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                                 SILICON VALLEY BANK


                             LOAN AND SECURITY AGREEMENT


BORROWER:             Advanced Power Technology, Inc.
ADDRESS:              405 S.W. Columbia Street
                      Bend, Oregon 97702

DATE:                 September 6, 1995


       THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive,
Santa Clara, California 95054-2895 and the borrower named above (the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").

1.     LOANS.

       1.1    LOANS.  Silicon will make loans to the Borrower (the "Loans") in
amounts determined by Silicon up to the amounts (the "Credit Limits") shown on
the Schedule to this Agreement (the "Schedule"), the terms of which are
incorporated into this Agreement.  The Borrower is responsible for monitoring
the total amount of Loans and other Obligations outstanding from time to time,
and the Borrower shall not permit that amount, at any time, to exceed the Credit
Limit.  If at any time the total of all outstanding Loans and all other
Obligations exceeds the Credit Limits, the Borrower shall immediately pay the
amount of the excess to Silicon, without notice or demand.

       1.2    INTEREST; REQUEST TO DEBIT ACCOUNTS.   All Loans and all other
monetary Obligations shall bear interest at the rate shown on the Schedule
hereto.  Interest shall be payable monthly, on the due date shown on the monthly
billing from Silicon to the Borrower.  The Borrower hereby requests and
authorizes Silicon to debit any of the Borrower's accounts with Silicon,
including without limitation account no. _______________, for payments of
interest and principal due on the Loans and all other obligations owing by the
Borrower to Silicon.  Silicon shall promptly notify the Borrower of all debits
which Silicon makes against the Borrower's accounts.  Any such debit against the
Borrower's accounts shall in no way be deemed a setoff by Silicon.

       1.3    FEES.  The Borrower shall pay to Silicon the commitment fees in
the amounts shown on the Schedule hereto concurrently herewith.  These fees are
in addition to all interest and other sums payable to Silicon and are not
refundable.


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2.     GRANT OF SECURITY INTEREST.

       2.1    OBLIGATIONS.  The term "Obligations" as used in this Agreement
means the following: the obligation to pay all Loans and all interest thereon
when due, and to pay and perform when due all other present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Borrower to Silicon, whether joint or
several, monetary or non-monetary, and whether created pursuant to this
Agreement or any other present or future agreement or otherwise.  Silicon may,
in its discretion, require that the Borrower pay monetary Obligations in cash to
Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans.

       2.2    COLLATERAL.  As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's assets,
including but not limited to all of the Borrower's interest in the types of
property described below, whether now owned or hereafter acquired, and wherever
located (collectively, the "Collateral"): (a) all accounts; (b) all chattel
paper; (c) all documents; (d) all instruments; (e) all inventory; (f) all
equipment, except such equipment that is or will be sold to and leased back from
Financing for Science, Inc.; (g) all goods; (h) all fixtures (except as provided
below in this Section 2.2); (i) all general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trademark applications, trade
secrets, drawings, blueprints, customer lists, patents, patent applications,
copyrights, copyright applications, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (j) all books and
records, whether stored on computers or otherwise maintained; (k) all of the
Borrower's cash; and (l) all substitutions, additions and accessions to any of
the foregoing, and all products, proceeds and insurance proceeds of the
foregoing, and all guaranties of and security for the foregoing; and all books
and records relating to any of the foregoing.  Notwithstanding anything to the
contrary in this paragraph 2.2, Borrower does not grant to Silicon a security
interest in any intellectual property consisting of any patents, patent
applications or other forms of process technology or product designs, although
Borrower does grant to Silicon a continuing security interest in proceeds of the
sale of these assets.  All terms used above in this Section 2.2 that are defined
in the Oregon Uniform Commercial Code shall have the meaning given to such terms
in the Oregon Uniform Commercial Code.   Silicon's security interest in
equipment includes equipment of the Borrower that is attached to the real
property occupied by the Borrower, but Silicon shall not have a security
interest in any tenant improvements of Borrower that are part of the real
property occupied by Borrower.  The Borrower shall, at least every six months,
provide a written Schedule to Silicon showing (i) all applications for the
registration of any patent, trademark, or copyright with the U.S. Patent and
Trademark Office, the U.S. Copyright Office, or any similar office or agency in
any other country, state, or any political subdivision (the "Offices") filed by
Borrower or any agent, employee, licensee or designee of Borrower, and (ii) all
assignments of any patent, trademark, or copyright which Borrower has acquired
from a third party with any one of the Offices.

3.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

       The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:


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       3.1    CORPORATE EXISTENCE AND AUTHORITY.   The Borrower is and will
continue to be duly authorized, validly existing and in good standing under the
laws of the state of Delaware.  The Borrower is and will continue to be
qualified and licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on the Borrower.  The execution,
delivery and performance by the Borrower of this Agreement, and all other
documents contemplated hereby have been duly and validly authorized, are
enforceable against the Borrower in accordance with their terms, subject to
applicable bankruptcy law and equitable principles of law, and do not violate
any law or any provision of, and are not grounds for acceleration under, any
agreement or instrument which is binding upon the Borrower.

       3.2    NAME, TRADE NAMES AND STYLES.   The name of the Borrower set forth
in the heading to this Agreement is its correct name. Listed on the Schedule
hereto are all prior names of the Borrower and all of the Borrower's present and
prior trade names.  The Borrower shall give Silicon 15 days' prior written
notice before changing its name or doing business under any other name.  The
Borrower has complied, and will in the future comply, with all laws relating to
the conduct of business under a fictitious business name.

       3.3    PLACE OF BUSINESS; LOCATION OF COLLATERAL.  The address set forth
in the heading to this Agreement is the Borrower's chief executive office.  In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement.  The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or moving the Collateral to any other location.

       3.4    TITLE TO COLLATERAL; PERMITTED LIENS.  The Borrower is now, and
will at all times in the future be, the sole owner of all the Collateral, except
for general intangibles licensed to the Borrower and items of equipment which
are leased by the Borrower.  The Collateral now is and will remain free and
clear of any and all liens, charges, security interests, encumbrances and
adverse claims, except for the following ("Permitted Liens"): (i) purchase money
security interests in specific items of equipment; (ii) licenses of general
intangibles and leases of specific items of equipment, including without
limitation the lease of equipment from Financing for Science, Inc.; (iii) liens
for taxes not yet payable; (iv) additional security interests and liens
consented to in writing by Silicon in its sole discretion; and (v) security
interests being terminated substantially concurrently with this Agreement.
Silicon will have the right to require, as a condition to its consent under
subparagraph (iv) above, that the holder of the additional security interest or
lien sign an intercreditor agreement on terms satisfactory to Silicon in its
sole discretion, acknowledge that the holder's security interest is subordinate
to the security interest in favor of Silicon, and that the Borrower agree that
any uncured default in any obligation secured by the subordinate security
interest shall also constitute an Event of Default under this Agreement.
Silicon now has, and will continue to have, a first priority, perfected and
enforceable security interest in all of the Collateral.  The Collateral shall
not be subject to any other liens or security interests of any type except for
the Permitted Liens.  The Borrower will at all times defend Silicon and the
Collateral against all claims of others.  None of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture.

       3.5    MAINTENANCE OF COLLATERAL.  The Borrower will maintain the
Collateral in good working condition, and the Borrower will not use the
Collateral for any unlawful purpose.  The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.


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       3.6    DEPOSIT SWEEP.  The Borrower will enter into a written contract,
in a form satisfactory to Silicon, with either U.S. Bank or First Interstate
Bank of Oregon (individually the "Depository Bank" ) whereby all of Borrower's
funds in its account with the Depository Bank are transferred to Silicon account
no.              on a daily basis.

       3.7    BOOKS AND RECORDS.  The Borrower has maintained and will maintain
at the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

       3.8    FINANCIAL CONDITION AND STATEMENTS.  All financial statements now
or in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated.  Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower.  The Borrower is now and shall
continue to be solvent.  The Borrower shall provide Silicon: (a) within 30 days
after the end of each month, a monthly financial statement (consisting of an
income statement and a balance sheet) prepared by the Borrower; (b) within 15
days after the end of each month, an accounts receivable report and an accounts
payable report in such form as Silicon shall reasonably specify; (c) within 15
days after the end of each month, a Borrowing Base Certificate in the form
attached to this Agreement as Exhibit A, as Silicon may reasonably modify such
Certificate from time to time, signed by the President or Chief Financial
Officer of the Borrower; and (d) within 30 days after the end of each quarter of
each fiscal year, a Compliance Certificate in such form as Silicon shall
reasonably specify, signed by the President or Chief Financial Officer of the
Borrower, certifying that throughout such quarter the Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth on
the Schedule hereto and such other information as Silicon shall reasonably
request.  The Borrower shall provide Silicon, within 90 days following the end
of the Borrower's fiscal year, complete CPA-audited financial statements with
details on Borrower, such review being conducted by independent certified public
accountants reasonably acceptable to Silicon.

       3.9    TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS.  The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower.  The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral.  The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower.  The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


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       3.10   COMPLIANCE WITH LAW.  The Borrower has complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Borrower, including, but not limited
to, those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.

       3.11   LITIGATION.  Except as disclosed in the Schedule hereto, there is
no claim, suit, litigation, proceeding or investigation pending or (to best of
the Borrower's knowledge) threatened by or against or affecting the Borrower in
any court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted.  The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.

       3.12   USE OF PROCEEDS.  All proceeds of all Loans shall be used solely
for lawful business purposes.

       3.13   NO PATENTS, TRADEMARKS OR COPYRIGHTS.  The attached Schedule 3.13
shows the patents (including pending applications, if any), trademarks and
copyrights with the U.S. Patent and Trademark Office, the U.S. Copyright Office
or any similar office or agency of any state, of the United States of America or
of any foreign jurisdiction that the Borrower owns.  The Borrower has not
granted a security interest in, assigned, or pledged any of the foregoing in any
manner to secure any obligations of the Borrower.

       3.14   HAZARDOUS SUBSTANCES.  The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section  9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section  1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section  6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing.  Except as disclosed to and acknowledged by Silicon in
writing, the Borrower represents and warrants that:  (a) the Borrower has no
knowledge of (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance by any prior
owners or occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters; (b)
Except as set forth in Schedule 3.14, neither the Borrower nor any subtenant,
contractor, agent or other user authorized by Borrower of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, or about any of the properties owned or
operated by the Borrower; and any such activity shall be conducted in compliance
with all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above.  The Borrower authorizes Silicon and its agents, upon 24 hours prior
notice (which need not be in writing), to enter upon the properties to make such
inspections and tests as Silicon may deem appropriate to determine compliance of
the properties owned or operated by the Borrower with this section of the
Agreement.  Any inspections or tests made by Silicon shall be for Silicon's
purposes only and shall not be construed to create any responsibility or
liability on the part of Silicon to the Borrower or to any other person.  The
Borrower hereby (a) releases and waives any future claims against Silicon for
indemnity or contribution in the event the Borrower becomes liable for


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cleanup or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Silicon against any and all claims, losses, liabilities, damages,
penalties, and expenses which Silicon may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or
threatened release occurring prior to the Borrower's ownership or interest in
the properties, whether or not the same was or should have been known to the
Borrower.  The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Silicon's acquisition of any interest in ny of the properties, whether by
foreclosure or otherwise.

4.     ADDITIONAL DUTIES OF THE BORROWER.

       4.1    COVENANTS.  The Borrower shall at all times comply with the
covenants set forth in the Schedule to this Agreement.

       4.2    OVERADVANCE; PROCEEDS OF ACCOUNTS.  If for any reason the total of
any outstanding Loan and all other Obligations exceeds the applicable Credit
Limit, without limiting Silicon's other remedies, and whether or not Silicon
declares an Event of Default, the Borrower shall remit to Silicon all checks and
other proceeds of the Borrower's accounts and other Collateral, in the same form
as received by the Borrower, within one day after the Borrower's receipt of the
same, to be applied to the Obligations in such order as Silicon shall determine
in its discretion.

       4.3    INSURANCE.  The Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require.  All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon.  Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its sole and absolute discretion,
except that, provided no Event of Default has occurred, Silicon shall release to
the Borrower insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Borrower for the replacement of the
equipment with respect to which the insurance proceeds were paid.  Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used.  If the Borrower fails to provide or pay for any insurance, Silicon may,
but is not obligated to, obtain the same at the Borrower's expense.  The
Borrower shall promptly deliver to Silicon copies of all reports made to
insurance companies.

       4.4    REPORT.  The Borrower shall provide Silicon with such written
reports with respect to the Borrower, as Silicon shall from time to time
reasonably specify.

       4.5    ACCESS TO COLLATERAL, BOOKS AND RECORDS.  At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral.  Silicon shall take reasonable
steps to keep confidential all information obtained in any such inspection or
audit, but Silicon shall have the right to disclose any such information to its
auditors, regulatory agencies and attorneys, and pursuant to any subpoena or
other legal process.  Borrower shall reimburse Silicon for up to $1,250.00 per
audit for Silicon's out-of-pocket costs for semi-annual accounts receivable
audits, and Silicon may debit the


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Borrower's deposit accounts with Silicon for the actual, reasonable
out-of-pocket cost of such accounts receivable audits (up to the limit stated
above), in which event Silicon shall send notification thereof to the
Borrower. Notwithstanding the foregoing, during the continuation of an Event
of Default all audits shall be at the Borrower's expense.

       4.6    NEGATIVE COVENANTS.  Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except that
the Borrower may merge or consolidate with another corporation if the Borrower
is the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined herein) as of the end of the month prior to the effective date of the
merger, and the assets of the corporation acquired in the merger are not subject
to any liens or encumbrances, except Permitted Liens; (ii) acquire any assets
outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined herein) as of the end
of the month prior to the effective date of the acquisition; (iii) enter into
any other transaction outside the ordinary course of business (except as
permitted by the other provisions of this Section); (iv) sell or transfer any
Collateral, except for the sale of finished inventory in the ordinary course of
the Borrower's business (which inventory shall be released from the security
interest granted in Section 2.2 upon completion of such sales), and except for
the sale of obsolete or unneeded equipment in the ordinary course of business;
(v) make any loans of any money or any other asset to any subsidiary or
affiliate of Borrower; (vi) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on the Borrower or on the
prospect of repayment of the Obligations; (vii) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (viii) pay or
declare any dividends on the Borrower's stock (except for dividends payable
solely in stock of the Borrower); (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of the Borrower's stock, except as the
Borrower may decide in order to satisfy stock warrants granted to Silicon,
Financing for Science International, Inc., Advanced Energy Industries, Inc., or
Bridgewater Capital Corporation; (x) make any change in the Borrower's capital
structure which has a material adverse effect on the Borrower or on the prospect
of repayment of the Obligations; (xi) dissolve or elect to dissolve; (xii) pay
bonuses or cash compensation to employees or officers for any fiscal year in
excess of net after tax earnings for the fiscal year; or (xiii) pledge or
otherwise encumber any patents, trademarks or other intellectual property of any
type owned or controlled by Borrower.  "Tangible Net Worth" means stockholders'
equity plus debt that is subordinated to the Loans pursuant to a written
subordination agreement satisfactory to Silicon and accrued interest thereon,
less goodwill, patents, capitalized software costs, tradenames, trademarks, and
all other assets which would be classified as intangible assets under generally
accepted accounting principles.  Transactions permitted by the foregoing
provisions of this Section are only permitted if no Event of Default is pending
at the time.

       4.7    LITIGATION COOPERATION.  Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to Silicon,
make available the Borrower and its officers, employees and agents and the
Borrower's books and records to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.

       4.8    VERIFICATION.  Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the
Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior


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notification shall be required following an Event of Default.  Silicon shall not
be required to obtain the Borrower's consent prior to any such verification of
accounts, whether or not an Event of Default has occurred.

       4.9    EXECUTE ADDITIONAL DOCUMENTATION.  The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.

5.     TERM.

       5.1    MATURITY DATE.  This Agreement shall continue in effect until the
payment in full of the Obligations, provided, however, that the Borrower shall
repay the Loans in full, with all accrued but unpaid interest, not later than
the "Maturity Date" for each such Loan set forth on the Schedule.

       5.2    EARLY TERMINATION.  Subject to Section 5.3, this Agreement may be
terminated, without penalty, prior to the latest Maturity Date for any Loan as
follows: (i) by the Borrower, effective three business days after written notice
of termination is given to Silicon; or (ii) by Silicon at any time after the
occurrence of an Event of Default, without notice, effective immediately.

       5.3    PAYMENT OF OBLIGATIONS.  On the due dates stated in the
Schedule, or on any earlier effective date of termination, the Borrower shall
pay and perform in full all Obligations, whether evidenced by installment
notes or otherwise, and whether or not all or any part of such Obligations
are otherwise then due and payable.  Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and
all of the terms and provisions of this Agreement shall continue in full
force and effect until all Obligations have been paid and performed in full;
provided that, without limiting the fact that Loans are discretionary on the
part of Silicon, Silicon may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or
impair any right or remedy of Silicon, nor shall any such termination relieve
the Borrower of any Obligation to Silicon, until all of the Obligations have
been paid and performed in full. Upon payment and performance in full of all
the Obligations, Silicon shall promptly deliver to the Borrower termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests.

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6.     EVENTS OF DEFAULT AND REMEDIES.

       6.1    EVENTS OF DEFAULT.  The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof:  (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; (b) the Borrower
shall fail to pay when due any Loan or any interest thereon or any other
monetary Obligation; (c) the total Loans and other Obligations outstanding at
any time exceed the applicable Credit Limits; (d) the Borrower shall fail to
comply with any of the covenants set forth in the Schedule to this Agreement or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured; (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, under this Agreement or any other agreement or document
relating to any Loan; (f) any levy, assessment, attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral; (g) dissolution,
termination of existence, insolvency or business failure of the Borrower, or
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by the Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; (h) the commencement of any
proceeding against the Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 30 days
after the date commenced; (i) revocation or termination of, or limitation of
liability upon, any guaranty of the Obligations; (j) commencement of proceedings
by any guarantor of any of the Obligations under any bankruptcy or insolvency
law; (k) the Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations, unless such payment
is permitted in the applicable subordination agreement, or if any person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; (l) the Borrower shall generally not pay its debts
as they become due; or the Borrower shall conceal, remove or transfer any part
of its property, with intent to hinder, delay or defraud its creditors, or make
or suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; (m) either the Borrower or any
other party thereto shall breach any subordination agreement executed in
connection with the Loan; (n) the sale or transfer of fifty percent or more of
the outstanding shares of stock of the Borrower; (o) the Borrower shall fail to
pay when due, or within any applicable grace periods, any amount due to
Sundstrand Corporation or the Oregon Economic Development Commission that is
secured by a lien on the Borrower's real property located in Deschutes County,
Oregon, or any such creditor shall commence a foreclosure on such real property;
or (p) the Borrower shall breach any of its obligations under the Deed of Trust,
Assignment of Rents and Leases, and Security Agreement given by the Borrower to
Silicon with respect to Borrower's real property located in Deschutes County,
Oregon.  If any of the foregoing defaults is curable and if Borrower has not
been given more than one prior notice of default within the preceding twelve
months, it may be cured (and no Event of Default will have occurred) if
Borrower, after receiving written notice from Lender demanding cure of such
default cures the failure within thirty days.  Silicon may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an Event
of Default has occurred.

       6.2    REMEDIES.  Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under Section 6.1, and at any time
thereafter, Silicon, at its option, and without


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<PAGE>

notice or demand of any kind (all of which are hereby expressly waived by the
Borrower), may do any one or more of the following: (a) Cease making Loans or
otherwise extending credit to the Borrower under this Agreement or any other
document or agreement; (b) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding any
deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose the Borrower hereby authorizes
Silicon without judicial process to enter onto any of the Borrower's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any or all of the Collateral by Court
process, the Borrower hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (d) Require the Borrower to
assemble any or all of the Collateral and make it available to Silicon at places
designated by Silicon which are reasonably convenient to Silicon and the
Borrower, and to remove the Collateral to such locations as Silicon may deem
advisable; (e) Require the Borrower to deliver to Silicon, in kind, all checks
and other payments received with respect to all accounts and other Collateral,
together with any necessary endorsements, within one day after the date received
by the Borrower; (f) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use the Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (g) Sell, lease or otherwise dispose of any of the Collateral in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at any one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale.  Silicon shall have the right to
conduct such disposition on the Borrower's premises without charge, for such
time or times as Silicon deems reasonable, or on Silicon's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Silicon may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under applicable
law, at any private disposition.  Any sale or other disposition of Collateral
shall not relieve the Borrower of any liability the Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale; (h)  Demand payment of, and collect any accounts and general
intangibles comprising Collateral and, in connection therewith, the Borrower
irrevocably authorizes Silicon to endorse or sign the Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to the Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon's
sole discretion, to grant extensions of time to pay, compromise claims and
settle accounts and the like for less than face value; (i) Offset against any
sums in any of the Borrower's general, special or other deposit accounts with
Silicon, including but not limited to account no.                    ; and (j)
Demand and receive possession of any of the Borrower's federal and state income
tax and the books and records utilized in the preparation thereof or referring
thereto.  All reasonable fees of professionals (including attorneys' fees),
expenses, costs, liabilities and obligations incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.  Without limiting any of Silicon's rights
and remedies, from and after the failure of


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<PAGE>

Borrower to cure any Event of Default, Silicon shall have the right to increase
the interest rate applicable to the Obligations by an additional four percent
per annum.

       6.3    STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS.  The Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the Collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same.  Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.

       6.4    POWER OF ATTORNEY.  Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Borrower or Silicon, or
in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Borrower, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements.  Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate


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<PAGE>

applicable to any of the Obligations.  In no event shall Silicon's rights under
the foregoing power of attorney or any of Silicon's other rights under this
Agreement be deemed to indicate that Silicon is in control of the business,
management or properties of the Borrower.

       6.5    APPLICATION OF PROCEEDS.  All proceeds realized as the result of
any sale of the Collateral shall be applied by Silicon first to the costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion.  Any surplus shall be
paid to the Borrower or other persons legally entitled thereto; the Borrower
shall remain liable to Silicon for any deficiency.  If Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale or other disposition of
Collateral, Silicon shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Silicon of the cash therefor.

       6.6    REMEDIES CUMULATIVE.  In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Oregon Uniform Commercial Code and under all
other applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights and
remedies are cumulative and none is exclusive.  Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies.  The failure or delay of Silicon to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.

7.     GENERAL PROVISIONS.

       7.1    NOTICES.  All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party.  All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.

       7.2    SEVERABILITY.  Should any provision of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

       7.3    INTEGRATION.  This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.  UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING,


Page 12 - LOAN AND SECURITY AGREEMENT

<PAGE>

EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO BE ENFORCEABLE.

       7.4    WAIVERS.  The failure of Silicon at any time or times to require
the Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith.  Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto.  None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, document or
guaranty at any time held by Silicon on which the Borrower is or may in any way
be liable, and notice of any action taken by Silicon, unless expressly required
by this Agreement.

       7.5    [INTENTIONALLY OMITTED].

       7.6    AMENDMENT.  The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

       7.7    TIME OF ESSENCE.  Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.

       7.8    ATTORNEYS' FEES AND COSTS.  The Borrower shall reimburse Silicon
for all reasonable attorneys' fees and fees of other professionals, and all
filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys' fees and costs Silicon incurs in order
to do the following: prepare and negotiate this Agreement and the documents
relating to this Agreement; obtain legal advice in connection with this
Agreement; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, account debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of the Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon's security
interest in, the Collateral and otherwise represent Silicon in any litigation
relating to the Borrower.  If either Silicon or the Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and
professionals' fees, including (but not limited to) reasonable attorneys' fees
and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment.  All fees and costs to which Silicon may be
entitled pursuant to this Paragraph shall immediately become part of the
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.

       7.9    BENEFIT OF AGREEMENT; CONFIDENTIALITY.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of the parties
hereto; provided, however, that the Borrower may not assign or transfer any of
its rights under this Agreement without the prior written consent of Silicon,
and any prohibited


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<PAGE>

assignment shall be void.  No consent by Silicon to any assignment shall release
the Borrower from its liability for the Obligations.  The Borrower agrees and
consents to Silicon's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether related
or unrelated to Silicon.  Silicon may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Silicon may have about the Borrower or about any other
matter relating to the Loan and the Borrower hereby waive any rights to privacy
it may have with respect to such matters.  The Borrower additionally waives any
and all notices of sale of participation interests, as well as all notices of
any repurchase of such participation interests.  The Borrower also agrees that
the purchasers of any such participation interests shall be considered as the
absolute owners of such interests in the Loans and shall have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests.  The Borrower unconditionally agrees that either
Silicon or such purchaser may enforce the Borrower's obligations under the Loans
irrespective of the failure or insolvency of any holder of any interest in the
Loans.

       7.10   JOINT AND SEVERAL LIABILITY.  If the Borrower consists of more
than one person, their liability shall be joint and several, and the compromise
of any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

       7.11   PARAGRAPH HEADINGS; CONSTRUCTION.  Paragraph headings are only
used in this Agreement for convenience.  The Borrower acknowledges that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement.  This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Silicon or the Borrower under any rule of construction or otherwise.

       7.12   MUTUAL WAIVER OF JURY TRIAL.  THE BORROWER AND SILICON  EACH
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR THE BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.

       7.13   GOVERNING LAW; JURISDICTION; VENUE.  This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of the
State of Oregon.  Any undefined term used in this Agreement that is defined in
the Oregon Uniform Commercial Code shall have the meaning assigned to that term
in the Oregon Uniform Commercial Code.  As a material part of the consideration
to Silicon to enter into this Agreement, the Borrower agrees (subject to the
parties right to require arbitration under Section 7.13 of this Agreement) that
all actions and proceedings relating directly or indirectly hereto shall be
litigated in courts located within Oregon, and that the exclusive venue therefor
shall be Washington County.


Page 14 - LOAN AND SECURITY AGREEMENT
<PAGE>

                            BORROWER:

                                          ADVANCED POWER TECHNOLOGY, INC.



                                          By:
                                             ----------------------------------
                                          Title:
                                                -------------------------------


                                          SILICON:

                                          SILICON VALLEY BANK


                                          By:
                                             ----------------------------------
                                          Title:
                                                -------------------------------


Page 15 - LOAN AND SECURITY AGREEMENT

<PAGE>

                       SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:             Advanced Power Technology, Inc.

Address:              405 S.W. Columbia Street
                      Bend, Oregon 97702

Date:                 September 6, 1995


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:
(Section 1. 1)        An amount not to exceed the lesser of: (i) $2,500,000.00
                      at any one time outstanding; or (ii) the amount of the
                      "Borrowing Base", as defined below.

                      For purposes of this Schedule, the "Borrowing Base" shall
                      mean the sum of (i) 80% of the Net Amount of Borrower's
                      eligible accounts receivable, plus (ii) 25% of Borrower's
                      "Eligible Inventory" (as defined below), up to a maximum
                      advance of $500,000.00 against Eligible Inventory.   With
                      respect to Borrower's accounts, "Net Amount" means the
                      gross amount of the account, minus all applicable sales,
                      use, excise and other similar taxes and minus all
                      discounts, credits and allowances of any nature granted
                      or claimed.  Borrower's "Eligible Inventory" means the
                      Borrower's inventory held for sale in the United States
                      or Canada, valued at the lower of wholesale cost or
                      market value, which Silicon in its reasonable discretion
                      deems eligible for borrowing, subject to the Backlog
                      Covenant described below.

                      The amount of all letters of credit issued by Silicon at
                      the request of the Borrower shall reduce, dollar for
                      dollar, the amount otherwise available to be borrowed
                      under the formulas described in this paragraph and the
                      paragraphs below.

                      Without limiting the fact that the determination of which
                      accounts are eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing:  accounts outstanding for more
                      than 90 days from the invoice date unless otherwise
                      agreed to in writing by Silicon, accounts subject to any
                      contingencies, accounts owing from an account debtor
                      outside the United States or billed or payable outside
                      the United States (except for those backed by a letter of
                      credit satisfactory to Silicon), accounts owing from
                      governmental agencies unless otherwise agreed to in
                      writing by Silicon, accounts owing from one account
                      debtor to the extent they exceed 25% of the total
                      eligible accounts outstanding, accounts owing from an
                      affiliate of the Borrower, accounts owing from an
                      affiliate of Borrower, and accounts subject to


Page 16 - LOAN AND SECURITY AGREEMENT
<PAGE>

                      setoff, recoupment, counterclaim or any other demand by
                      the account debtor.  In addition, if more than 50% of the
                      accounts owing from an account debtor are outstanding
                      more than 120 days from the invoice date or are otherwise
                      not eligible accounts, then all accounts owing from that
                      account debtor shall be deemed ineligible for borrowing.

                      Without limiting the fact that the determination of which
                      inventory is eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing: any inventory other than finished
                      goods that are owned by Borrower and located in Bend,
                      Oregon; inventory that is used, obsolete or returned
                      goods; inventory that is stored at a location other than
                      the Borrowers' Address or any location owned, leased or
                      rented by Borrowers and previously identified to Silicon;
                      inventory that is subject to a landlord's lien; and
                      inventory that is not in the possession of the Borrower.

INTEREST RATE:
(Section 1.2)         The interest rate applicable to the Secured Accounts
                      Receivable Line of Credit shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 2.0% per
                      annum.  In the event that the Borrower's ratio of total
                      liabilities to tangible net worth falls below 1.75, and
                      the Borrower realizes net profits after taxes, the
                      interest rate shall decrease to the Prime Rate, plus
                      1.75% per annum.  Interest calculations shall be made on
                      the basis of a 360-day year and the actual number of days
                      elapsed.  Interest is payable monthly.

                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.

COMMITMENT
FEE: (Section 1.3)    $25,000.00, which is fully earned and payable at closing.
                      (Any Commitment Fee previously paid by the Borrower in
                      connection with this loan shall be credited against this
                      Fee.)

MATURITY DATE:
(Section 1.3)         One year from the date of this Schedule, at which time
                      all unpaid principal and accrued but unpaid interest
                      shall be due and payable.

MATURITIES OF
LETTERS OF CREDIT:    Commercial or standby letters of credit issued by Silicon
                      shall have a maximum maturity of not later than the
                      Maturity Date for the Secured Accounts Receivable Line of
                      Credit.

REPAYMENT:            The Borrower shall repay on demand any amount drawn on a
                      letter of credit issued by Silicon.  Silicon may, but is
                      not obligated to, add to the principal amount outstanding
                      under the Secured Accounts Receivable Line of Credit any


Page 17 - LOAN AND SECURITY AGREEMENT
<PAGE>

                      amount drawn on a letter of credit issued by Silicon.
                      Any such amount shall be subject to the terms applicable
                      to the Secured Accounts Receivable Line of Credit.

ISSUANCE:             The issuance of any letter of credit under this Agreement
                      is subject to Silicon's written approval and must be in
                      form and content satisfactory to Silicon and in favor of
                      a beneficiary reasonably acceptable to Silicon.  The
                      Borrower shall execute Silicon's then-current application
                      forms, reimbursement agreement and related documents as a
                      condition to Silicon's issuance of any letter of credit.

FEES:                 The Borrower shall pay Silicon the fees and costs
                      customarily charged by Silicon (at the time of issuance
                      of the letter of credit) with respect to the issuance of
                      letters of credit.


SECURED TERM LOAN

CREDIT LIMIT:         An amount not to exceed $1,000,000.00.

INTEREST RATE:        The interest rate applicable to the Secured Term Loan
                      shall be a rate equal to the "Prime Rate" in effect from
                      time to time, plus 1.75% per annum.  Interest
                      calculations shall be made on the basis of a 360-day year
                      and the actual number of days elapsed.  "Prime Rate"
                      means the rate announced from time to time by Silicon as
                      its "prime rate"; it is a base rate upon which other
                      rates charged by Silicon are based, and it is not
                      necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.
                      Interest is payable monthly.

MATURITY DATE:        Two years from the date of this Schedule, at which time
                      all unpaid principal and accrued but unpaid interest
                      shall be due and payable.

COMMITMENT
FEE: (Section 1.3)    1,000.00.



PRIOR NAMES OF
BORROWER:             See Exhibit B

TRADE NAMES OF
BORROWER:             See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:        See Exhibit B

MATERIAL ADVERSE
LITIGATION:           See Exhibit B


Page 18 - LOAN AND SECURITY AGREEMENT

<PAGE>

FINANCIAL
COVENANTS:
(Section 4.1)         The Borrower shall comply with all of the following
                      covenants, all of which shall be determined and measured
                      in accordance with generally accepted accounting
                      principles, except as otherwise stated below:

TANGIBLE NET
WORTH:                Borrower shall at all times maintain a Tangible Net Worth
                      (defined below) of not less than $4,250,000, measured
                      quarterly.


DEBT TO TANGIBLE
NET WORTH RATIO:      Borrower shall maintain a ratio of total liabilities to
                      Tangible Net Worth of not more than 2.75:1.0, measured
                      quarterly.  Upon maturity of the Interim Bridge Loan,
                      Borrower shall maintain a ratio of total liabilities to
                      Tangible Net Worth of not more than 2.50:1.0, measured
                      quarterly.  For purposes of this calculation, total
                      liabilities shall exclude deferred revenues and debt, if
                      any, that has been subordinated to the Loans in a written
                      subordination agreement on terms satisfactory to Silicon.


QUICK RATIO:          Borrower shall maintain a ratio of Quick Assets (defined
                      below) to current liabilities of not less than 0.50:1,
                      measured quarterly.  Upon maturity of the Interim Bridge
                      Loan, Borrower shall maintain a ratio of Quick Assets to
                      current liabilities of not less than 0.55:1, measured
                      quarterly.
BACKLOG TO
INVENTORY RATIO:      Borrower shall maintain a ratio of Backlog (as defined
                      below) to the book value of inventory of at least
                      2.50:1.0, measured monthly on a rolling three month
                      average.  In the event that the ratio of Backlog to book
                      value of inventory is less than 2.50:1.0 for two
                      consecutive months, the definition of Borrowing Base for
                      the Secured Accounts Receivable Line of Credit shall be
                      revised to prohibit borrowing against Eligible Inventory
                      for a period of 30 consecutive days each year.

PROFITABILITY:        Borrower shall not incur a quarterly loss in excess of
                      $500,000 for one quarter, $750,000 for two quarters, nor
                      incur losses in any amount in more than three or more
                      consecutive quarters.  For purposes of this paragraph,
                      "loss" means net sales, less cost of goods sold, less
                      operating expenses excluding non-cash expenses.


DEFINITIONS:          "Tangible Net Worth" means stockholders' equity plus debt,
                      if any, that has been subordinated to the Loans in a
                      written subordination agreement on terms satisfactory to
                      Silicon, and accrued interest thereon, less goodwill,
                      patents, capitalized software costs, deferred
                      organizational costs, tradenames, trademarks, and all
                      other assets which would be classified as intangible
                      assets


Page 19 - LOAN AND SECURITY AGREEMENT

<PAGE>

                      under generally accepted accounting principles.  "Quick
                      Assets" means cash on hand or on deposit in banks,
                      readily marketable securities issued by the United
                      States, readily marketable commercial paper rated "A-I"
                      by Standard & Poor's Corporation (or a similar rating by
                      a similar rating organization), certificates of deposit
                      and banker's acceptances, and accounts receivable (net of
                      allowance for doubtful accounts).  "Backlog" is defined
                      as the book value of orders received by Borrower, backed
                      by purchase orders, for shipment of product within 12
                      months.

OTHER COVENANTS:
(Section 4.1)         Borrower shall at all times comply with all of the
                      following additional covenants:

                      BANKING RELATIONSHIP.  Borrower shall at all times
                      maintain its primary banking relationship with Silicon.

CONDITIONS TO
CLOSING:              Without in any way limiting the discretionary nature of
                      advances under this Agreement, before requesting any such
                      advance, the Borrower shall satisfy each of the following
                      conditions:

1.  LOAN DOCUMENTS:

                      Silicon shall have received this Agreement, the Schedule,
                      and such other loan documents as Silicon shall require,
                      each duly executed and delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                      Silicon shall have received each of the following in form
                      and substance satisfactory to it:

                      (a)   Certified Copies of the Articles of Incorporation
                      and Bylaws of the Borrower;

                      (b)  A Certificate of Good Standing issued by the
                      Secretary of State of the Borrower's state of
                      incorporation and such other states as Silicon may
                      reasonably request with respect to the Borrower;

                      (c)  A certified copy of a Resolution adopted by the
                      Board of Directors of the Borrower authorizing the
                      execution, delivery and performance of this Agreement,
                      and any other documents or certificates to be executed by
                      the Borrower in connection with this transaction; and

                      (d)  Incumbency Certificates describing the office and
                      identifying the specimen signatures of the individuals
                      signing all such loan documents on behalf of the
                      Borrower.


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<PAGE>

                      (e)  A Subordination Agreement executed by all
                      shareholders of Borrower to whom Borrower is indebted.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been
                      duly perfected and that such security interest is prior
                      to all other liens, charges, security interests,
                      encumbrances and adverse claims in or to the Collateral
                      other than Permitted Liens, which evidence shall include,
                      without limitation, a certificate from the Oregon
                      Secretary of State showing the due filing and first
                      priority of the UCC Financing Statements to be signed by
                      the Borrower covering the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, including a copy of the documents
                      relating to the purchase of shares of Borrower from
                      Sundstrand Corporation, all of which must be acceptable
                      to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its
                      sole discretion.

6.  EQUITY INVESTMENT:

                      Management in the Borrower shall have contributed not
                      less than $250,000 to purchase capital stock the Borrower
                      from Sundstrand Corporation.


       Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      --------------------------------------
                                   Title:
                                         -----------------------------------


Page 21 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      ---------------------------------------
                                   Title:
                                         ------------------------------------









Page 22 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]













Page 23 - LOAN AND SECURITY AGREEMENT


<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]

















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<PAGE>

                                    SCHEDULE 3.13















Page 25 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                    SCHEDULE 3.14




















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<PAGE>

                               SILICON VALLEY BANK


                           LOAN AND SECURITY AGREEMENT

                                 (EXIM PROGRAM)


BORROWER:                  Advanced Power Technology, Inc.
ADDRESS:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

DATE:                      September 6, 1995


         THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive,
Santa Clara, California 95054-2895 and the borrower named above (the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").

1.       LOANS.

         1.1 LOANS. Silicon will make loans to the Borrower (the "Loans") in
amounts determined by Silicon up to the amount (the "Credit Limit") shown on the
Schedule to this Agreement (the "Schedule"), the terms of which are incorporated
into this Agreement. The Borrower is responsible for monitoring the total amount
of Loans and other Obligations outstanding from time to time, and the Borrower
shall not permit that amount, at any time, to exceed the Credit Limit. If at any
time the total of all outstanding Loans and all other Obligations exceeds the
Credit Limit, the Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand.

         1.2 INTEREST; REQUEST TO DEBIT ACCOUNTS. All Loans and all other
monetary Obligations shall bear interest at the rate shown on the Schedule
hereto. Interest shall be payable monthly, on the due date shown on the monthly
billing from Silicon to the Borrower. The Borrower hereby requests and
authorizes Silicon to debit any of the Borrower's accounts with Silicon,
including without limitation account no. _______________, for payments of
interest and principal due on the Loan and all other obligations owing by the
Borrower to Silicon. Silicon shall promptly notify the Borrower of all debits
which Silicon makes against the Borrower's accounts. Any such debit against the
Borrower's accounts shall in no way be deemed a setoff by Silicon.

         1.3 FEES. The Borrower shall pay to Silicon a commitment fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.


Page 1 - LOAN AND SECURITY AGREEMENT
<PAGE>

2.       GRANT OF SECURITY INTEREST.

         2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means
the following: the obligation to pay all Loans and all interest thereon when
due, and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon, whether joint or several, monetary
or non-monetary, and whether created pursuant to this Agreement or any other
present or future agreement or otherwise. Silicon may, in its discretion,
require that the Borrower pay monetary Obligations in cash to Silicon, or charge
them to Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans.

         2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's assets,
including but not limited to all of the Borrower's interest in the types of
property described below, whether now owned or hereafter acquired, and wherever
located (collectively, the "Collateral"): (a) all accounts; (b) all chattel
paper; (c) all documents; (d) all instruments; (e) all inventory; (f) all
equipment, except such equipment that is or will be sold to and leased back from
Financing for Science, Inc.; (g) all goods; (h) all fixtures (except as provided
below in this Section 2.2); (i) all general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trademark applications, trade
secrets, drawings, blueprints, customer lists, patents, patent applications,
copyrights, copyright applications, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (j) all books and
records, whether stored on computers or otherwise maintained; (k) all of the
Borrower's cash; and (l) all substitutions, additions and accessions to any of
the foregoing, and all products, proceeds and insurance proceeds of the
foregoing, and all guaranties of and security for the foregoing; and all books
and records relating to any of the foregoing. Notwithstanding anything to the
contrary in this paragraph 2.2, Borrower does not grant to Silicon a security
interest in any intellectual property consisting of any patents, patent
applications or other forms of process technology or product designs, although
Borrower does grant to Silicon a continuing security interest in proceeds of the
sale of these assets. All terms used above in this Section 2.2 that are defined
in the Oregon Uniform Commercial Code shall have the meaning given to such terms
in the Oregon Uniform Commercial Code. Silicon's security interest in equipment
includes equipment of the Borrower that is attached to the real property
occupied by the Borrower, but Silicon shall not have a security interest in any
tenant improvements of Borrower that are part of the real property occupied by
Borrower. The Borrower shall, at least every six months, provide a written
Schedule to Silicon showing (i) all applications for the registration of any
patent, trademark, or copyright with the U.S. Patent and Trademark Office, the
U.S. Copyright Office, or any similar office or agency in any other country,
state, or any political subdivision (the "Offices") filed by Borrower or any
agent, employee, licensee or designee of Borrower, and (ii) all assignments of
any patent, trademark, or copyright which Borrower has acquired from a third
party with any one of the Offices.

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

         The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:


Page 2 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower is and will
continue to be duly authorized, validly existing and in good standing under the
laws of the state of Delaware. The Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would have a material adverse effect on the Borrower. The execution, delivery
and performance by the Borrower of this Agreement, and all other documents
contemplated hereby have been duly and validly authorized, are enforceable
against the Borrower in accordance with their terms, subject to applicable
bankruptcy law and equitable principles of law, and do not violate any law or
any provision of, and are not grounds for acceleration under, any agreement or
instrument which is binding upon the Borrower.

         3.2 NAME, TRADE NAMES AND STYLES. The name of the Borrower set forth in
the heading to this Agreement is its correct name. Listed on the Schedule hereto
are all prior names of the Borrower and all of the Borrower's present and prior
trade names. The Borrower shall give Silicon 15 days' prior written notice
before changing its name or doing business under any other name. The Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.

         3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is the Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or moving the Collateral to any other location.

         3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and will
at all times in the future be, the sole owner of all the Collateral, except for
general intangibles licensed to the Borrower and items of equipment which are
leased by the Borrower. The Collateral now is and will remain free and clear of
any and all liens, charges, security interests, encumbrances and adverse claims,
except for the following ("Permitted Liens"): (i) purchase money security
interests in specific items of equipment; (ii) licenses of general intangibles
and leases of specific items of equipment, including without limitation the
lease of equipment from Financing for Science, Inc.; (iii) liens for taxes not
yet payable; (iv) additional security interests and liens consented to in
writing by Silicon in its sole discretion; and (v) security interests being
terminated substantially concurrently with this Agreement. Silicon will have the
right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on terms satisfactory to Silicon in its sole discretion,
acknowledge that the holder's security interest is subordinate to the security
interest in favor of Silicon, and that the Borrower agree that any uncured
default in any obligation secured by the subordinate security interest shall
also constitute an Event of Default under this Agreement. Silicon now has, and
will continue to have, a first priority, perfected and enforceable security
interest in all of the Collateral. The Collateral shall not be subject to any
other liens or security interests of any type except for the Permitted Liens.
The Borrower will at all times defend Silicon and the Collateral against all
claims of others. None of the Collateral now is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture.

         3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the
Collateral in good working condition, and the Borrower will not use the
Collateral for any unlawful purpose. The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.


Page 3 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.6 DEPOSIT SWEEP. The Borrower will enter into a written contract, in
a form satisfactory to Silicon, with either U.S. Bank or First Interstate Bank
of Oregon (individually the "Depository Bank" ) whereby all of Borrower's funds
in its account with the Depository Bank are transferred to Silicon account no.
___________ on a daily basis.

         3.7 BOOKS AND RECORDS. The Borrower has maintained and will maintain at
the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

         3.8 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower. The Borrower is now and shall
continue to be solvent. The Borrower shall provide Silicon: (a) within 30 days
after the end of each month, a monthly financial statement (consisting of an
income statement and a balance sheet) prepared by the Borrower; (b) within 15
days after the end of each month, an accounts receivable report and an accounts
payable report in such form as Silicon shall reasonably specify; (c) within 15
days after the end of each month, a Borrowing Base Certificate as required by
the rules and regulations of the Export-Import Bank of the United States in the
form attached to this Agreement as Exhibit A, as Silicon may reasonably modify
such Certificate from time to time, signed by the President or Chief Financial
Officer of the Borrower; and (d) within 30 days after the end of each quarter of
each fiscal year, a Compliance Certificate in such form as Silicon shall
reasonably specify, signed by the President or Chief Financial Officer of the
Borrower, certifying that throughout such quarter the Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth on
the Schedule hereto and such other information as Silicon shall reasonably
request. The Borrower shall provide Silicon, within 90 days following the end of
the Borrower's fiscal year, complete CPA-audited financial statements with
details on Borrower, such review being conducted by independent certified public
accountants reasonably acceptable to Silicon.

         3.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower. The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


Page 4 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.10 COMPLIANCE WITH LAW. The Borrower has complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Borrower, including, but not limited
to, those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.

         3.11 LITIGATION. Except as disclosed in the Schedule hereto, there is
no claim, suit, litigation, proceeding or investigation pending or (to best of
the Borrower's knowledge) threatened by or against or affecting the Borrower in
any court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.

         3.12 USE OF PROCEEDS. All proceeds of all Loans shall be used solely
for lawful business purposes.

         3.13 NO PATENTS, TRADEMARKS OR COPYRIGHTS. The attached Schedule 3.13
shows the patents (including pending applications, if any), trademarks and
copyrights with the U.S. Patent and Trademark Office, the U.S. Copyright Office
or any similar office or agency of any state, of the United States of America or
of any foreign jurisdiction that the Borrower owns. The Borrower has not granted
a security interest in, assigned, or pledged any of the foregoing in any manner
to secure any obligations of the Borrower.

         3.14 HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. Except as disclosed to and acknowledged by Silicon in writing,
the Borrower represents and warrants that: (a) the Borrower has no knowledge of
(i) any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance by any prior owners or
occupants of any of the properties, or (ii) any actual or threatened litigation
or claims of any kind by any person relating to such matters; (b) Except as set
forth in Schedule 3.14, neither the Borrower nor any subtenant, contractor,
agent or other user authorized by Borrower of any of the properties shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous waste
or substance on, under, or about any of the properties owned or operated by the
Borrower; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. The Borrower authorizes Silicon and its agents, upon 24 hours prior
notice (which need not be in writing), to enter upon the properties to make such
inspections and tests as Silicon may deem appropriate to determine compliance of
the properties owned or operated by the Borrower with this section of the
Agreement. Any inspections or tests made by Silicon shall be for Silicon's
purposes only and shall not be construed to create any responsibility or
liability on the part of Silicon to the Borrower or to any other person. The
Borrower hereby (a) releases and waives any


Page 5 - LOAN AND SECURITY AGREEMENT
<PAGE>

future claims against Silicon for indemnity or contribution in the event the
Borrower becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Silicon against any and all claims,
losses, liabilities, damages, penalties, and expenses which Silicon may directly
or indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to the Borrower's
ownership or interest in the properties, whether or not the same was or should
have been known to the Borrower. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the payment of
the Indebtedness and the termination or expiration of this Agreement and shall
not be affected by Silicon's acquisition of any interest in any of the
properties, whether by foreclosure or otherwise.

4.       ADDITIONAL DUTIES OF THE BORROWER.

         4.1 COVENANTS. The Borrower shall at all times comply with the
covenants set forth in the Schedule to this Agreement.

         4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of
all outstanding Loans and all other Obligations exceeds the Credit Limit,
without limiting Silicon's other remedies, and whether or not Silicon declares
an Event of Default, the Borrower shall remit to Silicon all checks and other
proceeds of the Borrower's accounts and other Collateral, in the same form as
received by the Borrower, within one day after the Borrower's receipt of the
same, to be applied to the Obligations in such order as Silicon shall determine
in its discretion.

         4.3 INSURANCE. The Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require. All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon. Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its sole and absolute discretion,
except that, provided no Event of Default has occurred, Silicon shall release to
the Borrower insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Borrower for the replacement of the
equipment with respect to which the insurance proceeds were paid. Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used. If the Borrower fails to provide or pay for any insurance, Silicon may,
but is not obligated to, obtain the same at the Borrower's expense. The Borrower
shall promptly deliver to Silicon copies of all reports made to insurance
companies.

         4.4 REPORT. The Borrower shall provide Silicon with such written
reports with respect to the Borrower, as Silicon shall from time to time
reasonably specify.

         4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral. Silicon shall take reasonable
steps to keep confidential all information obtained in any such inspection or
audit, but Silicon shall have the right to disclose any such information to its
auditors, regulatory agencies and attorneys, and pursuant to any subpoena or
other legal process. Borrower shall reimburse Silicon for up to $1,250.00 per
audit for Silicon's out-of-pocket costs


Page 6- LOAN AND SECURITY AGREEMENT
<PAGE>

for semi-annual accounts receivable audits, and Silicon may debit the Borrower's
deposit accounts with Silicon for the actual, reasonable out-of-pocket cost of
such accounts receivable audits (up to the limit stated above), in which event
Silicon shall send notification thereof to the Borrower. Notwithstanding the
foregoing, during the continuation of an Event of Default all audits shall be at
the Borrower's expense.

         4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except that
the Borrower may merge or consolidate with another corporation if the Borrower
is the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined herein) as of the end of the month prior to the effective date of the
merger, and the assets of the corporation acquired in the merger are not subject
to any liens or encumbrances, except Permitted Liens; (ii) acquire any assets
outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined herein) as of the end
of the month prior to the effective date of the acquisition; (iii) enter into
any other transaction outside the ordinary course of business (except as
permitted by the other provisions of this Section); (iv) sell or transfer any
Collateral, except for the sale of finished inventory in the ordinary course of
the Borrower's business (which inventory shall be released from the security
interest granted in Section 2.2 upon completion of such sales), and except for
the sale of obsolete or unneeded equipment in the ordinary course of business;
(v) make any loans of any money or any other asset to any subsidiary or
affiliate of Borrower; (vi) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on the Borrower or on the
prospect of repayment of the Obligations; (vii) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (viii) pay or
declare any dividends on the Borrower's stock (except for dividends payable
solely in stock of the Borrower); (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of the Borrower's stock, except as the
Borrower may decide in order to satisfy stock warrants granted to Silicon,
Financing for Science International, Inc., Advanced Energy Industries, Inc., or
Bridgewater Capital Corporation; (x) make any change in the Borrower's capital
structure which has a material adverse effect on the Borrower or on the prospect
of repayment of the Obligations; (xi) dissolve or elect to dissolve; (xii) pay
bonuses or cash compensation to employees or officers for any fiscal year in
excess of net after tax earnings for the fiscal year; or (xiii) pledge or
otherwise encumber any patents, trademarks or other intellectual property of any
type owned or controlled by Borrower. "Tangible Net Worth" means stockholders'
equity plus debt that is subordinated to the Loans pursuant to a written
subordination agreement satisfactory to Silicon and accrued interest thereon,
less goodwill, patents, capitalized software costs, tradenames, trademarks, and
all other assets which would be classified as intangible assets under generally
accepted accounting principles. Transactions permitted by the foregoing
provisions of this Section are only permitted if no Event of Default is pending
at the time.

         4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to Silicon,
make available the Borrower and its officers, employees and agents and the
Borrower's books and records to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.

         4.8 VERIFICATION. Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the


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<PAGE>

Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior notification shall be required following an Event of
Default. Silicon shall not be required to obtain the Borrower's consent prior to
any such verification of accounts, whether or not an Event of Default has
occurred.

         4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.

5.       TERM.

         5.1 MATURITY DATE. This Agreement shall continue in effect until the
payment in full of the Obligations, provided, however, that the Borrower shall
repay the Loans in full, with all accrued but unpaid interest, not later than
the "Maturity Date" for each such Loan set forth on the Schedule.

         5.2 EARLY TERMINATION. Subject to Section 5.3, this Agreement may be
terminated, without penalty, prior to the Maturity Date as follows: (i) by the
Borrower, effective three business days after written notice of termination is
given to Silicon; or (ii) by Silicon at any time after the occurrence of an
Event of Default, without notice, effective immediately.

         5.3 PAYMENT OF OBLIGATIONS. On the due dates stated in the Schedule, or
on any earlier effective date of termination, the Borrower shall pay and perform
in full all Obligations, whether evidenced by installment notes or otherwise,
and whether or not all or any part of such Obligations are otherwise then due
and payable. Notwithstanding any termination of this Agreement, all of Silicon's
security interests in all of the Collateral and all of the terms and provisions
of this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without limiting the fact
that Loans are discretionary on the part of Silicon, Silicon may, in its sole
discretion, refuse to make any further Loans after termination. No termination
shall in any way affect or impair any right or remedy of Silicon, nor shall any
such termination relieve the Borrower of any Obligation to Silicon, until all of
the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations, Silicon shall promptly deliver to
the Borrower termination statements, requests for reconveyances and such other
documents as may be required to fully terminate any of Silicon's security
interests.


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<PAGE>

6.       EVENTS OF DEFAULT AND REMEDIES.

         6.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof: (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; (b) the Borrower
shall fail to pay when due any Loan or any interest thereon or any other
monetary Obligation; (c) the total Loans and other Obligations outstanding at
any time exceeds the Credit Limit; (d) the Borrower shall fail to comply with
any of the covenants set forth in the Schedule to this Agreement or shall fail
to perform any other non-monetary Obligation which by its nature cannot be
cured; (e) the Borrower shall fail to pay or perform any other non-monetary
Obligation, which failure is not cured within 15 days after the occurrence of
the same; (f) any levy, assessment, attachment, seizure, lien or encumbrance is
made on all or any part of the Collateral; (g) dissolution, termination of
existence, insolvency or business failure of the Borrower, or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by the Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; (h) the commencement of any
proceeding against the Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 60 days
after the date commenced; (i) revocation or termination of, or limitation of
liability upon, any guaranty of the Obligations; (j) the Borrower makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations, unless such payment is permitted in the applicable
subordination agreement, or if any person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; (k)
the Borrower shall generally not pay its debts as they become due; or the
Borrower shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of any
of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; (m) either the Borrower or any other party thereto
shall breach any subordination agreement executed in connection with the Loan;
(n) the sale or transfer of fifty percent or more of the outstanding shares of
stock of the Borrower; (o) the Borrower shall fail to pay when due, or within
any applicable grace periods, any amount due to Sundstrand Corporation or the
Oregon Economic Development Commission that is secured by a lien on the
Borrower's real property located in Deschutes County, Oregon, or any such
creditor shall commence a foreclosure on such real property; or (p) the Borrower
shall breach any of its obligations under the Deed of Trust, Assignment of Rents
and Leases, and Security Agreement given by the Borrower to Silicon with respect
to Borrower's real property located in Deschutes County, Oregon. If any of the
foregoing defaults is curable and if Borrower has not been given more than one
prior notice of default within the preceding twelve months, it may be cured (and
no Event of Default will have occurred) if Borrower, after receiving written
notice from Lender demanding cure of such default cures the failure within
thirty days. Silicon may cease making any Loans hereunder during any of the
above cure periods, and thereafter if an Event of Default has occurred.
         6.2 REMEDIES. Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under Section 6.1, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
Accelerate and declare all or any part of


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<PAGE>

the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
the Borrower hereby authorizes Silicon without judicial process to enter onto
any of the Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive
control thereof without charge for so long as Silicon deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Silicon seek
to take possession of any or all of the Collateral by Court process, the
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii)
any requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (d) Require the Borrower to
assemble any or all of the Collateral and make it available to Silicon at
places designated by Silicon which are reasonably convenient to Silicon and
the Borrower, and to remove the Collateral to such locations as Silicon may
deem advisable; (e) Require the Borrower to deliver to Silicon, in kind, all
checks and other payments received with respect to all accounts and other
Collateral, together with any necessary endorsements, within one day after
the date received by the Borrower; (f) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such
purpose and for the purpose of removal, Silicon shall have the right to use
the Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all
other property without charge; (g) Sell, lease or otherwise dispose of any of
the Collateral in its condition at the time Silicon obtains possession of it
or after further manufacturing, processing or repair, at any one or more
public and/or private sales, in lots or in bulk, for cash, exchange or other
property, or on credit, and to adjourn any such sale from time to time
without notice other than oral announcement at the time scheduled for sale.
Silicon shall have the right to conduct such disposition on the Borrower's
premises without charge, for such time or times as Silicon deems reasonable,
or on Silicon's premises, or elsewhere and the Collateral need not be located
at the place of disposition. Silicon may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition, and
if permissible under applicable law, at any private disposition. Any sale or
other disposition of Collateral shall not relieve the Borrower of any
liability the Borrower may have if any Collateral is defective as to title or
physical condition or otherwise at the time of sale; (h) Demand payment of,
and collect any accounts and general intangibles comprising Collateral and,
in connection therewith, the Borrower irrevocably authorizes Silicon to
endorse or sign the Borrower's name on all collections, receipts, instruments
and other documents, to take possession of and open mail addressed to the
Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) Offset against any sums in any of the
Borrower's general, special or other deposit accounts with Silicon, including
but not limited to account no.         ; and (j) Demand and receive
possession of any of the Borrower's federal and state income tax and the
books and records utilized in the preparation thereof or referring thereto.
All reasonable fees of professionals (including attorneys' fees), expenses,
costs, liabilities and obligations incurred by Silicon with respect to the
foregoing shall be added to and become part of the Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations. Without limiting any of Silicon's
rights and remedies, from and after the failure of Borrower to cure any Event
of Default, Silicon shall have the right to increase the interest rate
applicable to the Obligations by an additional four percent per annum.


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<PAGE>

         6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the Collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.

         6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Borrower or Silicon, or
in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Borrower, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements. Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's
rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of the Borrower.


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<PAGE>

         6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the exercise
of its rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Silicon shall determine in its sole discretion. Any surplus shall be paid to the
Borrower or other persons legally entitled thereto; the Borrower shall remain
liable to Silicon for any deficiency. If Silicon, in its sole discretion,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale or other disposition of Collateral,
Silicon shall have the option, exercisable at any time, in its sole discretion,
of either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Silicon
of the cash therefor.

         6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Oregon Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or
in the future entered into between Silicon and the Borrower, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be
deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but
all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.

7.       GENERAL PROVISIONS.

         7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.

         7.2 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.

         7.3 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO
BE ENFORCEABLE.

         7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly


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<PAGE>

comply with any of the provisions of this Agreement or any other present or
future agreement between the Borrower and Silicon shall not waive or diminish
any right of Silicon later to demand and receive strict compliance therewith.
Any waiver of any default shall not waive or affect any other default, whether
prior or subsequent thereto. None of the provisions of this Agreement or any
other agreement now or in the future executed by the Borrower and delivered to
Silicon shall be deemed to have been waived by any act or knowledge of Silicon
or its agents or employees, but only by a specific written waiver signed by an
officer of Silicon and delivered to the Borrower. The Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, document or guaranty at any time held by
Silicon on which the Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.

         7.5 [INTENTIONALLY OMITTED]

         7.6 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

         7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.

         7.8 ATTORNEYS' FEES AND COSTS. The Borrower shall reimburse Silicon for
all reasonable attorneys' fees and fees of other professionals, and all filing,
recording, search, title insurance, appraisal, audit, and other reasonable costs
incurred by Silicon, pursuant to, or in connection with, or relating to this
Agreement (whether or not a lawsuit is filed), including, but not limited to,
any reasonable attorneys' fees and costs Silicon incurs in order to do the
following: prepare and negotiate this Agreement and the documents relating to
this Agreement; obtain legal advice in connection with this Agreement; enforce,
or seek to enforce, any of its rights; prosecute actions against, or defend
actions by, account debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in
bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party
claim, or other claim; examine, audit, copy, and inspect any of the Collateral
or any of the Borrower's books and records; protect, obtain possession of,
lease, dispose of, or otherwise enforce Silicon's security interest in, the
Collateral and otherwise represent Silicon in any litigation relating to the
Borrower. If either Silicon or the Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and professionals' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of the Borrower's Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations.

         7.9 BENEFIT OF AGREEMENT; CONFIDENTIALITY. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of the parties
hereto; provided, however, that the Borrower may not assign or transfer any of
its rights under this Agreement without the prior written consent of Silicon,
and any prohibited assignment shall be void. No consent by Silicon to any
assignment shall release the Borrower from its liability for the Obligations.
The Borrower agrees and consents to Silicon's sale or transfer, whether now or
later, of one or more participation interests in the Loans to one or more
purchasers, whether related or


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<PAGE>

unrelated to Silicon. Silicon may provide, without any limitation whatsoever, to
any one or more purchasers, or potential purchasers, any information or
knowledge Silicon may have about the Borrower or about any other matter relating
to the Loan and the Borrower hereby waive any rights to privacy it may have with
respect to such matters. The Borrower additionally waives any and all notices of
sale of participation interests, as well as all notices of any repurchase of
such participation interests. The Borrower also agrees that the purchasers of
any such participation interests shall be considered as the absolute owners of
such interests in the Loans and shall have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests. The Borrower unconditionally agrees that either Silicon or such
purchaser may enforce the Borrower's obligations under the Loans irrespective of
the failure or insolvency of any holder of any interest in the Loans.

         7.10 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than
one person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

         7.11 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly against
Silicon or the Borrower under any rule of construction or otherwise.

         7.12 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY CONDUCT, ACTS
OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR THE
BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.

         7.13 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of the
State of Oregon. Any undefined term used in this Agreement that is defined in
the Oregon Uniform Commercial Code shall have the meaning assigned to that term
in the Oregon Uniform Commercial Code. As a material part of the consideration
to Silicon to enter into this Agreement, the Borrower agrees (subject to the
parties right to require arbitration under Section 7.13 of this Agreement) that
all actions and proceedings relating directly or indirectly hereto shall be
litigated in courts located within Oregon, and that the exclusive venue therefor
shall be Washington County.

                                    BORROWER:

                                                 ADVANCED POWER TECHNOLOGY, INC.



                                                 By:____________________________
                                                 Title:_________________________


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<PAGE>

                                    SILICON:

                                                 SILICON VALLEY BANK


                                                 By:____________________________
                                                 Title:_________________________


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<PAGE>





                     SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                 (Exim Program)

Borrower:                  Advanced Power Technology, Inc.

Address:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

Date:                      September 6, 1995


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:

                           Silicon and the Borrower are parties to that certain
                           other Loan and Security Agreement of even date (the
                           "Non-Exim Agreement"). Both this Agreement and the
                           Non-Exim Agreement shall continue in full force and
                           effect, and all rights and remedies under this
                           Agreement and the Non-Exim Agreement are cumulative.
                           The term "Obligations" as used in this Agreement and
                           in the Non-Exim Agreement shall include without
                           limitation the obligation to pay when due all Loans
                           made pursuant to this Agreement (the "Exim Loans")
                           and all interest thereon and the obligation to pay
                           when due all Loans made pursuant to the Non-Exim
                           Agreement (the "Non-Exim Loans") and all interest
                           thereon. Without limiting the generality of the
                           foregoing, all "Collateral" as defined in this
                           Agreement and as defined in the Non-Exim Agreement
                           shall secure all Exim Loans and all Non-Exim Loans
                           and interest thereon, and all other Obligations. Any
                           Event of Default under this Agreement shall
                           constitute an Event of Default under the Non-Exim
                           Agreement, and any Event of Default under the
                           Non-Exim Agreement shall also constitute an Event of
                           Default under this Agreement. In the event Silicon
                           assigns its rights under this Agreement and/or under
                           any Note evidencing Exim Loans and/or its rights
                           under the Non-Exim Agreement and/or under any Note
                           evidencing Non-Exim Loans, to any third party,
                           including without limitation the Export-Import Bank
                           of the United States ("Exim Bank"), whether before or
                           after the occurrence of any Event of Default, Silicon
                           shall have the right (but not any obligation), in its
                           sole discretion, to allocate and apportion Collateral
                           to the Agreement and/or Note assigned and to specify
                           the priorities of the respective security interests
                           in such Collateral between itself and the assignee,
                           all without notice to or consent of the Borrower.

                           This Agreement is subject to all of the terms and
                           conditions of the Borrower Agreement attached hereto
                           as Exhibit A, and all documents attached to such
                           Borrower Agreement (collectively, the "Exim
                           Documents"), all of which are hereby incorporated
                           herein by this reference. Borrower shall perform all
                           of the obligations and comply with all of the
                           affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Documents
                           as though such


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<PAGE>

                           obligations and covenants were expressly set forth
                           herein, and all of which are hereby incorporated
                           herein by this reference. In the event of any
                           conflict between the terms of the Exim Documents and
                           the terms of the Exim Loan Agreement or the Schedule
                           or any related promissory note, whichever terms are
                           more restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1.1)
EXIM LOANS:                An amount not to exceed the lesser of:

                           (a) $1,750,000 at any one time outstanding; or

                           (b) a total of (i) 90% of the value of Borrower's
                           eligible export receivables, which are eligible for
                           borrowing as provided below, plus (ii) 70% of the
                           value of Borrower's eligible exportable inventory
                           which is eligible for borrowing as provided below,
                           which Silicon in its reasonable discretion deems
                           eligible for borrowing.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: accounts outstanding
                           for more than 90 days from the invoice date unless
                           otherwise agreed to in writing by Silicon, accounts
                           subject to any contingencies, accounts billed or
                           payable outside the United States (except for those
                           backed by a letter of credit satisfactory to
                           Silicon), accounts owing from governmental agencies
                           unless otherwise agreed to in writing by Silicon,
                           accounts owing from one account debtor to the extent
                           they exceed 25% of the total eligible accounts
                           outstanding, accounts owing from an affiliate of the
                           Borrower, accounts subject to setoff, recoupment,
                           counterclaim or any other demand by the account
                           debtor. In addition, if more than 50% of the accounts
                           owing from an account debtor are outstanding more
                           than 120 days from the invoice date or are otherwise
                           not eligible accounts, then all accounts owing from
                           that account debtor shall be deemed ineligible for
                           borrowing.

                           Without limiting the fact that the determination of
                           which inventory is eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: any inventory other
                           finished goods that are owned by Borrower and located
                           in Bend, Oregon; inventory that is used, obsolete or
                           returned goods; inventory that is stored at a
                           location other than the Borrowers' Address or any
                           location owned, leased or rented by Borrowers and
                           previously identified to Silicon; inventory that is
                           subject to a landlord's lien; and inventory that is
                           not in the possession of the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                     This Agreement is subject to all of the terms and
                           conditions of the Exim Guarantee (including without
                           limitation the Transaction Attachment thereto and


Page 17 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           Special Conditions thereto) which are hereby
                           incorporated herein by this reference. Borrower
                           expressly agrees to perform all of the obligations
                           and comply with all of the affirmative and negative
                           covenants and all other terms and conditions set
                           forth in the Exim Guarantee as though the same were
                           expressly set forth herein, and all of the same are
                           hereby incorporated herein by this reference. In the
                           event of any conflict between the terms of the Exim
                           Guarantee and the other terms of this Agreement,
                           whichever terms are more restrictive shall apply.
                           Borrower shall reimburse Silicon for all fees and out
                           of pocket expenses incurred by Silicon with respect
                           to the Exim Guarantee, including without limitation
                           all facility fees and usage fees, and Silicon is
                           authorized to debit Borrower's account with Silicon
                           for such fees, costs and expenses when paid by
                           Silicon.

INTEREST RATE:
(Section 1.2)              The interest rate applicable to the Export Line of
                           Credit shall be a rate equal to the "Prime Rate" in
                           effect from time to time, plus 1.0% per annum.
                           Interest calculations shall be made on the basis of a
                           360-day year and the actual number of days elapsed.
                           "Prime Rate" means the rate announced from time to
                           time by Silicon as its "prime rate"; it is a base
                           rate upon which other rates charged by Silicon are
                           based, and it is not necessarily the best rate
                           available at Silicon. The interest rate applicable to
                           the Obligations shall change on each date there is a
                           change in the Prime Rate.

LOAN ORIGINATION
FEE: (Section 1.3)         $26,250.00, which is fully earned and payable at
                           closing. (Any Commitment Fee previously paid by the
                           Borrower in connection with this loan shall be
                           credited against this Fee.)

MATURITY DATE:
(Section 1.3)              One year from the date first written above, at which
                           time all unpaid principal and accrued but unpaid
                           interest shall be due and payable.

PRIOR NAMES OF
BORROWER:                  See Exhibit B

TRADE NAMES OF
BORROWER:                  See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:             See Exhibit B

MATERIAL ADVERSE
LITIGATION:                See Exhibit B

FINANCIAL
COVENANTS:
(Section 4.1)              The Borrower shall comply with all of the following
                           covenants, all of which


Page 18 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           shall be determined and measured in accordance with
                           generally accepted accounting principles, except as
                           otherwise stated below:

TANGIBLE NET
WORTH:                     Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $4,250,000,
                           measured quarterly.


DEBT TO TANGIBLE
NET WORTH RATIO:           Borrower shall maintain a ratio of total liabilities
                           to Tangible Net Worth of not more than 2.75:1.0,
                           measured quarterly. Upon maturity of the Interim
                           Bridge Loan, Borrower shall maintain a ratio of total
                           liabilities to Tangible Net Worth of not more than
                           2.50:1.0, measured quarterly. For purposes of this
                           calculation, total liabilities shall exclude deferred
                           revenues and debt, if any, that has been subordinated
                           to the Loans in a written subordination agreement on
                           terms satisfactory to Silicon.


QUICK RATIO:               Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities of not less
                           than 0.50:1, measured quarterly. Upon maturity of the
                           Interim Bridge Loan, Borrower shall maintain a ratio
                           of Quick Assets to current liabilities of not less
                           than 0.55:1, measured quarterly.

BACKLOG TO
INVENTORY RATIO:           Borrower shall maintain a ratio of Backlog (as
                           defined below) to the book value of inventory of at
                           least 2.50:1.0, measured monthly on a rolling three
                           month average. In the event that the ratio of Backlog
                           to book value of inventory is less than 2.50:1.0 for
                           two consecutive months, the definition of Borrowing
                           Base for the Secured Accounts Receivable Line of
                           Credit shall be revised to prohibit borrowing against
                           Eligible Inventory for a period of 30 consecutive
                           days each year.

PROFITABILITY:             Borrower shall not incur a quarterly loss in excess
                           of $500,000 for one quarter, $750,000 for two
                           quarters, nor incur losses in any amount in more than
                           three or more consecutive quarters. For purposes of
                           this paragraph, "loss" means net sales, less cost of
                           goods sold, less operating expenses excluding
                           non-cash expenses.


DEFINITIONS:               "Tangible Net Worth" means stockholders' equity plus
                           debt, if any, that has been subordinated to the Loans
                           in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less goodwill, patents, capitalized software
                           costs, deferred organizational costs, tradenames,
                           trademarks, and all other assets which would be
                           classified as intangible assets under generally
                           accepted accounting principles. "Quick Assets" means
                           cash on hand or on deposit in banks, readily
                           marketable securities issued by the United States,
                           readily marketable commercial paper rated "A-I" by
                           Standard & Poor's Corporation (or a similar rating by
                           a similar rating organization), certificates of


Page 19 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           deposit and banker's acceptances, and accounts
                           receivable (net of allowance for doubtful accounts).
                           "Backlog" is defined as the book value of orders
                           received by Borrower, backed by purchase order, for
                           shipment of product within 12 months.

OTHER COVENANTS:
(Section 4.1)              Borrower shall at all times comply with all of the
                           following additional covenants:

                           BANKING RELATIONSHIP.  Borrower shall at all
                           times maintain its primary banking relationship
                           with Silicon.

                           EXIM BANK REQUIREMENTS.  Borrower shall at all
                           times conform the rules and regulations of the
                           Export-Import Bank of the United States.

CONDITIONS TO
CLOSING:                   Without in any way limiting the discretionary
                           nature of advances under this Agreement, before
                           requesting any such advance, the Borrower shall
                           satisfy each of the following conditions:

1.  LOAN DOCUMENTS:

                           Silicon shall have received this Agreement, the
                           Schedule, and such other loan documents as Silicon
                           shall require, each duly executed and delivered by
                           the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                           Silicon shall have received each of the following in
                           form and substance satisfactory to it:

                           (a) Certified Copies of the Articles of Incorporation
                           and Bylaws of the Borrower;

                           (b) A Certificate of Good Standing issued by the
                           Secretary of State of the Borrower's state of
                           incorporation and such other states as Silicon may
                           reasonably request with respect to the Borrower;

                           (c) A certified copy of a Resolution adopted by the
                           Board of Directors of the Borrower authorizing the
                           execution, delivery and performance of this
                           Agreement, and any other documents or certificates to
                           be executed by the Borrower in connection with this
                           transaction; and

                           (d) Incumbency Certificates describing the office and
                           identifying the specimen signatures of the
                           individuals signing all such loan documents on behalf
                           of the Borrower.


Page 20 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           (e) A Subordination Agreement executed by all
                           shareholders of Borrower to whom Borrower is
                           indebted.

3.  PERFECTION AND
PRIORITY OF SECURITY:      Silicon shall have received evidence satisfactory to
                           it that its security interest in the Collateral has
                           been duly perfected and that such security interest
                           is prior to all other liens, charges, security
                           interests, encumbrances and adverse claims in or to
                           the Collateral other than Permitted Liens, which
                           evidence shall include, without limitation, a
                           certificate from the Oregon Secretary of State
                           showing the due filing and first priority of the UCC
                           Financing Statements to be signed by the Borrower
                           covering the Collateral.

4. INSURANCE:              Silicon shall have received evidence satisfactory to
                           it that all insurance required by this Agreement is
                           in full force and effect, with loss payee
                           designations and additional insured designations as
                           required by this Agreement.

5. OTHER INFORMATION:

                           Silicon shall have received such other statements,
                           opinions, certificates, documents and information
                           with respect to matters contemplated by this
                           Agreement as it may reasonably request, all of which
                           must be acceptable to Silicon.

                           Silicon shall have conducted an examination of the
                           Borrower's books, records, ledgers, journals, and
                           registers, as Silicon may deem necessary, and shall
                           be satisfied with the results of such examination in
                           its sole discretion.

                           Exim Bank shall have agreed to guarantee payment of
                           ninety percent (90%) of the Loan and all interest
                           accrued thereon, subject to the terms of a master
                           guarantee agreement between Exim Bank and Silicon.


         Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule.

                                            BORROWER:

                                            ADVANCED POWER TECHNOLOGY, INC.


                                            By:_________________________________
                                            Title:______________________________

                                            SILICON:

                                            SILICON VALLEY BANK


Page 21 - LOAN AND SECURITY AGREEMENT
<PAGE>

                                            By:_________________________________
                                            Title:______________________________


Page 22 - LOAN AND SECURITY AGREEMENT
<PAGE>




                                    EXHIBIT A

                        [INSERT EXIM BORROWER AGREEMENT]


Page 23 - LOAN AND SECURITY AGREEMENT
<PAGE>





                                    EXHIBIT B

                          [INSERT BORROWER DISCLOSURES]


Page 24 - LOAN AND SECURITY AGREEMENT
<PAGE>





                                  SCHEDULE 3.13


Page 25 - LOAN AND SECURITY AGREEMENT
<PAGE>


                                  SCHEDULE 3.14


Page 26 - LOAN AND SECURITY AGREEMENT
<PAGE>

                             LOAN MODIFICATION AGREEMENT


BETWEEN:      Advanced Power Technology, Inc., a Delaware corporation
              ("Borrower"), whose address is 405 S.W. Columbia Street, Bend,
              Oregon 97702;

AND:          Silicon Valley Bank ("Silicon"), whose address is 3003 Tasman
              Drive, Santa Clara, California 95054;

DATE:         December 18, 1997.

       This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.

       1.     BACKGROUND.  Borrower entered into a Loan and Security Agreement
(as amended from time to time, the "Loan Agreement") and a Loan and Security
Agreement (Exim Program) (as amended from time to time, the "Exim Loan
Agreement") with Silicon in September 1995.  Capitalized terms used in this Loan
Modification Agreement shall, unless otherwise defined in this Agreement, have
the meaning given to such terms in the Loan Agreement and the Exim Loan
Agreement.

       Silicon and Borrower are entering into this Agreement to state the terms
and conditions of certain modifications to the Loan Agreement and Schedule
thereto, and the Exim Loan Agreement and Schedule thereto.

       2.     MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE, AND EXIM LOAN
              AGREEMENT AND SCHEDULE.

              2.1     The Schedule to the Loan Agreement is hereby deleted and
replaced by the Amended and Restated Schedule to Loan and Security Agreement
attached to this Agreement as EXHIBIT A.

              2.2     The Schedule to the Exim Loan Agreement is hereby deleted
and replaced by the Amended and Restated Schedule to Loan and Security Agreement
(Exim Program) attached to this Agreement as EXHIBIT B.

              2.3     Borrower acknowledges and agrees that all Obligations,
including without limitation Borrower's obligation to repay amounts advanced by
Silicon to Borrower on the terms of the Loan Agreement and Schedule, and the
Exim Loan Agreement and Schedule, as modified by this Loan Modification
Agreement, are secured by all liens and security interests granted by Borrower
to Silicon in the Loan Agreement and the Exim Loan Agreement.  Borrower shall
not grant a lien on, or security interest in, any of its patents, maskworks,
copyrights, trademarks, tradenames, or service marks (in each case whether
registered or not), or any applications for any of the foregoing, or any other
intellectual property of Borrower without Silicon's prior written consent.

              2.4     Notwithstanding any provision of the Loan Agreement,
provided that no Event of Default is then pending or would result from such loan
by Borrower, Borrower shall be permitted to loan up to $3,000,000 to a limited
liability company owned by Borrower's management, to finance the acquisition by
such limited liability company of the stock in Borrower owned by Sundstrand
Corporation.

       3.     CONDITIONS PRECEDENT.  This Loan Modification Agreement shall not
take effect until Borrower delivers to Silicon a Certified Resolution of
Borrower, an Acknowledgment of Guarantor by the guarantor of the Loan in the
form attached hereto, joint and several Continuing Guaranties executed by the


Page 1 - LOAN MODIFICATION AGREEMENT


<PAGE>

members of management of Borrower who are also direct or indirect shareholders
of Borrower, in the form attached hereto, and such other documents as Silicon
shall reasonably require to give effect to the terms of this Loan Modification
Agreement.

       4.     NO OTHER MODIFICATIONS.  Except as expressly modified by this
Loan Modification Agreement, the terms of the Loan Agreement and the Exim
Loan Agreement shall remain unchanged and in full force and effect.
Silicon's agreement to modify the Loan Agreement and the Exim Loan Agreement
pursuant to this Loan Modification Agreement shall not obligate Silicon to
make any future modifications to the Loan Agreement, Exim Loan Agreement or
any other loan document.  Nothing in this Loan Modification Agreement shall
constitute a satisfaction of any indebtedness of any Borrower to Silicon.  It
is the intention of Silicon and Borrower to retain as liable parties all
makers and endorsers of the Loan Agreement, Exim Loan Agreement or any other
loan document. No maker, endorser, or guarantor shall be released by virtue
of this Loan Modification Agreement.  The terms of this paragraph shall apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.

       5.     REPRESENTATIONS AND WARRANTIES.

              5.1     The Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within the Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of the Borrower's articles of incorporation, bylaws or of any
undertaking to which the Borrower is a party or by which it is bound.

              5.2     The Borrower understands and agrees that in entering into
this Agreement, Silicon is relying upon the Borrower's representations,
warranties and agreements as set forth in the Loan Agreement, Exim Loan
Agreement and other loan documents.  Borrower hereby reaffirms all
representations and warranties in the Loan Agreement, all of which are true as
of the date of this Agreement.

                                   BORROWER:

                                          ADVANCED POWER TECHNOLOGY, INC.


                                          By:
                                                 ------------------------------
                                          Title:
                                                 ------------------------------

                                   SILICON:

                                          SILICON VALLEY BANK



                                          By:
                                                 ------------------------------
                                          Title:
                                                 ------------------------------


Page 2 - LOAN MODIFICATION AGREEMENT

<PAGE>

                             ACKNOWLEDGMENT OF GUARANTOR

       The undersigned guarantor (1) consents to the modifications to the Loan
Agreement and Schedule and the Exim Loan Agreement and Schedule stated in the
attached Loan Modification Agreement between Silicon and the Borrower, and (2)
ratifies the provisions of the guaranty executed by such guarantor for the
benefit of Silicon and confirms that all provisions of such guaranty are in full
force and effect and apply to the $2,500,000 Term Loan (as defined in such
guaranty) notwithstanding the terms of the Loan Modification Agreement.  Nothing
in this Acknowledgment of Guarantor increases the obligations of such guarantor
as stated in such guaranty.

                                                 ADVANCED ENERGY INDUSTRIES,
                                                 INC.



                                                 By:
                                                     --------------------------
                                                        Its:
                                                             ------------------






Page 3 - LOAN MODIFICATION AGREEMENT

<PAGE>

                        [ATTACH FORM OF CONTINUING GUARANTY]
















Page 4 - LOAN MODIFICATION AGREEMENT
<PAGE>

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:             Advanced Power Technology, Inc.

Address:              405 S.W. Columbia Street
                      Bend, Oregon 97702

Date:                 December 18, 1997


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:         An amount not to exceed the lesser of: (i) $3,000,000 at
                      any one time outstanding; or (ii) the amount of the
                      "Borrowing Base", as defined below.

                      For purposes of this Schedule, the "Borrowing Base" shall
                      mean the sum of (i) 80% of the Net Amount of Borrower's
                      eligible accounts receivable, plus (ii) 50% of Borrower's
                      "Eligible Inventory" (as defined below), up to a maximum
                      advance of $1,250,000 against Eligible Inventory.
                      Notwithstanding the foregoing, however, (a) the 50%
                      advance rate as stated in clause (i) above shall be
                      decreased to 25% beginning October 1, 1998, and
                      continuing thereafter; and (b) the $1,250,000 sublimit on
                      inventory advances as stated in clause (ii) above shall
                      be decreased to $500,000 beginning October 1, 1998, and
                      continuing thereafter.  With respect to Borrower's
                      accounts, "Net Amount" means the gross amount of the
                      account, minus all applicable sales, use, excise and
                      other similar taxes and minus all discounts, credits and
                      allowances of any nature granted or claimed.  Borrower's
                      "Eligible Inventory" means the Borrower's inventory held
                      for sale in the United States or Canada, valued at the
                      lower of wholesale cost or market value, which Silicon in
                      its reasonable discretion deems eligible for borrowing,
                      subject to the Backlog Covenant described below.

                      The amount of all letters of credit issued by Silicon at
                      the request of the Borrower shall reduce, dollar for
                      dollar, the amount otherwise available to be borrowed
                      under the Borrowing Base formula described above.  The
                      amount otherwise available to be borrowed under the
                      Borrowing Base formula described above shall also be
                      reduced by one-half of the outstanding balance of Secured
                      Term Loan No. 3 described below.

                      Without limiting the fact that the determination of which
                      accounts are eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing:  accounts outstanding for more
                      than 90 days from the invoice date unless otherwise
                      agreed to in writing by Silicon, accounts subject to any
                      contingencies, accounts owing from an account debtor
                      outside the United States or billed or payable outside
                      the United States (except for those backed by a letter of
                      credit satisfactory to Silicon), accounts owing from
                      governmental agencies unless otherwise agreed to in
                      writing by Silicon, accounts owing from one account
                      debtor to the extent they exceed 25% of the total
                      eligible accounts outstanding,


Page 1 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                      accounts owing from an affiliate of the Borrower, and
                      accounts subject to setoff, recoupment, counterclaim or
                      any other demand by the account debtor.  In addition, if
                      more than 50% of the accounts owing from an account
                      debtor are outstanding more than 90 days from the invoice
                      date or are otherwise not eligible accounts, then all
                      accounts owing from that account debtor shall be deemed
                      ineligible for borrowing.

                      Without limiting the fact that the determination of which
                      inventory is eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing: any inventory other than raw
                      materials, work-in-process and finished goods that are
                      owned by Borrower and located in Bend, Oregon; inventory
                      that is used, obsolete or returned goods; inventory that
                      is stored at a location other than the Borrowers' Address
                      or any location owned, leased or rented by Borrowers and
                      previously identified to Silicon; inventory that is
                      subject to a landlord's lien; and inventory that is not
                      in the possession of the Borrower.

INTEREST RATE:              If Borrower's Debt to Tangible Net Worth ratio is
                      greater than 2.00:1.00, the interest rate applicable to
                      the Secured Accounts Receivable Line of Credit shall be a
                      rate equal to the "Prime Rate" in effect from time to
                      time, plus 1.25% per annum.  If Borrower's Debt to
                      Tangible Net Worth ratio is 2.00:1.00 or less, the
                      interest rate applicable to the Secured Accounts
                      Receivable Line of Credit shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.00% per
                      annum.  Interest calculations shall be made on the basis
                      of a 360-day year and the actual number of days elapsed.
                      Changes in interest rate resulting from changes in
                      Borrower's Debt to Tangible Net Worth ratio shall be
                      effective on the first day of the month following the day
                      on which Silicon receives Borrower's quarterly financial
                      statement and calculation of its Debt to Tangible Net
                      Worth ratio.  Interest is payable monthly.

                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.

COMMITMENT FEE:       $7,500, which is fully earned and payable at closing.

MATURITY DATE:        December 17, 1998, at which time all unpaid principal and
                      accrued but unpaid interest shall be due and payable.

LETTERS OF CREDIT:    Subject to the terms of this Agreement, as amended from
                      time to time, Silicon shall issue or cause to be issued
                      under the Credit Limit standby and commercial letters of
                      credit for the account of Borrower in an aggregate face
                      amount not to exceed $1,000,000.  Each such letter of
                      credit shall have an expiry date of no later than the
                      Maturity Date.  All such letters of credit shall be, in
                      form and substance, acceptable to Silicon in its sole
                      discretion and shall be subject to the terms and
                      conditions of Silicon's form application and letter of
                      credit agreement, as executed by the Borrower from time
                      to time.


Page 2 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

FEES:                 The Borrower shall pay Silicon the fees and costs
                      customarily charged by Silicon (at the time of issuance
                      of the letter of credit) with respect to the issuance of
                      letters of credit.


SECURED TERM LOAN NO. 1

CREDIT LIMIT:         An amount not to exceed $2,500,000.

PURPOSE:              Borrower shall use the proceeds of this Secured Term Loan
                      No. 1 to assist in financing the purchase of Sundstrand
                      Corporation's 49% ownership interest in Borrower by a
                      limited liability company owned by Borrower's management.


INTEREST RATE:        If Borrower's Debt to Tangible Net Worth ratio is greater
                      than 2.00:1.00, the interest rate applicable to the
                      Secured Term Loan No. 1 shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.50% per
                      annum.  If Borrower's Debt to Tangible Net Worth ratio is
                      2.00:1.00 or less, the interest rate applicable to the
                      Secured Term Loan No. 1 shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.25% per
                      annum.  Interest calculations shall be made on the basis
                      of a 360-day year and the actual number of days elapsed.
                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate. Changes
                      in interest rate resulting from changes in Borrower's
                      Debt to Tangible Net Worth ratio shall be effective on
                      the first day of the month following the day on which
                      Silicon receives Borrower's quarterly financial statement
                      and calculation of its Debt to Tangible Net Worth ratio.
                       Interest is payable monthly.

MATURITY DATE:        December 17, 1999, at which time all unpaid principal and
                      accrued but unpaid interest shall be due and payable.

COMMITMENT
FEE:                  $1,500, which is fully earned and payable at closing.


SECURED EQUIPMENT TERM LOAN NO. 2

CREDIT LIMIT:         An amount not to exceed the lesser of (i) $500,000 at any
                      one time outstanding; or (ii) the amount of the
                      "Equipment Borrowing Base", as defined below.  For
                      purposes of this Schedule, the "Equipment Borrowing Base"
                      shall mean 90% of the invoice value of equipment
                      purchased by Borrower after August 31, 1996.  Silicon
                      shall have no obligation to advance against taxes,
                      freight charges, installation charges or other similar
                      amounts relating to Borrower's equipment, whether or not
                      such amounts are identified on the invoices submitted to
                      Silicon.  Equipment to be included in the Equipment
                      Borrowing Base must be new equipment, at the time of
                      purchase by Borrower, owned by Borrower, in good working
                      order, must not be subject to any liens in favor of any
                      person or entity other than Silicon, and must be subject
                      to a first priority, perfected security interest


Page 3 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                      in favor of Silicon.  Silicon shall have no obligation to
                      make advances against non-standard equipment, such as
                      tooling, software and custom equipment.  Silicon shall
                      have no obligation to make advances on this Secured
                      Equipment Term Loan after September 6, 1997.  Silicon
                      shall make advances under this Secured Equipment Term
                      Loan No. 2 from time to time, based on invoices and other
                      documentation as shall be requested by Silicon to support
                      such advances.  The Borrower's indebtedness to Silicon
                      with respect to this Secured Equipment Term Loan No. 2
                      shall be evidenced by this Schedule and the Loan
                      Agreement, not by a separate promissory note unless
                      required by Silicon.

                      Borrower shall submit to Silicon such invoices, advance
                      requests and other information, in form acceptable to
                      Silicon, as Silicon shall reasonably require from time to
                      time.

                      Once the maximum amount of the principal has been
                      advanced under this Secured Equipment Term Loan No. 2,
                      Borrower is no longer entitled to further advances on
                      this Loan.  Advances may be requested in writing by
                      Borrower or an authorized person.  Silicon may, but need
                      not, require that all oral requests be confirmed in
                      writing.  The unpaid principal balance owing on this
                      Secured Equipment Term Loan No. 2 at any time may be
                      evidenced by Silicon's internal records, including daily
                      computer print-outs (which Silicon shall provide to
                      Borrower periodically).

PURPOSE:              Borrowers shall use the proceeds of this Secured
                      Equipment Term Loan No. 2 to finance the purchase of new
                      equipment.

INTEREST RATE:        The interest rate applicable to the Secured Equipment
                      Term Loan shall be a rate equal to the "Prime Rate" (as
                      defined above) in effect from time to time, plus 1.50%
                      per annum.  Interest calculations shall be made on the
                      basis of a 360-day year and the actual number of days
                      elapsed.  The interest rate applicable to the Obligations
                      shall change on each date there is a change in the Prime
                      Rate.

AMORTIZATION:         Borrower shall pay Silicon monthly payments of interest
                      only on the last day each month commencing with September
                      30, 1996.  In addition, Borrower shall pay Silicon
                      commencing on October 6, 1997, and continuing on the same
                      day of each month thereafter, the amount necessary to
                      repay fully the amount of the Secured Equipment Term Loan
                      No. 2 in 30 equal month payments.

MATURITY DATE:        March 6, 2000, at which time all unpaid principal and
                      accrued but unpaid interest, fees and other charges shall
                      be due and payable.

COMMITMENT
FEE:                  $1,000, was paid at closing.  This fee is fully earned at
                      closing and is non-refundable.


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<PAGE>

SECURED TERM LOAN NO. 3

CREDIT LIMIT:         An amount not to exceed $500,000, in a single advance.

PURPOSE:              Borrowers shall use the proceeds of this Secured Term
                      Loan No. 3 to assist in financing the purchase of
                      Sundstrand Corporation's 49% ownership interest in
                      Borrower by a limited liability company owned by
                      Borrower's management.

INTEREST RATE:        If Borrower's Debt to Tangible Net Worth ratio is greater
                      than 2.00:1.00, the interest rate applicable to the
                      Secured Term Loan No. 3 shall be a rate equal to the
                      "Prime Rate" (as defined above) in effect from time to
                      time, plus 1.75% per annum.  If Borrower's Debt to
                      Tangible Net Worth ratio is 2.00:1.00 or less, the
                      interest rate applicable to the Secured Term Loan No. 3
                      shall be a rate equal to the "Prime Rate" in effect from
                      time to time, plus 1.50% per annum  Interest calculations
                      shall be made on the basis of a 360-day year and the
                      actual number of days elapsed.  Changes in interest rate
                      resulting from changes in Borrower's Debt to Tangible Net
                      Worth ratio shall be effective on the first day of the
                      month following the day on which Silicon receives
                      Borrower's quarterly financial statement and calculation
                      of its Debt to Tangible Net Worth ratio.  The interest
                      rate applicable to the Obligations shall change on each
                      date there is a change in the Prime Rate.

AMORTIZATION:         Borrower shall pay Silicon monthly payments of interest
                      on the last day each month commencing with January, 1998.
                      In addition, Borrower shall pay Silicon on the last day
                      of each month, commencing with January, 1998, the amount
                      necessary to repay fully the amount of the Secured Term
                      Loan No. 3 in 36 equal monthly payments.

MATURITY DATE:        December 17, 2000, at which time all unpaid principal and
                      accrued but unpaid interest, fees and other charges shall
                      be due and payable.

COMMITMENT
FEE:                  $1,250, payable at closing.  This fee is fully earned at
                      closing and is non-refundable.


PRIOR NAMES OF
BORROWER:             See Exhibit B

TRADE NAMES OF
BORROWER:             See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:        See Exhibit B

MATERIAL ADVERSE
LITIGATION:           See Exhibit B


Page 5 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

FINANCIAL
COVENANTS:            The Borrower, exclusive of the results of operations of
                      Advanced Power Technology Europe, S.A. ("APT-Europe"),
                      shall comply with all of the following covenants, all of
                      which shall be determined and measured quarterly in
                      accordance with generally accepted accounting principles,
                      except as otherwise stated below:

TANGIBLE NET
WORTH:                Borrower shall at all times maintain a Tangible Net Worth
                      (defined below) of not less than $2,250,000 (the "Initial
                      Minimum Tangible Net Worth) for the quarter ending
                      December 31, 1997, and increasing by $500,000 for each
                      quarter thereafter, measured quarterly.

DEBT TO TANGIBLE
NET WORTH RATIO:      Borrower shall maintain a ratio of total book liabilities
                      (less the outstanding balance of Secured Term Loan No. 1
                      and accrued interest thereon, less debt, if any, that has
                      been subordinated to the Loans in a written subordination
                      agreement on terms satisfactory to Silicon, and accrued
                      interest thereon, less deferred revenue) to Tangible Net
                      Worth, measured quarterly, of:

                      -     Not more than 3.50:1.00 for the quarter ending
                            December 31, 1997
                      -     Not more than 3.25:1.00 for the quarter ending
                            March 31, 1998
                      -     Not more than 2.75:1.00 for the quarter ending
                            June 30, 1998
                      -     Not more than 2.00:1.00 for the quarter ending
                            September 30, 1998, and each quarter thereafter

QUICK RATIO:          Borrower shall maintain a ratio of Quick Assets (defined
                      below) to current liabilities of not less than 0.50:1.00
                      through March 31, 1998, and not less than 0.60:1.00
                      thereafter, measured quarterly.
BACKLOG TO
INVENTORY RATIO:      Borrower shall maintain a ratio of Backlog (as defined
                      below) to the book value of inventory of at least
                      2.00:1.00, measured monthly on a rolling three month
                      average.  In the event that the ratio of Backlog to book
                      value of inventory is less than 2.00:1.00 for two
                      consecutive months, the definition of Borrowing Base for
                      the Secured Accounts Receivable Line of Credit shall be
                      revised to prohibit borrowing against Eligible Inventory
                      for a period of 30 consecutive days each year.

PROFITABILITY:        Borrower shall not incur a loss in any amount for any
                      quarter.  For purposes of this paragraph, "loss" means
                      net book income, plus any loss from APT-Europe, plus
                      depreciation and amortization, less any income from
                      APT-Europe.

DEBT SERVICE
COVERAGE RATIO:       Borrower shall maintain on an annualized basis a Debt
                      Service Coverage Ratio of not less than 2.00:1.00,
                      measured as of the end of each fiscal quarter of
                      Borrower.


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<PAGE>

LOANS TO
SUBSIDIARY:           Borrower shall limit its loans to its wholly owned
                      subsidiary, APT-Europe, to a maximum of $950,000 plus 25%
                      of any new equity at any one time, measured monthly.

RELEASE OF
GUARANTIES:           At such time as Silicon releases the Continuing
                      Guaranties provided by direct or indirect shareholders of
                      Borrower, as a result of additional equity contributions
                      to Borrower of at least $2,000,000 after the date hereof,
                      the Initial Minimum Tangible Net Worth stated above would
                      immediately increase by 75% of such additional equity,
                      the Debt to Tangible Net Worth covenant would immediately
                      reduce to not more than 2.00:1.00, and the Quick Ratio
                      would immediately increase to not less than 0.60:1.00.

DEFINITIONS:          "Backlog" is defined as the book value of orders received
                      by Borrower, backed by purchase orders, for shipment of
                      product within 12 months.

                      "Debt Service Coverage Ratio" means quarterly net book
                      income, plus any loss from APT-Europe, plus depreciation
                      and amortization, less any income from APT-Europe, plus
                      interest, plus taxes (EBITDA) multiplied by four (4),
                      divided by the Current Maturities of Long-Term Debt
                      (CMLTD) plus  interest for that quarter multiplied by
                      four (4).

                      "Quick Assets" means cash on hand or on deposit in banks,
                      readily marketable securities issued by the United
                      States, readily marketable commercial paper rated "A-I"
                      by Standard & Poor's Corporation (or a similar rating by
                      a similar rating organization), certificates of deposit
                      and banker's acceptances, and accounts receivable
                      (including accounts owing to Borrower's affiliate
                      APT-Europe) net of allowance for doubtful accounts.

                      "Tangible Net Worth" means stockholders' equity plus the
                      outstanding balance of the Secured Term Loan No. 1 and
                      accrued interest thereon, plus debt, if any, that has
                      been subordinated to the Loans in a written subordination
                      agreement on terms satisfactory to Silicon, and accrued
                      interest thereon, plus the amount of Borrower's negative
                      equity investment in Borrower's affiliate APT-Europe,
                      less goodwill, patents, capitalized software costs,
                      deferred organizational costs, tradenames, trademarks,
                      and all other assets which would be classified as
                      intangible assets under generally accepted accounting
                      principles, less the note receivable from Tremoliere LLC,
                      less the note receivable from Borrower's affiliate
                      APT-Europe, less the amount of Borrower's positive equity
                      investment in APT-Europe.

OTHER COVENANTS:      Borrower shall at all times comply with all of the
                      following additional covenants:

                      BANKING RELATIONSHIP.  Borrower shall at all times
                      maintain its primary banking relationship with Silicon.

                      FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                      provide Silicon:  (a) within 30 days after the end of
                      each month, a monthly financial statement for Borrower
                      and APT-Europe (consisting of a income statement and a
                      balance sheet)


Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                      prepared by the Borrower in accordance with generally
                      accepted accounting principles; (b) within 20 days after
                      the end of each month, an accounts receivable aging
                      report, an inventory report and an accounts payable aging
                      report, in such form as Silicon shall reasonably specify;
                      (c) within 20 days after the end of each month, a
                      Borrowing Base Certificate in the form attached to this
                      Agreement as Exhibit A, as Silicon may reasonably modify
                      such Certificate from time to time, signed by the Chief
                      Financial Officer of the Borrower; (d) within 30 days
                      after the end of each month, a Compliance Certificate in
                      such form as Silicon shall reasonably specify, signed by
                      the Chief Financial Officer of the Borrower, setting
                      forth calculations showing compliance (at the end of each
                      such calendar month) with the financial covenants set
                      forth on the Schedule, and certifying that throughout
                      such month the Borrower was in full compliance with all
                      other terms and conditions of this Agreement and the
                      Schedule, and providing such other information as Silicon
                      shall reasonably request; and (e) within 90 days
                      following the end of the Borrower's fiscal year, complete
                      annual CPA-audited financial statements, such audit being
                      conducted by independent certified public accountants
                      reasonably acceptable to Silicon, together with an
                      unqualified opinion of such accountants.

CONDITIONS TO
CLOSING:              Without in any way limiting the discretionary nature of
                      advances under this Agreement, before requesting any such
                      advance, the Borrower shall satisfy each of the following
                      conditions:

1.  LOAN DOCUMENTS:

                      Silicon shall have received this Agreement, the Schedule,
                      joint and several Continuing Guaranties and such other
                      loan documents as Silicon shall require, each duly
                      executed and delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                      Silicon shall have received each of the following in form
                      and substance satisfactory to it:

                      (a)   Certified Copies of the Articles of Incorporation
                      and Bylaws of the Borrower;

                      (b)  A Certificate of Good Standing issued by the
                      Secretary of State of the Borrower's state of
                      incorporation and such other states as Silicon may
                      reasonably request with respect to the Borrower;

                      (c)  A certified copy of a Resolution adopted by the
                      Board of Directors of the Borrower authorizing the
                      execution, delivery and performance of this Agreement,
                      and any other documents or certificates to be executed by
                      the Borrower in connection with this transaction; and




Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                      (d)  Incumbency Certificates describing the office and
                      identifying the specimen signatures of the individuals
                      signing all such loan documents on behalf of the
                      Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been
                      duly perfected and that such security interest is prior
                      to all other liens, charges, security interests,
                      encumbrances and adverse claims in or to the Collateral
                      other than Permitted Liens, which evidence shall include,
                      without limitation, a certificate from the Oregon
                      Secretary of State showing the due filing and first
                      priority of the UCC Financing Statements to be signed by
                      the Borrower covering the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, all of which must be reasonably
                      acceptable to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its
                      sole discretion.


       Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      ---------------------------------------
                                   Title:
                                         ------------------------------------

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      --------------------------------------
                                   Title:
                                         -----------------------------------


Page 9 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]



















Page 10 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]


















Page 11 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                    (EXIM PROGRAM)


Borrower:                Advanced Power Technology, Inc.

Address:                 405 S.W. Columbia Street
                         Bend, Oregon 97702

Date:                    December 18, 1997


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:

                         Silicon and the Borrower are parties to that certain
                         other Loan and Security Agreement of even date (the
                         "Non-Exim Agreement").  Both this Agreement and the
                         Non-Exim Agreement shall continue in full force and
                         effect, and all rights and remedies under this
                         Agreement and the Non-Exim Agreement are cumulative.
                         The term "Obligations" as used in this Agreement and in
                         the Non-Exim Agreement shall include without limitation
                         the obligation to pay when due all Loans made pursuant
                         to this Agreement (the "Exim Loans") and all interest
                         thereon and the obligation to pay when due all Loans
                         made pursuant to the Non-Exim Agreement (the "Non-Exim
                         Loans") and all interest thereon.  Without limiting the
                         generality of the foregoing, all "Collateral" as
                         defined in this Agreement and as defined in the
                         Non-Exim Agreement shall secure all Exim Loans and all
                         Non-Exim Loans and interest thereon, and all other
                         Obligations.  Any Event of Default under this Agreement
                         shall constitute an Event of Default under the Non-Exim
                         Agreement, and any Event of Default under the Non-Exim
                         Agreement shall also constitute an Event of Default
                         under this Agreement.  In the event Silicon assigns its
                         rights under this Agreement and/or under any Note
                         evidencing Exim Loans and/or its rights under the
                         Non-Exim Agreement and/or under any Note evidencing
                         Non-Exim Loans, to any third party, including without
                         limitation the Export-Import Bank of the United States
                         ("Exim Bank"), whether before or after the occurrence
                         of any Event of Default, Silicon shall have the right
                         (but not any obligation), in its sole discretion, to
                         allocate and apportion Collateral to the Agreement
                         and/or Note assigned and to specify the priorities of
                         the respective security interests in such Collateral
                         between itself and the assignee, all without notice to
                         or consent of the Borrower.

                         This Agreement is subject to all of the terms and
                         conditions of the Borrower Agreement attached hereto as
                         Exhibit A, and all documents attached to such Borrower
                         Agreement (collectively, the "Exim Documents"), all of
                         which are hereby incorporated herein by this reference.
                         Borrower shall perform all of the obligations and
                         comply with all of the affirmative and negative
                         covenants and all other terms and conditions set forth
                         in the Exim Documents as though such

Page 1
<PAGE>

                         obligations and covenants were expressly set forth
                         herein, and all of which are hereby incorporated herein
                         by this reference.  In the event of any conflict
                         between the terms of the Exim Documents and the terms
                         of the Exim Loan Agreement or the Schedule or any
                         related promissory note, whichever terms are more
                         restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1. 1)
EXIM LOANS:              An amount not to exceed the lesser of:

                         (a) $1,750,000 at any one time outstanding; or

                         (b) a total of (i) 90% of the value of Borrower's
                         eligible export receivables, which are eligible for
                         borrowing as provided below, plus (ii) 70% of the value
                         of Borrower's eligible exportable inventory which is
                         eligible for borrowing as provided below, which Silicon
                         in its reasonable discretion deems eligible for
                         borrowing.

                         Without limiting the fact that the determination of
                         which accounts are eligible for borrowing is a matter
                         of Silicon's discretion, the following shall not be
                         deemed eligible for borrowing:  accounts outstanding
                         for more than 90 days from the invoice date unless
                         otherwise agreed to in writing by Silicon, accounts
                         subject to any contingencies, accounts billed or
                         payable outside the United States (except for those
                         backed by a letter of credit satisfactory to Silicon),
                         accounts owing from governmental agencies unless
                         otherwise agreed to in writing by Silicon, accounts
                         owing from one account debtor to the extent they exceed
                         25% of the total eligible accounts outstanding,
                         accounts owing from an affiliate of the Borrower,
                         accounts subject to setoff, recoupment, counterclaim or
                         any other demand by the account debtor.  In addition,
                         if more than 50% of the accounts owing from an account
                         debtor are outstanding more than 90 days from the
                         invoice date or are otherwise not eligible accounts,
                         then all accounts owing from that account debtor shall
                         be deemed ineligible for borrowing.

                         Without limiting the fact that the determination of
                         which inventory is eligible for borrowing is a matter
                         of Silicon's discretion, the following shall not be
                         deemed eligible for borrowing: any inventory other than
                         raw materials, work-in-process and finished goods that
                         are owned by Borrower and located in Bend, Oregon;
                         inventory that is used, obsolete or returned goods;
                         inventory that is stored at a location other than the
                         Borrowers' Address or any location owned, leased or
                         rented by Borrowers and previously identified to
                         Silicon; inventory that is subject to a landlord's
                         lien; and inventory that is not in the possession of
                         the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                   This Agreement is subject to all of the terms and
                         conditions of the Exim Guarantee (including without
                         limitation the Transaction Attachment thereto and
                         Special Conditions thereto) which are hereby
                         incorporated herein by this reference.  Borrower
                         expressly agrees to perform all of the obligations and
                         comply with all of

Page 2
<PAGE>

                         the affirmative and negative covenants and all other
                         terms and conditions set forth in the Exim Guarantee as
                         though the same were expressly set forth herein, and
                         all of the same are hereby incorporated herein by this
                         reference.  In the event of any conflict between the
                         terms of the Exim Guarantee and the other terms of this
                         Agreement, whichever terms are more restrictive shall
                         apply.  Borrower shall reimburse Silicon for all fees
                         and out of pocket expenses incurred by Silicon with
                         respect to the Exim Guarantee, including without
                         limitation all facility fees and usage fees, and
                         Silicon is authorized to debit Borrower's account with
                         Silicon for such fees, costs and expenses when paid by
                         Silicon.

INTEREST RATE:           If Borrower's Debt to Tangible Net Worth ratio is
                         greater than 2.00:1.00, the interest rate applicable to
                         the Export Line of Credit shall be a rate equal to the
                         "Prime Rate" in effect from time to time, plus 1.25%
                         per annum.  If Borrower's Debt to Tangible Net Worth
                         ratio is 2.00:1.00 or less, the interest rate
                         applicable to the Export Line of Credit shall be a rate
                         equal to the "Prime Rate" in effect from time to time,
                         plus 1.00% per annum.  Interest calculations shall be
                         made on the basis of a 360-day year and the actual
                         number of days elapsed.  Changes in interest rate
                         resulting from changes in Borrower's Debt to Tangible
                         Net Worth ratio shall be effective on the first day of
                         the month following the day on which Silicon receives
                         Borrower's quarterly financial statement and
                         calculation of its Debt to Tangible Net Worth ratio.
                         Interest is payable monthly.

                         "Prime Rate" means the rate announced from time to time
                         by Silicon as its "prime rate"; it is a base rate upon
                         which other rates charged by Silicon are based, and it
                         is not necessarily the best rate available at Silicon.
                         The interest rate applicable to the Obligations shall
                         change on each date there is a change in the Prime
                         Rate.

LOAN ORIGINATION
FEE:                     $26,250, which is fully earned and payable at closing.

MATURITY DATE:           December 17, 1998, at which time all unpaid principal
                         and accrued but unpaid interest shall be due and
                         payable.

PRIOR NAMES OF
BORROWER:                See Exhibit B

TRADE NAMES OF
BORROWER:                See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:           See Exhibit B

MATERIAL ADVERSE
LITIGATION:              See Exhibit B

FINANCIAL
COVENANTS:               The Borrower, exclusive of the results of operations of
                         Advanced Power Technology Europe, S.A. ("APT-Europe")
                         shall comply with all of the following

Page 3
<PAGE>

                         covenants, all of which shall be determined and
                         measured quarterly in accordance with generally
                         accepted accounting principles, except as otherwise
                         stated below:

TANGIBLE NET
WORTH:                   Borrower shall at all times maintain a Tangible Net
                         Worth (defined below) of not less than $2,250,000 (the
                         "Initial Minimum Tangible Net Worth") for the quarter
                         ending December 31, 1997, and increasing by $500,000
                         for each quarter thereafter, measured quarterly.

DEBT TO TANGIBLE
NET WORTH RATIO:         Borrower shall maintain a ratio of total book
                         liabilities (less the outstanding balance of Secured
                         Term Loan No. 1 and accrued interest thereon, less
                         debt, if any, that has been subordinated to the Loans
                         in a written subordination agreement on terms
                         satisfactory to Silicon, and accrued interest thereon,
                         less deferred revenue) to Tangible Net Worth, measured
                         quarterly, of:

                         -    Not more than 3.50:1.00 for the quarter ending
                              December 31, 1997
                         -    Not more than 3.25:1.00 for the quarter ending
                              March 31, 1998
                         -    Not more than 2.75:1.00 for the quarter ending
                              June 30, 1998
                         -    Not more than 2.00:1.00 for the quarter ending
                              September 30, 1998, and each quarter thereafter

QUICK RATIO:             Borrower shall maintain a ratio of Quick Assets
                         (defined below) to current liabilities of not less than
                         0.50:1.00 through March 31, 1998, and not less than
                         0.60:1.00 thereafter, measured quarterly.
BACKLOG TO
INVENTORY RATIO:         Borrower shall maintain a ratio of Backlog (as defined
                         below) to the book value of inventory of at least
                         2.00:1.00, measured monthly on a rolling three month
                         average.  In the event that the ratio of Backlog to
                         book value of inventory is less than 2.00:1.00 for two
                         consecutive months, the definition of Borrowing Base
                         for the Secured Accounts Receivable Line of Credit
                         shall be revised to prohibit borrowing against Eligible
                         Inventory for a period of 30 consecutive days each
                         year.

PROFITABILITY:           Borrower shall not incur a loss in any amount for any
                         quarter.  For purposes of this paragraph, "loss" means
                         net book income, plus any loss from APT-Europe, plus
                         depreciation and amortization, less any income from
                         APT-Europe.

DEBT SERVICE
COVERAGE RATIO:          Borrower shall maintain on an annualized basis a Debt
                         Service Coverage Ratio of not less than 2.00:1.00,
                         measured as of the end of each fiscal quarter of
                         Borrower.

LOANS TO
SUBSIDIARY:              Borrower shall limit its loans to its wholly owned
                         subsidiary, APT-Europe, to a maximum of $950,000 plus
                         25% of any new equity at any one time, measured
                         monthly.

RELEASE OF

Page 4
<PAGE>

GUARANTIES:              At such time as Silicon releases the Continuing
                         Guaranties provided by direct or indirect shareholders
                         of Borrower, as a result of additional equity
                         contributions to Borrower of at least $2,000,000 after
                         the date hereof, the Initial Minimum Tangible Net Worth
                         stated above would immediately increase by 75% of such
                         additional equity, the Debt to Tangible Net Worth
                         covenant would immediately reduce to not more than
                         2.00:1.00, and the Quick Ratio would immediately
                         increase to not less than 0.60:1.00.

DEFINITIONS:             "Backlog" is defined as the book value of orders
                         received by Borrower, backed by purchase order, for
                         shipment of product within 12 months.

                         "Debt Service Coverage Ratio" means quarterly net book
                         income, plus any loss from APT-Europe, plus
                         depreciation and amortization, less any income from
                         APT-Europe, plus interest, plus taxes (EBITDA)
                         multiplied by four (4), divided by the Current
                         Maturities of Long-Term Debt (CMLTD) plus  interest for
                         that quarter multiplied by four (4).

                         "Quick Assets" means cash on hand or on deposit in
                         banks, readily marketable securities issued by the
                         United States, readily marketable commercial paper
                         rated "A-I" by Standard & Poor's Corporation (or a
                         similar rating by a similar rating organization),
                         certificates of deposit and banker's acceptances, and
                         accounts receivable (including accounts owing to
                         Borrower's affiliate of APT-Europe) net of allowance
                         for doubtful accounts.

                         "Tangible Net Worth" means stockholders' equity plus
                         the outstanding balance of the Secured Term Loan No. 1
                         and accrued interest thereon, plus debt, if any, that
                         has been subordinated to the Loans in a written
                         subordination agreement on terms satisfactory to
                         Silicon, and accrued interest thereon, plus the amount
                         of Borrower's negative equity investment in Borrower's
                         affiliate APT-Europe, less goodwill, patents,
                         capitalized software costs, deferred organizational
                         costs, tradenames, trademarks, and all other assets
                         which would be classified as intangible assets under
                         generally accepted accounting principles, less the note
                         receivable from Tremoliere LLC, less the note
                         receivable from Borrower's affiliate APT-Europe, less
                         the amount of Borrower's positive equity investment in
                         APT-Europe.

OTHER COVENANTS:         Borrower shall at all times comply with all of the
                         following additional covenants:

                         BANKING RELATIONSHIP.  Borrower shall at all times
                         maintain its primary banking relationship with Silicon.

                         EXIM BANK REQUIREMENTS.  Borrower shall at all times
                         conform the rules and regulations of the Export-Import
                         Bank of the United States.

                         FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                         provide Silicon: (a) within 30 days after the end of
                         each month, a monthly financial statement for Borrower
                         and APT-Europe (consisting of a income statement and a
                         balance sheet) prepared by the Borrower in accordance
                         with generally accepted accounting principles; (b)
                         within 20 days after the end of each month, an accounts
                         receivable aging report, an inventory report and an
                         accounts payable aging report, in such

Page 5
<PAGE>

                         form as Silicon shall reasonably specify; (c) within 20
                         days after the end of each month, a Borrowing Base
                         Certificate in the form attached to this Agreement as
                         Exhibit A, as Silicon may reasonably modify such
                         Certificate from time to time, signed by the Chief
                         Financial Officer of the Borrower; (d) within 30 days
                         after the end of each month, a Compliance Certificate
                         in such form as Silicon shall reasonably specify,
                         signed by the Chief Financial Officer of the Borrower,
                         setting forth calculations showing compliance (at the
                         end of each such calendar month) with the financial
                         covenants set forth on the Schedule, and certifying
                         that throughout such month the Borrower was in full
                         compliance with all other terms and conditions of this
                         Agreement and the Schedule, and providing such other
                         information as Silicon shall reasonably request; and
                         (e) within 90 days following the end of the Borrower's
                         fiscal year, complete annual CPA-audited financial
                         statements, such audit being conducted by independent
                         certified public accountants reasonably acceptable to
                         Silicon, together with an unqualified opinion of such
                         accountants.

CONDITIONS TO
CLOSING:                 Without in any way limiting the discretionary nature of
                         advances under this Agreement, before requesting any
                         such advance, the Borrower shall satisfy each of the
                         following conditions:

1.  LOAN DOCUMENTS:

                         Silicon shall have received this Agreement, the
                         Schedule, joint and several Continuing Guaranties, and
                         such other loan documents as Silicon shall require,
                         each duly executed and delivered by the parties
                         thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                         Silicon shall have received each of the following in
                         form and substance satisfactory to it:

                         (a)  Certified Copies of the Articles of Incorporation
                         and Bylaws of the Borrower;

                         (b)  A Certificate of Good Standing issued by the
                         Secretary of State of the Borrower's state of
                         incorporation and such other states as Silicon may
                         reasonably request with respect to the Borrower;

                         (c)  A certified copy of a Resolution adopted by the
                         Board of Directors of the Borrower authorizing the
                         execution, delivery and performance of this Agreement,
                         and any other documents or certificates to be executed
                         by the Borrower in connection with this transaction;
                         and

                         (d)  Incumbency Certificates describing the office and
                         identifying the specimen signatures of the individuals
                         signing all such loan documents on behalf of the
                         Borrower.

3.  PERFECTION AND

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<PAGE>

PRIORITY OF SECURITY:    Silicon shall have received evidence satisfactory to it
                         that its security interest in the Collateral has been
                         duly perfected and that such security interest is prior
                         to all other liens, charges, security interests,
                         encumbrances and adverse claims in or to the Collateral
                         other than Permitted Liens, which evidence shall
                         include, without limitation, a certificate from the
                         Oregon Secretary of State showing the due filing and
                         first priority of the UCC Financing Statements to be
                         signed by the Borrower covering the Collateral.

4.  INSURANCE:           Silicon shall have received evidence satisfactory to it
                         that all insurance required by this Agreement is in
                         full force and effect, with loss payee designations and
                         additional insured designations as required by this
                         Agreement.

5.  OTHER INFORMATION:

                         Silicon shall have received such other statements,
                         opinions, certificates, documents and information with
                         respect to matters contemplated by this Agreement as it
                         may reasonably request, all of which must be acceptable
                         to Silicon.

                         Silicon shall have conducted an examination of the
                         Borrower's books, records, ledgers, journals, and
                         registers, as Silicon may deem necessary, and shall be
                         satisfied with the results of such examination in its
                         sole discretion.

                         Exim Bank shall have agreed to guarantee payment of
                         ninety percent (90%) of the Loan and all interest
                         accrued thereon, subject to the terms of a master
                         guarantee agreement between Exim Bank and Silicon.


     Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      ----------------------------------
                                   Title:
                                         -------------------------------

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      ----------------------------------
                                   Title:
                                         -------------------------------

Page 7
<PAGE>

                                      EXHIBIT A

                           [INSERT EXIM BORROWER AGREEMENT]









Page 8
<PAGE>

                                      EXHIBIT B

                            [INSERT BORROWER DISCLOSURES]















Page 9
<PAGE>

                             LOAN MODIFICATION AGREEMENT



BETWEEN:  Advanced Power Technology, Inc., a Delaware corporation ("Borrower"),
          whose address is 405 S.W. Columbia Street, Bend, Oregon 97702;

AND:      Silicon Valley Bank ("Silicon"), whose address is 3003 Tasman Drive,
          Santa Clara, California 95054;

DATE:     January 6, 2000


     This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.

     1.   BACKGROUND.  Borrower entered into a Loan and Security Agreement (as
amended from time to time, the "Loan Agreement") and a Loan and Security
Agreement (Exim Program) (as amended from time to time, the "Exim Loan
Agreement") with Silicon in December, 1997.  Capitalized terms used in this Loan
Modification Agreement shall, unless otherwise defined in this Agreement, have
the meaning given to such terms in the Loan Agreement and the Exim Loan
Agreement.

     Silicon and Borrower are entering into this Agreement to state the terms
and conditions of certain modifications to the Loan Agreement and Schedule
thereto, and the Exim Loan Agreement and Schedule thereto.

     2.   MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE, AND EXIM LOAN AGREEMENT
          AND SCHEDULE.

          2.1  The Schedule to the Loan Agreement is hereby deleted and replaced
by the Amended and Restated Schedule to Loan and Security Agreement attached to
this Agreement as EXHIBIT A.

          2.2  The Schedule to the Exim Loan Agreement is hereby deleted and
replaced by the Amended and Restated Schedule to Loan and Security Agreement
(Exim Program) attached to this Agreement as EXHIBIT B.

          2.3  Borrower acknowledges and agrees that all Obligations, including
without limitation Borrower's obligation to repay amounts advanced by Silicon to
Borrower on the terms of the Loan Agreement and Schedule, and the Exim Loan
Agreement and Schedule, as modified by this Loan Modification Agreement, are
secured by all liens and security interests granted by Borrower to Silicon in
the Loan Agreement and the Exim Loan Agreement.  Borrower shall not grant a lien
on, or security interest in, any of its patents, maskworks, copyrights,
trademarks, tradenames, or service marks (in each case whether registered or
not), or any applications for any of the foregoing, or any other intellectual
property of Borrower without Silicon's prior written consent.

     3.   CONDITIONS PRECEDENT.  This Loan Modification Agreement shall not take
effect until Borrower delivers to Silicon a Certified Resolution of Borrower, an
Acknowledgment of Guarantor by all of the guarantors of the Loan in the form
attached hereto, in the form attached hereto, and such other documents as
Silicon shall reasonably require to give effect to the terms of this Loan
Modification Agreement.

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<PAGE>

     4.   NO OTHER MODIFICATIONS.  Except as expressly modified by this Loan
Modification Agreement, the terms of the Loan Agreement and the Exim Loan
Agreement shall remain unchanged and in full force and effect.  Silicon's
agreement to modify the Loan Agreement and the Exim Loan Agreement pursuant
to this Loan Modification Agreement shall not obligate Silicon to make any
future modifications to the Loan Agreement, Exim Loan Agreement or any other
loan document.  Nothing in this Loan Modification Agreement shall constitute
a satisfaction of any indebtedness of any Borrower to Silicon.  It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of the Loan Agreement, Exim Loan Agreement or any other loan
document. No maker, endorser, or guarantor shall be released by virtue of
this Loan Modification Agreement.  The terms of this paragraph shall apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.

     5.   REPRESENTATIONS AND WARRANTIES.

          5.1  The Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within the Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of the Borrower's articles of incorporation, bylaws or of any
undertaking to which the Borrower is a party or by which it is bound.

          5.2  The Borrower understands and agrees that in entering into this
Agreement, Silicon is relying upon the Borrower's representations, warranties
and agreements as set forth in the Loan Agreement, Exim Loan Agreement and other
loan documents.  Borrower hereby reaffirms all representations and warranties in
the Loan Agreement, all of which are true as of the date of this Agreement.

                         BORROWER:

                              ADVANCED POWER TECHNOLOGY, INC.


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


                         SILICON:

                              SILICON VALLEY BANK


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


Page 2
<PAGE>

                                     EXHIBIT A

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:           Advanced Power Technology, Inc.

Address:            405 S.W. Columbia Street
                    Bend, Oregon 97702

Date:               January 6, 2000


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:       An amount not to exceed the lesser of: (i) $3,000,000 at any
                    one time outstanding; or (ii) the amount of the "Borrowing
                    Base", as defined below.

                    For purposes of this Schedule, the "Borrowing Base" shall
                    mean the sum of (i) 80% of the Net Amount of Borrower's
                    eligible accounts receivable, plus (ii) 50% of Borrower's
                    "Eligible Inventory" (as defined below), up to a maximum
                    advance of $1,250,000 against Eligible Inventory.  With
                    respect to Borrower's accounts, "Net Amount" means the gross
                    amount of the account, minus all applicable sales, use,
                    excise and other similar taxes and minus all discounts,
                    credits and allowances of any nature granted or claimed.
                    Borrower's "Eligible Inventory" means the Borrower's
                    inventory held for sale in the United States or Canada,
                    valued at the lower of wholesale cost or market value, which
                    Silicon in its reasonable discretion deems eligible for
                    borrowing, subject to the Backlog Covenant described below.

                    The amount of all letters of credit issued by Silicon at the
                    request of the Borrower shall reduce, dollar for dollar, the
                    amount otherwise available to be borrowed under the
                    Borrowing Base formula described above.  The amount
                    otherwise available to be borrowed under the Borrowing Base
                    formula described above shall also be reduced by one-half of
                    the outstanding balance of Secured Term Loan No. 3 described
                    below.

                    Without limiting the fact that the determination of which
                    accounts are eligible for borrowing is a matter of Silicon's
                    discretion, the following shall not be deemed eligible for
                    borrowing:  accounts outstanding for more than 90 days from
                    the invoice date unless otherwise agreed to in writing by
                    Silicon, accounts subject to any contingencies, accounts
                    owing from an account debtor outside the United States or
                    billed or payable outside the United States (except for
                    those backed by a letter of credit satisfactory to Silicon),
                    accounts owing from governmental agencies unless otherwise
                    agreed to in writing by Silicon, accounts owing from one
                    account debtor to the extent they exceed 25% of the total
                    eligible accounts outstanding, accounts owing from an
                    affiliate of the Borrower, and accounts subject to setoff,
                    recoupment, counterclaim or any other demand by the account
                    debtor.  In addition, if more than 50% of the accounts owing
                    from an account debtor are outstanding

Page 1
<PAGE>

                    more than 90 days from the invoice date or are otherwise
                    then all accounts owing from that account debtor shall be
                    deemed ineligible for borrowing.

                    Without limiting the fact that the determination of which
                    inventory is eligible for borrowing is a matter of Silicon's
                    discretion, the following shall not be deemed eligible for
                    borrowing: any inventory other than raw materials,
                    work-in-process and finished goods that are owned by
                    Borrower and located in Bend, Oregon; inventory that is
                    used, obsolete or returned goods; inventory that is stored
                    at a location other than the Borrowers' Address or any
                    location owned, leased or rented by Borrowers and previously
                    identified to Silicon; inventory that is subject to a
                    landlord's lien; and inventory that is not in the possession
                    of the Borrower.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Accounts Receivable Line of Credit shall be a rate equal to
                    the "Prime Rate" in effect from time to time, plus 1.25% per
                    annum.  If Borrower's Debt to Tangible Net Worth ratio is
                    2.00:1.00 or less, the interest rate applicable to the
                    Secured Accounts Receivable Line of Credit shall be a rate
                    equal to the "Prime Rate" in effect from time to time, plus
                    1.00% per annum.  Interest calculations shall be made on the
                    basis of a 360-day year and the actual number of days
                    elapsed.  Changes in interest rate resulting from changes in
                    Borrower's Debt to Tangible Net Worth ratio shall be
                    effective on the first day of the month following the day on
                    which Silicon receives Borrower's quarterly financial
                    statement and calculation of its Debt to Tangible Net Worth
                    ratio.  Interest is payable monthly.

                    "Prime Rate" means the rate announced from time to time by
                    Silicon as its "prime rate"; it is a base rate upon which
                    other rates charged by Silicon are based, and it is not
                    necessarily the best rate available at Silicon.  The
                    interest rate applicable to the Obligations shall change on
                    each date there is a change in the Prime Rate.

LOAN FEE:           No new fee.

MATURITY DATE:      March 31, 2000, at which time all unpaid principal and
                    accrued but unpaid interest shall be due and payable.

LETTERS OF CREDIT:  Subject to the terms of this Agreement, as amended from time
                    to time, Silicon shall issue or cause to be issued under the
                    Credit Limit standby and commercial letters of credit for
                    the account of Borrower in an aggregate face amount not to
                    exceed $1,000,000.  Each such letter of credit shall have an
                    expiry date of no later than the Maturity Date.  All such
                    letters of credit shall be, in form and substance,
                    acceptable to Silicon in its sole discretion and shall be
                    subject to the terms and conditions of Silicon's form
                    application and letter of credit agreement, as executed by
                    the Borrower from time to time.

FEES:               The Borrower shall pay Silicon the fees and costs
                    customarily charged by Silicon (at the time of issuance of
                    the letter of credit) with respect to the issuance of
                    letters of credit.

Page 2
<PAGE>

SECURED TERM LOAN NO. 1

CREDIT LIMIT:       An amount not to exceed $2,500,000.

PURPOSE:            Borrower used the proceeds of this Secured Term Loan No. 1
                    to assist in financing the purchase of Sundstrand
                    Corporation's 49% ownership interest in Borrower by a
                    limited liability company owned by Borrower's management.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Term Loan No. 1 shall be a rate equal to the "Prime Rate" in
                    effect from time to time, plus 1.50% per annum.  If
                    Borrower's Debt to Tangible Net Worth ratio is 2.00:1.00 or
                    less, the interest rate applicable to the Secured Term Loan
                    No. 1 shall be a rate equal to the "Prime Rate" in effect
                    from time to time, plus 1.25% per annum.  Interest
                    calculations shall be made on the basis of a 360-day year
                    and the actual number of days elapsed.  "Prime Rate" means
                    the rate announced from time to time by Silicon as its
                    "prime rate"; it is a base rate upon which other rates
                    charged by Silicon are based, and it is not necessarily the
                    best rate available at Silicon.  The interest rate
                    applicable to the Obligations shall change on each date
                    there is a change in the Prime Rate. Changes in interest
                    rate resulting from changes in Borrower's Debt to Tangible
                    Net Worth ratio shall be effective on the first day of the
                    month following the day on which Silicon receives Borrower's
                    quarterly financial statement and calculation of its Debt to
                    Tangible Net Worth ratio.    Interest is payable monthly.

MATURITY DATE:      March 31, 2000, at which time all unpaid principal and
                    accrued but unpaid interest shall be due and payable.

CONTINUING
GUARANTY:           This facility is guaranteed by Advanced Energy Industries,
                    Inc., pursuant to that certain Amended and Restated Guaranty
                    and Subordination Agreement dated as of December 22, 1997.

SECURED EQUIPMENT TERM LOAN NO. 2

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the "Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" meant 90% of the
                    invoice value of equipment purchased by Borrower after
                    August 31, 1996.  Silicon had no obligation to advance
                    against taxes, freight charges, installation charges or
                    other similar amounts relating to Borrower's equipment,
                    whether or not such amounts were identified on the invoices
                    submitted to Silicon.  Equipment included in the Equipment
                    Borrowing Base was required to be new equipment, at the time
                    of purchase by Borrower, owned by Borrower, in good working
                    order, not subject to any liens in favor of any person or
                    entity other than Silicon, and were subject to a first
                    priority, perfected security interest in favor of Silicon.
                    Silicon had no obligation to make advances against
                    non-standard equipment, such as tooling, software and custom
                    equipment.  Silicon had no obligation to make advances on
                    this Secured Equipment Term Loan after September 6, 1997.
                    Silicon made

Page 3
<PAGE>

                    advances under this Secured Equipment Term Loan No. 2 from
                    time to time, based on invoices and other documentation as
                    requested by Silicon to support such advances.  The
                    Borrower's indebtedness to Silicon with respect to this
                    Secured Equipment Term Loan No. 2 shall be evidenced by this
                    Schedule and the Loan Agreement, not by a separate
                    promissory note unless required by Silicon.

                    Borrower shall submit to Silicon such invoices, advance
                    requests and other information, in form acceptable to
                    Silicon, as Silicon shall reasonably require from time to
                    time.

                    Once the maximum amount of the principal was advanced under
                    this Secured Equipment Term Loan No. 2, Borrower was no
                    longer entitled to further advances on this Loan.  Advances
                    were to be requested in writing by Borrower or an authorized
                    person.  Silicon may, but need not, require that all oral
                    requests be confirmed in writing.  The unpaid principal
                    balance owing on this Secured Equipment Term Loan No. 2 at
                    any time may be evidenced by Silicon's internal records,
                    including daily computer print-outs (which Silicon shall
                    provide to Borrower periodically).

PURPOSE:            Borrowers used the proceeds of this Secured Equipment Term
                    Loan No. 2 to finance the purchase of new equipment.

INTEREST RATE:      The interest rate applicable to the Secured Equipment Term
                    Loan shall be a rate equal to the "Prime Rate" (as defined
                    above) in effect from time to time, plus 1.50% per annum.
                    Interest calculations shall be made on the basis of a
                    360-day year and the actual number of days elapsed.  The
                    interest rate applicable to the Obligations shall change on
                    each date there is a change in the Prime Rate.

AMORTIZATION:       Borrower shall pay Silicon monthly payments of interest only
                    on the last day each month commencing with September 30,
                    1996.  In addition, Borrower shall pay Silicon commencing on
                    October 6, 1997, and continuing on the same day of each
                    month thereafter, the amount necessary to repay fully the
                    amount of the Secured Equipment Term Loan No. 2 in 30 equal
                    month payments.

MATURITY DATE:      March 6, 2000, at which time all unpaid principal and
                    accrued but unpaid interest, fees and other charges shall be
                    due and payable.
COMMITMENT
FEE:                $1,000, was paid at closing.  This fee was fully earned
                    at closing and is non-refundable.

SECURED TERM LOAN NO. 3

CREDIT LIMIT:       An amount not to exceed $500,000, in a single advance.

PURPOSE:            Borrowers used the proceeds of this Secured Term Loan No. 3
                    to assist in financing the purchase of Sundstrand
                    Corporation's 49% ownership interest in Borrower by a
                    limited liability company owned by Borrower's management.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Term Loan No. 3 shall be a rate equal to the

Page 4
<PAGE>

                    "Prime Rate" (as defined above) in effect from time to time,
                    plus 1.75% per annum.  If Borrower's Debt to Tangible Net
                    Worth ratio is 2.00:1.00 or less, the interest rate
                    applicable to the Secured Term Loan No. 3 shall be a rate
                    equal to the "Prime Rate" in effect from time to time, plus
                    1.50% per annum  Interest calculations shall be made on the
                    basis of a 360-day year and the actual number of days
                    elapsed.  Changes in interest rate resulting from changes in
                    Borrower's Debt to Tangible Net Worth ratio shall be
                    effective on the first day of the month following the day on
                    which Silicon receives Borrower's quarterly financial
                    statement and calculation of its Debt to Tangible Net Worth
                    ratio.  The interest rate applicable to the Obligations
                    shall change on each date there is a change in the Prime
                    Rate.

AMORTIZATION:       Borrower shall pay Silicon monthly payments of interest on
                    the last day each month commencing with January, 1998.  In
                    addition, Borrower shall pay Silicon on the last day of each
                    month, commencing with January, 1998, the amount necessary
                    to repay fully the amount of the Secured Term Loan No. 3 in
                    36 equal monthly payments.

MATURITY DATE:      December 17, 2000, at which time all unpaid principal and
                    accrued but unpaid interest, fees and other charges shall be
                    due and payable.

COMMITMENT
FEE:                $1,250, was paid at closing.  This fee was fully earned at
                    closing and is non-refundable.

SECURED TERM LOAN NO. 4

The Borrower may choose one of the following term loan options:

               A.   RE-FINANCE OF EXISTING LEASE:

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the "Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" shall mean 80% of
                    the fair market value ("FMV") of certain equipment subject
                    to an existing lease from Finova Capital.  FMV shall be
                    determined by Finova Capital, pursuant to the terms of the
                    lease agreement between Borrower and Finova Capital.  This
                    facility may only be drawn in one advance, and Silicon shall
                    have no obligation to make an advance on this facility after
                    January 31, 2000.  The Borrower's indebtedness to Silicon
                    with respect to this facility shall be evidenced by this
                    Schedule and the Loan Agreement, not by a separate
                    promissory note unless required by Silicon.

                    Borrower shall not have the right to reborrow any amount on
                    this facility that has been repaid by Borrower.  The advance
                    may be requested in writing by Borrower or an authorized
                    person.  Silicon may, but need not, require that an oral
                    request be confirmed in writing.  The unpaid principal
                    balance owing on this facility at any time may be evidenced
                    by Silicon's internal records, including daily computer
                    print-outs (which Silicon shall provide to Borrower
                    periodically).

Page 5
<PAGE>

PURPOSE:            Borrowers shall use the proceeds of this facility to
                    refinance an existing lease from Finova Capital.

INTEREST RATE:      The applicable interest rate shall be either:

                    (a)  A floating rate equal to the "Prime Rate" (as defined
                         above) in effect from time to time, plus 1.75% per
                         annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.  The interest rate applicable to the
                         Obligations shall change on each date there is a change
                         in the Prime Rate; or

                    (b)  A fixed rate equivalent to the rate for three-year
                         Treasury bills as of the date of advance, plus 4.00%
                         per annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.

                    If Borrower selects the floating rate option, Borrower shall
                    make thirty-six (36) equal monthly payments of principal,
                    plus interest, sufficient to fully amortize the facility in
                    thirty-six (36) months.  If Borrower selects the fixed rate
                    option, Borrower shall make thirty-six (36) equal monthly
                    payments, including both principal and interest, sufficient
                    to fully amortize the facility in thirty-six (36) months.

MATURITY DATE:      December         , 2002, at which time all unpaid principal
                    and accrued but unpaid interest, fees and other charges
                    shall be due and payable.

COMMITMENT FEE:     $5,000, payable at closing.  This fee is fully earned at
                    closing and is non-refundable.  (Any Commitment Fee
                    previously paid by the Borrower in connection with this loan
                    shall be credited against this Fee.).

     ---OR---

               B.   NEW SECURED EQUIPMENT TERM LOAN:

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" shall mean 90% of
                    the invoice value of equipment, software and leasehold
                    improvements purchased by Borrower after
                                           , 2000.  Up to 25% of the amount
                    outstanding under this facility may be used to fund the
                    purchase of software and leasehold improvements.  Silicon
                    shall have no obligation to advance against taxes, freight
                    charges, installation charges or other similar amounts
                    relating to Borrower's equipment, software or leasehold
                    improvements, whether or not such amounts are identified on
                    the invoices submitted to Silicon.  Equipment to be included
                    in the Equipment Borrowing Base must be new equipment, at
                    the time of purchase by Borrower, owned by Borrower, in good
                    working order, must not be subject to any liens in favor of
                    any person or entity other than Silicon, and must be subject
                    to a first priority, perfected security interest in favor of
                    Silicon.  Silicon shall have no obligation to make advances
                    against non-standard equipment, such as tooling and custom
                    equipment.  Silicon shall have no obligation to make
                    advances on this

Page 6
<PAGE>

                    facility after January         , 2001.  Silicon shall make
                    advances under this facility from time to time during the
                    twelve (12) month period between the date of this Agreement
                    and January         , 2001 (the "Draw Period"), based on
                    invoices and other documentation as shall be requested by
                    Silicon to support such advances.  The Borrower's
                    indebtedness to Silicon with respect to this facility shall
                    be evidenced by this Schedule and the Loan Agreement, not by
                    a separate promissory note unless required by Silicon.

                    Borrower shall submit to Silicon such invoices, advance
                    requests and other information, in form acceptable to
                    Silicon, as Silicon shall reasonably require from time to
                    time.

                    Once the maximum amount of the principal has been advanced
                    under this facility, Borrower is no longer entitled to
                    further advances on this Loan.  Borrower shall not have the
                    right to reborrow any amount on this facility that has been
                    repaid by Borrower.  Advances may be requested in writing by
                    Borrower or an authorized person.  Silicon may, but need
                    not, require that all oral requests be confirmed in writing.
                    The unpaid principal balance owing on this facility at any
                    time may be evidenced by Silicon's internal records,
                    including daily computer print-outs (which Silicon shall
                    provide to Borrower periodically).

PURPOSE:            Borrowers hall use the proceeds of this facility to finance
                    the purchase of new equipment.

INTEREST  RATE:     During the Draw Period, the applicable interest rate shall
                    be the floating rate option below.  After the Draw Period,
                    the applicable interest rate shall be either:

                    (a)  A floating rate equal to the "Prime Rate" (as defined
                         above) in effect from time to time, plus 1.75% per
                         annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.  The interest rate applicable to the
                         Obligations shall change on each date there is a change
                         in the Prime Rate; or

                    (b)  a fixed rate equivalent to the rate for two-year
                         Treasury bills as of the date of advance, plus 4.00%
                         per annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.

                    Borrower shall pay interest only on a monthly basis during
                    the Draw Period.  If Borrower selects the floating rate
                    option after the Draw Period, Borrower shall make
                    twenty-four (24) equal monthly payments of principal, plus
                    interest, beginning on January        , 2001, or on the
                    first day of the first full month following that month in
                    which the full $500,000 has been advanced, sufficient to
                    fully amortize the facility in twenty-four (24) months.  If
                    Borrower selects the fixed rate option after the Draw
                    Period, Borrower shall make twenty-four (24) equal monthly
                    payments, including both principal and interest, sufficient
                    to fully amortize the facility in twenty-four (24) months.

MATURITY DATE:      December        , 2002, at which time all unpaid principal
                    and accrued but unpaid interest, fees and other charges
                    shall be due and payable.


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<PAGE>

COMMITMENT FEE:     $5,000, payable at closing.  This fee is fully earned at
                    closing and is non-refundable.  (Any Commitment Fee
                    previously paid by the Borrower in connection with this loan
                    shall be credited against this Fee.)

PRIOR NAMES OF
BORROWER:           See Exhibit B

TRADE NAMES OF
BORROWER:           See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:      See Exhibit B

MATERIAL ADVERSE
LITIGATION:         See Exhibit B

FINANCIAL
COVENANTS:          The Borrower, exclusive of the results of operations of
                    Advanced Power Technology Europe, S.A. ("APT-Europe"), shall
                    comply with all of the following covenants, all of which
                    shall be determined and measured quarterly in accordance
                    with generally accepted accounting principles, except as
                    otherwise stated below:

TANGIBLE NET
WORTH:              Borrower shall at all times maintain a Tangible Net Worth
                    (defined below) of not less than $3,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO:    Borrower shall maintain a ratio of total book liabilities
                    (less the outstanding balance of Secured Term Loan No. 1 and
                    accrued interest thereon, less debt, if any, that has been
                    subordinated to the Loans in a written subordination
                    agreement on terms satisfactory to Silicon, and accrued
                    interest thereon, less deferred revenue) to Tangible Net
                    Worth, measured quarterly, of not more than 2.50:1.00.


QUICK RATIO:        Borrower shall maintain a ratio of Quick Assets (defined
                    below) to current liabilities of not less than 0.45:1.00,
                    measured quarterly.

PROFITABILITY:      Borrower shall earn net income of not less than $250,000 for
                    each quarterly period.

DEBT SERVICE
COVERAGE RATIO:     Borrower shall maintain, on an annualized basis, a Debt
                    Service Coverage Ratio of not less than 2.00:1.00.

LOANS OR EQUITY
CONTRIBUTIONS TO
SUBSIDIARY:         Borrower shall limit its loans or equity contributions to
                    its wholly-owned subsidiary, APT-Europe, to a maximum of
                    $1,250,000 plus 25% of any new equity at any one time,
                    measured quarterly.

Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

RELEASE OF
GUARANTIES:         Silicon shall release the Continuing Guaranties provided by
                    direct or indirect shareholders of Borrower at such time as
                    the Borrower satisfies all of the criteria described below:

                    (i)   Borrower raises a minimum of $2,000,000 in new equity
                          after April 1, 1999;

                    (ii)  Borrower achieves a Debt to Tangible Net Worth Ratio
                          of not more than 2.00:1.00;

                    (iii) Borrower achieves a Quick Ratio of not less than
                          0.60:1.00; and

                    (iv)  Borrower is able to reduce its reliance on
                          inventory-secured borrowings such that the advance
                          rate against inventory for purposes of the Borrowing
                          Base for the Secured Accounts Receivable Line of
                          Credit may be reduced from 50% to 25%, and the maximum
                          advance against Eligible Inventory may be reduced from
                          $1,250,000 to $500,000.

DEFINITIONS:        "Debt Service Coverage Ratio" means quarterly net book
                    income, plus any loss from APT-Europe, plus depreciation and
                    amortization, less any income from APT-Europe, plus
                    interest, plus taxes (EBITDA) multiplied by four (4),
                    divided by the Current Maturities of Long-Term Debt (CMLTD)
                    plus interest for that quarter multiplied by four (4).

                    "Quick Assets" means cash on hand or on deposit in banks,
                    readily marketable securities issued by the United States,
                    readily marketable commercial paper rated "A-I" by Standard
                    & Poor's Corporation (or a similar rating by a similar
                    rating organization), certificates of deposit and banker's
                    acceptances, and accounts receivable (including accounts
                    owing to Borrower's affiliate APT-Europe) net of allowance
                    for doubtful accounts.

                    "Tangible Net Worth" means stockholders' equity plus the
                    outstanding balance of the Secured Term Loan No. 1 and
                    accrued interest thereon, plus debt, if any, that has been
                    subordinated to the Loans in a written subordination
                    agreement on terms satisfactory to Silicon, and accrued
                    interest thereon, plus the amount of Borrower's negative
                    equity investment in Borrower's affiliate APT-Europe, less
                    goodwill, patents, capitalized software costs, deferred
                    organizational costs, tradenames, trademarks, and all other
                    assets which would be classified as intangible assets under
                    generally accepted accounting principles, less the note
                    receivable from Tremoliere LLC, less the note receivable
                    from Borrower's affiliate APT-Europe, less the amount of
                    Borrower's positive equity investment in APT-Europe.

OTHER COVENANTS:    Borrower shall at all times comply with all of the following
                    additional covenants:

                    BANKING RELATIONSHIP.  Borrower shall at all times maintain
                    its primary banking relationship with Silicon.

                    FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                    provide Silicon:  (a) within 30 days after the end of each
                    month, a monthly financial statement for

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<PAGE>

                    Borrower and APT-Europe (consisting of an income statement
                    and a balance sheet) prepared by the Borrower in accordance
                    with generally accepted accounting principles; (b) within 20
                    days after the end of each month, an accounts receivable
                    aging report, an inventory report and an accounts payable
                    aging report, in such form as Silicon shall reasonably
                    specify; (c) within 20 days after the end of each month, a
                    Borrowing Base Certificate in the form attached to this
                    Agreement as Exhibit A, as Silicon may reasonably modify
                    such Certificate from time to time, signed by the Chief
                    Financial Officer of the Borrower; (d) within 30 days after
                    the end of each quarter, a Compliance Certificate in such
                    form as Silicon shall reasonably specify, signed by the
                    Chief Financial Officer of the Borrower, setting forth
                    calculations showing compliance (at the end of each such
                    calendar month) with the financial covenants set forth on
                    the Schedule, and certifying that throughout such month the
                    Borrower was in full compliance with all other terms and
                    conditions of this Agreement and the Schedule, and providing
                    such other information as Silicon shall reasonably request;
                    and (e) within 90 days following the end of the Borrower's
                    fiscal year, complete annual CPA-audited financial
                    statements, such audit being conducted by independent
                    certified public accountants reasonably acceptable to
                    Silicon, together with an unqualified opinion of such
                    accountants.

CONDITIONS TO
CLOSING:            Without in any way limiting the discretionary nature of
                    advances under this Agreement, before requesting any such
                    advance, the Borrower shall satisfy each of the following
                    conditions:

1.  LOAN DOCUMENTS:

                    Silicon shall have received this Agreement, the Schedule,
                    joint and several Continuing Guaranties and such other loan
                    documents as Silicon shall require, each duly executed and
                    delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                    Silicon shall have received each of the following in form
                    and substance satisfactory to it:

                    (a)   Certified Copies of the Articles of Incorporation and
                          Bylaws of the Borrower;

                    (b)   A Certificate of Good Standing issued by the Secretary
                          of State of the Borrower's state of incorporation and
                          such other states as Silicon may reasonably request
                          with respect to the Borrower;

                    (c)   A certified copy of a Resolution adopted by the Board
                          of Directors of the Borrower authorizing the
                          execution, delivery and performance of this Agreement,
                          and any other documents or certificates to be executed
                          by the Borrower in connection with this transaction;
                          and

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<PAGE>

                      (d) Incumbency Certificates describing the office and
                          identifying the specimen signatures of the individuals
                          signing all such loan documents on behalf of the
                          Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been duly
                      perfected and that such security interest is prior to all
                      other liens, charges, security interests, encumbrances and
                      adverse claims in or to the Collateral other than
                      Permitted Liens, which evidence shall include, without
                      limitation, a certificate from the Oregon Secretary of
                      State showing the due filing and first priority of the UCC
                      Financing Statements to be signed by the Borrower covering
                      the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, all of which must be reasonably
                      acceptable to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its sole
                      discretion.


     Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                              BORROWER:

                              ADVANCED POWER TECHNOLOGY, INC.


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


                              SILICON:

                              SILICON VALLEY BANK


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------

Page 11 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]








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<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]















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<PAGE>

                                    EXHIBIT B

          AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                 (EXIM PROGRAM)


Borrower:                  Advanced Power Technology, Inc.

Address:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

Date:                      January ____, 2000


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:
                           Silicon and the Borrower are parties to that certain
                           other Loan and Security Agreement of even date (the
                           "Non-Exim Agreement"). Both this Agreement and the
                           Non-Exim Agreement shall continue in full force and
                           effect, and all rights and remedies under this
                           Agreement and the Non-Exim Agreement are cumulative.
                           The term "Obligations" as used in this Agreement and
                           in the Non-Exim Agreement shall include without
                           limitation the obligation to pay when due all Loans
                           made pursuant to this Agreement (the "Exim Loans")
                           and all interest thereon and the obligation to pay
                           when due all Loans made pursuant to the Non-Exim
                           Agreement (the "Non-Exim Loans") and all interest
                           thereon. Without limiting the generality of the
                           foregoing, all "Collateral" as defined in this
                           Agreement and as defined in the Non-Exim Agreement
                           shall secure all Exim Loans and all Non-Exim Loans
                           and interest thereon, and all other Obligations. Any
                           Event of Default under this Agreement shall
                           constitute an Event of Default under the Non-Exim
                           Agreement, and any Event of Default under the
                           Non-Exim Agreement shall also constitute an Event of
                           Default under this Agreement. In the event Silicon
                           assigns its rights under this Agreement and/or under
                           any Note evidencing Exim Loans and/or its rights
                           under the Non-Exim Agreement and/or under any Note
                           evidencing Non-Exim Loans, to any third party,
                           including without limitation the Export-Import Bank
                           of the United States ("Exim Bank"), whether before or
                           after the occurrence of any Event of Default, Silicon
                           shall have the right (but not any obligation), in its
                           sole discretion, to allocate and apportion Collateral
                           to the Agreement and/or Note assigned and to specify
                           the priorities of the respective security interests
                           in such Collateral between itself and the assignee,
                           all without notice to or consent of the Borrower.

                           This Agreement is subject to all of the terms and
                           conditions of the Borrower Agreement attached hereto
                           as Exhibit A, and all documents attached to such
                           Borrower Agreement (collectively, the "Exim
                           Documents"), all of which are hereby incorporated
                           herein by this reference. Borrower shall perform all
                           of the obligations and comply with all of the
                           affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Documents
                           as though such


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         (EXIM PROGRAM)

<PAGE>

                           obligations and covenants were expressly set forth
                           herein, and all of which are hereby incorporated
                           herein by this reference. In the event of any
                           conflict between the terms of the Exim Documents and
                           the terms of the Exim Loan Agreement or the Schedule
                           or any related promissory note, whichever terms are
                           more restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1. 1)
EXIM LOANS:                An amount not to exceed the lesser of:

                           (a) $2,000,000 at any one time outstanding; or

                           (b) a total of (i) 90% of the value of Borrower's
                           eligible export receivables, which are eligible for
                           borrowing as provided below, plus (ii) 70% of the
                           value of Borrower's eligible exportable inventory
                           which is eligible for borrowing as provided below,
                           which Silicon in its reasonable discretion deems
                           eligible for borrowing.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: accounts outstanding
                           for more than 90 days from the invoice date unless
                           otherwise agreed to in writing by Silicon, accounts
                           subject to any contingencies, accounts billed or
                           payable outside the United States (except for those
                           backed by a letter of credit satisfactory to
                           Silicon), accounts owing from governmental agencies
                           unless otherwise agreed to in writing by Silicon,
                           accounts owing from one account debtor to the extent
                           they exceed 25% of the total eligible accounts
                           outstanding, accounts owing from an affiliate of the
                           Borrower, accounts subject to setoff, recoupment,
                           counterclaim or any other demand by the account
                           debtor. In addition, if more than 50% of the accounts
                           owing from an account debtor are outstanding more
                           than 90 days from the invoice date or are otherwise
                           not eligible accounts, then all accounts owing from
                           that account debtor shall be deemed ineligible for
                           borrowing.

                           Without limiting the fact that the determination of
                           which inventory is eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: any inventory other
                           than raw materials, work-in-process and finished
                           goods that are owned by Borrower and located in Bend,
                           Oregon; inventory that is used, obsolete or returned
                           goods; inventory that is stored at a location other
                           than the Borrowers' Address or any location owned,
                           leased or rented by Borrowers and previously
                           identified to Silicon; inventory that is subject to a
                           landlord's lien; and inventory that is not in the
                           possession of the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                     This Agreement is subject to all of the terms and
                           conditions of the Exim Guarantee (including without
                           limitation the Transaction Attachment thereto and
                           Special Conditions thereto) which are hereby
                           incorporated herein by this reference. Borrower
                           expressly agrees to perform all of the obligations
                           and comply with all of


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         (EXIM PROGRAM)

<PAGE>

                           the affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Guarantee
                           as though the same were expressly set forth herein,
                           and all of the same are hereby incorporated herein by
                           this reference. In the event of any conflict between
                           the terms of the Exim Guarantee and the other terms
                           of this Agreement, whichever terms are more
                           restrictive shall apply. Borrower shall reimburse
                           Silicon for all fees and out of pocket expenses
                           incurred by Silicon with respect to the Exim
                           Guarantee, including without limitation all facility
                           fees and usage fees, and Silicon is authorized to
                           debit Borrower's account with Silicon for such fees,
                           costs and expenses when paid by Silicon.

INTEREST RATE:             If Borrower's Debt to Tangible Net Worth ratio is
                           greater than 2.00:1.00, the interest rate applicable
                           to the Export Line of Credit shall be a rate equal to
                           the "Prime Rate" in effect from time to time, plus
                           1.25% per annum. If Borrower's Debt to Tangible Net
                           Worth ratio is 2.00:1.00 or less, the interest rate
                           applicable to the Export Line of Credit shall be a
                           rate equal to the "Prime Rate" in effect from time to
                           time, plus 1.00% per annum. Interest calculations
                           shall be made on the basis of a 360-day year and the
                           actual number of days elapsed. Changes in interest
                           rate resulting from changes in Borrower's Debt to
                           Tangible Net Worth ratio shall be effective on the
                           first day of the month following the day on which
                           Silicon receives Borrower's quarterly financial
                           statement and calculation of its Debt to Tangible Net
                           Worth ratio. Interest is payable monthly.

                           "Prime Rate" means the rate announced from time to
                           time by Silicon as its "prime rate"; it is a base
                           rate upon which other rates charged by Silicon are
                           based, and it is not necessarily the best rate
                           available at Silicon. The interest rate applicable to
                           the Obligations shall change on each date there is a
                           change in the Prime Rate.

LOAN FEE:                  $30,000, was paid at closing. This fee was fully
                           earned at closing and is non-refundable.

MATURITY DATE:             March 31, 2000, at which time all unpaid principal
                           and accrued but unpaid interest shall be due and
                           payable.

PRIOR NAMES OF
BORROWER:                  See Exhibit B

TRADE NAMES OF
BORROWER:                  See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:             See Exhibit B

MATERIAL ADVERSE
LITIGATION:                See Exhibit B

FINANCIAL
COVENANTS:                 The Borrower, exclusive of the results of operations
                           of Advanced Power Technology Europe, S.A.
                           ("APT-Europe") shall comply with all of the following


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         (EXIM PROGRAM)

<PAGE>

                           covenants, all of which shall be determined and
                           measured quarterly in accordance with generally
                           accepted accounting principles, except as otherwise
                           stated below:

TANGIBLE NET
WORTH:                     Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $3,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO:           Borrower shall maintain a ratio of total book
                           liabilities (less the outstanding balance of
                           Secured Term Loan No. 1 and accrued interest thereon,
                           less debt, if any, that has been subordinated to the
                           Loans in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less deferred revenue) to Tangible Net
                           Worth, measured quarterly, of not more than
                           2.50:1.00.

QUICK RATIO:               Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities of not less
                           than 0.45:1.00, measured quarterly.

PROFITABILITY:             Borrower shall earn net income of not less than
                           $250,000 for each quarterly period.

DEBT SERVICE
COVERAGE RATIO:            Borrower shall maintain, on an annualized basis, a
                           Debt Service Coverage Ratio of not less than
                           2.00:1.00.

LOANS OR EQUITY
CONTRIBUTIONS TO
SUBSIDIARY:                Borrower shall limit its loans or equity
                           contributions to its wholly owned subsidiary,
                           APT-Europe, to a maximum of $1,250,000 plus 25% of
                           any new equity at any one time, measured quarterly.

RELEASE OF
GUARANTIES:                Silicon shall release the Continuing Guaranties
                           provided by direct or indirect shareholders of
                           Borrower at such time as the Borrower satisfies all
                           of the criteria described below:

                           (i)      Borrower raises a minimum of $2,000,000 in
                                    new equity after April 1, 1999;

                           (ii)     Borrower achieves a Debt to Tangible Net
                                    Worth Ratio of not more than 2.00:1.00;

                           (iii)    Borrower achieves a Quick Ratio of not less
                                    than 0.60:1.00; and

                           (iv)     Borrower is able to reduce its reliance on
                                    inventory-secured borrowings such that the
                                    advance rate against inventory for purposes
                                    of the Borrowing Base for the Secured
                                    Accounts Receivable Line of Credit may be
                                    reduced from 50% to 25%, and the maximum
                                    advance against Eligible Inventory may be
                                    reduced from $1,250,000 to $500,000.

DEFINITIONS:               "Debt Service Coverage Ratio" means quarterly net
                           book income, plus any loss from APT-Europe, plus
                           depreciation and amortization, less any income from
                           APT-



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         (EXIM PROGRAM)

<PAGE>

                           Europe, plus interest, plus taxes (EBITDA) multiplied
                           by four (4), divided by the Current Maturities of
                           Long-Term Debt (CMLTD) plus interest for that quarter
                           multiplied by four (4).

                           "Quick Assets" means cash on hand or on deposit in
                           banks, readily marketable securities issued by the
                           United States, readily marketable commercial paper
                           rated "A-I" by Standard & Poor's Corporation (or a
                           similar rating by a similar rating organization),
                           certificates of deposit and banker's acceptances, and
                           accounts receivable (including accounts owing to
                           Borrower's affiliate of APT-Europe) net of allowance
                           for doubtful accounts.

                           "Tangible Net Worth" means stockholders' equity plus
                           the outstanding balance of the Secured Term Loan No.
                           1 and accrued interest thereon, plus debt, if any,
                           that has been subordinated to the Loans in a written
                           subordination agreement on terms satisfactory to
                           Silicon, and accrued interest thereon, plus the
                           amount of Borrower's negative equity investment in
                           Borrower's affiliate APT-Europe, less goodwill,
                           patents, capitalized software costs, deferred
                           organizational costs, tradenames, trademarks, and all
                           other assets which would be classified as intangible
                           assets under generally accepted accounting
                           principles, less the note receivable from Tremoliere
                           LLC, less the note receivable from Borrower's
                           affiliate APT-Europe, less the amount of Borrower's
                           positive equity investment in APT-Europe.

OTHER COVENANTS:           Borrower shall at all times comply with all of the
                           following additional covenants:

                           BANKING RELATIONSHIP. Borrower shall at all times
                           maintain its primary banking relationship with
                           Silicon.

                           EXIM BANK REQUIREMENTS. Borrower shall at all times
                           conform the rules and regulations of the
                           Export-Import Bank of the United States.

                           FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
                           provide Silicon: (a) within 30 days after the end of
                           each month, a monthly financial statement for
                           Borrower and APT-Europe (consisting of an income
                           statement and a balance sheet) prepared by the
                           Borrower in accordance with generally accepted
                           accounting principles; (b) within 20 days after the
                           end of each month, an accounts receivable aging
                           report, an inventory report and an accounts payable
                           aging report, in such form as Silicon shall
                           reasonably specify; (c) within 20 days after the end
                           of each month, a Borrowing Base Certificate in the
                           form attached to this Agreement as Exhibit A, as
                           Silicon may reasonably modify such Certificate from
                           time to time, signed by the Chief Financial Officer
                           of the Borrower; (d) within 30 days after the end of
                           each quarter, a Compliance Certificate in such form
                           as Silicon shall reasonably specify, signed by the
                           Chief Financial Officer of the Borrower, setting
                           forth calculations showing compliance (at the end of
                           each such calendar month) with the financial
                           covenants set forth on the Schedule, and certifying
                           that throughout such month the Borrower was in full
                           compliance with all other terms and conditions of
                           this Agreement and the Schedule, and providing such
                           other information as Silicon shall reasonably
                           request; and (e) within 90 days following the end of
                           the Borrower's fiscal year, complete annual
                           CPA-audited financial statements, such audit being
                           conducted by independent certified public accountants


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         (EXIM PROGRAM)

<PAGE>

                           reasonably acceptable to Silicon, together with an
                           unqualified opinion of such accountants.

CONDITIONS TO
CLOSING:                   Without in any way limiting the discretionary nature
                           of advances under this Agreement, before requesting
                           any such advance, the Borrower shall satisfy each of
                           the following conditions:

1.  LOAN DOCUMENTS:
                           Silicon shall have received this Agreement, the
                           Schedule, joint and several Continuing Guaranties,
                           and such other loan documents as Silicon shall
                           require, each duly executed and delivered by the
                           parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                           Silicon shall have received each of the following in
                           form and substance satisfactory to it:

                           (a)      Certified Copies of the Articles of
                                    Incorporation and Bylaws of the Borrower;

                           (b)      A Certificate of Good Standing issued by the
                                    Secretary of State of the Borrower's state
                                    of incorporation and such other states as
                                    Silicon may reasonably request with respect
                                    to the Borrower;

                           (c)      A certified copy of a Resolution adopted by
                                    the Board of Directors of the Borrower
                                    authorizing the execution, delivery and
                                    performance of this Agreement, and any other
                                    documents or certificates to be executed by
                                    the Borrower in connection with this
                                    transaction; and

                           (d)      Incumbency Certificates describing the
                                    office and identifying the specimen
                                    signatures of the individuals signing all
                                    such loan documents on behalf of the
                                    Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY:      Silicon shall have received evidence satisfactory
                           to it that its security interest in the Collateral
                           has been duly perfected and that such security
                           interest is prior to all other liens, charges,
                           security interests, encumbrances and adverse claims
                           in or to the Collateral other than Permitted Liens,
                           which evidence shall include, without limitation, a
                           certificate from the Oregon Secretary of State
                           showing the due filing and first priority of the
                           UCC Financing Statements to be signed by the
                           Borrower covering the Collateral.

4.  INSURANCE:             Silicon shall have received evidence satisfactory to
                           it that all insurance required by this Agreement is
                           in full force and effect, with loss payee
                           designations and additional insured designations as
                           required by this Agreement.


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         (EXIM PROGRAM)

<PAGE>

5.  OTHER INFORMATION:

                           Silicon shall have received such other statements,
                           opinions, certificates, documents and information
                           with respect to matters contemplated by this
                           Agreement as it may reasonably request, all of which
                           must be acceptable to Silicon.

                           Silicon shall have conducted an examination of the
                           Borrower's books, records, ledgers, journals, and
                           registers, as Silicon may deem necessary, and shall
                           be satisfied with the results of such examination in
                           its sole discretion.

                           Exim Bank shall have agreed to guarantee payment of
                           ninety percent (90%) of the Loan and all interest
                           accrued thereon, subject to the terms of a master
                           guarantee agreement between Exim Bank and Silicon.


         Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule.

                                 BORROWER:

                                 ADVANCED POWER TECHNOLOGY, INC.


                                 By:
                                        --------------------------------------
                                 Name:
                                        --------------------------------------
                                 Title:
                                        --------------------------------------


                                 SILICON:

                                 SILICON VALLEY BANK


                                 By:
                                        --------------------------------------
                                 Name:
                                        --------------------------------------
                                 Title:
                                        --------------------------------------


Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

                                    EXHIBIT A

                        [INSERT EXIM BORROWER AGREEMENT]






















Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

                                    EXHIBIT B

                          [INSERT BORROWER DISCLOSURES]























Page 9 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of April 7, 2000 by
and between Advanced Power Technology, Inc. ("Borrower") and Silicon Valley Bank
("Silicon") whose address is 3003 Tasman Drive, Santa Clara, CA 95054.

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated September 6,
1995, together with any and all Schedules attached thereto, as amended from time
to time, (the "Loan Agreement"). The Loan Agreement provided for, among other
things, a Secured Accounts Receivable Line of Credit in the original principal
amount of Two Million Five Hundred Dollars ($2,500,000) (the "Line of Credit").
The Loan Agreement has been modified pursuant to among other documents, an
Amended and Restate Schedule to Loan and Security Agreement dated December 18,
1997, which the Line of Credit was increased to Three Million Dollars
($3,000,000). Additionally, Borrower is indebted to Silicon pursuant to, among
other documents, a Loan and Security Agreement (and Schedules thereto), dated
September 6, 1995, as may be amended from time to time (the "Exim Loan
Agreement"). The Exim Loan Agreement provided for, among other things, an Export
Line of Credit in the original principal amount of One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000) (the "Exim Line of Credit"). The Exim Loan
Agreement has been modified pursuant to among other documents, an Amended and
Restated Schedule to Loan and Security Agreement, dated April 1, 1999, which the
Exim Line of Credit was increased to Two Million Dollars ($2,000,000). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement and the Exim Loan Agreement, respectively.

Hereinafter, all indebtedness owing by Borrower to Silicon shall be referred to
as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by, among other things, the Collateral as described in the Loan
Agreement. In addition, repayment of the Indebtedness is guaranteed by Advanced
Energy Industries, Inc., Russell J. Crecraft, Marla K. Crecraft, John I. Hess,
Kimberly A. Hess, Patrick P. Sireta, Dah-Wen D. Tsang, Yvonne S. Tsang, Thomas
A. Loder, Patricia D. Loder, Greg M. Haugen and Bettina Haugen (each a
"Guarantor"), pursuant to 1 Amended and Restated Guaranty and Subordination
Agreement (executed by Advanced Energy Industries, Inc. and guaranteeing only
the Indebtedness under the Secured Term Loan No. 1) and 6 Continuing Guaranty
agreement (each a "Guaranty")

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO LOAN AGREEMENT.

                  1.       The "Secured Accounts Receivable Line of Credit" in
                           the Amended and Restated Schedule to Loan and
                           Security Agreement, dated January, 6, 2000, is hereby
                           amended in part as follows:

                           (A) The first 3 paragraphs under the term "Credit
                           Limit" are amended to read as follows:

                           An amount not to exceed the lesser of (i) $3,500,000
                           at any one time outstanding; or (ii) the amount of
                           the "Borrowing Base", as defined below:


                                       1
<PAGE>

                           For purposes of this Schedule, the "Borrowing Base"
                           shall mean the sum of (i) 80% of the Net Amount of
                           Borrower's eligible accounts receivable, plus (ii)
                           50% of Borrower's "Eligible Inventory" (as defined
                           below), up to a maximum advance of $875,000 against
                           Eligible Inventory. Notwithstanding the foregoing,
                           effective July 1, 2000, item "(ii)" of the preceding
                           paragraph shall read as 25% of Borrower's "Eligible
                           Inventory" (as defined below), up to a maximum
                           advance of $500,000 against Eligible Inventory. "Net
                           Amount" means the gross amount of the account, minus
                           all applicable sales, use, excise and other similar
                           taxes and minus all discounts, credits and allowances
                           of any nature granted or claimed. Borrower's
                           "Eligible Inventory" means the Borrower's inventory
                           held for sale in the United States or Canada, valued
                           at the lower of wholesale cost or market value, which
                           Silicon in its reasonable discretion deems eligible
                           for borrowing.

                           The amount of all letters of credit issued by Silicon
                           at the request of the Borrower shall reduce, dollar
                           for dollar, the amount otherwise available to be
                           borrowed under the Borrowing Base formula described
                           above.

                           (B) The item entitled "Maturity Date" under the term
                           "Credit Limit" is amended to read as follows:

                           May 31, 2001, at which time all unpaid principal and
                           accrued but unpaid interest shall be due and payable.

                  2.       The item entitled "Maturity Date" under the term
                           "Credit Limit" under "Secured Term Loan No. 1" in the
                           Amended and Restated Schedule to Loan and Security
                           Agreement, dated January, 6, 2000, amended to read as
                           follows:

                           Borrower will pay 6 equal installments of principal
                           (each principal payment to be equal to 1/48th of the
                           outstanding principal balance of the Secured Term
                           Loan No. 1 as of the date of this Loan Modification
                           Agreement) plus Interest (the "Secured Term Loan No.
                           1 Payment"). Each Secured Term Loan No. 1 Payment is
                           payable on the last day of each month during the term
                           of the loan. Borrower's final Secured Term Loan No. 1
                           Payment, due on September 30, 2000, includes all
                           outstanding Secured Term Loan No. 1 principal and
                           accrued but unpaid interest.

          B.      MODIFICATION(S) TO EXIM LOAN AGREEMENT.

                  1.       Item "(a)" under the Section entitled "Export Line of
                           Credit, Credit Limit (Section 1.1) Exim Loans" in the
                           "Amended and Restated Schedule to Loan and Security
                           Agreement (Exim Program)" is hereby amended to read
                           as follows:

                           (a) $2,500,000 at any one time outstanding; or

                  2.       The item entitled "Maturity Date" under the Section
                           entitled "Export Line of Credit, Credit Limit
                           (Section 1.1) Exim Loans" in the "Amended and
                           Restated Schedule to Loan and Security Agreement
                           (Exim Program)" is hereby amended to read as follows:

                           May 31, 2001, at which time all unpaid principal and
                           accrued but unpaid interest shall be due and payable.

         C.       MODIFICATION(S) TO LOAN AGREEMENT AND  EXIM LOAN AGREEMENT.

                  1.       The "Financial Covenants" Section entitled "Tangible
                           Net Worth" is hereby amended to read as follows:


                                       2
<PAGE>

                           Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $3,500,000, on
                           a quarterly basis.

                  2.       The Section entitled "Debt to Tangible Net Worth
                           Ratio" is hereby amended to read as follows:

                           Borrower shall maintain a ratio of total book
                           liabilities (less the outstanding balance of Secured
                           Term Loan No. 1 and accrued interest thereon, less
                           debt, if any, that has been subordinated to the Loans
                           in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less deferred revenue) to Tangible Net
                           Worth, measured quarterly, of not more than 2.25 to
                           1.00, decreasing to 2.00 to 1.00 beginning with the
                           quarter ending December 31, 2000 and quarterly
                           thereafter.

                  3.       The Section entitled "Quick Ratio" is hereby amended
                           to read as follows:

                           Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities (excluding the
                           current portion of long term debt of Secured Term
                           Loan No. 1) of not less than 0.50 to 1.00, measured
                           quarterly.

                  4.       The Section entitled "Profitability" is hereby
                           deleted.

                  5.       The Section entitled "Loans or Equity Contributions
                           to Subsidiary" is hereby amended to read as follows:

                           Borrower shall limit its loans or equity
                           contributions to its wholly-owned subsidiary,
                           APT-Europe, to a maximum of $375,000 plus 25% of any
                           new equity at any one time, measured quarterly.

                  6.       The following Section is hereby incorporated under
                           "Financial Covenants":

                           Maximum Loans to Tremoliere LLC. Borrower shall limit
                           its loans to Tremoliere to a maximum of $4,500,000 at
                           any one time, measured quarterly.

                  7.       The defined term "Debt Service Coverage Ratio" is
                           hereby amended to read as follows:

                           "Debt Service Coverage Ratio" means quarterly net
                           book income, plus any loss from APT-Europe, plus
                           depreciation and amortization, less any income from
                           APT-Europe, plus interest, plus taxes (EBITDA)
                           multiplied by four (4), divided by the sum of Current
                           Maturities of Long Term Debt (CMLTD) (excluding CMLTD
                           associated with the Secured Term Loan No. 1) plus the
                           interest for that quarter including interest under
                           the Secured Term Loan No. 1, multiplied by four (4).

                  8.       Borrower's fiscal year end complete annual
                           CPA-audited financial statements shall be due within
                           120 (rather than 90) days after the end of each
                           fiscal year end.

         D.       MODIFICATION(S) TO GUARANTY.

                  1.       Notwithstanding the terms and conditions contained in
                           each Guaranty, each Guarantor shall deliver to
                           Silicon complete and current financial statements as
                           requested and tax returns within 15 days of filing
                           and such other financial information about Guarantor
                           as Silicon may reasonably request.


                                       3
<PAGE>

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEE. Borrower shall pay to Silicon a fee in the amount
of Nine Thousand Four Hundred Eighty Dollars ($9,480) (the "Domestic Loan Fee")
plus Forty Thousand Six Hundred Twenty Five Dollars ($40,625) (the "Exim Loan
Fee") (collectively, the "Loan Fee") plus all out-of-pocket expenses.

6.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

7.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan Modification
Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

8.       CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                    SILICON:

ADVANCED POWER TECHNOLOGY, INC.              SILICON VALLEY BANK

By:                                          By:
   -----------------------------                ------------------------------
Name:                                        Name:
     ---------------------------                  ----------------------------
Title:                                       Title:
      --------------------------                   ---------------------------


                                       4
<PAGE>

The undersigned hereby consent to the modifications to the Indebtedness pursuant
to this Loan Modification Agreement, hereby ratify all the provisions of the
GUARANTY and confirms that all provisions of that document are in full force and
effect.

GUARANTOR:
Advanced Energy Industries, Inc.

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------


----------------------------------
Russell J. Crecraft

----------------------------------
Marla K. Crecraft

----------------------------------
John I. Hess

----------------------------------
Kimberly A. Hess

----------------------------------
Patrick P. Sireta

----------------------------------
Dah-Wen D. Tsang

----------------------------------
Yvonne S. Tsang

----------------------------------
Thomas A. Loder

----------------------------------
Patricia D. Loder

----------------------------------
Greg M. Haugen

----------------------------------
Bettina Haugen


                                       5
<PAGE>


[LOGO]
                               SILICON VALLEY BANK


                       PRO FORMA INVOICE FOR LOAN CHARGES



BORROWER:                  ADVANCE POWER TECHNOLOGY, INC.


LOAN OFFICER:              RON SHERMAN

DATE:                      APRIL 7, 2000

                           DOMESTIC LINE OF CREDIT            $9,480.00
                           EXIM LINE OF CREDIT                40,625.00
                           DOCUMENTATION FEE                     750.00

                           TOTAL FEE DUE                     $50,855.00
                           -------------                     ==========



PLEASE INDICATE THE METHOD OF PAYMENT:

         {   }   A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.

         {   }   DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.

         {   }   LOAN PROCEEDS





-------------------------------               ----------------------------
                         (DATE)                                     (DATE)


-------------------------------
SILICON VALLEY BANK      (DATE)
ACCOUNT OFFICER'S SIGNATURE


                                       6