Document:

Exhibit
10.26

 

Document
of Understanding Between Advanced Energy Industries
and

Advanced Power Technologies

Contract Number: 1010

 

1.             PREAMBLE

 

This agreement is made on
this 15th day of Jan 2001 by and between Advanced Energy Industries, Inc. &
Affiliates (hereinafter referred to as “Buyer”) and Advanced Power
Technologies, (hereinafter referred to as “Seller”), under which services shall
be performed. This contract is in effect through the 15th day of Jan 2002.

 

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
both the Buyer’s authorized Purchasing Agent or Commodity Manager and the
Seller’s authorized agent. This contract will be reviewed on an 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

 

[ * ]. The 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.             LIABILITY

 

The Seller agrees that the
relationship established by this order constitutes him as an independent
contractor and that, no tax assessment or legal liability of the Seller or of
his agents or employees becomes, by reason of this order, an obligation of the
Buyer.

 

5.             REMEDY

 

Seller will not be responsible
for incidental or consequential damages. Seller’s entire remedy will be the
value of the product sold to Buyer.

 

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.

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

1

 

7.             ENGINEERING CHANGE ORDERS AND BUYER CHANGES

 

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 scrap
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 the
related 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 window.

 

8.             DELIVERY

 

The goods described herein
shall be delivered FOB point of origin. Buyer’s Purchasing Agent or Commodity
Manager shall authorize means of shipment. Preferred means of shipment is UPS
Ground. If seller chooses alternative method of shipment without Buyer’s
authorization, Seller is responsible for any incremental shipping charges.

 

[ * ].

 

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 containers, the nature of which may be determined by the Buyer.

 

9.             KANBAN PULL PROCESS

 

Seller will participate in a
Kanban pull process for specifically agreed upon 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

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

2

 

quantity of Finished Goods Bins at the buyer’s
facility does not necessitate re­-negotiation of this contact. Seller agrees
that no shipments will be made to Buyer unless authorized by Buyer.

 

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.          SCHEDULE AGREEMENT

 

Schedule Agreements will be
issued with agreement by Buyer and Seller for a specific time frame, by part
number, negotiated price and estimate annual usage. Buyer shall provide Seller
with demand information as part of the planning and forecasting process, to be
updated periodically as agreed upon by Buyer and Seller. This report is for use
as a planning tool only. Seller is responsible for any and all material
purchased beyond the agreed upon liabilities, as stated in addendum.

 

12.          LIMITATION OF MATERIAL LIABILITY

 

The extent and limitation of
Buyer’s liability for materials purchased by Seller are as defined in the
addendum.

 

13.          PRICING

 

Buyer and Seller agree to
the price(s) set forth in the appropriate addendum. 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 an annual basis. Cost changes will
be reflected in price adjustments and a revised addendum to this document.

 

14.          PAYMENT TERMS

 

Terms of payment are net [ * ] days for each shipment invoiced, unless otherwise
expressly provided for and confirmed in writing by the Seller. Method of
payment for goods receipt is electronic receipt settlement (ERS). Seller shall
use standard invoicing for charges on any items that do not require a goods
receipt.

 

15.          PROPRIETARY INFORMATION

 

It is understood that the
Buyer may provide proprietary information to the 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

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

3

 

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.

 

Both parties to this agreement, agree to return to the forwarding party all
documents containing propriety 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 the
agreement agree that the obligation to protect proprietary information shall be
ongoing and shall not cease upon completion or termination of this contract.

 

16.          REVIEWS

 

Buyer and Seller agree to
conduct Annual Business Reviews, at an agreed venue. Such reviews shall be
conducted by the Buyer’s Commodity Manager or authorized Purchasing Agent.
Pricing will be reviewed annually, by the Seller and the Buyer’s Commodity
Manager or authorized Purchasing Agent. Supplier will establish and maintain a
formal cost reduction program. Material or labor cost savings identified by the
Buyer in conjunction with and verified by the Seller shall be implemented
immediately and shared equally between the Buyer and the Seller.

 

17.          DEFECTIVE MATERIAL RETURN POLICY

 

The Buyer will issue a DMR
to the Seller prior to returning failed product to the Seller. Seller shall
acknowledge Buyer DMR with an RMA number within twenty-four (24) hours. Seller
shall repair or replace failed products under warranty in a timely manner, at
Seller’s discretion, at Seller’s expense. The Seller will pay freight on goods
returned to the Buyer which are covered by warranty..

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

4

 

18.          QUALITY ASSURANCE

 

APT’s Quality must meet all
applicable Seller’s specifications. The Buyer shall
inspect the goods not later than the time permitted by the carrier for
inspection and assertion of claims, which may be related to shipping and
handling. The failure of the Buyer to report any damage or claims within two
(2) weeks of the Buyer’s receipt shall constitute the Buyer’s admission of
receipt of the goods in an undamaged condition and that such goods are in full
conformity with the contract. The Seller will utilize the Supplier Call Back
process to document all issues and concerns. Seller agrees to

 

participate in continuous improvement plans and programs
as defined by Buyer and Seller. .

 

19.          COMPLETE AGREEMENT

 

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. Either party with thirty (30)
days written notice may terminate this agreement. This clause is subject to
review after one year.

 

20.          MATERIAL PIPELINE REQUIREMENTS

 

The seller is responsible
setting up and maintaining a pipeline of finished goods for the items listed in
the addendum that will meet the following demands:

 

a. Be able to provide product to the customer
in the specified quantities and delivery times set forth in the Kanban
agreements

 

b. Be able to meet and sustain the demands of
a 50% ramp immediately

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

5

 

21.          SIGNATURE PAGE:

 

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

 

	
  Advanced Energy
  Industries, Inc.

  	
  Advanced Power
  Technologies

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Date

  	
  Name/Date

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Date

  	
  Name/Date

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Date

  	
  Name/Date

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Date

  	
  Name/Date

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Title

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name/Date

  	
  Name/Date

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title

  	
  Title

  

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTED  

 

6

 

APT
Addendum

Part
Number Pricing and Liability Information

 

	
  Plant

  	
   

  	
  AE P/N

  	
   

  	
  Class

  	
   

  	
  EAU 00

  	
   

  	
  EAU 01

  	
   

  	
  Unit Price

  	
   

  	
  01 Price

  	
   

  	
  Est. Annual S ‘00

  	
   

  	
  Est. Annual $‘01

  	
   

  
	
  UCM1

  	
   

  	
  1501258

  	
   

  	
  A

  	
   

  	
  1200

  	
   

  	
  1800

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  1541036

  	
   

  	
  A

  	
   

  	
  1300

  	
   

  	
  900

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  1541097

  	
   

  	
  A

  	
   

  	
  2200

  	
   

  	
  2400

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  1541107

  	
   

  	
  A

  	
   

  	
  250

  	
   

  	
  400

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  1541108

  	
   

  	
  A

  	
   

  	
  1000

  	
   

  	
  1800

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  8100014

  	
   

  	
  A

  	
   

  	
  179

  	
   

  	
  1000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  8100021

  	
   

  	
  A

  	
   

  	
  6231

  	
   

  	
  500.

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  8705113

  	
   

  	
  A

  	
   

  	
  1300

  	
   

  	
  3800

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UGS1

  	
   

  	
  8705109

  	
   

  	
  A

  	
   

  	
  1200

  	
   

  	
  1400

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501227

  	
   

  	
  A

  	
   

  	
  3797

  	
   

  	
  6000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501232

  	
   

  	
  A

  	
   

  	
  8915

  	
   

  	
  13500

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501257

  	
   

  	
  .A

  	
   

  	
  1379

  	
   

  	
  1400

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501258

  	
   

  	
  A

  	
   

  	
  239

  	
   

  	
  1800

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501260

  	
   

  	
  A

  	
   

  	
  682

  	
   

  	
  4500

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1501291

  	
   

  	
  A

  	
   

  	
  4500

  	
   

  	
  7200

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541031

  	
   

  	
  A

  	
   

  	
  3600

  	
   

  	
  3600

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541052

  	
   

  	
  A

  	
   

  	
  43587

  	
   

  	
  39000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541064

  	
   

  	
  A

  	
   

  	
  977

  	
   

  	
  600

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541083

  	
   

  	
  A

  	
   

  	
  2691

  	
   

  	
  3600

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541088

  	
   

  	
  A

  	
   

  	
  4601

  	
   

  	
  22000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541095

  	
   

  	
  A

  	
   

  	
  789

  	
   

  	
  1800

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541098

  	
   

  	
  A

  	
   

  	
  14078

  	
   

  	
  27600

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1541118

  	
   

  	
  A

  	
   

  	
  1300

  	
   

  	
  7200

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  8705109

  	
   

  	
  A

  	
   

  	
  9665

  	
   

  	
  14400

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  8705111

  	
   

  	
  A

  	
   

  	
  6100

  	
   

  	
  22000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP03

  	
   

  	
  1541031

  	
   

  	
  A

  	
   

  	
  10000

  	
   

  	
  10200

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP03

  	
   

  	
  1541134

  	
   

  	
  B

  	
   

  	
  —

  	
   

  	
  7300

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP04

  	
   

  	
  1541088

  	
   

  	
  A

  	
   

  	
  4801

  	
   

  	
  1000

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  136361

  	
   

  	
  208700

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  $

  	
  [ * ]

  	
   

  

 

Total Liability                       11%

 

	
  Plant

  	
   

  	
  Bin Size

  	
   

  	
  NCNR

  	
   

  	
  Bins FGI

  Liability

  	
   

  	
  Bins WIP

  Liability

  	
   

  	
  Bins of Die

  Buffer

  	
   

  	
  Total $

  Liability *

  	
   

  	
  Cycle

  Time

  	
   

  	
  Delta

  	
   

  
	
  UCM1

  	
   

  	
  100

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  65

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  100

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  26

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  100

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  80

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  50

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UCM1

  	
   

  	
  135

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UGS1

  	
   

  	
  40

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  265

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  825

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  .2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  50

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  100

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  180

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  15 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  310

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  250

  	
   

  	
  Y

  	
   

  	
  ,2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  2000

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  72

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  200

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  885

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  100

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  1600

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  315

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14 wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  800

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP01

  	
   

  	
  610

  	
   

  	
  Y

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP03

  	
   

  	
  500

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
  UP03

  	
   

  	
  500

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  [ * ]

  	
   

  
	
  UP04

  	
   

  	
  125

  	
   

  	
  N

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
  14wks

  	
   

  	
  $

  	
  [ * ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
   

  	
   

  	
  $

  	
  [ * ]

  	
   

  

 

Cost
Savings        -4%

 

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

* Does not include Die
Buffer Stock

 

New
Parts to be Added

 

	
  Plant

  	
   

  	
  APT P/N

  	
   

  	
  Class

  	
   

  	
  EAU 00

  	
   

  	
  EAU 01

  	
   

  	
  Unit

  Price

  	
   

  	
  01 Price

  	
   

  	
  Est. Annual $

  ‘00

  	
   

  	
  Est. Annual

  $‘01

  	
   

  
	
  UP01

  	
   

  	
  50M65JVFR

  	
   

  	
   

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
   

  	
   

  	
  $

  	
  [ * ]

  	
   

  	
   

  	
   

  	
   

  	
   

  
																			

 

	
  Plant

  	
   

  	
  Bin Size

  	
   

  	
  NCNR

  	
   

  	
  Bins FGI

  Liability

  	
   

  	
  Bins WIP

  Liability

  	
   

  	
  Bins of

  Die Buffer

  	
   

  	
  Total $

  Liability *

  	
   

  	
  Cycle

  Time

  	
   

  	
  Delta

  	
   

  
	
  UP01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[ * ] = CONFIDENTIAL TREATMENT REQUESTEDExhibit 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  

 

1

 

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  

 

2

 

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  

 

3

 

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  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]