**Exhibit 10.27**

 

**SUPPLY CONTRACT**

 

Advanced Power Technologyintends to secure silicon wafers for the manufacture of power switch devices.Siltronic Corporation manufactures silicon wafers and intends to supply thismaterial. Set forth is the “Silicon Supply Agreement” between Advanced PowerTechnology (APT) located in Bend, OR and Siltronic Corporation (SCO) located inPortland, OR.

 

1.0 Term of Agreement

 

1.1 Six (6) month agreement commencing on September 15, 2004 andexpiring on March 15,2005.

 

1.2Renegotiating discussions will commence one month before contract expiration;extension period to be agreed upon.

 

1.3Cause for early termination of this agreement would be for non-performance bySCO and/or APT, including but not limiting non-payment by APT.

 

2.0 Volume — [ * ]

 

3.0 Pricing

 

3.1 Pricing is set forth inattachment # I.

 

3.2Where possible, SCO will “help” keep APT competitive in both price andtechnology through cost reduction programs and technology improvements

 

4.0 Payment and FreightTerms

 

4.1 Net [ * ] days from dateof SCO invoice. Currency in US dollars.

 

4.2 F.O.B. Siltronic Corporation, Portland, OR, freight collect.Freight carrier as specified by APT.

 

4.3Freight costs for expedited shipments, if requested by APT, will be theresponsibility of APT. SCO will incur all expedited freight costs for lateshipments caused by SCO.

 

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[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

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5.0 Substrate Buffer Stock

 

5.1 SCO agrees to maintain athree week inventory equivalent to APT’s consumption of one common substrate.This substrate inventory will be maintained in Portland.

 

5.2  SCO agrees to replenish the Substrate BufferStock within four weeks.

 

6.0 Lead-time

 

6.1SCO will commit to a three-week lead-time provided the forecast is notincreased more than [ * ] in the same lead-time period and that it is a currentproduct. Lead­-time for non-regular material is 4-6 weeks after specificationhas been accepted.

 

6.2APT agrees to give SCO a five week “rolling forecast”. The first and secondweek will be firm, which means no cancellations, reductions, or push-outs areallowed. The third week may change [ * ], the fourth week may change [ * ] andthe fifth week may change [ * ].

Clarification: The week theupdated forecast is submitted is considered week zero, and the schedules inthis week are already considered completed and in shipping or in transit. Openschedules during the next two weeks, first and second week, are consideredfirm.

 

6.3 APT agrees to give SCO an additional eight week visibility beyondthe five week “rolling forecast” after planning meeting once a quarter.

 

6.4 Releases for weeks one through five will be by product and forweeks six through thirteen, it will be by total only.

 

6.5 Minimum order quantities for all schedules (including engineeringorders) will be in increments of [ * ] wafers or more.

 

7.0 Quality

 

7.1 SCO warrants that their products, at the time of delivery, are incompliance with approved APT specifications as agreed by both parties.

 

8.0 Engineering Services

 

8.1 A determination of cost benefit, if any, and ownership will beagreed upon prior to any new activities in the “Reduction of SCO ProductionCost” project.

 

8.2 SCO agrees to support engineering work involved with new productsand work to meet the stringent specification requirements of those and currentproducts.

 

9.0 Confidentiality

 

9.1APT and SCO agree to maintain such information in confidence and to take thenecessary measures to prevent complete or partial disclosure to third parties.Disclosure of any confidential information shall not be precluded if suchdisclosure is in response to a valid request from the SEC.

 

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[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

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10.0                           Force Majeure

 

10.1                        Pertaining to Force Majeure, APT and/or SCOshall promptly notify the other party and shall use its best efforts tominimize the consequences. For the duration and to the extent of Force Majeurethe parties will be released from their obligations.

 

11.0                           Indemnification

 

11.1                         SCO’s obligation to payment of damages, forwhatever reason, shall be limited to the invoice value of the wafers directlyhaving caused those damages.

 

12.0                           Sole Agreement

 

12.1                        This Supply Agreement including allattachments referenced herein, shall be the complete agreement of both APT andSCO and shall supersede all prior agreements and understanding, oral orwritten, between the parties respecting the subject matter hereof. Anyamendments to this Agreement shall be implemented by written amendment signedby authorized representatives of APT and SCO.

 

IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the date first above written,accepted and agreed:

 
| SILTRONIC CORPORATION         | ADVANCED POWER TECHNOLOGY |
|-------------------------------|---------------------------|
|                          |                      |
| By:                           |                      |   | By: |   |   |
| Robert  Gagnier               |                      |
|                          |                      |
| Title: Sales Account  Manager | Title:                    |   |   |
|                          |                      |
| Title:                        |                      |
|                          |                      |
| Date: September 2, 2004       | Date:                     |   |   |
|                               |                           |  |  |  |  |  |  |

 

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[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

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Attachment # 1

 
| **Part**                      | ** ** | **220-1020** | ** ** | **220-1040** | ** ** | **220-1050   &  220-1051** | ** ** | **220-1060   &  220-1063** | ** ** | **220-1080** | ** ** | **220-1100  1000V** | ** ** | **220-1120  1000V** | ** ** | **220-1120  1200V** | ** ** | **220-1126** | ** ** |
|-------------------------------|------------|--------------|------------|--------------|------------|--------------------------------|------------|--------------------------------|------------|--------------|------------|---------------------|------------|---------------------|------------|---------------------|------------|--------------|------------|
| ** **                    |       |         |       |         |       |                           |       |                           |       |         |       |                |       |                |       |                |       |         |       |
| **9’04-3’05 Price** |       | [ * ]        |       | [ * ]        |       | [ * ]                          |       | [ * ]                          |       | [ * ]        |       | [ * ]               |       | [ * ]               |       | [ * ]               |       | [ * ]        |       |

 

***Notes: All other partsnot listed receive a [ * ] price increase based on the last reorderschedule.  New/ENG orders to be quoted;minimum order quantities is [ * ] wafers or more.

** **

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[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

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