<PAGE>

                                                                    EXHIBIT 10.7

                                     [ * ]

                      LICENSE AND MANUFACTURING AGREEMENT

     This License and Manufacturing Agreement (the "Agreement") is entered into
on February 20, 1997 by and between [      *      ] and SONIX TECHNOLOGIES,
INC., a Utah corporation ("Sonix").

                                   RECITALS

     A. Sonix is in the business of designing, developing and selling certain
products for hearing applications which incorporate integrated circuits;

     B. [ * ] is in the business of designing, developing, manufacturing and
selling various types of integrated circuits; and

     C. Sonix and [ * ] desire to enter into this Agreement for the purposes of
setting forth the terms and conditions under which [ * ] will be granted the
right to make or have made certain integrated circuits, for sale to Sonix and
other customers of [ * ], and [ * ] will provide manufacturing services to Sonix
with respect to certain of Sonix integrated circuits.

                                   AGREEMENT

     NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL COVENANTS
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:

                                   SECTION 1

                                  DEFINITIONS

     For purposes of this Agreement the following terms shall have the meanings
set forth below:

     1.1 Sonix Patents.  "Sonix Patents" shall mean all patents, patent
applications, and additions, continuations, continuations-in part, divisions,
reissues or extensions based thereon, if any, in all countries of the world,
which are owned by Sonix now or at any time during the term of this Agreement,
or which are licensed by Sonix from a third party with the right to grant sub
licenses of the scope granted herein, and which are required for the
manufacture, use and sale of Products.

     1.2 Effective Date.  "Effective Date" shall mean the date first set forth
above.




[ * ]= CERTAIN INFORMATION IN THIS DOCUMENT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.



<PAGE>


     1.3     Licensed Technology. "Licensed Technology" shall mean those
integrated circuits and any Updates which are delivered by Sonix to [ * ],
comprising Sonix's core DSP, audio processing algorithm, low power/low voltage
technology and related circuit techniques and architecture.

     1.4     Hearing Applications. "Hearing Applications" shall mean all
applications involving hearing assistance, hearing restoration, hearing
enhancement, hearing protection, hearing simulation or hearing replacement
relating to personal hearing aids or similar types of devices.

     1.5     Non-Hearing Applications. "Non-Hearing Applications" shall mean all
applications other than Hearing Applications, including but not limited to
telephone and personal audio entertainment products.

     1.6     Sonix Know-How. "Sonix Know-How" shall mean Sonix's processes,
designs, know-how, trade secrets and other information owned by Sonix or
licensed to Sonix from a third party with the right to grant sub-licenses of the
scope granted herein that are necessary or useful to manufacture, use and sell
Products.

     1.7     Products. " Product(s)" shall mean one or more integrated circuit
products, developed or manufactured by or for [ * ] using all or a portion of
the Licensed Technology, Sonix Patents or Sonix Know-How.

     1.8     Net Selling Price. "Net Selling Price" shall mean the invoiced
price, F.O.B. [ * ]'s factory, to its customer, less any quantity and trade
discounts, independent sales representative or independent distributor
commissions, and/or product returns, and excluding charges for handling,
freight, taxes or duties of any kind, C.O.D. charges, insurance, and the like.

     1.9     Updates. "Updates" shall mean any updates, modifications,
corrections, or improvements made after the date hereof to the Licensed
Technology made during the term of the Agreement.

                                   SECTION 2

                                   LICENSES

     2.1     License Grant. Sonix hereby grants to [ * ] a worldwide, non-
exclusive license, non-sublicensable, under the Licensed Technology, Sonix
Patents and Sonix Know-How, to make, have made, modify, use, market and sell the
Products for Non-Hearing Applications.

     (a)     The licenses granted to [ * ] by Sonix pursuant to Section 2.1
             hereof, may be transferred by [ * ] to a majority-owned subsidiary
             or parent, or pursuant to a merger, reincorporation or other
             transfer, but may not be transferred separately except to a
             subsidiary of [ * ], provided however that such subsidiary or
             parent agrees to be bound by the terms of this Agreement. The
             license granted above may not otherwise be transferred except as
             set forth in this Section 2.1 (a). Any such transfer shall not
             relieve [ * ] of its obligations hereunder.


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       2
<PAGE>

     2.2   License to Sonix. [ * ] hereby grants to Sonix a perpetual,
worldwide, non- exclusive, non-transferable-license, to make, use and sell
products that include minor improvements or enhancements made by [ * ] to the
Licensed Technology for use by Sonix solely in Hearing Applications. If [ * ]
makes a major or substantial improvement or enhancement to the Licensed
Technology, [ * ] and Sonix shall meet to discuss a license to such major
improvements to Sonix for Hearing Applications.

     2.3   Intellectual Property Rights. [ * ] agrees that Sonix will retain
sole ownership and complete intellectual property rights to the Licensed
Technology, Sonix Patents and Sonix Know- How licensed to [ * ] hereunder and to
any enhancements, modifications, improvements, changes or derivative products
thereto made by or for Sonix.  Sonix agrees that [ * ] will retain sole
ownership and complete intellectual property rights to all masks, test
hardware/software and other tooling generated to the extent that any or all the
foregoing are generated by or for [ * ] to manufacture the Products and to any
enhancements, modifications, improvements, changes or derivative products made
by [ * ] with respect to the Products.

                                   SECTION 3

                          OBLIGATIONS OF THE PARTIES

     The Parties respectively agree to perform the following tasks with respect
to the Products:

     (a) [ * ] shall make available to Sonix its design, electrical and layout
rule set for [ * ]'s [  *  ] Process.

     (b) [ * ] shall make available to Sonix, in a format compatible with
Sonix's design platform, the [ * ] digital cell library; transistor level Hspice
models (level 42 or level 49); 1/0 pad library and gate level and transfer
transistor level representations for the EEPROM.

     (c) A preliminary design review will be held at [ * ]. [ * ] and Sonix
shall review and agree on the scope of the work, (for example, Sonix's product
specification, test specification and test plan) begin the design.

     (d) Sonix shall design, simulate, layout, run DRC and LVS on the circuit
and generate a GDSII tape for the complete chip, except for the EEPROM bit-cell.
Sonix will not be given EEPROM bit-cell information.

     (e) [ * ] shall integrate the EEPROM bit-cell into the EEPROM, run DRC's
and LVS, and generate mask data.

     (f) A final design review will be held at [ * ] before masks are made.

     (g) [ * ] shall generate masks, and start one (1) 24 wafer lot for design
verification (hold-12 @ poly; hold-6 @ contact.) 6 wafers will be completed and
delivered to Sonix. A number of the completed wafers (to be mutually agreed)
will be delivered without passivation. The remainder of the lot will be
completed after evaluation of the initial 6 wafers, possibly with mask changes
as provided for in Exhibit A.

     (h) [ * ] shall generate a test program (probe) from customer supplied,test
specification and test vectors.

     (i) [ * ] shall perform qualification (per Sonix's specification) and
characterization for release of the Product to production.

     (j) [ * ] shall make available to Sonix any applicable future fabrication
process that [ * ] installs into its fabrication facility in [ * ].


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       3
<PAGE>

                                   SECTION 4

                                   ROYALTIES

     4.1    Payments. In consideration for the grant of licenses and other
rights by Sonix to [ * ] hereunder, [ * ] agrees to pay Sonix a royalty in the
amount of five percent (5%) of the Net Selling Price of each Product sold by [ *
] or its transferee under Section 2.1 (a) to parties other than Sonix.

     4.2    Statement and Payment. Within forty-five (45) days after the end of
each calendar quarter, [ * ] shall finish to Sonix a statement showing for each
Product the number of each such Product which were sold by [ * ] or its
transferee under Section 2.1 (a) during such quarter and the royalty due to
Sonix, which statement shall be accompanied by payment of such royalties in U.S.
Dollars. Late payments shall be subject to a service charge of 1.5% per month or
the maximum rate permitted by applicable law. [ * ] shall keep records of
royalty bearing events for two years. Sonix may have an independent third party
audit such records of [ * ] upon reasonable notice and no more than once a year.
If the audit reveals an underpayment of royalties of 10% or more, then [ * ]
shall pay all costs of the audit in addition to the amount of the underpayment
plus reasonable interest.

                                   SECTION 5

                                 MANUFACTURING

5.1  Manufacturing. [ * ] agrees to manufacture and sell Products to Sonix on
the terms and conditions set forth herein. The terms and conditions of this
Agreement shall control all sales of Products by [ * ] to Sonix, and any
additional or different terms or conditions in either party's purchase order,
acknowledgment, or similar document shall be of no effect.

5.2  Pricing. Sonix shall pay [ * ] for Product and engineering services as set
forth in Exhibit A.

5.3  Payment.

     (a)  Payment for Products shall be made by Sonix in U.S. Dollars within
thirty (30) days following receipt of [ * ]'s invoice. In the event Sonix fails
to make any payment here-under when due, [ * ] may require, as a condition to
shipping any additional Products to Sonix, prepayment by Sonix for such shipment
or other assurance of payment by Sonix at [ * ]'s discretion. Amounts past due
will be subject to a monthly charge at the rate of 1.5% per month or the maximum
rate permitted by law, whichever is less, to cover [ * ]'s costs of servicing
such past due amounts.

     (b)  Any purchase by Sonix of any product shall be subject to reasonable
review and approval by [ * ]'s credit department.

     (c)  Sonix shall pay, in addition to the prices quoted or invoiced, the
amount of any sales, use, excise or other similar tax or duty applicable to the
sale to Sonix of any Products, or Sonix shall supply [ * ] with an appropriate
tax exemption certificate.


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       4
<PAGE>

5.4  Forecasts and Orders.

     (a)  Forecast. Commencing upon [ * ]'s commercial production of the
Products Sonix shall provide to [ * ] a eighteen (18) month rolling forecast
setting forth its estimated requirements for shipment by month for Products, and
Sonix and [ * ] agree that the current six (6) months of the rolling forecast is
a firm minimum and may be increased for months beyond the cycle time, which is
currently three (3) months, but may change from time to time. Sonix shall submit
purchase orders for products forecasted to be shipped in such six month period,
but shall in any event be liable for payment and [ * ] for shipment with respect
to such products even if Sonix fails to submit such an order to [ * ] provided,
however, if Sonix does not place a purchase order, or cancels a purchase order
prior to completion of the Products, Sonix shall only be liable for costs
incurred to the date of cancellation plus [ * ]'s profit for such Product. This
forecast shall be updated monthly. Such purchase orders may be changed as
mutually agreed to by the parties hereto.

     (b)  Minimums. Notwithstanding any other provisions of this Agreement,
Sonix agrees to purchase and [ * ] agrees to supply a minimum of the following
quantities:

        i)   [ * ] die per month ([ * ] die per year) beginning one year after
production release of the first Product manufactured for Sonix;

        ii)  [ * ] die per month ([ * ] die per year) beginning two years after
production release of the first Product manufactured for Sonix;

        iii) [ * ] die per month ([ * ] die per year) beginning three years
after production release of the first Product manufactured for Sonix; and

        iv)  [ * ] percent ([ * ]%) of all Product sold by [ * ] to parties
other than Sonix shall be counted as applying to the minimums set forth above.

     (c)  Orders. All Agreement purchases and sales between [ * ] and Sonix
shall be initiated by Sonix's issuance of written purchase orders sent via
courier or facsimile. Such orders shall state unit quantities, unit
descriptions, requested delivery dates, and shipping instructions. The
acceptance by [ * ] of an order shall be indicated by written acknowledgment
thereof by [ * ]. All orders placed by Sonix and accepted by [ * ] shall be non-
cancelable except as set forth in Section 5.4 (a). If in conformance with this
Agreement [ * ] shall accept the purchase order or if not in conformance with
this Agreement, [ * ] shall notify Sonix reasonably promptly to the extent it
does not accept any order placed by Sonix. The terms and conditions of this
Agreement shall prevail over and supersede any conflicting or contravening terms
or condition of any purchase order or acknowledgment for the Product.

     5.5  Shipping. All Products delivered pursuant to the terms of this
Agreement shall be suitably packed for shipment in [ * ]'s standard containers,
marked for shipment at Sonix's address set forth above or specified in Sonix's
purchase order, and delivered to a carrier or forwarding agent chosen by Sonix.
Should Sonix fail to designate a carrier, forwarding agent or type of
conveyance, [ * ] shall make such designation in conformance with its standard
shipping practices. Shipment will be F.O.B. [ * ]'s factory, at which time risk
of loss (other than loss or damage due to [ * ]'s failure to properly package
the Products) and title shall pass to Sonix, and all freight, insurance and
other shipping expenses, as well as any special packing expenses, shall be bome
by and charged separately to Sonix. Sonix shall have fifteen days to inspect the
Products and reject any Product that does not meet the applicable
specifications.


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       5
<PAGE>

5.6  Warranty.

     (a)  [ * ] warrants that goods delivered hereunder shall conform to the
applicable specifications and shall be free from defects in material and
workmanship under normal use and service for a period of one year from the
applicable date of invoice. For products which are not standard products, such
as dice and wafers, [ * ] warrants to Sonix that such products shall conform to
the applicable specifications and shall be free from defects in material and
workmanship under normal use and service for a period of ninety (90) days from
the date code as set forth on Sonix's end Product. Products which are "samples"
and/or "prototypes" are sold "AS IS", "WITH ALL FAULTS," and with no warranty
whatsoever.

If during such warranty period, (i) [ * ] is notified promptly in writing upon
discovery of any defects in the goods, including a detailed description of such
defect; (ii) such goods are returned to [ * ], FCA

[ * ]'s facility accompanied by [ * ]'s Returned Material Authorization; and
(iii) [ * ]'s reasonable examination of such goods discloses to [ * ]'s
satisfaction that such goods are defective and such defects are not caused by
accident, abuse, misuse, neglect, alteration, improper installation, repair, or
alteration by someone other than [ * ], improper testing, or use contrary to any
instructions issued by [ * ] within a reasonable time, [ * ] shall (at its sole
option) promptly either repair, replace or if not commercially reasonable for
the prior options, credit Sonix the purchase price of such goods.

Prior to any return of goods by Sonix pursuant to this clause, Sonix shall
afford [ * ] the opportunity to inspect such goods at Sonix's location, and any
such goods so inspected shall not be returned to [ * ] without its prior written
consent.

[ * ] shall return any goods repaired or replaced under this warranty to Sonix
transportation prepaid, and reimburse Sonix for the transportation charges paid
by Sonix for such goods. The performance of this warranty shall be tolled during
such repair, replacement and transportation period however the total warranty
period for any goods shall not be beyond that period applicable to the goods
originally delivered.

THE FOREGOING WARRANTY CONSTITUTES [ * ]'S EXCLUSIVE LIABILITY, AND THE
EXCLUSIVE REMEDY OF SONIX, FOR ANY BREACH OF WARRANTY OR OTHER NONCONFORMITY OF
GOODS COVERED BY THIS AGREEMENT. THIS WARRANTY IS EXCLUSIVE, AND IN LIEU OF ALL
OTHER WARRANTIES. [ * ] MAKES NO OTHER WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. THE SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH
OF THIS WARRANTY SHALL BE AS EXPRESSLY PROVIDED HEREIN.

                                   SECTION 6

                             TERM AND TERMINATION

     6.1  Term. This Agreement shall become effective upon the Effective Date
and shall remain in force until five (5) years from the Effective Date, and
thereafter shall be automatically extended for additional one (1) year periods,
unless either party gives ninety (90) days written notice prior to the
expiration of the Agreement.

     6.2  Termination for Breach. If either party breaches any term or condition
of this Agreement in any material respect and fails to cure that breach within
ninety (90) days after receiving written notice


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       6
<PAGE>

of the breach, the other party shall have the right to terminate this Agreement
by written notice after the end of such ninety (90) day period.

     6.3  Bankruptcy. Either party may terminate this Agreement if the other
becomes the subject of a voluntary or involuntary petition in bankruptcy or any
administrative or legal proceeding relating to insolvency, receivership,
liquidation or composition for the benefit of creditors.

     6.4  Survival of Provisions. The provisions of Sections 5, 6, 7, 8, 9 and
10 shall survive the termination of this Agreement for any reason. All other
rights and obligations of the parties shall cease upon termination of this
Agreement, except that in the event of the expiration or the termination of this
Agreement by [ * ] following a material breach by Sonix, the license granted to
[ * ] in Section 2 hereof shall survive and remain in ftill force and effect,
and such license shall thereafter be perpetual, but [ * ] shall continue to pay
royalties as set forth in Section 4 provided, however, that [ * ] may offset any
amounts owed to Sonix by [ * ] against any damage or costs it occurs because of
such breach. In the event of a termination of this Agreement by Sonix following
a material breach by [ * ], the license granted to [ * ] in Section 2 shall
terminate upon the sale of the Products [ * ] has on its backlog as of the date
of termination of the Agreement, and [ * ] shall pay Sonix royalties for such
Products and the licensed granted to Sonix in Section 2.2 shall survive the
termination or expiration of the Agreement. [ * ] shall have no rights to any
Updates made to the Licensed Technology after the expiration of the Agreement.

                                   SECTION 7

                                   INDEMNITY

     7.1  Indemnification by Sonix. Sonix represents and warrants that it has
full right and authority to enter into this Agreement and to grant the licenses
granted by it to [ * ] herein and that no third party has any rights of any kind
with respect to the Licensed Technology, the Sonix Patents or the Sonix Know-How
that would conflict with such licenses. Except as set forth in Section 7.2
hereof, Sonix further agrees to defend and indemnify [ * ] against any actions
brought against [ * ] or its customers to the extent based upon a claim that the
Licensed Technology infringes any patent, trade secret or other intellectual
property right of any third party, and to pay any settlements entered into or
damages awarded against [ * ] or its customers to the extent based upon such a
claim; provided, that Sonix is provided reasonably prompt notice of any such
action and reasonable assistance in connection with the defense thereof (at
Sonix's expense) and allows Sonix full control of the defense and settlement
thereof. This Section 7 sets forth [ * ]'s sole remedy for any infringement
claims it may have against Sonix or any breach by Sonix of the above warranty.

     7.2  Indemnification by [ * ]. Except as set forth in Section 7.1 hereof, [
* ] agrees to defend and indemnify Sonix against any actions brought against
Sonix or its customers to the extent based upon a claim that a Product or a
process used to manufacture a Product infringes any patent, trade secret or
other intellectual property right of any third party as a result of information
or processes provided to Sonix by [ * ], and agrees to pay any settlements
entered into or damages awarded against Sonix or its customers to the extent
based upon such a claim; provided that [ * ] is provided reasonably prompt
notice of any such action and reasonable assistance in connection with the
defense thereof (at [ * ]'s expense) and allows [ * ] full control of the
defense and settlement


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       7
<PAGE>

thereof. This Section 7 sets forth Sonix's sole remedy for any infringement
claims it may have against [ * ].

     7.3  Remedies. If a Product is or becomes the subject of any claim demand,
suit or proceeding for any infringement of any third party patent, trade secret
or other intellectual property right, or if it is adjudicatively determined that
such Product infringes any third party patent, trade secret or other
intellectual property right, then indemnifying party shall, at its option and
expense, either (i) procure for indemnified party and its customers the right
under such third party intellectual property to manufacture, sell or use, as
appropriate, the infringing technology; (ii) replace or modify the infringing
technology with other suitable and reasonably equivalent non-infringing
technology; or (iii) if neither of the foregoing is commercially practical
refund any amounts already paid with respect to those particular Products that
may no longer be sold or otherwise distributed. Sonix's total liability under
this Section 7 shall not exceed the amount of cumulative payments of royalties
Sonix has received from [ * ] pursuant to this Agreement. [ * ]'s total
liability under this Section 7 shall not exceed ten percent (10%) of the Net
Selling Price of each such Product found to be infringing.

     7.4  Disclaimer. THE FOREGOING STATES BOTH PARTIES ENTIRE LIABILITY AND
OBLIGATION (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT TO
INTELLECTUAL PROPERTY INFRINGEMENT OR CLAIMS THEREFOR REGARDING ANY OF THE
PRODUCTS OR TECHNOLOGY DEVELOPED, MANUFACTURED OR SOLD PURSUANT TO THIS
AGREEMENT.

                                   SECTION 8

                                CONFIDENTIALITY

     8.1  Confidential Information.

     (a)  As used in this Section 8. 1, the term "Confidential Information"
shall mean any information disclosed by one party to the other pursuant to this
Agreement which is in written, graphic, machine readable or other tangible form
and is marked "Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Confidential Information may also include oral
information disclosed by one party to the other pursuant to this Agreement,
provided that such information is designated as confidential at the time of
disclosure and reduced to a written summary by the disclosing party, within
thirty (30) days after its oral disclosure, which is marked in a manner to
indicate its confidential nature and delivered to the receiving party. In
addition, all technical and confidential information exchanged prior to the
Effective Date shall be subject to the terms of this Section 8 after the
Effective Date.

     (b)  Each party shall treat as confidential all Confidential Information of
the other party, shall not use such Confidential Information except as expressly
set forth herein or otherwise authorized in writing, shall implement reasonable
procedures to prohibit the disclosure, unauthorized duplication, misuse or
removal of the other party's Confidential Information and shall not disclose
such Confidential Information to any third party except as may be necessary and
required in connection with the rights and obligations of such party under this
Agreement, and subject to confidentiality obligations in writing at least as
protective as those set forth herein.


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       8
<PAGE>

Without limiting the foregoing, each of the parties shall use at least the same
procedures and degree of care which it uses to prevent the disclosure of its own
confidential information of like importance to prevent the disclosure of
Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than reasonable care.

     (c)   Notwithstanding the above, neither party shall have liability to the
other with regard to any Confidential Information of the other which:

     (i)   was generally known and available in the public domain at the time it
           was disclosed or becomes generally known and available in the public
           domain through no fault of the receiver;

     (ii)  was known to the receiver at the time of disclosure;

     (iii) is disclosed with the prior written approval of the disclosure;

     (iv)  was independently developed by the receiver without any use of the
           Confidential Information;

     (v)   becomes known to the receiver from a source other than the disclosure
           without breach of this Agreement by the receiver and otherwise not in
           violation of the disclosure's rights; or

     (vi)  is disclosed pursuant to the order or requirement of a court,
           administrative agency, or other governmental body; provided, that the
           receiver shall provide prompt, advanced notice thereof to enable the
           disclosure to seek a protective order or otherwise prevent such
           disclosure.

     (d)   Each party shall obtain the execution of proprietary non-disclosure
agreements with its employees, agents and consultants having access to
Confidential Information of the other party, and shall diligently enforce such
agreements, or shall be responsible for the actions of such employees, agents
and consultants in this respect.

     8.2   Publicity. All publicity regarding the announcement of this Agreement
shall be coordinated by both parties. Neither party shall disclose the terms of
this Agreement without the prior written approval of the other party, except as
required as a matter of law or to attorneys, accountants or investment bankers,
if necessary for Sonix to operate or raise funds but each such disclosure shall
have executed a non-disclosure agreement similar in content to Section 8 hereof.

     8.3   Return of Information. Upon the written request by either party
following the termination of this Agreement, each party shall return to the
other party any Confidential Information of the other party in its possession,
except that [ * ] shall be permitted to retain any Confidential Information
relating to Sonix Know-How in the event this Agreement is terminated by [ * ] as
a result of a breach by Sonix, but must keep all Confidential Information as set
forth in this Section 8.


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       9
<PAGE>

                                   SECTION 9

                            LIMITATION OF LIABILITY

EXCEPT IN THE CASE OF AN INTENTIONAL OR GROSSLY NEGLIGENT ACT OR OMISSION OF A
PARTY, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT,
OR INCIDENTAL DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR
NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING IN
ANY WAY OUT OF THIS AGREEMENT OR THE DESIGNS, PRODUCTS, INFORMATION OR OTHER
TECHNOLOGY PROVIDED PURSUANT TO THIS AGREEMENT.

                                  SECTION 10

                                 MISCELLANEOUS

     10.1 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.

     10.2 Force Majeure. If the performance of this Agreement or any obligations
hereunder is prevented, restricted or interfered with by reason of fire or other
casualty or accident, strikes or labor disputes, yield problems, war or other
violence, any law, order, proclamation, ordinance, or demand or requirement of
any government agency, the party so affected upon giving prompt notice to the
other party shall be excused from such performance during such prevention,
restriction or interference.

     10.3 Assignment. Except as set forth in Section 2, neither party may assign
or delegate this Agreement or any of its licenses, rights or duties under this
Agreement without the prior written consent of the other, except to a person or
entity into which it has merged or which has otherwise succeeded to all or
substantially all of its business and assets, and which has assumed in writing
or by operation of law its obligations under this Agreement.

     10.4 Arbitration. Any dispute or claim arising out of or relating to this
Agreement, or the interpretation, making, performance, breach or termination
thereof, shall be finally settled by binding arbitration in Santa Clara County,
California, under the Rules for Commercial Arbitration of the American
Arbitration Association, by three arbitrators (or such lesser number of
arbitrators as the parties hereto shall agree) appointed in accordance with said
Rules. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing, the parties
may apply to any court of competent jurisdiction for a temporary restraining
order, preliminary injunction, or other interim or conservatory relief, as
necessary, without breach of this arbitration agreement and without any
abridgment of the powers of the arbitrators.

     10.5 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand, by messenger or by
telecommunications addressed to the addresses first set forth above or at such
other address furnished with a notice in the manner set forth herein. Such
notices



                                       10
<PAGE>

shall be deemed to have been served when delivered or, if delivery is not
accomplished by reason of some fault of the addressee, when tendered.

     10.6  Partial Invalidity. If any paragraph, provision, or clause the of
shall be found or be held to be invalid or unenforceable in any jurisdiction in
which this Agreement is being performed, the remainder of this Agreement shall
be valid and enforceable and the parties shall negotiate, in good faith, a
substitute, valid and enforceable provision which most nearly effects the
parties' intent in entering into this Agreement.

     10.7  Counterparts. This Agreement may be executed in counterparts which,
taken together, shall be regarded as one and the same instrument.

     10.8  Waiver. The failure of either party to enforce at any time the
provisions of this Agreement shall in no way be constituted to be a present or
future waiver of such provisions, nor in any way affect the validity of either
party to enforce each and every such provision thereafter.

     10.9  Entire Agreement. The terms and conditions herein contained
constitute the entire agreement and supersede all previous agreements and
understandings, whether oral or written, including without limitation the Non-
Disclosure Agreement previously entered into by the parties, between the parties
hereto with respect to the subject matter hereof and no agreement or
understanding varying or extending the same shall be binding upon either party
hereto unless in a written document signed by the party to be bound thereby.

     10.10 Section Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized officers or representatives as of the date first above
written.


[         *             ]               SONIX TECHNOLOGIES, INC.


By:  /s/ [       *      ]               By: /s/ A. Raguskus
     -----------------------                ----------------------------
       [       *      ]                 Name: A. Raguskus
                                              --------------------------
       President and CEO                Title: President and CEO
                                               -------------------------


[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       11
<PAGE>

                                   EXHIBIT A
                                   (Pricing)


Non-recurring Engineering (NRE) Charges
---------------------------------------
<TABLE>
<CAPTION>
New Designs
-----------
<S>                       <C>                                                                     <C>
1.  Design Support        EEPROM Cell + Interface Circuits, ESD structures,                       $[ * ]
                          final DRC/LVS, Frame, FDR
2.  Masks                 [ * ] process [ * ] masks at [ * ] per layer                            $[ * ]
3.  Test Hardware         Design and Build Probe Card and Load Board
                          -Supply Sonix with two Probe Cards @ $[ * ] each                        $[ * ]
4.  Test Program          Sonix to provide digital test vectors and test specs. Jointly debug     $[ * ]
5.  Wafers                Sonix to receive [ * ] wafers with at least [ * ] wafers being without
                          passivation                                                             $[ * ]
                                                                                                  ------

    Total                                                                                         $[ * ]
</TABLE>

Design Revisions
----------------
Wafer lots are $[ * ] for [ * ] wafers. Masks are $[ * ] per layer. Engineering
support [ * ]*

Qualifications
--------------
6.  Qualification         [ * ]*
7.  Characterization      [ * ]*

Unit Pricing
------------
8.  Prototypes are $[ * ] each (Min and Max quantities [ * ]*)
9.  Productions Units are $[ * ]  each.
             Assumptions  a)  Die Size 100mils x 150mils on [ * ]  process;
                          b)  Wafer Sort Test time is 5 seconds; and
                          c)  Deliver tested die (bumping and price adder TBD*).

[ * ]




[ * ]= CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.