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                                                                   EXHIBIT 10.28

                          ARGONAUT TECHNOLOGIES, INC.

                            1995 INCENTIVE STOCK PLAN

                            (AS AMENDED AND RESTATED)

        1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.

        2. Definitions. As used herein, the following definitions shall apply:

                (a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

                (b) "Board" means the Board of Directors of the Company.

                (c) "Cause" means the (i) Employee's engagement in acts of
embezzlement, dishonesty or moral turpitude; (ii) the conviction of Employee for
having committed a felony; (iii) a breach by Employee of Employee's fiduciary
duties and responsibilities to the Company having the potential to result in an
adverse effect on the Company's business, operations, prospects or reputation;
(iv) gross negligence or bad faith as determined by a duly authorized
representative of the Company; or (v) the repeated failure of Employee to
perform Employee's duties and responsibilities to the reasonable satisfaction of
a duly authorized representative of the Company except in the case of death or
disability.

                (d) "Change of Control" means the occurrence of any of the
following events:

                        (i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities; or

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

                        (iii) The consummation of a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its parent) at least fifty percent (50%) of the total voting power
represented by the voting securities of

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the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation.

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

                (f) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.

                (g) "Common Stock" means the Common Stock of the Company.

                (h) "Company" means Argonaut Technologies, Inc., a Delaware
corporation.

                (i) Constructive Termination. "Constructive Termination" shall
mean the Employee voluntarily resigns within ninety (90) days after the
occurrence of any of the following (i) without the Employee's express written
consent, a material reduction of the Employee's duties, title, authority or
responsibilities, relative to the Employee's duties, title, authority or
responsibilities as in effect immediately prior to such reduction, or the
assignment to Employee of such reduced duties, title, authority or
responsibilities; provided, however, that a reduction in duties, title,
authority or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Chief Executive Officer
of the Company remains as such following a Change of Control and is not made the
Chief Executive Officer of the acquiring corporation) shall not by itself
constitute grounds for a "Constructive Termination" (ii) without the Employee's
express written consent, a material reduction, without good business reasons, of
the facilities and perquisites (including office space and location) available
to the Employee immediately prior to such reduction; (iii) a more than ten
percent (10%) reduction by the Company of the base salary of the Employee as in
effect immediately prior to such reduction; (iv) a material reduction by the
Company in the kind or level of employee benefits, including bonuses, to which
the Employee was entitled immediately prior to such reduction with the result
that the Employee's overall benefits package is materially reduced; (v) the
relocation of the Employee to a facility or a location outside of a one-hundred
(100) mile radius from the Employee's present location or facility, without the
Employee's express written consent; (vi) the failure of the Company to obtain
the assumption of this agreement by any successors contemplated in Article X
below; or (vii) any act or set of facts or circumstances which would, under
California case law or statute constitute a constructive termination of the
Employee.

                (j) "Consultant" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not, provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.

                (k) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company or any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock

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Options, no such leave may exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; provided, further, that on the ninety-first (91st) day of
any such leave (where reemployment is not guaranteed by contract or statute) the
Optionee's Incentive Stock Option shall cease to be treated as an Incentive
Stock Option and will be treated for tax purposes as a Nonstatutory Stock
Option; or (ii) transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successor.

                (l) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

                (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                (n) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                        (i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported, as quoted on such exchange or system for the last market trading day
prior to the time of determination) as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

                        (ii) If the Common Stock is quoted on the NASDAQ System
(but not on the Nasdaq National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination,
or;

                        (iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator in accordance with Section 260.140.40, Title 10 of the
California Code of Regulations ("California Code").

                (o) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.

                (p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

                (q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                (r) "Option" means a stock option granted pursuant to the Plan.

                (s) "Optioned Stock" means the Common Stock subject to an Option
or a Stock Purchase Right.

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                (t) "Optionee" means an Employee or Consultant who receives an
Option or Stock Purchase Right.

                (u) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                (v) "Plan" means this 1995 Incentive Stock Plan.

                (w) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.

                (x) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.

                (y) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 below.

                (z) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.

        3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 3,935,308 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.

                If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for future grant under the Plan.

        4. Administration of the Plan.

                (a) Initial Plan Procedure. Prior to the date, if any, upon
which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.

                (b) Plan Procedure After the Date, if any, upon Which the
Company becomes Subject to the Exchange Act.

                        (i) Administration With Respect to Directors and
Officers. With respect to grants of Options or Stock Purchase Rights to
Employees who are also officers or directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan in compliance
with Rule 16b-3 promulgated under the Exchange Act or any successor thereto
("Rule 16b-3") with respect to a plan intended to qualify thereunder as a
discretionary plan, or (B) a committee designated by the Board to administer the
Plan, which committee shall be constituted in such a manner as to permit the
Plan to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may

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increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.

                        (ii) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither directors nor
officers.

                        (iii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options or Stock Purchase Rights to
Employees or Consultants who are neither directors nor officers of the Company,
the Plan shall be administered by (A) the Board or (B) a committee designated by
the Board, which committee shall be constituted in such a manner as to satisfy
the legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate and securities laws, of the Code, and of
any applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

                (c) Powers of the Administrator. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion:

                        (i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;

                        (ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;

                        (iii) to determine whether and to what extent Options
and Stock Purchase Rights or any combination thereof are granted hereunder;

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

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

                        (vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder;

                        (vii) to determine whether and under what circumstances
an Option may be settled in cash under subSection 9(f) instead of Common Stock;

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

                        (ix) to determine the terms and restrictions applicable
to Stock Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights; and

                        (x) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.

                (d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.

        5. Eligibility.

                (a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or
Stock Purchase Right may, if otherwise eligible, be granted additional Options
or Stock Purchase Rights.

                (b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value:

                        (i) of Shares subject to an Optionee's Incentive Stock
Options granted by the Company, any Parent or Subsidiary, which

                        (ii) become exercisable for the first time during any
calendar year (under all plans of the Company or any Parent or Subsidiary)

exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.

                (c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment relationship with the Company, nor shall
it interfere in any way with his or her right or the Company's right to
terminate his or her employment relationship at any time, with or without cause.

                (d) Upon the Company or a successor corporation issuing any
class of common equity securities required to be registered under Section 12 of
the Exchange Act or upon the Plan being assumed by a corporation having a class
of common equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:

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                        (i) The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12(a).

                        (ii) If an Option or Stock Purchase Right is cancelled
(other than in connection with a transaction described in Section 12), the
cancelled Option or Stock Purchase Right will be counted against the limit set
forth in Section 5(e)(i). For this purpose, if the exercise price of an Option
or Stock Purchase Right is reduced, the transaction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant of a new Option
or Stock Purchase Right.

        6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company, as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.

        7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.

        8. Option Exercise Price and Consideration.

                (a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:

                        (i) In the case of an Incentive Stock Option

                                (A) granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

                                (B) granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.

                        (ii) In the case of a Nonstatutory Stock Option

                                (A) granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant.

                                (B) granted to any person, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.

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                (b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

        9. Exercise of Option.

                (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan. In no event shall the Option be exercised at a rate of less than 20% per
year over five years from the date of grant of the Option.

                        An Option may not be exercised for a fraction of a
Share.

                        An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.

                        Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

                (b) Termination of Employment or Consulting Relationship. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant with the Company (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the
ninety-first (91st) day following such change of status) or from Consultant to
Employee), such

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Optionee may, but only within such period of time as is determined by the
Administrator, of at least thirty (30) days, with such determination in the case
of an Incentive Stock Option not exceeding three (3) months after the date of
such termination (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.

                (c) Disability of Optionee. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee as a
result of his or her disability, Optionee may, but only within six (6) months
from the date of such termination (and in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination; provided, however, that if such disability is not a "disability" as
such term is defined in Section 22(e)(3) of the Code, in the case of an
Incentive Stock Option such Incentive Stock Option shall automatically convert
to a Nonstatutory Stock Option on the day three months and one day following
such termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option
to the extent so entitled within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

                (d) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent that the Optionee was entitled to exercise the Option at
the date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

                (e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

                (f) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

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        10. Non-Transferability of Options and Stock Purchase Rights. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

        11. Stock Purchase Rights.

                (a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."

                (b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable within 90 days of the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine, but at a minimum rate of 20% per year.

                (c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.

                (d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.

        12. Adjustments Upon Changes in Capitalization or Merger.

                (a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding

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Option or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

                (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

                (c) Merger. Subject to subsection (d) below, in the event of a
merger of the Company with or into another corporation, the Option or Stock
Purchase Right shall be assumed or an equivalent option or right shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. If, in such event, the Option or Stock Purchase Right is
not assumed or substituted, the Option or Stock Purchase Right shall terminate
as of the date of the closing of the merger. For the purposes of this paragraph,
the Option or Stock Purchase Right shall be considered assumed if, following the
merger, the option or right confers the right to purchase, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger, the consideration (whether stock, cash, or other securities or
property) received in the merger by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger was not solely common stock of the successor corporation
or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Option or Stock Purchase Right, for each Share of Optioned Stock subject to
the Option or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger.

                (d) Change of Control. In the event of (a) A Constructive
Termination or (b) Optionee's termination by the Company without Cause, within
twelve (12) months following a Change of Control, all outstanding options shall
become fully vested and exercisable.

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        13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Board. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

        14. Amendment and Termination of the Plan.

                (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

                (b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted, and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

        15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

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

        16. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

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

                                      -12-
<PAGE>   13

        17. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.

        18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.

        19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquired Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquired Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

                                      -13-<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, [***]

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                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

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                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-

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<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:

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                (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-

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<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

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<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 Dominik Winau.

                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-
<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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