Document:

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                   AGREEMENT FOR WAFER PRODUCTION AND TESTING

                                     BETWEEN

                            ADVANCED POWER TECHNOLOGY

                                       AND

                           SIEMENS AKTIENGESELLSCHAFT

                   AGREEMENT FOR WAFER PRODUCTION AND TESTING

This agreement ("Agreement") is entered into by Advanced Power Technology, a
Delaware Corporation located in Bend, Oregon, USA (hereinafter referred to as
"APT ")

                                       and

Siemens Aktiengesellschaft a German corporation located in Munich, Germany
(hereinafter referred to as "Siemens")

RECITALS

WHEREAS APT owns certain intellectual property rights to the technology and
design methods used in the design and manufacture of APTs Power MOS
semiconductors.

WHEREAS APT desires Siemens to produce and supply die to APT in the form of
fully processed wafers (including thinning, testing and sawing).

WHEREAS Siemens desires to produce and supply fully processed wafers to APT upon
the terms and conditions contained in this agreement.

WHEREAS both parties seek to enter into a long-term business relationship where
Siemens manufactures such fully processed wafers for APT including future Power

MOS generations. The expansion of this contract to FREDFET process out in time
is possible if it made economic sense for both companies.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
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NOW THEREFORE, based on mutual promises contained herein and intending to be
legally bound, Siemens and APT agree as follows:

DEFINITIONS

1.1  "Power MOS-Die" shall mean Die listed and specified in Exhibit 1, to be
     manufactured by Siemens for APT. Exhibit 1 may be amended or modified in
     numbers and types from time to time by agreement between APT and Siemens.

1.2  Product Information Package" shall mean the technical information (e.g.
     data base tape, test program, etc.) and hardware utilities specified in
     EXHIBIT 2 to be provided by APT for each Power MOS Die.

1.3  "Process" :shall mean a manufacturing process which has been mutually
     accepted by APT and Siemens and which has been specified in Exhibit 3, to
     be used by Siemens for the purpose of manufacturing of Wafers which are
     exclusively for APT.

1.4  "Wafers" shall mean 6-inch silicon wafers with Power MOS Die manufactured
     by Siemens using the Process, and design and database of the Product
     Information Package.

1.5  "Good Die" shall mean a Die on a Wafer which meets the specifications as
     per Exhibits 3, 4 and 5, and which fully satisfies the relevant test
     program for Wafer test, supplied by APT.

1.6  "Proprietary Information" shall mean any and all information including but
     not limited to technical information, database tapes, specifications, test
     tapes and supporting documentation provided either orally, in writing, or
     in machine readable format and reticles or masks generated by or for
     Siemens using the Product Information Package; provided that all such
     information is marked "Confidential" or similarly, or, if oral, identified
     as proprietary at time of disclosure and reduced to writing within thirty
     (30) days thereafter. Additionally the partners agree that this Agreement
     and its Exhibits as such and the content thereof shall be kept
     confidential. Notwithstanding the foregoing Proprietary Information does
     not include information generally available to the public, information
     independently developed or known by the receiving party without reference
     to information disclosed hereunder, information rightfully received from a
     third party without confidentiality obligations, or information authorized
     in writing for release by the disclosing party hereunder.

1.7  "Risk Start" shall mean production of Wafers before qualification, defined
     in Section 2.3, has been completed.

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PROCESS TECHNOLOGY. TESTING CAPABILITY AND QUALIFICATION

2.1  PROCESS TECHNOLOGY

2.1.1 APT shall provide Siemens with the design information for each Process as
     more fully described in EXHIBIT 3 for the purpose of specifying the Process
     in accordance with Section 2.1.2.

2.1.2 APT and Siemens shall agree upon Process specifications to be described in
     Exhibit 3, which shall be finalized before Siemens begins production in
     accordance with Section 3.

2.1.3 Subject to the stipulations and procedure set forth in this Agreement
     and in accordance with the qualification plan described in Exhibit 5
     Siemens shall bring up the Process which shall meet the specification in
     Exhibit 3 and deliver the required Wafers for qualification purposes.

2.2  MASKS

2.2.1 Siemens shall provide for each Power MOS Die the masks which are necessary
     for production of Wafers. The masks shall be produced by using the data
     base tape of APT and if necessary other technical information as provided
     with the relevant Product Information Package as more fully described in
     Exhibit 2.

2.2.2 For each Power MOS Die APT shall pay the first set of production masks,
     and any subsequent redesigned mask layers, including those for
     modified/redesigned Power MOS Die if such modification/redesign is APT's
     responsibility or has been conducted upon APT's request. APT will supply
     the databases to Siemens and the masks will be generated by Siemens for use
     in manufacturing and the amount APT will pay is Siemens internal mask shop
     prices if made internally or the outside mask shop Cost if purchased
     externally. Except as provided above all further masks shall be at Siemens
     charge, if not agreed otherwise.

2.3  QUALIFICATION

2.3.1 The qualification approval by APT for each Process and each individual
     Power MOS Die, manufactured with the Process, is a prerequisite for
     ordering and delivery of Wafers and/or Good Dies. This section 2.3.1 is not
     applicable in the case of Risk Starts.

2.3.2 For the purpose of qualification as specified in Exhibit 4 and 5 Siemens
     shall provide APT, with the agreed upon Number of Wafers. Such Wafers
     delivered for qualification must also meet all agreed APT standards,
     specifications and requirements defined in the Exhibits 1. 2, 3. 4, and
     provided however, that if failures occur due to reasons, for which APT is
     responsible, Siemens shall be paid 100 % of the Wafer price as specified in
     Exhibit 7. Siemens shall in accordance with the agreed schedule deliver to
     APT any documents and reports as required.

2.3.3 Prior to completion of the qualification, APT may. in accordance with
     Exhibit 6 request that Siemens provides Wafers out of "Risk Starts".
     Siemens will provide these Wafers out of Risk Starts to APT at the
     price/volume specified in Exhibit 6 and 7.

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2.3.4 During qualification, as specified in Exhibit 5, APT may stop production
     of Wafers for any or all APT Power MOS Chips by giving notice to Siemens.
     Siemens will stop production following completion of the process step at
     which the Wafer reside at the time of notification. APT will pay Siemens
     for all Wafers started prior to Siemens receiving such notice. Prices for
     such Wafers will be based on the stage of production of the Wafers as
     defined in Exhibit 7.

2.3.5 After APT qualification approval to the Process Siemens shall not carry
     out any major changes on the Process without prior written approval of APT
     (major changes as defined by Siemens internal standards and approved by
     APT). Process changes may only be carried out in accordance with the
     Process change notification procedure to be agreed upon.

2.3.6 In the case Siemens desires to perform major changes to a Process APT
     shall be informed 9 months, or a shorter period if mutually agreed upon,
     prior to the planned commencement of such changes to the Process and shall
     receive a detailed description of the planned changes as well as the
     results of a re-qualification of the Process with the intended changes to
     be performed by Siemens in accordance with Exhibits 3, 4 and 5. APT will
     inform Siemens in writing if the desired changes of the Process are
     acceptable. In such case a re-qualification of the Process according to
     this Section 2.3 is necessary and Siemens shall provide APT with the
     necessary Wafers for such re-qualification free of charge. APT shall
     purchase the Wafers for re-qualification if such changes to the Process are
     requested by APT. Successful re-qualification is the prerequisite for final
     approval of APT to a major change to a Process. APT will not unreasonable
     deny its consent to a major change to a process requested by Siemens and
     APT may not withhold such consent absent clear proof, that such change will
     have a material adverse effect on the resulting Power MOS Die, e.g. but not
     limited to yield, quality, reliability, specification of the respective
     Power MOS Die or reasonable customer requests affecting a material quantity
     of Wafers.

2.3.7 The specifications and requirements specified in Exhibits 3. 4 and 5 can
     only be modified on mutual agreement between Siemens and APT.

2.3.8 If APT determines that modifications to the specifications are required,
     including modifications to photo masks, Process or testing or next
     generation MOS technology, Siemens performs such modifications at APT's
     Cost which shall be fair and reasonable. Regarding modification of the
     Process the parties have to agree to such proposed modifications in
     advance. The parties will negotiate adjustment to production price and
     delivery schedule in advance if price or delivery schedule are affected by
     such modifications.

2.4  TESTING CAPABILITY

2.4.1 The testing of Wafers will be carried out by Siemens. For the purpose of
     yield improvement and for the calculation of the good Die price, Siemens
     will make available to APT this information's.

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2.4.2 In case APT is interested to perform the testing of Wafers, Siemens is
     willing to negotiate the terms and conditions of such option.

3.   PRODUCTION, FORECAST/ORDERING

3.1  The business for each Power MOS Die will be conducted in two phases. In
     phase I, forecasting ordering as well as pricing will be based on Wafers.
     In phase II, the pricing will change to Good Dies as specified in Exhibit
     7, ordering and forecasting will remain on Wafer base.

3.2  Upon written notice from APT of successful completion of the qualification
     as described in Section 2 and having received a purchase order from APT.
     Siemens shall manufacture and deliver Wafers according to the terms of this
     Agreement.

3.3  Siemens commits to reserve for APT a minimum production capacity for a
     minimum volume as defined in Exhibit 6 and to deliver such Wafers to APT or
     on request of APT to one of is Subsidiaries. Prices for such Wafers and/or
     Good Die are laid down in Exhibit 7.

3.4  As a basis for a long term cooperation APT commits to order a minimum
     quantity of Siemens monthly capacity commitment as specified in Exhibit 6.
     Should APT fail to fulfil this commitment, APT will pay a
     "lost-opportunity-charge" as Specified in Exhibit 6.

3.5  APT and Siemens agree on the forecast and ordering procedure in accordance
     with Exhibit 6. Annually or more often if mutually agreed upon Siemens and
     APT may adjust the committed capacity in accordance with the volume
     adjustment mechanism as specified in Exhibit 6.

3.6  APT may at any time add or substitute Power MOS Die similar to the Power
     MOS Die listed in Exhibit 1 using a Process approved by Siemens and APT to
     be manufactured and delivered under this Agreement with reasonable prior
     notice, provided that the agreed upon quantities of Wafers and/or Good Die
     required by APT does not exceed those specified in Section 3.2 except with
     the consent of Siemens. A similar Power MOS Die is one which is
     manufactured using a Process as specified in Exhibit 3 and in accordance
     with the same qualification plan as APT Power MOS product currently
     manufactured by Siemens under this Agreement.

3.7  The purchase of Wafers and Good Die pursuant to this Agreement shall be
     accomplished by means of APT individual purchase orders or other release
     documents (hereinafter collectively referred to as "purchase orders"). The
     maximum lead time (time from ordering by APT to delivery to APT) for Wafers
     and Good Die is specified in Exhibit 6.

3.8  It is anticipated that from time to time there will be instances where an
     accelerated lead and cycle time is required to serve APT's needs. Siemens
     will provide such services upon mutually agreed conditions.

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3.9  In order to ensure traceability, processing and delivery of Wafers and/or
     Good Dies shall only be performed lot by lot unless agreed upon otherwise.
     Should splitting be necessary because of process requirements APT will be
     notified, sublots must be reunited by Siemens before shipment unless
     otherwise agreed. If a lot consists of less than 45 Wafers, Siemens shall
     explain the reason and APT may deny acceptance of such a lot.

3.10 In the case of technical problems arising in the processing of Wafers
     and/or Good Die, especially with regard to yield, quality and reliability,
     Siemens shall inform APT forthwith in writing. Notwithstanding any right
     APT may have, APT is prepared to assist Siemens to a reasonable extent in
     solving the above mentioned problems.

3.11 Both parties shall immediately advise one another in writing whenever they
     have reason to believe that Wafers may not conform to the applicable
     specifications.

3.12 In case any technical problem, defect or malfunction should occur, which
     Siemens will be informed about, Siemens will immediately start
     investigations and supply a first substantiated answer or status report
     within seven (7) working days after receipt of APT's notification of such
     matter.

3.13 APT may stop production of Wafers for any or all APT Power MOS Products by
     giving notice to Siemens. Siemens will stop production following completion
     of the process step at which the Wafer reside at the time of APT's receipt
     of written notification. APT will pay Siemens for all Wafers started prior
     to Siemens receiving such notice. If such stop of production is due to any
     reasons) not attributable to a failure by Siemens to fulfil its obligations
     under this Agreement, Siemens shall be paid for the Wafers as stated in
     Exhibit 6. If such stop of production is due to reasons attributable to a
     failure by Siemens to fulfil its obligations under this Agreement, only
     those wafers which (i) meet the criteria applicable to production Wafers
     pursuant to Section 2.3.2 and (ii) are delivered pursuant to Section 4
     below, shall be paid for with 100 % of the Wafer price as specified for
     Production Wafers in Exhibit 6. Notwithstanding anything to the contrary,
     and subject to the terms of this Section 3.13 with respect to payment
     Siemens may, at its discretion, elect to proceed with production as to
     which APT has requested a stop by providing APT advance written notice of
     the Wafers involved.

3.14 Siemens shall cooperate with APT in order to continuously improve the
     outgoing quality by agreed upon quality improvement programs.

4.   PRICES, PAYMENT. DELIVERIES AND SHIPMENTS

4.1  Pricing for Wafers and/or Good Die are specified in Exhibit 7 and are based
     on FCA, Franz Josef Strauss International Airport, Munich, Germany. Prices
     are quoted in US currency.

4.2  Prices will be in accordance with Exhibit 7.

4.3  Payment shall be effected 30 days net after receipt by APT or one of its
     Subsidiaries and the respective invoice from Siemens.

<PAGE>

4.4  Subject to a respective purchase order of APT or one of its Subsidiaries
     Wafers and/or Good Die shall be delivered in accordance with the delivery
     specification to the address as laid down in the purchase order. APT may -
     without being obligated to - perform an incoming inspection.

4.5  If any circumstances should arise which could result in a delayed delivery
     to APT, Siemens shall promptly notify APT hereof in writing. Siemens will
     make every reasonable effort to recover the original schedule.

5.   ON-SITE INSPECTION, DOCUMENTATION AND REPORTING

5.1  Subject to Siemens standard safety and manufacturing procedures, employees
     of APT shall be allowed to visit Siemens factory during normal working
     hours at reasonable prior written notice to Siemens. Such employees shall
     be granted such access to Siemens production flow and production control
     information regarding the Power MOS Chips.

5.2  Subject to mutually agreeable confidentiality protections and to Siemens
     standard safety and manufacturing procedures and upon APT's written request
     reasonable in advance, Siemens will allow APT representatives and/or APT
     customers to perform an audit of Siemens production site and quality system
     for Wafers in accordance with the International Standards in ISO 9001. The
     documents which are necessary to perform such audits shall not occur more
     than 4 times per year no more than 2 times per quarter.

5.3  On request Siemens shall provide reports to APT. These reports may include
     work in process, ordered volumes and outgoing volumes, probe yield, probe
     rejects, parametric data. The detailed procedure shall be fixed in writing
     separately.

5.4  Both parties shall maintain a clear organizational responsibility for
     execution of this Agreement with respect to technical, logistical as well
     as quality issues. At least one person from each party will be nominated to
     cover the execution of this Agreement full time.

6.   WARRANTY

6.1  Siemens warrants that all Wafers and/or Good Die delivered hereunder will
     meet the applicable specifications and requirements in Exhibits 1. 2. 3. 4
     and 5 and shall be free from defects in material and workmanship.

6.2  If any Wafer supplied by Siemens hereunder fails to conform with this
     warranty Siemens shall, at its own Cost, replace such Wafer without delay
     after receipt of APTs return shipment thereof. Siemens shall bear APT's
     expenses for returning the defective Wafers to Siemens and pay the
     transportation of the replaced Wafers to APT. If within thirty (30) days
     after Siemens' receipt of such returned Wafer, the replacement is not
     shipped, APT shall have the right to replace the defective Wafers with
     products from Siemens' latest shipment or APT's stock. Siemens' shall ship
     on an emergency basis and on its own account such Number of Wafers as to
     make up for the thus diminished APT's stock or ordered quantities.

<PAGE>

6.3  The warranty period for the Wafers and Good Die shall end [ * ][ * ]
     after the delivery to customers of APT, but in any case no later than
     [ * ] from the date of receipt of the Wafers or Good Die by APT.

6.4  If Wafers and/or Good Die fail to meet specifications in Exhibits 1, 2. 3 4
     and 5, and in APT reasonable opinion such failure appears material, APT or
     one of its Subsidiaries may request Siemens to stop production. If Siemens
     is unable to correct such failures within a reasonable time, APT or the
     Subsidiary which has ordered may cancel such particular orders.

6.5  If defects or malfunctions appearing to be of excessive or epidemic nature
     resulting from processing or the use of unsuitable materials by Siemens,
     then Siemens shall take appropriate actions to remedy such defects in
     agreement with APT and in accordance with reasonable standards applicable
     to the individual circumstances. Siemens shall inform APT in writing about
     its actions to be taken within two (2) weeks after notification.

6.6  The foregoing warranty constitutes Siemens' exclusive liability, and the
     exclusive remedy of APT, for any breach of any warranty or any
     nonconformity of the Wafers to the specifications. This warranty is
     exclusive and in lieu of all other warranties, express, implied or
     statutory, including but not limited to the warranties for merchantability
     and fitness for a particular purpose, which are hereby expressly
     disclaimed.

7.   FORCE MAJEURE, LATE DELIVERIES

7.1  Neither party shall be liable to the other for failure or delay in the
     performance of any of its obligations under this Agreement for the time and
     to the extent such failure or delay is caused by Force Majeure such as, but
     not limited to, riots, civil commotion's, wars, hostilities between
     nations, governmental laws, orders or regulations, actions by the
     government or any agency thereof, storms, fires, strikes, lockouts,
     sabotages or any other contingencies beyond the reasonable control of the
     respective party and of its sub-contractors. In such events; the affected
     party shall immediately inform the other party of such circumstances
     together with documents of proof and the performance of obligations
     hereunder shall be suspended during, but not longer than, the period of
     existence of such cause and the period reasonably required to perform the
     obligations in such cases.

7.2  In addition to any other rights, in case of a delay of delivery by one
     month caused by whatever reason including late deliveries of Siemens'
     subcontractors, APT shall be entitled to cancel the order delayed, in whole
     or in part, without incurring any liability, and may reorder the quantities
     according to then existing needs of APT. APT will have no right to cancel
     purchase orders if the late delivery is due to a force majeure of less than
     2 months or APT's fault.

PROPRIETARY INFORMATION

8.1  Both Siemens and APT agree that Proprietary Information of the other will
     be used by them exclusively for the purpose of manufacturing Wafers and
     Good Dies hereunder and

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

     will not be disclosed to any third party without the prior written
     permission of the disclosing party.

8.2  Siemens agrees to use reasonable care to maintain in confidence Proprietary
     Information furnished hereunder, not to make use thereof other than for the
     purposes set forth in this Agreement, and not to distribute, disclose or
     disseminate Proprietary Information in any way or form to anyone except its
     own employees who have a reasonable need to know the same, provided however
     that this Agreement shall impose no obligation on Siemens with respect to
     any Proprietary Information which

          a)   Siemens can demonstrate, is already in the public domain or
               becomes available to the public through no breach by Siemens;

          b)   was rightfully in Siemens possession without obligation of
               confidence prior to receipt from APT as proved by Siemens'
               written records;

          c)   can be proved to have been rightfully received by Siemens from a
               third party without obligation of confidence;

          d)   is independently developed by Siemens as proved by its written
               records;

          e)   is approved for release by written agreement of APT.

          Each party acknowledges and agrees that in the course of performing
          under this agreement, it shall have access to and become acquainted
          with information concerning various trade secrets and other
          confidential and proprietary information of the other party. This
          includes but is not limited to marketing plans, the identities of
          suppliers and customers, ideas, design rules, secret inventions,
          unique processes, compellations of information, records,
          specifications and other information which is owned by the other
          party, and shall maintain such information in confidence and shall not
          apply this information either directly or indirectly without prior
          consent from the other party to any products not included in this
          agreement.

8.3  Siemens shall destroy all defective Wafers, Die and masks unless otherwise
     requested by APT in writing. In the case of idle masks, excessive Wafers or
     Good Die Siemens will inform APT in writing and APT will give the
     disposition within 30 days.

8.4  No press-release or any publication of the existence of this Agreement
     shall be allowed unless first approved by the other party in writing.

8.5  Upon respective written request by APT, Siemens shall return all written
     Proprietary Information received, as well as all copies made of such
     Proprietary Information.

8.6  All Proprietary Information of APT shall remain the property of APT. Any
     masks generated by Siemens from APT database tapes shall be the property of
     APT, will be returned to APT on APT request, and will be used exclusively
     to produce Wafers and

<PAGE>

     Good Die for APT. Nothing contained in this Agreement shall be construed as
     granting any license or rights under any proprietary right whether present
     or future. The disclosure of Proprietary Information shall not result in
     any obligation to grant Siemens rights therein.

8.7  If APT is furnished hereunder with Proprietary Information, the stipulation
     of Section 8 shall apply accordingly in the reverse relation between the
     parties.

8.8  Upon termination or expiration of this Agreement for whatever reason, the
     receiving party shall (i) return to the-other party the original and all
     copies of any Proprietary Information and (ii) at the disclosing party's
     request, have one of its officers certify in writing that it will not make
     any further use of such Proprietary Information and will not manufacture or
     have manufactured any product incorporating Proprietary Information.

9.   PATENT INDEMNITY, PRODUCT LIABILITY INDEMNITY

9.1  It is APTs responsibility to defend or otherwise solve at APT's expense any
     dispute arising from a claim that the Power MOS Die infringe a third
     party's patent, trademark, copyright, mask work rights, trade secret or
     other intellectual properties due to the APT Product Information Package
     and incorporated Power MOS processed by Siemens.

9.2  Notwithstanding Section 9.1 above, it is Siemens' responsibility to defend
     or otherwise solve at Siemens' expenses any dispute arising from a claim
     that the Wafers or die infringe a third party's patent, trademark,
     copyright, mask work rights, trade secret or other intellectual properties
     due to the Process used by Siemens or its subcontractors to process the
     Wafers.

9.3  If a third party's claim is made alleging an infringement of a patent,
     copyright or other intellectual properties of the said third party, then
     the party to this Agreement against which this claim is raised shall
     immediately inform the other party thereof.

9.4  APT shall indemnify and hold Siemens harmless against any third party
     claims, costs and expenses due to product liability which arises from
     Siemens use of know-how being part of APT Product Information Package
     supplied by APT.

9.5  Siemens shall indemnify and hold APT, its Subsidiaries and its customers
     harmless against any third party claims, costs and expenses due to any
     other product liability other than APT's product liability as per Section
     9.4 above.

9.6  The above liabilities of a party hereto to the other party are in any case
     under the condition that the other party notifies the first party of the
     respective third party's claim without any reasonable delay and does not
     admit on its own initiative that said claim was rightfully raised.

9.7  The above liability shall be the sole and exclusive remedies between the
     parties with respect to patent indemnity and product liability.

<PAGE>

10.  EXPORT REGULATIONS

10.1 APT's Product Information Package as well as supplies to be performed under
     this Agreement are subject to governmental export regulations.
     Consequently, these obligations may be subject to the approval by the
     respective governmental authorities.

10.2 For presentation to the German Export Control Authorities Siemens declares
     that all APT Product Information Package received by Siemens from APT are
     intended for manufacturing of Wafers and Good Die exclusively for APT.
     Siemens declares not to export such APT Product Information Package to
     third countries without approval of the competent German Export Control
     Authorities.

11.  ASSIGNMENT

11.1 Neither party shall delegate any obligations under this Agreement or assign
     this Agreement or any interest or rights hereunder without the prior
     written consent of the other, except incident to the Sales or transfer of
     substantially all of such party's business.

11.2 APT may. have fulfilled its obligations covered under this Agreement by its
     Subsidiaries.

12.  TERM AND TERMINATION

12.1 This Agreement becomes effective with the execution hereof by both parties
     and continues to be valid for an unlimited period of time. Each party may
     terminate the Agreement with 2 years prior written notice to the end of a
     calendar year unless mutually agreed to reduce this notice time. Siemens
     cannot terminate this contract before 5 years after 1" production delivery
     unless mutually agreed.

12.2 This Agreement may be terminated immediately by one party if the other
     party

          (i)  breaches any material provision of this Agreement and does not
               remedy such breach within thirty (30) days of notice of breach;
               or

          (ii) becomes insolvent or otherwise subject to insolvency procedures;

          (iii) comes under outside control, i. e. 50% or more of the
               shareholders' voting rights are held directly or indirectly by a
               third party or third parties which are direct competitor of the
               other party;

12.3 APT may terminate this Agreement if the Power MOS Die do not pass APT's
     qualification criteria (Exhibit 5) no-sooner than 3 months after the
     expected completion of qualification (Exhibit 5).

12.4 If Siemens terminates this Agreement according to Section 12.1 Siemens
     shall be obliged to deliver to APT upon APT request during the period of
     notice in addition to the

<PAGE>

     forecasted quantities of Wafers/Good Dies up to twice the quantity
     forecasted for that period.

12.5 The provisions of Section 6, 8, 13 and 14 shall also apply after
     termination of this Agreement.

13.  ARBITRATION

13.1 Any differences or disputes arising from this Agreement or from agreements
     regarding its performance shall be finally settled under the Rules of
     Conciliation and Arbitration of the International Chamber of Commerce in
     Paris (Rules) by three arbitrators appointed in accordance with the Rules.
     The chairman of such arbitral tribunal shall be of the legal profession and
     qualified to hold judgeship.

13.2 The place of arbitration shall be Munich. The procedural law of this place
     shall apply where the rules are silent.

13.3 The arbitral award shall be substantiated in writing. The arbitral tribunal
     also decide on the matter of costs of the arbitration.

13.4 The arbitration procedure shall be conducted in the English language.

13.5 If at the time when one party intends to initiate arbitration proceedings,
     awards, decrees or judgements of the arbitration court agreed upon above
     are not recognized and hence not enforceable without re-trial of the case
     in the defendant's country e. g. owing to lack of reciprocity the plaintiff
     (claimant) may by giving due written notice to the defendant bring the case
     before an ordinary court competent in the defendant's country in lieu of
     the arbitration proceedings foreseen above.

14.  SUBSTANTIVE LAW

     All disputes shall be settled in accordance with the provisions of this
     Agreement and all other agreements regarding its performance, otherwise in
     accordance with the substantive law in force in the Federal Republic of
     Germany without reference to other law. The United Nations Convention on
     Contracts for the International Sale of Goods of April 11, 1980 shall not
     apply.

NOTICES

     All notices required to be sent by either party under this Agreement will
     be sent to the addresses set forth below or to such other address as may
     subsequently be designated in writing:

<PAGE>

     If to APT:

     Advanced Power Technology
     405 S.W. Columbia Street
     Bend, OR 97702 USA

     If to Siemens:

     Siemens Aktiengesellschaft
     Rechtsabteilung 2
     Hofmannstrafle 51
     81359 Munchen
     Federal Republic of Germany

     The addresses for APT and Siemens for notices and communications concerning
     purchase orders, technical problems, etc. shall be fixed separately in
     writing between APT and Siemens.

ENTIRE AGREEMENT

     This document is the entire understanding between Siemens and APT respect
     to the subject matter hereof and merges all prior agreements, dealings, and
     negotiations. The terms of this Agreement shall govern the Sales and
     purchase of Wafers and Good Die. Any terms or conditions printed on the
     face or the reverse-side of the purchase order sheet or the APTs
     Acknowledgement form shall neither be part of this Agreement nor constitute
     the terms and conditions of the Sales of the Wafers and Good Die even in
     case such purchase order sheet or APT's acknowledgement form is signed and
     returned by APT to Siemens or Siemens to APT, unless both parties hereto
     expressly agree in writing to include any such terms or conditions in this
     Agreement. The parties recognize that the Exhibits to this Agreement will
     have to be amended or exchanged, as the case may be, from time to time. No
     modification, alternation or amendment shall be effective unless in writing
     and signed by both parties. No waiver of any breach shall be held to be a
     waiver of any other or subsequent breach.

AGREED TO:

Advanced Power Technology                        Siemens Aktiengesellschaft

By:      s/s                                     By:              s/s
   -------------------                              ----------------------------
Name                                             Name

Title                                            Title
Date:             Feb 11, 1998                   Date:

<PAGE>

LIST OF EXHIBITS

EXHIBIT:

1                    List of Power MOS Die to be manufactured by Siemens

2                    Product information package

3                    Specification of Processes

4                    Quality and reliability specifications and requirements

5                    Qualification plan and procedure

6                    Volume commitments and forecast/order procedure

7                    Two-phase business model (Wafer/Good Die based) and pricing

<PAGE>

             EXHIBIT 1: APT POWER MOS V MOSFET DIE TYPES / PRODUCTS

<TABLE>
<CAPTION>
MOSFET      MASK       MOSFET              TOTAL       DIMENSION, MILS      AREA       DIMENSION, MM.      AREA
DIE TYPE    SETS       EPI VOLTAGE         PRODUCTS    X            Y       SQ. MILS   X           Y       SQ. MM
------------------------------------------------------------------------------------------------------------------
<S>         <C>        <C>                 <C>         <C>          <C>     <C>      <C>          <C>     <C>
515         1          400, 500, 600       3           240          275     66.000     6.1         7.0     43
596         1          800                 1           262          298     78,076     6.7         7.6     50
566         1          400, 500, 600       3           240          357     85,680     6.1         9.1     55
576         1          800, 1000, 1200     3           270          349     94,230     6.9         8.9     61
5F6         1          100, 200, 300       3           254          371     94,234     6.5         9.4     61
546         1          400, 500, 600       3           254          371     94,234     6.5         9.4     61
5K6         1          100 ,200, 300       3           270          416     112,320    6.9         10.6    72
556         1          400, 500, 600       3           270          416     112,320    6.9         10.6    72
586         1          800, 1000, 1200     3           270          416     112,320    6.9         10.6    72
5F7         1          400, 500 ,600       3           364          368     133,952    9.2         9.3     86
547         1          100, 200, 300       3           362          515     186,430    9.2         13.1    120
527         1          400, 500, 600       3           362          515     186,430    9.2         13.1    120
557         1          800, 1000, 1200     3           362          515     186,430    9.2         13.1    120
538         1          100, 200, 300       3           555          700     388,500    14.1        17.8    251
528         1          400, 500, 600       3           555          700     388,500    14.1        17.8    251
548         1          800, 1000, 1200     3           555          700     388,500    14.1        17.8    251
</TABLE>

<PAGE>

EXHIBIT 2                  Product information package

The product information package shall include

-        Test programs
-        Data base

for each Die type.

<PAGE>

EXHIBIT 3                           SPECIFICATION OF PROCESSES

1) APT Lot traveler
2) APT Processing specifications
3) APT Material specifications
4) APT Equipment list
5) APT Equipment specifications
6) APT Control and Inspection specifications
7) APT Mask Tooling, procurement and inspection
         specifications
8) APT Critical dimension specifications
9) APT Wafer process Inspection specifications
10) APT Design rule specifications

<PAGE>

EXHIBIT 4

Quality and reliability specifications and requirements

These specifications will be per Siemens internal regulations (to made available
to APT upon request) and per Exhibit 3 as applicable.

<PAGE>

EXHIBIT 5                  Qualification plan and procedure

1. Both parties agree that development lots will be processed in order to
establish a stable process.

2. Both parties agree a stable process is defined as meaning achievement of
yields minimum or equal to [ * ] those specified at the [ * ] wafer start per
week level.

3. Qualification lots shall consists of [ * ] lots minimum, [ * ] wafers each
of the following die types:

         527-050
         557-100
         528-050
         548-100

4. Technology transfer:
Target products for technology transfer and qualification will be as defined in
item 3 above. Expected to proceed in 6 phases as follows:

Phase 1 - April 98 (3 days) - Training by APT personnel
This will cover all process steps including process requirements and results,
equipment requirements and modifications (if required), and special test
vehicles that can "pre-qualify" selected processes before the actual runs are
processed.
Phase 2 - May 98 (2 weeks) - Training of Siemens engineers at APT
This will include the key account manager and a minimum of 2 and maximum of 4
Siemens engineers.
Phase 3 - June - Aug 98 - Prototype runs produced by Siemens
APT engineers will be available at Siemens facility as needed to complete
process transfer and training.
Phase 4 - Sept 98 - Qualification runs processed
Products see item 3
Phase 5 - Oct - Dec 98 - Qualification
APT will package die from the qualification runs and complete qualification
testing at APT expense.
Phase 6 - Jan 99 - Production starts
Siemens qualified to produce MOSFETs for all die sizes and voltages by December
31, 1998.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

EXHIBIT 6                           VOLUME COMMITMENTS AND PRICING

6.1. QUALIFICATION COST APT recognizes and appreciates the fact that Siemens
will need to invest approximately [ * ] to install and qualify the APT
process in the Villach Wafer Fab. Therefore APT agrees; that in case APT
terminates the contract and at this time the total Wafers received over the
life of the contract (after Qualification) are less than [ * ], APT will pay
[ * ] for every Wafer less than [ * ].

6.2. LOST OPPORTUNITY CHARGES
The following table shows quantities. The 1st 12 months is the period starting
with the 1st production shipment of wafers to APT following qualification. APT
accepts that APT will pay the processing price in Exhibit 7 for all wafers below
the minimum quantity not requested to be delivered to APT for the first two
twelve month periods (fixed) below. The minimum quantities for the remaining
periods are forecasted volumes. Prior to the end of the second twelve month
period and on an annual basis thereafter, APT and Siemens will agree to the
minimum wafer quantity (forecasted quantity becomes fixed quantity) of the
following twelve month period and APT will subject to lost opportunity charges
if the minimum quantities are not met.

<TABLE>
<CAPTION>

         Time zero                 1st            2nd                3rd           4th         5th         6th
                               12 Month       12 Month           12 Month      12 Month     12 Month     12 Month
                                 fixed          fixed              fixed         fixed        fixed        fixed
<S>                            <C>            <C>                <C>         <C>           <C>           <C>
1st Production                                           [*]                           [*]
    shipment                                             [*]                           [*]
minimum wafer quantity                                   [*]                           [*]
</TABLE>

6.3. KEY ACCOUNT MANAGER Siemens will have a dedicated person "key account
manager" for APT. This person will have a comprehensive process engineering
background, be familiar with Siemens Wafer fabrication processes and will be
selected by Siemens and approved by APT. APT agrees that as long as the Wafer
volume is less than [ * ] Wafer per week the cost of [ * ] will be shared [ * ]
between APT and Siemens. Invoiced to APT on a monthly basis. With volumes
equal and higher than 200 Wafer per week, this person will be paid fully from
Siemens.

6.4. LOTSIZE / ROLLING FORECAST Siemens will produce the APT orders in lots
with [ * ] Wafer per lot predominantly. Siemens accepts that for a minority of
products this lotsize is not reasonable. Therefore Siemens will produce as a
guideline approximately [ * ] of all wafer starts as [ * ] wafer lot sizes.

APT will provide a rolling forecast for every Die Type as specified in Exhibit 1
for the next 12 month on a monthly basis to Siemens. This forecast will be in
the form of a Wafer start schedule. The start schedule variance allowance for
the weeks following the week that the forecast is sent will be as follows:

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

<TABLE>
<CAPTION>
WAFER STARTS                         First             Next             Next
                                     1 WEEK            2-8 WEEKS        9-13 WEEKS
                                     ---------------------------------------------
<S>               <C>                <C>               <C>              <C>
                  Total Volume       fixed             -+15%            -+40%
                  Device             fixed             variable*        variable*

WAFER OUTS                           First             Next             Next
                                     7 WEEKS           8-13 WEEKS       14-18 WEeks

                  Total Volume       fixed             -+15%            -+40%
                  Device             fixed             variable*        variable*
</TABLE>

*Variable within Siemens epi inventory and Wacker constraints. APT will work
closely with the Key Account Manager to optimize levels and Wacker communication
to provide for the maximum flexibility.

<PAGE>

EXHIBIT 7                                   TWO PHASE BUSINESS MODEL AND PRICING
--------------------------------------------------------------------------------

Siemens will offer prices per good die. This price depend on the starting
material, the volume per year and the chipsize. The Wafersize is 6 inch. The
lotsize is 50 wafers per lot.

7.1. Wafersize
It is the intent of both, APT and Siemens to manufacture on 6 inch Wafer.
However, APT has a concern that making such a large change from APT current
production on 4 inch wafers to 6 inch wafers may have some unexpected technical
problems due to the large Wafer size. Siemens has strong confidence that the
transfer to 6 inch wafers can be handled within the required schedule. If there
is unexpected technical delays due to the 6 inch wafers which may cause
substantial delays in production and which can be remedied using 5 inch wafers
then it may be necessary to manufacture on 5 inch wafers on an interim basis
until 6 inch technical problems are worked out.

APT agree to the following: APT agrees to pay for this additional costs
(approximately [ * ]) and accept 5 inch die cost which are [ * ] higher than 6
inch die cost, if APT requests 5 inch wafers. If there are technical
difficulties on 6 inch wafers then Siemens will produce wafers on 5 inch at
the same die cost as on 6 inch until 6 inch production can be realized and
APT will not be required for this additional costs (approximately [ * ]).

7.2. TWO-PHASE BUSINESS MODEL
The price for 6 inch die is split in a two-phase business model: Phase 1
takes place as long as the Wafer starts per week is lower than [ * ] wafers.
In this phase Siemens will be paid for every shipped Wafer. Phase 2 starts
with volumes higher than [ * ] Wafer starts per week. Here Siemens will be
paid for every good die, delivered to APT. Inside this phase the price is
split into 4 price breaks:
         [ * ] Wafers per week
         [ * ] Wafers per week
         [ * ] Wafers per week
         [ * ] Wafers per week

The relevant price break is in connection with the minimum volume as specified
in Exhibit 6. If by the end of the year, the cumulated volume was higher than
specified in Exhibit 6, Siemens will credit the difference to APT. In case that
the cumulated volume was lower than specified in Exhibit 6, lost opportunity
charges specified in Exhibit 6 have be paid by APT.

The Pricing table for each MOS Chip is listed below. APT understands and accepts
that Siemens cannot commit the price for the starting material delivered from
Wacker AG, a German corporation. Therefore only the processing price is fixed,
the price for the starting material is only a indication for 500V chips. It can
be fixed only after final quotation from Wacker AG, Germany. Siemens and APT
will cooperate to get the best price for the starting material.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

PRICETABLE

------------------------------------------------------------------------------
2) based on a 6 inch Wafer
WSPW = Wafer Starts per Week

<TABLE>
<CAPTION>
                           DIE SIZE: 43mm(2)      DIE TYPE:    515
                           [*]                    [*]                    [*]               [*]          [*]
<S>                        <C>                    <C>                    <C>               <C>          <C>
Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 51mm(2)      DIE TYPE:    596
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 56mm(2)      DIE TYPE:    566
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield         [*]                    [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]
</TABLE>

     [ * ] = CONFIDENTIAL TREAMENT REQUESTED

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
2) based on a 6 inch Wafer
WSPW = Wafer Starts per Week

<TABLE>
<CAPTION>
WSPW = Wafer Starts per Week
                           DIE SIZE: 61mm(2)      DIE TYPE:    546
                           [*]                    [*]                    [*]               [*]          [*]
<S>                        <C>                    <C>                    <C>               <C>          <C>
Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 56mm(2)      DIE TYPE:    566
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]
Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 61mm(2)      DIE TYPE:              5F6
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]
</TABLE>

     [ * ] = CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
2) based on a 6 inch Wafer
WSPW= Wafer Starts per Week

<TABLE>
<CAPTION>
WSPW = Wafer Starts per Week
                           DIE SIZE: 73mm(2)      DIE TYPE:    556
                           [*]                    [*]                    [*]               [*]          [*]
<S>                        <C>                    <C>                    <C>               <C>          <C>
Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 73mm(2)      DIE TYPE:    5K6
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 73mm(2)      DIE TYPE:    586
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]
</TABLE>

     [ * ] = CONFIDENTIAL TREAMENT REQUESTED

<PAGE>

PRICETABLE

--------------------------------------------------------------------------------
2) based on a 6 inch Wafer
WSPW = Wafer Starts per Week

<TABLE>
<CAPTION>
WSPW = Wafer Starts per Week
                           DIE SIZE: 86mm(2)      DIE TYPE:    5F7
                           [*]                    [*]                    [*]               [*]          [*]
<S>                        <C>                    <C>                    <C>               <C>          <C>
Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 121mm(2)     DIE TYPE:    557
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]
Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 121mm(2)     DIE TYPE:    527
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]
</TABLE>

     [ * ] = CONFIDENTIAL TREATMENT REQUESTED

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
2) based on a 6 inch Wafer
WSPW = Wafer Starts per Week

<TABLE>
<CAPTION>
WSPW = Wafer Starts per Week
                           DIE SIZE: 121mm(2)     DIE TYPE:    547
                           [*]                    [*]                    [*]               [*]          [*]
<S>                        <C>                    <C>                    <C>               <C>          <C>
Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

WSPW = Wafer Starts per Week
                           DIE SIZE: 251mm(2)     DIE TYPE:    528
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]

     [*] = CONFIDENTIAL TREATMENT REQUESTED

WSPW = Wafer Starts per Week
                           DIE SIZE: 251mm(2)    DIE TYPE:     538
                           [*]                    [*]                    [*]               [*]          [*]

Starting material 500V 1)  [*]                    [*]                    [*]               [*]          [*]
Processing price           [*]                    [*]                    [*]               [*]          [*]
Price per WAFERSTART       [*]                    [*]                    [*]               [*]          [*]

Price per Wafer 2)                                [*]                    [*]               [*]          [*]

Yield Waferfab             [*]                    [*]                    [*]               [*]          [*]
Optical-/testyield                                [*]                    [*]               [*]          [*]

Good die per Wafer 2)      [Price only per]       [*]                    [*]               [*]          [*]
                           [shipped wafer]

Price per good die         [*]                    [*]                    [*]               [*]          [*]
</TABLE>

     [ * ] = CONFIDENTIAL TREATMENT REQUESTED<PAGE>

   DOCUMENT OF UNDERSTANDING BETWEEN ADVANCED ENERGY INDUSTRIES AND ADVANCED
                               POWER TECHNOLOGY
                             CONTRACT NUMBER: 1010

1.       PREAMBLE

This agreement is an extension of the original contract between Buyer and Seller
entered into on August 14th, 1998. Amendments to the original agreement are made
on this 19th day of August, 1999 by and between-Advanced Energy. Industries,
Inc. (hereinafter referred to as "Buyer") and Advanced Power Technology,
(hereinafter referred to as "Seller") and are in effect through December 31,
2000.

2.       TERMS AND CONDITIONS

No terms and conditions other than the terms and conditions set forth in this
document and such terms and conditions as are set forth in any document attached
to or incorporated by reference in this contract shall be binding unless
specifically accepted by Buyer's authorized Purchasing Agent or Commodity
Manager. This contract will be reviewed on a semi-annual basis and unless
terminated by either party, as provided for in Section 19, shall continue to be
in force. This contract is intended as the complete and final agreement of both
parties and exclusive statement of its terms and may not be changed, altered or
modified, except in writing by agreement of both parties.

3.       WARRANTY

Seller warrants the goods and materials furnished under this contract for
workmanship, material and compliance with all specifications, for a period of
twelve (12) months. Seller shall comply with all applicable Colorado State,
Federal and local laws, rules and regulations. The exclusive venue for any
litigation concerning this matter shall be in the Larimer County District Court
in Fort Collins, Colorado.

4.       LIMITATION OF LEGAL LIABILITIES

Seller agrees that the relationship established by this contract constitutes a
relationship as Supplier and Purchaser only and no other legal relationship and
that no tax assessment or legal liability of Seller or Buyer or their agents or
employees becomes, by reason of this document, an obligation of the other.

5.       REMEDY

Seller agrees to defend at its own expense any suit or legal proceedings brought
against Buyer as a result of the specified use of any materials or equipment
furnished hereunder. In the event that Buyer has given Seller prompt notice of
such claim, Seller hereby agrees to reimburse Buyer for expenses resulting from
that claim and to pay judgment that may be rendered against Buyer. Seller shall
repair or replace such units or products or refund the purchase price for such
units or products.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

6.       BUYER CHANGES

 Buyer shall have the right to make changes to existing orders. Purchase order
changes will be allowed only if authorized by Buyer. If such change affects
delivery, quality or amount to be paid by Buyer, Seller shall notify Buyer of
such changes in writing.

7.       ENGINEERING CHANGE ORDERS

All Engineering change orders will be communicated to Seller via an Engineering
Change Order (ECO). If such change affects delivery, quality or the amount to be
paid by Buyer, Seller shall notify Buyer immediately. The charges for scrappage
and/or rework resulting from any change submitted via Buyer's ECO process, shall
be limited to the materials in process at the time of the change and within
Seller's manufacturing cycle, as defined in addendum. These charges will be
communicated in their entirety in writing, to Buyer, within fifteen (15) working
days of receipt of ECO. Buyer will not be responsible for any costs associated
with the change order which are not identified within the fifteen (15) working
day review window.

8.       DELIVERY

The goods described herein shall be delivered FOB point of origin. Means of
shipment shall be authorized by Buyer's Purchasing Agent or Commodity Manager.
Preferred means of shipment is UPS ground.

Seller is to schedule shipments such that deliveries are received no more than
three (3) days earlier than the due date and zero (0) days late. The purchase
order date is the date due in house. Seller is responsible for all costs
associated with expedited delivery when the need to expedite is due to Seller's
inability to meet Buyer's demand. The only exception is when Buyer pulls in
demand within Seller's lead time window.

Identification of the goods shall occur when they are placed in the hands of the
Carrier. Title shall pass to Buyer upon delivery to Carrier. The goods shall be
placed in suitably protected container, the nature of which may be determined by
Buyer.

9.       KANBAN PULL PROCESS

Seller will participate in a Kanban pull process for specifically agreed upon
assemblies, subassemblies and component part numbers, as listed in addendum.
This list will be updated as parts are added on to or deleted off of the kanban
program, with agreement between Buyer and Seller. Buyer's authorized Purchasing
Agent or Commodity Manager and Seller shall agree on the kanban quantity and
replenishment strategy for each part number. Kanban quantities for all part
numbers will be reviewed by Buyer on an as required basis and adjusted
accordingly. Buyer's quantity of Finished Goods Bins is subject to change
dependent upon Seller's ability to reduce manufacturing lead time. Changing the
quantity of Finished Goods bins at the Buyer's facility does not necessitate
renegotiation of this contract. Seller agrees that no shipments will be made to
Buyer unless authorized by Buyer.

<PAGE>

10.      PURCHASE ORDER

Buyer will also be entitled to issue purchase orders for individual items
separate from the Kanban Pull process and the Schedule Agreement Process, as
quoted by Seller and agreed to in writing by Buyer.

11.      LIMITATION OF MATERIAL LIABILITY

The extent and limitation of Buyer's liability for materials purchased by Seller
is as defined in addendum.

12.      PRICING

Buyer and Seller agree to the prices) set forth in addendum. The prices are firm
and fixed for the term of the contract period. Any change in the contracted
price must have written approval by Buyer's Commodity Manager or Purchasing
Agent, prior to implementation. Seller will establish a cost reduction program,
which will be reviewed on a quarterly basis.

13.      PAYMENT TERMS

Terms of payment are net [ * ] for each shipment invoiced, unless otherwise
expressly provided for and confirmed in writing by Seller.

14.      PROPRIETARY INFORMATION

It is understood that Buyer may provide proprietary information to Seller,
likewise Seller may provide proprietary information to Buyer in the performance
of this contract. "Proprietary Information" shall be deemed to include all
information conveyed by one party to the other party orally, in writing, by
demonstration or by magnetic or other media. If the disclosure is in other than
written form, the information shall not be deemed Proprietary Information after
thirty (30) days unless within that period the disclosing party has identified
it as such in written summary communicated to the receiving party. Proprietary
Information may also include, by way of example but without limitations, data,
know-how, formulas, algorithms, processes, design, sketches, photographs, plans,
drawings, specifications, samples, reports, customer and distributor names,
pricing information, product demand information, market definitions, inventions
and ideas. Proprietary Information shall not include information which can be
clearly demonstrated to be:

         (a)      generally known or available to the public, through no act of
                  omission on the part of the receiving party; or

         (b)      known to the receiving party prior to disclosure under this
                  agreement; or

         (c)      provided to the receiving party by a third party without any
                  restriction on disclosure and without breach of any obligation
                  of confidentiality to a party.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

Both parties to this agreement, agree to return to the receiving party all
documents containing proprietary information and to retain no copies thereof. In
addition, ownership and possession of all product assembly and test fixtures,
tooling, test programs, Non- Recurring Engineering (NRE) tooling, test equipment
and consigned equipment, shall revert to Buyer. Both parties to this agreement
agree that the obligation to protect proprietary information shall be ongoing
and shall not cease upon completion or termination of this contract.

15.      REVIEWS

Buyer and Seller agree to conduct quarterly business reviews, at an agreed venue
and agenda.

16.      DEFECTIVE MATERIAL RETURN POLICY

Buyer will issue a Defective Material Return (DMR) to Seller prior to returning
failed product to Seller. Seller shall acknowledge Buyer DMR with a Returned
Material Authorization (RMA) number within twenty-four (24) hours. Seller shall
repair or replace the failed product in an agreed upon time schedule. Seller
will pay freight on goods returned to the Buyer which are covered by warranty.

17.      QUALITY ASSURANCE

Seller's quality must meet-all applicable Buyer's specifications. Further,
Seller confirms it has manufacturing processes which consistently meet all
applicable Buyer's specifications. Seller, when acting as a distributor, will
ensure that the manufacturers they purchase from satisfy all applicable Buyer's
specifications. Seller will notify Buyer immediately if products which do not
meet Buyer's specifications. Buyer and Seller will identify and implement a
corrective action process to resolve non-conformances. Seller agrees to
participate in continuous improvement plans and programs as defined by Buyer and
Seller. Seller agrees that due to the nature of the technology employed by
Buyer, reliability and or quality issues may not arise until the assemblies
utilizing devices provided by Seller are in use by Buyer's customers. Buyer
retains the right to disqualify a component provided by Seller based on
performance and or reliability data as compiled by Buyer based on field
performance, customer service, quality and or reliability data.

This contract is intended as the complete and final agreement of the parties and
exclusive statement of its terms. This contract may not be changed, altered or
modified, except in writing by the party against whom enforcement is sought.
This agreement may be terminated by either party with thirty (30) days written
notice.

<PAGE>

18.      SIGNATURE PAGE

Signature attests that the parties have reviewed this agreement and concur with
the parameters:

<TABLE>
<S>                                                          <C>
Advanced Energy Industries, Inc.                             Advanced Power Technology
S/S                                                          S/S

---------------------------------------------------          ---------------------------------------------------
Fred Weaver                                 Date             Thomas A. Loder                             Date
Vice President of Operations                                 Vice President of Sales
S/S

---------------------------------------------------          ---------------------------------------------------
Kyle Pettine                                Date
Director of Materials
S/S

---------------------------------------------------          ---------------------------------------------------
Deb Dahlinger                               Date
Procurement Manager
S/S

---------------------------------------------------          ---------------------------------------------------
Joyce Bowser                                Date
Commodity Manager
S/S

---------------------------------------------------          ---------------------------------------------------
Hollis Caswell                              Date
COO and President
S/S
</TABLE>

<PAGE>

                                   ADDENDUM A:
                    CURRENT STOCK SITUATION - FINISHED GOODS
                           AND RAW MATERIAL INVENTORY

        Document of Understanding between Advanced Energy Industries Inc.
                          and Advanced Power Technology

                              Contract Number: 1010

                              Date: August 19, 1999

STANDARD PRODUCTS: Advanced Energy Industries Inc.'s liabilities for finished
goods inventory is limited [ * ]. For all other Power MOS IV products
Advanced Energy Industries, Inc.'s liability includes [ * ]

POWER PACK PART NUMBER 8705109:
Raw materials            =               [ * ]

DIE BUFFER INVENTORY Die buffer inventories are set at a level which will
enable APT to immediately meet a 100% increase in AE's requirements and
maintain it indefinitely. To meet this requirement, die buffer inventory
levels are set at a quantity which equals [ * ] Die buffer inventory levels
will be reviewed on a quarterly basis to insure that they are sized according
to the business expectations in the coming quarters. In the event that APT
must remove die from the die buffer inventory to meet production requirements
by AE, the die buffer inventory will be replenished as quickly as possible,
with a maximum lead time of 10 weeks.

Liability for the old die inventory level is [ * ]. The amount of this
liability will decrease or increase per AE demand. With respect to Contract
1010, AE's liability for the die buffer inventory will be limited to either
[ * ] in the event APT does not have customers to consume the die in either
die or packaged part form. At that point, AE will have the option of either
scrapping the die or having it packaged and consumed prior to or in
conjunction with utilizing Power Mos V devices.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                   ADDENDUM B:
                    NON-CANCELABLE, NON-RETURNABLE PARTS LIST

        Document of Understanding between Advanced Energy Industries Inc.
                          and Advanced Power Technology

                              Contract Number: 1010

                              Date: August 19, 1999

PREFACE:

Pursuant to contract agreement between Advanced Energy Industries, Inc. and
Advanced Power Technology, Advanced Energy Industries Inc. wishes to establish a
critical parts list of non-cancelable, non-returnable raw materials used in the
build of Advanced Energy Industries Inc. product. This list is to include the
following:

<TABLE>
<CAPTION>
AE P/N                    SUPPLIER P/N           SUPPLIER NAME           PART LEAD TIME         MIN BUY QTY
------                    ------------           -------------           --------------         -----------

<S>                       <C>                    <C>                     <C>                    <C>
230590                    220-4340               Kyocea                  14 weeks               [ * ] (at current
                                                                                                price)

Lid                       220-4511C              Kyocea                  6 weeks                [ * ]
</TABLE>

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                   ADDENDUM C:
                              SUPPLIER INFORMATION

        Document of Understanding between Advanced Energy Industries Inc.
                          and Advanced Power Technology

                              Contract Number: 1010

                              Date: August 19, 1999

PREFACE:

Pursuant to contract agreement between Advanced Energy Industries Inc. and
Advanced Power Technology and with the intent to better understand the supply
chain for its product line, Advanced Energy Industries Inc. solicits information
regarding specific contractual agreements between Advanced Power Technology and
its suppliers with respect to Advanced Energy finished goods. The specific
contractual agreements are

Kyocea

Reschedules:                     [ * ]

Cancellation Charges:            [ * ]

Restocking:                      [ * ]

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                 APT/ADDENDUM D:
                                 AUGUST 19, 1999
                  PART NUMBER PRICING AND LIABILITY INFORMATION

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                # of Bins     FGI        Total $      WIP Lia.,  Die Buffer   Cycle
  AE P/N  Class   EAU*    Unit Price*   Est. Annual $  Bin Size   Liable      Lia.       Liable       (2 Bins)    (6 Bins)     Time
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>    <C>     <C>           <C>             <C>      <C>         <C>        <C>            <C>        <C>         <C>
 1501227    A     3797   $ [ * ]       $  [ * ]          100         2         200      $ [ * ]          200         600     14 wks
 1501232    A     8915   $ [ * ]       $  [ * ]          260         2         520      $ [ * ]          520         1560    14 wks
 1501257    A     1379   $ [ * ]       $  [ * ]           45         2         90       $ [ * ]          90          270     14 wks
 1501258   N/A     239   $ [ * ]       $  [ * ]          N/A        N/A        N/A      $ [ * ]          N/A         N/A     14 wks
 1501260    A      682   $ [ * ]       $  [ * ]           50         2         100      $ [ * ]          100         300     14 wks
 1501291    A     4500   $ [ * ]       $  [ * ]          110         2         220      $ [ * ]          220         660     14 wks
 1541031    A     3600   $ [ * ]       $  [ * ]          720         2        1440      $ [ * ]         1440         4320    14 wks
 1541036    A     1300   $ [ * ]       $  [ * ]          480         3        1440      $ [ * ]          960         2880    14 wks
 1541047    A     3473   $ [ * ]       $  [ * ]          300      See note  See note    $ [ * ]       See note     See note  14 wks
 1541048    A     1611   $ [ * ]       $  [ * ]          108         2         216      $ [ * ]          216         648     14 wks
 1541052    A    43587   $ [ * ]       $  [ * ]          1100        2        2200      $ [ * ]         2200         6600    14 wks
 1541054    A     2007   $ [ * ]       $  [ * ]          260         2         520      $ [ * ]          520         1560    14 wks
 1541059   N/A     95    $ [ * ]       $  [ * ]          N/A        N/A        N/A      $ [ * ]          N/A         N/A     14 wks
 1541064    A      977   $ [ * ]       $  [ * ]           50         2         100      $ [ * ]          100         300     14 wks
 1541083    A     2691   $ [ * ]       $  [ * ]           60         2         120      $ [ * ]          120         360     14 wks
 1541088    A     4601   $ [ * ]       $  [ * ]          240         2         480      $ [ * ]          480         1440    14 wks
 1541095   N/A     789   $ [ * ]       $  [ * ]          N/A        N/A        N/A      $ [ * ]          N/A         N/A     14 wks
 1541098    A     14078  $ [ * ]       $  [ * ]          350         2         700      $ [ * ]          700         2100    14 wks
 8100014   N/A     179   $ [ * ]       $  [ * ]          N/A        N/A        N/A      $ [ * ]          N/A         N/A      N/A
 8100019    A     18197  $ [ * ]       $  [ * ]          750      See note   See note   $ [ * ]        See note    See note  14 wks
 8100021    A     6231   $ [ * ]       $  [ * ]          130         2         260      $ [ * ]          260         780     14 wks
 8100023   N/A     986   $ [ * ]       $  [ * ]           NA        N/A        N/A      $ [ * ]          N/A         N/A     14 wks
 8705109    A     9665   $ [ * ]       $  [ * ]          310         2         620      $ [ * ]          620         1860    14 wks
</TABLE>

AE is ONLY liable for Power Mos IV parts and parts that APT has no other
customers (FGI and WIP)

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

                                 APT/ADDENDUM D:
                                 AUGUST 19, 1999
                  PART NUMBER PRICING AND LIABILITY INFORMATION

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Comments
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Kanban starts Nov. 99
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will stay with IEC until 3-00
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will stay with IEC until 3-00
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Took off kanban 9/13 - Demand moved to 1541098
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Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]