Document:

Exhibit 10.1

                        MICROCHIP TECHNOLOGY INCORPORATED
                       1997 NONSTATUTORY STOCK OPTION PLAN

                       AS AMENDED THROUGH AUGUST 16, 2002

                                    ARTICLE I

     1.1. PURPOSES OF THE PLAN. The purposes of this Nonstatutory Stock Option
Plan are:

          *    to attract and retain the best available personnel for positions
               of substantial responsibility;

          *    to provide additional incentive to Employees and Consultants, and

          *    to promote the success of the Company's business.

          Options granted under the Plan will be Nonstatutory Stock Options.

     1.2. DEFINITIONS. As used herein, the following definitions shall apply:

          (a) "ADMINISTRATOR" means the Board or the Employee Committee as shall
     be administering the Plan, in accordance with Section 1.4 of the Plan.

          (b) "APPLICABLE LAWS" means the requirements relating to the
     administration of stock option plans under U.S. state corporate laws, U.S.
     federal and state securities laws, the Code, any stock exchange or
     quotation system on which the Common Stock is listed or quoted and the
     applicable laws of any foreign country or jurisdiction where Options are,
     or will be, granted under the Plan.

          (c) "BOARD" means the Board of Directors of the Company.

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

          (e) "COMMON STOCK" means the common stock, par value $0.001 per share,
     of the Company.

          (f) "COMPANY" means Microchip Technology Incorporated, a Delaware
     corporation.

          (g) "CONSULTANT" means any person, including an advisor but not
     including Directors, engaged by the Company or a Parent or Subsidiary to
     render services to such entity.

          (h) "DIRECTOR" means a member of the Board.

          (i) "DISABILITY" means total or permanent disability as defined in
     Code Section 22(e)(3).

          (j) "EMPLOYEE" means any person, excluding Officers and Directors,
     employed by the Company or any Parent or Subsidiary of the Company. A
     Service Provider shall not cease to be an Employee in the case of (i) any
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     leave of absence approved by the Company or (ii) transfers between
     locations of the Company or between the Company, its Parent, any
     Subsidiary, or any successor. Neither service as a Director nor payment of
     a director's fee by the Company shall be sufficient to constitute
     "employment" by the Company.

          (k) "EMPLOYEE COMMITTEE" means a committee of Directors appointed by
     the Board in accordance with Section 1.4 of the Plan.

          (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
     amended.

          (m) "FAIR MARKET VALUE" means, as of any date, the value of Common
     Stock determined as follows:

               (i)  If the Common Stock is listed on any established stock
                    exchange or a national market system, including without
                    limitation the Nasdaq National Market or The Nasdaq SmallCap
                    Market of The Nasdaq Stock Market, its Fair Market Value
                    shall be the closing sales price for such stock (or the
                    closing bid, if no sales were reported) as quoted on such
                    exchange or system for the market trading day on the date of
                    determination or the closing sales price on the last market
                    trading day prior to the date of determination if there is
                    no reported closing sales price on the date of
                    determination, as reported in THE WALL STREET JOURNAL or
                    such other source as the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized
                    securities dealer but selling prices are not reported, the
                    Fair Market Value of a Share of Common Stock shall be the
                    mean between the high bid and low asked prices for the
                    Common Stock on the last market trading day prior to the day
                    of determination, as reported in THE WALL STREET JOURNAL or
                    such other source as the Administrator deems reliable;

              (iii) In the absence of an established market for the Common
                    Stock, the Fair Market Value shall be determined in good
                    faith by the Administrator.

          (n) "NOTICE OF GRANT" means a written or electronic notice evidencing
     certain terms and conditions of an individual Option grant. The Notice of
     Grant is part of the Option Agreement.

          (o) "OFFICER" means a person who is an officer of the Company within
     the meaning of Section 16 of the Exchange Act and the rules and regulations
     promulgated thereunder or who is otherwise considered an "officer" under
     applicable NASD or stock exchange rules.

          (p) "OPTION" means a nonstatutory stock option granted pursuant to the
     Plan, that is not intended to qualify as an incentive stock option within
     the meaning of Code Section 422 and the regulations promulgated thereunder.

          (q) "OPTION AGREEMENT" means an agreement between the Company and an
     Optionee evidencing the terms and conditions of an individual Option grant.
     The Option Agreement is subject to the terms and conditions of the Plan.

          (r) "OPTIONED STOCK" means the Common Stock subject to an Option.

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          (s) "OPTIONEE" means the holder of an outstanding Option granted under
     the Plan.

          (t) "PARENT" means "parent corporation," whether now or hereafter
     existing, as defined in Code Section 424(e).

          (u) "PLAN" means this 1997 Nonstatutory Stock Option Plan.

          (v) "SERVICE PROVIDER" means an Employee or Consultant.

          (w) "SHARE" means a share of the Common Stock, as adjusted in
     accordance with Section 1.3(b), 2.2 and 2.3 of the Plan.

          (x) "SUBSIDIARY" means a "subsidiary corporation," whether now or
     hereafter existing, as defined in Code Section 424(f).

     1.3. STOCK SUBJECT TO THE PLAN.

          (a) RESERVATION OF SHARES; UNPURCHASED SHARES. Subject to the
     provisions of Sections 1.3(b), 2.2 and 2.3 of the Plan, the maximum
     aggregate number of Shares which may be optioned and sold under the Plan is
     30,087,500 Shares. The Shares may be authorized, but unissued, or
     reacquired Common Stock including shares repurchased by the Company on the
     open market.

          If an Option expires or becomes unexercisable without having been
     exercised in full, the unpurchased Shares which were subject thereto shall
     become available for future grant or sale under the Plan (unless the Plan
     has terminated).

          If Shares otherwise issuable under the Plan are withheld by the
     Company in satisfaction of the withholding taxes incurred in connection
     with the exercise of an outstanding Option, then the number of Shares
     available for issuance shall be reduced by the gross number of Shares for
     which the Option is exercised, and not by the net number of Shares actually
     issued to the Optionee.

          (b) ADJUSTMENTS FOR ORGANIC CHANGES. Should any change be made to the
     Common Stock issuable under the Plan by reason of any stock split, stock
     dividend, recapitalization, combination of shares, exchange of shares or
     other change affecting the outstanding Common Stock as a class without the
     Company's receipt of consideration, then appropriate adjustments shall be
     made to (i) the maximum number and/or class of securities issuable under
     the Plan, and (ii) the number and/or class of securities and price per
     share in effect under each Option outstanding under the Plan. Such
     adjustments to the outstanding Options are to be effected in a manner which
     shall preclude the enlargement or dilution of rights and benefits under
     such Options. The adjustments determined by the Board shall be final,
     binding and conclusive.

     1.4. ADMINISTRATION OF THE PLAN.

          (a) ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
     Board. The Board, however, may at any time appoint a committee (the
     "Employee Committee") of one or more persons who are members of the Board
     and delegate to such Employee Committee the power, in whole or in part, to

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     administer the Plan. Unless otherwise required by law, decisions among
     members of an Administrator shall be by majority vote.

          (b) TERM ON COMMITTEE. Members of the Employee Committee shall serve
     for such period of time as the Board may determine and shall be subject to
     removal by the Board at any time. The Board at any time may terminate the
     functions of the Employee Committee and reassume all powers and authority
     previously delegated to the Employee Committee.

          (c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
     Plan, the Administrator shall have the authority, in its discretion:

               (i)  to determine the Fair Market Value of the Common Stock;

               (ii) to select the Service Providers to whom Options may be
                    granted hereunder;

              (iii) to determine whether and to what extent Options are granted
                    hereunder;

               (iv) to determine the number of shares of Common Stock to be
                    covered by each Option granted hereunder;

               (v)  to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
                    the terms of the Plan, of any award granted hereunder. Such
                    terms and conditions include, but are not limited to, the
                    exercise price, the time or times when Options may be
                    exercised (which may be based on performance criteria), any
                    vesting acceleration or waiver of forfeiture restrictions,
                    and any restriction or limitation regarding any Option or
                    the shares of Common Stock relating thereto, based in each
                    case on such factors as the Administrator, in its sole
                    discretion, shall determine;

              (vii) to reduce the exercise price of any Option to the then
                    current Fair Market Value if the Fair Market Value of the
                    Common Stock covered by such Option shall have declined
                    since the date the Option was granted;

             (viii) to construe and interpret the terms of the Plan and awards
                    granted pursuant to the Plan;

               (ix) to prescribe, amend and rescind rules and regulations
                    relating to the Plan, including rules and regulations
                    relating to sub-plans established for the purpose of
                    qualifying for preferred tax treatment under foreign tax
                    laws;

               (x)  to modify or amend each Option (subject to Section 3.1(b) of
                    the Plan), including the discretionary authority to extend
                    the post-termination exercisability period of Options longer
                    than is otherwise provided for in the Plan as provided in
                    Section 2.1(g);

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               (xi) to authorize any person to execute on behalf of the Company
                    any instrument required to effect the grant of an Option or
                    previously granted by the Administrator;

              (xii) to determine the terms and restrictions applicable to
                    Options;

             (xiii) to allow Optionees to satisfy withholding tax obligations
                    as provided in Section 3.2; and

              (xiv) to make all other determinations deemed necessary or
                    advisable for administering the Plan.

          (d) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
     determinations and interpretations shall be final and binding on all
     Optionees and any other holders of Options.

          (e) INDEMNIFICATION. In addition to such other rights of
     indemnification as they may have, the members of each Administrator shall
     be indemnified and held harmless by the Company to the extent permitted
     under applicable law, for, from and against all costs and expenses
     reasonably incurred by them in connection with any action, legal proceeding
     to which any such member thereof may be party, by reason of any action
     taken or failed to be taken, under or in connection with the Plan or any
     rights granted thereunder, and against all amounts paid by them in
     settlement thereof or paid by them in satisfaction of a judgment of any
     such action, suit or proceeding, except a judgment based upon a finding of
     bad faith.

     1.5. ELIGIBLE PERSONS UNDER THE PLAN. The persons eligible to participate
in the Plan are Employees and Consultants.

                                   ARTICLE II
                                  OPTION GRANTS

     2.1. TERMS AND CONDITIONS OF OPTIONS.

          (a) GENERAL. Options granted to eligible persons pursuant to the Plan
     shall be authorized by action of the Administrator. Each granted Option
     shall be evidenced by one or more instruments in the form approved by the
     Administrator; provided, however, that each such instrument shall comply
     with the terms and conditions specified below.

          (b) OPTION PRICE. The Option price per Share shall be fixed by the
     Administrator and shall in no event be less than one hundred percent (100%)
     of the Fair Market Value of such Common Stock on the grant date.

          (c) PAYMENT OF OPTION PRICE. The Option price shall become immediately
     due upon exercise of the Option and shall be payable in one of the
     following alternative forms specified below:

               (i)  full payment in cash or check drawn to the Company's order;

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               (ii) full payment through a broker-dealer sale and remittance
                    procedure pursuant to which the Optionee (A) shall provide
                    irrevocable written instructions to a designated brokerage
                    firm to effect the immediate sale of the purchased Shares
                    and remit to the Company, out of the sale proceeds available
                    on the settlement date, sufficient funds to cover the
                    aggregate Option price payable for the purchased Shares plus
                    all applicable Federal and State income and employment taxes
                    required to be withheld by the Company in connection with
                    such purchase and (B) shall provide written directives to
                    the Company to deliver the certificates for the purchased
                    Shares directly to such brokerage firm in order to complete
                    the sale transaction.

                    For purposes of this Section 2.1(c), the Exercise Date shall
                    be the date on which written notice of the Option exercise
                    is delivered to the Company. Except to the extent the sale
                    and remittance procedure is utilized in connection with the
                    exercise of the Option, payment of the Option price for the
                    purchased Shares must accompany such notice.

          (d) TERM AND EXERCISE OF OPTIONS. Each Option granted under the Plan
     shall be exercisable at any time or times and during such period as is
     determined by the Administrator and set forth in the instrument evidencing
     the grant. No such Option, however, shall have a maximum term in excess of
     ten (10) years from the grant date. During the lifetime of the Optionee,
     the Option shall be exercisable only by the Optionee and shall not be
     assignable or transferable by the Optionee other than by will or by the
     laws of descent and distribution following the Optionee's death.

          (e) TERMINATION OF SERVICE. The following provisions shall govern the
     exercise period applicable to any outstanding Options held by the Optionee
     at the time of cessation of Service or death:

               (i)  Should an Optionee cease Service for any reason (including
                    Disability but not including death) while holding one or
                    more outstanding Options under the Plan, then none of those
                    Options shall (except to the extent otherwise provided
                    pursuant to Section 2.1(f) below) remain exercisable for
                    more than a ninety (90) day period (or such shorter or
                    longer period determined by the Administrator and set forth
                    in the instrument evidencing the grant, but not to exceed
                    twelve (12) months) measured from the date of such cessation
                    of Service.

               (ii) Any Option held by the Optionee under the Plan and
                    exercisable in whole or in part on the date of said
                    Optionee's death may be subsequently exercised by the
                    personal representative of the Optionee's estate or by the
                    person or persons to whom the Option is transferred pursuant
                    to the Optionee's will or in accordance with the laws of
                    descent and distribution. With respect to Options granted on
                    or after April 1, 2002, all such unvested Options shall
                    immediately vest upon the Optionee's death if such
                    Optionee's death occurs while Optionee is in Service to the
                    Company. Any exercise following Optionee's death while

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                    Optionee is in Service to the Company, however, must occur
                    prior to the earlier of six months following the date of
                    Optionee's death or the specified expiration date of the
                    Option term. Upon the occurrence of the earlier event, the
                    Option shall terminate and cease to be outstanding.

              (iii) Under no circumstances, however, shall any such Option be
                    exercisable after the specified expiration date on the
                    Option term.

               (iv) During the applicable post-Service exercise period, the
                    Option shall not be exercisable for more than the number of
                    shares (if any) in which the Optionee is vested at the time
                    of Optionee's cessation of Service (less any Option Shares
                    subsequently purchased by the Optionee prior to death). Upon
                    the expiration of the limited post-Service exercise period
                    or (if earlier) upon the specified expiration date of the
                    Option term, each such Option shall terminate and cease to
                    be outstanding with respect to any vested shares for which
                    the Option has not otherwise been exercised. However, each
                    outstanding Option shall immediately terminate and cease to
                    be outstanding, at the time of the Optionee's cessation of
                    Service, with respect to any shares for which the Option is
                    not otherwise at that time exercisable or in which the
                    Optionee is not otherwise at that time vested.

               (v)  Should (A) the Optionee's service be terminated for
                    misconduct (including, but not limited to, any act of
                    dishonesty, willful misconduct, fraud or embezzlement) or
                    (B) the Optionee make any unauthorized use or disclosure of
                    confidential information or trade secrets of the Company or
                    any Parent or Subsidiary, then in any such event all
                    outstanding Options held by the Optionee under the Plan
                    shall terminate immediately and cease to be outstanding.

          (f) DISCRETION TO ACCELERATE VESTING. The Administrator shall have
     complete discretion, exercisable either at the time the Option is granted
     or at any time while the Option remains outstanding, to permit one or more
     Options held by the Optionee under this Plan to be exercised, during the
     limited post-Service exercise period applicable under Section 2.1(e) above,
     not only with respect to the number of vested shares of Common Stock for
     which each such Option is exercisable at the time of the Optionee's
     cessation of Service but also with respect to one or more subsequent
     installments of vested shares for which the Option would otherwise have
     become exercisable had such cessation of Service not occurred.

          (g) DISCRETION TO EXTEND EXERCISE PERIOD. The Administrator shall also
     have full power and authority to extend the period of time for which the
     Option is to remain exercisable following the Optionee's cessation of
     Service or death from the limited period in effect under Section 2.1(e)
     above to such greater period of time as the Administrator shall deem
     appropriate. In no event, however, shall such Option be exercisable after
     the specified expiration date of the Option term.

          (h) DEFINITIONS. For purposes of the foregoing provisions of this
     Section 2.1 and for all other purposes under the Plan:

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               (i)  The Optionee shall (except to the extent otherwise
                    specifically provided in the applicable Option Agreement) be
                    deemed to remain in SERVICE for so long as such individual
                    renders services on a periodic basis to the Company (or any
                    Parent or Subsidiary) in the capacity of an Employee or a
                    Consultant.

               (ii) The Optionee shall be considered to be an Employee for so
                    long as Optionee remains in the employ of the Company or one
                    or more Parent or Subsidiary corporations, subject to the
                    control and direction of the employer entity not only as to
                    the work to be performed but also as to the manner and
                    method of performance.

          (i) STOCKHOLDER RIGHTS. An Optionee shall have no stockholder rights
     with respect to any Shares covered by the Option until such individual
     shall have exercised the Option and paid the Option price for the purchased
     Shares.

     2.2. CORPORATE TRANSACTIONS.

          (a) DEFINITION. For purposes of this Plan, any of the following
     stockholder approved transactions to which the Company is a party shall be
     considered a "Corporate Transaction":

               (i)  a merger or consolidation in which the Company is not the
                    surviving entity, except for a transaction the principal
                    purpose of which is to change the State in which the Company
                    is incorporated,

               (ii) the sale, transfer or other disposition of all or
                    substantially all of the assets of the Company in complete
                    liquidation or dissolution of the Company, or

              (iii) any reverse merger in which the Company is the surviving
                    entity but in which securities possessing more than fifty
                    percent (50%) of the total combined voting power of the
                    Company's outstanding securities are transferred to person
                    or persons different from those who held such securities
                    immediately prior to such merger.

          (b) ACCELERATION OF OPTION. Upon the stockholder approval of a
     Corporate Transaction, each Option which is at the time outstanding under
     the Plan shall automatically accelerate so that each such Option shall,
     immediately prior to the specified effective date for the Corporate
     Transaction, become fully exercisable with respect to the total number of
     shares of Common Stock at the time subject to such Option and may be
     exercised for all or any portion of such shares. However, an outstanding
     Option under the Plan shall not so accelerate if and to the extent: (A)
     such Option is, in connection with the Corporate Transaction, either to be
     assumed by the successor corporation or parent thereof or to be replaced
     with a comparable option to purchase shares of the capital stock of the
     successor corporation or parent thereof, (B) such Option is to be replaced
     with a cash incentive program of the successor corporation which preserves
     the option spread existing at the time of the Corporate Transaction and
     provides for subsequent payout in accordance with the same vesting schedule
     applicable to such Option, or (C) the acceleration of such Option is
     subject to other limitations imposed by the Administrator at the time of

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     the option grant. The determination of option comparability under clause
     (A) above shall be made by the Administrator, and its determination shall
     be final, binding and conclusive.

          (c) TERMINATION OF OPERATIONS. Upon the consummation of the Corporate
     Transaction, all outstanding options under the Plan shall terminate and
     cease to be outstanding, except to the extent assumed by the successor
     corporation or its parent company.

          (d) ADJUSTMENTS ON ASSUMPTION OR CONTINUATION. Each outstanding Option
     under the Plan which is assumed in connection with the Corporate
     Transaction or is otherwise to continue in effect shall be appropriately
     adjusted, immediately after such Corporate Transaction, to apply and
     pertain to the number and class of securities which would have been issued
     to the Option holder, in consummation of such Corporate Transaction, had
     such person exercised the Option immediately prior to such Corporate
     Transaction. Appropriate adjustments shall also be made to the Option price
     payable per share, provided the aggregate Option price payable for such
     securities shall remain the same. In addition, the class and number of
     securities available for issuance under the Plan following the consummation
     of the Corporate Transaction shall be appropriately adjusted.

          (e) DISCRETION TO ACCELERATE. The Administrator shall have the
     discretion, exercisable either in advance of any actually-anticipated
     Corporate Transaction or at the time of an actual Corporate Transaction, to
     provide (upon such terms as it may deem appropriate) for the automatic
     acceleration of one or more outstanding Options granted under the Plan
     which are assumed or replaced in the Corporate Transaction and do not
     otherwise accelerate at the time, in the event the Optionee's Service
     should subsequently terminate within a designated period following the
     effective date of such Corporate Transaction.

          (f) PLAN NOT TO AFFECT COMPANY. The grant of Options under the Plan
     shall in no way affect the right of the Company to adjust, reclassify,
     reorganize or otherwise change its capital or business structure or to
     merge, consolidate, dissolve, liquidate or sell or transfer all or any part
     of its business or assets.

     2.3. CHANGE IN CONTROL.

          (a) DEFINITION. For purposes of this Plan, a Change in Control shall
     be deemed to occur in the event:

               (i)  any person or related group of persons (other than the
                    Company or a person that directly or indirectly controls, is
                    controlled by, or is under common control with, the Company)
                    directly or indirectly acquires beneficial ownership (within
                    the meaning of Rule 13d-3 of the 1934 Act) of securities
                    possessing more than fifty percent (50%) of the total
                    combined voting power of the Company's outstanding
                    securities pursuant to a tender or exchange offer made
                    directly to the Company's stockholders which the Board does
                    not recommend such stockholders to accept; or

               (ii) there is a change in the composition of the Board over a
                    period of twenty-four (24) consecutive months or less such
                    that a majority of the Board members (rounded up to the next
                    whole number) ceases, by reason of one or more proxy
                    contests for the election of Board members, to be comprised
                    of individuals who either (A) have been Board members
                    continuously since the beginning of such period or (B) have
                    been elected or nominated for election as Board members

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                    during such period by at least a majority of the Board
                    members described in clause (A) who were still in office at
                    the time such election or nomination was approved by the
                    Board.

          (b) DISCRETION TO ACCELERATE. The Administrator shall have the
     discretionary authority, exercisable either in advance of any actually
     anticipated Change in Control or at the time of an actual Change in
     Control, to provide for the automatic acceleration of one or more
     outstanding Options under the Plan upon the occurrence of the Change in
     Control. The Administrator shall also have full power and authority to
     condition any such option acceleration upon the subsequent termination of
     the Optionee's Service within a specified period following the Change in
     Control.

          (c) EXERCISE RIGHTS. Any Options accelerated in connection with the
     Change in Control shall remain fully exercisable until the expiration or
     sooner termination of the Option term.

                                   ARTICLE III
                                  MISCELLANEOUS

     3.1. AMENDMENT AND TERMINATION OF THE PLAN.

          (a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
     suspend or terminate the Plan.

          (b) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
     suspension or termination of the Plan shall impair the rights of any
     Optionee, unless mutually agreed otherwise between the Optionee and the
     Administrator, which agreement must be in writing and signed by the
     Optionee and the Company. Termination of the Plan shall not affect the
     Administrator's ability to exercise the powers granted to it hereunder with
     respect to Options granted under the Plan prior to the date of such
     termination.

     3.2. TAX WITHHOLDING.

          (a) GENERAL. The Company's obligation to deliver Shares of Common
     Stock upon the exercise of Options for such Shares under the Plan shall be
     subject to the satisfaction of all applicable Federal, State and local
     income tax and employment tax withholding requirements.

          (b) SHARES TO PAY FOR WITHHOLDING. An Administrator may, in its
     discretion and in accordance with the provisions of this Section 3.2(b) and
     such supplemental rules as the Administrator may from time to time adopt,
     provide any or all holders of Options under the Plan with the right to use
     Shares in satisfaction of all or part of the Federal, State and local
     income tax and employment tax liabilities incurred by such Optionees in
     connection with the exercise of their Options (the "Taxes"). Such right may
     be provided to any such Optionee in either or both of the following
     formats:

               (i)  STOCK WITHHOLDING. The Optionee may be provided with the
                    election to have the Company withhold, from the Shares
                    otherwise issuable upon the exercise of such Option, a
                    portion of these Shares with an aggregate Fair Market Value
                    equal to the percentage of the applicable Taxes (not to
                    exceed one hundred percent (100%)) designated by the holder.

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               (ii) STOCK DELIVERY. The Administrator may, in its discretion,
                    provide the Optionee with the election to deliver to the
                    Company, at the time the Option is exercised, one or more
                    Shares previously acquired by such individual (other than
                    pursuant to the transaction triggering the Taxes) with an
                    aggregate Fair Market Value equal to the percentage of the
                    Taxes incurred in connection with such Option exercise (not
                    to exceed one hundred percent (100%)) designated by the
                    Optionee.

     3.3. EFFECTIVE DATE AND TERM OF PLAN. The Plan is effective as of November
10, 1997 (the "Effective Date"). It shall continue in effect for ten (10) years,
unless sooner terminated under Section 3.1 of the Plan.

     3.4. USE OF PROCEEDS. Any cash proceeds received by the Company from the
sale of Shares pursuant to Option grants under the Plan shall be used for
general corporate purposes.

     3.5. CONDITIONS UPON ISSUANCE OF SHARES.

          (a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
     exercise of an Option unless the exercise of such Option and the issuance
     and delivery of such Shares shall comply with Applicable Laws and shall be
     further subject to the approval of counsel for the Company with respect to
     such compliance.

          (b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
     Option, the Company may require the person exercising such Option to
     represent and warrant at the time of any such exercise that the Shares are
     being purchased only for investment and without any present intention to
     sell or distribute such Shares if, in the opinion of counsel for the
     Company, such a representation is required.

          (c) SECURITIES REGISTRATION. No shares of Common Stock or other assets
     shall be issued or delivered under this Plan unless and until there shall
     have been compliance with all applicable requirements of Federal and State
     securities laws, including the filing and effectiveness of the Form S-8
     registration statement for the shares of Common Stock issuable under the
     Plan, and all applicable listing requirements of any securities exchange on
     which stock of the same class is then listed.

          (d) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
     obtain authority from any regulatory body having jurisdiction, which
     authority is deemed by the Company's counsel to be necessary to the lawful
     issuance and sale of any Shares hereunder, shall relieve the Company of any
     liability in respect to the failure to issue or sell such Shares as to
     which such requisite authority shall not have been obtained.

     3.6. NO EMPLOYMENT/SERVICE RIGHTS. Neither the action of the Company in
establishing the Plan, nor any action taken by the Administrator hereunder, nor
any provision of the Plan shall be construed so as to grant any individual the
right to remain in the employ or service of the Company (or any Parent or

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Subsidiary) for any period of specific duration, and the Company (or any Parent
or Subsidiary retaining the services of such individual) may terminate such
individual's employment or service at any time and for any reason, with or
without cause.

     3.7. MISCELLANEOUS PROVISIONS.

          (a) ASSIGNMENT. The right to acquire Common Stock or other assets
     under the Plan may not be assigned, encumbered or otherwise transferred by
     any Optionee or other Option holder. The provisions of the Plan shall inure
     to the benefit of, and be binding upon, the Company and its successors or
     assigns, whether by Corporate Transaction or otherwise, and the Optionees,
     the legal representatives of their respective estates, their respective
     heirs or legatees and their permitted assignees.

          (b) CHOICE OF LAW. The provisions of the Plan relating to the exercise
     of options and the vesting of shares shall be governed by the laws of the
     State of Arizona, as such laws are applied to contracts entered into and
     performed in such State.

          (c) PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
     means by which the Company may issue options or warrants to acquire its
     shares of Common Stock, stock awards or issuances, or any other type of
     award or issuance. To the extent permitted by applicable law, any such
     other option, warrants, issuance, or awards may be issued by the Company
     other than pursuant to this Plan, without shareholder approval.

          EXECUTED as of the 16th day of August, 2002.

                                        MICROCHIP TECHNOLOGY INCORPORATED,
                                        a Delaware corporation

                                        By /s/ Steve Sanghi
                                           -------------------------------------
                                               Steve Sanghi

                                           Its: Chairman of the Board, President
                                                and Chief Executive Officer

Attested by:

/s/ Mary Simmons
-------------------------------------
Mary K. Simmons
Secretary

                                       12Exhibit 10.3

                        MICROCHIP TECHNOLOGY INCORPORATED

                        2001 EMPLOYEE STOCK PURCHASE PLAN

                       AS AMENDED THROUGH AUGUST 16, 2002

     The following constitute the provisions of the 2001 Employee Stock Purchase
Plan of Microchip Technology Incorporated, as amended through August 16, 2002.

     1. PURPOSE.  The purpose of the Plan is to provide employees of the Company
and one or more of its Corporate  Affiliates an opportunity  to purchase  Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an  "Employee  Stock  Purchase  Plan"
under Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed   so  as  to  extend  and  limit   participation   in  a  uniform  and
nondiscriminatory basis consistent with the requirements of Section 423.

     2. DEFINITIONS.

          (a) "ADMINISTRATOR"  shall mean the Committee  designated by the Board
to administer the Plan pursuant to Section 14.

          (b) "BOARD" shall mean the Board of Directors of the Company.

          (c)  "CHANGE  OF  CONTROL"  shall  mean the  occurrence  of any of the
following events:

               (i) a merger or other  reorganization  in which the Company  will
not be the surviving corporation (other than a reorganization effected primarily
to change the State in which the Company is incorporated); or

               (ii) the  consummation  of the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii) a  reverse  merger in which the  Company  is the  surviving
corporation  but in  which  more  than  fifty  percent  (50%)  of the  Company's
outstanding  voting stock is transferred  to a person or persons  different from
those who held the stock immediately prior to such merger.

          (d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

          (e) "COMMITTEE"  means a committee of the Board appointed by the Board
in accordance with Section 14 hereof.

          (f) "COMMON  STOCK" shall mean the common  stock of the  Company,  par
value $0.001.

          (g) "COMPANY" shall mean Microchip Technology Incorporated, a Delaware
corporation.
<PAGE>
          (h) "COMPENSATION"  shall mean the following items paid to an Eligible
Employee by the Company  and/ or one or more  Corporate  Affiliates  during such
individual's  period of participation in the Plan: (i) regular base salary,  and
(ii)  any  pre-tax  contributions  made by the  Eligible  Employees  to any Code
Section  401(k)  plan,  any Code Section 125 Plan,  any  unfunded  non-qualified
deferred compensation plan described in Sections 201(2),  301(a)(3) or 401(a)(1)
of ERISA, and (iii) all overtime payments, bonuses, commissions,  profit-sharing
distributions  and other  incentive type  payments.  There shall be excluded any
contributions  (except  401(k)  and  125  contributions)  made  on the  Eligible
Employee's behalf by the Company or Corporate Affiliate.

          (i) "CORPORATE  AFFILIATE"  shall mean any parent or subsidiary of the
Company (as defined in Section  424 of the Code)  which is  incorporated  in the
United States, including any parent or subsidiary corporation which becomes such
after the Effective Date.

          (j) "EFFECTIVE DATE" shall mean March 1, 2002.

          (k) "ELIGIBLE  EMPLOYEE" shall mean any individual who is a common law
employee of any  Participating  Company and whose customary  employment with the
Participating  Company  is at  least 20 hours  per week and more  than  five (5)
months  in  any  calendar  year.  For  purposes  of  the  Plan,  the  employment
relationship  shall be treated as continuing  intact while the  individual is on
sick leave or other leave of absence  approved by the Company.  Where the period
of leave  exceeds  90 days and the  individual's  right to  reemployment  is not
guaranteed  either by statute or in writing signed by a duly authorized  officer
of the Company,  the employment  relationship shall be deemed to have terminated
on the 91st day of such leave.

          (l) "ENTRY  DATE"  shall mean the first  Trading  Day of any  Offering
Period. An Entry Date occurs on the first Trading Day in March or September.

          (m) "ERISA"  shall mean the  Employee  Retirement  Income  Security of
1974, as amended.

          (n)  "EXERCISE  DATE"  shall mean the first  Trading  Day of March and
September.

          (o) "FAIR MARKET  VALUE"  shall mean the closing  sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system on the date of  determination,  as reported in THE WALL STREET JOURNAL
or such other source as the Board deems  reliable;  provided,  however,  that if
there is no closing sales price (or closing bid price,  if applicable)  for such
date, then the closing sales price (or closing bid price, if applicable) for the
next day for which such quotation exists.

          (p)  "OFFERING  PERIODS"  shall mean a period of time during  which an
option  granted  pursuant  to the  Plan  may be  exercised.  The  Plan  shall be
implemented by a series of Offering Periods ("Series of Offering Periods"). Each
Series of Offering  Periods shall contain four (4) Offering  Periods.  The first
Offering  Period in the Series  shall  commence  on the first  Trading Day on or
after March 1, 2002, and shall end on the first Trading Day on or after March 1,
2004 (the "Last Day of the Series").  The second  Offering  Period in the Series
shall commence on the next following  Entry Date,  shall last  approximately  18
months and shall end on the Last Day of the Series. The third Offering Period in
the  Series  shall  commence  on the  next  following  Entry  Date,  shall  last
approximately 12 months and shall end on the Last Day of the Series.  The fourth
Offering  Period in the Series shall commence on the next following  Entry Date,

                                       2
<PAGE>
shall  last  approximately  six (6)  months and shall end on the Last Day of the
Series.  A new Series of Offering  Periods shall commence on the Last Day of the
Series.  The duration and timing of Offering  Periods may be changed pursuant to
Section 19 of this Plan.

          (q) "PARTICIPATING  COMPANY" shall mean the Company and such Corporate
Affiliates  as may be  designated  from time to time by the Board to extend  the
benefits of the Plan to their Eligible Employees.

          (r) "PLAN" shall mean this Employee Stock Purchase Plan.

          (s)  "PURCHASE  PERIOD"  shall  mean the  approximately  six (6) month
period  commencing on one Exercise Date and ending with the next Exercise  Date,
except that the first Purchase  Period of any Offering  Period shall commence on
the first Entry Date and end with the next Exercise Date.

          (t)  "PURCHASE  PRICE"  shall mean 85% of the Fair  Market  Value of a
share of Common  Stock on the Entry Date or on the Exercise  Date,  whichever is
lower;  provided,  however,  that the  Purchase  Price  may be  adjusted  by the
Administrator pursuant to Section 20.

          (u) "TRADING DAY" shall mean a day on which national  stock  exchanges
and the Nasdaq System are open for trading.

     3. ELIGIBILITY.

          (a)  GENERALLY.  Any Eligible  Employee on a given Entry Date shall be
eligible to participate in the Plan.

          (b)   LIMITATIONS.   Any  provisions  of  the  Plan  to  the  contrary
notwithstanding,  no Eligible Employee shall be granted an option under the Plan
(i) to the extent that,  immediately after the grant, such Eligible Employee (or
any other  person  whose stock would be  attributed  to such  Eligible  Employee
pursuant to Section  424(d) of the Code) would own capital  stock of the Company
and/or hold  outstanding  options to purchase such stock possessing five percent
(5%) or more of the total  combined  voting power or value of all classes of the
capital  stock of the Company or of any  Subsidiary,  or (ii) to the extent that
his or her rights to purchase  stock under all employee  stock purchase plans of
the  Company and its  subsidiaries  accrues at a rate which  exceeds  $25,000.00
worth of stock  (determined  at the fair market  value of the shares at the time
such  option  is  granted)  for each  calendar  year in  which  such  option  is
outstanding at any time.

     4. OFFERING PERIODS.  The Plan shall be implemented by a series of Offering
Periods  ("Series of Offering  Periods").  Each Series of Offering Periods shall
contain four (4) Offering Periods. The first Offering Period in the Series shall
commence on the first  Trading  Day on or after March 1, 2002,  and shall end on
the first  Trading Day on or after March 1, 2004 (the "Last Day of the Series").
The second  Offering  Period in the Series shall  commence on the next following
Entry Date, shall last  approximately 18 months and shall end on the Last Day of
the Series.  The third Offering  Period in the Series shall commence on the next
following Entry Date,  shall last  approximately  12 months and shall end on the
Last Day of the Series.  The fourth Offering Period in the Series shall commence
on the next following Entry Date,  shall last  approximately  six (6) months and

                                       3
<PAGE>
shall end on the Last Day of the Series.  A new Series of Offering Periods shall
commence  on the Last Day of the  Series.  The  duration  and timing of Offering
Periods may be changed pursuant to Section 19 of this Plan.

     5. PARTICIPATION. An Eligible Employee may become a participant in the Plan
by completing a subscription  agreement  authorizing  payroll  deductions in the
form of  EXHIBIT A to this  Plan and  filing it with the  Company's  stock  plan
administrator,  on a date  determined by such  administrator,  which shall be no
later than five (5) Trading Days prior to the applicable Entry Date.

     6. PAYROLL DEDUCTIONS.

          (a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering  Period  in  any  multiple  of  one-percent  (1%),  but  not  exceeding
ten-percent  (10%) of the  Compensation  which he or she  receives  during  each
Purchase Period;  provided,  however,  that should a payday occur on an Exercise
Date, a participant  shall have the payroll  deductions made on such day applied
to his or her account under the new Offering Period or Purchase  Period,  as the
case may be. A participant's  subscription  agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.

          (b) Payroll  deductions for a participant  shall commence on the first
payday following the Entry Date and shall end on the last payday in the Offering
Period to which such  authorization is applicable,  unless sooner  terminated by
the  participant as provided in Section 10 hereof.  All payroll  deductions made
for a  participant  shall be credited  to his or her account  under the Plan and
shall be withheld in whole  percentages  only.  A  participant  may not make any
additional payments into such account.

          (c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may decrease (but not increase) the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new  subscription  agreement  authorizing a change in payroll
deduction  rate.  No more than one (1) such  reduction  shall be  allowed in any
Purchase  Period. A participant may only increase the rate of his or her payroll
deductions  beginning with the next Offering  Period which lasts 24 months.  The
change in rate shall be effective as soon as administratively practicable.

          (d) Notwithstanding  the foregoing,  to the extent necessary to comply
with Section  423(b)(8) of the Code and Section  3(b)  hereof,  a  participant's
payroll  deductions  may be  decreased to zero percent (0%) at any time during a
Purchase  Period.  Payroll  deductions  shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period  which  is  scheduled  to end  in the  following  calendar  year,  unless
terminated by the participant as provided in Section 10 hereof.

          (e) At the time the option is  exercised,  in whole or in part,  or at
the time some or all of the  Company's  Common  Stock  issued  under the Plan is
disposed of, the  participant  must make  adequate  provision  for the Company's
federal, state, or other tax withholding  obligations,  if any, which arise upon
the exercise of the option or the  disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the  participant's

                                       4
<PAGE>
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax  deductions or benefits  attributable  to sale or early  disposition  of
Common Stock by the Eligible Employee.

     7.  GRANT OF  OPTION.  On the  Entry  Date of each  Offering  Period,  each
Eligible  Employee  participating  in such  Offering  Period shall be granted an
option to purchase on each  Exercise  Date during such  Offering  Period (at the
applicable  Purchase  Price) up to a number of  shares of the  Company's  Common
Stock  determined  by  dividing  such  Eligible  Employee's  payroll  deductions
accumulated  prior to such  Exercise  Date  and  retained  in the  Participant's
account as of the Exercise Date by the applicable Purchase Price;  provided that
in no event shall an  Eligible  Employee be  permitted  to purchase  during each
Purchase Period more than 7,500(1) shares of the Company's Common Stock (subject
to any  adjustment  pursuant to Section  19),  and  provided  further  that such
purchase  shall be subject to the  limitations  set forth in Sections 3(b) and 6
hereof.  The Eligible Employee may accept the grant of such option by turning in
a completed  Subscription  Agreement (attached hereto as EXHIBIT A) to the stock
plan administrator,  on a date determined by such administrator,  which shall be
no later than five (5)  Trading  Days prior to an  applicable  Entry  Date.  The
Administrator  may, for future Offering  Periods,  increase or decrease,  in its
absolute discretion,  the maximum number of shares of the Company's Common Stock
an Eligible  Employee may purchase  during each Purchase Period of such Offering
Period.  Exercise  of the option  shall  occur as  provided in Section 8 hereof,
unless the participant has withdrawn  pursuant to Section 10 hereof.  The option
shall expire on the last day of the Offering Period.

     8. EXERCISE OF OPTION.

          (a)  Unless a  participant  withdraws  from the  Plan as  provided  in
Section  10  hereof,  his or her  option  for the  purchase  of shares  shall be
exercised  automatically  on the Exercise  Date,  and the maximum number of full
shares  subject  to  option  shall  be  purchased  for such  participant  at the
applicable  Purchase Price with the accumulated payroll deductions in his or her
account.  No  fractional  shares  shall be  purchased;  any  payroll  deductions
accumulated  in a  participant's  account which are not sufficient to purchase a
full share  shall be retained in the  participant's  account for the  subsequent
Purchase  Period or  Offering  Period,  subject  to  earlier  withdrawal  by the
participant  as  provided  in Section 10 hereof.  Any other funds left over in a
participant's  account  after  the  Exercise  Date  shall  be  returned  to  the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

          (b) If the  Administrator  determines  that, on a given Exercise Date,
the number of shares  with  respect to which  options  are to be  exercised  may
exceed (i) the number of shares of Common  Stock  that were  available  for sale
under the Plan on the Entry Date of the applicable  Offering Period, or (ii) the
number of shares  available for sale under the Plan on such Exercise  Date,  the
Administrator may in its sole discretion (x) provide that the Company shall make
a pro rata  allocation  of the shares of Common Stock  available for purchase on
such Entry Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable  and as it shall determine in its sole discretion to be equitable

----------
(1)  As adjusted for a May 2002 3-for-2 stock split.

                                       5
<PAGE>
among all  participants  exercising  options to  purchase  Common  Stock on such
Exercise Date, and continue all Offering Periods then in effect,  or (y) provide
that the Company shall make a pro rata  allocation  of the shares  available for
purchase on such Entry Date or Exercise  Date,  as  applicable,  in as uniform a
manner as shall be practicable  and as it shall determine in its sole discretion
to be equitable  among all  participants  exercising  options to purchase Common
Stock on such Exercise Date,  and terminate any or all Offering  Periods then in
effect  pursuant to Section 20 hereof.  The Company may make pro rata allocation
of the shares  available  on the Entry Date of any  applicable  Offering  Period
pursuant  to  the  preceding  sentence,  notwithstanding  any  authorization  of
additional  shares for  issuance  under the Plan by the  Company's  shareholders
subsequent to such Entry Date.

     9. DELIVERY. As soon as reasonably  practicable after each Exercise Date on
which a purchase of shares  occurs,  the Company  shall  arrange the delivery to
each  participant  the shares  purchased upon exercise of his or her option in a
form determined by the Administrator.

     10. WITHDRAWAL.

          (a) At any time prior to the last five (5) Trading  Days of a Purchase
Period, a participant may withdraw from the Plan by giving written notice to the
Company in the form of EXHIBIT B to this Plan.  The  participant  shall elect to
either have (i) all of the participant's  payroll deductions  credited to his or
her  account  used to  purchase  shares  at the next  Exercise  Date or (ii) all
payroll  deductions  credited to his or her account  refunded.  In neither event
will any further payroll  deductions for the purchase of shares be made for such
Offering  Period.  If a  participant  withdraws  from an  Offering  Period,  the
participant  may not re-enroll in the Plan until the next Offering  Period which
lasts 24 months,  and payroll  deductions  shall not resume at the  beginning of
such  Offering  Period  unless the  participant  delivers  to the  Company a new
subscription agreement in a manner provided for in Section 5.

          (b) A participant's  withdrawal from an Offering Period shall not have
any effect upon his or her  eligibility to participate in any similar plan which
may hereafter be adopted by the Company.

     11.  TERMINATION OF EMPLOYMENT.  In the event a participant ceases to be an
Eligible Employee of the Company or any  Participating  Company (other than as a
result of death or Permanent  Disability),  any payroll  deductions  credited to
such  participant's  account  during  the  Offering  Period  but not yet used to
purchase  shares under the Plan shall be returned to such  participant  and such
participant's  option  shall  be  automatically   terminated.  In  the  event  a
participant ceases to be an Employee of the Company or any Participating Company
as a result of death or Permanent Disability, then such participant (or personal
representative of the estate of the deceased  participant) may elect at any time
prior to the last five (5)  Trading  Days of a  Purchase  Period  in which  such
termination occurs, to (i) have all of such participant's payroll deductions for
such Purchase  Period  refunded to the Participant or (ii) have all such payroll
deductions  used to purchase the  Company's  common  stock on the Exercise  Date
following such termination.

     12.  INTEREST.  No interest  shall  accrue on the payroll  deductions  of a
participant in the Plan.

                                       6
<PAGE>
     13. STOCK.

          (a)  Subject  to  adjustment  upon  changes in  capitalization  of the
Company as provided in Section 19 hereof,  the number of shares of the Company's
Common  Stock  which  shall be made  available  for sale under the Plan shall be
1,800,000  shares plus up to 150,000  remaining  unissued shares available as of
the Effective Date under the Company's previous ESPP;  provided,  however,  that
the shares under the Company's previous ESPP shall not be available for issuance
under the Plan to the extent that such reservation  would, in the opinion of the
Company's independent auditors,  result in a compensation expense to the Company
under either EITF 97-12 or FIN 44 and; provided, further, that in no event shall
the total number of shares available under the Plan exceed 2,450,000. (2)

          (b) Until the shares are issued (as evidenced by the appropriate entry
on the  books  of the  Company  or of a duly  authorized  transfer  agent of the
Company), a participant shall only have the rights of an unsecured creditor with
respect to such shares,  and no right to vote or receive  dividends or any other
rights as a stockholder shall exist with respect to such shares.

          (c) Shares to be  delivered to a  participant  under the Plan shall be
held in a brokerage account in street name.

     14.  ADMINISTRATION.  The Administrator shall administer the Plan and shall
have full and exclusive discretionary authority to construe, interpret and apply
the terms of the Plan, to determine  eligibility  and to adjudicate all disputed
claims filed under the Plan. Every finding,  decision and determination  made by
the  Administrator  shall,  to the full  extent  permitted  by law, be final and
binding upon all parties.

     15. DESIGNATION OF BENEFICIARY.

          (a) A participant may file a written  designation of a beneficiary who
is to receive any payroll  deductions,  if any, from the  participant's  account
under  the  Plan in the  event  of such  participant's  death  subsequent  to an
Exercise  Date on which the option is  exercised  but prior to  delivery to such
participant of such payroll  deductions.  In addition,  a participant may file a
written  designation of a beneficiary  who is to receive any payroll  deductions
from the participant's account under the Plan in the event of such participant's
death  prior to  exercise of the  option.  If a  participant  is married and the
designated  beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.

          (b) Such  designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary  validly designated under the Plan who is living at
the time of such  participant's  death,  the Company  shall deliver such payroll
deductions to the executor or administrator of the estate of the participant, or
if no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such payroll deductions to
the spouse or to any one or more dependents or relatives of the participant,  or

----------
(2)  All numbers in this Section  13(a) have been adjusted to reflect a May 2002
     3-for-2  stock  split and an  additional  500,000  shares  approved  by the
     stockholders on August 16, 2002.

                                      7
<PAGE>
if no spouse,  dependent or relative is known to the Company, then to such other
person as the Company may designate.

          (c) All beneficiary  designations  shall be in such form and manner as
the Administrator may designate from time to time.

     16. TRANSFERABILITY. Neither payroll deductions credited to a participant's
account nor any rights  with  regard to the  exercise of an option or to receive
shares  under  the Plan  may be  assigned,  transferred,  pledged  or  otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided  in Section 15 hereof) by the  participant.  Any such  attempt at
assignment,  transfer,  pledge or other  disposition  shall be  without  effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.

     17. USE OF FUNDS.  All payroll  deductions  received or held by the Company
under the Plan may be used by the Company  for any  corporate  purpose,  and the
Company  shall not be  obligated to segregate  such  payroll  deductions.  Until
shares are  issued,  participants  shall  only have the  rights of an  unsecured
creditor.

     18. REPORTS.  Individual  accounts shall be maintained for each participant
in the Plan.  Statements  of account  shall be given to  participating  Eligible
Employees at least  annually,  which  statements  shall set forth the amounts of
payroll  deductions,  the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

     19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,  DISSOLUTION,  LIQUIDATION,
MERGER OR CHANGE OF CONTROL.

          (a) CHANGES IN  CAPITALIZATION.  Subject to any required action by the
shareholders  of the  Company,  the  maximum  number of shares of the  Company's
Common Stock which shall be made  available for sale under the Plan, the maximum
number of shares each participant may purchase each Purchase Period (pursuant to
Section  7), as well as the  price per share and the  number of shares of Common
Stock  covered by each  option  under the Plan which has not yet been  exercised
shall be proportionately  adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock  dividend,  combination or  reclassification  of the Common Stock,  or any
other change in the number of shares of Common Stock effected without receipt of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without  receipt  of  consideration."  Such  adjustment  shall  be  made  by the
Administrator,  whose determination in that respect shall be final,  binding and
conclusive.  Except as expressly  provided herein, no issuance by the Company of
shares of stock of any class, or securities  convertible into shares of stock of
any class,  shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.

          (b)  CHANGE IN  CONTROL.  In the event of a Change  of  Control,  each
outstanding  option shall be assumed or an equivalent option  substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
option,  any Purchase  Periods then in progress  shall be shortened by setting a
New Exercise Date and any Offering Periods then in progress shall end on the New

                                       8
<PAGE>
Exercise  Date.  The New Exercise Date shall be before the date of the Company's
proposed Change of Control.  The Administrator  shall notify each participant in
writing,  at least 10 business  days prior to the New  Exercise  Date,  that the
Exercise Date for the participant's  option has been changed to the New Exercise
Date and that the participant's  option shall be exercised  automatically on the
New Exercise Date,  unless prior to such date the participant has withdrawn from
the Offering Period as provided in Section 10 hereof.

     20. AMENDMENT OR TERMINATION.

          (a) The  Administrator may at any time and for any reason terminate or
amend the Plan.  Except as otherwise  provided in the Plan, no such  termination
can affect options previously  granted,  provided that an Offering Period may be
terminated  by the  Administrator  on any  Exercise  Date  if the  Administrator
determines  that the  termination  of the Offering  Period or the Plan is in the
best  interests  of the  Company  and its  shareholders.  Except as  provided in
Section 19 and this Section 20 hereof,  no amendment  may make any change in any
option   theretofore   granted  which  adversely   affects  the  rights  of  any
participant.  To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain  shareholder  approval in such a manner
and to such a degree as required.

          (b) Without  shareholder  consent  and  without  regard to whether any
participant  rights may be considered  to have been  "adversely  affected,"  the
Administrator  shall be  entitled  to change  the  Offering  Periods,  limit the
frequency  and/or  number of changes in the amount  withheld  during an Offering
Period,  establish  the  exchange  ratio  applicable  to amounts  withheld  in a
currency other than U.S.  dollars,  permit payroll  withholding in excess of the
amount  designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections,  establish
reasonable  waiting and  adjustment  periods  and/or  accounting  and  crediting
procedures  to ensure that amounts  applied  toward the purchase of Common Stock
for  each  participant  properly  correspond  with  amounts  withheld  from  the
participant's  Compensation,  and establish such other limitations or procedures
as the  Administrator  determines  in its sole  discretion  advisable  which are
consistent with the Plan.

          (c) In  the  event  the  Administrator  determines  that  the  ongoing
operation  of  the  Plan  may  result  in   unfavorable   financial   accounting
consequences,  the Board may, in its discretion and, to the extent  necessary or
desirable,  modify  or amend the Plan to reduce  or  eliminate  such  accounting
consequence including, but not limited to:

               (i)  increasing  the  Purchase  Price  for  any  Offering  Period
including  an  Offering  Period  underway  at the time of the change in Purchase
Price;

               (ii)  shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and

               (iii) allocating shares.

Such modifications or amendments shall not require  stockholder  approval or the
consent of any Plan participants.

                                       9
<PAGE>
     21. NOTICES.  All notices or other  communications  by a participant to the
Company under or in  connection  with the Plan shall be deemed to have been duly
given when  received  in the form and  manner  specified  by the  Company at the
location, or by the person, designated by the Company for the receipt thereof.

     22.  CONDITIONS  UPON  ISSUANCE OF SHARES.  Shares shall not be issued with
respect to an option  unless the  exercise of such option and the  issuance  and
delivery of such  shares  pursuant  thereto  shall  comply  with all  applicable
provisions  of law,  domestic or foreign,  including,  without  limitation,  the
Securities  Act of 1933,  as amended,  the  Securities  Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder,  and the requirements
of any stock  exchange  upon which the  shares may then be listed,  and shall be
further  subject to the approval of counsel for the Company with respect to such
compliance.

          As a condition to the  exercise of an option,  the Company may require
the person  exercising  such option to represent  and warrant at the time of any
such  exercise  that the  shares are being  purchased  only for  investment  and
without  any  present  intention  to sell or  distribute  such shares if, in the
opinion of counsel for the Company,  such a representation is required by any of
the aforementioned applicable provisions of law.

     23. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company.  It shall  continue in effect  until  terminated  under  Section 20
hereof.

     24.  AUTOMATIC  TRANSFER  TO LOW  PRICE  OFFERING  PERIOD.  To  the  extent
permitted by any applicable  laws,  regulations,  or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair  Market  Value of the  Common  Stock on the Entry Date of
such Offering  Period,  then all  participants  in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their  option on such  Exercise  Date and  automatically  re-enrolled  in the
immediately following Offering Period.

                                       10

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