MICROTUNE INC, S-1, 2000-05-05

MICROTUNE INC
S-1, 2000-05-05

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<PAGE>

As filed with the Securities and Exchange Commission on May 5, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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FORM S-1
REGISTRATION STATEMENT
Under The Securities Act of 1933

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MICROTUNE, INC.
(Exact name of Registrant as specified in its charter)

Delaware 3674 75-2665364
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Number) Identification No.)
incorporation or
organization)

Microtune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
(972) 673-1600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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Douglas J. Bartek
Chief Executive Officer
Microtune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
(972) 673-1600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies to:
Christopher J. Ozburn, Esq. John E. Hayes III, Esq.
Wilson Sonsini Goodrich & Rosati Brobeck Phleger & Harrison LLP
Professional Corporation 301 Congress Ave., Suite 1200
8911 Capital of Texas Highway Austin, Texas 78701
Westech 360, Suite 3350 (512) 477-5495
Austin, Texas 78759
(512) 338-5400

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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
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<S> <C> <C>
Common stock ($0.001 par value)........... $57,500,000 $15,180
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</TABLE>
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(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act.

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. These securities may not be sold until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+preliminary prospectus is not an offer to sell nor does it seek an offer to +
+buy these securities in any jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated May 5, 2000.

[Microtune Logo]

Microtune, Inc.

Common Stock

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This is an initial public offering of shares of common stock of Microtune,
Inc. All of the shares of common stock are being sold by Microtune.

At the request of Microtune, the underwriters have reserved, at the initial
public offering price, up to shares of common stock for sale to
entities and individuals identified by Microtune through a directed share
program.

Prior to this offering, there has been no public market for the common stock.
It is currently estimated that the initial public offering price per share will
be between and . Application has been made for quotation of
the common stock on the Nasdaq National Market under the symbol "TUNE."

See "Risk Factors" beginning on page 6 to read about factors you should
consider before buying shares of the common stock.

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Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed on the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

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<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial public offering price................................ $ $
Underwriting discount........................................ $ $
Proceeds, before expenses, to Microtune...................... $ $
</TABLE>

To the extent that the underwriters sell more than shares of common
stock, the underwriters have the option to purchase up to an additional
shares from Microtune at the initial public offering price less the
underwriting discount.

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The underwriters expect to deliver the shares against payment in New York,
New York on , 2000.

Goldman, Sachs & Co.
Chase H&Q
SG Cowen
Bear, Stearns & Co. Inc.

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Prospectus dated , 2000.
<PAGE>

Inside Front Cover

A caption centered on top of page --"Microtune, Inc."
A caption centered immediately below -- "broadband access for the new century"

[A picture that spans the top part of the page, left to right, of a partial
globe with the following caption superimposed on the left hand side of picture
- -- "Microtune is a leading radio frequency, or RF, silicon and systems company,
providing high-performance RF tuners and transceivers to the broadband
communications markets. Using proprietary technologies and advanced design
methodologies, we have designed and developed RF modules and integrated
circuits, or ICs, for a variety of broadband access devices, including cable
modems, PC/TV's, set-top boxes and digital TVs."

Moving left to right in the center of the page, a diagram of the delivery of
radio frequencies from cable and terrestrial broadcasts through our IC and
module tuners to access devices in the set-top box, cable modem, digital TV,
cable telephony, PC/TV and automotive markets.

A caption immediately below the diagram, centered on the page (in italics) --
"Our RF tuners are "gateway" devices between broadband communications systems
and a variety of access devices. Video, audio, data and/or voice are
transmitted through the communications systems to these access devices."
<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding us and the common stock being sold in this offering and
our consolidated financial statements and notes thereto appearing elsewhere in
this prospectus. Except as set forth in the consolidated financial statements
or as otherwise specified in this prospectus, all information in this
prospectus:

. assumes no exercise of the underwriters' over-allotment option;

. gives effect to the conversion of 11,148,598 outstanding shares of
preferred stock into 22,297,196 shares of common stock upon the closing
of this offering;

. reflects the exercise of warrants to purchase 2,212,342 shares of common
stock at a nominal exercise price; and

. reflects the two-for-one common stock split effected January 18, 2000
and our reincorporation into Delaware prior to the completion of this
offering.

Technical terms used in this prospectus are explained in the glossary beginning
on page G-1.

Microtune, Inc.

We are a leading radio frequency, or RF, silicon and systems company,
providing high-performance RF tuners and transceivers to broadband
communications markets. Using proprietary technologies and advanced design
methodologies, we have designed and developed radio frequency integrated
circuits, or RFICs, and RF modules for a variety of broadband access devices,
including cable modems, PC/TVs, which are multimedia personal computers with
broadband reception capabilities, set-top boxes and digital TVs. With at least
one RF tuner required in each of these access devices, RF tuners are the
gateway for reception of video, audio, data and/or voice over existing RF
broadband communications infrastructures, such as cable and terrestrial. Our
transceivers enable interactivity by permitting bi-directional communications.
Our latest RFIC products offer a high level of integration by including more
functions within the tuner through the use of increased silicon content,
resulting in significant benefits with respect to cost, performance, size,
reliability and manufacturability. Our RF module products provide a complete,
fully-tested and production-ready RF system, eliminating a customer's need for
RF design and manufacturing expertise.

In recent years, there has been dramatic growth in new broadband digital
entertainment, information and communications services, such as high-speed
Internet access, web-enabled TV, digital and high-definition TV and cable
telephony. These new services have fueled the growth in sales of broadband
access devices. We target existing high-growth broadband communications
markets, such as the cable modem and PC/TV markets, and emerging markets, such
as the digital TV, set-top box and cable telephony markets. In addition, we
sell our RF solutions to existing high-volume markets including the automotive
market. Every automotive radio, cable modem, PC/TV, set-top box, VCR and TV
requires at least one RF tuner. Increasingly, some of these access devices
include multiple tuners for enhanced or additional services. Based on market
reports from Cahner's Instat Group and Kinetic Strategies, the worldwide demand
for RF tuners in these markets could reach 310 million units by 2001.

Broadband digital entertainment, information and communications services pose
a number of RF performance challenges which are not adequately addressed by the
use of typical low-cost RF tuners currently used in analog devices, such as TVs
and VCRs. Typical high performance tuners also have been prohibitively
expensive for RF broadband applications. As a result, there is a demand for a
class of cost-effective RF tuners capable of high performance. In addition, we
believe the increasing

1
<PAGE>

pressures to provide even higher performance at lower cost, combined with the
desirable traits of increased reliability, manufacturability and reduced size,
will drive the market toward RF tuner solutions with increasing levels of
silicon content. These market demands have created a significant opportunity
for our RF solutions.

Our RF solutions provide our customers with the following benefits:

. High Performance Tuning. Our tuner solutions facilitate more efficient
use of the RF spectrum, reliable reception of digital content,
concurrent reception of analog and digital broadcasts, full utilization
of available bandwidth and compatibility with current industry
standards;

. IC Tuner Leadership. Our MicroTuner is the first single-chip RF tuner
that incorporates all of the active elements of an RF tuner, which
results in significant benefits with respect to cost, performance, size,
reliability and manufacturability;

. Unique Combination of RF Silicon and Systems Expertise. We possess both
leading RF silicon and systems expertise which allows us to achieve
increasing levels of integration and provides a complete solution to our
customers;

. Broad Suite of RF Tuner Solutions. We believe the breadth of our product
portfolio allows us to be a sole source provider for our customers and
allows them to migrate easily, at their own pace, to our silicon-only
implementations;

. Worldwide Sales, Support and Engineering Infrastructure. We offer our
products worldwide and provide our customers with global support; and

. Captive Module Manufacturing. We are able to leverage our manufacturing
facilities to deliver high quality RF solutions to our customers, as
evidenced by our QS-9000 and ISO 9002 certified facility.

Our goal is to be the leading provider of RF silicon and systems solutions to
our targeted broadband communications markets by:

. strengthening and broadening our broadband RF technology leadership,
including expanding our existing patent portfolio of 14 granted U.S. and
foreign patents and 21 pending U.S. and foreign patent applications
(which together include over 1000 individual claims);

. targeting high growth broadband RF markets;

. developing and expanding relationships with industry leaders; and

. migrating existing customers to more highly integrated RF solutions.

Corporate Information

In January 2000, we combined with Temic Telefunken Hochfrequenztechnik GmbH
(now called Microtune GmbH) and its affiliated companies, by acquiring HMTF
Acquisition (Bermuda), Ltd., a Bermuda corporation, which owned Temic and its
affiliated companies. In connection with this combination, we acquired
manufacturing facilities in Manila, Philippines, a design center in Ingolstadt,
Germany and a distribution facility in Huntsville, Alabama. Since January 2000,
we have been operating as one company.

We are a Delaware corporation with our principal executive offices located at
2540 East Plano Parkway, Suite 188, Plano, Texas 75074. Our telephone number is
(972) 673-1600. Our fiscal year ends on December 31. We maintain a world wide
website at www.microtune.com. The reference to our world wide website does not
constitute incorporation by reference of the information contained at this
site. Microtune, MicroTuner and the Microtune logo are our trademarks. All
other brand names and trademarks appearing in this prospectus are the property
of their respective holders.

2
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Shares offered by Microtune......... shares
Shares to be outstanding after the
offering........................... shares
Proposed Nasdaq National Market
Symbol............................. "TUNE"
Use of proceeds..................... For general corporate purposes and other
operating expenses including capital
expenditures and research and development
expenses.
</TABLE>

The total number of shares to be outstanding after the offering is based on
information as of March 31, 2000. The total number of shares to be outstanding
excludes 7,790,116 shares of common stock issuable upon the exercise of options
outstanding at a weighted average exercise price of $1.37 per share.

3
<PAGE>

SUMMARY FINANCIAL DATA
(in thousands, except per share data)

The following table presents a summary of our consolidated statement of
operations information:

. on an actual basis for the years ended December 31, 1997, 1998 and 1999
and the three months ended March 31, 1999 and 2000; and

. on a pro forma basis for the year ended December 31, 1999 to reflect our
combination with Temic in January 2000 as if the combination had
occurred on January 1, 1999.

<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
------------------------------------ -----------------
Pro Forma
1997 1998 1999(3) 1999(1) 1999(1) 2000(1)
------- ------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues............ $ -- $ -- $ -- $ 46,759 $ -- $ 13,896
Loss from operations.... (2,814) (4,059) (9,090) (13,265) (1,757) (17,720)
Net loss................ (2,406) (3,487) (8,508) (10,770) (1,658) (16,760)
Loss per common
share(2):
Basic and diluted loss
per common share..... $ (0.36) $ (0.52) $ (1.12) $ (1.42) $ (0.24) $ (2.06)
Weighted average
shares, basic and
diluted.............. 6,707 6,716 7,565 7,565 6,948 8,139
Pro forma, as adjusted
loss per common
share(3):
Basic and diluted loss
per common share..... $ (0.34) $ (0.50)
Weighted average
shares basic and
diluted.............. 32,074 32,649
</TABLE>
- --------
(1) The actual and pro forma results of operations for the year ended December
31, 1999 and the results of operations for the three months ended March 31,
1999 and 2000 include significant noncash charges related to stock option
compensation. The pro forma results of operations for the year ended
December 31, 1999 and the actual results of operations for the three months
ended March 31, 2000 also include significant noncash charges related to
our combination with Temic. See "Selected Financial Data."
(2) In accordance with generally accepted accounting principles, loss per
common share does not reflect the automatic conversion of 11,148,598
outstanding shares of preferred stock into 22,297,196 shares of common
stock or the automatic exercise of warrants to purchase 2,212,342 shares of
common stock at a nominal exercise price, both of which will occur upon the
closing of this offering, because the effects are antidilutive.
(3) Pro forma as adjusted reflects the automatic conversion of 11,148,598
outstanding shares of preferred stock into 22,297,196 shares of common
stock and the automatic exercise of warrants to purchase 2,212,342 shares
of common stock at a nominal exercise price, both of which will occur upon
the closing of this offering, as if such issuances occurred at the
beginning of each period presented.

4
<PAGE>

SUMMARY FINANCIAL DATA (CONTINUED)
(in thousands, except per share data)

The following table presents a summary of our consolidated balance sheet
information as of March 31, 2000:

. on an actual basis, which does not reflect the automatic conversion of
11,148,598 outstanding shares of preferred stock into 22,297,196 shares
of common stock or the automatic exercise of warrants to purchase
2,212,342 shares of common stock at a nominal exercise price both of
which will occur upon the closing of this offering; and

. on an as adjusted basis to reflect (i) the automatic conversion of
11,148,598 outstanding shares of preferred stock into 22,297,196 shares
of common stock and the automatic exercise of warrants to purchase
2,212,342 shares of common stock at a nominal exercise price both of
which will occur upon the closing of this offering and (ii) the receipt
of the estimated net proceeds from the sale of shares of
common stock in this offering at an assumed initial public offering
price of $ per share, after deducting the estimated underwriting
discount and estimated offering expenses payable by us. See
"Capitalization."

<TABLE>
<CAPTION>
At March 31, 2000
-----------------------
Actual As Adjusted
------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable securities........ $17,503 $
Working capital......................................... 27,409
Total assets............................................ 83,867
Long-term debt.......................................... -- --
Total stockholders' equity.............................. 67,141
</TABLE>

5
<PAGE>

RISK FACTORS

This offering and an investment in our common stock involve a high degree of
risk. You should carefully consider the risks described below before making an
investment decision.

If we are unable to migrate our customers over time from our modules using
discrete components to the MicroTuner or our modules that incorporate the
MicroTuner, our operating results could be harmed.

Currently, substantially all of our revenues are from the sale of our modules
using discrete components. Our future success will depend on our ability to
successfully migrate our customers from our modules that use discrete
components to the all-silicon MicroTuner, or MicroModules containing the
MicroTuner by convincing leading equipment manufacturers to select these
products for design into their own products. If we are not able to convince
these manufacturers to incorporate our silicon products our results of
operations could be harmed.

We may be unable to integrate our German and Philippines operations or other
operations that we acquire.

We have recently combined with Temic Telefunken Hochfrequenztechnik GmbH (now
called Microtune GmbH) and we are still in the process of integrating Temic's
German and Philippines operations with ours. Integrating operations of two
ongoing businesses can be difficult especially when they are located in
different countries. In addition to integrating the operational aspects of our
two companies, we will also face challenges coordinating and consolidating our
financial reporting functions. For example, our accounting functions utilize
different software programs, and Temic's consolidated financial statements have
historically been prepared based on German generally accepted accounting
principles. We cannot assure you that we will be able to complete this
integration on a timely and cost-effective basis.

In addition, from time to time, we expect to continue to evaluate
acquisitions and may make additional acquisitions in the future. Integrating
acquired organizations and their products and services may be expensive, time-
consuming and a strain on our resources.

Risks we could face with respect to our Temic acquisition, in particular, and
other potential acquisitions generally include:

. the difficulty of integrating acquired technology into our product
offerings or integrating our technology with an acquired company's
products;

. the impairment of relationships with employees, customers and vendors;

. the difficulty of coordinating and integrating geographically dispersed
operations;

. the difficulty of coordinating and integrating overall business
strategies and sales and marketing and research and development efforts;

. the potential disruption of our ongoing business and distraction of our
management;

. the maintenance of brand recognition of acquired businesses;

. the maintenance of corporate cultures, controls, procedures and
policies; and

. the potential unknown liabilities associated with acquired businesses.

6
<PAGE>

We are dependent upon third parties, some of which compete with us, for the
supply of components for our module manufacturing. Our failure to obtain
components for our module manufacturing would seriously harm our ability to
ship modules to our customers in a timely manner.

Many of the components for our modules are sole-sourced, meaning that we are
dependent upon one supplier for a specific component. At times we have
experienced significant difficulties in obtaining an adequate supply of
components necessary for our manufacturing operations, which have on occasion
prevented us from delivering RF solutions to our customers in a timely manner.
For example, we are currently not receiving our expected allocation of
components from a significant sole-source supplier which has constrained and
which we expect to continue to constrain our ability to meet customer demand
through the remainder of 2000 and possibly into 2001. We usually do not have
long-term supply agreements with our suppliers and instead obtain components on
a purchase order basis. Our suppliers typically have no obligation to supply
products to us for any specific period, in any specific quantity or at any
specific price, except as set forth in a particular purchase order. Our
requirements often represent a small portion of the total production capacity
of our suppliers, and our suppliers may reallocate capacity to other customers
even during periods of high demand for our RF solutions. In addition, some of
our suppliers offer or may offer products that compete with our RF solutions.
As a result, these suppliers may preferentially allocate their components to
in-house or third party manufacturers, rather than us. If our suppliers were to
become unable or unwilling to continue manufacturing or supplying the
components that we utilize in our RF solutions, our business would be seriously
harmed. As a result, we would have to identify and qualify substitute suppliers
or design around the component. This would be time-consuming and difficult, and
may result in unforeseen manufacturing and operations problems. This may also
require our customers to requalify our or their products, which may be a
lengthy process. The loss of a significant supplier or the inability of a
supplier to meet performance and quality specifications or delivery schedules
could impede our ability to meet customer demand for timeliness, performance
and quality, which could harm our reputation and our business.

If we are unable to develop and introduce new RF solutions successfully and in
a cost-effective and timely manner or to achieve market acceptance of our new
products, our operating results would be substantially harmed.

Our future success will depend on our ability to develop new RF solutions for
existing and new markets, introduce these products in a cost-effective and
timely manner, meet customer specifications and convince leading equipment
manufacturers to select these products for design into their own new products.
Our quarterly results in the past have been, and are expected in the future to
continue to be, dependent on the introduction and market acceptance of a
relatively small number of new products and the timely completion and delivery
of those products to customers. For example, we believe that market acceptance
of our RFICs for the cable modem market will be limited until such time as we
introduce RFICs with the power requirements that conform to the evolving
specifications of some cable modem manufacturers. The development of new RF
solutions is highly complex, and from time to time we have experienced delays
in completing the development and introduction of new products. In addition,
some of our new product development efforts are focused on producing silicon
products utilizing architectures and technologies with which we have no
experience, and delivering performance characteristics such as low power
consumption at levels that we have not previously achieved. If we are not able
to develop and introduce these new products successfully and in a cost-
effective and timely manner, we will not be able to successfully penetrate all
of our target markets and our business, financial condition, revenues and
results of operations would be substantially harmed.

7
<PAGE>

We are experiencing capacity constraints, and we are increasing production from
our module manufacturing facilities, which is critical to our business. If we
fail to increase production from our manufacturing facilities, we will be
unable to meet the anticipated demand for our RF solutions. Our failure to meet
our customers' demand for our RF solutions could damage our relationships with
our customers and result in diminished revenues.

We have two module manufacturing facilities in Manila, Philippines, although
one of them has only recently begun operations. We also have one integrated
circuit, or IC, test facility in Plano, Texas. We are experiencing capacity
constraints at our module manufacturing facilities due to increased demand for
our RF solutions, both current and anticipated. If we fail to increase
production from our manufacturing facilities, we will be unable to meet the
demand for our RF solutions. Our failure to meet our customers' demand for our
RF solutions could damage our relationships with our customers and result in
diminished revenues. We are in the process of adding additional production
equipment and hiring and training new employees. These facilities and our
current efforts to increase their production are crucial to our strategy of
expanding our manufacturing capacity in order to satisfy current and
anticipated customer demand for our RF solutions. As we increase capacity and
add new products, we must maintain and improve our line, assembly and test
yields in order to meet our manufacturing goals.

The lease covering our first manufacturing facility in the Philippines
expires in December 2000. We are currently in negotiations to extend this
lease. However, we may not be able to negotiate an extension on commercially
reasonable terms or at all. If we are unable to obtain an extension and are
unable to find substitute facilities promptly and on commercially reasonable
terms, we will encounter capacity constraints and may experience an
interruption of our ability to manufacture our RF solutions. This would
severely harm our business.

In addition, we are currently in the process of expanding our production
capability at our second manufacturing facility in the Philippines by
installing additional production equipment. This expansion is not expected to
be completed during the year 2000. Expansion activities like this are subject
to a number of risks, including the following:

. unforeseen environmental or engineering problems;

. unavailability or late delivery of, or delays in implementing production
equipment;

. unavailability of trained production employees, or the inability to
train employees on a timely basis; and

. work stoppages and delays.

These and other risks may increase both the ultimate cost of this project and
the date of completion of this planned increase in our production capacity. If
we fail to increase production and achieve satisfactory yields from our
manufacturing facilities, we will be unable to meet the anticipated demand for
our RF solutions. Our failure to meet our customers' demand for our RF
solutions could damage our relationships with our customers and result in
diminished revenues.

We face intense competition in the broadband communications and RF tuner
markets, which could reduce our market share in existing markets and affect our
ability to enter new markets.

The broadband communications and RF tuner markets are intensely competitive.
We expect competition to continue to increase in the future as industry
standards become well known and as other competitors enter our target markets.
We compete with, or may in the future compete with, a number of major domestic
and international suppliers of IC and system modules in the cable modem, PC/TV,
set-top box, cable telephony, digital TV and automotive markets. We currently
compete with tuner system module manufacturers such as Alps, Panasonic and
Philips Electronics and potentially

8
<PAGE>

with semiconductor companies such as Broadcom and Conexant. This competition
has resulted and may continue to result in declining average selling prices for
our RF solutions.

Many of our current and potential competitors have certain advantages,
including:

. longer operating histories and presence in key markets;

. greater name recognition;

. access to larger customer bases;

. significantly greater financial, sales and marketing, manufacturing,
distribution, technical and other resources; and

. relationships with potential customers as a result of the sales of other
components, which relationships our competitors can leverage into sales
of products competitive with our RF solutions.

As a result, such competitors may be able to adapt more quickly to new or
emerging technologies and changes in customer requirements or may be able to
devote greater resources to the development, promotion and sale of their
products than us.

Consolidation by industry participants, including in some cases, acquisitions
of certain of our customers or suppliers by our competitors, or vice versa,
could create entities with increased market share, customer base, technology
and marketing expertise in markets in which we compete. In fact, some of our
suppliers offer or may offer products that compete with our RF solutions. These
developments may significantly and adversely affect our current markets, the
markets we are seeking to serve and our ability to compete successfully in
those markets.

If we do not anticipate and adapt to evolving industry standards in the RF
tuner and broadband communications markets, our products could become obsolete
and we could lose market share.

Products for broadband communications applications generally are based on
industry standards that are continuously evolving. If new industry standards
emerge, our products or our customers' products could become unmarketable or
obsolete. We may also have to incur substantial unanticipated costs to comply
with these new standards. Our ability to adapt to changes and to anticipate
future standards and the rate of adoption and acceptance of those standards
will be a significant factor in maintaining or improving our competitive
position and prospects for growth. Our inability to anticipate the evolving
standards in the broadband communications market and, in particular, in the RF
tuner market, or to develop and introduce new products successfully into these
markets could result in diminished revenues and consequently harm our business.

The average selling price of our products will likely decrease over time. If
such selling price reductions are greater than we expect, our operating results
will be harmed.

Historically, the average selling price of our products has decreased over
the products' lives. In addition, as the markets for RFIC tuners and
transceivers mature, we believe that it is likely that the average unit prices
of our RF solutions will decrease in response to competitive pricing pressures,
increased sales discounts and new product introductions. To offset these
decreases, we rely primarily on achieving yield improvements and other cost
reductions for existing products and on introducing new products that can often
be sold at higher average selling prices. In addition, we will seek to increase
the sales of our higher margin products. However, our sales, product and
process development efforts may not be successful, and our new products or
processes may not achieve market acceptance. To the extent that our cost
reductions and emphasis on higher margin products do not occur in a timely
manner, our results of operations could suffer.

9
<PAGE>

We expect our quarterly operating results to fluctuate.

Our quarterly results of operations have fluctuated in the past and may
fluctuate significantly in the future based on a number of factors, many of
which are not in our control. Among other factors, our results of operations
may fluctuate in the future due to the following:

. effects of competitive pricing pressures;

. volume of product sales;

. timing and cancellation of significant customer orders;

. availability and cost of supplies and components from our suppliers;

. ability of our customers to procure the necessary components for their
end-products that utilize our RF solutions;

. lengthy sales cycles;

. pricing concessions on volume sales;

. production capacity levels and fluctuations in manufacturing yields;

. changes in our product and customer mix;

. intellectual property disputes;

. our ability to develop, introduce and market new products and
technologies on a timely basis;

. introduction of RF tuner products and technologies by our competitors;

. market acceptance of competitive products and technologies that do not
incorporate RF tuners, such as digital subscriber lines;

. market acceptance of our RF solutions and our customers' products;

. industry adoption and acceptance of communication standards, such as
PacketCable and OpenCable, on which many of our RF solutions are based;

. labor disputes at our manufacturing facilities; and

. quality problems with our RF solutions.

Our operating results could also be harmed by general economic or other
conditions causing a downturn in the market for RF tuners or the broadband
communications market, affecting the timing of customer orders or causing order
cancellations or rescheduling of orders. Moreover, our customers may change
delivery schedules or cancel or reduce orders without significant penalty and
generally are not subject to minimum purchase requirements. Any significant
shortfall in revenues would likely harm our business, operating results and
financial condition.

We believe that transitioning our silicon products to higher performance
process technologies will be important to our future competitive position. If
we fail to make this transition efficiently, our competitive position could be
seriously harmed.

We continually evaluate the benefits, on a product-by-product basis, of
migrating to higher performance process technologies in order to produce more
efficient and higher performance ICs. We believe this migration is required to
remain competitive. Other companies in the industry have experienced difficulty
in migrating to new process technologies and, consequently, have suffered
reduced yields, delays in product deliveries and increased expense levels.
Moreover, we are dependent on our relationships with foundries to migrate to
higher performance processes successfully. Our foundry partner may not make
higher performance process technologies available to us on a timely or cost-
effective basis, if at all. If our foundry partner does not make higher

10
<PAGE>

performance process technologies available to us on a timely or cost-effective
basis or if we experience difficulties in migrating to these advanced
processes, our competitive position and business prospects could be seriously
harmed.

Because we depend on a few significant customers for a substantial portion of
our revenues, the loss of a key customer could seriously harm our business. In
addition, if we are unable to continue to sell existing and new products to our
key customers in significant quantities or to attract new significant
customers, our future operating results could be harmed.

We have derived a substantial portion of our revenues in the past from sales
to a relatively small number of customers. As a result, the loss of any
significant customer could significantly harm our revenues. Sales to
DaimlerChrysler and ATI Technologies accounted for approximately 29% and 14%,
respectively, of our pro forma net revenues in 1999. DaimlerChrysler, ATI
Technologies and Motorola/General Instrument accounted for approximately 26%,
10% and 10%, respectively, of our net revenues for the three months ended March
31, 2000. Sales to our ten largest customers, including sales to their
respective manufacturing subcontractors, accounted for approximately 74% of our
net revenues in 1999 and approximately 72% for the three months ended March 31,
2000. We believe that our future operating results will continue to depend on
the success of our largest customers and on our ability to sell existing and
new products to these customers in significant quantities.

We may not be able to maintain or increase sales to our key customers for a
variety of reasons, including the following:

. most of our customers can stop purchasing our RF solutions with limited
notice to us without incurring any significant contractual penalty;

. most of our customers typically buy our RF solutions through a purchase
order, which does not require them to purchase a minimum amount of our
RF solutions;

. many of our customers have pre-existing relationships with our current
or potential competitors, which relationships may affect their decision
to purchase our RF solutions;

. our customers face intense competition from other manufacturers that do
not use our RF solutions;

. some of our customers offer or may offer products that compete with our
RF solutions; and

. our longstanding relationships with some of our larger customers may
also deter other potential customers who compete with these customers
from buying our RF solutions.

The loss of a key customer, a reduction in our sales to any key customer or
our inability to attract new significant customers could harm our revenues and
consequently our financial condition.

The sales cycle for our RF solutions is long, and we may incur substantial non-
recoverable expenses and devote significant resources to sales that may not
occur when anticipated or at all.

Our customers typically conduct significant evaluation, testing,
implementation and acceptance procedures before they purchase our RF solutions.
As a result, we may expend significant financial and other resources to develop
customer relationships before we recognize any revenues from these
relationships, and we may never recognize any revenues from these efforts. Our
customers' evaluation processes are frequently lengthy and may range from three
months to one year or more. In many situations, our customers design their
products to specifically incorporate our RF solutions, and our RF solutions
must be designed to meet their stringent specifications. This process can be
complex and may require significant engineering, as well as sales, marketing
and management efforts on our part. This process becomes more complex as we
simultaneously qualify our products with multiple customers.

11
<PAGE>

Uncertainties involving the ordering and shipment of our RF solutions could
harm our business.

Our sales are typically made pursuant to individual purchase orders, and we
generally do not have long-term supply arrangements with our customers.
Generally, our purchase orders provide that our customers may cancel orders
until 90 days prior to the shipping date and may reschedule shipments up to 30
days prior to the shipping date; however, in the past, we have permitted
customers to cancel orders less than 90 days before the expected date of
shipment, in many cases with little or no penalty. Moreover, we routinely
manufacture or purchase inventory based on estimates of customer demand for our
RF solutions, which demand is difficult to predict. The cancellation or
deferral of product orders, the return of previously sold products or
overproduction due to the failure of anticipated orders to materialize could
result in our holding excess or obsolete inventory that could substantially
harm our business, financial condition and results of operations. In addition,
our inability to produce and ship RF solutions to our customers in a timely
manner could harm our reputation and damage our relationships with our
customers.

We customize a substantial portion of our RF solutions to address our
customers' specific RF needs. If we do not sell our customer-specific products
in large volumes, we may be unable to cover our fixed costs or may be left with
substantial unsaleable inventory.

We manufacture a substantial portion of our RF solutions to address the needs
of individual customers. Frequent product introductions by systems
manufacturers make our future success dependent on our ability to select
development projects that will result in sufficient volumes to enable us to
achieve manufacturing efficiencies. Because customer-specific RF solutions are
developed for unique applications, we expect that some of our current and
future customer-specific RF solutions may never be produced in volume and may
impair our ability to cover our fixed manufacturing costs. In addition, if our
customers fail to purchase these customized RF solutions from us, we risk
having substantial unsaleable inventory. If substantial unsaleable inventory
occurs, our financial condition would be harmed.

Other technologies for the broadband communications market will compete with
some of our target markets. If these technologies prove to be more reliable,
faster or less expensive or become more popular, the demand for our RF
solutions and our revenues may decrease.

Some of our target markets, such as cable modem and cable telephony services,
are competing with a variety of different non-RF based broadband communications
technologies, including digital subscriber line technology. Many of these
technologies will compete effectively with cable modem and cable telephony
services. If any of these competing technologies are more reliable, faster or
less expensive, reach more customers or have other advantages over RF-based
broadband technology, the demand for our RF solutions and our revenues may
decrease.

We depend on the continued growth of the broadband communications market
generally, and the RF tuner market specifically, for our success.

We derive a substantial portion of our revenues from sales of RF solutions
for broadband communication applications. These markets are characterized by
the following:

. intense competition;

. rapid technological change; and

. short product life cycles, especially in the consumer electronics
markets.

Although the broadband communications market, in general, has grown rapidly
in the last few years, it may not continue to grow or a significant slowdown in
this market may occur. In particular, the set-top box, cable modem and cable
telephony markets may not grow at a rate sufficient for us to

12
<PAGE>

achieve profitability or at all. Because of the changing nature of the
broadband communications market, it is difficult to predict the potential size
and future growth rate of the RF tuner market. If the demand for RF tuners is
not as great as we expect, we may not be able to generate sufficient revenues
to become successful.

The semiconductor industry is cyclical. If there is a sustained upturn in the
semiconductor market, there could be a resulting increased demand for foundry
services, significantly increasing prices and reducing product availability.

Some of the RF solutions that we provide to the broadband communications
market require semiconductors. The semiconductor industry periodically
experiences increased demand and production capacity constraints. An increased
demand for semiconductors could substantially increase the cost of producing
our RF solutions and consequently reduce our profit margins. As a result, we
may experience substantial period-to-period fluctuations in future results of
operations due to general semiconductor industry conditions.

We depend on a single third-party wafer foundry to manufacture all of our IC
products, which reduces our control over the IC manufacturing process.

We do not own or operate a semiconductor fabrication facility. We rely on
IBM, an outside foundry, to produce all of our ICs. We do not have a long-term
supply agreement with IBM and instead obtain manufacturing services on a
purchase order basis. IBM has no obligation to supply products to us for any
specific period, in any specific quantity or at any specific price, except as
set forth in a particular purchase order. Our requirements represent a small
portion of the total production capacity of this foundry, and IBM may
reallocate capacity to other customers even during periods of high demand for
our ICs. If IBM were to become unable or unwilling to continue manufacturing
our ICs, our business would be seriously harmed. As a result, we would have to
identify and qualify substitute foundries, which would be time-consuming and
difficult, resulting in unforeseen manufacturing and operations problems. In
addition, if competition for foundry capacity increases, our product costs may
increase, and we may be required to pay significant amounts to secure access to
manufacturing services. We plan to qualify additional foundries in the future.
If we do not qualify additional foundries, we may be exposed to increased risk
of capacity shortages due to our dependence on IBM.

We depend on a single third-party subcontractor for IC packaging which reduces
our control over the IC packaging process.

Our IC products are packaged by a sole independent subcontractor, Amkor,
using facilities located in South Korea. We do not have long-term agreements
with Amkor and typically obtain services from them on a purchase order basis.
Our reliance on Amkor involves risks such as reduced control over delivery
schedules, quality assurance and costs. These risks could result in product
shortages or increase our costs of packaging our products. If Amkor is unable
or unwilling to continue to provide packaging services of acceptable quality,
at acceptable costs and in a timely manner, our business would be seriously
harmed. We would also have to identify and qualify substitute subcontractors,
which could be time consuming and difficult and may result in unforeseen
operations problems.

We are subject to the risks of doing business internationally. If we fail to
execute on our international sales and operations plans, our operating results
could be harmed.

We have facilities and suppliers located outside of the U.S., including
research and development operations in Ingolstadt, Germany, and two
manufacturing facilities in Manila, Philippines. Furthermore, our current IC
packaging partner is, and future foundry and packaging partners may be, located
internationally.

13
<PAGE>

Our international sales and operations are subject to a number of risks
inherent in manufacturing, selling and operating abroad. These include, but are
not limited to, risks regarding:

. currency exchange rate fluctuations;

. local economic and political instability;

. restrictive governmental actions (such as restrictions on repatriation
of funds and trade protection measures, including export duties and
quotas and customs duties and tariffs);

. changes in legal or regulatory requirements;

. changes in taxation policies;

. changes in import or export licensing requirements;

. nationalization of foreign operations;

. limitations on obtaining strong patent or intellectual property
protection internationally;

. natural disasters;

. difficulties with or work stoppages due to actions of labor unions; and

. the laws and policies of the U.S. affecting trade, foreign investment and
loans.

Due to our reliance on international sales and on foreign suppliers and
assemblers, we are subject to risks of conducting business outside of the U.S.,
including primarily those arising from currency fluctuations, which could
affect the price of our products and/or the cost of producing them.

Our success could be jeopardized if key personnel leave.

Our future success depends largely upon the continued service of our
executive officers and other key management and technical personnel. Our
success also depends on our ability to continue to attract, retain and motivate
qualified personnel. Our personnel represent a significant asset as the source
of our technological and product innovations. The competition for qualified
personnel is intense in the RF silicon and RF systems industries. We cannot
assure you that we will be able to continue to attract and retain qualified
management, technical and other personnel necessary for the design,
development, manufacture and sale of our RF solutions. We may have difficulty
attracting and retaining key personnel particularly during periods of poor
operating performance. The loss of the services of one or more of our key
employees or our inability to attract, retain and motivate qualified personnel
could harm our business.

We must manage our growth. If we fail to manage our growth, our reputation and
results of operations could be harmed.

Following our combination with Temic, our total number of employees has grown
from 51 to 125, excluding manufacturing personnel in Manila, Philippines. In
addition, as of March 31, 2000, we had 1,251 manufacturing personnel in the
Philippines. The resulting growth has placed, and is expected to continue to
place, significant demands on our personnel, management and other resources. We
must continue to improve our operational, financial and management information
systems to keep pace with the growth of our business.

Our business may be harmed if we fail to protect our proprietary technology.

We rely on a combination of patents, trademarks, copyrights, trade secret
laws, confidentiality procedures and licensing arrangements to protect our
intellectual property rights. We currently have patents issued and pending in
the U.S. and in foreign countries. We intend to seek further U.S and
international patents on our technology. We cannot be certain that patents will
be issued from any of

14
<PAGE>

our pending applications or that patents will be issued in all countries where
our products can be sold or that any claims will be allowed from pending
applications or will be of sufficient scope or strength to provide meaningful
protection or any commercial advantage. Our competitors may also be able to
design around our patents. The laws of some countries in which our products are
or may be developed, manufactured or sold, including various countries in Asia,
may not protect our products or intellectual property rights to the same extent
as do the laws of the U.S., increasing the possibility of piracy of our
technology and products. Although we intend to vigorously defend our
intellectual property rights, we may not be able to prevent misappropriation of
our technology. Our competitors may also independently develop technologies
that are substantially equivalent or superior to our technology.

Our ability to sell our RF tuners may suffer if someone claims we or our
customers infringe on their intellectual property.

The electronics industry is characterized by vigorous protection and pursuit
of intellectual property rights or positions, which have resulted in
significant and often protracted and expensive litigation. In addition, our
customers may be subject to infringement claims for products incorporating our
RF solutions. In the past, we have received a notification of a claim against
one of our customers. If any claims of infringement are made against any of our
customers, our customers may seek to involve us in the infringement claim and
request indemnification from us. If it is necessary or desirable, we may seek
licenses under patents or other intellectual property rights that are subject
to infringement claims. However, we cannot be certain that licenses will be
offered or that we would find the terms of licenses that are offered acceptable
or commercially reasonable. Our failure to obtain a license from a third party
for technology used by us could cause us to incur substantial liabilities and
to suspend the manufacture of products. Furthermore, we may initiate claims or
litigation against third parties for infringement of our proprietary rights or
to establish the validity of our proprietary rights. Litigation by or against
us or one of our customers could result in significant expense and divert the
efforts of our technical personnel and management, whether or not the
litigation results in a favorable determination. In the event of an adverse
result in any litigation, we could be required to:

. pay substantial damages;

. indemnify our customers;

. stop manufacturing, using and selling the infringing products;

. expend significant resources to develop non-infringing technology;

. discontinue the use of certain processes; or

. obtain licenses to the technology.

We may be unsuccessful in developing non-infringing products or negotiating
licenses upon reasonable terms, or at all. These problems might not be resolved
in time to avoid harming our results of operations. If any third party makes a
successful claim against our customers or us and a license is not made
available to us on commercially reasonable terms, our business could be harmed.

The products of our customers are subject to governmental regulation.
Governmental regulation could place constraints on our customers and
consequently minimize our customers' need or desire for our RF solutions.

The Federal Communications Commission, or FCC, has broad jurisdiction over
several of our target markets in the U.S. Similar governmental agencies
regulate our target markets in other countries. Although our products are not
directly subject to current regulations of the FCC or any

15
<PAGE>

other federal or state communications regulatory agency, much of the equipment
into which our products are incorporated is subject to direct government
regulation. Accordingly, the effects of regulation on our customers or the
industries in which they operate may, in turn, impede sales of our products.
For example, it is possible that demand for our RF solutions will decrease if
equipment incorporating our products fails to comply with FCC emissions
specifications.

You may not be able to sell your stock at or above the price you paid or when
you want to sell it if a public market does not exist for our stock.

An active public market for our common stock may not develop or be sustained
after this offering. The market price for our common stock will vary from the
initial offering price. The market price of our common stock may fluctuate
significantly in response to a number of factors, some of which are beyond our
control, including:

. variations in quarterly operating results;

. changes in financial estimates and recommendations by securities
analysts;

. changes in market valuations of other companies supplying RFICs and
tuners;

. announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;

. loss of a major supplier or customer;

. additions or departures of key personnel;

. sales of common stock in the future; and

. fluctuations in stock market price and volume, which are particularly
common among the securities of technology companies.

We will determine the initial public offering price of the shares of our common
stock through negotiations with the underwriters, and this price may not be
indicative of the prices that will prevail in the trading market.

Our business may be adversely affected by class action litigation due to stock
price volatility.

In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation.
Securities litigation could result in substantial costs and divert management's
attention and resources, which could severely harm our business, operating
results and financial condition.

We may be unable to obtain the additional capital required to grow our
business.

We expect the net proceeds from this offering, cash on hand, cash equivalents
and marketable securities will meet our working capital and capital expenditure
needs for at least the next 24 months. After that time, we may need to raise
additional funds, and we cannot be certain that we would be able to obtain
additional financing on favorable terms, if at all. Our capital requirements
depend upon several factors, including the rate of market acceptance, our
ability to expand our customer base, our level of expenditures for sales and
marketing, the cost of product and service upgrades and other factors. If our
capital requirements vary materially from those currently planned, we may
require additional financing sooner than anticipated. Further, if we issue
equity securities, stockholders may experience additional dilution or the new
equity securities may have rights, preferences or privileges senior to those of
existing holders of common stock. If we cannot raise funds, if needed, on
acceptable terms, we may not be able to develop our products and services, take
advantage of future opportunities or respond to competitive pressures or
unanticipated requirements, any of which could harm our ability to grow our
business.

16
<PAGE>

Our stockholders could be adversely affected if our management and larger
stockholders use their influence in a manner adverse to other stockholders'
interests.

Upon completion of this offering, executive officers and directors and 5%
stockholders will beneficially own, in the aggregate, approximately % of our
outstanding common stock. As a result, these stockholders will be able to
exercise significant control over all matters requiring stockholder approval,
including the election of directors and approval of significant corporate
transactions, which could delay or prevent someone from acquiring or merging
with us. These stockholders may use their influence to approve or take actions
that are adverse to your interests. See "Principal Stockholders."

Future sales of our common stock may cause our stock price to decline.

The market price of our common stock could decline as a result of sales of
substantial amounts of our common stock in the public market after the closing
of this offering, or the perception that such sales could occur. These sales or
the possibility that they may occur also could make it more difficult for us to
raise funds through future offerings of common stock. The number of shares of
common stock available for sale in the public market is limited by restrictions
under federal securities laws. In addition, we, our executive officers and
directors and all of our existing stockholders have agreed that they will not
sell shares of common stock without the consent of the underwriters for 180
days after the date of this prospectus; provided, however, that this
restriction shall terminate with respect to our stockholders as to 20% of the
shares after 90 days and an additional 20% of the shares after 120 days after
the date of this prospectus, in the event that, at such dates, the reported
last sale price of our common stock on the Nasdaq National Market is at least
twice the initial public offering price specified in this prospectus for a
certain period of time ending on such dates. Goldman Sachs may, however, in its
sole discretion and without notice, release all or any portion of the shares
from the restrictions in the lock-up agreements. To the extent any of our
stockholders have not entered into lockup agreements with the underwriters,
these stockholders are subject to lockup agreements with us, which agreements
provide that these stockholders may not sell their shares for 180 days after
the date of this prospectus. We do not intend to release any of these company
lockups.

After this offering we will have shares of common stock outstanding, of
which 455,643 shares are subject to repurchase by us in the event covered
employees' employment with us is terminated.

Shares of our common stock will become eligible for future sale in the public
market as follows, assuming the conditions set forth above are met:

<TABLE>
<CAPTION>
Number of
Shares Date Eligible for Public Resale
--------- -------------------------------
<S> <C>
Date of this prospectus (includes shares sold in this offering)
4,079,395 90 days after the date of this prospectus
4,079,395 120 days after the date of this prospectus
12,768,645 180 days after the date of this prospectus
11,815,871 At various times thereafter
</TABLE>

We intend to register on a Form S-8 registration statements under the
Securities Act a total of approximately 14,156,542 shares of common stock
reserved for issuance under our employee and director stock plans. As of
March 31, 2000, there were outstanding options to purchase 7,790,116 shares of
common stock, of which 230,353 were vested and exercisable.

Provisions in our charter documents and Delaware law may deter takeover efforts
that you may feel would be beneficial to stockholder value.

Certain provisions of our certificate of incorporation and bylaws may
discourage, delay or prevent a merger or acquisition that a stockholder may
consider favorable. Such provisions include:

. Authorizing the issuance of "blank check" preferred stock;

. Providing for a classified board of directors with staggered, three-year
terms;

17
<PAGE>

. Prohibiting cumulative voting in the election of directors;

. Limiting the persons who may call special meetings of the board or the
stockholders;

. Prohibiting stockholder action by written consent;

. Establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings; and

. Establishing super-majority voting requirements in some instances.

Investors in this offering will experience immediate and substantial dilution.

The initial public offering price is expected to be substantially higher than
the book value per share of the outstanding common stock immediately after the
offering. Accordingly, if you purchase common stock in the offering, you will
incur immediate dilution in the book value per share of the common stock from
the price you pay for the common stock. This dilution will be approximately
$ per share, at an assumed initial public offering price of $ . In
addition, we have issued options to acquire common stock at prices
significantly below the assumed initial public offering price. To the extent
outstanding options are ultimately exercised, there will be further dilution to
investors. For a discussion regarding dilution in this offering, please see
"Dilution."

You may not be paid dividends in the future.

There can be no guarantee that we will ever desire to or be in a position to
pay any dividends. We have not paid dividends to date and, even if and when
profitable operations are achieved, we are unlikely to pay dividends in the
foreseeable future.

If our management does not effectively use the proceeds from this offering, we
may not be able to successfully operate and grow our business.

At present, we have a wide range of planned expenditures to be funded with
the proceeds of this offering due to our need to retain flexibility to respond
to factors affecting our business. Accordingly, our management will retain
broad discretion as to the allocation of the proceeds of this offering and may
use such proceeds in a manner with which you may not agree.

18
<PAGE>

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found
in the material set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business" as well as in the
prospectus generally. Words such as "believes," "intends," "expects,"
"anticipates," "plans," and similar expressions are intended to identify
forward-looking statements. You should not place undue reliance on these
forward-looking statements. Our actual results could differ materially from
those anticipated in the forward-looking statements for many reasons, including
the risks described above and elsewhere in this prospectus.

USE OF PROCEEDS

We expect to receive net proceeds of approximately $ from the sale
of the shares of common stock at an assumed initial public offering
price of $ per share, or approximately $ if the underwriters'
over-allotment option is exercised in full, after deducting the estimated
underwriting discounts and offering expenses payable by us.

We intend to use the net proceeds of this offering primarily for general
corporate purposes and other operating expenses, including:

. capital expenditures, including expenditures relating to the expansion
of our manufacturing facilities; and

. research and development expenses.

In addition, if appropriate opportunities arise to acquire or invest in
complementary companies, product lines, products or technologies, we may use a
portion of the net proceeds for this acquisition or investment. However, we are
not currently discussing any such potential acquisition or investment with any
third party.

The amount and timing of these expenditures will vary depending on a number
of factors, including competitive and technological developments and the rate
of growth, if any, of our business.

We will retain broad discretion in the allocation of the net proceeds of this
offering. Pending the uses described above, we will invest the net proceeds in
investment grade, interest-bearing securities.

DIVIDEND POLICY

We have never declared or paid cash dividends. We currently expect to retain
future earnings, if any, for use in the operation and expansion of our business
and do not anticipate paying cash dividends in the foreseeable future.

19
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000:

. on an as adjusted basis to reflect (i) the automatic conversion of
11,148,598 outstanding shares of preferred stock into 22,297,196 shares
of common stock and the automatic exercise of warrants to purchase
2,212,342 shares of common stock at a nominal exercise price upon the
closing of this offering and (ii) the receipt of the estimated net
proceeds from the sale of shares of common stock in this
offering at an assumed initial public offering price of $ per
share, after deducting the estimated underwriting discount and estimated
offering expenses payable by us.

This information should be read in conjunction with our financial statements
and related notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
As of March 31, 2000
---------------------
Actual As Adjusted
-------- -----------
(in thousands,
except share data)
<S> <C> <C>
Long-term debt .......................................... $ - $ -
Stockholders' equity:
Preferred Stock, $0.001 par value per share; 18,999,513
shares authorized, actual; and 25,000,000 shares
authorized, as adjusted; 11,148,598 shares issued and
outstanding, actual; and no shares issued and
outstanding, as adjusted.............................. 11 -
Common Stock, $0.001 par value per share, 150,000,000
shares authorized, actual and as adjusted; 8,233,768
shares issued and outstanding, actual; shares
issued and outstanding, as adjusted................... 8
Additional paid-in capital............................. 100,631
Loans receivable from stockholders..................... (860) (860)
Accumulated other comprehensive income................. (866) (866)
Accumulated deficit.................................... (31,783) (31,783)
-------- --------
Total stockholders' equity........................... 67,141
-------- --------
Total capitalization............................... $ 67,141 $
======== ========
</TABLE>

The outstanding share information in the table above excludes:

. 7,130,116 shares of common stock issuable upon exercise of outstanding
options with a weighted average exercise price of $0.75 per share as of
March 31, 2000; and

. 660,000 shares of common stock issuable upon the exercise of outstanding
options with an exercise price of $8.00 per share issuable upon the
automatic conversion of options to purchase 330,000 shares of Series E
preferred stock at an exercise price of $16.00 per share in connection
with the offering.

20
<PAGE>

DILUTION

On a pro forma basis after giving effect to the automatic exercise of
warrants to purchase common stock issued to two of our stockholders that will
occur upon the closing of this offering, and the conversion of all outstanding
shares of preferred stock into common stock in connection with this offering,
our net tangible book value as of March 31, 2000 was $30.5 million or $0.93 per
share. Net tangible book value per share represents the amount of our total
tangible assets reduced by the amount of our total liabilities and divided by
the total number of shares of common stock outstanding (reflecting the
conversion of all outstanding shares of preferred stock into shares of common
stock upon the closing of this offering). Without taking into account any other
change in our pro forma net tangible book value after March 31, 2000, other
than to give effect to the sale of shares of common stock offered by
this prospectus at an assumed initial public offering price of $ per share
and receipt of the estimated net proceeds therefrom, our pro forma net tangible
book value as of March 31, 2000 would have been approximately $ or
$ per share. This represents an immediate increase in such net tangible
book value of $ per share to existing stockholders and an immediate
dilution of $ per share to the new investors. If the initial public
offering price is higher, the dilution to new investors will be greater; if the
initial public offering price is lower, the dilution to new investors will be
less. The following table illustrates this per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $
Net tangible book value per share as of March 31, 2000, before
this offering................................................. $0.93
Increase per share attributable to new investors...............
-----
Net tangible book value per share after this offering..........
-----
Dilution per share to new investors............................ $
=====
</TABLE>

The following table summarizes, as of March 31, 2000, on a pro forma basis to
reflect the adjustments described above, the differences between the existing
stockholders and the new investors with respect to the number of shares of
common stock purchased from us, the total consideration paid (or to be paid) to
us, and the average price per share paid (or to be paid) by existing
stockholders and by new investors at the assumed initial public offering price
of $ per share, before deducting the estimated underwriting discounts
and offering expenses payable by us:

<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
------------------ ------------------- Per
Number Percent Amount Percent Share
---------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 32,743,306 % $99,040,000 % $3.02
New investors....................
---------- --- ----------- -----
Total.......................... % $ 100.0%
========== === =========== =====
</TABLE>

This table assumes that the underwriters do not exercise their over-allotment
option. This table also assumes that, except as described above, no options or
warrants have been or are exercised after March 31, 2000. As of March 31, 2000,
there were outstanding options to purchase an aggregate of 7,790,116 shares of
common stock at a weighted average exercise price of $1.37 per share. If all
such options and warrants had been exercised on March 31, 2000, our net
tangible book value on such date would have been $ or $ per
share, the increase in net tangible book value attributable to new investors
would have been $ per share and the dilution in net tangible book value to
new investors would have been $ per share.

21
<PAGE>

SELECTED FINANCIAL DATA

You should read the data presented below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical and pro forma financial statements and the notes to those
financial statements included elsewhere in this prospectus. The historical
statement of operations data for each of the three fiscal years ended December
31, 1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and
1999 have been derived from our financial statements, which have been audited
by Ernst & Young LLP, independent auditors, and are included elsewhere in this
prospectus. The historical statement of operations data for the period May 28,
1996 (inception) and balance sheet data as of December 31, 1996 and 1997 have
been derived from our audited financial statements that are not included in
this prospectus. The historical balance sheet data as of March 31, 2000 and the
historical statement of operations data for the three months ended March 31,
1999 and 2000 have been derived from our unaudited interim financial statements
which are included elsewhere in this prospectus. The historical results are not
necessarily indicative of results to be expected for any future period.

<TABLE>
<CAPTION>
May 28, 1996
(inception) Three Months
through Year Ended December 31, Ended March 31,
December 31, ------------------------- -----------------
1996 1997 1998 1999 1999 2000
------------ ------- ------- ------- ------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues........... $ -- $ -- $ -- $ -- $ -- $ 13,896
Cost of revenues....... -- -- -- -- -- 10,071
------ ------- ------- ------- ------- --------
Gross margin........... -- -- -- -- -- 3,825
Operating expenses:
Research and
development.......... 484 2,091 3,174 5,913 984 2,584
Acquired in-process
research and
development.......... -- -- -- -- -- 12,692
Selling, general and
administrative....... 262 723 885 2,327 375 3,302
Amortization of
intangible assets and
goodwill............. -- -- -- -- -- 2,178
Stock option
compensation......... -- -- -- 850 398 789
------ ------- ------- ------- ------- --------
Total operating
expenses............ 746 2,814 4,059 9,090 1,757 21,545
------ ------- ------- ------- ------- --------
Loss from operations... (746) (2,814) (4,059) (9,090) (1,757) (17,720)
Other income
(expense)............. 123 408 572 582 99 1,324
------ ------- ------- ------- ------- --------
Loss before provision
for income taxes...... (623) (2,406) (3,487) (8,508) (1,658) (16,396)
Provision for income
taxes................. -- -- -- -- -- 364
------ ------- ------- ------- ------- --------
Net loss............... $ (623) $(2,406) $(3,487) $(8,508) $(1,658) $(16,760)
====== ======= ======= ======= ======= ========
Basic and diluted loss
per common share(1)... $(0.11) $ (0.36) $ (0.52) $ (1.12) $ (0.24) $ (2.06)
====== ======= ======= ======= ======= ========
Weighted average shares
used in computing
basic and diluted loss
per common share(1)... 5,699 6,707 6,716 7,565 6,948 8,139
====== ======= ======= ======= ======= ========
</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
December 31,
----------------------------- March 31,
1996 1997 1998 1999 2000
------ ------ ------- ------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and
marketable securities.... $4,828 $6,552 $ 7,868 $20,129 $17,503
Working capital........... 4,727 4,023 7,186 19,643 27,409
Total assets.............. 5,448 7,744 10,190 22,277 83,867
Long-term debt............ -- -- -- -- --
Total stockholders'
equity................... 5,347 5,215 9,508 21,605 67,141
</TABLE>
- --------
(1) See Note 2 of our Notes to Consolidated Financial Statements for
information concerning the computation of the number of shares used to
calculate net loss per common share.

23
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements and the notes to those statements that appear elsewhere in this
prospectus. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs, including without limitation forward-
looking statements regarding anticipated revenue growth, trends in costs of
revenues and operating expenses, international expansion and introduction of
additional products. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this prospectus, particularly in "Risk Factors."

Overview

We are a leading RF silicon and systems company, providing high-performance
RF tuners and transceivers to the broadband communications markets. We design
and develop highly integrated broadband gateway RFICs and modules for use in
cable modems, PC/TVs, set-top boxes, cable telephony, digital TV and other
consumer electronics devices.

We were incorporated in Texas in May 1996 and commenced operations in August
1996. Prior to the completion of this offering, we will reincorporate in
Delaware. Prior to December 31, 1999, our primary activities consisted of
raising capital, recruiting RF and analog engineers, developing our broadband
RF tuners in silicon and initiating relationships with potential customers and
suppliers. In January 2000, we combined with Temic Telefunken
Hochfrequenztechnik GmbH (now known as Microtune GmbH), a leader in the design
and manufacture of RF tuner and transceiver modules with operations in Germany,
the Philippines and the U.S. Since inception we have incurred significant
losses, and as of March 31, 2000, we had an accumulated deficit of
approximately $31.8 million. As a result of our combination with Temic, our
primary activities have expanded to include the design, manufacture and sale of
RF modules. Our limited combined operating history makes the prediction of
future results of operations difficult, and accordingly, we may not achieve or
sustain revenue growth or profitability.

With regard to our RFIC products, our design engineers develop our IC
technology. We use IBM to manufacture our wafers and Amkor to assemble our
RFICs. We perform final testing, packing and shipping of our RFICs at our
facility in Plano, Texas. In 1999, we introduced our first RFIC tuners, the
MT2000 series, and produced fully-tested product samples on reference boards
for our customers. We began volume production shipments of our latest
generation RFIC, the MT203x series, in March 2000. The time lag between product
availability and volume shipment can be significant due to a sales process that
includes customer qualification of our products and can take as long as two
years, during which we continue to evolve our technology. As a result of our
combination with Temic, we have broadened our product suite to include RF
modules, which generated all of our net revenues on a pro forma basis,
approximately $46.8 million for the year ended December 31, 1999. Two of our
customers, DaimlerChrysler and ATI Technologies, accounted for approximately
29% and 14% of these revenues, respectively. DaimlerChrysler, ATI Technologies
and Motorola/General Instrument accounted for approximately 26%, 10% and 10%,
respectively, of our net revenues for the three months ended March 31, 2000. We
recognize revenues from our products upon shipment to a customer or upon
notification of customer receipt, depending on the contract terms. We provide a
one year warranty on all products and record a related provision for estimated
warranty costs at the date of sale.

We have invested heavily in research and development of our RFICs and systems
technology. We expect to increase our investment in these areas in absolute
dollars to further develop our RF solutions. This investment will include the
continued recruitment of RF and analog IC designers and

24
<PAGE>

systems engineers, acquisition of test, development and production equipment
and expansion of facilities for research and manufacturing. As a result, we
expect to incur substantial operating losses for the foreseeable future. These
losses may increase significantly from current levels.

As a result of our combination, we have recently experienced a period of
rapid growth and expansion. To manage this growth and any future growth
effectively, we intend to enhance our existing operational and financial
systems and hire additional qualified administrative, finance, and information
technology personnel. In addition, we expect to move our current corporate
headquarters to a new facility during the second half of 2000, which will
increase our operating expenses in absolute dollars.

Results of Operations

The information included in the following discussion gives the historical
information for Microtune, Inc. and does not include the results of Temic for
periods prior to our combination with Temic in January 2000. These historical
results are not necessarily indicative of the future financial position or
results of operations of the combined company.

Comparison of the Three Months Ended March 31, 1999 and 2000.

Net Revenues. Revenues are recorded net of a provision for returns. Our net
revenues from the sale of our products were $13.9 million in the three months
ended March 31, 2000, primarily as a result of the inclusion of net revenues
from the sale of Microtune GmbH products in the three months ended March 31,
2000. In addition, we began shipments of our silicon single chip tuner in the
three months ended March 31, 2000. We did not generate net revenues from the
sale of our products in the three months ended March 31, 1999. Recent supplier
capacity constraints have affected our ability to meet customer demand for our
products in the three months ended March 31, 2000. We expect these supplier
capacity constraints to continue through the remainder of 2000 and possibly
into 2001, and they may adversely affect revenue growth during that time.

Cost of Revenues. Cost of revenues includes the cost of purchases for
subcontracted materials, IC assembly, factory labor and overhead and warranty
costs. In addition, we perform final testing of our products and incur cost for
the depreciation of our test and handling equipment, labor, quality assurance
and logistics. We have only recently begun manufacturing our silicon products
and as a result expect our costs to decrease as our suppliers and our test
personnel develop experience in producing our products. Our subcontracted
materials experience cyclical trends in pricing due to fluctuations in demand.
In many cases, we do not have written commitments from our suppliers for
guaranteed supply. Our cost of revenues in the three months ended March 31,
2000 was $10.1 million, or 72% of net revenues. We did not generate revenues
from the sale of products in the three months ended March 31, 1999 and,
therefore, did not incur cost of revenues.

Research and Development. Research and development expenses consist of
personnel-related expenses, lab supplies, training and prototype subcontract
materials. We expense all of our research and development costs in the period
incurred. Research and development expenses increased 163% from $1.0 million in
the three months ended March 31, 1999 to $2.6 million, or 19% of net revenues,
in the three months ended March 31, 2000. This increase primarily reflects our
recruiting of engineers and purchases of additional prototype materials
associated with the design process. We expect that research and development
expenses will increase in absolute dollars in future periods, and may increase
or fluctuate significantly as a percentage of total revenues from period to
period.

Acquired In-Process Research and Development. As a result of our combination
with Temic, we recorded acquired in-process research and development costs of
$12.7 million for the three months ended March 31, 2000. Amounts allocated to
acquired in-process research and development

25
<PAGE>

were expensed at the date of combination because the purchased research and
development had not reached technological feasibility based on the status of
design and development activities that required further refinement and testing.

Selling, General and Administrative. Selling, general and administrative
expenses include our personnel-related expenses for administrative, financial,
human resources, marketing and sales, and information technology departments,
and include expenditures related to legal, public relations and financial
advisors. In addition, these expenses include promotional and marketing costs,
and will include sales commissions and reserves for bad debts. Selling, general
and administrative expenses increased 781% from $0.4 million in the three
months ended March 31, 1999 to $3.3 million, or 24% of net revenues, in the
three months ended March 31, 2000. The increase in selling, general and
administrative expenses in the three months ended March 31, 2000 primarily
reflects the addition of expenses associated with Microtune GmbH operations,
professional fees and other expenses incurred in connection with our
combination with Temic, and increased sales and marketing expenses as we ramped
into production with our silicon products in the three months ended March 31,
2000.

Amortization of Intangible Assets and Goodwill. The amortization of
intangible assets and goodwill of $2.2 million in the three months ended March
31, 2000 results principally from our combination with Temic. The combination
has been accounted for using the purchase method of accounting. The purchase
price allocated to intangible assets of $8.0 million is being amortized over
the estimated useful lives of the related assets of one to five years. Goodwill
resulting from the transaction totaled $30.0 million and is being amortized
over five years. We had immaterial amortization charges in the three months
ended March 31, 1999.

Stock Option Compensation. In connection with the granting of stock options
to our employees in 1999 and in the three months ended March 31, 2000, we have
incurred aggregate stock option compensation of approximately $14.6 million.
For accounting purposes, this represents the difference between the deemed fair
market value for accounting purposes of the common stock at the date of grant
and the exercise price. The aggregate stock option compensation is being
amortized over the vesting periods of the related options. As a result, we
recorded stock option compensation expense of $0.4 million in the three months
ended March 31, 1999 and $0.8 million in the three months ended March 31, 2000.
This compensation charge does not affect our total stockholders' equity or cash
flows.

Other Income (Expense). Other income (expense) consists of interest income
from investment of cash and cash equivalents and foreign currency gains and
losses, and other non-operating income and expenses. Interest income increased
179% from $0.1 million in the three months ended March 31, 1999 to $0.3 million
in the three months ended March 31, 2000. Interest income is earned from high
quality, short-term investments from cash generated by our four private
placement equity rounds of funding. The foreign currency translation and
transaction gain of $0.9 million in the three months ended March 31, 2000
relates to the operations of Microtune GmbH. We use the German Mark as the
functional currency for Microtune GmbH's financial statements. Financial
statements of operations of Microtune GmbH outside of Germany are translated
into Marks using exchange rates in effect at period end for assets and
liabilities and average exchange rates during the period for results of
operations. The resulting translation adjustments are included in the results
of operations. Adjustments resulting from the translation of the financial
statements of Microtune GmbH into U.S. dollars are included as a component of
stockholders' equity.

Income Taxes. Prior to our combination with Microtune GmbH, or Temic, we had
not recognized any provision for income taxes. We have a net operating loss
carryforward for U.S. federal income tax purposes of approximately $14.3
million as of December 31, 1999. In addition, we have unutilized

26
<PAGE>

research and development tax credits of $0.4 million. Due to the uncertainty of
our ability to utilize these deferred tax assets they have been fully reserved.
The provision for income taxes in the three months ended March 31, 2000
consists of foreign income taxes on the income of Microtune GmbH.

Comparison of Years Ended December 31, 1997, 1998 and 1999.

Net Revenues. Our first silicon products were available for evaluation by our
customers in 1999. We did not generate net revenues from the sale of our
products in 1997, 1998 or 1999.

Cost of Revenues. We did not generate revenues from the sale of products in
1997, 1998 or 1999 and therefore have not incurred cost of revenues.

Research and Development. Research and development expenses increased 52%
from $2.1 million in 1997 to $3.2 million in 1998, and 86% to $5.9 million in
1999. These increases primarily reflect our increase of engineering personnel
and purchases of additional prototype materials associated with the design
process.

Selling, General and Administrative. Selling, general and administrative
expenses increased 22% from $0.7 million in 1997 to $0.9 million in 1998, and
163% to $2.3 million in 1999. The 1997 to 1998 increase was primarily due to
increased personnel-related costs resulting from the growth of our finance
staff and increases in amortization of patent expenditures and financial
advisory services for audit and tax planning. The larger increases from 1998 to
1999 were primarily related to our personnel-related expenses in sales and
marketing as we prepared for our first half 1999 product announcements and
began to develop our direct sales channels and independent sales representative
network.

Stock Option Compensation. In connection with the granting of stock options
to our employees in 1999, we have incurred aggregate stock option compensation
of approximately $3.4 million. As a result, we have recorded stock option
compensation expense of $0.9 million in 1999. We did not incur stock option
compensation in 1997 or 1998. This compensation charge does not affect our
total stockholders' equity or cash flows.

Other Income (Expense). Other income (expense) includes interest income which
increased 40% from $0.4 million in 1997 to $0.6 million in 1998. Interest
income was flat with $0.6 million in 1998 and 1999.

Income Taxes. Due to our net operating losses, we did not record any
provision for income taxes in 1997, 1998 or 1999.

27
<PAGE>

Pro Forma 1999 and Actual 2000 Quarterly Results of Operations

The following table sets forth quarterly financial information on a pro forma
basis for the year ended December 31, 1999, reflecting our combination with
Temic as if the combination had occurred on January 1, 1999, and on an actual
basis for the three months ended March 31, 2000. The pro forma information has
been derived from information used to prepare, and should be read in
conjunction with, the unaudited pro forma combined condensed statement of
operations included elsewhere in this prospectus. The pro forma information is
presented for illustrative purposes only and is not necessarily indicative of
the results of operations that would have been reported if the combination had
occurred as presented in such unaudited pro forma combined condensed statement
of operations. The financial information for the three months ended March 31,
2000 has been derived from our unaudited interim financial statements which are
included elsewhere in this prospectus. The quarterly results presented below
are not necessarily indicative of the results to be expected for any future
period.

Pro Forma
--------------------------------------------- Actual
March 31, June 30, September 30, December 31, March 31,
1999 1999 1999 1999 2000
--------- -------- ------------- ------------ ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net revenues............ $11,069 $11,638 $ 9,880 $14,172 $ 13,896
Cost of revenues........ 6,870 7,042 7,132 10,369 10,071
------- ------- ------- ------- --------
Gross margin............ 4,199 4,596 2,748 3,803 3,825
Operating expenses:
Research and
development.......... 1,815 2,144 2,606 2,508 2,584
Acquired in-process
research and
development.......... -- -- -- -- 12,692
Selling, general and
administrative....... 1,836 2,217 2,443 2,672 3,302
Amortization of
intangible assets and
goodwill............. 2,127 2,177 2,180 2,216 2,178
Stock option
compensation......... 602 353 354 361 789
------- ------- ------- ------- --------
Total operating
expenses........... 6,380 6,891 7,583 7,757 21,545
------- ------- ------- ------- --------
Loss from operations.... (2,181) (2,295) (4,835) (3,954) (17,720)
Other income (expense).. 905 961 157 879 1,324
------- ------- ------- ------- --------
Loss before provision
(benefit) for income
taxes.................. (1,276) (1,334) (4,678) (3,075) (16,396)
Provision (benefit) for
income taxes........... 583 684 (373) (487) 364
------- ------- ------- ------- --------
Net loss................ $(1,859) $(2,018) $(4,305) $(2,588) $(16,760)
======= ======= ======= ======= ========
</TABLE>

28
<PAGE>

The following table sets forth the quarterly results as a percentage of net
revenues:

<TABLE>
<CAPTION>
Pro Forma
--------------------------------------------- Actual
March 31, June 30, September 30, December 31, March 31,
1999 1999 1999 1999 2000
--------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Net revenues............ 100% 100% 100% 100% 100%
Cost of revenues........ 62 61 72 73 72
--- --- --- --- ----
Gross margin............ 38 39 28 27 28
Operating expenses:
Research and
development.......... 16 18 26 18 19
Acquired in-process
research and
development.......... 91
Selling, general and
administrative....... 17 19 25 18 24
Amortization of
intangible assets and
goodwill............. 19 19 22 16 16
Stock option
compensation......... 5 3 4 3 6
--- --- --- --- ----
Total operating
expenses........... 57 59 77 55 156
--- --- --- --- ----
Loss from operations.... (19) (20) (49) (28) (128)
Other income (expense).. 8 8 2 6 10
--- --- --- --- ----
Loss before provision
(benefit) for income
taxes.................. (11) (12) (47) (22) (118)
Provision (benefit) for
income taxes........... 5 5 (3) (4) 3
--- --- --- --- ----
Net loss................ (16)% (17)% (44)% (18)% (121)%
=== === === === ====
</TABLE>

We may from time to time make certain pricing, service or marketing decisions
that may adversely affect our profitability in a given three month or annual
period. Our expense levels are based in part on expectations of future revenue
and, to a large extent, are fixed. We may be unable to adjust spending quickly
enough to compensate for any unexpected revenue shortfall. In addition, we
generate a significant portion of our revenues from products that can be
cancelled by our customers with little or no notice and without recourse.

Our quarterly pro forma and actual operating results have varied
significantly in the past and we expect them to continue to vary on a quarterly
basis in future periods. We experience quarterly variations due to various
factors including changes in average selling prices, product mix, customer mix
and changes in the costs and availability of components and raw materials from
our suppliers. In addition, the level of research and development expenditures
have in the past, and could in the future, cause quarterly operating results to
fluctuate.

Net revenues in the three months ended September 30, 1999 decreased from the
three months ended June 30, 1999 due in part to historical seasonality, in
particular of our European markets, and because one of our key customers
decreased its production during the later part of 1999. Based on current market
trends and growth in newly penetrated markets we anticipate that there will not
be a similar seasonal effect in the three months ended September 30, 2000. In
the three months ended December 31, 1999, our net revenues increased 43%
compared to the three months ended September 30, 1999 due to volume increases
in our cable modem and PC/TV markets. Our net revenues for the three months
ended March 31, 2000 decreased from the fourth quarter of 1999 due to capacity
constraints relating to key components of our modules experienced by one of our
suppliers. We expect these supplier capacity constraints to continue through
the remainder of 2000 and possibly into 2001.

Beginning in the three months ended September 30, 1999, our gross margins
decreased as a percentage of net revenues, primarily as a result of initial
volume price discounts for key customers

29
<PAGE>

and additional incremental factory costs, including training of factory
personnel and low yields associated with initial low volume manufacturing as we
began producing some of our new products. We expect continued pressure on gross
margins as we continue to ramp up our production of our new products and
attempt to gain market share in key markets in 2000.

In the three months ended September 30, 1999, our research and development
expenses increased primarily due to larger than normal expenses, including
purchases of prototype materials and annual bonuses for engineers. In the three
months ended March 31, 2000, acquired in-process research and development
reflects the in-process technologies acquired in connection with our
combination with Temic.

Our selling, general and administrative expenses for the three months ended
March 31, 2000 increased $0.6 million or 24%, due to increased hiring of sales
personnel, and transactions costs, including professional services fees and
operational costs associated with combining our U.S., German and Philippines
operations. We expect that selling, general and administrative expenses will
increase as we continue to develop infrastructure.

The amortization of intangible assets and goodwill of $2.2 million results
principally from our combination with Temic in January 2000. The combination
has been accounted for using the purchase method of accounting. The purchase
price allocated to intangible assets of $8.0 million is being amortized over
the estimated useful lives of the related assets of one to five years. Goodwill
resulting from the transaction totaled $30.0 million and is being amortized
over five years.

The decrease of our other income (expense) in the three months ended
September 30, 1999 and the increases in the three months ended December 31,
1999 and the three months ended March 31, 2000 are primarily due to
fluctuations in currency markets resulting in translation and transaction gains
and losses.

Liquidity and Capital Resources

Since inception, we have funded our operations primarily through the issuance
of convertible preferred stock which has generated net cash proceeds of
approximately $34.6 million. As of March 31, 2000, we had net working capital
of $27.4 million, including $17.5 million of cash, cash equivalents and
marketable securities. Our marketable securities consist of high quality,
short-term investments.

Investments in property and equipment were $0.6 million in 1997, $1.5 million
in 1998, $0.9 million in 1999 and $1.9 million in the three months ended March
31, 2000. We expect capital expenditures to increase substantially over the
next 12 months as we move to a new corporate facility in the second half of
2000 and expand our manufacturing and test capacity to support our anticipated
increase in production. Other uses of cash include the funding of operating
activities which were $2.3 million in 1997, $2.7 million in 1998, $6.5 million
in 1999 and $4.4 million in the three months ended March 31, 2000.

We believe that the net proceeds from this offering, together with our
current cash balance will provide adequate liquidity to fund our operations and
meet our other cash requirements for at least the next 24 months following this
offering. However, we may find it necessary or we may choose to seek additional
financing if our investment plans change or if industry or market conditions
are favorable for such a financing. We cannot be sure that such financing will
be available on reasonable terms, or at all, when and if required. If we raise
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our stockholders will be reduced.

30
<PAGE>

Quantitative and Qualitative Disclosures About Market Risk

Following our combination with Temic, we now transact both sales and
purchases in multiple foreign currencies, including the Euro, German Mark and
the Philippine Peso. Due to the volatile nature of the currency markets, there
is a potential risk of foreign currency translation losses, as well as gains.

We currently do not use derivative financial instruments to hedge our balance
sheet exposures against future movements in exchange rates. However, we are
currently evaluating our exchange risk management strategy, including changes
in our organizational structure and other capital structuring techniques to
manage our currency risk. Our net investment in foreign subsidiaries,
translated into U.S. dollars using exchange rates at March 31, 2000 was $48.0
million. A potential loss in the value of this net investment resulting from a
hypothetical 10% adverse change in foreign exchange rates would be
approximately $4.8 million.

Euro Conversion

On January 1, 1999, 11 European Union member states (Germany, France, the
Netherlands, Austria, Italy, Spain, Finland, Ireland, Belgium, Portugal and
Luxembourg) adopted the Euro as their common national currency. Until
January 1, 2002, either the Euro or a participating country's national currency
will be accepted as legal tender. Beginning on January 1, 2002, Euro-
denominated bills and coins will be issued, and by July 1, 2002, only the Euro
will be accepted as legal tender. We do not expect future balance sheets,
statements of operations or statements of cash flows to be materially impacted
by the Euro conversion.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which we
are required to adopt by January 1, 2001. We do not currently use derivatives,
however, as such instruments may be used in the future, it is uncertain what,
if any impact the adoption of Statement 133 will have on our earnings or
financial position.

Year 2000

We have not incurred any material expense nor have we experienced any
material disruptions in our systems or those of our vendors and service
providers as a result of Year 2000 system processing.

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<PAGE>

BUSINESS

Overview

We are a leading RF silicon and systems company, providing high-performance
RF tuners and transceivers to the broadband communications markets. Using
proprietary technologies and advanced design methodologies, we have designed
and developed RFICs and RF modules for a variety of broadband communications
access devices including cable modems, PC/TVs, which are multimedia personal
computers with broadband reception capabilities, set-top boxes and digital TVs.
Our RF tuners are the gateway device for reception of video, audio, data and/or
voice over existing broadband communications infrastructures, such as cable and
terrestrial. Our transceivers enable interactivity by permitting bi-directional
communications. Our latest RFIC products offer a high level of integration,
resulting in significant cost, performance, size, reliability and
manufacturability benefits. Our RF module products provide a complete RF
system, eliminating a customer's need for RF design and manufacturing
expertise.

Industry Background

In recent years, there has been dramatic growth in new classes of broadband
digital entertainment, information and communications services, such as high-
speed Internet access, web-enabled television, digital and high-definition TV
and cable telephony. These new services, which are increasingly interactive,
involve the delivery of video, audio, data and/or voice to a growing range of
access devices, including cable modems, PC/TVs, set-top boxes and digital TVs.
In the future, we believe broadband services will increasingly be delivered to
mobile wireless devices such as cell phones, personal digital assistants, or
PDAs, and in-car information and entertainment systems.

Several significant trends are now influencing the market for broadband
entertainment, information and communications services, including:

. the transition from analog to digital content, transmission systems and
access devices;

. the transition from proprietary to standards-based systems such as
DOCSIS (data over cable service interface specification)-based cable
modems, OpenCable set-top boxes and PacketCable telephony devices; and

. the convergence of Internet, personal computer and consumer electronics
functions.

Many of the new broadband entertainment, information and communications
services are transmitted over cable, terrestrial or satellite systems that use
the RF spectrum. The RF spectrum is finite and its use is regulated by
governmental agencies. Due to the increased demand for services using the RF
spectrum, communications providers must use the limited amount of spectrum more
efficiently, by using every available channel and by packing data densely
within the channels. As a result, broadband communications providers are making
the transition to digital techniques because digital allows more efficient use
of the limited amount of spectrum than is possible with analog techniques. For
example, using digital techniques over cable, it is possible to broadcast two
high definition signals or as many as twenty standard definition signals in the
same amount of spectrum as a single standard definition signal using analog
techniques.

RF tuners are the gateway devices between broadband communications systems
and the related access devices. Video, audio, data and/or voice are transmitted
through these communications systems at RF frequencies. The RF tuner plays a
critical role by extracting content from the desired RF frequency and
converting the content into a form that is useable by the access device. In
interactive applications where bi-directional communication is necessary, the
RF tuner, together with an RF transmitter, acts as a transceiver, both
receiving and transmitting RF broadband data.

Every automotive radio, cable modem, set-top box, PC/TV, VCR and TV requires
at least one RF tuner. Increasingly, some of these access devices include
multiple tuners for enhanced or

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<PAGE>

additional services. Based on market reports from Cahner's Instat Group and
Kinetic Strategies, the worldwide demand for RF tuners in these markets could
reach 310 million units by 2001.

RF tuner technology is complex and significantly influences overall system
performance. Unlike digital circuits, which address stable and predictable
inputs and outputs, analog circuits, including RF, must accommodate variable
and unpredictable signals. RF tuners are significantly more complex than other
analog technologies because they must receive weak signals at very high
frequencies in noisy environments. A poorly performing tuner will result in
interference that manifests itself in spurious patterns, static and snow in an
analog environment, and total loss of signal in a digital environment.

The transition from analog to digital content and the convergence of
Internet, PC and consumer electronics functions pose significant challenges
that require even more complex, high performance RF tuners. These challenges
include:

. more efficiently using the RF spectrum;

. reliably receiving both analog and digital signals;

. handling the increasing bandwidth on broadband cable systems;

. serving many interconnected access devices; and

. complying with evolving standards in the broadband markets.

In addition to these performance challenges, RF tuners must maintain a small
form factor, have a high level of integration and provide customers rapid time-
to-market.

Typical low-cost RF tuners currently used in analog devices, such as TVs and
VCRs, fail to meet one or more of these challenges. Typical high performance
tuners have generally been prohibitively expensive for RF broadband
applications. As a result, there is a demand for a class of cost-effective RF
tuners capable of high performance. In addition, we believe the increasing
pressures of even higher performance and lower cost, combined with the
desirable traits of increased reliability, manufacturability and reduced size,
will drive the market toward RF tuner solutions with increasing levels of
silicon content.

The Microtune Solution

We are a leading RF silicon and systems company focused on delivering RF
gateway solutions, including both RF tuners and transceivers, to a range of
existing and emerging broadband communications markets. With our unique
combination of silicon and systems expertise, we provide complete and cost-
effective RF solutions for high performance RF tuner applications. Key features
of our solution include:

High Performance Tuning. Our tuner solutions deliver the high performance
required to meet the needs of advanced video, audio, data and/or voice
applications transmitted via sophisticated broadband communications systems. We
believe our tuner solutions provide the following benefits:

. higher channel selectivity by rejecting image and adjacent channel
interference, thereby permitting more efficient use of the RF spectrum;

. lower phase noise that allows reliable reception of digital content;

. lower distortion consistent with requirements of a cable system with
bandwidth that is fully utilized by concurrent analog and digital
broadcasts;

. operation at a higher frequency to fully utilize the available bandwidth
of broadband cable systems;

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<PAGE>

. lower incidence of spurious emissions to enable the interconnection of
multiple access devices; and

. compatibility with evolving standards, including the stringent
performance and functionality requirements of the DOCSIS standard.

IC Tuner Leadership. In January 1999, we introduced our MicroTuner, the
world's first single-chip RF tuner. The MicroTuner's high level of integration
results in significant cost, performance, size, reliability and
manufacturability benefits. We believe that the MicroTuner is the only single-
chip tuner to incorporate all of the active elements of an RF tuner solution,
including a low noise amplifier, which is critical for system performance.
Furthermore, our single-chip tuner incorporates varactors, thereby eliminating
the need for a high-voltage power supply. In addition, the MicroTuner has a
flexible architecture designed to support multiple broadband communications
systems, including analog and digital, cable and terrestrial systems, and
future broadband wireless mobile networks. The MicroTuner architecture and the
multiple ICs derived from the architecture are protected by 7 issued patents
and 12 pending U.S. patent applications.

Unique Combination of RF Silicon and Systems Expertise. We believe that we
differentiate ourselves from our competitors by possessing both leading RF
silicon and systems expertise. Our silicon expertise allows us to integrate
increasing levels of functionality into fewer ICs, resulting in higher
performance, smaller tuner solutions. Our RF systems expertise allows us to
offer tuner solutions that can be rapidly and cost effectively incorporated
into our customers' products and that contribute to optimizing the performance
of those products in an RF environment. Therefore, complete RF systems can be
provided to customers that do not have the expertise, time or desire to develop
their own RF solutions. Our 68 systems and IC engineers possess an average of
more than 12 years of experience. Given the complexity of RF tuner design, this
combination of silicon and systems expertise allows us to achieve optimal
technology integration and provides a complete solution to our customers'
demanding and varied needs.

Broad Suite of RF Tuner Solutions. We provide a full range of RF tuner
solutions to the broadband communications market with products that support
both analog and digital systems. Our portfolio of solutions includes ICs with
complete reference designs and manufacturing-ready RF modules, including
MicroModules, which contain MicroTuner ICs. We believe our solutions allow our
customers to integrate RF capabilities into their products quickly and easily.
Our solutions are customized for multiple markets, including the cable modem,
PC/TV, set-top box, cable telephony, digital TV and automotive markets. We
believe the breadth of our product portfolio allows us to be a sole source
provider for our customers and allows them to migrate easily, at their own
pace, to silicon-only implementations.

Worldwide Sales, Support and Engineering Infrastructure. We offer our
products worldwide and provide our customers with global support. Our corporate
headquarters and a major design center are located in Plano, Texas, and our
European headquarters and another major design center are located in
Ingolstadt, Germany. Sales centers are located in San Diego and San Jose,
California, and Huntsville, Alabama with applications support in San Diego and
Huntsville.

Captive Module Manufacturing. We currently operate our own manufacturing
facilities for assembly, tuning and testing our module products. We have two
manufacturing facilities located in Manila, Philippines, one of which is
qualified for both QS-9000 and ISO 9002. We are in the process of applying for
ISO 9002 certification for our second facility. Our QS-9000 qualified facility
allows us to supply RF tuner modules that meet the exacting standards required
for automobile-based products, such as the ability to operate in a wide range
of temperatures. We are able to leverage our quality manufacturing to benefit
all of our customers as well as to win new customers.

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<PAGE>

Our Strategy

Our goal is to be the leading provider of RF silicon and systems solutions to
the broadband communications markets for the delivery of video, audio, data
and/or voice to home, office and mobile environments. Key elements of our
strategy include the following:

Strengthen And Broaden Broadband RF Technology Leadership. We intend to build
on our technology capabilities and strengthen our position as a technology
leader in the broadband RF market. As a technology leader supplying complete
solutions to RF broadband markets, we believe we can drive the innovation of
next-generation technologies for these markets. We are aggressively building on
our technology leadership by devoting significant research and development
resources to increasing the performance of our products, while simultaneously
reducing their power requirements and form factor, and increasing their
integration. We have assembled a world-class team of engineers with silicon and
systems design expertise in RF and analog technologies, and we intend to expand
this team. In addition, we have protected our technology developments with
seven U.S. patents issued, the first of which expires in 2015, and with 15 U.S.
patent applications pending, as well as 7 foreign patents issued and 6 foreign
patent applications pending. We intend to vigorously protect our future
innovations through additional patent protection.

Target High Growth Broadband RF Markets. We are currently a market leader in
RF gateway solutions to the high growth DOCSIS cable modem and PC/TV markets.
We intend to leverage this market leadership and our flexible MicroTuner
architecture to penetrate emerging, high growth broadband communications
markets, such as the digital set-top box, digital TV and cable telephony
markets. Due to our flexible architecture, our RF gateway solutions can extract
both digital and analog content and operate in both cable and terrestrial
communications systems. As a result, we believe we are well positioned to
expand our market leadership to broadband communications opportunities as they
emerge. Furthermore, our target markets are transitioning to standards-based
systems. Consequently, to be an early provider of standards-compliant RF
solutions, we are focusing significant resources on developing products that
conform to emerging standards. For example, a majority of the DOCSIS-qualified
cable modem manufacturers currently incorporate our RF tuners. We believe that
our expertise in the DOCSIS standard will allow us to rapidly deploy products
that comply with the emerging standards of OpenCable and PacketCable due to the
similarities in the RF requirements of these three standards.

Develop and Expand Relationships with Industry Leaders. We have established
relationships with key market and technology leaders within the broadband
communications market. Leading equipment suppliers that currently ship products
that incorporate our RF solutions include:

. DOCSIS Cable Modem: Arris/Nortel, Askey, Cisco Systems, Motorola/General
Instrument, Samsung, Thomson Consumer Electronics and 3Com;

. PC/TV: ATI, Hauppauge, Pinnacle and 3Dfx; and

. Automotive: DaimlerChrysler.

In addition to these current customer relationships, we have design wins with
suppliers in the set-top box, cable telephony and cable modem markets. We
believe our relationships with market leaders enhance the acceptance of our RF
solutions and allow us to anticipate market trends to expand our market
leadership. Finally, while we design products that can be used by multiple
customers, we believe our ability to design custom features based on customers'
needs enables our customers to improve their time-to-market, differentiate
their products and address new market opportunities. We believe our ability to
customize RF solutions allows us to strengthen our relationships with our
existing and new customers.

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<PAGE>

Migrate Existing Customer Base to More Highly Integrated Solutions. We
currently have a large base of existing customers in the high growth broadband
communications markets incorporating our module solutions. We believe that once
a customer designs our solution into its product, that customer is more likely
to continue to choose our solutions for their products. As the market requires
more integrated solutions to improve cost, size, reliability and
manufacturability, we believe that we can leverage our incumbent position with
our customers to migrate these customers across our product line. Over time, we
intend to transition our customers from module solutions with discrete
components to either module solutions incorporating our ICs or to IC-only
solutions. By providing identical functionality, as we increase the silicon
content, we believe the customer can transition to more integrated solutions
with minimal engineering effort. At the same time, more highly integrated
solutions reduce our costs and improve our margins.

Markets

While the infrastructure of the broadband communications markets is varied,
we leverage our core silicon technologies and systems capabilities in various
product implementations across multiple complementary segments, including
automotive radio, cable modem, PC/TV, set-top box, VCR and TV. Based on market
reports from Cahner's Instat Group and Kinetic Strategies, the worldwide demand
for RF tuners in these markets could reach 300 million units by 2001. Many
industry analysts predict continued high-growth rates for these markets, even
though individual segments are at different phases in their evolution.
Specifically, we target existing high-growth segments, such as cable modems and
PC/TV, and emerging segments, such as digital TV, set-top boxes and cable
telephony. In addition, we target existing high-volume markets such as the
automotive market. We believe that these markets demand, or will demand in the
future, affordable RF tuner solutions at higher performance levels than
previous tuner implementations. These market requirements have created a
significant opportunity for our products.

Cable Modem. Major cable operators have been upgrading their networks to
support two-way communications, high-speed Internet access, and telecommuting
through the use of a cable modem. Paul Kagan Associates estimates that in 2000,
75% of U.S. cable homes will have access to two-way cable, which percentage is
expected to grow to 93% by 2003. Cahner's InStat Group estimates that 2.6
million cable modems were sold worldwide in 1999 with more than 5.1 million
projected through the first three quarters of 2000. The installed base of cable
modem customers in North America alone is expected to reach 15.9 million by
2003, according to the Kinetic Strategies.

In the cable market, factors such as the consolidation of systems operators
are driving a transition from proprietary cable modems to open architecture,
standards-based devices. The standard, called DOCSIS, enables interoperability
between different cable manufacturers' cable modems across different cable
networks. Major cable systems operators were offering DOCSIS-based services to
17% of all cable homes passed in North America at the end of 1999, expected to
climb 84% by the end of 2003, according to the Kinetic Strategies. Every cable
modem must include at least one RF tuner to receive the RF signal from the
cable networks. Presently, Microtune provides its RF module solution to
multiple DOCSIS-certified cable modem manufacturers.

PC/TV. Microsoft and Intel, through their PC guidelines and other industry
initiatives, have outlined rigorous specifications for high-resolution video
and audio services on the PC. These specifications reflect an initiative,
endorsed by computer OEMs, to transform the PC into a platform for
entertainment, information and communications in both the home and office. The
power and interactivity of the PC, in combination with new broadcast delivery
mechanisms, including digital TV transmission, digital audio broadcast and two-
way cable, is expected to drive the demand for new applications and services,
and in turn, increase computer sales. With its high-resolution monitor, the PC
is already equipped to support the display requirements of digital TV and it
provides a low-cost alternative to high-priced digital TV sets and receivers.
Cahner's Instat Group predicts that sales of

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<PAGE>

digital TV tuners for PCs will reach 9 million units worldwide by 2004,
climbing to more than 15 million units by 2010. We currently supply our RF
solutions to PC/TV manufacturers and will seek to migrate our customers to
digital television technology.

Set-top Box. According to Cahner's InStat Group the number of worldwide cable
subscribers at the end of 1999 was 258 million, and is expected to grow to 335
million by the end of 2003. In order to increase the number of channels,
provide higher picture quality and exploit the bandwidth of the existing cable
infrastructure, cable service providers have begun offering digital
programming. Cahner's InStat Group estimates that major cable system operators
are planning to add an average of 15 new 6MHz digital channels to existing
cable plants this year, and 18 within the next 24 months. Consumers receive
this digital programming through a digital cable set-top box. Cahner's InStat
Group predicts that there will be more than 35 million digital cable
subscribers worldwide by 2003. The number of cable digital service customers in
the U.S. alone is expected to increase to 42.1 million homes by 2006, according
to Paul Kagan Associates.

In addition, industry analysts predict that a new generation of digital
interactive set-top boxes will be introduced by the end of the year 2000 that
will facilitate interactive TV, Internet access, broadband multimedia services
and high-definition TV capability. These new set-top boxes, based on OpenCable
specifications, will also be interoperable, enabling set-top boxes from
multiple manufacturers to operate across different cable networks. Each set-top
box contains at least one tuner, and often multiple tuners, for reception of
analog and digital signals from the cable network. We are currently working
with customers who are developing OpenCable-compliant set-top boxes to supply
tuners that meet the RF hardware requirements of the OpenCable specification.
In addition, we are working with suppliers of satellite and terrestrial set-top
box receivers to incorporate our products.

Cable Telephony. As the availability of bi-directional cable communications
becomes more widespread, we expect voice-over-cable will become more readily
available as part of a cable operator's service portfolio. Major cable
operators, including AT&T and TimeWarner, are beginning to compete with local
companies in providing telephone service and other services, such as
videoconferencing via the cable infrastructure. Paul Kagan Associates projects
600,000 cable phone subscribers by 2000, reaching 13.8 million subscribers in
2005. The evolving standard, PacketCable, provides the framework for
identifying, qualifying and supporting Internet protocol-based voice and video
products via the cable network, and it ensures a level of service consistent
with that provided by telephone companies. To conform with the PacketCable
standard, suppliers must meet two technical challenges: compliance with
rigorous industrial-class environmental operating standards and the delivery of
a low-power solution. With our QS-9000 certified products that were developed
for the automotive industry and our success in developing low power products,
we believe that we are well positioned to meet the stringent environmental and
power requirements for RF tuners in the PacketCable standard. We are currently
working with customers who are developing prototype cable telephony systems to
supply RF tuners that meet their performance requirements.

Television. The worldwide infrastructure of traditional TV is undergoing
substantial change due to the transition to digital techniques. For example, in
the U.S., current FCC regulations, subject to certain exceptions, mandate that
all terrestrial broadcast stations in the U.S. convert solely to transmission
using digital techniques by 2006. Digital techniques will enable services such
as high-definition TV programming, data broadcasting, on-demand programming and
interactive TV. New equipment will be required by consumers to receive these
new digital services, and this equipment can include digital TVs, digital set-
top boxes as well as digital personal video recorders and other TV peripherals.
Cahner's InStat Group predicts that the number of digital TV tuners will reach
51 million units worldwide by 2004, climbing to 137 million units by 2010. Paul
Kagan Associates predicts that by 2006 there will be more than 31 million
digital TV-set households in the U.S., representing 30% of

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<PAGE>

all U.S. TV households, reaching more than 69 million digital TV-set households
in 2010 (representing 61% of U.S. TV households). Devices enabling the digital
delivery of information require at least one, and often more, RF tuner. In
addition, we sell our RF tuner modules in the analog TV market. Because of the
high-performance of our tuners, and their ability to reliably receive both
digital and analog signals, we believe that our tuners are well positioned to
meet both digital and analog TV manufacturers' requirements.

Automotive. Today's consumers are interested in smarter and safer
automobiles, and the automotive industry is responding with system upgrades and
advanced features, including next-generation digital radio, TV-based
entertainment systems, and the integration of networking and communications
into the automobile. We believe that these advanced services will lead to
increasing demand for high-performance tuner systems based on a new breed of RF
tuner technology and architectures. At the same time, the demand for silicon
content is increasing as automakers strive to provide more electronic systems
to meet automotive space constraints and QS-9000 quality standards, while
supporting industrial-class environmental operating conditions. Given our
experience in supplying FM and TV tuners to the automotive industry, we believe
that we can leverage our position in the tuner market for automobiles into
additional opportunities to incorporate our products into other automotive uses
of RF technology.

Products

We offer two product classes:

MicroTuners: Single-Chip Broadband Tuners. Our MicroTuner ICs, which
constitute the technology centerpiece of our product portfolio, are solid-state
dual-conversion tuners that incorporate all the active components associated
with receiving a cable or terrestrial signal in the RF spectrum and converting
it to a standard intermediate frequency. The MicroTuner offers a very small
form factor, suitable particularly for products that require high-performance
but have constrained space or that require multiple tuner implementations.

The MicroTuners are characterized by a number of features:

. compatibility with performance requirements of cable and terrestrial
environments, meeting the stringent requirements of new broadband
applications;

. support for analog and digital modes;

. support for worldwide standards;

. configurable implementation to meet a wide range of applications and
customer-customization requirements; and

. all-silicon implementation for reliable, stable, predictable operation
with lower manufacturing cost.

Modules: Complete, Production-Ready RF Solutions. Our modules are complete,
production-ready RF solutions that are available for specific markets,
including the cable modem, PC/TV, set-top box, cable telephony, digital TV and
automotive markets.

For many years, we have offered modules based on conventional discrete
components that offer high-performance RF capabilities and can include
additional functions, such as transmission capability enabling bi-directional
communications, packaged in a production-ready solution. These modules are
based on a single-conversion tuning architecture and offer customization
flexibility. We believe that these products, supported by our design and
applications engineering centers, have established a track record of
reliability, quality and performance.

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In March 2000, a new class of modules, called MicroModules, was introduced.
The MicroModules, containing the MicroTuner IC, package the complete RF
functionality into a small, module form-factor, designed for easy integration
and implementation into customers' existing or new systems. These high
performance, smaller form factor modules provide increased ease of
manufacturability and increased reliability. We have introduced four versions
of this product line, targeted to meet the specific requirements of the cable
modem, set-top box, digital TV, and PC/TV markets. Over time, we intend to
expand the silicon content of the MicroModules and to sell various
implementations across all of our target markets.

Our modules are characterized by a number of features:

. complete, fully-tested RF solutions, providing for easy integration into
a customer product;

. high-performance tuning capabilities, designed to meet performance
requirements of specific applications;

. high quality, with products manufactured to both ISO 9002 and QS-9000
standards;

. compliance with established worldwide industry standards; and

. customization capability, allowing our customers to differentiate their
products with added functions or unique features.

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<PAGE>

As part of our RFIC and module product portfolio, we develop and sell
reference platforms that represent application examples for incorporation into
customers' equipment. By providing these reference platforms, we can assist
customers in achieving easier and faster transitions from initial prototype
designs to final production releases. These reference-standard products enhance
the customer's confidence that our products will meet their market requirements
and product introduction schedules.

The following table summarizes our products by target market and
availability:

<TABLE>
<CAPTION>
Market Product Name and Description Availability

- ------------------------------------------------------------------------------
<C> <C> <S> <C>
Cable Modem Silicon IC . MicroTuner 2030-CM Single- Available Now
Chip Tuner
Modules . MicroModule featuring the Expected Q4, 2000
MicroTuner 2030-CM
. TM47XX RF Cable Modem RF Available Now
Tuner Module
. TM49XX Cable Modem Available Now
Transceiver

- ------------------------------------------------------------------------------
PC/TV Silicon IC . MicroTuner 2032-PC Single- Available Now
Chip Tuner
Modules . MicroModule featuring the Expected Q4, 2000
MicroTuner 2032-PC
. TM40XX PC/TV Module Available Now
. TM4040/42 Digital PC/DTV Expected Q3, 2000
Module
. TM41XX PC/TV Module Available Now

- ------------------------------------------------------------------------------
Set-top Box Silicon IC . MicroTuner 2030-STB Single- Available Now
Chip Tuner
Modules . MM8838 MicroModule Expected Q3, 2000
featuring the MicroTuner
2030-STB
. TM4041 Digital TV Tuner Expected Q2, 2000

- ------------------------------------------------------------------------------
Cable Telephony Silicon IC . MicroTuner for Cable Expected 2001
Telephony
Modules . TM4938 Cable Telephony Expected Q4, 2000
Transceiver Module

- ------------------------------------------------------------------------------
Television Silicon IC . MicroTuner 2032-DTV Single- Available Now
Chip Tuner
Modules . MicroModule featuring Expected Q4, 2000
MT2032-DTV
. TM5000 Analog TV Tuner Available Now
Module
. TM6000 Analog TV Tuner Available Now
Module

- ------------------------------------------------------------------------------
Automotive Modules . TM13XX AM/FM Tuner Module Available Now
. TM18XX FM Tuner Module Available Now
. TM51XX TV Tuner Module Available Now
</TABLE>

Although we anticipate that we will release the products in the table
immediately above in the time frame mentioned, the timing and success of
product releases remains unpredictable due to the complexity of our product
development, the compatibility of our products with the products of our
customers and market acceptance of our products. Moreover, once introduced, our
products may not generate any significant revenues.

Technology

We believe that one of our competitive advantages is our broad base of core
technologies across the range of engineering expertise for RF tuners, from
silicon to systems. We strive to continuously improve our technology and to
develop new technologies in the area of RF communication. To date, we have
developed RF technologies in the area of cable modem transceivers, television
tuning systems employed in personal computers, set-top boxes and digital video
recorders, automotive radios, and general television tuning technology for
terrestrial and cable applications. As of March 31, 2000, we have 7 patents
granted and an additional 15 patent applications pending in the U.S. and 7
patents granted and an additional 6 patent applications pending in other
countries.

MicroTuner IC. The centerpiece of our technology is our single-chip silicon
tuner, the MicroTuner. The MicroTuner is a highly integrated, solid-state
device that incorporates all the active components associated with receiving a
cable or terrestrial signal in the RF spectrum and converting it to a standard
intermediate frequency.

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<PAGE>

True Single-Chip Implementation. Our technology expertise has allowed us
to implement what we believe is the only single-chip tuner, incorporating
all of the active elements of an RF tuner solution. Our MicroTuner
addresses the especially difficult challenge of integrating the low noise
amplifier circuit which is critical for system performance due to its role
in defining a receiver's sensitivity. Furthermore, our MicroTuner is the
first tuner to incorporate varactors, thereby eliminating the need for a
high-voltage power supply.

Dual Conversion Architecture. The MicroTuner uses a patented dual
conversion architecture that has been optimized for an integrated circuit
implementation. The dual conversion architecture is considered highly
desirable because of its performance with respect to image rejection and
the accuracy of its output. Traditionally, dual conversion tuners were more
expensive than single conversion tuners due to the additional conversion
step and were only used in demanding and less cost sensitive applications
such as cable set-top boxes. But in the new digital era, higher performance
is a common requirement and the characteristics of the dual conversion
architecture are ideal.

Programmability. The MicroTuner also provides for substantial flexibility
through its programmability. A key part of the reference designs that we
develop and provide to customers is a software module. This software
provides for common functionality such as channel changing, but also allows
flexibility in creating on-chip reference frequencies used for tuning. By
providing this flexibility, it is possible to optimize performance on a
channel by channel basis. We believe the software also provides a
convenient user interface for designers and aids in system diagnostics.

All-Silicon Solution. Traditionally, RFICs have been based on a non-
silicon material called gallium arsenide. However, gallium arsenide suffers
from two weaknesses: high cost and low integration. Low integration means
that few components can be implemented on a single chip. Although silicon
germanium has attracted publicity in recent years due to its high
performance, to date, it has been available only at a high cost. In
contrast, we use an all-silicon chip to combine a high level of integration
in our RFICs, several tens of thousands of components on one chip, and low
cost. This allows us to provide our customers with cost-effective solutions
of small physical size.

High Performance Single Conversion Technology. Traditionally, high-
performance applications, such as cable TV tuners, have required performance
that was only realizable with a high-cost, dual conversion tuner module
composed of several discrete components. We have developed a proprietary design
for our single conversion tuner that extends its capabilities into the cable
and digital realm. While not offering all of the advanced capabilities of the
MicroTuner, the technology gives customers a choice of implementation methods
and cost alternatives. This has enabled us to sell reasonably priced RF modules
to additional target markets.

Sales, Marketing and Technical Support

We have a worldwide sales, marketing and technical support organization
consisting of 20 employees as of March 31, 2000, with sales and technical
support offices located in Plano, Texas, San Diego and San Jose, California,
Huntsville, Alabama, and Ingolstadt, Germany. To complement our direct sales
and support expertise, as of March 31, 2000 we had 17 sales representatives and
distributors in China (Hong Kong), Denmark, India, Israel, Japan, Korea,
Singapore, South Africa, Taiwan, Turkey and the United Kingdom. Products
shipped to North America accounted for approximately 46% of our total revenues
for 1999 on a pro forma basis and approximately 46% of our net revenues for the
three months ended March 31, 2000. In 1999, two customers, DaimlerChrysler
Corporation and ATI Technologies, accounted for greater than 10% of our
revenues, with approximately 29% and 14% of pro forma net revenues,
respectively. For the three months ended March 31, 2000, DaimlerChrysler, ATI
Technologies and Motorola/General Instrument accounted for approximately 26%,
10% and 10% of net revenues, respectively.

41
<PAGE>

In addition, our design and applications engineering staff is actively
involved with customers during all phases of design and production and provides
customer support through our worldwide sales and technical support offices and
major design centers in Plano, Texas, and Ingolstadt, Germany. We continue to
seek close technical collaboration with our customers during the design phase
of their new products to position us as the primary RF solutions supplier for
our customers' new products. We also provide technical support to our customers
through our field application engineers, technical marketing and factory
systems engineers.

We market our products through our web page, industry trade shows and
exhibitions, presentations of technical papers at industry meetings and
technical articles placed in industry magazines.

Manufacturing

Our manufacturing objective is to produce reliable, high quality ICs and
modules while maintaining a high level of on-time delivery to our customers. By
utilizing third parties for our wafer fabrication and IC packaging, we are able
to focus on module manufacturing and tuning and RF testing of both the ICs and
modules.

IC Manufacturing. We currently contract with a third-party silicon foundry,
IBM, for our wafer fabrication. However, we are in the process of qualifying a
second source third party silicon foundry. Our ICs are currently produced using
BiCMOS technology, and we are investigating using more advanced technologies
for fabrication of future products that increase the performance of our ICs
while reducing die size. Once produced by the third party foundry, the die are
then assembled into packages by a third party assembler. Currently, Amkor is
our sole source IC assembly subcontractor; however, we have recently identified
a second assembly subcontractor with a qualified package, and are continuing to
investigate other assembly subcontractors for future use. Once assembled, the
packaged units are returned to our Plano, Texas facility for final testing and
quality assurance to insure that manufacturability and yield enhancement
objectives are met.

Module Manufacturing. We currently operate our own manufacturing facilities
for assembly, tuning and testing our module products. We have two manufacturing
facilities located in Manila, Philippines, totaling 61,200 square feet of
space. One of our locations is qualified for both QS-9000 and ISO 9002. We
began manufacturing activities in the other facility in January 2000 and are in
the process of applying for ISO 9002 certification for this newer facility.

Module assembly is accomplished using the latest surface mount assembly
equipment utilizing 80% surface mount device components. The modules are then
tuned and tested using our proprietary test software and equipment.

Quality Assurance. Our quality control process is started during the design
phase of each product. Each of our products is designed for testability. During
the design phase for each product, we engage in specific layout rules for the
product and subject each product to extensive simulation at process,
temperature and voltage extremes prior to the product being prototyped. To
insure that the highest quality is maintained, our ICs and module prototypes
are subjected to extensive reliability testing prior to being released to high
volume production. Once a product is qualified and released to manufacturing, a
product-monitoring plan is used to ensure the highest-quality level is
maintained. We continue our quality testing process by submitting a
statistically valid random sample of finished products to extensive testing on
a rotational basis.

Engineering, Research and Development

Our engineering team has substantial expertise in communications systems,
RFIC technology, analog and mixed signal technology, television systems
engineering and PC systems and computer networks. As of March 31, 2000,
approximately 42 of our 68 research and development engineers had advanced
degrees. These engineers are involved in advancing our technology core

42
<PAGE>

competencies and our product development activities. Currently, our research
and development efforts are focused on increasing the functions of our RFICs
and modules, while maintaining a level of low power consumption.

In 1997, 1998 and 1999 and the quarter ended March 31, 2000, we spent
approximately $2.1 million, $3.2 million, $5.9 million and $2.6 million,
respectively, on research and development. On a pro forma combined basis in
1999, we spent approximately $21.8 million, which includes $12.7 million of
acquired in-process research and development. We believe that we must
continually enhance the performance and flexibility of our products, and
successfully introduce new products to maintain our leadership position.
Accordingly, we expect to continue to expend significant amounts of funds for
research and development activities in the future.

Backlog

As of April 14, 2000, our backlog was approximately $40.1 million. We include
in backlog all accepted product purchase orders for which delivery has been
specified by the customer within six months. Product orders in our backlog are
subject to changes in delivery schedules or to cancellation at the option of
the purchaser without significant penalty. Our backlog may vary significantly
from time to time depending upon the level of capacity available to satisfy
unfilled orders. Accordingly, although useful for scheduling production,
backlog as of a particular date may not be a reliable indicator of sales in any
future period.

Patents and Proprietary Information

Our future success and competitive position depend upon our ability to obtain
and maintain protection for the proprietary technology used in our products. As
of March 31, 2000, we held 7 issued U.S. patents and had 15 additional U.S.
patent applications pending, of which a majority of the claims made for three
pending applications has been approved, and 7 patents granted and 6 patent
applications pending in other countries (which together include over 1,000
individual claims). Our issued patents expire between 2015 and 2019. Our
patents and patent applications cover various aspects of our technology at the
broad architectural level as well as at the circuit and building block level,
including:

. integrated dual conversion tuners;

. multiple phase-locked loops on a single chip;

. synthesizer architecture and fast acquisition time; and

. changes to single-conversion tuners required for operating in a cable
environment.

We also have one registered trademark in the U.S.

Because it is critical to our success that we are able to prevent competitors
from copying our innovations, we intend to continue to seek patent protection
for our products. We also rely on trade secret protection for our technology,
in part through confidentiality agreements with our employees, consultants and
third parties.

To date, although at least one of our customers has received claims of
infringement with respect to its product incorporating our RF tuner solution,
we have not received any claims that we are infringing any other entity's
patents or trade secrets. We may, however, receive such claims in the future,
which could severely harm our rights to use our technology and, consequently,
our business.

Competition

The broadband communications markets and semiconductor industries are
intensely competitive and are characterized by rapid technological change,
evolving standards and price erosion. We expect competition to intensify as
current competitors expand their product offerings and new competitors enter
the market.

43
<PAGE>

We believe that we compete primarily on the basis of:

. conformity to industry standards;

. performance relative to price;

. product availability;

. time-to-market;

. quality and reliability;

. adaptability and flexibility to customers' and target markets'
requirements;

. customer service and responsiveness;

. level of integration;

. design and engineering capabilities; and

. new product innovation.

We believe that we compete favorably against our competitors with respect to
these factors.

We compete primarily with tuner manufacturers, such as Alps, Panasonic and
Philips Electronics, and potentially with semiconductor companies, such as
Broadcom and Conexant, who may produce competitive products in the future. We
expect to continue to face competition from these companies and emerging
companies developing new technologies that may meet the needs of our customers.

Environmental Matters

International, federal, state and local requirements relating to the
discharge of substances into the environment, the disposal of hazardous wastes
and other activities affecting the environment may have an impact on our
manufacturing operations. To date, compliance with environmental requirements
and resolution of environmental claims have been accomplished without material
effect on our liquidity or capital resources.

Facilities

Our principal administrative, sales, marketing, research and development and
final testing facility is located in a building of approximately 20,000 square
feet in Plano, Texas. This facility is leased through August 2003. We expect
that this facility will not be sufficient to meet our needs by the end of 2000,
and we expect to relocate our Texas operations to a new facility located in
Plano in late 2000. We also maintain an administrative, sales, marketing,
research and development office of approximately 25,000 square feet in
Ingolstadt, Germany, which is leased through December 2021. In addition, we
lease sales and technical support offices in San Diego and San Jose,
California, and Huntsville, Alabama.

Our manufacturing facilities are located in two buildings covering
approximately 25,200 and 36,000 square feet, respectively, located in Manila,
Philippines. Our leases for these properties expire in December 2000 and
November 2004, respectively. We are currently negotiating for an extension of
our lease that expires in December 2000. We believe that we will be able to
obtain this extension. We believe that our existing manufacturing facilities
require additional expansion, which expansion is not expected to be completed
in 2000.

44
<PAGE>

Employees

As of March 31, 2000, we had 125 employees worldwide (excluding our
manufacturing personnel in the Philippines), with 76 people in research and
development, 20 people in sales and marketing, 16 people in operations and 13
people in administration. In addition, as of March 31, 2000, we employed
1,251 people in our manufacturing facilities in Manila, Philippines, 956 of
whom are represented by a union. We believe that our future success will depend
in part upon our continued ability to attract and retain qualified personnel.
We consider our relations with our employees to be good. As of December 31,
1999, the union contract for our unionized employees expired. We are currently
renegotiating this contract. We do not believe that any union contract will
have a significant impact on our ability to manufacture our modules or on our
costs of manufacturing.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims
arising out of our ordinary course of business. We are not currently a party to
any material litigation.

45
<PAGE>

MANAGEMENT

Executive Officers and Directors

The following table sets forth information with respect to our executive
officers and directors as of March 31, 2000:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Douglas J. Bartek............ 50 Chief Executive Officer and Chairman
Martin Englmeier............. 48 Vice Chairman of Microtune, Inc. and Managing
Director of Microtune GmbH
James A. Fontaine............ 42 President
Everett (Buddy) Rogers....... 43 Chief Financial Officer and Vice President of
Finance and Administration
John P. Norsworthy........... 43 Chief Technical Officer
Thomas K. Widmer............. 40 Vice President of Marketing
Albert H. Taddiken........... 36 Vice President of IC Engineering
S. Vincent Birleson.......... 53 Vice President of Systems Engineering
William E. Basso............. 38 Vice President of Manufacturing
Tamara G. Mattison........... 40 Vice President and General Counsel
Harvey B. (Berry) Cash....... 61 Director
Walter S. Ciciora............ 57 Director
James H. Clardy.............. 65 Director
Kenneth G. Langone........... 64 Director
Philippe von Stauffenberg.... 35 Director
Lawrence D. Stuart, Jr....... 55 Director
William P. Tai............... 37 Director
</TABLE>

Douglas J. Bartek cofounded Microtune in May 1996 and has served as Chief
Executive Officer and Chairman since that time. From April 1992 to May 1996,
Mr. Bartek held various positions with Cirrus Logic, Inc., a semiconductor
company, most recently as a Division President. Mr. Bartek also serves as a
director of several privately held companies. Mr. Bartek holds a B.S. in
electrical engineering from The University of Texas at Austin and an M.S. in
engineering and computer science and an M.B.A. from Arizona State University.

Martin Englmeier joined Microtune as Vice Chairman and Managing Director of
Microtune GmbH in January 2000 at the time of our combination with Temic
Telefunken Hochfrequenztechnik GmbH. Since 1974, Mr. Englmeier has been with
Temic and its predecessor companies, in various positions, most recently as
Managing Director of Temic. Mr. Englmeier holds a Dipl. Ing. (TU) from the
Technical University in Munich, Germany.

James A. Fontaine joined Microtune in August 1998 as Executive Vice President
of Sales and Marketing and was promoted to President in February 1999. From
October 1997 to July 1988, Mr. Fontaine was President of Sentient
Communications, Inc. a provider of telephone line interface solutions for the
analog modem and xDSL markets, and from December 1996 to September 1997, he was
a principal at The Fontaine Group & Gabriel Ventures, a provider of consulting
services and funding to start-up high technology companies. From March 1995 to
December 1996, Mr. Fontaine was with Cirrus Logic, Inc., a semiconductor
company, in various positions, most recently as the Vice President of Marketing
of Graphics Products. Mr. Fontaine holds a B.S. in electrical engineering from
Marquette University.

Everett (Buddy) Rogers joined Microtune in January 1998 and has served as
Vice President of Finance and Administration since that time. In January 2000,
he was also named Chief Financial Officer. From January 1997 to January 1998,
Mr. Rogers was Director of Finance of Cypress

46
<PAGE>

Semiconductor, Inc., a semiconductor company. From October 1993 to December
1996, Mr. Rogers was Division Controller of Crystal Semiconductor, Inc., a
semiconductor company. Mr. Rogers holds a B.S. in business administration from
Kentucky Wesleyan College and an M.B.A. in international marketing from Huron
University, London, England.

John P. Norsworthy cofounded Microtune in May 1996 and has served as Chief
Technical Officer since that time. From June 1991 to May 1996, Mr. Norsworthy
was Vice President of Pixel Semiconductor, Inc., a semiconductor company and
wholly owned subsidiary of Cirrus Logic, Inc. Mr. Norsworthy holds a B.S. in
electrical engineering from University of Illinois.

Thomas K. Widmer joined Microtune in January 2000 when we acquired The Tuner
Company (formerly known as Temic Telefunken RF-Technologies, Inc.) and has
served as Vice President of Marketing since that time. From April 1998 to
December 1999, Mr. Widmer was President of The Tuner Company, a sales
distribution company for Temic Telefunken Hochfrequenztechnik GmbH, and from
April 1994 to March 1998, he was Director of the Technical Support Center for
Temic Telefunken Hochfrequenztechnik GmbH. Mr. Widmer holds a Dipl. Ing. (FH)
from Fachhochschule in Munich, Germany.

Albert H. Taddiken joined Microtune in November 1996 as Director of RFIC
Development, and was named Vice President of IC Engineering in April 1998. From
May 1983 to October 1996, he held various positions with Texas Instruments,
Inc., a semiconductor and electronics company, serving most recently as RFIC
Design Manager for Transmitters and PLLs and Member, Group Technical Staff. Mr.
Taddiken holds a B.S. in electrical engineering from Massachusetts Institute of
Technology.

S. Vincent Birleson began working with Microtune as a consultant in December
1996, joined Microtune as Director of Systems Engineering in July 1997, and was
named Vice President of Systems Engineering in February 1999. From September
1968 to December 1996, he held various positions with Texas Instruments, Inc.,
a semiconductor and electronics company, serving most recently as a TI Fellow.
Mr. Birleson holds a B.S. in electrical engineering from University of
Michigan.

William E. Basso joined Microtune in August 1998 as Director of
Manufacturing, and was named Vice President of Manufacturing in January 2000.
From January 1998 to August 1998, Mr. Basso was Director of Operations of
Sentient Communications, a telecommunications company. From January 1984 to
January 1998, he held various positions with SGS-Thomson Microelectronics, an
electronics company, serving most recently as Senior Engineering Manager. Mr.
Basso holds a B.S. in electrical engineering from Clemson University and an
M.B.A. from University of Dallas.

Tamara G. Mattison joined Microtune in February 2000 and has served as Vice
President and General Counsel since that time. From June 1998 to February 2000
and from February 1995 to September 1997, Ms. Mattison was an attorney with
Wilson Sonsini Goodrich & Rosati, Professional Corporation. From October 1997
to June 1998, she was an attorney with Wolin, Ridley and Miller. Ms. Mattison
has a B.B.A. degree in accounting and economics from University of Wisconsin--
Eau Claire, an M.M. from Northwestern University's J.L. Kellogg Graduate School
of Management and a J.D. from Northwestern University School of Law.

Harvey B. Cash became a director of Microtune in August 1996. Mr. Cash has
been a general partner of InterWest Partners, a venture capital firm, since
1986, and is an advisor to Austin Ventures, a venture capital firm. He also
currently serves on the Board of Directors of Ciena Corporation, a designer and
manufacturer of multiplexing systems for fiber optic networks, Liberte
Investors Inc., an investment company, Panja, Inc., a provider of electronic
information integration equipment, i2 Technologies, Inc., a provider of
marketplace services, Silicon Laboratories Inc., an IC company, and several
privately held companies. Mr. Cash holds a B.S. in electrical engineering from
Texas A&M University and an M.B.A. from Western Michigan University.

47
<PAGE>

Walter S. Ciciora became a director of Microtune in November 1996. Mr.
Ciciora has been an independent consultant for companies in the cable,
television, consumer electronics and telecommunications industries since
October 1993. Mr. Ciciora holds a B.S., M.S. and Ph.D. in electrical
engineering from the Illinois Institute of Technology and an M.B.A. from the
University of Chicago.

James H. Clardy became a director of Microtune in August 1996. Mr. Clardy has
been a venture partner of Austin Ventures, a venture capital firm, since
January 1998. From October 1997 to January 1998, Mr. Clardy was a private
consultant, and from October 1991 until October 1997, he was President of
Crystal Semiconductor, a wholly owned subsidiary of Cirrus Logic, Inc. He
currently serves on the Board of Directors of several privately held companies.
Mr. Clardy holds a B.S. in electrical engineering from University of Tennessee.

Kenneth G. Langone became a director of Microtune in November 1996. Since
1974, Mr. Langone has been Chairman of the Board, Chief Executive Officer and
President of Invemed Associates, Inc., a New York Stock Exchange member firm
engaged in investment banking and brokerage. He is one of the co-founders of
The Home Depot, Inc., a chain retail building supplies store, and has been a
director of that company since 1978. He also serves as a director of the
New York Stock Exchange, Inc., a stock exchange, General Electric Company, a
multinational conglomerate, Unifi, Inc., a provider of facsimile transmission
delivery services, DBT Online, Inc., a provider of online public records data,
and Tricon Global Restaurants, Inc., a food services company. Mr. Langone is
also a director of several privately held companies and serves on the boards of
a number of national charitable, civic and educational organizations. Mr.
Langone holds a B.A. in political science and economics from Bucknell
University and an M.B.A. from New York University.

Philippe von Stauffenberg became a director of Microtune in January 2000. Mr.
von Stauffenberg has been a principal of Hicks, Muse, Tate & Furst
Incorporated, a private investment firm since January 1999. From January 1996
to December 1998, he was the Chairman and Chief Executive Officer of Heitmann
International, a technical documentation and translation company. From
September 1992 to December 1995, Mr. von Stauffenberg was an associate at E.M.
Warburg Pincus & Co., a private equity company. Mr. von Stauffenberg also
serves on the Board of Directors of several privately held companies. Mr. von
Stauffenberg holds a B.A. in economics and an M.A. in history from Harvard
University and an M.B.A. from Harvard Business School.

Lawrence D. Stuart, Jr. became a director of Microtune in January 2000. Mr.
Stuart has been a partner of Hicks, Muse, Tate, & Furst Incorporated, a private
investment firm, since October 1995. From August 1988 to September 1995, Mr.
Stuart was an attorney with Weil, Gotshal & Manges, LLP, most recently serving
as Managing Partner. Mr. Stuart also serves on the Board of Directors of AMFM
Inc., a radio broadcasting company, Home Interiors & Gifts, Inc., a direct
seller of home decorative accessories, and several privately held companies.
Mr. Stuart holds a B.A. in Economics and a J.D. from Southern Methodist
University.

William P. Tai became a director of Microtune in June 1998. Mr. Tai has been
a general partner of Institutional Venture Partners, a venture capital firm,
since July 1997. From August 1995 to February 1998, Mr. Tai served as founder
and Chairman of the Board, until July 1997, of iAsiaWorks, Inc., a pan-Asian
Internet solutions provider. From September 1991 to July 1997, Mr. Tai was
affiliated with the Walden Group of Venture Capital Funds, a venture capital
firm. Mr. Tai also serves on the Board of Directors of Netergy Networks, Inc.,
a provider of IP telephony solutions, and several privately held companies
including iAsiaWorks, Inc., Chemconnect Inc. and Transmeta Corp. Mr. Tai holds
a B.S. in electrical engineering from University of Illinois and an M.B.A. from
Harvard University.

Board Composition

Our Board of Directors currently consists of ten directors. In accordance
with the terms of our Restated Certificate of Incorporation, the terms of
office of the members of the Board of Directors are

48
<PAGE>

divided into three classes: Class I, whose term will expire at the annual
meeting of stockholders to be held in 2001, Class II, whose term will expire at
the annual meeting of stockholders to be held in 2002, and Class III, whose
term will expire at the annual meeting of stockholders to be held in 2003. The
Class I directors are Messrs. Cash, Ciciora and Langone, the Class II directors
are Messrs. Englmeier, Norsworthy and von Stauffenberg, and the Class III
directors are Messrs. Bartek, Clardy, Stuart and Tai. At each annual meeting of
stockholders after the initial classification, the successors to the directors
whose term will then expire will be elected to serve from the time of election
and qualification until the third annual meeting following election. In
addition, our Amended and Restated Bylaws provide that the authorized number of
directors may be changed only by resolution of the Board of Directors. Any
additional directorships resulting from an increase in the number of directors
may be changed only by resolution of the Board of Directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. This classification
of the Board of Directors may have the effect of delaying or preventing changes
in our control or management.

Each officer is appointed by, and serves at the discretion of, the Board of
Directors. Each of our officers and directors, other than non-employee
directors, devotes full time to our affairs. Our non-employee directors devote
such time to our affairs as is necessary to discharge their duties.

Board Committees

The Audit Committee reviews our audited financial statements and accounting
practices, and considers and recommends the employment of, and approves the fee
arrangements with, independent accountants for both audit functions and for
advisory and other consulting services. The current members of the Audit
Committee are Messrs. Clardy, Langone and Stuart.

The Compensation Committee reviews and approves the compensation and benefits
for our key executive officers, administers our employee benefit plans and
makes recommendations to the Board of Directors regarding grants of stock
options and any other incentive compensation arrangements. The current members
of the Compensation Committee are Messrs. Cash and Ciciora.

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves on the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our Board of Directors or Compensation Committee.

Director Compensation

Non-employee directors are reimbursed for their reasonable travel expenses in
attending meetings of our Board of Directors. Prior to the completion of this
offering, non-employee directors were eligible to receive options under our
1996 Stock Option Plan and, effective upon consummation of this offering, they
will be eligible to be granted options under our 2000 Director Option Plan.

Change of Control Arrangements/Employment Agreements

Shares subject to options granted under our 1996 Stock Option Plan generally
vest over five years, with 20% of the shares vesting after one year and the
remaining shares vesting in monthly installments over the next 48 months. We
have approved option agreements for some of our key employees that provide for
variations in our standard vesting and for accelerated vesting of a portion of
the employees' unvested option shares if the employee is terminated without
cause by the surviving corporation following a "change of control." A "change
of control" is defined in the respective employee's option agreement, but
typically is defined to mean the sale of all or substantially all of our
assets, or the acquisition of us by another entity by means of consolidation or
merger pursuant to which our then current stockholders shall hold less than 50%
of the voting power of the surviving corporation.

49
<PAGE>

Agreement with Douglas J. Bartek

On March 23, 2000, we entered into an employment agreement with Douglas J.
Bartek, our chief executive officer and chairman of our board of directors.
This agreement provides for an initial term of three years and an initial base
annual salary of $150,000. In addition, he is entitled to participate in
employee benefit plans for which other senior executives are generally
eligible. Mr. Bartek is eligible for an annual discretionary bonus as
determined by our board of directors.

Under the terms of the employment agreement, Mr. Bartek may not terminate his
employment prior to March 23, 2003, except for certain reasons enumerated in
the agreement, including:

. a reduction in his compensation or benefits that is not part of a
generally applicable reduction for all of our executives,

. a material demotion in his responsibilities or duties,

. a relocation of his workplace to a place more than 50 miles from Dallas,
Texas, or

. a material breach of the agreement by us.

We may terminate Mr. Bartek's employment at any time with 30 days notice, but
if we terminate his employment without cause, or if there is constructive
termination, he is entitled to receive his base annual salary plus the highest
bonus paid to him in the three years prior to his termination. He is also
entitled to receive any and all employee benefits for two years from the date
of termination. In addition, any stock options and stock subject to repurchase
rights held by him that would have vested during the salary continuation period
will fully vest upon termination.

If Mr. Bartek's employment is terminated within two years of the date that we
experience a change in control, as defined in the agreement, he shall be
entitled to receive a lump sum severance payment equal to two times the sum of
his base annual compensation plus the highest bonus paid to him in the three
years prior to the change in control. All unvested stock options will
immediately vest upon such termination, and he will continue to receive any and
all employee benefits for 24 months. Mr. Bartek has agreed not to compete with
us and not to solicit our customers or employees for a period of three years
from the date of the termination of his employment.

Agreement with James A. Fontaine

Mr. James Fontaine entered into an employment agreement with us on August 1,
1998. Mr. Fontaine's initial base annual salary was set at a rate of $150,000,
and he is eligible for an annual discretionary bonus as determined by our Board
of Directors. If Mr. Fontaine's employment is terminated by us without cause
prior to August 1, 2000, then we are obligated to continue paying Mr.
Fontaine's salary and benefits for an additional six months. In addition, Mr.
Fontaine agreed not to compete with us for 12 months following the termination
of his employment, and not to solicit our customers or employees for 24 months
following the termination of his employment, with limited exceptions.

Agreement with John P. Norsworthy

Under an employment agreement dated August 8, 1996, John P. Norsworthy agreed
to hold the position of Founder and Chief Technology Officer of Microtune at an
initial base annual salary of $150,000. Mr. Norsworthy is eligible for an
annual discretionary bonus as determined by our Board of Directors. If Mr.
Norsworthy's employment is terminated by us without cause prior to August 8,
2001, then we are obligated to continue paying Mr. Norsworthy's salary, bonus
and benefits for an additional twelve months. In addition, options granted to
him under the Stock Option Plan, if any, will continue to vest during the
salary continuation period.

If Mr. Norsworthy's employment is terminated within two years of the date
that we experience a change in control, as defined in the agreement, he shall
be entitled to receive a lump sum severance

50
<PAGE>

payment equal to two times the sum of his base annual compensation plus the
highest bonus paid to him in the three years prior to the change in control.
All unvested stock options would be deemed fully vested and would be fully
exercisable subject to certain U.S. securities laws. He would also continue to
be indemnified pursuant to our Certificate of Incorporation. Mr. Norsworthy
agreed not to compete with us and not to solicit our customers or employees
prior to August 8, 2001.

Executive Compensation

The following summary compensation table sets forth the compensation paid to
our Chief Executive Officer and our next four most highly compensated executive
officers, during the fiscal year ended December 31, 1999 (collectively, the
"Named Executive Officers"):

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
---------------- ------------
Securities
Underlying All Other
Name and Principal Position Salary Bonus Options(1) Compensation(2)
--------------------------- ------ ----- ------------ ---------------
<S> <C> <C> <C> <C>
Douglas J. Bartek................ $146,551 -- 350,000 $319
Chairman and Chief Executive
Officer

James A. Fontaine................ 149,600 -- 300,000 199
President

John P. Norsworthy............... 148,200 -- 100,000 193
Chief Technical Officer

S. Vincent Birleson.............. 149,313 -- 60,000 603
Vice President of Systems
Engineering

William E. Basso................. 109,875 $12,000 32,000 72
Vice President of Manufacturing
</TABLE>
- --------
(1) All options granted pursuant to the 1996 Stock Option Plan permit early
exercise and shares obtained pursuant thereto are subject to rights of
repurchase in our favor pending full vesting according to their respective
schedules.
(2) These amounts consist solely of reimbursement for life insurance premiums
paid by us for each employee.

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<PAGE>

Option Grants in Last Fiscal Year

The following table sets forth information with respect to stock options
granted to each of the Named Executive Officers during the fiscal year ended
December 31, 1999:

Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise over Option Term(2)
Options Employees in Price Per Expiration ---------------------
Name Granted(1) Fiscal Year Share Date 5% 10%
---- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Bartek(3).... 350,000 16.2% $0.688(6) 06/01/09 $1,127,471 $1,937,944
James A. Fontaine(4).... 300,000 13.9% 0.375(7) 01/27/09 473,902 821,247
John P. Norsworthy(5)... 100,000 4.6% 0.625(6) 06/01/09 328,435 559,998
S. Vincent Birleson(4).. 60,000 2.8% 0.375(7) 01/27/09 94,780 164,249
William E. Basso........ 22,000 1.0% 0.625(6) 06/01/09 72,256 123,200
10,000 0.5% 0.375(6) 02/01/09 35,343 58,500
</TABLE>
- --------
(1) All options were granted under our 1996 Stock Option Plan. Except as set
forth below, options granted under the 1996 Stock Option Plan vest over a
five-year period with 20% vesting at the first anniversary date of the
vesting commencement date and the remaining shares vesting in monthly
installments over the next 48 months. The Board of Directors retains
discretion to modify the terms, including the price and exercisability, of
outstanding options.

(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The
potential realizable values have been calculated using the deemed fair
value of the common stock as of the date of grant. The assumed 5% and 10%
annual rates of stock price appreciation from the date of grant to the end
of the option term are provided in accordance with rules of the Securities
and Exchange Commission and do not represent our estimate or projection of
the future common stock price. Actual gains, if any, on stock option
exercises are dependent on the future performance of our common stock,
overall market conditions and the option holders' continued employment
through the vesting period. This table does not take into account any
actual appreciation in the price of the common stock from the date of grant
to the present.

(3) This option vests as to 1/7 of the shares subject to the option on October
19, 2000 and an additional 1/7 of the shares subject to the option at the
end of each six month period thereafter.

(4) These options vest upon the completion of milestones established by us. As
of December 31, 1999, none of these milestones had been deemed met.

(5) This option vests as to 1/2 of the shares on each of September 1, 2001 and
2002.

(6) The deemed fair value of the common stock as of the date of grant of these
options was $2.40.

(7) The deemed fair value of the common stock as of the date of grant of these
options was $1.20.

52
<PAGE>

Aggregate Option Exercises and Option Values

The following table sets forth certain information regarding exercised stock
options during the fiscal year ended December 31, 1999, and unexercised options
held as of December 31, 1999 by each of the Named Executive Officers. The Named
Executive Officers exercised options in 1999 as follows:

Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

<TABLE>
<CAPTION>
Number of Securities
Shares Value Underlying Value of Unexercised
Acquired Realized Unexercised Options at In-the-Money Options at
on for Fiscal Year-End(1) Fiscal Year-End(2)
Exercise Exercised ------------------------- -------------------------
Name of Options Options(3) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas J. Bartek....... -- -- 5,000 350,000 $10,350 $599,200
James A. Fontaine....... -- -- -- 300,000 -- 607,500
John P. Norsworthy...... -- -- -- 100,000 -- 177,500
S. Vincent Birleson..... 66,680 $55,011 30,006 163,314 68,264 356,537
William E. Basso........ 14,500 25,738 833 66,667 1,687 129,501
</TABLE>
- --------
(1) All options were granted under our 1996 Stock Option Plan. Our Board of
Directors retains discretion to determine the terms, including the price
and exercisability of outstanding options.
(2) Calculated on the basis of the deemed fair market value of the underlying
shares as of December 31, 1999 of $2.40 per share, minus the per share
exercise price, multiplied by the number of shares underlying the option.
(3) Calculated on the basis of the deemed fair market value of the underlying
shares as of the date of exercise of the options, minus the per share
exercise price, multiplied by the number of shares underlying the option.

Stock Plans

1996 Stock Option Plan. Our 1996 Stock Option Plan was adopted by our Board
of Directors and approved by our stockholders in August 1996. Our 1996 Stock
Option Plan provides for the grant of incentive stock options, which may
provide for preferential tax treatment, to our employees, and for the grant of
nonstatutory stock options and stock purchase rights to our employees and
directors. We have reserved an aggregate of 19,704,310 shares of our common
stock for issuance under this plan. As of March 31, 2000, 6,537,768 shares had
been issued pursuant to the exercise of options and stock purchase rights,
options to purchase 7,130,116 shares of common stock were outstanding and
6,040,426 shares were available for future grant. We will not grant any
additional stock options under our 1996 Stock Option Plan although options
granted under the 1996 Stock Option Plan will remain outstanding in accordance
with their terms. Instead, upon approval of our stockholders, the shares
available for issuance under the 1996 Stock Option Plan will be assumed under
our 2000 Stock Plan, and we will grant all future options under that stock
plan.

Options to Purchase Series E Preferred Stock. In connection with our
combination with Temic, we granted to three employees in Germany options to
purchase an aggregate of 330,000 shares of Series E preferred stock, which
shares are convertible into an aggregate of 660,000 shares of our common stock.
These options are exercisable at a per preferred share purchase price of
$16.00, have the same terms and provisions as the options granted under our
1996 Stock Option Plan and vest over a five year period.

2000 Stock Plan. Our 2000 Stock Plan was adopted by our Board of Directors on
March 23, 2000, and we have submitted the 2000 Stock Plan to our stockholders
for approval. The 2000 Stock Plan provides for the grant of incentive stock
options to our employees and nonstatutory stock

53
<PAGE>

options and stock purchase rights and common stock equivalents to our
employees, directors and consultants. The number of shares reserved for
issuance pursuant to our 2000 Stock Plan equals any shares of common stock that
were reserved but unissued under our 1996 Stock Option Plan and any shares that
are subsequently returned to the 1996 Stock Option Plan as a result of
termination of options or our repurchase of shares issued under the 1996 Stock
Option Plan. No options have yet been issued pursuant to the 2000 Stock Plan.
The number of shares reserved for issuance under our 2000 Stock Plan will
increase annually on January 1st of each calendar year, effective beginning in
2001, equal to the lesser of:

. 5% of the outstanding shares of our common stock on the first day of the
year;

. 3,000,000 shares of our common stock; or

. such lesser amount as our Board of Directors may determine.

However, there shall be no annual increase in the number of shares available
under the 2000 Stock Plan in the event that the increase plus any annual
increases under our other employee and director stock plans would be greater
than 30% of the total outstanding shares of our stock unless otherwise approved
by our Board of Directors.

The Compensation Committee or our Board of Directors administers the 2000
Stock Plan. The administrator has the power to determine the terms of the
options, stock purchase rights or common stock equivalents granted, including
the exercise price, the number of shares subject to each option, stock purchase
right or common stock equivalent, the exercisability of the options and the
form of consideration payable upon exercise. The administrator determines the
exercise price of options, restricted stock awards or common stock equivalents
granted under our 2000 Stock Plan, but with respect to incentive stock options,
the exercise price must at least be equal to the fair market value of our
common stock on the date of grant. Additionally, the term of an incentive stock
option may not exceed ten years. The administrator determines the term of all
other options, restricted stock awards or common stock equivalents. The 2000
Stock Plan generally does not allow for the transfer of options or stock
purchase rights and only the optionee may exercise an option, stock purchase
right or common stock equivalent during his or her lifetime.

No optionee may be granted an option to purchase more than 500,000 shares in
any fiscal year. In connection with his or her initial service, an optionee may
be granted an additional option to purchase up to 1,000,000 shares of our
common stock. After termination of an employee, director or consultant, he or
she may exercise his or her option for the period of time stated in his or her
option agreement. If termination is due to death or disability, the option will
generally remain exercisable for 12 months following such termination. In all
other cases, the option will generally remain exercisable for two months.
However, an option may never be exercised later than the expiration of its
term.

The administrator determines the number of and exercise price of stock
purchase rights granted under our 2000 Stock Plan. Unless the administrator
determines otherwise, the restricted stock purchase agreement will grant us a
repurchase option that we may exercise upon the voluntary or involuntary
termination of the purchaser's service with us for any reason (including death
or disability). The purchase price for shares we repurchase will generally be
the original price paid by the purchaser.

The administrator determines the number of common stock equivalents that will
be awarded to any particular employee, director or consultant. Upon exercise of
a common stock equivalent, we will deliver to the awardee a number of shares of
our common stock equal to the number of common stock equivalents in the
awardee's book account as of such date.

The 2000 Stock Plan provides that in the event of our merger with or into
another corporation or a sale of all or substantially all of our assets, the
successor corporation will assume or substitute for each option, stock purchase
right or common stock equivalent. If the outstanding options, stock purchase
rights or common stock equivalents are not assumed or substituted for, all
outstanding

54
<PAGE>

options, stock purchase rights or common stock equivalents will become
immediately vested and exercisable as of the closing of such merger or sale of
assets. The 2000 Stock Plan will automatically terminate in 2010, unless we
terminate it sooner. In addition, our Board of Directors has the authority to
amend, suspend or terminate the 2000 Stock Plan provided it does not adversely
affect any option previously granted under our 2000 Stock Plan.

2000 Director Option Plan. Our Board of Directors adopted the 2000 Director
Option Plan, referred to as the Director Plan, in March 2000, and has submitted
the Director Plan to our stockholders for approval. The Director Plan provides
for the periodic grant of nonstatutory stock options to our non-employee
directors. A total of 150,000 shares was reserved for issuance under the
Director Plan, none of which was issued and outstanding. In addition, our
Director Plan provides for annual increases in the number of shares available
for issuance under the Director Plan on January 1st of each year, beginning in
2001, equal to the lesser of:

. 1% of the outstanding shares of our common stock on the first day of the
calendar year;

. 75,000 shares of our common stock; or

. such other lesser amount as may be determined by our Board of Directors.

However, there shall be no annual increase in the number of shares available
under the Director Plan in the event that the increase plus any annual
increases under our other employee and director stock plans would be greater
than 30% of the total outstanding shares of our stock, unless otherwise
approved by our Board of Directors. All grants of options to our non-employee
directors under the Director Plan are automatic. We will grant each new non-
employee director elected or appointed after the effective date of the Director
Plan an option to purchase 10,000 shares when such person first becomes a non-
employee director (except for those directors who became non-employee directors
by ceasing to be employee directors). All non-employee directors who have been
directors for at least six months receive an option to purchase 5,000 shares on
the date of our annual stockholders' meeting of each year. All options granted
under our Director Plan have a term of ten years and an exercise price equal to
the fair market value on the date of grant. Each initial option becomes
exercisable as to 33 1/3% of the shares subject to the option on the first
three anniversaries of the date of grant and each subsequent option becomes
exercisable as to 50% of the shares subject to the option on the first and
second anniversary of the date of grant, provided the non-employee director
remains a director on such dates. After termination as a non-employee director
with us, an optionee must exercise an option at the time set forth in his or
her option agreement. If termination is due to death or disability, the option
will remain exercisable for 12 months. In all other cases, the option will
remain exercisable for a period of three months. However, an option may never
be exercised later than the expiration of its term.

A non-employee director may not transfer options granted under our Director
Plan other than by will or the laws of descent and distribution. Only the non-
employee director may exercise the option during his or her lifetime. In the
event of our merger with or into another corporation or a sale of all or
substantially all of our assets, the successor corporation will assume or
substitute each option. If such assumption or substitution occurs, the options
will continue to be exercisable according to the same terms as before the
merger or sale of assets. Following such assumption or substitution, if a non-
employee director is terminated other than by voluntary resignation, the option
will become fully vested and exercisable and generally will remain exercisable
for a period of three months. If the outstanding options are not assumed or
substituted for, our Board of Directors will notify each non-employee director
that he or she has the right to exercise the option as to all shares subject to
the option for a period of 30 days following the date of the notice. The option
will terminate upon the expiration of the 30-day period.

Unless terminated sooner, our Director Plan will automatically terminate in
2010. Our Board of Directors has the authority to amend, alter, suspend or
discontinue the Director Plan, but no such action may adversely affect any
grant made under the Director Plan.

55
<PAGE>

2000 Employee Stock Purchase Plan. Concurrently with this offering, we intend
to establish an employee stock purchase plan, referred to as the "Purchase
Plan". A total of 400,000 shares of our common stock will initially be made
available for sale under the Purchase Plan. In addition, our Purchase Plan
provides for annual increases in the number of shares available for issuance
thereunder on January 1st of each year, beginning in 2001, equal to the lesser
of:

. 2% of the outstanding shares of our common stock on the first day of the
calendar year;

. 400,000 shares of common stock; or

. such lesser amount as our Board of Directors may determine.

However, there shall be no annual increase in the number of shares available
under the Purchase Plan in the event that the increase plus any annual
increases under our other employee and director stock plans would be greater
than 30% of the total outstanding shares of our stock unless otherwise approved
by our Board of Directors. Our Board of Directors or the Compensation Committee
has full and exclusive authority to interpret the terms of the Purchase Plan
and determine eligibility. All of our employees are eligible to participate if
they are customarily employed by us or any participating subsidiary for at
least 20 hours per week and more than five months in any calendar year.
However, an employee may not be granted an option to purchase stock under the
Purchase Plan if such employee:

. immediately after the grant owns stock possessing 5% or more of the
total combined voting power or value of all classes of our capital
stock; or

. whose rights to purchase stock under all of our employee stock purchase
plans accrues at a rate that exceeds $25,000 worth of stock for each
calendar year.

Our Purchase Plan is intended to qualify for preferential tax treatment and
contains consecutive, overlapping 24-month offering periods. Each offering
period includes four 6-month purchase periods. The offering periods generally
start on the first trading day on or after May 1 and November 1 of each year,
except for the first such offering period that will commence on the first
trading day on or after the effective date of this offering and will end on the
last trading day on or before October 31, 2002.

The Purchase Plan permits participants to purchase common stock through
payroll deductions of up to 15% of their eligible compensation that includes a
participant's base straight time gross earnings and commissions, but excludes
all other compensation paid to our employees. A participant may purchase no
more than 5,000 shares during any 6-month purchase period.

Amounts deducted and accumulated by the participant are used to purchase
shares of our common stock at the end of each 6-month purchase period. The
price is 85% of the lower of the fair market value of our common stock at the
beginning of an offering period or after a purchase period ends. If the fair
market value at the end of a purchase period is less than the fair market value
at the beginning of the offering period, participants will be withdrawn from
the current offering period following their purchase of shares on the purchase
date and will be automatically re-enrolled in a new offering period.
Participants may end their participation at any time during an offering period,
and will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with us.

A participant may not transfer rights granted under our Purchase Plan other
than by will, the laws of descent and distribution or as otherwise provided
under the Purchase Plan.

Our Purchase Plan will terminate in 2010. However, our Board of Directors has
the authority to amend or terminate our Purchase Plan, except that, subject to
certain exceptions described in the Purchase Plan, no such action may adversely
affect any outstanding rights to purchase stock under our Purchase Plan.

56
<PAGE>

401(k) Plan. Our 401(k) plan covers our full-time employees located in the
U.S. The 401(k) plan is intended to qualify under Section 401(k) of the
Internal Revenue Code of 1986, as amended. Consequently, contributions to the
401(k) plan by employees or by us, and the investment earnings thereon, are not
taxable to employees until withdrawn from the 401(k) plan. Further,
contributions by us, if any, will be deductible by us when made. Employees may
elect to contribute up to 15% of their current compensation to the 401(k) plan
up to the statutorily prescribed annual limit, which is $10,500 in 2000. The
401(k) plan permits, but does not require, additional matching contributions to
the 401(k) plan by us on behalf of all participants in the 401(k) plan. To
date, we have not contributed to the 401(k) on behalf of any employee, but may
elect to contribute in the future.

Limitation of Liability and Indemnification

Upon completion of our reincorporation into Delaware, our Amended and
Restated Certificate of Incorporation will limit the liability of directors to
the maximum extent permitted by Delaware law. Delaware law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except liability for:

. breach of their duty of loyalty to the corporation or its stockholders;

. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

. unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

. any transaction from which the director derived an improper personal
benefit.

This limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.

Upon completion of our reincorporation into Delaware, our Bylaws will provide
that we shall indemnify our directors, officers, employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. Our Bylaws also permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in such capacity, regardless of whether our Bylaws permit
such indemnification.

We intend to enter into agreements to indemnify our directors and executive
officers, in addition to the indemnification provided for in our Bylaws and
Certificate of Incorporation. These agreements, among other things, indemnify
our directors, executive officers and other agents for certain expenses
(including attorneys' fees), judgments, fines and settlement amounts incurred
by any such person in any action or proceeding, including any action by or in
the right of Microtune arising out of such person's services as a Microtune
director, officer, employee, agent or fiduciary, any subsidiary of us or any
other company or enterprise to which the person provides services at our
request. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.

At present, there is no pending litigation or proceeding involving any of our
directors or officers in which indemnification is required or permitted, and we
are not aware of any threatened litigation or proceeding that may result in a
claim for such indemnification.

57
<PAGE>

CERTAIN TRANSACTIONS

Since our inception in May 1996, we have not been a party to, and we have no
plans to be a party to, any transaction or series of similar transactions in
which the amount involved exceeds $60,000, and in which any director, executive
officer, or holder of more than 5% of any class of our voting stock, or any
member of the immediate family of any of the foregoing persons had or will have
a direct or indirect material interest, other than as described under
"Management" and the transactions described below.

The share numbers and per share prices for the transactions described below
have been adjusted to give effect to the stock split effected on January 18,
2000. Upon the consummation of this offering, all outstanding shares of Series
A preferred stock, Series B preferred stock, Series C preferred stock, Series D
preferred stock and Series E preferred stock will automatically convert into
shares of common stock on a one-for-two basis.

We believe that all transactions between us and our officers, directors,
principal stockholders and other affiliates have been and will be on terms no
less favorable to us than could be obtained from unaffiliated third parties.

The holders of shares of preferred stock converted into common stock are
entitled to demand and piggy-back registration rights. See "Description of
Capital Stock--Registration Rights."

In August 1996, we sold 2,800,000 shares to Douglas J. Bartek and 1,400,000
shares to John P. Norsworthy as founders in consideration for $70,000 and
$35,000, respectively.

On August 31, 1998, James A. Fontaine, our President, issued a promissory
note to us in the principle amount of $118,000 to purchase 400,000 shares of
our common stock. The note bears interest at 5.77%, is secured by the shares of
common stock purchased and is due and payable 48 months after the date of the
note. The total amount of the principle and accrued interest in the amount of
$10,780 on the note is outstanding as of March 31, 2000.

During the past three years, we have issued convertible preferred stock as
follows:

. In August 1997, we sold 1,000,000 shares of Series B preferred stock in
a private placement at a per share purchase price of $4.00.

. In June and July 1998, we sold 1,426,666 shares of Series C preferred
stock in a private placement at a per share purchase price of $6.00.

. In November and December 1999, we sold 1,367,418 shares of Series D
preferred stock in a private placement at a per share purchase price of
$12.00.

The investors in these issuances of preferred stock include the following
entities, which are 5% stockholders or affiliated with directors, or both:

<TABLE>
<CAPTION>
Series B Series C Series D
Preferred Preferred Preferred
Purchaser(1) Stock Stock Stock
------------ --------- --------- ---------
<S> <C> <C> <C>
HMTF Temic/Microtune Cayman, L.P............... -- -- 833,334
Quantum Industrial Partners.................... 166,667 203,333 --
Institutional Venture Partners................. 450,000 666,667 --
</TABLE>
- --------
(1) See notes to table of beneficial ownership in "Principal Stockholders" for
information relating to the beneficial ownership of these shares.

58
<PAGE>

In January 2000, we combined with Microtune GmbH (formerly Temic Telefunken
Hochfrequenztechnik GmbH) and its wholly owned subsidiaries and affiliated
companies, by acquiring HMTF Acquisition (Bermuda), Ltd. In connection with
this combination, we issued 2,898,602 shares of our Series E preferred stock
and a warrant to acquire 1,932,402 shares of our common stock to HMTF
Temic/Microtune Cayman, L.P. and 419,911 shares of our Series E preferred stock
and a warrant to acquire 279,940 shares of our common stock to TIN
Vermogensverwaltungsgesellschaft mgH. The Series E preferred stock and warrants
were valued in the aggregate at $63.0 million. Lawrence D. Stuart, Jr. and
Philippe von Stauffenberg, two of our outside directors, are affiliated with
HMTF Temic/Microtune Cayman, L.P., Martin Englmeier, a director and officer of
Microtune, holds approximately 42% of the outstanding shares of TIN and Thomas
K. Widmer, one of our officers, holds approximately 10% of the outstanding
shares of TIN. The warrants will be automatically exercised with nominal
consideration paid upon the closing of this offering, assuming an initial price
to the public of $ per share. In addition, we entered into a Monitoring
and Oversight Agreement with Hicks, Muse & Co. Partners, L.P., a Texas limited
partnership and affiliate of HMTF Temic/Microtune Cayman, L.P. The Monitoring
and Oversight Agreement provides that we will pay Hicks, Muse & Co. Partners,
L.P. an annual fee of $200,000 for services we request from them. This
agreement terminates upon the completion of this offering.
Effective December 31, 1999, we acquired the principal assets of The Tuner
Company for an aggregate consideration of $1,010,000, which consisted of a cash
payment of $931,000, the assumption of liabilities and the cancellation of
indebtedness owed to our German operations. Thomas K. Widmer, one of our
executive officers, is the sole shareholder of The Tuner Company.

59
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock
as of March 31, 2000 (assuming conversion of all outstanding shares of
preferred stock into common stock upon the closing of this offering and as
adjusted to reflect the sale of the shares offered by this prospectus) by:

. each person who is known by us to beneficially own more than 5% of our
common stock;

. each of the Named Executive Officers;

. each of our directors; and

. all of our executive officers and directors as a group.

Percentage of ownership is based on 32,743,306 shares outstanding as of March
31, 2000, assuming conversion of the preferred stock, the automatic exercise of
warrants to purchase 2,212,342 shares of common stock and shares
outstanding after this offering and assuming no exercise of the underwriters'
over-allotment options. Beneficial ownership is calculated based on SEC
requirements. All shares of the common stock subject to options currently
exercisable or exercisable within 60 days after March 31, 2000 are deemed to be
outstanding for the purpose of computing the percentage of ownership of the
person holding such options, but are not deemed to be outstanding for computing
the percentage of ownership of any other person. Unless otherwise indicated
below, each stockholder named in the table has sole voting and investment power
with respect to all shares beneficially owned, subject to applicable community
property laws.

<TABLE>
<CAPTION>
Shares
Beneficially Owned Shares Beneficially
Before Offering Owned After Offering
------------------ ------------------------
Name Number Percent Number Percent
---- ---------- ------- ------------- ----------
<S> <C> <C> <C> <C>
HMTF Temic/Microtune Cayman,
L.P.(1)........................... 9,396,274 28.7%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
George Soros(2).................... 5,355,126 16.4%
c/o Michael C. Neus
Soros Fund Management
888 Seventh Avenue
New York, NY 10106
Quantum Industrial Partners, LDC... 3,840,000 11.7%
c/o Michael C. Neus
Soros Fund Management
888 Seventh Avenue
New York, NY 10106
Institutional Venture Partners(3).. 3,473,334 10.6%
c/o William P. Tai
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025

Directors & Officers:
Douglas J. Bartek(4)............... 2,805,000 8.6%
c/o Microtune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
John P. Norsworthy(5).............. 1,400,000 4.3%
James A. Fontaine(6)............... 400,000 1.2%
S. Vincent Birleson(7)............. 125,032 *
William E. Basso(8)................ 19,500 *
Harvey B. (Berry) Cash(9).......... 140,000 *
Walter S. Ciciora(10).............. 68,000 *
James H. Clardy(11)................ 70,000 *
Kenneth G. Langone(12)............. 837,794 2.6%
Lawrence D. Stuart, Jr.(13)........ 13,948 *
William P. Tai(14)................. 3,473,334 10.6%
Philippe von Stauffenberg(15)...... 4,198 *
All officers and directors as a
group (17 persons)(16)............ 10,259,001 31.3%
</TABLE>

60
<PAGE>

- --------
1. Includes 1,932,402 shares issuable upon exercise of warrants to purchase
shares of our common stock, which warrants will be automatically exercised
upon the closing of this offering, assuming an initial price to the public
of $ per share.
2. Includes 3,840,000 shares held by Quantum Industrial Partners LDC ("QIP").
Mr. Soros is the sole shareholder of QIH Management, Inc., the sole general
partner of the investment advisory firm that manages QIP and has investment
discretion over the shares held by QIP. Mr. Soros is also the Chairman of
Soros Fund Management LLC, and has agreed to use his best efforts to cause
QIH Management, Inc. to act at the discretion of Soros Fund Management LLC.
Mr. Soros may be deemed a beneficial owner of the shares held by QIP;
however, he expressly disclaims beneficial ownership of the shares held by
QIP except to the extent of his pecuniary interest therein.
3. Represents 108,666 shares held by Institutional Venture Management VII,
3,277,834 shares held by Institutional Venture Partners VII and 86,834
shares held by IVP Founders Fund I, L.P.
4. Of these shares, 2,800,000 are held by Bartek Investments-1, Ltd., of which
Mr. Bartek is the general partner. This amount also includes 5,000 shares
issuable upon exercise of stock options exercisable within 60 days of March
31, 2000.
5. Of these shares, 66,667 are unvested and subject to repurchase by Microtune
upon the termination of Mr. Norsworthy's employment with Microtune.
6. Of these shares, 400,000 shares are held by The Fontaine Family Limited
Partnership, of which Mr. Fontaine is the general partner. Of these shares,
225,001 shares are unvested and subject to repurchase by Microtune upon the
termination of Mr. Fontaine's employment with Microtune.
7. Includes 10,002 shares issuable upon exercise of stock options exercisable
within 60 days of March 31, 2000.
8. Includes 5,000 shares issuable upon exercise of stock options exercisable
within 60 days of March 31, 2000.
9. Of these shares, 6,250 are subject to repurchase by us upon the termination
of Mr. Cash's tenure as a member of our Board of Directors of Microtune.
10. Includes 2,000 shares issuable upon exercise of stock options exercisable
within 60 days of March 31, 2000.
11. Includes 2,000 shares issuable upon exercise of stock options exercisable
within 60 days of March 31, 2000.
12. Includes 387,500 shares held of record by Invemed Associates, Inc. Mr.
Langone is the Chairman of the Board, Chief Executive Officer and President
of Invemed Associates, Inc. and may be deemed to beneficially own these
shares. This amount also includes 9,334 shares issuable upon exercise of
stock options exercisable within 60 days of March 31, 2000.
13. Represents Mr. Stuart's beneficial ownership of shares held by HMTF/Temic
Microtune Cayman, L.P. Mr. Stuart indirectly holds a minority limited
partnership interest in HMTF/Temic Microtune Cayman, L.P., but is neither a
member nor manager of HMTF/Temic Microtune Cayman, L.P. or of its sole
general partner.
14. Includes 108,666 shares held by Institutional Venture Management VII,
3,277,834 shares held by Institutional Venture Partners VII and 86,834
shares held by IVP Founders Fund I, L.P. Mr. Tai is a general partner of
the general partner of each of these partnerships, shares voting and
dispositive power with respect to the shares held by each of these entities
and disclaims beneficial ownership of the shares held by these entities,
except to the extent of his pecuniary interest.
15. Represents Mr. von Stauffenberg's beneficial ownership in shares held by
HMTF/Temic Microtune Cayman, L.P. Mr. von Stauffenberg indirectly holds a
minority limited partnership interest in HMTF/Temic Microtune Cayman, L.P.,
but is neither a member nor manager of HMTF/Temic Microtune Cayman, L.P. or
of its sole general partner.
16. Includes 156,795 shares issuable upon exercise of stock options exercisable
within 60 days of March 31, 2000 and 297,918 shares unvested and subject to
repurchase by Microtune upon the termination of the holder's termination as
an employee or director of Microtune.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

General

Our Amended and Restated Certificate of Incorporation, which will become
effective upon the closing of this offering, authorizes the issuance of up to
150 million shares of common stock, par value $0.001 per share, and 25 million
shares of preferred stock, par value $0.001 per share, the rights and
preferences of which may be established from time to time by our Board of
Directors. As of March 31, 2000, 8,233,768 shares of common stock and warrants
to purchase 2,212,342 shares of common stock at a nominal exercise price, which
warrants will be automatically exercised upon the closing of this offering,
were outstanding, and 11,148,598 shares of preferred stock convertible into
22,297,196 shares of common stock upon the completion of this offering were
issued and outstanding. As of March 31, 2000, we had 112 stockholders.

Common Stock

Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of preferred stock issued after
the sale of the common stock offered hereby may be entitled, holders of common
stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by our Board of Directors out of funds legally
available therefor. Please see "Dividend Policy." In the event of our
liquidation, dissolution or winding up, holders of common stock would be
entitled to share in our assets remaining after the payment of liabilities and
the satisfaction of any liquidation preference granted to the holders of any
outstanding shares of preferred stock. Holders of common stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are, and the shares of common stock offered
by us in this offering, when issued and paid for, will be, fully paid and
nonassessable. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by the rights of the
holders of shares of any series of preferred stock, which we may designate in
the future.

Preferred Stock

Upon the closing of this offering, our Board of Directors will be authorized,
subject to any limitations prescribed by law, without stockholder approval,
from time to time to issue up to an aggregate of 25 million shares of preferred
stock, $0.001 par value per share, in one or more series, each of such series
to have such rights and preferences, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be determined by our Board of Directors. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of
holders of any preferred stock that may be issued in the future. Issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of our outstanding voting
stock. We have no present plans to issue any shares of preferred stock.

Registration Rights

Pursuant to the Fourth Amended and Restated Registration Rights Agreement
("Rights Agreement") dated as of December 31, 1999, the holders of
approximately 26,497,196 shares of common stock will have certain rights to
register those shares under the Securities Act of 1933, as amended ("Securities
Act") six months after the sale of the shares offered hereby. Subject to
limitations in the Rights Agreement and upon written request, we will have to
register those shares.

. The holders of at least ten percent (10%) of the then outstanding
registrable securities may require, on four occasions beginning 180 days
after the date of this prospectus, that we

62
<PAGE>

register their shares for public resale. We are obligated to register
these shares if the holders of at least ten percent (10%) of such shares
request registration and only if the net proceeds of such registration
would be greater than $10 million.

. The holders of at least fifteen percent (15%) of the then outstanding
registrable securities may require not more than one time in every six-
month period that we register their shares for public resale on Form S-3
or similar short-form registration, provided we are eligible to use Form
S-3 or similar short-form registration and provided further that the
value of the securities to be registered is at least $1,000,000.

. If we register any of our shares of common stock for purposes of
effecting any public offering, the holders of registrable securities are
entitled to include their shares of common stock in the registration,
subject however to our right to reduce the number of shares proposed to
be registered in view of market conditions.

We will bear all registration expenses in connection with any registration
(other than underwriting discounts and commissions). All registration rights
terminate with respect to each holder of registrable securities with less than
1% of the then outstanding shares of capital stock, at the time that the holder
is entitled to sell all of its shares in any three-month period under Rule 144
of the Securities Act.

The underwriters have the ability to limit the number of shares included in
the offering so requested. If they do limit the shares, the shares to be
included in the offering will be allocated among the holders of our capital
stock entitled to registration rights, as required by the Rights Agreement.

In addition, under the Rights Agreement, each investor agreed not to acquire
more than 50% of the voting power of us unless it first obtains the unanimous
consent of our Board of Directors. This standstill provision terminates with
respect to any holder at that time that the holder holds less than three
percent of our total voting power.

Delaware Anti-Takeover Law and Certain Charter and Bylaw Provisions

Provisions of Delaware law and our certificate of incorporation and bylaws
could make more difficult our acquisition by means of a tender offer, a proxy
contest or otherwise and the removal of incumbent officers and directors. These
provisions, summarized below, are expected to discourage coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of us to first negotiate with our Board of Directors. We
believe that the benefits of increased protection of our ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.

Delaware Anti-Takeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless (with
certain exceptions):

. The board of directors approves the transaction in which the stockholder
became an interested stockholder prior to the date the interested
stockholder attained to that status;

. When the stockholder became an interested stockholder, he or she owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding shares owned by persons who
are directors and also officers; or

63
<PAGE>

. On or subsequent to the date the business combination is approved by the
board of directors, the business combination is authorized at an annual
or special meeting of stockholders.

Generally, a "business combination" includes a merger, asset or stock sale,
or other transaction resulting in a financial benefit to the interested
stockholder. Generally, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock. The existence of this provision would be expected
to have an anti-takeover effect with respect to transactions not approved in
advance by the board of directors, including discouraging attempts that might
result in a premium over the market price for the shares of common stock held
by stockholders.

Certain Provisions of Our Certificate of Incorporation and Bylaws. Upon the
closing of this offering, our Amended and Restated Certificate of Incorporation
will provide for our Board of Directors to be divided into three classes, as
nearly equal in number as possible, serving staggered terms. Approximately one-
third of the board will be elected each year. Our having a classified board
could prevent a party who acquires control of a majority of the outstanding
voting stock from obtaining control of our Board of Directors until the second
annual stockholders meeting following the date the acquiror obtains the
controlling stock interest. A classified board could also have the effect of
discouraging a potential acquiror from making a tender offer or otherwise
attempting to obtain control of us and could increase the likelihood that
incumbent directors will retain their positions.

Our Amended and Restated Certificate of Incorporation will provide that our
directors may be removed (i) with cause by the affirmative vote of the holders
of at least a majority of the voting power of all of the then outstanding
shares of voting stock, voting as a single class or (ii) without cause by the
affirmative vote of the holders of at least 66 2/3% of the voting power of all
of the then-outstanding shares of the voting stock.

Our Bylaws establish an advance notice procedure for stockholder proposals to
be brought before our annual meeting of stockholders, including proposed
nominations of persons for election to our Board of Directors. Stockholders at
an annual meeting may only consider proposals or nominations specified in the
notice of meeting or brought before the meeting by or at the direction of our
Board of Directors or by a stockholder who was a stockholder of record on the
record date for the meeting, who is entitled to vote at the meeting and who has
given to our Secretary timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. Although the
Bylaws do not give our Board of Directors the power to approve or disapprove
stockholder nominations of candidates or proposals regarding other business to
be conducted at a special or annual meeting of the stockholders, the Bylaws may
have the effect of precluding the conduct of certain business at a meeting if
the proper procedures are not followed or may discourage or defer a potential
acquiror from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of our company.

Under Delaware law, a special meeting of stockholders may be called by the
Board of Directors or by any other person authorized to do so in the Amended
and Restated Certificate of Incorporation or the Bylaws. Our Bylaws authorize a
majority of the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the Chief Executive Officer, the President or a holder
of at least 15% of our outstanding stock to call a special meeting of
stockholders. The elimination of the right of minority stockholders to call a
special meeting means that a stockholder could not force stockholder
consideration of a proposal over the opposition of our Board of Directors by
calling a special meeting of stockholders prior to such time as a majority of
our Board of Directors believed such consideration to be appropriate or until
the next annual meeting provided that the requestor met the notice
requirements. The restriction on the ability of stockholders to call a special
meeting means that a proposal to replace our Board of Directors could be
delayed until the next annual meeting.

64
<PAGE>

Our Amended and Restated Certificate of Incorporation will provide for the
elimination of actions by written consent of stockholders upon the closing of
this offering. Under Delaware law, stockholders may execute an action by
written consent in lieu of a stockholder meeting. Delaware law permits a
corporation to eliminate such actions by written consent. Elimination of
written consents of stockholders may lengthen the amount of time required to
take stockholder actions since certain actions by written consent are not
subject to the minimum notice requirement of a stockholder's meeting. The
elimination of stockholders' written consents, however, deters hostile takeover
attempts. Without the availability of stockholder's actions by written consent,
a holder or group of holders controlling a majority in interest of our capital
stock would not be able to amend our Bylaws or remove directors pursuant to a
stockholders' written consent. Any such holder or group of holders would have
to obtain the consent of a majority of our Board of Directors, the Chairman of
the Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President or a holder of at least 15% of our outstanding stock to call a
stockholders' meeting and wait until the notice periods, as determined by the
Board of Directors pursuant to our Bylaws, expire prior to taking any such
action.

Transfer Agent and Registrar

The Transfer Agent and Registrar for our common stock is Harris Trust and
Savings Bank, 1601 Elm Street, Thanksgiving Tower, Suite 2320, Dallas, Texas,
75201, phone: (214) 665-6031.

65
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Immediately prior to this offering, there was no public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market could adversely affect the market price of our common stock.

Upon completion of this offering, we will have outstanding an aggregate of
shares of common stock, assuming the issuance of
shares of common stock offered hereby and no exercise of options after ,
2000. Of these shares, the shares sold in this offering will be
freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by our "Affiliates" as that
term is defined in Rule 144 under the Securities Act (whose sales would be
subject to certain limitations and restrictions described below).

The remaining 32,743,306 shares of common stock held by existing stockholders
were issued and sold by us in reliance on exemptions from the registration
requirements of the Securities Act. Of these shares, 29,768,838 shares,
representing 97.7% of our outstanding shares, will be subject to "lock-up"
agreements described below on the effective date of this offering.
Specifically, our officers and directors and most of our existing stockholders
agreed not to sell or otherwise dispose of any of their shares for a period of
180 days after the date of this offering; provided, however, that this
restriction shall terminate as to 20% of the shares after 90 days and an
additional 20% of the shares after 120 days after the date of this prospectus,
in the event that, at such dates, the reported last sale price of our common
stock on the Nasdaq National Market is at least twice the initial public
offering price specified in this prospectus for a certain period of time ending
on such dates. Goldman Sachs may, however, in its sole discretion and without
notice, release all or any portion of the shares from the restrictions in the
lock-up agreements. As a result of these contractual restrictions, and assuming
that the conditions to release of these shares are met as of 90 days and 120
days after the date of this prospectus, subject to delays as a result of the
timing of our earnings releases and compliance with our insider trading
policies, shares will become eligible for sale, subject in most cases to the
limitations of Rule 144 and the lapse of repurchase rights held by us. To the
extent that any of our stockholders have not entered into lockup agreements
with the underwriters, these stockholders are subject to lockup agreements with
us, which agreements provide that these stockholders may not sell their shares
for 180 days after the date of this prospectus. We do not intend to release any
of these company lockups.

<TABLE>
<CAPTION>
Approximate
Shares
Eligible
Days After Date for Future
of this Prospectus Sale Comment
- ------------------ ----------- -------
<S> <C> <C>
Upon effectiveness Shares sold in the offering
Upon effectiveness 0 Freely tradable shares salable under Rule 144(k)
that are not subject to the Lock-up
90 days after 4,079,395 Initial release of 20% of the shares subject to
effectiveness lock up; shares saleable under Rules 144 and
701
120 days after 4,079,395 Initial release of 20% of the shares subject to
effectiveness lock up; shares saleable under Rules 144 and
701
180 days after 12,768,645 All lock-ups released; shares salable under
effectiveness Rules 144 and 701
At various times 11,815,871
thereafter
</TABLE>

In addition, holders of stock options could exercise such options and sell
certain of the shares issued upon exercise as described below.

As of March 31, 2000, there were a total of 7,130,116 shares of common stock
subject to outstanding options under our 1996 Stock Option Plan and options to
purchase 660,000 shares of

66
<PAGE>

common stock upon the automatic conversion of options to purchase 330,000
shares of Series E preferred stock, approximately 230,353 of which were vested
and exercisable. However, all of these shares are subject to lock-up agreements
described above. Immediately after the completion of this offering, we intend
to file registration statements on Form S-8 under the Securities Act to
register all of the shares of common stock issued or reserved for future
issuance under the 1996 Stock Option Plan, 2000 Stock Plan, the 2000 Employee
Stock Purchase Plan and the 2000 Director Stock Option Plan. After the
effective dates of the registration statements on Form S-8, shares purchased
upon exercise of options granted pursuant to the 1996 Stock Option Plan, the
2000 Stock Plan, the 2000 Employee Stock Purchase Plan and the 2000 Director
Plan generally would be available for resale in the public market. On the date
180 days after the effective date of this offering, a total of approximately
1,260,020 shares of common stock subject to outstanding options will be vested
and exercisable.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell in "broker's
transactions" or to market makers, within any three-month period, a number of
shares that does not exceed the greater of:

. 1% of the number of shares of common stock then outstanding (which will
equal approximately shares immediately after this
offering); or

. the average weekly trading volume in the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.

Sales under Rule 144 are generally subject to the availability of current
public information about us.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been an affiliate of us
at any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without having to comply with the manner of sale, public information,
volume limitation or notice filing provisions of Rule 144. Therefore, unless
otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.

Rule 701

In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to sell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with the holding period and notice filing requirements of Rule 144 and,
in the case of non-affiliates, without having to comply with the public
information, volume limitation or notice filing provisions of Rule 144.

The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, along with the shares acquired
upon exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted
securities and, subject to the contractual restrictions described above,
beginning 90 days after the date of this prospectus, may be sold by persons
other than "affiliates" (as defined in Rule 144) subject only to the manner of
sale provisions of Rule 144 and by "affiliates" under Rule 144 without
compliance with its one-year minimum holding period requirements.

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<PAGE>

UNDERWRITING

Microtune and the underwriters named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co., Chase Securities
Inc., SG Cowen Securities Corporation and Bear, Stearns & Co. Inc. are the
representatives of the underwriters.

<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
Goldman, Sachs & Co................................................
Chase Securities Inc...............................................
SG Cowen Securities Corporation....................................
Bear, Stearns & Co. Inc............................................
----
Total............................................................
====
</TABLE>

If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
shares from Microtune to cover such sales. They may exercise
that option for 30 days. If any shares are purchased pursuant to this option,
the underwriters will severally purchase shares in approximately the same
proportion as set forth in the table above.

The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by Microtune. Such amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.

<TABLE>
<CAPTION>
Paid by Microtune
----------------------
No
Exercise Full Exercise
-------- -------------
<S> <C> <C>
Per Share................................................ $ $
Total.................................................... $ $
</TABLE>

Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus.
Any shares sold by the underwriters to securities dealers may be sold at a
discount of up to $ per share from the initial public offering price.
Any such securities dealers may resell any shares purchased from the
underwriters to certain other brokers or dealers at a discount of up to $
per share from the initial public offering price. If all the shares are not
sold at the initial public offering price, the representatives may change the
offering price and the other selling terms.

Microtune, its directors, officers, employees and certain stockholders have
agreed with the underwriters not to dispose of or hedge any of their common
stock or securities convertible into or exchangeable for shares of common stock
during the period from the date of this prospectus continuing through the date
180 days after the date of this prospectus, except with the prior written
consent of the representatives; provided, however, that with respect to our
officers, directors, and certain stockholders, this restriction shall terminate
as to 20% of the shares after 90 days and an additional 20% of the shares after
120 days after the date of this prospectus, subject to delays as a result of
the timing of Microtune's earnings releases and compliance with Microtune's
insider trading policies, in the event that, at such dates, the reported last
sale price of Microtune's common stock on the Nasdaq National Market is at
least twice the initial public offering price specified in this prospectus for
a certain period of time ending on such dates. See "Shares Eligible for Future
Sale" for a discussion of certain transfer restrictions.

68
<PAGE>

At Microtune's request, the underwriters have reserved, at the initial public
offering price, up to shares of common stock for sale to entities and
individuals identified by Microtune through a directed share program. There can
be no assurance that any of the reserved shares will be so purchased. The
number of shares available for sale to the general public will be reduced by
the number of reserved shares sold. Any reserved shares not so purchased will
be offered to the general public on the same basis as other shares offered
hereby.

Prior to this offering, there has been no public market for the common stock.
The initial public offering price has been negotiated among Microtune and the
representatives of the underwriters. Among the factors to be considered in
determining the initial public offering price of the shares, in addition to
prevailing market conditions, will be Microtune's historical performance,
estimates of Microtune's business potential and earnings prospects, an
assessment of Microtune's management and the consideration of the above factors
in relation to market valuation of companies in related businesses.

Application has been made for quotation of the common stock on the Nasdaq
National Market under the symbol "TUNE."

In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while the offering is in progress.

The underwriters may also impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the representatives have repurchased shares sold by or
for the account of such underwriter in stabilizing or short covering
transactions.

These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed five
percent of the total number of shares offered.

Microtune estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$ .

Microtune has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

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<PAGE>

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
Microtune by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Austin, Texas. Certain legal matters will be passed upon for the Underwriters
by Brobeck Phleger & Harrison LLP. As of the date of this prospectus, an
employee of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
beneficially owns an aggregate of 750 shares of Microtune Series D preferred
stock which will convert into 1,500 shares of common stock upon completion of
this offering.

EXPERTS

The consolidated financial statements of Microtune, Inc. as of December 31,
1998 and 1999 and for each of the three years in the period ended December 31,
1999, and the consolidated financial statements of Temic as of December 31,
1998 and for the nine months ended September 30, 1997, the three months ended
December 31, 1997, the year ended December 31, 1998, and the period January 1,
1999 through December 22, 1999, and the consolidated financial statements of
HMTF Acquisition (Bermuda) Ltd. as of December 31, 1999 and for the period
December 23, 1999 through December 31, 1999, appearing in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules) under the Securities
Act, with respect to the shares to be sold in this offering. This prospectus
does not contain all of the information set forth in the registration
statement. For further information with respect to us and the common stock
offered in this prospectus, reference is made to the registration statement,
including the exhibits thereto, and the financial statements and notes filed as
a part thereof. With respect to each such document filed with the SEC as an
exhibit to the registration statement, reference is made to the exhibit for a
more complete description of the matter involved.

We will be filing quarterly and annual reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the public reference facilities of the SEC in Washington, D.C. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from the SEC's website at
http://www.sec.gov.

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<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Combined Condensed Pro Forma Financial Statements (Unaudited):
Combined Condensed Pro Forma Statement of Operations for the Year Ended
December 31, 1999 (Unaudited).......................................... F-3
Notes to Combined Condensed Pro Forma Statement of Operations
(Unaudited)............................................................ F-4

Microtune, Inc.:
Report of Ernst & Young LLP, Independent Auditors....................... F-6
Consolidated Balance Sheets as of December 31, 1998 and 1999 and
March 31, 2000 (Unaudited)............................................. F-7
Consolidated Statements of Operations for the Years Ended December 31,
1997, 1998 and 1999 and for the Three Months Ended March 31, 1999 and
2000 (Unaudited)....................................................... F-8
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1997, 1998 and 1999 and for the Three Months Ended
March 31, 2000 (Unaudited)............................................. F-9
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1998 and 1999 and for the Three Months Ended March 31, 1999 and
2000 (Unaudited)....................................................... F-10
Notes to Consolidated Financial Statements.............................. F-11

HMTF Acquisition (Bermuda), Ltd. and Temic Telefunken Hochfrequentztechnik
GmbH:
Report of Ernst & Young LLP, Independent Auditors....................... F-24
Consolidated Balance Sheets as of December 31, 1998 and 1999............ F-25
Consolidated Statements of Operations for the Nine Months Ended
September 30, 1997, the Three Months Ended December 31, 1997, the Year
Ended December 31, 1998, the period January 1, 1999 through December
22, 1999 and the Period December 23, 1999 through December 31, 1999.... F-26
Consolidated Statements of Stockholders Equity for the Nine Months Ended
September 30, 1997, the Three Months Ended December 31, 1997, the Year
Ended December 31, 1998, the period January 1, 1999 through December
22, 1999 and the Period December 23, 1999 through December 31, 1999.... F-27
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1997, the Three Months Ended December 31, 1997, the Year
Ended December 31, 1998, the period January 1, 1999 through December
22, 1999 and the Period December 23, 1999 through December 31, 1999.... F-28
Notes to Consolidated Financial Statements.............................. F-29
</TABLE>

F-1
<PAGE>

MICROTUNE, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

On January 10, 2000, Microtune, Inc. (the Company) acquired HMTF Acquisition
(Bermuda) Ltd. (HMTF Acquisition). HMTF Acquisition was incorporated in
November 1999 for the purpose of serving as the ultimate parent company of
Temic Telefunken Hochfrequenztechnik GmbH (Temic), which is now called
Microtune GmbH. HMTF Acquisition acquired Temic on December 22, 1999.

The combination with HMTF Acquisition has been accounted for as a purchase
business combination by the Company. The pro forma combined condensed statement
of operations is based on the historical financial statements of the Company,
HMTF Acquisition and Temic and assumes the combination had been completed on
January 1, 1999.

The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the results of operations that would
have been reported if such transactions had been completed as presented in the
accompanying unaudited pro forma combined condensed statement of operations nor
is it necessarily indicative of the Company's future results of operations. The
pro forma adjustments and the assumptions on which they are based are described
in the accompanying notes to unaudited pro forma combined condensed statement
of operations.

The unaudited pro forma combined condensed statement of operations is based
on, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of the Company for the year
ended December 31, 1999, the consolidated financial statements and the related
notes thereto of HMTF Acquisition for the period December 23, 1999 through
December 31, 1999 and the consolidated financial statements and the related
notes thereto of Temic for the period January 1, 1999 through December 22, 1999
included elsewhere in this prospectus.

F-2
<PAGE>

MICROTUNE, INC.

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

Year Ended December 31, 1999

(Unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
HMTF
Temic Acquisition
Historical Historical
The Company Period Period
Historical January 1, December 23, Purchase
Year Ended 1999 Through 1999 Through Accounting
December 31, December 22, December 31, Pro Forma Pro Forma
1999 1999 1999 Adjustments Combined
------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues............ $ -- $45,178 $ 1,058 $ 523 (c) $ 46,759
Cost of revenues........ -- 29,990 719 704 (b) 31,413
------- ------- -------- ------- --------
Gross margin............ -- 15,188 339 (181) 15,346
Operating expenses:
Research and
development........... 5,913 2,949 70 141 (b) 9,073
Acquired in-process
research and
development........... -- -- 12,692 (12,692)(a) --
Selling, general and
administrative........ 2,327 6,800 176 (229)(c) 9,168
94 (b)
Employee bonuses....... -- 4,314 -- (4,314)(a) --
Amortization of
intangible assets and
goodwill.............. -- (532) 210 8,222 (b) 8,700
800 (c)
Stock option
compensation.......... 850 -- -- 820 (d) 1,670
------- ------- -------- ------- --------
Total operating
expenses............ 9,090 13,531 13,148 (7,158) 28,611
------- ------- -------- ------- --------
Income (loss) from
operations............. (9,090) 1,657 (12,809) 6,977 (13,265)
Other income (expense):
Interest income........ 582 165 5 -- 752
Interest expense....... -- (31) -- -- (31)
Foreign currency
translation and
transaction gains
(losses), net......... -- 1,245 1 -- 1,246
Other.................. -- 795 41 99 (c) 935
------- ------- -------- ------- --------
Income (loss) before
provision (benefit) for
income taxes........... (8,508) 3,831 (12,762) 7,076 (10,363)
Provision (benefit) for
income taxes........... -- 1,169 188 (950)(e) 407
------- ------- -------- ------- --------
Net income (loss)....... $(8,508) $ 2,662 $(12,950) $ 8,026 $(10,770)
======= ======= ======== ======= ========
Basic and diluted
earnings (loss) per
common share (Note 3).. $ (1.12) $ (1.42)
======= ========
Shares used to compute
per share data (Note
3)..................... 7,565 7,565
======= ========
</TABLE>

See accompanying notes.

F-3
<PAGE>

MICROTUNE, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

Year Ended December 31, 1999

1. General

The combination with HMTF Acquisition has been accounted for as a purchase
business combination by the Company. The accompanying unaudited pro forma
combined condensed statement of operations reflects an aggregate cost of the
combination of approximately $63.1 million, consisting of the fair market value
of the Company's securities issued to the shareholders of HMTF Acquisition plus
costs directly related to the combination as follows (in thousands, except
share data):

<TABLE>
<S> <C>
Fair market value of 3,318,513 shares of Series E Preferred Stock.. $55,548
Fair market value of warrants to purchase 2,212,342 shares of the
Company's common stock............................................ 7,411
Transaction costs.................................................. 185
-------
Total combination cost............................................. $63,144
=======
</TABLE>

The warrants have an exercise price of $0.001 per share. The fair values of
the Series E Preferred Stock and the warrants were based on an independent
valuation of the Company's common stock at the date of the combination and the
cash purchase price paid by HMTF Acquisition for Temic on December 22, 1999.

The aggregate purchase price has been allocated to the net assets acquired on
the basis of preliminary estimates of fair values as follows:

<TABLE>
<S> <C>
Working capital................................................. $11,596
Property and equipment.......................................... 6,118
Intangible assets............................................... 8,037
Goodwill........................................................ 30,038
Acquired in-process research and development costs charged to
expense........................................................ 12,692
Deferred income taxes........................................... (4,020)
Other assets and liabilities, net............................... (2,329)
Loans receivable from stockholders.............................. 1,012
-------
$63,144
=======
</TABLE>

The preliminary estimates of fair value were determined by the Company's
management based primarily on information furnished by management of Microtune
GmbH and a preliminary independent valuation of the assets and liabilities
acquired and the acquired in-process research and development. The final
allocation of the purchase price will be based on a complete evaluation of the
assets and liabilities of HMTF Acquisition. Although management does not expect
the final valuation of the assets and liabilities acquired to result in values
that are significantly different from the estimates included in the unaudited
pro forma condensed combined balance sheet, there can be no assurance such
differences will not occur.

The estimates of fair value were determined by management based on
information furnished by management of HMTF Acquisition and a preliminary
independent valuation. Amounts attributed to acquired in-process and
development were expensed at the date of the combination because the purchased
research and development had not reached technological feasibility based on the
status of design and development activities that required further refinement
and testing. The estimates used

F-4
<PAGE>

MICROTUNE, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(Continued)

Year Ended December 31, 1999

in valuing the research and development were based upon assumptions regarding
future events and circumstances management believes to be reasonable, but that
are inherently uncertain and unpredictable.

In connection with the acquisition of HMTF Acquisition, the Company acquired
the principal assets of The Tuner Company, an independent distributor of
products for Temic in North America, for $931,000 and the assumption of certain
liabilities.

2. Unaudited Pro Forma Combined Condensed Statement of Operations

The accompanying unaudited pro forma combined condensed statement of
operations have been prepared as if the combination with HMTF Acquisition
(including its acquisition of Temic) and the acquisition of the assets of the
Tuner Company were completed as of January 1, 1999 and reflects the following
pro forma adjustments:

(a) To eliminate nonrecurring charges for acquired in-process research and
development and the employee bonuses recorded by HMTF Acquisition
resulting from its acquisition of Microtune GmbH on December 22, 1999.

(b) To record the depreciation and amortization of property and equipment,
intangible assets and goodwill resulting from the allocation of the
cost of the combination with HMTF Acquisition. The allocation of the
cost is preliminary and amounts are subject to adjustment. The acquired
intangible assets are being amortized over periods of one to five
years. Goodwill is being amortized over five years.

(c) To record the effect on revenues and operating costs of combining the
results of operations of The Tuner Company and HMTF Acquisition, net of
the elimination of intercorporate accounts.

(d) To record stock option compensation resulting from the issuance of
options to purchase 1.7 million shares of the Company's common stock at
an exercise price of $0.875 per share to employees of Temic in
connection with the combination. The aggregate compensation expense
resulting from the issuance of these options of $4.1 million is being
amortized over the vesting periods of the options.

(e) To adjust the provision for income taxes to reflect the impact of the
results of operations of HMTF Acquisition and Temic and related pro
forma adjustments.

3. Unaudited Pro Forma Combined Earnings Per Common Share Data

The unaudited pro forma combined basic earnings per common share data is
computed by dividing pro forma combined income per share by the pro forma
weighted average number of common shares outstanding. Because the combined pro
forma results of operations are a loss for the period, the assumed exercise of
stock options and conversion of outstanding convertible preferred stock does
not have a dilutive effect.

F-5
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
Microtune, Inc.

We have audited the accompanying consolidated balance sheets of Microtune,
Inc. (the Company), as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Microtune, Inc.,
at December 31, 1998 and 1999, and the consolidated results of its operations
and its consolidated cash flows for the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

ERNST & YOUNG LLP

Dallas, Texas
March 24, 2000

F-6
<PAGE>

MICROTUNE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

<TABLE>
<CAPTION>
December 31,
----------------- March 31,
1998 1999 2000
ASSETS ------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 712 $ 6,331 $ 6,132
Marketable securities (Note 2)..................... 7,156 13,798 11,371
Accounts receivable, net of allowance for doubtful
accounts of $509 at March 31, 2000................ -- 164 8,266
Inventories (Note 3)............................... -- -- 10,206
Deferred income taxes (Note 6)..................... -- -- 101
Other current assets............................... -- 22 1,657
------- -------- -------
Total current assets............................... 7,868 20,315 37,733

Property and equipment, at cost:
Leasehold improvements............................. 413 418 657
Manufacturing equipment............................ -- -- 6,313
Other equipment.................................... 1,567 2,445 2,151
Furniture and fixtures............................. 16 82 375
Computer software.................................. 777 724 1,938
------- -------- -------
2,773 3,669 11,434
Less accumulated depreciation...................... 895 1,879 2,621
------- -------- -------
1,878 1,790 8,813
Intangible assets, net of accumulated amortization of
$1,009 (Note 1)..................................... -- -- 8,125
Goodwill, net of accumulated amortization of $1,495
(Note 1)............................................ -- -- 28,543
Deferred income taxes (Note 6)....................... -- -- 130
Other assets and deferred charges.................... 444 172 523
------- -------- -------
Total assets................................... $10,190 $ 22,277 $83,867
======= ======== =======

<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities:
Accounts payable................................... $ 447 $ 223 $ 5,622
Accrued expenses................................... 12 84 3,581
Accrued compensation............................... 98 365 1,121
Payable to stockholder............................. 125 -- --
------- -------- -------
Total current liabilities........................ 682 672 10,324

Deferred income taxes (Note 6)....................... -- -- 5,305
Other noncurrent liabilities......................... -- -- 1,097
Commitments (Note 4)

Stockholders' equity (Notes 7, 8 and 9):
Preferred stock, $0.001 par value
Authorized shares--18,999
Issued and outstanding Series A through E
convertible shares--
6,463 at December 31, 1998, 7,830 at December 31,
1999, and 11,149 at March 31, 2000................ 7 8 11
Common stock, $0.001 par value:
Authorized shares--100,000
Issued and outstanding shares--6,948 at December
31, 1998,
7,943 at December 31, 1999, and 8,234 at March 31,
2000.............................................. 7 8 8
Additional paid-in capital.......................... 19,216 36,819 100,631
Stock subscription -- funds held in escrow for
Series A Preferred Stock........................... (3,000) -- --
Loans receivable from stockholders.................. (207) (207) (860)
Accumulated other comprehensive income.............. -- -- (866)
Accumulated deficit................................. (6,515) (15,023) (31,783)
------- -------- -------
Total stockholders' equity....................... 9,508 21,605 67,141
------- -------- -------
Total liabilities and stockholders' equity..... $10,190 $ 22,277 $83,867
======= ======== =======
</TABLE>

See accompanying notes.

F-7
<PAGE>

MICROTUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
------------------------- -----------------
1997 1998 1999 1999 2000
------- ------- ------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net revenues..................... $ -- $ -- $ -- $ -- $ 13,896
Cost of revenues................. -- -- -- -- 10,071
------- ------- ------- ------- --------
Gross margin..................... -- -- -- -- 3,825
Operating expenses (Notes 1,4, 9
and 10):
Research and development....... 2,091 3,174 5,913 984 2,584
Acquired in process research
and development............... -- -- -- -- 12,692
Selling, general and
administrative................ 723 885 2,327 375 3,302
Amortization of intangible
assets and goodwill........... -- -- -- -- 2,178
Stock option compensation...... -- -- 850 398 789
------- ------- ------- ------- --------
Total operating expenses..... 2,814 4,059 9,090 1,757 21,545
------- ------- ------- ------- --------
Loss from operations............. (2,814) (4,059) (9,090) (1,757) (17,720)
Other income (expense):
Interest income................ 408 572 582 99 276
Foreign currency translation
and transaction gains
(losses), net................. -- -- -- -- 877
Other.......................... -- -- -- -- 171
------- ------- ------- ------- --------
Loss before provision for income
taxes........................... (2,406) (3,487) (8,508) (1,658) (16,396)
Provision for income taxes (Note
6).............................. -- -- -- -- 364
------- ------- ------- ------- --------
Net loss......................... $(2,406) $(3,487) $(8,508) $(1,658) $(16,760)
======= ======= ======= ======= ========
Basic and diluted loss per common
share........................... $ (0.36) $ (0.52) $ (1.12) $ (0.24) $ (2.06)
======= ======= ======= ======= ========
Weighted average shares used in
computing basic and diluted loss
per common share................ 6,707 6,716 7,565 6,948 8,139
======= ======= ======= ======= ========
</TABLE>

See accompanying notes.

F-8
<PAGE>

MICROTUNE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
Series A
Through E
Convertible
Preferred
Stock Common Stock
------------- ------------- Stock Loans Accumulated
Number Number Additional Subscription Receivable Other Total
of Par of Par Paid-In -Funds Held From Comprehensive Accumulated Stockholders'
Shares Value Shares Value Capital in Escrow Stockholders Income Deficit Equity
------ ----- ------ ----- ---------- ------------ ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1996........... 5,000 $ 5 6,770 $ 7 $ 9,056 $(3,000) $ (98) $ -- $ (622) $ 5,348
Issuance of
common stock
upon exercise
of stock
options for
cash........... -- -- 25 -- 2 -- -- -- -- 2
Repurchase of
common shares
for cash and
extinguishment
of note
receivable..... -- -- (81) -- (2) -- 2 -- -- --
Contribution
from Series A
Preferred
Stockholder
under formation
agreement
(Notes 7 and
11)............ -- -- -- -- 185 -- -- -- -- 185
Repurchase of
Series A
Preferred
Stock.......... (950) (1) -- -- (2,894) -- -- -- -- (2,895)
Issuance of
Series A
Preferred Stock
for cash....... 250 -- -- -- 750 -- -- -- -- 750
Issuance of
Series B
Preferred Stock
for cash net of
issuance
costs of $6.... 1,000 1 -- -- 3,993 -- -- -- -- 3,994
Proceeds to
Microtune,
Inc., for the
transfer of 650
shares of
Series A
Preferred Stock
from Cirrus
Logic, Inc.,
and Cirrus
Logic
International,
Ltd., to other
investors...... -- -- -- -- 237 -- -- -- -- 237
Net loss........ -- -- -- -- -- -- -- -- (2,406) (2,406)
------ --- ----- --- -------- ------- ------ ----- -------- --------
Balance at
December 31,
1997........... 5,300 5 6,714 7 11,327 (3,000) (96) -- (3,028) 5,215
Issuance of
common stock
upon exercise
of stock
options for
cash and
notes.......... -- -- 401 -- 120 -- (118) -- -- 2
Repurchase of
common shares
for
extinguishment
of note
receivable..... -- -- (167) -- (4) -- 4 -- -- --
Contribution
from Series A
Preferred
Stockholder
under formation
agreement
(Notes 7 and
11)............ -- -- -- -- 109 -- -- -- -- 109
Repurchase of
Series A
Preferred Stock
for cash....... (300) -- -- -- (1,090) -- -- -- -- (1,090)
Issuance of
Series C
Preferred Stock
for cash net of
issuance costs
of $20......... 1,463 2 -- -- 8,754 -- -- -- -- 8,756
Payments on
loans
receivable from
stockholders... -- -- -- -- -- -- 3 -- -- 3
Net loss........ -- -- -- -- -- -- -- -- (3,487) (3,487)
------ --- ----- --- -------- ------- ------ ----- -------- --------
Balance at
December 31,
1998........... 6,463 7 6,948 7 19,216 (3,000) (207) -- (6,515) 9,508
Issuance of
common stock
upon exercise
of stock
options........ -- -- 995 1 220 -- -- -- -- 221
Issuance of
Series D
Preferred Stock
for cash....... 1,367 1 -- -- 16,408 -- -- -- -- 16,409
Stock option
compensation... -- -- -- -- 850 -- -- -- -- 850
Funds released
from escrow for
Series A
Preferred
Stock.......... -- -- -- -- -- 3,000 -- -- -- 3,000
Other........... -- -- -- -- 125 -- -- -- -- 125
Net loss........ -- -- -- -- -- -- -- -- (8,508) (8,508)
------ --- ----- --- -------- ------- ------ ----- -------- --------
Balance at
December 31,
1999........... 7,830 8 7,943 8 36,819 -- (207) -- (15,023) 21,605
Issuance of
common stock
upon exercise
of stock
options
(unaudited).... -- -- 291 -- 67 -- (28) -- -- 39
Issuance of
Series E
Preferred Stock
and warrants to
purchase common
stock in the
combination
with HMTF
Acquisition
(Bermuda) Ltd.
(unaudited).... 3,319 3 -- -- 62,956 -- (1,012) -- -- 61,947
Stock option
compensation
(unaudited).... -- -- -- -- 789 -- -- -- -- 789
Payments on
loans
receivable from
stockholders
(unaudited).... -- -- -- -- -- -- 387 -- -- 387
Net loss
(unaudited).... -- -- -- -- -- -- -- -- (16,760) (16,760)
Unrealized
foreign
currency loss
(unaudited).... -- -- -- -- -- -- -- (866) -- (866)
--------
Total
comprehensive
loss
(unaudited).... -- -- -- -- -- -- -- -- -- (17,626)
------ --- ----- --- -------- ------- ------ ----- -------- --------
Balance at March
31, 2000
(unaudited).... 11,149 $11 8,234 $ 8 $100,631 $ -- $ (860) $(866) $(31,783) $ 67,141
====== === ===== === ======== ======= ====== ===== ======== ========
</TABLE>

See accompanying notes.

F-9
<PAGE>

MICROTUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
---------------------------- -----------------
1997 1998 1999 1999 2000
-------- -------- -------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Operating Activities
Net loss..................... $ (2,406) $ (3,487) $ (8,508) $(1,658) $(16,760)
Adjustments to reconcile net
loss to net cash used in
operating activities, net of
effects of business
combination:
Depreciation................. 278 554 1,007 248 1,017
Amortization of intangible
assets and goodwill......... -- -- -- -- 2,178
Acquired in-process research
and development............. -- -- -- -- 12,692
Foreign currency translation
and transaction gain
(losses), net............... -- -- -- -- (877)
Stock option compensation.... -- -- 850 398 789
Deferred income taxes........ -- -- -- -- (144)
Changes in operating assets
and liabilities:
Accounts receivable......... -- -- (164) -- (270)
Inventories................. -- -- -- -- (336)
Other assets................ (262) (138) 250 109 316
Accounts payable............ 37 333 (224) (425) 1,066
Accrued expenses............ -- 13 72 22 (815)
Accrued compensation........ 30 46 267 25 483
Employee bonuses............ -- -- -- -- (3,775)
-------- -------- -------- ------- --------
Net cash used in operating
activities................ (2,323) (2,679) (6,450) (1,281) (4,436)

Investing Activities
Net cash aquired in
acquisition of HMTF
Acquisition................. -- -- -- -- 3,550
Purchases of marketable
securities.................. (11,000) (14,653) (30,958) (6,899) (14,371)
Proceeds from sales and
maturities of marketable
securities.................. 7,100 11,397 24,316 8,600 16,798
Purchases of property and
equipment................... (588) (1,546) (919) (490) (1,950)
Sale of property and
equipment................... -- -- -- -- 28
Purchase of intangible
assets...................... -- -- -- -- (825)
Payments on loans
receivable.................. -- -- -- -- (33)
Proceeds from loans
receivable.................. -- -- -- -- 302
-------- -------- -------- ------- --------
Net cash provided by (used
in) investing activities.. (4,488) (4,802) (7,561) 1,211 3,499
Financing Activities
Proceeds from issuance of
Series A Preferred Stock.... 935 -- -- -- --
Repurchase of Series A
Preferred Stock............. (2,895) (982) -- -- --
Proceeds from issuance of
Series B Preferred Stock.... 3,994 -- -- -- --
Proceeds from issuance of
Series C Preferred Stock.... -- 8,756 -- -- --
Proceeds from issuance of
Series D Preferred Stock.... -- -- 16,409 -- --
Proceeds from transfer of
shares of Series A Preferred
Stock....................... 237 -- -- -- --
Proceeds from issuance of
common stock................ 2 2 221 124 39
Proceeds from the release of
funds in escrow............. -- -- 3,000 -- --
Proceeds from loans
receivable from
stockholders................ -- 3 -- -- 387
Increase (decrease) in
payable to stockholder...... 2,363 (2,238) -- (125) --
-------- -------- -------- ------- --------
Net cash provided by (used
in) financing activities.. 4,636 5,541 19,630 (1) 426
Effect of foreign currency
exchange rate changes on
cash......................... -- -- -- -- 312
-------- -------- -------- ------- --------
Net increase (decrease) in
cash and cash equivalents.... (2,175) (1,940) 5,619 (71) (199)
Cash and cash equivalents at
beginning of period.......... 4,827 2,652 712 712 6,331
-------- -------- -------- ------- --------
Cash and cash equivalents at
end of period................ $ 2,652 $ 712 $ 6,331 $ 641 $ 6,132
======== ======== ======== ======= ========
</TABLE>

See accompanying notes.

F-10
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

1. Description of Business and Basis of Presentation

Description of Business

Microtune, Inc. (the Company), was incorporated on May 28, 1996, and
commenced operations on August 21, 1996. The Company operates in a single
business segment and is engaged in the design, manufacture, and marketing of
high performance RF tuners and transceivers to the broadband communications
markets.

The consolidated financial statements include the Company and its wholly
owned subsidiaries. All significant intercompany transactions and balances have
been eliminated.

Acquisition of HMTF Acquisition (Bermuda), Ltd.

On January 10, 2000, the Company combined with HMTF Acquisition (Bermuda)
Ltd. (HMTF Acquisition), the ultimate parent company of Temic Telefunken
Hochfrequenztechnik GmbH (Temic), in a transaction accounted for as a purchase
business combination. HMTF Acquisition acquired Temic on December 22, 1999.
Temic is now called Microtune GmbH. Microtune GmbH is a leading provider of RF
systems solutions. The consideration in the combination consisted of 3,318,513
shares of Series E Preferred Stock and 2,212,342 warrants to purchase shares of
common stock at an exercise price of $.001 per share. The results of operations
of HMTF Acquisition are included in the results of the Company from the date of
acquisition.

The components of the aggregate cost of the combination were as follows (in
thousands, except share data):

The fair values of the Series E Preferred Stock and the warrants were based
on an independent valuation of the Company's common stock at the date of the
combination and the cash purchase price paid by HMTF Acquisition for Temic on
December 22, 1999 of $60.0 million.

The cost of the acquisition has been allocated to the assets and liabilities
acquired and to acquired in-process research and development, with the
remainder recorded as excess cost over net assets acquired, based on
preliminary estimates of fair values as follows (in thousands):

<TABLE>
<S> <C>
Working capital.................................................. $ 11,596
Property and equipment........................................... 6,118
Intangible assets................................................ 8,037
Goodwill......................................................... 30,038
Acquired in-process research and development costs charged to
expense......................................................... 12,692
Deferred income taxes............................................ (4,020)
Other assets and liabilities, net................................ (2,329)
Loans receivable from stockholders............................... 1,012
--------
$ 63,144
========
</TABLE>

F-11
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

The estimates of fair value were determined by management based on
information furnished by management of Microtune GmbH and a preliminary
independent valuation. The final allocation of the purchase price will be based
on a complete evaluation of the assets and liabilities of HMTF Acquisition.
Although management does not expect the final valuation of the assets and
liabilities acquired to result in values that are significantly different from
the estimates included in the table above, there can be no assurance that such
differences will not occur.

Amounts allocated to acquired in-process and development were expensed at the
date of acquisition because the purchased research and development had not
reached technological feasibility based on the status of design and development
activities that required further refinement and testing. The acquired in-
process research and development projects were assessed, analyzed and valued
using the exclusion approach articulated by the Securities and Exchange
Commission. The estimates used in valuing the research and development were
based upon assumptions regarding future events and circumstances management
believes to be reasonable, but that are inherently uncertain and unpredictable.
The relative stage of completion and projected operating cash flows of the
underlying in-process projects acquired were the most significant and uncertain
assumptions utilized in the valuation analysis of the acquired in-process
research and development. Such uncertainties could give rise to unforeseen
budget overruns and revenue shortfalls in the event that the Company is unable
to successfully complete and commercialize the projects.

The acquired in-process technology relates to the development of new tuners
and modules for cable modem, set-top box, multimedia and automotive
applications, focusing on increased functionality, cost effectiveness and size
reduction, while maintaining a low level of power consumption. The estimated
percentage completion of the development projects as of the acquisition date
was approximately 70%, 50%, 70% and 60% for projects in the cable modem, set-
top box, multimedia and automotive product groups, respectively.

The value of the acquired in-process research and development was determined
by discounting the estimated projected net cash flows related to the applicable
products for the next ten years, including costs to complete the development of
the technology and the future revenues to be earned upon release of the
products. The rate utilized to discount the net cash flows to present value was
22% based on the weighted average cost of capital adjusted for the risks
associated with the estimated growth, profitability, developmental and market
risks of the acquired development projects. Projected net cash flows from such
products are based on estimates of revenues and operating profit related to
such products.

Management expects that products developed from the research and development
will generally be released during 2000 through 2002. Management expects that
the purchased research and development generally will be successfully developed
into commercially viable products. However, there can be no assurance that
commercial viability or timely release of these products will be achieved.

In connection with the combination with HMTF Acquisition, the Company
acquired the principal assets of The Tuner Company, an independent distributor
of products for Temic in North America, for $931,000 and the assumption of
certain liabilities.

F-12
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

The following unaudited pro forma information presents the results of
operations of the Company as if the combination with HMTF Acquisition and the
acquisition of The Tuner Company had occurred as of January 1, 1998. The pro
forma information has been prepared by combining the results of operations of
the Company, HMTF Acquisition, Temic and The Tuner Company with adjustments to
eliminate the 1999 charge for acquired in-process research and development
costs and to record additional amortization expense and the impact on the
provision for income taxes resulting from the application of purchase
accounting. The pro forma information does not purport to
be indicative of what would have occurred had the acquisition occurred as of
that date, or of results of operations that may occur in the future (in
thousands, except per share data):

<TABLE>
<CAPTION>
Years Ended
December 31,
-----------------
1998 1999
------- --------
<S> <C> <C>
Revenue.................................................. $51,083 $ 46,759
Loss from operations..................................... $(3,917) $(13,265)
Net loss................................................. $(3,741) $(10,770)
Basis and diluted net loss per common share.............. $ (0.56) $ (1.42)
</TABLE>

Prior to the combination with HMTF Acquisition, the Company was in the
development stage and had been engaged primarily in raising capital, recruiting
RF and analog engineers, product research and development, and developing
relationships with potential customers and suppliers.

Interim Financial Information

The interim consolidated financial information as of March 31, 2000 and for
the three months ended March 31, 1999 and March 31, 2000 is unaudited but, in
the opinion of management, includes all adjustments which are of a normal
recurring nature and are necessary for a fair presentation of the financial
position and results of operations for the periods presented. Results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of results of operations to be expected for the entire fiscal year.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of bank deposits and money market funds.
The Company considers highly liquid investments with original maturities of
three months or less to be cash equivalents.

Inventories

Inventories are stated at the lower of standard cost, which approximates
actual cost determined on a first-in, first-out basis, or estimated realizable
value.

F-13
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

Marketable Securities

The Company's investments in debt securities are comprised of high-credit
quality debt securities in accordance with the Company's investment policy.
Management determines the appropriate classification of its investments in debt
securities at the time of purchase and reevaluates such determinations at each
balance sheet date. At December 31, 1998 and 1999, the Company's debt
securities are classified as available for sale.

As of December 31, 1998, the Company owned an interest in a municipal bond
with a cost basis of $1,200,000. This investment was carried at cost, which
approximated its fair market value at December 31, 1998. The Company's
ownership interest in the municipal bond had a coupon option under which the
interest rate earned by the Company was adjusted every 35 days if the Company
elected to continue to hold the investment.

As of December 31, 1998 and 1999, the Company owned asset-backed commercial
paper stated at cost of $5,956,162 and $13,798,244, respectively, which
approximated its fair value at December 31, 1999. The Company's investment in
asset-backed commercial paper matured within 8 days and 32 days of December 31,
1998 and 1999, respectively.

The fair value of marketable securities is estimated based on quoted market
prices.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, which are
currently three to five years.

Intangible Assets and Goodwill

Intangible assets, which consist primarily of the customer base, patents and
other intangible assets acquired in the acquisition of HMTF Acquisition, are
being amortized on the straight-line basis over three to ten years.

Goodwill resulting from the acquisition of HMTF Acquisition is being
amortized over a period of five years.

The carrying value of goodwill and other intangible assets will be reviewed
if the facts and circumstances suggest that they may be permanently impaired.
If a comparison of the undiscounted cash flow method to the carrying value of
goodwill and other intangible assets indicates that these assets will not be
recoverable, the assets will be reduced to their estimated recoverable value.
Estimated recoverable value is determined by applying the discounted cash flow
method.

Research and Development Costs

Research and development costs, consisting of the costs of designing,
developing, and testing new or significantly enhanced products, are expensed as
incurred.

Revenue Recognition

Revenues are recognized when title to the product transfers to the customer.
Provision is made currently for estimated returns.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25), and related interpretations
in accounting for its employee stock options.

F-14
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

Warranty Costs

The Company provides a one-year warranty on all products and records a
related provision for estimated warranty costs at the date of sale.

Foreign Currency Translation

The accompanying financial statements have been prepared using the United
States (U.S.) dollar as the functional currency, except that the Deutsch Mark
(DM) is used as the functional currency for Microtune GmbH. Financial
statements of operations of Microtune GmbH outside of Germany are translated
into DM using exchange rates in effect at period end for assets and liabilities
and average exchange rates during the period for results of operations. The
resulting translation adjustments are included in the results of operations.
Adjustments resulting from the translation of the DM financial statements of
Microtune GmbH into U.S. dollars are included as a component of stockholders'
equity.

Income Taxes

The Company's income taxes are computed using the asset and liability method
of accounting. Under the asset and liability method, a deferred tax asset or
liability is recognized for estimated future tax effects attributable to
temporary differences and carryforwards. The measurement of deferred income tax
assets is adjusted by a valuation allowance, if necessary, to recognize future
tax benefit only to the extent, based on available evidence, it is more likely
than not such benefit will be realized.

Earnings Per Share

Basic earnings (loss) per common share is computed using the weighted average
number of common shares outstanding during each period. Diluted earnings (loss)
per common share is computed using the weighted average number of common shares
outstanding during each period and common equivalent shares consisting of
preferred stock and stock options (using the treasury stock method), if
dilutive. All outstanding options and shares to be issued upon the conversion
of convertible preferred stock have not been included in the computation of
diluted earnings per share for all periods presented as the effect would not be
dilutive.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. It includes all changes in equity during a period,
except those resulting from investments by owners and distributions to owners.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations
of credit risk consist primarily of trade accounts receivable. Products are
sold to customers in the broadband communications industry internationally,
principally in Europe and the United States. The Company continually evaluates
the creditworthiness of its customers' financial condition and generally does
not require collateral. Microtune GmbH also maintains credit insurance covering
certain receivables. The Company has not experienced significant losses on
uncollectible accounts.

F-15
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which, as
amended, is required to be adopted by the Company beginning January 1, 2001.
The Company does not currently use derivatives, however, as such instruments
may be used in the future, it is uncertain what, if any, impact the adoption of
Statement 133 will have on the earnings or the financial position of the
Company.

Risk and Uncertainties

The future results of operations and financial condition of the Company will
be impacted by the following factors, among others: the level of difficulty
experienced in the integration of acquired businesses, dependence on the
broadband communications markets, lengthy sales cycle, dependence on third
party manufactures and subcontractors, dependence on new personnel,
technological change and dependence on new products, international operations,
property rights, and product liability.

3. Inventories

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
March 31, 2000
--------------
<S> <C>
Finished goods................................................ $ 4,208
Work-in process............................................... 2,184
Raw materials................................................. 3,814
-------
$10,206
=======
</TABLE>

4. Commitments

In May 1998, the Company entered into a five-year operating lease for office
space. The lease requires no rent payments during the first three years. In
November 1999, the Company modified the lease to include additional office
space. Lease expense under this lease is recognized on the straight-line basis
over the lease term. Microtune GmbH leases its administrative, sales and
marketing and research and development facility in Germany under an operating
lease with a twenty two year term, which began in December 1999. The Company
also leases certain other facilities, equipment and computer software under
operating leases. Future minimum lease payments required under operating
leases that have an initial or remaining noncancelable lease terms in excess of
one year as of March 31, 2000 are as follows (in thousands):

<TABLE>
<S> <C>
Nine months ended December 31, 2000................................. $ 1,356
Year ended December 31, 2001........................................ 1,235
Year ended December 31, 2002........................................ 974
Year ended December 31, 2003........................................ 921
Year ended December 31, 2004........................................ 655
Thereafter.......................................................... 5,271
-------
$10,412
=======
</TABLE>

As of March 31, 2000, future minimum payments required under the operating
lease for the facility in Germany include $3.5 million guaranteed by Microtune
GmbH relating to obligations issued to finance the land and building.

F-16
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

Rent expense for the years ended December 31, 1997, 1998 and 1999, was
$75,516, $70,082 and $72,783, respectively.

The Company is involved in legal proceedings that arise in the ordinary
course of business. In the opinion of management, the outcome of pending legal
proceedings will not have a material adverse affect on the consolidated
financial statements.

5. Note Payable

At March 31, 2000, Microtune GmbH has credit agreements with two banks which
provide for borrowings of up to $2.9 million under each agreement. One of the
agreements is cancellable upon notification by the bank and the second
agreement expires August 31, 2000. Borrowings under these agreements bear
interest at rates determined from time to time by the banks (6.50% and 6.75%,
respectively, at March 31, 2000). At March 31, 2000, no borrowings were
outstanding under these credit agreements.

6. Income Taxes

The provision (benefit) for income taxes is reconciled with the U.S. federal
statutory rate as follows (in thousands):

<TABLE>
<CAPTION>
Three Months
Year Ended December Ended
31, March 31,
----------------------- --------------
1997 1998 1999 1999 2000
------ ------- ------- ----- -------
<S> <C> <C> <C> <C> <C>
Expense (benefit) computed at the
U.S. federal statutory rate...... $(818) $(1,198) $(2,893) $(564) $(5,575)
Benefit of losses not recognized.. 736 1,196 2,887 564 1,121
Acquired in-process research and
development costs for which no
tax benefit was recognized....... -- -- -- -- 4,315
Non-deductible goodwill
amortization..................... -- -- -- -- 508
Other, net........................ 82 2 6 -- (5)
------ ------- ------- ----- -------
Income tax provision (benefit).... $ -- $ -- $ -- $ -- $ 364
====== ======= ======= ===== =======
</TABLE>

F-17
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

The significant components of the Company's deferred tax liabilities and
assets are as follows (in thousands):

<TABLE>
<CAPTION>
December 31,
------------- March 31,
1998 1999 2000
------ ------ ---------
<S> <C> <C> <C>
Deferred tax liabilities:
Accrued expenses................................... $ -- $ -- $ 897
Unrealized foreign currency gains.................. -- -- 364
Property and equipment............................. 59 -- 317
Identifiable intangible assets..................... -- -- 3,925
Other.............................................. 6 -- --
------ ------ ------
Total deferred tax liabilities................... 65 -- 5,503
Deferred tax assets:
Inventory.......................................... -- -- 75
Property and equipment............................. -- 115 137
Accrued expenses................................... 48 -- --
Net operating losses............................... 2,133 4,892 5,980
Research and development credits................... 251 383 441
Other, net......................................... 199 129 224
------ ------ ------
Total deferred tax assets........................ 2,631 5,519 6,857
Valuation allowance.................................. 2,566 5,519 6,691
------ ------ ------
Total deferred tax liabilities, net............ $ -- $ -- $5,337
====== ====== ======
</TABLE>

The Company has established a valuation allowance to fully reserve its U.S.
deferred tax assets at December 31, 1998 and 1999 and March 31, 2000 due to the
uncertainty of the timing and amount of future taxable income. For federal
income tax purposes, at December 31, 1999, the Company had a net operating loss
carryforward of approximately $14,300,000 and an unused research and
development credit carryforward of approximately $383,000, which begins to
expire in the year 2011. The occurrence of a change in ownership, as defined in
the Internal Revenue Code, may limit utilization of the U.S. federal net
operating loss and research and development credit carryforwards.

The income tax returns of the Company, HMTF Acquisition and Microtune GmbH
are subject to review and examination in the various jurisdictions in which
they operate. Management believes that all income tax issues which have been or
may be raised as a result of such reviews and examinations will be resolved
with no material impact on the financial position or future results of
operations of the Company.

F-18
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

7. Convertible Preferred Stock

The Company has authorized 18,998,513 shares of $0.001 par value preferred
stock, of which 13,998,513 shares have been designated in five series, A
through E. Information with respect to each of the five series of preferred
stock is summarized below (in thousands, except per share data):

<TABLE>
<CAPTION>
Series A Series B Series C Series D Series E
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Number of shares
authorized............. 5,000 1,250 1,500 2,600 3,649
Number of shares issued
and outstanding:
December 31, 1997...... 4,300 1,000 -- -- --
December 31, 1998...... 4,000 1,000 1,463 -- --
December 31, 1999...... 4,000 1,000 1,463 1,367 --
March 31, 2000......... 4,000 1,000 1,463 1,367 3,318

Conversion ratio of
preferred shares into
common................. One for two One for two One for two One for two One for two

Liquidation preference.. $2.58 per $4.00 per $6.00 per $12.00 per $20.56 per
share, plus share, plus share, plus share, plus share, plus
all declared all declared all declared all declared all declared
but unpaid but unpaid but unpaid but unpaid but unpaid
dividends dividends dividends dividends dividends

Dividend rights......... $0.2064 per $0.32 per $0.48 per $0.96 per $1.36 per
share per share per share per share per share annum
annum (if annum (if annum (if annum (if (if
declared) declared) declared) declared) declared)
and and and and and
noncumulative noncumulative noncumulative noncumulative noncumulative
</TABLE>

The preferred stockholders have voting rights equal to the number of common
shares they would have upon conversion into common stock. Additionally,
preferred stockholders are entitled to receive additional preferred shares
based on a prescribed formula if the Company obtains additional private
financing at less than the liquidation preference value of the respective stock
series. All outstanding shares of preferred stock convert automatically to
common stock upon the closing of a firm underwritten public offering of the
Company's securities provided the aggregate sales price of such securities
equals or exceeds $10,000,000 with respect to the Series A, Series B and Series
C preferred stock, and $20,000,000 with respect to the Series D and Series E
preferred stock. At December 31, 1999, the Company had 15,660,170 shares of
common stock reserved for conversion of the preferred stock.

In August 1996, Cirrus Logic, Inc., and Cirrus Logic International, Ltd.
(collectively called Cirrus), and the Company entered into a Formation
Agreement whereby Cirrus contributed certain technology, patents, copyrights,
trademarks, equipment, and computer software. Additionally, Cirrus committed to
provide ongoing support through payment of certain operating expenses to be
incurred by the Company for a period of two years. In exchange for the above
consideration, the Company issued 1,899,999 shares of Series A preferred stock.
The net book value, which totaled $544,574, of the equipment and computer
software contributed by Cirrus was recorded as par value of the Series A
preferred stock and additional paid-in capital. Operating expenses incurred on
behalf of the Company by Cirrus were recorded as a credit to additional paid-in
capital as the expenses were incurred (Note 11). In August 1997, the Company
repurchased 950,000 shares of Series A preferred stock from Cirrus for
$2,895,000. During 1998, the Company repurchased 299,999 shares of Series A
preferred stock from Cirrus for $1,091,246.

F-19
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

In August 1996, the Company issued 1,937,493 shares of Series A Preferred
Stock to investors for cash proceeds of $5,000,000. Additionally, the investors
contributed cash of $3,000,000 in exchange for 1,162,508 shares of Series A
Preferred Stock, which were subject to an escrow agreement. The investors could
vote the shares while held in escrow. The escrow agent was required to invest
the funds held in escrow in AAA-rated short-term investments, and was required
to pay interest earned on the investments to the Company on a monthly basis. In
1999, the funds held in escrow were released by the escrow agent to the Company
upon the successful demonstration by the Company of a working prototype of an
integrated circuit.

In connection with the 250,000 shares of Series A Preferred Stock issued to
an investor in 1997, the investor received a warrant to purchase 40,698 shares
of Series A at an exercise price of $0.01 per share. The warrant shall become
exercisable, in whole, only beginning immediately prior to the liquidation,
dissolution, or winding up of the Company in which the price per share of the
Series A Preferred Stock immediately prior to the liquidation, dissolution, or
winding up of the Company is less than $3.00 per share. At December 31, 1999,
there are 40,698 shares of Series A Preferred Stock reserved for the exercise
of this warrant.

8. Common Stock

At December 31, 1999, 5,222,082 shares of common shares were issued and
outstanding under stock repurchase and restriction agreements that restrict the
transfer of ownership of such stock. Pursuant to the stock purchase and
restriction agreements, ownership vests based on employment over periods which
range from four to five years from the date of grant. At December 31, 1999,
4,541,452 of these shares were vested. Upon termination of employment of a
holder of restricted shares, the Company has the right but not the obligation
to purchase any unvested shares, at the stockholder's original cost. At
December 31, 1999, 680,630 shares with an original cost of $90,349 were subject
to the repurchase right. Further, the Company and certain stockholders have
right of first refusal and co-sale rights with respect to sales of both common
and preferred shares as specified in a Founders Right of First Refusal and Co-
Sale Agreement dated August 21, 1996.

In January 2000, the Board of Directors declared a stock dividend of one
share of common stock for each outstanding share of common stock of the
Company. The stock dividend would also have the effect of adjusting the
conversion prices for each series of Preferred Stock to the Company such that
each share of the Company's Preferred Stock would be convertible into two
shares of Common Stock. The effect of the stock dividend is reflected
retroactively in the accompanying financial statements.

9. Stock Plans

The Company's 1996 Stock Option Plan provides for incentive stock options and
nonqualified stock options to be granted to key employees, certain directors,
and consultants of the Company. The terms of each option granted under the 1996
Stock Option Plan are established by the Board of Directors. At December 31,
1999, the Company had reserved 10,368,458 shares of common stock for issuance
upon exercise of options granted pursuant to the 1996 Stock Option Plan.

F-20
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

A summary of the Company's stock option activity and related information for
the years ended December 31, 1997, 1998 and 1999 follows:

<TABLE>
<CAPTION>
1997 1998 1999
------------------- ------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
Options Price Options Price Options Price
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of year...... 765,000 $0.09 1,069,000 $0.11 1,843,700 $0.17
Granted................ 449,000 0.14 1,175,900 0.27 2,160,150 0.55
Exercised.............. (24,802) 0.07 (401,200) 0.31 (994,784) 0.22
Canceled............... (120,198) 0.10 -- -- (64,000) 0.36
--------- --------- ---------
Options outstanding at
end of year............ 1,069,000 0.11 1,843,700 0.17 2,945,066 0.42
========= ========= =========
Options exercisable at
end of year............ 299,748 0.09 616,768 0.12 419,314 0.21
========= ========= =========
Weighted average grant-
date fair value of
options granted during
the year............... $0.04 $0.06 $1.39
===== ===== =====
</TABLE>

The options outstanding at December 31, 1999, have exercise prices which
range from $0.025 to $0.875 per share, and have a weighted average remaining
contractual life of 8.77 years.

The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123 (SFAS 123), Accounting for Stock based
Compensation, requires the use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, no
compensation expense is recorded when the exercise price of the Company's
employee stock options equals the fair value of the underlying stock on the
date of grant. Compensation equal to the intrinsic value of employee stock
options is recorded when the exercise price of the stock options is less than
the fair value of the underlying stock on the date of grant. Any resulting
compensation is amortized to expense over the vesting periods of the options.

During the year ended December 31, 1999, the Company granted options to
purchase 2,160,150 shares of common stock with a weighted average exercise
price of $0.55 per share. Although the Company's Board of Directors believed
that the exercise price per share assigned to these stock options was equal to
the fair value on the dates of grant, the Company concluded an independent
appraisal was necessary to validate its estimates of fair value due to the
subjective nature of such estimates. Therefore, the Company commissioned an
independent appraisal of its common stock as of January 10, 2000. The appraised
value was used as a basis to estimate compensation on stock option grants
during 1999. Based on this valuation, the Company incurred aggregate deferred
stock option compensation expense of $3.4 million related to the options
granted in 1999, which is being recognized over the respective vesting periods
of the options which range from less than one year to five years.

During the period January 1, 2000 through March 31, 2000, the Company granted
options to purchase 4,477,950 shares of common stock with a weighted average
exercise price of $0.93. These options have exercise prices which were less
than the deemed fair market value of the Company's common stock on the date of
grant, resulting in aggregate deferred stock option compensation expense of
$11.2 million, which is being recognized over the respective vesting periods of
the options which range from less than one year to six years.

F-21
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

In January 2000, the Company also granted options to purchase 330,000 shares
of the Company's Series E Preferred Stock with an exercise price of $16.00 per
share. Upon an initial public offering of the Company's common stock, these
options will automatically convert into options to purchase 660,000 shares of
common stock with an exercise price of $8.00 per share.

The Company received $98,000 and $118,000 in recourse notes upon exercise of
stock options in 1996 and 1998, respectively. Under the terms of the notes, a
lump-sum payment is due four years from the date of issuance, with interest
accrued at a rate of 6.7% per annum. At December 31, 1999, $206,979 of the
notes remained outstanding.

Information regarding pro forma net income is required by SFAS 123, and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of SFAS 123. The fair value of these options was
estimated at the date of grant using a Black-Scholes option pricing model with
no volatility and the following assumptions for 1997, 1998 and 1999,
respectively: weighted-average risk free interest rate of 6.24%, 4.65% and
5.49%, no dividends, and weighted average expected life of 5.0, 5.0 and 4.52
years.

The Black Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information is as follows:

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
(in thousands, except
per share data)
<S> <C> <C> <C>
Pro forma net loss............................... $(2,420) $(3,507) $(8,652)
======= ======= =======
Basic and diluted pro forma loss per share....... $ (0.36) $ (0.52) $ (1.14)
======= ======= =======
</TABLE>

10. Employee Benefit Plans

In January 1997, the Board of Directors and Stockholders approved a plan
which provides retirement benefits under the provisions of Section 401(k) of
the Internal Revenue Code. The Plan covers substantially all employees who meet
a minimum service requirement. Under the Plan, the Company can elect to make
voluntary contributions. No contributions were made by the Company in 1997,
1998 and 1999.

Microtune GmbH sponsors defined benefit retirement plans for its employees.
Retirement benefit expense for the three months ended March 31, 2000 was not
significant.

F-22
<PAGE>

MICROTUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(Information for the Three Months Ended March 31, 1999 and March 31, 2000 is
Unaudited)

11. Transactions with Cirrus Logic, Inc.

Under the terms of the Formation Agreement (Note 7) and for partial
consideration of stock received, Cirrus agreed to fund certain operating
expenses during the Company's start-up period. Additionally, Cirrus agreed to
provide rent, phone, and computer network access over a period of two years. In
1997 and 1998, Cirrus contributed $185,409 and $109,456, respectively, to the
Company for these expenses. The contribution of these expenses has been
classified as additional paid-in capital. In August 1998, the two year period
that Cirrus was to pay these expenses expired.

At December 31, 1997, the Company had a payable to Cirrus in the amount of
$2,363,273 relating to proceeds received by the Company on behalf of Cirrus
from the sale of Series A Preferred Stock by Cirrus to other investors. The
Company made a cash payment to Cirrus in January 1998 to settle this
obligation.

F-23
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
HMTF Acquisition (Bermuda) Ltd.

We have audited the accompanying consolidated balance sheet of HMTF
Acquisition (Bermuda) Ltd. (HMTF Acquisition), as of December 31, 1999 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the period December 23, 1999 through December 31, 1999. We have also
audited the consolidated balance sheet of Temic Telefunken Hochfrequenztechnik
GmbH (Temic) as of December 31, 1998, and the related consolidated statements
of operations, stockholders' equity, and cash flows for the nine months ended
September 30, 1997, the three months ended December 31, 1997, the year ended
December 31, 1998, and the period January 1, 1999 through December 22, 1999.
These financial statements are the responsibility of the respective companies'
managements. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements of HMTF Acquisition referred to
above present fairly, in all material respects, the consolidated financial
position of HMTF Acquisition as of December 31, 1999, and the consolidated
results of its operations and its consolidated cash flows for the period
December 23, 1999 through December 31, 1999 in conformity with accounting
principles generally accepted in the United States. In addition, in our
opinion, the financial statements of Temic referred to above present fairly, in
all material respects, the consolidated financial position of Temic as of
December 31, 1998, and the consolidated results of its operations and its
consolidated cash flows for the nine months ended September 30, 1997, the three
months ended December 31, 1997, the year ended December 31, 1998, and the
period January 1, 1999 through December 22, 1999, in conformity with accounting
principles generally accepted in the United States.

ERNST & YOUNG LLP

Dallas, Texas
March 24, 2000

F-24
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

(Note 1)

CONSOLIDATED BALANCE SHEETS
(U.S. dollars, in thousands, except per share data)

<TABLE>
<CAPTION>
| HMTF
Temic |Acquisition
December 31,|December 31,
1998 | 1999
ASSETS ------------|------------
<S> <C> |<C>
Current assets: |
Cash and cash equivalents.......................................................................... $ 5,702 | $ 3,936
Accounts receivable, net of allowance for doubtful accounts of $835 at December 31, 1998, and $41| |
at December 31, 1999.............................................................................. 6,896 | 7,832
Inventories (Note 3)............................................................................... 8,161 | 9,869
Loan receivable.................................................................................... -- | 391
Deferred income taxes.............................................................................. 197 | 69
Other current assets............................................................................... 1,251 | 2,197
------- | -------
Total current assets............................................................................. 22,207 | 24,294
------- | -------
Property and equipment, at cost (Note 4)............................................................. 6,326 | 6,149
Less accumulated depreciation...................................................................... (3,497) | (31)
------- | -------
Property and equipment, net.......................................................................... 2,829 | 6,118
Intangible assets, net of accumulated amortization of $55 (Note 1)................................... -- | 7,982
Goodwill, net of accumulated amortization of $155 (Note 1)........................................... -- | 29,703
Deferred income taxes (Note 8)....................................................................... 740 | 72
Other assets and deferred charges.................................................................... 3 | --
------- | -------
Total assets..................................................................................... $25,779 | $68,169
======= | =======

<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable and accrued liabilities (Note 5).................................................. $ 8,467 | $ 8,923
Employee bonuses (Note 1).......................................................................... -- | 3,775
Notes payable...................................................................................... 1,115 | --
------- | -------
Total current liabilities........................................................................ 9,582 | 12,698
Employee bonuses (Note 1)............................................................................ -- | 515
Deferred income taxes (Note 8)....................................................................... 1,602 | 5,353
Excess of fair value over cost of net assets acquired net of accumulated amortization of $1,083 at |
December 31, 1998 (Note 1).......................................................................... 3,037 | --
Accrued retirement costs (Note 9).................................................................... 817 | 606
Commitments and contingencies (Note 6) |
Stockholders' equity (Note 1): |
Temic: |
Subscribed capital................................................................................. 3,400 | --
Other comprehensive income......................................................................... 512 | --
Retained earnings.................................................................................. 6,829 | --
HMTF Acquisition: |
Common stock $0.10 par value: |
Authorized shares--1,200; issued and outstanding shares--158 at December 31, 1999.................. -- | 16
Additional capital................................................................................. -- | 62,943
Loans receivable from employee stockholders........................................................ -- | (1,012)
Retained earnings (deficit)........................................................................ -- | (12,950)
------- | -------
Total stockholders' equity....................................................................... 10,741 | 48,997
------- | -------
Total liabilities and stockholders' equity..................................................... $25,779 | $68,169
======= | =======
</TABLE>

See accompanying notes.

F-25
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

(Note 1)

CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars, in thousands)

See accompanying notes.

F-26
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

(Note 1)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(U.S. dollars, in thousands)

<TABLE>
<CAPTION>
Loans Accumulated
Common Stock Receivable Other Retained Total
Subscribed ------------- Additional from Comprehen- Earnings Stockholders'
Capital Shares Amount Capital Stockholders sive Income (Deficit) Equity
---------- ------ ------ ---------- ------------ ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Temic:
Balance at December 31,
1996.................. $3,936 -- $ -- $ 6,560 $ -- $ (195) $ 1,863 $12,164
Capital contribution... -- -- -- 1,464 -- -- -- 1,464
Net loss............... -- -- -- -- -- -- (4,110) (4,110)
Unrealized foreign
currency loss......... -- -- -- -- -- (1,370) -- (1,370)
-------
Total comprehensive
income................ -- -- -- -- -- -- -- (5,480)
------ --- ---- ------- ------- ------- -------- -------
Balance at September
30, 1997.............. $3,936 -- $ -- $ 8,024 $ -- $(1,565) $ (2,247) $ 8,148
====== === ==== ======= ======= ======= ======== =======
- --------------------------------------------------------------------------------------------------------------
Temic:
Acquisition of common
stock by management
shareholders.......... $3,400 -- $ -- $ -- $ -- $ -- $ (2,511) $ 889
Net income............. -- -- -- -- -- -- 1,731 1,731
Unrealized foreign
currency loss......... -- -- -- -- -- (48) -- (48)
-------
Total comprehensive
income................ -- -- -- -- -- -- -- 1,683
------ --- ---- ------- ------- ------- -------- -------
Balance at December 31,
1997.................. 3,400 -- -- -- -- (48) (780) 2,572
Net income............. -- -- -- -- -- -- 8,850 8,850
Unrealized foreign
currency gain (net of
income taxes of
$512)................. -- -- -- -- -- 560 -- 560
-------
Total comprehensive
income................ -- -- -- -- -- -- 9,410
-------
Dividends paid......... -- -- -- -- -- -- (1,241) (1,241)
------ --- ---- ------- ------- ------- -------- -------
Balance at December 31,
1998.................. 3,400 -- -- -- -- 512 6,829 10,741
Capital contribution... -- -- -- 4,314 -- -- -- 4,314
Net income............. -- -- -- -- -- -- 2,662 2,662
Unrealized foreign
currency loss (net of
income tax benefit of
$795)................. -- -- -- -- -- (795) -- (795)
-------
Total comprehensive
income................ -- -- -- -- -- -- -- 1,867
------ --- ---- ------- ------- ------- -------- -------
Balance at December 22,
1999.................. $3,400 -- $ -- $ 4,314 $ -- $ (283) $ 9,491 $16,922
====== === ==== ======= ======= ======= ======== =======
- --------------------------------------------------------------------------------------------------------------
HMTF Acquisition:
Issuance of common
stock for cash and
loans receivable from
stockholders.......... $ -- 158 $ 16 $62,943 $(1,012) $ -- $ -- $61,947
Net loss............... -- -- -- -- -- -- (12,950) (12,950)
------ --- ---- ------- ------- ------- -------- -------
Balance at December 31,
1999.................. $ -- 158 $ 16 $62,943 $(1,012) $ -- $(12,950) $48,997
====== === ==== ======= ======= ======= ======== =======
</TABLE>

See accompanying notes.

F-27
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

(Note 1)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars, in thousands)

<TABLE>
<CAPTION>
| HMTF
Temic |Acquisition
----------------------------------------------------|------------
| Period | Period
Nine Months |Three Months January 1, |December 23,
Ended | Ended Year Ended 1999 Through|1999 Through
September 30,|December 31, December 31, December 22,|December 31,
1997 | 1997 1998 1999 | 1999
-------------|------------ ------------ ------------|------------
<S> <C> |<C> <C> <C> |<C>
Operating Activities | |
Net income (loss)...... $(4,110) | $1,731 $ 8,850 $ 2,662 | $(12,950)
Adjustments to | |
reconcile net income | |
(loss) to net cash | |
used in operating | |
activities, net of | |
effects of | |
acquisitions of Temic: | |
Depreciation........... 1,033 | 33 999 1,671 | 31
Amortization of | |
intangible assets, | |
goodwill and excess of | |
fair value over cost | |
of net assets | |
acquired.............. -- | (207) (827) (533) | 210
Acquired in-process | |
research and | |
development........... -- | -- -- -- | 12,692
Foreign currency | |
exchange (gains) | |
losses, net........... (935) | 1,168 885 (1,245) | (1)
Deferred income taxes.. -- | -- 761 81 | 453
Changes in operating | |
assets and | |
liabilities: | |
Accounts receivable... 8,965 | (255) 1,282 122 | (1,058)
Inventories........... 1,695 | 1,791 (2,576) (2,428) | 719
Other assets.......... 3,526 | (451) 207 (904) | (38)
Accounts payable and | |
accrued liabilities.. (587) | 3,592 2 (642) | 188
Employee bonuses...... -- | -- -- 4,290 | --
Accrued retirement | |
costs................ (7) | 8 207 (127) | --
------- | ------ ------- ------- | --------
Net cash provided by | |
(used in) operating | |
activities.......... 9,580 | 7,410 9,790 2,947 | 246
Investing Activities | |
Acquisition of Temic by | |
HMTF Acquisition, net | |
of cash acquired (Note | |
1).................... -- | -- -- -- | (58,057)
Net cash acquired in | |
acquisition of Temic | |
by management | |
shareholders (Note | |
1).................... -- | 530 -- -- | --
Purchase of property | |
and equipment......... (1,935) | (240) (3,793) (4,510) | --
Loans receivable....... -- | -- -- (190) | (200)
Intangible assets...... -- | -- -- (928) | --
Sale of property and | |
equipment............. 26 | 6 166 221 | --
------- | ------ ------- ------- | --------
Net cash provided by | |
(used in) investing | |
activities.......... (1,909) | 296 (3,627) (5,407) | (58,257)
| |
| |
Financing Activities | |
Additions to notes | |
payable............... -- | -- 1,000 -- | --
Payments of notes | |
payable............... (7,431) | (334) (7,724) (1,115) | --
Dividends.............. -- | -- (1,241) -- | --
Capital contributions.. 1,464 | 889 -- 4,314 | 61,947
------- | ------ ------- ------- | --------
Net cash provided by | |
(used in) financing | |
activities.......... (5,967) | 555 (7,965) 3,199 | 61,947
Effect of foreign | |
currency exchange rate | |
changes on cash........ (434) | (658) (99) 52 | --
------- | ------ ------- ------- | --------
Net increase (decrease) | |
in cash and cash | |
equivalents............ 1,270 | 7,603 (1,901) 791 | 3,936
Cash and cash | |
equivalents at | |
beginning of period.... 149 | -- 7,603 5,702 | --
------- | ------ ------- ------- | --------
Cash and cash | |
equivalents at end of | |
period................. $ 1,419 | $7,603 $ 5,702 $ 6,493 | $ 3,936
======= | ====== ======= ======= | ========
Supplemental cash flow | |
information: | |
Interest paid in cash.. $ -- | $ -- $ 288 $ 20 | $ --
Income taxes paid in | |
cash.................. -- | -- 90 494 | --
</TABLE>

See accompanying notes.

F-28
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 1999

1. Basis of Presentation

General

The accompanying financial statements are presented in accordance with
accounting principles generally accepted in the United States (U.S.) and in
U.S. dollars.

Acquisition of Temic

HMTF Acquisition (Bermuda) Ltd. (HMTF Acquisition) was incorporated under the
laws of Bermuda by HMTF Europe Fund Cayman L.P. (HMTF Europe Fund) as sole
shareholder on November 12, 1999 for the purpose of serving as the ultimate
parent company in the acquisition of Temic Telefunken Hochfrequenztechnik GmbH
(Temic). Temic is a leading provider of RF system solutions, providing high
performance RF tuners and transceivers to the broadband communications markets.
In December 1999, HMTF Europe Fund and certain shareholders and members of
management of Temic contributed approximately $62.9 million to HMTF Acquisition
in exchange for 158,058 shares of the Company's common stock. Effective
December 22, 1999, HMTF Acquisition acquired Temic and Temic became an indirect
wholly owned subsidiary of HMTF Acquisition. In connection with the
transaction, Temic loaned certain employees $1.1 million to purchase shares of
common stock of HMTF Acquisition. The results of operations of Temic are
included in results of operations of HMTF Acquisition from the date of
acquisition.

The components of the aggregate cost of the acquisition were as follows (in
thousands):

<TABLE>
<S> <C>
Cash transaction consideration................................... $60,064
Transaction costs................................................ 4,938
-------
Total acquisition cost........................................... $65,002
=======
</TABLE>

<TABLE>
<S> <C>
Working capital................................................ $14,840
Property and equipment......................................... 6,149
Intangible assets.............................................. 8,037
Goodwill....................................................... 29,858
Acquired in-process research and development costs charged to
expense....................................................... 12,692
Deferred income taxes.......................................... (4,020)
Other assets and liabilities, net.............................. (2,554)
-------
$65,002
=======
</TABLE>

The estimates of fair value were determined by management based on
information furnished by management of Temic and a preliminary independent
valuation. The final allocation of the purchase price will be based on a
complete evaluation of the assets and liabilities of HMTF Acquisition.

F-29
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

Although management does not expect the final valuation of the assets and
liabilities acquired to result in values that are significantly different from
the estimates included in the table above, there can be no assurance that such
differences will not occur.

The value of the acquired in-process research and development was determined
by discounting the estimated projected net cash flows related to the applicable
products for the next ten years, including costs to complete the development of
the technology and the future revenues to be earned upon release of the
products. The rate utilized to discount the net cash flows to present value of
22% was based on the weighted average cost adjusted for the risks associated
with the estimated growth, profitability, developmental and market risks of the
acquired development projects. Projected net cash flows from such products are
based on estimates of revenues and operating profits related to such products.

F-30
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

The following unaudited pro forma information presents the results of
operations of HMTF Acquisition as if the acquisition of Temic had occurred as
of January 1, 1998. The pro forma information has been prepared by combining
the results of operations of HMTF Acquisition and Temic with adjustments to
eliminate the 1999 charge for acquired in-process research and development
costs and to record additional amortization expense and the impact on the
provision for income taxes resulting from the application of purchase
accounting. The pro forma information does not purport to be indicative of what
would have occurred had the acquisition occurred as of that date, or of results
of operations that may occur in the future (in thousands):

<TABLE>
<CAPTION>
Years Ended
December 31,
---------------
1998 1999
------- -------
<S> <C> <C>
Revenue................................................. $50,961 $46,236
Income (loss) from operations........................... $ 509 $(3,307)
Net income (loss)....................................... $ 38 $(1,493)
</TABLE>

Financial Statements of Temic Prior to the Date of Acquisition by HMTF
Acquisition

Temic was organized under the laws of Germany on October 1, 1996 as an
indirect wholly owned subsidiary of DaimlerChrysler to operate the RF systems
solutions business of Temic Telefunken microelectronics GmbH (TTM), another
wholly owned subsidiary of DaimlerChrysler. On September 30, 1997, Microtune
was acquired by certain members of management (Management Shareholders) of
Temic for approximately $889,000. The cost of the acquisition was allocated to
the fair value of assets and liabilities acquired. The excess of the fair value
of the net assets acquired over the cost of the acquisition was first recorded
as a reduction of noncurrent assets with the remainder recorded as a deferred
credit which was amortized over a period of five years.

The statements of operations, cash flows and stockholders equity of Temic for
the nine months ended September 30, 1997 have been prepared using the
historical basis of accounting of the assets and liabilities to TTM. The
balance sheet of Temic as of December 31, 1998 and the related statements of
operations, cash flows and stockholders equity for the three months ended
December 31, 1997, the year ended December 31, 1998 and the period January 1,
1999 through December 22, 1999 (the date Temic was acquired by HMTF
Acquisition) have been prepared using the basis of the assets and liabilities
to the Management Shareholders.

Footnote Information

Certain amounts presented in the notes to the consolidated financial
statements for the years ended December 31, 1999 and 1997 include information
for the full fiscal year for ease of comparison and because such amounts are
not impacted by the changes in accounting basis resulting from the acquisition
transactions described above.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements of the HMTF Acquisition and Temic
include the accounts of their respective majority-owned subsidiaries during the
periods presented. All intercompany accounts have been eliminated.

F-31
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of bank deposits and money market funds.
Highly liquid investments with original maturities of three months or less are
considered to be cash equivalents.

Inventories

Inventories are stated at the lower of standard cost, which approximates
actual cost determined on a first-in, first-out basis, or estimated realizable
value.

Property and Equipment

Property and equipment are recorded at cost and depreciated using straight-
line or accelerated methods over the estimated useful lives of the assets.

Intangible Assets and Goodwill

Intangible assets, which consist primarily of the customer base, patents and
other intangible assets acquired in the acquisition of Temic, are being
amortized on the straight-line basis over one to five years.

Goodwill resulting from the acquisition of Temic is being amortized over a
period of five years.

The carrying value of goodwill and other intangible assets will be reviewed
if the facts and circumstances suggest that they may be permanently impaired.
If a comparison of the undiscounted cash flow method to the carrying value of
goodwill and other intangible assets indicates that these assets will not be
recoverable, the assets will be reduced to its estimated recoverable value.
Estimated recoverable value is determined by applying the discounted cash flow
method.

Revenue Recognition

Revenues are recognized when title to the product transfers to the customer.
Provision is made currently for estimated returns.

Research and Development Costs

Research and development costs, consisting of the costs of designing,
developing, and testing new or significantly enhanced products, are expensed as
incurred.

Income Taxes

Income taxes are computed using the asset and liability method of accounting.
Under the asset and liability method, a deferred tax asset or liability is
recognized for estimated future tax effects attributable to temporary
differences and carryforwards. The measurement of deferred income tax assets is
adjusted by a valuation allowance, if necessary, to recognize future tax
benefit only to the extent, based on available evidence, it is more likely than
not such benefit will be realized.

F-32
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

Warranty Costs

Microtune GmbH provides a one-year warranty on all products and records a
related provision for estimated warranty costs at the date of sale.

Foreign Currency Translation

The accompanying financial statements have been prepared using the Deutsch
Mark (DM) as the functional currency. Financial statements of operations
outside of Germany are translated into DM using exchange rates in effect at
period end for assets and liabilities and average exchange rates during the
period for results of operations. The resulting translation adjustments are
included in the results of operations. Adjustments resulting from the
translation of the DM financial statements into U.S. dollars are included as a
component of stockholders' equity.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. It includes all changes in equity during a period
except those resulting from investments by owners and distributions to owners.

Recent Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities," which, as
amended, is required to be adopted by HMTF Acquisition on January 1, 2001. HMTF
Acquisition does not currently use derivatives, however, as such instruments
may be used in the future, it is uncertain what, if any, impact the adoption of
Statement 133 will have on the earnings or the financial position of HMTF
Acquisition in the future.

Concentrations of Credit Risk

Financial instruments that potentially subject HMTF Acquisition and Temic to
concentrations of credit risk consist primarily of trade accounts receivable.
Products are sold to customers in the broadband communications industry
internationally, principally in Europe and the United States. HMTF Acquisition
and Temic continually evaluate the creditworthiness of their customers'
financial condition and generally do not require collateral. HMTF Acquisition
also maintains credit insurance covering certain receivables. HMTF Acquisition
and Temic have not experienced significant losses on uncollectible accounts.

Risks and Uncertainties

The future results of operations and financial condition of HMTF Acquisition
could be impacted by the following factors, among others: dependence on the
broadband communications industry, lengthy sales cycle, dependence on third
party manufactures and subcontractors, product concentration, dependence on a
few significant customers, competition, dependence on key personnel,
technological change and dependence on new products, international operations,
proprietary rights, and product liability.

F-33
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

3. Inventories

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
December 31,
-------------
1998 1999
------ ------
<S> <C> <C>
Finished goods.............................................. $4,695 $4,350
Work-in-process............................................. 915 1,432
Raw materials............................................... 2,551 4,087
------ ------
$8,161 $9,869
====== ======
</TABLE>

4. Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
December 31,
------------- Estimated
1998 1999 Useful Lives
------ ------ ------------
<S> <C> <C> <C>
Manufacturing equipment........................ $2,097 $3,810 2 to 7 years
Other equipment................................ 3,292 1,051 2 to 6 years
Furniture and fixtures......................... 230 408 4 to 6 years
Computer software.............................. 707 880 3 to 4 years
------ ------
$6,326 $6,149
====== ======
</TABLE>

5. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following (in
thousands):

<TABLE>
<CAPTION>
December 31,
-------------
1998 1999
------ ------
<S> <C> <C>
Accounts payable........................................... $3,493 $4,333
Accrued payroll and benefits............................... 209 273
Accrued warranty obligation................................ 657 387
Accrued income taxes (Note 8).............................. 1,295 925
Deferred income taxes (Note 8)............................. 96 269
Other...................................................... 2,717 2,736
------ ------
$8,467 $8,923
====== ======
</TABLE>

F-34
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

6. Commitments and Contingencies

Temic leases its administrative, sales and marketing and research and
development facility in Germany under an operating lease with a twenty two year
term beginning in December 1999. Certain other facilities and equipment are
also leased under operating leases. Future minimum lease payments required
under operating leases that have initial or remaining non-cancelable lease
terms in excess of one year as of December 31, 1999, as follows (in thousands):

<TABLE>
<S> <C>
2000.............................................................. $ 1,467
2001.............................................................. 882
2002.............................................................. 886
2003.............................................................. 891
2004.............................................................. 655
Thereafter........................................................ 5,271
-------
$10,052
=======
</TABLE>

As of December 31, 1999, future minimum payments required under the operating
lease for the facility in Germany include $3.5 million guaranteed by Temic
relating to obligations issued to finance the land and building.

Rent expense for the nine months ended September 30, 1997, the three months
ended December 31, 1997, the year ended December 31, 1998, the period January
1, 1999 through December 22, 1999 and the period December 23, 1999 through
December 31, 1999 was $232,000, $105,000, $616,000, $921,000 and $22,000,
respectively.

Temic is involved in legal proceedings that arise in the ordinary course of
business. In the opinion of management, the outcome of pending legal
proceedings will not have a material adverse affect on the consolidated
financial statements.

7. Note Payable

In August 1998, Temic borrowed $1,000,000 from a bank at an interest rate of
2.56% per annum. All principal and interest due under the note was due and paid
in May 1999.

At December 31, 1999, Temic had credit agreements with two banks which
provide for borrowings of up to $2.9 million under each agreement. One of the
agreements is cancellable upon notification by the bank and the second
agreement expires August 31, 2000. Borrowings under these agreements bear
interest at rates determined from time to time by the banks ( 6.50% and 6.75%,
respectively, at December 31, 1999). At December 31, 1999, no borrowings were
outstanding under these credit agreements.

F-35
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

8. Income Taxes

HMTF Acquisition is not subject to income taxes in Bermuda. All of the income
before provision for taxes on income and the related provision for taxes on
income of HMTF Acquisition relates to operations in jurisdictions other than
Bermuda. Temic is subject to income taxes in Germany. However, Temic has
substantial operations in other jurisdictions. The relationship between income
before provision for taxes on income and the provision for taxes on income
varies from period to period because each jurisdiction in which Temic operates
has its own system of taxation (not only with respect to the nominal rate, but
also with respect to the allowability of deductions, credits and other
benefits) and because the amounts earned in, and subject to tax by, each
jurisdiction changes from period to period. The reconciliation of income taxes
computed at the German statutory rate and the provision for taxes on income is
as follows (in thousands):

<TABLE>
<CAPTION>
Period Period
Nine Months Three Months January 1, December 23,
Ended Ended Year Ended 1999 Through 1999 Through
September 30, December 31, December 31, December 22, December 31,
1997 1997 1998 1999 1999
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Provision (benefit) for
taxes on income (loss)
at the applicable
German statutory
rates.................. $(1,914) $ 759 $ 5,202 $1,916 $(6,381)
Effect of income taxes
other than German
statutory rates........ (139) 90 (369) (582) --
Acquired in-process
research and
development costs for
which no tax benefit
was recognized......... -- -- -- -- 6,346
Utilization of net
operating loss
carryover.............. -- (668) (1,678) (170) --
Unbenefited net
operating losses....... 2,335 -- -- -- --
Adjustment of deferred
tax asset valuation
allowance.............. -- (394) (1,602) -- --
Income not subject to
tax.................... -- -- -- (66) --
Non-deductible goodwill
amortization........... -- -- -- -- 90
Other................... -- -- -- 71 133
------- ----- ------- ------ -------
Provision (benefit) for
income taxes.......... $ 282 $(213) $ 1,553 $1,169 $ 188
======= ===== ======= ====== =======
</TABLE>

The components of the provision for taxes on income are as follows (in
thousands):

F-36
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

The significant components of the deferred tax liabilities and assets are as
follows (in thousands):

<TABLE>
<CAPTION>
December 31,
-------------
1998 1999
------ ------
<S> <C> <C>
Deferred tax liabilities:
Accrued expenses......................................... $1,089 $ 938
Unrealized foreign currency gains........................ 418 430
Property and equipment................................... 226 359
Identifiable intangible assets........................... -- 4,187
Other.................................................... 4 16
------ ------
Total deferred tax liabilities......................... 1,737 5,930

Deferred tax assets:
Excess of fair value over cost of net assets acquired.... 777 --
Inventory................................................ 80 83
Accrued expenses......................................... 81 123
Net operating loss carryover............................. -- 243
Other, net............................................... 38 --
------ ------
Total deferred tax assets.............................. 976 449
------ ------
Total deferred tax liabilities, net.................... $ 761 $5,481
====== ======
</TABLE>

At December 31, 1999, Temic had net operating loss carryforwards for German
income tax purposes of $486,000 which may be carried forward indefinitely.

The income tax returns of HMTF Acquisition and Temic are subject to review
and examination in the various jurisdictions in which they operate. Management
believes that all income tax issues which have been or may be raised as a
result of such reviews and examinations will be resolved with no material
impact on the financial position or future results of operations of HMTF
Acquisition.

F-37
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

9. Retirement Plans

Temic sponsors defined benefit retirement plans for its employees. The
following tables provide a reconciliation of the changes in the plans' benefit
obligations and fair value of plan assets at December 31, 1998 and 1999 (in
thousands):

<TABLE>
<CAPTION>
December 31,
--------------
1998 1999
------ ------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of period.............. $ 739 $1,091
Service cost........................................... 119 181
Interest cost.......................................... 68 101
Actuarial (gains) losses............................... 108 (125)
Benefits paid.......................................... -- (53)
Foreign currency exchange rate changes................. 57 (90)
------ ------
Benefit obligation at end of period.................. $1,091 $1,105
====== ======
Change in plan assets:
Fair value of plan assets at beginning of period....... $ 171 $ 223
Actual return on plan assets........................... 41 41
Company contributions.................................. -- 305
Benefits paid.......................................... -- (53)
Foreign currency exchange rate changes................. 11 (17)
------ ------
Fair value of plan assets at end of period........... $ 223 $ 499
====== ======
Funded status:
Funded status of the plan (underfunded)................ $ (868) $ (606)
Unrecognized net actuarial loss........................ 51 --
------ ------
Aggregate accrued retirement costs................... $ (817) $ (606)
====== ======
</TABLE>

The following table provides the components of net periodic retirement costs
as determined by independent actuaries for the years ended December 31, 1997,
1998 and 1999 (in thousands).

<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Service cost............................................ $ 94 $119 $181
Interest cost........................................... 54 68 101
Expected return on plan assets.......................... (20) (27) (46)
---- ---- ----
Net periodic benefit cost............................. $128 $160 $236
==== ==== ====
</TABLE>

Net periodic retirement costs charged to expense were $117,000, $11,000,
$160,000, $230,000 and $6,000 for the nine months ended September 30, 1997, the
three months ended December 31, 1997, the year ended December 31, 1998, the
period January 1, 1999 through December 22, 1999 and the period December 23,
1999 through December 31, 1999.

F-38
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

Gains and losses in excess of 10% of the greater of the benefit obligation
and the market value of assets are amortized over the remaining service period
of active participants. Temic's unfunded German retirement benefit plan had an
accumulated benefit obligation of $352,000 and $359,000 at December 31, 1998
and 1999, respectively.

The assumptions used in the measurement of the benefit obligation are shown
in the following table:

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Weighted-average assumptions:
Discount rate................................... 6% to 12% 6% to 12% 6% to 12%
Increase in future compensation levels.......... 3% to 11% 3% to 11% 3% to 11%
Expected long-term rate of return on assets..... 12% 12% 12%
</TABLE>

10. Segment Information

HMTF Acquisition and Temic operate in a single business segment, providing RF
system solutions to the broadband communications market. The administrative,
sales and marketing, and research and development facility is located in
Germany and manufacturing facilities are located in the Philippines. Sales are
made to customers internationally, primarily in the United States and Europe.
Revenues by geographical area are summarized below for the years ended December
31 (in thousands):

<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
North America..................................... $23,435 $18,045 $21,400
Europe............................................ 21,655 22,651 12,795
Asia Pacific...................................... 9,760 7,340 10,010
Other............................................. 1,200 2,925 2,031
------- ------- -------
$56,050 $50,961 $46,236
======= ======= =======
</TABLE>

The locations of property and equipment are summarized below:

<TABLE>
<CAPTION>
December 31,
-------------
1998 1999
------ ------
<S> <C> <C>
Germany..................................................... $1,870 $2,994
Philippines................................................. 898 3,061
United States............................................... 61 63
------ ------
$2,829 $6,118
====== ======
</TABLE>

Sales to DaimlerChrysler represented approximately 21.8%, 25.0%, and 28.6% of
consolidated revenues during 1997, 1998, and 1999, respectively. Sales to ATI
represented approximately 2.8%, 3.3%, and 14.1% of consolidated revenues during
1997, 1998, and 1999, respectively. Sales to Beko Electronics represented
approximately 12.7% and 11.6% of consolidated revenues during 1997 and 1998,
respectively. The loss of DaimlerChrysler or ATI as customers could have a
material adverse impact on future results of operations.

F-39
<PAGE>

HMTF ACQUISITION (BERMUDA) LTD.
TEMIC TELEFUNKEN HOCHFREQUENZTECHNIK GmbH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 31, 1999

11. Subsequent Event--Acquisition by Microtune, Inc.

On January 10, 2000, HMTF Acquisition combined with by Microtune, Inc.
(Microtune) in exchange for shares of Microtune's Series E Preferred Stock and
warrants to purchase common stock of Microtune. As a result of this
transaction, HMTF Acquisition became a wholly owned subsidiary of Microtune.

F-40
<PAGE>

Glossary

BiCMOS A semiconductor technology which combines
bipolar transistors with complementary metal-
oxide-semiconductor (CMOS) transistors on the
same wafer.

Bi-directional Communication A connection between two points on a broadband
network where information can flow in either
direction, upstream or downstream, thus
enabling interactivity.

Broadband A term used to describe digital communications
at a high data rate, typically in excess of 1.5
million bits (1.5 Megabits) per second.

DOCSIS DOCSIS (Data Over Cable Service Interface
Specification) is a project conducted by a
Cable Television Laboratories, Inc.
(CableLabs(R)) and defines interface
requirements for cable modems involved in high-
speed data distribution over cable television
networks.

Dual Conversion A tuner architecture that uses two steps to
convert the desired RF channel to the required
output. Dual conversion tuners are used in
applications where higher performance is
required, and especially in receiving signals
from a densely packed spectrum.

IC An acronym for "integrated circuit", which
means a semiconductor chip that contains many
components integrated together.

Interference Undesired signals present in the desired
channel signal which, in an analog video
system, manifest themselves as unwanted
patterns or completely inhibits reception in a
digital video system.

Low Noise Amplifier (LNA) A circuit required in all tuners whose
performance plays a large role in determining
the performance of the overall tuner. The LNA
is the first circuit to process a radio
frequency signal, and must amplify it without
adding significant noise and distortion.

NTSC The National Television Systems Committee
defined method used in the United States and
elsewhere for encoding analog color television.

OpenCable OpenCable is a project conducted by Cable
Television Laboratories, Inc. (CableLabs(R))
and its member companies aimed at obtaining a
new generation of set-top boxes that are
interoperable.

PacketCable PacketCable is a project conducted by Cable
Television Laboratories, Inc. (CableLabs(R))
and its member companies aimed at identifying,
qualifying and supporting Internet-based voice
and video products over cable systems.

G-1
<PAGE>

PAL An acronym meaning "Phase Alternating Line", an
alternative analog color television method used
in Europe (except France) and elsewhere.

PC/TV An acronym used to describe a multimedia
computer that can receive and display a
television signal.

PDA An acronym meaning "Personal Digital
Assistant", which is a palm-sized electronic
device used to assist people in organizing
their activities. It may combine the function
of an address book, calendar and notepad, and,
may provide computer and networking functions.

Phase Noise A type of noise that is detrimental to the
reception of digitally modulated signals,
especially those used in digital cable
networks.

Reference Platforms Application designs provided to customers to
aid them in rapidly developing their products.

RF Acronym for "Radio Frequency", signifying
frequencies of operation in the radio frequency
bands, which in the context of this prospectus,
means the frequencies in the range of 30
Megahertz (Mhz), or 30 million cycles per
second, to 3000 Mhz.

RFIC An acronym meaning "Radio Frequency Integrated
Circuit", which is a chip that processes analog
signals that are transmitted at radio
frequencies.

Single Conversion A tuner architecture that uses one step to
convert the desired RF channel to the required
output. Single conversion tuners are used in
applications where low cost is important.

Snow An undesirable effect of random noise in an
analog video display.

Solid State Describes electronic components that are based
on semiconductors.

Spurious Emissions Leakage from the tuner or receiver of its
internal signals into the broadcast medium. In
the context of this document, the broadcast
medium is either the cable network or the
airwaves.

Terrestrial Refers to broadcasts through the airwaves that
are "earthbound", meaning the transmitter and
receiver are both on the earth (as opposed to
satellite broadcast methods).

Varactor A semiconductor component that is used to tune
circuits to operate at specific frequencies.
Traditionally, varactors in tuners have been
discrete components requiring high voltage
power supplies, approximately 30 Volts, rather
than the 3 to 5 Volt supplies in typical
electronic systems.

G-2
<PAGE>

Inside Back Cover Page

[A caption across the top of the page, left to right --"MICROTUNE RFIC AND
MODULE TUNERS"

Three pictures of our IC and module tuners off-center (to the right) on the
page, with the following captions immediately to the left of each picture --
"RF TUNER MODULE", "MICROTUNER SINGLE-CHIP TUNER" and "MICROMODULE FEATURING
THE MICROTUNER".]
<PAGE>

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

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely
on any unauthorized information or representations. This prospectus is an
offer to sell only the shares offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Dilution................................................................. 21
Selected Financial Data.................................................. 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations .......................................................... 24
Business................................................................. 32
Management............................................................... 46
Certain Transactions..................................................... 58
Principal Stockholders................................................... 60
Description of Capital Stock ............................................ 62
Shares Eligible for Future Sale.......................................... 66
Underwriting............................................................. 68
Legal Matters............................................................ 70
Experts.................................................................. 70
Where You Can Find More Information...................................... 70
Index to Financial Statements............................................ F-1
Glossary................................................................. G-1
</TABLE>

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

Through and including , 2000 (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether
or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to an unsold
allotment or subscription.

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

Microtune, Inc.

Common Stock

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

[LOGO]

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

Goldman, Sachs & Co.

Chase H&Q

SG Cowen

Bear, Stearns & Co. Inc.

Representatives of the Underwriters

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth all expenses to be paid by the Registrant,
other than the underwriting discounts and commissions payable by the Registrant
in connection with the sale of the common stock being registered. All amounts
shown are estimates except for the registration fee and the NASD filing fee.

<TABLE>
<S> <C>
SEC registration fee.................................................
NASD filing fee......................................................
Nasdaq National Market listing fee...................................
Blue Sky qualification fees and expenses.............................
Printing and engraving expenses......................................
Legal fees and expenses..............................................
Accounting fees and expenses.........................................
Director and Officer liability insurance.............................
Transfer agent and registrar fees....................................
Miscellaneous expenses...............................................
-------
Total..............................................................
=======
</TABLE>
- --------
* To be supplied by amendment.

Item 14. Indemnification of Officers and Directors.

Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Certificate of
Incorporation and Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant intends to enter into separate indemnification agreements with its
directors, officers and certain employees which would require the Registrant,
among other things, to indemnify them against certain liabilities which may
arise by reason of their status or service (other than liabilities arising from
willful misconduct of a culpable nature). The Registrant also intends to
maintain director and officer liability insurance, if available on reasonable
terms.

These indemnification provisions and the indemnification agreement to be
entered into between the Registrant and its officers and directors may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred)
arising under the Securities Act.

The Registrant intends to obtain in conjunction with the effectiveness of the
Registration Statement a policy of directors' and officers' liability insurance
that insures the Registrant's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.

The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act, or otherwise.

II-1
<PAGE>

Item 15. Recent Sales of Unregistered Securities.

During the past three years, we have issued and sold the following
unregistered securities to a limited number of persons as described below (as
adjusted to reflect a 2-for-1 stock split of the common stock effective as of
January 18, 2000). None of these transactions involved any underwriters,
underwriting discounts or commissions, or any public offering, and we believe
that each transaction was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof, Regulation D promulgated
thereunder or Rule 701 pursuant to compensatory benefit plans and contracts
relating to compensation as provided under such Rule 701. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends were affixed to the
share certificates and instruments issued in such transactions. All recipients
had adequate access, through their relationships with us, to information about
us.

(a) In August 1997, we issued an aggregate of 175,130 shares of Series A
preferred stock at a purchase price of $3.1579 per share for an aggregate
purchase price of $553,043 to one investor.

(b) In August 1997, we issued an aggregate of 1,000,000 shares of Series B
preferred stock at $4.00 per share for an aggregate purchase price of
$4,000,000 to 15 investors.

(c) In June and July 1998, we issued an aggregate of 1,462,666 shares of
Series C preferred stock at $6.00 per share for an aggregate purchase price of
$8,775,996 to 32 investors.

(d) In June 1999, we issued an aggregate of 66,683 shares of Series C
preferred stock at $6.00 per share for an aggregate purchase price of $400,098
to two investors.

(e) In October through December 1999, we issued an aggregate of 1,367,418
shares of Series D preferred stock at $12.00 per share for an aggregate
purchase price of $16,409,016 to seven investors.

(f) In January 2000, we issued an aggregate of 3,318,513 shares of Series E
Preferred Stock and warrants to purchase 2,212,342 shares of common stock at a
nominal exercise price to two investors in exchange for all of the outstanding
shares of HMTF Acquisition (Bermuda), Ltd., which securities were valued at, in
the aggregate, approximately $63 million.

(g) In January 2000, we granted three employees options to purchase 330,000
shares of Series E preferred stock at an exercise price of $16.00 per share.

(h) Between May 1997 and April 2000, we granted options to purchase an
aggregate of 8,400,000 shares of common stock to our employees at per share
exercise prices ranging from $0.025 to $4.95.

(i) Between May 1, 1997 and April 30, 2000, we issued an aggregate of
1,871,643 shares of our common stock to our employees or other service
providers at a range of $0.025 to $0.875 per share upon the exercise of stock
options issued under our 1996 Stock Option Plan, for an aggregate purchase
price of $424,512.

II-2
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits.

<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- ----------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Certificate of Incorporation as currently in effect
3.2 Form of Amended and Restated Certificate of Incorporation (to be filed
with the Delaware Secretary of State upon the closing of the offering
covered by this Registration Statement)
3.3* Bylaws as currently in effect
3.4 Form of Amended and Restated Bylaws (to be effective upon the closing
of the offering covered by this Registration Statement)
4.1* Form of Specimen Stock Certificate
4.2* Fourth Amended and Restated Registration Rights Agreement dated
effective as of December 31, 1999
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued
10.1 Form of Indemnification Agreement, to be entered into between the
Registrant and each of its directors and officers, to become effective
upon the closing of the offering made under this Registration
Statement
10.2 1996 Stock Option Plan
10.3 2000 Stock Plan
10.4 2000 Director Option Plan
10.5 2000 Employee Stock Purchase Plan
10.6 Employment Agreement between Douglas J. Bartek and the Registrant
dated March 23, 2000
10.7 Employment Agreement between John P. Norsworthy and the Registrant
dated August 8, 1996
10.8 Employment Agreement between James Fontaine and the Registrant dated
August 1, 1998
10.9 Standard Commercial Lease dated May 18, 1998 between Jupiter Parkway
Village, Ltd. and the Registrant, as amended, for the premises located
at 2540 East Plano Parkway, Suite 388, Plano, Texas 75074
10.10 Commercial Lease Agreement dated March 24, 2000 between Jupiter
Service Center, Ltd. and the Registrant for the premises located at
2201 10th Street, Plano, Texas 75074
10.11 Property Leasing Contract, as supplemented as of January 1, 2000,
between Sanctor Grundstucks-Vermietungsgesellschaft mbH & Co. and
Temic Telefunken Hochfrequeztechnik GmbH for facility in Ingolstadt,
Germany
10.12 Contract of Lease dated December 10, 1998 between MX Technology
Corporation and Temic RF-Technologies (Phils.), Inc. for factory space
in the Granville Industrial Complex in Cavite, Philippines
10.13 Sublease Agreement dated December 10, 1998 between Temic RF-
Technologies (Phils.), Inc. and NSF RF-Technologies Corporation for
factory space in the Granville Industrial Complex in Cavite,
Philippines
10.14 Securities Purchase Agreement dated January 10, 2000, effective
December 31, 1999, between HMTF Acquisition (Bermuda), Ltd. and the
Registrant
10.15 Asset Purchase Agreement between Registrant, The Tuner Company and
Thomas Widmer dated January 10, 2000
10.16 Line of Credit dated March 22, 1999 between Deutsche Bank AG and Temic
Telefunken Hochfrequenztechnik GmbH
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- ---------------------------------------------------------------------
<C> <S>
10.17 Line of Credit dated September 9, 1999 between HypoVereinsbank and
Temic Telefunken Hochfrequenztechnik GmbH
21.1 List of Subsidiaries and Affiliates of Microtune, Inc.
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(contained in Exhibit 5.1)
24.1 Power of Attorney (contained in the signature page to this
Registration Statement)
27.1 Financial Data Schedule
</TABLE>
- --------
* to be filed by amendment

(b) Financial Statement Schedules.

Schedules not listed above have been omitted because the information required
to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

Item 17. Undertakings

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and

2. For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Plano, County of Collin,
State of Texas, on the 4th day of May 2000.

MICROTUNE, INC.

/s/ Douglas J. Bartek
By: _________________________________
Douglas J. Bartek
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Douglas J. Bartek and Everett Rogers, and
each of them acting individually, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments or any abbreviated registration statement
and any amendments thereto filed pursuant to Rule 462(b) increasing the number
of securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ Douglas J. Bartek Chief Executive Officer May 4, 2000
______________________________________ and Chairman (Principal
Douglas J. Bartek Executive Officer)

/s/ Everett Rogers Chief Financial Officer May 4, 2000
______________________________________ (Principal Financial and
Everett Rogers Accounting Officer)

/s/ Harvey B. Cash Director May 4, 2000
______________________________________
Harvey B. Cash

/s/ Walter S. Ciciora Director May 4, 2000
______________________________________
Walter S. Ciciora
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
/s/ James H. Clardy Director May 4, 2000
______________________________________
James H. Clardy

/s/ Martin Englmeier Vice Chairman May 4, 2000
______________________________________
Martin Englmeier

/s/ Kenneth G. Langone Director May 4, 2000
______________________________________
Kenneth G. Langone

/s/ Philippe Von Stauffenberg Director May 4, 2000
______________________________________
Philippe von Stauffenberg

/s/ Lawrence D. Stuart, Jr. Director May 4, 2000
______________________________________
Lawrence D. Stuart, Jr.

/s/ William P. Tai Director May 4, 2000
______________________________________
William P. Tai
</TABLE>

II-6
<PAGE>

EXHIBIT INDEX

<PAGE>

EXHIBIT 3.2

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

MICROTUNE, INC.

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

Microtune, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
-----------

A. The name of the Corporation is Microtune, Inc. Microtune, Inc. was
originally incorporated under the name Microtune Holding Company, Inc., and the
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of the state of Delaware on [___________], 2000.

B. This Amended and Restated Certificate of Incorporation was duly adopted
by the Corporation's directors and stockholders in accordance with the
applicable provisions of Sections 228, 242 and 245 of the Delaware General
Corporation Law (the "DGCL").
----

C. This Amended and Restated Certificate of Incorporation restates,
integrates and amends the provisions of the Certificate of Incorporation of this
Corporation, as heretofore amended.

D. The text of the Certificate of Incorporation, as heretofore amended, is
hereby amended and restated in its entirety to read as follows:

ARTICLE I

The name of this Corporation is Microtune, Inc.

ARTICLE II

The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, New Castle County, Delaware 19801. The name of
its registered agent at such office is The Corporation Service Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the DGCL.

ARTICLE IV

The Corporation is authorized to issue two classes of shares of stock to be
designated, respectively, Common Stock, $0.001 par value, and Preferred Stock,
$0.001 par value. The total number of shares that the Corporation is authorized
to issue is 175,000,000 shares. The number of
<PAGE>

shares of Common Stock authorized is 150,000,000. The number of shares of
Preferred Stock authorized is 25,000,000.

The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted by
the Board of Directors (authority to do so being hereby expressly vested in the
board). The Board of Directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The Board of Directors, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series.

The authority of the Board of Directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:

(a) the distinctive designation of such class or series and the
number of shares to constitute such class or series;

(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether dividends at the
rate so determined shall be cumulative or accruing, and whether the shares of
such class or series shall be entitled to any participating or other dividends
in addition to dividends at the rate so determined, and if so, on what terms;

(c) the right or obligation, if any, of the Corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;

(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;

(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or series, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;

(f) the obligation, if any, of the Corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking fund or fund of a
similar nature or otherwise, and the terms and conditions of such obligation;

-2-
<PAGE>

(g) voting rights, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of Preferred
Stock;

(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
and

(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the Board of Directors of the
Corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.

ARTICLE V

1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
that shall constitute the whole Board of Directors shall be fixed exclusively by
one or more resolutions adopted from time to time by the Board of Directors.

Holders of stock of any class or series of the Corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders.

The Board of Directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the date
hereof, the term of office of the Class I directors shall expire and Class I
directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the date hereof, the term of office of the
Class II directors shall expire and Class II directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the date hereof, the term of office of the Class III directors shall expire and
Class III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.

Notwithstanding the foregoing provisions of this Article V, each director
shall serve until his or her successor is duly elected and qualified or until
his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.

Any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other causes shall be filled by either (i) the
affirmative vote of the holders of a majority of the voting power of the then-
outstanding shares of voting stock of the corporation entitled to vote generally
in the election of directors (the "Voting Stock") voting together as a single
------------
class; or (ii) by the affirmative vote of a majority of the remaining directors
then in office, even though less than a

-3-
<PAGE>

quorum of the Board of Directors. Newly created directorships resulting from any
increase in the number of directors shall, unless the Board of Directors
determines by resolution that any such newly created directorship shall be
filled by the stockholders, be filled only by the affirmative vote of the
directors then in office, even though less than a quorum of the Board of
Directors. Any director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified.

2. The directors of the Corporation need not be elected by written ballot
unless a stockholder demands election by written ballot at the meeting and
before voting begins, or unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the Corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.

4. Advance notice of stockholder nomination for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.

5. Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause by the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.

ARTICLE VI

In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Corporation's Bylaws.

The affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
voting power of the then outstanding shares of Voting Stock, voting together as
a single class, shall be required for the amendment, repeal or modification of
the provisions of Article V, Article VI or Article XI of this Restated
Certificate of Incorporation or Section 2.2 (Annual Meeting), Sections 2.3
(Special Meeting), 2.4 (Notice of Stockholders' Meeting), 2.5 (Advanced Notice
of Stockholder Nominees and Stockholder Business), 2.10 (Voting), or 2.12
(Stockholder Action by Written Consent Without a Meeting), or 3.2 (Number of
Directors) of the Corporation's Bylaws.

ARTICLE VII

The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute,

-4-
<PAGE>

except as provided in Article VI of this Restated Certificate of Incorporation,
and all rights conferred upon the stockholders herein are granted subject to
this right.

ARTICLE VIII

The Corporation is to have perpetual existence.

ARTICLE IX

1. Limitation of Liability. To the fullest extent permitted by the DGCL as
-----------------------
the same exists or as may hereafter be amended, a director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.

2. Indemnification. To the fullest extent permitted by applicable law,
---------------
this Corporation is authorized to provide indemnification of (and advancement of
expenses to) directors, officers, employees and other agents of this Corporation
(and any other persons to which Delaware law permits this Corporation to provide
indemnification), through Bylaw provisions, agreements with any such director,
officer, employee or other agent or other person, vote of stockholders or
disinterested directors, or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the DGCL.

3. Amendments. Neither any amendment nor repeal of this Article IX, nor
----------
the adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article IX, shall eliminate or reduce the effect of this
Article IX, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article IX, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.

ARTICLE X

In the event any shares of Preferred Stock shall be redeemed or converted
pursuant to the terms hereof, the shares so converted or redeemed shall not
revert to the status of authorized but unissued shares, but instead shall be
canceled and shall not be re-issuable by the Corporation.

ARTICLE XI

Meetings of stockholders may be held within or without the State of
Delaware, as the Corporation's Bylaws may provide. The books of the Corporation
may be kept (subject to any provision contained in the statutes) outside of the
State of Delaware at such place or places as may be designated from time to time
by the Board of Directors or in the Corporation's Bylaws.

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

-5-
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its Chief Executive Officer on ___________ , 2000.

Microtune, Inc.

-------------------------------
Douglas J. Bartek
Chief Executive Officer

-6-

<PAGE>

EXHIBIT 3.4

AMENDED AND RESTATED BYLAWS OF

MICROTUNE, INC.
<PAGE>

TABLE OF CONTENTS

Page
----
ARTICLE I CORPORATE OFFICES................................................ 1
- ---------------------------

1.1 REGISTERED OFFICE................................................ 1
-----------------
1.2 OTHER OFFICES.................................................... 1
-------------

ARTICLE II MEETINGS OF STOCKHOLDERS........................................ 1
- -----------------------------------

2.1 PLACE OF MEETINGS................................................ 1
-----------------
2.2 ANNUAL MEETING................................................... 1
--------------
2.3 SPECIAL MEETING.................................................. 1
---------------
2.4 NOTICE OF STOCKHOLDERS' MEETINGS................................. 2
--------------------------------
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS.. 2
---------------------------------------------------------------
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE..................... 3
--------------------------------------------
2.7 QUORUM........................................................... 3
------
2.8 ADJOURNED MEETING; NOTICE........................................ 4
-------------------------
2.9 CONDUCT OF BUSINESS.............................................. 4
-------------------
2.10 VOTING........................................................... 4
------
2.11 WAIVER OF NOTICE................................................. 4
----------------
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.......... 5
-------------------------------------------------------
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS...... 5
-----------------------------------------------------------
2.14 PROXIES.......................................................... 5
-------
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE............................ 6
-------------------------------------

ARTICLE III DIRECTORS...................................................... 6
- ---------------------

3.1 POWERS........................................................... 6
------
3.2 NUMBER OF DIRECTORS.............................................. 7
-------------------
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.......... 7
-------------------------------------------------------
3.4 RESIGNATION AND VACANCIES........................................ 8
-------------------------
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE......................... 9
----------------------------------------
3.6 REGULAR MEETINGS................................................. 9
----------------
3.7 SPECIAL MEETINGS; NOTICE......................................... 9
------------------------
3.8 QUORUM........................................................... 9
------
3.9 WAIVER OF NOTICE................................................. 10
----------------
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................ 10
-------------------------------------------------
3.11 FEES AND COMPENSATION OF DIRECTORS............................... 10
----------------------------------
3.12 APPROVAL OF LOANS TO OFFICERS.................................... 10
-----------------------------
3.13 REMOVAL OF DIRECTORS............................................. 11
--------------------

- i -
<PAGE>

ARTICLE IV COMMITTEES...................................................... 11
- ---------------------

4.1 COMMITTEES OF DIRECTORS.......................................... 11
-----------------------
4.2 COMMITTEE MINUTES................................................ 12
-----------------
4.3 MEETINGS AND ACTION OF COMMITTEES................................ 12
---------------------------------

ARTICLE V OFFICERS......................................................... 12
- ------------------

5.1 OFFICERS......................................................... 12
--------
5.2 APPOINTMENT OF OFFICERS.......................................... 12
-----------------------
5.3 SUBORDINATE OFFICERS............................................. 12
--------------------
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES........... 13
------------------------------------------------------
5.5 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................... 13
----------------------------------------------
5.6 AUTHORITY AND DUTIES OF OFFICERS................................. 13
--------------------------------

ARTICLE VI INDEMNITY....................................................... 13
- --------------------

6.1 THIRD PARTY ACTIONS.............................................. 13
-------------------
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.................... 14
---------------------------------------------
6.3 SUCCESSFUL DEFENSE............................................... 14
------------------
6.4 DETERMINATION OF CONDUCT......................................... 15
------------------------
6.5 PAYMENT OF EXPENSES IN ADVANCE................................... 15
------------------------------
6.6 INDEMNITY NOT EXCLUSIVE.......................................... 15
-----------------------
6.7 INSURANCE INDEMNIFICATION........................................ 15
-------------------------
6.8 THE CORPORATION.................................................. 16
---------------
6.9 EMPLOYEE BENEFIT PLANS........................................... 16
----------------------
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...... 16
-----------------------------------------------------------

ARTICLE VII RECORDS AND REPORTS............................................ 16
- -------------------------------

7.1 MAINTENANCE AND INSPECTION OF RECORDS............................ 16
-------------------------------------
7.2 INSPECTION BY DIRECTORS.......................................... 17
-----------------------
7.3 ANNUAL STATEMENT TO STOCKHOLDERS................................. 17
--------------------------------

ARTICLE VIII GENERAL MATTERS............................................... 18
- ----------------------------

8.1 CHECKS........................................................... 18
------
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS................. 18
------------------------------------------------
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES........................... 18
--------------------------------------
8.4 SPECIAL DESIGNATION ON CERTIFICATES.............................. 19
-----------------------------------
8.5 LOST CERTIFICATES................................................ 19
-----------------
8.6 CONSTRUCTION; DEFINITIONS........................................ 19
-------------------------
8.7 DIVIDENDS........................................................ 19
---------
8.8 FISCAL YEAR...................................................... 20
-----------
8.9 SEAL............................................................. 20
----
8.10 TRANSFER OF STOCK................................................ 20
-----------------

- ii -
<PAGE>

8.11 STOCK TRANSFER AGREEMENTS........................................ 20
-------------------------
8.12 REGISTERED STOCKHOLDERS.......................................... 20
-----------------------

ARTICLE IX AMENDMENTS...................................................... 21
- ---------------------

- iii -
<PAGE>

AMENDED AND RESTATED BYLAWS OF

MICROTUNE, INC.

ARTICLE I

CORPORATE OFFICES
-----------------

1.1 REGISTERED OFFICE
-----------------

The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.

1.2 OTHER OFFICES
-------------

The board of directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS
------------------------

2.1 PLACE OF MEETINGS
-----------------

Meetings of stockholders shall be held at any place, either within or
without the State of Delaware, as may be designated by the board of directors or
in the manner provided in these bylaws. In the absence of any such designation,
stockholders' meetings shall be held at the registered office of the corporation
in the State of Delaware.

2.2 ANNUAL MEETING
--------------

The annual meeting of stockholders, for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at such place (within or
without the state of Delaware), on such date, and at such time as the board of
directors shall fix and set forth in the notice of the meeting, which date shall
be within thirteen (13) months subsequent to the last annual meeting of
stockholders.

2.3 SPECIAL MEETING
---------------

A special meeting of the stockholders may be called at any time by the
board of directors, the chairman or vice chairman of the board, the chief
executive officer, the president or a holder of at least 15% of the outstanding
voting stock of the corporation.
<PAGE>

If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.

2.4 NOTICE OF STOCKHOLDERS' MEETINGS
--------------------------------

All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.6 of these bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder entitled to vote at such meeting. The notice shall specify the
place, date, and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called.

2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
---------------------------------------------------------------

Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,

(i) nominations for the election of directors, and

(ii) business proposed to be brought before any stockholder meeting

may be made by the board of directors or proxy committee appointed by the board
of directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of their intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than one hundred twenty (120) calendar days in advance of
the first anniversary date of mailing of the corporation's proxy statement
released to stockholders in connection with the previous year's annual meeting
of stockholders; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received a reasonable time

- 2 -
<PAGE>

before the solicitation is made. To be in proper form, a stockholder's notice to
the secretary shall set forth:

(a) the name and address of the stockholder who intends to make the
nominations or propose the business and, as the case may be, of the person
or persons to be nominated or a brief description of the business to be
proposed and the reasons for conducting such business at the annual
meeting;

(b) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;

(c) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder;

(d) such other information regarding each nominee or each matter of
business to be proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or intended to be
proposed by the board of directors; and

(e) if applicable, the consent of each nominee to serve as director
of the corporation if so elected.

The chairman of the meeting shall refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
--------------------------------------------

Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.

2.7 QUORUM
------

The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the Chairman of the meeting or (ii) the
stockholders entitled to vote

- 3 -
<PAGE>

thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting of the time and place of the holding of the adjourned meeting. At such
adjourned meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
noticed.

2.8 ADJOURNED MEETING; NOTICE
-------------------------

When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

2.9 CONDUCT OF BUSINESS
-------------------

The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.

2.10 VOTING
------

The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.13 of these bylaws,
subject to the provisions of Sections 217 and 218 of the Delaware General
Corporation Law (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).

Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.

2.11 WAIVER OF NOTICE
----------------

Whenever notice is required to be given under any provision of the Delaware
General Corporation Law or of the certificate of incorporation or these bylaws,
a written waiver, signed by the person entitled to notice, whether before or
after the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these bylaws.

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<PAGE>

2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
-------------------------------------------------------

Unless otherwise provided in the certificate of incorporation, the
stockholders of the corporation may not act by written consent without a meeting
but instead must act at a duly called annual or special meeting.

2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
-----------------------------------------------------------

In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.

If the board of directors does not so fix a record date:

(i) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held.

(ii) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the first date on which a
signed written consent is delivered to the corporation.

(iii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.

2.14 PROXIES
-------

Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to a corporate action in writing without a meeting
may authorize another person or persons to act for him, her or it by proxy.
Proxies for use at any meeting of stockholders shall be filed with the secretary
of the corporation, or such other officer as the board of directors may from
time to time determine by resolution, before or at the time of the meeting. All
proxies shall be received and taken charge of and all ballots shall be received
and canvassed by the secretary of the meeting, who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the

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<PAGE>

acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.

No proxy shall be valid after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the Delaware General Corporation Law.

Should a proxy designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at any
meeting at which their powers thereunder are to be exercised shall have and may
exercise all the powers of voting or giving consents thereby conferred, or if
only one be present, then such powers may be exercised by that one; or, if an
even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of such
portion of the shares as is equal to the reciprocal of the fraction equal to the
number of proxies representing such shares divided by the total number of shares
represented by such proxies.

2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE
-------------------------------------

The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.

ARTICLE III

DIRECTORS
---------

3.1 POWERS
------

Subject to the provisions of the Delaware General Corporation Law and any
limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.

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<PAGE>

3.2 NUMBER OF DIRECTORS
-------------------

The initial number of directors shall be ten (10). The number of directors
may be changed by an amendment to this bylaw, duly adopted by the board of
directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation. Upon the closing of the first sale of the
corporation's common stock pursuant to a firmly underwritten registered public
offering (the "IPO"), the Directors shall be divided into three classes
designated as Class I, Class II and Class III, respectively. Directors shall be
assigned to each class in accordance with a resolution or resolutions adopted by
the board of directors. At the first annual meeting of stockholders following
the closing of the IPO, the term of office of the Class I Directors shall expire
and Class I Directors shall be elected for a full term of three years. At the
second annual meeting of stockholders following the closing of the IPO, the term
of office of the Class II Directors shall expire and Class II Directors shall be
elected for a full term of three years. At the third annual meeting of
stockholders following the closing of the Initial Public Offering, the term of
office of the Class III Directors shall expire and Class III Directors shall be
elected for a full term of three years. At each succeeding annual meeting of
stockholders, Directors shall be elected for a full term of three years to
succeed the Directors of the class whose terms expire at such annual meeting.

Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
earlier death, resignation or removal.

No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
-------------------------------------------------------

Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the third
succeeding annual meeting of the stockholders held after such election.
Directors need not be stockholders unless so required by the certificate of
incorporation or these bylaws, wherein other qualifications for directors may be
prescribed. Each director, including a director elected to fill a vacancy,
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal.

Elections of directors need not be by written ballot.

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<PAGE>

3.4 RESIGNATION AND VACANCIES
-------------------------

Any director may resign at any time upon written notice to the attention of
the Secretary of the corporation. When one or more directors shall resign from
the board of directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each director so chosen shall hold
office as provided in this section in the filling of other vacancies.

Unless otherwise provided in the certificate of incorporation or these
bylaws:

(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.

(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the Delaware General Corporation Law.

If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the Delaware
General Corporation Law as far as applicable.

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<PAGE>

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
----------------------------------------

The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of such board of directors, or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting pursuant to this section shall constitute
presence in person at the meeting.

3.6 REGULAR MEETINGS
----------------

Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.

3.7 SPECIAL MEETINGS; NOTICE
------------------------

Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any director.

Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.

3.8 QUORUM
------

At all meetings of the board of directors, a majority of the directors then
in office shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute, the certificate of incorporation, or these
bylaws. If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.

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<PAGE>

A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.

3.9 WAIVER OF NOTICE
----------------

Whenever notice is required to be given under any provision of the Delaware
General Corporation Law, the certificate of incorporation, or these bylaws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when such person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
directors, or members of a committee of directors, need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these bylaws.

3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
-------------------------------------------------

Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.

3.11 FEES AND COMPENSATION OF DIRECTORS
----------------------------------

Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors and members of standing committees, and such directors and members
shall be reimbursed for all reasonable expenses incurred in attending and
returning from meetings of the board of directors or committees, as the case may
be.

3.12 APPROVAL OF LOANS TO OFFICERS
-----------------------------

The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

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<PAGE>

3.13 REMOVAL OF DIRECTORS
--------------------

Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however, that, so long
as stockholders of the corporation are entitled to cumulative voting, if less
than the entire board is to be removed, no director may be removed without cause
if the votes cast against his removal would be sufficient to elect such director
if then cumulatively voted at an election of the entire board of directors or,
if there be classes of directors, at an election of the class of directors of
which such director is a part.

No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.

ARTICLE IV

COMMITTEES
----------

4.1 COMMITTEES OF DIRECTORS
-----------------------

The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority (i) approving or adopting
or recommending to the stockholders, any action or matter expressly required by
the Delaware General Corporation Law to be submitted to stockholders for
approval or (ii) adopting, amending, or repealing any bylaws of the corporation;
and, unless the board resolution establishing the committee, the bylaws or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the Delaware General Corporation Law.

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<PAGE>

4.2 COMMITTEE MINUTES
-----------------

Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.

4.3 MEETINGS AND ACTION OF COMMITTEES
---------------------------------

Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.6 (regular meetings),
Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9
(waiver of notice), and Section 3.10 (action without a meeting), with such
changes in the context of those bylaws as are necessary to substitute the
committee and its members for the board of directors and its members; provided,
however, that the time of regular meetings of committees may be determined
either by resolution of the board of directors or by resolution of the
committee, that special meetings of committees may also be called by resolution
of the board of directors and that notice of special meetings of committees
shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.

ARTICLE V

OFFICERS
--------

5.1 OFFICERS
--------

The officers of the corporation shall be a chief executive officer or
president, a secretary, and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents, one or more assistant vice presidents, one or more
assistant secretaries, one or more assistant treasurers, and any such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these bylaws. Any number of offices may be held by the same person.

5.2 APPOINTMENT OF OFFICERS
-----------------------

The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall
be appointed by the board of directors, subject to the rights, if any, of an
officer under any contract of employment.

5.3 SUBORDINATE OFFICERS
--------------------

The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such

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<PAGE>

period, have such authority, and perform such duties as are provided in these
bylaws or as the board of directors may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES
------------------------------------------------------

Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.

Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.

Any vacancy occurring in any office of the corporation shall be filled by
the board of directors.

5.5 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
----------------------------------------------

The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.

5.6 AUTHORITY AND DUTIES OF OFFICERS
--------------------------------

All officers of the corporation shall respectively have such authority and
perform such duties in the management of the business of the corporation as may
be designated from time to time by the board of directors or the stockholders.

ARTICLE VI

INDEMNITY
---------

6.1 THIRD PARTY ACTIONS
-------------------

The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal,

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<PAGE>

administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement (if such settlement is approved in advance by the corporation, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---- ----------
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interest of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.

6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
---------------------------------------------

The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) and amounts paid in settlement (if such settlement is approved in advance
by the corporation, which approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding any other
provision of this Article VI, no person shall be indemnified hereunder for any
expenses or amounts paid in settlement with respect to any action to recover
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended.

6.3 SUCCESSFUL DEFENSE
------------------

To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, such person shall be

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<PAGE>

indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.

6.4 DETERMINATION OF CONDUCT
------------------------

Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court)
shall be made by the corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper in the circumstances because such person has met the applicable
standard of conduct set forth in Sections 6.1 and 6.2. Such determination shall
be made (1) by the Board of Directors or the Executive Committee by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding or (2) or if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders. Notwithstanding the
foregoing, a director, officer, employee or agent of the Corporation shall be
entitled to contest any determination that the director, officer, employee or
agent has not met the applicable standard of conduct set forth in Sections 6.1
and 6.2 by petitioning a court of competent jurisdiction.

6.5 PAYMENT OF EXPENSES IN ADVANCE
------------------------------

Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
Section 6.1 or 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article VI.

6.6 INDEMNITY NOT EXCLUSIVE
-----------------------

The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

6.7 INSURANCE INDEMNIFICATION
-------------------------

The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
Article VI.

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<PAGE>

6.8 THE CORPORATION
---------------

For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.

6.9 EMPLOYEE BENEFIT PLANS
----------------------

For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.

6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
-----------------------------------------------------------

The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

ARTICLE VII

RECORDS AND REPORTS
-------------------

7.1 MAINTENANCE AND INSPECTION OF RECORDS
-------------------------------------

The corporation shall, either at its principal executive officer or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.

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<PAGE>

Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

7.2 INSPECTION BY DIRECTORS
-----------------------

Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.

7.3 ANNUAL STATEMENT TO STOCKHOLDERS
--------------------------------

The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.

- 17 -
<PAGE>

ARTICLE VIII

GENERAL MATTERS
---------------

8.1 CHECKS
------

From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.

8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
------------------------------------------------

The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.

8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
--------------------------------------

The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until such certificate is surrendered to
the corporation. Notwithstanding the adoption of such a resolution by the board
of directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend

- 18 -
<PAGE>

on fully paid shares, the corporation shall declare a dividend upon partly paid
shares of the same class, but only upon the basis of the percentage of the
consideration actually paid thereon.

8.4 SPECIAL DESIGNATION ON CERTIFICATES
-----------------------------------

If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

8.5 LOST CERTIFICATES
-----------------

Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.

8.6 CONSTRUCTION; DEFINITIONS
-------------------------

Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of
this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.

8.7 DIVIDENDS
---------

The directors of the corporation, subject to any restrictions contained in
(i) the Delaware General Corporation Law or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.

- 19 -
<PAGE>

The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.

8.8 FISCAL YEAR
-----------

The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.

8.9 SEAL
----

The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.

8.10 TRANSFER OF STOCK
-----------------

Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.

8.11 STOCK TRANSFER AGREEMENTS
-------------------------

The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the Delaware General Corporation Law.

8.12 REGISTERED STOCKHOLDERS
-----------------------

The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.

- 20 -
<PAGE>

ARTICLE IX

AMENDMENTS
----------

The bylaws of the corporation may be adopted, amended or repealed by the
stockholders entitled to vote; provided, however, that the corporation may, in
its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.

- 21 -
<PAGE>

Microtune, Inc.

Certificate of Adoption of Bylaws

=================================

The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of Microtune, Inc. and that the foregoing Amended and
Restated Bylaws, comprising twenty-one (21) pages, were adopted as the Amended
and Restated Bylaws of the corporation on March 23, 2000 by the board of
directors of the corporation.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
___ day of _____________________, 2000.

-------------------------------
Secretary

<PAGE>

EXHIBIT 5.1

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
8911 CAPITAL OF TEXAS HIGHWAY, SUITE 3350
AUSTIN, TEXAS 78759
TELEPHONE: 512-338-5400 FACSIMILE 512-338-5499
WWW.WSGR.COM
May 4, 2000

Microtune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074

RE: REGISTRATION STATEMENT ON FORM S-1

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-1 to be filed by you
with the Securities and Exchange Commission on May 4, 2000 (the "Registration
Statement") in connection with the registration under the Securities Act of
1933, as amended, of up to $57,500,000 worth of common stock (including shares
issuable upon exercise of the underwriters' over-allotment option) of Microtune,
Inc. (the "Shares"). As your counsel in connection with this transaction, we
have examined the proceedings proposed to be taken in connection with such sale
and issuance of the Shares.

It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
various states, where required, the Shares when issued and sold in the manner
referred to in the Registration Statement will be legally and validly issued,
fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part thereof,
and any amendment thereto.

Very truly yours,

WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati

<PAGE>

Exhibit 10.1

MICROTUNE, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is effective as of
____________ and between Microtune, Inc., a Delaware corporation (the
"Company"), and __________________ ("Indemnitee").

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and its related
entities;

WHEREAS, in order to induce Indemnitee to continue to provide services to
the Company, the Company wishes to provide for the indemnification of, and the
advancement of expenses to, Indemnitee to the maximum extent permitted by law;

WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company's directors, officers, employees,
agents and fiduciaries, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited;

WHEREAS, in connection with the Company's reincorporation, the Company and
Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement, with such changes as are required to
conform the existing agreement to Delaware law and to provide indemnification
and advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law; and

WHEREAS, in view of the considerations set forth above, the Company desires
that Indemnitee shall be indemnified and advanced expenses by the Company as set
forth herein;

NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.

1. Certain Definitions.
-------------------

a. "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding Voting Securities,
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board
<PAGE>

of Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation other than a
merger or consolidation that would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company's assets.

b. "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.

c. References to the "Company" shall include, in addition to
Microtune, Inc., any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which Microtune, Inc. (or
any of its wholly owned subsidiaries) is a party that, if its separate existence
had continued, would have had power and authority to indemnify its directors,
officers, employees, agents or fiduciaries, so that if Indemnitee is or was a
director, officer, employee, agent or fiduciary of such constituent corporation,
or is or was serving at the request of such constituent corporation as a
director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.

d. "Covered Event" shall mean any event or occurrence related to the
fact that Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or any subsidiary of the Company, or is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action or inaction on the part of Indemnitee while serving in
such capacity.

e. "Expenses" shall mean any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, to be a witness in or to participate in, any
action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of any Claim and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement.
<PAGE>

f. "Expense Advance" shall mean a payment to Indemnitee pursuant to
Section 3 of Expenses in advance of the settlement of or final judgement in any
action, suit, proceeding or alternative dispute resolution mechanism, hearing,
inquiry or investigation that constitutes a Claim.

g. "Independent Legal Counsel" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).

h. References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company that imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.

i. "Reviewing Party" shall mean, subject to the provisions of Section
2(d), any person or body appointed by the Board of Directors in accordance with
applicable law to review the Company's obligations hereunder and under
applicable law, which may include a member or members of the Company's Board of
Directors, Independent Legal Counsel or any other person or body not a party to
the particular Claim for which Indemnitee is seeking indemnification.

j. "Section" refers to a section of this Agreement unless otherwise
indicated.

k. "Voting Securities" shall mean any securities of the Company that
vote generally in the election of directors.

2. Indemnification.
---------------

a. Indemnification of Expenses. Subject to the provisions of Section
---------------------------
2(b) below, the Company shall indemnify Indemnitee for Expenses to the fullest
extent permitted by law if Indemnitee was or is or becomes a party to or witness
or other participant in, or is threatened to be made a party to or witness or
other participant in, any Claim (whether by reason of or arising in part out of
a Covered Event), including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses.

b. Review of Indemnification Obligations. Notwithstanding the
-------------------------------------
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
<PAGE>

under applicable law; provided, however, that if Indemnitee has commenced or
-------- -------
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.

c. Indemnitee Rights on Unfavorable Determination; Binding Effect.
--------------------------------------------------------------
If any Reviewing Party determines that Indemnitee substantively is not entitled
to be indemnified hereunder in whole or in part under applicable law, Indemnitee
shall have the right to commence litigation seeking an initial determination by
the court or challenging any such determination by such Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and, subject to
the provisions of Section 15, the Company hereby consents to service of process
and to appear in any such proceeding. Absent such litigation, any determination
by any Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.

d. Selection of Reviewing Party; Change in Control. If there has not
been a Change in Control, any Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control that has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), any
Reviewing Party with respect to all matters thereafter arising concerning the
rights of Indemnitee to indemnification of Expenses under this Agreement or any
other agreement or under the Company's Certificate of Incorporation or Bylaws as
now or hereafter in effect, or under any other applicable law, if desired by
Indemnitee, shall be Independent Legal Counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all matters concerning a single Indemnitee, and such
Independent Legal Counsel shall be the Independent Legal Counsel for any or all
other Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.

e. Mandatory Payment of Expenses. Notwithstanding any other
-----------------------------
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
<PAGE>

3. Expense Advances.
----------------

a. Obligation to Make Expense Advances. Upon receipt of a written
-----------------------------------
undertaking by or on behalf of the Indemnitee to repay such amounts if it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
therefore by the Company hereunder under applicable law, the Company shall make
Expense Advances to Indemnitee.

b. Form of Undertaking. Any obligation to repay any Expense Advances
-------------------
hereunder pursuant to a written undertaking by the Indemnitee shall be unsecured
and no interest shall be charged thereon.

c. Determination of Reasonable Expense Advances. The parties agree
--------------------------------------------
that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.

4. Procedures for Indemnification and Expense Advances.
---------------------------------------------------

a. Timing of Payments. All payments of Expenses (including without
------------------
limitation Expense Advances) by the Company to the Indemnitee pursuant to this
Agreement shall be made to the fullest extent permitted by law as soon as
practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.

b. Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.

c. No Presumptions; Burden of Proof. For purposes of this Agreement,
--------------------------------
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
---------------
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by this Agreement or applicable
law. In addition, neither the failure of any Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by any
Reviewing Party that Indemnitee has not met such standard of conduct or did not
have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
this Agreement under applicable law, shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief. In connection with any
determination by any Reviewing
<PAGE>

Party or otherwise as to whether the Indemnitee is entitled to be indemnified
hereunder under applicable law, the burden of proof shall be on the Company to
establish that Indemnitee is not so entitled.

d. Notice to Insurers. If, at the time of the receipt by the Company
------------------
of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect that may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.

e. Selection of Counsel. In the event the Company shall be obligated
--------------------
hereunder to provide indemnification for or make any Expense Advances with
respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; provided that, (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of separate
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
Claim, then the fees and expenses of Indemnitee's separate counsel shall be
Expenses for which Indemnitee may receive indemnification or Expense Advances
hereunder.

5. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------

a. Scope. The Company hereby agrees to indemnify the Indemnitee to
-----
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule that expands the right of a Delaware corporation to indemnify a
member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule that narrows the right of a
Delaware corporation to indemnify a member of its board of directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 10(a) hereof.

b. Nonexclusivity. The indemnification and the payment of Expense
--------------
Advances provided by this Agreement shall be in addition to any rights to which
Indemnitee may be entitled under the Company's Certificate of Incorporation, its
Bylaws, any other agreement, any vote of stockholders or disinterested
directors, the General Corporation Law of the State of Delaware, or otherwise.
The indemnification and the payment of Expense Advances provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
<PAGE>

6. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.

7. Partial Indemnification. If Indemnitee is entitled under any provision
-----------------------
of this Agreement to indemnification by the Company for some or a portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.

8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
---------------------
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

9. Liability Insurance. To the extent the Company maintains liability
-------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

10. Exceptions. Notwithstanding any other provision of this Agreement,
----------
the Company shall not be obligated pursuant to the terms of this Agreement:

a. Excluded Action or Omissions. To indemnify or make Expense
----------------------------
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.

b. Claims Initiated by Indemnitee. To indemnify or make Expense
------------------------------
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or crossclaim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's Certificate of Incorporation or Bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, Expense Advances, or insurance recovery, as
the case may be.

c. Lack of Good Faith. To indemnify Indemnitee for any Expenses
------------------
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was
<PAGE>

frivolous, or (ii) by or in the name of the Company to enforce or interpret this
Agreement, if a court having jurisdiction over such action determines as
provided in Section 13 that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous.

d. Claims Under Section 16(b). To indemnify Indemnitee for Expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns. This Agreement shall be
--------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.

13. Expenses Incurred in Action Relating to Enforcement or Interpretation.
---------------------------------------------------------------------
In the event that any action is instituted by Indemnitee under this Agreement or
under any liability insurance policies maintained by the Company to enforce or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee with respect to such action
(including without limitation attorneys' fees), regardless of whether Indemnitee
is ultimately successful in such action, unless as a part of such action a court
having jurisdiction over such action makes a final judicial determination (as to
which all rights of appeal therefrom have been exhausted or lapsed) that each of
the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous; provided, however, that until such final
judicial determination is made, Indemnitee shall be entitled under Section 3 to
receive payment of Expense Advances hereunder with respect to such action. In
the event of an action instituted by or in the name of the Company under this
Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee in
defense of such action (including without limitation costs and expenses incurred
with respect to Indemnitee's counterclaims and cross-claims made in such
action), unless as a part of such action a court having jurisdiction over such
action makes a final judicial determination (as to which all rights of appeal
therefrom have been exhausted or lapsed) that each of the material defenses
asserted by Indemnitee in such action was made in bad faith or was frivolous;
provided, however, that until such final judicial determination is made,
Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action.

14. Period of Limitations. No legal action shall be brought and no cause
---------------------
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual
<PAGE>

of such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such two year period; provided, however, that if any shorter
-------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

15. Notice. All notices, requests, demands and other communications under
------
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.

16. Consent to Jurisdiction. The Company and Indemnitee each hereby
-----------------------
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding that arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.

17. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

18. Choice of Law. This Agreement, and all rights, remedies, liabilities,
-------------
powers and duties of the parties to this Agreement, shall be governed by and
construed in accordance with the laws of the State of Delaware as applied to
contracts between Delaware residents entered into and to be performed entirely
in the State of Delaware without regard to principles of conflicts of laws.

19. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

20. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.

21. Integration and Entire Agreement. This Agreement sets forth the
--------------------------------
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
<PAGE>

22. No Construction as Employment Agreement. Nothing contained in this
---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.

[Remainder of Page Intentionally Left Blank]
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.

MICROTUNE, INC.

By:______________________

Name:____________________

Title:___________________

Address: 2540 East Plano Parkway, Suite 188
Plano, TX 75074

AGREED TO AND ACCEPTED

INDEMNITEE:

____________________________
(signature)

____________________________
Name

____________________________
Address

____________________________

<PAGE>

Exhibit 10.2

MICROTUNE, INC.

AMENDED AND RESTATED

1996 STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this 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 of
the Company and any Parent or Subsidiary and to promote the success of the
Company's business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant of an option and subject to the applicable provisions of Section
422 of the Code and the regulations promulgated thereunder.

2. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Administrator" means the Board or any of its Committees appointed
-------------
pursuant to Section 4 of the Plan.

(b) "Board" means the Board of Directors of the Company.
-----

(d) "Committee" means a Committee appointed by the Board of Directors
---------
in accordance with Section 4 of the Plan.

(e) "Common Stock" means the Common Stock of the Company.
------------

(f) "Company" means MicroTune, Inc., a Texas corporation.
-------

(g) "Consultant" means any person who is engaged by the Company or any
----------
Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.

(h) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship with the Company, any Parent or Subsidiary
is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of (i) any 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. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave. For purposes of Incentive Stock Options, no
such leave may exceed 90 days, unless
<PAGE>

reemployment upon expiration of such leave is guaranteed by statute or contract,
including Company policies. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 181st day of such
leave any Incentive Stock Option held by the Optionee shall cease to be treated
as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.

(i) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.

(j) "Employee" means any person, including officers and directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.

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

(l) "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 last market trading day prior to the time 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, its Fair Market Value
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; or

(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.

(m) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code.

(n) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.

(o) "Option" means a stock option granted pursuant to the Plan.
------

(p) "Optioned Stock" means the Common Stock subject to an Option.
--------------

-2-
<PAGE>

(q) "Optionee" means an Employee or Consultant who receives an Option.
--------
(r) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(s) "Plan" means this 1996 Stock Option Plan.
----

(t) "Section 16(b)" means Section 16(b) of the Securities Exchange Act
-------------
of 1934, as amended.

(u) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 below.

(v) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 9,852,155 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program
authorized by the Administrator, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated); provided, however, that Shares that have actually been
--------
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested Shares
are repurchased by the Company at their original purchase price, such Shares
shall become available for future grant under the Plan.

4. Administration of the Plan.
--------------------------

(a) Initial Plan Procedure. Prior to the date, if any, upon which the
----------------------
Company becomes subject to the Exchange Act, the Plan shall be administered by
the Board or a committee appointed by the Board.

(b) Plan Procedure after the Date, if any, upon Which the Company
-------------------------------------------------------------
becomes Subject to the Exchange Act.
- -----------------------------------

(i) Administration With Respect to Directors and Officers Subject
-------------------------------------------------------------
to Section 16(b). With respect to Option grants made to Employees who are also
- ----------------
Officers or Directors subject to Section 16(b) of the Exchange Act, the Plan
shall be administered by (A) the Board, if the Board may administer the Plan in
a manner complying with any then existing rules relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt

-3-
<PAGE>

discretionary grants and awards of equity securities are to be made, or (B) a
committee designated by the Board to administer the Plan, which committee shall
be constituted to comply with any then existing rules relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by any then existing
rules relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made.

(ii) Administration With Respect to Other Persons. With respect
--------------------------------------------
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy the legal requirements, if any, relating to the administration of
incentive stock option plans of state corporate and securities laws, of the
Code, and of any stock exchange or national market system upon which the Common
Stock is then listed or traded (the "Applicable Laws"). Once appointed, such
Committee shall serve in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.

(c) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange or national market
system upon which the Common Stock is then listed, the Administrator shall have
the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(l) of the Plan;

(ii) to select the Consultants and Employees to whom Options
may from time to time 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 such award granted hereunder;

-4-
<PAGE>

(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 may include, but are not limited to, the exercise price, the time or
times when Options may be exercised, any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

(vii) to determine whether and under what circumstances an
Option may be settled in cash under Section 9(e) instead of Common Stock;

(viii) 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 has declined since the date the Option was granted;

(ix) to provide for the early exercise of Options for the
purchase of unvested Shares, subject to such terms and conditions as the
Administrator may determine; and

(x) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.

(d) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.

5. Eligibility.
-----------

(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.

(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options.

For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.

-5-
<PAGE>

(c) The Plan shall not confer upon any Optionee any right with
respect to the continuation of the Optionee's employment or consulting
relationship with the Company, nor shall it interfere in any way with the
Optionee's right or the Company's right to terminate the Optionee's employment
or consulting relationship at any time, with or without cause.

6. 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, as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.

7. Term of Option. The term of each Option shall be the term stated in
--------------
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.

8. Option Exercise Price and Consideration.
---------------------------------------

(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option, the per share
exercise price shall be determined by the Administrator.

(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date

-6-
<PAGE>

of surrender and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price, or (6) any
combination of the foregoing methods of payment. In making its determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

9. Exercise of Option.
------------------

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) Termination of Employment or Consulting Relationship. Upon
----------------------------------------------------
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for three (3) months following the Optionee's termination. In the
case of an

-7-
<PAGE>

Incentive Stock Option, such period of time for exercise shall not exceed three
(3) months from the date of termination. If, on the date of termination, the
Optionee is not entitled to exercise the Optionee's entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.

Notwithstanding the above, in the event of an Optionee's change in
status from Consultant to Employee or Employee to Consultant, an Optionee's
Continuous Status as an Employee or Consultant shall not automatically terminate
solely as a result of such change in status. However, in such event, an
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option three months and one day following such change of status.

(c) Disability of Optionee. In the event of termination of an
----------------------
Optionee's Continuous Status as an Employee or Consultant as a result of his or
her Disability, the Optionee may, but only within twelve (12) months from the
date of such termination (and in no event later than the expiration date of the
term of his or her Option as set forth in the Option Agreement), exercise the
Option to the extent the Optionee was otherwise entitled to exercise it on the
date of such termination. To the extent that the Optionee is not entitled to
exercise the Option on the date of termination, or if the Optionee does not
exercise the Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by the Option shall revert to
the Plan.

(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who has acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquires the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

(f) Rule 16b-3. Options granted to persons subject to Section 16(b)
----------
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of

-8-
<PAGE>

the Exchange Act with respect to Plan transactions.

10. Non-Transferability of Options. Unless otherwise stated in an Option
------------------------------
Agreement granting with respect to Nonstatutory Stock Options, options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee; provided,
however, that in any event, stock vested under Nonstatutory Stock Options may be
transferred to lineal descendants of the Optionee or trusts where lineal
descendants of the Optionee are the primary beneficiary.

11. Adjustments Upon Changes in Capitalization or Merger.
----------------------------------------------------

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, 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 increase or decrease in the
number of issued 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 Board,
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) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

-9-
<PAGE>

or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If an Option is
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option shall terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the option confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.

13. Amendment and Termination of the Plan.
-------------------------------------

(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any stock exchange or national market system upon
which the Common Stock is then listed), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.

(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

-10-
<PAGE>

14. Conditions Upon Issuance of Shares. 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 pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or national market system
upon which the Common Stock is then listed or traded, 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 relevant provisions of law.

15. Reservation of Shares. The Company, during the term of this Plan,
---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

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 of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

16. Agreements. Options shall be evidenced by written agreements in such
----------
form as the Administrator shall approve from time to time.

17. Shareholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange or national market system upon which the Common
Stock is then listed or traded.

-11-
<PAGE>

MICROTUNE, INC.
1996 STOCK OPTION PLAN
NOTICE OF GRANT

FORM TWO
--------

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Notice of Grant.

MicroTune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:

Grant Number

Date of Grant

Vesting Commencement Date

Exercise Price per Share $

Total Number of Shares Granted (the "Shares")

Total Exercise Price $.00

Type of Option:

Term/Expiration Date:

-1-
<PAGE>

MICROTUNE, INC.
1996 STOCK OPTION PLAN
NOTICE OF GRANT

FORM TWO
--------

Continued

II. Vesting Schedule:
----------------

This Option may be exercised and vested, in whole or in part, in accordance
with the following schedule:

Twenty percent (20%) of the total Shares shall become exercisable and vest
twelve (12) months after the Vesting Commencement Date, and one sixtieth
(1/60th) of the total Shares shall become exercisable and vest each month
thereafter.

III. Consideration for Exercising Shares:
-----------------------------------

The Optionee shall pay consideration for Shares according to 5(i), (ii),
and (iv) of the Option Agreement.

IV. Termination Period:
------------------

This Option may be exercised for two (2) months after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.

-2-
<PAGE>

MICROTUNE, INC.
1996 STOCK OPTION PLAN
OPTION AGREEMENT

1. Grant of Option. MicroTune, Inc. (the "Company"), hereby grants to the
---------------
Optionee (the "Optionee") named in the Notice of Grant, an option (the "Option")
to purchase the total number of shares of Common Stock (the "Shares") set forth
in the Notice of Grant, at the exercise price per share set forth in the Notice
of Grant (the "Exercise Price") subject to the terms, definitions and provisions
of the 1996 Stock Option Plan (the "Plan") adopted by the Company, which is
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. However, if this Option is intended to be
an Incentive Stock Option, to the extent that it exceeds the $100,000 rule of
Code Section 422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

2. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the Vesting Schedule set out in the Notice of Grant and with
the provisions of Section 9 of the Plan as follows:

(i) Right to Exercise.
-----------------

(a) This Option may not be exercised for a fraction of a Share.

(b) In the event of Optionee's death, disability or other
termination of the Optionee's Continuous Status as an Employee or Consultant,
the exercisability of the Option is governed by Sections 6, 7 and 8 below,
subject to the limitation contained in subsection 2(i)(c).

(c) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

(ii) Method of Exercise. This Option shall be exercisable by written
------------------
notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.

-1-
<PAGE>

No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange or national market system upon which
the Common Stock is then listed and is pursuant to a duly executed and delivered
Exercise Notice in the form attached hereto as Exhibit A. Assuming such
---------
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

3. Optionee's Representations. In the event the Shares purchasable
--------------------------
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.

4. Lock-Up Period. Optionee hereby agrees that if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.

5. Method of Payment. Payment of the Exercise Price shall be by any of
-----------------
the following, or a combination thereof, according to the terms of the Exercise
Grant (Form One or Form Two) attached hereto ad Exhibit B:
---------

(i) cash;

(ii) check;

(iii) payment of a promissory note for all or part of the Exercise
Price; or

(iv) surrender of other shares of Common Stock of the Company which
(A) in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or

-2-
<PAGE>

(v) to the extent authorized by the Company, delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the Exercise Price.

6. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

7. Termination of Relationship. In the event an Optionee's Continuous
---------------------------
Status as an Employee or Consultant terminates, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not entitled to exercise this Option at
the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

8. Disability of Optionee. Notwithstanding the provisions of Section 6
----------------------
above, in the event of termination of an Optionee's Continuous Status as an
Employee or Consultant as a result of his or her Disability, Optionee may, but
only within twelve (12) months from the date of such termination (and in no
event later than the expiration date of the term of such Option as set forth in
the Notice of Grant) exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee is not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

9. Death of Optionee. In the event of termination of Optionee's
-----------------
Continuous Status as an Employee or Consultant as a result of the death of
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the date of expiration
of the term of this Option as set forth in Section 11 below), by Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.

10. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

-3-
<PAGE>

11. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Options designated as Incentive Stock Options
and Options granted to more than ten percent (10%) shareholders shall apply to
this Option.

12. Tax Consequences. Set forth below is a brief summary as of the date
----------------
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(i) Exercise of an ISO. If this Option qualifies as an ISO, there
------------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

(ii) Exercise of an NSO. There may be a regular federal income tax
------------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee, the Company will be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

(iii) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and are disposed of at least two years after the
Date of Grant, any gain realized on disposition of the Shares will also be
treated as long-term capital gain for federal income tax purposes. If Shares
purchased under an ISO are disposed of within such one-year period or within two
years after the Date of Grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the difference between the Exercise Price and the lesser of (1) the Fair
Market Value of the Shares on the date of exercise, or (2) the sale price of the
Shares.

(iv) Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in

-4-
<PAGE>

writing of such disposition. Optionee agrees that Optionee may be subject to
income tax withholding by the Company on the compensation income recognized by
the Optionee.

13. Inconsistent Terms. To the extent that words or terms of the Notice
------------------
of Grant and Waiver of Equity Interest in CHAMA, this Option Agreement and the
1996 Stock Option Plan are inconsistent or conflict with the terms of any
employment agreement between the Optionee and the Company, the terms of the
employment agreement shall prevail and supercede those inconsistent terms.

MICROTUNE, INC.

By:__________________________________

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 1996 STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

Dated: ____________________ _____________________________________
Optionee

Residence Address:
_____________________________________

-5-
<PAGE>

______________________________________

CONSENT OF SPOUSE
-----------------

The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.

_______________________________________
Spouse of Optionee

-6-
<PAGE>

EXHIBIT A
---------

MICROTUNE, INC.

1996 STOCK OPTION PLAN

EXERCISE NOTICE

MicroTune, Inc.
2540 East Plano Parkway, Suite 188
Plano, TX 75074
Attention: Secretary

1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
--------
_________ shares of the Common Stock (the "Shares") of MicroTune, Inc. (the
"Company") under and pursuant to the 1996 Stock Option Plan, as amended (the
"Plan") and the [ ] Incentive [ ] Nonstatutory Stock Option Agreement dated
________, 19___ (the "Stock Option Agreement").

2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Stock Option Agreement and agrees
to abide by and be bound by their terms and conditions.

3. Rights as Shareholder. Until the stock certificate evidencing such
---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 11 of the Plan.

Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have
no further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.

4. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
<PAGE>

"Right of First Refusal").

(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee (the "Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).

(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

(c) Purchase Price. The purchase price (the "Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Administrator in good faith.

(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash, by check, by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice; provided however that if the Stock
Option Agreement permits payment with a promissory note, the Optionee shall have
the right to pay with a promissory note.

(e) Holder's Right to Transfer. If all of the Shares proposed in the
--------------------------
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice and provided further
that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, a new Notice
shall be given to the Company, and the Company and/or its assignees shall again
be offered the Right of First Refusal before any Shares held by the Holder may
be sold or otherwise transferred.

(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime
<PAGE>

or on the Optionee's death by will or intestacy to the Optionee's immediate
family, a trust for the benefit of the Optionee's immediate family, or a
"Qualified Business Entity" shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

"Qualified Business Entity" shall mean a corporation, limited
liability company, general partnership or a limited partnership; so long as it
is owned entirely, directly or indirectly, by the Optionee and/or the Optionee's
immediate family.

If any interest in a Qualified business Entity is later transferred to
a person or entity not a member of the Optionee's immediate family, all
transferred Shares shall then be subject to the right of first refusal in this
Section 4.

(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate upon the closing of the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

5. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

6. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------

(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws
at the time of the issuance of the Shares:

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
THE ISSUER OF THE SHARES (THE "ISSUER") HAS RECEIVED AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
<PAGE>

RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THE SHARES REPRESENTED HEREBY.

(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

7. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

8. Interpretation. Any dispute regarding the interpretation of this
--------------
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator of the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Administrator shall be final
and binding on the Company and on Optionee.

9. Governing Law; Severability. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of Texas excluding that body
of law pertaining to conflicts of law. Should any provision of this Agreement
be determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.

10. Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.

11. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

12. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full Exercise Price for the Shares.
<PAGE>

13. Entire Agreement. The Plan, the Notice of Grant, and the Stock Option
----------------
Agreement are incorporated herein by reference. This Agreement, the Plan, the
Notice of Grant, the Stock Option Agreement, any employment agreement between
Optionee and the Company and the Investment Representation Statement (if
applicable) constitute the entire agreement of the parties and supersede in
their entirety all prior undertakings and agreements of the Company and Optionee
with respect to the subject matter hereof.

Submitted by: Accepted by:

OPTIONEE: MICROTUNE, INC.

By:__________________________________

Its:_________________________________

(Signature)

Address: Address:
- ------- -------

2540 East Plano Parkway, Suite 188
Plano, TX 75074
<PAGE>

EXHIBIT B
---------

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE :

COMPANY :

SECURITY : COMMON STOCK

AMOUNT :

DATE :

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under then applicable state or federal securities laws.

promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require)
the Securities exempt under Rule 701 may be resold, subject to the satisfaction
of certain of the conditions specified by Rule 144, including: (1) the resale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Exchange Act); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.

(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A under the Securities Act, or
some other registration exemption will be required; and that, notwithstanding
the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk. Optionee understands that no
assurances can be given that any such other registration exemption will be
available in such event.

Signature of Optionee:

____________________________________________

Date: ________________________, 19__________

<PAGE>

EXHIBIT 10.3

MICROTUNE, INC.

2000 STOCK PLAN

1. Purposes of the Plan. The purposes of this 2000 Stock Plan are:
--------------------

. to attract and retain the best available personnel for
positions of substantial responsibility,

. to provide additional incentive to Employees, Directors and
Consultants, and

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

Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights and Common Stock Equivalents may also be granted
under the Plan.

2. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Administrator" means the Board or any of its Committees as
-------------
shall be administering the Plan, in accordance with Section 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 or Stock Purchase Rights are,
or will be, granted under the Plan.

(c) "Award" means an award of Options, Stock Purchase Rights or
-----
Common Stock Equivalents pursuant to the terms of the Plan.

(d) "Board" means the Board of Directors of the Company.
-----

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

(f) "Committee" means a committee of Directors appointed by the
---------
Board in accordance with Section 4 of the Plan.

(g) "Common Stock" means the common stock of the Company.
------------

(h) "Common Stock Equivalent" means an unfunded and unsecured right
-----------------------
to receive Shares in the future that may be granted to a Service Provider
pursuant to Section 12.

(i) "Common Stock Equivalent Agreement" means a written or
---------------------------------
electronic agreement between the Company and a Service Provider evidencing the
terms and conditions of an individual Common Stock Equivalent grant or Award.
<PAGE>

(j) "Company" means Microtune, Inc., a Delaware corporation.
-------

(k) "Consultant" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services to such entity.

(l) "Director" means a member of the Board.
--------

(m) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.

(n) "Employee" means any person, including 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 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.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three (3) months following the 91st day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.

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

(p) "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 on
the day 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 day of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or

(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.

(q) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
<PAGE>

(r) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.

(s) "Notice of Grant" means a written or electronic notice evidencing
---------------
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

(t) "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.

(u) "Option" means a stock option granted pursuant to the Plan.
------

(v) "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.

(w) "Optioned Stock" means the Common Stock subject to an Option or
--------------
Stock Purchase Right.

(x) "Optionee" means the holder of an outstanding Option or Stock
--------
Purchase Right granted under the Plan.

(y) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(z) "Plan" means this 2000 Stock Plan.
----

(aa) "Restricted Stock" means shares of Common Stock acquired
----------------
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.

(bb) "Restricted Stock Purchase Agreement" means a written or
-----------------------------------
electronic agreement between the Company and the Optionee evidencing the terms
and restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

(dd) "Section 16(b) " means Section 16(b) of the Exchange Act.
-------------

(ee) "Service Provider" means an Employee, Director or Consultant.
----------------

(ff) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 14 of the Plan.

(gg) "Stock Purchase Right" means the right to purchase Common Stock
--------------------
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
<PAGE>

(hh) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 14 of
-------------------------
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is equal to (a) the number of Shares which were reserved but
unissued under the Company's 1996 Stock Option Plan ("1996 Plan") as of the date
of stockholder approval of the original adoption of this Plan, (b) the number of
Shares subsequently returned to the 1996 Plan as a result of termination of
options or repurchase of Shares issued under the 1996 Plan, plus (c) an annual
increase to be added on the first day of each of the Company's fiscal years
during the term of this Plan beginning in fiscal year 2001 equal to the lesser
of (i) 3,000,000 shares, (ii) 5% of the outstanding shares on such date or (iii)
an amount determined by the Board. Notwithstanding clause (c) above, in no event
shall the number of shares available for issuance under this Plan be increased
as set forth in clause (c) if such increase in addition to any proposed
increases in the number of shares available under all other employee and
director stock plans (including without limitation, the 2000 Director Stock
Option Plan and the 2000 Employee Stock Purchase Plan) will result in the total
number of shares available under all employee and director stock plans equaling
or exceeding 30% of the outstanding shares of the Company on the first day of
the respective fiscal year. The Shares may be authorized, but unissued, or
reacquired Common Stock.

If an Option or Stock Purchase Right 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); provided, however, that Shares that have actually been
--------
issued under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.

4. Administration of the Plan.
--------------------------

(a) Procedure.
---------

(i) Multiple Administrative Bodies. Different Committees with
------------------------------
respect to different groups of Service Providers may administer the Plan.

(ii) Section 162(m). To the extent that the Administrator
--------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

(iii) Rule 16b-3. To the extent desirable to qualify
----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

(iv) Other Administration. Other than as provided above, the
--------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

(i) to determine the Fair Market Value;
<PAGE>

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

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

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

(v) 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 or Stock Purchase Rights may be exercised (which may be based
on performance criteria), the time or times when Common Stock Equivalents may be
converted to Shares, any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Award or the
Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

(vi) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan;

(vii) 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 satisfying applicable foreign laws;

(viii) to modify or amend each Award (subject to Section 16(c) 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;

(ix) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by an Optionee
to have Shares withheld for this purpose shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable;

(x) to authorize any person to execute on behalf of the
Company any instrument required to effect an Award previously made by the
Administrator; and

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

(c) 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 Awards.

5. Eligibility. Nonstatutory Stock Options, Stock Purchase Rights and
-----------
Common Stock Equivalents may be granted to Service Providers. Incentive Stock
Options may be granted only to Employees.
<PAGE>

6. Limitations.
-----------

(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.

(i) No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 500,000 Shares.

(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,000,000
Shares, which shall not count against the limit set forth in subsection (i)
above.

(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.

(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 14), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall become
------------
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 16 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
<PAGE>

9. Option Exercise Price and Consideration.
---------------------------------------

(a) Exercise Price. The per share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.

(b) Waiting Period and Exercise Dates. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

(i) cash;

(ii) check;

(iii) promissory note;

(iv) other Shares, provided Shares acquired from the Company,
(A) have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option shall be
exercised;

(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
<PAGE>

(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;

(vii) any combination of the foregoing methods of payment; or

(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

10. Exercise of Option.
------------------

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
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), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 14 of the Plan.

Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Relationship as a Service Provider. If an Optionee
-------------------------------------------------
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
<PAGE>

(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

11. Stock Purchase Rights.
---------------------

(a) Rights to Purchase. Stock Purchase Rights may be issued either
------------------
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines
-----------------
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
<PAGE>

(c) Other Provisions. The Restricted Stock Purchase Agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Shareholder. Once the Stock Purchase Right is
-----------------------
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

12. Common Stock Equivalents.
------------------------

(a) Award of Common Stock Equivalents. Common Stock Equivalents may
---------------------------------
be awarded to Service Providers either alone, in addition to, or in tandem with
other Awards granted under the Plan and/or cash awards made outside of the Plan.
An Award of Common Stock Equivalents shall be made pursuant to a Common Stock
Equivalent Agreement in such form as is determined by the Administrator.

(b) Bookkeeping Account; Nontransferability. The number of Common
---------------------------------------
Stock Equivalents awarded pursuant to Section 12(a) to each Service Provider
shall be credited to a bookkeeping account established in the name of the
Service Provider at such time or times as specified in the Service Provider's
Common Stock Equivalent Agreement. The Company's obligation with respect to such
Common Stock Equivalents shall not be funded or secured in any manner. A Service
Provider's right to receive Common Stock Equivalents may not be assigned or
transferred, voluntarily or involuntarily, except as expressly provided herein.

(c) Dividends. If the Company pays a cash dividend with respect to the
---------
Shares at any time while Common Stock Equivalents are credited to a Service
Provider's account, there shall be credited to the Service Provider's account
additional Common Stock Equivalents equal to (i) the dollar amount of the cash
dividend the Service Provider would have received had he or she been the actual
owner of the Shares to which the Common Stock Equivalents then credited to the
Service Provider's account relate, divided by (ii) the Fair Market Value of one
Share on the dividend payment date. The Company will pay the Service Provider a
cash payment in lieu of fractional Common Stock Equivalents on the date of such
dividend payment.

(d) Conversion. The Company shall deliver to the Service Provider
----------
(or his or her designated beneficiary or estate) a number of Shares equal to the
whole number of Common Stock Equivalents then credited to the Service Provider's
account, at such time or times as specified in the Service Provider's Common
Stock Equivalent Agreement, or as otherwise provided herein.

(e) Stockholder Rights. A Service Provider (or his or her designated
------------------
beneficiary or estate) shall not be entitled to any voting or other stockholder
rights as a result of the credit of Common Stock Equivalents to the Service
Provider's account, until certificates representing Shares are delivered to the
Service Provider (or his or her designated beneficiary or estate) upon
conversion of the Service Provider's Common Stock Equivalents pursuant to
Section 12(d).

13. Non-Transferability of Awards. Unless determined otherwise by the
-----------------------------
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner
<PAGE>

other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Award transferable, such Award shall contain such
additional terms and conditions as the Administrator deems appropriate.

14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
------------------------------------------------------------------------
Sale.
- ----

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Award, the number of Common Stock Equivalents credited to a
Service Provider's account under Section 12(b) and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Awards have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Award, the number of shares that may be
added annually to the shares reserved under the Plan (pursuant to Section
3(a)(i)), as well as the price per share of Common Stock covered by each such
outstanding Award, 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 increase or decrease in the number of issued
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 Board, 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 Award.

(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide: (i) for an
Optionee to have the right to exercise his or her Option until ten (10) days
prior to such transaction as to all of the Optioned Stock covered thereby,
including Shares as to which the Option would not otherwise be exercisable; (ii)
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated; and (iii) that any Common Stock Equivalents credited to
a Service Provider's account under Section 12(b) shall convert into Shares (as
provided in Section 12(d)) immediately prior to the consummation of any such
dissolution or liquidation. To the extent it has not been previously exercised,
an Award will terminate immediately prior to the consummation of such proposed
action.

(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Award shall be assumed or an equivalent award
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 Award: (i) each Optionee shall fully vest in and
have the right to exercise the Option or Stock Purchase Right as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable; (ii) any Company repurchase option applicable to any Shares
acquired upon exercise of an Option or Stock Purchase Right shall lapse as to
all such Shares; and (iii) Common Stock Equivalents credited to a Service
Provider's account
<PAGE>

under Section 12(b) shall convert into Shares (as provided in Section 12(d))
immediately prior to the merger or sale of assets. If an Option or Stock
Purchase Right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully vested and exercisable for a period of fifteen
(15) days from the date of such notice, and the Option or Stock Purchase Right
shall terminate upon the expiration of such period. If a Common Stock Equivalent
converts into Shares in such event, the Administrator shall notify the holder of
such Common Stock Equivalent at least fifteen (15) days prior to the
consummation of the proposed action. For the purposes of this paragraph, an
Award shall be considered assumed if, following the merger or sale of assets,
the award confers the right to purchase or receive, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right or for each Common Stock
Equivalent, immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option or
Stock Purchase Right, for each Share of Optioned Stock subject to the Option or
Stock Purchase Right or upon conversion of each Common Stock Equivalent, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

15. Date of Grant. The date of grant of an Award shall be, for all purposes,
-------------
the date on which the Administrator makes the determination granting such Award,
or such other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.

16. Amendment and Termination of the Plan.
-------------------------------------

(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.

(b) Shareholder Approval. The Company shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

(c) 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 holder of such Award and the
Administrator, which agreement must be in writing and signed by the holder of
such Award 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 Awards granted under the Plan prior to the date of such termination.

17. Conditions Upon Issuance of Shares.
----------------------------------

(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares shall comply
<PAGE>

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
--------------------------
Award, the Company may require the person exercising such Award 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.

18. 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
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

19. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

20. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
<PAGE>

MICROTUNE, INC.

2000 STOCK PLAN

STOCK OPTION AGREEMENT

(TRANSFERABLE)

Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT
----------------------------

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:

Grant Number ___________________________________

Date of Grant ___________________________________

Vesting Commencement Date ___________________________________

Exercise Price per Share $__________________________________

Total Number of Shares Granted ___________________________________

Total Exercise Price $__________________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: ___________________________________

Vesting Schedule:
----------------

Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:

[20% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/60 of the Shares subject to the Option shall
vest each month thereafter on the same day of the month as the Vesting
Commencement Date, subject to the Optionee continuing to be a Service Provider
on such dates].
<PAGE>

Termination Period:
------------------

This Option may be exercised for [two (2) months] after Optionee ceases to
be a Service Provider. Upon the death or Disability of Optionee, this Option may
be exercised for [twelve (12) months] after Optionee ceases to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

II. AGREEMENT
---------

A. Grant of Option.
---------------

The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 16(c) of
the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").

B. Exercise of Option.
------------------

(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
---------
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by such aggregate Exercise
Price.

No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
<PAGE>

C. Method of Payment.
-----------------

Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

1. cash; or

2. check; or

3. consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or

4. surrender of other Shares, which in the case of Shares acquired
from the Company, (i) have been owned by the Optionee for more than six (6)
months on the date of surrender, and (ii) have a Fair Market Value on the date
of surrender equal to the aggregate Exercise Price of the Exercised Shares.

D. Limited Transferability of Option. This Option may not be sold,
---------------------------------
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee; provided, however,
that the Optionee may transfer, without payment of consideration, the Option to
any member of the Optionee's immediate family or to a trust or partnership whose
beneficiaries are members of the Optionee's immediate family by completing an
Election to Transfer Stock Option Form to be obtained from the Company. In such
case, the Option shall be exercisable only by such transferee. Following
transfer, this Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer. For purposes
of this Section, an Optionee's "immediate family" shall mean the Optionee's
spouse, children and grandchildren.

E. Term of Option.
--------------

This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.

F. Tax Obligations.
---------------

1. Withholding Taxes. Optionee agrees to make appropriate
-----------------
arrangements with the Company (or the Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state, and local income
and employment tax withholding requirements applicable to the Option exercise.
Optionee acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

2. Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
<PAGE>

G. Entire Agreement; Governing Law.
-------------------------------

The Plan is incorporated herein by reference. The Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Texas.

H. NO GUARANTEE OF CONTINUED SERVICE.
---------------------------------

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE: MICROTUNE, INC.

____________________________ _____________________________________
Signature By

____________________________ ____________________________________
Print Name Title

____________________________
Residence Address

____________________________
<PAGE>

EXHIBIT A
---------

MICROTUNE, INC.

2000 STOCK PLAN

EXERCISE NOTICE

Microtune, Inc.
2540 E. Plano Parkway, Suite 188
Plano, TX 75074

Attention: [Title]

1. Exercise of Option. Effective as of today, ________________, _____,
------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Microtune, Inc. (the "Company") under and
pursuant to the 2000 Stock Plan (the "Plan") and the Stock Option Agreement
dated, _____ (the "Option Agreement"). The purchase price for the Shares shall
be $_____, as required by the Option Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 14 of the
Plan.

5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE>

6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
Texas.

Submitted by: Accepted by:

PURCHASER: MICROTUNE, INC.

___________________________ _________________________________
Signature By

___________________________ _________________________________
Print Name Its

Address: Address:
- ------- -------

___________________________ 2540 E. Plano Parkway, Suite 188
Plano, TX 75074

___________________________

_________________________________
Date Received

<PAGE>

MICROTUNE, INC.

2000 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT
----------------------------

[Optionee's Name and Address]

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number _______________________________

Date of Grant _______________________________

Vesting Commencement Date _______________________________

Exercise Price per Share $______________________________

Total Number of Shares Granted _______________________________

Total Exercise Price $______________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: _______________________________

Vesting Schedule:
----------------

Subject to accelerated vesting as set forth below, this Option may be
exercised, in whole or in part, in accordance with the following schedule:

Termination Period:
------------------

II. AGREEMENT
---------

A. Grant of Option.
---------------

B. Exercise of Option.
------------------

C. Method of Payment.
-----------------

Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

1. cash; or

2. check; or

3. consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or

D. Non-Transferability of Option.
-----------------------------

This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

E. Term of Option.
--------------

This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.

F. Tax Obligations.
---------------

G. Entire Agreement; Governing Law.
-------------------------------

H. NO GUARANTEE OF CONTINUED SERVICE.
---------------------------------

OPTIONEE: MICROTUNE, INC.

__________________________ ________________________________
Signature By

__________________________ ________________________________
Print Name Title

__________________________
Residence Address

__________________________
<PAGE>

EXHIBIT A
---------

MICROTUNE, INC.

2000 STOCK PLAN

EXERCISE NOTICE

Microtune, Inc.
2540 E. Plano Parkway, Suite 188
Plano, TX 75074

Attention: [Title]

2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares.

Submitted by: Accepted by:

PURCHASER: MICROTUNE, INC.

__________________________ ________________________________
Signature By

__________________________ ________________________________
Print Name Its

Address: Address:
- ------- -------

__________________________ 2540 E. Plano Parkway, Suite 188
Plano, TX 75074
__________________________

________________________________
Date Received
<PAGE>

MICROTUNE, INC.

Election to Transfer Stock Option

Instructions: Complete this form if you want to transfer all or part of a
nonstatutory stock option that was granted to you under the Microtune, Inc. 2000
Stock Plan. You must complete Parts I through IV of this form. The person to
whom you wish to transfer the option (the "Transferee") must complete Part V.
Please return the completed form to the General Counsel, Microtune, Inc., 2540
East Plano Parkway, Suite 188, Plano, Texas 75074. All transfers are subject to
the approval of the Company. Stock Administration will notify you if your form
is complete and your transfer has been accepted.

I. OPTIONEE INFORMATION

Enter the name and other identifying information for the Optionee (that is, for
the person to whom the option originally was granted). You may transfer a stock
option only if your option agreement between you and the Company permits the
transfer and the transfer is by bona fide gift.

Name:_____________________________________________________________________

Social Security Number:___________________________________________________

Address:__________________________________________________________________

Telephone:________________________________________________________________

II. TRANSFEREE INFORMATION

Enter the information for the person to whom you want to transfer your option
(that is, for the Transferee). You may transfer an option only to: (a) a member
of your immediate family, (b) a trust established for the exclusive benefit of
you and/or your immediate family, (c) a partnership, limited liability company
or other entity whose only partners or members are you and/or your immediate
family, or (d) a foundation if the foundation's assets are controlled by you
and/or your immediate family. Immediate family means your spouse, parents,
brothers, sisters, children, stepchildren and grandchildren.

Name of Transferee:________________________________________________________

Social Security Number (or TIN):___________________________________________

Address:___________________________________________________________________

Telephone:_________________________________________________________________

III. STOCK OPTION(S) TO BE TRANSFERRED

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Option Number Grant Date Number of Shares Exercise Price per Date of Transfer
Being Transferred Share (cannot be retroactive)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

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

- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

IV. ACKNOWLEDGMENT AND SIGNATURE OF OPTIONEE

By signing below, I (the Optionee) acknowledge and confirm that: (a) I am
transferring full and complete ownership of the option(s) shown above to the
Transferee (including all rights to exercise and profit from the option(s)), (b)
the transfer is a bona fide gift, (c) when the Transferee exercises an option, I
will have ordinary income (reportable by the Company on my Form W-2 or Form
1099) equal to the difference between the fair market value of the purchased
shares on the date of exercise and the exercise price of the option, and (d) the
information that I have provided on this form is true and complete. I understand
that I am solely responsible for paying any taxes owed because of an option
exercise and I agree to make full payment to the Company of any withholding
taxes (including FICA tax) due upon exercise of the option. I also authorize the
Company (at its option) to deduct the withholding taxes from any other
compensation or payments that the Company otherwise owes to me. I have received
and read a copy of the prospectus for the 1999 Stock Plan and I understand that
my transfer election is subject to all 1999 Stock Plan rules.

Signature:___________________________ Date:________________________

V. ACKNOWLEDGMENT AND SIGNATURE OF TRANSFEREE

By signing below, I (the Transferee) acknowledge and confirm that (a) I accept
ownership of the option(s) shown above, (b) the option(s) continue to be subject
to all of the terms of the applicable option agreement(s) and of the 2000 Stock
Plan, (c) the above information about me is true and complete, (d) the option(s)
cannot be transferred by me except upon my death, (e) my exercise of the
option(s) and disposition of shares purchased with the option(s) are subject to
all Company policies as if the option(s) had not been transferred, including the
Company's securities trading policy, and (f) I have received and read a copy of
the prospectus for the Plan.

Signature:___________________________ Date:________________________

For Company use only: Received ____________________ Date:_________________
<PAGE>

MICROTUNE, INC.

2000 STOCK PLAN

COMMON STOCK EQUIVALENT AGREEMENT

This Common Stock Equivalent Agreement (the "Agreement") is made this
_________ day of ________, 20__, by and between Microtune, Inc. (the "Company")
and __________ (the "Recipient"). Unless otherwise defined herein, the terms
defined in the Company's 2000 Stock Plan (the "Plan") shall have the same
defined meanings herein.

1. Award. The Company hereby awards _______________ Common Stock
-----
Equivalents to the Recipient pursuant to this Agreement and Section 12 of the
Plan; provided, however, that this Award shall vest in accordance with the
following schedule:

[INSERT VESTING SCHEDULE]

The Company shall credit a bookkeeping account in the Recipient's name
(the "Account"), established for such purpose, with the number of Common Stock
Equivalents specified above entered into the Account at such times as specified
above.

2. Conversion. Following the earlier of (i) _______________, _____
----------
or (ii) the date on which the Recipient shall die or retire, or his or her
engagement as a Service Provider shall terminate for any other reason, the
Company shall deliver to the Recipient (or to his designated beneficiary,
executor or administrator, in the event of his death) a number of Shares equal
to the whole number of vested Common Stock Equivalents, if any, credited to the
Account at such time.

3. Designation of Beneficiary; Nontransferability.
----------------------------------------------

(a) Designation of Beneficiary. The Recipient shall have the
--------------------------
right by will to designate one or more beneficiaries to receive any Shares
deliverable pursuant to Section 2 above. If no beneficiary shall be designated
or, having been designated, shall not be living at the time delivery of the
Shares is to be made, the balance of the Shares shall be delivered to the
Recipient's executor or administrator and shall constitute part of the
Recipient's estate. If the Company determines that a person to whom Shares are
to be delivered is a minor or is mentally or physically incapable of receiving
or caring for the Shares that would otherwise be delivered to such person, the
Shares may be applied for the benefit of the person (with or without the
intervention of a guardian or committee) or, in the case of a minor, may be
delivered to a custodian for the minor under the California Uniform Transfer to
Minors Act, to the parents or a parent of the minor, to a legal guardian of the
minor, or any other person who may have the estate or custody of the minor's
person. Any such delivery shall be a complete discharge of the liabilities of
the Company under this Agreement.

(b) Nontransferability. Except as provided in subsection (a), the
------------------
rights of the Recipient under this Agreement are personal to him or her and no
right or benefit under this
<PAGE>

Agreement shall be subject to anticipation, alienation, sale, assignment,
pledge or encumbrance by the Recipient or anyone on his or her behalf and shall
not be liable for the debts, contracts, liabilities, engagements or torts of the
Recipient. Neither this Agreement nor the establishment of the Account shall
create or be construed to create a trust or asset segregation of any kind for
the benefit of the Recipient or to create any form of fiduciary relationship
between the Company and the Recipient, his named beneficiary or executor or
administrator, as the relationship created by this Agreement is that of a
general creditor.

4. Title and Beneficial Ownership. Title to and beneficial ownership
------------------------------
of all assets in the Account shall at all times remain with the Company, and
neither the Recipient nor his named beneficiary or executor or administrator
shall have any property interest whatsoever in any specific assets of the
Company.

5. Entire Agreement; Governing Law. The Plan is incorporated herein
-------------------------------
by reference. This Agreement shall in all respects be subject to the terms,
definitions and provisions of the Plan. The Plan and this Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and the Recipient with respect to the subject matter hereof, and may not
be modified except by means of a writing signed by the Company and the
Recipient. This Agreement shall be governed by Texas law, except for that body
of law pertaining to conflicts of laws.

THE RECIPIENT ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT
OR THE PLAN SHALL CONFER UPON THE RECIPIENT ANY RIGHT WITH RESPECT TO
CONTINUATION OF HIS OR HER ENGAGEMENT AS A SERVICE PROVIDER.

RECIPIENT: MICROTUNE, INC:

_____________________ __________________________

[Name] Its:______________________

<PAGE>

EXHIBIT 10.4
MICROTUNE, INC.

2000 DIRECTOR OPTION PLAN

1. Purposes of the Plan. The purposes of this 2000 Director Option Plan are
--------------------
to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.

All Options granted hereunder shall be nonstatutory stock options.

2. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Board" means the Board of Directors of the Company.
-----

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

(d) "Company" means Microtune, Inc., a Delaware corporation.
-------

(e) "Director" means a member of the Board.
--------

(f) "Disability" means total and permanent disability as defined in
----------
section 22(e)(3) of the Code.

(g) "Employee" means any person, including officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

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

(i) "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 on
the day 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 for the day of
<PAGE>

determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or

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

(j) "Inside Director" means a Director who is an Employee.
---------------

(k) "Option" means a stock option granted pursuant to the Plan.
------

(l) "Optioned Stock" means the Common Stock subject to an Option.
--------------

(m) "Optionee" means a Director who holds an Option.
--------

(n) "Outside Director" means a Director who is not an Employee.
----------------

(o) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(p) "Plan" means this 2000 Director Option Plan.
----

(q) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 10 of the Plan.

(r) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 150,000 Shares plus an annual increase to be added on the
first day of the Company's fiscal year beginning in 2001, equal to the lesser of
(i) 75,000 shares, (ii) 1.0% of the outstanding shares on such date or (iii) an
amount determined by the Board. Notwithstanding the preceding sentence, unless
otherwise approved by the Board, in no event shall the number of shares
available for issuance under this Plan be increased as set forth in the
preceding sentence if such increase in addition to any proposed increases in the
number of shares available under all other employee and director stock plans
(including without limitation, the 2000 Stock Plan and the 2000 Employee Stock
Purchase Plan) will result in the total number of shares available under all
employee and director stock plans equaling or exceeding 30% of the outstanding
shares of the Company on the first day of the respective fiscal year. The Shares
may be authorized, but unissued, or reacquired Common Stock.

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). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

4. Administration and Grants of Options under the Plan.
---------------------------------------------------

(a) Procedure for Grants. All grants of Options to Outside Directors
--------------------
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
<PAGE>

(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options.

(ii) Each Outside Director shall be automatically granted an
Option to purchase 10,000 Shares (the "First Option") on the date on which such
person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.

(iii) Each Outside Director shall be automatically granted an
Option to purchase 5,000 Shares (a "Subsequent Option") on the date of the
Company's annual stockholder's meeting of each year, provided he or she is then
an Outside Director and if as of such date, he or she shall have served on the
Board for at least the preceding six (6) months.

(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any exercise of an Option granted before the Company has obtained
shareholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 16 hereof.

(v) The terms of a First Option granted hereunder shall be as
follows:

(A) the term of the First Option shall be ten (10) years.

(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.

(D) subject to Section 10 hereof, the First Option shall
become exercisable as to 33 1/3 % of the Shares subject to the First Option on
each anniversary of its date of grant, provided that the Optionee continues to
serve as a Director on such dates.

(vi) The terms of a Subsequent Option granted hereunder shall be
as follows:

(A) the term of the Subsequent Option shall be ten (10)
years.

(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.
<PAGE>

(D) subject to Section 10 hereof, the Subsequent Option
shall become exercisable as to 50% of the Shares subject to the Subsequent
Option on the first anniversary of its date of grant, provided that the Optionee
continues to serve as a Director on such date.

(vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

6. Term of Plan. The Plan shall become effective upon the earlier to occur
------------
of its adoption by the Board or its approval by the shareholders of the Company
as described in Section 16 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 11 of the Plan.

7. Form of Consideration. The consideration to be paid for the Shares to be
---------------------
issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other Shares, provided Shares acquired
directly from the Company, (x) have been owned by the Optionee for more than six
(6) months on the date of surrender, and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (iv) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (v) any combination of the foregoing methods of payment.

8. Exercise of Option.
------------------

(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained. An Option may not be exercised for a fraction of a Share.

method of payment allowable under Section 7 of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment shall be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 10 of the Plan.

(b) Termination of Continuous Status as a Director. Subject to
----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.

(c) Disability of Optionee. In the event Optionee's status as a
----------------------
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within six (6) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

(d) Death of Optionee. In the event of an Optionee's death, the
-----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.

9. Limited Transferability of Options. An Option may not be sold, pledged,
----------------------------------
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee; provided, however that the
Optionee may transfer, without payment of consideration, the Option to any
member of the Optionee's immediate family or to a trust or partnership whose
beneficiaries are
<PAGE>

members of the Optionee's immediate family. In such case, the Option shall be
exercisable only by such transferee. Following transfer, the Option shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to the transfer. For purposes of this Section, an Optionee's
"immediate family" shall mean the Optionee's spouse, children and
grandchildren."

10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
------------------------------------------------------------------------
Sale.
- ----

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, the number of
shares that may be added annually to the shares reserved under the Plan
(pursuant to Section 3(a)(i)), as well as the price per Share covered by each
such outstanding Option, and the number of Shares issuable pursuant to the
automatic grant provisions of Section 4 hereof shall be proportionately adjusted
for any increase or decrease in the number of issued Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares 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." 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 subject to an Option.

(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.

If the Successor Corporation does not assume an outstanding
Option or substitute for it an equivalent option, the Option shall become fully
vested and exercisable, including as to Shares for which it would not otherwise
be exercisable. In such event the Board shall notify the Optionee that the
Option shall be fully exercisable for a period of thirty (30) days from the date
of such notice, and upon the expiration of such period the Option shall
terminate.

For the purposes of this Section 10(c), an Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of
<PAGE>

assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

11. Amendment and Termination of the Plan.
-------------------------------------

(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.

(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

12. Time of Granting Options. The date of grant of an Option shall, for all
------------------------
purposes, be the date determined in accordance with Section 4 hereof.

13. Conditions Upon Issuance of Shares. 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 pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, 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 relevant provisions of law.

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 of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
<PAGE>

14. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

15. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.

16. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.
<PAGE>

EXHIBIT A
---------

DIRECTOR OPTION EXERCISE NOTICE

Microtune, Inc.
2540 E. Plano Parkway, Suite 188
Plano, TX 75074

Attention: Corporate Secretary

1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Microtune, Inc. (the "Company") under and pursuant to the Company's
2000 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").

2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Agreement.

3. Federal Restrictions on Transfer. Optionee understands that the
--------------------------------
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the ?1933 Act?), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.

4. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.

5. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.

6. Entire Agreement. The Agreement is incorporated herein by reference.
----------------
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the
<PAGE>

subject matter hereof. This Exercise Notice and the Agreement are governed by
Texas law except for that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

OPTIONEE: MICROTUNE, INC.

By:___________________ By:_______________________

Its:______________________

Address:

Dated:________________ Dated:____________________

-2-
<PAGE>

FIRST OPTION

MICROTUNE, INC.

DIRECTOR OPTION AGREEMENT

Microtune, Inc., (the "Company"), has granted to ___________________ (the
"Optionee") an option to purchase a total of [_______] shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of the
Company's 2000 Director Option Plan (the "Plan") adopted by the Company which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.

1. Nature of the Option. This Option is a nonstatutory option and is not
--------------------
intended to qualify for any special tax benefits to the Optionee.

2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.

3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:

(i) Right to Exercise.
-----------------

(a) This Option shall become exercisable in installments
cumulatively with respect to 1/3 of the Optioned Stock on each anniversary of
its date of grant, so that one hundred percent (100%) of the Optioned Stock
shall be exercisable three years after the date of grant; provided, however,
that in no event shall any Option be exercisable prior to the date the
stockholders of the Company approve the Plan.

(b) This Option may not be exercised for a fraction of a
share.

(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.

(ii) Method of Exercise. This Option shall be exercisable by
------------------
written notice which shall state the election to exercise the Option and the
number of Shares in respect of which the Option is being exercised. Such written
notice, in the form attached hereto as Exhibit A, shall be signed by the
---------
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company. The written notice shall be accompanied by payment of the
exercise price.

4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:

(i) cash;

(ii) check; or

(iii) surrender of other Shares, provided Shares acquired from
the Company, (x) have been owned by the Optionee for more than six (6) months on
the date of surrender, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised; or

(iv) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan.
<PAGE>

5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

6. Limited Transferability of Option. This Option may not be sold,
---------------------------------
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee; provided, however,
that the Optionee may transfer, without payment of consideration, the Option to
any member of the Optionee's immediate family or to a trust or partnership whose
beneficiaries are members of the Optionee's immediate family by completing an
Election to Transfer Stock Option Form to be obtained from the Company. In such
case, the Option shall be exercisable only by such transferee. Following
transfer, this Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer. For purposes of
this Section, an Optionee's "immediate family" shall mean the Optionee's spouse,
children and grandchildren."

7. Term of Option. This Option may not be exercised more than ten (10)
--------------
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.

8. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option.

DATE OF GRANT: ______________

MICROTUNE, INC.,
A Delaware corporation

By:______________________________

Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.

Dated: _________________

______________________________
Optionee
<PAGE>

SUBSEQUENT OPTION
MICROTUNE, INC.

DIRECTOR OPTION AGREEMENT

Microtune, Inc., (the "Company"), has granted to ___________________ (the
"Optionee") an option to purchase a total of 5,000 shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of the
Company's 2000 Director Option Plan (the "Plan") adopted by the Company which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.

1. Nature of the Option. This Option is a nonstatutory option and is not
--------------------
intended to qualify for any special tax benefits to the Optionee.

2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.

3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:

(i) Right to Exercise.
-----------------

(a) This Option shall become exercisable with respect to 50%
of the Optioned Stock on the anniversary of its date of grant; provided,
however, that in no event shall any Option be exercisable prior to the date the
stockholders of the Company approve the Plan.

(b) This Option may not be exercised for a fraction of a
share.

(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.

4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:

(i) cash;

(ii) check; or

(iii) surrender of other Shares, provided Shares acquired from the
Company, (x) have been owned by the Optionee for more than six (6) months on the
date of surrender, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised; or

(iv) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan.

constitute a violation of any applicable federal or state securities or other
law or regulations, or if such issuance would not comply with the requirements
of any stock exchange upon which the Shares may then be listed. As a condition
to the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.

DATE OF GRANT: ______________

MICROTUNE, INC.,

A Delaware corporation

By:________________________

Dated: _________________

______________________________
Optionee

<PAGE>

EXHIBIT 10.5
MICROTUNE, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Microtune, Inc.

1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with 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 Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. Definitions.
-----------

(a) "Board" shall mean the Board of Directors of the Company or
-----
any committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.

(b) "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.

(d) "Company" shall mean Microtune, Inc. and any Designated
-------
Subsidiary of the Company.

(e) "Compensation" shall mean all base straight time gross
------------
earnings and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.

(f) "Designated Subsidiary" shall mean any Subsidiary that has
---------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

(g) "Employee" shall mean any individual who is an Employee of
--------
the Company for tax purposes whose customary employment with the Company is at
least twenty (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 by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.

(h) "Enrollment Date" shall mean the first Trading Day of each
---------------
Offering Period.

(i) "Exercise Date" shall mean the first Trading Day on or after
-------------
May 1 and November 1 of each year.
<PAGE>

(j) "Fair Market Value" shall mean, 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 on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;

(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;

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

(iv) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").

(k) "Offering Periods" shall mean the periods of approximately
----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective and ending on the last Trading Day on or before April 30,
2002. The duration and timing of Offering Periods may be changed pursuant to
Section 4 of this Plan.

(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
----

(m) "Purchase Period" shall mean the approximately six 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 Enrollment Date and end with the next Exercise Date.

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

(o) "Reserves" shall mean the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
<PAGE>

(p) "Subsidiary" shall mean a corporation, domestic or foreign,
----------
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

(q) "Trading Day" shall mean a day on which national stock
-----------
exchanges and the Nasdaq System are open for trading.

3. Eligibility.
-----------

(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.

(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such 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 Twenty-Five Thousand Dollars ($25,000) 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 consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 of each year, or on such other date
as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
April 30, 2002. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.

5. Participation.
-------------

(a) 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 payroll office prior
---------
to the applicable Enrollment Date.

(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
<PAGE>

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 an amount not exceeding 15% of the Compensation
which he or she receives on each pay day during the Offering Period; provided,
however, that should a pay day 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.

(b) 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 increase or decrease 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. The Board may, in its discretion, limit the nature and/or number
of participation rate changes during any Offering Period. The change in rate
shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.

(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
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 Employee.

7. Grant of Option. On the Enrollment 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 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 Employee be permitted to purchase during each Purchase Period more than 5,000
shares of the Company's Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase shall be
<PAGE>

subject to the limitations set forth in Sections 3(b) and 12 hereof. The Board
may, for future Offering Periods, increase or decrease, in its absolute
discretion, the maximum number of shares of the Company's Common Stock an
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 monies 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 Board 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 Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board 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
Enrollment 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 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 Enrollment 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 Enrollment 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 Enrollment Date.

9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

10. Withdrawal.
----------

(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the
---------
<PAGE>

participant's payroll deductions credited to his or her account shall be paid to
such participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period shall be automatically terminated,
and no further payroll deductions for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.

(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 or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.

11. Termination of Employment.
-------------------------

Upon a participant's ceasing to be an Employee, for any reason,
he or she shall be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.

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

13. Stock.
-----

(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 400,000 shares plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2001, equal to the lesser of (i) 400,000
shares, (ii) 2% of the outstanding shares on such date or (iii) an amount
determined by the Board. Notwithstanding the preceding sentence, unless
otherwise approved by the Board, in no event shall the number of shares
available for issuance under this Plan be increased as set forth in the
preceding sentence if such increase in addition to any proposed increases in the
number of shares available under all other employee and director stock plans
(including without limitation, the 2000 Director Stock Option Plan and the 2000
Stock Plan) will result in the total number of shares available under all
employee and director stock plans equaling or exceeding 30% of the outstanding
shares of the Company on the first day of the respective fiscal year.

(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.

14. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee 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 Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

15. Designation of Beneficiary.
--------------------------
<PAGE>

(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, 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 shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash 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 shares and/or cash 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 shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.

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.

18. Reports. Individual accounts shall be maintained for each
-------
participant in the Plan. Statements of account shall be given to participating
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 Asset Sale.
- --------------------

(a) Changes in Capitalization. Subject to any required action
-------------------------
by the shareholders of the Company, the Reserves, the maximum number of shares
each participant may purchase each Purchase Period (pursuant to Section 7), the
number of shares that may be added annually to the shares reserved under the
Plan (pursuant to Section 13(a)(i)), 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 increase or decrease 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
<PAGE>

deemed to have been "effected without receipt of consideration." Such adjustment
shall be made by the Board, 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) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(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.

(c) Merger or Asset Sale. In the event of a proposed sale of
--------------------
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, 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 (the "New Exercise Date") and any Offering Periods then in progress shall
end on the New Exercise Date. The New Exercise Date shall be before the date of
the Company's proposed sale or merger. The Board shall notify each participant
in writing, at least ten (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 Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 19 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board 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
Board (or its committee) 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
<PAGE>

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 Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.

(c) In the event the Board 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) altering 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.

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 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 for a term of ten (10)
years unless sooner 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
<PAGE>

on any Exercise Date in an Offering Period is lower than the Fair Market Value
of the Common Stock on the Enrollment 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.
<PAGE>

EXHIBIT A
---------

MICROTUNE, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date:___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. ____________________ hereby elects to participate in the Microtune, Inc.
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (from 0 to 15%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note
that no fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.

4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to shareholder approval of the Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only).

6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time such
shares were purchased by me over the price which I paid for the shares. I
-
hereby agree to notify the Company in writing within 30 days after the date
---------------------------------------------------------------------------
of any disposition of my shares and I will make adequate provision for
----------------------------------------------------------------------
Federal, state or other tax withholding obligations, if any, which arise
------------------------------------------------------------------------
upon the
--------
<PAGE>

disposition of the Common Stock. The Company may, but will not be
-------------------------------
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to
the extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 15% of the fair market
value of the shares on the first day of the Offering Period. The remainder
of the gain, if any, recognized on such disposition will be taxed as
capital gain.

7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.

8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:

NAME: (Please print)_____________________________________________________

(First) (Middle) (Last)

_________________________ _______________________________________________
Relationship
_______________________________________________
(Address)

-2-
<PAGE>

Employee's Social

Security Number: _____________________________________________

Employee's Address: _____________________________________________

_____________________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:___________________ _____________________________________________
Signature of Employee

_____________________________________________
Spouse's Signature (If beneficiary other than
spouse)

-3-
<PAGE>

EXHIBIT B
---------

MICROTUNE, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the Microtune, Inc.
Employee Stock Purchase Plan which began on ____________, ______ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.

Name and Address of Participant:

________________________________

Signature:

________________________________

Date:____________________________

<PAGE>

EXHIBIT 10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of March 23, 2000
(the "Effective Date") by and between MicroTune, Inc., a Texas corporation (the
"Company"), and Douglas J. Bartek ("Employee").

The parties hereby agree as follows:

1. Employment.
----------

(a) As of the Effective Date, Employee shall serve as the Chief
Executive Officer of the Company. Employee agrees to perform such reasonable
responsibilities and duties as may be required of him by the Board of Directors
of the Company (the "Board") in such capacity. Employee shall report directly to
the Board. In addition, during the Term (as defined below), Employee shall be
elected to the position of Chairman of the Board. Employee agrees not to
terminate the Term prior to the third (3rd) anniversary of the Effective Date,
except for Certain Reasons (as defined below).

(b) The Board may terminate the Term at any time, by giving Employee
thirty (30) days' advance notice in writing. However, if the Board terminates
the Term without Cause (as defined below) within five (5) years after the
Effective Date, the Company shall pay Employee severance benefits as set forth
in Section 6. Any termination of employment by the Company or by Employee for
any reason whatsoever during the term of this Agreement shall be communicated by
written notice of termination to the other party hereto ("Notice of
Termination").

(c) In the event of a Change of Control (as defined below) of the
Company that results in termination of the Term, the Company shall pay Employee
severance benefits as set forth in Section 7.

2. Duties and Scope of Employment.
------------------------------

(a) Positions and Duties. Employee will continue to serve as Chief
--------------------
Executive Officer of the Company while employed hereunder. Employee will render
such business and professional services in the performance of his duties,
consistent with Employee's position within the Company, as shall reasonably be
assigned to him by the Board.

(b) Obligations. During the Term, Employee will perform his duties
-----------
faithfully and to the best of his ability and will devote his full business
efforts and time to the Company.

(c) Term. The term of the Employee's employment under this Agreement
----
shall commence as of the Effective Date and shall continue for a period of three
(3) years from the date hereof (the "Initial Term"). The Initial Term hereof
will be automatically renewed for additional
<PAGE>

terms (each a "Renewal Term," and, together, with the Initial Term, collectively
the "Term") of one (1) year unless either party hereto provides the other party
hereto written notice of its election not to renew this Agreement thirty (30)
days prior to the expiration of the Initial Term, or, if applicable, thirty (30)
days prior to the expiration of any Renewal Term.

3. Compensation.
------------

(a) Employee's initial base salary shall be paid at a rate of
$150,000 per year. Employee's base salary will be reviewed annually by the
compensation committee of the Board, or by the Board if at such time there is no
compensation committee.

(b) During the Term, Employee will be entitled to participate in the
employee benefit plans currently and hereafter maintained by the Company of
general applicability to other senior executives of the Company, including,
without limitation, the Company's group medical, dental, vision, disability,
dependent care, life insurance, flexible-spending account and 401(k) plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

(c) The Company will reimburse Employee for reasonable travel,
entertainment or other expenses incurred by Employee in the furtherance of or in
connection with the performance of Employee's duties hereunder, in accordance
with the Company's expense reimbursement policy as in effect from time to time.

4. Covenant Not to Compete or Solicit.
----------------------------------

(a) Non-Competition. Employee agrees that if the Company terminates
---------------
his employment for Cause or Employee terminates his employment with the Company
other than for Certain Reasons, then for three (3) years from the Date of
Termination he will not directly or indirectly engage in (whether as an
employee, consultant, proprietor, partner, director or otherwise), or have any
ownership interest in, or participate in the financing, operation, management or
control of, any person, firm, corporation or business that engages in or (to
Employee's knowledge, after due inquiry) intends to engage in a Restricted
Business (as defined below).

Ownership of (i) no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation, or (ii) any stock presently owned
by Employee, shall not constitute a violation of this provision.

(b) Non-Solicitation. For a period of three (3) years from the Date
----------------
of Termination, Employee shall not:

(i) solicit, encourage, or take any other action which is
intended to induce any other employee of the Company to terminate his employment
with the Company, or

(ii) interfere in any manner with the contractual or employment
relationship between the Company and any such employee of the Company.
<PAGE>

The foregoing shall not prohibit any entity with which the Employee
may be affiliated from hiring a former employee of the Company.

(c) Worldwide. The parties acknowledge that the market for radio
---------
frequency tuner products is worldwide, and that, in this market, products from
any nation compete with products from all other nations. Accordingly, in order
to secure to the Company all possible benefits, the parties agree that the
provisions of this Section 4 shall apply to each of the states and counties of
the United States, and to each nation worldwide.

(d) Severability. The parties intend that the covenants contained
------------
in the preceding paragraphs shall be construed as a series of separate
covenants, one for each state of the Union, and each nation. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in proceeding paragraphs. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants (or
any part thereof) deemed included in said paragraphs, then such unenforceable
covenant (or such part) shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 4 should ever be deemed to exceed the time or
geographic limitations, or the scope of this covenant, permitted by applicable
law, then such provisions shall be reformed to the maximum time or geographic
limitations, as the case may be, permitted by applicable laws.

5. Certain Definitions. For the purposes of this Agreement, the
-------------------
following terms have the meanings set forth below.

(a) "Base Compensation" means Employee's rate of annual salary, as in
effect for the twelve-month period ending on the date six months prior to any
Change of Control or on the Date of Termination, whichever is higher. Base
Compensation does not include elements such as bonuses, reimbursement of
interest paid on guaranteed loans, auto allowances, nor any income from equity
based compensation, such as may result from the exercise of stock options or
stock appreciation rights, or the receipt of restricted stock awards or the
lapse of the restrictions on such awards. If Employee is employed by the Company
and/or any of its subsidiaries for less than one full calendar year immediately
preceding the Change of Control, Employee's "highest annual bonus" will be
determined by annualizing the bonus earned during employee's period of
employment.

(b) "Cause", for purposes of this Agreement, means (i) if Employee is
determined by a court of law or pursuant to arbitration to have committed a
willful act of embezzlement, fraud or dishonesty which resulted in material
loss, material damage or material injury to the Company, (ii) Employee's
conviction of, or plea of nolo contendere to, a felony, or (iii) Employee's
continued substantial violations of his employment duties after Employee has
received a written demand for performance from the Company which specifically
sets forth the factual basis the Company's belief that Employee has not
substantially performed his duties. In such an event, at the election of the
Company, Employee shall have no rights under this Agreement other than payment
of compensation and reimbursement of business expenses pursuant to this
Agreement through the date of termination. Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated for Cause without (i)
reasonable notice to Employee setting forth the reasons for the Company's
intention to
<PAGE>

terminate for Cause, and (ii) an opportunity for Employee, together with
counsel, if any, to be heard before the Board.

(c) "Certain Reasons" means (A) a reduction in cash compensation
(exclusive of bonuses) or a material reduction in benefits, except as part of a
salary or benefit reduction program by the Company that is applicable generally
to all executives, (B) a material demotion in responsibilities or duties, (C)
relocation of Employee's workplace to any place more than fifty miles from
Dallas, Texas, without Employee's consent or (D) a material breach by the
Company of this Agreement or any other material agreement between the Company
and Employee.

(d) "Change of Control" means a change of control of a nature which
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or in response to any other form or report to the Securities
and Exchange Commission or any stock exchange or the Nasdaq National Market on
which the Company's shares are listed which requires the reporting of a change
of control. In addition, a Change of Control shall be deemed to have occurred if
any person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing more than 35% of the combined voting power of the
Company's then outstanding securities.

Notwithstanding the foregoing definition, "Change of Control"
for purposes of this Agreement, shall exclude the acquisition of securities
representing more than 35% of the combined voting power of the Company by any of
its wholly owned subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan now or hereafter
established by the Company. As used herein, the term "beneficial owner" shall
have the same meaning as under Section 13(d) of the Exchange Act, and related
case law.

(e) "Constructive Termination" means the resignation by Employee due
to any diminution or adverse change in the circumstances of employment
including, without limitation, reporting relationships, job description, duties,
responsibilities, compensation, perquisites, office or location of employment.
The Board will determine in good faith whether a Constructive Termination has
occurred after (i) Employee has provided the Board reasonable notice setting
forth the reasons as to why he believes there has been a Constructive
Termination, and (ii) Employee, together with counsel, if any, is given an
opportunity to be heard before the Board.

(f) "Date of Termination" shall mean a date which is (1) specified in
the Notice of Termination if the Term is terminated by Employee; or (2) thirty
(30) days from the date on which a Notice of Termination is delivered to
Employee, if the Term is terminated by the Company.

(g) "Disability" means that Employee is unable by reason of accident
or illness (including mental illness) to perform the material duties of his
regular position with the Company after a physician acceptable to both the
Company and Employee (which acceptance will not be unreasonably withheld)
determines that such inability is certain or likely to continue for a period of
more than ninety (90) days. Employee will cooperate fully with the physician. If
the physician determines that Employee is disabled, the physician will certify
to the Company that Employee is
<PAGE>

disabled and the physician's determination in that respect will be conclusive.
The Company will pay the physician's fee.

(h) "Restricted Business" means any business that is engaged in or
(to Employee's knowledge, after due inquiry) preparing to engage in the design,
manufacture, marketing, sale or distribution of semiconductors or modules (or
components thereof) which provide the function of a radio frequency tuner or
compete with radio frequency products under development by the Company at the
time of this Agreement or during Employee's tenure as an executive of the
Company.

6. Severance Benefits for Termination resulting from other than a Change
---------------------------------------------------------------------
of Control.
- ----------

(a) Involuntary Termination. If Employee's employment is terminated
-----------------------
by the Board other than for Cause, or if Employee terminates his employment for
Certain Reasons, then (i) Employee shall be paid compensation at a rate equal to
his then current Base Compensation and the highest annual bonus paid to Employee
during the prior three (3) years until one year following Date of Termination as
severance benefits, (ii) options granted to Employee under the Company's
employee stock plans, if any, shall immediately vest and become exercisable as
to the number of shares which would have otherwise vested had Employee continued
to be employed for twelve (12) months following the Date of Termination (but in
no event may the shares which so vest exceed the number of shares subject to
such options), (iii) the Company will continue to provide Employee coverage
under a plan providing whatever medical, dental, disability, life or insurance
benefits were in effect at the time of such termination for two (2) years
following the Date of Termination and (iv) any repurchase rights held by the
Company on options exercised or stock owned by the Employee will be canceled on
the Date of Termination.

(b) Voluntary Termination; Termination for Cause. No severance
--------------------------------------------
benefits shall be paid if Employee's employment is terminated by the Company for
Cause or by Employee without Certain Reasons.

7. Termination of Employment Following Change of Control. If within two
-----------------------------------------------------
(2) years following a Change of Control, Employee's employment with the Company
terminates as the result of a Constructive Termination or is terminated by the
Company for other than Cause, then the Company shall provide to Employee as soon
as practicable, but not more than ten (10) business days following the Date of
Termination, each of the following benefits:

(a) Severance Benefits. The Company shall pay Employee a lump sum
------------------
severance benefit which shall equal two (2) times the sum of (i) Employee Base
Compensation, plus (ii) the highest annual bonus paid to Employee during the
last three (3) full calendar years immediately prior to the Change of Control.

(b) Equity Compensation. All unvested stock options, stock
-------------------
appreciation rights and restricted stock awards held by Employee on the Date of
Termination shall be deemed fully vested and exercisable on such Date of
Termination, provided that if any option, right or award would, as a result of
such accelerated exercisability no longer qualify for exemption under section 16
of the Exchange Act, then such option, right or award shall be fully vested but
shall not become exercisable until the earliest date on which it could become
exercisable and also qualify for exemption from
<PAGE>

section 16 of the Exchange Act. All vested options held by Employee, including
those deemed fully vested as of the Date of Termination, shall remain
exercisable for a period of one (1) year from the Date of Termination; provided,
however, in no event shall any option remain exercisable beyond the maximum
period allowed therefor in the stock option plan under which it was granted. Any
repurchase rights held by the Company on stock owned or options exercised by the
Employee shall be canceled on the Date of Termination. This Agreement shall
serve as an amendment to all of Employee's outstanding stock options, restricted
stock awards, repurchase rights, and stock appreciation rights as of the Date of
Termination;

(c) Accrued Bonus. The Company shall pay Employee an amount equal
-------------
to the pro rata amount of the annual bonus accrued under the Company's executive
officer bonus plan, if any, for the portion of the year prior to the Date of
Termination.

(d) Other Benefits. The Company shall provide to Employee for a
--------------
period of twenty-four (24) months following the Date of Termination, coverage
under a plan providing health and welfare benefits, at least comparable to those
benefits in effect on the Date of Termination, including but not limited to
medical, dental, vision, disability, dependent care and life insurance coverage.
At the Company's election, health benefits may be provided by reimbursing
Employee for the cost of converting a group policy to individual coverage, or
for the cost of extended COBRA coverage. The Company shall also pay to Employee
an amount calculated to pay any income taxes due as a result of the payment by
the Company on Employee's behalf for such health benefits. Such tax payment
shall be calculated to place Employee in the same after-tax position as if no
such income taxes had been imposed.

(e) Other Benefits Payable. The benefits described in subsections
----------------------
(a) through (d) above shall be payable in addition to, and not in lieu of, all
other accrued or vested or earned but deferred compensation, rights, options or
other benefits which may be owed to Employee following termination of
employment, irrespective of whether Employee's termination was preceded by a
Change of Control, including, without limitation, accrued vacation or sick pay,
amounts or benefits payable under any employment agreement or any bonus or other
compensation plans, stock option plan, stock ownership plan, stock purchase
plan, life insurance plan, health plan, disability plan or similar plan.

(f) Indemnification. For at least six years following a Change of
---------------
Control, Employee shall continue to be indemnified under the Company's Articles
of Incorporation and Bylaws, each as may be amended from time to time, at least
to the same extent as prior to the Change of Control, and Employee shall be
covered by the directors' and officers' liability insurance, the fiduciary
liability insurance and the professional liability insurance policies that are
the same as, or provide coverage at least equivalent to, those the Company
carried prior to the Change of Control.

8. Payment Obligations Absolute. The Company's obligation to pay the
----------------------------
benefits described herein shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any of its
subsidiaries may have against Employee or anyone else. In the event of any
dispute concerning Employee's right to payment, the Company shall nevertheless
continue to pay to Employee the Base Compensation until the dispute is resolved.
Any such amounts paid following
<PAGE>

Employee's termination of his employment shall be credited against the amounts
otherwise due to Employee under this Agreement or, in the event the Company
prevails, shall be repaid to the Company.

9. Legal Fees. The Company shall also pay forthwith upon written demand
----------
from Employee all legal fees and expenses reasonably incurred by Employee in
seeking to obtain or enforce any right or benefit provided by this Agreement. In
the event Employee does not prevail in any ensuing arbitration or litigation,
the Company shall absorb its own costs, expenses, and attorney's fees, and
Employee shall reimburse the Company for one-half of Employee's costs, expenses,
and attorney's fees.

10. Successors; Binding Agreement. The Company shall require any
-----------------------------
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Employee to compensation from the Company in
the same amount and on the same terms as Employee would be entitled hereunder if
the Company had terminated Employee's employment without Cause after a Change of
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
defined herein and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.

11. Miscellaneous.
-------------

(a) Notices. Any notice, report or other communication
-------
required or permitted to be given hereunder shall be in writing to both parties
and shall be deemed given on the date of delivery, if delivered, or three days
after mailing, if mailed first-class mail, postage prepaid, to the following
addresses:

(i) If to Employee, at the address set forth below
Employee's signature at the end hereof.

(ii) If to the Company:

Microtune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
Attention: Board of Directors, Compensation Committee

or to such other address as any party hereto may
designated by notice given as herein provided.
<PAGE>

(b) Governing Law. This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the State of Texas as
applied to agreements made and performed in Texas by residents of Texas.

(c) Amendments. This Agreement shall not be changed or
----------
modified in whole or in part except by an instrument in writing signed by each
party hereto.

(d) Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.

(e) Effect of Headings. The section headings herein are for
------------------
convenience only and shall not affect the construction or interpretation of
this Agreement.

12. Conflicting Terms. In the event that words or terms of this
-----------------
Employment Agreement conflict with the words or terms of any other agreement or
contract, including, without limitation, any stock plan, notice of grant, or
restricted stock purchase agreement or option agreement entered into in
connection with the employment of Employee by the Company, the interpretation of
this Agreement shall prevail.
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

MICROTUNE, INC.

By: Compensation Committee of the Board of
Directors

By: /s/ Harvey B. Cash
-----------------------------------
Harvey B. Cash

By: /s/ James H. Clardy
-----------------------------------
James H. Clardy

EMPLOYEE

/s/ Douglas J. Bartek
--------------------------------------
Douglas J. Bartek

5211 Spanish Oaks Dr.
--------------------------------------
(Print Address)

Frisco, TX 75034
--------------------------------------

972-712-5888
--------------------------------------
(Print Telephone Number)

<PAGE>

Exhibit 10.7

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of August 8, 1996 by and
between MicroTune, Inc. ("MicroTune"), a Texas corporation, and John P.
Norsworthy ("Employee").

The parties hereby agree as follows:

1. Employment
----------

(a) MicroTune agrees to continue the employment of Employee after the
formation of the company, and Employee agrees to perform such
reasonable responsibilities and duties as may be required of him in an
executive capacity. Employee will have the title of Founder and Chief
Technical Officer, will report to the President and CEO, and as long
as employed will be elected to the Board of Directors. Employee agrees
not to terminate Employee's employment for 3 years, except for
"Certain Reasons" (as defined below).

(b) The MicroTune Board may terminate Employee's employment at any time,
by giving Employee thirty (30) days' advance notice in writing.
However, if the MicroTune Board terminates Employee's employment
without Cause (as defined below) within five years after the date of
the formation of the company, MicroTune shall pay Employee severance
benefits as set forth in Section 5.

(c) For a Change in Control of the company that results in Termination of
Employee as defined in Section 6, MicroTune shall pay Employee
severance benefits as set forth in Section 6.

2. Compensation
------------

(a) Employee's initial base annual salary after the formation of the
company shall be $150,000 per annum. Employee's base salary will be
reviewed annually by the compensation committee of the Board of
Directors.

(b) Employee will participate in an Executive Variable Compensation
Program, to be determined by the MicroTune Board of Directors, at the
highest category available of those employees reporting to the
President and CEO.

3. Covenant Not to Compete or Solicit
----------------------------------

(a) Non-Competition. Employee agrees that until the earlier to occur of
---------------
(i) five (5) years from the formation of the company, (ii) the
termination by MicroTune of Employee's employment other than for
Cause, or (iii) the resignation by Employee of his employment with
MicroTune for Certain Reasons, he will not directly or indirectly
<PAGE>

engage in (whether as an employee, consultant, proprietor, partner,
director or otherwise), or have any ownership interest in, or
participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in or (to
Employee's knowledge, after due inquiry) intends to engage in a
"Restricted Business" (as defined below).

Ownership of (i) no more than one percent (1%) of the outstanding voting
stock of a publicly traded corporation, or (ii) any stock presently owned
by Employee, shall not constitute a violation of this provision.

(b) Non-Solicitation. For a period of five (5) years from the formation of
----------------
the company, Employee shall not

(i) solicit, encourage, or take any other action which is intended to
induce any other employee of MicroTune to terminate his
employment with MicroTune, or

(ii) interfere in any manner with the contractual or employment
relationship between MicroTune and any such employee of
MicroTune.

The foregoing shall not prohibit any entity with which the Employee may be
affiliated from hiring a former employee of MicroTune.

(c) World-wide. The parties acknowledge that the market for television
----------
tuner products is world-wide, and that, in this market, products from
any nation compete with products from all other nations. Accordingly,
in order to secure to MicroTune all possible benefits, the parties
agree that the provisions of this Section 3 shall apply to each of the
states and counties of the United States, and to each nation
worldwide.

(d) Severability. The parties intend that the covenants contained in the
------------
preceding paragraphs shall be construed as a series of separate
covenants, one for each state of the Union, and each nation. Except
for geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenant contained in proceeding paragraphs.
If, in any judicial proceeding, a court shall refuse to enforce any of
the separate covenants (or any part thereof) deemed included in said
paragraphs, then such unenforceable covenant (or such part) shall be
deemed eliminated from this Agreement for the purpose of those
proceedings to the extent necessary to permit the remaining separate
covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 3 should ever be deemed to exceed the time
or geographic limitations, or the scope of this covenant, permitted by
applicable law, then such provisions shall be reformed to the maximum
time or geographic limitations, as the case may be, permitted by
applicable laws.
<PAGE>

4. Certain Definitions. For the purposes of this Agreement, the following
-------------------
terms have the meanings set forth below.

(a) "Cause". For the purposes of this Agreement, MicroTune shall have
-----
"Cause" to terminate employment if employee is determined by a court
of law or pursuant to arbitration to have committed a willful act of
embezzlement, fraud or dishonesty which resulted in material loss,
material damage or material injury to MicroTune. In such an event, at
the election of MicroTune, employee shall have no rights under this
Agreement other than payment of compensation and reimbursement of
business expenses through the date of termination.

(b) "Certain Reasons" shall mean (A) a reduction in cash compensation
---------------
(exclusive of bonuses) or a material reduction in benefits, except as
part of a salary or benefit reduction program by MicroTune that is
applicable generally to all executives, (B) a material demotion in
responsibilities or duties, (C)relocation of Employee's workplace to
any place more than fifty miles from Dallas, Texas or (D) a material
breach by MicroTune of this agreement or any other material agreement
between MicroTune and Employee..

(c) "Disability" means that Employee is unable by reason of accident or
----------
illness (including mental illness) to perform the material duties of
his regular position with MicroTune, and is not expected to recover
from such disability within a reasonable period of time. If at any
time Employee or MicroTune claims that Employee is disabled, a
physician acceptable to both MicroTune and Employee (which acceptance
will not be unreasonably withheld) will be appointed by MicroTune to
examine Employee. Employee will cooperate fully with the physician. If
the physician determines that Employee is disabled, the physician will
certify to MicroTune that Employee is disabled. The physician's
determination will be conclusive. MicroTune will pay the physician's
fee.

(d) "Restricted Business" shall mean any business that is engaged in or
-------------------
(to Employee's knowledge, after due inquiry) preparing to engage in
the design, manufacture, marketing, sale or distribution of
semiconductors which provide the function of a television tuner or
compete with Radio Frequency products under development by MicroTune
at the time of this Agreement or during Employee's tenure as an
executive of MicroTune.

(e) "Change of Control". For purposes of this Agreement, a "Change of
-----------------
Control" shall mean a change of control of a nature which would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended ("Exchange Act") or in response to any other form or report
to the Securities and Exchange Commission or any stock exchange on
which the Company's shares are listed which requires the reporting of
a change of control. In addition, a Change of Control shall be deemed
to have occurred if any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of
<PAGE>

MicroTune representing more than 35% of the combined voting power of
MicroTune's then outstanding securities.

Notwithstanding the foregoing definition, "Change of Control" for
purposes of this Agreement, shall exclude the acquisition of
securities representing more than 35% of the combined voting power of
MicroTune by any of its wholly owned subsidiaries, or any trustee or
other fiduciary holding securities of MicroTune under an employee
benefit plan now or hereafter established by MicroTune. As used
herein, the term "beneficial owner" shall have the same meaning as
under Section 13(d) of the Exchange Act, and related case law.

(f) "Base Compensation" means Employee's rate of annual salary, as in
-----------------
effect for the twelve-month period ending on the date six months prior
to any Change of Control or on the Date of Termination, whichever is
higher. Base Compensation does not include elements such as bonuses,
reimbursement of interest paid on guaranteed loans, auto allowances,
nor any income from equity based compensation, such as may result from
the exercise of stock options or stock appreciation rights, or the
receipt of restricted stock awards or the lapse of the restrictions on
such awards. If Employee is employed by MicroTune and/or any of its
subsidiaries for less than one full calendar year immediately
preceding the Change of Control, Employee's "highest annual bonus"
will be determined by annualizing the bonus earned during employee's
period of employment.

(g) "Constructive Termination". For purposes of this Agreement,
------------------------
"Constructive Termination" shall mean a resignation by the Employee
due to any diminution or adverse change in the circumstances of
employment as determined in good faith by Employee, including, without
limitation, reporting relationships, job description, duties,
responsibilities, compensation, perquisites, office or location of
employment.

(h) Notice of Termination. Any termination of employment by MicroTune or
---------------------
by Employee for any reason whatsoever during the term of this
Agreement shall be communicated by written notice of termination to
the other party hereto ("Notice of Termination").

(i) Date of Termination. "Date of Termination" shall mean a date which is
-------------------
(1) within two years after a Change of Control and is the date
specified in the Notice of Termination, if employment is terminated by
Employee during the term hereof; or (2) the date on which a Notice of
Termination is given, if employment is terminated for any other
reason.

5. Severance Benefits for Termination resulting from other than a Change of
------------------------------------------------------------------------
Control. If, during the first three years after the formation of the
-------
company, Employee's employment is terminated by the MicroTune Board other
than for Cause, or if Employee terminates his employment for Certain
Reasons, then Employee shall be paid his then current Base Compensation and
the highest annual bonus paid to Employee during the prior 3 years for each
of the two years following Date of Termination as severance benefits. If,
during the
<PAGE>

fourth or fifth year after the formation of the company, Employee's
employment is terminated by MicroTune other than for Cause, or if Employee
terminates his employment for Certain Reasons, then Employee shall be paid
his then current Base Compensation and the highest annual bonus paid to
Employee during the prior 3 years until one year following Date of
Termination as severance benefits. During the salary continuation period,
options granted to Employee under the MicroTune Stock Option Plan, if any,
will continue to vest, and MicroTune will continue to provide whatever
medical, dental, disability, life or insurance benefits were in effect at
the time of termination. Any repurchase rights held by MicroTune on options
exercised or stock owned by the Employee will be canceled on the Date of
Termination. No severance benefits shall be paid if Employee's employment
is terminated by MicroTune for Cause or by Employee without Certain
Reasons.

6. Termination of Employment Following Change of Control. If any of the events
-----------------------------------------------------
described in Section 4(e) constituting a Change of Control shall have
occurred, employee shall be entitled to the benefits provided in Section 6
hereof upon the actual termination by MicroTune or "Constructive
Termination" of employment within two years after such Change of Control,
unless such termination is by MicroTune for Cause.

MicroTune shall provide to employee as soon as practicable, but not more
than ten business days following the Date of Termination subsequent to a
Change of Control of MicroTune, each of the following benefits:

(a) Severance Benefits. MicroTune shall pay Employee a lump sum severance
------------------
benefit which shall equal two times the sum of (A) Employee Base
Compensation, plus (B) the highest annual bonus paid to Employee
during the last three full calendar years immediately prior to the
Change of Control.

(b) Equity Compensation. All unvested stock options, stock appreciation
-------------------
rights and restricted stock awards held by Employee on the Date of
Termination shall be deemed fully vested and exercisable on such Date
of Termination, provided, that if any option, right or award would, as
a result of such early exercisability no longer qualify for exemption
under Section 16 of the Exchange Act, then such option, right or award
shall be fully vested but shall not become exercisable until the
earliest date on which it could become exercisable and also qualify
for exemption from Section 16 of the Exchange Act. All vested options
held by Employee, including those deemed fully vested as of the Date
of Termination shall become automatically exercisable for a period of
one (1) year from the Date of Termination; provided, however, in no
event shall any option remain exercisable beyond the maximum period
allowed therefor in the stock option plan under which it was granted.
Any repurchase rights held by MicroTune on stock owned or options
exercised by the Employee will be canceled on the Date of Termination.
This agreement shall serve as an amendment to all of Employee's
outstanding stock options, restricted stock awards, repurchase rights,
and stock appreciation rights as of the Date of Termination.
<PAGE>

(c) Accrued Bonus. MicroTune shall pay Employee an amount equal to the pro
-------------
rata amount of the annual bonus accrued under MicroTune's Executive
Bonus Plan for the portion of the year prior to the Date of
Termination.

(d) Other Benefits. MicroTune shall provide to Employee for a period of
--------------
twelve (12) months following the Date of Termination, health and
welfare benefits, at least comparable to those benefits in effect on
the Date of Termination, including but not limited to medical, dental,
disability, dependent care, and life insurance coverage. At
MicroTune's election, health benefits may be provided by reimbursing
Employee for the cost of converting a group policy to individual
coverage, or for the cost of extended COBRA coverage. MicroTune shall
also pay to Employee an amount calculated to pay any income taxes due
as a result of the payment by MicroTune on Employee's behalf for such
health benefits. Such tax payment shall be calculated to place
Employee in the same after-tax position as if no such income taxes had
been imposed.

(e) Other Benefits Payable. The benefits described in subsections (a)
through (d) above shall be payable in addition to, and not in lieu of,
all other accrued or vested or earned but deferred compensation,
rights, options or other benefits which may be owed to Employee
following termination of employment, irrespective of whether
Employee's termination was preceded by a Change of Control, including
but not limited to accrued vacation or sick pay, amounts or benefits
payable under any employment agreement or any bonus or other
compensation plans, stock option plan, stock ownership plan, stock
purchase plan, life insurance plan, health plan, disability plan or
similar plan.

(f) Indemnification. For at least six years following a Change of Control,
---------------
Employee shall continue to be indemnified under MicroTune's
Certificate of Incorporation and Bylaws at least to the same extent as
prior to the Change of Control, and Employee shall be covered by the
directors' and officers' liability insurance, the fiduciary liability
insurance and the professional liability insurance policies that are
the same as, or provide coverage at least equivalent to, those
MicroTune carried prior to the Change of Control.

7. Payment Obligations Absolute. MicroTune's obligation to pay the benefits
----------------------------
described herein shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which MicroTune or any of
its subsidiaries may have against Employee or anyone else. In the event of
any dispute concerning Employee's right to payment, MicroTune shall
nevertheless continue to pay to Employee the Base Compensation until the
dispute is resolved. Any such amounts paid following Employee's termination
of employment shall be credited against the amounts otherwise due to
Employee under this agreement or, in the event MicroTune prevails, shall be
repaid to MicroTune.

8. Legal Fees. MicroTune shall also pay forthwith upon written demand from
----------
Employee all legal fees and expenses reasonably incurred by Employee in
seeking to obtain or enforce any
<PAGE>

right or benefit provided by this Agreement. In the event Employee does not
prevail in any ensuing arbitration or litigation, MicroTune shall absorb
its own costs, expenses, and attorney's fees, and Employee shall reimburse
MicroTune for one-half of Employee's costs, expenses, and attorney's fees.

9. Successors; Binding Agreement.
-----------------------------

MicroTune will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of MicroTune, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
MicroTune would be required to perform it if no such succession had taken
place. Failure of MicroTune to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from MicroTune in the same
amount and on the same terms as Employee would be entitled hereunder if
MicroTune had terminated Employee's employment without Cause after a Change
of Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the
Date of Termination. As used in this Agreement, "MicroTune" shall mean
MicroTune as hereinabove defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for
in this Section or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.

10. Miscellaneous.
-------------

(a) Notices. Any notice, report or other communication required or
-------
permitted to be given hereunder shall be in writing to both parties
and shall be in writing to both parties and shall be deemed given on
the date of delivery, if delivered, or three days after mailing, if
mailed first-class mail, postage prepaid, to the following addresses:

(i) If to Employee, at the address set forth below Employee's
signature at the end hereof.

(ii) If to MicroTune:

MicroTune
5068 West Plano Parkway, 3/rd/ Floor
Plano, Texas 75093
Attention: Board of Directors, Compensation Committee

or to such other address as any party hereto may designated by
notice given as herein provided.

(b) Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Texas as applied
to agreements made and performed in Texas by residents of Texas.
<PAGE>

(c) Amendments. This Agreement shall not be changed or modified in whole
----------
or in part except by an instrument in writing signed by each party.

(d) Attorneys' Fees. In the event of any legal action or proceeding to
---------------
enforce or interpret the provisions hereof, the provisions hereof, the
prevailing party shall be entitled to reasonable attorneys' fees,
whether or not the proceeding results in a final judgment.

(e) Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be an original, but all of which together shall
constitute one and the same agreement.

(f) Effect of Headings. The section headings herein are for convenience
------------------
only and shall not affect the construction or interpretation of this
Agreement.

11. Conflicting Terms. In the event that words or terms of this Employment
-----------------
Agreement conflict with the words or terms of any other agreement or
contract, including but not limited to the Stock Option Plan, Notice of
Grant, and Option Agreement, the interpretation of this Employment
Agreement shall prevail.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

MICROTUNE, INC.

By: /s/ Douglas J. Bartek
-----------------------------

EMPLOYEE

/s/ John P. Norsworthy
---------------------------------
John P. Norsworthy

8 White Rock Trail
---------------------------------
(Print Address)

Lucas, TX 75002
---------------------------------

214.930.8346
---------------------------------
(Print Telephone Number)

<PAGE>

Exhibit 10.8

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of August 1, 1998 by and between MicroTune,
Inc. ("MicroTune"), a Texas corporation, and James Fontaine ("Employee").

The parties hereby agree as follows:

1. Employment
----------

(a) MicroTune agrees to employ the Employee beginning August 1, 1998, and
Employee agrees to perform such reasonable responsibilities and duties
as may be required of him in an executive capacity. Employee will have
the title of Executive Vice President, Sales & Marketing.

(b) The MicroTune Board or CEO may terminate Employee's employment at any
time, by giving Employee thirty (30) days advance notice in writing.
However, if the MicroTune Board terminates Employee's employment
without Cause (as defined below) within 2 years after August 1, 1998,
MicroTune shall pay Employee severance benefits as set forth in
Section 5.

2. Compensation
------------

(a) Employee's initial base annual salary shall be $150,000 per annum.
Employee's base salary will be reviewed annually by the compensation
committee of the Board of Directors.

(b) Employee will participate in an Executive Variable Compensation
Program, to be determined by the MicroTune Board of Directors, once
that Program has been initiated.

3. Covenant Not to Compete or Solicit
----------------------------------

(a) Non-Competition. Employee agrees that until the earlier to occur of
---------------
(i) 12 months from termination, (ii) the termination by MicroTune of
Employee's employment other than for Cause, or (iii) the resignation
by Employee of his employment with MicroTune for Certain Reasons, he
will not directly or indirectly engage in (whether as an employee,
consultant, proprietor, partner, director or otherwise), or have any
ownership interest in, or participate in the financing, operation,
management or control of, any person, firm, corporation or business
that engages in or (to Employee's knowledge, after due inquiry)
intends to engage in a "Restricted Business" (as defined below).
<PAGE>

Ownership of (i) no more than one percent (1%) of the outstanding voting
stock of a publicly traded corporation, or (ii) any stock presently owned
by Employee, shall not constitute a violation of this provision.

(b) Non-Solicitation. For a period of two (2) years following termination
----------------
from the company, Employee shall not

(i) solicit, encourage, or take any other action which is intended to
induce any other employee of MicroTune to terminate his
employment with MicroTune, or

(ii) interfere in any manner with the contractual or employment
relationship between MicroTune and any such employee of
MicroTune.

The foregoing shall not prohibit any entity with which the Employee may be
affiliated from hiring a former employee of MicroTune.

4. Certain Definitions. For the purposes of this Agreement, the following
-------------------
terms have the meanings set forth below.

Agreement other than payment of compensation and reimbursement of
business expenses through the date of termination.

(e) "Constructive Termination". For purposes of this Agreement,
-------------------------
"Constructive Termination" shall mean a resignation by the Employee
due to any diminution or adverse change in the circumstances of
employment as determined in good faith by Employee, including, without
limitation, reporting relationships, job description, duties,
responsibilities, compensation, perquisites, office or location of
employment.

(f) Notice of Termination. Any termination of employment by MicroTune or
---------------------
by Employee for any reason whatsoever during the term of this
Agreement shall be communicated by written notice of termination to
the other party hereto ("Notice of Termination").

(g) Date of Termination. "Date of Termination" shall mean the date on
-------------------
which a Notice of Termination is given, if employment is terminated
for any other reason.

for Certain Reasons, then Employee shall be paid his then current monthly
salary times six (6 months severance). During the salary continuation
period, MicroTune will continue to provide whatever medical, dental,
disability, life or insurance benefits were in effect at the time of
termination. No severance benefits shall be paid if Employee's employment
is terminated by MicroTune for Cause or by Employee without Certain
Reasons.

6. Other Benefits. For purposes of vacation accrual, Employee will be
--------------
considered to have 3 years of employment at MicroTune on August 1, 1998.
Employee will be allowed to expense 2 local phone lines at his residence,
assuming the most cost-effective service available, for Internet/modem and
fax service.

7. Miscellaneous.
-------------

(a) Notices. Any notice, report or other communication required or
-------
permitted to be given hereunder shall be in writing to both parties
and shall be deemed given on the date of delivery, if delivered, or
three days after mailing, if mailed first-class mail, postage prepaid,
to the following addresses:

(i) If to Employee, at the address set forth below Employee's
signature at the end hereof.

(ii) If to MicroTune:

MicroTune
2540 East Plano Parkway, Suite 188
Plano, TX 75074
Attention: President & CEO

or to such other address as any party hereto may designated by
notice given as herein provided.

(c) Amendments. This Agreement shall not be changed or modified in whole
----------
or in part except by an instrument in writing signed by each party.

(e) Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be an original, but all of which together shall
constitute one and the same agreement.
<PAGE>

(f) Effect of Headings. The section headings herein are for convenience
------------------
only and shall not affect the construction or interpretation of this
Agreement.

8. Conflicting Terms. In the event that words or terms of this Employment
------------------
Agreement conflict with the words or terms of any other agreement or
contract, including but not limited to the Stock Option Plan, Notice of
Grant, and Option Agreement, the interpretation of this Employment
Agreement shall prevail.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

MICROTUNE, INC.

By: /s/ Douglas J. Bartek
---------------------
Douglas J. Bartek

EMPLOYEE

/s/ James Fontaine
--------------------------------
James Fontaine

6445 Brandon Ct.
--------------------------------
(Print Address)

Plano, TX 75093
--------------------------------

972-306-6445
--------------------------------
(Print Telephone Number)

<PAGE>

EXHIBIT 10.9

STANDARD COMMERCIAL LEASE

ARTICLE 1.00 BASIC LEASE TERMS

1.01 Parties. This Lease agreement ("Lease") is entered in to by and
between the following Lessor and Lessee:

JUPITER PARKWAY VILLAGE, LTD. ("Lessor")
--------------------------------------------------------------------------

MICROTUNE, INC., Texas corporation ("Lessee")
--------------------------------------------------------------------------

1.02 Leased Premises: In consideration of the rents, terms, provisions and
covenants of this Lease, Lessor hereby leases, lets and demises to the Lessee
the following described premises ("leased premises"):

14,439 (12,000) office (Approximate sq. ft.) 1127484 (Job. no.)
Jupiter Park Village (Name of building or project)
2540 East Plano Parkway, Suite 388 (Street Address/Suite Number)
Plano, Texas 75074 (City, State, and Zip Code)

1.03 Term. Subject to and upon the conditions set forth herein, the term
of this Lease shall commence on (September 1, 1998, the "commencement date")
[interlineated text] and shall terminate 60 months thereafter.

1.04 Base Rent and Security Deposit. Base rent is Months 1-36: Waived:
Months 37-60: $7,902.08 per month. Security Deposit is $12,032.50.

1.05 Addresses:
- --------------------------------------------------------------------------------
Lessor's Address: Lessee's Address:
- --------------------------------------------------------------------------------
c/o Bradford Companies 2540 East Plano Parkway, Suite 388
12801 North Central Expressway Plano, Texas 75074
Suite 1600
Dallas, Texas 75243
- -------------------------------------------------------------------------------

1.06 Permitted Use. General office, warehouse, assembly and testing of
semiconductor company.

ARTICLE 2.00 RENT

2.01 Base Rent. Lessee agrees to pay monthly as base rent during the term
of this Lease the sum of money set forth in Section 1.04 of this Lease, which
amount shall be payable to Lessor at the address shown above. [Interlineated
text]. One monthly installment of rent shall be due and payable on the date of
execution of this Lease by Lessee for the first month's rent and a like monthly
installment shall be due and payable on or before the first day of each calendar
month succeeding the
<PAGE>

commencement date or completion date during the term of this Lease; provided, if
the commencement date or the completion date should be a date other than the
first day of a calendar month, the monthly rental set forth above shall be
prorated to the end of that calendar month, and all succeeding installments of
rent shall be payable on or before the first day of each succeeding calendar
month during the term of this Lease. Lessee shall pay, as additional rent, all
other sums due under this Lease.

2.02 Operating Expenses. Lessee shall also pay as additional rent
Lessee's pro rata share of the operating expenses of Lessor for the building
and/or project of which the leased premises are a part. Lessor may invoice
Lessee monthly for Lessee's pro rata share of the estimated operating expenses
for each calendar year, which amount shall be adjusted each year based upon
anticipated operating expenses. Lessor may invoice Lessee monthly for Lessee's
pro rata share of the estimated operating expenses for each calendar year, which
amount shall be adjusted each year based upon anticipated operating expenses.
Within nine months following the close of each calendar year, Lessor shall
provide Lessee an accounting showing in reasonable detail all computations of
additional rent due under this section. In the event the accounting shows that
the total of the monthly payments made by Lessee exceeds the amount of
additional rent due by Lessee under this section, the accounting shall be
accompanied by a refund. In the event the accounting shows that the total of the
monthly payments made by Lessee is less than the amount of additional rent due
by Lessee under this section, the account shall be accompanied by an invoice for
the additional rent. Notwithstanding any other provision in this Lease, during
the year in which the Lease terminates. Lessor, prior to the termination date,
shall have the option to invoice Lessee for Lessee's pro rata share of the
excess operating expenses based upon the previous year's operating expenses. If
this Lease shall terminate on a day other than the last day of a calendar year,
the amount of any additional rent payable by Lessee applicable to the year in
which such termination shall occur shall be prorated on the ratio that the
number of days from the commencement of the calendar year to and including the
termination date bears to 365. Lessee shall have the right, at its own expense
and within a reasonable time, to audit Lessor's books relevant to the additional
rent payable under this section. Lessee agrees to pay any additional rent due
under this section within [Interlineated text] thirty days following receipt of
the invoice or accounting showing additional rent due.

2.03 Definition of Operating Expenses. The term "operating expenses"
includes all expenses incurred by Lessor with respect to the maintenance and
operation of the building of which the leased premises are a part, including,
but not limited to, the following: maintenance, repair and replacement costs:
security, management fees, wages and benefits payable to employees of Lessor
whose duties are directly connected with the operation and maintenance of the
building; all services, utilities, supplies, repairs, replacements or other
expenses for maintaining and operating the common parking and plaza areas; the
cost, including interest, amortized over its useful life, of any capital
improvement made to the building by Lessor after the date of this Lease which is
required under any governmental law or regulation that was not applicable to the
building at the time it was constructed; the cost including interest, amortized
over its useful life, of installation of any device or other equipment which
improves the operating efficiency of any system within the leased premises and
thereby reduces operating expenses; all other expenses which would generally be
regarded as operating and maintenance expenses which would reasonably be
amortized over period not to exceed five years; all real property taxes and
installments of special assessments, including dues and assessments by means of
deed restrictions and/or owner's associations which accrue against the

2
<PAGE>

building of which the leased premises are a part during the term of its Lease;
and all insurance premiums Lessor is required to pay or deems necessary to pay,
including public liability insurance, with respect to the building. The term
operating expenses does not include the following; repairs, restoration, or
other work occasioned by fire, wind, the elements or other casualty; income and
franchise taxes of Lessor, expenses incurred in leasing to or procuring of
lessees, leasing commissions, advertising expenses and expenses for the
renovating of space for new lessees; interest or principal payments on any
mortgage or other indebtedness of Lessor; compensation paid to any employee of
Lessor above the grade of property manager; any depreciation allowance or
expense; or operating expense which are the responsibility of Lessee.
Notwithstanding the foregoing, Lessor and Lessee agree that operating expenses
shall include Lessee's pro rata share for the cost of replacing the roof, but
shall not include costs associated with major repairs to the building structural
integrity, maintenance excluded.

2.04 Late Payment Charge. Other remedies for nonpayment of rent
notwithstanding, if the monthly rental payment is not received by Lessor on or
before the tenth day of the month for which the rent is due, or if any other
payment due Lessor by Lessee is not received by Lessor on or before the tenth
day of the month following the month in which Lessee was invoiced, a late
payment charge of five percent of such past due amount shall become due and
payable in addition to such amounts owed under this Lease.

2.05 [Interlineated text]

2.06 Security Deposit. The security deposit set forth above shall be held
by Lessor for the performance of Lessee's covenants and obligations under this
Lease, it being expressly understood that the deposit shall not be considered on
advance payment of rental or a measure of Lessor's damage in case of default by
Lessee. Upon the occurrence of any event of default by Lessee or breach by
Lessee of Lessee's covenants under this Lease, Lessor may, from time to time,
within ten (10) days written notification to Lessee, without prejudice to any
other remedy, use the security deposit to the extent necessary to make good any
arrears of rent, or to repair any damage or injury, or pay any expense or
liability incurred by Lessor as a result of the event of default or breach of
covenant, and any remaining balance of the security deposit shall be returned by
Lessor to Lessee upon termination of this Lease. If any portion of the security
deposit is so used or applied, Lessee shall upon ten days written notice from
Lessor, deposit with Lessor by cash or cashier's check an amount sufficient to
restore the security deposit to its original amount.

2.07 Holding Over. In the event that Lessee does not vacate the leased
premises upon the expiration or termination of this Lease, Lessee shall be a
tenant at will for the holdover period and all of the terms and provisions of
this Lease shall be applicable during that period, except that Lessee shall pay
Lessor as base rental for the period of such holdover an amount equal to two
times the base rent which would have been payable by Lessee had the holdover
period been a part of the original term of this Lease. Lessee agrees to vacate
and deliver the leased premises to Lessor upon Lessee's receipt of notice from
Lessor to vacate. The rental payable during the holdover period shall be
payable to Lessor on demand. No holding over by Lessee, whether with or without
the consent of Lessor, shall operate to extend the term of this Lease.

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ARTICLE 3.00 OCCUPANCY AND USE

3.01 Use. Lessee warrants and represents to Lessor that the leased
premises shall be used and occupied only for the purpose as set forth in section
1.06. Lessee shall occupy the leased premises, conduct its business and control
its agents, employees, invitees and visitors in such a manner as is lawful,
reputable and will not create a nuisance. Lessee shall not permit any operation
which emits any odor or matter which intrudes into other portions of the
building, use any apparatus or machine which makes undue noise or causes
vibration in any portion of the building or otherwise interfere with, annoy or
disturb any other lessee in its normal business operations or Lessor in its
management of the building. Lessee shall neither permit any waste on the leased
premises nor allow the leased premises to be used in any way which would, in the
opinion of Lessor, validated by a competent third party, be extra hazardous on
account of fire or which would in any way increase or render void the fire
insurance on the building. Lessee warrants to Lessor that the insurance
questionnaire (filled out by Lessee, signed and presented to Lessor prior to the
execution of this Lease) accurately reflects Lessee's original intended use of
the lease premises. The insurance questionnaire is made a part of this Lease by
reference as though fully copied herein. If at any time during the term of this
Lease the State Board of Insurance or other insurance authority disallows any of
Lessor's sprinkler credits or imposes an additional penalty or surcharge in
Lessor's insurance premiums because of Lessee's original or subsequent placement
or use of storage racks or bins, method of storage or nature of Lessee's
inventory or any other act of Lessee, Lessee agrees to pay as additional rent
the increase (between fire walls) in Lessor's insurance premiums.

3.02 Signs. No sign of any type or description shall be erected, placed
or painted in or about the leased premises or project except those signs
submitted to Lessor in writing and approved by Lessor in writing, and which
signs are in conformance with Lessor's sign criteria established for the
project.

3.03 Compliance with Laws, Rules and Regulations. Lessee, at Lessee's
sole cost and expense, shall comply with all laws, ordinances, orders, rules and
regulations of state, federal, municipal or other agencies or bodies having
jurisdiction over use, condition and occupancy of the leased premises. Lessee
will comply with the rules and regulations of the building adopted by Lessor
which are set forth on a schedule attached to this Lease. Lessor shall have the
right at all times to change and amend the rules and regulations in any
reasonable manner as may be deemed advisable for the safety, care, cleanliness,
preservation of good order and operation or use of the building or the leased
premises. All changes and amendments to the rules and regulations of the
building will be sent by Lessor to Lessee in writing and shall thereafter be
carried out and observed by Lessee. (See Addendum 1)

3.04 Warranty of Possession. Lessor warrants that it has the right and
authority to execute this Lease, and Lessee, upon payment of the required rents
and subject to the terms, conditions, covenants and agreements contained in this
Lease, shall have possession of the leased premises during the full terms of
this Lease as well as any extension or renewal thereof. Lessor shall not be
responsible for the acts or omissions of any other lessee or third party that
may interfere with Lessee's use and enjoyment of the leased premises.

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3.05 Inspection. Lessor or its authorized agents shall [interlineated
text] during normal business hours and upon twenty-four (24) hour prior verbal
notice, except in the case of an emergency have the right to enter the leased
premises without reasonably interfering with Lessee's business, to inspect the
same, to supply janitorial service or any other service to be provided by
Lessor, to show the leased premises to prospective purchasers or lessees, and to
alter, improve or repair the leased premises or any other portion of the
building. Lessee hereby waives any claim for damages for injury or
inconvenience to or interference with Lessee's business, any loss of occupancy
or use of the leased premises, and any other loss other loss occasioned thereby.
Lessor shall at all times have and retain a key with which to unlock all of the
doors in, upon and about the leased premises. Lessee shall not change Lessor's
lock system or in any other manner prohibit Lessor from entering the leased
premises. Lessor shall have the right to use any and all means which Lessor may
deem property to open any door in an emergency without liability therefor.

ARTICLE 4.00 UTILITIES AND SERVICE

4.01 Building Services. Lessor shall provide the normal utility service
connections to the building. Lessee shall pay the cost of all utility services,
including, but not limited to, initial connection charges all charges for gas,
electricity, water, sanitary and storm sewer service, and for all electric
lights. However, in a multi-occupancy building, Lessor may provide water to the
leased premises, in which case Lessee agrees to pay to Lessor its pro rata share
of the cost of such water. Lessee shall pay all costs caused by Lessee
introducing excessive pollutants or solids other than ordinary human waste into
the sanitary sewer system, including permits, fees and charges levied by any
governmental subdivision for any such pollutants or solids. Lessee shall be
responsible for the installation and maintenance of any dilution tanks, holding
tanks, settling tanks, sewer sampling devices, sand traps, grease traps or
similar devices as may be required by any governmental subdivision for Lessee's
use of the sanitary sewer system. If the leased premises are in a multi-
occupancy building, Lessee shall pay all surcharges levied due to Lessee's use
of sanitary sewer or waste removal services insofar as such surcharges affect
Lessor or other lessees in the building. Lessor shall not be required to pay
for any utility services, supplies or upkeep in connection with the leased
premises or building.

4.02 Theft or Burglary. Lessor shall not be liable to Lessee for losses
to Lessee's property or personal injury caused by criminal acts for entry by
unauthorized persons into the leased premises or the building.

ARTICLE 5.00 REPAIRS AND MAINTENANCE

5.01 Lessor Repairs. Lessor shall not be required to make any
improvements, replacements or repairs of any kind or character to the leased
premises or the project during the term of this Lease except as are set forth in
this section. Lessor shall maintain only the roof, foundation, parking and
common areas, and the structural soundness of the exterior walls (excluding
windows, windowglass, plate glass and doors). Lessor's costs of maintaining the
items set forth in this section are subject to the additional rent provisions in
section 2.02. Lessor shall not be liable to Lessee, except as expressly
provided in this Lease, or any damage or inconvenience, and Lessee shall not be
entitled to any abatement or reduction of rent by reason of any repairs,
alterations or additions made by Lessor under this Lease.

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5.02 Lessee Repairs. Lessee shall, at its sole cost and expense,
maintain, repair and replace all other parts of the leased premises in good
repair and condition, including, but not limited to heating, ventilating and
air conditioning systems, down spouts, fire sprinkler system, dock bumpers, lawn
maintenance, pest control and extermination, trash pick-up and removal, and
painting the building and exterior doors. Lessee shall repair and pay for any
damage caused by any act or omission of Lessee or Lessee's agents, employees,
invitees, licensees or visitors. If the leased premises are in a multi-
occupancy building or project, Lessor reserves the right to perform, on behalf
of Lessee, lawn maintenance, painting, and trash pick-up and removal; Lessee
agrees to pay Lessor, as additional rent, Lessee's pro rata share of the cost of
such services within ten days from receipt of Lessor's invoice, or Lessor may by
monthly invoice direct Lessee to prepay the estimated costs for the current
calendar year, and such amount shall be adjusted annually. If the leased
premises are served by rail, Lessee agrees, if requested by the railroad, to
enter into a joint maintenance agreement with the railroad and bear its pro rata
share of the cost of maintaining the railroad spur. If Lessee fails to make the
repairs or replacements promptly as required herein, Lessor may, at its option,
make the repairs and replacements and the cost of such repairs and replacements
shall be charged to Lessee as additional rent and shall become due and payable
by Lessee within ten days from receipt of Lessor's invoice. Costs incurred
under this section are the total responsibility of Lessee and do not constitute
operating expenses under section 2.02.

5.03 Request for Repairs. All requests for repairs or maintenance that
are the responsibility of Lessor pursuant to any provision of this Lease must be
made in writing to Lessor at the address in section 1.05.

5.04 Lessee Damages. Lessee shall not allow any damage to be committed on
any portion of the leased premises or building, and at the termination of this
Lease, by lapse of time or otherwise. Lessee shall deliver the leased premises
to Lessor in as good condition as existed at the commencement date of this
Lease, ordinary wear and tear excepted. The cost and expense of any repairs
necessary to restore the condition of the leased premises shall be borne by
Lessee.

5.05 Maintenance Contract. Lessee shall, at its sole cost and expense,
during the term of this Lease maintain a regularly schedule preventative
maintenance/service contract with a maintenance contractor for the servicing of
all hot water, heating and air conditioning systems and equipment within the
leased premises. The maintenance contractor and contract must be approved by
Lessor and must include all service suggested by the equipment manufacturer.

ARTICLE 6.00 ALTERATIONS AND IMPROVEMENTS

6.01 Lessor Improvements. If construction to the leased premises is to be
performed by Lessor prior to or during Lessee's occupancy, Lessor will complete
the construction of the improvements to the leased premises, in accordance with
plans and specifications agreed to by Lessor and Lessee, which plans and
specifications are made a part of this Lease by reference. Lessee shall execute
a copy of the plans and specifications and change orders, if applicable, setting
forth the amount of any costs to be borne by Lessee within seven days of receipt
of the plans and specifications. In the event Lessee fails to execute the plans
and specifications and change order within the seven day period, Lessor may, at
its sole option, declare this Lease canceled or notify Lessee that the base rent
shall commence on the completion date even though the improvements to

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be constructed by Lessor may not be complete. Any changes or modifications to
the approved plans and specifications shall be made and accepted by written
change order or agreement signed by Lessor and Lessee and shall constitute an
amendment to this Lease.

6.02 Lessee Improvements. Lessee shall not make or allow to be made any
alterations or physical additions in or to the leased premises without first
obtaining the written consent of Lessor, which consent may in the sole and
absolute discretion of Lessor be denied. Any alterations, physical additions or
improvements to the leased premises made by Lessee shall at once become the
property of Lessor and shall be surrendered to Lessor upon the termination of
this Lease. [Interlineated text.] This clause shall not apply to moveable
equipment or furniture owned by Lessee, which may be removed by Lessee at the
end of the term of this Lease if Lessee is not then in default and if such
equipment and furniture are not then subject to any other rights, liens and
interest of Lessor.

6.03 Mechanics Lien. Lessee will not permit mechanic's or materialman's
lien(s) or other lien to be placed upon the leased premises or the building and
nothing in this Lease shall be deemed or construed in any way as constituting
the consent or request of Lessor, express or implied, by inference or otherwise,
to any person for the performance of any labor or the furnishing of any
materials to the leased premises, or any part thereof, nor as giving Lessee any
right, power or authority to contract for or permit the rendering of any
services or the furnishing of any materials that would give rise to any
mechanic's, materialman's or other lien against the leased premises. In the
event any such lien is attached to the leases premises, then, in addition to any
other right or remedy of Lessor, Lessor may, but shall not be obligated to,
obtain the release of or otherwise discharge the same. Any amount paid by
Lessor for any of the aforesaid purposes shall be paid by Lessee to Lessor on
demand as additional rent.

ARTICLE 7.00 CASUALTY AND INSURANCE

7.01 Substantial Destruction. If the leased premises should be totally
destroyed by fire or other casualty, or if the leased premises should be damaged
so that rebuilding cannot reasonably be completed within [interlineated text]
one hundred twenty working days after the date of written notification by Lessee
to Lessor of the destruction, this Lease shall terminate and the rent shall be
abated for the unexpired portion of the Lease, effective as of the date of the
written notification.

7.02 Partial Destruction. If the leased premises should be partially
damaged by fire or other casualty, and rebuilding or repairs can reasonably be
completed within [interlineated text] one hundred twenty working days from the
date of written notification by Lessee to Lessor of the destruction, this Lease
shall not terminate, and Lessor shall at its sole risk and expense proceed with
reasonable diligence to rebuild or repair the building or other improvements to
substantially the same condition in which they existed prior to the damage. If
the leased premises are to be rebuilt or repaired and are untenantable in whole
or in part following the damage, and the damage or destruction was not caused or
contributed to by act or negligence of Lessee, its agents, employees, invitees
or those for whom Lessee is responsible, the rent payable under this Lease
during the period for which the leased premises are untenantable shall be
adjusted to such an extent as may be fair and reasonable under the
circumstances. In the event that Lessor fails to complete the necessary
repairs or rebuilding within ninety working days from the date of written
notification by Lessee to Lessor of

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the destruction, Lessee may at its option terminate this Lease by delivering
written notice of termination to Lessor, whereupon all rights and obligations
under this Lease shall cease to exist.

7.03 Property Insurance. Lessor shall at all times during the term of
this Lease maintain a policy or policies of insurance with the premiums paid in
advance, issued by and binding upon some solvent insurance company, insuring the
building against all risk of direct physical loss in an amount equal to at least
ninety percent of the full replacement cost of the building structure and its
improvements as of the date of the loss; provided, Lessor shall not be obligated
in any way or manner to insure any personal property (including, but not limited
to, any furniture, machinery, goods or supplies) of Lessee upon or within the
leased premises, any fixtures installed or paid for by Lessee upon or within the
leased premises, or any improvements which Lessee may construct on the leased
premises. Lessee shall have no right in or claim to the proceeds of any policy
of insurance maintained by Lessor even if the cost of such insurance is borne by
Lessee as set forth in article 2.00.

7.04 Waiver of Subrogation. Anything in this Lease to the contrary not
withstanding, Lessor and Lessee hereby waive and release each other of and
from any and all right of recovery, claim, action or cause of action, against
each other, their agents, officers and employees, for any loss or damages that
may occur to the leased premises, improvements to the building of which the
leased premises are a part, or personal property within the building, by reason
of fire or the elements, regardless of cause or origin, including negligence of
Lessor or Lessee and their agents, officers and employees. Lessor and Lessee
agree immediately to give their respective insurance companies which have issued
policies of insurance covering all risk of direct physical loss, written notice
of the terms of the mutual waivers contained in this section and to have the
insurance policies properly endorsed, if necessary, to prevent the invalidation
of the insurance coverages by reason of the mutual waivers.

7.05 Hold Harmless. Lessor shall not be liable to Lessee's employees,
agents, invitees, licensees or visitors, or to any other person, for an injury
to person or damage to property on or about the leased premises caused by any
act or omission of Lessee, its agents, servants or employees, or of any other
person entering upon the leased premises under express or implied invitation by
Lessee, or caused by the improvements located on the leased premises becoming
out of repair, the failure or cessation of any service provided by Lessor
(including security service and devices), or caused by leakage of gas, oil,
water or steam or by electricity emanating from the leased premises. Lessee
agrees to indemnify and hold harmless Lessor of and from any loss, attorney's
fees, expenses or claims arising out of any such damage or injury. Lessee shall
not be liable for any injury or damage caused by the gross negligence or willful
misconduct of Lessor or Lessor's employees or agents and Lessor agrees to
indemnify and hold Lessee harmless from any loss, expense or damage arising out
of such damage or injury.

ARTICLE 8.00 CONDEMNATION

8.01 Substantial Taking. If all or a substantial part of the leased
premises are taken for any public or quasi-public use under any governmental
law, ordinance or regulation, or by right of eminent domain or by purchase in
lieu thereof, and the taking would prevent or materially interfere with the use
of the leased premises for the purpose for which it is then being used, this
Lease shall terminate and the rent shall be abated during the unexpired portion
of this Lease effective on the date

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physical possession is taken by the condemning authority. Lessee shall have no
claim to the condemnation award or proceeds in lieu thereof.

8.02 Partial Taking. If a portion of the leased premises shall be taken
for any public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain or by purchase in lieu thereof, and
this Lease is not terminated as provided in section 8.01 above, Lessor shall at
Lessor's sole risk and expense, restore and reconstruct the building and other
improvements on the leased premises to the extent necessary to make it
reasonably tenantable. The rent payable under this Lease during the unexpired
portion of the term shall be adjusted to such an extent as may be fair and
reasonable under the circumstances. Lessee shall have no claim to the
condemnation award or proceeds in lieu thereof.

ARTICLE 9.00 ASSIGNMENT OR SUBLEASE

9.01 Lessor Assignment. Lessor shall have the right to sell, transfer or
assign, in whole or in part, its rights and obligations under this Lease and in
the building. Any such sale, transfer or assignment shall operate to release
Lessor from any and all liabilities under this Lease arising after the date of
such sale, assignment or transfer.

9.02 Lessee Assignment. Lessee shall not assign, in whole or in part,
this Lease, or allow it to be assigned, in whole or in part, by operation of law
or otherwise (including without limitation by transfer of a majority interest of
stock, merger, or dissolution, which transfer of majority interest of stock,
merger or dissolution shall be deemed an assignment) or mortgage or pledge the
same or sublet the leased premises, in whole or in part, without the prior
written consent of Lessor, and in no event shall any such assignment or sublease
ever release Lessee or any guarantor from any obligation or liability hereunder.
No assignee or sublessee of the leased premises or any portion thereof may
assign or sublet the leased premises or any portion thereof.

9.03 Conditions of Assignment. If Lessee desires to assign or sublet all
or any part of the leased premises, it shall so notify Lessor at least thirty
days in advance of the date on which Lessee desires to make such assignment or
sublease. Lessee shall provide Lessor with a copy of the proposed assignment or
sublease and such information as Lessor might request concerning the proposed
sublessee or assignee to allow Lessor to make informed judgements as to the
financial condition, reputation, operations and general desirability of the
proposed sublessee or assignee. Within fifteen days after Lessor's receipt of
Lessee's proposed assignment or sublease and all required information concerning
the proposed sublessee or assignee, Lessor shall have the following options: (1)
cancel this Lease as to the leased premises or portion thereof proposed to be
assigned or sublet; (2) consent to the proposed assignment or sublease, and, if
the rent due and payable by any assignee or sublessee under any such permitted
assignment or sublease (or a combination of the rent payable under such
assignment or sublease plus any bonus or any other consideration or any payment
incident thereto) exceeds the rent payable under this Lease for such space.
Lessee shall pay to Lessor all such excess rent and other excess consideration
within ten days following receipt thereof by Lessee; or (3) refuse, in its
reasonable [interlineated text] discretion and judgment, to consent to the
proposed assignment or sublease, which refusal shall be deemed to have been
exercised unless Lessor gives Lessee written notice providing otherwise. Upon
the occurrence of an event of default, if all or any part of the leased premises
are then assigned or sublet, Lessor, in

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addition to any other remedies provided by this Lease or provided by law, may,
at its option, collect directly from the assignee or sublessee all rents
becoming due to Lessee by reason of the assignment or sublease, and Lessor shall
have a security interest in all properties on the leased premises to secure
payment of such sums. Any collection directly, by Lessor from the assignee or
sublessee shall not be construed to constitute a novation or a release of Lessee
or any guarantor from the further performance of its obligations under this
Lease.

9.04 Subordination. Lessee accepts this Lease subject and subordinate to
any recorded mortgage or deed of trust lien presently existing or hereafter
created upon the building or project and to all existing recorded restrictions,
covenants, easements and agreements with respect to the building or project.
Lessor is hereby irrevocably vested with full power and authority to subordinate
Lessee's interest under this Lease to any first mortgage or deed of trust lien
hereafter placed on the leased premises, and Lessee agrees upon demand to
execute additional instruments subordinating this Lease as Lessor may require.
If the interests of Lessor under this Lease shall be transferred by reason of
foreclosure or other proceedings for enforcement of any first mortgage or deed
of trust lien on the leased premises. Lessee shall be bound to the transferee
(sometimes call the "Purchaser") at the option of the Purchaser, under the
terms, covenants and conditions of this Lease for the balance of the term
remaining, including any extensions or renewals, with the same force and effect
as if the Purchaser were Lessor under this Lease, and, if requested by the
Purchaser, Lessee agrees to attorn to the Purchaser, including the first
mortgagee under any such mortgage if it be the Purchaser, as its Lessor.

9.05 Estoppel Certificates. Lessee agrees to furnish, from time to time,
within ten days after receipt of a request from Lessor or Lessor's mortgagee, a
statement certifying, if applicable, the following: Lessee is in possession of
the leased premises; the leased premises are acceptable; the Lease is in full
force and effect, the Lease is unmodified; Lessee claims no present charge,
lien, or claim of offset against rent; the rent is paid for the current month,
but is not prepaid for more than one month and will not be prepaid for more than
one month in advance there is no existing default by reason of some act or
omission by Lessor; and such other matters as may be reasonably required by
Lessor or Lessor's mortgagee. Lessee's failure to deliver such statement, in
addition to being a default under this Lease, shall be deemed to establish
conclusively that this Lease is in full force and effect except as declared by
Lessor, that Lessor is not in default of any of its obligations under this Lease
and that Lessor has not received more than one month's rent in advance.

ARTICLE 10.00 LIENS

10.01 [Interlineated text]

10.02 Uniform Commercial Code. This Lease is intended as and constitutes
a security agreement within the meaning of the Uniform Commercial Code of the
state in which the leased premises are situated. Lessor, in addition to the
rights prescribed in this Lease, shall have all of the rights, titles, liens and
interests in and to Lessee's property, now or hereafter located upon the leased
premises, which may be granted a secured party, as that term is defined, under
the Uniform Commercial Code to secure to Lessor payment of all sums due and the
full performance of all Lessee's covenants under this Lease. Lessee will on
request execute and deliver to Lessor a financing statement for the purpose of
perfecting Lessor's security interest under this Lease or Lessor

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may file this Lease or a copy thereof as a financing statement. Unless otherwise
provided by law and for the purpose of exercising any right pursuant to this
section, Lessor and Lessee agree that reasonable notice shall be met if such
notice is given by ten days written notice, certified mail, return receipt
requested, to Lessor or Lessee at the addresses specified herein.

ARTICLE 11.00 DEFAULT AND REMEDIES

11.01 Default by Lessee. The following shall be deemed to be events of
default by Lessee under this Lease: (1) Lessee shall fail to pay, when due any
installment of rent or any other payment required pursuant to this Lease; (2)
Lessee shall abandon any substantial portion of the leased premises; (3) Lessee
shall fail to comply with any term, provision or covenant of this Lease, other
than the payment of rent, and the failure is not cured within "interlineated
text" thirty days after written notice to Lessee; (4) Lessee shall file a
petition or be adjudged bankrupt or insolvent under any applicable federal or
state bankruptcy or insolvency law, or admit that it cannot meet its financial
obligations as they become due; or a receiver or trustee shall be appointed for
all or substantially all of the assets of Lessee; or Lessee shall make a
transfer in fraud of creditors or shall make an assignment for the benefit of
creditors; or (5) Lessee shall do or permit to be done any act which results in
a lien being filed against the leased premises or the building and/or project of
which the leased premises are a part.

11.02 Remedies for Lessee's Default. Upon the occurrence of any event of
default set forth in this Lease, Lessor shall have the option to pursue any one
or more of the remedies set forth herein without any notice or demand. (1)
Lessor may enter upon and take possession of the leased premises, by picking or
changing locks if necessary, and lock out, expel or remove Lessee and any other
person who may be occupying all or any part of the leased premises without being
liable for any claim for damages, and relet the leased premises on behalf of
Lessee and receive the rent directly by reason of the reletting. Lessee agrees
to pay Lessor on demand any deficiency that may arise by reason of any reletting
of the leased premises; further, Lessee agrees to reimburse Lessor for any
expenditures made by it in order to relet the leased premises, including, but
not limited to, remodeling and repair costs. (2) Lessor may enter upon the
leased premises, by picking or changing locks if necessary, without being liable
for any claim for damages, and do whatever Lessee is obligated to do under the
terms of this Lease. Lessee agrees to reimburse Lessor on demand for any
expenses which Lessor may incur in effecting compliance with Lessee's
obligations under this Lease; further, Lessee agrees that Lessor shall not be
liable for any damages resulting to Lessee from effecting compliance with
Lessee's obligations under this Lease caused by the negligence of Lessor or
otherwise. (3) Lessor may terminate this Lease, in which event Lessee shall
immediately surrender the leased premises to Lessor, and if Lessee fails to
surrender the leased premises, Lessor may, without prejudice to any other remedy
which it may have for possession or arrearages in rent, enter upon and take
possession of the leased premises, by picking or changing locks if necessary,
and lock out, expel or remove Lessee and any other person who may be occupying
all or any part of the leased premises without being liable for any claim for
damages. Lessee agrees to pay on demand the amount of all loss and damage which
Lessor may suffer by reason of the termination of this Lease under this section,
whether through inability to relet the leased premises on satisfactory terms or
otherwise. Notwithstanding any other remedy set forth in this Lease, in the
event Lessor has made rent concessions of any type or character, or waived any
base rent, and Lessee fails to take possession of the leased premises on the
commencement or completion date or otherwise defaults at

11
<PAGE>

any time during the term of this Lease, the rent concessions, including any
waived base rent, shall be canceled and the amount of the base rent or other
rent concessions shall be due and payable immediately as if no rent concessions
or waiver of any base rent had ever been granted. A rent concession or waiver of
the base rent shall not relieve Lessee of any obligation to pay any other charge
due and payable under this Lease including without limitation any sum due under
section 2.02. Notwithstanding anything contained in this Lease to the contrary,
this Lease may be terminated by Lessor only by mailing or delivering written
notice of such termination to Lessee, and no other act or omission of Lessor
shall be construed as a termination of this Lease.

ARTICLE 12.00 RELOCATION

12.01 Relocation Option. In the event Lessor determines to utilize the
leased premises for other purposes during the term of this Lease, Lessee agrees
to relocate to other space in the building and/or project designated by Lessor,
provided such other space is of equal or larger size than the leased premises.

12.02 Expenses. Lessor shall pay all out-of-pocket expenses of any such
relocation, including the expenses of moving and reconstruction of all Lessee
furnished and Lessor furnished improvements. In the event of such relocation,
this Lease shall continue in full force and effect without any change in the
terms or conditions of this Lease, but with the new location substituted for the
old location set forth in section 1.02 of this Lease.

ARTICLE 13.00 DEFINITIONS

13.01 Abandon. "Abandon" means the vacating of all or a substantial
portion of the leased premises by Lessee, whether or not Lessee is in default of
the rental payments due under this Lease.

13.02 Act of God or Force Majeure. An "act of God" or "force majeure" is
defined for purposes of this Lease as strikes, lockouts, sitdowns, material or
labor restrictions by any governmental authority, unusual transportation delays,
riots, floods, washouts, explosions, earthquakes, fire, storms, weather
(including wet grounds or inclement weather which prevents construction), acts
of the public enemy, wars, insurrections and any other cause not reasonably
within the control of Lessor and which by the exercise of due diligence Lessor
is unable, wholly or in part, to prevent or overcome.

13.03 Building or Project. "Building" or "project" as used in this Lease
means the building and/or project described in section 1.02, including the
leased premises and the land upon which the building or project is situated.

13.04 Commencement Date. "Commencement date" shall be the date set forth
in section 1.03. This commencement date shall constitute the commencement of
the term of this Lease for all purposes, whether or not Lessee has actually
taken possession.

13.05 Completion Date. "Completion date" shall be the date on which the
improvements erected and to be erected upon the leased premises shall have been
completed in accordance with the plans and specifications described in article
6.00. The completion date shall constitute the commencement of the term of this
Lease for all purposes, whether or not Lessee has actually taken

12
<PAGE>

possession. Lessor shall use its best efforts to establish the completion date
as the date set forth in section 1.03. In the event that the improvements have
not in fact been completed as of that date, Lessee shall notify Lessor in
writing of its objections. Lessor shall have a reasonable time after delivery of
the notice in which to take such corrective action as may be necessary and shall
notify Lessee in writing as soon as it deems such corrective action has been
completed and the improvements are ready for occupancy. Upon completion of
construction, Lessee shall deliver to Lessor a letter accepting the leased
premises as suitable for the purposes for which they are let and the date of
such letter shall constitute the commencement of the term of this Lease. Whether
or not Lessee has executed such letter of acceptance, taking possession of the
leased premises by Lessee shall be deemed to establish conclusively that the
improvements have been completed in accordance with the plans and
specifications, are suitable for the purposes for which the leased premises are
let, and that the leased premises are in good and satisfactory condition as of
the date possession was so taken by Lessee, except for latent defects, if any.

13.06 Square Feet. "Square feet" or "square foot" as used in this Lease
includes the area contained within the leased premises together with a common
area percentage factor of the leased premises proportionate to the total
building area.

ARTICLE 14.00 MISCELLANEOUS

14.01 Waiver. Failure of Lessor to declare an event of default
immediately upon its occurrence, or delay in taking any action in connection
with an event of default, shall not constitute a waiver of the default, but
Lessor shall have the right to declare the default at any time and take such
action as is lawful or authorized under this Lease. Pursuit of any one or more
of the remedies set forth in article 11.00 above shall not preclude pursuit of
any one or more of the other remedies provided elsewhere in this Lease or
provided by law, nor shall pursuit of any remedy constitute forfeiture or waiver
of any rent or damages accruing to Lessor by reason of the violation of any of
the terms, provisions or covenants of this Lease. Failure by Lessor to enforce
one or more of the remedies provided upon an event of default shall not be
deemed or construed to constitute a waiver of the default or of any other
violation or beach of any of the terms, provisions and covenants contained in
this Lease.

14.02 Act of God. Lessor shall not be required to perform any covenant or
obligation in this Lease, or be liable in damages to Lessee, so long as the
performance or non-performance of the covenant or obligation is delayed, caused
or prevented by an act of God, force majeure or by Lessee.

14.03 Attorney's Fees. In the event Lessee defaults in the performance of
any of the terms, covenants, agreements or conditions contained in this Lease
and Lessor places in the hands of an attorney the enforcement of all or any part
of this Lease, the collection of any rent due or to become due or recovery of
the possession of the leased premises, Lessee agrees to pay Lessor's costs of
collection, including reasonable attorney's fees for the services of the
attorney, whether suit is actually filed or not.

14.04 Successors. This Lease shall be binding upon and inure to the
benefit of Lessor and Lessee and their respective heirs, personal
representatives, successors and assigns. It is hereby covenanted and agreed
that should Lessor's interest in the leased premises cease to exist for any

13
<PAGE>

reason during the term of this Lease, then notwithstanding the happening of such
event this Lease nevertheless shall remain unimpaired and in full force and
effect, and Lessee hereunder agrees to attorn to the then owner of the leased
premises.

14.05 Rent Tax. If applicable in the jurisdiction where the leased
premises are situated, Lessee shall pay and be liable for all rental, sales and
use taxes or other similar taxes, if any, levied or imposed by any city, state,
county or other governmental body having authority, such payments to be in
addition to all other payments required to be paid to Lessor by Lessee under the
terms of this Lease. Any such payment shall be paid concurrently with the
payment of the rent, additional rent, operating expense or other charge upon
which the tax is based as set forth above.

14.06 Captions. The captions appearing in this Lease are inserted only as
a matter of convenience and in no way define, limit, construe or describe the
scope or intent of any section.

14.07 Notice. All rent and other payments required to be made by Lessee
shall be payable to Lessor at the address set forth in section 1.05. All
payments required to be made by Lessor to Lessee shall be payable to Lessee at
the address set forth in section 1.05, or at any other address within the United
States as Lessee may specify from time to time by written notice. Any notice or
document required or permitted to be delivered by the terms of this Lese shall
be deemed to be delivered (whether or not actually received) when deposited in
the United States Mail, postage prepaid, certified mail, return receipt
requested, addressed to the parties at the respective addresses set forth in
section 1.05.

14.08 Submission of Lease. Submission of this Lease to Lessee for
signature does not constitute a reservation of space or an option to lease.
This Lease is not effective until execution by and delivery to both Lessor and
Lessee.

14.09 Corporate Authority. If Lessee executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Lessee does
hereby personally represent and warrant that Lessee is a duly authorized and
existing corporation, that Lessee is qualified to do business in the state in
which the leased premises are located, that the corporation has full right and
authority to enter into this Lease, and that each person signing on behalf of
the corporation is authorized to do so. In the event any representation or
warranty is false, all persons who execute this Lease shall be liable,
individually, as Lessee.

14.10 Severability. If any provision of this Lease or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Lease and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

14.11 Lessor's Liability. If Lessor shall be in default under this Lease
and, if as a consequence of such default, Lessee shall recover a money judgment
against Lessor, such judgment shall be satisfied only out of the right, title
and interest of Lessor in the building as the same may then be encumbered and
neither Lessor nor any person or entity comprising Lessor shall be liable for
any deficiency. In no event shall Lessee have the right to levy execution
against any property of

14
<PAGE>

Lessor nor any person or entity comprising Lessor other than its interest in the
building as herein expressly provided.

14.12 Indemnity. Lessor agrees to indemnify and hold harmless Lessee from
and against any liability or claim, whether meritorious or not, arising with
respect to any broker whose claim arises by, through or on behalf of Lessor.
Lessee agrees to indemnify and hold harmless Lessor from and against any
liability or claim, whether meritorious or not, arising with respect to any
broker whose claim arises by, through or on behalf of Lessee.

ARTICLE 15.00 AMENDMENT AND LIMITATION OF WARRANTIES

15.01 Entire Agreement. IT IS EXPRESSLY AGREED BY LESSEE, AS A MATERIAL
CONSIDERATION FOR THE EXECUTION OF THIS LEASE, THAT THIS LEASE, WITH THE
SPECIFIC REFERENCES TO WRITTEN EXTRINSIC DOCUMENTS, IS THE ENTIRE AGREEMENT OF
THE PARTIES; THAT THERE ARE, AND WERE, NO VERBAL REPRESENTATIONS, WARRANTIES,
UNDERSTANDINGS, STIPULATIONS, AGREEMENTS OR PROMISES PERTAINING TO THIS LEASE OR
TO THE EXPRESSLY MENTIONED WRITTEN EXTRINSIC DOCUMENTS NOT INCORPORATED IN
WRITING IN THIS LEASE.

15.02 Amendment. THIS LEASE MAY NOT BE ALTERED, WAIVED, AMENDED OR
EXTENDED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY LESSOR AND LESSEE.

15.03 Limitation of Warranties. LESSOR AND LESSEE EXPRESSLY AGREE THAT
THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE,
AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN
THIS LEASE.

ARTICLE 16.00 OTHER PROVISIONS

16.01 HAZARDOUS WASTE. See Addendum 1 attached hereto and made a part
hereof.

16.02 LIABILITY INSURANCE. See Addendum 1 attached hereto and made a part
hereof.

16.03 CERTIFICATE OF OCCUPANCY. See Addendum 1 attached hereto and made a
part hereof.

16.04 PRO RATA SHARE. Lessor and Lessee agree that Lessee's pro rata
share upon lease commencement shall be 21.47%.

16.05 In return for Lessor waiving a portion of the base rent for months 1
through 60 of the primary lease term, Lessee agrees to complete all construction
and be responsible for all construction costs which include construction
management fees, architectural fees, permit fees, and utility connections fees.
All construction must be completed by September 1, 1998 and be in compliance

15
<PAGE>

with local, municipal and state ordinances. The construction is to include, but
is not limited to, the following items:
1. Construct a minimum of 10,000 square feet of office.
2. Install a minimum of 47 tons of air conditioning with a minimum of
six (6) HVAC package units.
3. Install a continuous 2' x 4' or 2' x 2' (acoustical ceiling tile
with bat insulation) drop ceiling throughout office area.
4. Lessee shall provide Lessor with a complete set of plans of the
proposed finish, including sepias or mylars.
The construction and plans must be approved by Lessor, which approval shall not
be unreasonably withheld.

16.06 In the event Lessee does not comply with section 16.05 by September
1, 1998, Lessor will have a claim for a portion and/or all of the base monthly
rent waived per section 1.04.

16.07 Lessor agrees to provide Lessee with the leased premises effective
within two (2) business days after lease execution, to complete tenant
improvements, at which time all provisions of this Lease Agreement will apply,
except section 2.01 the payment of base rent.

16.08 CONSTRUCTION BY LESSEE. See Addendum II attached hereto and made a
part hereof.

16.09 SITE PLAN. See Exhibit A attached hereto and made a part hereof.

16.10 GUARANTEED EXPANSION. Notwithstanding the foregoing, Lessor and
Lessee agree that Lessee shall expand into the expansion space effective on the
23rd month of the lease term as shown on Exhibit A, for a new total square
footage of 18,965 square feet. Lessor and Lessee agree that Lessee shall
deposit with Lessor an additional $1,885 to increase the security deposit in
Section 1.04 for a total deposit of $13,971.50 prior to the commencement of the
23rd month. In addition, Lessor and Lessee agree that Lessee's pro rata share
shall increase from 21.47% to 28.20%.

16.11 SIGN CRITERIA. See Addendum III attached hereto and made a part
hereof.

16.12 RIGHT OF FIRST REFUSAL. See Addendum IV attached hereto and made a
part hereof.

16.13 RENEWAL OPTION. See Addendum IV attached hereto and made a part
hereof.

16.14 Lessor agrees to repair the following items prior to commencement
date:
a. Repair all roof leaks to demised space and clean downspouts.
b. Powerwash exterior sidewalk.
c. Replace any window seals which have pulled away.

16.15 Lessor and Lessee agree that Lessor shall make its best efforts to
have Lessor's lender to execute a subordination attornment and nondisturbance
agreement similar to the form attached hereto and made a part hereof as Exhibit
B.

16
<PAGE>

ARTICLE 17.00 SIGNATURES

SIGNED at DALLAS, TEXAS , this 18 day of May , 1998.
------------------ -------- ---------- --

LESSOR LESSEE

JUPITER PARKWAY VILLAGE, LTD. MICROTUNE, INC., a Texas corporation
- ------------------------------ ----------------------------------------

By: /s/ Jerry Peter Kezhaya By: /s/ Everett Rogers
--------------------------- -------------------------------------
Jerry Peter Kezhaya [interlineated text] Everett Rogers
President - Wulaadna, Inc. [interlineated text] V.P., Finance
- ------------------------------ ----------------------------------------
(Type Name and Title) (Type Name and Title)

<PAGE>

ADDENDUM I

3.03 (cont'd.) COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Should the
building of which the leased premises are a part not be classified as a
"commercial facility which is a place of public accommodations" as defined in
Title III of the American With Disabilities Act of 1990 (the Act) on the date
hereof, and Lessee's use, alterations or improvements thereafter causes the
building to be classified as such, Lessee shall be responsible for and shall
indemnify Lessor against any and all costs and expenses of Lessor associated
with complying with the Act.

16.01 HAZARDOUS WASTE. The term "Hazardous Substances," as used in this Lease
shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the use and/or the removal of which is required or the
use of which is restricted, prohibited or penalized by any
"Environmental Law," which term shall mean any federal, state or local
law, ordinance or other statute of a governmental or quasi-governmental
authority relating to pollution or protection of the environment. Lessee
hereby agrees that (i) no activity will be conducted on the premises
that will produce any Hazardous Substance, except for such activities
that are part of the ordinary course of Lessee's business activities
(the "Permitted Activities") provided said Permitted Activities are
conducted in accordance with all Environmental Laws and have been
approved in advance in writing by Lessor; Lessee shall be responsible
for obtaining any required permits and paying any fees and providing any
testing required by any governmental agency; (ii) the premises will not
be used in any manner for the storage of any Hazardous Substances except
for the temporary storage of such materials that are used in the
ordinary course of Lessee's business (the "Permitted Materials")
provided such Permitted Materials are properly stored in a manner and
location meeting all Environmental Laws and approved in advance in
writing by Lessor; Lessee shall be responsible for obtaining any
required permits and paying any fees and providing any testing required
by any governmental agency; (iii) no portion of the premises will be
used as a landfill or a dump; (iv) Lessee will not install any
underground or above ground tanks of any type; (v) Lessee will not allow
any surface or subsurface conditions to exist or come into existence
that constitute, or with the passage of time may constitute a public or
private nuisance; (vi) Lessee will not permit any Hazardous Substances
to be brought onto the premises, except for the Permitted Materials
described below, and if so brought or found located thereon, the same
shall be immediately removed, with proper disposal, and all required
cleanup procedures shall be diligently undertaken pursuant to all
Environmental Laws. Lessor or Lessor's representative shall have the
right but not the obligation to enter the premises for the purpose of
inspecting the storage, use and disposal of Permitted Materials to
ensure compliance with all Environmental Laws. Should it be determined,
in Lessor's sole opinion, that said Permitted Materials are being
improperly stored, used, or disposed of, then Lessee shall immediately
take such corrective action as requested by Lessor. Should Lessee fail
to take such corrective action with 24 hours, Lessor shall have the
right to perform such work and Lessee shall promptly reimburse Lessor
for any and all costs associated with said work. If at any time during
or after the term of the lease, the premises is found to be so
contaminated or subject to said conditions, Lessee shall diligently
institute proper and thorough cleanup procedures at Lessee's sole cost.
Before taking any action to comply with hazardous material laws or to
clean up hazardous material contaminating the premises,
<PAGE>

Lessee shall submit to Lessor a plan of action, including any and all
plans and documents required by any hazardous material law to be
submitted to a governmental authority (collectively, a "plan of
action"). Before Lessee begins the actions necessary to comply with
hazardous material laws or to clean up contamination from hazardous
materials, Lessor shall have (1) approved the nature, scope and timing
of the plan of action, and (2) approved any and all covenants and
agreements to effect the plan of action. Lessee agrees to indemnify and
hold Lessor harmless from all claims, demands, actions, liabilities,
costs, expenses, damages and obligations of any nature arising from or
as a result of the use of the premises by Lessee. The foregoing
indemnification and the responsibilities of Lessee shall survive the
termination or expiration of this Lease.

Permitted Materials (if none, enter "None"):

16.02 LIABILITY INSURANCE. Lessee shall, at its sole expense, maintain at all
times during the term of this Lease public liability insurance with
respect to the leased premises and the conduct or operation of Lessee's
business therein, naming Lessor as an additional insured, with limits of
not less than $1,000,000.00 for death or bodily injury to any one or
more persons in a single occurrence and $500,000.00 for property damage.
Lessee shall deliver a certificate of such insurance to Lessor on or
before the commencement date and thereafter from time to time upon
request.

16.03 CERTIFICATE OF OCCUPANCY. Upon occupancy of the leased premises, Lessee
shall be required to obtain a Certificate of Occupancy (the CO) from the
municipality in which the building is located. Failure of Lessee to
obtain and deliver the CO to Lessor upon occupancy shall be a default
which shall allow Lessor to pursue the remedies set forth in Article
11.02 of this Lease.

-2-
<PAGE>

ADDENDUM "II"
-------------

CONSTRUCTION BY LESSEE

CONSTRUCTION BY LESSEE: Lessee accepts the leased premises "as is,"
whether the leased premises is in shell form or has been previously occupied.
Any finish-out construction or refurbishing work, including all utility
connections, HVAC and plumbing repairs, etc., shall be performed by Lessee.
This paragraph is subject to the following terms and conditions:

1. Lessee, at Lessee's cost, shall submit plans and specifications
prepared by a State Licensed and Registered Architect for the finish-
out work to Lessor within 30 days from the execution date of this
lease. Lessee's plans and specifications must be approved by Lessor's
Construction Manager in writing prior to the commencement of
construction. All work shall be performed in conformance with such
approved plans and specifications in a good and workmanlike manner
and in compliance with all applicable laws, rules, codes, ordinances
and regulations. Lessee, at Lessee's sole cost and expense, shall
obtain all permits required prior to commencement of construction.
Lessor, at Lessor's sole option, may require Lessee to prepay half of
---------------------------------------------------------------------
the estimated construction price to either Lessor or general
------------------------------------------------------------
contractor.
----------

2. Lessee assumes all responsibility with regard to modifications or
construction alterations necessary to meet the provisions of the
Americans with Disabilities Act (ADA) and the Texas Accessibility
Standards (TAS). All necessary submittals to the Texas Department of
Licensing and Regulation (TDLR) will be the responsibility of the
Lessee. Any alterations to the leased premises required to comply
with the ADA and on TAS during the term of this Lease shall be at the
sole cost and expense of the Lessee.

3. Lessee shall provide Lessor with a complete list of contractors and
subcontractors who will be performing working in or on the leased
premises, as well as copies of all contracts. Lessor, in its sole
discretion, shall have the right to reject any contractor or
subcontractor.

4. Lessee shall furnish Lessor a Certificate of Insurance on the general
contractor who is to perform the work naming Lessor as an additional
insured on Lessee's liability insurance in the form as shown on Page
2 of this addendum in the amount of coverage as set forth on Page 3
of this addendum.

5. If work is performed by Lessee on parts of the building that are
presently under warranty from other contractors or subcontractors,
including but not limited to the roof, heating, ventilating and air
conditioning systems, electrical and sprinkler systems, such work
shall be done by Lessor's contractor or subcontractor who is
responsible under the warranty at Lessee's expense.

6. Construction Manager reserves the right to suspend or cancel work if
confronted with a discrepancy or problem concerning the construction
in relation to the property.
<PAGE>

7. Upon completion of the work, Lessor's Construction Manager shall
inspect the leased premises to insure that the work has been
performed in accordance with the approved plans and specifications.
Upon acceptance of the work, lien waivers from all contractors and
subcontractors who performed work on the leased premises and a copy
of a Certificate of Occupancy, must be provided to Lessor. Any
claims, judgments, lawsuits, etc., brought about due to a failure in
producing said documents are the direct responsibility of Lessee, and
constitutes default of the Lease.

8. Lessee shall hold Lessor harmless from and indemnify Lessor against
any and all liability, cost, expenses, including attorney's fees,
claims, demands, or causes of action for damage to persons or
property arising out of or in connection with the work performed by
Lessee, its employees, agents, contractors or subcontractors.

9. [Interlineated text]

-2-
<PAGE>

BRADFORD MANAGEMENT COMPANY OF DALLAS, INC.
Insurance Requirements for Tenant Finish Construction

1. The minimum amount of coverage Bradford Management Company of Dallas, Inc.
require for tenant finish construction is:

General Liability $1,000,000
Auto Liability $1,000,000
Umbrella Liability $2,000,000
Worker's Compensation Statutory
Employer's Liability $ 500,000

The attached certificate exemplifies the insurance coverage and language
required on the policy.

2. Bradford Management Company of Dallas, Inc. is to be named as the
Certificate Holder at the address shown on attached example.

3. Bradford Management Company of Dallas, Inc. and property owners must be
named as additional insured. The additional insured language must read
exactly as shown on attached example.

4. The certificate must state that the Certificate Holder will be notified
within 30 days if the insurance is terminated. The CANCELLATION language
must read as follows: "Should any of the above described policies be
canceled before the expiration date thereof, the issuing company will mail
30 days written notice to the Certificate Holder named to the left."

5. Underwriters must currently be rated at least a B+VII by AM Best Key Rating
Guide.

If you have any questions pertaining to any of this information, please contact
your Bradford Companies representative.

[Image of Category 3 Certificate of Liability Insurance example for
Bradford Management Company of Dallas, Inc. inserted here.]
<PAGE>

EXHIBIT A

Master Plan, Jupiter Park Village

PROJECT DATA
- ------------

BUILDING TABULATION
- -------------------

Building A 32,107 SF

Building B 12,[xxx] SF

Building C 21,[xxx] SF
- ---------------------------------

Total Building Area: 6[x,xxx] SF

[Graphical image of Buildings A, B and C, together with parking and other
configurations inserted here.]

-2-
<PAGE>

ADDENDUM III

JUPITER PARKWAY VILLAGE

SIGN CRITERIA AND REQUIREMENTS

The purpose of this sign criteria is to create a graphic environment that is
individual and distinctive in identity for the Tenants and also compatible with
other signs within the Center. The total concept should give an impression of
quality and professionalism, as well as instill a good business image.
Lettering shall be well proportioned and its design, spacing and legibility
shall be a major criterion for approval.

The following specifications are to be used for the design of your sign:
however, in all cases, final written approval must be obtained from the Lessor
-- --------
prior to the manufacturing or installation of any signage. Lessor shall make
interpretation of this sign policy.

NOTICE: Written approval and conformance with these specifications does not
- ------ ---- ---
imply conformance with local City and County sign ordinances. Please have your
sign company check with local authorities to avoid non-compliance with local
codes.

A. REQUIRED SIGNS
-------- -----

1. Tenant shall be requested to identify its premises by erecting one (1)
sign which shall be attached directly to the building fascia as
described hereinafter. Where the leased Premises is a corner store,
the Tenant may install a fascia sign in each fascia when the parallel
lease frontage exceeds fifteen (15) feet, and the criteria shall
govern each frontage respectively.

2. Tenant shall not be allowed to open for business without approved
required signs in place. Failure to open for this reason shall not
excuse the Tenant from the performance of its obligations under the
Lease.

B. TYPE OF SIGN -- Front of Lease Space
---- -- ----

Aluminum Alco-band to have routed out letters not to exceed 18" in type
style as approved by Property Management; Plex to be #2283 Red letter.

C. TYPE OF SIGN -- Rear of Lease Space
------------

Individual, single faced, raceway mounted letters. Letters are to be
mounted on a 6" deep x 8" high raceway. Raceway to be aligned with bottom
of letters. Business identification only will be allowed -- no
advertising.

-3-
<PAGE>

D. SIZE OF SIGN
---- -- ----

1. Depth -- 4"; height -- not to exceed 18"; Multiple Rows -- not to
exceed 28" in total height including spaces between rows; Minimum
Letter Size -- 12".

2. The overall length or spread of letters cannot exceed 75% of the total
linear store front measurement of the leased space. Sign length and
square must comply with City of Plano Sign Ordinances.

E. STYLE OF SIGN
----- -- ----

1. Any style (block or script) may be used. Upper and lower case are
allowed. Property Management will have final review over height
increases for script letters.

2. Logos in addition to signage must be approved. They must be
proportionate to height of fascia and sign and in same color as
signage.

3. All lines of lettering shall run horizontally.

F. COLOR OF SIGN
----- -- ----

1. Face Plexiglass -- Color of face to be #2283.

2. Return -- Black or white.

3. Trim Cap - Black with black, white with white returns.

4. Raceway -- Color to be Dark Bronze #313.

G. CONSTRUCTION OF LETTERS
------------ -- -------

1. Individual channel letters will have 1/8" plexiglass faces.

2. Returns and Backs -- .063 gauge aluminum (minimum).

3. NO armorplate or wood in the manufactured returns may be used.
--

H. PLACEMENT OF LETTERS
--------- -- -------

1. Letters are to be located on signage area of building as determined by
Lessor. (See attached sign location drawings). The assigned position
for each Tenant sign shall be as close to a center-of-frontage
location as possible subject to allowances for positioning corner
store signs and suitable space between adjacent Tenant signs, as
determined by the Lessor.

2. The principal base of all sign letters shall be aligned on a base line
located as determined by the Lessor for each Tenant sign and as
indicated on the attached sign drawings.

-4-
<PAGE>

I. LIGHTING
--------

1. All lighting will be internal face lighting.

2. All copy will be mounted on raceway regardless of lighting for rear
signage.

3. All neon used shall be 15 mm clear red.

4. Electrical power shall be brought to required location at lessee's
expense. Routing and location of conduit and other required items
shall not be visible on front of fascia.

5. Penetration of structure and graphic beams shall be kept to a minimum
and must have proper insulation for high voltage cable.

6. Transformers shall be concealed in raceway.

7. Final electrical connection of sign to transformer box will be
performed by a licensed electrician approved by management.

8. Owner shall provide an access panel in the Front canopy soffit to the
sign wiring area.

J. DETAIL DRAWING
------ -------

1. Prior to awarding a contract for fabrication and installation, Tenant
shall submit three (3) scaled drawings to:

Bradford Management Co. of Dallas
Retail Architectural Department
1110 E. Collins Blvd., Suite 138
Richardson, TX 75081

for final review and approval. One copy shall be returned to Tenant
with its required modifications and/or approval.

2. Elevation of building fascia and sign shall be drawn using a minimum
1/4" = 1'0" scale.

3. Drawing shall indicate the following specifications: Type, Color and
thickness of plexiglass; type of materials; finish used on returns;
type of illumination and mounting method.

4. Drawing must include fascia cross section showing electrical
connections.

5. Non-corrosive mounting fasteners must be used.

-5-
<PAGE>

K. TRAILER SIGNS OR TEMPORARY SIGNS
------- ----- -- --------- -----

Trailer will not be permitted.
---
Banner will be permitted for initial 30 day period.

L. ADDRESS SIGNAGE
------- -------

Street address will be installed by Lessor. 3" while die-cut vinyl or
plastic letters.

M. WINDOW SIGNS
------ -----

Submit three (3) copies of 1/4" = 1'0" scaled drawings for approval.

N. THE FOLLOWING ARE NOT PERMITTED
--- --------- --- --- ---------

1. Roof signs or box signs.

2. Cloth signs hanging in front of business.

3. Exposed seam tubing.

4. Animated or moving components.

5. Intermittent or flashing illumination.

6. Iridescent painted signs.

7. Letter mounted or painted on illuminated panels.

8. Signs or letters painted directly on any surface except as herein
provided.

9. Signs installed or placed along perimeter of shopping center.

10. The names, stamps or decals of manufacturers or installers shall not
be visible except for technical data (if any) required by governing
authorities.

-6-
<PAGE>

ADDENDUM IV

RIGHT OF FIRST REFUSAL: Lessor hereby grants to Lessee a right of first refusal
to lease any suite or all of the suites at the project known as Jupiter Park
Village as shown on Exhibit "A" attached hereto. If Lessor desires to lease any
portion of such space to a third party other than the existing occupants
(tenants) or their assignees and/or related partners at Jupiter Park Village,
Lessor shall first notify Lessee in writing of its intention to offer such space
for lease. Lessee shall have five (5) days from receipt of such notice to
notify Lessor in writing of Lessee's intent to exercise its right of first
refusal. If Lessee does not exercise its right of first refusal, then the right
of first refusal as to the space described in the notice from Lessor to Lessee
shall terminate and Lessor may lease such space to any third party. If Lessee
elects to exercise its right of first refusal to lease such described space, the
term for such space shall expire simultaneously with the term of this Lease, and
the rent for such described space shall be based on the then prevailing rental
rates for properties of equivalent quality, size, utility and location, with the
length of the Lease term and credit standing of Lessee to be taken into account,
but in no event shall the rent be less than the base monthly rent set forth in
Section 1.04 of this Lease, otherwise subject to all of the same terms,
covenants, and conditions of this Lease. Within fourteen (14) days from the
date of Lessee's election to exercise its right of first refusal, Lessee shall
execute plans and specifications, change orders showing construction costs to be
paid by Lessee, if any, and a modification and ratification of this Lease to
include the additional space; otherwise Lessee's right of first refusal shall
terminate as to the space described in the notice from Lessor to Lessee and
Lessor may lease such space to any third party.

RENEWAL OPTION: If, at the end of the primary term of this Lease, Lessee has
not been in monetary default and is not in default in any of the terms,
conditions or covenants of the Lease, Lessee, but not any assignee or subtenant
of Lessee, is hereby granted an option to renew this Lease for one (1)
additional term of twenty-four (24) months upon the same terms and conditions
contained in this Lease with the following exceptions:

A. The renewal option term will contain no further renewal options unless
expressly granted by Lessor in writing; and

B. The rental for the renewed term shall be $7.50 per square foot for the
first twelve (12) months and $8.50 per square foot for the next twelve
(12) months.

If Lessee desires to renew this Lease, Lessee will notify the Lessor of its
intention to renew no later than six (6) months prior to the expiration date of
the Lease; Lessor shall, within the next fifteen (15) days notify Lessee in
writing of the proposed rental rate and the Lessee shall, within the next
fifteen (15) days following receipt of the proposed rate, notify the Lessor in
writing of its acceptance or rejection of the proposed rental rate. Rejection
of the proposed rental rate terminates any renewal option pursuant to this
paragraph.

-7-
<PAGE>

EXHIBIT B

ADDENDUM "H"
------------
SUBORDINATION, ATTORNMENT
-------------------------
AND NONDISTURBANCE AGREEMENT
----------------------------

THIS AGREEMENT is entered into this _________ day of __________, 199___ by
and between Microtune, Inc., a Texas corporation , hereinafter called
----------------------------------------------
"Tenant" and Canyon Creek National Bank , hereinafter called "Lender."
--------------------------------

RECITALS
--------

WHEREAS, Tenant is the Tenant under that certain Commercial Lease Agreement
("Lease") dated _____________ between Tenant and ________________ ("Borrower"),
as Landlord, covering certain real property located in the City of Plano, County
-----
of Collin, State of Texas, more fully described in Exhibit "B" attached hereto
------ -----
and made a part hereof (the "Premises").

WHEREAS, Lender has made a mortgage loan to Borrower secured by a deed of
trust from Borrower to Lender (the "Mortgage"), covering the premises.

WHEREAS, Tenant agreed to enter into the Lease provided Lender would
execute this agreement.

AGREEMENT
---------

NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and in order to induce Tenant to enter the Lease, Tenant and
Lender hereby agree and covenant as follows:

1. The Lease and the estate conveyed thereby are and shall at all times
continue to be subject and subordinate in all respects to the Mortgage and to
all renewals, modifications as hereinafter set forth in this Agreement.

2. So long as Tenant is not in default (beyond any period given Tenant to
cure such default) in the payment of rent or additional rent or in the
performance of any of the other terms, covenants or conditions of the Lease on
Tenant's part to be performed, Tenant's possession under the Lease and Tenant's
rights and privileges thereunder or under any extensions or renewals thereof
which may be effected in accordance with any option therefore contained in the
lease, shall not be diminished or interfered with by Lender under any
circumstances and Tenant's occupancy shall not be disturbed by Lender during the
term of the Lease or any extensions or renewals thereof. Lender will be bound
by the terms of the Lease and will not join Tenant as a party defendant in any
foreclosure proceeding taken by Lender.

3. If the interests of Borrower shall be acquired by Lender by reason of
foreclosure of the Mortgage or other proceedings brought to enforce the rights
of the holder of the Mortgage, by

-8-
<PAGE>

deed in lieu of foreclosure or by any other method and Lender succeeds to the
interest of Borrower under the Lease, the Lease and the rights of Tenant
thereunder shall continue in full force and effect and shall not be terminated
or disturbed except in accordance with the terms of the Lease. Tenant shall be
bound to Lender under all of the terms, covenants and conditions of the Lease
for the balance of the term thereof remaining and any extensions or renewals
thereof which may be effected in accordance with any option therefore contained
in the Lease, with the same force and effect as if Lender were the Landlord
under the Lease and Tenant does hereby attorn to Lender, as its landlord, said
attornment to be effective and self operative without the execution of any other
instruments on the part of either party hereto, immediately upon Lender's
succeeding to the interest of Borrower under the Lease, provided, however, that
Tenant shall be under no obligation to pay rent to Lender until Tenant receives
written notice from Lender that it has succeeded to the interests of Borrower
under the Lease. The respective rights and obligations of Tenant and Lender upon
such attornment, to the extent of the then remaining balance of the term of the
lease and any extensions or renewals, shall be and are the same as not set forth
in the Lease, it being the intention of the parties hereon for this purpose to
incorporate the lease into this Agreement by reference, with the same force and
effect as if set forth at length herein.

4. If Lender shall succeed to the interests of Borrower under the Lease,
Lender shall be bound to Tenant under all of the terms, covenants and conditions
of the Lease and Tenant shall have the same remedies against Lender for the
breach of any agreement contained in the lease that Tenant might have had under
the Lease against Borrower if Lender had not succeeded to the interests of
Borrower; provided further, however, that Lender shall not be:

a. Liable for any act or omission of any prior landlord (including
Borrower); or

b. Bound by any rent or additional rent which Tenant might have paid
for more than one (1) month in advance to any prior landlord
(including Borrower).

5. This Agreement may not be modified orally or in any other manner other
than by an agreement in writing signed by the parties hereto or their respective
successors in interest. Tenant further agrees to send to Lender at the
following address copies of those notices given to Borrower pursuant to the
terms of the aforesaid Lease which relate to Borrower's or Tenant's default,
insurance, casualty and condemnation matters at the same time such notice is
given to Borrower:

_____________________________
_____________________________
_____________________________
Attention: _________________

This Agreement shall inure to the benefit of and being binding upon
the parties hereto, their respective heirs, successors and assigns, it being
expressly understood that all references herein to Lender shall be deemed to
include not only Lender, but also its successors and assigns.

-9-
<PAGE>

RULES AND REGULATIONS

1. Lessor agrees to furnish Lessee two keys without charge. Additional keys
will be furnished at a nominal charge. Lessee shall not change locks or
install additional locks on doors without prior written consent of Lessor.
Lessee shall not make or cause to be made duplicates of keys procured from
Lessor without prior approval of Lessor. All keys to leased premises shall
be surrendered to Lessor upon termination of this Lease.

2. Lessee will refer all contractors, contractor's representatives and
installation technicians rendering any service on or to the leased premises
for Lessee to Lessor for Lessor's approval before performance of any
contractual service. Lessee's contractors and installation technicians
shall comply with Lessor's rules and regulations pertaining to construction
and installation. This provision shall apply to all work performed on or
about the leased premises or project, including installation of telephones,
telegraph equipment, electrical devices and attachments and installations
of any nature affecting floors, walls, woodwork, trim, windows, ceilings
and equipment or any other physical portion of the leased premises or
project.

3. Lessee shall not at any time occupy any parts of the leased premises or
project as sleeping or lodging quarters.

4. Lessee shall not place, install or operate on the leased premises or in any
part of the building any engine, stove or machinery, or conduct mechanical
operations or cook thereon or therein, or place or use in or about the
leased premises or project any explosives, gasoline, kerosene, oil, acids,
caustics, or any flammable, explosive or hazardous material without written
consent of Lessor.

5. Lessor will not be responsible for lost or stolen personal property,
equipment, money or jewelry from the leased premises or the project
regardless of whether such loss occurs when the area is locked against
entry or not.

6. No dogs, cats, fowl, or other animals shall be brought into or kept in or
about the leased premises or project.

7. Employees of Lessor shall not receive or carry messages for or to any
Lessee or other person or contract with or render free or paid services to
any Lessee or to any of Lessee's agents, employees or invitees.

8. None of the parking, plaza, recreation or lawn areas, entries, passages,
doors, elevators, hallways or stairways shall be blocked or obstructed or
any rubbish, litter, trash, or material of any nature placed, emptied or
thrown into these areas or such area used by Lessee's agents, employees or
invitees at any time for purposes inconsistent with their designation by
Lessor.

9. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or by the

-10-
<PAGE>

defacing or injury of any part of the building shall be borne by the person
who shall occasion it. No person shall waste water by interfering with the
faucets or otherwise.

10. No person shall disturb occupants of the building by the use of any radios,
record players, tape recorders, musical instruments, the making of unseemly
noises or any unreasonable use.

11. Nothing shall be thrown out of the windows of the building or down the
stairways or other passages.

12. Lessee and its employees, agents and invitees shall park their vehicles
only in those parking areas designated by Lessor. Lessee shall furnish
Lessor with state automobile license numbers of Lessee's vehicles and its
employees' vehicles within five days after taking possession of the leased
premises and shall notify Lessor of any changes within five days after such
change occurs. Lessee shall not leave any vehicle in a state of disrepair
(including without limitation, flat tires, out of date inspection stickers
or license plates) on the leased premises or project. If Lessee or its
employees, agents or invitees park their vehicles in areas other than the
designated parking areas or leave any vehicle in a state of disrepair,
Lessor, after giving written notice to Lessee of such violation, shall have
the right to remove such vehicles at Lessee's expense.

13. Parking in a parking garage or area shall be in compliance with all parking
rules and regulations including any sticker or other identification system
established by Lessor. Failure to observe the rules and regulations shall
terminate Lessee's right to use the parking garage or area and subject the
vehicle in violation of the parking rules and regulations to removal and
impoundment. No termination of parking privileges or removal of
impoundment of a vehicle shall create any liability on Lessor or be deemed
to interfere with Lessee's right to possession of its leased premises.
Vehicles must be parked entirely within the stall lines and all directional
signs, arrows and posted speed limits must be observed. Parking is
prohibited in areas not striped for parking, in aisles, where "No Parking"
signs are posted, on ramps, in cross hatched areas, and in other areas as
may be designated by Lessor. Parking stickers or other forms of
identification supplied by Lessor shall remain the property of Lessor and
not the property of Lessee and are not transferable. Every person is
required to park and lock his vehicle. All responsibility for damage to
vehicles or persons is assumed by the owner of the vehicle or its driver.

14. Movement in or out of the building of furniture or office supplies and
equipment, or dispatch or receipt by Lessee of any merchandise or materials
which require use of elevators or stairways, or movement through the
building entrances or lobby, shall be restricted to hours designated by
Lessor. All such movement shall be under supervision of Lessor and carried
out in the manner agreed between Lessee and Lessor by prearrangement before
performance. Such prearrangement will include determination by Lessor of
time, method, and routing of movement and limitations imposed by safety or
other concerns which may prohibit any article, equipment or any other item
from being brought into the building. Lessee assumes, and shall indemnify
Lessor against, all risks and claims of damage to persons and properties
arising in connection with any said movement.

-11-
<PAGE>

15. Lessor shall not be liable for any damages from the stoppage of elevators
for necessary or desirable repairs or improvements or delays of any sort or
duration in connection with the elevator service.

16. Lessee shall not lay floor covering within the leased premises without
written approval of the Lessor. The use of cement or other similar
adhesive materials not easily removed with water is expressly prohibited.

17. Lessee agrees to cooperate and assist Lessor in the prevention of
canvassing, soliciting and peddling within the building or project.

18. Lessor reserves the right to exclude from the building or project, between
the hours of 6:00 p.m. and 7:00 a.m. on weekdays and at all hours on
Saturday, Sunday and legal holidays, all persons who are not known to the
building or project security personnel and who do not present a pass to the
building signed by the Lessee. Each Lessee shall be responsible for all
persons for whom he supplies a pass.

19. It is Lessor's desire to maintain in the building or project the highest
standard of dignity and good taste consistent with comfort and convenient
for Lessees. Any action or condition not meeting this high standard should
be reported directly to the Lessor. Your cooperation will be mutually
beneficial and sincerely appreciated. Lessor reserves the right to make
such other and further reasonable rules and regulations as in its judgement
may from time to time be necessary, for the safety, care and cleanliness of
the leased premises and for the preservation of good order therein.

-12-
<PAGE>

MODIFICATION AND RATIFICATION OF LEASE

This Modification and Ratification of Lease Agreement is made and entered
into between JUPITER PARKWAY VILLAGE, LTD. (Lessor or Landlord) and MICROTUNE,
----------------------------- ----------
INC., a Texas corporation (Lessee or Tenant) for and in consideration of One
- -------------------------
Dollar ($1.00) and other good and valuable consideration, receipt of which is
hereby acknowledged.

W I T N E S S E T H:

1. Lessor and Lessee hereby confirm and ratify, except as modified below,
all of the terms, conditions and covenants in that certain written Lease
Agreement dated May 18, 1998 and amended June 1, 1999 and August 6, 1998,
--------------------------------------------------------
between Lessor and Lessee, for the rental of the following described property:
2540 East Plano Parkway, Suite 188, Plano, Texas 75074 located in Jupiter Park
Village and containing approximately 18, 965 square feet per Job Number 1127484.

2. Lessor and Lessee agree that per section 16.10 of the Lease Agreement;
(a) the effective date for the Guaranteed Expansion space of 4,526 square feet
shall be changed from July 1, 2000 to November 15, 1999, (b) the additional
security deposit of $1,885.00 shall be required from Lessee by Lessor upon
execution of this Modification and Ratification of Lease, and (c) Lessee's pro
rata share shall increase from 21.47% to 28.20% effective November 15, 1999.

3. Lessor and Lessee agree that effective November 15, 1999, the base rent
shall no longer be waived, and shall be $528.47 per month.

4. Lessor and Lessee agree that effective September 1, 2001, the base rent
shall increase from $528.47 per month by $7,373.62 per month for a new base rent
of $7,902.09 per month.

SIGNED at Dallas, Texas , this 13th day of Oct. , 1999.
---------------------- ---- --------- --

LESSOR:

Attest JUPITER PARKWAY VILLAGE, LTD.
--------- -----------------------------

By:
---------------------------------
Jerry Peter Kezhaya

Title: President - Wulaadna, Inc.
----------------------------

LESSEE:

Attest /s/ Barbara Ureste MICROTUNE, INC., a Texas corporation
------------------ ------------------------------------

By: /s/ Everett Rogers
---------------------------------
Everett Rogers

(Corporate Seal) Title: Vice President, Finance
----------------------------
<PAGE>

MODIFICATION AND RATIFICATION OF LEASE

This Modification and Ratification of Lease Agreement is made and entered
into between JUPITER PARKWAY VILLAGE, LTD. (Lessor or Landlord) and MICROTUNE,
----------------------------- ----------
INC., a Texas corporation (Lessee or Tenant) for an in consideration of One
- -------------------------
Dollar ($1.00) and other good and valuable consideration, receipt of which is
hereby acknowledged.

W I T N E S S E T H:

1. Lessor and Lessee hereby confirm and ratify, except as modified below,
all of the terms, conditions and covenants in that certain written Lease
Agreement dated May 18, 1998 and amended June 1, 1998, between Lessor and
-------------------------------------
Lessee, for the rental of the following described property: 2540 East Plano
Parkway, Suite 388, Plano, Texas 75074 located in Jupiter Park Village and
containing approximately 14,439 square feet of which 12,000 square feet is air
conditioned office space effective September 1, 1998, then effective July 1,
2000 containing approximately 18,965 square feet, per Job Number 1127484.

2. Lessor and Lessee agree that the suite number of Lessee's address, per
section 1.02 and 1.05 of the Lease Agreement shall be corrected from "Suite 388"
to "Suite 188."

SIGNED at Dallas, Texas , this 6th day of August , 1998.
------------------------- --- -------------- --

LESSOR:

Attest JUPITER PARKWAY VILLAGE, LTD.
--------- -----------------------------------

By: /s/ Jerry Peter Kezhaya
--------------------------------
Jerry Peter Kezhaya

Title: President - Wulaadna, Inc.
--------------------------

LESSEE:

Attest /s/ Barbara Ureste MICROTUNE, INC., a Texas corporation
------------------ ------------------------------------

By: /s/ Everett Rogers
---------------------------------
Everett Rogers

(Corporate Seal) Title: Vice President, Finance
------------------------------
<PAGE>

MODIFICATION AND RATIFICATION OF LEASE

This Modification and Ratification of Lease Agreement is made and entered
into between JUPITER PARKWAY VILLAGE, LTD. (Lessor or Landlord) and MICROTUNE,
----------------------------- ----------
INC., a Texas corporation (Lessee or Tenant) for an in consideration of One
- -------------------------
Dollar ($1.00) and other good and valuable consideration, receipt of which is
hereby acknowledged.

W I T N E S S E T H:

1. Lessor and Lessee hereby confirm and ratify, except as modified below,
all of the terms, conditions and covenants in that certain written Lease
Agreement dated May 18, 1998, between Lessor and Lessee, for the rental of the
------------
following described property: 2540 East Plano Parkway, Suite 388, Plano, Texas
75074 located in Jupiter Park Village and containing approximately 14,439 square
feet of which 12,000 square feet is air conditioned office space, per Job Number
1127484.

2. Lessor and Lessee agree that the total security deposit of "$13,971.50"
per Section 16.10 of the Lease Agreement shall be corrected to "$13,917.50."

3. Lessor and Lessee agree that "None" shall be entered under "Permitted
Materials" in section 16.01 of the Lease Agreement.

SIGNED at Dallas, Texas , this 1st day of June , 1998.
--------------------- --- ----------- --

LESSOR:

Attest JUPITER PARKWAY VILLAGE, LTD.
--------- ------------------------------------

By: /s/ Jerry Peter Kezhaya
---------------------------------
Jerry Peter Kezhaya

Title: President - Wulaadna, Inc.
------------------------------

LESSEE:

Attest MICROTUNE, INC., a Texas corporation
-------- ------------------------------------

By: /s/ Everett Rogers
---------------------------------
Everett Rogers

(Corporate Seal) Title: Vice President, Finance
------------------------------

<PAGE>

EXHIBIT 10.10

COMMERCIAL LEASE AGREEMENT

BETWEEN

JUPITER SERVICE CENTER, LTD.

AND

MICROTUNE, INC.
<PAGE>

TABLE OF CONTENTS
Page
----
1. PREMISES, TERM, AND INITIAL IMPROVEMENTS........................ 1

2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT................. 2

3. TAXES........................................................... 4

4. LANDLORD'S MAINTENANCE.......................................... 5

5. TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS..................... 5

6. ALTERATIONS..................................................... 6

7. SIGNS........................................................... 7

8. UTILITIES....................................................... 7

9. INSURANCE....................................................... 7

10. CASUALTY DAMAGE................................................. 8

11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND
NEGLIGENCE..................................................... 8

12. USE............................................................. 9

13. INSPECTION...................................................... 10

14. ASSIGNMENT AND SUBLETTING....................................... 10

15. CONDEMNATION.................................................... 11

16. SURRENDER OF PREMISES; HOLDING OVER............................. 12

17. QUIET ENJOYMENT................................................. 12

18. EVENTS OF DEFAULT............................................... 13

19. REMEDIES........................................................ 13

20. LANDLORD'S DEFAULT.............................................. 15

21. MORTGAGES....................................................... 15

22. ENCUMBRANCES.................................................... 16

i
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

Page
----

23. MISCELLANEOUS................................................... 16

24. NOTICES......................................................... 18

25. HAZARDOUS WASTE................................................. 18

26. TENANT'S OPTION TO PURCHASE..................................... 19

27. TENANT'S RIGHT OF FIRST REFUSAL TO EXPAND PREMISES.............. 19

28. PARKING LOT ADDITION............................................ 20

29. BUILDING ADDITION............................................... 20

EXHIBIT A - DESCRIPTION OF LAND

EXHIBIT B - CONSTRUCTION AGREEMENT

ii
<PAGE>

LEASE AGREEMENT

This Lease Agreement (this "LEASE") is entered into by JUPITER SERVICE
CENTER, LTD., a Texas limited partnership ("LANDLORD"), and MICROTUNE, INC. a
Texas corporation ("TENANT").

1. PREMISES, TERM, AND INITIAL IMPROVEMENTS.

(a) Landlord leases to Tenant, and Tenant leases from Landlord, Forty-three
thousand Six Hundred Eighty (43,680) square feet of Net Rentable Area
(hereinafter the "PREMISES") located in the approximately One Hundred Twenty
Five Thousand (125,000) square foot building (the "BUILDING") located on the
real property described on EXHIBIT "A" (the "LAND"). The term "NET RENTABLE
AREA" refers to the area occupied by office and/or warehouse space, as
calculated within the boundaries defined by (i) the exterior surface of the
exterior walls and windows of the Building, and (ii) the center line of any
demising walls separating the Premises from space to be occupied by another
tenant. The Net Rentable Area in the Premises has been calculated on the basis
of the foregoing definition and is hereby stipulated to be forty-three thousand
six hundred eighty (43,680) square feet. Notwithstanding the foregoing, the
Premises shall consist of thirty thousand (30,000) square feet for the first
five (5) months of the Term and thereafter shall include all of the
aforementioned square footage.

(b) The term of this Lease shall be sixty (60) months, beginning on the
Commencement Date (defined below) ("TERM", shall include all renewals and
extensions of the initial Term); however, if the Commencement Date is not the
first day of a calendar month, then the Term shall end sixty (60) months after
the first day of the first full calendar month of the Term. The "COMMENCEMENT
DATE" shall be the date on which Substantial Completion (defined in EXHIBIT "B")
occurs. Following the Commencement Date, Landlord and Tenant shall execute an
instrument specifying the Commencement Date and the expiration date of the Term.
In the event that the Commencement Date shall not have occurred for any reason
whatsoever other than events of delay caused by Tenant, on or before August 15,
2000, then Tenant may terminate this Lease by written notice to Landlord at any
time prior to the occurrence of the Commencement Date, whereupon any monies
previously paid by Tenant to Landlord shall be reimbursed to Tenant.

(c) Provided no Event of Default exists when Tenant delivers such notice,
Tenant may renew this Lease for one additional period of five (5) years on the
same terms provided in this Lease, except that the Base Rent payable for each
month shall be fair market rental rate for space of equivalent size, quality and
utility taking into account the credit standing of Tenant (the "Renewal Rate"),
Tenant shall have no further renewal options, and Landlord shall lease to Tenant
the Premises in their then current condition, and Landlord shall not provide to
Tenant any allowances (e.g., moving allowance, construction allowance, and the
like) or other tenant inducements. Notwithstanding the foregoing the Base Rate
for such renewal period shall in no event be less than $10.00 per square foot
nor more than $11.00 per square foot. Tenant shall deliver written notice to
Landlord indicating whether or not Tenant elects to extend the Term no later
than one hundred twenty-eight (128) days prior to the expiration of the Term
("Election Date"). Within thirty (30) days after receipt of written request from
Tenant, which written request shall be made no earlier than one hundred eighty
(180) days and no later than one hundred fifty

1
<PAGE>

(150) days prior to the expiration of the Term, Landlord shall provide Tenant
with the Renewal Rate. The Renewal Rate shall be determined by Landlord in its
sole discretion, taking into account the factors described herein above.
Notwithstanding anything contained herein to the contrary, if Tenant fails to
deliver written notice indicating whether or not it elects to extend prior to
the Election Date, Tenant shall be deemed to have elected not to extend the
Term. Tenant's rights hereunder shall terminate if (i) this Lease expires or is
canceled or because of an Event of Default this Lease or Tenant's right to
possession of the Premises is terminated, or (ii) Tenant fails to timely
exercise its option hereunder, time being of the essence with respect to
Tenant's exercise thereof.

(d) Landlord shall construct the Premises in substantial accordance with
the plans and specifications referenced on EXHIBIT "B", and, by occupying the
Premises, Tenant shall have accepted the Premises in their condition, subject to
the completion of any punch-list items.

2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT.

(a) Tenant shall pay to Landlord "BASE RENT", in advance, without demand,
deduction or set off, equal to the following amounts for the following periods
of time:

Annual Per
Monthly Square Foot
Months in Term Base Rent Base Rent
-------------- --------- ------------
Month 1 to month 9 $26,250.00 $10.50
Month 10 to month 60 $36,400.00 $10.00

The first monthly installment, plus the other monthly charges set forth in
Section 2.(c), shall be due on the date hereof; thereafter, monthly installments
of Base Rent shall be due on the first day of each calendar month following the
Commencement Date. If the Term begins on a day other than the first day of a
month or ends on a day other than the last day of a month, then Base Rent and
additional rent for such partial month shall be prorated.

(b) Tenant shall deposit with Landlord on the date hereof $0.00 (the
"SECURITY DEPOSIT"), which shall be held by Landlord to secure Tenant's
obligations under this Lease; however, the Security Deposit is not an advance
rental deposit or a measure of Landlord's damages for an Event of Default
(defined below). Landlord may use any portion of the Security Deposit to satisfy
Tenant's unperformed obligations hereunder, without prejudice to any of
Landlord's other remedies. If so used, Tenant shall pay Landlord an amount that
will restore the Security Deposit to its original amount upon request. In
connection with any waiver of a Tenant default or modification of this Lease,
Landlord may require that Tenant provide Landlord with an additional amount to
be held as part of the Security Deposit. The Security Deposit shall be
Landlord's property. The unused portion of the Security Deposit will be returned
to Tenant within a reasonable time after the end of the Term, provided that
Tenant has fully and timely performed its obligations pursuant to this Lease
throughout the Term.

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(c) Tenant shall pay, as additional rent, its Proportionate Share
(hereinafter defined) of all reasonable costs incurred in owning, operating and
maintaining the Land and Building and the facilities and services provided for
the common use of Tenant and any other tenants of the Building (collectively,
"OPERATING EXPENSES"), including the following items: (1) Taxes (defined below)
and the cost of any tax consultant employed to assist Landlord in determining
the fair tax valuation of the Building and Land; (2) the cost of all utilities
used in the Building which are not billed separately to a tenant of the Building
for above Building standard utility consumption; (3) the cost of insurance; (4)
the cost of repairs, replacement, management fees and expenses, landscape
maintenance and replacement, security service (if provided), sewer service (if
provided), and trash service (if provided); (5) the cost of dues, assessments,
and other charges applicable to the Land payable to any property or community
owner association under restrictive covenants or deed restrictions to which the
Premises are subject; and (6) alterations, additions, and improvements made by
Landlord to comply with Law (defined in Section 23(a) below). On the same day
that Base Rent is due, Tenant shall pay to Landlord an amount equal to 1/12 of
Landlord's estimate of Tenant's Proportionate Share of annual Operating
Expenses. The initial monthly payments are based upon Landlord's estimate of the
Operating Expenses for the year in question, and shall be increased or decreased
annually to reflect the projected actual Operating Expenses for that year. If
Tenant's total payments in respect of Operating Expenses for any year are less
than Tenant's Proportionate Share of Operating Expenses for that year, Tenant
shall pay the difference to Landlord within thirty (30) days after Landlord's
request therefor; if such payments are more than Tenant's Proportionate Share of
Operating Expenses, Landlord shall retain such excess and credit it against
Tenant's future annual payments. Operating Expenses shall not include the
following: (A) any costs for interest, amortization, or other payments on loans
to Landlord; (B) expenses incurred in leasing or procuring tenants; (C) legal
expenses other than those incurred for the general benefit of the Building's
tenants; (D) allowances, concessions, and other costs of renovating or otherwise
improving space for occupants of the Building or vacant space in the Building;
(E) federal income taxes imposed on or measured by the income of Landlord from
the operation of the Building; (F) rents under ground leases; and (G) capital
replacement items; (H) costs incurred in selling, syndicating, financing,
mortgaging, or hypothecating any of Landlord's interests in the building; (I)
costs incurred to investigate or remediate Hazardous Substances on the Building
or the surrounding area except to the extent such Hazardous Materials are
released by Tenant; and (J) insurance deductibles in excess of The Thousand
Dollars ($10,000.00). There shall be no duplication of costs for reimbursements
in calculating Operating Expenses. The amounts of the initial monthly Base Rent
and Tenant's Proportionate Share of Operating Expenses (and the part thereof
attributable to Taxes) are as follows:

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Months 1-9 Months 10-60
---------- ------------
Base Rent (Section 2.(a)) $26,250.00 $36,400.00
Operating Expenses, excluding 1,181.25 1,719.00
Taxes(Section 2.(c))
Taxes (Section 2.(c) and 3.(a)) 2,193.75 3,194.10
Total initial monthly payment $29,625.00 $41,314.00

(d) If during any year the Building is less than 100% occupied, then, for
purposes of calculating Tenant's Proportionate Share of Operating Expenses for
that year, the amount of Operating Expenses that fluctuate with Building
occupancy shall be "grossed-up" to the amount which, in Landlord's reasonable
estimation, they would have been had the Building been 100% occupied for that
entire year.

(e) If any payment required of Tenant under this Lease is not paid when
due, Landlord may charge Tenant a fee equal to 5% of the delinquent payment to
reimburse Landlord for its cost and inconvenience incurred as a consequence of
Tenant's delinquency.

(f) All payments and reimbursements required to be made by Tenant under
this Lease shall constitute "RENT" (herein so called).

(g) The term "TENANT'S PROPORTIONATE SHARE" means the ratio from time to
time of the Net Rentable Area of the Premises to the Net Rentable Area of the
Building. Tenant's Proportionate Share has been initially determined to be 24%
for months 1 to 9 and 35% for months 10 to 60. If the Net Rentable Area of the
Premises or Building changes, Tenant's Proportionate Share shall change
accordingly.

3. TAXES.

(a) Landlord shall pay all taxes, assessments and governmental charges
whether federal, state, county, or municipal and whether they are imposed by
taxing or management districts or authorities presently existing or hereafter
created (collectively, "TAXES") that accrue against the Premises, the Land and
the Building. If, during the Term, there is levied, assessed or imposed on
Landlord a capital levy or other tax directly on the rent or a franchise tax,
assessment, levy or charge measured by or based, in whole or in part, upon rent,
then all such taxes, assessments, levies or charges, or the part thereof so
measured or based, shall be included within the term "TAXES". If the Building is
occupied by more than one tenant and the cost of any improvements constructed in
the Premises is disproportionately higher than the cost of improvements
constructed in the premises of other tenants of the Building, then Landlord may
require that Tenant pay the amount of Taxes attributable to such improvements in
addition to its Proportionate Share of other Taxes.

(b) Tenant shall (1) before delinquency pay all taxes levied or assessed
against any personal property, fixtures or alterations placed in the Premises
and (2) upon the request of Landlord, deliver to Landlord receipts from the
applicable taxing authority or other evidence

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acceptable to Landlord to verify that such taxes have been paid. If any such
taxes are levied or assessed against Landlord or Landlord's property and (A)
Landlord pays them or (B) the assessed value of Landlord's property is increased
thereby and Landlord pays the increased taxes, then Tenant shall pay to Landlord
such taxes within ten (10) days after Landlord's request therefor.

4. LANDLORD'S MAINTENANCE.

(a) Landlord's maintenance obligations are limited to the repair,
maintenance and replacement of the Building's roof and maintenance of the
foundation and structural members of the exterior walls (collectively, the
"BUILDING'S STRUCTURE") and the maintenance of the electrical systems, plumbing
systems, storm drainage and other mechanical systems, exterior walls and windows
of the Building and underground utility and sewer pipes outside of the Building,
parking areas, driveways, alleys and grounds surrounding the Premises; however,
Landlord shall not be responsible (1) for any such work until Tenant delivers to
Landlord written notice of the need therefor, or (2) for alterations to the
Building's Structure required by Law because of Tenant's use of the Premises
(which alterations shall be performed by Tenant). The Building's Structure does
not include skylights, windows, glass or plate glass, doors, special store
fronts or office entries, all of which shall be maintained by Tenant. Landlord's
liability for any defects, repairs, replacement or maintenance for which
Landlord is responsible hereunder shall be limited to the cost of performing
such work if same are performed on a timely basis. Landlord shall be responsible
for repairing any damages to the Premises caused by leaks in the roof of the
Building. All work performed by Landlord shall provide for containment of any
toxic materials which may be encountered and shall be in conformance with
O.S.H.A. and E.P.A. standards and local building codes and regulations.

(b) If Tenant defaults on its obligations of maintenance, repair or
replacement, Landlord may perform Tenant's maintenance, repair and replacement
obligations and any other items that are otherwise Tenant's obligations under
Section 5(b), in which event Tenant shall pay to Landlord any cost incurred by
Landlord in performing such obligations within ten (10) days after Landlord's
request therefor.

(c) If Landlord does not perform its obligations of maintenance, repair or
replacement as required herein in a timely manner, and such failure continues
for thirty (30) days after written notice to Landlord from Tenant setting forth
such failure, Tenant shall have the right to perform such obligations. In such
case, Landlord shall pay to Tenant any reasonable costs incurred by Tenant in
performing such obligations within ten (10) days after Tenant's request
therefor. In no event, however, may the costs incurred by Tenant in performing
such obligations be deducted from any of Tenant's required payments to Landlord
hereunder, including those for Base Rent and Operating Expenses.

5. TENANT'S MAINTENANCE AND REPAIR OBLIGATIONS.

(a) Tenant shall maintain all parts of the Premises (except for maintenance
work which Landlord is expressly responsible for under Section 4(a)) in good
condition and promptly make all necessary repairs and replacements to the
Premises. Tenant shall repair and pay for any damage caused by a Tenant Party
(defined below) or caused by Tenant's default hereunder. All work performed by
Tenant shall provide for a containment of any toxic materials

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<PAGE>

which may be encountered and shall be in strict conformance with O.S.H.A. and
E.P.A. standards and local building codes and regulations.

(b) Tenant shall maintain the hot water equipment and the heating, air
condition, and ventilation equipment and system (the "HVAC System") in good
repair and condition and in accordance with Law and with such equipment
manufacturers' suggested operation/maintenance service program. Within ten (10)
days after the Commencement Date, Tenant shall enter into preventive
maintenance/service contracts for such equipment for the duration of the Term,
each in form and substance and with a contractor reasonably acceptable to
Landlord certifying that the hot water equipment and the HVAC System are then in
good repair and working order. Landlord represents and warrants that, as of the
Commencement Date, the HVAC System will be in good repair and working order and
any guarantees and warranties received by Landlord through the completion of the
Improvements shall inure to the benefit of the Tenant.

6. ALTERATIONS. Tenant shall not make any alterations, additions, or
improvements to the Premises without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Tenant has informed
Landlord that it desires to install multiple satellite dish systems on the roof
of the Building and Landlord agrees that it will grant its approval of same so
long as the plans and specifications therefore are approved in accordance with
the terms of this Agreement. Landlord shall not be required to notify Tenant of
whether it consents to any alteration, addition or improvements until it (a) has
received plans and specifications therefor which are sufficiently detailed to
allow construction of the work depicted thereon to be performed in a good and
workmanlike manner, and (b) has had a reasonable opportunity to review them. If
the alteration, addition or improvements will affect the Building's Structure,
HVAC Systems, or mechanical, electrical, or plumbing systems, then the plans and
specifications therefor must be prepared by a licensed engineer reasonably
acceptable to Landlord. Landlord's approval of any plans and specifications
shall not be a representation that the plans or the work depicted thereon will
comply with Law or be adequate for any purpose, but shall merely be Landlord's
consent to performance of the work. Upon completion of any alteration, addition,
or improvement, Tenant shall deliver to Landlord accurate, reproducible as-built
plans therefor. Tenant may erect shelves, bins, machinery and trade fixtures
provided that such items (1) do not alter the basic character of the Premises or
the Building; (2) do not overload or damage the same; and (3) may be removed
without damage to the Premises. Unless Landlord specifies in writing otherwise,
all alterations, additions, and improvements shall be Landlord's property when
installed in the Premises. All work performed by a Tenant Party in the Premises
(including that relating to the installations, repair, replacement, or removal
of any item) shall be performed in accordance with law and with Landlord's
specifications and requirements, in a good and workmanlike manner, and so as not
to damage or alter the Building's Structure or the Premises. In connection with
any such alteration, addition, or improvement, Tenant shall reimburse Landlord
for any and all fees and expenses incurred with respect to architectural and
engineering reviews. Upon receipt of plans and specifications to any proposed
improvements, Landlord shall give Tenant an estimate of expected fees and
expenses to be incurred and reimbursable by Tenant, and Tenant shall have the
right to decline to move forward with such improvements or alterations upon
notice to Landlord prior to the undertaking of architectural and engineering
reviews.

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<PAGE>

7. SIGNS. Tenant shall not place, install or attach any signage,
decorations, advertising, media, blinds, draperies, window treatments, bars, or
security installations to the Premises or the Building without Landlord's prior
written approval, which consent shall not be unreasonably withheld or delayed.
Landlord shall pay the cost of the initial signage installed at the facility up
to a maximum of twenty-five hundred dollars ($2,500.00). All signage installed
at the facility shall comply and conform with all city and other governmental
codes and regulations. Tenant shall repair, paint, and/or replace any portion of
the Premises or the Building damaged or altered as a result of its signage when
it is removed (including, without limitation, any discoloration of the
Building). Tenant shall not (a) make any changes to the exterior of the Premises
or the Building, (b) install any exterior lights, decorations, balloons, flags,
pennants, banners or paintings; or (c) erect or install any signs, windows or
door lettering, decals, window or storefront stickers, placards, decorations or
advertising media of any type that is visible from the exterior of the Premises
without Landlord's prior written consent. Landlord shall not be required to
notify Tenant of whether it consents to any sign until it (1) has received
detailed, to-scale drawings thereof specifying design, material composition,
color scheme, and method of installation, and (2) has had a reasonable
opportunity to review them.

8. UTILITIES. Tenant shall obtain and pay for all water, gas, electricity,
heat, telephone, sewer, sprinkler charges and other utilities and services used
at the Premises, together with any taxes, penalties, surcharges, maintenance
charges, and the like pertaining to the Tenant's use of the Premises. Landlord
may, at Tenant's expense, separately meter and bill Tenant directly for its use
of any such utility service, in which case, the amount separately billed to
Tenant for Building-standard utility service shall not be duplicated in Tenant's
obligation to pay additional rent under Section 2.(c). Except to the extent of
the gross negligence or willful misconduct of Landlord or its agents or
contractors, Landlord shall not be liable for any interruption of failure of
utility service to the Premises. All amounts due from Tenant under this Section
8 shall be payable within ten (10) days after Landlord's request therefor.

9. INSURANCE. Tenant shall maintain (a) workers' compensation insurance
(with a waiver of subrogation endorsement reasonably acceptable to Landlord) and
commercial general liability insurance (with contractual liability endorsement),
including personal injury and property damage in the amount of $1,000,000 per
occurrence combined single limit for personal injuries and death of persons and
property damage occurring in or about the Premises, plus umbrella coverage of at
least $2,000,000 per occurrence, (b) fire and extended coverage insurance
covering (1) the replacement cost of all alterations, additions, partitions and
improvements installed in the Premises by or on behalf of a Tenant Party, (2)
the replacement cost of all of Tenant's personal property in the Premises, and
(3) loss of profits in the event of an insured peril damaging the Premises, and
(c) such other insurance as Landlord may reasonably require. Such policies shall
(A) name Landlord, Landlord's agents, and their respective Affiliates (defined
below), as additional insureds (and as loss payees on fire and extended coverage
insurance), (B) be issued by an insurance company acceptable to Landlord, (C)
provide that such insurance may not be canceled unless thirty (30) days' prior
written notice is first given to Landlord, unless a substantially similar policy
is to be substituted therefor (D) be delivered to Landlord by Tenant before the
Commencement Date and at least thirty (30) days before each renewal thereof, and
(E) provide primary coverage to Landlord when any policy issued to Landlord is
similar or duplicate in coverage, in which case Landlord's policy shall be
excess over Tenant's policies.

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Landlord shall maintain standard "all risk" property insurance covering the
Building for ninety-five percent (95%) of full replacement cost of the
Improvements.

10. CASUALTY DAMAGE.

(a) Tenant immediately shall give written notice to Landlord of any damage
to the Premises or the Building. If the Premises or the Building are totally
destroyed by an insured peril, or so damaged by an insured peril that, in
Landlord's estimation, rebuilding or repairs cannot be substantially completed
within one hundred eighty (180) days after the date of Landlord's actual
knowledge of such damage, then either Landlord or (if a Tenant Party did not
cause such damage) Tenant may terminate this Lease by delivering to the other
written notice thereof within thirty (30) days after such damage, in which case,
the rent shall be abated during the unexpired portion of this Lease, effective
upon the date such damage occurred. Time is of the essence with respect to the
delivery of such notices.

(b) Subject to Section 10(c), if this Lease is not terminated under Section
10. (a), then Landlord shall restore the Premises to substantially its previous
condition, except that Landlord shall not be required to rebuild, repair or
replace any part of the partitions, fixtures, additions and other improvements
or personal property required to be covered by Tenant's insurance under Section
9. If the Premises are untenantable, in whole or in part, during the period
beginning on the date such damage occurred and ending on the date of substantial
completion of Landlord's repair or restoration work (the "REPAIR PERIOD"), then
the rent for such period shall be reduced to such extent as may be fair and
reasonable under the circumstances and the Term shall be extended by the number
of days in the Repair Period.

(c) If the Premises are destroyed or substantially damaged by any peril not
covered by the insurance maintained or required to be maintained by Landlord, or
any Landlord's Mortgagee (defined below) requires that insurance proceeds be
applied to the indebtedness secured by its Mortgage (defined below) or to the
Primary Lease (defined below) obligations, Landlord may terminate this Lease by
delivering written notice of termination to Tenant within thirty (30) days after
such destruction or damage or such requirement is made known by any such
Landlord's Mortgagee, as applicable, whereupon all rights and obligations
hereunder shall cease and terminate, except for any liabilities of Tenant which
accrued before this Lease is terminated. Notwithstanding anything herein to the
contrary, Landlord shall not have the right to terminate the Lease if the damage
to the Building is relatively minor (e.g., repair or restoration would cost less
than five percent (5%) of the replacement cost of the Building).

11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND NEGLIGENCE.

(a) SUBJECT TO SECTION 11(B), TENANT SHALL INDEMNIFY, DEFEND, AND HOLD
HARMLESS LANDLORD, ITS SUCCESSORS, ASSIGNS, AGENTS, EMPLOYEES, CONTRACTORS,
PARTNERS, DIRECTORS, OFFICERS AND AFFILIATES (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") FROM AND AGAINST ALL FINES, SUITS, LOSSES, COSTS, LIABILITIES, CLAIMS,
DEMANDS, ACTIONS AND JUDGMENTS OF EVERY KIND OR CHARACTER (1) ARISING FROM
TENANT'S FAILURE TO PERFORM ITS COVENANTS HEREUNDER, (2) RECOVERED FROM OR
ASSERTED AGAINST ANY OF THE INDEMNIFIED PARTIES ON ACCOUNT OF ANY

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LOSS (DEFINED BELOW) TO THE EXTENT THAT ANY SUCH LOSS MAY BE INCIDENT TO, ARISE
OUT OF, OR BE CAUSED, EITHER PROXIMATELY OR REMOTELY, WHOLLY OR IN PART, BY A
TENANT PARTY OR ANY OTHER PERSON ENTERING UPON THE PREMISES UNDER OR WITH A
TENANT PARTY'S EXPRESS OR IMPLIED INVITATION OR PERMISSION, (3) ARISING FROM OR
OUT OF THE OCCUPANCY OR USE BY A TENANT PARTY OR ARISING FROM OR OUT OF ANY
OCCURRENCE IN THE PREMISES, HOWSOEVER CAUSED, OR (4) SUFFERED BY, RECOVERED FROM
OR ASSERTED AGAINST ANY OF THE INDEMNIFIED PARTIES BY THE EMPLOYEES, AGENTS,
CONTRACTORS, OR INVITEES OF TENANT OR ITS SUBTENANTS OR ASSIGNEES, REGARDLESS OF
WHETHER LANDLORD'S NEGLIGENCE CAUSED SUCH LOSS OR DAMAGE. HOWEVER, SUCH
INDEMNIFICATION OF THE INDEMNIFIED PARTIES BY TENANT SHALL NOT BE APPLICABLE IF
SUCH LOSS, DAMAGE, OR INJURY IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD OR ANY OF ITS DULY AUTHORIZED AGENTS OR EMPLOYEES.

(b) LANDLORD SHALL NOT BE LIABLE TO TENANT OR THOSE CLAIMING BY, THROUGH,
OR UNDER TENANT FOR ANY INJURY TO OR DEATH OF ANY PERSON OR PERSONS OR THE
DAMAGE TO OR THEFT, DESTRUCTION, LOSS, OR LOSS OF USE OF ANY PROPERTY OR
INCONVENIENCE (A "LOSS") CAUSED BY CASUALTY, THEFT, FIRE, THIRD PARTIES, OR ANY
OTHER MATTER (INCLUDING LOSSES ARISING THROUGH REPAIR OR ALTERATION OF ANY PART
OF THE BUILDING, OR FAILURE TO MAKE REPAIRS, OR FROM ANY OTHER CAUSE),
REGARDLESS OF WHETHER THE NEGLIGENCE OF EITHER PARTY CAUSED SUCH LOSS IN WHOLE
OR IN PART LANDLORD AND TENANT EACH WAIVES ANY CLAIM IT MIGHT HAVE AGAINST THE
OTHER FOR ANY DAMAGE TO OR THEFT, DESTRUCTION, LOSS, OR LOSS OF USE OF ANY
PROPERTY, TO THE EXTENT THE SAME IS INSURED AGAINST UNDER ANY INSURANCE POLICY
MAINTAINED BY IT THAT COVERS THE BUILDING, THE PREMISES, LANDLORD'S OR TENANT'S
FIXTURES, PERSONAL PROPERTY, LEASEHOLD IMPROVEMENTS, OR BUSINESS, OR IS REQUIRED
TO BE INSURED AGAINST BY THE WAIVING PARTY UNDER THE TERMS HEREOF, REGARDLESS OF
WHETHER THE NEGLIGENCE OR FAULT OF THE OTHER PARTY CAUSED SUCH LOSS; HOWEVER,
LANDLORD'S WAIVER SHALL NOT APPLY TO ANY DEDUCTIBLE AMOUNTS MAINTAINED BY
LANDLORD UNDER ITS INSURANCE. EACH PARTY SHALL CAUSE ITS INSURANCE CARRIER TO
ENDORSE ALL APPLICABLE POLICIES WAIVING THE CARRIER'S RIGHTS OF RECOVERY UNDER
SUBROGATION OR OTHERWISE AGAINST THE OTHER PARTY.

12. USE.

(a) The Premises shall be used only for general office, receiving, storing,
shipping and selling products, materials and merchandise made or distributed by
Tenant and for such other lawful purposes as may be incidental thereto; however,
no retail sales may be made from the Premises. Tenant shall not use the Premises
to receive, store or handle any product, material or merchandise that is
explosive or highly inflammable or hazardous. Outside storage is prohibited.
Tenant shall be solely responsible for complying with all Laws applicable to the
use, occupancy, and condition of the Premises. Tenant shall not permit any
objectionable or

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unpleasant odors, smoke, dust, gas, light, noise or vibrations to emanate from
the Premises; nor take any other action that would constitute a nuisance or
would disturb, unreasonably interfere with, or endanger Landlord or any other
person; nor permit the Premises to be used for any purpose or in any manner that
would (1) void the insurance thereto, (2) increase the insurance risk, or (3)
cause the disallowance of any sprinkler credits. Tenant shall pay to Landlord
within thirty (30) days after written notice to Tenant any increase in the cost
of any insurance on the Premises or the Building incurred by Landlord which is
caused by Tenant's use of the Premises or because Tenant vacates the Premises.

(b) Tenant and its employees and invitees shall have the non-exclusive
right to use, in common with others, any parking areas associated with the
Premises which Landlord has designated for such use, subject to (1) such
reasonable rules and regulations as Landlord may promulgate from time to time
and (2) rights of ingress and egress of other tenants and their employees,
agents and invitees. In addition, Landlord shall designate the parking spaces
set forth on EXHIBIT "C" attached hereto for the exclusive use of Tenant.
Landlord shall not be responsible for enforcing Tenant's parking rights against
third parties.

13. INSPECTION. Landlord and Landlord's agents and representatives may
enter the Premises during business hours upon reasonable notice to Tenant to:
inspect the Premises; to make such repairs as may be required or permitted under
this Lease; to perform any unperformed obligations of Tenant hereunder; and to
show the Premises to prospective purchasers, mortgagees, ground lessors, and
(during the last 12 months of the Term) tenants. During the last 12 months of
the Term, Landlord may erect a sign on the Premises indicating that the Premises
are available. Tenant shall notify Landlord in writing of its intention to
vacate the Premises at least sixty (60) days before Tenant will vacate the
Premises; such notice shall specify the date on which Tenant intends to vacate
the Premises (the "Vacation Date"). At least thirty (30) days before the
Vacation Date, Tenant shall arrange to meet with Landlord for a joint inspection
of the Premises. After such inspection, Landlord shall prepare a list of items
that Tenant must perform before the Vacation Date. If Tenant fails to arrange
for such inspection, then Landlord may conduct such inspection and Landlord's
determination of the work Tenant is required to perform before the Vacation Date
shall be conclusive. If Tenant fails to perform such work before the Vacation
Date, then Landlord may perform such work at Tenant's cost. Tenant shall pay all
reasonable and necessary costs incurred by Landlord in performing such work
within ten (10) days after Landlord's request therefor.

14. ASSIGNMENT AND SUBLETTING.

(a) Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably be withheld or delayed, (1) advertise that any
portion of the Premises is available for lease or cause or allow any such
advertisement, (2) assign, transfer, or encumber this Lease or any estate or
interest herein, whether directly or by operation of law, (3) sublet any portion
of the Premises, unless to an affiliate of Tenant, (4) grant any license,
concession, or other right of occupancy of any portion of the Premises, or (5)
permit the use of the Premises by any parties other than Tenant (any of the
events listed in Sections 14(a)(2) through 14. (a)(5) being a "TRANSFER"). If
Tenant requests Landlord's consent to a Transfer, then Tenant shall provide
Landlord with a written description of all terms and conditions of the proposed
Transfer, copies of the proposed documentation, and the following information
about the

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proposed transferee: name and address; reasonably satisfactory information about
its business and business history; its proposed use of the Premises; banking,
financial, and other credit information; and general references sufficient to
enable Landlord to determine the proposed transferee's creditworthiness and
character. Tenant shall reimburse Landlord for its reasonable attorneys' fees
and other expenses incurred in connection with considering any request for its
consent to a Transfer. If Landlord consents to a proposed Transfer, then the
proposed transferee shall deliver to Landlord a written agreement whereby it
expressly assumes the Tenant's obligations hereunder (however, any transferee of
less than all of the space in the Premises shall be liable only for obligations
under this Lease that are properly allocable to the space subject to the
Transfer, and only to the extent of the rent it has agreed to pay Tenant
therefor). Landlord's consent to a Transfer shall not release Tenant from
performing its obligations under this Lease unless Tenant dissolves or is
eliminated in connection with the Transfer, but rather Tenant and its transferee
shall be jointly and severally liable therefor. Landlord's consent to any
Transfer shall not waive Landlord's rights as to any subsequent Transfers. If an
Event of Default occurs while the Premises or any part thereof are subject to a
Transfer, then Landlord, in addition to its other remedies, may collect directly
from such transferee all rents becoming due to Tenant and apply such rents
against Tenant's rent obligations. Tenant authorizes its transferees to make
payments of rent directly to Landlord upon receipt of notice from Landlord to do
so. Notwithstanding anything to the contrary in the Lease, Tenant may, without
Landlord's prior written consent and without being subject to any bonus rent
provisions or cancellation rights, sublet the Premises or assign the Lease to
(a) a subsidiary, affiliate, division or corporation controlling, controlled by
or under common control with Tenant, (b) a successor corporation related to
Tenant by merger, consolidation, nonbankruptcy reorganization, or governmental
action, or (c) a purchaser of substantially all of Tenant's assets. A sale or
transfer of Tenant's capital stock shall not be deemed an assignment, subletting
or any other transfer of the Lease or the Premises.

(b) Landlord may, within thirty (30) days after submission of Tenant's
written request for Landlord's consent to a Transfer and subject to Section
14(a) above, cancel this Lease as of the date of the proposed Transfer was to be
effective. Landlord cancels this Lease as to any portion of the Premises, then
this Lease shall cease for such portion of the Premises and Tenant shall pay to
Landlord all rent accrued through the cancellation date relating to the portion
of the Premises covered by the proposed Transfer. Thereafter, Landlord may lease
such portion of the Premises to the prospective transferee (or to any other
person) without liability to Tenant.

(c) Tenant hereby assigns, transfers and conveys fifty percent (50%) of all
consideration received by Tenant under any Transfer, which are in excess of the
rents payable by Tenant under this Lease, and Tenant shall hold such amounts in
trust for Landlord an pay them to Landlord within ten (10) days after receipt.

15. CONDEMNATION. If more than 20% of the Premises is taken for any public
or quasi-public use by right of eminent domain or private purchase in lieu
thereof (a "Taking"), and the Taking prevents or materially interferes with the
use of the remainder of the Premises for the purpose for which they were leased
to Tenant, either party may terminate this Lease by delivering to the other
written notice thereof within thirty (30) days after the Taking, in which case
rent shall be abated during the unexpired portion of the Term, effective on the
date of such Taking. If (a) less than 20% of the Premises are subject to a
Taking or (b) more than 20% of the Premises are subject to a Taking, but the
Taking does not prevent or materially interfere with the use of the

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remainder of the Premises for the purpose for which they were leased to Tenant,
then neither party may terminate this Lease, but the rent payable during the
unexpired portion of the Term shall be reduced to such extent as may be fair and
reasonable under the circumstances. All compensation awarded for any Taking
shall be the property of Landlord and Tenant assigns any interest it may have in
any such award to Landlord; however, Landlord shall have no interest in any
award made to Tenant for loss of business or goodwill or for the taking of
Tenant's trade fixtures, if a separate award for such items is made to Tenant.

16. SURRENDER OF PREMISES; HOLDING OVER. No act by Landlord shall be an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender of the Premises shall be valid unless it is in writing and signed by
Landlord. At the end of the Term or the termination of Tenant's right to possess
the Premises, Tenant shall (1) deliver to Landlord the Premises with all
improvements located thereon in good repair and condition, reasonable wear and
tear (subject however to Tenant's maintenance obligations) excepted, and with
the HVAC System and hot water equipment, light and light fixtures (including
ballasts), and overhead doors and related equipment in good working order, (2)
deliver to Landlord all keys to the Premises, and (3) remove all signage placed
on the Premises, the Building, or the Land by or at Tenant's request. All
fixtures, alterations, additions, and improvements (whether temporary or
permanent) shall be Landlord's property and shall remain on the Premises except
as provided in the next two sentences. Provided that Tenant has performed all of
its obligations hereunder, Tenant may remove all unattached trade fixtures,
furniture, and personal property placed in the Premises by Tenant (but Tenant
shall not remove any such item which was paid for, in whole or in part, by
Landlord). Additionally, Tenant shall remove such alterations, additions,
improvements, fixtures, equipment, wiring, furniture, and other property as
Landlord may request, provided such request is made within six months after the
end of the Term. All items not so removed shall, at the option of Landlord, be
deemed abandoned by Tenant and may be appropriated, sold, stored, destroyed, or
otherwise disposed of by Landlord without notice to Tenant and without any
obligation to account for such items and Tenant shall pay for the costs incurred
by Landlord in connection therewith. Any such disposition shall not be
considered a strict foreclosure or other exercise of Landlord's rights in
respect of the security interest granted under Section 26. All work required of
Tenant under this Section 16.(a) shall be coordinated with Landlord and be done
in a good and workmanlike manner, in accordance with all Laws, and so as not to
damage the Building or unreasonably interfere with other tenants' use of their
premises. Tenant shall, at its expense, repair all damage caused by any work
performed by Tenant under this Section 16.(a).

(a) If Tenant fails to vacate the Premises at the end of the Term, then
Tenant shall be a Tenant at will and Tenant shall pay, in addition to the other
rent due hereunder, a daily base rental equal to 150% of the daily Base Rent
payable during the last month of the Term. Additionally, Tenant shall defend,
indemnify, and hold harmless Landlord from any damage, liability and expense
(including attorneys' fees and expenses) incurred because of such holding over.
No payments of money by Tenant to Landlord after the Term shall reinstate,
continue or extend the Term, and no extension of this Term shall be valid unless
it is in writing and signed by Landlord and Tenant.

17. QUIET ENJOYMENT. Provided Tenant has fully performed its obligations
under this Lease, Tenant shall peaceably and quietly hold and enjoy the Premises
for the Term,

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without hindrance from Landlord or any party claiming by, through, or under
Landlord, but not otherwise.

18. EVENTS OF DEFAULT.

Each of the following events shall constitute an "EVENT OF DEFAULT" under
this Lease:

(a) Tenant fails to pay any rent when due or any payment or reimbursement
required under any other lease with Landlord when due, and in either case such
failure continues for a period of five (5) days from the date such payment was
due; provided, however, that with respect to Tenant's first failure to pay rent
when due, such event shall not be deemed to be an Event of Default until ten
(10) days have passed after Landlord gives Tenant notice of such failure to pay.

(b) The filing of a petition by or against Tenant or any guarantor of
Tenant's obligations hereunder (1) in any bankruptcy or other insolvency
proceeding; (2) seeking any relief under any debtor relief Law; (3) for the
appointment of a liquidator, receiver, trustee, custodian, or similar official
for all or substantially all of Tenant's property or for Tenant's interest in
this Lease; or (4) for reorganization or modification of Tenant's capital
structure (however, if any such petition is filed against Tenant, then the
filing of such petition shall not constitute an Event of Default, unless it is
not dismissed within forty-five (45) days after the filing thereof).

(c) Tenant (1) vacates all or a substantial portion of the Premises or
(2) fails to continuously operate its business at the Premises for the permitted
use set forth herein.

(d) Tenant fails to discharge any lien placed upon the Premises in
violation of Section 22 within ten (10) days after Tenant discovers or is
notified that any such lien or encumbrance is filed against the Premises.

(e) Tenant fails to comply with any term, provision or covenant of this
Lease (other than those listed in this Section 18), and such failure continues
for twenty (20) days after written notice thereof to Tenant.

19. REMEDIES.

(a) Upon any Event of Default, Landlord may, in addition to all other
rights and remedies afforded Landlord hereunder or by Law, take any of the
following actions:

(1) Terminate this Lease by giving Tenant written notice thereof, in
which event, Tenant shall pay to Landlord the sum of (A) all rent accrued
hereunder through the date of termination, (B) all amounts due under
Section 19(b), and (C) an amount equal to (i) the total rent that Tenant
would have been required to pay for the remainder of the Term discounted to
Present value at a per annum rate equal to the "PRIME RATE" as published on
the date this Lease is terminated by The Wall Street Journal, Southwest
Edition, in its listing of "MONEY RATES", minus (ii) the then present fair
rental value of the Premises for such period, similarly discounted; or

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<PAGE>

(2) Terminate Tenant's right to possess the Premises without
terminating this Lease by giving written notice thereof to Tenant, in which
event Tenant shall pay to Landlord (A) all rent and other amounts accrued
hereunder to the date of termination of possession, (B) all amounts due
from time to time under Section 19(b), and (C) all rent and other sums
required hereunder to be paid by Tenant during the remainder of the Term,
diminished by any net sums thereafter received by Landlord through
reletting the Premises during such period; however, Landlord shall not be
obligated to relet the Premises and shall not be liable for, nor shall
Tenant's obligations hereunder be diminished because of, Landlord's failure
to relet the Premises or to collect rent due for a reletting. Tenant shall
not be entitled to the excess of any consideration obtained by reletting
over the rent due hereunder. Reentry by Landlord in the Premises shall not
affect Tenant's obligations hereunder for the unexpired Term; rather,
Landlord may, from time to time, bring action against Tenant to collect
amounts due by Tenant, without the necessity of Landlord's waiting until
the expiration of the Term. Unless Landlord delivers written notice to
Tenant expressly stating that it has elected to terminate this Lease, all
actions taken by Landlord to exclude or dispossess Tenant of the Premises
shall be deemed to be taken under this Section 19(a)(2). If Landlord elects
to proceed under this Section 19(a)(2), it may at any time elect to
terminate this Lease under Section 19(a)(1). Additionally, without notice,
Landlord may alter locks or other security devices at the Premises to
deprive Tenant of access thereto, and Landlord shall not be required to
provide a new key or right of access to Tenant.

(b) Tenant shall pay to Landlord all costs incurred by Landlord (including
court costs and reasonable attorneys' fees and expenses) in (1) obtaining
possession of the Premises, (2) removing and storing Tenant's or any other
occupant's property, (3) repairing, restoring, altering, remodeling, or
otherwise putting the Premises into condition acceptable to a new tenant, (4) if
Tenant is dispossessed of the Premises and this Lease is not terminated,
reletting all or any part of the Premises (including brokerage commissions, cost
of tenant finish work, and other costs incidental to such reletting), (5)
performing Tenant's obligations which Tenant failed to perform, and (6)
enforcing, or advising Landlord of, its rights, remedies, and recourses.
Landlord's acceptance of rent following an Event of Default shall not waive
Landlord's rights regarding such Event of Default. Landlord's receipt of rent
with knowledge of any default by Tenant hereunder shall not be a waiver of such
default, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless set forth in writing and signed by Landlord. No
waiver by Landlord of any violation or breach of any of the terms contained
herein shall waive Landlord's rights regarding any future violation of such term
or violation of any other term. If Landlord repossesses the Premises pursuant to
the authority herein granted, then Landlord shall have the right to (A) keep in
place and use or (B) remove and store, at Tenant's expense, all of the
furniture, fixtures, equipment and other property in the Premises, including
that which is owned by or leased to Tenant at all times before any foreclosure
thereon by Landlord or repossession thereof by any lessor thereof or third party
having a lien thereon. Landlord may relinquish possession of all or any portion
of such furniture, fixtures, equipment and other property to any person (a
"CLAIMANT") who presents to Landlord a copy of any instrument represented by
Claimant to have been executed by Tenant (or any predecessor of Tenant) granting
Claimant the right under various circumstances to take possession of such
furniture, fixtures, equipment or other property, without the necessity on the
part of Landlord to inquire into the authenticity or legality of the instrument.
Landlord may, at its option and without prejudice to or waiver of any rights it
may have, (i) escort Tenant to the Premises to retrieve any personal belongings
of Tenant and/or its employees not covered by the Landlord's statutory lien or
the

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security interest described in Section 26 or (ii) obtain a list from Tenant of
the personal property of Tenant and/or its employees that is not covered by the
Landlord's statutory lien or the security interest described in Section 26, and
make such property available to Tenant and/or Tenant's employees; however,
Tenant first shall pay in cash all costs and estimated expenses to be incurred
in connection with the removal of such property and making it available. The
rights of Landlord herein stated are in addition to any and all other rights
that Landlord has or may hereafter have at law or in equity, and Tenant agrees
that the rights herein granted Landlord are commercially reasonable.

20. LANDLORD'S DEFAULT. If Landlord fails to perform any of its obligations
hereunder within thirty (30) days written notice from Tenant specifying such
failure, Tenant's exclusive remedy shall be an action for damages. Unless
Landlord fails to so cure such default after such notice, Tenant shall not have
any remedy or cause of action by reason thereof. Liability of Landlord to Tenant
for any default by Landlord, shall be limited to actual, direct, but not
consequential, damages therefor and shall be recoverable only from the interest
of Landlord in the Building and the Land, and neither Landlord nor Landlord's
owners shall have any personal liability therefor.

21. MORTGAGES.

(a) This Lease shall be subordinate to any deed of trust, mortgage or other
security instrument (a "MORTGAGE"), and any ground lease, master lease, or
primary lease (a "PRIMARY LEASE") that now or hereafter covers any portion of
the Premises (the mortgagee under any Mortgage or the lessor under any Primary
Lease is referred to herein as "LANDLORD'S MORTGAGEE"), and to increases,
renewals, modifications, consolidations, replacements, and extensions thereof.
However, any Landlord's Mortgagee may elect to subordinate its Mortgage or
Primary Lease (as the case may be) to this Lease by delivering written notice
thereof to Tenant. The provisions of this Section 21 shall be self-operative,
and no further instrument shall be required to effect such subordination;
however, Tenant shall from time to time within ten (10) days after request
therefor, execute any instruments that may be required by any Landlord's
Mortgagee to evidence the subordination of this Lease to any such Mortgage or
Primary Lease. If Tenant fails to execute the same within such ten-day period,
Landlord may execute the same as attorney-in-fact for Tenant.

(b) Tenant shall attorn to any party succeeding to Landlord's interest in
the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure,
power of sale, termination of lease, or otherwise, upon such party's request,
and shall execute such agreements confirming such attornment as such party may
reasonably request. Tenant shall not seek to enforce any remedy it may have for
any default on the part of Landlord without first giving written notice by
certified mail, return receipt requested, specifying the default in reasonable
detail to any Landlord's Mortgagee whose address has been given to Tenant, and
affording such Landlord's Mortgagee a reasonable opportunity to perform
Landlord's obligations hereunder.

(c) Notwithstanding any such attornment or subordination of a Mortgage or
Primary Lease to this Lease, the Landlord's Mortgagee shall not be liable for
any acts of any previous Landlord, shall not be obligated to install the Initial
Improvements, and shall not be bound by any amendment to which it did not
consent in writing nor any payment of rent made

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<PAGE>

more than one month in advance. Notwithstanding anything to the contrary in this
Lease, this Lease shall not be subject or subordinate to any ground or
underlying lease, nor subordinate to any lien, mortgage, deed of trust or
security agreement now or hereafter affecting the Premises, nor shall Tenant be
required to execute any document subordinating this Lease unless the ground
lessor, lender, or other holder of the interest to which this Lease shall be
subordinated, contemporaneously executes a recognition and non-disturbance
agreement which (i) provides that this Lease shall not be terminated except in
accordance with the terms of this Lease and (ii) recognizes all of Tenant's
rights hereunder (an "SNDA"). In addition, Landlord shall use its best
reasonable efforts to obtain an SNDA from all mortgagees, lenders, ground
lessors, and other parties currently holding interests affecting the Premises or
the Building on or before the date which is two (2) weeks after the Commencement
Date.

22. ENCUMBRANCES. Tenant has no authority, express or implied, to create or
place any lien or encumbrance of any kind or nature whatsoever upon, or in any
manner to bind Landlord's property or the interest of Landlord or Tenant in the
Premises or to charge the rent for any claim in favor of any person dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs. Tenant shall pay or cause to be paid all sums due for
any labor performed or materials furnished in connection with any work performed
on the Premises by or at the request of Tenant. Tenant shall give Landlord
immediate written notice of the placing of any lien or encumbrance against the
Premises.

23. MISCELLANEOUS.

(a) Words of any gender used in this Lease shall include any other gender,
and words in the singular shall include the plural, unless the context otherwise
requires. The captions inserted in this Lease are for convenience only and in no
way affect the interpretation of this Lease. The following terms shall have the
following meanings: "LAWS" shall mean all federal, state, and local laws, rules,
and regulations; all court orders, governmental directives, and governmental
orders; and all restrictive covenants affective the Property, and "LAW" shall
mean any of the foregoing; "AFFILIATE" shall mean any person or entity which,
directly or indirectly, controls, is controlled by, or is under common control
with the party in question; and "TENANT PARTY" shall include Tenant, any
assignees claiming by, through, or under Tenant, any subtenants claiming by,
through, or under Tenant, and any of their respective agents, contractors,
employees, and invitees.

(b) Landlord may transfer and assign, in whole or in part, its rights and
obligations in the Building and property that are the subject of this Lease, in
which case Landlord shall have no further liability hereunder accruing
thereafter to the extent the transferee assumes such liability. Each party shall
furnish to the other, promptly upon demand, a corporate resolution, proof of due
authorization by partners, or other appropriate documentation evidencing the due
authorization of such party to enter into this Lease.

(c) Whenever a period of time is herein prescribed for action to be taken
by either party, such party shall not be liable or responsible for, and there
shall be excluded from the computation for any such period of time, any delays
due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations, or restrictions, or any other causes of any kind
whatsoever which are beyond the control of such party.

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<PAGE>

(d) Tenant shall, from time to time, within ten (10) days after request of
Landlord, deliver to Landlord, or Landlord's designee, a certificate of
occupancy for the Premises, financial statements for itself and any guarantor of
its obligations hereunder, evidence reasonably satisfactory to Landlord that
Tenant has performed its obligations under this Lease (including evidence of the
payment of the Security Deposit), and an estoppel certificate stating that this
Lease is in full effect, the date to which rent has been paid, the unexpired
Term and such other factual matters pertaining to this Lease as may be requested
by Landlord. Tenant's obligation to furnish the above-described items in a
timely fashion is a material inducement for Landlord's execution of this Lease.
If Tenant fails to execute any such estoppel certificate within such ten-day
period, Landlord may do so as attorney-in-fact for Tenant.

(e) This Lease constitutes the entire agreement of the Landlord and Tenant
with respect to the subject matter of this Lease, and contains all of the
covenants and agreements of Landlord and Tenant with respect thereto. Landlord
and Tenant each acknowledge that no representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein, and any
prior agreements, promises, negotiations, or representations not expressly set
forth in this Lease are of no effect. This Lease may not be altered, changed or
amended except by an instrument in writing signed by both parties hereto.

(f) All obligations of Tenant hereunder not fully performed by the end of
the Term shall survive, including, without limitation, all payment obligations
with respect to Taxes and insurance and all obligations concerning the condition
and repair of the Premises. Upon the end of the Term and before Tenant vacates
the Premises, Tenant shall pay to Landlord any amount reasonably estimated by
Landlord as necessary to put the Premises in good condition and repair,
reasonable wear and tear (subject however to Tenant's maintenance obligations)
excluded. Tenant shall also, prior to vacating the Premises, pay to Landlord the
amount, as estimated by Landlord, of Tenant's obligation hereunder for Operating
Expenses for the year in which the Term ends. All such amounts shall be used and
held by Landlord for payment of such obligations of Tenant hereunder, with
Tenant being liable for any additional costs therefor upon demand by Landlord or
with any excess to be returned to Tenant after all such obligations have been
determined and satisfied as the case may be. Any Security Deposit held by
Landlord may be credited against the amount due by Tenant under this Section
23.(f).

(g) If any provision of this Lease is illegal, invalid or unenforceable,
then the remainder of this Lease shall not be affected thereby, and in lieu of
each such provision, there shall be added, as a part of this Lease, a provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.

(h) All references in this Lease to "THE DATE HEREOF" or similar references
shall be deemed to refer to the last date, in point of time, on which all
parties hereto have executed this Lease.

(i) Landlord and Tenant each warrant to the other that it has not dealt
with any broker or agent in connection with this Lease. Tenant and Landlord
shall each indemnify the other against all costs, attorneys' fees, and other
liabilities for commissions or other compensation claimed by any broker or agent
claiming the same by, through, or under the indemnifying party.

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(j) If and when included within the term "TENANT", as used in this
instrument, there is more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of a notice
specifying an individual at a specific address within the continental United
States for the receipt of notices and payments to Tenant. All parties included
within the terms "LANDLORD" and "TENANT", respectively, shall be bound by
notices given in accordance with the provisions of Section 24 to the same effect
as if each had received such notice.

(k) The terms and conditions of this Lease are confidential and Tenant
shall not disclose the terms of this Lease to any third party other than to
potential investors, lenders, subtenants or assignees, in connection with any
public or private offering, or except as may be required by law or to enforce
its rights hereunder.

(l) Tenant shall pay interest on all past-due rent from the date due until
paid at the maximum lawful rate. In no event, however, shall the charges
permitted under this Section 23.(l) or elsewhere in this Lease, to the extent
they are considered to be interest under applicable Law, exceed the maximum
lawful rate of interest.

24. NOTICES. Each provision of this instrument or any of applicable Laws
and other requirements with reference to the sending, mailing or delivering of
notice or the making of any payment hereunder shall be deemed to be complied
with when and if the following steps are taken:

(a) All rent shall be payable to Landlord at the address for Landlord set
forth below or at such other address as Landlord may specify from time to time
by written notice delivered in accordance herewith. Tenant's obligation to pay
rent shall not be deemed satisfied until such rent has been actually received by
Landlord.

(b) All payments required to be made by Landlord to Tenant hereunder shall
be payable to Tenant at the address set forth below, or at such other address
within the continental United States as Tenant may specify from time to time by
written notice delivered in accordance herewith.

(c) Any written notice or documents required or permitted to be delivered
hereunder shall be deemed to be delivered upon the earlier to occur of (1)
tender of delivery (in the case of hand-delivered notice), (2) deposit in the
United States Mail, postage prepaid, Certified Mail, Return Receipt Requested,
or (3) receipt by facsimile transmission, in each case, addressed to the parties
hereto at the respective addresses set out below, or at such other address as
they have theretofore specified by written notice delivered in accordance
herewith. Tenant shall be deemed to have received any written notice of
documents required or permitted to be delivered hereunder if Landlord delivers
same by facsimile transmission to (972) 673-1602, Attn.:Buddy Rogers. If
Landlord has attempted to deliver notice to Tenant at Tenant's address reflected
on Landlord's books but such notice was returned or acceptance thereof was
refused, then Landlord may post such notice in or on the Premises, which notice
shall be deemed delivered to Tenant upon the posting thereof.

25. HAZARDOUS WASTE. The term "Hazardous Substances", as used in this
Lease, shall mean pollutants, contaminants, toxic, or hazardous wastes, or any
other substances

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<PAGE>

(excluding ordinary cleaning supplies), the removal of which is required or the
use of which is restricted, prohibited or penalized by any "Environmental Law",
which term shall mean any Law relating to health, pollution, or protection of
the environment. Tenant hereby agrees that (a) no activity will be conducted on
the Premises that will produce any Hazardous Substances, except for such
activities that are part of the ordinary course of Tenant's business activities
(the "Permitted Activities") provided such Permitted Activities are conducted in
accordance with all Environmental Laws and have been approved in advance in
writing by Landlord; (b) the Premises will not be used in any manner for the
storage of any hazardous Substances except for any temporary storage of such
materials that are used in the ordinary course of Tenant's business (the
"Permitted Materials") provided such Permitted Materials are properly stored in
a manner and location satisfying all Environmental Laws and approved in advance
in writing by Landlord; (c) no portion of the Premises will be used a landfill
or a dump; (d) Tenant will not install any underground tanks of any type; (e)
Tenant will not allow any surface or subsurface conditions to exist or come into
existence that constitute, or with the passage of time may constitute a public
or private nuisance; and (f) Tenant will not permit any Hazardous Substances to
be brought onto the Premises, except for the Permitted Materials, and if so
brought or found located thereon, the same shall be immediately removed by
Tenant, with proper disposal, and all required cleanup procedures shall be
diligently undertaken pursuant to all Environmental Laws. If at any time during
or after the Term, the Premises are found to be so contaminated or subject to
such conditions, Tenant shall defend, indemnify and hold Landlord harmless from
all claims, demands, actions, liabilities, costs, expenses, damages and
obligations of any nature arising from or as a result of the use of the Premises
by Tenant. Unless expressly identified on an addendum to this Lease, as of the
date hereof there are no "Permitted Activities" or "Permitted Materials" for
purposes of the foregoing provision and none shall exist unless and until
approved in writing by the Landlord. Landlord may during normal business hours
and upon reasonable notice to Tenant enter the Premises and conduct
environmental inspections and tests therein as it may require from time to time,
provided that Landlord shall use reasonable efforts to minimize the interference
with Tenant's business. Such inspections and tests shall be conducted at
Landlord's expense, unless they reveal the presence of Hazardous Substances
(other than Permitted Materials) or that Tenant has not complied with the
requirements set forth in this Section 25, in which case Tenant shall reimburse
Landlord for the cost thereof within ten (10) days after Landlord's request
therefor. To the best of Landlord's knowledge, without any independent
investigation, the Premises, Building, and Land contain no Hazardous Substances
and no Hazardous Substances were used in the construction of the Building and
Improvements.

26. TENANT'S OPTION TO PURCHASE. Tenant shall have the right of first
refusal to purchase the Building if an offer acceptable to Landlord is tendered
to Landlord during the Term. Tenant shall have a fifteen (15) day period from
receipt of Landlord's notification to Tenant of said offer within which to
accept or decline the offer under the same terms and conditions as the offer. If
Tenant declines the offer, Tenant's right of first refusal hereunder shall
thereafter be null and void and of no further force and effect.

27. TENANT'S RIGHT OF FIRST REFUSAL TO EXPAND PREMISES. If at any time
during the Term Landlord receives an offer to lease space within Buildings 1 and
3 of the Project of which the Premises are a part, and Landlord desires to
accept such offer, Tenant shall have the right of first refusal to lease the
specific space on the terms set forth in the offer. Tenant shall have fifteen
(15) days from the receipt of Landlord's notification to Tenant of said

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<PAGE>

offer to accept or decline the offer under the terms and conditions offered. If
Tenant shall not accept the offer, Tenant's right of first refusal shall be null
and void with respect to this specific offer (but not future offers for such
space or offers for other space within Buildings 1 and 3) and Landlord may lease
such space to the original offeror. If Tenant as Landlord does not lease that
space to the original offeror, Landlord shall be required to undertake the
aforementioned processes with respect to subsequent offerors.

28. PARKING LOT ADDITION. If at any time prior to the end of the second
year of the Term Tenant gives notice to Landlord of its request for construction
of additional parking, Landlord shall construct an additional paved parking lot
on the land adjacent to the east property line of the Land, such location to be
selected by Landlord and approved by Tenant in its reasonable discretion. The
parking lot will be constructed in accordance with specifications approved by
the City of Plano and will be completed within three (3) months of Tenant's
written request to Landlord, unless the City of Plano's approval processes
unreasonably delay the construction. In consideration of the foregoing, Tenant
will pay additional Rent to Landlord in accordance with the following formula:

50% of the cost of the parking lot improvements will be amortized and
paid to Landlord by Tenant along with interest at the rate of 12% over the
remaining Term, along with an annual interest return of 12% of the cost of
the land upon which the parking lot will be constructed, which land cost is
agreed to be equal to One Hundred Thirty Four Thousand Dollars
($134,000.00).

For example, if the improvements cost equals $110,000.000 and are
finished as of the end of 2nd year of the Term, then the additional annual
Rent shall equal:

Improvements $21,921.44
($55,000.00 amortized at 12% over 3 years)
Land $16,080.00
(12% of $134.000.00)
Annual Total Rent for parking lot $38,001.44
Monthly Rent $ 3,166.78

29. BUILDING ADDITION. If at any time prior to the end of the second year
of the Term Tenant gives notice to Landlord of its request for construction of
additional space in the Building, Landlord shall construct up to an additional
9,600 square feet of building area on the east side of the Premises, in
accordance with plans and specifications to be developed by Landlord and
approved by Tenant in its reasonable discretion. The additional square footage
will be of similar style and constructed to the same specifications and
governmental regulations as the Building. The new building area will be
constructed within four (4) months of Tenant's written notice to Landlord unless
the City of Plano's approval processes unreasonably delay the construction. In
consideration of the foregoing, Tenant will pay additional Rent to Landlord in
accordance with the following formula:

20
<PAGE>

60% of the interior improvement cost, not to exceed a total of
$240,000.00, will be paid to Landlord by Tenant, along with interest at the
rate of 12% over the remaining Term, along with an annual interest return
of 14% of the cost of the new Building improvements including, but not
limited to roof, walls, land, windows, parking lot, foundation, steel
structure, professional fees, testing labs, development fees, bank fees,
attorney fees, etc.

For example, if the interior improvements costs are $240,000.00, the
Building costs are $691,200.00, and are completed as of the end of the
second year of the Term, then the additional annual Rent payment shall
equal:

Improvements $ 57,394.32
($144,000.00 amortized at 12% over 3 years)
Building $ 96,768.00
(9,600 sf at $85.00 psf with a 14% interest rate)
Annual Total Rent for new improvements $154,162.32
$ 12,846.86

EXECUTED by Tenant on March 24, 2000.

TENANT:

Microtune, Inc.

By: /s/ Everett Rogers
-------------------------------
Name: Everett Rogers
Chief Financial Officer,
Vice President of Finance and
Administration

21
<PAGE>

EXECUTED by Landlord on March 24, 2000.

LANDLORD:

JUPITER SERVICE CENTER, LTD.

By: /s/ John Butten
--------------------------------
Its: General Partner

22
<PAGE>

EXHIBIT "A"

DESCRIPTION OF LAND

Lot A, Block 1, Jupiter Service Center, more commonly known as 2201 10th
Street, Plano, Texas 75074.
<PAGE>

EXHIBIT "B"

CONSTRUCTION AGREEMENT

1. PLANS.

(a) OUTLINE SPECIFICATIONS. Attached as Exhibit B-1 are the preliminary
plans and outline specifications for the construction of the interior
improvements in the Premises (the "Improvements") which are hereby approved by
Landlord and Tenant (the "Outline Specifications").

(b) DRAWINGS. Landlord shall cause to be prepared all plans and
specifications for the Improvements depicted on the Outline Specifications,
including, without limitation, working drawings, construction drawings,
electrical, plumbing and mechanical drawings necessary to construct the
Improvements (the "Drawings"), and shall be accompanied by an estimate of the
cost of constructing the Improvements. The initial Drawings shall be delivered
to Tenant as soon as reasonably practicable after the execution of this Lease.
Tenant shall notify Landlord whether it approves of the submitted Drawings
within fourteen (14) days after Landlord's submission thereof. If Tenant
disapproves of such Drawings, then Tenant shall notify Landlord thereof
specifying in detail the reasons for such disapproval, in which case, Landlord
shall correct the submitted Drawings and deliver them to Tenant for its approval
within ten (10) days after Landlord receives Tenant's notice disapproving the
submitted drawings. Tenant shall have five (5) days to approve or disapprove any
resubmitted Drawings, and Landlord shall have five (5) days to correct any such
resubmitted Drawings disapproved by Tenant. This process shall be repeated until
the Drawings have been finally approved.

(c) CHANGES. After approval of the Drawings, Landlord and Tenant shall
initial the plans in question. Tenant may from time to time make changes to the
Drawings by delivering written notice to Landlord, specifying in detail the
requested change. If Tenant requests any changes to any submitted Drawings that
relate to matters other than changes necessary to the conform the Drawings to
the Outline Specifications or requests any changes to the approved Drawings,
then (1) before any such change will be made, Tenant shall pay the difference
between (A) all additional costs in designing and constructing the Improvements
as a result of any such changes and (B) any reductions in costs in designing and
constructing the Improvements realized in connection with other change orders
and (2) all delays in designing and constructing the Improvements caused by such
changes shall not delay the Commencement Date.

2. CONSTRUCTION OF IMPROVEMENTS. Landlord shall diligently construct the
Improvements in accordance with the Drawings in a good and workmanlike manner
using materials specified in the Drawings and in compliance with Law and shall
pay for all permits, licenses, and all other governmental improvements requisite
for the construction thereof. Landlord assumes no liability for special,
consequential, or incidental damages of any kind whatsoever in connection with
the design or construction of the Improvements, and makes no representations,
warranties, or guaranties regarding the same, expressed or implied, including,
without limitation, warranties of merchantability, fitness for a particular
purpose, or of habitability, except for the one-year

1
<PAGE>

construction warranty provided in the next sentence. Landlord shall warrant that
the design and construction of the Improvements shall be free of defects for a
period of one (1) year after Substantial Completion.

3. SUBSTANTIAL COMPLETION. "Substantial Completion" shall occur when each
of the following conditions is satisfied: the Improvements are substantially
completed in accordance with the Drawings as certified by the architect
preparing the Shell Plans utilizing AIA document G704, Certificate of
Substantial Completion; the Premises may be lawfully occupied; and Landlord has
tendered to Tenant physical possession thereof. Substantial Completion shall
have occurred even though minor details of construction, decoration,
landscaping, and mechanical adjustments remain to be completed by Landlord.
Tenant shall prepare and deliver to Landlord a punch list of incomplete, minor,
detail items within thirty (30) days after Substantial Completion and Landlord
shall use all reasonable efforts to complete such items within thirty (30) days
thereafter, except as to such items that, by their nature, will take a longer
period to complete as set forth in the punch list. The "Target Date" for
Substantial Completion of the Improvements is July 1, 2000, with respect to the
first Thirty Thousand (30,000) square feet of the Premises and April 1, 2001
with respect to the remaining Thirteen Thousand Six Hundred and Eighty (13,680)
square feet. If Substantial Completion is delayed because of (a) any acts of a
Tenant Party, (b) changes requested by Tenant to any submitted Drawings that
relate to matters other than changes necessary to conform such drawings to the
Outline Specification or to comply with Law, or (c) changes requested by Tenant
in the approved Drawings other than changes necessary to conform such drawings
with Law, then the Commencement Date shall not be extended, but rather shall
start on the date which it would have occurred but for such event. Each day of
delay in Substantial Completion caused by the events described in clauses (a),
(b) or (c) of the preceding sentence or by a Tenant Party is herein called a
"Tenant Delay Day". If the actual date of Substantial Completion is delayed
beyond the Target Date, then Landlord shall have no liability therefor and the
date of Substantial Completion shall be extended by the period of any such
delay. This Lease shall remain in full effect notwithstanding any delay in
Substantial Completion.

4. ALLOCATION OF CONSTRUCTION COSTS. Landlord shall pay One Million Ninety-
Two Thousand Dollars ($1,092,000.00) toward the design and construction of the
Improvements depicted on the Outline Specifications. The allocation of these
costs shall be split pro rata between the two portions of the Premises to be
completed at different times. That is, Landlord shall pay Seven Hundred Fifty
Thousand Dollars ($750,000.00) toward the design and construction of the
improvements depicted on the outline specifications with respect to the first
Thirty Thousand (30,000) square feet to be part of the Premises and the
remaining portion for the second portion of the Premises, being the remaining
Thirteen Thousand Six Hundred (13,600) square feet of the Premises. All other
work required to design and construct the Improvements (the "Additional Work")
shall be performed at Tenant's expense. Tenant shall pay one-half (1/2) of the
costs required to be paid by Tenant hereunder upon Landlord's commencement of
construction of the Premises. Tenant shall pay all remaining costs upon
Substantial Completion. In the event that upon the completion of the design and
construction of the Improvements, the cost to Landlord for same is less than the
sums set forth above, Landlord shall apply such difference to Rent due from
Tenant after all Improvements are completed and accounting with respect thereto
is finalized.

2
<PAGE>

5. CONDITION OF PREMISES AT DELIVERY. Prior to delivery and possession of
the Premises to Tenant, Landlord will cause to be removed from the Premises all
rubbish, tools, scaffolding, and surplus materials and will cause the Premises,
interior and exterior, to be cleaned and ready for occupancy. All floors, floor
coverings, roof areas, and glass will be cleaned, both interior and exterior.
The HVAC System and all utility services will be installed and connected and in
good working order, subject to Tenant's obligations and responsibilities set
forth in Section 8 of the Lease.

<PAGE>

EXHIBIT 10.11

PROPERTY LEASING CONTRACT

No. 2820-4377

SANCTOR Grundstucks-Vermietungsgesellschaft mbH & Co.
Object TTHFT KG

_________________________________________________________________________

- - Lessor -

TEMIC TELEFUNKEN Hochfrequenztechnik GmbH, 85098 GroBmehring

_________________________________________________________________________

. Lessee -

I. Leased Property
---------------

Administrative building

_________________________________________________________________________

With a fractional tract of land still to be surveyed:

Land Register Description
Land Register of the Local Court Ingolstadt for mailing
Folio 74 Page 3098
Lot 375 Plot
Size approx. 5,974 m/2/

II. Total Lease Term: 22 years
----------------

Expected commencement of the total lease term on: 1 January 2000

III. Payments of the Lessee:
----------------------

Basis of calculation for the payments of the Lessee pursuant to No. 1, 3
and 5 are the Total Investment Costs (TIC)
<PAGE>

of presumably DM 7,000,00.00

of this
Land DM 1,732,460.00
Building DM 5,167,540.00 depreciation for wear and tear (AfA) 4.00
% p.a.
Other DM 100,000.00 depreciation for wear and tear(AfA) 4.54
% p.a.

Presumed contractual
remaining value at the end of the total lease term: DM 2,352,564.80

1. Payment upon Conclusion of Contract: - not applicable -

2. Payments prior to commencement of the total lease term:

a) Advance rent payment open pursuant to Supplementary Agreement
No. 1

b) Appropriation charge open pursuant to Supplementary Agreement
No. 1

3. Payments after commencement of the total lease term:

Rent open pursuant to Supplementary Agreement
No. 1

4. Adjustment of rent due to conversion
of interest (conversion date) on: open pursuant to Supplementary Agreement
No. 1

5. Share in management costs 0.32% p.a.

6. Ancillary Leasing Costs:

The Lessee reimburses the Lessor for documented ancillary leasing costs
pursuant to (S) 4 of the Leasing Conditions

7. Value Added Tax:

The respectively applicable statutory value added tax shall be paid in
addition to payment upon conclusion of contract, to payments prior to
commencement of the
<PAGE>

total lease term, rent payments, share in management costs and to ancillary
leasing costs if the Lessor does not exercise the opportunity to waive tax
exemption pursuant to Section 9 Turnover Tax Act (UstG) - in whole or in
part - (VAT Option).

8. VAT-free Leasing:

Insofar as the Lessor is not entitled to input tax deduction due to VAT-free
leasing, in addition to the share in management costs and ancillary leasing
costs pursuant to the no. 5 and 6 above, the Lessee shall reimburse the
Lessor an additional charge in the amount of the statutory VAT.

IV. Rent Payment Account of the Lessor: Account no. 206 300 630
----------------------------------
Deutsche Bank AG, Dusseldorf
Bank Code No. 300 700 10

V. Account No. Of the Lessee (for direct debiting system): - to be provided
------------------------------------------------------
later -

VI. Supplementary Agreements:
------------------------

Supplementary Agreement No. 1 "Open Conditions"

VII. Provision of Documents:
----------------------

Lessee is obligated to provide the following documents:

Evidence pursuant to (S) 2 no. 8
<PAGE>

LEASING CONDITIONS

(S) 1

Commencement of the Total Lease Term

The total lease term commences when the Lessee takes over the Leased Property.
The take-over, which will be documented in a protocol, shall take place upon
completion of the Leased Property and/or upon its purchase by the Lessor. The
Lessor does not guarantee for compliance with the expected time of take-over
stated in No. II above. The Lessee is not entitled to refuse to take over the
Leased Property due to insignificant defects (in accordance with Section 12 no.
3 Standard Official Contracting Terms (VOB) Part B).

(S) 2

Payments of the Lessee

1. Payment upon conclusion of contract

- not applicable -

2. Payments prior to commencement of the total lease term

a) Advance rent payment:

The advance rent payment is the payment for investment funds paid by
the Lessor. Until the input tax is refunded by the tax office,
interest at a rate of 5% p.a. above the respective discount rate of
the German Federal Bank shall be paid by the Lessee on VAT paid by the
Lessor and to be claimed as input tax vis-a-vis the tax office. This
also applies to VAT on investment funds which the Lessor does not pay
out until after commencement of the total lease term.

b) Appropriation Charge

The appropriation charge is the charge for investment funds which have
been appropriated by the Lessor but not yet paid out.
<PAGE>

These payments shall be calculated on a monthly basis according to the
balance as of the end of the respective month of the investment funds
paid out (advance rent payment) and/or investment funds not yet paid
out (appropriation charge).

3. Payments after commencement of the total lease term

a) Rent payments shall be calculated on the basis of the final total
investment costs ((S) 3)

b) - not applicable -

4. Adjustments

As of each agreed conversion date, the Lessor is entitled and obligated to
adjust the rent payments for the next fixed-rate period using the same
method of calculation and taking into consideration the repayments
contained in the rent payments up to that point in time, the remaining time
of the respective rent period and the interest rate which must be agreed
with the Lessee in a timely manner prior to the conversion date. If the
Lessor and the Lessee cannot agree on the interest rate, the Lessee is
entitled and obligated to raise a substitute loan. The nominal interest
rate of such loan must, however, be at least 0.1% less than the loan
proposed by the Lessor. Additionally, the substitute loan raised by the
Lessee must correspond to the other terms of financing up to now. As long
as an agreement regarding the interest rate is not reached, the Lessor
shall take the respective interest rate for current accounts credits of the
present financing bank as a basis for the calculation of rent payments. The
costs for possible debt refinancing shall be borne by the Lessee.

5. Share in Management Costs

The share in management costs to be paid as of conclusion of the Contract
shall be increased annually by 2% of the amount of the previous year.

6. Ancillary Leasing Costs

The Lessee shall reimburse the Lessor for documented ancillary leasing
costs listed in (S) 4.
<PAGE>

7. Depreciation

The rent underlies the depreciation rates defined in no. III. In the event
of a change to the depreciation rates becoming necessary as a result of a
change in the useful life (depreciation period), the rent shall be adjusted
accordingly. This also applies to any change in the basis for depreciation
which should become necessary.

8. Input Tax Deduction

To the extent permissible by law, the Lessor shall waive exemption from VAT
pursuant to Section 9 Turnover Tax Act (in the binding version of the Tax
Abuse Correction Act (StMBG)) for the leasing of the Leased Property and/or
of independent parts of the building of the Leased Property.

To this extent, the Lessee is obligated to use the Leased Property and/or
independent parts of the building exclusively or nearly exclusively (at
least 95%) for activities which do not exclude input tax deduction. Should
the Lessee intend to deviate from this type of use, the Lessee shall
immediately inform the Lessor of this and is obligated to reimburse the
Lessor for any tax disadvantages arising from this.

The Lessee shall enable the Lessor to comply with its statutory obligations
to provide evidence by providing suitable documents for this purpose.

Should the Lessor be required to repay refunded input tax because the
prerequisites of Section 9 para. 2 Turnover Tax Act are not or are no
longer fulfilled, it is intended to include the input tax repayment of the
Lessor in the TIC and to increase this accordingly; however, this action
will only be taken insofar as the refinancing of the Lessor is secured and
its supervisory bodies have approved the increase of the TIC. Otherwise
the amounts of input tax repayment levied against the Lessor shall be
billed to the Lessee as advance rent payments being immediately due for
payment.

Input tax refunds to the Lessor due to change in use within the meaning of
Section 9 para. 2 Turnover Tax Act shall be passed on to the Lessee within
the scope of a rent refund. The Lessor reserves the right of set-off
against future rent due.

Reciprocal claims based on the aforementioned agreements are barred under
the statute of limitations six months after the date on which the
limitation according to the respective provisions of the Tax Code
(Abgabenordnung) has occurred.
<PAGE>

(S) 3

Basis for Calculation
of the Payments of the Lessee
Total Investment Costs (TIC)

1. The basis for calculation of the payments of the Lessee pursuant to (S) 2
no. 1, 3 and 5 are all expenses which the Lessor incurs through the
purchase of the real estate and the acquisition and/or erection of the
Leased Property, meaning inter alia:

The purchase price including ancillary costs of purchase (such as costs of
notarisation) and/or building costs including public charges as well as
costs billed by third parties to the Lessor for evaluation and loans. Also
included in the expenses are the property acquisition tax and development
costs irrespective of when they were incurred, and also those costs which
are not billed to the Lessor until after the Leased Property is taken over
pursuant to (S) 1 and/or following determination of the TIC pursuant to no.
2 below. TIC does not include the VAT on the TIC paid by the Lessor for
that portion of investment funds for which the Lessor has exercised the
VAT-option.

2. The TIC shall be determined jointly by the parties after receipt of all
invoices. The payments of the Lessee pursuant to (S) 2 no. 1, 3, and 5 and
the contractual remainder according to No. III. shall be brought into line
with the determined TIC.

3. In the event of the anticipated TIC being exceeded, the Lessor can demand
that the Lessee deem the missing amounts to be lost subsidies up to a
maximum amount of 10% of the anticipated TIC. Should the anticipated TIC
not be reached, then the Lessee must reimburse the Lessor for costs which
the Lessor incurs due to not using investment funds which were appropriated
but not paid out.

(S) 4

Ancillary Leasing Costs

Ancillary leasing costs include all incidental costs not be capitalised which
are incurred for the Leased Property as of conclusion of the Contract, inter
alia:

1. costs for concluded insurance policies ((S) 9);
<PAGE>

2. ongoing performance of obligations from a real estate purchase contract
concluded by the Lessor;

3. all taxes, charges, contributions and fees in connection with the Leased
Property, as well as other burdens and obligations of all types relating to
the Leased Property, in particular, property tax, waste disposal, street
cleaning, canal cleaning and chimneysweep, also when these are newly
implemented during the time period of the lease;

4. trade tax which possibly becomes due for the Lessor and/or its shareholders
or the respective parent company as well as wealth tax possibly becoming
due and corporation tax being levied thereon;

In the case of taxes due on shareholder level, this only applies for cases
where, due to its participation, Deutsche Immobilien Leasing GmbH
Dusseldorf or one of its affiliated companies is additionally burdened with
the aforementioned taxes;

Ancillary costs also include taxes and charges which may be newly
implemented as well as ancillary tax payments arising from interest
payments being levied on the aforementioned taxes;

5. Miscellaneous costs which are incurred by the Lessor in its capacity as
Property Company, e.g., costs of foundation, costs for necessary amendments
to the Articles of Association, annual auditing costs, IHK dues, etc.

(S) 5

Terms of Payment

1. Payments of the Lessee are basically to be made irrespective of the
condition and suitability for use of the Leased Property. In the event
that the Leased Property has defects or is not able to be used, the Lessee
is also not entitled to reduce payments in whole or in part, to withhold
payments or to set off against these payments, unless these are undisputed
claims or claims which have been determined by a final decision. The
Lessee can demand reduction of its payment obligations in the event of
accidental loss of the Leased Property, in whole or in part, or whole or
partial destruction for which the Lessee is not responsible, or if the use
of the Leased
<PAGE>

Property is precluded for a long period of time for reasons for which the
Lessee is not responsible.

2. Payments of rent and the share in management costs are due pro rata monthly
in advance on the third calendar day of the respective month (credit of the
value to the rent receipt account of the Lessor). Ancillary costs and
advance rent payments and appropriation charges are due for payment 14 days
after date of invoice.

3. Should the Lessee not comply with the agreed payment dates, then,
notwithstanding a further loss incurred due to default in payment, the
Lessor is entitled to demand default interest of 5% above the discount rate
of the German Federal Bank on the arrears, unless the Lessee provides
evidence that the loss was not suffered or was of a lower amount.

4. The Lessee authorises the Lessor to collect payments due by direct debiting
to the Lessee's account stated in no. V.

5. Should payments of the Lessee not be sufficient to fully cover all its
obligations vis-a-vis the Lessor, the Lessor can decide for which purpose
and in which sequence the payments are to be used.

(S) 6

Execution of Contract

The Lessor shall provide the Lessee the contracts to be concluded by the Lessor
and which are in connection with the procurement and erection of the Leased
Property for the Lessee's approval. By way of approval, the Lessee accepts that
the Lessor will fulfil all payment obligations which result from these contracts
and their execution to the account of the TIC pursuant to (S) 3 or the ancillary
leasing costs pursuant to (S) 4.
<PAGE>

(S) 7

Liability, Maintenance
Repair and Bearing of Risk

1. The Lessee shall, at its cost, maintain the Leased Property in good and
always functional condition for use in conformance with the contract. Costs
for operation, maintenance and upkeep as well as all repairs including
interior decoration shall be borne by the Lessee. In the event of
destruction of the Leased Property, in whole or in part, the Lessee is also
obligated to restore and/or rebuild the Leased Property at its expense
unless the Lessee is not responsible for the whole or partial destruction.
The risk of accidental whole or partial loss of the Leased Property shall
be borne by the Lessor.

After unsuccessful reminders, the Lessor is entitled to have necessary
repairs carried out at the expense of the Lessee.

Compensation payments by third parties (insurance companies, damaging
parties, etc.) shall be reimbursed to the Lessee in an amount which the
Lessee has expended for work carried out in connection with the damage
incurred or which shall be expended for work still to be carried out.

2. The Lessee assumes the full duty to maintain safety for the Leased Property
and its components and indemnifies the Lessor for all claims of third
parties in this regard.

3. The Lessee shall comply with all statutory and public regulations and
requirements. The Lessee shall also fulfil all obligations which the
Lessor would encounter in its capacity as owner, such as for example, the
obligations from a liability for condition of the property. In this
regard, the Lessee indemnifies the Lessor for all claims of third parties
including state institutions which occur during the time the Lessee has
possession of the Leased Property or during the term of the Contract -
beginning with conclusion of the Contract - in connection with the
planning, erection, possession and use of the Leased Property. This
indemnification also applies in particular to claims in connection with the
avoidance or removal of substances endangering the environment. All costs
for facilities and installations which become necessary due to statutory
regulations or public requirements shall be borne by the Lessee. Any
amounts paid by the Lessor due to such demands shall be reimbursed without
delay by the Lessee upon the provision of evidence.
<PAGE>

A claim against the Lessee to indemnification of the Lessor does not exist
if the circumstances of the claim of a third party were not caused by the
Lessee. The indemnification claims of the Lessor in the event of an
extraordinary termination before the Leasing Property is taken over are
provided for in (S) 11 no. 5.

(S) 8

Warranty

1. The Lessee cannot enforce claims against the Lessor due to defects or due
to limitation of use of the Leased Property unless the Lessor has caused
this with intent and gross negligence or another clause of this Contract
provides otherwise.

2. Herewith, the Lessor assigns to the Lessee the warranty claims against
third parties to which the Lessor is entitled as well as claims from
positive breach of contract. The Lessee accepts the assignment and is
obligated to enforce the claims without delay at its expense; in case of
emergency, the Lessor shall file a law suit in a timely manner and take the
necessary enforcement measures.

Should the assigned warranty claims prove to be without value for reasons
for which the Lessee is not responsible, the warranty claims of the Lessee
vis-a-vis the Lessor shall be revived.

3. The Lessee shall demand payment be made to the Lessor and shall keep the
Lessor informed on the progress of the proceedings.

The Lessor is obligated at its discretion to use the payments it has
received from warranty claims and positive breach of contract either to
restore the Leased Property or to newly determine the payments of the
Lessee.

(S) 9

Insurance

1. In co-ordination with the Lessee, the Lessor shall take out the following
insurance:
<PAGE>

a) "All Risk" insurance against unnamed risks in an amount of the new
value with an additional value clause and/or of a sliding-scale new
value. Clean up, demolition and fire extinguishing costs shall also be
covered by the insurance. To the extent necessary, the Lessor reserves
the right in co-ordination with the Lessee to insure further areas of
cost.

b) House and property owner liability insurance including water damage
liability insurance to the extent necessary according to type of
operation.

The costs shall be billed to the Lessee by the Lessor as ancillary leasing
costs pursuant to (S) 4 no. 1.

2. The Lessee shall notify the Lessor without delay of any missing or
insufficient insurance coverage. A notification obligation also exists in
particular when carrying out the installation of interior fittings and when
undertaking constructional modifications or changes of use. Such measures
must be notified to the Lessor prior to their execution.

The Lessee undertakes to observe the regulations of statute and the police.
In addition, the Lessee undertakes to observe safety regulations and the
requirements of the insurance company which is a party to the insurance
contract; the basis for this is the respective valid insurance contract.

3. The Lessee shall notify the Lessor without delay of a damage claim and
shall ensure that the location of the damage remains unchanged until it has
been inspected by the insurance company. This does not affect measures
which are necessary to minimise the damage or to avoid any further damage.
On its own behalf and for its own account the Lessee instructs specialised
companies to take the necessary safety measures and subsequently to remove
the damage. After examination and payment, the Lessee shall submit the
invoice to the Lessor who shall submit this invoice to the insurance
company.

4. The Lessor is obligated to use the full amount of compensation received
from the insurance company for the restoration of the Leased Property or at
the Lessor's discretion to make this amount available to the Lessee for
this purpose. The additional costs in addition to the insurance payment
still required to fully restore the Leased Property as well as any costs
for expert opinions shall be born by the Lessee unless the Lessee is not
responsible for the whole or partial destruction of the Leased Property.
<PAGE>

The Lessee is not entitled to a right to repossess or a claim to
compensation in respect of the additional expenses.

(S) 10

Fittings and Modifications

1. Fittings and modifications - also changes in type of use - are permissible
without the consent of the Lessor if they do not affect the value and the
functioning of the Leased Property and all required approvals under public
law are on hand prior to execution. In all other cases, the prior written
consent of the Lessor shall be obtained. The consent can only be refused
for important reason.

2. In order to maintain insurance coverage, the Lessee shall notify the Lessor
of such fittings and modifications to the Leased Property which are
permissible without the consent of the Lessor.

3. The Lessee shall notify the Lessor without delay in the event the Lessee
vacates the Leased Property prematurely or changes the type of use.

4. The Lessor shall not make any reimbursement for fittings, expansions or
reconstruction measures, also when they become major components of the
Leased Property. The Lessee has the right to repossess fittings provided
that the Lessee restores the Leased Property to its original condition.

(S) 11

Premature Termination of the Contract

1. This Contract basically cannot be terminated.

2. However, each party has the right to terminate the Contract without notice
for important reason. In particular, an important reason is if

a) the purchase or the construction of the Leased Property finally does
not take place for reasons for which the terminating party is not
responsible;
<PAGE>

b) the other party discontinues its payments, or settlement or bankruptcy
proceedings are commenced against the assets of the other party, or the
commencement is refused for insufficiency of assets, or other court or
out of court procedures for the settlement of debts are initiated;

c) a substantial impairment of the basis for liability of the other party
as against the situation at the time of conclusion of the Contract has
occurred and the entitlements of the terminating party are endangered
by this;

d) the other party does not comply with major contractual obligations
within two months despite written reminder of the contracting partner
or does not remedy substantial consequences of the breach of contract
without delay.

3. In addition to this, the Lessor has the right to termination without notice
if

a) the Lessee is in arrears with payment obligations under this Contract
of more than two rent payments for a period of more than two months,
despite written reminder of the Lessor;

b) the conditions under no. 2 b) and c) exist for a third party that has
taken the responsibility for the obligations of the Lessee as
guarantor, joint debtor or in another manner.

4. The Lessor is obligated to withdraw the extraordinary termination and to
continue the Contract on the same conditions if the Lessee fulfils the
payment obligations in arrears within a time limit of six weeks after
receipt of the termination or provides adequate collateral. The same
applies if the Lessee fulfils its other main contractual obligations
without delay and eliminates the main consequences of the breach of
contract within a time limit of six weeks after receipt of the termination.
The Lessor shall inform the Lessee of this regulation in the event of
extraordinary termination.

5. Should the Contract be terminated without notice before the Leased Property
is taken over for reasons for which the Lessee is responsible, the Lessee
shall reimburse the Lessor for investment costs incurred or which will be
incurred in the execution of this Contract. To the extent that the Lessor
incurs necessary one-time or continuing expenses, e.g., from the property,
the Lessee shall also reimburse these costs. Furthermore, the Lessee also
reimburses the Lessor, following provision of evidence, for costs resulting
from the investment funds, which have
<PAGE>

been appropriated by the Lessor, not being utilised. The Lessor can require
the Lessee to enter into all contracts concluded with third parties in
fulfilment of this Contract in place of the Lessor and indemnifies the
Lessor for all obligations in connection with the contract.

Additionally, for own costs of the Lessor in connection with the premature
termination, the Lessee shall pay the Lessor a share in management cost of
2% of the anticipated TIC defined under No. III. Any payment made upon
conclusion of contract shall be credited against this.

Should the Lessor have entered into obligations pursuant to (S) 6 in
connection with the leasing commitment at the express wish and in co-
ordination with the Lessee, the Lessee shall be subject to the
aforementioned obligations to reimbursement and/or indemnification also
then when neither the Lessee nor the Lessor is responsible for the
termination.

6. Should the Contract be terminated after the Leased Property has been taken
over for reasons for which the Lessee is responsible, the Lessee is
obligated to reimburse the Lessor until expiration of the total lease term
for damage which it incurs due to the premature termination of the
Contract, in particular because the Lessor cannot lease or exploit the
Leased Property or only on conditions which are less favourable. Benefits
which the Lessor receives from a lease or exploitation of the Leased
Property shall be credited against the damage claim of the Lessor.

7. Lost subsidies ((S) 3) shall not be reimbursed either in the event of
premature termination or of regular termination of this Contract.

8. The statutory termination right upon the death of the Lessee pursuant to
Section 569 German Civil Code (BGB) is excluded.

(S) 12

Miscellaneous

1. Sub-leasing, assignment of claims from sub-lease relationships

Sub-leasing is permitted with the prior consent of the Lessor; the Lessor
can only object to sub-leasing for important reason. The statutory right to
termination
<PAGE>

pursuant to Section 549 para. 1 sentence 2 German Civil Code is excluded.
In order to provide collateral for all claims of the Lessor from this
Contract, already now, the Lessee herewith assigns its present and future
claims from sub-lease relationships (also rights to alter a legal
relationship as well as the right to terminate the sub-lease relationship
and also the landlord's lien) to the Lessor. The Lessor accepts the
assignment and is entitled to reveal such.

2. Disposition/Assignment

The Lessee shall only assign the claims and rights from this Contract to
third parties with prior consent of the Lessor.

3. Right to Inspection

Following prior co-ordination with the Lessee, the Lessor has the right to
inspect the Leased Property or to have such inspection conducted by
authorised parties during normal business hours.

4. Obligation of Operation

The Lessee is obligated to maintain business operations in the Leased
Property during the term of the Contract which are appropriate to the
Leased Property.

5. Return of the Leased Property

Upon termination of this Contract, the Leased Property shall be returned to
the Lessor in a condition ready for occupancy and - insofar as the Lessee
is responsible for any environmental pollution - free from any substances
endangering the environment.

6. Disclosure of Information

The Lessee shall submit its annual accounts as well as business and/or
audit report to the Lessor annually. Major changes in the Lessee's
property, economic and business situation shall be notified to the Lessor
without request and in a timely manner.
<PAGE>

7. Legal Successor

The Lessor and the Lessee are obligated to transfer their obligations from
this Contract to any contingent legal successor.

8. Amendments to the Contract and Additional Agreements

Amendments to the Contract and additional agreements must be in writing.
Oral agreements require written confirmation.

9. Validity

Should one or several provisions of this Contract be or become invalid, all
the remaining provisions shall remain valid. The contracting parties are
obligated to provide analogous amendments to the Contract.

10. Disposition over Investment Funds

The Lessor cannot dispose over the appropriated investment funds until the
transfer of ownership for the land required for the Leased Property free of
encumbrances to the Lessor has been secured, the encumbrance of the land in
favour of the financing bank in the proper priority ranking has been
documented and the documents described in No. VI. and VII. have been
received by the Lessor. If payments must be made prior to the Lessor
having disposal over the investment funds, the Lessor shall advance the
funds.

11. Priority Ranking

- not applicable -

12. Offer of the Lessee

The Lessee makes an offer to the Lessor to conclude the aforementioned
Property Leasing Contract. The leasing offer of the Lessee shall be
binding for six weeks following receipt by the Lessor.

Dusseldorf, 29 December 1998 GroBmehring, 17 December 1998
<PAGE>

SANCTOR Grundstucks-Vermietungs- TEMIC TELEFUNKEN
gesellschaft mbH & Co. Hochfrequenztechnik GmbH
Objekt TTHFT KG KriegsstraBe
D-85098 GroBmehring

[signature] [signature]
[Illegible] /s/ Martin Englmeier
- ------------------------- -------------------------
Lessor Lessee
<PAGE>

Supplement No. 1

PROPERTY LEASING CONTRACT

No. 2820-4377

SANCTOR Grundstucks-Vermietungsgesellschaft mbH & Co.
Object TTHFT KG

_________________________________________________________________________

- - Lessor -

TEMIC TELEFUNKEN Hochfrequenztechnik GmbH, 85098 GroBmehring

_________________________________________________________________________

- - Lessee -

I. Leased Property
---------------

Administrative building
_________________________________________________________________________

With a fractional tract of land still to be surveyed:

Land Register Description
Land Register of the Local Court Ingolstadt for mailing
Folio 74 Page 3098
Lot 375 Plot
Size approx. 5,974 m/2/

II. Total Lease Term: 22 years
----------------

Expected commencement of the total lease term on: 1 January 2000
<PAGE>

III. Payments of the Lessee:
----------------------

Basis of calculation for the payments of the Lessee pursuant to No. 1, 3
and 5 are the Total Investment Costs (TIC)

of presumably DM 7,000,00.00

of this
Land DM 1,732,460.00
Building DM 5,167,540.00 depreciation for wear and tear (AfA) 4.00
% p.a.
Other DM 100,000.00 depreciation for wear and tear(AfA) 4.54
% p.a.

Presumed contractual
remaining value at the end of the total lease term: DM 2,352,564.80

1. Payment upon Conclusion of Contract: - not applicable -

2. Payments prior to commencement of the total lease term:

a) Advance rent payment
for partial Total Investment Costs of
DM 4,750,000.00 (KfW funds) as of
date of payment until 30 June 1999 DM 17,614.58 per month

for partial Total Investment Costs of
DM 4,750,000.00 (KfW funds)
from 1 July 1999 to 31 December 1999 DM 30,227.68 per month

for partial Total Investment Costs of
DM 2,250,000.00 DM 9,187.50 per month

b) Appropriation charge for
partial Total Investment Costs of
DM 4,750,000.00 (KfW funds) 0.25% per month as of
13 March 1999
<PAGE>

3. Payments after commencement of the total lease term:

Rent:

For partial Total Investment Costs of
DM 4,750,000.00 (KfW funds)
from 1 January 2000 to 31 December 2018: DM 30,227.68 per month
from 1 January 2019 to 31 December 2019: DM 30,227.67 per month

For partial Total Investment Costs of
DM 2,250,000.00: DM 9,187.50 per month

4. Adjustment of rent due to conversion
of interest (conversion date):

for partial Total Investment Costs of
DM 4,750,000.00 (KfW funds) on: 30 June 2009

for partial Total Investment Costs of
DM 2,250,000.00 on: 31 December 2008

5. Share in management costs

for partial Total Investment Costs of
DM 4,750,000.00 (KfW funds) - not applicable -

for partial Total Investment Costs of
DM 2,250,000.00: 1.0% p.a.

6. Ancillary Leasing Costs:

The Lessee reimburses the Lessor for documented ancillary leasing costs
pursuant to (S) 4 of the Leasing Conditions

7. Value Added Tax:

The respectively applicable statutory value added tax shall be paid in
addition to payment upon conclusion of contract, to payments prior to
commencement of the total lease term, rent payments, share in management
costs and to ancillary leasing
<PAGE>

costs if the Lessor does not exercise the opportunity to waive tax
exemption pursuant to Section 9 Turnover Tax Act (UstG)- in whole or in
part - (VAT Option).

8. VAT-free Leasing:

Insofar as the Lessor is not entitled to input tax deduction due to VAT-
free leasing, in addition to the share in management costs and ancillary
leasing costs pursuant to no. 5 and 6 above, the Lessee shall reimburse the
Lessor an additional charge in the amount of the statutory VAT.

IV. Rent Payment Account of the Lessor: Account no. 206 300 630
----------------------------------
Deutsche Bank AG, Dusseldorf
Bank Code No. 300 700 10

V. Account No. Of the Lessee (for direct debiting system): - to be provided
------------------------------------------------------
later -

VI. Supplementary Agreements:
------------------------

Supplementary Agreement No. 1 "Open Conditions"

VII. Provision of Documents:
----------------------

Lessee is obligated to provide the following documents:

Evidence pursuant to (S) 2 no. 8

<PAGE>

Exhibit 10.12

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENTS:

This Contract of Lease, made and executed by and between:

MX TECHNOLOGY CORPORATION, a corporation organized and
existing under Philippine laws, with principal office at 10-D JMT
Building, ADB Avenue, Pasig City, Metro Manila, duly represented
in this act by its President, Manuel L. Olivan, hereinafter
referred to as the "LESSOR";

- and -

TEMIC RF-TECHNOLOGIES (PHILS.), INC., a corporation duly
organized and existing under Philippine laws, with principal
office at 2nd Floor, Temic Building, Bagsakan Road, FTI Estate,
Taguig, Metro Manila, duly represented in this act by its
Chairman & President, Martin Hans Josef Englmeier, hereinafter
referred to as the "LESSEE".

(collectively referred to hereafter as the "PARTIES")

WITNESSETH, THAT:

The LESSOR is the owner of a factory located at the Granville Industrial
Complex, Bo. Bancal, Carmona, Cavite;

The LESSEE desires, and the LESSOR is willing, to lease floor space within
the factory consisting of an area of 570 square meters (19 meters x 30 meters),
more or less, together with certain facilities and conveniences, hereinafter
referred to as the "LEASED PREMISES";

NOW, THEREFORE, the LESSOR lets and by there presents does hereby let and
lease unto the LESSEE the LEASED PREMISES, and the LESSEE hereby accepts the
same by way of lease, subject to the following terms and conditions:
<PAGE>

1. THE LEASED PREMISES: The LEASED PREMISES consist of floor space within
the factory premises of the LESSOR, containing an area of 570 sq. m., more or
less, and includes the following:

1.1 Electricity 1.4 Compressed Air

1.2 Lighting 1.5 Emergency Power

1.3 Air Conditioning 1.6. One (1) Telephone Line for
the exclusive use of the
LESSEE

The LEASED PREMISES shall also include access to-and-use of the canteen and
comfort rooms, janitorial services, and 24-hour security services to safeguard
and protect the LESSEE's employees and properties. For purposes of determining
electrical consumption on the 570 sq. m. floor space occupied by the LESSEE, the
LESSOR to his own account shall install a separate electric meter.

2. PERIOD: This lease shall be for a term of at least six (6) months and
up to one (1) year, commencing on January 1, 1999.

3. AMOUNT OF RENT: The monthly rental for the LEASED PREMISES as proposed
by the LESSOR and accepted by the LESSEE shall be Pesos Two Hundred Fifty per
square meter (P250.00/sq. m.), Philippine currency, plus the ten percent (10%)
value-added tax (VAT). The LESSEE shall deduct from the basic monthly rental of
P250.00/sq. m. an amount equivalent to the five percent (5%) withholding tax,
and remit the same promptly to the Bureau of Internal Revenue.

The LESSOR shall submit to the LESSEE a billing statement for the rental
within the first week of each month for which the rent and other charges are
due. The LESSEE shall pay such monthly rental and charges within seven (7) days
from its receipt of the billing statement.
<PAGE>

4. PAYMENT OF LIGHT, POWER AND UTILITIES: The LESSEE undertakes to
promptly pay all charges for light, electric current, telephone and compressed
air.

The LESSEE shall pay for electricity based on actual usage as recorded by
the separate electric meter, plus ten percent (10%) thereof. Charges for
compressed air shall be based at the rate of Centavos Sixty per cubic meter (PO
.60/cu. m.), and telephone on the basis of actual usage. All such charges, duly
substantiated, shall be included by the LESSOR in the monthly billing statement
to the LESSEE.

5. USE OF PREMISES: The factory premises shall used by the LESSEE or by
the assigned occupant of the LESSEE for production and manufacturing purposes
only, or for any other activities related to or incidental to the LESSEE's
business. The LEASED PREMISES may be subleased by the LESSEE to NSF RF-
TECHNOLOGIES CORPORATION, provided the Sublessee agrees to be bound by the same
terms and conditions as the LESSEE.

6. IMPROVEMENTS: The LESSOR consents that the LESSEE may make any
changes, alterations and improvements in the factory premises as may be
necessary for its business purposes. Any and all improvements of a fixed or
permanent nature introduced by the LESSEE in the factory premises (except
machinery and equipment), that may not be removed without damaging the premises,
shall belong to the LESSOR at the expiration or termination of the lease without
need of reimbursement therefor.

7. MAINTENANCE AND REPAIRS: The LESSOR hereby warrants that the LEASED
PREMISES are in good and habitable condition and shall remain fit for their
intended use during the term of this lease. The LESSEE has inspected the LEASED
PREMISES and found the same to be in
<PAGE>

good and tenantable condition. The LESSEE shall cooperate with the LESSOR to
keep the LEASED PREMISES in good and tenantable condition.

The LESSOR shall be responsible for all major repairs on the LEASED
PREMISES and on the water, electrical and sewage installations caused by
ordinary wear and tear, except repairs due to the fault or negligence of the
LESSEE, its agents, employees, guests, visitors, or Sublessee. In the event the
LESSOR fails to commence major repairs it is obligated to perform hereunder
within five (5) calendar days of notice from the LESSEE, the LESSEE may cause
such repairs to be completed for the account of the LESSOR and the LESSOR shall
pay all costs incurred by the LESSEE thereby.

8. TAXES, INSURANCE AND PERMITS: Real estate taxes, government
assessments and fire insurance charges on the LEASED PREMISES shall be for the
LESSOR's account. The LESSEE shall obtain all necessary government permits and
approvals for its business, and may secure its own insurance policies for its
properties within the LEASED PREMISES.

9. SALE, TRANSFER AND MORTGAGE: In the event- of sale, transfer, mortgage
or any other encumbrance of the LEASED PREMISES or any part thereof, or any
existing sale, transfer, mortgage or encumbrance of the same, the LESSOR shall
warrant that the purchaser, mortgagee or encumbrancee shall respect all the
terms and conditions of this lease contract.

10. RETURN OF LEASED PREMISES: Upon the termination of this contract for
any reason whatsoever, the LESSEE shall immediately vacate the LEASED PREMISES,
and return possession thereof to the LESSOR in as good condition as when the
LESSEE first took occupation
<PAGE>

of the LEASED PREMISES, ordinary wear and tear excepted, without any delay
whatsoever, unless this Contract of Lease is extended upon mutual agreement of
the parties.

IN WITNESS WHEREOF, the parties hereto through their duly designated
representatives have set their hands, this 10th day of December, 1998 at Makati,
Metro Manila, Philippines.

MX TECHNOLOGY CORPORATION TEMIC RF-TECHNOLOGIES
LESSOR (PHILS.), INC.
LESSEE

TIN: 004-187-461 TIN: 004-641-152

By: /s/ Manuel L. Olivan By: /s/ Martin H.J. Englmeier
------------------------- ----------------------------------
MANUEL L. OLIVAN MARTIN HANS JOSEF ENGLMEIER

Signed in the presence of:

/s/ /s/
- ----------------------------- ----------------------------------

ACKNOWLEDGEMENT
---------------

REPUBLIC OF THE PHILIPPINES )
MAKATI, METRO MANILA ) S.S.

BEFORE ME personally appeared:

Name Comm. Tax Cert. No. Date/Place Issued
- ---------------------- ------------------- -------------------------------

MX TECHNOLOGY CORP. 14909 2/20/98; Carmona, Cavite

MANUEL L. OLIVAN 7155118 2/22/98; Pasacao, Camarines Sur

TEMIC RF-TECHNOLOGIES
(PHILS.), INC. 4118 6/17/98; Taguig, M. M.

MARTIN HANS JOSEF
ENGLMEIER 8136039848 2/01/98; Lenting, Germany
<PAGE>

known to me to be the same persons who executed the foregoing Contract of
Lease, through their duly authorized representatives, and they acknowledged to
me that the same is of their own free and voluntary act and deed.

This instrument, consisting of seven (7) pages including the page on which
this Acknowledgement appears, has been signed by the parties and their witnesses
on each page thereof.

WITNESS MY HAND AND SEAL, this 10th day of December, 1998 at Makati, Metro
Manila, Philippines.

/s/ Alfred Z. Pio de Roda, III
ALFREDO Z. PIO DE RODA, III
NOTARY PUBLIC
Until December 31, 1999
PTR No. 1232414
Issued at Makati, M. M.
Issued on January 2, 1998
TIN: 100-134-35G

Doc. No. 112;
Page No. 24;
Book No. X;
Series of 1998.

[AZP-2346 / azp#10]

<PAGE>

Exhibit 10.13

SUBLEASE AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This AGREEMENT, made and executed by and between:

TEMIC RF-TECHNOLOGIES (PHILS.), INC., a corporation duly
organized and existing under Philippine laws, with principal
office at 2nd Floor, TEMIC Building, Bagsakan Road, FTI Estate,
Taguig, Metro Manila, duly represented in this act by its
Chairman and President, Martin Hans Josef Englmeier, hereinafter
referred to as the "SUBLESSOR".

- and -

NSF RF-TECHNOLOGIES CORPORATION, a Corporation duly
organized and existing under Philippine laws, with principal
office at Granville Industrial Complex, Barrio Bancal, Carmona,
Cavite, duly represented in this act by its President, OTHMAR
OBER, hereinafter referred to as the "SUBLESSEE",

WITNESSETH, THAT:

The SUBLESSOR is the Lessee of floor space, consisting of an area of 570
square meters and other facilities (the "Leased Premises"), in the factory of MX
Technology Corporation located at Granville Industrial Complex, Bo. Bancal,
Carmona, Cavite;

The SUBLESSOR as Lessee is allowed to sublease the Leased Premises to
another Party;

The SUBLESSEE is desirous of leasing, and the SUBLESSOR is willing to
sublease, a portion of the Leased Premises consisting of an area of 170 square
meters for production activities.

NOW, THEREFORE, the SUBLESSOR lets and by these presents does hereby
sublease unto the SUBLESSEE a portion of the Leased Premises aforesaid, and the
SUBLESSEE accepts the same by way of lease, subject to the following terms and
conditions:

1. THE SUBLEASED PREMISES: The SUBLESSEE shall inform the SUBLESSOR, at
the start of the sublease, which area of the Leased Premises shall comprise the
170 square meters to be rented to it. The sublease shall also include the
following facilities and utilities: electricity; lighting; air conditioning;
compressed air; emergency power; access to and use of canteen, comfort rooms,
janitorial services, 24-hour security services, and one (1) telephone line.

2. PERIOD: The sublease shall be co-terminus with the lease of the
SUBLESSOR, or a term of at least six (6) months but not to exceed one (1) year.
<PAGE>

3. AMOUNT OF RENT: The SUBLESSEE shall pay the SUBLESSOR a monthly rental
in the amount of Pesos Two Hundred Sixty per square meter (PHP 260.00/sq. m.),
plus the ten percent (10%) value-added tax (VAT). The SUBLESSEE shall deduct
from the basic monthly rental of PHP260.00/sq. m. an amount equivalent to the
five percent (5%) withholding tax, and remit the same promptly to the Bureau of
Internal Revenue.

The SUBLESSOR shall submit to the SUBLESSEE a billing statement for the
rental within the first week of each month for which the rent and other charges
are due. The SUBLESSEE shall pay such monthly rental and charges within seven
(7) days from its receipt of the billing statement.

4. PAYMENT OF LIGHT, POWER AND UTILITIES: The SUBLESSEE shall promptly
pay its proportionate share of the charges for light, electric current,
telephone and compressed air, as set forth in the "Contract of Lease" between
the SUBLESSOR and MX Technology Corporation, copy of which is attached hereto
and made an integral part hereof. The SUBLESSOR shall include such proportionate
share of the charges in the monthly billing statement to the SUBLESSEE, which
the latter agrees to accept as correct and accurate.

5. USE OF PREMISES AND IMPROVEMENTS: The area leased by the SUBLESSEE
shall be used for production and manufacturing purposes only, or other
activities incidental or related thereto. The SUBLESSEE may introduce such
improvements, machinery and equipment as may be necessary for its business
activities, provided they do not interfere with the production activity of the
SUBLESSOR or MX Technology Corporation.

6. APPLICABILITY OF CONTRACT OF LEASE: In all other respects and matters
not covered by this Agreement, the SUBLESSEE agrees to abide by the same terms
and conditions contained in the "Contract of Lease" between the SUBLESSOR and MX
Technology Corporation.

IN WITNESS WHEREOF, the Parties hereto through their duly authorized
representatives have set their hands, this 10th day of December 1998 at Makati,
Metro Manila, Philippines.

TEMIC RF-TECHNOLOGIES NSF RF-TECHNOLOGIES CORP.
(PHILS.), INC.

By: /s/ Martin H. J. Englmeier By: /s/ Othmar Ober

MARTIN HANS JOSEF ENGLMEIER OTHMAR OBER

Signed in the presence of:

/s/_________________________ /s/ ___________________
<PAGE>

ACKNOWLEDGMENT
--------------

REPUBLIC OF THE PHILIPPINES )
MAKATI, METRO MANILA ) S.S.

BEFORE ME personally appeared:

<TABLE>
<CAPTION>
Passport/
Name Comm. Tax Cert. No. Date/Place Issued
---- ------------------- -----------------
<S> <C> <C>
Temic RF-Technologies (Phils.), Inc. 8136039848 2/01/98; Lenting, Germany
By:
Martin Hans Josef Englmeier
NSF RF-Technologies Corporation 12809809 3/30/98; Manila, Philippines
By:
Othmar Ober
</TABLE>

known to me to be the same persons who executed the foregoing "Sublease
Agreement", consisting of three (3) pages including the page on which this
acknowledgment appears, signed by the Parties through their duly authorized
representatives and their witnesses, the Parties acknowledging to me that the
same is of their own free and voluntary act and deed.

WITNESS MY HAND AND SEAL, this 10th day of December 1998 at Makati, Metro
Manila.

/s/ Alfredo Z. Pio De Roda, III
Doc. No. 116; ALFREDO Z. PIO DE RODA, III
Page No. 25; Notary Public
Book No. X; Until December 31, 1999
Series of 1998. PTR No. 1232414
Issued at Makati, M.M.
Issued on January 2, 1998

<PAGE>

Exhibit 10.14

SECURITIES PURCHASE AGREEMENT

BY AND AMONG

BUYER

AND

THE SHAREHOLDERS OF
THE COMPANY NAMED HEREIN

Dated January 10, 2000,

Effective as of December 31, 1999

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE ACQUISITION................................................ 1

1.1 Closing........................................................ 1
1.2 Purchase and Sale of Company Shares............................ 1
1.3 Consideration for Company Shares............................... 2

ARTICLE II REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY AND THE NEW COMPANY SUBSIDIARIES............................ 2

2.1 Organization and Standing; Articles and Bylaws................. 2
2.2 No Conflicts; Governmental Consent; Permits.................... 2
2.3 Capitalization................................................. 3
2.4 Subsidiaries................................................... 3
2.5 Limited Prior Activities....................................... 3
2.6 Compliance with Laws........................................... 4
2.7 Litigation, etc................................................ 4
2.8 Brokers' and Finders' Fees..................................... 4
2.9 Disclosure..................................................... 4

ARTICLE III REPRESENTATIONS AND WARRANTIES CONCERNING TEMIC.............. 4

3.1 Incorporation of Representations and Warranties................ 4
3.2 Amounts Paid to HMTF........................................... 5
3.3 Consummation of Acquisition of Temic........................... 5

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AND REGARDING THE
SHAREHOLDERS........................................................ 5

4.1 Power, Consents and Authorization.............................. 5
4.2 Title to Securities............................................ 6
4.3 No Conflicts................................................... 6
4.4 Absence of Claims.............................................. 6
4.5 Investment Representations..................................... 6

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................ 9

5.1 Organization and Standing; Articles and Bylaws................. 10
5.2 Corporate Power................................................ 10
5.3 Subsidiaries................................................... 10
5.4 Capitalization................................................. 10
5.5 Authorization.................................................. 11
5.6 Material Liabilities........................................... 11
5.7 Title to Properties and Assets; Liens, etc..................... 12
5.8 Compliance with Laws; No Conflicts............................. 12
</TABLE>

-i-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
5.9 Patents and Trademarks......................................... 12
5.10 Litigation, etc................................................ 13
5.11 Employees...................................................... 13
5.12 Registration Rights and Voting Agreements...................... 13
5.13 Governmental Consents.......................................... 13
5.14 Offering....................................................... 13
5.15 Brokers' and Finders' Fees..................................... 14
5.16 Disclosure..................................................... 14
5.17 No Conflict of Interest........................................ 14
5.18 Permits........................................................ 14
5.19 Agreements; Action............................................. 14
5.20 Financial Statements........................................... 16
5.21 Changes........................................................ 17
5.22 Employee Benefit Plans......................................... 17
5.23 Tax Returns and Payments....................................... 17
5.24 Insurance...................................................... 17
5.25 Labor Agreements and Actions................................... 17
5.26 Environmental and Safety Laws.................................. 17
5.27 Year 2000 Matters.............................................. 17
5.28 Investment Company Act......................................... 18
5.29 HSR Act........................................................ 18

ARTICLE VI ADDITIONAL AGREEMENTS.......................................... 18

6.1 Reincorporation into Delaware.................................. 18
6.2 Expenses....................................................... 18
6.3 Public Disclosure.............................................. 18
6.4 Stock Option Grants............................................ 18
6.5 Financial Information.......................................... 19
6.6 Change of Name................................................. 20

ARTICLE VII DOCUMENTS DELIVERED AT THE CLOSING............................ 20

7.1 Documents Delivered by the Shareholders at Closing............. 20
7.2 Documents Delivered by Buyer at Closing........................ 21

ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION.. 22

8.1 Survival of Representations and Warranties..................... 22
8.2 Indemnification................................................ 22
8.3 Third-Party Claims............................................. 23
</TABLE>

-ii-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IX GENERAL PROVISIONS...................................... 24

9.1 No Joint Venture........................................ 24
9.2 Waiver.................................................. 24
9.3 Notices................................................. 25
9.4 Governing Law........................................... 26
9.5 Entire Agreement........................................ 26
9.6 Successors and Assigns.................................. 26
9.7 Severability............................................ 26
9.8 Further Assurances...................................... 26
9.9 Other Remedies; Specific Performance.................... 26
9.10 Interpretation; Titles and Subtitles.................... 27
9.11 Absence of Third Party Beneficiary Rights............... 27
9.12 Language................................................ 27
9.13 Counterparts............................................ 27
9.14 No Recourse............................................. 27
9.15 Definitions............................................. 27
</TABLE>

-iii-
<PAGE>

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into January 10, 2000 (the "Signing Date"), to be effective as of December 31,
1999 (the "Effective Date") among MicroTune, Inc., a Texas corporation (the
"Buyer"), and the persons listed on the signature pages hereto as shareholders
of HMTF Acquisition (Bermuda), Ltd., a company organized under the Laws of
Bermuda (the "Company"), (each a "Shareholder" and collectively the
"Shareholders").

Except as otherwise set forth in this Agreement, capitalized terms shall
have the definitions set forth in Section 9.15.

RECITALS

A. The Shareholders are collectively the owners of all of the issued and
outstanding common shares, par value $0.10 per share of the Company (the
"Company Shares"), which Company Shares represent all of the issued and
outstanding capital stock of the Company.

B. The Shareholders desire to sell to Buyer, and Buyer desires to purchase
from the Shareholders, all of the Company Shares, subject to the terms and
conditions of this Agreement (the "Acquisition").

NOW, THEREFORE, in consideration of the mutual covenants, promises, and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows.

ARTICLE I

THE ACQUISITION

1.1 Closing. The consummation of the Acquisition (the "Closing") shall be
-------
deemed effective as of the Effective Date and shall take place concurrently with
the execution and delivery of this Agreement (the "Closing Date"), at the
offices Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas,
Texas.

1.2 Purchase and Sale of Company Shares. Concurrently herewith and on the
-----------------------------------
terms and subject to the conditions of this Agreement, each Shareholder is
selling and delivering to Buyer, and Buyer is purchasing from each such
Shareholder, all right, title, and interest of such Shareholder in and to the
Company Shares set forth opposite such Shareholder's name on Schedule 1.2, free
and clear of all Liens.
<PAGE>

1.3 Consideration for Company Shares. In consideration of the transfer of
--------------------------------
the Company Shares pursuant to Section 1.2, Buyer is concurrently herewith
issuing to each Shareholder (i) the number of shares (the "Series E Preferred
Shares") of Buyer's Series E Preferred Stock, par value $.001 per share (the
"Series E Preferred Stock"), set forth opposite such Shareholder's name on
Schedule 1.3, and (ii) warrants, substantially in the form attached hereto as
Exhibit A (the "Warrants"), to purchase up to the number of shares (the "Warrant
- ---------
Shares") of Buyer's common stock, par value $0.001 per share, (the "Common
Stock") set forth opposite such Shareholder's name on Schedule 1.3.

ARTICLE II

REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
AND THE NEW COMPANY SUBSIDIARIES

The HM Shareholders, jointly and severally, hereby represent and warrant to
Buyer, as of the Signing Date (unless a different date is specified within a
particular section), subject to such exceptions as are specifically disclosed in
the Schedule 2 with reference to the appropriate section number (the "Company
Disclosure Schedule") as follows:

2.1 Organization and Standing; Articles and Bylaws. Each of the Company
----------------------------------------------
and each subsidiary of the Company listed in Section 2.1 of the Company
Disclosure Schedule (the "New Company Subsidiaries") is a company duly organized
and existing under, and by virtue of, the Laws of its jurisdiction of
organization and is in good standing under such Laws. Each of the Company and
each New Company Subsidiary has the requisite corporate or other power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and proposed to be conducted. Each of the
Company and each New Company Subsidiary is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so qualified
would have a Material Adverse Effect on the Company or the New Company
Subsidiary, as the case may be. The HM Shareholders have delivered to Buyer a
true and correct copy of each of the Company Charter Documents.

2.2 No Conflicts; Governmental Consent; Permits.
-------------------------------------------

(a) The execution and delivery of this Agreement by the Shareholders
does not, and, as of the Closing Date, the consummation of the transactions
contemplated by this Agreement will not: (i) conflict with any provision of the
Company Charter Documents; (ii) conflict with, or result in any violation of, or
constitute a default (with or without notice, lapse of time, or both) under, or
give rise to a right of termination, cancellation, or acceleration of any
obligation or to loss of benefit under, any material mortgage, indenture, lease,
contract, or other agreement or instrument, permit, or license to which the
Company or any of the New Company Subsidiaries is a party or by which any of
their assets are bound; (iii) constitute a material violation of any Law
applicable to the Company or any of the New Company Subsidiaries or their
properties or assets; or (iv) result in the creation of any Lien upon any of
their assets; and there is no such violation or default which will

-2-
<PAGE>

have a Material Adverse Effect on the Company or any New Company Subsidiary or
any of their respective properties or assets.

(b) Except as set forth in Section 2.2(b) of the Company Disclosure
Schedule, each of the Company and each New Company Subsidiary has all permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, except for any such permits, licenses or authority
the lack of which would not have a Material Adverse Effect on the Company or the
New Company Subsidiaries, as the case may be. Each of the Company and each New
Company Subsidiary is not in default in any material respect under any such
permits, licenses or other similar authority.

2.3 Capitalization.
--------------

(a) The authorized capital stock of the Company consists of 1,200,000
common shares, par value $0.10 per share. As of the Signing Date, there are
issued and outstanding 158,058 Company Shares. The outstanding Company Shares
are held of record by the Persons and in the amounts set forth in Section 2.3(a)
of the Company Disclosure Schedule. The authorized capital stock or other equity
interests of each New Company Subsidiary and the total number of issued and
outstanding shares of capital stock or other equity interests of each New
Company Subsidiary is set forth in Section 2.3(a) of the Company Disclosure
Schedule.

(b) All of the outstanding Company Shares, and all of the outstanding
shares of each New Company Subsidiary (except for directors' qualifying shares),
have been duly authorized, validly issued, are fully paid and non-assessable.

(c) There are no outstanding securities, rights (preemptive or
other), subscriptions, calls, warrants, options, or other agreements (except for
this Agreement) to which the Company, any New Company Subsidiary, or HMTF or any
of its Affiliates, is a party that give any Person the right to purchase,
subscribe for, or otherwise receive or be issued any shares of capital stock of
the Company or any New Company Subsidiary or any security convertible into or
exchangeable or exercisable for any shares of capital stock of the Company or
any New Company Subsidiary.

2.4 Subsidiaries. Except for the New Company Subsidiaries, Temic, and any
------------
Subsidiaries of Temic as set forth in Section 2.4 of the Company Disclosure
Schedule, the Company has no Subsidiaries and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association, or
business entity.

2.5 Limited Prior Activities. Except for obligations incurred in
------------------------
connection with its formation and except as set forth in Section 2.5 of the
Company Disclosure Schedule, neither the Company nor any New Company Subsidiary
has incurred any liability or obligation or engaged in any business or activity
of any type or kind whatsoever or entered into any agreement or arrangement with
any Person. Section 2.5 of the Company Disclosure Schedule lists all agreements

-3-
<PAGE>

and documents entered into by the Company and each New Company Subsidiary in
connection with its formation.

2.6 Compliance with Laws. The Company and each New Company Subsidiary has
--------------------
complied with each Law binding on the Company or any New Company Subsidiary, or
any of their respective assets or properties and is not currently in violation
of any of the foregoing, except for such failures to comply or violations as
would not have a Material Adverse Effect on the Company or such New Company
Subsidiary.

2.7 Litigation, etc. There are no actions, suits, proceedings or
---------------
investigations pending against Company, any of the New Company Subsidiaries, or
any of their respective properties before any Governmental Entity (nor, to the
HM Shareholder's knowledge, is there any reasonable basis therefor or threat
thereof).

2.8 Brokers' and Finders' Fees. None of the HM Shareholders, the Company
--------------------------
or any New Company Subsidiary has incurred, nor will it incur, directly or
indirectly as a result of any action taken by the HM Shareholders, the Company
or the New Company Subsidiaries, any liability for brokerage or finder's fees,
or agents' commissions or any similar charges in connection with this Agreement.

2.9 Disclosure. This Agreement with the Schedules hereto provided by the
----------
HM Shareholders with respect to the HM Shareholders, when taken as a whole, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein not misleading
in the light of the circumstances under which they were made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES CONCERNING TEMIC

The HM Shareholders, jointly and severally, hereby represent and warrant to
Buyer, as of the Signing Date (unless a different date is specified within a
particular section), subject to such exceptions as are specifically disclosed in
the Schedule 3 with reference to the appropriate section number (the "Temic
Disclosure Schedule"), as follows:

3.1 Incorporation of Representations and Warranties. The representations
and warranties of the Sellers (as defined therein) set forth in the Share Sale,
Purchase and Transfer Agreement regarding Shares in a GmbH (the "Temic Purchase
Agreement") dated as of November 29, 1999, by and among HMT Erste Beteiligungs
GmbH i.Gr., a German limited liability company, HMTF Verwaltungs GmbH (formerly
known as Residenz Zehnte Vermogensverwaltungs GmbH), a German limited liability
company, the Company, MAR, Vermogensverwaltungsgesellschaft mbH, a German
limited liability company, and Dipl.-Ing. (TU) Martin Englmeier and the Sellers,
pursuant to which the Company acquired the business of Temic Telefunken
Hochfrequenztechnik GmbH

-4-
<PAGE>

("Temic"), are herein incorporated into this Agreement as representations and
warranties given by the HM Shareholders hereunder as of the Signing Date;
provided, however, such representations and warranties shall be deemed modified
- -------- -------
to the extent such representations and warranties are rendered incorrect as a
result of the consummation of the transactions contemplated by the Temic
Purchase Agreement and the documents and instruments delivered in connection
therewith, as described in Section 3.1 of the Temic Disclosure Schedule.

3.2 Amounts Paid to HMTF. Section 3.2 of the Temic Disclosure Schedule
--------------------
sets forth all of the cash disbursements, payments and other transfers of
property (whether to be made prior to, or to be made after, the Closing) from
Temic, the Company or any New Company Subsidiary to Hicks, Muse, Tate & Furst
Incorporated or any Affiliate or Subsidiary or advisor or representative (other
than Temic, the Company or any New Company Subsidiary) of Hicks, Muse, Tate &
Furst Incorporated.

3.3 Consummation of Acquisition of Temic. The transactions contemplated
------------------------------------
under the Temic Purchase Agreement have been consummated, and there are no
further contingencies or covenants to be fulfilled prior to closing of the
transactions contemplated under the Temic Purchase Agreement. All of the
material agreements entered into in connection with the acquisition of Temic by
the Company are listed in Section 3.3 of the Temic Disclosure Schedule and have
been provided to Buyer for its review.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
AND REGARDING THE SHAREHOLDERS

Each of the Shareholders, severally and not jointly, represents and
warrants to Buyer, as of the Signing Date (unless a different date is specified
within a particular section), subject to such exceptions as are specifically
disclosed in the Schedule 4 with reference to the appropriate section number
(the "Shareholder Disclosure Schedule") as follows:

4.1 Power, Consents and Authorization.
---------------------------------

(a) Such Shareholder has all requisite legal (corporate or otherwise)
power and authority to execute and deliver this Agreement and each of the
Related Agreements and to carry out and perform its obligations under the terms
of this Agreement and the Related Agreements.

(b) Except as set forth in Section 4.1(b) of the Shareholder
Disclosure Schedule, no consent, approval or authorization of or designation,
declaration or filing with any Governmental Entity, on the part of such
Shareholder is required in connection with the valid execution and delivery of
this Agreement or the consummation of any other transaction contemplated hereby.

-5-
<PAGE>

(c) Each of this Agreement and the Related Agreements executed and
delivered by the Shareholder shall (assuming the due authorization, execution,
and delivery hereof and thereof by the other parties hereto and thereto)
constitute valid and binding obligations of such Shareholder, enforceable
against such Shareholder in accordance with their terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies.

4.2 Title to Securities. Such Shareholder owns of record and beneficially
-------------------
the number of Company Shares set forth opposite such Shareholder's name in
Section 4.2 of the Shareholder Disclosure Schedule. Except as set forth in
Section 4.2 of the Shareholder Disclosure Schedule, such Shareholder owns all
right, title and interest in and to such Company Shares, free and clear of all
Liens.

4.3 No Conflicts. The execution and delivery of this Agreement and each
------------
Related Agreement by such Shareholder does not, and the performance by such
Shareholder of the transactions contemplated to be performed by it hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby, will not (i) if such Shareholder is other than a natural person,
conflict with its certificate or incorporation or bylaws or other similar
organizational or governance documents; (ii) conflict with, or result in any
violation of, or constitute a default (with or without notice, lapse of time, or
both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation or to loss of benefit under, any material
mortgage, indenture, lease, contract, or other agreement or instrument, permit,
or license to which such Shareholder is a party or by which any of its assets
are bound; (iii) constitute a material violation of any Law applicable to such
Shareholder or its properties or assets, or (iv) result in the creation of any
Lien upon any of its assets.

4.4 Absence of Claims. Except as set forth in Schedule 4.4 of the
-----------------
Shareholder Disclosure Schedule, such Shareholder has no claim against the
Company or any of the New Company Subsidiaries, except for accrued compensation
and benefits and the reimbursement of expenses incurred in the ordinary course
of business. Such Shareholder has no right, claim or interest in or to any stock
or equity ownership interest in the Company except for the Company Shares set
forth in Schedule 1.2 and such rights, claims or interests of such Shareholder
under the Temic Purchase Agreement. Such Shareholder has no right, claim or
interest in or to the intellectual property rights of the Company or any New
Company Subsidiary.

4.5 Investment Representations.
--------------------------

(a) Shareholder is aware of Buyer's business affairs and financial
condition and has had access to and has acquired sufficient information about
Buyer to reach an informed and knowledgeable decision to acquire the Series E
Preferred Shares and Warrants to be acquired hereunder (the "Securities").
Shareholder has such business and financial experience as is required to give it
the capacity to protect its own interests in connection with the purchase of the
Securities.

-6-
<PAGE>

(b) Except as otherwise set forth in Schedule 4.5(b) of the
Shareholder Disclosure Schedule, Shareholder is purchasing the Securities for
its own account as principal, for investment purposes only, and not with a
present view to, or for, resale, distribution or fractionalization thereof, in
whole or in part, within the meaning of the Securities Act. Shareholder
understands that its acquisition of the Securities has not been registered under
the Securities Act or registered or qualified under any state securities Law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of Shareholder's investment intent as
expressed herein.

(c) Each Shareholder that resides and is domiciled in and is a
citizen of the United States of America (a "U.S. Shareholder") further
represents and warrants that:

(i) Such U.S. Shareholder is an "accredited investor" as
defined in Rule 501 (a)(1), (a)(2), (a)(3), (a)(5), (a)(6), or (a)(7) or a
"Qualified Institutional Buyer" as defined in Rule 144A under the Securities
Act.

(ii) Such U.S. Shareholder further acknowledges and understands
that the Securities may not be resold to any Person or otherwise transferred
except in a transaction registered under the Securities Act or pursuant to an
exemption from such registration. Such U.S. Shareholder understands that the
certificates evidencing the Securities will be imprinted with a legend that
prohibits the transfer of the Securities unless (a) such transaction is
registered or such registration is not required, and (b) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the
Securities Act, and if Buyer shall so require in writing, an opinion reasonably
satisfactory to Buyer, delivered by counsel reasonable satisfactory to Buyer, is
obtained to the effect that the transaction is so exempt.

(iii) Such U.S. Shareholder acknowledges and agrees that each
certificate representing the Series E Preferred Shares issued to such U.S.
Shareholder hereunder shall bear substantially the following legends (in
addition to any legends required under applicable state securities Laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.

(iv) Each U.S. Shareholder acknowledges and agrees that each
certificate representing the Warrants issued to such U.S. Shareholder shall bear
substantially the following legend (in addition to any legends required under
applicable state securities Laws):

-7-
<PAGE>

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.

(d) Each Shareholder that does not reside and is not domiciled in and
is not a citizen of the United States of America (a "Non-U.S. Shareholder")
further represents and warrants that:

(i) Except as set forth in Section 4.5(d)(i) of the Shareholder
Disclosure Schedule, neither the Non-U.S. Shareholder nor any Person for the
account of whom such Non-U.S. Shareholder is acting, including the estate of any
such Person, a trust of which any such Person is a beneficiary, or a
corporation, partnership trust or other entity organized under the laws of the
United States of America, its territories and possessions and all areas under
the jurisdiction of the United States of America, is a citizen or resident of
the United States of America (a "U.S. Person").

(ii) Except for transfers for estate planning purposes to
immediate family members or trusts organized for the benefit of immediate family
members not in violation of applicable securities Laws, such Non-U.S.
Shareholder will not sell, transfer or otherwise dispose of the Securities for a
period of one year after the Closing Date, and such Non-U.S. Shareholder will
not thereafter sell or otherwise transfer the Securities to a U.S. Person unless
Buyer has received an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Buyer, that such transfer will not be in violation of
the Securities Act or any applicable state securities Laws.

(iii) The Non-U.S. Shareholder understands that Buyer will not
allow any transfer or other disposition of the Securities unless the proposed
transferee shall have executed an instrument containing the representations set
forth in the preceding two paragraphs or Buyer shall have received an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to Buyer, to
the effect that such proposed transfer would not be in violation of the
Securities Act or any applicable state or foreign securities Law.

(iv) The share certificate(s) of a Non-U.S. Shareholder
evidencing the Series E Preferred Shares shall bear the following legend (in
addition to any other legend required under this Agreement):

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE

-8-
<PAGE>

UNITED STATES ("STATE ACT") AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR A
PERIOD OF ONE YEAR AFTER THE DATE ON THE FACE HEREOF, TO A
CITIZEN OR RESIDENT OF THE UNITED STATES OF AMERICA, INCLUDING
THE ESTATE OF ANY SUCH PERSON, A TRUST OF WHICH ANY SUCH PERSON
IS A BENEFICIARY, OR A CORPORATION, PARTNERSHIP, TRUST OR OTHER
ENTITY ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA,
ITS TERRITORIES AND POSSESSIONS AND ALL AREAS UNDER THE
JURISDICTION OF THE UNITED STATES OF AMERICA, UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE
ACT OR ANY APPLICABLE STATE ACT.

(v) Each Non-U.S. Shareholder acknowledges and agrees that each
certificate representing the Warrants issued to such Non-U.S. Shareholder shall
bear substantially the following legend (in addition to any other legend
required under this Agreement):

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED ("ACT"), OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES ("STATE ACT") AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR A
PERIOD OF ONE YEAR AFTER THE DATE ON THE FACE HEREOF TO A CITIZEN
OR RESIDENT OF THE UNITED STATES OF AMERICA, INCLUDING THE ESTATE
OF ANY SUCH PERSON, A TRUST OF WHICH ANY SUCH PERSON IS A
BENEFICIARY, OR A CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA, ITS
TERRITORIES AND POSSESSIONS AND ALL AREAS UNDER THE JURISDICTION
OF THE UNITED STATES OF AMERICA, UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE ACT OR ANY
APPLICABLE STATE ACT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to each of the Shareholders, as of the
Signing Date (unless a different date is specified within a particular section),
subject to such exceptions as are specifically disclosed in Schedule 5 (with
reference to the appropriate section number (the "Buyer Disclosure Schedule"),
as follows:

-9-
<PAGE>

5.1 Organization and Standing; Articles and Bylaws. Each of Buyer and
----------------------------------------------
Buyer Subsidiary is a corporation duly organized and existing under, and by
virtue of, the Laws of its jurisdiction of organization and is in good standing
under such Laws. Buyer and Buyer Subsidiary have requisite corporate power and
authority to own and operate their respective properties and assets and to carry
on their businesses as presently conducted and as proposed to be conducted.
Buyer and Buyer Subsidiary are not currently qualified to do business as a
foreign corporation in any jurisdiction, and the failure to be so qualified will
not have a Material Adverse Effect on Buyer or Buyer Subsidiary's businesses as
now conducted or as now proposed to be conducted. Buyer has made available to
each Shareholder copies of its Restated Articles and Bylaws, each as amended to
date.

5.2 Corporate Power. Buyer has all requisite legal and corporate power and
---------------
authority to execute and deliver this Agreement, the Warrants, and the Related
Agreements, to sell and issue the Series E Preferred Shares and the Warrants
hereunder, to issue the Warrant Shares and the Common Stock issuable upon
conversion of such Series E Preferred Shares and to carry out and perform its
obligations under the terms of this Agreement, the Warrants and the Related
Agreements.

5.3 Subsidiaries. Except for MicroTune International ("Buyer Subsidiary")
------------
and as set forth in Section 5.3 of the Buyer Disclosure Schedule, Buyer does not
otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or business entity.

5.4 Capitalization.
--------------

(a) As of the Signing Date and immediately prior to the Closing, the
authorized capital stock of Buyer consists of 100,000,000 shares of Common
Stock, 3,971,434 shares of which are issued and outstanding, and 18,998,513
shares of Preferred Stock, 5,000,000 of which have been designated Series A
Preferred Stock, 4,000,001 of which are outstanding; 1,250,000 of which have
been designated Series B Preferred Stock, 1,000,000 of which are outstanding;
1,500,000 of which have been designated Series C Preferred Stock, 1,462,666 of
which are outstanding; 2,600,000 of which have been designated Series D
Preferred Stock, 1,367,418 of which are outstanding; 3,648,513 of which have
been designated Series E Preferred, none of which are outstanding; and 5,000,000
of which have not been designated, none of which are outstanding. The
outstanding shares have been duly authorized and validly issued, and are fully
paid and nonassessable. Buyer has reserved 3,318,513 shares of Series E
Preferred Stock and 1,106,171 shares of Common Stock for issuance hereunder and
under the Warrants, and 3,648,513 shares of Common Stock for issuance upon
conversion of the Series E Preferred Shares. The Series E Preferred Shares shall
have the rights, preferences, privileges and restrictions set forth in the
Restated Articles. Except as set forth in Section 5.4 of the Buyer Disclosure
Schedule, there are no outstanding securities, rights (preemptive or other),
subscriptions, calls, warrants, options, or other agreements (except for this
Agreement, the Related Agreements, and the Warrants) that give any Person the
right to purchase, subscribe for, or otherwise receive or be issued any shares
of capital stock of the Buyer or Buyer Subsidiary or any security convertible
into or exchangeable or exercisable for any shares of capital stock of Buyer or
Buyer Subsidiary, except that (i) Buyer has issued to a warrant exercisable for
40,698 shares of

-10-
<PAGE>

Series A Preferred, exercisable upon liquidation, dissolution, or winding up of
Buyer, (ii) as of the Signing Date, there are 6,933,925 shares of Common Stock
reserved for issuance under Buyer's Amended and Restated 1996 Stock Option Plan,
a copy of which is attached hereto as Exhibit F ("Restated Buyer Stock Plan"),
----------
of which 3,475,633 are subject to outstanding options, of which options to
purchase 2,003,100 shares of Common Stock are contingent upon the consummation
of the transactions contemplated hereby, and (iii) Buyer has granted options,
which options are contingent upon the consummation of the transactions
contemplated hereby, exercisable for an aggregate of 330,000 shares of Series E
Preferred Stock at an exercise price of $16.00 per share to three employees of
Temic Telefunken Hochfrequenztechnik GmbH.

(b) The outstanding shares of capital stock of Buyer Subsidiary have
been duly authorized and validly issued, and are fully paid and nonassessable,
and are owned by Buyer.

5.5 Authorization. All corporate action on the part of Buyer, its
-------------
directors and its shareholders necessary for the authorization, execution,
delivery and performance of this Agreement, the Warrants and the Related
Agreements by Buyer, the authorization, sale, issuance and delivery of the
Series E Preferred Shares (and the Common Stock issuable upon conversion of the
Series E Preferred Shares) and the Warrants (and the Warrant Shares issuable
upon exercise of the Warrants), and the performance of all of Buyer's
obligations hereunder and thereunder has been taken. This Agreement, the
Warrants and the Related Agreements shall (assuming the due authorization,
execution, and delivery hereof and thereof by the other parties hereto and
thereto) constitute valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The Series E Preferred Shares, when issued in compliance with the provisions of
this Agreement and the Warrants, will be validly issued, fully paid and
nonassessable; the Common Stock issuable upon conversion of the Series E
Preferred Shares and the Warrant Shares upon exercise of the Warrants have been
duly and validly reserved and, when issued in compliance with the provisions of
this Agreement, the Warrants (if applicable) and the Restated Articles, will be
validly issued, fully paid and nonassessable; and the Series E Preferred Shares
and Warrant Shares will be free of any Liens, other than any Liens created by or
imposed upon the holders; provided, however, that the Series E Preferred Shares
(and the Common Stock issuable upon conversion thereof) the Warrants and the
Warrant Shares may be subject to restrictions on transfer under state and/or
federal securities Laws and restrictions as set forth herein and in the
Registration Rights Agreement, the Co-Sale and Right of First Refusal Agreement
and the Voting Agreement. The issuance of the Series E Preferred Shares, the
Common Stock issuable upon conversion of the Series E Preferred Shares, the
Warrants and the Warrant Shares are not subject to any preemptive rights or
rights of first refusal.

5.6 Material Liabilities. Neither Buyer nor Buyer Subsidiary has any
--------------------
material liabilities or obligations, absolute or contingent (individually or in
the aggregate), except (i) liabilities and obligations which have been incurred
in the ordinary course of business and which have not had, either in any case or
in the aggregate, a Material Adverse Effect on Buyer on a consolidated basis,
(ii) liabilities and obligations under a lease for its principal offices and
leases for equipment, and

-11-
<PAGE>

liabilities and obligations under sales, procurement and other contracts and
arrangements entered into in the normal course of business, and (iii)
liabilities and obligations which have been incurred as a result of the
Intellectual Property Assignment between Buyer, Cirrus Logic, Inc. and Cirrus
Logic International, Ltd. dated August 21, 1996 (the "IP Assignment").

5.7 Title to Properties and Assets; Liens, etc. Each of Buyer and Buyer
------------------------------------------
Subsidiary has good title to its properties and assets, and has good title to
all of its respective leasehold interests, in each case subject to no Lien other
than (i) the Lien of current Taxes not yet due and payable, and (ii) possible
minor Liens which do not in any case materially detract from the value of the
property subject thereto or materially impair the operations of Buyer on a
consolidated basis, and which have not arisen otherwise than in the ordinary
course of business.

5.8 Compliance with Laws; No Conflicts.
----------------------------------

(a) Each of Buyer and Buyer Subsidiary has complied with each Law
binding on such entity or any of its assets or properties and neither Buyer nor
Buyer Subsidiary is currently in violation of any of the foregoing, except for
such failures to comply or violations as would not have a Material Adverse
Effect on Buyer, on a consolidated basis.

(b) The execution, delivery and performance of and compliance with
this Agreement, the Related Agreements and the Warrants, and the issuance of the
Series E Preferred Shares and the Common Stock issuable upon conversion of the
Series E Preferred Shares and the Warrant Shares issuable upon exercise of the
Warrants, will not: (i) conflict with the Restated Articles or bylaws of Buyer
or any charter documents of Buyer Subsidiary; (ii) conflict with, or result in
any violation of, or constitute a default (with or without notice, lapse of
time, or both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation or to loss of benefit under, any material
mortgage, indenture, lease, contract, or other agreement or instrument, permit,
or license to which Buyer or Buyer Subsidiary is a party or by which any of
their assets are bound; (iii) constitute a material violation of any Law
applicable to Buyer or Buyer Subsidiary or their properties or assets; or (iv)
result in the creation of any Lien upon any of their assets; and there is no
such violation or default which will have a Material Adverse Effect on Buyer on
a consolidated basis or any of its properties or assets; and there is no such
violation or default which will have a Material Adverse Effect on Buyer on a
consolidated basis or any of its respective properties or assets.

5.9 Patents and Trademarks. To Buyer's knowledge, Buyer and Buyer
----------------------
Subsidiary own or possess sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information and other
proprietary rights and processes necessary for their respective business as now
conducted and as proposed to be conducted, without any known infringement of the
rights of others. Except as set forth in the IP Assignment and Section 5.9 of
the Buyer Disclosure Schedule, there are no outstanding options, licenses or
agreements of any kind relating to the foregoing, nor is Buyer or Buyer
Subsidiary bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,

-12-
<PAGE>

copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other Person other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. Neither Buyer nor
Buyer Subsidiary has received any communications alleging that Buyer or Buyer
Subsidiary has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other Person.

5.10 Litigation, etc. There are no actions, suits, proceedings or
---------------
investigations pending against Buyer or Buyer Subsidiary or their respective
properties before any Governmental Entity (nor, to Buyer's knowledge, is there
any reasonable basis therefor or threat thereof).

5.11 Employees. To the Buyer's knowledge, no employee of Buyer or Buyer
---------
Subsidiary is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of such employee with Buyer or Buyer Subsidiary or any other Person
because of the nature of the business conducted or to be conducted by Buyer or
Buyer Subsidiary. Except as set forth in Section 5.11 of the Buyer Disclosure
Schedule, each employee or consultant of Buyer and Buyer Subsidiary with access
to confidential or proprietary information has executed a Confidential
Information and Invention Assignment Agreement with Buyer or Buyer Subsidiary.

5.12 Registration Rights and Voting Agreements. Except as set forth in the
-----------------------------------------
Registration Rights Agreement, Buyer is not under any contractual obligation to
register (as defined in that Agreement) any of its currently outstanding
securities or any of its securities which may hereafter be issued. To Buyer's
knowledge, except as contemplated by the Voting Agreement, no shareholders of
Buyer have entered into any agreements with respect to the voting of capital
shares of Buyer.

5.13 Governmental Consents. No consent, approval or authorization of or
---------------------
designation, declaration or filing with any Governmental Entity on the part of
Buyer is required in connection with the valid execution and delivery of this
Agreement, the Warrants, or the Related Agreements, or the offer, sale or
issuance of the Series E Preferred Shares (and the Common Stock issuable upon
conversion of the Series E Preferred Shares), the Warrants or Warrant Shares, or
the consummation of any other transaction contemplated hereby or thereby, except
qualification (or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the Series E
Preferred Shares (and the Common Stock issuable upon conversion of the Series E
Preferred Shares), the Warrants and the Warrant Shares under applicable blue sky
Laws, which filings and qualifications, if required, will be accomplished in a
timely manner.

5.14 Offering. Subject to the accuracy of each Shareholder's
--------
representations in Article IV hereof, the offer, sale and issuance of the Series
E Preferred Shares and the Warrants to be issued in conformity with the terms of
this Agreement, the issuance of the Warrant Shares upon exercise of the
Warrants, and the issuance of the shares of Common Stock to be issued upon
conversion of the Series E Preferred Shares, constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act.

-13-
<PAGE>

5.15 Brokers' and Finders' Fees. Neither Buyer nor Buyer Subsidiary has
--------------------------
incurred, nor will incur, directly or indirectly, as a result of any action
taken by Buyer or Buyer Subsidiary, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement.

5.16 Disclosure. This Agreement with the Schedules hereto provided by
----------
Buyer with respect to Buyer, when taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained herein not misleading in the light of the
circumstances under which they were made.

5.17 No Conflict of Interest. Neither Buyer nor Buyer Subsidiary is
-----------------------
indebted, directly or indirectly, to any of its officers or directors or to
their respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees. None of Buyer's or Buyer
Subsidiary's officers or directors, or any members of their immediate families,
are, directly or indirectly, indebted to Buyer or Buyer Subsidiary (other than
in connection with purchases of Buyer's stock) or have any direct or indirect
ownership interest in any firm or corporation with which Buyer or Buyer
Subsidiary is affiliated or with which Buyer or Buyer Subsidiary has a business
relationship, or any firm or corporation which competes with Buyer or Buyer
Subsidiary except that officers, directors and/or shareholders of Buyer may own
stock in (but not exceeding five percent of the outstanding capital stock of)
any companies that may compete with or are associated with Buyer or Buyer
Subsidiary. None of Buyer's or Buyer Subsidiary's officers or directors or any
members of their immediate families have an interest in, directly or indirectly,
any material contract with Buyer or Buyer Subsidiary. Neither Buyer nor Buyer
Subsidiary is a guarantor or indemnitor of any indebtedness of any other Person.

5.18 Permits. Each of Buyer and Buyer Subsidiary has all permits, licenses
-------
and any similar authority necessary for the conduct of its business as now being
conducted by it, except for any such permits, licenses or authority the lack of
which would not have a Material Adverse Effect on Buyer, on a consolidated
basis. Neither Buyer nor Buyer Subsidiary is in default in any material respect
under any of such permits, licenses or other similar authority.

5.19 Agreements; Action. Except as set forth in Section 5.19 of the Buyer
------------------
Disclosure Schedule and for agreements explicitly contemplated by this Agreement
and the Related Agreements, there are no agreements, understandings or proposed
transactions between Buyer and any of its officers, directors, Affiliates, or
any affiliate thereof.

(a) Except for agreements explicitly referred to or contemplated by
this Agreement and the Related Agreements, there are no agreements,
understandings, instruments, contracts or proposed transactions to which Buyer
or Buyer Subsidiary is a party or by which it is bound that involve (i) the
license of any patent, copyright, trade secret or other proprietary right to or
from Buyer or Buyer Subsidiary, or (ii) the grant of rights to manufacture,
produce, assemble,

-14-
<PAGE>

license, market, or sell its products to any other Person or affect Buyer's or
Buyer Subsidiary's exclusive right to develop, manufacture, assemble,
distribute, market or sell its products.

(b) Neither Buyer nor Buyer Subsidiary has (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $500,000 or
in excess of $1,500,000 in the aggregate, (iii) made any loans or advances to
any Person, other than ordinary advances for travel expenses and in connection
with purchases of Buyer's stock, or (iv) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.

(c) Neither Buyer nor Buyer Subsidiary is a party to or is bound by
any contract, agreement or instrument, or subject to any restriction under its
articles of incorporation or bylaws, that has a Material Adverse Effect on the
Buyer, on a consolidated basis.

(d) Buyer has not engaged in the past three (3) months in any
discussion (i) with any representative of any corporation or corporations
regarding the merger of Buyer with or into any such corporation or corporations,
(ii) with any representative of any corporation, partnership, association or
other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of Buyer or a transaction
or seE, PLEDGrelated transactions in which more than fifty percent (50%) of the
voting power of Buyer would be disposed of, or (iii) regarding any other form of
liquidation, dissolution or winding up of Buyer.

5.20 Financial Statements.
--------------------

(a) Buyer has made available to each Shareholder its audited
financial statements (including balance sheet, income statement and statement of
cash flows) as of December 31, 1998 and for the fiscal year ended December 31,
1998 and its unaudited financial statements (including balance sheets and income
statements) as of March 31, 1999, June 30, 1999, and September 30, 1999, and for
the three-month periods ending March 31, 1999, June 30, 1999, and September 30,
1999 (collectively, the "Buyer Financial Statements"). The Buyer Financial
Statements have been prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods indicated, except that the unaudited
Buyer Financial Statements may not contain all footnotes required by U.S. GAAP.
The Buyer Financial Statements fairly present the financial condition and
operating results of Buyer as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments.

(b) Except as set forth in the Buyer Financial Statements, Buyer has
no material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to December 31, 1998 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under U.S. GAAP to be reflected in the Buyer
Financial Statements, which, in both cases, individually or in the aggregate are
not material to

-15-
<PAGE>

the financial condition or operating results of Buyer. Except as disclosed in
the Buyer Financial Statements, Buyer is not a guarantor or indemnitor or of any
indebtedness of any other Person.

5.21 Changes. Except as set forth in Section 5.21 of the Buyer Disclosure
-------
Schedule, since September 30, 1999 there has not been:

(a) any change in the assets, liabilities, financial condition or
operating results of Buyer from that reflected in the Buyer Financial
Statements, except changes in the ordinary course of business that have not had
a Material Adverse Effect on Buyer on a consolidated basis;

(b) any material damage, destruction or loss, whether or not covered
by insurance, which has had a Material Adverse Effect on Buyer on a consolidated
basis;

(c) any waiver or compromise by Buyer or Buyer Subsidiary of a
valuable right or of a material debt owed to Buyer or Buyer Subsidiary;

(d) any satisfaction or discharge of any material Lien, or payment of
any obligation by Buyer or Buyer Subsidiary, except for those in the ordinary
course of business and which have not had a Material Adverse Effect on Buyer, on
a consolidated basis;

(e) any material adverse change to a material contract or agreement
by which Buyer or Buyer Subsidiary, or any of their respective assets is bound
or subject;

(f) any material change in any compensation arrangement or agreement
with any key employee, officer, director or shareholder of Buyer or Buyer
Subsidiary;

(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets owned or used by Buyer or
Buyer Subsidiary;

(h) receipt of notice that there has been a material loss of, or
material order cancellation by, any major customer of Buyer or Buyer Subsidiary;

(i) any material mortgage, pledge, transfer of a security interest
in, or Lien, created by Buyer or Buyer Subsidiary, with respect to any of their
respective material properties or assets, except Liens for Taxes not yet due or
payable;

(j) any loans or guarantees made by Buyer or Buyer Subsidiary to or
for the benefit of their respective employees, officers or directors, or any
members of their immediate families, other than travel advances and other
advances made in the ordinary course of their respective businesses and other
than in connection with purchases of Buyer's capital stock;

(k) any declaration, setting aside or payment or other distribution
in respect to any of Buyer's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by Buyer; or

-16-
<PAGE>

(l) to the Buyer's knowledge, any other event or condition of any
character that might result in a Material Adverse Effect on Buyer on a
consolidated basis.

5.22 Employee Benefit Plans. Except as set forth in Section 5.22 of the
----------------------
Buyer Disclosure Schedule, neither Buyer nor Buyer Subsidiary has any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.

5.23 Tax Returns and Payments. Each of Buyer and Buyer Subsidiary has
------------------------
filed all Tax returns and reports as required by Law. These returns and reports
are true and correct in all material respects. Each of Buyer and Buyer
Subsidiary has paid all Taxes and other assessments due except for Taxes
incurred in the ordinary course of business not yet due and payable.

5.24 Insurance. Each of Buyer and Buyer Subsidiary has in full force and
--------
effect fire and casualty insurance policies, with extended coverage, sufficient
in amount (subject to reasonable deductibles) to allow Buyer or Buyer Subsidiary
to replace any of their respective properties that might be damaged or
destroyed.

5.25 Labor Agreements and Actions. Neither Buyer nor Buyer Subsidiary is
----------------------------
bound by or subject to (and none of their respective assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of Buyer, has sought to represent any of the employees,
representatives or agents of Buyer or Buyer Subsidiary. There is no strike or
other labor dispute involving Buyer or Buyer Subsidiary pending, or to the
knowledge of Buyer threatened, which could have a Material Adverse Effect on
Buyer or Buyer Subsidiary, nor is Buyer aware of any labor organization activity
involving its employees or the employees of Buyer Subsidiary. Except as set
forth in Section 5.25 of the Buyer Disclosure Schedule, the employment of each
officer and employee of Buyer and Buyer Subsidiary is terminable at the will of
Buyer or Buyer Subsidiary, as the case may be. To Buyer's knowledge, each of
Buyer and Buyer Subsidiary has complied in all material respects with all
applicable state and federal equal employment opportunity Laws and with other
Laws related to employment.

5.26 Environmental and Safety Laws. Neither Buyer nor Buyer Subsidiary is
-----------------------------
in violation of any applicable Law relating to the environment or occupational
health and safety, except for such violations that would not have a Material
Adverse Effect on Buyer, on a consolidated basis, and to the best of Buyer's
knowledge, no material expenditures are or will be required in order to comply
with any such existing Law. No Hazardous Materials are used or have been used,
stored, or disposed of by Buyer or Buyer Subsidiary or to the best of Buyer's
knowledge after reasonable investigation, by any other Person on any property
owned, leased or used by Buyer or Buyer Subsidiary.

5.27 Year 2000 Matters. All of Buyer's and Buyer Subsidiary's software
products, devices and programs will operate prior to, during and after the
calendar year 2000 A.D. without material error relating to the date data that
represents or references different centuries or more than one

-17-
<PAGE>

century other than such errors which have not had nor would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Buyer, on a consolidated basis.

5.28 Investment Company Act. Buyer is not an "investment company" or, to
----------------------
Buyer's knowledge, a company "controlled" by an "investment company" within the
meaning of the 1940 Act.

5.29 HSR Act. Buyer has neither annual net sales nor total assets of
-------
$10,000,000 or more as of September 30, 1999 (the date of Buyer's most recent
regularly prepared balance sheet).

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 Reincorporation into Delaware. In connection with the first meeting
-----------------------------
of the shareholders of Buyer following the Closing, Buyer shall use all
commercially reasonable efforts to effect a reincorporation into Delaware (the
"Reincorporation"), including soliciting the affirmative vote of the
shareholders of Buyer in respect of the Reincorporation and obtaining all
necessary consents and approvals of third parties to effect the Reincorporation.
Upon the effectiveness of the Reincorporation, the resulting Delaware
corporation shall assume all of the obligations of Buyer under this Agreement
and the Related Agreements as if such Delaware corporation were a party to this
Agreement and the Related Agreements.

6.2 Expenses. Except as contemplated in Section 3.2, all fees and
--------
expenses incurred in connection with the Acquisition including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties incurred by a party in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby, shall be the obligation of the respective party incurring
such fees and expenses.

6.3 Public Disclosure. Buyer, on the one hand, and HMTF, acting on behalf
-----------------
of all Shareholders, on the other hand, will consult with the other before
issuing, and will provide the other with a reasonable opportunity to review and
comment upon, any press release or other public statements in respect of the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation except as
may be required by applicable Law or judicial process.

6.4 Stock Option Grants. Effective upon the Closing, Buyer has granted to
-------------------
certain employees of Temic and Buyer options or warrants to purchase shares of
Common Stock or Preferred Stock of Buyer on such terms as set forth in a
schedule previously reviewed and mutually agreed upon by Buyer and HMTF, as
evidenced by their signatures hereto.

-18-
<PAGE>

6.5 Financial Information.
---------------------

(a) Periodic Reports. So long as a Shareholder (together with its
----------------
Affiliates is a holder of at least 250,000 shares of Series E Preferred Stock
and/or Common Stock issuable upon conversion of the Series E Preferred Shares
and/or Common Stock issuable upon conversion of the Series D Preferred Stock
and/or Warrant Shares (in each case as adjusted for stock splits, dividends,
combinations, recapitalizations or the like), upon prior written request by such
Shareholder Buyer will distribute the following reports to that Shareholder:

(i) As soon as practicable after the end of each fiscal year of
Buyer, and in any event within 90 days thereafter, consolidated balance sheets
of Buyer and its Subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of cash flows of
Buyer and its Subsidiaries, if any, for such year, prepared in accordance with
U.S. GAAP and setting forth in each case in comparative form the figures for the
previous fiscal year (or, at the election of Buyer, setting forth in comparative
form the budgeted figures for the fiscal year then reported), all in reasonable
detail and audited by independent public accountants of national standing
selected by Buyer.

(ii) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of Buyer and in any
event within 45 days thereafter, a consolidated balance sheet of Buyer and its
Subsidiaries, if any, as of the end of each such quarterly period, and
consolidated statements of income and consolidated statements of cash flows of
Buyer and its Subsidiaries, if any, for such period and for the current fiscal
year to date, prepared in accordance with U.S. GAAP (other than for accompanying
notes), subject to changes resulting from year-end audit adjustments, all in
reasonable detail and signed by the principal financial or accounting officer of
Buyer; provided, however, that Buyer shall, from time to time and at its sole
discretion, limit or prohibit the right of any Shareholder to receive such
information pursuant to this Section 6.5 if Buyer, in good faith, determines
that such information is a trade secret or contains confidential or classified
information.

(b) Assignment of Rights to Financial Information. The rights granted
---------------------------------------------
pursuant to this Section 6.5 may not be assigned or otherwise conveyed by any
Shareholder or by any subsequent transferee of any such rights without the prior
written consent of Buyer; provided, however, that any Shareholder may assign to
any transferee, other than a competitor of Buyer, and after giving notice to
Buyer, the rights granted pursuant to this Section 6.5 to (i) a transferee
(together with its Affiliates) who acquires at least 250,000 shares of Series E
Preferred Stock and/or Common Stock issued upon conversion of the Series E
Preferred Stock and/or Common Stock issuable upon conversion of the Series D
Preferred Stock and/or Warrant Shares (in each case as appropriately adjusted
for stock splits, dividends, combinations, recapitalizations or the like) or
Warrant Shares or (ii) immediate family members, trusts or partnerships for the
benefit of a Shareholder or his immediate family members, or charitable trusts
of foundations established by the Shareholder.

-19-
<PAGE>

6.6 Change of Name. Upon the request, and at the expense, of the HM
--------------
Shareholders, Buyer shall change or cause the change of the name of each of the
Company and each New Company Subsidiary so that "HMTF" is deleted from name of
each of the Company and each New Company Subsidiary.

ARTICLE VII

DOCUMENTS DELIVERED AT THE CLOSING

7.1 Documents Delivered by the Shareholders at Closing. On the Signing
--------------------------------------------------
Date, the Shareholders (except as otherwise expressly provided below) are
delivering to Buyer each of the following documents:

(a) Certificates Evidencing the Company Shares. Certificates
------------------------------------------
evidencing the Company Shares accompanied by stock powers or other instruments
of transfer (in form and substance reasonably satisfactory to Buyer) duly
executed in blank, and such other documents and instruments of transfer as Buyer
may reasonably request conveying and transferring title of the Company Shares to
Buyer.

(b) Related Agreements. Copies of each of the following documents
------------------
duly executed by each such Shareholder: (i) the Registration Rights Agreement,
(ii) the Co-Sale and Right of First Refusal Agreement, and (iii) the Voting
Agreement.

(c) Monitoring and Oversight Agreement. Solely in respect of the HM
----------------------------------
Shareholders, a copy of the Monitoring and Oversight Agreement duly executed by
Hicks, Muse & Co. Partners, L.P.

(d) Resignation of Officers and Directors. Evidence that each officer
------------------------------------
and director of the Company and each New Company Subsidiary has resigned from
such positions with the Company and each New Company Subsidiary.

(e) Termination of Certain Agreements. Evidence that each of the
following agreements has been terminated and has ceased to have any force or
effect: (i) the Temic Shareholders Agreement, (ii) Temic Monitoring and
Oversight Agreement, and (iii) the Temic Financial Advisory Agreement.

(f) Pledge Agreement and Pledged Shares. Pledge agreement and related
----------------------------------
stock powers and assignment agreements, all in the form attached hereto as
Exhibit L, duly executed by the Company and TIN.
- ---------

(g) Officer's Certificate. An officer's certificate duly executed by
an officer of the Company and a director of each New Company Subsidiary
certifying (as applicable) that (i) the certificate of incorporation and
memorandum of association of the Company and such other similar organizational
documents of each New Company Subsidiary in each case as attached thereto are
true,

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<PAGE>

correct, and complete and (ii) the Bye-Laws of the Company and such other
similar governance documents of each New Company Subsidiary in each case as
attached thereto are true, correct, and complete.

(h) Legal Opinions. Legal opinions from Appleby Spurling & Kempe,
--------------
Bermuda counsel, in the form attached hereto as Exhibit H, Hunter & Hunter, in
---------
the form attached hereto as Exhibit I, and Bruckhaus Westrick Heller Lober, in
---------
the form attached hereto as Exhibit J.
---------

(i) Noncompete Agreement. Noncompete agreement in a form reasonably
--------------------
satisfactory to the Buyer, duly executed by the employees listed in Schedule
7.1(i).

(j) Third-Party Consents. All necessary consents of, filings with,
--------------------
any Government Entity or third Person, relating to the consummation by each
Shareholder of the transactions contemplated hereby.

7.2 Documents Delivered by Buyer at Closing. On the Signing Date, Buyer is
---------------------------------------
delivering to the Shareholders each of the following documents:

(a) Certificates Evidencing Preferred Shares. In respect of each
----------------------------------------
Shareholder, a certificate in the name of such Shareholder evidencing the
Preferred Shares acquired by such Shareholder as set forth opposite such
Shareholder's name on Schedule 1.3.

(b) Warrants. In respect of each Shareholder, an original Warrant
showing such Shareholder as the holder thereof and evidencing the right to
acquire the number of Warrant Shares set forth opposite such Shareholder's name
on Schedule 1.3 duly executed by Buyer.

(c) Related Agreements. Copies of each of the following documents
------------------
duly executed by each of Buyer and such persons necessary to amend and restate
such agreement (other than the Shareholders): (i) the Registration Rights
Agreement, (ii) the Co-Sale and Right of First Refusal Agreement, (iii) the
Voting Agreement.

(d) Monitoring and Oversight Agreement. A copy of the Monitoring and
----------------------------------
Oversight Agreement duly executed by Buyer.

(e) Restated Articles. A copy of the Restated Articles certified by
-----------------
the Secretary of State of the State of Texas effective as of a date not more
than five days prior to the Effective Date.

(f) Officer's Certificate. An officer's certificate duly executed by
---------------------
the secretary of Buyer certifying that (i) the Restated Articles are true,
correct, and complete, (ii) the bylaws of the Company as attached thereto are
true, correct, and complete, (iii) the resolutions of the board of directors of
Buyer approving (A) the execution and delivery of this Agreement, the Related
Agreements, the Warrants, and each of the other documents delivered by Buyer
pursuant hereto and authorizing the consummation of the transactions
contemplated hereby and thereby, (B) the Restated

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<PAGE>

Articles, (C) the Restated Buyer Stock Plan, and (D) the increase in the number
of directors on Buyer's board of directors from seven directors to ten
directors, and (iv) the resolutions of the requisite number of shareholders of
Buyer approving (A) the Restated Articles, (B) the Restated Buyer Stock Plan and
(C) electing Martin Englmeier, Lawrence D. Stuart, Jr. and Philippe von
Stauffenberg to Buyer's Board of Directors.

(g) Third-Party Consents. Any and all approvals, authorizations,
--------------------
consents, orders, and waivers of any Governmental Entity or third party that are
required in connection with the consummation of the transactions contemplated by
this Agreement or any Related Agreement.

(h) Legal Opinion. Legal opinion from Wilson Sonsini Goodrich &
-------------
Rosati, counsel to Buyer, in the form attached hereto as Exhibit K.
---------

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
INDEMNIFICATION

8.1 Survival of Representations and Warranties.
-----------------------------------------

(a) Except as to the representations and warranties contained in
Section 2.1 (organization and standing; articles and bylaws), Section 2.2(b)
(governmental consents), Section 2.8 (brokers' and finders' fees), and Section
2.3 (capitalization), which shall survive the Closing and remain in effect
indefinitely, the representations and warranties of the HM Shareholders
contained in this Agreement shall not survive the Closing.

(b) Except as to the representations and warranties contained in
Section 4.1 (power, consents and authorization), Section 4.2 (title to
securities), and Section 4.5 (investment representations), which shall survive
the Closing and remain in effect indefinitely, the representations and
warranties of the Shareholders contained in this Agreement shall not survive the
Closing.

(c) Except as to the representations and warranties contained in
Section 5.1 (organization and standing; articles and bylaws), Section 5.2
(power), Section 5.3 (authorization), Section 5.4 (capitalization), Section 5.13
(governmental consents), and Section 5.15 (brokers' and finders' fees), which
shall survive the Closing and remain in effect indefinitely, the representations
and warranties of Buyer contained in this Agreement shall not survive the
Closing.

(d) The covenants in this Agreement shall survive the Closing and
remain in effect indefinitely, unless any such covenant provides that it will
survive for a different period after the Closing (in which event such different
period shall apply).

8.2 Indemnification.
---------------

-22-
<PAGE>

(a) Subject to Section 8.1, each Shareholder severally but not
jointly, shall indemnify and hold harmless Buyer and its officers, directors,
agents, and Affiliates from and against any and all Indemnifiable Losses to the
extent relating to, resulting from, or arising out of:

(i) any inaccuracy or breach of any representation or warranty
of such Shareholder contained herein; and

(ii) any breach or nonfulfillment of any agreement or covenant of
such Shareholder under this Agreement.

(b) Subject to Section 8.1, Buyer shall indemnify and hold harmless
each Shareholder and its officers, directors, agents, and Affiliates from and
against any and all Indemnifiable Losses to the extent relating to, resulting
from, or arising out of:

(i) any inaccuracy or breach of any representation or warranty
of Buyer contained herein; and

(ii) any breach or nonfulfillment of any agreement or covenant of
Buyer under this Agreement.

8.3 Third-Party Claims.
------------------

(a) If any Indemnified Party receives notice of assertion or
commencement of any Third Party Claim against such Indemnified Party in respect
of which an Indemnifying Party is obligated to provide indemnification under
this Agreement, the Indemnified Party will give such Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than 15
calendar days after receipt of such notice of such Third Party Claim. Such
notice will describe the Third Party Claim in reasonable detail, will include
copies of all material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has been or
may be sustained by the Indemnified Party. The Indemnifying Party will have the
right to participate in, or, by giving written notice to the Indemnified Party,
to assume, the defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably satisfactory to
the Indemnified Party), and the Indemnified Party will cooperate in good faith
in such defense.

(b) If, within ten calendar days after giving notice of a Third Party
Claim to an Indemnifying Party pursuant to Section 8.3(a), an Indemnified Party
receives written notice from the Indemnifying Party that the Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 8.3(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof; provided, however, that if the Indemnifying Party
fails to take reasonable steps necessary to defend diligently such Third Party
Claim within ten calendar days after receiving written notice from the
Indemnified Party that the Indemnified Party believes the Indemnifying Party

-23-
<PAGE>

has failed to take such steps or if the Indemnifying Party has not undertaken
fully to indemnify the Indemnified Party in respect of all Indemnifiable Losses
relating to the matter, the Indemnified Party may assume its own defense, and
the Indemnifying Party will be liable for all reasonable costs or expenses paid
or incurred in connection therewith. Without the prior written consent of the
Indemnified Party, the Indemnifying Party will not enter into any settlement of
any Third Party Claim which would lead to liability or create any financial or
other obligation on the part of the Indemnified Party for which the Indemnified
Party is not entitled to indemnification hereunder.

(c) Direct Claims. The Indemnifying Party will have a period of 30
-------------
calendar days within which to respond in writing to any claim by an Indemnified
Party on account of an Indemnifiable Loss that does not result from a Third
Party Claim (a "Direct Claim"). If the Indemnifying Party does not so respond
within such 30 calendar day period, the Indemnifying Party will be deemed to
have rejected such claim, in which event the Indemnified Party will be free to
pursue such remedies as may be available to the Indemnified Party on the terms
and subject to the conditions of this Article VIII. In case the Indemnifying
Party shall so object in writing to any claim or claims made by Indemnified
Party hereunder, the Indemnifying Party and Indemnified Party shall attempt in
good faith to agree upon the rights of the respective parties with respect to
each of such claims.

(d) A failure to give timely notice or to include any specified
information in any notice as provided in this Section 8.3 will not affect the
rights or obligations of any party hereunder except and only to the extent that,
as a result of such failure, any Person which was entitled to receive such
notice was deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise materially damaged as a result of such
failure.

(e) No Shareholder shall have any right of contribution from the
Company, Temic or any Subsidiary of the Company or Temic with respect to any
Indemnifiable Loss.

ARTICLE IX

GENERAL PROVISIONS

9.1 No Joint Venture. Nothing contained in this Agreement shall be deemed
----------------
or construed as creating a joint venture or partnership between or among any of
the parties. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party shall have the
power to control the activities and operations of any other and their status is,
and at all times will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other.

9.2 Waiver. No delay or omission to exercise any right, power or remedy
------
accruing to any party hereto upon any breach or default of any other party under
this Agreement shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach or default, or any acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall any

-24-
<PAGE>

waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character of any breach or default under this Agreement,
or any waiver of any provisions or conditions of this Agreement must be set
forth in a written instrument duly executed and delivered on behalf of the
waiving party. Any such waiver shall not be applicable or have any effect except
in the specific instance in which it is given.

9.3 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses or facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by like notice):

(a) if to Buyer, to:

MicroTune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
Attention: Chief Executive Officer
Telephone No.: (972) 673-1600
Facsimile No.: (972) 673-1602

with a copy to:

Wilson Sonsini Goodrich & Rosati
8911 Capital of Texas Highway
Westech 360, Suite 3350
Austin, Texas 78759-7247
Attention: Paul R. Tobias, Esq.
Telephone No.: (512) 338-5400
Facsimile No.: (512) 338-5499

(b) if to the Shareholders, to their respective addresses set forth
on the signature pages to this Agreement, with a copy to each of:

Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telephone No.: (214) 740-7300
Facsimile No. (214) 740-7313

and

-25-
<PAGE>

Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6905
Attention: Glenn D. West
Telephone No.: (214) 746-7700
Facsimile No.: (214) 746-7777

9.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas applicable to contracts entered
into and wholly to be performed within Texas by Texas residents.

9.5 Entire Agreement. This Agreement, (including the Schedules hereto),
----------------
the Restated Articles, the Warrants, the Related Agreements, the Mutual
Disclosure Agreement dated September 28, 1999 between Buyer and Temic and the
Mutual Disclosure Agreement dated September 16, 1999 between Buyer and Hicks,
Muse, Tate & Furst Incorporated constitute the full and entire understanding and
agreement among the parties hereto and thereto with regard to the subject matter
hereof and thereof and supersede all prior oral and written understandings and
agreements with regard to such subject matter.

9.6 Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns, but shall not be assignable
or delegable without the prior written consent of each other party hereto;
provided, however, that any of the parties hereto may assign or delegate its
rights or obligations to any of its Affiliates; provided further, that any such
assignment shall not relieve any such party of its obligations hereunder. Any
purported assignment or delegation in violation of the foregoing shall be null
and void.

9.7 Severability. In the event that any provision of this Agreement or the
------------
application thereof shall be deemed or declared by a court of competent
jurisdiction to be illegal, void or unenforceable, (i) the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto, and (ii) such void or unenforceable
provision shall be replaced with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.

9.8 Further Assurances. The parties hereto shall execute such further
------------------
instruments and shall take such further action as may be reasonably requested by
another party hereto to carry out the purposes or intent of this Agreement and
the transactions contemplated hereby.

9.9 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The

-26-
<PAGE>

parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.

9.10 Interpretation; Titles and Subtitles. The words "include," "includes"
------------------------------------
and "including" when used herein shall be deemed in each case to be followed by
the words "without limitation." The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. The parties hereto agree that
they have been represented by counsel during the negotiation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.

9.11 Absence of Third Party Beneficiary Rights. No provision of this
-----------------------------------------
Agreement is intended, nor shall it be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any Person not
a party hereto unless specifically provided otherwise herein.

9.12 Language. The parties hereby acknowledge that it is their express
--------
desire that this Agreement be prepared in the English language.

9.13 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which will be an original, but all of which together shall
be considered one and the same agreement.

9.14 No Recourse. No past, present, or future director, officer, employee,
-----------
shareholder, incorporator, or partner, as such, of Buyer, the Company, or the
Shareholders (except to the extent any of the foregoing is a party to this
Agreement) shall have any liability for any obligation of Buyer, the Company, or
the Shareholders under this Agreement or for any claim based on, in respect of,
or by reason of such obligations or their creation.

9.15 Definitions. The following terms when used herein have the meanings
-----------
set forth below:

"1940 Act" means the Investment Company Act of 1940, as amended.

"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such other Person. For purposes of this
definition "control" means the possession of the power to direct or

-27-
<PAGE>

cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise.

"Agreement" has the meaning set forth in the introductory paragraph.

"Acquisition" has the meaning set forth in the Recitals.

"Buyer" has the meaning set forth in the introductory paragraph.

"Buyer Disclosure Schedule" has the meaning set forth in the first
paragraph of Article V.

"Buyer Financial Statements" has the meaning set forth in Section 5.20.

"Buyer Subsidiary" has the meaning set forth in Section 5.3.

"Closing" and "Closing Date" have the respective meanings set forth in
Section 1.1.

"Common Stock" has the meaning set forth in Section 1.3.

"Company" has the meaning set forth in the introductory paragraph.

"Company Charter Documents" means the Memorandum and Articles of
Association of Company, each as amended through the date of this Agreement and
the organizational documents for each New Company Subsidiary.

"Company Disclosure Schedule" has the meaning set forth in the first
paragraph of Article II.

"Company Shares" has the meaning set forth in the Recitals.

"Co-Sale and Right of First Refusal Agreement" means the Fourth Amended and
Restated Co-Sale and Right of First Refusal Agreement dated as of even date
hereof by and among Buyer and the signatories thereto, in the form attached
hereto as Exhibit D.
---------

"Direct Claim" has the meaning set forth in Section 8.3(c)(i).

"Effective Date" has the meaning set forth in the introductory paragraph.

"Governmental Entity" shall mean any domestic or foreign national,
provincial, state, county, local or other legislative body, administrative
agency, authority, court, instrumentality, agency or commission.

"Hazardous Materials" means any chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum products
or other substances the use, storage or disposal of which is subject to Law.

-28-
<PAGE>

"HM Shareholders" means HTMF Temic/Microtune Cayman, L.P., a limited
partnership organized under the laws of the Cayman Islands and its successors.

"HMTF" means HMTF Temic/Microtune Cayman, L.P., a limited partnership
organized under the Laws of the Cayman Islands, and its successors.

"Indemnifiable Losses" means any and all damages, losses, liabilities,
obligations, costs, and expenses, and any and all claims, demands, or suits (by
any Person), including the costs and expenses of any and all actions, suits,
proceedings, demands, assessments, judgments, settlements, and compromises
relating thereto and including reasonable attorneys' fees and expenses in
connection therewith.

"Indemnifying Party" means any Person required to provide indemnification
under this Agreement.

"Indemnified Party" means any Person entitled to indemnification under this
Agreement.

"IP Assignment" has the meaning set forth in Section 5.6.

"Knowledge", "known" or words of similar import mean knowledge of the
directors, officers shareholders of the relevant company, including facts of
which the directors, officers and shareholders of the relevant company, in the
reasonably prudent exercise of their duties as directors, officers and/or
shareholders of the company should be aware.

"Law" or, collectively, "Laws", means any statute, law, rule, regulation,
ordinance, code, governmental policy, and any judicial or administrative
interpretation thereof including any judicial or administrative order, consent,
decree, or judgment.

"Lien" means any mortgage, pledge, lien, security interest, charge, claim,
equity, encumbrance, restriction on transfer, conditional sale or other title
retention device or arrangement (including a capital lease), transfer for the
purpose of subjection to the payment of any indebtedness, or restriction on the
creation of any of the foregoing, whether relating to any property or right or
the income or profits therefrom.

"Material Adverse Effect" on a Person means a material adverse effect on
the business (as conducted or proposed to be conducted), properties, prospects,
assets (including intangible assets), liabilities, financial condition or
results of operations of such party and its Subsidiaries considered as a single
enterprise.

"Monitoring and Oversight Agreement" means that certain Monitoring and
Oversight Agreement dated on even date hereof, in the form attached hereto as
Exhibit G.
- ---------

"New Company Subsidiaries" has the meaning set forth in Section 2.1.

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<PAGE>

"Non-U.S. Shareholder" has the meaning set forth in Section 4.5(d).

"Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a Governmental Entity.

"Registration Rights Agreement" means the Fourth Amended and Restated
Registration Rights Agreement dated on even date hereof by and among Buyer, the
Shareholders (as defined therein) and the Founders, in the form attached hereto
as Exhibit C.
---------

"Reincorporation" has the meaning set forth in Section 6.1.

"Related Agreements" means the Registration Rights Agreement, the Co-Sale
and Right of First Refusal Agreement and the Voting Agreement.

"Restated Articles" the Second Amended and Restated Articles of
Incorporation of Buyer, as corrected, in the form attached hereto as Exhibit B,
---------
as filed with the Secretary of State of Texas effective as of December 31, 1999.

"Restated Buyer Stock Plan" has the meaning set forth in Section 5.4(a).

"Securities" has the meaning set forth in Section 4.5(a).

"Securities Act" means the United States Securities Act of 1933, as
amended, including all rules and regulations promulgated thereunder, or any
successor law.

"Series D Preferred Stock" means the Company's Series D Preferred Stock,
par value $0.001 per share.

"Series E Preferred Shares" has the meaning set forth in Section 1.3(a).

"Series E Preferred Stock" has the meaning set forth in Section 1.3(a).

"Shareholder" or, collectively "Shareholders" has the meaning set forth in
the introductory paragraph.

"Shareholder Disclosure Schedule" has the meaning set forth in the first
paragraph of Article IV.

"Signing Date" has the meaning set forth in the introductory paragraph.

"Subsidiary" means any corporation, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the

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<PAGE>

other Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership,
association or other business entity.

"Tax" or, collectively, "Taxes", means any and all national, provincial,
and local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other Person with respect to such amounts and including
any liability for taxes of a predecessor entity.

"Temic" has the meaning set forth in Section 3.1.

"Temic Disclosure Schedule" has the meaning set forth in the introductory
paragraph of Article III.

"Temic Financial Advisory Agreement" means that certain Financial Advisory
Agreement dated as of December 23, 1999, by and among Temic, its Subsidiaries
party thereto, and Hicks Muse & Co. Partners, L.P.

"Temic Monitoring and Oversight Agreement" means that certain Monitoring
and Oversight Agreement dated as of December 23, 1999, by and among Temic, its
Subsidiaries party thereto, and Hicks Muse & Co. Partners, L.P.

"Temic Purchase Agreement" has the meaning set forth in Section 3.1.

"Temic Shareholders Agreement" means that certain Shareholders Agreement
dated as of December 23, 1999, by and among HMTF Europe Fund Cayman L.P., the
Beneficiaries (as defined therein), TIN, and the Company.

"Third Party Claim" means a claim for Indemnifiable Losses made by any
Person who is not a signatory to this Agreement.

"TIN" means TIN Vermogensverwaltungsgellschaft mbH.

"U.S. GAAP" means United States generally accepted accounting principles.

"U.S. Person" has the meaning set forth in Section 4.5(d)(i).

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<PAGE>

"U.S. Shareholder" has the meaning set forth in Section 4.5(c).

"Voting Agreement" means the Fourth Amended and Restated Voting Agreement
dated on even date hereof by and among Buyer, in the form attached hereto as
Exhibit E.
- ---------

"Warrants" has the meaning set forth in Section 1.3(a).

"Warrant Shares" has the meaning set forth in Section 1.3(a).

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<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized respective officers, all as of the date first written
above.

MICROTUNE, INC.

By: /s/ Douglas J. Bartek
----------------------------------------
Name: Douglas J. Bartek
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------

SHAREHOLDERS:

TIN Verhogensverwaltungs Gesellschaft mbH
- -----------------------------------------
[Print Name]

By: /s/ Gerd Hansen
--------------------------------------
Title: Geschafisfuhrer
-----------------------------------
Address:
---------------------------------
Koogskaat 10a
- -----------------------------------------
25870 Norderfriedrickskoog
- -----------------------------------------

<PAGE>

Exhibit 10.15

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

ASSET PURCHASE AGREEMENT

dated

January 10, 2000

by and among

The Tuner Company,

Thomas Widmer

and

MicroTune, Inc.

- --------------------------------------------------------------------------------
<PAGE>

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into January
10, 2000, by and between MicroTune, Inc., a Texas corporation (the "Buyer"),
The Tuner Company (formerly known as Temic Telefunken RF-Technologies, Inc.), a
Texas corporation (the "Seller"), and Thomas Widmer (the "Shareholder").

RECITALS
--------

A. Seller wishes to sell to the Buyer certain of the assets of Seller and
to transfer to the Buyer certain specified obligations and liabilities of Seller
(the "Acquisition") related to the business of Seller (the "Business").

B. The Buyer wishes to acquire such assets and is willing to assume such
obligations and liabilities on the terms and subject to the conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

1.1 Agreement to Purchase and Sell. Upon the terms and subject to the
------------------------------
conditions set forth in this Agreement, upon the Closing Date (as defined in
Section 3.2), Seller and Shareholder agree to convey, sell, transfer, assign and
deliver to Buyer, and Buyer shall purchase from Seller and/or Shareholder, all
right, title and interest existing now or at any time hereafter through the
Closing Date (whether or not in inchoate form) in or to all of the assets,
properties and rights of Seller and/or Shareholder set forth on Schedule 1.1(a)
--------------
hereto, which shall include those listed below:

(a) All marketing materials, training materials, office and
reference manuals and similar items associated with the Business;

(b) The franchises, licenses, permits, consents and certificates
of any regulatory, administrative or other governmental agency or body issued to
or held by Seller (to the extent the same are transferable) (the "Permits");

(c) All rights of Seller and Shareholder in the Seller
Intellectual Property (as defined in Section 4.7) and all inventions, materials,
information, know-how and intellectual property rights related thereto, except
for the name "The Tuner Company" and the domain names "thetuner.com",
"thetuner.org" and "thetuner.net";
<PAGE>

(d) The contracts, agreements, contract rights, license
agreements, purchase and sales orders, quotations and other executory rights of
Seller and commitments of third parties related to or used in the Business (the
"Contracts");

(e) The furniture, art work, fixtures, equipment (including
office equipment), machinery, parts, computer hardware, tools, dies, jigs,
patterns, molds, automobiles and trucks and other tangible personal property
used in the Business (collectively, the "Equipment");

(f) All customer and supplier lists, including addresses,
drawings, files, papers and records relating to the Business and all information
with respect to the accounts relating to the Business (the "Account
Information");

(g) All causes of action, judgments and claims or demands of
whatever kind or description arising out of or relating to the Purchased Assets
(as defined below), excluding (with the exception of the Permitted Encumbrances)
all causes of action, judgments and claims and demands against the Purchased
Assets;

(h) All of Seller's membership interests in Temic Telefunken RF-
Engineering, LLC, an Alabama limited liability company ("Temic LLC");

(i) All rights of Seller, if any, under express or implied
warranties from suppliers and vendors to Seller which are related to the
Business and associated with the Purchased Assets; and

(j) All goodwill, if any, associated with the Business.

The assets, properties and rights to be conveyed, sold, transferred, assigned
and delivered to Buyer pursuant to this Section 1.1 are sometimes hereinafter
collectively referred to as the "Purchased Assets." All of the Purchased Assets
shall be sold to Buyer free and clear of any Liens (as defined in Section 4.5),
other than Permitted Encumbrances (as defined in Section 4.5). The Purchased
Assets shall explicitly exclude (A) the cash, cash equivalents and securities of
the Company (excluding any cash or cash equivalents received related to
prepayments for product shipments to be made after 11:59 p.m. on December 31,
1999, except as set forth below), (B) all trade notes, accounts and commissions
receivable of Seller (which shall not include intercompany notes) related to
actual product shipments made by Seller or TTH (I) on or before 11:59 p.m. on
December 31, 1999 and (II) to satisfy the purchase orders listed on Schedule
--------
1.1(b) hereto (including all cash or other proceeds generated from the payment
- ------
of such receivables), (C) the automobiles described in Schedule 1.1(c) hereto,
---------------
and (D) the promissory note payable dated August 3, 1998 to Seller from Temic
LLC in the principal amount of $21,000 and the promissory note payable dated
November 19, 1999 to Seller from Temic LLC in the principal amount of $100,000.
Notwithstanding anything else in this Agreement, Buyer shall not be liable or
obligated with respect to any liability, obligation or commitment with respect
to any of the foregoing except as expressly provided in Section 2.1 below.

ARTICLE II

ASSUMPTION OF LIABILITIES

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<PAGE>

2.1 Agreement to Assume. At the Closing (as defined in Section 3.2
hereof), Buyer shall assume and agree to discharge and perform when due, and
obtain releases of any guarantees of, those liabilities and obligations of
Seller, and only those liabilities and obligations of Seller, that are
specifically enumerated in Schedule 2.1 (the "Assumed Liabilities"). In
-----------
addition, upon the Closing, Seller's note payable dated March 30, 1998 in favor
of Temic Telefunken Hochfrequenztechnik, GmbH ("TTH") shall be canceled and
shall be of no further force or effect.

2.2 No Expansion of Third Party Rights. The assumption by Buyer of the
----------------------------------
Assumed Liabilities shall not expand the rights or remedies of any third party
against Buyer or Seller as compared to the rights and remedies which such third
party would have had against Seller had Buyer not assumed the Assumed
Liabilities. Without limiting the generality of the preceding sentence, the
assumption by Buyer of the Assumed Liabilities shall not create any third party
beneficiary rights.

ARTICLE III

PURCHASE PRICE, MANNER OF PAYMENT AND CLOSING

3.1 Consideration. Upon the terms and subject to the conditions contained
-------------
in this Agreement, the consideration for the Purchased Assets and the covenant
contained in Section 7.5 hereof shall be one million ten thousand dollars
($1,010,000) (the "Purchase Price").

3.2 Time and Place of Closing. The transaction contemplated by this
-------------------------
Agreement shall be consummated (the "Closing") at 10:00 a.m. at the offices of
Buyer on the date hereof (the "Closing Date") and shall be deemed effective as
of 11:59 p.m. on December 31, 1999.

3.3 Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Purchased Assets and the non-compete covenant provided for in the
Employment Agreement as set forth in a statement of allocation of the Purchase
Price (plus Assumed Liabilities), such statement to be prepared by Buyer at the
Closing Date or as soon as practicable thereafter and mutually agreed upon by
Buyer and Seller. The statement of the allocation prepared and mutually agreed
to in accordance with this Section 3.3 shall be binding upon the parties hereto
and shall be prepared using the allocating methods and principles required by
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations promulgated thereunder. Neither Buyer nor Seller shall take any
position inconsistent with such allocations, and any and all filings with and
reports made to any taxing authority will be consistent with that allocation,
except in each case to the extent that Buyer or Seller reasonably believes,
after discussion with the other, that the foregoing will result in a violation
of applicable law.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDER

Seller and the Shareholder, jointly and severally, represent and warrant to
Buyer that the statements contained in this Article IV are true and correct,
except as set forth in the disclosure schedule attached hereto as Exhibit A (the
---------
"Seller Disclosure Schedule"). Any reference in this Article IV to an agreement
being "enforceable" shall be deemed to be qualified to the extent such

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<PAGE>

enforceability is subject to (i) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (ii) the
availability of specific performance, injunctive relief and other equitable
remedies.

4.1 Capitalization. As of the Closing Date (i) the authorized capital
--------------
stock of the Seller consists of 100,000 shares of common stock, (ii) 1,000
shares of common stock are issued and outstanding, and (iii) all such
outstanding shares are owned by the Shareholder.

4.2 Corporate Organization; Standing and Power. Seller is a corporation
------------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Texas. Seller has the corporate power to own its properties and to
carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect (as
defined in Section 9.2 hereof) on Seller. Seller is not in violation of any of
the provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.

4.3 Authority.
---------

(a) Seller has all requisite corporate power and authority to
enter into the Agreement, the Employment Agreement (as defined in Section
6.2(c), the Bill of Sale (as defined in Section 6.2(b) and the termination
agreements referenced in Sections 6.3(h) through (j) (collectively, the
"Transaction Documents") to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement and the other
Transaction Documents have been duly executed and delivered by each of Seller
and the Shareholder and constitute the valid and binding obligations of each of
Seller and the Shareholder enforceable against each Seller and the Shareholder
in accordance with their terms.

(b) The execution and delivery of this Agreement and the other
Transaction Documents by each of Seller and the Shareholder do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any benefit under (i)
any provision of the Articles of Incorporation or Bylaws of Seller, as amended,
or (ii) any Material Contract (as defined in Section 4.9), permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Seller or the Shareholder or any of their properties or
assets, except where such conflict, violation or default would not have a
Material Adverse Effect (as defined in Section 9.2) on Seller, the Purchased
Assets or the Business.

(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Seller or the Shareholder in
connection with the execution and delivery of this Agreement and the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, except for (i) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be

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<PAGE>

required under applicable state securities laws and the securities laws of any
foreign country; and (ii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Seller or the Business and would not prevent, or
materially alter or delay any of the transactions contemplated by this
Agreement.

4.4 Litigation. There is no private or governmental action, suit,
----------
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Seller or Shareholder,
threatened (including allegations that could form the basis for future action)
against Seller or any of its properties or officers or directors (in their
capacities as such). There is no judgment, decree or order against Seller, or,
to the knowledge of Seller or the Shareholder, any of its directors or officers
(in their capacities as such), that could prevent, enjoin, or materially alter
or delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on Seller or the
Business. All litigation to which Seller is a party (or, to the knowledge of
Seller or the Shareholder, threatened to become a party) is disclosed in the
Seller Disclosure Schedule. Seller does not have any plans to initiate any
litigation, arbitration or other proceeding against any third party.

4.5 Governmental Authorization. Seller has obtained each federal, foreign,
--------------------------
state, county or local governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (i) pursuant to which Seller currently
operates or holds any interest in any of its properties related to the Business
or (ii) that is required for the operation of the Business or the holding of any
such interest ((i) and (ii) herein collectively called "Seller Authorizations"),
and all of such Seller Authorizations are in full force and effect, except where
the failure to obtain or have any such Seller Authorizations could not
reasonably be expected to have a Material Adverse Effect on the Business.

4.6 Title to Property. Except for Permitted Encumbrances (as defined
-----------------
below), Seller has good title to all of the Purchased Assets, in each case free
and clear of all mortgages, liens, pledges, charges or encumbrances of any kind
or character (collectively, "Liens"). The term "Permitted Encumbrances" shall
mean (i) liens for current taxes not yet due and payable, (ii) liens securing
debt that are reflected on the Seller's Balance Sheet for the most recent period
delivered to Buyer and (iii) with respect to standard, generally commercially
available, "off-the-shelf" third party software products, any ownership or
license rights of others. Seller shall transfer the Purchased Assets to Buyer
free and clear of all Liens other than Permitted Encumbrances.

4.7 Intellectual Property. Seller has sufficient title and ownership of or
---------------------
licenses to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes set forth in
Section 4.7 of Seller Disclosure Schedule, (collectively, the "Seller
Intellectual Property") without, to the best knowledge of Seller, any conflict
with or infringement of the rights of others. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is Seller
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity, except, in either case, for standard end-user, object
code, internal-use software license and support/maintenance agreements. Neither
Seller nor the Shareholder has received any written communications alleging that
Seller has violated or, by conducting the Business, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person

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<PAGE>

or entity. The Shareholder is not obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his best efforts to promote the interests of the
Business or the Buyer's business as an employee of the Buyer.

4.8 Taxes. All taxes, including without limitation, income, property,
-----
sales, use, franchise, added value, withholding, and social security taxes,
imposed by the United States, any state, municipality, other local government or
other subdivision or instrumentality of the United States, or any foreign
country or any state or other government thereof, or any other taxing authority,
that are due or payable by Seller with respect to the Business, and all interest
and penalties thereon, whether disputed or not, and which would result in the
imposition of a Lien on the Purchased Assets or against Buyer, other than taxes
which are not yet due and payable, have been paid in full, all tax returns
required to be filed in connection therewith have been accurately prepared and
duly and timely filed and all deposits required by law to be made by Seller with
respect to employees' withholding taxes have been duly made. Seller is not
delinquent in the payment of any foreign or domestic tax, assessment or
governmental charge or deposits which would result in the imposition of a lien,
claim or encumbrance on the Purchased Assets or against Buyer, and Seller does
not have a tax deficiency or claim outstanding, assessed against it, or, to the
knowledge of Seller and Shareholder, proposed, and there is no basis for any
such deficiency or claim, which would result in the imposition of any Lien on
the Purchased Assets or against Buyer.

4.9 Employee Benefit Plans.
----------------------

(a) Seller is not a party to any pension, profit sharing,
savings, retirement or other deferred compensation plan, or any bonus (whether
payable in cash or stock) or incentive program, or any group health plan
(whether insured or self-funded), or any disability or group life insurance plan
or other employee welfare benefit plan, or to any collective bargaining
agreement or other agreement, written or oral, with any trade or labor union,
employees association or similar organization. Seller is not a party to, nor has
made any contribution to or otherwise incurred any obligation under, a
"multiemployer plan" as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended.

(b) To the best knowledge of Seller and the Shareholder, Seller
has not violated any of the health care continuation coverage requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985 prior to the Closing.

4.10 Material Contracts. There are no agreements, understandings,
------------------
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees in excess of $25,000 (each a "Material Contract") to which the Seller is
a party or by which it is bound that may involve obligations (contingent or
otherwise) of, or payments to, Seller, other than those listed in Section 4.10
of the Seller Disclosure Schedule.

4.11 No Breach of Material Contracts. The Seller has performed all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not alleged to be in default in respect of any Material Contract.
Each of the Material Contracts is in full force and effect, unamended, and there
exists no default or event of default or event, occurrence, condition or act,

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<PAGE>

with respect to Seller or, to the knowledge of Seller or the Shareholder, with
respect to the other contracting party, or otherwise that, with or without the
giving of notice, the lapse of the time or the happening of any other event or
conditions, could reasonably be expected to (A) become a default or event of
default under any Material Contract or (B) result in the loss or expiration of
any material right or option by Seller (or the gain thereof by any third party)
under any Material Contract. True, correct and complete copies of all Material
Contracts have been delivered to the Buyer.

4.12 Complete Copies of Materials. Seller has delivered true and complete
----------------------------
copies of each document listed in Section 4.12 of the Seller Disclosure
Schedule.

4.13 Assets. The Purchased Assets include all of the assets necessary to
------
operate the Business in the same manner as the Business was operated by Seller
prior to the Closing Date.

4.14 Representations Complete. None of the representations or warranties
------------------------
made by Seller or the Shareholder herein or in any Schedule hereto, including
the Seller Disclosure Schedule, or certificate furnished by Seller pursuant to
this Agreement, when all such documents are read together in their entirety,
contains or will contain at the Closing any untrue statement of a material fact,
or omits or will omit at the Closing to state any material fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.

4.15 Broker or Finder. Neither Seller nor Shareholder has incurred any
----------------
obligation or liability, contingent or other, for brokerage or finders' fees or
agents' commissions or other similar payment in connection with this Agreement
or the Transaction Documents or the transactions contemplated hereby or thereby.

It is the explicit intent of each party hereto that Seller is not making
any representation or warranty whatsoever, express or implied, regarding the
future revenues, profits or costs and expenses of the Business. Notwithstanding
anything to the contrary in the preceding sentence, the preceding sentence shall
in no way impact the terms and provisions of Section 7.7 or any adjustments made
pursuant to its provisions.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that the statements contained in
this Article V are true and correct. Any reference in this Article V to an
agreement being "enforceable" shall be deemed to be qualified to the extent such
enforceability is subject to (i) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (ii) the
availability of specific performance, injunctive relief and other equitable
remedies.

5.1 Organization, Power and Standing. Buyer is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of Texas. Buyer
has the corporate power to own its properties and to carry on its business as
now being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be

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<PAGE>

so qualified and in good standing would have a Material Adverse Effect on Buyer.
Buyer is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws

5.2 Authority. Buyer has all requisite corporate power and authority to
---------
enter into this Agreement and the other Transaction Documents to which it is a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the other Transaction Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of each of Buyer.
This Agreement and the other Transaction Documents have been duly executed and
delivered by Buyer and constitute the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with its terms.

5.3 No Violation. Neither the execution and delivery by Buyer of this
------------
Agreement and the other Transaction Documents, nor the consummation by Buyer of
the transactions contemplated hereby or thereby in accordance with the terms
hereof, will (a) conflict with or result in a breach of any provisions of the
Amended and Restated Articles of Incorporation or Bylaws of Buyer; (b) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, result in the termination, or in a right of termination or
cancellation of, accelerate the performance required by, result in the
triggering of any payment or other material obligations pursuant to, result in
the creation of any lien, security interest, charge or encumbrance upon any of
the material properties of Buyer under, or result in being declared void,
voidable, or without further binding effect, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust or any material
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which Buyer is a party, or by which Buyer or any of
its respective properties is bound or affected, except for any of the foregoing
matters which would not have a Material Adverse Effect; (c) contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Buyer which
would have a Material Adverse Effect; or (d) other than the filings under
applicable federal, state and local regulatory filings, or filings in connection
with the maintenance of qualification to do business in other jurisdictions,
require any material consent, approval or authorization of, or declaration, of
or registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would have a Material Adverse Effect.

5.4 Broker or Finder. Buyer has not incurred any obligation or liability,
----------------
contingent or other, for brokerage or finders' fees or agents' commissions or
other similar payment in connection with this Agreement or the Transaction
Documents or the transactions contemplated hereby or thereby.

5.5 No Outside Reliance. Buyer has not relied and is not relying upon any
-------------------
statement or representation not made in this Agreement, any exhibit, any
Schedule or any certificate or other instrument or document to be delivered to
Buyer in connection with the execution of this Agreement.

ARTICLE VI

CLOSING

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<PAGE>

6.1 Form of Documents. At the Closing, the parties shall deliver the
-----------------
documents, and shall perform the acts, which are set forth in this Article VI.

6.2 Buyer's Deliveries. At the Closing, Buyer shall execute and/or deliver
------------------
to Seller:

(a) a duly executed copy of an Assumption Agreement for the
Assumed Liabilities, in substantially the form attached hereto as Exhibit B
--------
hereto;

(b) a wire transfer in the amount of $931,000, which cash
payment was determined as set forth on Schedule 6.2(b);

(c) a duly executed copy of the Employment Agreement with the
Shareholder, in substantially the form attached hereto as Exhibit C (the
---------
"Employment Agreement");

(d) duly executed copies of each of (i) the stock option
agreement attached as Exhibit A to the Employment Agreement (the "Time-based
Stock Option") and (ii) the performance stock option agreement attached as
Exhibit B to the Employment Agreement (the "Performance Stock Option"); and

(e) Seller's note payable dated March 30, 1998 in favor of TTH
marked "canceled" and Seller's note payable dated December 31, 1999 in favor of
TTH marked "paid in full".

6.3 Seller's Deliveries. At the Closing, Seller shall deliver to Buyer:
-------------------

(a) physical possession of all tangible Purchased Assets;

(b) a duly executed copy of a Bill of Sale for the Purchased
Assets, in substantially the form attached hereto as Exhibit D (the "Bill of
---------
Sale");

(c) such other instruments of sale, transfer, conveyance, and
assignment as Buyer and its counsel may reasonably request;

(d) except for the Permitted Encumbrances, releases of all Liens
and security interests held by any lender of Seller, in any of the Purchased
Assets, including, without limitation, UCC-3 termination statements;

(e) all necessary consents for the assignment of contracts,
leases, purchase orders, sales orders and Permits which are to be assigned to
Buyer or alternate arrangements with respect thereto, all as reasonably
acceptable to Buyer;

(f) Good Standing certificates from the Texas Comptroller
regarding franchise, sales, use and excise taxes;

(g) a duly executed copy of the Employment Agreement;

(h) evidence of the transfer of the Temic LLC interests to
Buyer;

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<PAGE>

(i) a duly executed termination agreement terminating the
Representation Agreement dated April 1, 1998 between Seller and TTH;

(j) a duly executed termination agreement terminating the
Equipment Leases dated August 1, 1998 and August 8, 1998, by and between Seller
and TTH;

(k) a duly executed termination agreement terminating the
Sublease Agreement dated August 8, by and between Seller and Temic LLC; and

(l) each of the promissory note payable dated August 3, 1998 to
Seller from Temic LLC in the principal amount of $21,000 and the promissory note
payable dated November 19, 1999 to Seller from Temic LLC in the principal amount
of $100,000 marked "paid in full."

ARTICLE VII

POST-CLOSING AGREEMENTS

7.1 Use of Trademarks; References to Seller. Seller shall cease to use and
---------------------------------------
shall not license any third party to use, or consent to the use by any third
party of, the names "TEMIC" and "Temic," any name, slogan, logo or trademark of
Seller (or any similar or deceptively similar name, slogan, logo or trademark
thereto).

7.2 Expenses. Whether or not the Acquisition is consummated, all fees and
--------
expenses incurred in connection with this Agreement and the Acquisition
including all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement and
the transactions contemplated hereby, shall be the obligation of the respective
party incurring such fees and expenses; provided, however, that the foregoing
shall not apply in the event of a material breach of this Agreement by a party,
in which case the non-breaching party may seek to recover such fees and expenses
from the breaching party. Notwithstanding anything to the contrary in this
Section 7.2, Buyer shall pay all reasonable fees and expenses to complete the
transfer of Seller domain names and the expenses (including employee
compensation expenses) set forth on Schedule 7.2, which expenses have been
incurred by Seller with respect to the operation of the Business from January 1,
2000 through the Closing Date. In no event shall Buyer be responsible for any
expenses or liabilities of Seller from and after the Closing Date other than as
set forth in this Section 7.2 , Section 7.3 or included in the Assumed
Liabilities.

7.3 Employment by Buyer of Seller Employees. Seller shall use its best
---------------------------------------
efforts to assist the Buyer in hiring and retaining the services of those
employees of Seller set forth on Schedule 7.3 hereto (the "Retained Employees").
------------
Buyer agrees that upon the acceptance of each Retained Employee of an employment
offer, such Retained Employee shall become an employee of Buyer with full credit
for prior service with Seller for all purposes, including but not limited to
that of determining their eligibility for Buyer's employment benefits. Any
Retained Employee accepting employment by Buyer will be required as a condition
precedent to such employment to terminate any existing employment agreement with
Seller, execute the Buyer's standard form of confidentiality and proprietary
information agreement and take such other actions generally required

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<PAGE>

by Buyer of its employees. Buyer also agrees to cover reasonable moving expenses
for each Retained Employee to move closer to Buyer's offices located in Plano,
Texas; provided, however, that such reimbursement shall only apply to a Retained
Employee that moves at least fifty (50) miles from his or her present residence;
and, provided, further, that any such expenses shall be subject to the prior
approval of Buyer. In addition, Buyer agrees to pay to either of Gil Medel or
Randy Brase any severance pay owed to them by Seller under the employment offer
letters between Seller and such individuals if, and only if, Mr. Medel or Mr.
Brase, as the case may be, is terminated by Seller (which in no event shall
include a voluntary termination of such employee by such employee) from his
employment with Seller within one month from the Closing Date.

7.4 Taxes.
-----

(a) Seller shall be responsible for and shall pay when due (i)
all Taxes attributable, levied or imposed upon or incurred in connection with
the Purchased Assets (pertaining to the period (or any portion of any period)
ending on or prior to the Closing Date) and (ii) all Taxes incurred in
connection with or attributable to the Business (pertaining to the period (or
any portion of any period) ending on or prior to the Closing Date). Seller
agrees to continue to file timely within the time period for filing, or any
extension granted with respect thereto, all Returns relating to any and all
Taxes required to be filed by it and such Returns shall be true and correct and
completed in accordance with applicable laws.

(b) Seller or Shareholder, as the case may be, shall bear, pay
and promptly discharge when due the entire amount of any and all excise, sales,
value-added, use, registration, stamp, documentary, transfer and other like
taxes and filing, recording and notarization fees (together with all interest,
penalties and additions imposed with respect thereto or thereon) imposed or
levied on Seller or Shareholder by reason of, in connection with or attributable
to this Agreement and the Acquisition.

7.5 Further Assurances. The parties shall execute such further documents,
------------------
and perform such further acts, as may be necessary to transfer and convey the
Purchased Assets to Buyer, on the terms herein contained, and otherwise to
comply with the terms of this Agreement and to consummate the transaction
contemplated hereby, including, without limitation, completion of the
registration of the transfer of Seller domain names.

7.6 Bulk Sales Laws. Each of Buyer and Seller hereby waives compliance by
---------------
the other with the so-called "bulk sales law" and any other similar laws in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.

7.7 Revenues Adjustment.
-------------------

(a) Within sixty (60) days following the first anniversary of
the Closing, Ernst & Young, LLP ("Buyer's Accountant") shall review the books of
the form, comprising the Buyer and Temic Telefunken Hochfrequenztechnik, GmbH
("TTH") to determine the Combined Entity's net Revenues (as defined below) for
the year ended December 31, 2000 (the "Measurement Period"), calculated in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP")
consistently applied

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<PAGE>

(the "Measured Revenues"). For purposes of this Section 7.7, Revenues shall mean
revenues generated by the Combined Entity from sales of both (i) product in
which the design-in activity occurs in the United States and the product is
shipped to a location within the United States for production (or direct
revenues) and (ii) product in which the design-in activity occurs in the United
States, but the product is shipped to a location outside of the United States
for production (or shared revenues). In the event that the Measured Revenues is
less than $40,000,000, Buyer shall promptly deliver to the Shareholder a notice
("Revenues Adjustment Notice") setting forth the determination of Buyer's
Accountant, including the amount by which the Measured Revenues is less than
$40,000,000 (the "Revenues Adjustment").

(b) The Shareholder shall have thirty (30) days from the receipt
of the Revenues Adjustment Notice to notify Buyer that the Shareholder disputes
such Revenues Adjustment Notice. If Buyer has not received notice of such a
dispute within such thirty (30)-day period, Buyer shall be entitled to set off
against the Vested Pledged Shares (as defined in Section 8.3 below) an amount
equal to (i) the Revenues Adjustment times (ii) two percent (2%). For purposes
of this section, the Vested Pledged Shares shall be valued at the current market
value of such shares as determined by the Board of Directors of Buyer in good
faith and consistent with past practices. If, however, the Shareholder has
delivered notice of such a dispute to Buyer, then Buyer and the Shareholder
shall mutually select an independent accounting firm of nationally recognized
standing that has not represented any of the parties hereto within the two (2)-
year period preceding the date of the Revenues Adjustment Notice to review the
books and records of the Business and the Revenues Adjustment Notice (and
related information) to determine the amount, if any, of the Revenues
Adjustment. The independent accounting firm shall make its determination of the
Revenues Adjustment, if any, within thirty (30) days of its selection.

(c) The determination of the independent accounting firm shall
be final and binding on the parties hereto, and upon such determination, Buyer
shall be entitled to offset against the Vested Pledged Shares the amount of the
Revenues Adjustment, if any, as set forth above in this Section 7.7. The costs
of the independent accounting firm shall be borne by the party (either Buyer or
the Shareholder) whose determination of the Revenues Adjustment shall be
furthest from the independent accounting firm's determination of the Revenues
Adjustment, or equally by Buyer and the Shareholder in the event that the
determination by the independent accounting firm is equidistant between each
party's determination of the Revenues Adjustment.

(d) Notwithstanding anything to the contrary in this Section
7.7, at such time prior to December 31, 2000, as the Combined Entity's net
revenues as determined in accordance with U.S. GAAP, exceeds $40,000,000, as
verified by Buyer's Accountant, Buyer shall notify Shareholder and shall release
the pledge against the Vested Pledged Shares, except to the extent that there
are claims for Damages set off against such Vested Pledged Shares.

7.8 Transfer of Seller Tradename and Domain Name. Shareholder shall
--------------------------------------------
transfer upon dissolution of Seller within one year from the Closing Date to
Buyer all of Shareholder and/or Seller's right, title and interest in and to the
trademark "The Tuner Company" and the domain names "thetuner.com",
"thetuner.org" and thetuner.net". All reasonable fees and expenses incurred by
Buyer, Seller or Shareholder in connection with the transfer shall be paid by
Buyer.

-12-
<PAGE>

ARTICLE VIII

INDEMNIFICATION

8.1 Survival of Representations, Warranties and Covenants. Notwithstanding
-----------------------------------------------------
any investigation conducted before or after the Closing, and notwithstanding any
actual or implied knowledge or notice of any facts or circumstances which Buyer
or Seller may have as a result of such investigation or otherwise, Buyer and
Seller will be entitled to rely upon the other party's representations,
warranties and covenants set forth in this Agreement. Unless otherwise specified
herein, the obligations of Buyer, Seller and the Shareholder with respect to
their respective representations, warranties, agreements and covenants will
survive the Closing and continue in full force and effect until the date one (1)
year following the Closing Date.

8.2 Indemnification.
---------------

(a) From and after the Closing, and subject to the provisions of
Section 8.1, Buyer (on or after the Closing Date) shall be indemnified and held
harmless by Seller and the Shareholder against, and reimbursed for, any actual
liability, damage, loss, obligation, demand, judgment, fine, penalty, cost or
expense (other than any such damages resulting from injunctive relief granted as
to an intellectual property claim, but including reasonable attorneys' fees and
expenses, and the costs of investigation incurred in defending against or
settling such liability, damage, loss, cost or expense or claim therefor and any
amounts paid in settlement thereof) (collectively the "Damages") imposed on or
reasonably incurred by Buyer as a result of (i) any breach of any
representation, warranty, agreement or covenant on the part of Seller under this
Agreement; (ii) any and all liabilities of Seller or Shareholder that are not
Assumed Liabilities, or (iii) the operation or ownership of the Purchased Assets
of Seller prior to the Closing.

(b) From and after the Closing, and subject to the provisions of
Section 8.1, Seller (on or after the Closing Date) shall be indemnified and held
harmless by Buyer against, and reimbursed for, any Damages imposed on or
reasonably incurred by Seller as a result of (i) any breach of any
representation, warranty, agreement or covenant on the part of Buyer under this
Agreement, (ii) any and all of the Assumed Liabilities, or (iii) the operation
or ownership of the Purchased Assets by Buyer after the Closing.

(c) "Damages" as used herein is not limited to matters asserted
by third parties, but includes Damages incurred or sustained by Buyer in the
absence of claims by a third party. There shall be no liability for Damages
under Section 8.2(a) or 8.2(b) (i) unless and only to the extent that the
aggregate amount of such Damages exceeds $25,000 or (ii) for claims for Damages
made after the one (1) year anniversary of the Closing.

8.3 Pledge of Shares; Set-off. As partial security for the indemnity
-------------------------
provided in Section 8.2, Shareholder shall pledge, transfer and assign to Buyer,
for the benefit of Buyer, a security interest in the shares of Buyer's Common
Stock subject to the Performance Stock Option as such shares vest (the "Vested
Pledged Shares"). Buyer shall have the right to set off amounts against the
Vested Pledged Shares in the manner set forth below and in the order that such
Vested Pledged Shares become vested under the Performance Stock Option. In the
event that Buyer has elected to set off

-13-
<PAGE>

any Damages against the Vested Pledged Shares, Buyer shall promptly notify the
Shareholder that it has suffered such Damages, and intends to set off such
Damages against the Vested Pledged Shares. The Shareholder may elect to pay the
amount of such Damages to Buyer in cash by notifying Buyer in writing of its
election to pay the Loss in cash and shall deliver the amount of such Damages in
cash to Buyer within thirty (30) days of receipt of the Buyer's notice of such
claim for Damages. In the event there is not sufficient value in the Vested
Pledged Shares (as determined above) to offset the entire claim for Damages made
by Buyer, Shareholder shall immediately pay Buyer the amount of such deficiency
in cash within thirty (30) days of receipt of the Buyer's notice of such claim
for Damages.

8.4 Liability Ceiling; Sole Remedy. Notwithstanding anything herein
------------------------------
contained to the contrary, none of Seller and Shareholder, as a group, nor Buyer
shall be liable for any Damages pursuant to this Article VIII in an aggregate
amount in excess of the sum of the Purchase Price plus the value of the Vested
Pledged Shares and any shares vested under the Time-based Stock Option. The
parties acknowledge and agree that the provisions of this Article VIII shall be
the sole and exclusive remedy of any party hereto from any claims against any
party under this Agreement, and no other right or remedy shall exist at law or
by statute or from or related to this Agreement or arising from or related to
the transaction which is the subject matter hereof; provided, however, that the
foregoing shall not (i) in any way restrict or limit the remedies available to
Buyer, Seller or Shareholder pursuant to or with respect to the Employment
Agreement (including all Exhibits thereto) or the lease for the Irving, Texas
location included in the Assumed Liabilities, (ii) prohibit any party from
seeking and obtaining specific performance of this Agreement or injunctive
relief or enforcement thereof against any party hereto, or (iii) in any way
restrict or limit the remedies available to Buyer, Seller or Shareholder in the
case of Fraud. "Fraud" as used herein shall mean a false representation of a
material fact contained in this Agreement (including the Seller Disclosure
Schedule) or any certificate or other document delivered by Seller or
Shareholder pursuant to this Agreement or an omission of a material fact
necessary to make a representation contained in this Agreement (including the
Seller Disclosure Schedule) or any certificate or other document delivered by
Shareholder or Seller pursuant to this Agreement not misleading, if, at the date
of this Agreement: (a) Seller or Shareholder had knowledge (without any duty of
investigation) of the falsity of such false representation or the existence of
such omission and failed to notify Buyer or otherwise correct it; and (b) Seller
or Shareholder failed to notify Buyer of such falsity or omission or otherwise
correct it for the specific purpose of inducing Buyer to enter into this
Agreement or consummate the transactions contemplated herein.

8.5 Resolutions of Disputes, Arbitration. Any disputes that arise under
------------------------------------
this Article 8 shall be resolved through binding arbitration administered by the
American Arbitration Association in accordance with its Commercial Arbitration
Rules, as such rules may be amended from time to time. Any such arbitration
shall take place in Dallas County, Texas.

ARTICLE IX

GENERAL PROVISIONS

9.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or

-14-
<PAGE>

certified mail (return receipt requested) or sent via facsimile (with
confirmation of receipt) to the parties at the following address (or at such
other address for a party as shall be specified by like notice):

(a) if to Buyer, to:

MicroTune, Inc.
2540 East Plano Parkway, Suite 188
Plano, Texas 75074
Attention: Chief Executive Officer
Facsimile No.: (972) 673-1602
Telephone No.: (972) 673-1600

with a copy to:

Wilson Sonsini Goodrich & Rosati
8911 Capital of Texas Highway
Westech 360, Suite 3350
Austin, TX 78759-7247
Attention: Paul R. Tobias, Esq.
Facsimile No.: (512)338-5499
Telephone No.: (512) 338-5400

(b) if to Seller, to:

The Tuner Company

5605 N. MacArthur Blvd., Suite 220
Irving, TX 75038
Attention: President
Facsimile No.: (972) 756-0702
Telephone No.: (972) 756-0302

with a copy to:

Haynes and Boone, LLP
201 Main Street, Suite 2200
Fort Worth, TX 76102
Attention: Butler Eaton, Esq.
Facsimile No.: (817) 347-6650
Telephone No.: (817) 347-6600

9.2 Interpretation. When a reference is made in this Agreement to
--------------
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event,

-15-
<PAGE>

change, condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
prospects, operations or results of operations of such entity or group of
entities. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken
as a whole. In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after due and diligent inquiry of officers and
directors of such party. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

9.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

9.4 Entire Agreement; No Third Party Beneficiaries. This Agreement, the
----------------------------------------------
other Transaction Documents and the documents and instruments and other
agreements specifically referred to herein or delivered pursuant hereto,
including the Exhibits, the Schedules, including the Seller Disclosure Schedule,
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and (b) are not intended to confer upon any other person any rights or
remedies hereunder.

9.5 Severability. In the event that any provision of this Agreement, or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

9.6 Remedies Cumulative. Except as otherwise provided herein, any and all
-------------------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

9.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas without regard to applicable
principles of conflicts of law. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any court located within the State of Texas, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Texas for such persons and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.

-16-
<PAGE>

9.8 Assignment. Neither this Agreement nor any of the rights, interests or
----------
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.

9.9 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

9.10 Attorneys' Fees. In the event of any suit or other proceeding to
construe or enforce any provision of this Agreement or any other agreement to be
entered into pursuant hereto, or otherwise in connection with this Agreement,
the prevailing party's or parties' reasonable attorneys' fees and costs (in
addition to all other amounts and relief to which such party or parties may be
entitled) shall be paid by the other party or parties.

[Remainder of page intentionally left blank]

-17-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

BUYER:

MicroTune, Inc.

By: /s/ Douglas J. Bartek
------------------------------------
Name: Douglas J. Bartek
----------------------------------
Title: CEO and Chairman
---------------------------------

SELLER:

The Tuner Company

By: /s/ Thomas Widmer
------------------------------------
Name: Thomas Widmer
----------------------------------
Title: President and CEO
---------------------------------

SHAREHOLDER:

/s/ Thomas Widmer
---------------------------------------
Thomas Widmer

[Asset Purchase Agreement Signature Page]

<PAGE>

EXHIBIT 10.16

Deutsche Bank

Branch Office Ingolstadt
Enterprises and Real Estate
Ludwigstr. 24
Postfach 21 03 62
85049 Ingolstadt

Confidential
- ------------
Temic Telefunken
Hochfrequenztechnik GmbH
- - Management -
Kriegstr. 1 Winfried Mayer

85098 GroBmehring Tel: (0841) 315-136
Fax: (0841) 315-141

18 March 1999

Dear Mr. Englmeier,

We are pleased to confirm to you that we will make a business line of credit
available to your company in an amount of

DM 5,000,000.--
(in words: Deutsche Mark five million).

Presently, until further notice, we will charge 6% p.a. for utilisation of this
line of credit.

Within the scope of this line of credit, as in the past, we are gladly prepared
to arrange for special financing, to acquire bills of exchange which fulfil the
requirements of the European Central Bank (ECB), to open documentary credits as
well as to conclude forward exchange deals. Upon demand, we will co-ordinate
the respective terms with you.

To the account of this line of credit, pursuant to your loan application of 9
November 1998, we have taken over the commitment for the business loan amounting
to US$ 250,000. -- of Temic-RF Technologies (Phils.) Inc. at Deutsche Bank
Philippines, Manila Branch. Additionally, also to the account of the line of
credit, pursuant to your loan application of 9 March 1999, we have made a
business loan presently in an amount of DM 500,000. -- available to Toplan GmbH.
<PAGE>

You can use a portion of the line of credit in an amount of up to DM 2,500,000.
- -- in order to refinance investment costs by way of loans with a maximum term of
up to 47 months.

We are limiting our commitment for the time being to 31 December 1999. We will
contact you promptly prior to expiration of this time limit regarding the
further handling of the line of credit.

In connection with our willingness to provide finance, we still assume that you
will not put other banks in a better position regarding collateral for business
lines of credit and/or we will be given equal treatment in the event of a
possible provision of collateral.

We request that you keep us informed on the further economic development of your
company as well as subsidiaries in Manila by submission of quarterly business
analyses.

Our General Terms and Conditions are applicable.

As an indication of your agreement with this loan commitment, we request you
furnish the enclosed copy of this letter with a legally binding signature and
return this copy to us.

Sincerely yours,

Deutsche Bank AG
Branch Office Ingolstadt

[signature] [signature]
Mayer Schweizer

Signed copy returned on 22 March 1999.

[signature]
Haas
22 March 1999

<PAGE>

EXHIBIT 10.17

HypoVereinsbank

Business Clients Branch Ingolstadt
TEMIC Telefunken Am Stein 10
Hochfrequenztechnik GmbH Mailing Address:
Mr. Rainer Kempf Postfach 210264
Kriegsstrasse 1 85049 Ingolstadt
85098 GroBmehring Telefax (0841) 3103-333

Point of Contact Telephone Date
Gerhard Schreiner/sh (0841) 3103-302 9 Sept. 1999

Granting of a General Line of Credit

Dear Mr. Kempf,

We are pleased to again grant you a line of credit.

Amount: DM 5,000,000.00
(in words: DM five million)
to be used either as:

1. Current account credit on
account no. 4473213

2. Euroloan on several accounts

Intended Use: The loan is for commercial purposes.

Duration: Until 31 August 2000

Terms: Ref. 1.: 6.50% p.a. on the amount
utilised within the scope of the
line of credit.

This interest rate shall be valid
until further notice. The bank has
the right to increase the interest
rate when the cost of refinancing on
the money market has increased. In
the event of a decrease of the cost
of refinancing, the bank will also
decrease the interest rate.
<PAGE>

Accounts shall be balanced at the end of each
quarter.

Ref. 2.: We request you co-ordinate the amount and
the interest rate of the individual Euroloan tranches
from time to time.

Collateral: This current account credit is provided to you
without the provision of collateral. However, rights
to collateral which exist or arise according to the
General Terms and Conditions remain unaffected.

Equal Treatment Clause: Other banks providing loans shall not be put in a
better position than us regarding collateral (for
similar loans) and information and this agreement
with the other banks is also in writing. We have the
right at all times to inspect the loan
agreements/contracts of the other banks.

Additional Agreement: As agreed upon with you, you will take us into
consideration in a reasonable manner in the
allocation of business.

Insofar as you want to borrow Euro funds against your line of credit, we
herewith confirm to you, also on behalf of the HypoVereinsbank Luxembourg
Societe Anonyme, our willingness to extend this loan to you. This extending of
Euroloans is given under the reservation of the respective funds being available
on the Euromarket and in the event of this transaction being passed to our
subsidiary in Luxembourg, in accordance with the enclosed "Terms and Conditions
for Euroloans of the HypoVereinsbank Luxembourg Societe Anonyme".

According to the provisions of bank supervisory rules (Section 18 German
Banking Act (Kreditwesengesetz)), in the event of the extending of loans - prior
to the loan being extended as well as during the total duration of the loan
relationship - banks must examine the economic situation of the borrower, in
particular by inspection of annual accounts.

Upon acceptance of this loan agreement, you therefore obligate yourself to send
us your duly signed annual accounts on a regular basis. The Federal Supervisory
Agency for Banking has determined a deadline of nine months after the effective
date of the balance sheet for the submission of annual accounts or, if these are
not completed, for the submission of equivalent documents.

Additionally, our General Terms and Conditions are applicable which are
available for examination in each branch office and which can be made available
to you at any time upon request.
<PAGE>

As an indication of your agreement, please sign the enclosed copy of this letter
and return it to us.

This loan commitment replaces the commitment of 3 September 1998.

Information in accordance with Section 8 Money Laundering Act
(Geldwaschegesetz):

. I am /we are acting on my/our own account.

. I am /we are acting on the account of a third party. Name and address of the
person/company for which the loan has been taken out:

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

Please mark the applicable option. Any change shall be notified to us in
writing without delay.

We look forward to future pleasant business relations.

Sincerely yours,
Bayerische Hypo- und Vereinsbank
Aktiengesellschaft

[signature] [signagure]
Gerhard Schreiner Stefan Trofer

TEMIC TELEFUNKEN
Hochfrequenztechnik GmbH
Kriegstrasse 1
D-85098 GroBmehring
[signature]
---------
TEMIC Telefunken
Hochfrequenztechnik GmbH

Place, Date
<PAGE>

Terms and Conditions for Euroloans

of the HypoVereinsbank Luxembourg Societe Anonyme

The following terms and conditions apply to Euroloans of the HypoVereinsbank
Luxembourg Societe Anonyme (hereinafter referred to as "HypoVereinsbank
Luxembourg":

1. Upon becoming due for payment, capital and interest shall be remitted,
without any deductions, to the account of HypoVereinsbank Luxembourg at the
Bayerischen Hypo- und Vereinsbank Aktiengesellschaft (hereinafter "Bank")
(stated in the Euroloan confirmation letter of the HypoVereinsbank
Luxembourg). Interest shall be calculated according to the number of
calendar days divided by 360.

2. The HypoVereinsbank Luxembourg has been empowered by you to give the Bank
instructions on your behalf upon maturity of the loan to remit to the
HypoVereinsbank Luxembourg the amount required to cover the loan and the
interest. In this case, the HypoVereinsbank Luxembourg reserves the right
to assign the loan claim against you, including any collateral directly
provided for it, to the Bank.

3. The HypoVereinsbank Luxembourg is herewith expressly empowered to obtain
all information relating to you from the Bank which it considers to be
necessary in connection with the loan. Equally, it is herewith expressly
empowered to give such information to the Bank.

4. Should taxes, charges or other burdens (e.g., due to the implementation of
a minimum reserve obligation, amendment to domestic or foreign currency
provisions, etc.) be levied on the HypoVereinsbank Luxembourg in connection
with the loan, and/or should such be increased, these shall be assumed by
you in the full amount

5. Land charges which you have taken out in favour of the Bank or which you
have assigned or will assign to the Bank as well as objects and assigned
claims which have been transferred to the Bank as collateral shall also
serve to secure the respective claims of the HypoVereinsbank Luxembourg
from the business relationship with you, in particular from the granting of
loans. The agreements on collateral concluded between you and the Bank
shall be respectively applicable to the legal relationship between you and
the HypoVereinsbank Luxembourg.

All property, claims and other rights, to which the Bank has an entitlement
to a lien based on its claims against you, shall serve as a lien against
you for the claims of the HypoVereinsbank Luxembourg defined in the
paragraph above. Insofar as the
<PAGE>

lien of the HypoVereinsbank Luxembourg concerns moveable property, you
shall herewith assign your present and future contractual claims for
repossession against the Bank to the HypoVereinsbank Luxembourg.

The HypoVereinsbank Luxembourg will obtain the approval of the Bank, as
assignee, and your consent to concurrently hold the loan collateral in
trust for the HypoVereinsbank Luxembourg.

6. The HypoVereinsbank Luxembourg has the right to call in the loan with
immediate effect for an important reason which makes a continuation of the
loan unreasonable for the HypoVereinsbank Luxembourg, also after your
justified concerns have been reasonably taken into account. In particular,
such reason exists when you have made incorrect statements regarding your
financial situation or if a substantial decrease of your assets or a
substantial threat to your assets occurs, in particular, if enforcement
(e.g., sale by public auction or judicially enforced receivership) in an
encumbered piece of land is ordered, or if you cease payments, or if
bankruptcy or settlement or similar proceedings are commenced against your
assets.

7. For borrowers with business seat or domicile in the Federal Republic of
Germany: German law shall apply for all legal relationships between you
and the HypoVereinsbank Luxembourg.

For borrowers with business seat or domicile outside the Federal Republic
of Germany: The laws of Luxembourg shall apply for all legal relationships
between you and the HypoVereinsbank Luxembourg, place of jurisdiction for
any disputes shall be Luxembourg or the responsible court at your business
seat/domicile, according to the election of the HypoVereinsbank Luxembourg.

Terms and Conditions for Euroloans of the HypoVereinsbank Luxembourg S.A.
/Version 11/98

<PAGE>

Exhibit 21.1

MICROTUNE, INC.

LIST OF SUBSIDIARIES AND AFFILIATES

Wholly Owned Subsidiaries

HMTF Acquisition (Bermuda) Ltd.
Microtune International
Microtune (Texas), Inc.

Indirectly Owned Subsidiaries

HMTF Erste Beiteiligungs GmbH
NSF RF-Technologies Corporation
Residenz Zehnte Vermogensverwaltungs GmbH
TEMIC RF - Technologies Corporation
TEMIC TELEFUNKEN Hochfrequenztechnik GmbH
TEMIC TELEFUNKEN RF-Engineering, LLC

<PAGE>

Exhibit 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the caption "Experts" and
"Selected Financial Data", to the use of our report dated March 24, 2000, with
respect to the consolidated financial statements of Microtune, Inc. and to the
use of our report dated March 24, 2000, with respect to the consolidated
financial statements of HMTF Acquisition (Bermuda) Ltd. and the consolidated
financial statements of Temic Telefunken Hochfrequentztechnik GmbH in the
Registration Statement (Form S-1) and related Prospectus of Microtune, Inc. for
the registration of shares of its common stock.

/s/ Ernst & Young LLP

Dallas, Texas
May 3, 2000

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MICROTUNE,
INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-2000
<PERIOD-START> JAN-01-1999 JAN-01-2000
<PERIOD-END> DEC-31-1999 MAR-31-2000
<CASH> 6,331 6,132
<SECURITIES> 13,798 11,371
<RECEIVABLES> 164 8,775
<ALLOWANCES> 0 509
<INVENTORY> 0 10,206
<CURRENT-ASSETS> 20,315 37,733
<PP&E> 3,669 11,434
<DEPRECIATION> 1,879 2,621
<TOTAL-ASSETS> 22,277 83,867
<CURRENT-LIABILITIES> 672 10,324
<BONDS> 0 0
0 0
8 11
<COMMON> 8 8
<OTHER-SE> 21,589 67,122
<TOTAL-LIABILITY-AND-EQUITY> 22,277 83,867
<SALES> 0 13,896
<TOTAL-REVENUES> 0 13,896
<CGS> 0 10,071
<TOTAL-COSTS> 0 10,071
<OTHER-EXPENSES> 9,090 21,545
<LOSS-PROVISION> 0 97
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (8,508) (16,396)
<INCOME-TAX> 0 364
<INCOME-CONTINUING> (8,508) (16,760)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,508) (16,760)
<EPS-BASIC> (1.12) (2.06)
<EPS-DILUTED> (1.12) (2.06)

</TABLE>