Document:

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                                                                    EXHIBIT 10.7

                         FOUNDRY SERVICES SALE AGREEMENT

        A FOUNDRY SERVICE SALE AGREEMENT (hereinafter "Agreement") is entered
into as of August 19, 1998 ("Effective Date") between Stanford Microdevices,
with offices at 522 Almanor Ave., Sunnyvale, CA 94086 (hereinafter "Buyer") and
TRW Inc., a corporation organized in the State of Ohio, U.S.A., acting through
its Space and Electronics Group, with offices at One Space Park, Redondo Beach,
California 90278, U.S.A. (hereinafter "TRW" or "Seller").

        WHEREAS, Buyer desires to purchase, and TRW desires to provide the
personnel, material, equipment, services and facilities necessary to perform the
work specified in this Agreement and the parties desire to define the terms and
conditions under which the same will be furnished.

        NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the parties hereto agree as follows:

                                    ARTICLE 1
                            DEFINITIONS AND PRIORITY

1.1 DEFINITIONS: The following words and phrases shall have the meanings set
forth below:

        AGREEMENT:           This Sale Agreement between TRW and Buyer including
                             the following Exhibits, attached hereto and made a
                             part hereof:

                             EXHIBIT 1A: Statement of Work
                             EXHIBIT 1B: List of Deliverables, Price, Delivery
                             Schedule and Buyer's Site

        CONTRACT PRICE:      Defined in Article 4.1.

        DELIVERY DATE(s):    Defined in Section 6.1.

        MASKSET:             The set of plates used to define the
                             photolithographic pattern of the MMIC design for
                             semiconductor wafer processing.

        MMIC:                Monolithic Microwave Integrated Circuit

        PRODUCTS:            The equipment and materials described in Exhibits
                             1A

        WAFER:               The processed GaAs substrate containing Buyer's
                             designed MMIC's

        SERVICES:            The services to be provided by TRW under this
                             Agreement

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        SITE:                Buyer's facility or other location identified in
                             Exhibit 1B as the destination to which
                             transportation is to be arranged for deliverable
                             items.

        TRW PLANT:           Each of the factories or establishments of TRW and
                             its suppliers located in the United States.

        1.2 PRIORITY: In case of any inconsistencies between this Agreement and
any of the Exhibits, the text of this Agreement shall prevail.

                                    ARTICLE 2
                             SUBJECT MATTER OF SALE

2.1 SUPPLY: TRW hereby agrees to sell to Buyer and Buyer hereby agrees to buy
from TRW, on and subject to the terms and conditions contained in this
Agreement, the Products and Services listed in Exhibit 1A.

2.1 REQUIREMENTS: Buyer shall buy from TRW no less than the minimum quantities
of Product as set forth in Exhibit 1B.

                                    ARTICLE 3
                             EFFECTIVE DATE AND TERM

This Agreement shall be effective and binding on the parties as of the first
date noted above when signed by Buyer and TRW (the "Effective Date") and shall
remain in force and effect until 31 August 2000. Articles 12 and 15 hereof shall
survive termination or completion of this Agreement.

                                    ARTICLE 4
                             CONTRACT PRICE, TAXES,
                      TRANSPORTATION, EXPENSES AND CHARGES

4.1 PRICE: Buyer shall pay TRW for the performance of TRW's obligations
hereunder, the prices for Products and Services stated in Exhibit 1B in
accordance with the provisions of Article 5. The aforementioned price is
hereinafter referred to as the "Contract Price."

4.2 TAXES: Any taxes (including but not limited to, stamp, withholding, value
added and turnover taxes), duties, fees, charges, or assessments of any nature
levied by any governmental authority in connection with this transaction,
whether levied against Buyer or TRW, or employees of TRW as a result of Services
performed or Products provided by TRW under this Agreement, shall be for Buyer's
account and shall be paid directly by Buyer to the governmental authority
concerned. If TRW is required by law or otherwise to pay any such levy and/or
fines, penalties, or assessments in the first instance, or as a result of
Buyer's failure to comply with any applicable laws or regulations governing the
payment of such levies by Buyer, the amount of any payments so made by TRW shall

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be reimbursed by Buyer to TRW upon submission of TRW's invoices and supporting
documentation.  Buyer's resale tax certificate number is ____________.

4.3 TRANSPORTATION EXPENSES: Seller shall pay for all expenses of handling,
freight, and other transportation expenses including, without limiting the
foregoing, all packing and special handling charges for shipment incurred in
connection with the delivery of the Products from the TRW Plant to the Site.

4.4 ACCEPTANCE OF ORDERS: Each week after the Effective Date, Buyer shall submit
purchase order(s) to TRW specifying its requirements for Product delivery ten
(10) weeks thereafter. Buyer must specify part number, order quantity, and
requested delivery date on all purchase orders placed under this Agreement. TRW
shall use its best efforts to accept and supply all Orders for Products which
buyer submits hereunder, and unless otherwise agreed, TRW shall deliver products
so ordered on or before the requested delivery specified in each Order. All
preprinted terms and conditions contained in any Order are superseded by the
terms and conditions of this Agreement. Notwithstanding the foregoing, TRW shall
have no obligation to accept and shall not be deemed to have accepted, any Order
(i) for any Products not listed in Exhibit 1A hereto or revisions thereof; or
(ii) which specifies a delivery date less than ten (10) weeks from the date of
such Order.

TRW shall provide Buyer notice in the event any Order specifying delivery dates
less than ten weeks from the date of submission of the Order can be
accommodated. Such notice shall be provided to Buyer within five working days
after receipt of such Order.

4.5.1 ORDER PROCESSING Buyer may change an individual Order delivery schedule
provided that such change request is furnished to TRW in writing, and in
accordance with the following advance notification terms:

        (a) If written notification is received by TRW five (5) work days or
        less from the original Order delivery date - no schedule deviation shall
        be allowable; or

        (b) If written notification is received by TRW six (6) work days or more
        from the original Order delivery date - Buyer may delay delivery up to
        (3) weeks

Buyer may request only one delay, as set forth herein, per scheduled delivery.
TRW reserves the right to sell such products to another customer. TRW shall
notify Buyer of such impending sale; and Buyer shall have option to accept
product based upon original delivery schedule. TRW may complete sale to any
other customer unless Buyer provides TRW written notification of its option to
accept product based upon original Order delivery schedule within (24) hours of
TRW's notification of the impending sale to another customer.

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4.5.2 ORDER CANCELLATION Buyer must provide in writing request for cancellation
of order. If an order is in process, Buyer agrees that TRW shall assess
cancellation charges as follows:

    [***]

4.6 ROLLING ORDERS FORECASTS Buyer shall submit to TRW on the Effective date and
quarterly thereafter during the term hereof a rolling sales forecast of Buyer's
best estimate of their requirements for product delivery during the next nine
months. The forecast shall be formatted as set forth in Appendix 1C, and list
separately for each time period covered by the forecast the product quantity, by
part number, which Buyer expects to require during each period. The Rolling
Forecast is intended to give the supplier visibility into upcoming requirements
for capacity planning and does not take the place of the ordering process.

4.7 PRODUCT RETURNS Prior to returning any product to TRW, Buyer must obtain a
Return Material Authorization (RMA) number from TRW. TRW is not obligated to
accept nor shall have any liability for any returned Product(s) without RMA. TRW
shall at its sole option either replace, credit invoice or issue a refund for
Products TRW determines to be non-conforming with the requirements herein.
Product(s) shall not be returned by Buyer to TRW more than ninety (90) days
after the original date of shipment of such Product(s) from TRW to Buyer.

                                    ARTICLE 5
                                     PAYMENT

5.1 METHOD OF PAYMENT: Payment for Products and Services shall be in United
States dollars (U.S.D.) and shall be due and payable within 30 days of Buyer's
receipt of TRW's invoice in the amounts as set forth in Exhibit 1B. TRW may
assess a late payment charge, equivalent to the rate of one percent (1%) per
month (or partial month) of any past due invoice balance, until such past due
balance plus any late charges associated therewith is paid in full. Buyer's
failure to pay TRW invoices in full within forty five (45) days of Buyer's
receipt of invoice shall constitute a default condition under this Agreement.

Payment shall be made by mail or electronic funds transfer of immediately
available funds as follows:

               By Mail                             By Wire Transfer
               TRW Space & Defense                 Bank of America
               File No. 41818                      1850 Gateway Boulevard
               Los Angeles, CA 90074               Concord, California 92520
                                                   Telex - MCI #67652
                                                   ABA 121000358
                                                   TRW Account # 06005-04132

*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.

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Payment of other charges, if any, provided for in this Agreement shall be due
and payable within thirty (30) days after receipt of TRW's invoice thereof. In
the event that payment is not made within thirty (30) days, Buyer shall pay
additional late charges as set forth herein until full payment is received.

                                    ARTICLE 6
                        SHIPMENT, TITLE, AND RISK OF LOSS

6.1 DELIVERY OF PRODUCTS: TRW shall place the Products in the possession of the
carrier on or before the date or dates specified in Exhibit 1B for delivery to
Buyer, F.O.B. origin ("F.O.B."), to the Site. TRW shall arrange for shipment of
the deliverable items by common carrier to the Site, and in accordance with
Article 4.3 above, the cost of such shipping shall be borne by Seller.

6.2 PROTECTION AND PACKING OF THE PRODUCTS: TRW shall arrange to have all
deliverable items suitably packaged in accordance with good commercial
practices. The cost of all standard packaging, except for special packaging
associated with air shipment, shall be borne by TRW. Unless otherwise provided,
all packing containers used by TRW shall be non-returnable.

6.3 RISK OF LOSS AND TITLE: Risk of loss shall pass to Buyer upon delivery to
the carrier at Seller's facility, notwithstanding any provisions for payment of
freight or insurance by Seller, or the form of shipping documents, or the breach
or default by Seller at the time of loss. Risk of loss of goods sent to Seller
for adjustment shall remain with Buyer until such are received by Seller.
Neither (i) the time, method, place, or medium of payment provided for herein,
or any combination of the foregoing, nor (ii) the manner of consignment provided
for, whether to, or to the order of, Buyer or its agent, shall in any way limit
or modify the rights of TRW as the owner of the Products, to have control over
the right to possession of the Products until the title thereto passes to Buyer
as provided for above. The term "F.O.B" or other commercial abbreviations, if
used on any document related to this Agreement, shall not be deemed to relate to
the time when or the place where the title of and responsibility for the
Products is transferred from TRW to Buyer.

                                    ARTICLE 7
                                 FACTORY TESTING

Prior to delivery, TRW or its suppliers shall perform standard quality control
inspections and tests applicable to their respective deliverable items. Records
of such tests shall be retained by TRW and remain available for review by Buyer
for at least one year after the date(s) of delivery. A copy of such inspection
test records shall be delivered to Buyer with scheduled deliveries of Product to
which such records correspond. TRW shall make available to Buyer upon Buyer's
request, process control monitor (PCM) and specification limit testing protocols
implemented by TRW with respect to Products.

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                                    ARTICLE 8
                                    WARRANTY

8.1 WARRANTY: TRW warrants that, upon delivery to Buyer, the wafers shall meet
TRW's commercial visual inspection requirements and the Process Control Monitor
specifications. Should the wafers not conform, at delivery, to the above
requirements and specifications, TRW shall replace the non-conforming wafers.
Any non-conforming Products must be returned for inspection to TRW. Buyer shall
prepay all freight charges to return any such non-conforming Products to TRW.

8.2 EXCLUSION: THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
CONDITIONS OR REPRESENTATIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE
INCLUDING ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR
MERCHANTABILITY. THIS WARRANTY SHALL NOT BE VALID IF THE PRODUCTS HAVE BEEN
SUBJECTED TO ABUSE, MISUSE, ACCIDENT, ALTERATION, NEGLECT, UNAUTHORIZED REPAIR,
OR EXPOSURE TO CONDITIONS BEYOND APPLICABLE ENVIRONMENT.

                                    ARTICLE 9
                                     DELAYS

9.1 FORCE MAJEURE: No failure on the part of either party to carry out or
observe any of the terms or provisions of this Agreement or any order hereunder
(except the payment of monies owed hereunder) shall be deemed a breach of this
Agreement or such Order if same shall arise or result from force majeure or from
any cause reasonable beyond the control of Buyer or TRW, as the case may be,
including but without limitation, acts of God, acts (including delays or failure
to act) of any governmental authority, (de jeure or de facto), war (declared or
undeclared), riot, fires, labor disputes, sabotage or epidemics. Should such
delay occur, the date or dates of performance by the affected party shall be
extended for a period equal to the number of days during which performance is so
delayed. The affected party shall give the other party written notice of such
delay within five (5) working days after identification of the delay. If a delay
in the performance of any Order in the aggregate shall continue for more than
one hundred and eighty (180) calendar days and the parties have not agreed upon
a revised basis for performing the Order at the and of such delays, the either
party, upon thirty (30) days written notice, may terminate such Order without
liability.

9.2 TRW DELAYS: If at any time TRW discovers that it is unable (whether for
reasons set out in Section 9.1 or otherwise) to deliver any Products to Buyer on
the scheduled delivery date, TRW shall give Buyer written notice within five (5)
working days of such discover, which notice shall specify the delivery date on
which TRW shall be able to deliver such Products to Buyer. If the delivery date
proposed by TRW is more than forty five (45) days after the scheduled delivery
date, Buyer shall have the right to cancel (in whole or in part) its Order for
such Products, by giving TRW written notice of cancellation within five (5)
working days after receipt of TRW's notification of delay.

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                                   ARTICLE 10
                            TRANSFERS AND ASSIGNMENTS

10.1 TRANSFER: Neither party shall, without the consent in writing of the other
Party, which consent shell not be unreasonably withheld, assign or transfer this
Agreement or the benefits or obligations thereof or any part thereof to any
other person other than a subsidiary wholly owned by such Party, provided that
this shall not affect any right of such Party to assign, either absolutely or by
way of charge, any moneys due or to become due to it or which may become payable
to it under this Agreement.

10.2 RELEASE OF OBLIGATIONS: No assignment or transfer of any right or duty
hereunder by either party shall constitute a novation or otherwise release or
relieve such party of its obligations hereunder.

                                   ARTICLE 11
                                   TERMINATION

11.1 TERMINATION: This Agreement can be terminated by the terminating party in
writing to the other party under the circumstances set forth below:

               (a) By the non-defaulting party if the other party fails to pay
the nondefaulting party any amount required to be paid hereunder within five
days of when the amount is due and payable hereunder; or

               (b) By the non-defaulting party if the other party fails to
perform any other material obligation required to be performed by it under any
provision of this Agreement within thirty (30) days after the time specified or
within thirty (30) days after notice from the non-defaulting party that such
performance has become due; provided, however, Buyer shall have no right to
terminate this Agreement for TRW's default so long as corrective action is being
diligently pursued by TRW in a manner that demonstrates that TRW's obligations
hereunder shall be completed in sufficient time to allow Buyer to meet its
end-use requirements for the Products; or

               (c) By either party upon thirty (30) days prior written notice to
the other party if the delays resulting from any of the causes stated in Article
9.1 extend in the aggregate for more than one hundred eighty (180) days and the
parties have not agreed upon a revised basis for continuing the work at the end
of such delays, including adjustment of the price; or

               (d) By TRW if Buyer has not provided TRW with the Final Layout
Tape within twelve (12) months of the Effective Date.

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11.2 TERMINATION CHARGES

               (a) In the event of termination of this Agreement by TRW pursuant
to Article 11.1(a) or 11.1(b) above, the termination charges owed by Buyer to
TRW shall be the Contract Price not already paid to TRW by Buyer.

               (b) In the event of termination of this Agreement pursuant to
Article 11.1(c) or 11.1(d) above, TRW shall promptly submit to Buyer a detailed
written statement and supporting documentation of TRW's work effort to date. The
report shall also include a listing of the charges to terminate the work effort.
The termination charges shall not exceed the value of this Agreement (plus any
interest or late charges set forth in Article 5 hereof) and shall include the
following:

        (1) the price of any completed and unbilled Products or Services
pursuant to Exhibit 1B;

        (2) for partially completed Products or Services a charge equal to the
price of the Product multiplied by the percentage of completion of the partially
completed Product or Service; and

        (3) any charges for late payment or Buyer's delay as set forth in
Article 5.

               (c) The termination charges set forth in this Article 11.2 shall
be paid by Buyer within thirty (30) days after receipt of TRW's invoice
therefore.

11.3 STOPPAGE OF WORK FOLLOWING TERMINATION: Following receipt of a notice of
termination pursuant to Article 11.1 hereof, TRW shall immediately stop
performing the service hereunder and shall not enter into or place any orders
with its vendors or subcontractors in connection with the performance of this
Agreement.

11.4 BUYER'S REMEDIES IN THE EVENT OF TERMINATION: In the event that Buyer
terminates this Agreement as a result of TRW's breaches of the provisions
covered in Article 11.1(b), Buyer shall be entitled to the remedies provided in
the Uniform Commercial Code as adopted in California, subject to the limitations
set forth in Article 12.2 hereof. Buyer shall not be entitled to any damages,
compensation or other remedies in the event that either party terminates the
Agreement pursuant to Article 11.1(c) hereof.

                                   ARTICLE 12
                             LIMITATION OF LIABILITY

12.1 INFRINGEMENT: Nothing contained in this Agreement shall be construed as a
warranty or representation that the manufacture, sale, lease, use or other
disposition of systems, processes, circuits, devices, software and products will
be free from infringement of patents, utility models, design patents, maskwork
rights, copyrights, trade secrets and/or other legal rights of third parties.

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12.2 LIMITATION OF LIABILITY: The total liability of TRW on all claims in total
whether in contract, tort (including sole or concurrent negligence), or
otherwise, arising out of, connected with, or resulting from the manufacture,
sale, delivery, resale, repair, replacement, or use of the Products or Services
shall not exceed the Contract Price

12.3 DAMAGES: In no event shall TRW be liable for any special, indirect,
incidental or consequential damages, however caused, whether by TRW's sole or
concurrent negligence or otherwise, including, but not limited to costs and
expenses incurred in connection with labor, overhead, transportation,
installation, or removal of the Products or substitute facilities or supply
sources.

12.4 INDEMNIFICATION: (a) In the event any product to be furnished under this
Agreement is not to be made in accordance with drawings, samples or
manufacturing specifications designated by Buyer, but rather is the design of
Seller, Seller agrees that it shall, at its own expense and at its option,
defend or settle any claim, suit, or proceeding brought against Buyer or any
customer of Buyer, based on an allegation that the product furnished under this
Agreement constitutes a direct or a contributory infringement of any claim of
any patent, mask work, copyright or any other intellectual property right. This
obligation shall be effective only if Buyer shall have made all payments then
due and if Seller is notified of said allegation promptly in writing and given
authority, information, and assistance for the settlement or defense of said
claim, suit, or proceeding. Seller shall pay all damages and costs assessed in
such suit or proceedings. In the event of a final adjudication by a court of
competent jurisdiction that its product or any part thereof infringes or
violates any third party intellectual property right or if the use or sale
thereof is enjoined, or if the provisions of any negotiated settlement Agreement
prohibit the use of the product, Seller shall at its sole option and its own
expense, either: (a) procure for Buyer the right to continue using the product;
or (b) replace it with a substantially equivalent non-infringing product; or (c)
modify it so it becomes non-infringing but substantially equivalent; or (d) if
none of the above is reasonably available, terminate the Buyer's right to use
the product, accept the return of the product from Buyer, and return to the
Buyer the price originally paid by Buyer to Seller for the product supplied by
Seller.

The foregoing indemnity does not apply to the following: (1) infringement by a
combination of products furnished under this Agreement with other products not
furnished hereunder unless Seller is a contributory infringer; (2) infringement
resulting from changes or modifications made to or from the product by the
Buyer; and (3) any settlements of a claim, suit, or proceeding made without
Seller's written consent.

The foregoing states the entire liability of Seller with respect to infringement
or violation of third party intellectual property rights in connection with
products furnished under this Agreement.

               (a) In the event any product to be furnished under this Agreement
is to be made in accordance with drawings, samples or manufacturing
specifications designated by Buyer and is not the design of Seller, Buyer agrees
to defend, indemnify and hold Seller harmless to the same extent

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and subject to the same requirements as set forth in Sellers indemnification of
Buyer as set forth in (a) above.

                                   ARTICLE 13
                                     NOTICES

All notices, requests, consents, and other communications required or permitted
to be given under this Agreement must be in writing and mailed by registered or
certified mail to the other party at its respective business address as follows:

<TABLE>
<CAPTION>
if to TRW:                                        if to Buyer:
---------                                         -----------
<S>                                               <C>
TRW Inc., Space and Electronics Group             Stanford Microdevices
Telecommunication Products Division               522 Almanor Ave.
One Space Park, Bldg E2/5085                      Sunnyvale, CA 94086
Redondo Beach, California 90278                   Attention: Mr. John Ocampo
Attention: Mr. Edward Cornejo                     Phone: (408) 616-5499
Phone:     310-814-2001                           Fax: (408) 496-4774
FAX:       310-812-7011
</TABLE>

                                   ARTICLE 14
                            CONTRACT CHANGE PROCEDURE

14.1 CHANGES: Any changes to this Agreement after the effective date hereof
which relate to: (i) the deletion of Products or Services; (ii) adding
additional Products, or Services; (iii) changing or modifying Products or
Services; or (iv) making other changes which do not materially alter the scope
of this Agreement shall be made in accordance with the procedures set forth in
this Article 14.

14.2 CONTRACT CHANGES REQUESTS: Either party hereto may, from time to time and
at any time during the term hereof, request a change, as defined in Section
14.1, to this Agreement (The party requesting the change is hereinafter referred
to as the "Requesting Party."). Requests for changes shall be in writing and
shall be addressed and delivered to the other party (the "Notified Party"). Such
writing shall be identified as a "Contract Change Request" (or "CCR"), shall
carry a sequential number for ease of tracking, shall set forth in detail the
nature of the change requested, and shall identify the Products to be changed.

14.3 PROCEDURE: As soon as practical after receipt by the Notified Party of
copies of the CCR, the parties shall, as necessary, meet to discuss the
change(s) and to ascertain cost and schedule impacts, if any.

14.4 CONTRACT CHANGE NOTICE: If the parties decide to implement a change
request, a standard form Contract Change Notice ("CCN") shall be prepared, which
CCN shall describe the change, delineate the cost, schedule, and other impacts
of the change and the payment terms for any price

                                      -10-
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increase. Execution of a CCN by both parties shall constitute a modification
hereof and shall be binding on both parties hereto.

14.5 EXCEPTION: Substitutions relative to Products which are purchased items not
manufactured by TRW may be made by TRW without the consent of Buyer if such
substitutes are of like quality.

                                   ARTICLE 15
                              INTELLECTUAL PROPERTY

15.1 PROPRIETARY INFORMATION: For the purpose of this Agreement:

               (a) "Proprietary Information" shall mean all drawings, documents,
ideas, know-how and other information supplied by one Party ("Disclosing Party")
to another ("Recipient") (whether disclosed orally, or in documentary form, by
demonstration or otherwise) for the purpose of achieving the objectives of this
Agreement.

               (b) "Proper Use" shall mean use of the Proprietary Information
solely by the Recipient for the objectives of this Agreement.

15.2 NONDISCLOSURE: Buyer and TRW each agree to employ reasonable efforts to
keep in confidence and prevent the disclosure to any person(s) outside their
respective organizations or any person(s) within their organizations not having
a need to know, all information received from the other which is designated in
writing or by appropriate stamp or legend to be of a proprietary nature
(hereafter "Proprietary Information") and neither will use Proprietary
Information for purposes other than the Purpose; provided, however, neither
party will be liable for disclosure or use of such information if the same is:

        (a) In the public domain at the time of disclosure, or is subsequently
made available to the general public without restriction by the disclosing
party;

        (b) known to the Recipient at the time of disclosure without
restrictions on its use or independently developed by the Recipient, and there
is adequate documentation to demonstrate either condition;

        (c) used or disclosed with the prior written approval of the Disclosing
Party;

        (d) disclosed without restriction to the Recipient from a source other
than the Disclosing Party; or

        (e) disclosed after five (5) years from the date of delivery by the
Disclosing Party to the Recipient, which five (5) year period shall survive the
termination of this Agreement.

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If any portion of Proprietary Information falls within any one of these
exceptions, the remainder shall continue to be subject to the foregoing
prohibitions and restrictions. The Recipient of Proprietary Information shall
inform its employees of the confidential nature of the Proprietary Information
and shall prohibit them from making copies of any of it except where such copies
are necessary for the purposes of Proper Use, unless agreed upon by the
Disclosing Party.

Each party shall protect the Proprietary Information of the other party using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use, dissemination or publication of the confidential
information as that party uses to protect its own Proprietary Information of
comparable importance.

Prior to disclosure of Proprietary Information to any employee, each party shall
fully advise such employee that he or she is required to hold in confidence all
information and that such information is not to be disclosed to persons outside
his or her organization or to any co-employees not directly concerned with
furthering the Purpose. The parties shall maintain between themselves and their
officers, employees and consultants duly binding agreements by such persons as
may be necessary to fulfill their obligations under this Agreement.

15.3 MARKING: Proprietary Information made available in written form by one
Party to another Party shall be marked with the legend:

                      "PROPRIETARY INFORMATION"
           or         "TRW PROPRIETARY INFORMATION"

as the case may be, or an equivalent conspicuous legend. No sheet or page of any
written material shall be so labeled which is not, in good faith, believed by
the Disclosing Party to contain Proprietary Information. A Recipient of
Proprietary Information hereunder shall have no obligation with respect to any
portion of any written material which is not so labeled or any information
received orally unless it is identified as proprietary and a written summary of
such oral communication, specifically identifying the items of Proprietary
Information, is furnished to the Recipient within thirty (30) days of such
disclosure.

The individuals identified below are the only persons authorized to receive
Proprietary information on behalf of the Parties:

        For Buyer:    Mr. John Ocampo

        For TRW:      Dr. Tom Joseph

By written notice to the other Party, these representatives may be replaced by
another person from the same Party.

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15.4 JUDICIAL ORDERS: In the event any governmental or judicial order requires
the disclosure of Proprietary Information, the Recipient of such Proprietary
Information shall promptly but in any event prior to such disclosure notify the
originator of the Proprietary Information of the requirement and provide
reasonable aid and assistance if the originator decides to oppose such
governmental or judicial order. Recipient shall not be liable for any disclosure
of Proprietary Information made pursuant to such governmental or judicial order
if it has complied with the provisions of this paragraph.

15.5 COMPENSATION: The Parties shall not be obligated to compensate each other
for the transfer of any Proprietary Information under this Agreement and agree
that no warranties of any kind are given with respect to such Proprietary
Information or any use thereof. No license is hereby granted under any patent,
trademark or copyrights with respect to any Proprietary Information.

15.6 SURVIVAL: The obligations of the Parties concerning confidentiality set
forth in this Article 15 shall survive termination or completion of this
Agreement. All documents, drawings and writings disclosing Proprietary
Information and all copies thereof shall be returned promptly by a party to the
other party upon receipt of a request therefor or following termination or
expiration of this Agreement except that recipient may keep one archival copy
for evidentiary purposes only.

                                   ARTICLE 16
                                  MISCELLANEOUS

16.1 HEADINGS: The headings and titles to the articles, sections, and paragraphs
of this Agreement are inserted for convenience only and shall not be deemed a
part hereof or affect the construction or interpretation of any provision
hereof.

16.2 REMEDIES: Unless otherwise expressly provided herein, the rights and
remedies hereunder are in addition to, and not in limitation of, other rights
and remedies under the Agreement, at law or in equity, and exercise of one right
or remedy shall not be deemed a waiver of any other right or remedy.

16.3 MODIFICATION AND WAIVER: No cancellation, modification, deletion, addition,
or other change in the Agreement or any provision hereof, or waiver of any right
or remedy herein provided, shall be effective for any purpose unless
specifically set forth in a writing signed by the party to be bound thereby. No
waiver of any right or remedy in respect of any occurrence or event on one
occasion shall be deemed a waiver of such right or remedy in respect of such
occurrence or event on any other occasion.

16.4 ENTIRE AGREEMENT: This Agreement supersedes all other agreements, oral or
written, heretofore made with respect to the subject hereof and the transactions
contemplated hereby and contains the entire agreement of the parties.

                                      -13-
<PAGE>   14

16.5 SEVERABILITY: Any provision hereof prohibited by or unlawful or
unenforceable under any applicable law of any jurisdiction shall as to such
jurisdiction be ineffective without affecting any other provision of the
Agreement. To the full extent, however, that the provisions of such applicable
law may be waived, they are hereby waived, to the end that the Agreement be
deemed to be a valid and binding agreement enforceable in accordance with its
terms.

16.6 CONTROLLING LAW: All questions concerning the validity and operation of
this Agreement and the performance of the obligations imposed upon the parties
hereunder shall be governed by the laws of the State of California applicable to
contracts entered into and wholly to be performed in such jurisdiction.

16.7 SUCCESSORS AND ASSIGNS: The provisions of this Agreement shall be binding
upon and for the benefit of TRW and Buyer and their respective successors and
assigns. This provision shall not be deemed to expand or otherwise affect the
limitation on assignment and transfers set forth in Article 10 and no party is
intended to or shall have any right or interest under this Agreement, except, as
provided in Article 10.

16.8 COUNTERPARTS: This Agreement has been executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts
together shall constitute but one and the same instrument.

16.9 LANGUAGE: If a translation of this Agreement is required or otherwise made,
the English version shall be the official version and shall control in the event
of differences. All communications relating to this Agreement shall be in
English.

16.10 EXPORT SALES:

        (a) Buyer agrees that it shall not knowingly sell, transfer, or deliver,
directly or indirectly, any part or portion of the Products or related
documentation supplied by TRW pursuant to this Agreement to any person or
organization in any country where such sale, transfer, or delivery by Buyer
would be prohibited by law or regulation now or hereafter in effect which
imposes any restrictions on United States trade with foreign countries.

16.11 OWNERSHIP OF MASKSET(s): Each party hereto shall retain sole ownership of
its Masksets and TRW shall retain sole possession of any and all Masksets
developed or procured by TRW under this Agreement. TRW will store Buyer's
Maskset at TRW for a maximum period of two (2) years after delivery of the
Products (wafers) to Buyer. TRW will destroy/dispose of the Maskset after the
two (2) year storage period.

16.12 OWNERSHIP OF MMIC DESIGNS: Each party hereto shall retain sole ownership
rights to its MMIC designs. TRW shall retain all rights to individual circuit
elements, design libraries, design rule manuals, circuit elements and MMIC
fabrication processes. Buyer agrees that TRW may release maskset information
containing Buyer's designs to TRW's maskset vendor, for maskset procurement.

                                      -14-
<PAGE>   15

        IN WITNESS WHEREOF, the parties have executed this Agreement in English
as of the date and year first set forth above.

TRW INC                                 Buyer

By: /s/ Frederick J. F                  By: /s/ John Ocampo
   --------------------------------        -------------------------------------
   for David B. Vandervoet                 John Ocampo

Title: VP & General Manager             Title: Chairman
      -----------------------------           ----------------------------------

                                      -15-
<PAGE>   16

                                   EXHIBIT 1A

                                LIST OF PRODUCTS

1.      PCM Tested 3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
        PART NUMBER                       DESCRIPTION
        -----------                       -----------
<S>                                       <C>
                          [***]
</TABLE>

* 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.

<PAGE>   17

                                   EXHIBIT 1B

                 PRICE, MINIMUM ANNUAL QUANTITIES, DELIVERY SCHEDULE AND SITE

A.      UNIT PRICE

        3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
                                                            STANDARD
        PART NUMBER              DESCRIPTION                PROCESS PRICE
        -----------              -----------                -------------
<S>                              <C>                        <C>
                                     [***]
</TABLE>

B.      MINIMUM QUANTITIES DURING TERM

        PRODUCT                      NUMBER OF WAFERS
        3" GaAs Process Wafers            [***]

C.      SITE:         Stanford Microdevices
                      522 Almanor Avenue
                      Sunnyvale, Ca 94086

D.      DELIVERY SCHEDULE
        Wafers will be shipped to Buyer not later than ten (10) weeks from the
        first Monday after receipt of valid order.

E.      LIFE TIME BUY OPTION

TRW AGREES TO PROVIDE UP TO [***] WAFERS, LESS THE TOTAL NUMBER OF WAFERS
PREVIOUSLY DELIVERED TO BUYER UNDER TRW SALES NUMBERS 65487 AND 66002, UPON
TRW'S NOTIFICATION TO BUYER THAT TRW WILL OBSOLETE OR UPGRADE ITS HBT MMIC
FABRICATION PROCESS. TRW WILL PROVIDE THIS NOTIFICATION TO BUYER AT LEAST SIX
MONTHS PRIOR TO THE TIME THAT TRW WILL NO LONGER ACCEPT ORDERS FOR SAID PRODUCT.
A DELIVERY SCHEDULE WILL BE NEGOTIATED AT THE TIME THE OPTION IS EXERCISED,
PRIOR TO TRW'S INITIATING PERFORMANCE OF THE OPTION.

* 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.
<PAGE>   18

                                   EXHIBIT 1C

                          Rolling Sales Forecast Format

Pursuant to Article 4.6 of this Agreement, Buyer shall submit regular rolling
sales forecast formatted as follows:

<TABLE>
<CAPTION>
                                               WEEKS                                             MONTHS
                                               -----                                             ------
   PART NUMBER            1   2  3   4   5  6   7  8   9   10   11    12      Month    Month    Month   Month     Month   Month
                                                                                4        5        6        7        8       9
--------------- --------- --- -- --- --- -- --- -- --- --- ---- ---- ------ --------- ------- -------- -------- -------- --------
<S>             <C>       <C> <C> <C><C><C> <C> <C><C> <C> <C>  <C>  <C>    <C>       <C>     <C>       <C>     <C>      <C>
e.g. DAMP2      Forecast
--------------- --------- --- -- --- --- -- --- -- --- --- ---- ---- ------ --------- ------- -------- -------- -------- --------
e.g. DAMP7      Forecast
--------------- --------- --- -- --- --- -- --- -- --- --- ---- ---- ------ --------- ------- -------- -------- -------- --------
</TABLE>

The initial 10 weeks shall indicate existing orders from Buyer.

<PAGE>   19

                     CONTRACT CHANGE NOTICE AMENDMENT NO. 1
                                       TO
                       TRW/STANFORD WAFER SUPPLY AGREEMENT
                               AGREEMENT NO. 1A551

THIS AMENDMENT ("Amendment") is made and entered into and between Stanford
Microdevices ("Buyer") and TRW Inc., by and through its Space and Electronics
Group, a corporation organized and existing under the laws of Ohio, having
offices at Redondo Beach, California, USA ("TRW").

        WHEREAS, Buyer and TRW entered into Agreement No. 1A551 with an
effective date of 19 August 1998.

        WHEREAS, Buyer and TRW desire to amend the Agreement in order to add 3"
GaAs HBT wafers designed by the the Buyer and maskset layout support.

NOW THEREFORE, the parties agree to amend the Agreement as follows:

Exhibit 1A, List of Products as included as part of the original agreement, is
deleted and replaced with Exhibit 1A-Revision 1 (copy attached).

Exhibit 1B, Price and Minimum Annual Quantities, Deliver Schedule and Site, as
included as part of the original agreement, is deleted and replaced with Exhibit
1B-Revision 1 (copy attached).

The above changes constitute Contract Change Notice No. 1 to the Agreement.
Except as expressly provided hereinabove all other terms and conditions of the
Agreement shall apply herein and remain in full force and effect as previously
agreed to between Buyer and TRW. In the event of any conflict between the terms
of this Amendment and those of the Agreement, the terms of this Amendment will
be deemed to have superseded those of the Agreement and exclusively will govern
the matter in question.

Buyer:                                    TRW Inc.
                                          Space and Electronics Group

By: /s/ John Ocampo                       By: /s/ Brian H. Ward
   -------------------------------           -----------------------------------
Name:    John Ocampo                      Name:  Brian H. Ward
Title:   President & CEO                  Title: Contracts Manager
         Stanford Microdevices                   Telecommunication Programs
                                                 Division

Date:    9-4-98                           Date:  9/2/98

<PAGE>   20

                              EXHIBIT 1A-REVISION 1

                                LIST OF PRODUCTS

1.      PCM Tested 3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
        PART NUMBER                       DESCRIPTION
        -----------                       -----------
<S>                                       <C>
                           [***]
</TABLE>

2.

<TABLE>
<CAPTION>
        PART NUMBER                       DESCRIPTION
        -----------                       -----------
<S>                                       <C>
        PAD2                              VARIOUS
        SMDXX                             VARIOUS
</TABLE>

[***] 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.
<PAGE>   21

                              EXHIBIT 1B-REVISION 1

          PRICE, MINIMUM ANNUAL QUANTITIES, DELIVERY SCHEDULE AND SITE

A.      PRICE

1.      3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
                                                               Standard
        Part Number              Description                 Process Price
        -----------              -----------                 -------------
<S>                              <C>                         <C>
          [***]                     [***]                        [***]
</TABLE>

2.      3" GaAs HBT Wafers (Circuits designed by Buyer)
        Maximum of [***] Wafers for sale, transaction completed by
        December 31, 1998.

<TABLE>
<CAPTION>
                                                               Standard
        Part Number                  Description            Process Price
        -----------                  -----------            -------------
<S>                                  <C>                    <C>
           [***]                     VARIOUS                [***]
                                     VARIOUS
</TABLE>

3.      Layout support for Stanford Microdevices Product masksets. (Does not
        include cost for or purchase of maskset. Buyer will purchase and supply
        maskset.)

<TABLE>
<CAPTION>
                                                              Standard
                       Product                              Process Price
                       -------                              -------------
<S>                                                          <C>
        Three (3) circuits or less (Production)                $[***]

        Greater than three (3) circuits                        $[***]
</TABLE>

[***]

[***] 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.
<PAGE>   22

                        EXHIBIT 1B-REVISION 1 (CONTINUED)

B.      MINIMUM QUANTITIES DURING TERM

<TABLE>
<CAPTION>
                        Product                      Number of Wafers
                        -------                      ----------------
<S>                                                  <C>
        3" GaAs Process Wafers                            [***]
</TABLE>

C.      SITE
        Stanford Microdevices
        522 Almanor Avenue
        Sunnyvale, CA 94086

D.      DELIVERY SCHEDULE
        Wafers will be shipped to Buyer not later than ten (10) weeks from the
        first Monday after receipt of valid order.

E.      LIFE TIME BUY OPTION
        TRW agrees to provide up to [***] wafers, less the total number of
        wafers previously delivered to Buyer under TRW Sales Numbers 65487 and
        66002, upon TRW's notification to buyer that TRW will obsolete or
        upgrade its HBT MMIC fabrication process. TRW will provide this
        notification to Buyer at least six months prior to the time that TRW
        will no longer accept orders for said Product. A delivery schedule will
        be negotiated at the time the option is exercised, prior to TRW's
        initiating performance of the option.

* 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.
<PAGE>   23

                     CONTRACT CHANGE NOTICE AMENDMENT NO. 2
                                       TO
                       TRW/STANFORD WAFER SUPPLY AGREEMENT
                               AGREEMENT NO. 1A551

THIS AMENDMENT ("Amendment") is made and entered into and between Stanford
Microdevices ("Buyer") and TRW Inc., by and through its Space and Electronics
Group, a corporation organized and existing under the laws of Ohio, having
offices at Redondo Beach, California, USA ("TRW").

        WHEREAS, Buyer and TRW entered into Agreement No. 1A551 with an
effective date of 19 August 1998 ("Agreement").

        WHEREAS, Buyer and TRW desire to amend the Agreement in order to
evaluate an alternative [***] coating process for Darlington Amplifier
Products.

NOW THEREFORE, the parties agree to amend the Agreement as follows:

Exhibits 1A and 1B, as included as part of the original Agreement and Amendment
1, are deleted and replaced with Exhibits 1A - Revision 2 and 1B - Revision 2
(attached).

The above changes constitute Contract Change Notice No. 2 to the Agreement.
Except as expressly provided hereinabove all other items and conditions of the
Agreement shall apply herein and remain in full force and effect as previously
agreed to between Buyer and TRW. In the event of any conflict between the terms
of this Amendment and those of the Agreement, the terms of this Amendment will
be deemed to have superseded those of the Agreement and exclusively will govern
the matter in question.

Stanford Microdevices                     TRW Inc.
                                          Space and Electronics Group

By: /s/ John Ocampo                       /s/ Patrick J. Reynolds
   --------------------------------       --------------------------------------

Name:   John Ocampo                       Name:
Title:  President & CEO                   Title:
Date:                                     Date:    11/24/98

* 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.
<PAGE>   24

                             EXHIBIT 1A - REVISION 2
                                LIST OF PRODUCTS

1.      PCM TESTED 3" GAAS HBT WAFERS (DARLINGTON AMPLIFIERS)

<TABLE>
<CAPTION>
        PART NUMBER                         DESCRIPTION
        -----------                         -----------
<S>                                         <C>
                             [***]
</TABLE>

2.      PCM TESTED 3" GAAS HBT WAFERS

<TABLE>
<CAPTION>
        PART NUMBER                         DESCRIPTION
        -----------                         -----------
<S>                                         <C>
                             [***]
</TABLE>

3.      TRW ENGINEERING

        TRW shall conduct evaluation of [***] coating vs. a Layout change on
        Darlington Amplifiers and shall also conduct an implementation study of
        selected technique for application to future products. TRW shall
        determine all criteria for selection of technique, select technique
        based upon its criteria, and prepare the appropriate documentation to
        implement the selected technique.

        Price for future sale of Products utilizing the selected technique to
        Buyer shall be negotiated separately between TRW and Buyer, and such
        Products shall be incorporated into this Agreement by Amendment.

        TRW shall retain ownership and all intellectual property rights to
        technical data, techniques, applications, trade secrets or documentation
        and other intellectual property related to this activity and such
        information shall be deemed TRW Proprietary Information pursuant to
        Article 15 of the Agreement.

* 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.
<PAGE>   25

                             EXHIBIT 1B - REVISION 2

                 PRICE, MINIMUM ANNUAL QUANTITIES, DELIVERY SCHEDULE AND SITE

A.      PRICE

1.      3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
        Part Number                   Description               Standard Process Price
        -----------                   -----------               ----------------------
<S>                                   <C>                       <C>
        [***]                         [***]                     [***]
</TABLE>

2.      3" GaAS HBT Wafers (Circuits designed by Buyer)
        Maximum of Ninety (90) Wafers for sale, transaction completed by
December 31, 1998.

<TABLE>
<CAPTION>
        Part Number                   Description               Standard Process Price
        -----------                   -----------               ----------------------
<S>                                   <C>                       <C>
        [***]                         [***]                     [***]
</TABLE>

3.      Layout support for Stanford Microdevices Product masksets. (Does not
        include cost for or purchase of maskset. Buyer will purchase and supply
        maskset.)

<TABLE>
<CAPTION>
                               Product                          Standard Process Price
                               -------                          ----------------------
<S>                                                             <C>
        Three (3) circuits or less (Production)                        [***]
        Greater than three (3) circuits                                [***]
</TABLE>

4.      TRW Evaluation of [***] Coating vs. a Layout change on Darlington
        Amplifiers and Implementation study - [***] Payment Schedule: [***]
        shall be due upon execution of this Amendment. The balance is due upon
        completion of the implementation study. Such completion shall be
        evidenced by Completion Certificate signed by TRW.

[***]

* 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.
<PAGE>   26

B.      MINIMUM QUANTITIES DURING TERM

<TABLE>
<CAPTION>
                    Product                 Number of Wafers
                    -------                 ----------------
<S>                                         <C>
        3" GaAs Process Wafers                     [***]
</TABLE>

C.      SITE
        Stanford Microdevices
        522 Almanor Avenue
        Sunnyvale, CA 94086

D.      DELIVERY SCHEDULE
        Wafers will be shipped to Buyer not later than ten (10) weeks from the
        first Monday after receipt of valid order.

E.      LIFE TIME BUY OPTION
        TRW agrees to provide up to [***] wafers, less the total number of
        wafers previously delivered to Buyer under TRW Sales Numbers 65487 and
        66002, upon TRW's notification to buyer that TRW will obsolete or
        upgrade its HBT MMIC fabrication process. TRW will provide this
        notification to Buyer at least six months prior to the time that TRW
        will no longer accept orders for said Product. A delivery schedule will
        be negotiated at the time the option is exercised, prior to TRW's
        initiating performance of the option.

* 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.
<PAGE>   27

                     CONTRACT CHANGE NOTICE AMENDMENT NO. 3
                                       TO
                       TRW/STANFORD WAFER SUPPLY AGREEMENT
                               AGREEMENT NO. 1A551

THIS AMENDMENT ("Amendment") is made and entered into and between Stanford
Microdevices, Inc. ("Buyer") and TRW Inc., by and through its Space and
Electronics Group, a corporation organized and existing under the laws of Ohio,
having offices at Redondo Beach, California, USA ("TRW").

        WHEREAS, Buyer and TRW entered into Agreement No. 1A551 with an
effective date of August 19, 1998.

        WHEREAS, Buyer and TRW desire to amend the Agreement in order to provide
for expedited production.

NOW THEREFORE, the parties agree to amend the Agreement as follows:

Exhibit 1B, Price and Minimum Annual Quantities, as revised through Revision 2
is deleted and replaced with Exhibit 1B- Revision 3 dated August 2, 1999 (Copy
attached).

The above changes constitute Contract Change Notice No. 3 to the Agreement.
Except as expressly provided hereinabove all other terms and conditions of the
Agreement shall apply herein and remain in full force and effect as previously
agreed to between Buyer and TRW. In the event of any conflict between the terms
of this Amendment and those of the Agreement, the terms of this Amendment will
be deemed to have superseded those of the Agreement and exclusively will govern
the matter in question.

Buyer:                                   TRW Inc.
                                         Space and Electronics Group

By: /s/ John Ocampo                      By: /s/ Patrick J. Reynolds
   ---------------------------------        ------------------------------------
Name:    John Ocampo                     Name:  Patrick J. Reynolds
Title:   President & CEO                 Title: Contracts Manager
         Stanford Microdevices, Inc.

Date:    8/4/99                          Date:    8/11/99

<PAGE>   28

                             EXHIBIT 1B - REVISION 3
          PRICE, MINIMUM ANNUAL QUANTITIES, DELIVERY SCHEDULE AND SITE
                                 AUGUST 2, 1999

A.      PRICE

1.      3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
        Part Number              Description                Standard Process Price
        -----------              -----------                ----------------------
<S>                              <C>                        <C>
        [***]                    [***]                      [***]
</TABLE>

2.      3" GaAs HBT Wafers (Circuits designed by Buyer)
        Maximum of [***] Wafers for sale, transaction completed by December 31,
1998.

<TABLE>
<CAPTION>
        Part Number                       Description         Standard Process Price
        -----------                       -----------         ----------------------
<S>                                       <C>                 <C>
        [***]                             [***]               [***]
</TABLE>

[***]

3.      Layout support for Stanford Microdevices Product masksets. (Does not
        include cost for or purchase of maskset. Buyer will purchase and supply
        maskset.)

<TABLE>
<CAPTION>
                             Product                          Standard Process Price
                             -------                          ----------------------
<S>                                                           <C>
        Three (3) circuits or less (Production)                        [***]
        Greater than three (3) circuits                                [***]
</TABLE>

4.      TRW Evaluation of [***] Coating vs. a Layout change on Darlington
        Amplifiers and Implementation study - [***] Payment Schedule: [***]
        shall be due upon execution of Amendment No. 2. The balance is due upon
        completion of the implementation study. Such completion shall be
        evidenced by Completion Certificate signed by TRW.

* 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.
<PAGE>   29

        5.     Accelerated Lot Option(1)

<TABLE>
<CAPTION>
                            Deliverable             Standard Process Price
                            -----------             ----------------------
<S>                         <C>                         <C>
                            [***]                       [***]
</TABLE>

Note 1) Only one (1) order for an Accelerated lot can be accepted for processing
at any time from all Stanford Microdevices contracts.

Note 2) Accelerated lot pricing is only valid if wafers are shipped to Buyer not
later than 45 days from receipt of order or lot start, whichever is later. TRW
will deliver a minimum lot start. For a lot that is designated as Accelerated
after it has already started fabrication, the shipment date will be determined
as follows; 1+(1-EV) x 45 days from the time the lot is designated Accelerated
at TRW. EV equals the Earned Value or percent complete of the in-process lot.

Note 3) If the shipment date to Stanford Microdevices is 46 days or later (or as
defined above for a lot in process) from receipt of order or lot start, option
price shall not be charged. The option is available when ordered in conjunction
with a production lot or for a lot in process.

B.      MINIMUM QUANTITIES DURING TERM

<TABLE>
<CAPTION>
                             Product                              Number of Wafers
                             -------                              ----------------
<S>                   <C>                                             <C>
                      3" GaAs Process Wafers                          [***]
</TABLE>

C.      SITE
        Stanford Microdevices
        522 Almanor Avenue
        Sunnyvale, CA 94086

D.      DELIVERY SCHEDULE
        Wafers will be shipped to Buyer not later than ten (10) weeks from the
        first Monday after receipt of valid order.

E.      LIFE TIME BUY OPTION
        TRW agrees to provide up to [***] wafers, less the total number of
        wafers previously delivered to Buyer under TRW Sales Numbers 65487 and
        66002, upon TRW's notification to buyer that TRW will obsolete or
        upgrade its HBT MMIC fabrication process. TRW will provide this
        notification to Buyer at least six months prior to the time that TRW
        will no longer accept orders for said Product. A delivery schedule will
        be negotiated at the time the option is exercised, prior to TRW's
        initiating performance of the option.

* 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>   30

                     CONTRACT CHANGE NOTICE AMENDMENT NO. 4
                                       TO
                       TRW/STANFORD WAFER SUPPLY AGREEMENT
                               AGREEMENT NO. 1A551

THIS AMENDMENT ("Amendment") is made and entered into and between Stanford
Microdevices, Inc. ("Buyer") and TRW Inc., by and through its Space and
Electronics Group, a corporation organized and existing under the laws of Ohio,
having offices at Redondo Beach, California, USA ("TRW").

        WHEREAS, Buyer and TRW entered into Agreement No. 1A551 with an
effective date of August 19, 1998.

        WHEREAS, Buyer and TRW desire to amend the Agreement in order to provide
for expedited production.

NOW THEREFORE, the parties agree to amend the Agreement as follows:

Article 3, Effective Date and Term: Delete "31 August 1999" and replace with "31
December 2000."

Article 13, Notices: Delete "Mr. Edward Cornejo, Phone 310-814-2001" and replace
with "Mr. Patrick J. Reynolds, Phone: 310-812-7602".

Article 15, Intellectual Property, Section 15.3 Marking: Delete "Messrs. Ed
Cornejo and Bob Van Buskirk" and replace with "Mr. Patrick J. Reynolds".

Exhibit 1B, Price and Minimum Annual Quantities, as revised through Revision 3
is deleted and replaced with Exhibit 1B- Revision 4 dated November 23, 1999
(Copy attached).

Add the following exhibit: Exhibit 1D, Time and Material (T&M) Labor Rates,
Calendar Years 1999 and 2000, dated November 23, 1999.

The above changes constitute Contract Change Notice No. 4 to the Agreement.
Except as expressly provided hereinabove all other terms and conditions of the
Agreement shall apply herein and remain in full force and effect as previously
agreed to between Buyer and TRW. In the event of any conflict between the terms
of this Amendment and those of the Agreement, the terms of this Amendment will
be deemed to have superseded those of the Agreement and exclusively will govern
the matter in question.

Buyer:                                    TRW Inc.
                                          Space & Electronics Group

By: /s/ Jerry Quinnell                   /s/ Wes Bush
   --------------------------------      ---------------------------------------
Name:    Jerry Quinnell                   Name:    Wes Bush
Title:   Chief Operating Officer          Title:   Vice President and General
         Stanford Microdevices, Inc.               Manager Telecommunication
                                                   Programs Division

Date:                                     Date:

                                 TRW PROPRIETARY

<PAGE>   31

A.      PRICE MQP PRICE SUBJECT TO MINIMUM QUANTITY PURCHASE (MQP) TERMS IN "B."
        BELOW.

1.      3" GaAs HBT Wafers (Darlington Amplifiers)

<TABLE>
<CAPTION>
        Mask Name              MQP Price       Reversion Price
        ---------              ---------       ---------------
<S>                            <C>              <C>
        [***]                  [***]            [***]
</TABLE>

2.      3" GaAs HBT Wafers (Circuits designed by Buyer)

<TABLE>
<CAPTION>
        Part Number           Description     MQP Price          Reversion Price
        -----------           -----------     ---------          ---------------
<S>                           <C>             <C>                 <C>
        [***]                 [***]           [***]               [***]
</TABLE>

[***]

3.      LINE ITEM 3. TASK, "LAYOUT SUPPORT FOR STANFORD MICRODEVICES PRODUCT
        MASKSETS", IS HEREIN DELETED IN ITS ENTIRETY.

4.      Time & Material (T&M) Engineering Support for Failure Analysis and
        Device Troubleshooting, Mask Layouts, and related support, shall be
        billed per the hourly rates per Exhibit 1D. Material and Other Direct
        Costs (ODC) will be billed as incurred.

5.      LINE ITEM 4. TASK, "TRW EVALUATION OF [***] COATING VS. A LAYOUT
        CHANGE ON DARLINGTON AMPLIFIERS AND IMPLEMENTATION STUDY - [***], IS
        HEREIN DELETED IN ITS ENTIRETY.

* 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.

                                       1

                                 TRW PROPRIETARY

<PAGE>   32

        6.     Accelerated Lot Option(1)

<TABLE>
<CAPTION>
     Deliverable          Standard Process Price
     -----------          ----------------------
<S>                       <C>
     [***]                [***]
</TABLE>

 Note 1) Only one (1) order for an Accelerated lot can be accepted for
 processing at any time from all Stanford Microdevices contracts.

 Note 2) Accelerated lot pricing is only valid if wafers are shipped to Buyer
 not later than 45 days from receipt of order or lot start, whichever is later.
 TRW will deliver a minimum of three (3) wafers for a six (6) wafer lot start.
 For a lot that is designated as Accelerated after it has already started
 fabrication, the shipment date will be determined as follows; 1+(l-EV) x 45
 days from the time the lot is designated Accelerated at TRW. EV equals the
 Earned Value or percent complete of the in-process lot.

 Note 3) If the shipment date to Stanford Microdevices is 46 days or later (or
 as defined above for a lot in process) from receipt of order or lot start,
 option price shall not be charged. The option is available when ordered in
 conjunction with a production lot or for a lot in process.

B.      MINIMUM QUANTITIES DURING CALENDAR YEAR 2000
The minimum purchase quantity of HBT wafers for the year 2000 shall be:

<TABLE>
<CAPTION>
             Product                    Number of Wafers
             -------                    ----------------
<S>                                      <C>
        3" GaAs HBT Wafers               [***]
</TABLE>

If Buyer fails to purchase the minimum quantity, the price reverts to the
reversion price of [***] per wafer, TRW Darlington Amplifiers, and [***] per
wafer, SMD Circuits designed by Buyer. Prices are good and the order quantity is
measured for all deliveries starting 1 January 2000, no matter when they started
or when they were ordered. Releases against this delivery quantity will still be
by purchase order as it has been in 1999.

C.      SITE
        Stanford Microdevices, Inc.
        522 Almanor Avenue
        Sunnyvale, CA 94086

D.      DELIVERY SCHEDULE
        Wafers will be shipped to Buyer not later than ten (10) weeks from the
        first Monday after receipt of valid order.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the

                                       2

                                 TRW PROPRIETARY

<PAGE>   33
                             EXHIBIT 1B - REVISION 4
          PRICE, MINIMUM ANNUAL QUANTITIES, DELIVERY SCHEDULE AND SITE
                               NOVEMBER 23, 1999

        E.     LIFE TIME BUY OPTION
               TRW agrees to provide up to [***] wafers, less the total number
               of wafers previously delivered to Buyer under this contract, and
               TRW Sales Numbers 65487 and 66002, upon TRW's notification to
               buyer that TRW will obsolete or upgrade its HBT MMIC fabrication
               process. TRW will provide this notification to Buyer at least six
               months prior to the time that TRW will no longer accept orders
               for said Product. A delivery schedule will be negotiated at the
               time the option is exercised, prior to TRW's initiating
               performance of the option.

* 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

                                 TRW PROPRIETARY

<PAGE>   34

                                   EXHIBIT 1D
                       TIME AND MATERIAL (T&M) LABOR RATES
                          CALENDAR YEARS 1999 AND 2000
                                NOVEMBER 23, 1999

<TABLE>
<CAPTION>
                                                HOURLY RATES
Acct. Code            Labor Category          1999          2000
----------            --------------         -------       -------
<S>                   <C>                    <C>           <C>
[***]                 [***]                  [***]         [***]
</TABLE>

Notes:  1) [***]

        2) [***]

* 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>   1

                                                                    EXHIBIT 10.8

                               FOUNDRY AGREEMENT

This Agreement (the "Agreement") is entered into this 1st day of September, 1999
by and between

TEMIC Semiconductor GmbH, having its registered office at Theresienstrasse 2,
POB 3535, 74072 Heilbronn, Germany, hereinafter referred to as `TEMIC'

and

Stanford Microdevices Inc., having its registered office at 522 Almanor Avenue,
Sunnyvale, CA 94086, USA, hereinafter referred to as `SMI'.

TEMIC desires to sell, and SMI desires to buy, semiconductor wafers and parts to
be manufactured by TEMIC using SMI proprietary designs, pursuant to the terms
and conditions of this Agreement.

The provisions of this Agreement do not alter the provisions specified in the
License Agreement between SMI and TEMIC. The Agreements complement each other.

NOW, THEREFORE; in consideration of these premises, and the mutual promises and
conditions in this Agreement, the parties agree as follows:

1.      SCOPE OF FOUNDRY SERVICE

        1.1     Subject to the terms and conditions contained in Section 13 of
                this Agreement, SMI and TEMIC hereby will disclose know-how,
                copyrights and mask work rights to make and have made wafers (as
                defined in Exhibit A) at TEMIC fabrication facility in
                Heilbronn, Germany, or any TEMIC facility previously qualified
                by SMI, in accordance with the Wafer Specifications set forth in
                Exhibit B, to test such wafers, and to sell such wafers only to
                SMI at the prices established in Exhibit A.

                "Know-how", when used in this Agreement, shall mean all of SMI
                designs, techniques, technology, trade secrets, proprietary
                information and other confidential information disclosed by SMI
                to TEMIC pursuant to this Agreement which SMI, at its sole
                discretion, determines is necessary for TEMIC to produce wafers
                under this Agreement.

        1.2     TEMIC shall provide appropriate masks, wafer processing of
                engineering runs and process validation runs (multi-project
                wafers) at the prices per Exhibit A.

        1.3     For all prices set forth in Exhibit A or in any amendment
                thereto, such prices shall be no less favourable for SMI than
                are extended to TEMIC customers, other than the TEMIC Companies,
                for comparable goods or services supplied in comparable
                quantities.

        1.4     During this agreement TEMIC will not sell products, which are
                pin-to-pin compatible to SMI products, [***]

[***] 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.

<PAGE>   2

                However in no case shall TEMIC sell in any form products
                exclusively developed by SMI to anyone other than SMI. This does
                not preclude TEMIC from selling foundry services to anyone
                (including those above) that do not include SMI intellectual
                property.

2.      PAYMENT

        2.1     SMI shall pay in United States Dollars for wafers supplied by
                TEMIC to SMI hereunder within [***] days after SMI receipt of
                an invoice from TEMIC which shall be submitted to SMI upon
                shipment.

        2.2     SMI shall bear all costs to produce the initial mask set
                necessary to produce any specific product, or mask changes to
                complete design or process changes initiated by SMI. SMI shall
                bear all costs for replacement masks or new masks to complete
                process changes initiated by SMI as well as all costs for
                replacement of masks worn of during production at TEMIC.

3.      ORDERS, WARRANTY AND CLAIMS

        3.1     TEMIC shall supply wafers, parts and other production services
                to SMI in accordance with written purchase orders to be provided
                by SMI. Each purchase order shall include the following:

                (a)     purchase order number

                (b)     product name

                (c)     manufacturing process

                (d)     quantities

                (e)     unit wafer prices and total prices

                (f)     desired shipment date (subject to Section "DELIVERY
                        TIMES" below)

                (g)     delivery instructions

                (h)     any special requests or comments

                Subject orders shall become effective only upon the written
                acceptance thereof by TEMIC within 5 working days.

                The terms of this Agreement shall prevail over any conflicting
                terms in any order documents, invoices or similar documents
                exchanged between the parties hereunder.

        3.2     SMI shall provide TEMIC every month with a good faith rolling
                forecast of its wafer, parts and other production service
                requirements on a monthly basis, and TEMIC shall use its best
                efforts to make available to SMI sufficient fabrication capacity
                and

                                      -2-

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<PAGE>   3

                engineering support to meet such forecast requirements. In
                addition to the status reports established under Section 5
                below, the parties shall provide one another with reasonable
                notice about changes in desired shipping or production
                schedules, availability of capacity or other similar situations.
                The forecast is considered as firmorder for the period of 0-60
                days, can change by [***] in the period of 60-120 days and can
                vary by [***] for the period >120 days.

        3.3     Any other provision of this Agreement notwithstanding, if TEMIC
                shall be delayed more than sixty (60) days in the production and
                delivery of wafers for any particular SMI purchase order,
                regardless of cause, SMI may, at its reasonable discretion,
                provided that TEMIC is unable to provide a recovery program
                acceptable to SMI, cancel such order effective upon written
                notice thereof to TEMIC. Upon resubmission of any such cancelled
                order by SMI and acceptance thereof by TEMIC. TEMIC shall then
                use its best efforts to give a priority delivery date to such
                new order. If TEMIC delays production and delivery more than
                sixty (60) days under three (3) or more SMI purchase orders in
                any six (6) months' period under this Agreement, SMI may
                terminate this Agreement immediately by sending notice of
                termination to TEMIC.

        3.4     TEMIC gives warranty on workmanship and material for [***]
                months. In case of warranty claims by SMI, TEMICs warranty is
                limited to the replacement of wafers.

        3.5     TEMICs standard Terms & Conditions (Exhibit D) apply if not
                otherwise specified in the contract.

4.      DELIVERY TIMES

        4.1     Unless otherwise agreed to in writing by SMI, delivery times
                upon acceptance of a SMI purchase order by TEMIC shall be:

                (a)     twelve (12) weeks for production wafers, with the target
                        to go down to eight (8) weeks within Q4/99

                (b)     eight (8) weeks for engineering masks and wafers

                TEMIC shall use its best efforts to achieve such delivery times
                on a regular and consistent basis. However, since these delivery
                times correspond to the actual production cycles for wafers, no
                recovery is possible in case of accidental misprocessing of
                wafer batches.

        4.2     In the event of a third party suit or claim against SMI and/or
                TEMIC involving a Third Party Right (as defined in Section 15),
                TEMIC may, at its reasonable discretion and upon advice of its
                legal counsel, suspend or terminate the production and supply of
                any wafers to SMI if such continued production and supply would
                or could cause TEMIC to violate such Third Party Right. TEMIC
                shall discuss any such suspension or termination with SMI and
                shall give due opportunity for SMI to satisfy the provisions of
                Section 15, prior to the implementation thereof. In case TEMIC

                                      -3-

[***] 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.

<PAGE>   4

                interrupts production due to circumstances described
                hereinabove, it shall provide reasonable assistance to SMI in
                order to re-establish deliveries of wafers, if appropriate, by
                subcontracting to another foundry.

5.      STATUS REPORTS

        5.1     Upon request from SMI, TEMIC shall provide SMI with
                work-in-process, in SMI content and format, status reports, with
                projection of wafer-out dates.

        5.2     Any deviations from acknowledged delivery dates due to
                unforeseen manufacturing problems shall be reported to SMI
                within 3 working days when such problems become apparent.

6.      PROCESS HOLDS

        6.1     SMI may request in writing that TEMIC hold engineering wafer
                processing at mask levels of [***] and [***] for a maximum
                cumulative period of [***] days, and TEMIC shall accept such
                requests.

7.      PROCESS CHANGES

        7.1     Either party may request the other party to accept changes in
                the production process for wafers, provided, however, any
                material changes to the production process for wafers that has
                been previously approved by SMI for production of its wafers,
                including changes to procedures, flow or specifications, may
                only be made if such changes are first approved in writing by
                SMI, which approval shall not be unreasonably withheld.

        7.2     Changes requiring written approval are major changes as
                described in Exhibit C.

8.      OWNERSHIP AND RESPONSIBILITY

        8.1     TEMIC acknowledges and agrees that SMI shall own all rights,
                including, without limitation, all patent rights, copyrights,
                trade secret rights, and mask work and similar rights, in and to
                the wafers and other products produced by TEMIC for SMI
                hereunder, and in the know-how disclosed by SMI to TEMIC
                hereunder. TEMIC shall own all rights in and to the production
                process and all know-how independently developed by TEMIC and
                used in the manufacturing of the wafers. SMI and TEMIC
                acknowledge that TEMIC is acting only as a foundry.

9.      DISCONTINUATION OF PRODUCTION

        9.1     In the event SMI cannot consume all processed wafers, TEMIC will
                stop production immediately upon written notice of SMI and
                advice the work-in-process status to SMI. In lieu of paying the
                order value for completed wafers, the following compensation may
                be calculated:

                                      -4-

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with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

<PAGE>   5

                (a)     For any wafers due for delivery in less than 8 weeks,
                        irrespective of the state of completion and in addition
                        to the charges under (b), (c) and (d) below
                                                                           [***]

                (b)     For any wafers processed up to Poly-l              [***]

                (c)     For any wafers processed up to Metal-1
                        (or Metal-2 if applicable)                         [***]

                (d)     For any wafers processed beyond Metal              [***]

                The percentages relate to the wafer prices per Exhibit A.

                The quantities in steps (b), (c) and (d) have to relate
                reasonably to the total quantity of wafers ordered.

        9.2     TEMIC agrees to provide up to [***] wafers to SMI upon
                notification that TEMIC will obsolete or upgrade its wafer
                fabrication process. TEMIC will provide notification at least 6
                months in advance prior to time of obsolescence or major process
                change. Delivery of wafers ordered under this provision will be
                at a mutually agreeable rate.

        9.3     1 year after the final production, TEMIC may scrap the masks or
                send the masks to SMI on SMIs request.

10.     TEMIC QUALITY INSPECTION

        10.1    TEMIC shall ship only such wafers or parts as have passed visual
                inspection and electrical testing (PCM) by TEMIC, in accordance
                with the specifications set forth in Exhibit B (the
                "Specifications Used By Foundry to Build Wafers").

        10.2    SMI and/or its appointed customers shall be entitled upon any
                reasonably written request and during normal business hours, and
                at its sole expense, to witness inspection and testing of all
                wafers manufactured by TEMIC for SMI under this Agreement and to
                audit the TEMIC quality control system to monitor the quality of
                wafers manufactured. If corrective actions require follow-up,
                additional, directly related audits are permitted, SMI
                personnel, in conducting such inspections or audits, shall be
                bound by TEMIC rules at its plants respecting visits by outside
                personnel.

        10.3    TEMIC shall keep and provide reasonable access by SMI to all
                TEMIC test, inspection, processing, and full tracing of all
                wafers, from fabrication to shipment, including scraps, normally
                maintained for a wafer lot for each lot of wafers processed, for
                SMI on the same terms as it handles its standard production
                records for other customers. TEMIC shall not destroy records
                pertaining to the wafers within 18 months of their creation, and
                without first giving SMI thirty (30) days written notice of such
                intended destruction and the right to obtain copies of such
                records for SMI own files and at SMI own expense.

                                      -5-

[***] 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.

<PAGE>   6

        10.4    If TEMIC experiences any unusual technical problems in
                manufacturing wafers pursuant to this Agreement, TEMIC may
                request that SMI assist TEMIC in resolving such technical
                problems, and SMI shall use its best efforts to assist TEMIC in
                resolving such problems as promptly as possible. If SMI
                personnel are requested by TEMIC to travel to TEMIC facilities
                to assist TEMIC in resolving such technical problems, SMI shall
                bear all of its own overhead costs and personnel and travel
                expenses. TEMIC will provide adequate technical equipment for
                carrying out effective analyses of the perceived technical
                problems to SMI personnel while working at TEMIC facilities. If
                TEMIC and SMI agree in good faith that the perceived problems
                are not related to the design of SMI products, TEMIC will
                reimburse travel expenses, including room and board.

        10.5    Should TEMIC discover or be informed about a condition that may
                affect the quality of reliability of wafers in process or
                shipped to SMI will inform SMI immediately and present to SMI
                all pertinent data.

11.     LOC INSPECTION

        11.1    SMI shall conduct its own inspection of shipped wafers or parts
                in accordance with the Wafer Specifications within fifteen (15)
                business days after receipt thereof by SMI. If any wafers or
                parts shipped by TEMIC do not meet Wafer Specifications upon
                such inspection, SMI shall immediately notify TEMIC in writing
                of the rejection of such shipment and the lot number(s)
                affected, and the specific defect of deficiency identified by
                the inspection. SMI shall hold such materials in a safe and
                secure facility and make them available for inspection by TEMIC,
                subject to Section 11.5.

        11.2    If appropriate TEMIC may direct SMI to return such defective
                materials to TEMIC for further inspection, testing or other
                procedures. Any such direction shall be accomplished by an TEMIC
                Return Material Authorization ("RMA"), including a specific
                tracer number to be prominently displayed on the shipping
                container for such returned materials. Upon issuance of an RMA,
                SMI shall promptly ship such materials together with all
                relevant data from the SMI inspection to the designated TEMIC
                facility, freight and insurance prepaid, in the original
                shipping container or containers of equivalent protective
                constitution.

        11.3    SMI may return such wafers or parts hereunder for a credit and
                may recover its return shipping and insurance expenses from
                TEMIC if, and only if, defects in such materials actually exist
                as indicated in the SMI rejection notice and were not caused by
                SMI own misuse unauthorized modifications, neglect, improper
                testing, attempts to repair, or by accident, fire or other
                hazard, while such materials are in the possession or control of
                SMI.

        11.4    TEMIC and SMI acknowledge that some wafers or parts which do not
                meet Wafer Specifications and/or are broken may nevertheless
                still be expected to yield a functional and reliable produce. If
                SMI elects to purchase such below-specification

                                      -6-
<PAGE>   7

                wafers or parts, shall be entitled to a partial credit against
                the TEMIC invoice amount as may be reasonably agreed upon in
                writing by SMI and TEMIC. If SMI and TEMIC fail to agree upon a
                partial credit amount, then the below-specification wafers or
                parts shall be returned to TEMIC at TEMICs expense for
                destruction by TEMIC. TEMIC shall not sell or provide access to
                such wafers to any third party.

        11.5    SMI and TEMIC agree that conformance to the specifications
                within this document does not necessarily indicate the wafers
                are free of defects in material and/or workmanship, and that
                subsequent processing or testing may uncover such defects in
                material and/or workmanship. Warrant claims of such nature shall
                be made by SMI no later than 30 working days after the first
                indication of a potential problem to SMI and TEMIC agree to use
                their best efforts to correct such defects and provide each
                other with a reasonable amount of data or information to effect
                a cure.

        11.6    Any other provision of this Agreement to the contrary
                notwithstanding, no claim by SMI with respect to wafers, parts
                or services delivered to SMI thereunder shall be greater in
                amount than the purchase price of the order in respect of which
                damages are claimed. IN NO EVENT SHALL TEMIC BE LIABLE FOR ANY
                CONSEQUENTIAL, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES, HOWEVER
                CAUSED, WITH REGARD TO ANY WAFERS, PARTS OR SERVICES DELIVERED
                HEREUNDER. REGARDLESS OF WHETHER TEMIC HAS BEEN INFORMED OF THE
                POSSIBILITY OF SUCH DAMAGES OR NOT.

12.     DELIVERY QUANTITIES

        12.1    Delivery quantities will match with ordered quantities as
                closely as possible; however, wafer shipments will always be
                done in integer multiples of production batches for the sake of
                lot traceability. A production batch is currently [***] wafers.
                In large volume continuous production, batches of [***] wafers
                are preferred for better economy of scale. SMI will, whenever
                possible, place orders in integer multiples of production
                batches and TEMIC will deliver and invoice the actually
                accomplished number of wafers (normally +0/-10 % of batch size).

13.     CONFIDENTIALITY

        13.1    Each party acknowledges that the information disclosed in
                connection with any transactions contemplated hereunder will
                contain the Confidential Information and trade secrets of the
                disclosing party, and will remain the property of the disclosing
                party ("Confidential Information"). A party receiving any
                Confidential Information of the other party shall take all
                reasonable measures to keep and hold any such Confidential
                Information of the other party in strict confidence as it would
                be its own Confidential Information and shall not disclose such
                Confidential Information of the other party to any person, firm
                or corporation without the prior written consent of the party
                disclosing such Confidential Information. A party receiving
                Confidential Information of the other party shall not, except as
                may be authorized hereafter in

                                      -7-

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with the Commission. Confidential treatment has been requested with respect to
the omitted portions.

<PAGE>   8

                writing by the disclosing party, use any Confidential
                Information of the other party for any purpose not stated in
                this Agreement.

        13.2    A party receiving Confidential Information of the other party
                shall limit dissemination of and access to any Confidential
                Information of the other party to those employees or consultants
                of the receiving party who have a good faith need for such
                access to effectuate the purpose of this Agreement and who have
                executed a standard non-disclosure agreement with the receiving
                party.

        13.3    The obligations of the receiving party described in this Section
                shall survive termination or expiration of this Agreement and
                shall continue in full force and effect with respect to any
                information as long as it remains Confidential Information under
                this Section 13.

        13.4    A party receiving Confidential Information of the other party
                may disclose such information to subcontractors upon the prior
                written approval of the party disclosing the Confidential
                Information if such disclosure is necessary to perform its
                duties under this Agreement, and such approval shall not be
                unreasonably withheld. The receiving party shall cause its
                permitted subcontractors to sign a confidentiality agreement
                with substantially the same terms and conditions of this Section
                prior to disclosing Confidential Information of the other party
                to such subcontractors.

        13.5    Neither party shall have the obligation to the other party with
                respect to any information of the other party of any portion
                thereof which is:

                (a)     already known to the receiving party at the time of
                        receiving same as shown by the receiving party's files
                        and records in existence at the time of disclosure;

                (b)     or hereafter becomes publicly known through no wrongful
                        act of the receiving party;

                (c)     rightfully received from a third party without
                        restriction on disclosure and without breach of this
                        Agreement;

                (d)     now or hereafter independently developed by the
                        receiving party and without reliance in any degree upon
                        any Confidential Information of the other party;

                (e)     furnished by the disclosing party to a third party
                        without any restriction upon disclosure comparable to
                        that set forth in this Agreement; or

                (f)     revealed pursuant to a requirement of a governmental
                        agency or lay, provided that the receiving party
                        provides prompt written notice of such requirement or
                        law so as to afford the disclosing party an opportunity
                        to intervene and oppose disclosure.

        13.6    The parties agree that any material breach of Section 13 will
                cause irreparable injury and that injunctive relief in a court
                of competent jurisdiction will be appropriate to

                                      -8-
<PAGE>   9

                prevent either an initial or continuing breach of such
                nondisclosure and confidentiality provisions herein in addition
                to any other relief to which the owner of such Confidential
                Information may be entitled.

        13.7    Insofar as the performance hereunder involves the transfer of
                products and technologies subject to the United States Export
                Regulations (15 C.F.R., Parts 779, et seq.), the parties hereto
                warrant to fully comply with all pertinent regulations.

14.     TERM

        14.1    This Agreement may be terminated by SMI or TEMIC upon written
                notice to the other party:

                (a)     in the event the other party files a petition in
                        bankruptcy, or in the event all or part of the other
                        party's assets are assigned to a trustee or receiver, or
                        if an involuntary petition in bankruptcy is filed by a
                        third party and the other party does not resolve such
                        petition in its favour within sixty (60) days after
                        filing and notice thereof; or

                (b)     in the event of a substantial breach of a material term
                        of this Agreement not remedied by the other party in
                        breach within thirty (30) days after receipt of written
                        notice by the terminating party specifying such breach
                        and requesting that it be remedied.

                (c)     immediately for any violations or Section 13.

        14.2    IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR
                ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, OR SPECIAL DAMAGES,
                HOWEVER CAUSED, AND ON ANY THEORY OF LIABILITY, ARISING OUT OF
                THE TERMINATION OF THIS AGREEMENT.

        14.3    TEMIC shall not be liable for any damages caused by SMI
                products, due to design, packaging, testing and whatsoever.

        14.4    This agreement shall be in effect for 60 months and shall be
                self renewing annually. Should TEMIC decide to not renew this
                agreement the discontinuation of product clause (Section 9.1)
                becomes valid.

15.     INFRINGEMENT

        15.1    TEMIC warrants to SMI that TEMIC owns the know-how, copyrights,
                mask work rights, and other intellectual rights solely to enable
                TEMIC to produce the wafers or parts for SMI lawfully. SMI
                hereby indemnifies and holds TEMIC and its directors, officers,
                employees and agents harmless from any claim, suit or other
                liability (including reasonable attorneys, fees and costs)
                arising out of or resulting from a material breach of the
                foregoing warranty.

                                      -9-
<PAGE>   10

        15.2    SMI warrants to TEMIC that SMI owns, or otherwise has the right
                to use on behalf of TEMIC all applicable intellectual property
                rights to the manufacturing processes not otherwise licensed to
                SMI by TEMIC which will be used by TEMIC to produce the wafers
                or parts. SMI hereby indemnifies and holds TEMIC and its
                directors, officers, employees and agents harmless from any
                claim, suit or other liability (including reasonable attorneys,
                fees and costs) arising out of or resulting from a material
                breach of the foregoing warranty.

        15.3    In the event of the institution of any suit or claim against an
                indemnified party alleging that TEMIC manufacture of the wafers
                or parts violates any circuit design patent or mask work,
                manufacturing process patent, or other circuit design or
                manufacturing process proprietary right of a third party
                recognised under the laws of the United States of America
                (hereinafter "Third Party Rights"), or shall become the subject
                of any claim for violation of Third Party Rights, the
                indemnified party shall promptly notify the indemnifying party
                of such suit or claim and provide reasonable details thereof.
                Failure to give such notice, if it materially impairs the
                ability of the indemnifying party to defend against such suit or
                claim, shall terminate any duty of indemnification under this
                Section.

        15.4    The indemnifying party shall have sole control of any action or
                settlement negotiations relating to any such suit or claim, and
                the indemnified party shall render all cooperation reasonably
                requested by the indemnifying party in defense of such suit or
                claim, provided that the indemnified party may retain its own
                counsel at its own expense. The indemnified party shall not
                settle or attempt to settle any such suit or claim without the
                express written consent of the indemnifying party.

        15.5    In addition to its duty of indemnification hereunder, the
                indemnifying party may, at its sole discretion and expense:

                (a)     alter or change the circuit design or manufacturing
                        process, as may be the case, so as to make said design
                        or process non-infringing of any third Party Right; or

                (b)     obtain permission from the affected thirty party to use
                        the Third Party right, it being the intention of both
                        parties to continue the performance of this Agreement if
                        commercially reasonable to do so.

                If neither of these methods is appropriate to eliminate the
                infringement of the Third Party Right, the indemnifying party at
                its sole discretion may terminate this Agreement or withdraw the
                infringing products without any additional obligation or
                liability to the indemnified party, for lost opportunity or
                profits or otherwise, due to such termination.

                                      -10-
<PAGE>   11

16.     NOTICES

        16.1    Any and all notices or other communications required or
                permitted by this Agreement or by law to be served on or given
                to either party hereto by the other party shall be in writing
                and shall be deemed duly served and given when personally
                delivered to either of the parties to whom it is directed, or in
                lieu of such personal service, on the same day of transmission
                by telex or confirmed facsimile or seven (7) days after deposit
                in the mail, first class international air mail postage prepaid,
                or two (2) business days after being sent by overseas courier,
                addressed to:

                Stanford Microdevices Inc.         TEMIC Semiconductor GmbH
                522 Almanor Avenue                 Theresienstrasse 2
                Sunnyvale, CA 94086                D-74072 Heilbronn
                Attn. of: Gerald L. Quinnell       Attn. of: Dominik Winau

                                                   Copy to:
                                                   AMTEL Corporation
                                                   2325 Orchard Parkway
                                                   San Jose, CA 95131
                                                   Attn. of: Mike Ross

                                                   Copy to:
                                                   TEMIC Semiconductor
                                                   160 Street Road
                                                   Oxford, PA 19363
                                                   Attn. of: Rodney Hsing

                Either party may change the addresses above upon notice duly
                given in writing to the other party.

17.     ARBITRATION

        17.1    Except for any claim based upon an alleged or actual violation
                of Section 13 above with respect to confidentiality and
                non-disclosure, any dispute relating to the interpretation or
                performance of this Agreement or the grounds for the termination
                thereof shall be resolved at the request of either party through
                final and binding arbitration as set forth herein. Such
                arbitration shall be conducted by three (3) arbitrators, at
                least one (1) of whom shall have reasonable technical knowledge
                of and experience in the semiconductor industry, selected by the
                mutual agreement of the parties, or, failing such agreement, as
                selected according to the applicable rules specified below. The
                parties shall bear the costs of such arbitrators equally.

        17.2    Arbitration shall be conducted in the English language in
                Sacramento, California, USA, under the Commercial Arbitration
                Rules of the American Arbitration Association (the "AAA") and
                its Supplementary Procedures for International Commercial
                Arbitration, except as superseded by the provisions of this
                Section. The

                                      -11-
<PAGE>   12

                arbitration panel shall operate in all respects by a majority
                vote of the arbitrators. The parties shall be entitled to all
                discovery permitted under Section 1283.05 of the California Code
                of Civil Procedure, with all such discovery to be completed
                within ninety (90) days of the commencement of the arbitration,
                provided, however, that if TEMIC is not entitled to discovery
                under Germany's or other law, SMI shall not be entitled to
                discovery. Upon completion of the arbitration bearing, the
                arbitrators shall promptly render their decision and award,
                which shall be in writing and which shall state the reasons for
                the conclusions reached.

        17.3    The arbitrators shall have the power to render any award for
                ordinary damages or injunctive relief but may not award punitive
                damages. If judicial enforcement or review of such arbitration
                award is sought by either party, judgement may be entered upon
                such award in any court of competent jurisdiction in the United
                States or Germany, as the case may be.

        17.4    The prevailing party in any such judicial enforcement,
                arbitration or review proceeding or in any other legal
                proceeding relating to the interpretation or performance of this
                Agreement or the grounds for termination thereof shall be
                entitled to its reasonable attorneys' fees and related other
                costs (including the costs for any interpreters or translators)
                in addition to any other amount of recovery ordered by such
                court. For purposes of this Section, a "prevailing party" shall
                be that party which recovers more than one-half (1/2) of the
                amount set forth in its claim in the arbitration or which
                defeats the other party's claim by more than one-half, or which
                achieves a comparable result in respect of injunctive relief.

18.     MISCELLANEOUS

        18.1    This document constitutes the entire agreement of SMI and TEMIC
                with regard to the subject matter hereof and supersedes all
                prior negotiations and agreements whether written or oral. The
                executed English language version of this Agreement and of any
                other documents prepared by the parties under this Agreement
                shall be controlling for all purposes.

        18.2    This Agreement may be amended only by a written document
                executed by authorized representatives of SMI and TEMIC.

        18.3    SMI and TEMIC acknowledge the need for certainty, orderliness
                and predictability essential to the performance of this
                agreement in international commerce. The parties further
                acknowledge that the choice of law to be applied by the parties
                or by a tribunal in the event of arbitration of litigation
                arising out of this Agreement is a material and bargained for
                provision upon which both parties have had the opportunity to
                consult with their respective legal advisors. In light of the
                foregoing, this Agreement shall be governed by and construed in
                accordance with the laws of the State of California, excluding

                (a)     its choice of law rules and

                                      -12-
<PAGE>   13

                (b)     the United Nations Convention on the International sale
                        of Goods.

        18.4    No right may be assigned, and no duty may be delegated, by
                either party under this Agreement except upon the written
                consent of the other party, and any attempted assignment and
                delegation without such consent shall be void.

        18.5    Notwithstanding the foregoing, however, either party shall be
                entitled to assign this Agreement, and all rights and
                obligations hereunder, to a successor to all or substantially
                all of its assets, whether by sale, merger, or otherwise,
                provided that either party indicating such assignment shall
                provide the other party with at least thirty (30) days prior
                written notice and cause such assignee to be bound by this
                Agreement. This agreement shall be binding upon and shall inure
                to the benefit of the parties hereto and their respective
                representatives, heirs, administrators, successors and permitted
                assigns except as otherwise provided herein.

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

        18.7    Except for the duty of payment for goods and services previously
                supplied, neither party shall be responsible or liable to the
                other party for non-performance or delay in performance of any
                terms or conditions of this Agreement due to acts of God, acts
                of governments, wars, riots, strikes or other labour disputes,
                shortages of labour or materials, or other causes beyond the
                reasonable control of the non-performing or delayed party,
                provided, however, non-performance or delay in excess of one
                hundred eighty (180) days shall constitute cause for termination
                of this Agreement by either party.

        18.8    This Agreement may be executed in any number of counterparts,
                each of which shall be deemed an original, but such counterparts
                together shall constitute only one and the same instrument.

        18.9    Any waiver (express or implied) by either party of any breach of
                this agreement shall not constitute a waiver of any other or
                subsequent breach.

        18.10   In the event any provision of this Agreement is held to be
                invalid or unenforceable, the valid or enforceable portion
                thereof and the remaining provisions of this Agreement will
                remain in full force and effect.

        18.11   Each party hereto is an independent contractor of the other, and
                neither shall be deemed an employee, agent, partner or joint
                venturer of the other. Neither party shall make any commitment,
                by contract or otherwise, binding upon the other nor represent
                that it has any authority to do so.

        18.12   Each party shall obey all applicable laws and regulations in the
                performance of its respective duties and tasks under this
                Agreement and shall use its best efforts to assist the other
                party to do likewise.

                                      -13-
<PAGE>   14

        18.13   Each party shall designate a single management representative
                who shall be the primary point of contact for that party in its
                relations with the other party hereunder, and each party may
                change its representative from time to time upon prior written
                notice to the other party. Initially, the SMI representative
                shall be Gerald L. Quinnell and the TEMIC representative shall
                be [***].

                IN WITNESS WHEREOF the parties have caused this agreement to be
                executed by their respective duly authorized representatives.

FOR STANFORD MICRODEVICES                          FOR TEMIC

<TABLE>
<S>                             <C>                         <C>
/s/ Gerald L. Quinnell          /s/ Dr. Dominik Winau       /s/ Dr. Frank Heinricht
----------------------          ----------------------      -----------------------
       (signature)                   (signature)                  (signature)
    Gerald L. Quinnell             Dr. Dominik Winau          Dr. Frank Heinricht
  Chief Operating Officer       Vice President Business     Chief Executive Officer
   Stanford Microdevices         Center Communications        TEMIC Semiconductors
                                  TEMIC Semiconductors

Sept 01, 1999                   09/09/99                     09/09/99
----------------------          ----------------------       -----------------------
       (date)                          (date)                        (date)
</TABLE>

                                      -14-

[***] 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.

<PAGE>   15

                                    EXHIBIT A

                               PRODUCT DESCRIPTION

                                     [***]

[***] 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.

<PAGE>   16
                                     [***]

[***] 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>   17

                                    EXHIBIT B

                                     [***]

[***] 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.

<PAGE>   18

                                     EXHIBIT C

[***]

All other changes are considered to be minor changes, unless otherwise mutually
agreed on in writing.

[***] 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.

<PAGE>   19

                                     EXHIBIT D

STANDARD TERMS AND CONDITIONS OF SALE

1.      GENERAL: This Agreement shall be governed by and interpreted in
        accordance with the laws of the State of California. This constitutes
        the entire Agreement between Buyer and Supplier with respect to the
        purchase and sale of the Products described on the face hereof and only
        representations or statements contained herein shall be binding upon
        Supplier as a warranty or otherwise. Acceptance or acquiescence in the
        course of performance rendered pursuant hereto shall not be relevant to
        determine the meaning of this writing even though the accepting or
        acquiescing party has knowledge of the nature of the performance and
        opportunity for objection. No addition to or modification of any of the
        terms and conditions specified herein shall be binding upon Supplier
        unless made in writing and signed by a duly authorized representative of
        Supplier. The terms and conditions specified herein shall prevail
        notwithstanding any variance from the terms and conditions of any order
        or other form submitted by Buyer for the Products set forth on the face
        of this Agreement ("Products"). To the extent that this writing may be
        treated as an acceptance of Buyer's prior offer, such acceptance is
        expressly made conditional on assent by Buyer to the terms hereof, and,
        without limitation, acceptance of the goods by Buyer shall constitute
        such assent. All cancellations and reschedules require a minimum of
        thirty (30) days notice for standard product and ninety (90) days notice
        for non-standard product, commencing 5 days after notice is received at
        the Temic facility that was designated to ship the product. All products
        scheduled for delivery during the respective thirty (30) or ninety (90)
        day period will be shipped unless an exception is negotiated with the
        Product Marketing Manager.

2.      PRICES AND TAXES:

        (a)     Prices shown are F.O.B. Supplier's plant. Regardless of any
                prices quoted by Supplier or listed on Buyer's order, any order
                is accepted only at the price shown on Supplier's Sales Order
                Acknowledgment of such order and Supplier reserves the right to
                revise such prices prior to shipment so as to reflect any
                increased cost to Supplier for materials used in the manufacture
                of the Products. Prices are also subject to revision when
                interruptions, engineering changes or modifications are caused
                or requested by Buyer. All prices are quoted, all orders are
                accepted, and all billings are rendered exclusive of all
                federal, state and local excise, transactions, sales, use and
                similar taxes. Consequently, in addition to the prices specified
                herein, the amount of any present or future excise,
                transactions, sales, use or similar tax applicable to the sale
                of a product hereunder shall be paid by Buyer. Such taxes, when
                applicable, Will appear as separate additional items on the
                invoice unless Supplier receives a proper tax exemption
                certificate from Buyer prior to shipment. All personal property
                taxes assessable on the products after delivery to Buyer shall
                be borne by Buyer.

        (b)     In the event that a "revert pricing" schedule, a "bill back"
                schedule, or a pricing schedule which indicates lower per unit
                prices or higher volume purchases appears as part of this
                Agreement, it is understood and agreed that the unit price to be
                paid by Buyer is that price determined by the total number of
                units purchased by Buyer in accordance with the schedule at the
                date of termination of this Agreement. Any payment made by Buyer
                at price levels equal to the lowest per unit price appearing on
                this Agreement is accepted by Supplier only as an accommodation
                to Buyer and as a partial payment in the event that the
                necessary volume of units to achieve the lowest available price
                is not purchased. In the event of any termination of this
                Agreement for any reason, Buyer agrees that it will pay Supplier
                a unit price based upon the total number of units purchased
                prior to termination.

        (c)     In the event Buyer shall desire quantities of any product in
                addition to those contracted for pursuant to this Agreement
                Buyer agrees that Supplier shall have no obligation whatsoever
                to renegotiate this price.

3.      TERMS AND CONDITIONS OF PAYMENT. Where Supplier has extended credit to
        Buyer, terms of payment shall be net thirty (30) days from the date of
        invoice. A late charge in the amount of the lesser of one percent (1%)
        of the outstanding amount or the maximum amount permitted by law shall
        be assessed each twenty-eight (28) days on all accounts fifteen (15)
        days past due. The amount of credit may be changed or credit withdrawn
        by Supplier at any time in Supplier's sole discretion. On any order on
        which credit is not extended by Supplier, shipment or delivery shall be
        made at Supplier's election: Cash with Order (in whole or part) C.O.D.
        or sight draft attached to bill of lading or other shipping documents,
        with all costs of collection to be paid by Buyer.

<PAGE>   20

        Buyer agrees to make payment of each shipment separately and understands
        that if payment is not so made Supplier is under no obligation to make
        further shipments. If shipment or manufacture is delayed by Buyer,
        payment shall become due on the date when Supplier is prepared to make
        shipment or on the date on which manufacture is delayed, and such
        payment shall be made based on the contract price and the percentage of
        completion. Products held by Supplier for Buyer by reason of Buyer's
        delay shall be held at the risk and expense of Buyer. If, in the
        judgment of Supplier, the financial condition of Buyer at any time does
        not justify continuance of production or shipment upon the terms of
        payment specified, Supplier may require full or partial payment in
        advance and, in the event of bankruptcy or insolvency of Buyer, or in
        the event any proceeding is brought by or against Buyer under the
        bankruptcy or insolvency laws, Supplier shall be entitled to cancel any
        order of Buyer then outstanding and shall receive reimbursement from
        Buyer for all costs incurred by Supplier in connection with any such
        canceled order from and after the date of such order to and including
        the date of cancellation.

4.      DELIVERY AND RISK OF LOSS: All products shall be delivered to Buyer,
        F.O.B. Supplier's plant, and Buyer assumes all risk of loss from the
        time the products are delivered to a common carrier or placed in the
        United States Mails, as the case may be, for shipment to Buyer. Should
        United States Mails be specified as method of delivery by Buyer, Buyer
        waives right to proof of delivery in the absence of specific
        instructions. Supplier will exercise its discretion in the method of
        shipment. Unless otherwise specified to the contrary, supplier is under
        no obligation to ship by any particular date. Shipping dates are
        approximate, and in the case of development contracts, it is recognized
        that no delivery dates are certain until by a separate writing signed by
        Supplier, supplier obligates itself to specific delivery dates.

5.      WARRANTIES: THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE IN LIEU OF
        ANY AND ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, EXCEPT AS
        TO TITLE, AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
        A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY THE SUPPLIER AND EXCLUDED
        FROM THIS AGREEMENT. In no event shall Supplier have any warranty
        obligation to any person with respect to products purchased from someone
        other than Supplier or one of its contract distributors. Standard
        Products of Supplier (those products appearing on Supplier's official
        price list) are warranted to be free from defects in materials and
        workmanship and, when tested, to meet the applicable published
        specification as of the date hereof. Development Products of Supplier
        (those products not appearing on Supplier's official price list) are
        warranted to be free from defects in materials and workmanship and to
        meet the agreed to applicable specification supplied by Buyer to
        Supplier as of the date of this agreement. Unless otherwise specifically
        agreed to in writing signed by Supplier, Supplier's warranty shall
        extend for one year from the date of invoice or until Buyer resells the
        respective product(s), whichever date first occurs. The liability of
        Supplier under the warranty as herein set forth is limited solely to
        replacing, repairing or issuing credit (each at the discretion of
        supplier) for such products that are defective at the time they are
        received by Buyer, provided that supplier will not be liable under this
        warranty unless, (i) Supplier is, during the warranty period, promptly
        notified in writing upon discovery of defects by Buyer, (ii) the
        defective unit is returned to Supplier, transportation charges prepaid
        by Buyer, (iii) the defective unit is received by Supplier for
        adjustment no later than four weeks following the last day of the
        warranty, and (iv) Supplier's examination of such unit shall disclose to
        its satisfaction, that such defects have not been caused by misuse,
        neglect, improper installation, repair, alteration or accident. In no
        event shall Supplier be responsible for reimbursing Buyer for any costs
        of replacement of any defective product. Supplier shall not be
        responsible for any shortage unless Buyer shall notify Supplier in
        writing within thirty days following receipt of shipment, of Buyer's
        claim for any such shortage, together with a reasonably detailed
        description of the basis of such claim.

        IN NO EVENT SHALL SUPPLIER BE LIABLE TO BUYER FOR LOSS OF PROFITS, LOSS
        OF USE, OR CONSEQUENTIAL DAMAGES BASED UPON A CLAIM FOR BREACH OF
        CONTRACT OR BREACH OF WARRANTY. Supplier's warranty shall not be
        enlarged, diminished or affected by and no obligation or liability shall
        arise or grow out of Supplier rendering technical advice or service in
        connection with Buyer's order for the products furnished hereunder.

        Tools, dies and other equipment furnished Supplier by Buyer shall be at
        Buyer's risk and expense. Weights and dimensions set forth in sales
        literature on equipment products are not guaranteed unless specifically
        agreed to in writing signed by Supplier.

                                      -2-
<PAGE>   21

6.      PATENTS, COPYRIGHTS, AND MASK WORKS:
        With respect to products manufactured solely to Supplier's design or
        specification, Supplier shall indemnify, defend and hold Buyer harmless
        against any and all expenses, damages, costs or losses resulting from
        any suit or proceedings brought against Buyer based on a claim that any
        such products or any parts thereof constitute an infringement of any
        patent, copyright or mask work of the United States or any other
        jurisdiction, provided that supplier is notified promptly of such claim
        in writing and given authority, information and assistance (at
        Supplier's expense) for the defense of same in the event said products
        or any parts thereof, are found to constitute infringement of any United
        States or other patent, copyright or mask work right and the use of said
        products or parts is enjoined. Supplier shall, in its sole discretion
        either procure for buyer the right to continue using said products or
        parts, replace said products or parts with noninfringing substitutes or
        accept the return of said products or parts and refund the purchase
        price and the transportation costs related thereto.

        Buyer shall indemnify, defend and hold Supplier harmless from any and
        all expenses, damages, costs or losses resulting from any suit or
        proceeding brought for infringement of patents, copyrights, mask works,
        or trademarks or for unfair competition or violation of trade secrets
        arising from compliance with Buyer's designs, specifications or
        instructions.

        The sales of products or any parts thereof hereunder confers on Buyer no
        license to or other rights under any patent, copyright or mask work
        rights, trade secrets, or other proprietary information or processes of
        Supplier covering or relating to (a) the structure, design or concept of
        any devices to which the products or parts may be applied, or (b) any
        process, part or machine in connection with which such products may be
        manufactured or used. Supplier shall not be liable for any costs or
        damages incurred by Buyer as a result of any suit or proceeding brought
        against Buyer and Buyer will indemnify, defend and hold Supplier
        harmless from any expenses, damages, costs or losses resulting from any
        suit or proceeding brought against Supplier, either severally or jointly
        with Buyer so far as such suit or proceeding is based upon claims (a)
        that use by Buyer of any product, or any parts thereof furnished
        hereunder, in combination with products not supplied by Supplier or (b)
        that a manufacturing use or other process by Buyer utilizing any
        product, or any parts thereof furnished thereunder constitutes either
        (i) direct or contributory infringement of any patent, copyright or mask
        work right of the United States or other jurisdiction, or (ii) direct or
        indirect violation of any trade secret or proprietary right.

        THIS PROVISION IS STATED IN LIEU OF ANY OTHER EXPRESSED, IMPLIED OR
        STATUTORY WARRANTY AGAINST INFRINGEMENT AND SHALL BE THE SOLE AND
        EXCLUSIVE REMEDY FOR PATENT, COPYRIGHT, OR MASK WORK INFRINGEMENT OF ANY
        KIND.

7.      CONTINGENCIES: Supplier shall not be liable for any failure to perform,
        or delay in performance, caused by circumstances beyond its reasonable
        control which makes such performance commercially impracticable
        including, but not limited to fire, storm, flood, earthquake, explosion,
        accident, acts of a public enemy or rebellion, insurrection, sabotage,
        epidemic, quarantine restrictions, labor dispute, labor shortages,
        transportation embargoes, or delays in transportation, shortages of
        materials, acts of God, acts of Federal government or any agency
        thereof, acts of state or local government or agency thereof, and
        judicial action. In the event of inability due to any of the above
        circumstances to supply the total demands for the goods specified in
        Buyer's orders, Supplier may allocate its available supply without
        liability for any failure of performance which may result therefrom. To
        the extent that no allocation is made to Buyer, either Buyer or Supplier
        shall have the right to terminate the contract by prompt notice to the
        other party in writing.

8.      NON-WAIVER OF DEFAULT. In the event of any default by Buyer, Supplier
        may decline to make further shipments without in any way affecting its
        rights under such order. If, despite any default by Buyer, Supplier
        elects to continue to make shipments, its action shall not constitute a
        waiver of any default by Buyer or in any way affect the Supplier's legal
        remedies regarding any such default. No claim or right arising out of a
        breach of the Agreement by Buyer can be discharged in whole or in part
        by waiver or renunciation of the claim or right unless the waiver or
        renunciation is supported by consideration, and is in writing signed by
        Supplier.

9.      ASSIGNS: The Agreement shall be binding and inure to the benefit of the
        successors and assigns of Supplier, but shall not be assignable by Buyer
        voluntarily or involuntarily without the written consent of Supplier.

10.     TITLE TO PRODUCTS: Title to and right of possession of the products sold
        hereunder shall remain with Supplier until all payments provided
        hereunder (including deferred payments whether evidenced by notes or

                                      -3-
<PAGE>   22

        otherwise and revert pricing or billback payments) shall have been made
        in full, and Buyer agrees to do all acts necessary to perfect and
        maintain such right and title in Supplier. Failure of the Buyer to pay
        the purchase price for any product when due shall give the Supplier the
        right, without liability, to repossess such product with or without
        notice, and to avail itself of any remedy provided by law.

                                      -4-

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