MICROCHIP TECHNOLOGY INCORPORATED CHANGE OF CONTROL SEVERANCE AGREEMENT

This Change of Control Severance Agreement (the “Agreement”) is made and entered into by and between ________________ (the “Employee”) and Microchip Technology Incorporated (the “Company”), effective as of ________________, 2006 (the “Effective Date”).

1.    It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein) of the Company.

2.    The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his or her employment and to motivate the Employee to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.

3.    The Board believes that it is imperative to provide the Employee with certain severance benefits upon the Employee’s termination of employment following a Change of Control. These benefits will provide the Employee with enhanced financial security and incentive and encouragement to remain with the Company notwithstanding the possibility of a Change of Control.

4.    Certain capitalized terms used in the Agreement are defined in Section 5 below.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

1.    Term of Agreement . This Agreement shall terminate upon the date that all of the obligations of the parties hereto with respect to this Agreement have been satisfied.

2.    At-Will Employment . The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law, except as may otherwise be specifically provided under the terms of any written formal employment agreement or offer letter between the Company and the Employee (an “Employment Agreement”). If the Employee’s employment terminates prior to the Change of Control Period, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or under his or her Employment Agreement if any exists in writing, or as may otherwise be available in accordance with the Company’s established employee plans.

3.    Severance Benefits.

(a)    Benefits Following Termination During Change of Control Period . Upon termination of employment for any reason other than for “Cause” (as defined herein) during the Change of Control Period the Employee shall receive the following benefit:

(i)     Equity Compensation Acceleration . One hundred percent (100%) of the Employee’s outstanding stock options, stock appreciation rights, restricted stock units and other Company equity compensation awards (the “Equity Compensation Awards”) shall immediately vest and become exercisable. Any Company stock options and stock appreciation rights shall remain exercisable following the Employee’s employment termination for the period prescribed in the respective option and stock appreciation right agreements.

(b)    Involuntary Termination Other than for Cause, Voluntary Termination for Good Reason During the Change of Control Period . If within the three-month period preceding or any time following a Change of Control (the “Change of Control Period”), (i) the Employee terminates his or her employment with the Company (or any parent or subsidiary of the Company) for “Good Reason” (as defined herein) or (ii) the Company (or any parent or subsidiary of the Company) terminates the Employee’s employment for other than “Cause” (as defined herein), and the Employee signs, and does not revoke, a standard release of claims with the Company in a form acceptable to the Company (the “Release”), then the Employee shall receive the following severance from the Company:

(i)    Severance Payment . The Employee shall be entitled to receive a lump-sum severance payment (less applicable withholding taxes) equal to one hundred percent of the Employee’s annual base salary (as in effect immediately prior to (A) the Change of Control, or (B) the Employee’s termination of employment, whichever is greater) plus   one hundred percent of the Employee’s target bonuses for which the Employee was or would have been eligible (for the fiscal year in which the Change of Control or the Employee’s termination occurs, whichever is greater.)

(ii)    Continued Employee Benefits . Company-paid health, dental, vision, and life insurance coverage at the same level of coverage as was provided to such Employee immediately prior to termination and at the same ratio of Company premium payment to Employee premium payment as was in effect immediately prior to termination (the “Company-Paid Coverage”). If such coverage included the Employee’s eligible dependents immediately prior to termination, such dependents shall also be covered at Company expense. Company-Paid Coverage shall continue until the earlier of (A) twelve months from the date of termination, or (B) the date upon which the Employee and his dependents become covered under another employer’s group health, dental, vision, long-term disability or life insurance plans that provide Employee and his dependents with comparable benefits and levels of coverage. For purposes of Title X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying event” for Employee and his or her dependents shall be the date upon which the Company-Paid Coverage terminates. Coverage in this section is dependent on the valid and timely election of continued COBRA coverage under applicable law.

(c)    Timing of Severance Payments . Except as otherwise provided herein, the severance payment to which Employee is entitled shall be paid by the Company to Employee in cash and in full, not later than ten (10) calendar days after the effective date of the Release. If the Employee should die before all amounts have been paid, such unpaid amounts shall be paid in a lump-sum payment (less any withholding taxes) to the Employee’s designated beneficiary, if living, or otherwise to the personal representative of the Employee’s estate.

(d)    Voluntary Resignation . If the Employee’s employment with the Company terminates during the Change of Control Period voluntarily by the Employee other than for Good Reason, then the Employee shall not be entitled to receive severance or other benefits except for those described in 3(a)(i) and as may then be established under the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

(e)    Termination for Cause; Termination Prior to Change of Control Period . In the event the Employee’s employment is terminated for Cause, or for any reason prior to the Change of Control Period, then the Employee shall not be entitled to receive severance and any other benefits except as may then be established under the Company’s existing written severance and benefits plans and practices or pursuant to other written agreements with the Company.

(f)    Internal Revenue Code Section 409A . Notwithstanding any other provision of this Agreement, if the Employee is a “key employee” under Code Section 409A and a delay in making any payment or providing any benefit under this Agreement is required by Code Section 409A and any Treasury Regulations, and IRS guidance thereunder, or necessary in the good faith judgment of the Company, to avoid the Employee incurring additional tax under Section 409A, such payments shall not be made until the end of six (6) months following the date of the Employee’s separation from service in accordance with Code Section 409A.

4.    Golden Parachute Excise Tax .

(a)    Parachute Payments Equal to or Greater than 3.0 x Base Amount . In the event that the benefits provided for in this agreement or otherwise payable to Employee, including vesting acceleration upon a change of control pursuant to Company equity plans or any Employment Agreement which may exist (i) constitute “parachute payments” within the meaning of Section 280G of the Code, (ii) would be subject to the excise tax imposed by Section 4999 of the Code, and (iii) the aggregate value of such parachute payments, as determined in accordance with Section 280G of the Code and the prop