of the Company shall
be liable for any action taken or omitted to be taken by such member, by any
other member of the Committee or by any officer of the Company in connection
with the performance of duties under the Plan, except for such person's own
willful misconduct or as expressly provided by statute.

          The expenses of the Plan shall be borne by the Company.  The Plan
shall not be required to establish any special or separate fund or make any
other segregation of assets to assume the payment of any award under the Plan,
and rights to the payment of such awards shall be no greater than the rights of
the Company's general creditors.

4.   Shares Available for the Plan.

          Subject to adjustments as provided in Section 15, the number of shares
of Common Stock (the "Shares") issuable pursuant to the Plan shall equal the sum
of (a) 6,400,000 Shares, plus (b) any Shares returned to the Company's existing
stock option plans (the "Existing Plans") as a result of termination of options
under the Existing Plans, plus (c) an annual increase to be added on the date of
each annual meeting of the shareholders of the Company, beginning with the 2000
annual meeting of the shareholders, equal to one  percent (1.0%) of the
outstanding Shares on such date or such lesser amount determined by the Board.
Such Shares may be in whole or in part authorized and unissued or held by the
Company as treasury shares.  If any grant under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited as to any Shares, or is
tendered or withheld as to any shares in payment of the exercise price of the
grant or the taxes payable with respect to the exercise, then such unpurchased,
forfeited, tendered or withheld Shares shall thereafter be available for further
grants under the Plan unless, in the case of options granted under the Plan,
related SARs are exercised.

          Without limiting the generality of the foregoing provisions of this
Section 4 or the generality of the provisions of Sections 3, 6 or 17 or any
other section of this Plan, the Committee may, at any time or from time to time,
and on such terms and conditions (that are consistent with and not in
contravention of the other provisions of this Plan) as the Committee may, in its
sole discretion, determine, enter into agreements (or take other actions with
respect to the options) for new options containing terms (including exercise
prices) more (or less) favorable than the outstanding options.

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5.   Participation.

          (a)  Participation in the Plan shall be limited to those directors
(including Non-Employee Directors), officers (including non-employee officers)
and employees of, and other individuals performing services for, or to whom an
offer of employment has been extended by, the Company and its Subsidiaries
selected by the Committee (including participants located outside the United
States).  Nothing in the Plan or in any grant thereunder shall confer any right
on a participant to continue in the employ as a director or officer of or in the
performance of services for the Company or shall interfere in any way with the
right of the Company to terminate the employment or performance of services or
to reduce the compensation or responsibilities of a participant at any time.  By
accepting any award under the Plan, each participant and each person claiming
under or through him or her shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.

          Incentive Stock Options or Non-qualified Stock Options, SARs  alone or
in tandem with options, restricted stock awards, performance awards, or any
combination thereof, may be granted to such persons and for such number of
Shares as the Committee shall determine (such individuals to whom grants are
made being sometimes herein called "optionees" or "grantees," as the case may
be).  Determinations made by the Committee under the Plan need not be uniform
and may be made selectively among eligible individuals under the Plan, whether
or not such individuals are similarly situated.  A grant of any type made
hereunder in any one year to an eligible participant shall neither guarantee nor
preclude a further grant of that or any other type to such participant in that
year or subsequent years.

          (b)  On the first business day immediately following the date that an
individual is first elected or appointed to serve as a Non-Employee Director
(other than Non-Employee Directors affiliated with any shareholder of the
Company beneficially owning 10% or more of the Company's outstanding common
stock), such Non-Employee Director shall be granted an option to purchase 12,000
Shares (the "Initial Options"). Thereafter, each year on the first business day
immediately following the date of the Company's annual meeting of shareholders,
each individual reelected or continuing as a Non-Employee Director shall
automatically receive an option to acquire 8,000 Shares (the "Annual Options").
Except as set forth herein, each Non-Employee Director who receives options
under the Plan must continue as a Non-Employee Director for one year from the
date of grant of the Initial Options and six months from the date of grant of
the Annual Options in order to exercise any options granted hereby. Each Initial
Option will vest and be exercisable as to [_____] Shares on the first
anniversary of grant and [_____] additional shares beginning on the first day of
each three-month period commencing on the date three months after the first
anniversary of the date of grant. The right to exercise an Initial Option will
expire on the fifth anniversary of the date on which the option was granted.
Once an installment of an Initial Option has become exercisable, such
installment may be exercised in whole at any time or in part from time to time
until the expiration of the option, whether or not any option granted previously
remains outstanding at the time of such exercise. Each Annual Option will vest
and be exercisable, on a cumulative basis, as to [____] shares beginning six
months from the date of grant, [____] additional shares beginning nine months
from the date of grant and [____] additional shares beginning on the first
anniversary of the date of grant.

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The right to exercise an Annual Option will expire on the fifth anniversary of
the date on which the option was granted. Once an Annual Option has become
exercisable, it may be exercised in whole at any time or in part from time to
time until the expiration of the option, whether or not any option granted
previously to the optionee remains outstanding at the time of such exercise.

6.   Incentive and Non-qualified Options and SARs.

          The Committee may from time to time grant to eligible participants
Incentive Stock Options, Non-qualified Stock Options, or any combination
thereof; provided that the Committee may grant Incentive Stock Options only to
eligible employees of the Company or its subsidiaries (as defined for this
purpose in Section 424(f) of the Code or any successor thereto).  In any one
calendar year, the Committee shall not grant to any one participant options or
SARs to purchase a number of shares of Common Stock in excess of __% of the
total number of Shares authorized under the Plan pursuant to Section 4.  The
options granted shall take such form as the Committee shall determine, subject
to the following terms and conditions.

          It is the Company's intent that Non-qualified Stock Options granted
under the Plan not be classified as Incentive Stock Options, that Incentive
Stock Options be consistent with and contain or be deemed to contain all
provisions required under Section 422 of the Code and any successor thereto, and
that any ambiguities in construction be interpreted in order to effectuate such
intent. If an Incentive Stock Option granted under the Plan does not qualify as
such for any reason, then to the extent of such non-qualification, the stock
option represented thereby shall be regarded as a Non-qualified Stock Option
duly granted under the Plan, provided that such stock option otherwise meets the
Plan's requirements for Non-qualified Stock Options.

          (a)  Price. The price per Share deliverable upon the exercise of each
option ("exercise price") shall be established by the Committee, except that in
the case of the grant of any Option, the exercise price may not be less than 50%
of the Fair Market Value of a share of Common Stock as of the date of grant of
the option, and in the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total combined
voting power of all classes of stock of the Company or any of its Subsidiaries,
the exercise price may not be less than 110% of the Fair Market Value of a share
of Common Stock as of the date of grant of the option, in each case unless
otherwise permitted by Section 422 of the Code or any successor thereto.

          (b)  Payment. Options may be exercised, in whole or in part, upon
payment of the exercise price of the Shares to be acquired. Unless otherwise
determined by the Committee, payment shall be made (i) in cash (including check,
bank draft, money order or wire transfer of immediately available funds), (ii)
by delivery of outstanding shares of Common Stock with a Fair Market Value on
the date of exercise equal to the aggregate exercise price payable with respect
to the options' exercise, (iii) by simultaneous sale through a broker reasonably
acceptable to the Committee of Shares acquired on exercise, as permitted under
Regulation T of the Federal Reserve Board, (iv) by authorizing the Company to
withhold from issuance a number of Shares issuable upon exercise of the options
which, when multiplied by the Fair Market Value of a share of Common Stock on
the date of exercise, is equal to the aggregate exercise price payable with
respect to the options so

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exercised or (v) by any combination of the foregoing. Options may also be
exercised upon payment of the exercise price of the Shares to be acquired by
delivery of the optionee's promissory note, but only to the extent specifically
approved by and in accordance with the policies of the Committee.

          In the event a grantee elects to pay the exercise price payable with
respect to an option pursuant to clause (ii) above, (A) only a whole number of
share(s) of Common Stock (and not fractional shares of Common Stock) may be
tendered in payment, (B) such grantee must present evidence acceptable to the
Company that he or she has owned any such shares of Common Stock tendered in
payment of the exercise price (and that such tendered shares of Common Stock
have not been subject to any substantial risk of forfeiture) for at least six
months prior to the date of exercise, and (C) Common Stock must be delivered to
the Company. Delivery for this purpose may, at the election of the grantee, be
made either by (A) physical delivery of the certificate(s) for all such shares
of Common Stock tendered in payment of the price, accompanied by duly executed
instruments of transfer in a form acceptable to the Company, or (B) direction to
the grantee's broker to transfer, by book entry, of such shares of Common Stock
from a brokerage account of the grantee to a brokerage account specified by the
Company. When payment of the exercise price is made by delivery of Common Stock,
the difference, if any, between the aggregate exercise price payable with
respect to the option being exercised and the Fair Market Value of the shares of
Common Stock tendered in payment (plus any applicable taxes) shall be paid in
cash. No grantee may tender shares of Common Stock having a Fair Market Value
exceeding the aggregate exercise price payable with respect to the option being
exercised (plus any applicable taxes).

          In the event a grantee elects to pay the exercise price payable with
respect to an option pursuant to clause (iv) above, (A) only a whole number of
Share(s) (and not fractional Shares) may be withheld in payment and (B) such
grantee must present evidence acceptable to the Company that he or she has owned
a number of shares of Common Stock at least equal to the number of Shares to be
withheld in payment of the exercise price (and that such owned shares of Common
Stock have not been subject to any substantial risk of forfeiture) for at least
six months prior to the date of exercise. When payment of the exercise price is
made by withholding of Shares, the difference, if any, between the aggregate
exercise  price payable with respect to the option being exercised and the Fair
Market Value of the Shares withheld in payment (plus any applicable taxes) shall
be paid in cash.  No grantee may authorize the withholding of Shares having a
Fair Market Value exceeding the aggregate exercise price payable with respect to
the option being exercised (plus any applicable taxes).  Any withheld Shares
shall no longer be issuable under such option (except pursuant to any Reload
Option (as defined below) with respect to any such withheld Shares).

          (c)  Terms of Options.  The term during which each option may be
exercised shall be determined by the Committee, but if required by the Code and
except as otherwise provided herein, no option shall be exercisable in whole or
in part more than ten years from the date it is granted, and no Incentive Stock
Option granted to an employee who at the time of the grant owns more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries shall be exercisable more than five years from the date it is
granted. All rights to purchase Shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the Committee. The Committee
shall determine the date on which each option shall become exercisable and may
provide that an option shall become exercisable in installments. The Shares

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constituting each installment may be purchased in whole or in part at any time
after such installment becomes exercisable, subject to such minimum exercise
requirements as may be designated by the Committee. Prior to the exercise of an
option and delivery of the Shares represented thereby, the optionee shall have
no rights as a shareholder with respect to any Shares covered by such
outstanding option (including any dividend or voting rights).

          (d)  Limitations on Grants. If required by the Code, the aggregate
Fair Market Value (determined as of the grant date) of Shares for which an
Incentive Stock Option is exercisable for the first time during any calendar
year under all equity incentive plans of the Company and its Subsidiaries (as
defined in Section 422 of the Code or any successor thereto) may not exceed
$100,000.

          (e)  Termination; Forfeiture.

               (i)   Death or Disability. If a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
and any Subsidiary due to death or Disability, all of the participant's options
and SARs that were exercisable on the date of Retirement shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 180
days from the date of such death or Disability, but in no event after the
expiration date of the options or SARs; provided that the participant does not
engage in Competition during such 180-day period unless he or she received
written consent to do so from the Board or the Committee. Notwithstanding the
foregoing, if the Disability giving rise to the termination of employment is not
within the meaning of Section 22(e)(3) of the Code or any successor thereto,
Incentive Stock Options not exercised by such participant within 90 days after
the date of termination of employment will cease to qualify as Incentive Stock
Options and will be treated as Non-qualified Stock Options under the Plan if
required to be so treated under the Code.

               (ii)  Retirement. If a participant ceases to be a director,
officer or employee of, or to perform other services for, the Company and any
Subsidiary upon the occurrence of his or her Retirement, (A) all of the
participant's options and SARs that were exercisable on the date of Retirement
shall remain exercisable for, and shall otherwise terminate at the end of, a
period of 90 days after the date of Retirement, but in no event after the
expiration date of the options or SARs; provided that the participant does not
engage in Competition during such 90-day period unless he or she receives
written consent to do so from the Board or the Committee, and (B) all of the
participant's options and SARs that were not exercisable on the date of
Retirement shall be forfeited immediately upon such Retirement; provided,
however, that such options and SARs may become fully vested and exercisable in
the discretion of the Committee.

               (iii) Discharge for Cause. If a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
or a Subsidiary due to Cause, or if a participant does not become a director,
officer or employee of, or does not begin performing other services for, the
Company or a Subsidiary for any reason, all of the participant's options and
SARs shall expire and be forfeited immediately upon such cessation or non-
commencement, whether or not then exercisable.

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               (iv)  Other Termination. Unless otherwise determined by the
Committee, if a participant ceases to be a director, officer or employee of, or
to otherwise perform services for, the Company or a Subsidiary for any reason
other than death, Disability, Retirement or Cause, (A) all of the participant's
options and SARs that were exercisable on the date of such cessation shall
remain exercisable for, and shall otherwise terminate at the end of, a period of
30 days after the date of such cessation, but in no event after the expiration
date of the options or SARs; provided that the participant does not engage in
Competition during such 30-day period unless he or she receives written consent
to do so from the Board or the Committee, and (B) all of the participant's
options and SARs that were not exercisable on the date of such cessation shall
be forfeited immediately upon such cessation.

               (v)   Change in Control. If there is a Change in Control of the
Company and a participant is terminated as a director, officer or employee of,
or from performing other services for, the Company or a subsidiary within one
year after such Change in Control, all of the participant's options and SARs
shall become fully vested and exercisable upon such termination and shall remain
so until the expiration date of the options or SARS. In addition, the
Compensation Committee shall have the authority to grant options that become
fully vested and exercisable automatically upon a Change in Control, whether or
not the grantee is subsequently terminated.

          (f)  Forfeiture. If a participant exercises any of his or her options
or SARs and, within one year thereafter, either (i) is terminated from the
Company or a Subsidiary for any of the reasons specified in the definition of
"Cause" set forth in Section 2(b)(i), (ii) or (iv), or (ii) engages in
Competition without having received written consent to do so from the Board or
the Committee, then the participant may, in the discretion of the Committee, be
required to pay the Company the gain represented by the difference between the
aggregate selling price of the Shares acquired upon the options' exercise (or,
if the Shares were not then sold, their aggregate Fair Market Value on the date
of exercise) and the aggregate exercise price of the options exercised (the
"Option Gain"), without regard to any subsequent increase or decrease in the
Fair Market Value of the Common Stock. In addition, the Company may, in its
discretion, deduct from any payment of any kind (including salary or bonus)
otherwise due to any such participant an amount equal to the Option Gain.

          (g)  Grant of Reload Options. The Committee may provide (either at the
time of grant or exercise of an option), in its discretion, for the grant to a
grantee who exercises all or any portion of an option ("Exercised Options") and
who pays all or part of such exercise price with shares of Common Stock, of an
additional option (a "Reload Option") for a number of shares of Common Stock
equal to the sum (the "Reload Number") of the number of shares of Common Stock
tendered or withheld in payment of such exercise price for the Exercised Options
plus, if so provided by the Committee, the number of shares of Common Stock, if
any, tendered or withheld by the grantee or withheld by the Company in
connection with the exercise of the Exercised Options to satisfy any federal,
state or local tax withholding requirements. The terms of each Reload Option,
including the date of its expiration and the terms and conditions of its
exercisability and transferability, shall be the same as the terms of the
Exercised Option to which it relates, except that (i) the grant date for each
Reload Option shall be the date of exercise of the Exercised Option to

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which it relates and (ii) the exercise price for each Reload Option shall be the
Fair Market Value of the Common Stock on the grant date of the Reload Option.

7.   Stock Appreciation Rights.

          The Committee shall have the authority to grant SARs under this Plan,
either alone or to any optionee in tandem with options (either at the time of
grant of the related option or thereafter by amendment to an outstanding
option). SARs shall be subject to such terms and conditions as the Committee
may specify.

          No SAR may be exercised unless the Fair Market Value of a share of
Common Stock of the Company on the date of exercise exceeds the exercise price
of the SAR or, in the case of SARs granted in tandem with options, any options
to which the SARs correspond. Prior to the exercise of the SAR and delivery of
the cash and/or Shares represented thereby, the participant shall have no rights
as a shareholder with respect to Shares covered by such outstanding SAR
(including any dividend or voting rights).

          SARs granted in tandem with options shall be exercisable only when, to
the extent and on the conditions that any related option is exercisable.  The
exercise of an option shall result in an immediate forfeiture of any related SAR
to the extent the option is exercised, and the exercise of an SAR shall cause an
immediate forfeiture of any related option to the extent the SAR is exercised.

          Upon the exercise of an SAR, the participant shall be entitled to a
distribution in an amount equal to the difference between the Fair Market Value
of a share of Common Stock on the date of exercise and the exercise price of the
SAR or, in the case of SARs granted in tandem with options, any option to which
the SAR is related, multiplied by the number of Shares as to which the SAR is
exercised.  The Committee shall decide whether such distribution shall be in
cash, in Shares having a Fair Market Value equal to such amount, in Other
Company Securities having a Fair Market Value equal to such amount or in a
combination thereof.

          All SARs will be exercised automatically on the last day prior to the
expiration date of the SAR or, in the case of SARs granted in tandem with
options, any related option, so long as the Fair Market Value of a share of
Common Stock on that date exceeds the exercise price of the SAR or any related
option, as applicable.  An SAR granted in tandem with options shall expire at
the same time as any related option expires and shall be transferable only when,
and under the same conditions as, any related option is transferable.

8.   Restricted Stock.

          The Committee may at any time and from time to time grant Shares of
restricted stock under the Plan to such participants and in such amounts as it
determines. Each grant of restricted stock shall specify the applicable
restrictions on such Shares, the duration of such restrictions (which shall be
at least six months except as otherwise determined by the Committee or provided
in the third

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paragraph of this Section 8), and the time or times at which such restrictions
shall lapse with respect to all or a specified number of Shares that are part of
the grant.

          The participant will be required to pay the Company the aggregate par
value of any Shares of restricted stock (or such larger amount as the Board may
determine based upon applicable law) within ten days of the date of grant,
unless such Shares of restricted stock are treasury shares. Unless otherwise
determined by the Committee, certificates representing Shares of restricted
stock granted under the Plan will be held in escrow by the Company on the
participant's behalf during any period of restriction thereon and will bear an
appropriate legend specifying the applicable restrictions thereon, and the
participant will be required to execute a blank stock power therefor. Except as
otherwise provided by the Committee, during such period of restriction the
participant shall have all of the rights of a holder of Common Stock, including
but not limited to the rights to receive dividends and to vote, and any stock or
other securities received as a distribution with respect to such participant=s
restricted stock shall be subject to the same restrictions as then in effect for
the restricted stock.

          Except as otherwise provided by the Committee, no restrictions on
Shares shall lapse because of a Change in Control or the death, Disability or
Retirement of any participant. At such time as a participant ceases to be, or in
the event a participant does not become, a director, officer or employee of, or
otherwise performing services for, the Company or its Subsidiaries for any other
reason, all Shares of restricted stock granted to such participant on which the
restrictions have not lapsed shall be immediately forfeited to the Company.

9.   Performance Awards.

          Performance awards may be granted to participants at any time and from
time to time as determined by the Committee.  The Committee shall have complete
discretion in determining the size and composition of performance awards granted
to a participant and the appropriate period over which performance is to be
measured (a "performance cycle").  Performance awards may include (i) specific
dollar-value target awards (ii) performance units, the value of each such unit
being determined by the Committee at the time of issuance, and/or (iii)
performance Shares, the value of each such Share being equal to the Fair Market
Value of a share of Common Stock.

          The value of each performance award may be fixed or it may be
permitted to fluctuate based on a performance factor (e.g., return on equity)
selected by the Committee.

          The Committee shall establish performance goals and objectives for
each performance cycle on the basis of such criteria and objectives as the
Committee may select from time to time, including, without limitation, the
performance of the participant, the Company, one or more of its Subsidiaries or
divisions or any combination of the foregoing.  During any performance cycle,
the Committee shall have the authority to adjust the performance goals and
objectives for such cycle for such reasons as it deems equitable.

          The Committee shall determine the portion of each performance award
that is earned by a participant on the basis of the Company's performance over
the performance cycle in relation

                                      -11-
<PAGE>

to the performance goals for such cycle. The earned portion of a performance
award may be paid out in Shares, cash, Other Company Securities, or any
combination thereof, as the Committee may determine.

          A participant must be a director, officer or employee of, or otherwise
perform services for, the Company or its Subsidiaries at the end of the
performance cycle in order to be entitled to payment of a performance award
issued in respect of such cycle; provided, however, that except as otherwise
determined by the Committee, if a participant ceases to be a director, officer
or employee of, or to otherwise perform services for, the Company and its
Subsidiaries upon his or her death, Retirement, or Disability prior to the end
of the performance cycle, the participant shall earn a proportionate portion of
the performance award based upon the elapsed portion of the performance cycle
and the Company's performance over that portion of such cycle.

          In the event of a Change in Control, a participant shall earn no less
than the portion of the performance award that the participant would have earned
if the applicable performance cycle(s) had terminated as of the date of the
Change in Control.

10.  Withholding Taxes.

     (1)  Participant Election. Unless otherwise determined by the Committee, a
participant may elect to deliver shares of Common Stock (or have the Company
withhold shares acquired upon exercise of an option or SAR or deliverable upon
grant or vesting of restricted stock, as the case may be) to satisfy, in whole
or in part, the amount the Company is required to withhold for taxes in
connection with the exercise of an option or SAR or the delivery of restricted
stock upon grant or vesting, as the case may be. Such election must be made on
or before the date the amount of tax to be withheld is determined. Once made,
the election shall be irrevocable. The fair market value of the shares to be
withheld or delivered will be the Fair Market Value as of the date the amount of
tax to be withheld is determined. In the event a participant elects to deliver
or have the Company withhold shares of Common Stock pursuant to this Section
10(a), such delivery or withholding must be made subject to the conditions and
pursuant to the procedures set forth in Section 6(b) with respect to the
delivery or withholding of Common Stock in payment of the exercise price of
options.

     (2)  Company Requirement. The Company may require, as a condition to any
grant or exercise under the Plan or to the delivery of certificates for Shares
issued hereunder, that the grantee make provision for the payment to the
Company, either pursuant to Section 10(a) or this Section 10(b), of federal,
state or local taxes of any kind required by law to be withheld with respect to
any grant or delivery of Shares. The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or delivery of Shares under the Plan.

11.  Written Agreement; Vesting.

          Each employee to whom a grant is made under the Plan shall enter into
a written agreement with the Company that shall contain such provisions,
including without limitation vesting

                                      -12-
<PAGE>

requirements, consistent with the provisions of the Plan, as may be approved by
the Committee. Unless the Committee determines otherwise and except as otherwise
provided in Sections 6, 7, 8 and 9 in connection with a Change of Control or
certain occurrences of termination, no grant under this Plan may be exercised,
and no restrictions relating thereto may lapse, within six months of the date
such grant is made.

12.  Transferability.

          Unless the Committee determines otherwise, no option, SAR, performance
award or restricted stock granted under the Plan  shall be transferable by a
participant other than by will or the laws of descent and distribution or to a
participant's Family Member by gift or a qualified domestic relations order as
defined by the Code.  Unless the Committee determines otherwise, an option, SAR
or performance award may be exercised only by the optionee or grantee thereof;
by his or her Family Member if such person has acquired the option, SAR or
performance award by gift or qualified domestic relations order; by his or her
executor or administrator or any person to whom the Option is transferred by
will or the laws of descent and distribution; or by his or her guardian or legal
representative; provided that Incentive Stock Options may be exercised by any
Family Member, guardian or legal representative only if permitted by the Code
and any regulations thereunder. All provisions of this Plan shall in any event
continue to apply to any option, SAR, performance award or restricted stock
granted under the Plan and transferred as permitted by this Section 12, and any
transferee of any such option, SAR, performance award or restricted stock shall
be bound by all provisions of this Plan as and to the same extent as the
applicable original grantee.

13.  Listing, Registration and Qualification.

          If the Committee determines that the listing, registration or
qualification upon any securities exchange or under any law of Shares subject to
any option, SAR, performance award or restricted stock grant is necessary or
desirable as a condition of, or in connection with, the granting of same or the
issue or purchase of Shares thereunder, no such option or SAR may be exercised
in whole or in part, no such performance award may be paid out, and no Shares
may be issued, unless such listing, registration or qualification is effected
free of any conditions not acceptable to the Committee.

14.  Transfer of Employee.

          The transfer of an employee from the Company to a Subsidiary, from a
Subsidiary to the Company, or from one Subsidiary to another shall not be
considered a termination of employment; nor shall it be considered a termination
of employment if an employee is placed on military or sick leave or such other
leave of absence which is considered by the Committee as continuing intact the
employment relationship.

                                      -13-
<PAGE>

15.  Adjustments.

          In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of assets,
or any other change in the corporate structure or shares of the Company, the
Committee shall make such adjustment as it deems appropriate in the number and
kind of Shares or other property available for issuance under the Plan
(including, without limitation, the total number of Shares available for
issuance under the Plan pursuant to Section 4), in the number and kind of
options, SARs, Shares or other property covered by grants previously made under
the Plan, and in the exercise price of outstanding options and SARs. Any such
adjustment shall be final, conclusive and binding for all purposes of the Plan.
In the event of any merger, consolidation or other reorganization in which the
Company is not the surviving or continuing corporation or in which a Change in
Control is to occur, all of the Company's obligations regarding options, SARs,
performance awards, and restricted stock that were granted hereunder and that
are outstanding on the date of such event shall, on such terms as may be
approved by the Committee prior to such event, be assumed by the surviving or
continuing corporation or canceled in exchange for property (including cash).

          Without limitation of the foregoing, in connection with any
transaction of the type specified by clause (iii) of the definition of a Change
in Control in Section 2(c), the Committee may, in its discretion, (i) cancel any
or all outstanding options under the Plan in consideration for payment to the
holders thereof of an amount equal to the portion of the consideration that
would have  been payable to such holders pursuant to such transaction if their
options had been fully exercised immediately prior to such transaction, less the
aggregate exercise price that would have been payable therefor, or (ii) if the
amount that would have been payable to the option holders pursuant to such
transaction if their options had been fully exercised immediately prior thereto
would be equal to or less than the aggregate exercise price that would have been
payable therefor, cancel any or all such options for no consideration or payment
of any kind. Payment of any amount payable pursuant to the preceding sentence
may be made in cash or, in the event that the consideration to be received in
such transaction includes securities or other property, in cash and/or
securities or other property in the Committee's discretion.

16.  Amendment and Termination of the Plan.

          The Board of Directors or the Committee, without  approval of the
shareholders, may amend or terminate the Plan, except that no amendment shall
become effective without prior approval of the shareholders of the Company if
shareholder approval would be required by applicable law or regulations,
including if required for continued compliance with the performance-based
compensation exception of Section 162(m) of the Code or any successor thereto,
under the provisions of Section 422 of the Code or any successor thereto, or by
any listing requirement of the principal stock exchange on which the Common
Stock is then listed.

17.  Amendment or Substitution of Awards under the Plan.

          The terms of any outstanding award under the Plan may be amended from
time to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not

                                      -14-
<PAGE>

limited to, acceleration of the date of exercise of any award and/or payments
thereunder or of the date of lapse of restrictions on Shares); provided that,
except as otherwise provided in Section 15, no such amendment shall adversely
affect in a material manner any right of a participant under the award without
his or her written consent. The Committee may, in its discretion, permit holders
of awards under the Plan to surrender outstanding awards in order to exercise or
realize rights under other awards, or in exchange for the grant of new awards,
or require holders of awards to surrender outstanding awards as a condition
precedent to the grant of new awards under the Plan.

18.  Commencement Date; Termination Date.

          The date of commencement of the Plan shall be May __, 2000, subject to
approval by the shareholders of the Company.  If required by the Code, the Plan
will also be subject to reapproval by the shareholders of the Company prior to
the fifth anniversary of the date of commencement of this Plan.

          Unless previously terminated upon the adoption of a resolution of the
Board terminating the Plan, the Plan shall terminate at the close of business on
the tenth anniversary of the date of commencement of this Plan.  No termination
of the Plan shall materially and adversely affect any of the rights or
obligations of any person, without his or her written consent, under any grant
of options or other incentives theretofore granted under the Plan.

19.  Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of the Plan.

20.  Governing Law. The Plan shall be governed by the corporate laws of the
State of Pennsylvania, without giving effect to any choice of law provisions
that might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction.

                                      -15-<PAGE>

                                                                       EXHIBIT E

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

                SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK

                              PURCHASE AGREEMENT

                                    BETWEEN

                               INTEL CORPORATION

                                      AND

                       INTEGRATED CIRCUIT SYSTEMS, INC.

                         Dated as of December 23, 1999

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

<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----
<S>                                                                      <C>
SECTION 1 - Authorization and Sale of the Preferred Stock.................. 2

            1.1.  Sale of the Preferred Stock.............................. 2

SECTION 2 - Closing Date; Delivery.......................................   2

            2.1.  Closing Date...........................................   2
            2.2.  Delivery...............................................   2

SECTION 3 - Representations and Warranties of the Company................   2

            3.1.  Organization and Qualification; Subsidiaries...........   2
            3.2.  Capitalization; Subsidiaries...........................   3
            3.3.  Authority Relative to this Agreement...................   3
            3.4.  No Violation...........................................   4
            3.5.  Financial Statements...................................   4
            3.6.  Compliance with Applicable Laws........................   5
            3.7.  Litigation.............................................   5
            3.8.  Certain Approvals......................................   5
            3.9.  Employee Benefit Plans.................................   6
            3.10. Taxes..................................................   7
            3.11. Environmental Matters..................................   8
            3.12. Absence of Certain Changes.............................  10
            3.13. Brokers................................................  11
            3.14. Material Contracts.....................................  11
            3.15. Issuance of Shares.....................................  12
            3.16. Intellectual Property..................................  12
            3.17. Related Party Transactions.............................  13
            3.18. Labor Relations and Employment.........................  14
            3.19. Year 2000..............................................  15
            3.20. Real Estate............................................  15
                  (a)   Owned Properties.................................  15
                  (b)   Leased Properties................................  15
                  (c)   Real Property Disclosure.........................  16
                  (d)   No Proceedings...................................  16
                  (e)   Condition and Operation of Improvements..........  16
                  (f)   Permits..........................................  16
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
            3.21. Knowledge Qualification................................  17

SECTION 4 - Representations and Warranties of Purchaser..................  17

            4.1.  Organization...........................................  17
            4.2.  Authorization..........................................  17
            4.3.  Experience.............................................  17
            4.4.  Investment.............................................  17
            4.5.  Rule 144...............................................  18
            4.6.  No Public Market.......................................  18
            4.7.  Access to Data.........................................  18
            4.8.  Brokers or Finders.....................................  18

SECTION 5 - Conditions to Closing of Purchaser...........................  18

            5.1.  Representations and Warranties Correct.................  18
            5.2.  Covenants..............................................  19
            5.3.  Filing of Articles of Incorporation....................  19
            5.4.  Ancillary Agreements...................................  19
            5.5.  Delivery of Preferred Shares...........................  19
            5.6.  Opinion of Company Counsel.............................  19
            5.7.  Addendum to Purchase Agreement.........................  19
            5.8.  Board and Shareholder Approval.........................  19
            5.9.  Good Standing Certificate..............................  19

SECTION 6 - Conditions to Closing of Company.............................  20

            6.1.  Representations and Warranties Correct.................  20
            6.2.  Filing of Articles of Incorporation....................  20
            6.3.  Ancillary Agreements...................................  20
            6.4.  Delivery of Purchase Price.............................  20
            6.5.  Addendum to Purchase Agreement.........................  20
            6.6.  Board and Shareholder Approval.........................  20

SECTION 7 - Affirmative Covenants of the Company.........................  20

            7.1.  Financial Information..................................  20
            7.2.  Shareholder and Commission Reports.....................  21

SECTION 8 - Restrictions on Transferability of
               Securities; Registration Rights...........................  22
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
            8.1.  Restrictions on Transfer...............................  22
            8.2.  Restrictive Legend.....................................  22
            8.3.  Notice of Proposed Transfers...........................  22
            8.4.  Required Registration and Notice.......................  23

SECTION 9 - Miscellaneous................................................  23

            9.1.  Governing Law..........................................  23
            9.2.  Counterparts; Telecopied Signatures....................  23
            9.3.  Termination............................................  23
            9.4.  Survival...............................................  23
            9.5.  Successors and Assigns.................................  24
            9.6.  Entire Agreement; Amendment............................  24
            9.7.  Notices, etc...........................................  24
            9.8.  Expenses...............................................  25
            9.9.  Severability...........................................  25
            9.10. Titles and Subtitles...................................  25
</TABLE>

EXHIBITS
--------

    A.      Amended and Restated Articles of Incorporation
    B.      Amendment No. 1 to Registration Agreement
    C.      Amendment No. 1 to Stockholders Agreement
    D.      Confidentiality Agreement
    E.      Opinion of Company Counsel

DISCLOSURE SCHEDULE
-------------------

                                     -iii-
<PAGE>

                SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
                              PURCHASE AGREEMENT

          This Series A Cumulative Convertible Preferred Stock Purchase
Agreement ("Agreement") is made this 23rd day of December, 1999, between INTEL
CORPORATION, a Delaware corporation (the "Purchaser"), and INTEGRATED CIRCUIT
SYSTEMS, INC., a Pennsylvania corporation (the "Company").

          WHEREAS, The Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 (the "1933 Act") and Section 4(6) of the 1933 Act;

          WHEREAS, The Company's Board of Directors has authorized a new series
of preferred stock, designated as its Series A Cumulative Convertible Preferred
Stock (the "Preferred Stock"), having the rights and preferences set forth in
the Amended and Restated Articles of Incorporation of Integrated Circuit
Systems, Inc. attached hereto as Exhibit "A" (the "Articles of Incorporation"),
and the Board and the Company's shareholders have approved the Articles of
Incorporation;

          WHEREAS, The Preferred Stock is convertible into shares of Class A
Common Stock, par value $.01 per share, of the Company and Class L Common Stock,
par value $.01 per share, of the Company, upon the terms and subject to the
conditions set forth in the Articles of Incorporation (the Common Stock into
which the Preferred Stock is convertible being hereinafter referred to as the
"Conversion Shares");

          WHEREAS, The Purchaser desires to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this Agreement, (i)
an aggregate of Three Million Four Hundred Sixty Six Thousand Six Hundred Eights
(3,366,670) shares of Preferred Stock (the "Preferred Shares"), having a stated
value of Four Dollars ($4.00) per share, for an aggregate purchase price of
Thirteen Million Four Hundred Sixty Six Thousand Six Hundred Eighty Dollars
($13,466,680) (the "Purchase Price");

          WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering (1) Amendment No.1 to
the Registration Agreement dated May 11, 1999 among the Company, Investment
Stockholders specified therein, Executive Stockholders specified therein and
Other Stockholders specified therein, in the form attached hereto as Exhibit "B"
(the "Amended Registration Agreement"), pursuant to which the Company has agreed
to provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws; (2)
Amendment No.1  to the Stockholders Agreement dated May 11, 1999 among the Bain
Stockholders, the Bear Stearns Stockholders and the FirstBoston Stockholder, in
the form
<PAGE>

attached hereto as Exhibit "C" (the "Amended Stockholders Agreement"); and (3) a
Confidentiality Agreement, in the form attached hereto as Exhibit "D" (the
"Confidentiality Agreement").

          NOW, THEREFORE, the parties agree as follows:

                                   SECTION 1

                           Authorization and Sale of
                              the Preferred Stock

          1.1  Sale of the Preferred Stock.  Subject to the terms and conditions
               ---------------------------
hereof, the Company will issue and sell to the Purchaser and the Purchaser will
buy from the Company the Preferred Shares for the Purchase Price, payable via
wire transfer of immediately available Federal funds to an account designated in
writing by the Company at least one day prior to the Closing Date.

                                   SECTION 2

                            Closing Date; Delivery

          2.1  Closing Date.  The closing of the purchase and sale of the
               ------------
Preferred Shares hereunder (the "Closing") shall be held within two business
days after the date of this Agreement or on such other date upon which the
Company and the Purchaser shall agree (the date of the Closing is hereinafter
referred to as the "Closing Date").

          2.2  Delivery.  At the Closing, the Company will deliver to the
               --------
Purchaser duly executed certificates representing the Preferred Shares being
purchased by Purchaser hereunder and the Purchaser will pay the Purchase Price
in the manner specified in Section 2.1.

                                   SECTION 3

                 Representations and Warranties of the Company

          The Company hereby represents and warrants to the Purchaser as
follows:

          3.1  Organization and Qualification; Subsidiaries.  The Company and
               --------------------------------------------
each of its Subsidiaries (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of its state or
jurisdiction of incorporation and has all requisite corporate power and
corporate authority to own, lease and operate its properties and to carry on

                                      -2-

<PAGE>

its business as now being conducted and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification and where failure to
be in good standing or to so qualify would have a Material Adverse Effect on the
Company. The term "Material Adverse Effect on the Company," as used in this
Agreement, means any effect, event, occurrence, change or state of facts that,
individually or aggregated with other effects, events, occurrences, changes or
states of facts, is, or is reasonably likely to be, materially adverse to (i)
the assets, liabilities, business, property, operations, condition as a whole
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
or (ii) the ability of the Company to perform its obligations under this
Agreement. The Company has heretofore made available to Purchaser a complete and
correct copy of its Articles of Incorporation, as amended, and By-Laws. The
following is a list of every corporation, limited liability company, partnership
or other business organization or entity of which the Company owns either
directly or through its Subsidiaries, (a) more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests therein, or (iii) the capital or profit
interests therein, in the case of a partnership; or (b) or otherwise has the
power to vote or direct the voting of sufficient securities to elect a majority
of the board of directors or similar governing body of such entity (the
"Subsidiaries"): ICS Technologies, Inc., ICST, Inc., Integrated Circuit Systems
PTE Ltd. and MicroClock, Inc.

          3.2  Capitalization; Subsidiaries.  Upon filing the Articles of
               ----------------------------
Incorporation with the Pennsylvania Department of State, the authorized capital
stock of the Company will consist of 68,366,670 shares, including 3,366,670
shares of Preferred Stock, 31,000,000 shares of Class A Common Stock, 31,000,000
shares of Class B Common Stock and 4,000,000 shares of Class L Common Stock
("Common Stock"). As of the close of business on November 12, 1999, 15,612,588
shares of Class A Common Stock were issued and outstanding, 5,653,079 shares of
Class B Common Stock were issued and outstanding and 2,362,852 shares of Class L
Common Stock were issued and outstanding. Prior to the date of this Agreement,
the Company had no shares of Preferred Stock authorized or issued and
outstanding. Except for (i) 6,868,000 shares of Class A Common Stock and 137,000
shares of Class L Common Stock reserved for issuance pursuant to outstanding
Options and rights granted under the Stock Plans, there are no existing options,
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company or any of its Subsidiaries, other than in favor of
the Company's senior secured lenders. All of the outstanding shares of capital
stock of each of the Company's Subsidiaries have been validly issued and are
fully paid and non-assessable.

          3.3  Authority Relative to this Agreement.
               ------------------------------------

               (a)  The Company has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Upon receipt of the Board of Directors and shareholder
approval as contemplated by Section 5.8,

                                      -3-

<PAGE>

the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly authorized by
the Company Board and, to the extent necessary, the shareholders of the Company,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated. Upon
receipt of the Board of Directors and shareholder approval as contemplated by
Section 5.8, this Agreement has been duly and validly executed and delivered by
the Company, and, assuming this agreement constitutes a valid and binding
obligation of Purchaser, this Agreement will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the rights of creditors generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.

               (b)  Other than in connection with, or in compliance with, the
provisions of the Pennsylvania Business Corporation Law of 1988 ("BCL") with
respect to the transactions contemplated hereby, and federal and state
securities laws, no authorization, consent or approval of, or filing with, any
Governmental Entity (as hereinafter defined) is necessary for the consummation
by the Company of the transactions contemplated by this Agreement. As used in
this Agreement, the term "Governmental Entity" means any government or
subdivision thereof, domestic, foreign or supranational or any administrative,
governmental or regulatory authority, agency, commission, tribunal or body,
domestic, foreign or supranational.

          3.4  No Violation.  Neither the execution or delivery of this
               ------------
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Articles of Incorporation or By-Laws of the Company, (ii) violate any
applicable law or other restriction of any governmental body or (iii) constitute
a breach or violation of any obligation, agreement, covenant, consideration or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
note, lease or other contract to which the Company is a party or by which it or
any of its assets is subject.

          3.5  Financial Statements.  Since January 1, 1995, the Company has
               --------------------
filed all forms, reports  and documents ("SEC Reports") with the SEC required to
be filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder. Copies of all such SEC Reports have been made available
to Purchaser by the Company or are publicly available on EDGAR. None of such SEC
Reports (as of their respective filing dates) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading except as subsequently
disclosed. The audited and unaudited consolidated financial statements of the
Company included in the SEC Reports have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as otherwise stated in such financial statements, including the related notes)
and

                                      -4-

<PAGE>

fairly present the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited financial statements, to year-end audit adjustments. Except as
set forth in the SEC Reports, at the date of the most recent audited financial
statements of the Company included in the SEC Reports, neither the Company nor
any of its Subsidiaries had, and since such date neither the Company nor any of
such Subsidiaries has incurred, any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which, individually or in
the aggregate, would be required to be disclosed in a balance sheet of the
Company prepared in accordance with generally accepted accounted principles
except liabilities incurred in the ordinary and usual course of business and
consistent with past practice, liabilities incurred in connection with the
transactions contemplated by this Agreement, and liabilities that would not
reasonably be expected to have a Material Adverse Effect on the Company.

          3.6  Compliance with Applicable Laws.  Except for matters relating to
               -------------------------------
Environmental Laws (which matters are covered in Section 3.12 hereof) or matters
relating to real estate (which matters are covered in Section 3.20 hereof), (i)
the Company and its Subsidiaries possess all permits, licenses, certifications
and other governmental or regulatory authorizations and approvals necessary to
enable the Company and its Subsidiaries to carry on their business as presently
conducted except for such failures to have such permits, licenses,
certifications or regulatory authorizations or approvals that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, and all such permits are valid, and in full force
and effect and there exists no default thereunder and (ii) the operations of the
Company and its Subsidiaries have been conducted in compliance with all laws,
ordinances, regulations, judgments and decrees of any Governmental Entity
applicable to the Company or such Subsidiary or by which it may be bound, except
for possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.

          3.7  Litigation. Except as set forth in the SEC Reports filed prior to
               ----------
the date of this Agreement or on Section 3.7 of the Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened, at law or in equity, or before any
Governmental Entity, against the Company or any of its Subsidiaries, and the
matters set forth on Section 3.7 of the Disclosure Schedule, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company or would reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
Except as disclosed in the SEC Reports filed prior to the date of this Agreement
or on Section 3.7 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree.

          3.8  Certain Approvals.  The Company Board has taken any and all
               -----------------
necessary and appropriate action to approve the transactions contemplated by
this Agreement.

                                      -5-

<PAGE>

          3.9  Employee Benefit Plans.
               ----------------------

               (a)  Section 3.9 of the Disclosure Schedule includes a list of
all material employee benefit plans and programs providing benefits to any
employee or former employee of the Company and its Subsidiaries sponsored or
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries contributes or is obligated to contribute ("Plans").
Without limiting the generality of the foregoing, the term "Plans" includes all
employee welfare benefit plans within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA"), and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.

               (b)  With respect to each Plan, the Company has made available to
Purchaser a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the United States Internal
Revenue Service (the "IRS"), if any.

               (c)  The Company and each of its Subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Internal Revenue Code of 1986, as amended, including the Treasury Regulations
thereunder (the "Code") and all laws and regulations applicable to the Plans.
With respect to each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"),(i) such Plan is a
Qualified Plan within the meaning of Section 401(a) of the Code, (ii) such
Qualified Plans are within the remedial amendment period and (iii) the Company
will submit such Qualified Plans to the IRS for a favorable determination letter
within the remedial amendment period.

               (d)  All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under generally
accepted accounting principles.

               (e)  No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under

                                      -6-

<PAGE>

common control, within the meaning of Section 4063 of ERISA and which is subject
to Title IV of ERISA (a "Multiple Employer Plan").

                 (f)  There does not now exist, nor do any circumstances exist
that could result in, any material liability under (i) Title IV of ERISA, (ii)
Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv) the
continuation coverage requirements of section 601 et seq. of ERISA and Section
4980B of the Code, or (v) corresponding or similar provisions of foreign laws or
regulations, other than a liability that arises solely out of, or relates solely
to, the Plans, that would be a liability of the Company or any of its
Subsidiaries following the Effective Time. Without limiting the generality of
the foregoing, none of the Company, its Subsidiaries nor any ERISA Affiliate of
the Company or any of its Subsidiaries has engaged in any transaction described
in Section 4069 or Section 4204 or 4212 of ERISA. An "ERISA Affiliate" means any
entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the Company or any of its Subsidiaries, or that is a member of the same
"controlled group" as the Company or any of its Subsidiaries, pursuant to
Section 4001(a)(14) of ERISA.

          3.10.  Taxes.
                 -----

                 (a)  The Company and each of its Subsidiaries has timely
filed all federal, state, local and foreign income Tax Returns (as hereinafter
defined) required to be filed by it in all jurisdictions in which it is required
to do so, and all other Tax Returns required to be filed by it, and such Tax
Returns are true and complete, and the Company and each of its Subsidiaries has
paid or caused to be paid all Taxes (as hereinafter defined) shown due on such
Tax Returns and has made adequate provision in the Company's financial
statements for payment of all Taxes that are not payable as of the date hereof
or have not been paid, in respect of all taxable periods or portions thereof
ending on or before the date hereof, except where the failure to so file or pay
or make adequate provision would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. All Tax Returns for the Company in
respect of all years not barred by the statute of limitations have heretofore
been made available by the Company to Purchaser. There are no outstanding
Agreements, waivers or requests for waivers extending the statutory period of
limitation applicable to any Tax Return of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries (i) has been a
member of a group filing consolidated returns for federal income tax purposes
(except for the group of which the Company is the common parent), (ii) is a
party to or has any liability pursuant to a Tax sharing or Tax indemnity
agreement or any other agreement of a similar nature that remains in effect or
(iii) has any liability for the Taxes of any person (other than any of the
Company or its Subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. No claim has ever been made by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that such person is or may be subject to taxation by such jurisdiction.
None of the Company or its Subsidiaries will be required to include any item of
income in, or exclude any

                                      -7-

<PAGE>

item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date under
Code (S) 481(c) (or any corresponding or similar provision of state, local or
foreign income Tax law), (ii) "closing agreement" as described in Code (S) 7121
(or any corresponding or similar provision of state, local or foreign income Tax
law) or (iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Code Section 1502. None of the Company or its
Subsidiaries is a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Code (S) 280G (or any
corresponding provision of state, local or foreign income Tax law).

                 (b)  For purposes of this Agreement, the term "Taxes" means all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.

          3.11.  Environmental Matters.
                 ---------------------

          Except for such matters that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company
(other than the representation with respect to the matters described in
paragraph (c) below, which is made without any Material Adverse Effect
qualification):

                 (a)  with respect to the Business, the Company and its
Subsidiaries have complied and are in compliance with all Environmental and
Safety Requirements;

                 (b)  without limiting the generality of the foregoing, the
Company and its Subsidiaries have obtained and complied with, and are in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation of
their facilities and the operation of the Business and all such permits,
licenses and authorizations may be relied upon for the lawful operation of the
Business and such facilities on and after the Closing without transfer,
reissuance or other governmental action;

                 (c)  neither the Company nor any Subsidiary has received any
written or oral notice, report or other information regarding any actual or
alleged violation of Environmental and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial

                                      -8-

<PAGE>

or corrective obligations, relating to the Business or its past or current
facilities and arising under Environmental and Safety Requirements;

                 (d)  none of the following exists at any property or facility
owned or operated by the Company or any Subsidiary in connection with the
Business: (i) underground storage tanks; (ii) asbestos-containing material in
any form or condition; (iii) materials or equipment containing polychlorinated
biphenyls; or (iv) landfills, surface impoundments, or disposal areas;

                 (e)  with respect to the Business, neither the Company nor any
Subsidiary has  treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental and Safety Requirements;

                 (f)  no facts, events or conditions relating to the past or
present facilities, properties or operations of the Company, any Subsidiary, or
any of their respective affiliates or predecessors the Business will prevent,
hinder or limit continued compliance by the Business with Environmental and
Safety Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements, or give rise to
any other liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage;

                 (g)  neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental and Safety
Requirements;

                 (h)  with respect to the Business, neither the Company nor any
Subsidiary has, either expressly or by operation of law, assumed or undertaken
any liability, including without limitation any obligation for corrective or
remedial action, of any other person relating to Environmental and Safety
Requirements; and

                                      -9-

<PAGE>

                 (i)  for purposes of this Agreement, "Environmental and Safety
Requirements" shall mean all federal, state, local and foreign statutes,
regulations, ordinances and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, as such of the foregoing are enacted or in
effect, prior to, on, or after the Closing Date.

          3.12.  Absence of Certain Changes.  Except as disclosed in the SEC
                 --------------------------
Reports, since July 3, 1999, through the date of this Agreement the Company (a)
has conducted its business only in the ordinary course consistent with past
practice and (b) has not:

                 (a)  incurred any indebtedness for borrowed money, except
borrowings from banks (or other financial institutions) necessary to meet
ordinary course working capital requirements and to finance ordinary course
capital expenditures;

                 (b)  mortgaged, pledged or subjected to any Lien, any asset or
related group of assets having a net book value in excess of $500,000;

                 (c)  sold, leased, assigned or transferred any tangible asset
or related group of assets having a net book value in excess of $500,000 except
for the sale of inventory and obsolete or used machinery and equipment in the
ordinary course of business consistent with past practice;

                 (d)  sold, leased, assigned or transferred any interest in real
estate having a net book value in excess of $500,000;

                 (e)  sold, licensed, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets
having a fair market value in excess of $500,000 individually or in the
aggregate;

                 (f)  waived or relinquished any right or claim or related group
of rights or claims except any such item which the Company believes has a fair
value of less than $500,000 individually or in the aggregate;

                 (g)  (x) issued or sold any of its Common Stock or other equity
securities or any warrants, options or other rights to acquire its Common Stock
or other securities of the Company except for the issuance of Common Stock upon
exercise of Options outstanding

                                     -10-

<PAGE>

as of July 3, 1999, or (y) purchased or redeemed or agreed to purchase or redeem
any Common Stock or other equity securities;

                 (h)  made or entered into binding commitment for any capital
expenditures or related group of capital expenditures in excess of $2,500,000;

                 (i)  modified or amended in any material manner or terminated
any Material Contract (as hereinafter defined) other than the termination of any
such contract by its terms;

                 (j)  granted any increase in the base compensation of, or made
any other material change in the employments terms for, any of its directors,
officers, and employees other than normal periodic increases or changes
reflecting or based upon changed responsibilities or duties made in the ordinary
course of business consistent with past practice or changes made pursuant to any
collective bargaining agreements or existing contracts;

                 (k)  adopted, modified, or terminated any bonus, profit-
sharing, incentive, severance or other plan or contract for the benefit of any
of its directors, officers, and employees, other than for changes which do not
materially increase the aggregate cost of such plan or contract or which are
required by law or a collective bargaining agreement; or

                 (l)  declared or paid any dividend or other distribution with
respect to the Common Stock.

          3.13.  Brokers. None of the Company, any of its Subsidiaries, or any
                 -------
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.

          3.14.  Material Contracts.  Except as set forth on Section 3.14 of the
                 ------------------
Disclosure Schedule or filed as exhibits to the SEC Reports, neither the Company
nor any of its Subsidiaries is a party to any:  (i)  collective bargaining
agreement or contract with any labor union; (ii) bonus, pension, profit sharing,
retirement or other form of deferred compensation plan; (iii) stock purchase,
stock option, stock appreciation or similar plan; (iv) contract for the
employment of any officer, individual employee or other person on a full-time or
consulting basis involving an annual compensation commitment by the Company or a
Subsidiary in excess of $200,000; (v) agreement or indenture relating to the
borrowing of money in excess of $1,000,000 or to mortgaging, pledging or
otherwise placing a Lien (other than a Permitted Lien (as defined herein)) on
any material portion of the Company's assets; (vi) guaranty of any obligation
for borrowed money in excess of $1,000,000; (vii) lease or agreement under which
it is lessee of, or holds or operates any personal property owned by any other
party, for which the annual rental exceeds $250,000, (viii) contract or group of
related contracts with the same party for the

                                     -11-

<PAGE>

purchase of inventories, supplies or services, under which the undelivered
balance of such inventories, supplies or services has a selling price in excess
of $1,000,000; (ix) contract or group of related contracts with the same party
for the sale of products or services under which the undelivered balance of such
products or services has a sales price in excess of $1,000,000; (x) agreement
pertaining to Intellectual Property (as hereinafter defined) including, license
agreements or similar arrangements; or (xi) contract which prohibits or limits
the Company or a Subsidiary from freely engaging in business in the United
States or anywhere else in the world (all such contracts and agreements,
"Material Contracts"). The Company has provided or made available to Purchaser
(i) true and complete copies of all written Material Contracts, or (ii) with
respect to such Material Contracts that have not been reduced to writing, a
written description thereof, each of which is listed on Section 3.14 of the
Disclosure Schedule. Neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any such Material Contract, except for those defaults which
would not reasonably be likely, either individually or in the aggregate, to have
a Material Adverse Effect on the Company; and there has not occurred any event
that, with the lapse of time or the giving of notice or both, would constitute
such a default by the Company or any of its Subsidiaries or, to the knowledge of
the Company, by any other party thereto. For purposes of this Agreement,
"Permitted Liens" shall mean (i) Liens for Taxes (other than those pursuant to
Section 412 of the Code) or governmental assessments, charges or claims, the
payment of which is not yet due, or for Taxes, the validity of which are being
contested in good faith by appropriate proceedings; (ii) statutory Liens
incurred in the ordinary course of business for sums not yet due or being
contested in good faith; (iii) Liens relating to deposits made in the ordinary
course of business; and (iv) Liens which do not individually or in the aggregate
materially interfere with or materially impair the conduct of the Business as it
is currently being conducted, or the value, marketability, use or ownership of
the asset to which it attaches.

          3.15.  Issuance of Shares.  Upon receipt of the Board of Directors and
                 ------------------
shareholder approval as contemplated by Section 5.8, the Preferred Shares and
the Conversion Shares will be duly authorized and, upon issuance in accordance
with the terms of this Agreement or upon conversion of the Preferred Shares, as
applicable, the Preferred Shares and the Conversion Shares will be validly
issued, fully paid and non-assessable, and free from all taxes, liens and
charges with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of securityholders of the Company (other than any
such rights created by the Purchaser).

          3.16.  Intellectual Property.
                 ---------------------

                 (a)  Section 3.16 of the Disclosure Schedule contains a
complete and accurate list of all (i) patented or registered Intellectual
Property (as hereinafter defined) owned or filed by the Company or any
Subsidiary, (ii) pending patent applications and applications for registration
of other Intellectual Property filed by or on behalf of the Company or any
Subsidiary, (iii) material unregistered trade names, corporate names, or
Internet domain names owned or

                                     -12-

<PAGE>

used by the Company or any Subsidiary, (iv) material unregistered trademarks,
service marks, copyrights and mask works owned or used by the Company or any
Subsidiary, (v) all computer software owned and/or used by the Company or any of
its Subsidiaries (other than mass-marketed software with a license fee of less
than $10,000) that is material to the Business, and (vi) all material licenses
or similar agreements or arrangements pertaining to Intellectual Property to
which the Company or its Subsidiaries is a party, either as licensee or
licensor. "Intellectual Property" means (i) all patents, patent applications and
patent disclosures; all inventions (whether or not patentable and whether or not
reduced to practice); (ii) all trademarks, service marks, trade names, logos,
slogans, corporate names and Internet domain names, and all the goodwill
associated with each of the foregoing; (iii) all mask works and registrations
and applications for registry thereof; (iv) all registered and unregistered
statutory and common law copyrights; (v) all registrations, applications and
renewals for any of the foregoing; and (vi) all trade secrets, confidential
information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research information, drawings,
specifications, designs, plans, improvements, proposals, technical and computer
data, documentation and software, financial business and marketing plans,
customer and supplier lists and related information and marketing materials and
all other proprietary rights.

                 (b)  Except as set forth on Section 3.16 of the Disclosure
Schedule, (i) the Company or one of its Subsidiaries owns all right, title and
interest to, or has a valid and enforceable license to use, all Intellectual
Property necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted and free and clear of all Liens or other
encumbrances or restrictions; (ii) no claim by any other Person contesting the
validity, enforceability, use or ownership of any of the Intellectual Property
owned or used by the Company or any of its Subsidiaries (the "Company
Intellectual Property") has been made, is currently outstanding or, to the
knowledge of the Company, is threatened (including, without limitation, any
demand or request that the Company or its Subsidiaries license any rights from a
third Person); (iii) neither the Company nor its Subsidiaries have received any
notices of, nor are aware of any facts which indicate a likelihood of, any
infringement or misappropriation by, or conflict with, any third Person with
respect to the Company Intellectual Property; (iv) to the knowledge of the
Company, neither the Company nor its Subsidiaries have infringed,
misappropriated, or otherwise conflicted with any Intellectual Property or other
rights of any third Persons and neither the Company nor its Subsidiaries is
aware of any infringement, misappropriation or conflict which will occur as a
result of the continued operation of the business of the Company or its
Subsidiaries as currently conducted; (v) no loss or expiration of any of the
material Company Intellectual Property is threatened, pending or reasonably
foreseeable; (vi) the transactions contemplated by this Agreement will have no
Material Adverse Effect on the Company on the right, title and interest in and
to the Company Intellectual Property; and (vii) the Company and its Subsidiaries
have taken all necessary and desirable action to maintain and protect the
Company Intellectual Property and will continue to maintain and protect the
Company Intellectual Property to ensure that there is no effect on any of the
Company Intellectual Property that would have a Material Adverse Effect on the
Company.

                                     -13-

<PAGE>

          3.17.  Related Party Transactions. Except as set forth in Section 3.17
                 --------------------------
of the Disclosure Schedule hereto, and excluding intercompany arrangements
solely between or among the Company and any of its Subsidiaries (or solely
between or among Subsidiaries), no director, officer, partner, "affiliate" or
"associate" (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934 (the "Exchange Act")) of the Company or any of its
Subsidiaries (i) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to the Company or any of its
Subsidiaries; (ii) owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries, (3) participating in any
transaction to which the Company or any of its Subsidiaries is a party or (iii)
otherwise a party to any contract, arrangement or understanding with the Company
or any of its Subsidiaries.

          3.18.  Labor Relations and Employment.
                 ------------------------------

                 (a)  Except as set forth on Section 3.18(a) of the Disclosure
Schedule and except for matters which would not (other than in the case of
clauses (i), (ii), (iii),(iv), (vi), (vii) and (ix) of this sentence) be
reasonably likely to result in a Material Adverse Effect on the Company, (i)
there is no labor strike, dispute, slowdown, stoppage or lockout actually
pending, or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, and during the past three years there has not been any
such action; (ii) to the knowledge of the Company, no union claims to represent
the employees of the Company or any of its Subsidiaries; (iii) neither the
Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries; (iv) none of
the employees of the Company or any of its Subsidiaries is represented by any
labor organization and the Company does not have any knowledge of any current
union organizing activities among the employees of the Company or any of its
Subsidiaries, nor does any question concerning representation exist concerning
such employees; (v) the Company and its Subsidiaries are, and have at all times
been, in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation; (vi) there is no unfair labor practice charge or
complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency; (vii) there is no grievance arising out
of any collective bargaining agreement or other grievance procedure; (viii) no
charges with respect to or relating to the Company or any of its Subsidiaries
are pending

                                     -14-

<PAGE>

before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices; and (ix)
neither the Company nor any of its Subsidiaries has received notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation with respect
to or relating to the Company or any of its Subsidiaries and no such
investigation is in progress.

                 (b)  Within the past five years , there has not been (i) a
"plant closing" (as defined in the Worker Adjustment and Retraining Notification
("WARN") Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company or any
of its Subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
Subsidiaries; nor has the Company or any of its Subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of the
employees of the Company or any of its Subsidiaries has suffered an "employment
loss" (as defined in the WARN Act) since three months prior to the date of this
Agreement.

          3.19.  Year 2000. The Company has conducted an assessment, testing and
                 ---------
remediation of Year 2000 compliance issues as described in the SEC Reports.
Based on such assessment, testing and remediation, the Company believes that all
Information Technology used by the Company and its Subsidiaries are, and the
Company has no knowledge, after due inquiry, that the Information Technology
used by the Company's and its Subsidiaries' key suppliers, vendors and customers
are not, reasonably expected on a timely basis to be Year 2000 Compliant (as
defined below), except to the extent that a failure to do so would not
reasonably be expected, individually or in the aggregate, to have Material
Adverse Effect on the Company. "Year 2000 Compliant" means, with respect to the
Company's information technology, the information technology is designed to be
used prior to, during, and after the calendar Year 2000 A.D., and the
information technology used during each such time period will accurately
receive, provide and process date/time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and leap year
calculations and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data. "Information Technology" means
the Company's internal application systems, infrastructure and procedures, and
manufacturing and control processes and other computer applications.

          3.20.  Real Estate.
                 -----------

                 (a)  Owned Properties. There is no Real Property owned (the
                      ----------------
"Owned Real Property") by the Company used by the Company in the operation of
the Company's business.

                                     -15-

<PAGE>

                 (b)  Leased Properties. Section 3.20 of the Disclosure Schedule
                      -----------------
sets forth a list of all of the leases and subleases ("Leases") and each leased
and subleased parcel of real property in which the Company has a leasehold and
subleasehold interest (the "Leased Real Property"). Each of the Leases are in
full force and effect, and the Company holds a valid and existing leasehold or
subleasehold interest under each of the Leases described in Schedule 3.20. With
respect to each Lease set forth on Section 3.20 of the Disclosure Schedule: (i)
the Lease is legal, valid, binding, enforceable and in full force and effect;
(ii) the Lease will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the Closing; (iii) neither
the Company, nor, to the knowledge of the Company, any other party to the Lease,
is in breach or default, and no event has occurred which, with notice or lapse
of time, would constitute such a breach or default by the Company or permit
termination, modification or acceleration under the Lease by any other party
thereto; (iv) the Company has not, and, to the knowledge of the Company, no
third party has repudiated any provision of the Lease; (v) there are no
disputes, oral agreements, or forbearance programs in effect as to the Lease;
(vi) the Lease has not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to ICS; (vii) the
Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the Lease (except for Permitted Liens); and (viii)
the Lease is fully assignable to ICS without the necessity of any consent or the
Company shall obtain all necessary consents prior to the Closing.

                 (c)  Real Property Disclosure. Except as disclosed on Section
                      ------------------------
3.20 of the Disclosure Schedule, there is no Real Property leased or owned by
the Company used in the Company's business. The Owned Real Property and Leased
Real Property is referred to collectively herein as the "Real Property."

                 (d)  No Proceedings. There are no proceedings in eminent domain
                      --------------
or other similar proceedings pending or, to the knowledge of the Company,
threatened, affecting any portion of the Real Property (except for Permitted
Liens). There exists no writ, injunction, decree, order or judgment outstanding,
nor any litigation, pending or threatened, relating to the ownership, lease,
use, occupancy or operation by any person of the Real Property (except for
Permitted Liens).

                 (e)  Condition and Operation of Improvements. All buildings and
                      ---------------------------------------
other improvements included within the Real Property (the "Improvements") are in
good condition and repair and adequate to operate such facilities as currently
used, and there are no facts or conditions affecting any of the Improvements
which would, individually or in the aggregate, interfere with the use, occupancy
or operation thereof in a manner that would reasonably be expected to have a
Material Adverse Effect on the Company as currently used, occupied or operated
or intended to be used, occupied or operated. No Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
improvement not included in the Real Property.

                                     -16-

<PAGE>

                 (f)  Permits. All required or appropriate certificates of
                      -------
occupancy, permits, licenses, franchises, approvals and authorizations
(collectively, the "Real Property Permits") of all governmental authorities
having jurisdiction over the Real Property, the absence of which could have a
Material Adverse Effect on the Company, have been issued to the Company to
enable the Real Property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been lawfully issued
and are, as of the date hereof, in full force and effect. The Company has
delivered complete and correct copies of the Real Property Permits to Purchaser.
The Company has not received any notice from any governmental authority having
jurisdiction over the Real Property threatening a suspension, revocation,
modification or cancellation of any Real Property Permit and, to the knowledge
of the Company, there is no basis for the issuance of any such notice or the
taking of any such action.

          3.21.  Knowledge Qualification. Whenever a representation or warranty
                 -----------------------
contained herein is based on the knowledge of the Company, such representation
and warranty is made based on the actual knowledge of the officers or directors
of the Company and on the knowledge that the officers or directors of the
Company would have if it had conducted a diligent inquiry into the subject
matter of the representation or warranty.

                                   SECTION 4

                  Representations and Warranties of Purchaser

          Purchaser hereby represents and warrants to the Company as follows:

          4.1.   Organization. Purchaser is a corporation duly organized,
                 ------------
validly existing and in good standing under the laws of its jurisdiction of
organization and has the power and authority to enter into the Transaction
Documents and to carry out the transactions contemplated thereby.

          4.2.   Authorization.  It has all necessary corporate power and
                 -------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by its Board and no other corporate proceedings on the part
of it are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Purchaser, and, assuming this agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of Purchaser, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting

                                     -17-

<PAGE>

the rights of creditors generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.

          4.3  Experience.  It has experience in evaluating and investing in
               ----------
private placement transactions of securities in companies similar to the Company
so that it is capable of evaluating the merits and risks of its investment in
the Company and has the capacity to protect its own interests.

          4.4  Investment.  It is acquiring the Preferred Stock for investment
               ----------
for its own account, not as nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof.  It understands that the
Preferred Stock has not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed herein.

          4.5  Rule 144.  It acknowledges that the Preferred Stock must be held
               --------
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available.  It is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions, including (except as otherwise provided for in Rule 144(k)),
among other things, the existence of a public market for the securities, the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" and the amount of securities being
sold during any three-month period not exceeding specified limitations.

          4.6  No Public Market.  It understands that no public market now
               ----------------
exists for any of the securities issued by the Company and that it is uncertain
whether a public market will ever exist.

          4.7  Access to Data.  It has had an opportunity to discuss the
               --------------
Company's business, management and financial affairs with the Company's
management and has had the opportunity to inspect the Company's facilities. It
understands that such discussions, as well as any written information issued by
the Company, were intended to describe the aspects of the Company's business and
prospects which it believes to be material but were not necessarily a thorough
or exhaustive description. Nothing contained in this Section 4.7 shall be
construed as a limitation of any of the representations and warranties contained
in Section 3.

          4.8  Brokers or Finders.  The Purchaser has not incurred, and will not
               ------------------
incur, directly or indirectly, as a result of any action taken by the Purchaser,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Transaction Documents.

                                      -18-
<PAGE>

                                   SECTION 5

                      Conditions to Closing of Purchaser

          The obligation of the Purchaser at the Closing to purchase  the
Preferred Stock is, at the option of the Purchaser, subject to the fulfillment
of the following conditions:

          5.1  Representations and Warranties Correct.  The representations and
               --------------------------------------
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.  The Purchaser
shall have received a certificate signed on behalf of the Company, by an
authorized officer of the Company, to the effect set forth in this paragraph.

          5.2  Covenants.  All covenants, agreements and conditions contained in
               ---------
the Transaction Documents to be performed or complied with by the Company on or
prior to the Closing Date shall have been performed or complied with.  The
Purchaser shall have received a certificate signed on behalf of the Company, by
an authorized officer of the Company, to the effect set forth in this paragraph.

          5.3  Filing of Articles of Incorporation.  The Articles of
               -----------------------------------
Incorporation shall have been filed with the Secretary of the Commonwealth of
Pennsylvania.

          5.4  Ancillary Agreements.  The Company and the required number of
               --------------------
signatories to the Registration Agreement shall have executed and delivered to
the Purchaser the Amended Registration Agreement. The Company and the required
number of signatories to the Stockholders Agreement shall have executed and
delivered to the Purchaser the Amended Stockholders Agreement. The Company shall
have executed and delivered to the Purchaser the Confidentiality Agreement.

          5.5  Delivery of Preferred Shares.  The Company shall have delivered
               ----------------------------
to the Purchaser duly executed certificates representing such number of
Preferred Shares as being purchased by Purchaser hereunder.

          5.6  Opinion of Company Counsel.  The Company shall have delivered to
               --------------------------
the Purchaser an opinion of its counsel containing the opinions set forth in

Exhibit E attached hereto, and otherwise in a form reasonably acceptable to the
---------
Purchaser.

          5.7  Addendum to Purchase Agreement.  That certain Addendum "I"
               ------------------------------
Supplemental Provisions to Purchase Agreement - Goods (the "Purchase Addendum")
between the Company and the Purchaser shall have been executed and delivered by
the Company to the

                                      -19-
<PAGE>

Purchaser.

          5.8  Board and Shareholder Approval.  This Agreement, the Articles of
               ------------------------------
Incorporation, the Amended Registration Agreement, the Amended Shareholders
Agreement and the Purchase Addendum shall have been approved by the Company's
Board of Directors and the Articles of Amendment shall have been approved by the
Company's shareholders, in each case in accordance with applicable provisions of
the BCL, the Articles of Incorporation, the Company's By-laws and applicable
agreements.

          5.9  Good Standing Certificate.  The Purchaser shall have received a
               -------------------------
good standing certificate with respect to the Company from the Secretary of the
Commonwealth of Pennsylvania.

                                   SECTION 6

                       Conditions to Closing of Company

          The Company's obligation to sell and issue the Preferred Stock at the
Closing Date is, at the option of the Company, subject to the fulfillment as of
the Closing Date of the following conditions:

          6.1  Representations and Warranties Correct.  The representations and
               --------------------------------------
warranties made by the Purchaser in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.

          6.2  Filing of Articles of Incorporation.  The Articles of
               -----------------------------------
Incorporation shall have been filed with the Pennsylvania Department of State.

          6.3  Ancillary Agreements.  The Purchaser shall have executed and
               --------------------
delivered to the Company the Amended Stockholders Agreement, the Amended
Registration Agreement and the Confidentiality Agreement.

          6.4  Delivery of Purchase Price. The Purchaser shall have delivered to
               --------------------------
the Company  funds in the total amount of Thirteen Million Four Hundred Sixty
Six Thousand Six Hundred Eighty Dollars ($13,466,680), in payment of the
Purchase Price, which may be evidenced by a check in such amount payable to the
Company or by wire transfer of such amount to the Company's bank account.

          6.5  Addendum to Purchase Agreement.  That Purchase Addendum shall
               ------------------------------
have been executed and delivered by the Purchaser to the Company.

                                      -20-
<PAGE>

          6.6  Board and Shareholder Approval.  This Agreement, the Articles of
               ------------------------------
Incorporation, the Amended Registration Agreement, the Amended Shareholders
Agreement and the Purchase Addendum shall have been approved by the Company's
Board of Directors and the Articles of Amendment shall have been approved by the
Company's shareholders, in each case in accordance with applicable provisions of
the BCL, the Articles of Incorporation, the Company's By-laws and applicable
agreements.

                                   SECTION 7

                     Affirmative Covenants of the Company

          The Company hereby covenants and agrees as follows:

          7.1  Financial Information.  At any time that the Company is not
               ---------------------
subject to the periodic reporting requirements of Section 13(a) or 15(d) of the
Exchange Act, as long as Purchaser retains at least 25% of the Preferred Stock
purchased hereunder (or a corresponding amount of Conversion Shares), the
Company will mail to the Purchaser:

               (a) Within 90 days after the end of each fiscal year, a
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and
consolidated statements of changes in financial position of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles, consistently applied, in reasonable detail and
audited by independent public accountants selected by the Company.

               (b) Within 45 days after the end of each fiscal quarter, an
unaudited consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of such fiscal quarter, and unaudited consolidated statements
of income and consolidated statements of changes in financial position of the
Company and its subsidiaries, if any, for such quarter, prepared in accordance
with generally accepted accounting principles, consistently applied (not
including any accompanying notes), subject to changes resulting from year-end
audit adjustments.

               (c) Within 30 days after the end of each month, an unaudited
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of each such month, and unaudited consolidated statements of operations
of the Company and consolidated statements of changes in financial position, for
such month, prepared in accordance with generally accepted accounting
principles, consistently applied (not including any accompanying notes), subject
to changes resulting from year-end audit adjustments.

               (d) Within 30 days after the end of each fiscal year, an annual
budget

                                      -21-
<PAGE>

for the ensuing fiscal year.

          7.2  Shareholder and Commission Reports.  At any time that the Company
               ----------------------------------
is subject to the periodic reporting requirements of Section 13(a) or 15(d) of
the Exchange Act, as long as Purchaser retains at least 25% of the Preferred
Stock purchased hereunder (or a corresponding amount of Conversion Shares), the
Company will deliver to the Purchaser copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
shareholders or filed with or supplied to any securities exchange or pursuant to
the requirements of such exchange or, as the case may be, the SEC pursuant to
the 1933 Act or the Exchange Act.

                                   SECTION 8

      Restrictions on Transferability of Securities; Registration Rights

          8.1  Restrictions on Transfer.  The Preferred Stock and the Conversion
               ------------------------
Shares will be subject to the restrictions on transfers set forth in Section 8
hereof.  The Purchaser will cause any proposed transferee of the securities held
by the Purchaser to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 8.

          8.2  Restrictive Legend.  The Preferred Stock shall be (unless
               ------------------
otherwise permitted by the provisions of Section 8.3 below) stamped or otherwise
imprinted with a legend in substantially the following form (in addition to any
legend required under applicable state securities laws):

          THIS PREFERRED STOCK AND THE SHARES INTO WHICH IT MAY BE CONVERTED
          HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
          THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD OR TRANSFERRED IN THE
          ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
          COPIES OF THE PURCHASE AGREEMENT DATED DECEMBER 23, 1999, COVERING THE
          PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE
          OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
          THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
          OFFICE OF THE CORPORATION.

          8.3  Notice of Proposed Transfers.  The Purchaser by its acceptance of
               ----------------------------
the Preferred Stock agrees to comply in all respects with the provisions of this
Section 8.3.  Prior to

                                      -22-
<PAGE>

any proposed transfer of the Preferred Stock or Conversion Shares, unless there
is in effect a registration statement under the Securities Act covering the
proposed transfer, the Purchaser shall give written notice to the Company of its
intention to effect such transfer. Such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail to evidence
compliance with securities laws, and shall be accompanied (except in
transactions in compliance with Rule 144) by either (i) a written opinion of the
in-house counsel of the Purchaser or other legal counsel who shall be reasonably
satisfactory to the Company addressed to the Company and reasonably satisfactory
in form and substance to the Company's counsel, to the effect that the proposed
transfer of the Preferred Stock or the Conversion Shares may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the SEC
to the effect that the distribution of such securities without registration will
not result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the Purchaser shall be entitled to transfer such
Preferred Stock or the Conversion Shares in accordance with the terms of the
notice delivered by the Purchaser to the Company. The certificate evidencing the
Preferred Stock or the Conversion Shares, as applicable, transferred as above
provided shall bear the appropriate restrictive legend set forth in Section 8.2
above, except that such certificate shall not bear such restrictive legend if in
the opinion of counsel for the Company such legend is not required in order to
establish compliance with any provisions of the Securities Act.

          8.4  Required Registration and Notice.  The holder of the Preferred
               --------------------------------
Stock and the Conversion Shares (the Preferred Stock and the Conversion Shares
being collectively referred to as the "Registrable Shares") will be entitled to
the registration rights set forth in the Amended Registration Agreement.

                                   SECTION 9

                                 Miscellaneous

          9.1  Governing Law.  This Agreement shall be governed in all respects
               -------------
by the internal laws of the State of Pennsylvania.

          9.2  Counterparts; Telecopied Signatures.  This Agreement and any of
               -----------------------------------
the Transaction Documents may be executed in counterparts, each of which shall
be deemed an original, and all of which together shall constitute one
instrument.  The execution signatures of any party pursuant to this Agreement
and any of the Transaction Documents may be delivered by telecopy, and any
execution signature so delivered shall have the same legal force and effect as
the delivery of an ink execution signature.  At the request of any other party,
each party delivering execution signatures via telecopier will promptly provide
original ink execution signatures following the date hereof.

          9.3  Termination.  This Agreement may be terminated and the
               -----------
transactions

                                      -23-
<PAGE>

contemplated hereby may be abandoned by either party upon written notice to the
other party if approval of this Agreement and the transactions contemplated
thereby by the Board of Directors or shareholders of the Company is not obtained
by January 31, 1999. In the event of the termination of this Agreement pursuant
to this Section 9.3, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party or its directors,
officers or shareholders, other than the provisions of Section 9.8 hereof, which
shall survive any such termination. Nothing contained in this Section 9.3 shall
relieve any party from liability for any breach of any covenant of this
Agreement or any breach of warranty or any misrepresentation.

          9.4  Survival.  The representations, warranties, covenants and
               --------
agreements made herein shall survive any investigation made by the Purchaser and
the Closing for a period of one year following the Closing Date, except for
Article VII hereof, which shall survive the Closing and shall expire only in
accordance with its terms.

          9.5  Successors and Assigns.  Except as otherwise provided herein, the
               ----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of the Purchaser to purchase the Preferred
Stock shall not be assignable without the consent of the Company, which consent
shall not be unreasonably withheld; and provided further that the Company may
not assign its rights hereunder.

          9.6  Entire Agreement; Amendment.  This Agreement and the other
               ---------------------------
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement and the other documents delivered pursuant hereto at the
Closing, nor any term hereof or thereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.

          9.7  Notices, etc.  All notices and other communications required or
               -------------
permitted hereunder shall be in writing and shall be delivered personally, by
overnight courier, or by messenger, addressed to the other party at the address
set forth below, or at such other address as such party shall furnish to the
other in writing in accordance with this Section.

                                      -24-
<PAGE>

          If to Company:      Integrated Circuit Systems, Inc.
                              23435 Boulevard of the Generals
                              P.O. Box 968
                              Valley Forge, PA 19482
                              Attention:     Hock E. Tan
                              Telecopier:    610-630-3385

             with a copy to:  Pepper Hamilton LLP
                              3000 Two Logan Square
                              18/th/ and Arch Streets
                              Philadelphia, PA  19103-2799
                              Attention:  Robert Friedel, Esq.
                              Telecopier:  (215) 981-4750

          If to Purchaser:    Intel Corporation
                              2200 Mission College Blvd.
                              Santa, Clara, CA 95052
                              Attention:  Jose Blanc
                              Telecopier:     (408) 765-6038

             with a copy to:  Gibson, Dunn & Crutcher LLP
                              333 South Grand Avenue
                              Los Angeles, CA  90071
                              Attention:  Brette S. Simon, Esq.
                              Telecopier:  (213) 229-7520

          Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given upon actual receipt of
delivery or refusal of delivery by the intended recipient.

          9.8  Expenses.  The Company and the Purchaser shall each bear its own
               --------
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby; except that the Company will reimburse the
Purchaser all out-of-pocket fees and expenses, including attorneys' and
accountants' fees, whether incurred prior to, on or after the date hereof, in
connection with the consummation of all transactions contemplated by this
Agreement, up to a maximum of all such fees and expenses of $20,000.

          9.9  Severability.  In the event that any provision of this Agreement
               ------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.

                                      -25-
<PAGE>

          9.10 Titles and Subtitles.  The titles and subtitles used in this
               --------------------
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.

          IN WITNESS WHEREOF, the parties have duly executed this Agreement
under seal as of the day and year first above mentioned.

                              INTEGRATED CIRCUIT SYSTEMS, INC.

                              BY: /S/ HOCK E. TAN
                                 ------------------------------------
                                 Title: President and cheif executive
                                        officer

                              INTEL CORPORATION

                              BY: /S/ Arvind Sodhni
                                 -------------------------------------
                                 Title: Vice President and Treasurer

                                      -26-

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