Exhibit 10.27


 


SUPPLY CONTRACT


 


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


 


1.0 Term of Agreement


 


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


 


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


 


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


 


2.0 Volume — [ * ]


 


3.0 Pricing


 


3.1 Pricing is set forth in
attachment # I.


 


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


 


4.0 Payment and Freight
Terms


 


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


 


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


 


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


 










[ * ] = CONFIDENTIAL TREATMENT REQUESTED  


 


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5.0 Substrate Buffer Stock


 


5.1 SCO agrees to maintain a
three 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 Buffer
Stock within four weeks.


 


6.0 Lead-time


 


6.1
SCO will commit to a three-week lead-time provided the forecast is not
increased more than [ * ] in the same lead-time period and that it is a current
product. Lead­-time for non-regular material is 4-6 weeks after specification
has been accepted.


 


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


Clarification: The week the
updated forecast is submitted is considered week zero, and the schedules in
this week are already considered completed and in shipping or in transit. Open
schedules during the next two weeks, first and second week, are considered
firm.


 


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


 


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


 


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


 


7.0 Quality


 


7.1 SCO warrants that their products, at the time of delivery, are in
compliance 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 be
agreed upon prior to any new activities in the “Reduction of SCO Production
Cost” project.


 


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


 


9.0 Confidentiality


 


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


 










[ * ] = CONFIDENTIAL TREATMENT REQUESTED  


 


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10.0                           Force Majeure


 


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


 


11.0                           Indemnification


 


11.1                         SCO’s obligation to payment of damages, for
whatever reason, shall be limited to the invoice value of the wafers directly
having caused those damages.


 


12.0                           Sole Agreement


 


12.1
                        This Supply Agreement including all
attachments referenced herein, shall be the complete agreement of both APT and
SCO and shall supersede all prior agreements and understanding, oral or
written, between the parties respecting the subject matter hereof. Any
amendments to this Agreement shall be implemented by written amendment signed
by authorized representatives of APT and SCO.


 


IN WITNESS WHEREOF, the
parties 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:

  	
   

  	
   

  
								



 










[ * ] = 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 parts
not listed receive a [ * ] price increase based on the last reorder
schedule.  New/ENG orders to be quoted;
minimum order quantities is [ * ] wafers or more.


 










[ * ] = CONFIDENTIAL TREATMENT REQUESTED  


 


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