<SUBMISSION>
<ACCESSION-NUMBER>0000912057-00-027203
<TYPE>S-1
<PUBLIC-DOCUMENT-COUNT>21
<FILING-DATE>20000602
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ADVANCE POWER TECHNOLOGY INC
<CIK>0001114973
<ASSIGNED-SIC>
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-1
<ACT>33
<FILE-NUMBER>333-38418
<FILM-NUMBER>648465
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>405 SW COLUMBIA STREET
<CITY>BEND
<STATE>OR
<ZIP>97702
<PHONE>5413828028
</BUSINESS-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-1
<SEQUENCE>1
<FILENAME>s-1.txt
<DESCRIPTION>FORM S-1
<TEXT>

<PAGE>
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 2000
                                                     REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                         ------------------------------

                                    FORM S-1

                             REGISTRATION STATEMENT

                                     UNDER

                           THE SECURITIES ACT OF 1933

                         ------------------------------

                        ADVANCED POWER TECHNOLOGY, INC.
             (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                             <C>                          <C>
           DELAWARE                        3784                      93-0875072
 (State or other Jurisdiction        (Primary Standard            (I.R.S. Employer
       of Incorporation          Industrial Classification       Identification No.)
       or Organization)                Code Number)
</TABLE>

                  405 S.W. COLUMBIA STREET, BEND, OREGON 97702
                                 (541) 382-8028
          (Address of Principal Executive Offices, including Zip Code)

                              PATRICK P. H. SIRETA
                  405 S.W. COLUMBIA STREET, BEND, OREGON 97702
                                 (541) 382-8028

(Name, Address and Telephone Number, Including Area Code, of Agent for Service)

                         ------------------------------

                                   Copies to:

<TABLE>
<S>                                                     <C>
                 DAVID C. BACA                                         RICHARD A. BOEHMER
              GUSTAVO J. CRUZ, JR.                                      SHANNON M. MASON
           Davis Wright Tremaine LLP                                 O'Melveny & Myers LLP
       1300 S.W. Fifth Avenue, Suite 2300                            400 South Hope Street
          Portland, Oregon 97204-5682                            Los Angeles, California 90071
                 (503) 241-2300                                          (213) 430-6000
</TABLE>

                         ------------------------------

    APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.

    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
                         ------------------------------

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
                                                              PROPOSED MAXIMUM       AMOUNT OF REGISTRATION
          TITLE OF SECURITIES TO BE REGISTERED            AGGREGATE OFFERING PRICE            FEE
<S>                                                       <C>                       <C>
Common Stock............................................        $69,000,000                 $18,216
</TABLE>

    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                   SUBJECT TO COMPLETION, DATED JUNE 2, 2000
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
                                           SHARES

                                     [LOGO]

                                  COMMON STOCK

     ----------------------------------------------------------------------

    Advanced Power Technology, Inc. is offering             shares of common
stock. The selling stockholders are offering             shares of common stock.
This is our initial public offering. We estimate that the initial public
offering price will be between $  and $  per share.

    We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "APTI."

    SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR FACTORS THAT INVESTORS SHOULD
CONSIDER BEFORE INVESTING IN SHARES OF OUR COMMON STOCK.

                             ---------------------

<TABLE>
<CAPTION>
                                                              PER SHARE    TOTAL
                                                              ---------   --------
<S>                                                           <C>         <C>
Public offering price.......................................  $           $
Underwriting discounts and commissions......................  $           $
Proceeds, before expenses, to APT...........................  $           $
Proceeds to selling stockholders............................  $           $
</TABLE>

    We and one of the selling stockholders have granted the underwriters an
option to purchase up to       additional shares of common stock for a period of
30 days.

    The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares on or about July   , 2000.

                            ------------------------

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

STEPHENS INC.

               NEEDHAM & COMPANY, INC.

                               FIRST SECURITY VAN KASPER

               The date of this prospectus is             , 2000
<PAGE>
INSIDE FRONT COVER

[Photographs of end-user equipment in which company products are used, with
captions describing each application and naming certain users. Photographs of
end-user equipment in the communications and internet infrastructure,
semiconductor capital equipment, industrial, medical, and military and aerospace
industries will be included.]
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Prospectus Summary..........................................      4
Risk Factors................................................      8
Special Note Regarding Forward-Looking Statements...........     15
Use of Proceeds.............................................     15
Capitalization..............................................     17
Dividend Policy.............................................     18
Dilution....................................................     18
Selected Consolidated Financial Data........................     20
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     22
Business....................................................     33
Management..................................................     42
Certain Relationships and Related Transactions..............     45
Principal and Selling Stockholders..........................     46
Description of Capital Stock................................     47
Shares Eligible for Future Sale.............................     49
Underwriting................................................     51
Legal Matters...............................................     52
Experts.....................................................     52
Additional Information......................................     52
Index to Consolidated Financial Statements..................    F-1
</TABLE>

                            ------------------------

    YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE
IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF
THIS PROSPECTUS.

    AS USED IN THIS PROSPECTUS, REFERENCES TO "WE," "OUR," "US," "APT" AND "THE
COMPANY" ALL REFER TO ADVANCED POWER TECHNOLOGY, INC., AND ITS CONSOLIDATED
SUBSIDIARY, AND NOT TO THE UNDERWRITERS OR TO THE SELLING STOCKHOLDERS.

    UNTIL             , 2000, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

                                       3
<PAGE>
                               PROSPECTUS SUMMARY

    THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE INFORMATION
DISCUSSED UNDER "RISK FACTORS." THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION
FROM THIS PROSPECTUS AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU.

                        ADVANCED POWER TECHNOLOGY, INC.

    We are a leading designer, manufacturer and marketer of high-performance
power semiconductors. Power semiconductors manage and regulate power by
converting electricity into a form required by electrical and electronic
products. Our power semiconductors increase system efficiency, permit the design
of more compact end products and improve features and functionality. We are
primarily focused on the high power, high frequency segment of the power
semiconductor market. High power refers to the ability to handle voltages and
currents above one kilowatt, and high frequency refers to the ability to switch
on and off at speeds above 100 kilohertz.

    We sell our products to over 750 customers primarily in North America and
Europe, and increasingly in Asia, through a network of independent sales
representatives and distributors. The principal end-user markets for our
products are communications and internet infrastructure, semiconductor capital
equipment, industrial, medical, and military and aerospace. Our largest volume
original equipment manufacturer, or OEM, customers include Advanced Energy
Industries, Power-One and Siemens. Our leading distributor is Richardson
Electronics. Our products are typically critical to the performance of our
customers' products. We therefore work very closely with our customers in the
design phase of their products to ensure we can meet their performance
requirements. Once our products are designed into end products, they tend to be
used through the lifecycle of these end products. We have secured recent design
wins with industry leaders such as Ericsson and IBM.

    We have recently experienced increased demand for our products. Net revenues
increased from $5.9 million for the first three months of 1999 to $9.6 million
for the first three months of 2000, a growth rate of 63.4%. Our gross margin has
improved from 31.2% for the first three months of 1999 to 35.4% for the first
three months of 2000.

    The demand for high power, high frequency semiconductors is expanding as a
result of the rapid proliferation of sophisticated electronics and the
increasing need for higher power and more precisely regulated power quality in
electronic equipment. The primary markets we serve are characterized by rapid
technological development and increasing complexity. The following are the key
trends in our primary markets:

    - Convergence of voice, video and data transmission and proliferation of
      wireless systems;

    - Growing demand for semiconductor capital equipment; and

    - Emergence of new applications for high power, high frequency
      semiconductors.

    Our products, which are based on our proprietary technology, offer
performance advantages directly addressing the needs arising from these market
trends. We believe our products operate more efficiently and at higher
frequencies than competing products. Our goal is to be a world leader in
providing leading-edge semiconductor solutions for high power, high frequency
applications. To accomplish this goal, our strategy is to:

    - Maintain our technological leadership within the high power, high
      frequency market;

    - Build on our relationships with customers in expanding markets;

    - Expand our product offering for radio frequency, or RF, applications;

                                       4
<PAGE>
    - Leverage our external and internal manufacturing capabilities; and

    - Pursue external growth opportunities.

    We were founded in 1984 and incorporated in Delaware in 1992. Our executive
offices are located at 405 SW Columbia Street, Bend, Oregon 97702, and our
telephone number is (541) 382-8028. Our website is at www.advancedpower.com. The
information found on our website is not a part of this prospectus.

                                  THE OFFERING

    The following information assumes that the underwriters do not exercise the
option that we and one of the selling stockholders granted to them to purchase
additional shares in the offering.

<TABLE>
<S>                                            <C>
Common stock offered by us...................  shares

Common stock offered by selling
  stockholders...............................  shares

Common stock to be outstanding after the
  offering...................................  shares

Use of proceeds..............................  To repay debt, to fund capital improvements
                                               and for general corporate purposes, including
                                               research and development and possible
                                               acquisitions.

Proposed Nasdaq National Market symbol.......  APTI
</TABLE>

    The number of shares outstanding after the offering includes       shares of
common stock we expect to be issued upon exercise of warrants held by Advanced
Energy Industries. See "Principal and Selling Stockholders." As of May 31, 2000,
the number of shares of common stock to be outstanding after the offering does
not include 953,197 shares of common stock issuable upon exercise of stock
options issued under our 1995 Stock Option Plan at a weighted average exercise
price of $1.46 per share, 152,858 shares of common stock issuable upon exercise
of outstanding warrants at a weighted average exercise price of $1.40 per share
and 546,283 shares of common stock reserved for issuance under our 1995 Stock
Option Plan.

                                       5
<PAGE>
                      SUMMARY CONSOLIDATED FINANCIAL DATA

    When you read this summary consolidated financial data, it is important that
you read along with it the section titled "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our consolidated financial
statements and related notes included elsewhere in this prospectus. Historical
results are not necessarily indicative of future results.

<TABLE>
<CAPTION>
                                                                                       THREE MONTHS
                                                      YEARS ENDED DECEMBER 31,        ENDED MARCH 31,
                                                   ------------------------------   -------------------
                                                     1997       1998       1999       1999       2000
                                                   --------   --------   --------   --------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA (1):
  Revenues, net..................................  $25,732    $24,851    $27,461     $5,852     $9,561
  Gross profit...................................    8,452      6,412      9,461      1,828      3,383
  Income (loss) from operations..................       18     (1,625)     1,256        (50)       851
  Net income (loss)..............................     (994)    (1,656)      (175)      (412)       244

  Net income (loss) per share (2):
    Basic........................................  $ (0.20)   $ (0.33)   $ (0.04)    $(0.08)    $ 0.05
    Diluted......................................  $ (0.20)   $ (0.33)   $ (0.04)    $(0.08)    $ 0.04
  Shares used in per share calculations (2):
    Basic........................................    5,000      5,000      5,000      5,000      5,000
    Diluted......................................    5,000      5,000      5,000      5,000      6,456

OTHER CONSOLIDATED FINANCIAL DATA:
  Gross margin...................................     32.8%      25.8%      34.5%      31.2%      35.4%
  EBITDA (3).....................................  $ 2,233    $   611    $ 3,075     $  496     $1,270
  EBITDA margin (4)..............................      8.7%       2.5%      11.2%       8.5%      13.3%
</TABLE>

<TABLE>
<CAPTION>
                                                                         MARCH 31, 2000
                                                            ----------------------------------------
                                                                                        PRO FORMA
                                                             ACTUAL    PRO FORMA(5)   AS ADJUSTED(6)
                                                            --------   ------------   --------------
                                                                         (IN THOUSANDS)
<S>                                                         <C>        <C>            <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents...............................  $   177          177
  Working capital.........................................     (906)        (906)
  Total assets............................................   15,871       15,871
  Total debt..............................................   11,208       11,208             320
  Total stockholders' equity (deficit)....................   (2,137)
</TABLE>

------------------------

(1) In September 1995, our six senior officers purchased a controlling 51%
    interest in APT, of which approximately $3.3 million was funded with a note
    payable to Hamilton Sundstrand, the seller. In January 1998, these same
    officers purchased the remaining interest in APT, of which $3.0 million was
    funded with a note payable to APT. In accordance with purchase accounting
    and push down accounting rules, we were required to establish a new cost
    basis for our assets and liabilities based on these purchase transactions.
    See "Management's Discussion and Analysis of Financial Condition and Results
    of Operations--Effects of Push Down Accounting."

(2) Please see Note 1 of Notes to Consolidated Financial Statements for an
    explanation of the determination of the number of shares used in computing
    per share data.

(3) EBITDA means earnings before income taxes, interest expense, interest
    income, depreciation, amortization and compensation charges for stock plans.
    Although EBITDA is a widely accepted financial concept, it should not be
    considered as an alternative to operating income or to cash

                                       6
<PAGE>
    flows from operating activities and should not be construed as an indication
    of our operating performance or as a measure of liquidity.

(4) EBITDA margin is EBITDA as a percentage of net revenues.

(5) Gives effect to the purchase of       shares of common stock pursuant to the
    exercise of warrants held by Advanced Energy Industries at a weighted
    average exercise price of $2.73 per share. These warrants will expire on
    completion of this offering, and we expect them to be exercised immediately
    before expiration.

(6) Gives effect to the sale of       shares of the common stock offered by us
    and the selling stockholders at an assumed initial public offering price of
    $      per share and the use of the estimated net proceeds therefrom.

                                       7
<PAGE>
                                  RISK FACTORS

    AN INVESTMENT IN OUR COMMON STOCK INVOLVES A SIGNIFICANT DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN THIS
PROSPECTUS BEFORE PURCHASING SHARES OF OUR COMMON STOCK.

THE SEMICONDUCTOR INDUSTRY IS VERY CYCLICAL, AND AN INDUSTRY DOWNTURN WOULD HARM
OUR BUSINESS.

    The semiconductor industry is characterized by:

    - rapid technological change;

    - cyclical market patterns;

    - significant price erosion;

    - periods of over-capacity and production shortages;

    - variations in manufacturing costs and yields; and

    - significant expenditures for capital equipment and product development.

    The semiconductor industry has from time to time experienced depressed
business conditions. In the past, business conditions in this industry have
rapidly changed from periods of strong demand to periods of weak demand. Any
future downturn in the industry could harm our business and cause our operating
results to suffer. We cannot assure you that we will not experience substantial
period-to-period fluctuations in operating results due to general semiconductor
industry conditions or other factors.

WE HAVE HISTORICALLY EXPERIENCED FLUCTUATIONS IN OUR OPERATING RESULTS AND
EXPECT THESE FLUCTUATIONS TO CONTINUE, WHICH MAY CAUSE OUR COMMON STOCK PRICE TO
DECLINE.

    Our quarterly and annual operating results are affected by a wide variety of
factors that could materially and adversely affect our net sales, gross margins
and operating results. These factors include:

    - the volume and timing of orders received;

    - market acceptance of our products and the products of our customers;

    - competitive pricing pressures;

    - our ability to expand manufacturing output to meet increasing demand;

    - the timing and extent of our research and development expenses;

    - failure to anticipate changing customer product requirements;

    - fluctuations in manufacturing yields;

    - disruption in the supply of wafers or assembly services;

    - the ability of customers to make payments to us;

    - increases in material costs;

    - certain production and other risks associated with using independent
      manufacturers; and

    - potential changes in accounting policies.

    Historically in the semiconductor industry, average selling prices of
products have decreased over time. If we are unable to introduce new proprietary
products with higher margins or reduce manufacturing costs to offset anticipated
decreases in the prices of our existing products, then our

                                       8
<PAGE>
operating results will be harmed. Our business is characterized by short-term
orders and shipment schedules, and customer orders typically can be canceled or
rescheduled without penalty to the customer. Because most of our backlog is
cancelable without penalty, we typically plan our production and inventory
levels based on internal forecasts of customer demand, which is highly
unpredictable and can fluctuate substantially. In addition, because of fixed
costs in the semiconductor industry, we are limited in our ability to reduce
costs quickly in response to any revenue shortfalls. As a result of the
foregoing or other factors, we may experience material adverse fluctuations in
our future operating results on a quarterly or annual basis. We cannot assure
you that we will be profitable on a quarterly or annual basis in future periods.

IF WE CANNOT INTRODUCE NEW PRODUCTS ON A TIMELY BASIS, OUR FINANCIAL RESULTS MAY
SUFFER.

    The markets for our products are characterized by rapid technological change
and frequent new product introductions. Our success depends upon our ability to
develop improved power semiconductors for new and existing markets, to introduce
these products in a timely manner, and to have these products gain market
acceptance. The development of new power semiconductors is highly complex and
from time to time we have experienced delays in developing and introducing new
products. Successful product development and introduction depends on a number of
factors, including:

    - proper new product definition;

    - timely completion of design and testing of new products;

    - achievement of acceptable manufacturing yields; and

    - market acceptance of our products and the products of our customers.

    We cannot assure you we will be able to meet these challenges or adjust to
changing market conditions as quickly and cost-effectively as necessary to
compete successfully. Due to the complexity and variety of power semiconductors,
the limited number of qualified development engineers and the limited
effectiveness of computer-aided design systems in the design of such circuits,
we cannot assure you that we will be able to successfully develop and introduce
new products on a timely basis. We cannot assure you that any products
introduced by us will be adopted by existing or potential customers, or that any
products initially accepted by our customers will become industry standard
products. Our failure to develop and introduce new products successfully could
significantly harm our business and cause our operating results to suffer.

    Our results of operations are also dependent on our ability to optimize the
mix between sales of relatively higher margin but lower volume products and
relatively higher volume but lower margin products. In order to improve our
margins, sales of higher margin products must in the future represent a greater
percentage of our net sales, requiring us to develop, introduce and market new
proprietary products. We cannot assure you that we will be successful in
developing new proprietary products with the features and functionality that
customers in our key markets will demand.

DISRUPTION, TERMINATION OR REDUCTION IN THE FUNCTIONS PERFORMED BY OUR KEY
SUBCONTRACTORS COULD HARM OUR BUSINESS.

    We depend on third party subcontractors in Europe and Asia for
manufacturing, assembly and packaging of many of our products. We have entered
into a wafer foundry agreement with Infineon Technologies, an outside foundry
located in Europe. We also rely on an agreement with Team Pacific, a
subcontractor in the Philippines, for assembly and packaging of most of our
products. Disruption or termination of either of these arrangements could harm
our business and operating results. Political instability, labor disputes or
natural disasters could disrupt the operations of our subcontractors. If any of
our subcontractors experience financial, operational, production or quality
assurance difficulties resulting in a reduction or interruption in supply to us,
our operating results would suffer until

                                       9
<PAGE>
alternate subcontractors, if any, become available. Infineon Technologies may
not be able to maintain the technological capability to meet our future needs.
In addition, our subcontractors also manufacture and package products for our
competitors, and there is a risk that our subcontractors could allocate less of
their production capacity and resources to our needs.

IF WE ARE UNABLE TO RESPOND TO TECHNOLOGICAL ADVANCES IN SEMICONDUCTOR
MANUFACTURING, OUR BUSINESS WILL BE HARMED.

    Semiconductor design and process methodologies are subject to rapid
technological change, requiring large expenditures for research and development
in order to improve product performance and increase manufacturing yields. We
cannot assure you that our current process technology will not become obsolete.
If we are unable to develop or obtain access to advanced silicon wafer
processing technologies as they become needed, our future operating results will
suffer.

IF WE CANNOT ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR FINANCIAL
RESULTS MAY SUFFER.

    Our success depends on our ability to obtain or maintain protection of
certain proprietary technologies used in our principal products. We rely on a
combination of patents, trademarks, trade secret laws and contractual provisions
to protect our proprietary rights. Our competitors may, however, misappropriate
our technology or independently develop technologies that are as good as or
better than ours. We currently hold 17 U.S. patents, eight foreign patents and
have six patents pending on semiconductor devices and methods. The first patent
on our core technology expires on March 21, 2006. We cannot assure you that any
patent owned by us will not be invalidated, circumvented or challenged.
Moreover, the process of seeking patent protection can be long and expensive,
and we cannot assure you that our current patents are or any new patents that
may be issued will be of sufficient scope or strength to provide any meaningful
protection or any competitive advantage to us. We may also become subject to or
initiate interference proceedings in the U.S. Patent and Trademark office, which
can demand significant financial and management resources and could harm our
financial results.

    In addition, we have licensed a portion of our intellectual property rights
to European and Japanese entities and have entered into a joint venture and
pending licensing and technology transfer agreement in China. Intellectual
property law and practice differs in foreign jurisdictions, and it may prove
difficult for us to protect our rights in certain foreign countries. We cannot
assure you that our licensing and other arrangements with foreign entities will
not result in infringements on our proprietary rights. If we are unable to
protect our intellectual property rights, either in the U.S. or abroad, we could
face increased competition in the market for our products and technologies,
which could negatively affect our sales and ability to expand our business.

WE MAY BECOME INVOLVED IN COSTLY AND LENGTHY PATENT INFRINGEMENT OR INTELLECTUAL
PROPERTY LITIGATION, WHICH COULD HARM OUR BUSINESS.

    The semiconductor industry in general is characterized by frequent
litigation regarding patent and other intellectual property rights. Protecting
our proprietary rights may require us to defend claims of intellectual property
infringement by our competitors. If any such infringements arise or are claimed
in the future, we may be exposed to substantial liability for damages and may
need to obtain licenses from the patent owners, discontinue or change our
processes or products or expend significant resources to develop or acquire
non-infringing technologies. We cannot be certain that licenses would be
available under reasonable terms or that we could successfully develop or
acquire non-infringing technologies. Moreover, such efforts would likely be
time-consuming and divert management attention and resources. Our future
involvement in patent infringement or intellectual property litigation could
harm our operating results and financial condition.

                                       10
<PAGE>
STRONG COMPETITION IN THE POWER SEMICONDUCTOR MARKET MAY REDUCE THE DEMAND FOR
OUR PRODUCTS OR THE PRICES OF OUR PRODUCTS, WHICH COULD REDUCE OUR REVENUES AND
HARM OUR BUSINESS.

    The power semiconductor industry is highly competitive and subject to rapid
technological change. Significant competitive factors in the power semiconductor
market include:

    - product features and performance;

    - product quality;

    - product reliability;

    - technical knowledge;

    - breadth of product line;

    - competitive pricing; and

    - customer service and support.

    Because the market for power semiconductors is diverse and highly
fragmented, we encounter different competitors in our various product markets.
Our principal competitors in one or more of our product areas include
International Rectifier, IXYS and ST Microelectronics. Many of our competitors
have substantially greater technical, financial and marketing resources and
greater name recognition than we do. We expect intensified competition from
existing power semiconductor suppliers and the possible entry of new
competitors. Increased competition could harm our business. We cannot assure you
that we will be able to compete successfully in the future or that competitive
pressures will not harm our financial condition or our operating results.
Competitive pressures could reduce market acceptance of our products and result
in price reductions and increases in expenses that could harm our business and
our financial condition.

OUR FINANCIAL RESULTS WOULD BE HARMED IF WE WERE TO LOSE ONE OF OUR MAJOR
CUSTOMERS OR KEY DISTRIBUTORS.

    Several of our major customers account for a significant portion of our net
sales each year. During 1999, our top five customers accounted for 39.5% of our
net sales, and one customer, Advanced Energy Industries accounted for 14.6% of
our net sales. If we lost Advanced Energy Industries or one of our other major
customers, or if one of them reduced or canceled significant orders, our net
income and operating results could be harmed. Richardson Electronics serves as a
significant distributor of our products. If this relationship were discontinued,
or if Richardson Electronics should fail to provide adequate service to our
customers, we could lose sales and our operating results would suffer.

IF WE FAIL TO MANAGE OUR GROWTH EFFECTIVELY, WE MAY LOSE BUSINESS AND EXPERIENCE
REDUCED PROFITABILITY.

    We have recently experienced rapid revenue growth, and we anticipate
continued growth if demand increases in the markets for our products. To manage
this growth successfully, we will need to manage increased production
requirements, attract, retain and train new employees and management, improve
our operational and administrative systems, and manage multiple relationships
with customers and suppliers. We may be unable to accomplish any of these
requirements, and our failure to do so would harm our operating results.

WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT DILUTE THE OWNERSHIP INTEREST OF OUR
STOCKHOLDERS AND CAUSE US TO INCUR DEBT AND ASSUME CONTINGENT LIABILITIES.

    From time to time, we may review acquisition prospects or joint ventures
that would complement our current product offering, enhance our design
capability or that may otherwise offer growth opportunities. We have no current
agreements or formal negotiations underway with respect to any

                                       11
<PAGE>
acquisitions. However, we may acquire businesses, products or technologies in
the future. In the event of future acquisitions, we could:

    - use a significant portion of our available cash, including the cash
      proceeds from this offering;

    - issue equity securities that would dilute current stockholders' percentage
      ownership;

    - incur substantial debt; or

    - assume contingent liabilities.

    Such actions by us could harm our operating results and/or the price of our
common stock. Acquisitions also entail numerous risks, including:

    - difficulties in the assimilation of acquired operations, technologies or
      products;

    - unanticipated costs associated with the acquisition or joint venture;

    - diversion of management's attention from other business concerns;

    - adverse effects on existing business relationships with customers; and

    - potential loss of key employees of acquired organizations.

    We cannot assure you that we will be able to integrate successfully any
businesses, products, technologies or personnel that we might acquire in the
future, and our failure to do so could harm our business and operating results.

OUR BUSINESS IS SUBJECT TO RISKS ASSOCIATED WITH OPERATIONS IN FOREIGN
COUNTRIES.

    In 1999, approximately 43% of our revenues were from sales to customers
located outside of the U.S. We are vulnerable to risks associated with doing
business in foreign countries, including tariffs, quotas, taxes and other market
barriers, political and economic instability, currency fluctuations and
difficulties in staffing and management of overseas operations. In addition, we
have supply agreements, assembly agreements, and other relationships with
foreign companies that are subject to similar risks.

FAILURE TO ATTRACT AND RETAIN KEY TECHNICAL AND MANAGEMENT PERSONNEL COULD HARM
OUR OPERATING RESULTS.

    Our success depends upon the continued service of our executive officers and
other key management and technical personnel, particularly our development
engineers, and on our ability to continue to attract, retain and motivate
qualified personnel, particularly experienced development engineers, systems
applications engineers and sales managers. There is intense competition for the
services of development engineers in our industry. The loss of the services of
one or more of our development engineers, executive officers or other key
personnel or our inability to recruit replacements for such personnel or to
otherwise attract, retain and motivate qualified personnel could harm our
business. We do not currently carry life insurance payable to APT with respect
to any of our management employees.

OUR PRODUCTS ARE COMPLEX AND COULD CONTAIN DEFECTS, WHICH COULD REDUCE SALES OF
THOSE PRODUCTS OR RESULT IN CLAIMS AGAINST US.

    We develop complex and evolving products. Despite testing by us and our
customers, defects or other performance problems may be found in existing or new
products. This could result in delay in recognition or loss of revenues, loss of
market share or failure to achieve market acceptance. These defects may also
cause us to incur significant warranty, support and repair costs, divert the
attention of our engineering personnel from our product development efforts and
harm our relationships with our customers. Any defects or other problems with
our products could result in financial or other damages

                                       12
<PAGE>
to our customers who could seek damages from us for their losses. Even an
unsuccessful product liability claim would likely be time-consuming and costly
to defend.

INTERRUPTIONS IN WAFER PRODUCTION MAY HARM OUR OPERATING RESULTS.

    Any prolonged inability to utilize our Bend, Oregon foundry or the Infineon
Technologies foundry as a result of fire, natural disaster or otherwise would
harm our financial condition and cause our operating results to suffer. If we
are not able to obtain additional foundry capacity as required, our
relationships with our customers would be harmed and our sales would likely be
reduced. We may not be able to make arrangements for additional foundry capacity
in a timely fashion or at all, and such arrangements, if any, may not be on
terms favorable to us. Moreover, if we are able to secure additional foundry
capacity, we may be obligated to utilize all of that capacity or incur
penalties. These penalties may be expensive and could harm our operating
results.

WE DEPEND ON THE AVAILABILITY OF CERTAIN RAW MATERIALS TO MANUFACTURE OUR
PRODUCTS, AND A DISRUPTION IN SUPPLY COULD HARM OUR OPERATING RESULTS.

    We rely on certain raw materials to manufacture our products, including
silicon, various chemicals, gases and compounds. We obtain some of these raw
materials through limited sources of supply, and in the event of a shortage, we
may be forced to locate alternative sources and be forced to pay higher prices
for the same raw materials. A severe shortage or an increase in the price of
these raw materials may harm our gross margins and our ability to deliver our
products on a timely basis, if at all.

OUR MANUFACTURING OPERATIONS INVOLVE HAZARDOUS SUBSTANCES, AND THE COSTS OF
COMPLYING WITH APPLICABLE ENVIRONMENTAL LAWS COULD HARM OUR FINANCIAL RESULTS.

    Our manufacturing operations are subject to various federal, state, local
and foreign environmental laws and regulations relating to the management,
disposal and remediation of hazardous substances and the emission and discharge
of pollutants into the air, water and soil. In the conduct of our manufacturing
operations, we have handled and do handle materials that are considered
hazardous, toxic or volatile under federal, state and local laws. The risk of
accidental release of such materials cannot be completely eliminated, and if
such an accidental release occurs, we could be held financially responsible for
clean-up costs and other consequences of the release. In addition, if
environmental laws become more stringent over time, or existing laws are more
stringently enforced, we could incur greater compliance costs and be subject to
increased risks and penalties for violations. We could be held liable for
significant damages for violating environmental laws and could lose certain
licenses or permits, which could harm our financial results.

AN ACCIDENT AT OUR MANUFACTURING FACILITY COULD CAUSE SERIOUS DAMAGE FOR WHICH
WE COULD BE RESPONSIBLE.

    Our manufacturing operations involve high voltage equipment, explosive gases
and hazardous chemicals. An accident at our manufacturing facility could result
in serious personal injury or property damage for which we could be held
financially responsible. Any financial obligation in excess of available
insurance could harm our financial results.

OUR CHARTER CONTAINS PROVISIONS THAT MAY HINDER OR PREVENT A CHANGE IN THE
CONTROL OF OUR COMPANY.

    The authorization of undesignated preferred stock makes it possible for our
board of directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to change control of
APT. These and other provisions in our charter may defer hostile takeovers or
delay changes in control or management, which could reduce our stock price.
Also, there are provisions of Delaware law that may have similar effects. See
"Description of Capital Stock."

                                       13
<PAGE>
CERTAIN MEMBERS OF MANAGEMENT, AS A GROUP, WILL OWN A CONTROLLING INTEREST IN
OUR COMMON STOCK AFTER THIS OFFERING.

    Certain members of our senior management will beneficially own approximately
  % of our outstanding shares of common stock following the completion of this
offering, and   % if the underwriters' over-allotment option is exercised in
full. As a result, these members of management will exercise significant control
over all matters requiring stockholder approval. The concentrated holdings of
management may result in a delay of, or serve as a deterrent to, possible
changes in control of APT, which may reduce the market price of our common
stock. See "Management" and "Principal and Selling Stockholders."

OUR MANAGEMENT WILL HAVE BROAD DISCRETION OVER THE USE OF THE NET PROCEEDS OF
THIS OFFERING AND MAY FAIL TO USE SUCH FUNDS EFFECTIVELY.

    We will repay approximately $7.6 million in debt, plus accrued interest,
from the net proceeds of this offering, and the remainder of the net proceeds
will be utilized for general corporate purposes, including research and
development and possible acquisitions. Consequently, our management will have
significant flexibility in applying the net proceeds of this offering.
Management's allocation of the proceeds of this offering may not benefit the
business, and could harm our financial results.

THERE IS NO PRIOR PUBLIC MARKET FOR OUR STOCK, AND ANY MARKET THAT DEVELOPS MAY
BE VOLATILE.

    Prior to this offering, there has been no active public market for our
common stock. We have applied to have our common stock approved for quotation on
the Nasdaq National Market. We cannot assure you that an active trading market
for our common stock will develop or be sustained after this offering. The
initial public offering price was determined through negotiations between us and
the underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The market price of
our common stock could be subject to significant fluctuations in response to
variations in actual and anticipated operating results, changes in earnings
estimates by analysts, lack of liquidity, our failure to achieve growth plans
and other events or factors. The market for securities of semiconductor
manufacturers has been highly volatile in recent years, often as a result of
factors unrelated to their operations.

FUTURE SALES OF OUR COMMON STOCK MAY LOWER OUR STOCK PRICE.

    If our existing stockholders sell a large number of shares of our common
stock following this offering, the market price of our common stock could
decline significantly. In addition, the perception in the public market that our
existing stockholders might sell shares of common stock could depress the market
price of our common stock, regardless of the actual plans of our existing
stockholders. Immediately after this offering, approximately       shares of our
common stock will be outstanding, or             if the underwriters'
over-allotment option is exercised in full. Of these shares, all of the shares
included in this offering will be available for immediate resale in the public
market, except those held by our "affiliates." Of the remaining shares
outstanding,             are subject to lock-up agreements restricting the sale
of such shares for 180 days from the date of this prospectus. However, the
underwriters may waive this restriction and allow the stockholders to sell their
shares at any time.

PURCHASERS IN THIS OFFERING WILL IMMEDIATELY EXPERIENCE SUBSTANTIAL DILUTION IN
NET TANGIBLE BOOK VALUE.

    Purchasers of shares in this offering will experience immediate dilution in
the net tangible book value of their shares. Based on an assumed initial public
offering price of $      per share, dilution per share in this offering will be
$      per share (or       % of the price). See "Dilution."

                                       14
<PAGE>
               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    This prospectus contains statements which, to the extent that they do not
recite historical fact, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words "believe," "expect," "estimate,"
"may," "will," "could," "plan" or "continue" and similar expressions are
intended to identify forward-looking statements. Such forward-looking
information involves important risks and uncertainties that could materially
alter results in the future from those expressed in any forward-looking
statements made by, or on behalf of, us. These risks and uncertainties include,
but are not limited to those listed in this prospectus.

    We caution you that such forward-looking statements are only predictions and
that actual events or results may differ materially. In evaluating such
statements, you should specifically consider the various factors which could
cause actual events or results to differ materially from those indicated by such
forward-looking statements, including the factors that we discuss in the section
entitled "Risk Factors."

                                USE OF PROCEEDS

    We estimate that our net proceeds (after we pay the underwriters and our
expenses) from the sale of the             shares that we are selling will be
$      million ($      million if the underwriters exercise their option to
acquire additional shares), based upon an assumed initial public offering price
of $      per share. We expect to use a portion of the net proceeds from sales
of our common stock to repay approximately $7.6 million in debt, plus accrued
interest, owed to financial institutions.

    At March 31, 2000, the outstanding debt that will be repaid with the
proceeds from this offering consists of:

    - $3.8 million outstanding under our two lines of credit, which expire in
      May 2001 and bear interest at prime plus 1.0% or 1.25% based on the ratio
      of debt to equity (10.25% at March 31, 2000);

    - $2.5 million of subordinated debt outstanding under our secured credit
      agreement, which matures on September 30, 2000 and bears interest at prime
      plus 1.5% (10.5% at March 31, 2000);

    - $500,000 outstanding under a term loan, which matures in March 2003 and
      bears interest at 10.6%;

    - $357,000 outstanding under our European subsidiary's line of credit, which
      bears interest at Euribor plus 2% per annum (5.7% at March 31, 2000), plus
      commissions;

    - $253,000 outstanding under a term loan, which matures in December 2003 and
      bears interest at 10.6%;

    - $125,000 outstanding under a term loan, which matures in January 2001 and
      bears interest at prime plus 1.75% (10.75% at March 31, 2000); and

    - $64,000 outstanding under a loan to our European subsidiary with no stated
      interest rate and due currently.

    We incurred approximately $3.1 million of this debt to fund the purchase of
APT by our six senior officers. This debt includes $3.0 million initially loaned
to our six senior officers in connection with the purchase of the remaining APT
stock in 1998, and $100,000 loaned to those officers to pay interest on the note
payable to Hamilton Sundstrand in connection with their initial purchase of APT
stock in 1995.

    We expect to use the remaining net proceeds for general corporate purposes,
which may include research and development and acquisitions. We have no current
commitments or agreements with

                                       15
<PAGE>
respect to any specific acquisition. Until we use the net proceeds as described
above, we intend to invest the net proceeds in short-term government securities
or other investment grade obligations.

    In addition to the net proceeds accruing directly to us, we will receive
approximately $      million from the sale of common stock by our six senior
officers. The six senior officers estimate that they will receive approximately
$      million in net proceeds, of which approximately $      million will be
used to pay taxes resulting from the sale of their shares, $      million will
be used to pay debt and interest owed to us, $      million will be used to pay
debt and interest owed to Hamilton Sundstrand and approximately $
will be used to repay personal debt. The debt to be repaid by these stockholders
was incurred to fund management's purchase of APT. The net proceeds to Advanced
Energy Industries as a selling stockholder will be an amount sufficient to pay
the estimated taxes to be incurred as a result of the exercise of its warrants.
See "Certain Relationships and Related Transactions."

                                       16
<PAGE>
                                 CAPITALIZATION

    The following table sets forth our capitalization as of March 31, 2000:

    - on an actual basis;

    - on a pro forma basis giving effect to the net exercise of the warrants
      held by Advanced Energy Industries; and

    - on a pro forma as adjusted basis giving effect to our sale of the common
      stock in this offering at an assumed initial public offering price of
      $      per share and the application of the net proceeds as described
      under "Use of Proceeds."

<TABLE>
<CAPTION>
                                                                        MARCH 31, 2000
                                                              ----------------------------------
                                                                                      PRO FORMA
                                                               ACTUAL    PRO FORMA   AS ADJUSTED
                                                              --------   ---------   -----------
                                                              (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                           <C>        <C>         <C>
Cash and cash equivalents...................................  $    177   $    177      $
                                                              ========   ========      ========

Debt:
  Lines of credit...........................................  $  4,126   $  4,126      $     --
  Current portion of long-term debt.........................     2,940      2,940            --
  Long-term debt, less current portion......................     3,822      3,822            --
  Capital lease obligations.................................       320        320           320
                                                              --------   --------      --------
    Total debt..............................................    11,208     11,208           320
                                                              --------   --------      --------

Stockholders' equity (deficit):
  Preferred stock, undesignated, $.001 par value; no shares
    authorized, actual; 1,000,000 shares authorized, pro
    forma and pro forma as adjusted; no shares issued or
    outstanding, actual, pro forma and pro forma as
    adjusted................................................        --         --            --
  Common stock, $.01 par value per share; 5,110,371
    authorized, actual; 19,000,000 shares authorized, pro
    forma and pro forma as adjusted; 5,000,520 shares issued
    and outstanding actual;       shares issued and
    outstanding pro forma, and       shares issued and
    outstanding pro forma as adjusted.......................        50
  Additional paid-in capital................................    16,176
  Deferred stock compensation...............................      (538)      (538)         (538)
  Accumulated other comprehensive income....................        69         69            69
  Accumulated deficit.......................................   (17,894)   (17,894)      (17,894)
                                                              --------   --------      --------
    Total stockholders' equity (deficit)....................    (2,137)
                                                              --------   --------      --------
      Total capitalization..................................  $  9,071
                                                              ========   ========      ========
</TABLE>

    The table above reflects the following:

    - Pro forma and pro forma as adjusted preferred stock and common stock
      includes shares authorized on May 31, 2000.

    - Excludes 953,197 shares of common stock issuable upon the exercise of
      options outstanding on March 31, 2000, at a weighted average exercise
      price of $1.46 per share; 546,283 additional shares of common stock
      reserved for future issuance under our 1995 Stock Option Plan as amended
      through May 31, 2000; and 152,858 shares of common stock issuable upon the
      exercise of warrants, other than those held by Advanced Energy Industries,
      at a weighted average exercise price of $1.40 per share.

                                       17
<PAGE>
    - Pro forma as adjusted includes repayment (out of proceeds of sales of
      common stock by our six senior officers as selling stockholders) of
      $3.3 million in debt plus accrued interest owed by those officers to
      Hamilton Sundstrand that is accounted for as debt of APT; and the
      repayment by those officers of $3.1 million of debt plus accrued interest
      owed to APT. The repayment of the debt to APT will be reflected as an
      increase to additional paid-in capital on our consolidated balance sheet.

                                DIVIDEND POLICY

    We have not declared or paid any cash dividends on our capital stock, and we
do not anticipate doing so in the foreseeable future. We currently intend to
retain future earnings, if any, to operate and expand our business. Our loan
covenants require us to obtain the bank's consent prior to the payment of any
cash dividends.

                                    DILUTION

    The pro forma net tangible book value of our common stock as of March 31,
2000 was a deficit of $  million, or $      per share, after giving effect to
the exercise of the warrants held by Advanced Energy Industries. Pro forma net
tangible book value per share before the offering has been determined by
dividing net tangible book value (total book value of tangible assets less total
liabilities) by the number of shares of common stock outstanding at March 31,
2000, after giving effect to the exercise of the warrants held by Advanced
Energy Industries. After giving effect to the sale of our common stock in this
offering at an assumed initial public offering price of $      per share and
after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us, our adjusted pro forma net tangible book value
as of March 31, 2000 would have been $      million, or $      per share. This
represents an increase in pro forma net tangible book value per share of $
to existing stockholders and dilution in pro forma net tangible book value per
share of $      to new investors who purchase shares in the offering. The
following table illustrates this per share dilution:

<TABLE>
<S>                                                       <C>        <C>
Initial public offering price per share.................             $
  Pro forma net tangible book value per share as of
    March 31, 2000......................................  $
  Increase in pro forma net tangible book value per
    share attributable to new investors.................
                                                          --------
Adjusted pro forma net tangible book value per share....
                                                                     --------
Dilution per share to new investors.....................             $
                                                                     ========
</TABLE>

    The following table sets forth, on the adjusted pro forma basis described
above, as of March 31, 2000, the difference between the number of shares of
common stock purchased, the total consideration paid, and the average price per
share paid by the existing stockholders and by investors purchasing shares in
this offering, before deducting estimated underwriting discounts and commissions
and estimated offering expenses:

<TABLE>
<CAPTION>
                                   SHARES PURCHASED     TOTAL CONSIDERATION    AVERAGE
                                  -------------------   -------------------   PRICE PER
                                   NUMBER    PERCENT     AMOUNT    PERCENT      SHARE
                                  --------   --------   --------   --------   ---------
<S>                               <C>        <C>        <C>        <C>        <C>
Existing stockholders...........                   %    $                %    $
New investors...................
                                  -------     -----     --------    -----
  Total.........................                   %                     %
                                  =======     =====     ========    =====
</TABLE>

                                       18
<PAGE>
    The discussion and tables above exclude the following:

    - 953,197 shares of common stock issuable upon the exercise of options
      outstanding at March 31, 2000, at a weighted average exercise price of
      $1.46 per share under our 1995 Stock Option Plan;

    - 546,283 additional shares of common stock reserved for future issuance
      under our 1995 Stock Option Plan as amended through May 31, 2000; and

    - 152,858 shares of common stock issuable upon the exercise of other
      warrants at a weighted average exercise price of $1.40 per share.

To the extent that any options or warrants are exercised in addition to those
held by Advanced Energy Industries, the new investors will experience additional
dilution.

                                       19
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA

    In the tables below, we provide you with selected consolidated financial
data. We have prepared this data using financial statements for the fiscal years
ended December 31, 1995, 1996, 1997, 1998 and 1999, and the three-month periods
ended March 31, 1999 and 2000. The consolidated statement of operations data for
the years ended December 31, 1997, 1998 and 1999 and the consolidated balance
sheet data as of December 31, 1998 and 1999 are derived from our consolidated
financial statements included elsewhere in this prospectus, which have been
audited by KPMG LLP, independent auditors. The consolidated balance sheet data
for December 31, 1995, 1996 and 1997 and consolidated statement of operations
data for the years ended December 31, 1995 and 1996 are derived from
consolidated financial statements audited by KPMG LLP not included in this
prospectus. The consolidated statement of operations data for the three-month
periods ended March 31, 1999 and 2000 and the balance sheet data as of March 31,
2000 have not been audited. We have prepared this unaudited financial data on
substantially the same basis as the audited consolidated financial statements
and included all adjustments, consisting only of normal recurring adjustments,
that we consider necessary for a fair presentation of the financial position and
results of operations for the period. When you read this selected consolidated
financial data, it is important that you read along with it the section titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes included
elsewhere in this prospectus. Historical results are not necessarily indicative
of future results.

<TABLE>
<CAPTION>
                                                                                             THREE MONTHS
                                                                                                 ENDED
                                                 YEARS ENDED DECEMBER 31,                      MARCH 31,
                                   ----------------------------------------------------   -------------------
                                     1995       1996       1997       1998       1999       1999       2000
                                   --------   --------   --------   --------   --------   --------   --------
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                <C>        <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF
  OPERATIONS DATA (1):
  Revenues, net..................  $26,287    $26,948    $25,732    $24,851    $27,461     $5,852     $9,561
  Cost of goods sold.............   19,211     17,919     17,280     18,439     18,000      4,024      6,178
                                   -------    -------    -------    -------    -------     ------     ------
  Gross profit...................    7,076      9,029      8,452      6,412      9,461      1,828      3,383
  Operating expenses:
    Research and development.....      772        943      1,021        926        883        200        243
    Selling, general and
      administrative.............    7,615      7,376      7,413      7,111      7,322      1,678      2,289
                                   -------    -------    -------    -------    -------     ------     ------
      Total operating expenses...    8,387      8,319      8,434      8,037      8,205      1,878      2,532
                                   -------    -------    -------    -------    -------     ------     ------
  Income (loss) from
    operations...................   (1,311)       710         18     (1,625)     1,256        (50)       851
  Other income (expense):
    Interest expense.............     (786)    (1,094)    (1,010)    (1,208)    (1,308)      (336)      (271)
    Other, net...................      327          7         95         58         77         24         12
                                   -------    -------    -------    -------    -------     ------     ------
  Income (loss) before income
    taxes........................   (1,770)      (377)      (897)    (2,775)        25       (362)       592
  Income tax expense (benefit)...     (184)       411         97     (1,119)       200         50        348
                                   -------    -------    -------    -------    -------     ------     ------
  Net income (loss)..............  $(1,586)   $  (788)   $  (994)   $(1,656)   $  (175)    $ (412)    $  244
                                   =======    =======    =======    =======    =======     ======     ======
  Net income (loss) per share
    (2):
    Basic........................  $ (0.32)   $ (0.16)   $ (0.20)   $ (0.33)   $ (0.04)    $(0.08)    $ 0.05
    Diluted......................  $ (0.32)   $ (0.16)   $ (0.20)   $ (0.33)   $ (0.04)    $(0.08)    $ 0.04
  Shares used in per share
    calculations (2):
    Basic........................    5,000      5,000      5,000      5,000      5,000      5,000      5,000
    Diluted......................    5,000      5,000      5,000      5,000      5,000      5,000      6,456
OTHER CONSOLIDATED FINANCIAL
  DATA:
  Gross margin...................     26.9%      33.5%      32.8%      25.8%      34.5%      31.2%      35.4%
  EBITDA (3).....................  $ 1,438    $ 3,420    $ 2,233    $   611    $ 3,075     $  496     $1,270
  EBITDA margin (4)..............      5.5%      12.7%       8.7%       2.5%      11.2%       8.5%      13.3%
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                        ----------------------------------------------------   MARCH 31,
                                          1995       1996       1997       1998       1999       2000
                                        --------   --------   --------   --------   --------   ---------
                                                                 (IN THOUSANDS)
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA (1):
  Cash and cash equivalents...........  $   348    $   445    $   301    $    56    $   316     $   177
  Working capital.....................    1,726      2,214      2,104        515     (1,023)       (906)
  Total assets........................   18,660     16,342     14,941     14,200     13,859      15,871
  Long-term obligations, less current
    portion...........................    7,267      5,367      5,253      6,148      3,525       4,001
  Total debt..........................   12,680     10,230      9,312     11,796     11,338      11,208
  Total stockholders' equity
    (deficit).........................    2,558      1,780        814     (2,451)    (2,475)     (2,137)
</TABLE>

------------------------

(1) In September 1995, our six senior officers purchased a controlling 51%
    interest in APT, of which approximately $3.3 million was funded with a note
    payable to Hamilton Sundstrand, the seller. In January 1998, these same
    officers purchased the remaining interest in APT, of which approximately
    $3.0 million was funded with a note payable to APT. In accordance with
    purchase accounting and push down accounting rules, we were required to
    establish a new cost basis for our assets and liabilities based on these
    purchase transactions. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations--Effects of Push Down
    Accounting."

(2) Please see Note 1 of Notes to Consolidated Financial Statements for an
    explanation of the determination of the number of shares used in computing
    per share data.

(3) EBITDA means earnings before income taxes, interest expense, interest
    income, depreciation, amortization and compensation charges for stock plans.
    Although EBITDA is a widely accepted financial concept, it should not be
    considered as an alternative to operating income or to cash flows from
    operating activities and should not be construed as an indication of our
    operating performance or as a measure of liquidity.

(4) EBITDA margin is EBITDA as a percentage of net revenues.

                                       21
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES AND THE OTHER FINANCIAL
INFORMATION INCLUDED IN THIS PROSPECTUS. IN ADDITION TO HISTORICAL INFORMATION,
THE FOLLOWING DISCUSSION AND OTHER PARTS OF THIS PROSPECTUS CONTAIN
FORWARD-LOOKING INFORMATION THAT INVOLVES RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED BY FORWARD-LOOKING
INFORMATION DUE TO FACTORS DISCUSSED UNDER "RISK FACTORS," "BUSINESS" AND
ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

    We are a leading designer, manufacturer and marketer of high-performance
power semiconductors. Power semiconductors manage and regulate power by
converting electricity into a form required by electrical and electronic
products. Our power semiconductors increase system efficiency, permit the design
of more compact end products and improve features and functionality. We are
primarily focused on the high power, high frequency segment of the power
semiconductor market. High power refers to the ability to handle voltages and
currents above one kilowatt, and high frequency refers to the ability to switch
on and off at speeds above 100 kilohertz. We sell our products to over 750
customers primarily in North America and Europe, and increasingly in Asia,
through a network of independent sales representatives and distributors.

    We were founded in 1984 to develop a new technology for the manufacture of a
specific type of power semiconductor, the metal oxide semiconductor field effect
transistor, or MOSFET. In 1989, we completed development of our proprietary and
patented technology, Power MOS IV-TM-, and introduced our first high power
MOSFET device to the market. In 1989, we entered into a contract with Hamilton
Sundstrand for the development and production of high power, insulated gate
bipolar transistors, a derivative of our core MOSFET technology, for use in
Hamilton Sundstrand's electric power generating systems for aircraft. Hamilton
Sundstrand first invested in APT in 1989 and purchased all of the remainder of
our outstanding stock in 1992. In 1993, Hamilton Sundstrand acquired Power
Compact S.A. in France, which we later renamed APT Europe. APT Europe designs
and manufactures application specific power modules, which combine power
semiconductors such as MOSFETs with other power management components. In 1995,
our six senior officers purchased a controlling interest in APT from Hamilton
Sundstrand, and APT Europe became a wholly owned subsidiary of APT. They
completed the purchase of the remaining interest held by Hamilton Sundstrand in
January 1998, in part using funds borrowed from APT.

    The semiconductor industry is very cyclical and has from time to time
experienced depressed business conditions. The semiconductor industry also has
historically experienced a decrease in average selling prices of products over
time. During 1996 through 1998, the semiconductor industry experienced worldwide
overcapacity, which caused prices to erode and was accompanied by a slowdown in
the demand for semiconductors and in turn, semiconductor capital equipment.
Markets for semiconductors and semiconductor capital equipment have improved;
however, we cannot assure you that these conditions will continue.

    We are increasing our use of external manufacturing capabilities to maximize
our efficiency and flexibility and expand our capacity while reducing our costs.
We have established a long-term agreement with an outside foundry, Infineon
Technologies, to reduce capital spending and manufacturing overhead expenses,
gain access to additional process technologies, and to allocate our internal
manufacturing facilities to produce more specialized, limited production run
products. The resulting supply of processed silicon wafers from Infineon
Technologies, which we began to receive in the fourth quarter of 1999, has
increased our gross profit margin because of the lower costs associated with
these wafers.

                                       22
<PAGE>
    Historically, a significant portion of our revenues has been derived from
sales outside of the United States. In 1999, approximately 43% of our total
revenues were derived from sales in foreign markets. We expect to continue our
strong international presence by leveraging established sales channels and the
growth in demand for our products brought about by international trends, such as
the development of wireless infrastructure in Asia. We recently entered into a
joint venture agreement in China, which includes a pending license and
technology transfer agreement for our Power MOS V-TM- and Power MOS VI-TM-
technology, in exchange for cash payments totaling $1.5 million over two years
and a 25% share in the equity ownership of the joint venture. Our interest in
the joint venture will be recorded in our consolidated balance sheet at a
nominal amount. Our share of initial cumulative losses from the joint venture
will be accumulated, but will not be included in our consolidated results of
operations. Our share of any future income from the joint venture will be
recorded on our financial statements when it exceeds our share of cumulative
losses from the joint venture. We believe that this arrangement, along with
other agreements, will enhance our access to key markets in Asia and Europe.

EFFECTS OF PUSH DOWN ACCOUNTING

    In September 1995, our six senior officers purchased a controlling 51%
interest in APT for approximately $3.6 million, of which approximately
$3.3 million was funded with a note payable to Hamilton Sundstrand, the seller,
and the balance was funded from the personal assets of these officers. In
January 1998, these same officers purchased the remaining interest in APT for
approximately $2.5 million. We loaned our six senior officers $3.0 million, an
amount sufficient to purchase the remaining 49% interest and to pay interest on
the note owed to Hamilton Sundstrand. In addition, we loaned $100,000 to our six
senior officers in 1999 to pay interest on the Hamilton Sundstrand note. In
accordance with purchase accounting and push down accounting rules, we were
required to establish a new cost basis for our assets and liabilities based on
these purchase transactions and to reflect that basis in our consolidated
financial statements. The effects of applying push down accounting to our
consolidated financial statements were as follows:

    - The $3.3 million note payable to Hamilton Sundstrand related to the 1995
      purchase was recorded as long-term debt on our consolidated balance sheet
      and the corresponding interest is included in interest expense in our
      consolidated statements of operations. The $3.1 million in notes payable
      to APT and accrued interest related to the 1998 purchase is not recorded
      as a liability on our consolidated balance sheet, but is reflected as a
      reduction to stockholders' equity.

    - In the January 1998 purchase, inventories were increased by $799,000 to
      their proportionate fair value. The inventory increase was amortized over
      three months, the period during which the inventories were presumed sold.
      The adjustment had the effect of decreasing our gross margin in 1998.

    Our six senior officers intend to use a portion of their proceeds from the
sale of shares in this offering to repay the $3.3 million note payable and
accrued interest to Hamilton Sundstrand, which will eliminate our interest
expense related to this debt after the repayment, and to repay the $3.1 million
notes payable and accrued interest to APT, which will increase our stockholders'
equity.

                                       23
<PAGE>
    The following table presents selected consolidated statement of operations
data, shown on a pro forma basis, without the effects of push down accounting as
described above:

<TABLE>
<CAPTION>
                                                                                          THREE MONTHS
                                                               YEARS ENDED                    ENDED
                                                               DECEMBER 31,                 MARCH 31,
                                                      ------------------------------   -------------------
                                                        1997       1998       1999       1999       2000
                                                      --------   --------   --------   --------   --------
                                                                         (IN THOUSANDS)
<S>                                                   <C>        <C>        <C>        <C>        <C>
Gross profit........................................   $8,452     $7,211     $9,461     $1,828     $3,383
Selling, general and administrative expense.........    7,137      6,753      6,959      1,588      2,193
Income (loss) from operations.......................      294       (468)     1,619         40        948
Interest expense, net...............................     (686)      (714)      (825)      (188)      (144)
Income tax expense (benefit)........................      107       (801)       208        (65)       321
Net income (loss)...................................     (379)      (289)       686        (53)       497
EBITDA..............................................    2,233        611      3,075        496      1,270
</TABLE>

    The following table presents selected consolidated statement of operations
data indicated as a percentage of net revenue, shown on a pro forma basis,
without the effects of push down accounting as described above:

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS
                                                                                     ENDED
                                                YEARS ENDED DECEMBER 31,           MARCH 31,
                                             ------------------------------   -------------------
                                               1997       1998       1999       1999       2000
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
Gross profit...............................    32.8%      29.0%      34.5%       31.2%      35.4%
Selling, general and administrative
  expense..................................    27.7       27.2       25.3        27.1       22.9
Income (loss) from operations..............     1.1       (1.9)       5.9         0.7        9.9
Interest expense, net......................    (2.7)      (2.9)      (3.0)       (3.2)      (1.5)
Income tax expense (benefit)...............     0.4       (3.2)       0.8        (1.1)       3.4
Net income (loss)..........................    (1.5)      (1.2)       2.5        (0.9)       5.2
EBITDA.....................................     8.7        2.5       11.2         8.5       13.3
</TABLE>

    We accounted for the purchase of APT by our six senior officers using the
purchase method of accounting, which requires that the purchase price be
allocated to the net assets acquired based on the relative fair value of assets
acquired. Any amount of the purchase price in excess of the fair value of the
net assets acquired is classified as goodwill. We recorded approximately
$1.4 million of goodwill related to the 1995 purchase transaction, and $245,000
related to the 1998 purchase transaction. Goodwill amortization is included in
selling, general and administrative expense in our consolidated statements of
operations, and is being amortized over a five-year life. We expect to record
approximately $99,000 of goodwill amortization in the second quarter of 2000 and
approximately $67,000 in the third quarter of 2000. As of September 30, 2000,
goodwill associated with the purchase transactions will be fully amortized.

                                       24
<PAGE>
RESULTS OF OPERATIONS

    The following table presents our consolidated statement of operations data
for the periods indicated as a percentage of net revenue:

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS
                                                                                            ENDED
                                                       YEARS ENDED DECEMBER 31,           MARCH 31,
                                                    ------------------------------   -------------------
                                                      1997       1998       1999       1999       2000
                                                    --------   --------   --------   --------   --------
<S>                                                 <C>        <C>        <C>        <C>        <C>
Revenues, net.....................................   100.0%     100.0%     100.0%     100.0%     100.0%
Cost of goods sold................................    67.2       74.2       65.5       68.8       64.6
                                                     -----      -----      -----      -----      -----
Gross profit......................................    32.8       25.8       34.5       31.2       35.4
Operating expenses:
  Research and development........................     4.0        3.7        3.2        3.4        2.6
  Selling, general and administrative.............    28.8       28.6       26.7       28.7       23.9
                                                     -----      -----      -----      -----      -----
    Total operating expenses......................    32.8       32.3       29.9       32.1       26.5
                                                     -----      -----      -----      -----      -----
Income (loss) from operations.....................      --       (6.5)       4.6       (0.9)       8.9
Other income (expense):
  Interest expense................................    (3.9)      (4.9)      (4.8)      (5.7)      (2.8)
  Other, net......................................     0.4        0.2        0.3        0.4        0.1
                                                     -----      -----      -----      -----      -----
Income (loss) before income taxes.................    (3.5)     (11.2)       0.1       (6.2)       6.2
Income tax expense (benefit)......................     0.4       (4.5)       0.7        0.8        3.6
                                                     -----      -----      -----      -----      -----
Net income (loss).................................    (3.9)%     (6.7)%     (0.6)%     (7.0)%      2.6%
                                                     =====      =====      =====      =====      =====
</TABLE>

    THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999

    REVENUES.  Our net revenues were $9.6 million in the first three months of
2000, an increase of 63.4% from net revenues of $5.9 million in the first three
months of 1999. The increase in net revenues was primarily a result of higher
levels of demand from our customers as the semiconductor industry continued to
recover from the downturn it experienced from 1996 through 1998. Sales of our
products increased in the semiconductor capital equipment market as a result of
an increase in the building of wafer fabrication facilities and in the
telecommunications markets as a result of increasing demand for communications
infrastructure, including in China, India and Korea.

    GROSS PROFIT.  Our gross profit margin was 35.4% in the first quarter of
2000 compared to 31.2% in the first quarter of 1999. The increase in gross
profit margin resulted primarily from lower costs associated with the supply of
processed silicon wafers from Infineon Technologies, which we began to purchase
in the fourth quarter of 1999, higher capacity utilization in our Bend, Oregon
manufacturing facility, a negotiated reduction in the cost of silicon from our
key supplier and a more favorable product mix.

    RESEARCH AND DEVELOPMENT EXPENSE.  Our research and development expenses
were $243,000 in the first quarter of 2000, an increase of 21.5% from research
and development expenses of $200,000 in the first quarter of 1999. In the first
quarter of 1999, salaries were lower due to salary reductions implemented in
1998 in response to the semiconductor market slowdown, which were subsequently
eliminated in mid-1999. As a percent of net revenues, research and development
expense decreased to 2.6% in the first quarter of 2000 from 3.4% in the first
quarter of 1999, primarily due to the increase in net revenues. We anticipate
that our research and development expenses will increase in absolute dollars in
future periods as we focus on the growing opportunities for RF power
semiconductors and as we continue to enhance our core technology and the
products associated with it.

                                       25
<PAGE>
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  Our selling, general and
administrative expenses were $2.3 million in the first quarter of 2000, an
increase of 36.4% from selling, general and administrative expenses of
$1.7 million in the first quarter of 1999. The increase in selling, general and
administrative expenses primarily resulted from increased commissions on higher
revenues, bonuses accrued based on the operating results of the first quarter of
2000, the elimination of the salary decreases which were in effect in the first
quarter of 1999 and increased depreciation on computer systems. Selling, general
and administrative expenses include amortization of goodwill of $95,000 in the
first quarter of 2000 and $90,000 in the first quarter of 1999 related to the
purchase of APT by our six senior officers. See "Effects of Push Down
Accounting" above. As a percent of net revenues, selling, general and
administrative expense decreased to 23.9% in the first quarter of 2000 from
28.7% in the first quarter of 1999, primarily due to the increase in net
revenues. We believe that our general and administrative expenses will increase
in absolute dollars in future periods as a result of the expenses associated
with being a public company, including annual and other public reporting costs,
directors' and officers' liability insurance, investor relations programs and
professional service fees.

    STOCK COMPENSATION EXPENSE.  Stock compensation expense includes costs
relating to stock-based employee compensation arrangements, and is based on the
difference between the fair market value of our common stock on the date of
grant of options and the exercise price of options to purchase that stock. Stock
compensation expense is recognized over the vesting periods of the related
options, typically five years. Stock compensation expense of $69,000 was
recorded in the first quarter of 2000. Of this amount, $23,000 was recorded in
cost of goods sold, $8,000 was recorded in research and development expense and
$38,000 was recorded in selling, general and administrative expense. We expect
to record an additional $69,000 in the second quarter of 2000 related to stock
grants. The actual amount will depend on the number of additional options
granted in the second quarter of 2000, if any, and their respective exercise
prices.

    INCOME (LOSS) FROM OPERATIONS.  As a result of the items discussed above,
income from operations was $851,000 in the first quarter of 2000, compared to a
loss from operations of $50,000 in the first quarter of 1999. As a percent of
net revenues, income (loss) from operations increased to 8.9% in the first
quarter of 2000 from (0.9)% in the first quarter of 1999.

    INTEREST EXPENSE.  Interest expense decreased to $271,000 in the first
quarter of 2000 from $336,000 in the first quarter of 1999, primarily as a
result of the buyout of certain equipment under capital lease, which we were
able to finance with long-term debt at a lower interest rate. Interest expense
includes interest expense of $75,000 in the first quarter of 2000 and $75,000 in
the first quarter of 1999 related to the $3.3 million note payable to Hamilton
Sundstrand for the purchase of APT by our six senior officers. See "Effects of
Push Down Accounting" above. In April 2000, we issued a warrant to Advanced
Energy Industries to purchase 60,000 shares of our common stock at an exercise
price of $3.00 per share, in return for a renewal of their loan guaranty. The
fair value of the warrants issued was $450,000. Of this amount, $225,000 will be
included in interest expense in our consolidated statement of operations in each
of the second and third quarters of 2000.

    INCOME TAXES.  Absent the impact of push down accounting, our effective tax
rate would have been approximately 39% in the first quarter of 2000. However,
our effective tax rate was approximately 59% in the first quarter of 2000 due to
the impact of push down accounting. Due to the effects of push down accounting,
the $3.3 million note payable to Hamilton Sundstrand resulted in an increase in
the effective tax rate because the interest on that note was not deductible for
tax purposes by APT. In addition, interest income was recognized for tax
purposes on the $3.1 million notes payable from our six senior officers, but no
interest income was recorded on those notes on our consolidated financial
statements. See "Effects of Push Down Accounting" above.

                                       26
<PAGE>
    YEARS ENDED DECEMBER 31, 1999 AND 1998

    REVENUES.  Our net revenues were $27.5 million in 1999, an increase of 10.5%
from net revenues of $24.9 million in 1998. During 1998, the semiconductor
industry continued to experience worldwide overcapacity, which caused prices to
erode and was accompanied by a slowdown in the demand for semiconductors and in
turn, semiconductor capital equipment. During 1999, market conditions began to
improve, and we experienced an increase in sales in 1999, primarily in the
semiconductor capital equipment and telecommunications markets.

    GROSS PROFIT.  Our gross profit margin was 34.5% in 1999 compared to 25.8%
in 1998. In 1998, gross profit was decreased by $799,000, relating to the
inventory effect of the application of push down accounting. Without this
effect, our gross profit margin in 1998 would have been 29.0%. See "Effects of
Push Down Accounting" above. The increase in gross profit margin in 1999 was
primarily attributable to higher capacity utilization in our Bend, Oregon and
Bordeaux, France manufacturing facilities as a result of improvement in the
semiconductor market from the slowdown that impacted us throughout 1998, a
negotiated reduction in the cost of silicon from our key supplier and a more
favorable product mix. In the fourth quarter of 1999, we also began to purchase
processed silicon wafers from Infineon Technologies at a lower cost to us.

    RESEARCH AND DEVELOPMENT EXPENSE.  Our research and development expenses
were $883,000 in 1999, a decrease of 4.6% from research and development expenses
of $926,000 in 1998. As a percent of net revenues, research and development
expense decreased to 3.2% in 1999 from 3.7% in 1998. The decrease in research
and development expense was primarily attributable to decreases in the cost of
masks and other product design costs, a decrease in outside service and
maintenance costs in 1999, and the continuation of the salary reductions
implemented in 1998.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  Our selling, general and
administrative expenses were $7.3 million in 1999, an increase of 3.0% from
selling, general and administrative expenses of $7.1 million in 1998. The
increase in selling, general and administrative expenses primarily resulted from
increased commissions on higher revenues. Selling, general and administrative
expenses include amortization of goodwill of $363,000 in 1999 and $358,000 in
1998 related to the purchase of APT by our six senior officers. See "Effects of
Push Down Accounting" above. As a percent of net revenues, selling, general and
administrative expenses decreased to 26.7% in 1999 from 28.6% in 1998, primarily
as a result of the increase in net revenues.

    INCOME (LOSS) FROM OPERATIONS.  As a result of the items discussed above,
income from operations was $1.3 million in 1999, compared to a loss from
operations of $1.6 million in 1998. As a percent of net revenues, income (loss)
from operations increased to 4.6% in 1999 from (6.5)% in 1998.

    INTEREST EXPENSE.  Interest expense increased to $1.3 million in 1999 from
$1.2 million in 1998. Interest expense increased as a result of imputed interest
related to the issuance of and adjustment to warrants in 1999 to purchase our
common stock. Interest expense includes interest expense of $298,000 in 1999 and
$324,000 in 1998 related to the $3.3 million note payable to Hamilton Sundstrand
for the purchase of APT by our six senior officers. See "Effects of Push Down
Accounting" above.

    INCOME TAXES.  Our effective tax rate was approximately 800% in 1999,
compared to a tax benefit of approximately 40% in 1998. The 1999 effective tax
rate was increased by permanent differences such as goodwill amortization and
expired net operating loss carryforwards, offset in part by the release of a
deferred net operating loss. In addition, the impact of push down accounting,
primarily the nondeductibility of interest expense and the recognition of
interest income as described above, resulted in an increase in our effective tax
rate. See "Effects of Push Down Accounting". The 1998 effective tax rate was
also a result of a net loss in the period and the write-off of the tax basis of
our European subsidiary, APT Europe. However, the reduction to the effective tax
rate was offset by increases for

                                       27
<PAGE>
permanent differences such as goodwill amortization, expired net operating loss
carryforwards and the differences in the treatment of the interest income and
interest expense.

    YEARS ENDED DECEMBER 31, 1998 AND 1997

    REVENUES.  Our net revenues were $24.9 million in 1998, a decrease of 3.4%
from net revenues of $25.7 million in 1997. In 1998, the semiconductor industry
continued to experience worldwide overcapacity, worsened by business recessions
in various Asian economies, which caused prices to erode and was accompanied by
a slowdown in the demand for semiconductors and in turn, semiconductor capital
equipment. As a result, our net revenues decreased in 1998 due to lower product
sales, primarily in the semiconductor capital equipment and the
telecommunications markets. However, these decreases were partially offset by
increases in product sales in the medical and industrial markets.

    GROSS PROFIT.  Our gross profit margin was 25.8% in 1998 compared to 32.8%
in 1997. In 1998, gross profit was decreased by $799,000, relating to the
inventory effect of the application of push down accounting. Without this
effect, our gross profit margin in 1998 would have been 29.0%. See "Effects of
Push Down Accounting" above. The decrease in gross profit margin was caused by a
reduction in production volume in our Bend, Oregon manufacturing facility due to
lower demand resulting from the downturn in the semiconductor market, as
described above, which continued to impact us throughout 1998.

    RESEARCH AND DEVELOPMENT EXPENSE.  Our research and development expenses
were $926,000 in 1998, a decrease of 9.3% from research and development expenses
of $1.0 million in 1997. As a percent of net revenues, research and development
expense decreased to 3.7% in 1998 from 4.0% in 1997. The decrease in research
and development expense was primarily attributable to a salary reduction
implemented in response to the semiconductor market slowdown and a decrease in
the cost of masks and other product design costs.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSE.  Our selling, general and
administrative expenses were $7.1 million in 1998, a decrease of 4.1% from
selling, general and administrative expenses of $7.4 million in 1997. The
decrease in selling, general and administrative expense primarily resulted from
lower commissions on reduced revenues, a salary reduction implemented in
response to the semiconductor market slowdown and a work force reduction at our
European subsidiary, APT Europe, due to poor market conditions. Selling, general
and administrative expenses include amortization of goodwill of $358,000 in 1998
and $276,000 in 1997 related to the purchase of APT by our six senior officers.
See "Effects of Push Down Accounting" above. As a percent of net revenues,
selling, general and administrative expense remained relatively flat at 28.6% in
1998 compared to 28.8% in 1997.

    INCOME (LOSS) FROM OPERATIONS.  As a result of the items discussed above,
loss from operations was $1.6 million in 1998, compared to income from
operations of $18,000 in 1997. As a percent of net revenues, income (loss) from
operations decreased to (6.5)% in 1998 from 0% in 1997.

    INTEREST EXPENSE.  Interest expense increased to $1.2 million in 1998 from
$1.0 million in 1997, primarily as a result of additional debt we incurred in
order to finance the loan to our six senior officers in January 1998 as part of
the final buyout of APT. See "Certain Relationships and Related Transactions."
Interest expense includes interest expense of $324,000 in each of 1998 and 1997
related to the $3.3 million note payable to Hamilton Sundstrand for the purchase
of APT by our six senior officers. See "Effects of Push Down Accounting" above.

    INCOME TAXES.  We had a tax benefit of approximately 40% in 1998, compared
to an effective tax rate of approximately 11% in 1997. The 1998 tax benefit was
a result of a net loss in the period and the write-off of our tax basis of our
European subsidiary, APT Europe, in 1998. However, the reduction to the
effective tax rate was offset by increases for permanent differences including
goodwill

                                       28
<PAGE>
amortization and expired net operating loss carryforwards. In addition, the
impact of push down accounting, primarily the nondeductibility of interest
expense and the recognition of interest income, as described above, resulted in
an increase in our effective tax rate. See "Effects of Push Down Accounting"
above. The 1997 effective tax rate was a result of the non-deductible loss
generated by APT Europe. This loss carryforward has a full valuation allowance
offsetting the corresponding deferred asset. In addition, the rate was increased
due to differences in the treatment of the interest income and interest expense
and the non-deductibility of goodwill amortization.

QUARTERLY RESULTS OF OPERATIONS

    The following table shows, for the periods indicated, selected data from our
consolidated statements of operations. This selected data has been derived from
our unaudited consolidated financial statements, and, in our opinion, includes
all adjustments, consisting only of normal recurring adjustments, that are
necessary for a fair presentation of the results of operations for these
periods.

    This unaudited selected quarterly financial data should be read in
conjunction with the consolidated financial statements and notes included
elsewhere in this prospectus. Our operating results in any quarter are not
necessarily indicative of the results that may be expected for any future
period.

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED
                                          ---------------------------------------------------------------------------------------
                                          JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MAR. 31,
                                            1998       1998        1998       1999       1999       1999        1999       2000
                                          --------   ---------   --------   --------   --------   ---------   --------   --------
                                                                              (IN THOUSANDS)
<S>                                       <C>        <C>         <C>        <C>        <C>        <C>         <C>        <C>
Revenues, net...........................   $6,642     $6,159     $ 5,375     $5,852     $6,586     $7,250      $7,773     $9,561
Gross profit............................    2,101      1,843         923      1,828      2,346      2,365       2,922      3,383
Income (loss) from operations...........      (67)        74      (1,159)       (50)       263        460         583        851
Net income (loss).......................      (67)        81      (1,045)      (412)       (55)       118         174        244
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

    In the first quarter of 2000, we generated approximately $1.0 million from
operating activities, primarily from net income of $244,000, depreciation and
amortization of $345,000 and an increase in accounts payable and accrued
expenses of $2.4 million, offset by increases in accounts receivable of
$1.1 million and inventories of $436,000. Accounts payable and accrued expenses
increased as a result of increased purchases of processed wafers and packages
during the first quarter of 2000 from two of our primary materials suppliers due
to the increasing level of sales. Accounts receivable and inventories increased
as a result of increased sales in the first quarter of 2000 as compared to the
fourth quarter of 1999.

    In the first quarter of 2000, we used approximately $1.0 million in
investing activities, which primarily consisted of $875,000 for the purchase of
certain equipment, which had been under capital leases. At March 31, 2000, we
had capital expenditure commitments of approximately $420,000.

                                       29
<PAGE>
    In the first quarter of 2000, we used approximately $130,000 in financing
activities, which primarily consisted of repayment on lines of credit of
$769,000, offset by issuance of $775,000 of long-term debt to finance the
purchase of equipment, largely comprised of the buyout of the capital leases
referred to above.

    In 1999, we generated approximately $1.7 million from operating activities,
primarily from depreciation and amortization of $1.8 million and a decrease in
prepaid expenses and other assets of $735,000, offset by an increase in accounts
receivable of $994,000. The decrease in prepaid expense and other assets was
attributable to the receipt in 1999 of an income tax refund, which was included
in prepaid expenses and other assets at the end of 1998. Accounts receivable
increased as a result of increased sales in 1999 as compared to 1998 and, in
particular, increased sales in the fourth quarter of 1999 as compared to the
fourth quarter of 1998.

    In 1999, we used approximately $594,000 in investing activities, which
primarily consisted of the purchase and implementation of a new enterprise
resource planning system and upgrades to our MIS systems of approximately
$350,000 and the purchase of manufacturing equipment of approximately $249,000.

    In 1999, we used approximately $789,000 in financing activities, which
primarily consisted of payments on capital lease obligations of $885,000 and
principal payment on long-term debt of $274,000, offset by borrowings on lines
of credit of $528,000.

    In 1998, we generated approximately $359,000 from operating activities,
primarily from depreciation and amortization of $2.3 million and an increase in
accounts payable and accrued expenses of $630,000, offset by an increase in
deferred taxes of $771,000 and an increase in inventories of $321,000. The
increase in accounts payable and accrued expenses was attributable to the timing
of payments in late 1998. The increase in inventories was primarily attributable
to the slow down in the semiconductor industry that continued in 1998, which
resulted in lower sales and an increase in our finished goods inventories. The
increase in deferred taxes was due to the write-off of the tax basis of our
European subsidiary, APT Europe.

    In 1998, we used approximately $614,000 in investing activities, primarily
consisting of the purchase of manufacturing equipment for approximately
$821,000, offset by the sale and lease back of $207,000 of equipment.

    In 1998, we used approximately $7,000 in financing activities. We borrowed
$1.6 million under our lines of credit and increased our long-term debt by
$1.9 million. We paid $2.5 million in connection with the 1998 purchase
transaction by our six senior officers. "See Certain Relationships and Related
Transactions." Additionally, we made payments on capital lease obligations of
$933,000.

    We have two lines of credit with a bank for up to a total of $6.0 million to
provide funds for our continuing operations and financing of the management
buyout in January 1998. The outstanding balance under the lines of credit at
March 31, 2000 was $3.8 million. The lines of credit expire in May 2001, and
bear interest at prime plus 1.0% or 1.25% based on the ratio of debt to equity
(10.25% at March 31, 2000). The lines of credit are secured by accounts
receivable and inventories, and a $1.0 million personal guarantee by our six
senior officers, which we expect to be cancelled at the time of this offering.

    We have a loan from a bank, which is subordinate to amounts outstanding
under the two lines of credit described above, under which $2.5 million is
outstanding at March 31, 2000. This loan bears interest at prime plus 1.5% per
annum (10.5% at March 31, 2000), with monthly principal and interest payments.
The loan matures on September 30, 2000, is collateralized by substantially all
of our assets and is guaranteed by one of our major customers.

                                       30
<PAGE>
    APT Europe has a line of credit with a financing institution, which provides
borrowings based on a percentage of outstanding export accounts receivable,
bears interest at Euribor plus 2.0% per annum (5.7% at March 31, 2000), plus
commissions, and is collateralized by APT Europe's accounts receivable. Amounts
outstanding under this line of credit were $357,000 at March 31, 2000. The line
of credit is payable upon three months notice by either party.

    We have two term loans outstanding at March 31, 2000. One of the term loans
has $500,000 outstanding at March 31, 2000, bears interest at 10.6% per annum,
with monthly principal and interest payments, and expires in March 2003. The
other term loan has $253,000 outstanding at March 31, 2000, bears interest at
10.6% per annum, with monthly principal and interest payments, and expires in
December 2003. Proceeds from these term loans were used to purchase equipment
and the loans are collateralized by the equipment.

    We intend to use a portion of the net proceeds from this offering to repay
in full the amounts outstanding under our lines of credit of approximately
$4.1 million, the $2.5 million outstanding under a bank loan, and approximately
$942,000 of other outstanding long-term debt. We may make further borrowings in
the future under such lines of credit, if available. In addition, certain
selling stockholders will use a portion of the net proceeds from sale of their
stock in this offering to pay the $3.3 million note owed to Hamilton Sundstrand
that is reflected in our consolidated financial statements.

    Borrowings under our lines of credit and term loans are subject to certain
financial covenants, including minimum tangible net worth, maximum debt to
tangible net worth, minimum debt service ratio and quick ratio. We were in
compliance with all covenants as of March 31, 2000, except for the covenant
which specifies maximum debt to tangible net worth, which was subsequently
waived.

    We believe that the net proceeds from this offering, together with our
existing cash and cash equivalents, expected cash flow from operations and other
existing financing sources will be sufficient to support our operating cash and
debt service requirements for at least the next 18 months. We expect from time
to time to evaluate potential acquisitions and equity investments complementary
to our market strategy. To the extent we pursue such transactions, we could
require additional equity or debt financing to fund such activities or our
working capital requirements in the event of an industry downturn or an
unexpected adverse change in our business operations. To the extent we require
additional capital, we cannot assure you that we will be able to obtain such
financing on terms favorable to us, or at all.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities", or SFAS No. 133. SFAS No. 133 establishes
methods for derivative financial instruments and hedging activities related to
those instruments, as well as other hedging activities. Because we do not
currently hold any derivative instruments and do not currently engage in hedging
activities, we expect that the adoption of SFAS No. 133 will not have a material
impact on our financial position or results of operations. In June 1999, the
FASB issued Statement No. 137, "Accounting for Derivative Instruments and
Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB No. 133." SFAS No. 137 defers the effective date of SFAS
No. 133 for one year. SFAS No. 133, as amended, is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," or
SAB 101, and amended it in March 2000 to defer the effective date. We are
required to adopt the provisions of SAB 101 in our second quarter of 2000. We
are currently reviewing the provisions of SAB 101. Based on our revenue
recognition policy, we expect that the adoption of SAB 101 will not have a
material impact on our financial position or results of operations.

                                       31
<PAGE>
    In March 2000, the FASB issued FASB Interpretation No. 44, or FIN 44, which
provides interpretive guidance on several implementation issues related to
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees." We are required to adopt the provisions of FIN 44 in our third
quarter of 2000. We are currently reviewing the provisions of FIN 44. Based on
the activity under our stock option plan, we expect that the adoption of FIN 44
will not have a material impact on or financial position or results of
operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    We do not use derivative financial instruments in our investment portfolio.
Due to the short duration and conservative nature of our cash equivalents, we do
not expect any material loss with respect to our investment portfolio.

    Certain of our sales, cost of manufacturing and marketing are transacted in
local currencies. As a result, our international results of operations are
subject to foreign exchange rate fluctuations. We do not currently hedge against
foreign currency rate fluctuations. Gains and losses from such fluctuations have
not been material to our consolidated results of operations. We believe a 10.0%
change in local currencies against the U.S. dollar as of March 31, 2000 would
have an immaterial effect on our pretax income over the next fiscal year.

                                       32
<PAGE>
                                    BUSINESS

    We are a leading designer, manufacturer and marketer of high-performance
power semiconductors. Power semiconductors manage and regulate power by
converting electricity into a form required by electrical and electronic
products. Our power semiconductors increase system efficiency, permit the design
of more compact end products and improve features and functionality. We are
primarily focused on the high power, high frequency segment of the power
semiconductor market. High power refers to the ability to handle voltages and
currents above one kilowatt, and high frequency refers to the ability to switch
on and off at speeds above 100 kilohertz.

    Our products can be broadly categorized into two product types:

    - DISCRETE POWER SEMICONDUCTORS. Discrete power semiconductors are single
      components used in general power management applications and consist of
      power transistors and diodes. These products include metal oxide silicon
      field effect transistors, or MOSFETs, insulated gate bipolar transistors,
      or IGBTs, and fast recovery epitaxial diodes, or FREDs.

    - APPLICATION SPECIFIC POWER MODULES. Application specific power modules, or
      ASPMs, combine power semiconductors with other power management components
      in modules that improve efficiency, provide a cost-effective solution and
      enable customers to introduce new products more quickly. We produce most
      of the power semiconductors used in our ASPMs.

    We sell our products to over 750 customers through a network of independent
sales representatives and distributors, managed by our sales staff. We sell our
products primarily in North America and Europe, and increasingly in Asia. The
principal end-user markets for our products are communications and internet
infrastructure, semiconductor capital equipment, industrial, medical, and
military and aerospace. Our largest volume OEM customers include Advanced Energy
Industries, Power-One and Siemens. Our leading distributor is Richardson
Electronics. Power semiconductors are typically critical to the performance of
our customers' products, and we therefore work closely with a number of our
large OEM customers in the design phase of their products to ensure that we can
meet their performance requirements. Once our products have been designed into
end products, they tend to be used through the lifecycle of these end products.

INDUSTRY AND MARKET OVERVIEW

    We believe there are two significant factors driving the general demand for
high performance power semiconductors:

    - Rapid proliferation of sophisticated electronics; and

    - Increasing need for higher power and more precisely regulated power
      quality in electronic equipment.

    Power semiconductors are used in virtually every electronic device to
convert and control the electrical current that powers the device. As a result,
the power semiconductor market is a large and steadily growing segment of the
semiconductor industry. The proliferation of consumer electronic devices,
wireless communication, and mobile computing is driving demand for new
generations of power semiconductors that are smaller, lighter and more
efficient. At the same time, new medical and industrial applications are
creating demand for more powerful and reliable power semiconductors.

    Power semiconductors address the growing demand for energy efficiency and
are used to provide the precisely regulated power required by sophisticated
electronic products and equipment. The more sophisticated the end product, the
greater its need for specially formatted, finely regulated power. Within the end
product, power semiconductors are most commonly used to convert AC power (from
the power source such as a wall socket) into a more useable DC power and to
alter DC power to

                                       33
<PAGE>
different voltage levels. Higher power, higher frequency power semiconductors
make many end products more efficient and permit them to be smaller and lighter.

    Older generations of solid state power switching devices have been used for
the past 40 years. Bipolar transistors, which can handle large voltages and
currents, are slow to switch on and off, and require complex external drive
circuitry to handle the switching function. Power MOSFETs, which are controlled
by electrical voltage rather than by current, were introduced approximately
20 years ago. Because they are voltage controlled, power MOSFETs provide for
greater speed and reduced complexity of drive circuitry. Power MOSFETs were
originally very limited in the ranges of voltage and current that they could
handle. Our power MOSFETs were developed to increase the power that could be
handled by the device, while maintaining its advantage in speed of switching
over bipolar transistors.

    The demand for power semiconductors is expanding as a result of the
proliferation of new technologies that require electricity and the increasing
use of electrical processes and automation in industry to increase productivity.
Sophisticated electronics are increasing their share of total electrical
consumption, with the Information Technology Industry Council reporting that
computers represented 13% of U.S. electrical consumption in 1998 versus only 6%
in 1994. The increasing complexity and power requirements of electronic
products, and the rapid increase in electronic features in communications
equipment, consumer electronics and industrial processes all require more
efficient power management.

MARKET SIZE AND TRENDS

    Statistics published by the Semiconductor Industry Association project that
the worldwide market for all power semiconductors will grow at a 15% compound
annual growth rate from $11.2 billion in 1999 to $17.0 billion in 2002. The
Semiconductor Industry Association also projects that the worldwide market for
power MOSFETs and IGBTs will grow at a 17% compound annual growth rate from
$3.1 billion in 1999 to $5.1 billion in 2002. We believe that our current
products address approximately one-fourth of the market for power MOSFETs and
IGBTs. We believe that the market our products address is capturing a larger
share of the overall market for power MOSFETs and IGBTs as applications for high
power, high frequency semiconductors increase.

    The primary markets we serve are characterized by rapid technological
development and increasing complexity. In addition to more overall power, we
believe these markets will require more reliable and precisely regulated forms
of power. The following key trends are driving the demand for high power, high
frequency semiconductors in our primary markets:

    - CONVERGENCE OF VOICE, VIDEO AND DATA TRANSMISSION AND PROLIFERATION OF
      WIRELESS SYSTEMS. As voice, video and data converge into one digital
      stream, the power demands of traditional and emerging transmission systems
      are changing. Service providers and equipment manufacturers are looking to
      modify and supplement existing infrastructures to address these new
      demands. Power semiconductors with higher power levels and faster
      switching speeds give providers and manufacturers much more flexibility in
      addressing these demands, in particular in building base stations for
      wireless applications and servers for internet infrastructure.

    - GROWING DEMAND FOR SEMICONDUCTOR CAPITAL EQUIPMENT. According to the
      Semiconductor Industry Association, the worldwide semiconductor market is
      forecasted to grow substantially from $148 billion in 1999 to
      $212 billion in 2001, representing a compound annual growth rate of 20%.
      Sales for semiconductor capital equipment to produce these semiconductor
      devices is expected to grow even faster, from $24 billion in 1999 to
      $38 billion in 2001, a compound annual growth rate of 25%. As
      semiconductor capital equipment becomes more sophisticated in areas such
      as thin film deposition and plasma etching, there is an increasing need
      for high power, high frequency semiconductors.

                                       34
<PAGE>
    - EMERGENCE OF NEW APPLICATIONS FOR HIGH POWER, HIGH FREQUENCY
      SEMICONDUCTORS. Continuing demands for higher power, higher voltages and
      higher frequencies are expanding the range of applications for which
      sophisticated power semiconductor products are suitable. For example, the
      use of RF power semiconductors presents opportunities to enter new
      markets. The same power delivery systems used for plasma generation in
      semiconductor processing equipment are now finding new applications in the
      industrial market (such as flat panel displays, optical and glass coatings
      and tool-hard coatings) and the data storage market (such as data
      recording heads as well as hard and compact disc technologies). In
      addition, RF MOSFETs are now being used in magnetic resonance imaging
      equipment in place of vacuum tubes, enhancing the performance of those
      systems significantly.

    Our products, which are based on our proprietary technology, offer
performance advantages that directly address the needs arising from these market
trends. We believe that our products operate more efficiently and at higher
frequencies than competing products.

STRATEGY

    Our goal is to be a world leader in providing technologically advanced
semiconductor solutions for high power, high frequency applications. To
accomplish this goal, we plan to:

    MAINTAIN OUR TECHNOLOGICAL LEADERSHIP WITHIN THE HIGH POWER, HIGH FREQUENCY
MARKET.  Our current products are at the leading edge of the high power, high
frequency semiconductor industry. We will continue to leverage our strong
intellectual property position in developing power semiconductor solutions based
on our patented design and process architecture. We currently are developing
succeeding generations of our core products, as well as other, more application
specific products. Each of these generations is tailored to meet what we believe
will be the future market demands by further reducing conduction and switching
losses, and enhancing speed and performance.

    BUILD ON OUR RELATIONSHIPS WITH CUSTOMERS IN EXPANDING MARKETS.  We work
with industry leaders to understand their power application needs and develop
unique product solutions that offer a combination of increased speed, efficiency
and power density. We have had significant recent design wins, in which our
products are specified as the component of choice in newly developed products.
Since early 1999, we have been awarded 70 design wins, including eight different
telecommunications programs for Ericsson and two programs for Power-One. Our
products are being used by a number of the top manufacturers in the
communications and internet infrastructure, semiconductor capital equipment,
medical and industrial laser industries. We believe our technical assistance to
market leaders encourages the use of our devices in their products and results
in the adoption of our devices by other manufacturers in the industry.

    EXPAND OUR PRODUCT OFFERING FOR RF APPLICATIONS.  We expect to continue to
leverage the technological and competitive advantages of our products in the
growing market for RF applications. The markets for these applications are
rapidly expanding, and we believe there are few competitive products that match
the capabilities of our RF products. Examples of products that are using
increasing quantities of our RF semiconductors include plasma generation
equipment for semiconductor manufacturing and other thin film applications,
carbon dioxide lasers and magnetic resonance imaging systems.

    LEVERAGE OUR EXTERNAL AND INTERNAL MANUFACTURING CAPABILITIES.  We are
increasing our use of external manufacturing resources in order to maximize our
efficiency and flexibility and expand our capacity and capabilities, while
substantially reducing costs. Our five year foundry agreement with Infineon
Technologies allows us to reduce capital spending and manufacturing overhead
expenses and gain access to additional process technologies, and also allows our
internal manufacturing facilities to produce more specialized, limited
production run products. We are also expanding the role of our

                                       35
<PAGE>
assembly subcontractors to further reduce manufacturing costs and production
cycle time. Our in-house manufacturing capabilities enable us to retain certain
proprietary aspects of our process technology, bring new products to market more
quickly and foster close collaboration between our design and process engineers
in the development of new products.

    PURSUE EXTERNAL GROWTH OPPORTUNITIES.  We are committed to pursuing
opportunities to expand our business through joint ventures, strategic
alliances, licensing agreements and strategic acquisitions in the U.S. and
internationally. We intend to expand new product development activities, enhance
our technological capabilities, and improve our industry expertise and customer
base through these arrangements. Examples of this strategy include our new joint
venture and pending licensing and technology transfer agreement in China, which
we expect will strengthen our position in the Asia market, and our alliance with
Microsemi, which we expect will enable us to serve the implantable medical
device market.

PRODUCTS

    Our products combine innovative proprietary and patented semiconductor
technology, designs, processes and packaging solutions that are optimized for
our customers' applications. They can be broadly categorized into two product
types:

    - DISCRETE POWER SEMICONDUCTORS. Discrete power semiconductors are single
      components used in general power management applications and consist of
      power transistors and diodes. These products include MOSFETs, IGBTs and
      FREDs.

     A power MOSFET is a switch controlled by voltage at its gate. Power MOSFETs
     are used in combination with passive components to vary the amperage and
     frequency of electricity by switching on and off at very high speeds. Based
     on our original core technology, our MOSFET products include Power MOS
     IV-TM- introduced in 1989, Power MOS V-TM- introduced in 1997 and Power MOS
     VI-TM- introduced in 1999. Each succeeding generation offers performance
     improvements over the preceding generation. Our products also include RF
     MOSFETs for applications with frequencies higher than 13 megahertz.

     Our IGBTs and FREDs are derivative products of our core technology. IGBTs
     are also switches and serve many of the same functions as power MOSFETS.
     IGBTs can operate at higher currents and voltages but have a much slower
     switching speed than that of power MOSFETS. FREDs are very fast rectifiers
     that limit spikes in voltage across the power switch in order to reduce
     power dissipation and electromagnetic interference. FREDs are typically
     used in conjunction with MOSFETs and IGBTs.

     Our RF MOSFETs, IGBTs and FREDs are often used as part of the same power
     conversion or support systems that use our power MOSFETs. These derivative
     technologies and products share many of the same markets and customers with
     our core products, and we expect them to contribute to our growth.

     Our discrete power semiconductors are packaged either in plastic or
     hermetically in metal. Our higher volume products are plastic packaged,
     where the product is encapsulated in a plastic mold compound. We also offer
     a line of hermetic products where the product is encapsulated in a metallic
     and hermetic package. Hermetic products are typically used in high
     reliability applications, serving the military and aerospace markets,
     although there is a trend in these markets toward using plastic products
     that are more cost effective. Some of our plastic products have been
     successfully used in aerospace applications.

    - APPLICATION SPECIFIC POWER MODULES. ASPMs combine power semiconductors
      with other power management components in modules that improve efficiency,
      provide a cost-effective solution and enable customers to introduce new
      products more quickly. We produce most of the power

                                       36
<PAGE>
      semiconductors used in our ASPMs. Our ASPMs cover a wide range of
      integration and complexity, from relatively simple functions integrating
      less than ten components to fully integrated functions integrating more
      than 500 components in a single power module. Many of our ASPM customers
      also buy our discrete products.

RESEARCH AND DEVELOPMENT

    Our research and development efforts focus on improving our core technology
and the products associated with it. Over the past several years we introduced
new and significantly improved versions of our core switching MOSFET
technology--Power MOS V-TM- in 1997, and next generation Power MOS VI-TM-, with
further performance enhancements in 1999 and 2000. Succeeding generations of
switching power MOSFET technologies for further product performance enhancements
are currently in development.

    Our research and development engineers work closely with our product
engineers and technicians to improve our products and our core technology. We
focus on internal improvements in our technology (such as reducing feature size)
to improve the efficiency and speed of our products, and on incorporating
outside technological advances to ensure that our products remain highly
competitive. We also spend significant engineering time modifying our core
products in order to address specific customers or market needs. Our discrete
semiconductor research and development activities take place at our Bend, Oregon
facility. ASPM research and development activity takes place at our Bordeaux,
France facility. We incurred expenses of $1.0 million, $926,000 and $883,000, in
fiscal years 1997, 1998 and 1999, respectively, for research and development.
Historically, capital constraints have required us to focus our research and
development activity almost exclusively on enhancing and protecting our core
technology. We expect to increase our research and development investments in
the future to accelerate the development of our core technology and to further
expand into fast growing areas such as power semiconductors for RF applications.

CUSTOMERS

    We sell our products to approximately 750 customers through a network of
independent sales representatives and distributors, managed by our sales staff.
In 1999, approximately 57% of our revenues were from sales to customers in the
United States, 35% to customers in Europe, 7% to customers in Asia and 1% to
customers in the rest of the world.

                                       37
<PAGE>
    We maintain a diversified customer base in the markets we serve. Outlined in
the table below are our end markets, as well as representative end applications,
OEM customers and end-users.

<TABLE>
<CAPTION>
        MARKETS               APPLICATIONS           OEM CUSTOMERS             END-USERS
 <S>                     <C>                     <C>                     <C>
 Communications and      Servers and Mass        Acme Electric           EMC
 Internet                  Storage               Alcatel                 Ericsson
 Infrastructure          Telecom Rectifiers and  Alpha Technologies      Hewlett-Packard
                           AC to DC Converters   Ascom Energy Systems    IBM
                           for                   Ericsson Energy         India Telecom
                         - Fiber Optic             Systems               Motorola
                           Repeaters             ITI                     Nextel
                         - Cellular Base         Power-One               Nokia
                           Stations              With Com                Sun Microsystems
                         - Routers / Hubs                                Williams
                         - Telecom Switches                                Communications
 Semiconductor Capital   Plasma Generation for   Advanced Energy         Applied Materials
 Equipment               - Thin Film Deposition    Industries            Eaton
                         - Dry Etching           Emerson / ENI           Lam Research
                         Power Supplies                                  Novellus
 Industrial              Welding                 Barco
                         Lasers                  Branson Ultrasonic
                         Induction Heating       Fronius
                         Projection Systems      Intecolor
                         Ultrasonic Cleaning     Migatronic
                                                 Transistor Devices
 Medical                 Magnetic Resonance      Analogic                GE Medical
                           Imaging               Colorado MEDtech        Phillips Medical
                         X-Ray                   Microsemi               Picker International
                         Radio Therapy           MTS Systems             Siemens Medical
                         Defibrillators          Siemens Medical
 Military and Aerospace  Electronic Counter      Northrop Corporation
                           Measures              Raytheon
                         Missiles                Tecro
                         Radar / Sonar
                         Solar Panel Power
                           Distribution
</TABLE>

    We sell our products both to OEMs and through distributors. In 1999,
approximately 80% of our net sales were to OEMs, and 20% were to distributors.
In 1999, sales to our five largest customers accounted for 39.5% of our sales.
Advanced Energy Industries accounted for 15.6% of our net sales in 1997, 7.8% of
our net sales in 1998, and 14.6% in 1999. No other customer account exceeded 10%
of our net sales during these periods. We provide to our customers a 12-month
repair or replacement warranty for defective products.

                                       38
<PAGE>
SALES, MARKETING AND DISTRIBUTION

    Our internal sales organization consists of three regional sales managers
who work under the supervision of the vice president of sales. There is one
sales manager for each of Europe and Asia, and North America is covered jointly
by both a sales manager and our vice president of sales. Each regional sales
manager directs the sales efforts of the independent manufacturers'
representatives and independent distributors in his or her region. We currently
have 36 independent manufacturers' representatives, whose primary focus is
developing and servicing major OEM accounts.

    We use independent distributors to develop and service our smaller volume
accounts worldwide. We have three regional and two national distributors in
North America, and 23 single country distributors who cover western Europe and
Asia. In 1998, we entered into a strategic agreement with Richardson
Electronics, a worldwide distributor, under which they stock significant
quantities of our most popular products. This arrangement has significantly
enhanced our ability to meet the needs of our smaller volume customers and
permitted increased sales to large manufacturing customers by freeing up sales
and support resources. Distributors can return up to 5% of the dollar value of
products purchased during the prior six months upon 30 days notice. We closely
monitor inventory levels at our key distributors on a monthly basis.

    Technical support for the sales force is provided by our application
engineering, product engineering and product marketing organizations. We employ
six engineers in these organizations, as well as support staff. Customer service
for all of our accounts is handled by our customer service organizations in
Bend, Oregon and Bordeaux, France. Our website gives our customers access to
information about us and our products, enables them to request product samples,
quotations or technical assistance and provides links to our local sales
channels worldwide.

MANUFACTURING AND FACILITIES

    Our discrete power semiconductors are manufactured in our Bend, Oregon
facilities, and, beginning in the fourth quarter of 1999, by Infineon
Technologies at its facility in Austria under our wafer foundry agreement. We
use subcontractors in the Philippines and Taiwan to package and test our plastic
packaged discrete products. We manufacture and assemble all of our discrete
hermetic packages in Bend. ASPMs are manufactured at our facility in Bordeaux,
France, as well as at our subcontractor's facility in the Philippines.

    We lease a 41,000 square foot building in Bend where we perform our
semiconductor manufacturing, shipping and warehousing, as well as our
engineering and research and development. We manufacture four-inch wafers in
this facility. We lease an 18,000 square foot building in Bend that houses all
of our administrative functions, as well as some testing and shipping. We lease
a 10,000 square foot facility in Bordeaux that houses our ASPM production,
shipping and warehousing, as well as the administrative and development staff
for our European operations.

    Our current manufacturing strategy is to expand our use of external
subcontractors for the manufacture and assembly of our most popular, highest
volume products. We selected Infineon Technologies as our foundry partner for
its ability to process more cost effective six-inch wafers in its
state-of-the-art manufacturing facility. This should permit us to reduce our
manufacturing costs on higher volume products while expanding the use of our
internal manufacturing facilities for increased research and development and for
the production of more specialized, lower volume products. Our Bend
manufacturing facility is currently operating at or near capacity, and we are
increasing production at Infineon Technologies faster than we initially
anticipated in order to meet increasing customer demand. We expect our agreement
with Infineon Technologies to nearly triple our production capacity, and to
substantially reduce our cost per wafer as the volume of wafers purchased
increases. This agreement with Infineon Technologies extends through 2004.

                                       39
<PAGE>
    Our packaging subcontractors currently test a portion of the products that
they assemble. Most of the discrete power semiconductors are returned to our
Bend facility for further testing prior to shipment to customers. We plan to
move more of the testing operations to our subcontractor's facility in the
Philippines, which will permit direct shipment from that facility to our
customers. We expect this to reduce our manufacturing costs and production cycle
times.

    Our ASPM manufacturing techniques utilize a wide variety of processes and
equipment, which allow us to design and produce products of varying complexity
for a number of different applications. Our ASPM manufacturing strategy includes
moving the assembly and testing of certain niche products to our Bend facility,
and the assembly and testing of certain high volume products to our
subcontractor in the Philippines. We intend to continue manufacturing low to
medium volume and medium to high complexity ASPMs at our facility in Bordeaux.

    Our manufacturing processes emphasize quality and reliability, and involve
testing at various stages of the manufacturing process. We test 100% of our
products. Our Bend facility is certified to IS0-9001 standards and to U.S.
military specifications.

COMPETITION

    We encounter varying degrees of competition for our products, depending on
the nature of the product and the particular market served. Generally, the power
semiconductor industry is highly competitive and subject to price erosion, and
many of our competitors are larger companies with greater financial resources.
There are a number of companies that manufacture products that compete directly
with our products. Our principal competitors include International Rectifier,
IXYS and ST Microelectronics.

    We believe that the primary elements of competition in our markets are
product features and performance, quality, reliability, technical knowledge,
breadth of product line, competitive pricing and customer service and support.
We believe that our proprietary design makes our products more efficient and
allows them to operate at higher frequencies than those of our competitors,
allowing us to compete effectively in our markets.

INTELLECTUAL PROPERTY MATTERS

    We have received 17 U.S. patents and eight foreign patents and have
applications pending for an additional one U.S. and five foreign patents on
different aspects of our core technology. We rely on these patents, trade secret
and other intellectual property laws, as well as confidentiality and
intellectual property assignment agreements with our employees in Bend, Oregon
to protect our proprietary rights. We regard certain of our processes,
information and knowledge that we have developed and use to design and
manufacture our products as proprietary. We have also registered trademarks for
Power MOS IV-TM-, Power MOS V-TM- and Power MOS VI-TM-.

    We have licensed portions of our intellectual property for commercialization
in certain foreign markets. In 1990, we entered into two non-exclusive,
non-transferable licenses and technology transfer agreements for the manufacture
of our products in Japan. In 1991, we entered into a similar arrangement with a
manufacturer in the United Kingdom for sales in Europe only. Each of these
agreements resulted in one-time payments to us and entitle us to certain
royalties over the life of the licenses. To date, on going royalties from these
licensing arrangements have not been material. We recently entered into a joint
venture agreement in China, which includes a license and technology transfer
agreement for our Power MOS V-TM- and Power MOS VI-TM- technology, in exchange
for cash payments totalling $1.5 million over two years and a 25% share in the
equity ownership of the joint venture. We believe that these arrangements will
enhance our access to key markets in Asia and Europe.

                                       40
<PAGE>
EMPLOYEES

    At March 31, 2000, we had 204 employees. Of these, 172 were at our
facilities in Bend, Oregon, 31 were at our facility in Bordeaux, France, and one
was located in Boston, Massachusetts. Our continued success depends heavily on
our ability to attract and retain qualified personnel. We consider our relations
with our employees to be good. None of our employees are represented by a union.

ENVIRONMENTAL REGULATION

    While we believe we have the environmental permits necessary to conduct our
business and that our operations conform to present environmental regulations,
increased public attention has been focused on the environmental impact of
semiconductor operations. In the conduct of our manufacturing operations, we
have handled and do handle materials that are considered hazardous, toxic or
volatile under federal, state and local laws; therefore, we are subject to
regulations related to the use, storage, discharge and disposal of materials.
The risk of accidental release of such materials cannot be completely
eliminated, and if such a release occurs, we could be held financially
responsible for the clean up or other consequences of the release. Along with
the rest of the semiconductor industry, we are subject to variable
interpretations and governmental priorities concerning environmental laws and
regulations. Environmental statutes have been interpreted to provide for joint
and several liability and strict liability regardless of actual fault. We may be
required to incur costs to comply with current or future environmental laws or
regulations, and our operations, business or financial condition could be
adversely affected by such requirements.

LEGAL PROCEEDINGS

    From time to time in our industry, participants become involved in
litigation over intellectual property rights and other matters. We are not
currently involved in any litigation, and have not received any unresolved
claims or threats of claims. However, we are from time to time a party to
litigation or claims that arise out of the ordinary conduct of our business,
including those relating to commercial transactions, contracts and environmental
matters.

                                       41
<PAGE>
                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

    The following table sets forth the names, ages as of June 1, 2000 and
positions of our directors and executive officers:

<TABLE>
<CAPTION>
NAME                                          AGE                       POSITION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Patrick P.H. Sireta.......................     55      President, Chief Executive Officer, and
                                                         Chairman of the Board of Directors

Russell J. Crecraft.......................     39      Vice President, Manufacturing Operations

Greg M. Haugen............................     44      Vice President, Finance and
                                                       Administration; Chief Financial Officer;
                                                         Secretary

John I. Hess..............................     50      Vice President, Marketing and Discrete
                                                         Product Operations

Thomas A. Loder...........................     46      Vice President, Sales

Dah Wen Tsang.............................     53      Vice President, Engineering and Research
                                                       and Development

James E. Petersen.........................     60      Director

Douglas S. Schatz.........................     54      Director
</TABLE>

    PATRICK P.H. SIRETA. Mr. Sireta joined APT as its President and Chief
Executive Officer in 1985, and was named Chairman of the Board in 1995. Before
joining APT, Mr. Sireta held several positions with Texas Instruments, including
Financial Director, Texas Instruments France; General Manager, Texas Instruments
Portugal; General Manager, Texas Instruments France; and Vice President and
General Manager, CMOS Division, Texas. He was General Manager of Video Color, a
joint venture of RCA and Thomson, from 1979 to 1981. He holds a Master's Degree
in Engineering from Ecole Centrale de Paris and a Ph.D. in Statistics from Paris
University.

    RUSSELL J. CRECRAFT. Mr. Crecraft was appointed Vice President,
Manufacturing Operations in 1995. He joined APT in 1986, and held several
supervisory positions in product management and assembly/ test operations. Prior
to joining APT, he worked with Texas Instruments where he held product
engineering and management positions. Mr. Crecraft has a BSEE in Electrical
Engineering from Texas A&M University.

    GREG M. HAUGEN. Mr. Haugen was appointed Vice President, Finance and
Administration, Chief Financial Officer and Secretary in 1995. Mr. Haugen joined
APT in 1985. Prior to joining APT, he worked for the accounting firm of KPMG LLP
and was on the corporate accounting staff of Evans Products Company. Mr. Haugen
graduated with a BS Degree from Lewis and Clark College and has passed the CPA
examination.

    JOHN I. HESS. Mr. Hess was appointed Vice President, Marketing and Discrete
Product Operations in 1999. Mr. Hess, who joined APT in 1985, held several prior
positions in APT, including Vice President, Sales and Marketing; Vice President,
Discrete Power Products; and Vice President, Manufacturing Operations. Prior to
joining APT, Mr. Hess was Director of Wafer Fabrication and Test Operations at
Seeq Technology. He also held engineering, project management, and manufacturing
assignments with Siliconix and Signetics. Mr. Hess has a BSE in Chemical
Engineering from Arizona State University.

    THOMAS A. LODER. Mr. Loder was appointed Vice President, Sales in 1999.
Mr. Loder joined APT in 1988 as Regional Sales Manager for the southern U.S.,
and subsequently served as Worldwide Sales

                                       42
<PAGE>
Manager, and Vice President, Discrete Power Products. Prior to joining APT,
Mr. Loder was Area Sales Manager for Unitrode Corporation, Regional Sales
Manager for Silicon General and ION Associates, Product Sales Manager for
Elmwood Sensors, and Branch Manager for Newark Electronics. Mr. Loder has a BA
in Biology from Brown University.

    DAH WEN TSANG. Dr. Tsang was appointed Vice President, Engineering and
Research and Development in 1987. Previously, he was Director of Research at
Theta-J, and worked in Hewlett-Packard's power MOSFET program. Dr. Tsang's
papers have been published by technical journals, including the Journal of
Applied Physics and IEEE Transactions. Dr. Tsang has BES and MS Degrees from
Brigham Young University, and a Ph.D. from the University of California at
Berkeley.

    JAMES E. PETERSEN. Mr. Petersen was elected as a Director in 1995. He also
serves as outside general counsel to APT. Mr. Petersen is a partner with the
firm of Karnopp, Petersen, Noteboom, Hansen, Arnett & Sayeg, LLP, of Bend,
Oregon. Mr. Petersen received his BA Degree and Juris Doctor from the University
of Oregon. Mr. Petersen also serves as a Director of Cascade Bancorp, a bank
holding company.

    DOUGLAS S. SCHATZ. Mr. Schatz was elected as a Director in 1995. He is the
Chief Executive Officer, a director and Chairman of the Board of Advanced Energy
Industries. Mr. Schatz founded Advanced Energy Industries in 1981.

BOARD OF DIRECTORS

    We currently have authorized up to seven directors. Each director holds
office until his or her annual term expires or until his or her successor is
duly elected and qualified. We have agreed to add two independent directors
within 90 days of this offering.

    Our board of directors has an audit committee and a compensation committee.
These committees currently consist of Mr. Petersen who will be joined by two new
independent directors. The audit committee reviews our internal accounting
procedures and consults with and reviews the services provided by our
independent accountants. The compensation committee reviews the compensation and
benefits of our employees and directors and makes recommendations to our board
of directors. No member of our compensation committee has served as a member of
the board of directors or compensation committee of any entity that has one or
more executive officers serving as a member of our board of directors or
compensation committee. We do not currently have a nominating committee.

    Directors do not receive any cash compensation, however, they are reimbursed
for expenses incurred in attending any board or committee meeting. Our
non-employee directors are eligible to participate in our 1995 Stock Option
Plan. Each non-employee director will be eligible to receive a grant of an
option to purchase shares of common stock. Currently, the shares subject to each
of these options will vest and become fully exercisable over five years, in
equal annual installments beginning one year after the date of grant and
continuing for the length of the director's term.

EXECUTIVE COMPENSATION

    The following table describes the compensation we paid to our chief
executive officer and our four other most highly compensated executive officers
during fiscal year 1999.

                                       43
<PAGE>
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                     ANNUAL COMPENSATION
                                                    ------------------------------------------------------
                                                                                                OTHER
                                                                                               ANNUAL
NAME AND PRINCIPAL POSITION                           YEAR     SALARY ($)   BONUS ($)(1)   COMPENSATION(2)
---------------------------                         --------   ----------   ------------   ---------------
<S>                                                 <C>        <C>          <C>            <C>
Patrick P.H. Sireta, Chairman, President and
  CEO.............................................    1999       183,113       17,482            490

Russell J. Crecraft, VP, Manufacturing
  Operations......................................    1999       101,205        5,608             56

John I. Hess, VP, Marketing and Discrete Product
  Operations......................................    1999       120,799        6,538            366

Thomas A. Loder, VP, Sales........................    1999       106,563        5,776            187

Dah Wen Tsang, VP, Engineering, Research &
  Development.....................................    1999       122,805        6,629            378
</TABLE>

------------------------

(1) Accrued during fiscal year 1999 and paid in January 2000.

(2) Term life insurance premiums paid by APT for the executive's benefit.

EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS

    We have entered into employment agreements with each of the named officers.
Each officer can be dismissed without cause, with severance pay equal to one
month's salary. These agreements obligate each officer other than John Hess and
Thomas Loder to not compete with us for a period of 18 months after termination.
We have an annual cash bonus plan in which our key managers, including the named
officers, participate. Bonuses are paid quarterly based on our financial
performance.

1995 STOCK OPTION PLAN

    Our stockholders and our board of directors have approved and adopted an
employee stock option plan effective December 31, 1995, under which optionees
may acquire rights to purchase shares of our common stock. The plan is
administered by our board of directors, and the principal purpose of this plan
is to provide incentives to attract, retain and motivate employees whose
contributions are important to our success. A total of 1,500,000 shares are
reserved for issuance under the plan. The price at which options may be
exercised under the plan has been determined by our board of directors, and the
board of directors acted in good faith to establish an exercise price that is
equal to or greater than the fair market value of the underlying shares on the
date of issuance. After this offering, exercise prices will be set in compliance
with the rules and policies of any stock exchange upon which our common shares
are listed. Options issued under the plan are subject to vesting schedules and
other terms and conditions set by the board of directors. Options may be granted
at any time to any of our employees, contractors, consultants or independent
directors, but no person other than an employee of APT or a related entity may
receive a grant of incentive stock options. Each option granted under the plan
expires on the tenth anniversary of the date of grant unless the agreement
granting the option specifies an earlier termination date.

    The number of common shares we may issue under the plan can be increased
with the approval of a majority of our stockholders.

    As of May 31, 2000, there were outstanding options to purchase 953,197
shares of common stock, of which 416,783 were vested, and of which 412,810 were
held by officers and directors. The average exercise price of those options is
$1.46 per share, and the outstanding options expire between December 31, 2005
and March 30, 2010.

                                       44
<PAGE>
OPTION GRANTS IN 1999

    There were no stock option grants to our chief executive officer or our four
other most highly compensated officers during the fiscal year ended
December 31, 1999.

AGGREGATE OPTION EXERCISES IN 1999

    None of the named executive officers exercised options during the fiscal
year ended December 31, 1999. The following table sets forth information
concerning exercisable and unexercisable stock options held by the executive
officers named in the summary compensation table at December 31, 1999. The value
of unexercised in-the-money options is based on an assumed initial offering
price of $      per share minus the actual exercise prices.

<TABLE>
<CAPTION>
                                                    NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                   UNDERLYING UNEXERCISED             IN-THE-MONEY
                                                         OPTIONS AT                    OPTIONS AT
                                                      DECEMBER 31, 1999             DECEMBER 31, 1999
                                                 ---------------------------   ---------------------------
                                                 EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
                                                 -----------   -------------   -----------   -------------
<S>                                              <C>           <C>             <C>           <C>
Patrick P.H. Sireta............................    133,305         88,870        $              $
Russell J. Crecraft............................     11,967         10,478
John I. Hess...................................     23,700         16,800
Thomas A. Loder................................     18,021         14,514
Dah Wen Tsang..................................     43,343         33,062
</TABLE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In 1995, our six senior officers, acting through Tremoliere, LLC, purchased
a controlling 51% interest in APT from Hamilton Sundstrand for approximately
$3.6 million, of which approximately $3.3 million was funded with a note payable
to Hamilton Sundstrand and the balance was funded from the personal assets of
the purchasers. In 1998, the same group purchased the remainder of APT for
approximately $2.5 million. Tremoliere, LLC borrowed $3.0 million from APT, an
amount sufficient to purchase the remaining 49% interest in the Company and to
pay interest on the note owed to Hamilton Sundstrand. In 1999, Tremoliere, LLC
borrowed an additional $100,000 from APT to pay interest on the note owed to
Hamilton Sundstrand. Our six senior officers as selling stockholders intend to
use a portion of their net proceeds from this offering to pay an estimated
$  million in taxes incurred as a result of the sale of the shares, and to repay
approximately $4.1 million owed to Hamilton Sundstrand and $3.6 million owed to
APT.

    In 1999, sales to Advanced Energy Industries were $4.0 million, and
accounted for 14.6% of our net sales. Advanced Energy Industries guaranteed a
$1.0 million bank loan to us in 1995, and increased that guaranty to
$2.5 million in 1998. That guaranty is still outstanding, however, it will be
terminated in connection with this offering. We have issued warrants to purchase
560,000 shares of our common stock at a weighted average exercise price of $2.73
per share to Advanced Energy Industries. These warrants will expire on
completion of this offering, and we expect them to be exercised immediately
before expiration. Douglas Schatz, who is the Chief Executive Officer, Chairman
of the Board and a substantial shareholder of Advanced Energy Industries, serves
as a director of APT.

                                       45
<PAGE>
                       PRINCIPAL AND SELLING STOCKHOLDERS

    The following table sets forth information regarding the beneficial
ownership of our common stock as of May 31, 2000 with respect to:

    - each person or group of affiliated persons known by us to own beneficially
      more than 5% of the outstanding shares of common stock;

    - each of our directors;

    - each of our executive officers; and

    - all directors and executive officers as a group.

    Except as otherwise indicated in the footnotes to the table, each
stockholder has sole voting and investment power with respect to the shares
beneficially owned by such stockholder. 5,000,000 of the 5,000,520 outstanding
shares are currently held by Tremoliere, LLC. Upon the closing of this offering,
Tremoliere will be dissolved and the shares distributed to its members. The
following table assumes that distribution has been completed:

<TABLE>
<CAPTION>
                                             OWNERSHIP OF COMMON                             OWNERSHIP OF COMMON
                                         STOCK PRIOR TO THE OFFERING                      STOCK AFTER THE OFFERING
                                        ------------------------------     NUMBER OF      -------------------------
                                            NUMBER OF       PERCENTAGE   SHARES OFFERED    NUMBER OF    PERCENTAGE
                                             SHARES         OWNERSHIP        HEREBY         SHARES       OWNERSHIP
                                        -----------------   ----------   --------------   -----------   -----------
<S>                                     <C>                 <C>          <C>              <C>           <C>
Patrick P.H. Sireta (1)...............          2,905,015       56.1%                                           %
Douglas S. Schatz (2).................            560,000       10.1
Dah Wen Tsang (3).....................            513,169       10.1
John I. Hess (4)......................            486,345        9.7
Thomas A. Loder (5)...................            479,073        9.5
Russell J. Crecraft (6)...............            471,001        9.4
Greg M. Haugen (7)....................            463,545        9.3
James E. Petersen (8).................              1,000         --
Advanced Energy Industries (9)........            560,000       10.1
All directors and executive officers
  as a group (8 persons) (10).........          5,879,148      100.0
</TABLE>

------------------------

(1) Includes 177,740 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000, of which 55,544 have been
    assigned to Mrs. Elizabeth Sellers. Mr. Sireta disclaims beneficial
    ownership of those shares assigned to Mrs. Sellers, his ex-wife. Mr. Sireta
    owns his shares through Sireta, LLC.

(2) Comprised of 560,000 shares beneficially owned by Advanced Energy
    Industries. Mr. Schatz is the Chief Executive Officer and Chairman of the
    Board of Advanced Energy Industries and may be deemed to share voting or
    investment control with respect to those shares. Mr. Schatz disclaims
    beneficial ownership of such shares.

(3) Includes 58,624 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

(4) Includes 31,800 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

(5) Includes 24,528 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

(6) Includes 16,456 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

                                       46
<PAGE>
(7) Includes 9,000 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

(8) Comprised of 1,000 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000.

(9) Comprised of 560,000 shares issuable upon exercise of warrants which expire
    at closing of this offering. Advanced Energy Industries intends to exercise
    its warrants utilizing the "net exercise" provision, thereby receiving
    approximately       shares at closing of this offering, at a weighted
    average exercise price of $2.73 per share and an assumed initial public
    offering price of $  per share. Advanced Energy Industries intends to sell
    approximately             shares in this offering to satisfy its estimated
    tax liability, and has granted the underwriters an option to purchase an
    additional             shares, exercisable within 30 days of the offering.
    The remaining       shares will remain subject to a "lock-up" agreement for
    180 days. The address for Advanced Energy Industries is 1625 Sharp Point
    Drive, Fort Collins, Colorado 80525.

(10) Includes 319,148 shares issuable upon exercise of options which are
    exercisable within 60 days of May 31, 2000, and 560,000 shares issuable upon
    exercise of warrants. See notes 1 through 8 above.

                          DESCRIPTION OF CAPITAL STOCK

    The following description summarizes the most important terms of our capital
stock. Because it is only a summary, it does not contain all of the information
that may be important to you. For a complete description, you should refer to
our Certificate of Incorporation, as amended, and our Bylaws, as amended.

COMMON STOCK

    Each holder of our common stock is entitled to receive notice of and to
attend any meeting of our stockholders, and is entitled to one vote per share
held at such time on all matters to be voted on by our stockholders. Each holder
of our common stock is entitled to receive dividends if they are declared by our
board of directors, and will participate equally in any distribution of assets
upon our liquidation, dissolution or winding up period. There are no cumulative,
subscription or pre-emptive rights to subscribe for any additional securities
which we may issue. There are also no redemption provisions, conversion
provisions or sinking fund provisions applicable to our common stock.

PREFERRED STOCK

    Our board of directors, pursuant to the Certificate of Incorporation as
amended, is authorized to issue the preferred stock in one or more series and to
fix the voting rights, liquidation preferences, dividend rights, conversion
rights, redemption rights and terms, including sinking fund provisions, and
certain other rights and preferences of the preferred stock. The board of
directors, without stockholder approval, can therefore, issue preferred stock
with voting, conversion and other rights that could adversely affect the voting
power and other rights of, and amounts payable with respect to, the common
stock. This may be deemed to have a potential anti-takeover effect because the
issuance of preferred stock in accordance with such provision may delay, defer
or prevent a change of control regarding us and could adversely affect the price
of our common stock.

REGISTRATION RIGHTS

    We granted registration rights with respect to shares of our common stock
that are issuable upon the exercise of warrants. Certain of these shares are
being registered for sale in this offering. We estimate that 152,858 shares of
common stock issuable under these warrants will continue to have

                                       47
<PAGE>
registration rights following this offering. All of these shares are subject to
a lock-up agreement as described in "Underwriting."

POSSIBLE ANTI-TAKEOVER EFFECT ON CERTAIN CHARTER PROVISIONS

    Our Certificate of Incorporation and Bylaws require that stockholders give
advance notice to us of any business to be brought by stockholders at any
stockholders' meeting. This provision may have the effect of delaying changes in
control or management of APT, deterring hostile takeovers or deferring or
preventing a tender offer or takeover attempt that a stockholder might consider
to be in such stockholder's best interest, including those attempts that might
result in a premium over the market price for the shares held by the
stockholders.

CERTAIN PROVISIONS OF DELAWARE LAW

    We are a Delaware corporation and are subject to Section 203 of the Delaware
General Corporations Law, or DGCL. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined therein) with a Delaware corporation for three years
following the date such person became an interested stockholder, unless
(a) before such person became an interested stockholder, the board of directors
of the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (b) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation and shares held by certain employee stock ownership plans) or
(c) following the transaction in which such person became an interested
stockholder, the business combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of at least two-thirds of the outstanding voting stock of
the corporation not owned by the interested stockholder.

LIMITATION OF LIABILITY AND INDEMNIFICATION AGREEMENTS

    Our Certificate of Incorporation provides that to the fullest extent
permitted by the DGCL, our directors will not be liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director.
Under the DGCL, liability of a director may not be limited (a) for any breach of
the director's duty of loyalty to us or our stockholders, (b) for acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law, (c) in respect of certain unlawful dividend payments or stock
redemptions or repurchases and (d) for any transaction from which the director
derives an improper personal benefit. The effect of the provisions of our
Certificate of Incorporation is to eliminate the rights of APT and its
stockholders (through stockholders' derivative suits on behalf of APT) to
recover monetary damages against a director for breach of the fiduciary duty of
care as a director (including breaches resulting from negligent or grossly
negligent behavior), except in the situations described in clauses (a) through
(d) above. This provision does not limit or eliminate the rights of APT or any
stockholder to seek nonmonetary relief, such as an injunction or rescission, in
the event of a breach of a director's duty of care. Our Certificate of
Incorporation and Bylaws provide that APT shall indemnify its directors,
officers, employees and agents against claims, liabilities, damages, expenses,
losses, costs, penalties or amounts paid in settlement incurred by such director
or officer in or arising out of his or her capacity as a director, officer,
employee and/or agent of APT to the extent the person acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
APT. In addition, such director or officer is entitled to an advance of expenses
to the maximum extent authorized or permitted by law.

                                       48
<PAGE>
TRANSFER AGENT AND REGISTRAR

    The Transfer Agent and Registrar for our common stock is American Securities
Transfer & Trust.

                        SHARES ELIGIBLE FOR FUTURE SALE

    Upon the consummation of the offering, we will have outstanding
shares of common stock (assuming no exercise of the underwriters' over-allotment
option). All of the shares of common stock sold in the offering will be freely
tradable under the Securities Act, unless purchased by "affiliates" of APT as
that term is defined under the Securities Act. Upon the expiration of lock-up
agreements between APT, substantially all of the stockholders and the
underwriters, which will occur 180 days after the date of this prospectus, or
the Effective Date,             shares of common stock owned by these
stockholders, or Restricted Shares, will become eligible for sale, subject to
compliance with Rule 144 of the Securities Act as described below.

    In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least one year, will be entitled to sell in any three-month period a number of
shares that does not exceed the greater of: (i) 1% of the number of shares of
Common Stock then outstanding (approximately       shares immediately after the
offering) or (ii) the average weekly trading volume of the Company's Common
Stock on Nasdaq during the four calendar weeks immediately preceding the date on
which the notice of sale is filed with the Securities and Exchange Commission.
Substantially all of the Restricted Shares have been held for over one year.
Sales pursuant to Rule 144 are subject to certain requirements relating to
manner of sale, notice and availability of current public information about the
Company. A person (or persons whose shares are aggregated) who is not deemed to
be an affiliate of the Company preceding the sale, and who has beneficially
owned Restricted Shares for at least two years is entitled to sell such shares
pursuant to Rule 144(k) without regard to the limitations and requirements
described above.

    APT, and its officers, directors, the holders of       outstanding shares,
and the holders of options to acquire       of the             shares subject to
outstanding options have agreed with the underwriters that until 180 days after
the Effective Date not to directly or indirectly, offer to sell, contract to
sell, sell or otherwise dispose of any common stock or any securities
convertible into or exercisable or exchangeable for common stock without the
prior written consent of Stephens Inc. APT has also agreed not to directly or
indirectly, offer to sell, contract to sell, sell or otherwise dispose of any
common stock or any securities convertible into or exercisable or exchangeable
for common stock for a period of 180 days after the Effective Date, without the
prior written consent of Stephens Inc., subject to certain limited exceptions
including grants of options and issuance of shares of common stock upon exercise
of currently outstanding options under our 1995 Stock Option Plan. The lock-up
agreements may be released at any time as to all or any portion of the shares
subject to such agreements at the sole discretion of Stephens Inc.

    Any of our employees, officers or directors or a consultant who holds vested
options as of the Effective Date pursuant to our 1995 Stock Option Plan are
entitled to rely on the resale provisions of Rule 701, which permit
non-affiliates to sell their Rule 701 shares without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144 and permit affiliates to sell their Rule 701 shares without having to
comply with Rule 144's holding period restrictions, in each case commencing
90 days after the date of completion of this offering. However, we and our
officers, directors and the holders of       of the outstanding options have
agreed not to, directly or indirectly, offer to sell, contract to sell, sell or
otherwise dispose of any shares of our common stock or any securities
convertible into or exercisable or exchangeable for common stock for the 180-day
period after the Effective Date without the prior written consent of
Stephens Inc. See "Underwriting" for additional information regarding
limitations on the sale of our common stock.

                                       49
<PAGE>
    Not earlier than ninety (90) days after the date of completion of this
offering, we intend to file a registration statement on Form S-8 under the
Securities Act to register shares of common stock reserved for issuance under
our stock option plan, thus permitting the resale of such shares by
non-affiliates in the public market without restriction under the Securities
Act. This registration statement will become effective immediately upon filing.

    We are unable to estimate the number of shares that may be sold in the
future by the existing stockholders or the effect, if any, that sales of shares
by such stockholders will have on the market price of our common stock. Sales of
substantial amounts of common stock by such stockholders could adversely affect
the market price our common stock.

                                       50
<PAGE>
                                  UNDERWRITING

    The underwriters named below, through their representatives, Stephens Inc.,
Needham & Company, Inc., and First Security Van Kasper, have severally agreed to
purchase from us and the selling stockholders the following respective number of
shares of our common stock:

<TABLE>
<CAPTION>
UNDERWRITER                                                   NUMBER OF SHARES
-----------                                                   ----------------
<S>                                                           <C>
Stephens Inc................................................
Needham & Company, Inc......................................
First Security Van Kasper...................................
Total.......................................................
</TABLE>

    The underwriters propose to offer the shares of our common stock directly to
the public at the public offering price set forth on the cover page of this
prospectus, and to certain dealers at that price less a concession not in excess
of $  per share. The underwriters may allow and such dealers may reallow a
concession not in excess of $  per share to certain other dealers. After the
public offering of the shares, the underwriters may change the offering price
and other selling terms. The representatives of the underwriters have advised us
that the underwriters do not intend to confirm any shares to any accounts over
which they exercise discretionary authority.

    The underwriting agreement makes the obligations of the underwriters subject
to conditions that we and the selling stockholders must satisfy, such as the
receipt of certificates, opinions and letters from us, the selling stockholders,
our counsel and our independent auditors. The underwriters are committed to
purchase all shares of common stock offered in this prospectus (other than those
covered by the over-allotment options described below) if any of those shares
are purchased.

    The offering of the shares is made for delivery when, as and if accepted by
the underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

    OVER-ALLOTMENT OPTION.  We and Advanced Energy Industries have granted the
underwriters an option, exercisable within 30 days after the date of this
prospectus, to purchase up to             additional shares of our common stock.
To that extent that the underwriters exercise this option, each underwriter is
committed to purchase a number of shares that reflects approximately the same
percentage of total shares that such underwriter purchased in the above table.
We will be obligated to sell shares to the underwriters to the extent the option
is exercised. The underwriters may exercise their option only to cover
over-allotments made in connection with the sale of common stock offered in this
prospectus.

    UNDERWRITING DISCOUNTS AND COMMISSIONS.  The following table shows the per
share and total underwriting discounts and commissions that we and the selling
stockholders will pay to the underwriters. These amounts are shown assuming both
no exercise and full exercise of the underwriters' option to purchase
      additional shares.

<TABLE>
<CAPTION>
                                                                                     PAID BY SELLING
                                                       PAID BY COMPANY                STOCKHOLDERS
                                                 ---------------------------   ---------------------------
                                                 NO EXERCISE   FULL EXERCISE   NO EXERCISE   FULL EXERCISE
                                                 -----------   -------------   -----------   -------------
<S>                                              <C>           <C>             <C>           <C>
Per share......................................    $             $               $             $
Total..........................................    $             $               $             $
</TABLE>

    INDEMNITY.  We and the selling stockholders have agreed to indemnify the
underwriters against certain liabilities, including liabilities under the
Securities Act and to contribute to payments the underwriters may be required to
make in respect thereof.

                                       51
<PAGE>
    LOCK-UP AGREEMENTS.  APT, our executive officers and directors, the selling
stockholders and certain option and warrant holders have agreed that they will
not, without the consent of Stephens Inc., directly or indirectly, offer to
sell, contract to sell, sell or otherwise dispose of any shares of our common
stock or any securities convertible into or exercisable or exchangeable for our
common stock during the 180-day period following the effective date of the
registration statement relating to this prospectus. Stephens Inc. has the
discretion, at any time and without notice, to release the sale prohibitions in
part or in whole.

    STABILIZATION.  The underwriters may over-allot or effect transactions that
stabilize, maintain or otherwise affect the market price of our common stock at
levels above those which might otherwise prevail in the open market. This may be
done by entering stabilizing bids, effecting syndicate covering transactions or
imposing penalty bids. A stabilizing bid means placing a bid or making a
purchase for the purpose of pegging, fixing or maintaining the price of the
common stock. A syndicate covering transaction means placing a bid on behalf of
the underwriting syndicate or making a purchase to reduce a short position
created in connection with the offering. A penalty bid means an arrangement that
permits the underwriters to reclaim a selling concession from a syndicate member
in connection with the offering when shares of common stock sold by the
syndicate member are purchased in syndicate covering transactions. Such
transactions may be effected on the Nasdaq National Market, in the
over-the-counter market or otherwise. Such stabilizing, if commenced, may be
discontinued at any time.

    PRICING.  Prior to this offering, there was no public market for the common
stock. The initial public offering price for the common stock will be determined
by negotiation between us, the selling stockholders and the underwriters. Among
other factors to be considered in determining the initial public offering price
are prevailing market and economic conditions, our revenues and earnings, the
state of our business operation, an assessment of our management and
consideration of the above factors in relation to market valuation of companies
in related businesses and other factors deemed relevant. There can be no
assurance, however, that the prices at which the common stock will sell in the
public market after this offering will be equal to or greater than the initial
public offering.

                                 LEGAL MATTERS

    Davis Wright Tremaine LLP, Portland, Oregon, will pass upon the validity of
the common stock that we are offering. O'Melveny & Myers LLP, Los Angeles,
California, will pass upon certain legal matters for the underwriters.

                                    EXPERTS

    The consolidated financial statements of Advanced Power Technology, Inc. as
of December 31, 1998 and 1999, and for each of the years in the three-year
period ended December 31, 1999, have been included in this prospectus and
elsewhere in the registration statement in reliance upon the report of KPMG LLP,
independent auditors, appearing elsewhere in this prospectus and registration
statement and upon the authority of KPMG LLP as experts in accounting and
auditing.

                             ADDITIONAL INFORMATION

    We have filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a registration statement on Form S-1
under the Securities Act with respect to the common stock offered by this
prospectus. This prospectus does not contain all of the information set forth in
the registration statement and the exhibits thereto. Certain items are omitted
in accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the common stock offered by this
prospectus, reference is made to the registration statement and the exhibits
filed as a part hereof. Statements contained in this prospectus as to the
contents of any

                                       52
<PAGE>
contract or any other such contract or document is filed as an exhibit, to the
copy of such contract or document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such reference
to such exhibit. The registration statement, including exhibits thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at Seven World Trade Center, 13(th)
Floor, New York, New York 10048, and the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any part
thereof may be obtained from such office after payment of fees prescribed by the
Commission. The Commission maintains a Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.

    As a result of this offering, we will become subject to the information and
reporting requirements of the Securities and Exchange Act of 1934, as amended,
and will file periodic reports, proxy statements and other information with the
Commission. Upon approval of the common stock for quotation on the Nasdaq
National Market, these reports, proxy statements and other information may also
be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 2006.

    We will issue to our stockholders annual reports and unaudited quarterly
reports for the first three quarters of each fiscal year. Annual reports will
include audited financial statements and a report of our independent auditors
with respect to the examination of such financial statements. In addition, we
will issue such other interim reports as we deem appropriate.

                                       53
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Report................................    F-2

Consolidated Balance Sheets.................................    F-3

Consolidated Statements of Operations.......................    F-4

Consolidated Statements of Stockholders' Deficit............    F-5

Consolidated Statements of Cash Flows.......................    F-6

Notes to Consolidated Financial Statements..................    F-7
</TABLE>

                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Advanced Power Technology, Inc.:

    We have audited the accompanying consolidated balance sheets of Advanced
Power Technology, Inc. and subsidiary as of December 31, 1998 and 1999, and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for each of the years in the three-year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amount and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Advanced
Power Technology, Inc. and subsidiary at December 31, 1998 and 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States of America.

                                          /s/ KPMG LLP

Portland, Oregon
February 25, 2000

                                      F-2
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

                          CONSOLIDATED BALANCE SHEETS

                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------    MARCH 31,
                                                                1998       1999        2000
                                                              --------   --------   -----------
                                                                                    (UNAUDITED)
<S>                                                           <C>        <C>        <C>
                                            ASSETS
Current assets:
  Cash and cash equivalents.................................  $    56    $   316      $   177
  Accounts receivable, net..................................    3,639      4,447        5,555
  Inventories, net..........................................    5,305      5,153        5,589
  Prepaid expenses and other current assets.................    1,293        584          501
  Net current deferred tax asset............................      130        564          564
                                                              -------    -------      -------
    Total current assets....................................   10,423     11,064       12,386
                                                              -------    -------      -------
Property and equipment, net.................................    3,074      2,483        3,273
Other assets................................................      703        312          212
                                                              -------    -------      -------
    Total assets............................................  $14,200    $13,859      $15,871
                                                              =======    =======      =======
                             LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Book overdraft............................................  $   158    $    --      $    --
  Lines of credit...........................................    4,452      4,895        4,126
  Accounts payable..........................................    2,429      2,485        4,124
  Accrued expenses..........................................    1,673      1,789        1,961
  Current portion of long-term debt.........................      339      2,737        2,940
  Current portion of capital lease obligations..............      857        181          141
                                                              -------    -------      -------
    Total current liabilities...............................    9,908     12,087       13,292
Long-term debt, less current portion........................    6,006      3,320        3,822
Capital lease obligations, less current portion.............      142        205          179
Deferred gain on sale leaseback.............................      341        267          260
Net non-current deferred tax liability......................      254        455          455
                                                              -------    -------      -------
    Total liabilities.......................................   16,651     16,334       18,008
                                                              -------    -------      -------
Commitments and contingencies

Stockholders' deficit
  Common stock, par value $.01, 5,110,371 shares authorized;
    5,000,000, 5,000,020 and 5,000,520 (unaudited) shares
    issued and outstanding in 1998, 1999 and 2000,
    respectively............................................       50         50           50
  Additional paid-in capital................................   15,436     15,600       16,176
  Deferred stock compensation...............................       --        (31)        (538)
  Accumulated other comprehensive income--currency
    translation.............................................       26         44           69
  Accumulated deficit.......................................  (17,963)   (18,138)     (17,894)
                                                              -------    -------      -------
    Total stockholders' deficit.............................   (2,451)    (2,475)      (2,137)
                                                              -------    -------      -------
                                                              $14,200    $13,859      $15,871
                                                              =======    =======      =======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                  YEARS ENDED DECEMBER 31,           MARCH 31,
                                               ------------------------------   -------------------
                                                 1997       1998       1999       1999       2000
                                               --------   --------   --------   --------   --------
                                                                                    (UNAUDITED)
<S>                                            <C>        <C>        <C>        <C>        <C>
Revenues, net................................  $25,732    $24,851    $27,461     $5,852     $9,561
Cost of goods sold...........................   17,280     18,439     18,000      4,024      6,178
                                               -------    -------    -------     ------     ------
Gross profit.................................    8,452      6,412      9,461      1,828      3,383
                                               -------    -------    -------     ------     ------
Operating expenses:
  Research and development...................    1,021        926        883        200        243
  Selling, general and administrative........    7,413      7,111      7,322      1,678      2,289
                                               -------    -------    -------     ------     ------
    Total operating expenses.................    8,434      8,037      8,205      1,878      2,532
                                               -------    -------    -------     ------     ------
Income (loss) from operations................       18     (1,625)     1,256        (50)       851
                                               -------    -------    -------     ------     ------
Other income (expense):
  Interest expense...........................   (1,010)    (1,208)    (1,308)      (336)      (271)
  Other, net.................................       95         58         77         24         12
                                               -------    -------    -------     ------     ------
                                                  (915)    (1,150)    (1,231)      (312)      (259)
                                               -------    -------    -------     ------     ------
Income (loss) before income taxes............     (897)    (2,775)        25       (362)       592
Income tax expense (benefit).................       97     (1,119)       200         50        348
                                               -------    -------    -------     ------     ------
Net income (loss)............................  $  (994)   $(1,656)   $  (175)    $ (412)    $  244
                                               =======    =======    =======     ======     ======
Net income (loss) per share:
  Basic......................................  $ (0.20)   $ (0.33)   $ (0.04)    $(0.08)    $ 0.05
  Diluted....................................    (0.20)     (0.33)     (0.04)     (0.08)      0.04
Weighted average number of shares used in the
  computation of net income (loss) per share:
  Basic......................................    5,000      5,000      5,000      5,000      5,000
  Diluted....................................    5,000      5,000      5,000      5,000      6,456
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                          ACCUMULATED
                                         COMMON STOCK       ADDITIONAL     DEFERRED          OTHER        COMPREHENSIVE
                                     --------------------    PAID-IN         STOCK       COMPREHENSIVE        INCOME
                                      SHARES      AMOUNT     CAPITAL     COMPENSATION    INCOME (LOSS)        (LOSS)
                                     ---------   --------   ----------   -------------   --------------   --------------
<S>                                  <C>         <C>        <C>          <C>             <C>              <C>
Balance, December 31, 1996.........  5,000,000   $    50     $17,000         $  --          $     43
Contribution for interest payment
  to Sundstrand....................         --        --         150            --                --
Net loss...........................         --        --          --            --                --         $   (994)
Foreign currency translation.......         --        --          --            --              (122)            (122)
                                                                                                             --------
Comprehensive loss.................                                                                          $ (1,116)
                                                                                                             ========
                                     ---------   -------     -------         -----          --------
Balance, December 31, 1997.........  5,000,000        50      17,150            --               (79)
Application of push-down
  accounting.......................         --        --      (1,714)           --                --
Net loss...........................         --        --          --            --                --         $ (1,656)
Foreign currency translation.......         --        --          --            --               105              105
                                                                                                             --------
Comprehensive loss.................                                                                          $ (1,551)
                                                                                                             ========
                                     ---------   -------     -------         -----          --------
Balance, December 31, 1998.........  5,000,000        50      15,436            --                26
Exercise of stock options..........         20        --          --            --                --
Issuance of warrants...............         --        --         126            --                --
Net loss...........................         --        --          --            --                --         $   (175)
Deferred stock compensation........         --        --          38           (38)               --
Amortization of deferred stock
  compensation.....................         --        --          --             7                --
Foreign currency translation.......         --        --          --            --                18               18
                                                                                                             --------
Comprehensive income...............                                                                          $   (157)
                                                                                                             ========
                                     ---------   -------     -------         -----          --------
Balance, December 31, 1999.........  5,000,020        50      15,600           (31)               44
Exercise of stock options
  (unaudited)......................        500        --          --            --                --
Deferred stock compensation
  (unaudited)......................         --        --         576          (576)               --
Amortization of deferred stock
  compensation (unaudited).........         --        --          --            69                --
Net income (unaudited).............         --        --          --            --                --         $    244
Foreign currency translation
  (unaudited)......................         --        --          --            --                25               25
                                                                                                             --------
Comprehensive income (unaudited)...                                                                          $    269
                                                                                                             ========
                                     ---------   -------     -------         -----          --------
Balance, March 31, 2000
  (unaudited)......................  5,000,520   $    50     $16,176         $(538)         $     69
                                     =========   =======     =======         =====          ========

<CAPTION>

                                     ACCUMULATED
                                       DEFICIT       TOTAL
                                     ------------   --------
<S>                                  <C>            <C>
Balance, December 31, 1996.........    $(15,313)    $ 1,780
Contribution for interest payment
  to Sundstrand....................          --         150
Net loss...........................        (994)       (994)
Foreign currency translation.......          --        (122)

Comprehensive loss.................

                                       --------     -------
Balance, December 31, 1997.........     (16,307)        814
Application of push-down
  accounting.......................          --      (1,714)
Net loss...........................      (1,656)     (1,656)
Foreign currency translation.......          --         105

Comprehensive loss.................

                                       --------     -------
Balance, December 31, 1998.........     (17,963)     (2,451)
Exercise of stock options..........          --          --
Issuance of warrants...............          --         126
Net loss...........................        (175)       (175)
Deferred stock compensation........          --          --
Amortization of deferred stock
  compensation.....................          --           7
Foreign currency translation.......          --          18

Comprehensive income...............

                                       --------     -------
Balance, December 31, 1999.........     (18,138)     (2,475)
Exercise of stock options
  (unaudited)......................          --          --
Deferred stock compensation
  (unaudited)......................          --          --
Amortization of deferred stock
  compensation (unaudited).........          --          69
Net income (unaudited).............         244         244
Foreign currency translation
  (unaudited)......................          --          25

Comprehensive income (unaudited)...

                                       --------     -------
Balance, March 31, 2000
  (unaudited)......................    $(17,894)    $(2,137)
                                       ========     =======
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       YEARS ENDED               THREE MONTHS ENDED
                                                                       DECEMBER 31,                   MARCH 31,
                                                              ------------------------------   -----------------------
                                                                1997       1998       1999        1999         2000
                                                              --------   --------   --------   ----------   ----------
                                                                                                     (UNAUDITED)
<S>                                                           <C>        <C>        <C>        <C>          <C>
Cash flows from operating activities:
  Net income (loss).........................................  $  (994)   $(1,656)    $ (175)     $(412)      $   244
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization...........................    2,206      2,275      1,809        546           345
    Net gain on disposal of property and equipment..........       (2)        (7)        --         --            --
    Deferred taxes..........................................     (297)      (771)      (233)        --            --
    Deferred gain on sale--leaseback........................      (86)       (97)       (74)       (24)           (7)
    Non-cash interest expense...............................       --         --        118         30            --
    Amortization of deferred stock compensation.............       --         --          7         --            69
    Changes in operating assets and liabilities:
      Accounts receivable...................................     (440)       243       (994)       123        (1,108)
      Inventories...........................................      688        321        142       (186)         (436)
      Prepaid expenses and other assets.....................     (341)      (286)       735        299          (476)
      Accounts payable and accrued expenses.................      721        630        319       (247)        2,370
      Deferred revenue......................................      293       (293)        --         --            --
                                                              -------    -------     ------      -----       -------
        Net cash provided by operating activities...........    1,748        359      1,654        129         1,001
                                                              -------    -------     ------      -----       -------
Cash flows from investing activities:
  Purchase of property and equipment........................     (801)      (821)      (599)       (22)       (1,035)
  Proceeds from sale of property and equipment..............        2        207          5         --            --
                                                              -------    -------     ------      -----       -------
        Net cash used in investing activities...............     (799)      (614)      (594)       (22)       (1,035)
                                                              -------    -------     ------      -----       -------
Cash flows from financing activities:
  Book overdraft............................................       --        158       (158)      (158)           --
  Borrowings (payments) on lines of credit, net.............     (133)     1,585        528        348          (769)
  Payments on capital lease obligations.....................     (903)      (933)      (885)       (99)          (66)
  Proceeds from issuance of long-term debt..................      172      1,868         --         --           775
  Principal payments on long-term debt......................     (195)      (235)      (274)       (70)          (70)
  Payment to Sundstrand for APT's common stock..............       --     (2,450)        --         --            --
                                                              -------    -------     ------      -----       -------
        Net cash used in financing activities...............   (1,059)        (7)      (789)        21          (130)
                                                              -------    -------     ------      -----       -------
Effects of exchange rate changes on cash....................      (34)        17        (11)         9            25
                                                              -------    -------     ------      -----       -------
        Net change in cash and cash equivalents.............     (144)      (245)       260        137          (139)
Cash and cash equivalents at beginning of period............      445        301         56         56           316
                                                              -------    -------     ------      -----       -------
Cash and cash equivalents at end of period..................  $   301    $    56     $  316      $ 193       $   177
                                                              =======    =======     ======      =====       =======
Supplemental disclosure of noncash investing and financing
  activities:
  Property and equipment acquired through capital lease
    obligations.............................................  $    60    $   199     $  271      $  --       $    --
  Issuance of warrants in connection with refinancing.......       --         --        126         30            --
Supplemental disclosure of cash flow information:
  Cash paid during the period for:
    Interest................................................  $   636    $   856     $  915      $ 196       $   171
    Income taxes............................................      188        348        346         --           217
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    (A) COMPANY BACKGROUND

    Advanced Power Technology, Inc. (APT) is a leading designer, manufacturer
and marketer of high power, high frequency power semiconductors on a national
and international basis.

    In 1992, APT was purchased by Hamilton Sundstrand (Sundstrand) (the 1992
purchase). In 1993, Sundstrand purchased all of the outstanding shares of Power
Compact of Merignac, France (the 1993 purchase), whose name was subsequently
changed to Advanced Power Technology Europe S.A. (APT Europe). On September 6,
1995, Tremoliere LLC (Tremoliere), a company owned by APT's management group,
purchased 51% of APT from Sundstrand for $250 in cash and $3,320 in a note
payable to Sundstrand (the 1995 purchase). Just prior to the effective date of
this transaction: 1) APT completed a recapitalization in which the Board of
Directors authorized 5,110,370 shares of common stock and, pursuant to the
recapitalization, the 1,000 shares of $1 par value common stock issued and
outstanding were converted into 5,000,000 shares of $.01 par value common stock,
2) $12,394 of APT's payables to Sundstrand were converted to additional paid in
capital and 3) Sundstrand transferred all of its shares of APT Europe to APT.
Pursuant to the buyout agreement, 51% of APT's outstanding common shares, owned
by Tremoliere, collateralize the $3,320 note payable from Tremoliere to
Sundstrand.

    On January 5, 1998, Tremoliere purchased the remaining 49% interest in APT
from Sundstrand for $2,450 in cash. Tremoliere borrowed $3,000 from APT under a
promissory note to purchase the remaining 49% interest in APT and pay interest
accrued on the $3,320 note payable to Sundstrand (the 1998 purchase). The note
from Tremoliere is due on the fourth anniversary of the loan or upon the closing
of APT's initial public offering, whichever occurs first. The loan bears
interest at 6.10% per annum. Tremoliere's basis in APT has been allocated to
APT's financial statements using the push-down method of accounting.

    (B) PRINCIPLES OF CONSOLIDATION

    The accompanying consolidated financial statements include the accounts of
APT and its wholly-owned subsidiary, APT Europe. All intercompany balances have
been eliminated in the consolidation of financial statements.

    (C) CASH EQUIVALENTS

    APT considers all highly liquid debt and equity instruments purchased with a
maturity of three months or less to be cash equivalents.

    (D) INVENTORIES

    Inventories are stated at the lower of standard cost (approximates actual
cost on a first-in, first-out basis) or market (net realizable value).

                                      F-7
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    (E) PROPERTY AND EQUIPMENT

    Property and equipment are recorded at cost. Machinery and equipment under
capital lease are stated at the lower of the present value of the minimum lease
payments at the beginning of the lease term or the fair value of the leased
assets at the inception of the lease.

    Depreciation is provided using the straight-line method over estimated
useful lives, five years for equipment, furniture and fixtures. Leased assets
and leasehold improvements are amortized over the shorter of the estimated life
of the asset or the term of the related lease, ranging from three to ten years.
Depreciation begins on assets in process at the time the related assets are
placed in service. Maintenance and repairs are expensed as incurred.

    As required by Statement of Financial Accounting Standards (SFAS) No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF, management
reviews long-lived assets and intangible assets for impairment whenever events
or changes in circumstances indicate the carrying amount of the assets may not
be recoverable. Recoverability of these assets is determined by comparing the
forecasted undiscounted net cash flows of the operation to which the assets
relate, to the carrying amount including associated intangible assets of the
operation. If the operation is determined to be unable to recover the carrying
amount of its assets, then intangible assets are written down first, followed by
the other long-lived assets of the operation, to fair value. Fair value is
determined based on discounted cash flows or appraised values, depending on the
nature of the assets.

    (F) INTANGIBLE ASSETS

    Goodwill resulting from the change of control described in note 3 is
amortized on a straight-line basis over a five-year life. Goodwill, net, was
$619 and $256 at December 31 1998 and 1999, and is included in other assets in
the accompanying consolidated balance sheets. Amortization of goodwill was $276,
$358 and $363 for the years ended December 31, 1997, 1998 and 1999,
respectively.

    (G) INCOME TAXES

    APT accounts for income taxes under the asset and liability method. Under
the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.

    (H) REVENUE RECOGNITION

    Standard product revenue is recognized upon shipment of product. APT
recognizes revenue on customer-specific products or services based on the terms
of customer contracts which is generally customer acceptance. In general, APT
provides for a one-year repair or replacement warranty on its products. Upon
shipment, APT also provides for the estimated cost that may be incurred for
product

                                      F-8
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
warranty and sales returns based on historical experience. The reserve for
warranties and sales returns was $91 and $119 as of December 31, 1998 and 1999,
respectively.

    Revenue from certain contractual product sales or license arrangements is
deferred and recognized when earned in accordance with the arrangement.

    APT uses independent distributors to sell its products. Distributors can
return up to 5% of the dollar value of products purchased during the prior six
months upon a 30 days notice. Sales to distributors are recognized upon
shipment, less an allowance for estimated returns.

    (I) RESEARCH AND PRODUCT DEVELOPMENT EXPENSES

    Expenditures for research and product development are expensed as incurred.
Engineering and design costs related to revenues on non-recurring engineering
services billed to customers are classified as cost of goods sold.

    (J) STOCK-BASED COMPENSATION

    SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, defines a fair value
based method of accounting for an employee stock option or similar instrument.
Under the fair value based method, compensation cost is measured at the grant
date based on the value of the award and is recognized over the service period,
which is usually the vesting period. However, SFAS 123 also allows an entity to
continue to measure compensation cost using the intrinsic value based method of
accounting prescribed by APB Opinion No. 25 (Opinion 25), ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES. Under the intrinsic value based method, compensation cost
is the excess, if any, of the quoted market price of the stock at grant date or
other measurement date over the amount an employee must pay to acquire the
stock. Entities electing to remain with the accounting in Opinion 25 must make
pro forma disclosures of net income (loss) and, if presented, earnings per
share, as if the fair value based method had been applied. APT has elected to
continue to apply the prescribed accounting in Opinion 25.

    APT accounts for equity instruments issued to non-employees in accordance
with the provisions of SFAS 123 and other applicable accounting literature.

    (K) MANAGEMENT ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

    (L) FOREIGN CURRENCY

    The local currency of APT's foreign subsidiary is the functional currency.
Assets and liabilities of APT's foreign operation are translated into U.S.
dollars using exchange rates in effect at the translation date, and revenue and
expenses are translated into U.S. dollars using average exchange rates. The
effects of foreign currency translation adjustments are included as a component
of stockholder's deficit.

                                      F-9
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Gains or losses occurring on foreign currency transactions during the year have
been included in the consolidated statements of operations as other income
(expense).

    (M) ADVERTISING COSTS

    The cost of advertising is expensed as incurred. Advertising costs were not
significant during the periods presented.

    (N) FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amount of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the short-term nature of these
instruments. The carrying amount of amounts due under the lines of credit and
long-term obligations approximate fair value since the interest rates
approximate current rates available to APT.

    (O) EARNINGS PER SHARE

    APT reports earnings per share in accordance with SFAS 128, EARNINGS PER
SHARE, and SEC Staff Accounting Bulletin No. 98 (SAB 98), which requires the
presentation of both basic and diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
and diluted earnings per share is computed using the weighted-average number of
common shares outstanding and dilutive potential common shares assumed to be
outstanding during the period using the treasury stock method. The following
weighted-average potential common shares have been excluded from the computation
of diluted net loss per share for the respective periods presented because the
effect would have been anti-dilutive.

<TABLE>
<CAPTION>
                                                                              THREE MONTHS
                                                                                  ENDED
                                             YEARS ENDED DECEMBER 31,           MARCH 31,
                                          ------------------------------   -------------------
                                            1997       1998       1999       1999       2000
                                          --------   --------   --------   --------   --------
                                                                               (UNAUDITED)
<S>                                       <C>        <C>        <C>        <C>        <C>
Incremental shares issuable under stock
  options and warrants..................     --       24,099    692,365     15,388       --
</TABLE>

    Approximately 1,456,000 (unaudited) incremental shares issuable under stock
options and warrants were included in the weighted-average number of shares used
in the computation of diluted net income per share for the three months ended
March 31, 2000.

    (P) RISK OF TECHNOLOGICAL CHANGE

    The markets in which APT competes or seeks to compete are subject to rapid
technological change, frequent new product introductions, changing customer
requirements for new products and features, and evolving industry standards. The
introduction of new technologies and the emergence of new industry standards
could render APT's products less desirable or obsolete, which could harm its
business.

                                      F-10
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    (Q) UNAUDITED QUARTERLY INFORMATION

    The financial information included herein as of March 31, 2000 and for the
three-month periods ended March 31, 1999 and 2000 is unaudited. However, such
information reflects all adjustments consisting of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim
period.

    (R) COSTS OF SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE

    Internal use software development costs are accounted for in accordance with
Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE
DEVELOPED OR OBTAINED FOR INTERNAL USE. Costs incurred in the preliminary
project stage are expensed as incurred and costs incurred in the application and
development stage, which meet the capitalized criteria, are capitalized and
amortized on a straight-line basis over five years, the estimated useful life of
the asset.

    (S) ACCOUNTS RECEIVABLE

    Accounts receivable are shown net of allowance for doubtful accounts of
$110, $62 and $103 (unaudited) at December 31, 1998 and 1999 and March 31, 2000.
The following table presents a rollforward of the allowance for doubtful
accounts for the indicated periods:

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                ------------------------------    MARCH 31,
                                                  1997       1998       1999        2000
                                                --------   --------   --------   -----------
                                                                                 (UNAUDITED)
<S>                                             <C>        <C>        <C>        <C>
Balance--beginning of period..................    $ 81       $ 60       $110         $ 62
Provision (reduction).........................     158        (73)       (24)          41
(Charge offs) recoveries......................    (179)       123        (24)          --
                                                  ----       ----       ----         ----
Balance--end of period........................    $ 60       $110       $ 62         $103
                                                  ====       ====       ====         ====
</TABLE>

    (T) CONCENTRATION OF SUPPLIERS

    APT relies on one external subcontractor for the manufacture and
substantially all the assembly/packaging of certain products, respectively. The
failure to perform by one of these suppliers could have a material impact on
APT's growth and results of operations.

                                      F-11
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(2) BALANCE SHEET COMPONENTS

    (A) INVENTORIES

    Inventories consist of the following:

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                 -------------------
                                                   1998       1999     MARCH 31, 2000
                                                 --------   --------   --------------
                                                                        (UNAUDITED)
<S>                                              <C>        <C>        <C>
Raw materials..................................   $  901     $  583        $  812
Work in progress...............................    3,590      3,954         4,126
Finished goods.................................    1,485      1,410         1,567
                                                  ------     ------        ------
                                                   5,976      5,947         6,505

Valuation reserve..............................     (671)      (794)         (916)
                                                  ------     ------        ------
  Inventories, net.............................   $5,305     $5,153        $5,589
                                                  ======     ======        ======
</TABLE>

    (B) PROPERTY AND EQUIPMENT

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                 DECEMBER 31,
                                              -------------------
                                                1998       1999     MARCH 31, 2000
                                              --------   --------   --------------
                                                                     (UNAUDITED)
<S>                                           <C>        <C>        <C>
Machinery, furniture and equipment..........  $11,354    $ 11,843      $ 12,684
Leasehold improvements......................      580         564           553
Assets in process...........................      524         722           884
                                              -------    --------      --------
                                               12,458      13,129        14,121

Less accumulated depreciation and
  amortization..............................   (9,384)    (10,646)      (10,848)
                                              -------    --------      --------
                                              $ 3,074    $  2,483      $  3,273
                                              =======    ========      ========
</TABLE>

    (C) ACCRUED EXPENSES

    Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                 -------------------
                                                   1998       1999     MARCH 31, 2000
                                                 --------   --------   --------------
                                                                        (UNAUDITED)
<S>                                              <C>        <C>        <C>
Accrued interest...............................   $  378     $  572        $  647
Payroll, commissions and related liabilities...      383        392           376
Vacation accrual...............................      247        240           277
Warranty and sales returns accrual.............       91        119           210
Other..........................................      574        466           451
                                                  ------     ------        ------
                                                  $1,673     $1,789        $1,961
                                                  ======     ======        ======
</TABLE>

                                      F-12
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(3) MANAGEMENT BUYOUT

    The Tremoliere purchases have resulted in a change of control and a step up
in the basis of assets and liabilities under the purchase method of accounting
for the percentage acquired at the time. The cost of the acquisition was
allocated on the basis of estimated fair market value of the assets acquired and
liabilities assumed. The purchase price was allocated as follows for each
transaction:

<TABLE>
<CAPTION>
                                                                1995       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Total consideration.........................................   $3,570     $2,450
Fair value of net tangible assets acquired..................    2,189      2,205
                                                               ------     ------
  Goodwill..................................................   $1,381     $  245
                                                               ======     ======
</TABLE>

(4) LINES OF CREDIT

    APT has two lines of credit with a bank for up to a total of $5,000 to
provide funds for the continuing operations of APT and financing of the
management buyout in January 1998 as discussed in note 1. The outstanding
balance on the lines of credit at December 31, 1999 and 1998 was $4,344 and
$3,871, respectively. The lines of credit expire on March 31, 2000, and bear
interest at prime plus 1.0% to 1.25% based on the ratio of debt to equity (9.75%
at December 31, 1999). The lines of credit are secured by accounts receivable
and inventories and a $1,000 personal guarantee by our officers. See note 14.
APT's loan covenants require the consent of the bank prior to the payment of any
cash dividends.

    Borrowings under these lines of credit, as well as the $2,500 and $167 notes
payable discussed in note 5, are subject to certain financial covenants for
which APT was in compliance as of December 31, 1999.

    APT Europe has a line of credit with a financing institution which provides
borrowings based on a percentage of outstanding export accounts receivable,
bears interest at 5.94% per annum, plus commissions, and is collateralized by
APT Europe's accounts receivable. Amounts outstanding under this line of credit
was $551 and $581 as of December 31, 1999 and 1998, respectively. The line of
credit may be terminated upon three months notice by either party.

                                      F-13
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(5) LONG-TERM DEBT

    Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                 -------------------
                                                   1998       1999     MARCH 31, 2000
                                                 --------   --------   --------------
                                                                        (UNAUDITED)
<S>                                              <C>        <C>        <C>
Note payable to Sundstrand, interest at 9%,
  interest and principal due September 6, 2001
  or upon completion of an initial public
  offering, whichever occurs first, secured by
  the stock of APT owned by Tremoliere.........   $3,320     $3,320        $3,320
Subordinate loan from bank, subordinate to
  amounts outstanding under lines of credit
  (see note 4), interest payable monthly at
  prime plus 1.5% per annum (9.25% as of
  December 31, 1999), principal due September
  30, 2000, and collateralized by substantially
  all assets of APT............................    2,500      2,500         2,500
Term loan with bank, monthly principal payments
  of $14 plus interest at prime plus 1.75% per
  annum (9.5% as of December 31, 1999), final
  payment due January 2001, and collateralized
  by substantially all assets of APT...........      347        167           125
Other..........................................      178         70           817
                                                  ------     ------        ------
  Total long-term debt.........................    6,345      6,057         6,762
Less current portion of long-term debt.........      339      2,737         2,940
                                                  ------     ------        ------
  Total long-term debt, less current portion...   $6,006     $3,320        $3,822
                                                  ======     ======        ======
</TABLE>

(6) LEASES

    APT leases its facilities and certain office equipment under noncancelable
operating leases, which expire over the next five years. Rental expense was
$486, $560 and $633 for the years ended December 31, 1997, 1998 and 1999,
respectively.

    APT is also obligated under capital leases for certain equipment, which
expire over the next four years. The gross amounts of equipment and accumulated
amortization recorded under capital leases were as follows:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              1998       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Equipment.................................................  $ 3,864    $ 4,123
Less accumulated amortization.............................   (3,017)    (3,752)
                                                            -------    -------
                                                            $   847    $   371
                                                            =======    =======
</TABLE>

                                      F-14
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(6) LEASES (CONTINUED)

    Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) and capital leases are
as follows:

<TABLE>
<CAPTION>
                                                             CAPITAL    OPERATING
                                                              LEASES     LEASES
                                                             --------   ---------
<S>                                                          <C>        <C>
Year ending December 31:
  2000.....................................................    $204      $  541
  2001.....................................................      98         535
  2002.....................................................      84         541
  2003.....................................................      59         417
  2004.....................................................      --         202
                                                               ----      ------
    Total minimum lease payments...........................     445      $2,236
                                                                         ======
Less amount representing interest..........................      59
                                                               ----
    Minimum lease payments.................................     386
Less current portion of capital lease obligations..........     181
                                                               ----
                                                               $205
                                                               ====
</TABLE>

    During 1995, APT sold equipment for $3,000 which has been leased back
through a capital lease which expired on December 31, 1999. The transaction
generated a gain of $225 which was deferred and amortized over the four-year
lease period.

    During 1996, APT sold its fabrication facility in Bend, Oregon for $1,550
and leased it back under a fifteen-year operating lease agreement. The
transaction produced a gain of approximately $348 which is being deferred and
amortized over the fifteen-year lease period.

    During 1998, APT sold equipment for $200 which has been leased back through
capital leases which expire in 2001. The transaction generated a gain of $14,
which is being deferred and amortized over the three-year lease period.

(7) TAXES

    Domestic and foreign pre-tax income (loss) consist of the following:

<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                                        ------------------------------
                                                          1997       1998       1999
                                                        --------   --------   --------
<S>                                                     <C>        <C>        <C>
Domestic..............................................   $(214)    $(2,114)     $(43)
Foreign...............................................    (683)       (661)       68
                                                         -----     -------      ----
                                                         $(897)    $(2,775)     $ 25
                                                         =====     =======      ====
</TABLE>

                                      F-15
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(7) TAXES (CONTINUED)
    Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         1997       1998       1999
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Current:
  Federal............................................   $ 370     $  (348)    $ 418
  State..............................................      24          --        15
                                                        -----     -------     -----
                                                          394        (348)      433
                                                        -----     -------     -----

Deferred:
  Federal............................................    (239)       (579)     (252)
  State..............................................     (58)       (192)       19
                                                        -----     -------     -----
                                                         (297)       (771)     (233)
                                                        -----     -------     -----
    Total............................................   $  97     $(1,119)    $ 200
                                                        =====     =======     =====
</TABLE>

    The actual income tax expense (benefit) differs from the expected tax
benefit computed by applying the U.S. federal corporate income tax rate of 34%
to loss before income taxes as follows:

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,
                                                      ------------------------------------
                                                        1997          1998          1999
                                                      --------      --------      --------
<S>                                                   <C>           <C>           <C>
Expected income tax expense (benefit)...............     (34)%        (34)%           34%
Difference attributable to foreign subsidiary.......      26          (20)            --
Expired net operating loss carryforwards............     150           11             67
Change in valuation allowance.......................    (151)          (1)           (65)
State income taxes, net of federal..................       1           (7)             9
Release of deferred net operating loss..............      --           --           (489)
Goodwill amortization...............................      11            4            494
Difference in tax status for pass through entity....      13            6            654
Other...............................................      (5)           1             96
                                                        ----          ---           ----
Actual expense (benefit)............................      11%         (40)%          800%
                                                        ====          ===           ====
</TABLE>

                                      F-16
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(7) TAXES (CONTINUED)
    The income tax effect of temporary differences and carryforwards which give
rise to significant portions of deferred tax assets and liabilities are as
follows:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              1998       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Deferred tax assets:
  Allowance for doubtful accounts.........................  $    96    $    87
  Reserve for inventory obsolescence......................      248        291
  Accrued vacation pay....................................       48         53
  Reserve for product returns.............................       29         44
  Net operating loss carryforwards........................    2,441      2,293
  Depreciation and amortization differences...............      116        325
  Credit carryforwards....................................       84          5
  Interest................................................       --         45
  Other...................................................       26         39
                                                            -------    -------
    Total gross deferred tax assets.......................    3,088      3,182
Less valuation allowance..................................   (2,309)    (2,293)
                                                            -------    -------
    Deferred tax assets, net of valuation allowance.......      779        889
Deferred tax liability:
  Deferred utilization of net operating loss
    carryforwards.........................................     (903)      (780)
                                                            -------    -------
    Net deferred tax asset (liability)....................  $  (124)   $   109
                                                            =======    =======
</TABLE>

    The valuation allowance for deferred tax assets as of January 1, 1997 was
$3,442. The net change in the valuation allowance for the years ended
December 31, 1997, 1998 and 1999 were decreases of $1,102, $31 and $16,
respectively.

    APT has federal research and experimentation credit carryforwards of $5
which are available to offset future income taxes, if any, through 2014.

    As of December 31, 1999, APT had foreign net operating loss carryforwards
for tax purposes available to offset future income of the foreign subsidiary of
approximately (French Francs) FF32,121, or $4,931 based on the exchange rate as
of December 31, 1999; FF21,686 ($3,329), which are available indefinitely and
FF10,435 ($1,601), which expire in 2000 through 2004.

(8) STOCKHOLDERS' DEFICIT

    (A) STOCK OPTION PLAN

    The 1995 Stock Option Plan (the Plan) provides for the granting of stock
options to employees, directors and consultants up to 1,241,430 shares (see
note 14) of authorized but unissued common stock. Options granted under the Plan
must generally be exercised while the individual is an employee and within ten
years of the date of grant. Options granted typically vest at a rate of 20% per
year for five years.

                                      F-17
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(8) STOCKHOLDERS' DEFICIT (CONTINUED)
    APT applies Opinion 25 in accounting for its Plan. Had APT determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS 123, APT's net loss would have been the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                                     ------------------------------
                                                       1997       1998       1999
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Net loss:
  As reported......................................  $  (994)   $(1,656)    $ (175)
  Pro forma........................................   (1,156)    (1,826)      (350)
Basic and diluted net loss per share:
  As reported......................................    (0.20)     (0.33)     (0.04)
  Pro forma........................................    (0.23)     (0.37)     (0.07)
</TABLE>

    The fair value of compensation costs reflected in the above pro forma
amounts were determined using the Black-Scholes option pricing model and the
following weighted average assumptions for grants used in the calculation are as
follows:

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                    ------------------------------
                                                      1997       1998       1999
                                                    --------   --------   --------
<S>                                                 <C>        <C>        <C>
Risk-free interest rate...........................      6.3%       5.5%       5.5%
Expected dividend yield...........................        0%         0%         0%
Expected life.....................................  7 years    5 years    5 years
Volatility........................................      100%       100%       100%
</TABLE>

    Under the Black-Scholes option pricing model, the weighted average fair
value of options granted during the years ended December 31, 1997, 1998 and 1999
was approximately $1.17, $1.14 and $1.47, respectively.

    The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts and additional awards anticipated in future years.

    APT has recorded a deferred stock compensation of $38 through December 31,
1999. This deferred stock compensation is based on the difference between the
deemed fair market value of common stock and the exercise price of the option or
stock on the grant date. Deferred stock compensation is being amortized on an
accelerated basis over the vesting period, generally five years. APT recognized
compensation expense of $7 during the year ended December 31, 1999 related to
these grants. Amortization of the December 31, 1999 balance of deferred stock
compensation for the years ending December 31, 2000, 2001, 2002 and 2003 would
not be significant in the respective periods.

    During the three months ended March 31, 2000, APT recorded additional
deferred stock compensation of $576 (unaudited) related to the issuance of
147,150 (unaudited) of stock options.

                                      F-18
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(8) STOCKHOLDERS' DEFICIT (CONTINUED)
    Stock option activity is as follows:

<TABLE>
<CAPTION>
                                                                   WEIGHTED AVERAGE
                                                NUMBER OF SHARES    EXERCISE PRICE
                                                ----------------   ----------------
<S>                                             <C>                <C>
Options outstanding at December 31, 1996......      462,575             $1.47
Granted.......................................      106,550              1.40
Forfeited.....................................       (9,600)             1.40
                                                    -------
Options outstanding at December 31, 1997......      559,525              1.46
Granted.......................................      245,650              1.41
Forfeited.....................................      (47,100)             1.40
                                                    -------
Options outstanding at December 31, 1998......      758,075              1.41
Granted.......................................      113,277              1.47
Exercised.....................................          (20)             1.40
Forfeited.....................................      (61,485)             1.42
                                                    -------
Options outstanding at December 31, 1999......      809,847              1.45
Granted (unaudited)...........................      147,150              1.48
Exercised (unaudited).........................         (500)             1.40
Forfeited (unaudited).........................       (3,300)             1.42
                                                    -------
Options outstanding at March 31, 2000
  (unaudited).................................      953,197              1.46
                                                    =======
</TABLE>

    As of December 31, 1999, the range of exercise prices and weighted average
remaining contractual life of options outstanding was $1.40 to $1.54 and
6.6 years, respectively.

    As of December 31, 1998 and 1999 and March 31, 2000, the number of options
exercisable were 214,623, 346,842 and 412,053 (unaudited), respectively, with
weighted average exercise prices of $1.41, $1.46 and $1.45, respectively.

    (B) WARRANTS

    On September 6, 1995, APT issued three warrants to financing companies and a
bank. Two of the warrants permit the holders to purchase 35,715 shares and one
warrant permits the holder to purchase 35,714 shares of APT's common stock, each
at exercise prices of $1.40 per share. Two of the warrants are exercisable
through December 31, 2005; the other warrant is exercisable through
September 6, 2002. In connection with the refinancing of certain debt, the
expiration dates of two warrants were extended to December 31, 2005. The fair
value of $77 was determined using the Black-Scholes methodology using the
refinancing date as the measurement date, a risk-free rate of 5.2%, expected
dividend yield of 0%, 2-year term and expected volatility of 65%.

    Also on September 6, 1995, APT issued a warrant to Advanced Energy
Industries, Inc., a customer, in return for their guaranty of a $1,000 loan from
a bank. The warrant allows Advanced Energy Industries, Inc. to purchase 250,000
shares of APT's common stock at an exercise price of $1.40 per share. The
warrant expires upon the first to occur of the following: (i) the closing date
of an initial public offering of shares of stock of APT; (ii) two years after
the date the loan is repaid in full; or (iii) two years after the date the
guaranty expires. Pursuant to the agreement between this customer and APT, the
customer holds a seat on APT's board of directors for as long as the guaranty is
outstanding.

                                      F-19
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(8) STOCKHOLDERS' DEFICIT (CONTINUED)

    On September 6, 1996, APT issued a warrant to a bank. The warrant permits
the holder to purchase 35,714 shares of APT's common stock at an exercise price
of $1.40 per share. The warrant is exercisable through September 6, 2003. The
fair value of the warrants issued of $27 was determined by applying the
Black-Scholes methodology using the issuance date as the measurement date, a
risk-free rate of 4.7%, expected dividend yield of 0%, a four-year term and
expected volatility of 65%.

    On December 23, 1997, APT issued a warrant to Advanced Energy
Industries, Inc., a customer, in return for their guaranty of a $2,500 loan to a
bank. The warrant allows Advanced Energy Industries, Inc. to purchase 250,000
shares of APT's common stock at an exercise price of $4.00 per share. The
warrant expires on the first to occur of the following: (i) the closing date of
an initial public offering of shares of stock of APT; (ii) two years after the
date the loan is repaid in full; or (iii) two years after the date that the
guaranty expires. The fair value of the warrants issued of $70 was determined by
applying the Black-Scholes methodology using the issuance date as the
measurement date, a risk-free rate of 6%, expected dividend yield of 0%, a
four-year term and expected volatility of 60%. The warrant values represent a
deferred financing cost and are being amortized over the term of the debt
facility of 27 months.

    On November 5, 1998, APT issued warrants to two financing companies in
connection with the renegotiations of certain commitments. The warrants permit
the holders to purchase a total of 10,000 shares of APT's common stock at $1.40
per share. These warrants are exercisable through December 31, 2005. The fair
value of the warrants issued of $87 was determined by applying the Black-
Scholes methodology using the issuance date as the measurement date, a risk-free
rate of 5.15%, expected dividend yield of 0%, a seven-year term and expected
volatility of 80%. The warrant values represent a deferred financing cost and
are being amortized over the term of the debt facility of sixteen months.

    As of December 31, 1999, warrants to purchase 652,858 shares of common stock
were exercisable at a weighted average exercise price of $2.40 per share.

(9) RETIREMENT BENEFIT PLAN

    APT sponsors a defined contribution 401(k) plan (the Plan). Employees in the
United States who are at least eighteen years old and have six months of service
are eligible to participate in the Plan. Participants may defer up to 15% of
eligible compensation. Currently, APT does not provide matching contributions
for the Plan.

(10) SEGMENT INFORMATION

    APT operates in one segment and is engaged in the design, development,
manufacture and sale of high power, high frequency power semiconductor products
and related services.

                                      F-20
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(10) SEGMENT INFORMATION (CONTINUED)
    (A) GEOGRAPHIC INFORMATION

    APT's geographic revenues, operating income (loss) and identifiable assets
are summarized as follows:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                   ------------------------------
                                                     1997       1998       1999
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Geographic revenues:
  United States..................................  $13,925    $14,277    $15,685
  Germany........................................    2,836      3,038      3,063
  Other..........................................    8,971      7,536      8,713
                                                   -------    -------    -------
                                                   $25,732    $24,851    $27,461
                                                   =======    =======    =======
Operating income (loss):
  United States..................................  $   530    $  (757)   $ 1,029
  France.........................................     (512)      (868)       227
                                                   -------    -------    -------
                                                   $    18    $(1,625)   $ 1,256
                                                   =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              1998       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Identifiable assets:
  United States...........................................  $12,159    $12,263
  France..................................................    2,041      1,596
                                                            -------    -------
                                                            $14,200    $13,859
                                                            =======    =======
</TABLE>

    (B) SIGNIFICANT CUSTOMER

    One customer, Advanced Energy Industries, Inc., accounted for $4,007 of
sales in 1997 and $4,005 in 1999. No other customer represented greater than 10%
of sales during the years ended December 31, 1997, 1998 and 1999.

(11) COMMITMENTS AND CONTINGENCIES

    APT is involved in various claims and legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on APT's consolidated
financial position, results of operations or liquidity.

    APT has an agreement with its foundry partner in Europe to process six-inch
wafers. This agreement extends through 2004. The agreement contains no minimum
purchase requirements.

    APT has entered into employment agreements with certain senior officers.
These agreements contain severance payment clauses equal to one months salary if
they are dismissed without cause.

                                      F-21
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(12) EXTERNAL SUBCONTRACTORS

    APT generally commits to purchase products from its external subcontractors
to be delivered within the most recent 90 days covered by forecasts with
cancellation fees. As of December 31, 1999, APT had committed to make purchases
totaling $2,600 from the external subcontractors in the 90 days subsequent to
the fiscal year-end. In addition, in specific instances, APT may agree to assume
liability for limited quantities of specialized components with lead times
beyond their 90-day period.

(13) RELATED PARTY TRANSACTIONS

    The Chief Executive Officer of Advanced Energy Industries, Inc. (Advanced
Energy), who is a substantial shareholder of Advanced Energy, serves as a
director of APT. For the years ended December 31, 1997, 1998 and 1999, sales to
Advanced Energy were approximately $4,007, $1,939 and $4,005. Advanced Energy
also guaranteed a $1,000 bank loan to APT in 1995, and subsequently increased to
$2,500 in 1998. The guaranty is still outstanding. APT has issued warrants to
purchase 560,000 shares of APT's common stock at a weighted-average exercise
price of $2.73 per share to Advanced Energy. These warrants will expire on
completion of an initial public offering if not exercised immediately before the
offering.

    A director of APT is also a partner at Karnopp, Petersen, Noteboom, Hansen,
Arnett & Sayeg LLP. For the years ended December 31, 1997, 1998 and 1999, APT
paid Karnopp, Petersen, Noteboom, Hansen, Arnett & Sayeg LLP $4, $8 and $6 in
legal fees, respectively.

(14) SUBSEQUENT EVENTS (UNAUDITED)

    (A) LINES OF CREDIT

    The lines of credit to APT were renewed in March of 2000, and increased from
$5,000 to $6,000. The lines now expire in May 2001.

    (B) JOINT VENTURE AGREEMENT

    In April of 2000, APT entered into a joint venture agreement in China, which
includes a pending license and technology transfer agreement for certain
technologies, in exchange for a cash payment of $1,500 over two years and a 25%
share in the equity ownership of the joint venture.

    (C) AUTHORIZED OPTIONS

    In May of 2000, the board of directors increased the number of authorized
stock options under the Plan to 1,500,000.

    (D) AUTHORIZED SHARES

    In May of 2000, the board of directors approved an increase in the
authorized number of common stock to 19,000,000 stock and 1,000,000 of preferred
stock.

    (E) WARRANTS

    On April 1, 2000, APT issued a warrant to Advanced Energy in return for the
renewal of their guaranty of a $2,500 loan to a bank. The warrant allows
Advanced Energy to purchase 60,000 shares of

                                      F-22
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

(14) SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
APT's common stock at an exercise price of $3.00 per share. The warrant expires
on the first to occur of the following; (i) the closing date of an initial
public offering of shares of stock of APT; (ii) two years after the date of the
loan is repaid in full; or (iii) two years after the date the guaranty expires.
The deemed fair value of the warrants issued of approximately $450 was
determined by applying the Black-Scholes methodology.

                                      F-23
<PAGE>
                               INSIDE BACK COVER

                                    [Blank]
<PAGE>
[BACK COVER]

                                     [LOGO]

                                 --------------
                                   PROSPECTUS
                                 --------------

                                 STEPHENS INC.
                            NEEDHAM & COMPANY, INC.
                           FIRST SECURITY VAN KASPER
<PAGE>
                                    PART II
                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

    The table below lists various expenses, other than underwriting discounts
and commissions, we expect to incur in connection with the sale and distribution
of the securities being registered hereby. All the expenses are estimates,
except the Securities and Exchange Commission registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.

<TABLE>
<CAPTION>
TYPE                                                            AMOUNT
----                                                          -----------
<S>                                                           <C>
Securities and Exchange Commission Registration Fee.........  $ 18,216.00
NASD Filing Fee.............................................     7,400.00
Nasdaq National Market Listing Fee..........................       *
Legal fees and expenses.....................................       *
Accounting fees and expenses................................       *
Printing and engraving expenses.............................       *
Transfer agent and registrar fees...........................       *
Miscellaneous expenses......................................       *
TOTAL.......................................................  $    *
</TABLE>

------------------------

*   To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

    Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons under circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act. Our Amended and Restated Certificate of Incorporation and Amended and
Restated Bylaws provide for indemnification of our officers, directors,
employees and agents to the extent and under the circumstances permitted under
the Delaware General Corporation Law.

    The Underwriting Agreement (Exhibit 1.1) provides for indemnification by the
underwriters of us, our directors and officers, and by us of the underwriters,
for some liabilities arising under the Securities Act, and affords some rights
of contributions with respect thereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

    Within the last three years, and through May 31, 2000, we have issued and
sold the following unregistered securities:

1.  Options to purchase 513,427 shares of common stock, issued pursuant to
    exemptions from registration provided by Rule 701 and comparable state
    exemptions; and

2.  Warrants to purchase 320,000 shares, issued pursuant to federal and state
    exemptions from registration for private offerings.

                                      II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

    (a) EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           NAME OF DOCUMENT
---------------------   ----------------
<C>                     <S>
          1.1*          Form of Underwriting Agreement

          3.1           Amended and Restated Certificate of Incorporation

          3.2           Amended and Restated Bylaws

          4.1*          Form of Common Stock Certificate

          5.1*          Opinion of Davis Wright Tremaine LLP

         10.1           Stock Option Plan dated December 31, 1995, as amended

         10.2           Employment Agreement: Patrick P.H. Sireta

         10.3           Employment Agreement: Russell J. Crecraft

         10.4           Employment Agreement: Greg M. Haugen

         10.5*          Employment Agreement: John I. Hess

         10.6           Employment Agreement: Thomas A. Loder

         10.7           Employment Agreement: Dah Wen Tsang

         10.8           Lease Agreement between Shevlin No. One and Advanced Power
                        Technology, Inc. dated as of March 21, 1985, as amended

         10.9           Commercial Lease between Glassow Ventures, L.L.C. and
                        Advanced Power Technology, Inc. dated March 6, 1996, as
                        amended

        10.10+          North America Distributor Agreement between Richardson
                        Electronics, Ltd. and Advanced Power Technology, Inc. dated
                        as of April 1, 1997

        10.11+          Manufacturing Agreement by and between Siemens AG and
                        Advanced Power Technology, Inc. dated October 14, 1997

        10.12+          Agreement for Wafer Production and Testing by and between
                        Advanced Power Technology, Inc. and Siemens
                        Aktiengesellschaft dated February 11, 1998

        10.13+          Document of Understanding between Advanced Energy Industries
                        and Advanced Power Technology, Inc. dated August 14, 1998,
                        as amended

        10.14+          Supply Contract between Wacker Siltronic Corporation and
                        Advanced Power Technology, Inc. dated December 17, 1998

        10.15+          Master Agreement by and between Liaoning Huahai Power
                        Electronics Co. Ltd., Advanced Power Technology, Inc., and
                        Advanced Power Technology Europe SA dated as of October 15,
                        1999

        10.16+          Subcontract Agreement between Team Pacific Corporation and
                        Advanced Power Technology, Inc. dated January 26, 2000

        10.17*          Leases: Bordeaux, France

         21.1           Subsidiaries of Advanced Power Technology, Inc.

         23.1           Consent of KPMG LLP

         23.2*          Consent of Davis Wright Tremaine LLP (included in its
                        opinion filed as Exhibit 5 to this Registration Statement)

         24.1           Powers of Attorney (included on the signature pages)
</TABLE>

                                      II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           NAME OF DOCUMENT
---------------------   ----------------
<C>                     <S>
         27.1           Financial Data Schedule
</TABLE>

------------------------

*   To be filed by amendment.

+  Confidential treatment has been requested with respect to certain portions of
    these agreements.

ITEM 17. UNDERTAKINGS.

    Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

    The undersigned registrant hereby undertakes that:

    (a) For purposes of determining any liability under the Act, the information
       omitted from the form of prospectus filed as part of this registration
       statement in reliance upon Rule 430A and contained in a form of
       prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
       497(h) under the Act shall be deemed to be a part of this registration
       statement as of the time it was declared effective; and

    (b) For the purpose of determining any liability under the Act, each
       post-effective amendment that contains a form of prospectus shall be
       deemed to be a new registration statement relating to the securities
       offered therein, and the offering of such securities at that time shall
       be deemed to be the initial bona fide offering thereof; and

    (c) It will provide to the underwriters at the closing(s) specified in the
       underwriting agreement, certificates in such denominations and registered
       in such names as required by the underwriters to permit prompt delivery
       to each purchaser.

                                      II-3
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Portland, Oregon on June
1, 2000.

<TABLE>
<S>                                                    <C>  <C>
                                                       ADVANCED POWER TECHNOLOGY, INC.

                                                       By:           /s/ PATRICK P.H. SIRETA
                                                            -----------------------------------------
                                                                       Patrick P.H. Sireta
                                                              PRESIDENT, CHIEF EXECUTIVE OFFICER AND
                                                                      CHAIRMAN OF THE BOARD
</TABLE>

                               POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Patrick P.H. Sireta and Greg M. Haugen, and each
of them, his true and lawful attorneys-in-fact and agents, each with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement, and any registration statement
relating to the offering covered by this Registration Statement and filed
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact and agents or their substitute or
substitutes may lawfully so or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <S>                          <C>
                                                       President, Chief Executive
               /s/ PATRICK P.H. SIRETA                   Officer and Chairman of
     -------------------------------------------         the Board (principal          June 1, 2000
                 Patrick P.H. Sireta                     executive officer)

                 /s/ GREG M. HAUGEN                    Chief Financial Officer
     -------------------------------------------         (principal financial and      June 1, 2000
                   Greg M. Haugen                        accounting officer

     -------------------------------------------       Director
                  Douglas S. Schatz

                /s/ JAMES E. PETERSEN
     -------------------------------------------       Director                        June 1, 2000
                  James E. Petersen
</TABLE>

                                      II-4
<PAGE>
                        ADVANCED POWER TECHNOLOGY, INC.
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           NAME OF DOCUMENT
---------------------   ----------------
<C>                     <S>
          1.1*          Form of Underwriting Agreement
          3.1           Amended and Restated Certificate of Incorporation
          3.2           Amended and Restated Bylaws
          4.1*          Form of Common Stock Certificate
          5.1*          Opinion of Davis Wright Tremaine LLP
         10.1           Stock Option Plan dated December 31, 1995, as amended
         10.2           Employment Agreement: Patrick P.H. Sireta
         10.3           Employment Agreement: Russell J. Crecraft
         10.4           Employment Agreement: Greg M. Haugen
         10.5*          Employment Agreement: John I. Hess
         10.6           Employment Agreement: Thomas A. Loder
         10.7           Employment Agreement: Dah Wen Tsang
         10.8           Lease Agreement between Shevlin No. One and Advanced Power
                        Technology, Inc. dated as of March 21, 1985, as amended
         10.9           Commercial Lease between Glassow Ventures, L.L.C. and
                        Advanced Power Technology, Inc. dated March 6, 1996, as
                        amended
        10.10+          North America Distributor Agreement between Richardson
                        Electronics, Ltd. and Advanced Power Technology, Inc. dated
                        as of April 1, 1997
        10.11+          Manufacturing Agreement by and between Siemens AG and
                        Advanced Power Technology, Inc. dated October 14, 1997
        10.12+          Agreement for Wafer Production and Testing by and between
                        Advanced Power Technology, Inc. and Siemens
                        Aktiengesellschaft dated February 11, 1998
        10.13+          Document of Understanding between Advanced Energy Industries
                        and Advanced Power Technology, Inc. dated August 14, 1998,
                        as amended
        10.14+          Supply Contract between Wacker Siltronic Corporation and
                        Advanced Power Technology, Inc. dated December 17, 1998
        10.15+          Master Agreement by and between Liaoning Huahai Power
                        Electronics Co. Ltd., Advanced Power Technology, Inc., and
                        Advanced Power Technology Europe SA dated as of October 15,
                        1999
        10.16+          Subcontract Agreement between Team Pacific Corporation and
                        Advanced Power Technology, Inc. dated January 26, 2000
        10.17*          Leases: Bordeaux, France
         21.1           Subsidiaries of Advanced Power Technology, Inc.
         23.1           Consent of KPMG LLP
         23.2*          Consent of Davis Wright Tremaine LLP (included in its
                        opinion filed as Exhibit 5 to this Registration Statement)
         24.1           Powers of Attorney (included on the signature pages)
         27.1           Financial Data Schedule
</TABLE>

------------------------
*   To be filed by amendment.

+  Confidential treatment has been requested with respect to certain portions of
    these agreements.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.1
<SEQUENCE>2
<FILENAME>ex-31.txt
<DESCRIPTION>EXHIBIT 3.1
<TEXT>

<PAGE>

               AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                         ADVANCED POWER TECHNOLOGY, INC.

                                  May 31, 2000

         Advanced Power Technology, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:

         A. The name of the Corporation is Advanced Power Technology, Inc. and
the original Certificate of Incorporation was filed with the Secretary of State
of the State of Delaware on March 23, 1992.

         B. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation restates and
amends the provisions of the Certificate of Incorporation of the Corporation.

         C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:

                                ----------------

         FIRST: The name of the corporation (the "Corporation") is Advanced
Power Technology, Inc.

         SECOND: The registered office of the Corporation is to be located
at1209 Orange Street, Wilmington, County of New Castle, Delaware, 19801-1196,
c/o Corporation Trust Center. The name of its registered agent at that address
is Corporation Trust Company.

         THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.

         FOURTH: The total number of shares of all classes of capital stock that
the corporation shall have authority to issue is twenty million (20,000,000), of
which nineteen million (19,000,000), with a par value of $0.01 per share, shall
be designated common stock (the "Common Stock") and one million (1,000,000),
with a par value of $0.001 per share, shall be designated preferred stock (the
"Preferred Stock"). The Preferred Stock may be issued from time in one or more
series. To the extent permitted under the General Corporation Law of Delaware,
the Board of Directors is authorized to fix the number of shares of any series
of Preferred Stock and to determine the designation of any such shares. The
Board of Directors also is authorized to determine or alter the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock and, within the limits and restrictions
stated in any resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series, to increase or decrease
(but not below the number of shares of such series then outstanding) the number
of shares of any such series subsequent to the

<PAGE>

issue of that series unless a vote of the holders of such series is required
pursuant to the certificate establishing the series of Preferred Stock.

         FIFTH: The Corporation shall have perpetual existence.

         SIXTH: Unless, and except to the extent that the bylaws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.

         SEVENTH: The number of directors which constitutes the whole Board of
Directors of the Corporation shall be designated in the bylaws of the
Corporation and may be changed by resolution of the Board.

         EIGHTH: The Corporation hereby confers the power to adopt, amend or
repeal bylaws of the Corporation upon the board of directors.

         NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by statute and all rights conferred upon
the stockholders are granted subject to this right.

         TENTH: To the fullest extent now or hereafter permitted by the General
Corporation Law of the State of Delaware, as the same exist or may hereafter be
amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.

         ELEVENTH: Each person (and the heirs, executors or administrators of
such person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
by Delaware law. The right to indemnification conferred in this ARTICLE ELEVENTH
shall also include the right to be paid by the Corporation the expenses incurred
in connection with any such proceeding in advance of its final disposition to
the fullest extent authorized by Delaware law. The right to indemnification
conferred in this ARTICLE ELEVENTH shall be a contract right. The rights and
authority conferred in this ARTICLE ELEVENTH shall not be exclusive of any other
right that any person may otherwise have or hereafter acquire. Neither the
amendment nor repeal of ARTICLES TENTH and ELEVENTH hereof, nor the adoption of
any provision of this Restated Certificate of Incorporation or the bylaws of the
Corporation, nor, to the fullest extent permitted by Delaware Law, any
modification of law, shall eliminate or reduce the effect of ARTICLES TENTH or
ELEVENTH hereof in respect of any acts or omissions occurring prior to such
amendment, repeal, adoption or modification.

         TWELFTH: No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of the stockholders called in
accordance with the bylaws, provided that


                                       2
<PAGE>

action may be taken by the stockholders by written consent of the holder of a
majority of the issued and outstanding shares.

         THIRTEENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the Corporation.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Incorporation of Advanced Power Technology, Inc., and acknowledges, under
penalties of perjury, that this instrument is the act and deed of the
Corporation and that the facts stated herein are true.


                                        ------------------------------------
                                        Patrick P.H. Sireta, President


                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>ex-32.txt
<DESCRIPTION>EXHIBIT 3.2
<TEXT>

<PAGE>

                        ADVANCED POWER TECHNOLOGY, INC.

                             A DELAWARE CORPORATION

                                   ----------

                                     BYLAWS

                                   ----------


                                    ARTICLE I

                                  STOCKHOLDERS

         Amended and Restated as May 31, 2000

         Section 1.1        Annual Meeting.

         An annual meeting of stockholders for the purpose of electing directors
and of transacting such other business as may come before it shall be held each
year at such date, time, and place, either within or without the State of
Delaware, as may be specified by the Board of Directors.

         Section 1.2        Special Meetings.

         Special meetings of stockholders for any purpose or purposes may be
held at any time upon call of the Chairman of the Board, the Vice Chairman, or
the President, at such time and place either within or without the State of
Delaware as may be stated in the notice.

         Section 1.3        Notice of Meetings.

         Written notice of duly called meetings of the stockholders, stating the
place, date, and hour thereof shall be given by the Chairman of the Board, the
Vice Chairman of the Board, the President, the Secretary or Assistant Secretary
to each stockholder entitled to vote thereat at least ten days but not more than
sixty days before the date of the meeting, unless a different period is
prescribed by law. The notice of an annual meeting shall state that the meeting
is called for the election of directors and for the transaction of other
business which may properly come before the meeting, and shall, if any other
action which could be taken at a special meeting is to be taken at such annual
meeting, state the nature of such action. The notice of a special meeting shall
in all instances state the purpose or purposes for which the meeting is called.

         Section 1.4        Quorum.

         Except as otherwise provided by law or in the Amended and Restated
Certificate of Incorporation or these Bylaws, at any meeting of stockholders the
holders of a majority of the outstanding shares of each class of stock entitled
to vote at the meeting shall be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of the stockholders present or the
chairman of


PAGE 1 - BYLAWS
<PAGE>

the meeting may adjourn the meeting from time to time in the manner provided in
SECTION 1.5 of these Bylaws until a quorum shall be present.

         Section 1.5        Adjournment.

         Any meeting of stockholders, annual or special, may adjourn from time
to time to reconvene at the same or some other place, and notice need not be
given of any such adjourned meeting if the time and place thereof are announced
at the meeting at which the adjournment is taken. At any adjourned meeting at
which a quorum is present, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.

         Section 1.6        Organization.

         The Chairman of the Board, or in his or her absence the Vice Chairman
of the Board, or in their absence one of the following officers, the Chief
Executive Officer, the President, or a Vice President (in order of seniority),
shall call to order meetings of stockholders, and shall act as chairman of such
meetings. The Board of Directors or, if the Board fails to act, the
stockholders, may appoint any stockholder, director, or officer of the
Corporation to act as chairman of any meeting in the absence of the Chairman of
the Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President, and all Vice Presidents. The Secretary of the Corporation shall act
as secretary of all meetings of stockholders, but, in the absence of the
Secretary, the chairman of the meeting may appoint any other person to act as
secretary of the meeting.

         Section 1.7        Voting.

         Except as otherwise provided by law or in the Amended and Restated
Certificate of Incorporation or these Bylaws, at any meeting duly called and
held at which a quorum is present corporate action to be taken by stockholder
vote, other than the election of directors, shall be authorized by a majority of
the votes cast at a meeting of stockholders. Directors shall be elected at each
annual meeting of stockholders by a plurality of the votes cast and shall hold
office until the next succeeding annual meeting of stockholders and until the
election of their respective successors.

         Section 1.8        Action Without Meeting.

         Any action required or permitted to be taken at any meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not fewer than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voting.
Prompt notice of the taking of any such action shall be given to those
stockholders who did not consent in writing.


PAGE 2 - BYLAWS
<PAGE>

         Section 1.9        Proxy Representation.

         Each stockholder entitled to vote at any meeting of stockholders or to
express consent to or dissent from corporate action in writing without a meeting
may authorize another person to act for him, her or it by proxy. No proxy shall
be valid after three years from its date, unless it provides otherwise.

         Section 1.10       Stockholders.

                           (a) At an annual meeting of the stockholders, only
such business shall be conducted as shall have been brought before the meeting
(i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction
of the Board of Directors or (iii) by a stockholder of the Corporation who is a
stockholder of record at the time of giving of the notice provided for in this
SECTION 1.10, who shall be entitled to vote at such meeting and who complies
with the notice procedures set forth in this SECTION 1.10.

                           (b) For business to be properly brought before an
annual meeting by a stockholder pursuant to clause (a)(iii) above, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 120 calendar days in advance of the first anniversary date of the
mailing of the Corporation's proxy statement released to stockholders in
connection prior to the anniversary of the preceding year's annual meeting;
PROVIDED, HOWEVER, that in the event no annual meeting was held in the previous
year or the date of the meeting is changed by more than 30 days from the date
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be received no later than the close of business on
the earlier of the 10th day following the date on which notice of the date of
the meeting was mailed or a public announcement of the meeting was made.

                           (c) A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the meeting (i)
a brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (ii) the name and
address, as they appear on the Corporation's books of the stockholder proposing
such business, and the name and address of the beneficial owner, if any, on
whose behalf the proposal is made, (iii) the class and number of shares of stock
of the Corporation which are owned beneficially and of record by such
stockholder of record and by the beneficial owner, if any, on whose behalf the
proposal is made, and (iv) any material interest of such stockholder of record
and the beneficial owner, if any, on whose behalf the proposal is made, in such
business.

                           (d) Notwithstanding anything in this SECTION 1.10 to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this SECTION 1.10. The chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
whether or not business was properly brought before the meeting in accordance
with the procedures prescribed by these Bylaws, and if (s)he should so
determine, (s)he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.


PAGE 3 - BYLAWS
<PAGE>

                           (e) Notwithstanding the foregoing provisions of this
SECTION 1.10, a stockholder also shall comply with all applicable requirements
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, with respect to the matters set forth in this SECTION
1.10.

                                   ARTICLE II

                               BOARD OF DIRECTORS

         Section 2.1        Number and Term of Office.

         The business, property, and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors of the Corporation. The
number of directors constituting the entire Board shall be not less than one (1)
nor more than seven (7) as fixed from time to time by vote of a majority of the
entire Board; PROVIDED, HOWEVER, that no decrease in the number of directors may
shorten the term of any incumbent director.

         Section 2.2        Chairman and Vice Chairman of the Board.

         The directors may elect a Chairman and a Vice Chairman of the Board of
Directors. The Chairman and Vice Chairman shall be subject to the control of and
may be removed by the Board of Directors.

         Section 2.3        Meetings.

         Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board.
Special meetings of the Board of Directors shall be held at such time and place
as shall be designated in the notice of the meeting whenever called by the
Chairman of the Board, the Vice Chairman, the Chief Executive Officer (if a
director), the President (if a director) or by a majority of the directors then
in office.

         Section 2.4        Notice of Special Meetings.

         The Secretary, or in his or her absence any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board of Directors by mail at least seven days before
the meeting, or by telecopy, telegram, cable, radiogram, or by certified mail
with return receipt requested, by a nationally recognized courier, or by
personal service at least two days before the meeting. Unless otherwise stated
in the notice thereof, any and all business may be transacted at any meeting
without specification of such business in the notice.

         Section 2.5        Quorum and Organization of Meetings.

         Except as provided in SECTION 4.3 of these Bylaws, a majority of the
total number of members of the Board of Directors as constituted from time to
time shall constitute a quorum for the transaction of business, but, if at any
meeting of the Board of Directors (whether or not adjourned from a previous
meeting) there shall be less than a quorum present, a majority of those present
may adjourn the meeting to another time and place, and the meeting may be held
as


PAGE 4 - BYLAWS
<PAGE>

adjourned without further notice or waiver. Except as otherwise provided by law
or in the Amended and Restated Certificate of Incorporation or these Bylaws, a
majority of the directors present at any meeting at which a quorum is present
may decide any question brought before such meeting. Meetings shall be presided
over by the Chairman of the Board, or in his or her absence, by the Vice
Chairman, the Chief Executive Officer, the President, or such other person as
the directors may select. The Secretary of the Corporation shall act as
secretary of the meeting, but in his or her absence, the chairman of the meeting
may appoint any person to act as secretary of the meeting.

         Section 2.6        Committees.

         The Board of Directors may, by resolution adopted by a majority of the
whole Board, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation; provided, that persons who are not
directors of the Corporation may also be members of such committees to the
extent provided in the resolution of the Board. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors and permitted by law, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business, property, and affairs of the Corporation, and may authorize the seal
of the Corporation to be affixed to all papers which may require it. Each
committee of the Board of Directors may fix its own rules and procedures. Notice
of meetings of committees, other than of regular meetings provided for by the
rules, shall be given to committee members. All action taken by committees shall
be recorded in minutes of the meetings.

         Section 2.7        Action Without Meeting.

         Nothing contained in these Bylaws shall be deemed to restrict the power
of members of the Board of Directors or any committee designated by the Board to
take any action required or permitted to be taken by them without a meeting, if
all the members of the Board of Directors or committee, as the case may be,
consent in writing to the adoption, and the writing or writings are filed with
the minutes of proceedings of the Board or Committee.

         Section 2.8        Fees and Compensation of Directors.

         Unless otherwise restricted by law, the Amended and Restated
Certificate of Incorporation or these Bylaws, the Board of Directors shall have
the authority to fix the compensation of Directors.


PAGE 5 - BYLAWS
<PAGE>

         Section 2.9        Telephone Meetings.

         Nothing contained in these Bylaws shall be deemed to restrict the power
of members of the Board of Directors, or any committee designated by the Board,
to participate in a meeting of the Board, or a committee thereof, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.

                                   ARTICLE III

                                    OFFICERS

         Section 3.1        Executive Officers.

         The executive officers of the Corporation shall be the Chairman of the
Board, the Vice Chairman of the Board the Chief Executive Officer, the
President, one or more Vice Presidents, the Treasurer, and the Secretary, each
of whom shall be elected by the Board of Directors. The Board of Directors may
elect or appoint such other officers (including a Controller and one or more
Assistant Treasurers and Assistant Secretaries) as it may deem necessary or
desirable. Each officer shall hold office for such term as may be prescribed by
the Board of Directors from time to time. Any person may hold at one time two or
more offices.

         Section 3.2        Chairman of the Board.

         The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors.

         Section 3.3        Vice Chairman of the Board.

         The Vice Chairman of the Board shall, at the request, or in the absence
or disability, of the Chairman of the Board, perform the duties and exercise the
powers of such office.

         Section 3.4        Chief Executive Officer.

         The Chief Executive Officer of the Corporation shall have general
supervision of the business, affairs and property of the Corporation, and over
its several officers. In general, the Chief Executive Officer shall have all
authority incident to the office of Chief Executive Officer and shall have such
other authority and perform such other duties as may from time to time be
assigned by the Board of Directors or by any duly authorized committee of
directors. The Chief Executive Officer hall have the power to fix the
compensation of elected officers whose compensation is not fixed by the Board of
Directors or a committee thereof and also to engage, discharge, determine the
duties and fix the compensation of all employees and agents of the Corporation
necessary or proper for the transaction of the business of the Corporation. If
the Chief Executive Officer is not also the Chairman of the Board, then the
Chief Executive Officer shall report to the Chairman of the Board or the Vice
Chairman, as the case may be.


PAGE 6 - BYLAWS
<PAGE>

         Section 3.5        President.

         The President shall be the chief operating officer of the Corporation
and, subject to the direction of the Board of Directors, or any duly authorized
committee of directors, shall have general supervision of the operations of the
Corporation. In general, but subject to any contractual restriction, the
President shall have all authority incident to the office of President and chief
operating officer and shall have such other authority and perform such other
duties as may from time to time be assigned by the Board of Directors or by any
duly authorized committee of directors or by the Chairman of the Board of
Directors. The President shall, at the request or in the absence or disability
of the Chairman or Vice Chairman of the Board, or the Chief Executive Officer,
or if no Chairman or Vice Chairman of the Board or Chief Executive Officer has
been appointed by the Board of Directors, perform the duties and exercise the
powers of such officer or officers.

         Section 3.6        Vice Presidents.

         Each vice president shall have such powers and duties as the Board, the
Chief Executive Officer or the President assigns to him or her.

         Section 3.7        Treasurer.

         The Treasurer of the Corporation shall be in charge of the
corporation's books and accounts. Subject to the control of the Board, (s)he
shall have such other powers and duties as the Board, the Chief Executive
Officer or the President assigns to him or her.

         Section 3.8        Secretary.

         The Secretary shall be the secretary of and keep the minutes of all
meetings of the Board and the stockholders, and shall have such other powers and
duties as the Board or the President assigns to him or her. In the absence of
the Secretary from any meeting, the minutes shall be kept by the person
appointed for that purpose by the chairman of the meeting.

                                   ARTICLE IV

                      RESIGNATIONS, REMOVALS, AND VACANCIES

         Section 4.1        Resignations.

         Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the Chief Executive Officer, the President, or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein or, if the time be not specified therein, then upon receipt thereof. The
acceptance of such resignation shall not be necessary to make it effective.

         Section 4.2        Removals.

         The Board of Directors, by a vote of not less than a majority of the
entire Board, at any meeting thereof, or by written consent, at any time, may,
to the extent permitted by law, remove


PAGE 7 - BYLAWS
<PAGE>

with or without cause from office or terminate the employment of any officer or
member of any committee and may, with or without cause, disband any committee.
Any director or the entire Board of Directors may be removed, with or without
cause, by the holders of a majority of the shares entitled at the time to vote
at an election of directors.

         Section 4.3        Vacancies.

         Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from increase in the number of directors, shall be filled
at any time exclusively by a majority of the directors then in office (even
though less than a quorum remains) and, subject to the provisions of this
ARTICLE IV, the person so chosen shall hold office until his or her successor
shall have been elected; or, if the person so chosen is a director elected to
fill a vacancy, (s)he shall (subject to the provisions of this ARTICLE IV) hold
office for the unexpired term of his or her predecessor.

                                    ARTICLE V

                                  CAPITAL STOCK

         Section 5.1        Stock Certificates.

         The certificates for shares of the capital stock of the Corporation
shall be in such form as shall be prescribed by law and approved, from time to
time, by the Board of Directors. Each certificate shall be signed by the
Chairman or Vice Chairman of the Board of Directors, if any, or by the Chief
Executive Officer or the President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation. Any and
all signatures on any such certificates may be facsimiles. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate issued, it may be issued by the
Corporation with the same effect as if (s)he were such officer, transfer agent,
or registrar at the date of issue.

         Section 5.2        Transfer of Shares.

         Upon compliance with provisions restricting the transfer or
registration of transfer of shares of capital stock, if any, shares of the
capital stock of the Corporation may be transferred on the books of the
Corporation only by the holder of such shares or by his or her duly authorized
attorney, upon the surrender to the Corporation or its transfer agent of the
certificate representing such stock properly endorsed and the payment of taxes
due thereon.

         Section 5.3        List of Stockholders Entitled to Vote.

         The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice


PAGE 8 - BYLAWS
<PAGE>

of the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. Such list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.

         Section 5.4        Fixing Record Date.

         In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent in to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.

                  If the board of directors does not so fix a record date:

                           (i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held.

                           (ii) The record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the board of directors is necessary, shall be the first
date on which a signed written consent is delivered to the corporation.

                           (iii) The record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.

                  A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.


PAGE 9 - BYLAWS
<PAGE>

         Section 5.5        Lost Certificates.

         The Board of Directors or any transfer agent of the Corporation may
direct one or more new certificate(s) representing stock of the Corporation to
be issued in place of any certificate or certificates theretofore issued by the
Corporation, alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen, or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors (or any transfer agent of the Corporation
authorized to do so by a resolution of the Board of Directors) may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as the Board of
Directors (or any transfer agent so authorized) shall direct to indemnify the
Corporation against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed or
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.

         Section 5.6        Regulations.

         The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.

                                   ARTICLE VI

                                    INDEMNITY

         Section 6.1        Third Party Actions

                 The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.


PAGE 10 - BYLAWS
<PAGE>

         Section 6.2        Actions By Or In The Right Of The Corporation

         The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) and amounts paid in settlement (if such settlement is approved in advance
by the corporation, which approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding any other
provision of this ARTICLE VI, no person shall be indemnified hereunder for any
expenses or amounts paid in settlement with respect to any action to recover
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended.

         Section 6.3        Successful Defense

         To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in SECTIONS 6.1 AND 6.2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.

         Section 6.4        Determination Of Conduct

         Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the director, officer, employee
or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in SECTIONS 6.1 AND 6.2. Such
determination shall be made (1) by the board of directors or the executive
committee by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (2) or if such quorum is not
obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders. Notwithstanding the foregoing, a director, officer, employee or
agent of the corporation shall be entitled to contest any determination that the
director, officer, employee or agent has not met the applicable standard of
conduct set forth in SECTIONS 6.1 AND 6.2 by petitioning a court of competent
jurisdiction.


PAGE 11 - BYLAWS
<PAGE>

         Section 6.5        Payment Of Expenses In Advance

         Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
SECTION 6.1 OR 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this ARTICLE VI.

         Section 6.6        Indemnity Not Exclusive

         The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this ARTICLE VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

         Section 6.7        Insurance Indemnification

         The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
ARTICLE VI.

         Section 6.8        The Corporation

         For purposes of this ARTICLE VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this ARTICLE VI (including,
without limitation the provisions of SECTION 6.4) with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.

         Section 6.9        Employee Benefit Plans

         For purposes of this ARTICLE VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which


PAGE 12 - BYLAWS
<PAGE>

imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this ARTICLE
VI.

         Section 6.10       Continuation Of Indemnification And Advancement Of
Expenses

         The indemnification and advancement of expenses provided by, or granted
pursuant to, this ARTICLE VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

                                   ARTICLE VII

                                  MISCELLANEOUS

         Section 7.1        Corporate Seal.

         The corporate seal shall have inscribed thereon the name of the
Corporation and shall be in such form as may be approved from time to time by
the Board of Directors.

         Section 7.2        Fiscal Year.

         The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.

         Section 7.3        Notices and Waivers Thereof.

         Whenever any notice is required by law, the Amended and Restated
Certificate of Incorporation, or these Bylaws to be given to any stockholder,
director, or officer, such notice, except as otherwise provided by law, may be
given personally, or by mail, or, in the case of directors or officers, by
telecopy, telegram, cable, or radiogram, or by certified mail with return
receipt requested, by a nationally recognized courier, addressed to such address
as appears on the books of the Corporation. Any notice given by telecopy,
telegram, cable, radiogram, by certified mail with return receipt requested, or
by a nationally recognized courier shall be deemed to have been given when it
shall have been delivered for transmission and any notice given by mail shall be
deemed to have been given when it shall have been deposited in the United States
mail with postage thereon prepaid.

         Whenever any notice is required to be given by law, the Amended and
Restated Certificate of Incorporation, or these Bylaws, a written waiver
thereof, signed by the person entitled to such notice, whether before or after
the meeting or the time stated therein, shall be deemed equivalent in all
respects to such notice to the full extent permitted by law.


PAGE 13 - BYLAWS
<PAGE>

         Section 7.4        Maintenance And Inspection Of Records.

         The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.

         Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

         The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

         Section 7.5        Inspection By Directors.

         Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.

         Section 7.6        Stock of Other Corporations or Other Interests.

         Unless otherwise ordered by the Board of Directors, the Chairman of the
Board, the Vice Chairman of the Board, the Chief Executive Officer or the
President, and such attorneys or agents of the Corporation as may from time to
time be authorized by the Board of Directors or the Chairman of the Board shall
have full power and authority on behalf of this Corporation to attend and to act
and vote in person or by proxy at any meeting of the holders of securities of
any corporation or other entity in which this Corporation may own or hold shares
or other securities,


PAGE 14 - BYLAWS
<PAGE>

and at such meetings shall possess and may exercise all the rights and powers
incident to the ownership of such shares or other securities which this
Corporation, as the owner or holder thereof, might have possessed and exercised
if present. The Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer or President, or such attorneys or agents, may also execute
and deliver on behalf of this Corporation powers of attorney, proxies, consents,
waivers, and other instruments relating to the shares or securities owned or
held by this Corporation.

                                  ARTICLE VIII

                                   AMENDMENTS

         The Board of Directors shall have the power to adopt, amend, or repeal
these Bylaws.


PAGE 15 - BYLAWS
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>ex-101.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

<PAGE>

                           AMENDMENT NO. 2 TO

                   ADVANCED POWER TECHNOLOGY, INC.

                           STOCK OPTION PLAN

         The ADVANCED POWER TECHNOLOGY, INC., Stock Option Plan ("Plan") is
amended to increase the aggregate amount of Common Stock to be delivered upon
the exercise of all options granted under the Plan from 991,430 to 1,500,000.


         ADOPTED BY BOARD OF DIRECTORS effective May 31, 2000.

         APPROVED BY SHAREHOLDERS effective May 31, 2000.





                                    ---------------------------------
                                    GREG HAUGEN, Secretary



1 - AMENDMENT NO. 2 TO STOCK OPTION PLAN

<PAGE>

                               AMENDMENT NO. 1 TO

                         ADVANCED POWER TECHNOLOGY, INC.

                                STOCK OPTION PLAN

         The ADVANCED POWER TECHNOLOGY, INC., Stock Option Plan ("Plan") is
amended to increase the aggregate amount of Common Stock to be delivered upon
the exercise of all options granted under the Plan from 610,370 to 991,430.





         ADOPTED BY BOARD OF DIRECTORS effective July 1, 1996.

         APPROVED BY SHAREHOLDERS effective July 1, 1996.





                                          --------------------------------------
                                          GREG HAUGEN, Secretary










1 - AMENDMENT NO. 1 TO STOCK OPTION PLAN

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.
                                STOCK OPTION PLAN

         SECTION 1. PURPOSE. The purpose of the Advanced Power Technology, Inc.
Incentive Stock Option Plan (this "Plan") is to provide a means whereby
officers, directors and selected employees of Advanced Power Technology, Inc.
(the "Company") or of any subsidiary (as defined in Subsection 5.7 and referred
to hereinafter as "related corporation") thereof, may be granted incentive stock
options (employees only) and/or nonqualified stock options to purchase the
Common Stock (as defined in Section 3) of the Company, in order to attract and
retain the services or advice of such officers and employees and to provide
added incentive to them by encouraging stock ownership in the Company.

         SECTION 2. ADMINISTRATION. This Plan shall be administered by the Board
of Directors of the Company (the "Board") or, in the event the Board shall
appoint and/or authorize a committee to administer this Plan, by such committee.
The administrator of this Plan shall hereafter be referred to as the "Plan
Administrator."

         In the event an officer who is also a member of the Board (or the
committee) may be eligible, subject to the restrictions set forth in Section 4,
to participate in or receive or hold options under this Plan, no member of the
Board of the committee shall vote with respect to the granting of an option
hereunder to himself or herself, as the case may be.

         The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
from time to time remove members from, or add members to, the committee.
Vacancies on the committee, however caused, may be filled by the Board. If at
any time an insufficient number of disinterested directors is available to serve
on such committee, interested directors may serve on the committee; however,
during such time, if the Company is a company required to report under the
Securities Exchange Act of 1934 ("Exchange Act") no options shall be granted
under this Plan to any person if the granting of such option would not meet the
requirements of Section 16(b) of the Exchange Act.

         For purposes of this Section 2, a disinterested director is a member of
the Board who meets the definition of "disinterested person" as set forth in the
rules and regulations promulgated under Section 16(b) of the Exchange Act, as
amended from time to time. Currently a disinterested director for purposes of
this Section 2 is a member of the Board who for one year prior to service as an
administrator of this Plan has not been granted or awarded equity securities,
including options for equity securities, pursuant to this Plan or any other plan
of the Company or its affiliates, except for certain exclusions described in
Rule 16b-3.

              2.1 PROCEDURES. The Board shall designate one of the members of
the Plan Administrator as chairman. The Plan Administrator may hold meetings at
such times and places as it shall determine. The acts of a majority of the
members of the Plan Administrator present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Plan Administrator members,
shall be valid acts of the Plan Administrator.

<PAGE>

              2.2 RESPONSIBILITIES. Except for the terms and conditions
explicitly set forth in this Plan, the Plan Administrator shall have the
authority, in its discretion, to determine all matters relating to the options
to be granted under this Plan, including selection of the individuals to be
granted options, the number of shares to be subject to each option, the exercise
price, and all other terms and conditions of the options. Grants under this Plan
need not be identical in any respect, even when made simultaneously. The
interpretation and construction by the Plan Administrator of any terms or
provisions of this Plan or any option issued here-under, or of any rule or
regulation promulgated in connection herewith, shall be conclusive and binding
on all interested parties, so long as such interpretation and construction with
respect to incentive stock options correspond to the requirements of Internal
Revenue Code (the "Code") Section 422, the regulations thereunder, and any
amendments thereto.

              2.3 SECTION 16(b) COMPLIANCE AND BIFURCATION OF PLAN. It is the
intention of the Company that at any time the Company is required to report
under the Exchange Act, this Plan shall comply in all respects with Rule 16b-3
under the Exchange Act and, if any Plan provision is later found not to be in
compliance with such Section, the provision shall be deemed null and void, and
in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3. Notwithstanding anything in the Plan to the
contrary, the Board, in its absolute discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
participants who are both officers and directors subject to Section 16(b) of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other participants.

         SECTION 3. STOCK SUBJECT TO THIS PLAN. The stock subject to this Plan
shall be the Company's Common Stock (the "Common Stock"), presently authorized
but unissued or subsequently acquired by the Company. Subject to adjustment as
provided in Section 7 hereof, the aggregate amount of Common Stock to be
delivered upon the exercise of all options granted under this Plan shall not
exceed 610,370 shares as such Common Stock was constituted on the effective date
of this Plan. If any option granted under this Plan shall expire, be
surrendered, exchanged for another option, canceled or terminated for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall thereupon again be available for purposes of this Plan, including for
replacement options which may be granted in exchange for such surrendered,
canceled or terminated options.

         SECTION 4. ELIGIBILITY. An incentive stock option may be granted only
to any individual who, at the time the option is granted, is an employee of the
Company or any related corporation. A nonqualified stock option may be granted
to any officer, director or employee of the Company or any related corporation,
whether an individual or an entity. Any party to whom an option is granted under
this Plan shall be referred to hereinafter as an "Optionee."

         SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under this
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, options shall include or incorporate by reference the following terms
and conditions:


Page 2.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

              5.1 NUMBER OF SHARES AND PRICE. The maximum number of shares that
may be purchased pursuant to the exercise of each option and the price per share
at which such option is exercisable (the "Exercise price") shall be as
established by the Plan Administrator, provided that the Plan Administrator
shall act in good faith to establish the exercise price which shall be not less
than the fair market value per share of the Common Stock at the time the option
is granted with respect to incentive stock options, provided that, with respect
to incentive stock options granted to greater than 10 percent shareholders, the
exercise price shall be as required by Section 6. For purposes of this Plan, the
fair market value of the Company's stock shall be determined in good faith by
the Company's Board of Directors unless the Company's stock is publicly traded,
in which case the air market value of the Company's stock shall be deemed to be
the average of the bid and ask price as quoted for the date nearest to the date
such value needs to be determined.

              5.2 TERM AND MATURITY. Subject to the restrictions contained in
Section 6 with respect to granting incentive stock options to greater than 10
percent shareholders, the term of each incentive stock option shall be as
established by the Plan Administrator and, if not so established, shall be 10
years from the date it is granted but in no event shall the term of any
incentive stock option exceed 10 years. The term of each nonqualified stock
option shall be as established by the Plan Administrator. To ensure that the
Company or related corporation will achieve the purpose and receive the benefits
contemplated in this Plan, any option granted to any Optionee hereunder shall,
unless the condition of this sentence is waived or modified in the agreement
evidencing the option or by resolution adopted by the Plan Administrator, be
exercisable according to a vesting schedule and the achievement of specific
performance goals as set forth in each option agreement.

              5.3 EXERCISE. Subject to the vesting schedule and the achievement
of performance goals as referred to in subsection 5.2 above and to any
additional holding period required by applicable law, each option may be
exercised in whole or in part; provided, however, that only whole shares will be
issued pursuant to the exercise of any option. During an Optionee's lifetime,
any incentive stock options granted under this Plan are personal to him or her
and are exercisable solely by such Optionee. Options shall be exercised by
delivery to the Company of notice of the number of shares with respect to which
the option is exercised, together with payment of the exercise price.

              5.4 PAYMENT OF EXERCISE PRICE. Payment of the option exercise
price shall be made in full at the time the notice of exercise of the option is
delivered to the Company and shall be in cash, bank certified or cashier's check
or personal check (unless at the time of exercise the Plan Administrator in a
particular case determines not to accept a personal check) for the Common Stock
being purchased. At the discretion of the Plan Administrator, as evidenced in
each Optionee's written option agreement, payment may be made through the
delivery of a full-recourse promissory note executed by the Optionee; provided,
that (i) such note delivered in connection with an incentive stock option shall,
and such note delivered in connection with a nonqualified stock option may, in
the sole discretion of the Plan Administrator, bear interest at a rate specified
by the Plan Administrator but in no case less than the rate required to avoid
imputation of interest (taking into account any exceptions to the imputed
interest rules) for federal income tax purposes, and (ii) the Plan Administrator
in its sole discretion shall specify the term and other provisions of such note
at the time an incentive stock option is granted or at


Page 3.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

any time prior to exercise of a nonqualified stock option, and (iii) the Plan
Administrator may require that the Optionee pledge the Optionee's shares to the
Company for the purpose of securing the payment of such note and may require
that the certificate representing such shares be held in escrow in order to
perfect the Company's security interest, and (iv) the Plan Administrator in its
sole discretion may at any time restrict or rescind this right upon notification
to the Optionee. In addition, at the Optionee's discretion, payment may be made
by transferring Common Stock (acquired by the exercise of the option or
previously owned by Optionee) to the Company in payment of the exercise price.
If payment is made by the transfer of Common Stock, the value of such Stock
shall be its fair market value at the time the option is exercised.

              5.5 WITHHOLDING TAX REQUIREMENT. The Company or any related
corporation shall have the right to retain and withhold from any payment of cash
or Common Stock under the Plan the amount of taxes required by any government to
be withheld or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require in Optionee receiving shares of Common Stock
to reimburse the Company for any such taxes required to be withheld by the
Company and withhold any distribution in whole or in part until the Company is
so reimbursed. In lieu thereof, the Company shall have the right to withhold
from any other cash amounts due or to become due from the Company to the
Optionee an amount equal to such taxes or retain and withhold a number of shares
having a market value not less than the amount of such taxes required to be
withheld by the Company to reimburse the Company for any such taxes and cancel
(in whole or in part) any such shares so withheld. If the Company is required to
report under the Exchange Act and if required by Section 16(b) of the Exchange
Act, the election to pay withholding taxes by delivery of shares held by any
person who at the time of exercise is subject to Section 16(b) of the Exchange
Act, shall be made either six months prior to the date the option exercise
becomes taxable or during the quarterly 10-day window period required under
Section 16(b) of the Exchange Act for exercises of stock appreciation rights.

              5.6 NONTRANSFERABILITY OF OPTION. Incentive options granted under
this Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution, and shall not be subject to execution, attachment or similar
process. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan, or of any right or privilege conferred
hereby, contrary to the Code or to the provisions of this Plan, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void.

              5.7 TERMINATION OF RELATIONSHIP. If the Optionee's relationship
with the Company or any related corporation ceases for any reason other than
termination for cause, death or total disability, and unless by its terms the
option sooner terminates or expires, then the Optionee may exercise, for a
three-month period, that portion of the Optionee's option which is exercisable
at the time of such cessation, but the Optionee's option shall terminate at the
end of such period following such cessation as to all Shares for which it has
not theretofore been exercised, unless such provision is waived in the agreement
evidencing the option or by resolution adopted by the Plan Administrator. IF, in
the case of an incentive stock option, an Optionee's relationship with the
Company or related corporation changes (i.e., from employee to nonemployee, such
as a consultant), such change shall constitute a termination of an Optionee's


Page 4.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

employment with the Company or related corporation and the Optionee's incentive
stock option shall terminate in accordance with this subsection. Upon the
expiration of the three-month period following cessation of employment in the
case of an incentive stock option, or within 90 days of the cessation of an
Optionee's relationship with the Company in the case of a nonqualified stock
option, the Plan Administrator shall have sole discretion in a particular
circumstance to extend the exercise period following such cessation beyond that
specified above. If, however, in the case of an incentive stock option, the
Optionee does not exercise the Optionee's option within three months after
cessation of employment, the option will no longer qualify as an incentive stock
option under the Code.

         If an Optionee is terminated for cause, any option granted hereunder
shall automatically terminate as of the first discovery by the Company of any
reason for termination for cause, and such Optionee shall thereupon have no
right to purchase any shares pursuant to such option. "Termination for cause"
shall mean dismissal for dishonesty, conviction or confession of a crime
punishable by law (except minor violations), fraud, misconduct or disclosure of
confidential information. If an Optionee's relationship with the Company or any
related corporation is suspended pending an investigation of whether or not the
Optionee shall be terminated for cause, all Optionee's rights under any option
granted hereunder likewise shall be suspended during the period of
investigation.

         If an Optionee's relationship with the Company or any related
corporation ceases because of a total disability, the Optionee's option shall
not terminate or, in the case of an incentive stock option, cease to be treated
as an incentive stock option until the end of the 12-month period following such
cessation (unless by its terms it sooner terminates and expires). As used in
this Plan, the term "total disability" refers to a mental or physical impairment
of the Optionee which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Optionee to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Plan Administrator.

         For purposes of this subsection 5.7, a transfer of relationship between
or among the Company and/or any related corporation shall not be deemed to
constitute a cessation of relationship with the Company or any of its related
corporations. For purposes of this subsection 5.7, with respect to incentive
stock options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence (as determined by
the Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.

         As used herein, the term "related corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50 percent or more of the total
combined voting power of all classes of stock of each of the corporations other
than the Company is owned by one of the other corporations in such chain. When
referring to a parent corporation, the term "related corporation" shall mean any


Page 5.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

corporation in an unbroken chain of corporations ending with the Company if,
at the time of the granting of the option, each of the corporations other than
the Company owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

              5.8 DEATH OF OPTIONEE. If an Optionee dies while he or she has a
relationship with the Company or any related corporation or within the
three-month period (or 12-month period in the case of totally disabled
Optionees) following cessation of such relationship, any option held by such
Optionee to the extent that the Optionee would have been entitled to exercise
such option, shall be fully vested and may be exercised prior to the expiration
of its term after his or her death by the personal representative of his or her
estate or by the person or persons to whom the Optionee's rights under the
option shall pass by will or by the applicable laws of descent and distribution.

              5.9 STATUS OF SHAREHOLDER. Neither the Optionee nor any party to
which the Optionee's rights and privileges under the option may pass shall be,
or have any of the rights or privileges of, a shareholder of the Company with
respect to any of the shares issuable upon the exercise of any option granted
under this Plan unless and until such option has been exercised.

              5.10 CONTINUATION OF EMPLOYMENT. Nothing in this Plan or in any
option granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a related corporation, or to
interfere in any way with the right of the Company or of any such corporation to
terminate his or her employment or other relationship with the Company at any
time with or without cause.

              5.11 MODIFICATION AND AMENDMENT OF OPTION. Subject to the
requirements of Code Section 422 with respect to incentive stock options and to
the terms and conditions and within the limitations of this Plan, the Plan
Administrator may modify or amend outstanding options granted under this Plan.
The modification or amendment of an outstanding option shall not, without the
consent of the Optionee, impair or diminish any of his or her rights or any of
the obligations of the Company under such option. Except as otherwise provided
in this Plan, no outstanding option shall be terminated without the consent of
the Optionee. Unless the Optionee agrees otherwise, any changes or adjustments
made to outstanding incentive stock options granted under this Plan shall be
made in such a manner so as not to constitute a "modification" as defined in
Code Section 424(h) and so as not to cause any incentive stock option issued
hereunder to fail to continue to qualify as an incentive stock option as defined
in Code Section 422(b).

              5.12 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to all
incentive stock options granted under the terms of this Plan, to the extent that
the aggregate fair market value (determined at the time the incentive stock
option is granted) of the stock with respect to which incentive stock options
are exercisable for the first time by the Optionee during any calendar year
exceeds $100,000, such options shall be treated as nonqualified stock options.
The previous sentence shall not apply if the Internal Revenue Service publicly
rules, issues a private ruling to the Company, any Optionee, or any legatee,
personal representative or distributee of an Optionee or issues regulations
changing or eliminating such annual limit.


Page 6.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

         SECTION 6. GREATER THAN 10 PERCENT SHAREHOLDERS.

              6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If
incentive stock options are granted under this Plan to employees who own more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any related corporation, the term of such incentive stock options
shall not exceed five years and the exercise price shall be not less than 110
percent of the fair market value of the Common Stock at the time the incentive
stock option is granted. This provision shall control notwithstanding any
contrary terms contained in an option agreement or any other document.

              6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in
determining stock ownership, an employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. If an
employee or a person related to the employee owns an unexercised option or
warrant to purchase stock of the Company, the stock subject to that portion of
the option or warrant which is unexercised shall not be counted in determining
stock ownership. For purposes of this Section 6, stock owned by an employee
shall include all stock actually issued and outstanding immediately before the
grant of the incentive stock option to the employee.

         SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares for which options may be granted under this Plan, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and each such option, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend.

              7.1 EFFECT OF LIQUIDATION, REORGANIZATION OR CHANGE IN CONTROL.

                   7.1.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK. Except as
provided in subsection 7.1.2, upon a merger (other than a merger of the Company
in which the holders of Common Stock immediately prior to the merger have the
same proportionate ownership of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation of
a holding company) or liquidation of the company, as a result of which the
shareholders of the Company receive cash, stock or other consideration in
connection with their shares of Common Stock, any option granted hereunder shall
terminate, but the Optionee shall have the right immediately prior to any such
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise such in whole or in part whether or
not the vesting requirements set forth in the option agreement have been
satisfied.

                   7.1.2 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE. If
the shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger


Page 7.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

have the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation or reorganization (other than a mere
reincorporation or the creation of a holding company), all options granted
hereunder shall be converted into options to purchase shares of Exchange Stock
unless the Company and the corporation issuing the Exchange Stock, in their sole
discretion, determine that any or all such options granted hereunder shall not
be converted into options to purchase shares of Exchange Stock but instead shall
terminate in accordance with the provisions of subsection 7.1.1. The amount and
price of converted options shall be determined by adjusting the amount and price
of the options granted hereunder in the same proportion as used for determining
the number of shares of Exchange Stock the holders of the Common Stock receive
in such merger, consolidation, acquisition of property or stock, separation or
reorganization. Unless accelerated by the Board, the vesting schedule set forth
in the option agreement shall continue to apply for the Exchange Stock.

                   7.1.3 CHANGE IN CONTROL. In the event of a "Change in
Control," as defined below, of the Company after the Company has registered any
of its equity securities pursuant to Section 12(b) or 12(g) of the Exchange Act,
unless otherwise determined by the Board prior to the occurrence of such Change
in Control, the following acceleration and cash-out provisions shall apply:

                       (a) Any options or portions thereof outstanding as of the
date such Change in Control is determined to have occurred that are not yet
fully vested on such date shall become immediately exercisable in full; and

                       (b) Subject to Section 16(b) of the Exchange Act,
Optionees shall have, as an alternative to the right to exercise any
nonqualified stock option, the right to elect within 90 days following a Change
in Control to receive in cash an amount equal to the difference between the
option exercise price and the fair market value of the stock on the date of
exercising this election, times the number of shares subject to the option or
portion thereof for which this election is made. The election shall be made by
delivering written notice of making such election to the Company within the
ninety (90) day period. The notice shall specify the options or portions thereof
to which the election relates. The cash-out proceeds shall be paid to the
Optionee or, in the event of death of an Optionee prior to full payment, to the
estate of the Optionee or to a person who acquired the right to exercise the
option by bequest or inheritance.

                   7.1.4 DEFINITION OF "CHANGE IN CONTROL". For purposes of the
Plan, a "Change in Control" shall mean (a) the first approval by the Board or by
the stockholders of the Company of an Extraordinary Event, or (b) Purchase. For
purposes of the Plan, an "Extraordinary Event" shall mean any of the following
actions:

                       (a) Any consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or pursuant to which
shares of Common Stock would be converted into cash, securities or other
property, other than a merger or the Company in which the holders of Common
Stock immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger;


Page 8.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

                       (b) Any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
the assets of the Company; or

                       (c) The adoption of any plan or proposal for liquidation
or dissolution of the Company.

         For purposes of the Plan, a "Purchase" shall mean the acquisition by
any person (as such term is defined in Section 13(d) of the Exchange Act) of any
shares of Common Stock (or securities convertible into Common Stock) without the
prior approval of a majority of the directors of the Company continuing in
office after the Purchase, if after making such acquisition such person is the
beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act)
directly or indirectly of Securities of the Company representing 20 percent or
more of the combined voting power of the Company's then outstanding securities
(calculated as provided in paragraph (d) of such Rule 13d-3).

              7.2 FRACTIONAL SHARES. In the event of any adjustment in the
number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.

              7.3 DETERMINATION OF BOARD TO BE FINAL. All Section 7 adjustments
shall be made by the Board, and its determination as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive. Unless
an Optionee agrees otherwise, any change or adjustment to an incentive stock
option shall be made in such a manner so as not to constitute a "modification"
as defined in Code Section 424(h) and so as not to cause his or her incentive
stock option issued hereunder to fail to continue to qualify as an incentive
stock option as defined in Code Section 422(b).

         SECTION 8. SECURITIES REGULATION. Shares shall not be issued with
respect to an option granted under this Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the
issuance and sale of any shares hereunder. Inability of the Company to obtain
the authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.

         As a condition to the exercise of an option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the


Page 9.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed in the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation; may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER.

         Should any of the Company's capital stock of the same class as the
stock subject to options granted hereunder be listed on a national securities
exchange, then at the option of the Company, all stock issued hereunder, if not
previously listed on such exchange, shall be authorized by that exchange for
listing thereon prior to the issuance thereof.

         SECTION 9. AMENDMENT AND TERMINATION.

              9.1 BOARD ACTION. The Board may at any time suspend, amend or
terminate this Plan, provided that except as set forth in Section 7, the
approval of the Company's shareholders is necessary within 12 months before or
after the adoption by the Board of any amendment which will:

                    9.1.1 Increase the number of shares which are to be reserved
for the issuance of options under this Plan;

                    9.1.2 Permit the granting of stock options to a class of
persons other than those presently permitted to receive stock options under this
Plan; or

                    9.1.3 Require shareholder approval under applicable law,
including Section 16(b) of the Exchange Act.

         Any amendment made to this Plan which would constitute a "modification"
to incentive stock options outstanding on the date of such amendment, shall not
be applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.

              9.2 AUTOMATIC TERMINATION. Unless sooner terminated by the Board,
this Plan shall terminate ten years from the earlier of (a) the date on which
this Plan is adopted by the Board or (b) the date on which this Plan is approved
by the shareholders of the Company. No option may be granted after such
termination or during any suspension of this Plan. The amendment or termination
of this Plan shall not, without the consent of the option holder, alter or
impair any rights or obligations under any option theretofore granted under this
Plan.

         SECTION 10. EFFECTIVENESS OF THIS PLAN. This Plan shall become
effective upon adoption by the Board so long as it is approved by the Company's
shareholders any time within 12 months before or after the adoption of this
Plan.


Page 10.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

<PAGE>

         SECTION 11. PLAN SUBJECT TO SHAREHOLDER AGREEMENT. The administration
of this Plan and the term, conditions and timing of any option granted under
this Plan are subject to the provisions of Section 9 of that certain Agreement
Among the Company and its Shareholders dated as of September 6, 1995.

Adopted by the Board of Directors on December 4, 1995, and approved by the
shareholders on DECEMBER 31, 1995.


Page 11.  ADVANCED POWER TECHNOLOGY, INC. STOCK OPTION PLAN

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<FILENAME>ex-102.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT
                       (MANAGEMENT & TECHNICAL PERSONNEL)
                            EXEMPT SALARIED EMPLOYEES


     THIS EMPLOYMENT AGREEMENT is made and entered into this day of AUGUST 16,
1985 by and between ADVANCED POWER TECHNOLOGY, INC., a Delaware corporation
("Company") and PATRICK SIRETA an individual ("Employee").

     WHEREAS, Company desires to employ Employee upon the terms and conditions
hereinafter set forth, and Employee desires to be so employed;

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
Company and Employee agree as follows:

1.   EMPLOYMENT

     Company hereby employees Employee as PRESIDENT AND CHIEF EXECUTIVE OFFICER
     of the Company with the powers an duties consistent with such position, and
     Employee hereby accepts such employment, on the terms and conditions
     hereinafter set forth. Employee, subject to the control of the Management
     of Company, agrees to diligently utilize his or her best efforts to further
     the interests of the Company and to discharge those responsibilities and
     duties required for the planning, development, operation, promotion and
     advancement of the Company, and such other duties as Company may require.

2.   TERM AND TERMINATION

     2.1  This Agreement shall terminate upon the happening of any of the
     following events:

          (a)  By mutual agreement between Company and Employee;

          (b)  Unilaterally by Employee without cause;

          (c)  Upon the death of Employee;

          (d)  Upon the good faith determination of the Chief Executive Officer
          of the Company that Employee has become so physically or mentally
          disabled as to be incapable of satisfactorily performing his or her
          duties hereunder for a period of ninety (90) consecutive days, such
          determination based upon a certificate as to such physical or mental
          disability issued by a licensed physician and/or psychiatrist (as the
          case may be) employed by the Company; or

          (e)  By the Company for cause, that is to say only upon Employee's
          conviction of a felony, commission of any material act of dishonesty
          against the Company, material breach of this Agreement by Employee, or
          misconduct by Employee having a substantial adverse effect on the
          business of the Company.


<PAGE>

          (f)  Unilaterally by the Company without cause, in which event
          (Section 2.2 to the contrary not withstanding) the Company will
          continue to pay Employee the full amount due as salary for a period of
          thirty days following notice of termination.

     2.2  In the event that this Agreement is terminated pursuant to Paragraph
     2.1, neither Company nor Employee shall have any remaining duties or
     obligations hereunder, except that Company shall pay to Employee, or his or
     her representatives, such compensation as is due pursuant to Sub-Section
     2.1(f) and Section 3. The provisions of Section 4-9 shall survive
     termination.

     2.3  This Agreement shall not be terminated by any:

          (a)  Merger, whether the Company is or is not the surviving
          corporation; or

          (b)  Transfer of all or substantially all of the assets of the
          Company; or

          (c)  Voluntary or involuntary dissolution or liquidation of the
          Company; or

          (d)  Consolidation to which the Company is a party.

     In the event of any such merger, transfer of assets, dissolution,
     liquidation, or consolidation, the surviving corporation or transferee, as
     the case may be, shall be bound by and shall have the benefits of this
     Agreement, and Company shall take all action to ensure that such
     corporation or transferee is bound by the provisions of this Agreement.

3.   COMPENSATION

     3.1  As the total consideration for services which Employee agrees to
     render hereunder, Employee is entitled to the following:

          (a)  Beginning on AUGUST 16, 1985, an annual base salary at the rate
          of __________Dollars ($150,000), subject to increases at the
          discretion of Company, in accordance with the regular and ordinary
          payment practices of Company. All payroll payments shall be subject to
          deduction of payroll taxes and related deductions as required by law.

          (b)  Participation in all plans or programs sponsored by Company for
          employees in general, including without limitation participation in
          any group health plan, medical reimbursement plan and life insurance
          plan, pension and profit sharing plan.

          (c)  Reimbursement of any and all necessary and reasonable expenses
          incurred by Employee from time to time in the performance of his or
          her duties hereunder, including without limitation entertainment
          expenses and air fare, taxi, automobile, and other traveling expenses.

          (d)  After six (6) months of continuous employment, Employee shall be
          eligible for five (5) working days of paid vacation; after twelve (12)
          months of


<PAGE>

          continuous employment, Employee shall be eligible for ten (10) working
          days of paid vacation; thereafter, Employee shall be eligible for ten
          (10) working days of paid vacation upon the completion of each
          successive twelve (12) month period of continuous employment. Paid
          vacations non-cumulative and must be taken during the twelve (12)
          months following accrual.

          (e)  Such other benefits as Company, in its sole discretion, may from
          time to time provide.

     3.2  Subject to the limitations contained in Paragraph 2.1, if Employee
     shall be absent on account of personal injuries or physical or mental
     disability, Employee shall continue to receive all payments provided in
     this Agreement; provided, however, that any such payments may, at the sole
     option of Company, be reduced by any amount that Employee receives for the
     period covered by such payments as disability compensation under insurance
     policies maintained by Company or under governmental programs.

     3.3  Company shall have the right to deduct from the compensation due to
     Employee hereunder any and all sums required for social security and
     withholding taxes and for any other federal, state, or local tax or charge
     which may be in effect or hereafter enacted or required as a charge on the
     compensation of Employee.

     3.4  Employee shall repay relocation expenses paid by Company if he or she
     voluntarily terminates employment, or is terminated for cause within one
     year from date of employment.

4.   NON-DISCLOSURE

     Employee shall not disclose or use in any way, either during his or her
employment with Company or thereafter, except as required in the course of his
or her employment with Company, any confidential business or technical
information or trade secrets acquired during his or her employment by Company,
whether or not conceived of, discovered, developed or prepared by Employee,
including without limitation any formulae, patterns, inventions, procedures,
processes, plans, devices, products, operations, techniques, know-how,
specifications, data, compilations of information, customer lists, records,
financing or production methods, costs, employees, and information concerning
specific customer requirements, preferences, practices and methods of doing
business, all of which are exclusive and valuable property of Company.


<PAGE>

5.   ASSIGNMENT OF PROPRIETARY INTEREST

     Employee hereby assigns and transfers to Company his or her entire right,
title and interest in and to any and all inventions, improvements, processes,
sketches, methods of production, designs, discoveries, ideas (whether or not
shown or described in writing) or services (collectively "inventions") whether
or not patentable, which are made, conceived or first reduced to practice by
Employee with Company's equipment, supplies, facilities, or trade secrets and on
Company's time, or which relates to the business of Company or Company's actual
or anticipated research or business development, or which results from any work
performed by the Employee for Company. Employee agrees that Company shall have
the right to keep such inventions as trade secrets. To permit Company to claim
rights to which it may be entitled, the Employee agrees to promptly disclose to
Company in confidence all inventions which the employee makes, conceives, or
first reduces to practice during the course of his or her employment or within
one year after termination thereof if such inventions relate to a product,
process or service upon which Employee worked during the period of his or her
employment by Company, and all patent or copyright applications filed by the
Employee within a year after termination of this Agreement. Both during and
after the period of employment with Company, Employee shall further assist
Company in obtaining patents or copyrights on all inventions deemed patentable
or copyrightable by Company in the United States and in all foreign countries,
and shall execute all documents and do all things necessary to obtain letters
patent and/or copyrights, to vest Company with full and extensive title thereto,
and to protect Company's rights against infringement by others. Employee further
agrees that any patent application filed within a year after termination of his
or her employment on an invention for which the Employee was partially or
totally responsible shall be presumed to relate to an invention made during the
term of the Employee's employment unless the Employee can provide evidence to
the contrary.

6.   TANGIBLE ITEMS AS PROPERTY OF COMPANY

     Excluding any personal property owned by Employee prior to the date hereof,
all files, records, documents, drawings, plans, specifications, manuals, books,
forms, receipts, notes, reports, memoranda, studies, data, calculations,
recordings, catalogues, compilations of information, correspondence and all
copies, abstracts and summaries of the foregoing, instruments, tools and
equipment and all other physical items related to the business of Company, other
than a merely personal item of a general professional nature, whether of a
public nature or not, and whether prepared by Employee or not, are and shall
remain the exclusive property of Company and shall not be removed from the
premises of Company under any circumstances whatsoever without the prior written
consent of Company, and the same shall be promptly returned to Company by
Employee on the expiration or termination of his or her employment with Company
or at any time prior thereto upon the request of Company.


<PAGE>

7.   SOLICITATION OF CUSTOMERS AND EMPLOYEES

     Both during and after the period of employment, Employee shall not in any
way attempt to interfere with the business of Company and, shall not call on,
solicit, interfere with or attempt to entice away, either directly or
indirectly, any employee of Company with whom he or she became acquainted during
his or her employment with Company, either for his or her own benefit or
purposes or for the benefit or purposes of any other person, partnership,
corporation, firm, association or other business organization, entity or
enterprise.

8.   NONCOMPETITION

     Except as set forth in this Section 8, for a period of 18 months after
termination of this Agreement, Employee shall not, directly or indirectly,
engage or participate in, assist or have any interest in any person,
partnership, corporation, firm, association or other business organization,
entity or enterprise (whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise) which, directly or indirectly,
manufactures, designs, develops, engineers, markets or otherwise produces or
offers for sale or sells inventions, products, processes, systems or services
the same as, similar to or competitive with any devices, inventions, products,
processes, systems or services manufactured, designed, developed, engineered,
marketed or otherwise produced or offered for sale or sold by Company (or any
successor thereof) in the United States or abroad.

     The parties intend that the covenant contained in this Section 8 shall be
construed as a series of separate covenants. If, in any judicial or arbitration
proceeding, a court shall refuse to enforce any of the separate covenants deemed
included in this paragraph, then this unenforceable covenant shall be deemed
eliminated from these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be enforced.
Moreover, if, in any judicial or arbitration proceedings, the term of
non-competition shall be determined to be unreasonable, the parties agree that
the term shall be shortened to the maximum period deemed reasonable under the
laws of the state of Oregon, and that modified period shall be enforceable as
though originally set forth herein.

9.   INJUNCTIVE RELIEF

     Employee hereby acknowledges and agrees that it would be difficult to fully
compensate Company for damages resulting from the breach or threatened breach of
Sections 4, 5, 6, 7 or 8 of this Agreement, and accordingly, that Company shall
be entitled to temporary and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages therewith. This
provision with respect to injunctive relief shall not, however, diminish
Company's right to claim and recover damages.


<PAGE>

10.  INDEMNIFICATION

     Company shall, to the maximum extent permitted by law, indemnify and hold
Employee harmless against expenses, including reasonable attorney's fees,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Employee's
employment with Company if Employee, in incurring the above expenses, acted in
good faith and in a manner Employee believed to be in the best interests of
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe Employee's conduct was unlawful.

11.  COPIES OF AGREEMENT

     Employee authorizes Company to send a copy of this Agreement to any and all
future employers which he or she may have, and to any and all persons, firms,
and corporations, with whom he or she may become affiliated in a business or
commercial enterprise, and to inform any and all such employers, persons, firms
or corporations that Company intends to exercise its legal rights should
Employee breach the terms of this Agreement or should another party induce a
breach of Employee's part.

12.  SEVERABLE PROVISIONS

     The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

13.  BINDING AGREEMENT

     This Agreement shall inure to the benefit of and shall be binding upon
Company, its successors and assigns.

14.  CAPTIONS

     The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

15.  ENTIRE AGREEMENT

     This Agreement contains the entire agreement of the parties relating to the
subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth in these documents. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto.

16.  GOVERNING LAW

     This Agreement shall be governed and construed in accordance with the laws
of the state of Oregon.


<PAGE>

17.  NOTICES

     Any notice or demand required or permitted to be given hereunder shall be
in writing and shall be deemed effective upon the personal delivery thereof or,
if mailed, forty-eight hours after having been deposited in the United States
mails, postage prepaid, and addressed to the party to whom it is directed at the
address et forth below:

     If to Company:

     ADVANCED POWER TECHNOLOGY, INC.
     405 S. W. Columbia Street
     Bend, Oregon  97702

     With a copy to:
     Thomas J. Poletti, Esq.
     Freshman, Marantz, Orlanski, Comsky & Deutsch
     9100 Wilshire Blvd., Ste. 8-E
     Beverly Hills, CA 90212

     If to EMPLOYEE:
     60462 TALL PINES
     ----------------------------------
     BEND, OREGON, 97702
     ----------------------------------

     ----------------------------------


Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first written above.



ADVANCED POWER TECHNOLOGY, INC.
a Delaware corporation ("Company")



By:   S/S
      Ted Hollinger
      President



         S/S
------------
("Employee")


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>6
<FILENAME>ex-103.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

<PAGE>

                        ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT
                       (MANAGEMENT & TECHNICAL PERSONNEL)
                           EXEMPT SALARIED EMPLOYEES


         THIS EMPLOYMENT AGREEMENT is made and entered into this 20 day of JUNE,
1986, by and between ADVANCED POWER TECHNOLOGY, INC., a Delaware corporation
("Company") and RUSSELL J. CRECRAFT an individual ("Employee").

         WHEREAS, Company desires to employ Employee upon the terms and
conditions hereinafter set forth, and Employee desires to be so employed;

         NOW, THEREFORE, in consideration of the mutual promises contained
herein, Company and Employee agree as follows:

1.       EMPLOYMENT

         Company hereby employees Employee as PRODUCT ENGINEER of the Company
         with the powers an duties consistent with such position, and Employee
         hereby accepts such employment, on the terms and conditions hereinafter
         set forth. Employee, subject to the control of the Management of
         Company, agrees to diligently utilize his or her best efforts to
         further the interests of the Company and to discharge those
         responsibilities and duties required for the planning, development,
         operation, promotion and advancement of the Company, and such other
         duties as Company may require.

2.       TERM AND TERMINATION

         2.1 This Agreement shall terminate upon the happening of any of the
         following events:

                  (a)      By mutual agreement between Company and Employee;

                  (b)      Unilaterally by Employee without cause;

                  (c)      Upon the death of Employee;

                  (d) Upon the good faith determination of the Chief Executive
                  Officer of the Company that Employee has become so physically
                  or mentally disabled as to be incapable of satisfactorily
                  performing Employee's duties hereunder for a period of ninety
                  (90) consecutive days, such determination based upon a
                  certificate as to such physical or mental disability issued by
                  a licensed physician and/or psychiatrist (as the case may be)
                  employed by the Company; or

                  (e) By the Company for cause, that is to say only upon
                  Employee's conviction of a felony, commission of any material
                  act of dishonesty against the Company, material breach of this
                  Agreement by Employee, or misconduct by Employee having a
                  substantial adverse effect on the business of the Company.



<PAGE>

                  (f) Unilaterally by the Company without cause, in which event
                  (Section 2.2 to the contrary not withstanding) the Company
                  will continue to pay Employee the full amount due as salary
                  for a period of thirty days following notice of termination.

         2.2 In the event that this Agreement is terminated pursuant to
         Paragraph 2.1, neither Company nor Employee shall have any remaining
         duties or obligations hereunder, except that Company shall pay to
         Employee, or his or her representatives, such compensation as is due
         pursuant to Sub-Section 2.1(f) and Section 3. The provisions of Section
         4-9 shall survive termination.

         2.3      This Agreement shall not be terminated by any:

                  (a)   Merger, whether the Company is or is not the surviving
                        corporation; or

                  (b)   Transfer of all or substantially all of the assets of
                        the Company; or

                  (c)   Voluntary or involuntary dissolution or liquidation of
                        the Company; or

                  (d)   Consolidation to which the Company is a party.

         In the event of any such merger, transfer of assets, dissolution,
         liquidation, or consolidation, the surviving corporation or transferee,
         as the case may be, shall be bound by and shall have the benefits of
         this Agreement, and Company shall take all action to ensure that such
         corporation or transferee is bound by the provisions of this Agreement.

3.       COMPENSATION

         3.1 As the total consideration for services which Employee agrees to
         render hereunder, Employee is entitled to the following:

                  (a) Beginning on JUNE 20, 1986, an annual base salary at the
                  rate of $33000 THIRTY THREE THOUSAND Dollars ($33000), subject
                  to increases at the discretion of Company, in accordance with
                  the regular and ordinary payment practices of Company. All
                  payroll payments shall be subject to deduction of payroll
                  taxes and related deductions as required by law.

                  (b) Participation in all plans or programs sponsored by
                  Company for employees in general, including without limitation
                  participation in any group health plan, medical reimbursement
                  plan and life insurance plan, pension and profit sharing plan.

                  (c) Reimbursement of any and all necessary and reasonable
                  expenses incurred by Employee from time to time in the
                  performance of his or her duties hereunder, including without
                  limitation entertainment expenses and air fare, taxi,
                  automobile, and other traveling expenses.

                  (d) After six (6) months of continuous employment, Employee
                  shall be eligible for five (5) working days of paid vacation;
                  after twelve (12) months of



<PAGE>

                  continuous employment, Employee shall be eligible for ten (10)
                  working days of paid vacation; thereafter, Employee shall be
                  eligible for ten (10) working days of paid vacation upon the
                  completion of each successive twelve (12) month period of
                  continuous employment. Paid vacations non-cumulative and must
                  be taken during the twelve (12) months following accrual.

                  (e) Such other benefits as Company, in its sole discretion,
                  may from time to time provide.

         3.2 Subject to the limitations contained in Paragraph 2.1, if Employee
         shall be absent on account of personal injuries or physical or mental
         disability, Employee shall continue to receive all payments provided in
         this Agreement; provided, however, that any such payments may, at the
         sole option of Company, be reduced by any amount that Employee receives
         for the period covered by such payments as disability compensation
         under insurance policies maintained by Company or under governmental
         programs.

         3.3 Company shall have the right to deduct from the compensation due to
         Employee hereunder any and all sums required for social security and
         withholding taxes and for any other federal, state, or local tax or
         charge which may be in effect or hereafter enacted or required as a
         charge on the compensation of Employee.

         3.4 Employee shall repay relocation expenses paid by Company if he or
         she voluntarily terminates employment, or is terminated for cause
         within one year from date of employment.

         3.5 Any payments, whether incurred by the Company or by an employee or
         officer of the Company on behalf of and reimbursed b the Company,
         including, without limitation, salary, commission, bonus, interest,
         rent or travel and entertainment expenses, which are disallowed in
         whole or in part as a deductible expense for federal income tax
         purposes on the grounds that said payments constitute unreasonable
         compensation to an employee or officer, shall be repaid by the employee
         or officer to the Company to the full extent of the disallowance, if
         the Board, in its discretion, agrees to enforce the repayment of each
         such amount disallowed.

4.       NON-DISCLOSURE

         Employee shall not disclose or use in any way, either during his or her
employment with Company or thereafter, except as required in the course of his
or her employment with Company, any confidential business or technical
information or trade secrets acquired during his or her employment by Company,
whether or not conceived of, discovered, developed or prepared by Employee,
including without limitation any formulae, patterns, inventions, procedures,
processes, plans, devices, products, operations, techniques, know-how,
specifications, data, compilations of information, customer lists, records,
financing or production methods, costs, employees, and information concerning
specific customer requirements, preferences, practices and methods of doing
business, all of which are exclusive and valuable property of Company.



<PAGE>

5.       ASSIGNMENT OF PROPRIETARY INTEREST

         Employee hereby assigns and transfers to Company his or her entire
right, title and interest in and to any and all inventions, improvements,
processes, sketches, methods of production, designs, discoveries, ideas (whether
or not shown or described in writing) or services (collectively "inventions")
whether or not patentable, which are made, conceived or first reduced to
practice by Employee with Company's equipment, supplies, facilities, or trade
secrets and on Company's time, or which relates to the business of Company or
Company's actual or anticipated research or business development, or which
results from any work performed by the Employee for Company. Employee agrees
that Company shall have the right to keep such inventions as trade secrets. To
permit Company to claim rights to which it may be entitled, the Employee agrees
to promptly disclose to Company in confidence all inventions which the employee
makes, conceives, or first reduces to practice during the course of his or her
employment or within one year after termination thereof if such inventions
relate to a product, process or service upon which Employee worked during the
period of his or her employment by Company, and all patent or copyright
applications filed by the Employee within a year after termination of this
Agreement. Both during and after the period of employment with Company, Employee
shall further assist Company in obtaining patents or copyrights on all
inventions deemed patentable or copyrightable by Company in the United States
and in all foreign countries, and shall execute all documents and do all things
necessary to obtain letters patent and/or copyrights, to vest Company with full
and extensive title thereto, and to protect Company's rights against
infringement by others. Employee further agrees that any patent application
filed within a year after termination of his or her employment on an invention
for which the Employee was partially or totally responsible shall be presumed to
relate to an invention made during the term of the Employee's employment unless
the Employee can provide evidence to the contrary.

6.       TANGIBLE ITEMS AS PROPERTY OF COMPANY

         Excluding any personal property owned by Employee prior to the date
hereof, all files, records, documents, drawings, plans, specifications, manuals,
books, forms, receipts, notes, reports, memoranda, studies, data, calculations,
recordings, catalogues, compilations of information, correspondence and all
copies, abstracts and summaries of the foregoing, instruments, tools and
equipment and all other physical items related to the business of Company, other
than a merely personal item of a general professional nature, whether of a
public nature or not, and whether prepared by Employee or not, are and shall
remain the exclusive property of Company and shall not be removed from the
premises of Company under any circumstances whatsoever without the prior written
consent of Company, and the same shall be promptly returned to Company by
Employee on the expiration or termination of his or her employment with Company
or at any time prior thereto upon the request of Company.



<PAGE>

7.       SOLICITATION OF CUSTOMERS AND EMPLOYEES

         Both during and within one year after the period of employment,
Employee shall not in any way attempt to interfere with the business of Company
and, shall not call on, solicit, interfere with or attempt to entice away,
either directly or indirectly, any employee of Company with whom he or she
became acquainted during his or her employment with Company, either for his or
her own benefit or purposes or for the benefit or purposes of any other person,
partnership, corporation, firm, association or other business organization,
entity or enterprise.

8.       NONCOMPETITION

         Except as set forth in this Section 8, for a period of 18 months after
termination of this Agreement, Employee shall not, directly or indirectly,
engage or participate in, assist or have any interest in any person,
partnership, corporation, firm, association or other business organization,
entity or enterprise (whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise) which, directly or indirectly,
manufactures, designs, develops, engineers, markets or otherwise produces or
offers for sale or sells inventions, products, processes, systems or services
the same as, similar to or competitive with any devices, inventions, products,
processes, systems or services manufactured, designed, developed, engineered,
marketed or otherwise produced or offered for sale or sold by Company (or any
successor thereof) in the United States or abroad.

         The parties intend that the covenant contained in this Section 8 shall
be construed as a series of separate covenants. If, in any judicial or
arbitration proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then this unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced. Moreover, if, in any judicial or arbitration proceedings, the
term of non-competition shall be determined to be unreasonable, the parties
agree that the term shall be shortened to the maximum period deemed reasonable
under the laws of the state of Oregon, and that modified period shall be
enforceable as though originally set forth herein.

9.       INJUNCTIVE RELIEF

         Employee hereby acknowledges and agrees that it would be difficult to
fully compensate Company for damages resulting from the breach or threatened
breach of Sections 4, 5, 6, 7 or 8 of this Agreement, and accordingly, that
Company shall be entitled to temporary and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
to enforce such Sections without the necessity of proving actual damages
therewith. This provision with respect to injunctive relief shall not, however,
diminish Company's right to claim and recover damages.



<PAGE>

10.      INDEMNIFICATION

         Company shall, to the maximum extent permitted by law, indemnify and
hold Employee harmless against expenses, including reasonable attorney's fees,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Employee's
employment with Company if Employee, in incurring the above expenses, acted in
good faith and in a manner Employee believed to be in the best interests of
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe Employee's conduct was unlawful.

11.      COPIES OF AGREEMENT

         Employee authorizes Company to send a copy of this Agreement to any and
all future employers which he or she may have, and to any and all persons,
firms, and corporations, with whom he or she may become affiliated in a business
or commercial enterprise, and to inform any and all such employers, persons,
firms or corporations that Company intends to exercise its legal rights should
Employee breach the terms of this Agreement or should another party induce a
breach of Employee's part.

12.      SEVERABLE PROVISIONS

         The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

13.      BINDING AGREEMENT

         This Agreement shall inure to the benefit of and shall be binding upon
Company, its successors and assigns.

14.      CAPTIONS

         The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

15.      ENTIRE AGREEMENT

         This Agreement contains the entire agreement of the parties
relating to the subject matter hereof, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of
this Agreement that are not set forth in these documents. No modification of
this Agreement shall be valid unless made in writing and signed by the
parties hereto.

16.      GOVERNING LAW

         This Agreement shall be governed and construed in accordance with the
laws of the state of Oregon.



<PAGE>

17.      NOTICES

         Any notice or demand required or permitted to be given hereunder shall
be in writing and shall be deemed effective upon the personal delivery thereof
or, if mailed, forty-eight hours after having been deposited in the United
States mails, postage prepaid, and addressed to the party to whom it is directed
at the address et forth below:

         If to Company:

         ADVANCED POWER TECHNOLOGY, INC.
         405 S. W. Columbia Street
         Bend, Oregon  97702

         With a copy to:
         Thomas J. Poletti, Esq.
         Freshman, Marantz, Orlanski, Comsky & Deutsch
         9100 Wilshire Blvd., Ste. 8-E
         Beverly Hills, CA 90212

         If to EMPLOYEE:

         ________________________________

         ________________________________

         ________________________________



Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.

ADVANCED POWER TECHNOLOGY, INC.
a Delaware corporation ("Company")


By:   S/S
      Patrick Sireta
      President and Chief Executive Officer


         S/S
------------
("Employee")



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>7
<FILENAME>ex-104.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT
                       (MANAGEMENT & TECHNICAL PERSONNEL)
                            EXEMPT SALARIED EMPLOYEES


         THIS EMPLOYMENT AGREEMENT is made and entered into this 9th day of
August, 1985 by and between ADVANCED POWER TECHNOLOGY, INC., a Delaware
corporation ("Company") and Greg M. Haugen an individual ("Employee").

         WHEREAS, Company desires to employ Employee upon the terms and
conditions hereinafter set forth, and Employee desires to be so employed;

         NOW, THEREFORE, in consideration of the mutual promises contained
herein, Company and Employee agree as follows:

1.       EMPLOYMENT

         Company hereby employees Employee as Accounting Manager of the Company
         with the powers an duties consistent with such position, and Employee
         hereby accepts such employment, on the terms and conditions hereinafter
         set forth. Employee, subject to the control of the Management of
         Company, agrees to diligently utilize his or her best efforts to
         further the interests of the Company and to discharge those
         responsibilities and duties required for the planning, development,
         operation, promotion and advancement of the Company, and such other
         duties as Company may require.

2.       TERM AND TERMINATION

         2.1      This Agreement shall terminate upon the happening of any of
         the following events:

                  (a)      By mutual agreement between Company and Employee;

                  (b)      Unilaterally by Employee without cause;

                  (c)      Upon the death of Employee;

                  (d)      Upon the good faith determination of the Chief
                  Executive Officer of the Company that Employee has become so
                  physically or mentally disabled as to be incapable of
                  satisfactorily performing his or her duties hereunder for a
                  period of ninety (90) consecutive days, such determination
                  based upon a certificate as to such physical or mental
                  disability issued by a licensed physician and/or psychiatrist
                  (as the case may be) employed by the Company; or

                  (e)      By the Company for cause, that is to say only upon
                  Employee's conviction of a felony, commission of any material
                  act of dishonesty against the Company, material breach of this
                  Agreement by Employee, or misconduct by Employee having a
                  substantial adverse effect on the business of the Company.

<PAGE>

                  (f)      Unilaterally by the Company without cause, in which
                  event (Section 2.2 to the contrary not withstanding) the
                  Company will continue to pay Employee the full amount due as
                  salary for a period of thirty days following notice of
                  termination.

         2.2      In the event that this Agreement is terminated
         pursuant to Paragraph 2.1, neither Company nor Employee shall have
         any remaining duties or obligations hereunder, except that Company
         shall pay to Employee, or his or her representatives, such
         compensation as is due pursuant to Sub-Section 2.1(f) and Section 3.
         The provisions of Section 4-9 shall survive termination.

         2.3      This Agreement shall not be terminated by any:

                  (a)      Merger, whether the Company is or is not the
                  surviving corporation; or

                  (b)      Transfer of all or substantially all of the assets of
                  the Company; or

                  (c)      Voluntary or involuntary dissolution or liquidation
                  of the Company; or

                  (d)      Consolidation to which the Company is a party.

         In the event of any such merger, transfer of assets, dissolution,
         liquidation, or consolidation, the surviving corporation or
         transferee, as the case may be, shall be bound by and shall have the
         benefits of this Agreement, and Company shall take all action to
         ensure that such corporation or transferee is bound by the
         provisions of this Agreement.

3.       COMPENSATION

         3.1      As the total consideration for services which Employee agrees
         to render hereunder, Employee is entitled to the following:

                  (a)      Beginning on December 9, 1985, an annual base salary
                  at the rate of Thirty-Six Thousand Dollars ($36,000), subject
                  to increases at the discretion of Company, in accordance with
                  the regular and ordinary payment practices of Company. All
                  payroll payments shall be subject to deduction of payroll
                  taxes and related deductions as required by law.

                  (b)      Participation in all plans or programs sponsored by
                  Company for employees in general, including without limitation
                  participation in any group health plan, medical reimbursement
                  plan and life insurance plan, pension and profit sharing plan.

                  (c)      Reimbursement of any and all necessary and reasonable
                  expenses incurred by Employee from time to time in the
                  performance of his or her duties hereunder, including without
                  limitation entertainment expenses and air fare, taxi,
                  automobile, and other traveling expenses.

                  (d)      After six (6) months of continuous employment,
                  Employee shall be eligible for five (5) working days of paid
                  vacation; after twelve (12) months of

<PAGE>

                  continuous employment, Employee shall be eligible for ten (10)
                  working days of paid vacation; thereafter, Employee shall be
                  eligible for ten (10) working days of paid vacation upon the
                  completion of each successive twelve (12) month period of
                  continuous employment. Paid vacations non-cumulative and must
                  be taken during the twelve (12) months following accrual.

                  (e)      Such other benefits as Company, in its sole
                  discretion, may from time to time provide.

         3.2      Subject to the limitations contained in Paragraph
         2.1, if Employee shall be absent on account of personal injuries or
         physical or mental disability, Employee shall continue to receive
         all payments provided in this Agreement; provided, however, that any
         such payments may, at the sole option of Company, be reduced by any
         amount that Employee receives for the period covered by such
         payments as disability compensation under insurance policies
         maintained by Company or under governmental programs.

         3.3      Company shall have the right to deduct from the
         compensation due to Employee hereunder any and all sums required for
         social security and withholding taxes and for any other federal,
         state, or local tax or charge which may be in effect or hereafter
         enacted or required as a charge on the compensation of Employee.

         3.4      Employee shall repay relocation expenses paid by Company if
         he or she voluntarily terminates employment, or is terminated for
         cause within one year from date of employment.

4.       NON-DISCLOSURE

         Employee shall not disclose or use in any way, either during his or her
employment with Company or thereafter, except as required in the course of his
or her employment with Company, any confidential business or technical
information or trade secrets acquired during his or her employment by Company,
whether or not conceived of, discovered, developed or prepared by Employee,
including without limitation any formulae, patterns, inventions, procedures,
processes, plans, devices, products, operations, techniques, know-how,
specifications, data, compilations of information, customer lists, records,
financing or production methods, costs, employees, and information concerning
specific customer requirements, preferences, practices and methods of doing
business, all of which are exclusive and valuable property of Company.

<PAGE>

5.       ASSIGNMENT OF PROPRIETARY INTEREST

         Employee hereby assigns and transfers to Company his or her entire
right, title and interest in and to any and all inventions, improvements,
processes, sketches, methods of production, designs, discoveries, ideas (whether
or not shown or described in writing) or services (collectively "inventions")
whether or not patentable, which are made, conceived or first reduced to
practice by Employee with Company's equipment, supplies, facilities, or trade
secrets and on Company's time, or which relates to the business of Company or
Company's actual or anticipated research or business development, or which
results from any work performed by the Employee for Company. Employee agrees
that Company shall have the right to keep such inventions as trade secrets. To
permit Company to claim rights to which it may be entitled, the Employee agrees
to promptly disclose to Company in confidence all inventions which the employee
makes, conceives, or first reduces to practice during the course of his or her
employment or within one year after termination thereof if such inventions
relate to a product, process or service upon which Employee worked during the
period of his or her employment by Company, and all patent or copyright
applications filed by the Employee within a year after termination of this
Agreement. Both during and after the period of employment with Company, Employee
shall further assist Company in obtaining patents or copyrights on all
inventions deemed patentable or copyrightable by Company in the United States
and in all foreign countries, and shall execute all documents and do all things
necessary to obtain letters patent and/or copyrights, to vest Company with full
and extensive title thereto, and to protect Company's rights against
infringement by others. Employee further agrees that any patent application
filed within a year after termination of his or her employment on an invention
for which the Employee was partially or totally responsible shall be presumed to
relate to an invention made during the term of the Employee's employment unless
the Employee can provide evidence to the contrary.

6.       TANGIBLE ITEMS AS PROPERTY OF COMPANY

         Excluding any personal property owned by Employee prior to the date
hereof, all files, records, documents, drawings, plans, specifications, manuals,
books, forms, receipts, notes, reports, memoranda, studies, data, calculations,
recordings, catalogues, compilations of information, correspondence and all
copies, abstracts and summaries of the foregoing, instruments, tools and
equipment and all other physical items related to the business of Company, other
than a merely personal item of a general professional nature, whether of a
public nature or not, and whether prepared by Employee or not, are and shall
remain the exclusive property of Company and shall not be removed from the
premises of Company under any circumstances whatsoever without the prior written
consent of Company, and the same shall be promptly returned to Company by
Employee on the expiration or termination of his or her employment with Company
or at any time prior thereto upon the request of Company.

<PAGE>

7.       SOLICITATION OF CUSTOMERS AND EMPLOYEES

         Both during and after the period of employment, Employee shall not in
any way attempt to interfere with the business of Company and, shall not call
on, solicit, interfere with or attempt to entice away, either directly or
indirectly, any employee of Company with whom he or she became acquainted during
his or her employment with Company, either for his or her own benefit or
purposes or for the benefit or purposes of any other person, partnership,
corporation, firm, association or other business organization, entity or
enterprise.

8.       NONCOMPETITION

         Except as set forth in this Section 8, for a period of 18 months after
termination of this Agreement, Employee shall not, directly or indirectly,
engage or participate in, assist or have any interest in any person,
partnership, corporation, firm, association or other business organization,
entity or enterprise (whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise) which, directly or indirectly,
manufactures, designs, develops, engineers, markets or otherwise produces or
offers for sale or sells inventions, products, processes, systems or services
the same as, similar to or competitive with any devices, inventions, products,
processes, systems or services manufactured, designed, developed, engineered,
marketed or otherwise produced or offered for sale or sold by Company (or any
successor thereof) in the United States or abroad.

         The parties intend that the covenant contained in this Section 8 shall
be construed as a series of separate covenants. If, in any judicial or
arbitration proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this paragraph, then this unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced. Moreover, if, in any judicial or arbitration proceedings, the
term of non-competition shall be determined to be unreasonable, the parties
agree that the term shall be shortened to the maximum period deemed reasonable
under the laws of the state of Oregon, and that modified period shall be
enforceable as though originally set forth herein.

9.       INJUNCTIVE RELIEF

         Employee hereby acknowledges and agrees that it would be difficult to
fully compensate Company for damages resulting from the breach or threatened
breach of Sections 4, 5, 6, 7 or 8 of this Agreement, and accordingly, that
Company shall be entitled to temporary and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions,
to enforce such Sections without the necessity of proving actual damages
therewith. This provision with respect to injunctive relief shall not, however,
diminish Company's right to claim and recover damages.

<PAGE>

10.      INDEMNIFICATION

         Company shall, to the maximum extent permitted by law, indemnify and
hold Employee harmless against expenses, including reasonable attorney's fees,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Employee's
employment with Company if Employee, in incurring the above expenses, acted in
good faith and in a manner Employee believed to be in the best interests of
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe Employee's conduct was unlawful.

11.      COPIES OF AGREEMENT

         Employee authorizes Company to send a copy of this Agreement to any and
all future employers which he or she may have, and to any and all persons,
firms, and corporations, with whom he or she may become affiliated in a business
or commercial enterprise, and to inform any and all such employers, persons,
firms or corporations that Company intends to exercise its legal rights should
Employee breach the terms of this Agreement or should another party induce a
breach of Employee's part.

12.      SEVERABLE PROVISIONS

         The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

13.      BINDING AGREEMENT

         This Agreement shall inure to the benefit of and shall be binding upon
Company, its successors and assigns.

14.      CAPTIONS

         The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

15.      ENTIRE AGREEMENT

         This Agreement contains the entire agreement of the parties relating to
the subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth in these documents. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto.

16.      GOVERNING LAW

         This Agreement shall be governed and construed in accordance with the
laws of the state of Oregon.

<PAGE>

17.      NOTICES

         Any notice or demand required or permitted to be given hereunder shall
be in writing and shall be deemed effective upon the personal delivery thereof
or, if mailed, forty-eight hours after having been deposited in the United
States mails, postage prepaid, and addressed to the party to whom it is directed
at the address et forth below:

         If to Company:

         ADVANCED POWER TECHNOLOGY, INC.
         401 S. W. Columbia Street
         Bend, Oregon  97701

         With a copy to:
         Thomas J. Poletti, Esq.
         Freshman, Marantz, Orlanski, Comsky & Deutsch
         9100 Wilshire Blvd., Ste. 8-E
         Beverly Hills, CA 90212

         If to EMPLOYEE:

         -------------------------------------

         -------------------------------------

         -------------------------------------


Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.

                  IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first written above.

ADVANCED POWER TECHNOLOGY, INC.
a Delaware corporation ("Company")


By:   S/S
      Patrick Sireta
      President


         S/S
------------
("Employee")



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>8
<FILENAME>ex-106.txt
<DESCRIPTION>EXHIBIT 10.6
<TEXT>

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT

                                (SALES PERSONNEL)


     THIS EMPLOYMENT AGREEMENT is made and entered into this 19 day of SEPTEMBER
1988, by and between ADVANCED POWER TECHNOLOGY, INC., a Delaware corporation
("Company") and THOMAS A. LODER, an individual ("Employee").

     WHEREAS, Company desires to employ Employee upon the terms and conditions
hereinafter set forth, and Employee desires to be so employed;

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
Company and Employee agree as follows:

1.   EMPLOYMENT

     Company hereby employees Employee as SOUTHERN SALES MANAGER of the Company
     with the powers an duties consistent with such position, and Employee
     hereby accepts such employment, on the terms and conditions hereinafter set
     forth. Employee, subject to the control of the Management of Company,
     agrees to diligently utilize his or her best efforts to further the
     interests of the Company and to discharge those responsibilities and duties
     required for the planning, development, operation, promotion and
     advancement of the Company, and such other duties as Company may require.

2.   TERM AND TERMINATION

     2.1  This Agreement shall terminate upon the happening of any of the
     following events:

          (a)  By mutual agreement between Company and Employee;

          (b)  Unilaterally by Employee without cause;

          (c)  Upon the death of Employee;

          (d)  By the Company upon the good faith determination of the Chief
          Executive officer of Company that Employee has become so physically or
          mentally disabled as to be incapable of satisfactorily performing his
          or her duties hereunder for a period of ninety (90) days during any
          six month period, such determination may be based upon a certificate
          as to such physical or mental disability issued by a licensed
          physician and/or psychiatrist (as the case may be) employed by
          Company; or

          (e)  By the Company for cause, that is to say only upon Employee's
          conviction of a felony, commission of any material act of dishonesty
          against the Company,


<PAGE>

          material breach of this Agreement by Employee, or misconduct by
          Employee having a substantial adverse effect on the business of the
          Company.

          (f)  By the Company without cause, in which event (Section 2.2 to the
          contrary not withstanding) the Company will continue to pay Employee
          the full amount due as salary for a period of thirty days following
          notice of termination.

     2.2  In the event that this Agreement is terminated pursuant to Paragraph
     2.1, neither Company nor Employee shall have any remaining duties or
     obligations hereunder, except that Company shall pay to Employee, or his or
     her representatives, such compensation as is due pursuant to Section 3. The
     provisions of Section 4-6 shall survive termination.

     2.3  This Agreement shall not be terminated by any:

          (a)  Merger, whether the Company is or is not the surviving
          corporation; or

          (b)  Transfer of all or substantially all of the assets of the
          Company; or

          (c)  Voluntary or involuntary dissolution or liquidation of the
          Company; or

          (d)  Consolidation to which the Company is a party.

     In the event of any such merger, transfer of assets, dissolution,
     liquidation, or consolidation, the surviving corporation or transferee, as
     the case may be, shall be bound by and shall have the benefits of this
     Agreement, and Company shall take all action to ensure that such
     corporation or transferee is bound by the provisions of this Agreement.

3.   COMPENSATION

     3.1  As the total consideration for services which Employee agrees to
     render hereunder, Employee is entitled to the following:

          (a)  Beginning on SEPTEMBER 16, 1988, or as soon thereafter as
          Employee begins work, an annual base salary at the rate of FIFTY SEVEN
          THOUSAND AND SIX HUNDRED Dollars ($57,600.00), subject to increases at
          the discretion of Company, in accordance with the regular and ordinary
          payment practices of Company. All payroll payments shall be subject to
          deduction of payroll taxes and related deductions as required by law.

          (b)  In addition, the Employee will have an opportunity to
          substantially increase total cash compensation under terms of the
          Advanced Power Technology Sales Incentive Plan.

          (c)  Participation in all plans or programs sponsored by Company for
          employees in general, including without limitation participation in
          any group health plan, medical reimbursement plan and life insurance
          plan, pension and profit sharing plan.


<PAGE>

          (d)  Reimbursement of any and all reasonable expenses incurred by
          Employee from time to time in the performance of his or her duties
          hereunder, including without limitation entertainment expenses and air
          fare, taxi, automobile, and other traveling expenses.

          (e)  Upon completion of six (6) months of continuous employment,
          Employee shall be eligible for five (5) working days of paid vacation.
          Employee then continues to earn vacation in the amount of five/sixths
          (5/6) day per month, and on the monthly date of hire date. This
          results in the Employee continuing to earn vacation at the rate of ten
          (10) days per anniversary year. Paid vacation is non-cumulative and
          must be taken during the eighteen (18) month period following earned
          eligibility.

          (f)  Such other benefits as Company, in its sole discretion, may from
          time to time provide, and which Employee qualifies for.

     3.2  Subject to the limitations contained in Paragraph 2.1 and to the
     Policies of the Company as adopted from time to time, if Employee shall be
     absent on account of personal injuries or physical or mental illness,
     Employee shall continue to receive all payments provided in this Agreement;
     provided, however, that any such payments may, at the sole option of
     Company, be reduced by any amount that Employee receives for the period
     covered by such payments as disability compensation under insurance
     policies maintained by Company or under governmental programs.

     3.3  Company shall have the right to deduct from the compensation due to
     Employee hereunder any and all sums required for social security and
     withholding taxes and for any other federal, state, or local tax or charge
     which may be in effect or hereafter enacted or required as a charge on the
     compensation of Employee.

     3.4  Employee shall repay relocation expenses paid by Company if he or she
     voluntarily terminates employment, or is terminated for cause within one
     year from date of employment.

     3.5  Any payments, whether incurred by the Company or by an employee or
     officer of the Company on behalf of and reimbursed b the Company,
     including, without limitation, salary, commission, bonus, interest, rent or
     travel and entertainment expenses, which are disallowed in whole or in part
     as a deductible expense for federal income tax purposes on the grounds that
     said payments constitute unreasonable compensation to an employee or
     officer, shall be repaid by the employee or officer to the Company to the
     full extent of the disallowance, if the Board, in its discretion, agrees to
     enforce the repayment of each such amount disallowed.

4.   NON-DISCLOSURE

     Employee shall not disclose or use in any way, either during his or her
employment with Company or thereafter, except as required in the course of his
or her employment with Company, any confidential business or technical
information or trade secrets acquired during his or her employment by Company,
whether or not conceived of, discovered, developed or prepared by


<PAGE>

Employee, including without limitation any formulae, patterns, inventions,
procedures, processes, plans, devices, products, operations, techniques,
know-how, specifications, data, compilations of information, customer lists,
records, financing or production methods, costs, employees, and information
concerning specific customer requirements, preferences, practices and methods of
doing business, all of which are exclusive and valuable property of Company.

5.   TANGIBLE ITEMS AS PROPERTY OF COMPANY

     Excluding any personal property owned by Employee prior to the date hereof,
all files, records, documents, drawings, plans, specifications, manuals, books,
forms, receipts, notes, reports, memoranda, studies, data, calculations,
recordings, catalogues, compilations of information, correspondence and all
copies, abstracts and summaries of the foregoing, instruments, tools and
equipment and all other physical items related to the business of Company, other
than a merely personal item of a general professional nature, whether of a
public nature or not, and whether prepared by Employee or not, are and shall
remain the exclusive property of Company and shall not be removed from the
premises of Company under any circumstances whatsoever without the prior written
consent of Company, and the same shall be promptly returned to Company by
Employee on the expiration or termination of his or her employment with Company
or at any time prior thereto upon the request of Company.

6.   SOLICITATION OF EMPLOYEES

     Both during and within one year after the period of employment, Employee
shall not in any way attempt to interfere with the business of Company and,
shall not call on, solicit, interfere with or attempt to entice away, either
directly or indirectly, any employee of Company with whom he or she became
acquainted during his or her employment with Company, either for his or her own
benefit or purposes or for the benefit or purposes of any other person,
partnership, corporation, firm, association or other business organization,
entity or enterprise.

7.   INJUNCTIVE RELIEF

     Employee hereby acknowledges and agrees that it would be difficult to fully
compensate Company for damages resulting from the breach or threatened breach of
Sections 4, 5, and 6 of this Agreement, and accordingly, that Company shall be
entitled to temporary and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages therewith. This
provision with respect to injunctive relief shall not, however, diminish
Company's right to claim and recover damages.

8.   INDEMNIFICATION

     Company shall, to the maximum extent permitted by law, indemnify and hold
Employee harmless against expenses, including reasonable attorney's fees,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Employee's
employment with Company if Employee, in incurring the above expenses, acted in
good faith and in a manner Employee believed to be in the best interests of
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe Employee's conduct was unlawful.


<PAGE>

9.   SEVERABLE PROVISIONS

     The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

10.  BINDING AGREEMENT

     This Agreement shall inure to the benefit of and shall be binding upon
Company, its successors and assigns.

11.  CAPTIONS

     The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

12.  ENTIRE AGREEMENT

     This Agreement, together with that offer of employment dated AUGUST 30,
1988 a copy of which is attached hereto and incorporated herein, contains the
entire agreement of the parties relating to the subject matter hereof, and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement that are not set forth in these
documents. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto.

13.  GOVERNING LAW

     This Agreement shall be governed and construed in accordance with the laws
of the state of Oregon.

14.  NOTICES

     Any notice or demand required or permitted to be given hereunder shall be
in writing and shall be deemed effective upon the personal delivery thereof or,
if mailed, forty-eight hours after having been deposited in the United States
mails, postage prepaid, and addressed to the party to whom it is directed at the
address et forth below:

     If to Company:

     ADVANCED POWER TECHNOLOGY, INC.
     405 S. W. Columbia Street
     Bend, Oregon  97702

     With a copy to:
     Kathy Gawne-Doxsee
     Freshman, Marantz, Orlanski
     Cooper & Klein


<PAGE>

     9100 Wilshire Blvd., suite 8-E
     Beverly Hills, CA 90212

     If to EMPLOYEE

     ----------------------------------
     ----------------------------------
     ----------------------------------

Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first written above.



                   ADVANCED POWER TECHNOLOGY, INC.
                   a Delaware corporation ("Company")


                   By:    S/S
                         Patrick Sireta
                         President and Chief Executive Officer



                            S/S
                    -----------
                   ("Employee")


<PAGE>

                         [ADVANCED POWER TECHNOLOGY LETTERHEAD]



Tom Loder                                                      August 30, 1988
207 Timber Ridge Lane
Coppell, TX 75019

Dear Tom:

         All of us at APT are delighted with your decision to join the
company as its Southern Sales Manager, reporting to Terry Bowman, APT
Marketing and Sales Manager.

         This letter confirms the terms of our discussions of last week and
our most recent telephone conversation. Your annual salary will be $57,600
and you will be offered the possibility to buy 15,000 shares of common stock
of APT at the price of $0.059 per share upon your joining the company and
subject to the approval of the Board of Director. The payment of these
shares, $885, will be made in cash or in the form of a one (1) year note
bearing 10% annual interest rate. You will also be eligible for all the
benefits provided by the company, including Group Medical and Dental
coverages, Life Insurance, and the 401K program.

         In addition, you will participate in APT's Sales Incentive
Compensation Program. This program provides you with the opportunity to earn
commission on the sales booked in your territory as well as new account
bonuses. A draft of the "Southern Sales Manager Incentive Compensation
Agreement" for the period September 1, 1988 to December 31, 1988 is enclosed
for reference.

         This letter constitutes a formal offer of employment to join
Advanced Power Technology in the capacity of Southern Sales Manager. The
Company's policies and procedures require that you sign the attached
Employment Agreement on your first day of employment. Let me know if you have
any questions about it.

         After you have a chance to review the terms of this letter, please
give me a call to discuss when you will be able to joint APT and any other
point which might still be open.

         Again, we are all extremely pleased to have you join us and we look
forward to welcoming you soon.



                                       Sincerely,

                                       /s/ Patrick Sireta

                                       Patrick Sireta
                                       President and Chief Executive Officer
                                       Advanced Power Technology, Inc.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>9
<FILENAME>ex-107.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>

<PAGE>

                                                                    Exhibit 10.7


                         ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT
                       (MANAGEMENT & TECHNICAL PERSONNEL)
                            EXEMPT SALARIED EMPLOYEES


     THIS EMPLOYMENT AGREEMENT is made and entered into this day of JANUARY 12,
1987, by and between ADVANCED POWER TECHNOLOGY, INC., a Delaware corporation
("Company") and DAH WEN TSANG an individual ("Employee").

     WHEREAS, Company desires to employ Employee upon the terms and conditions
hereinafter set forth, and Employee desires to be so employed;

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
Company and Employee agree as follows:

1.   EMPLOYMENT

     Company hereby employees Employee as V.P. COMPONENT ENGINEERING & RESEARCH
     AND DEVELOPMENT of the Company with the powers an duties consistent with
     such position, and Employee hereby accepts such employment, on the terms
     and conditions hereinafter set forth. Employee, subject to the control of
     the Management of Company, agrees to diligently utilize his or her best
     efforts to further the interests of the Company and to discharge those
     responsibilities and duties required for the planning, development,
     operation, promotion and advancement of the Company, and such other duties
     as Company may require.

2.   TERM AND TERMINATION

     2.1  This Agreement shall terminate upon the happening of any of the
     following events:

          (a)  By mutual agreement between Company and Employee;

          (b)  Unilaterally by Employee without cause;

          (c)  Upon the death of Employee;

          (d)  Upon the good faith determination of the Chief Executive Officer
          of the Company that Employee has become so physically or mentally
          disabled as to be incapable of satisfactorily performing his or her
          duties hereunder for a period of ninety (90) consecutive days, such
          determination based upon a certificate as to such physical or mental
          disability issued by a licensed physician and/or psychiatrist (as the
          case may be) employed by the Company; or

          (e)  By the Company for cause, that is to say only upon Employee's
          conviction of a felony, commission of any material act of dishonesty
          against the Company, material breach of this Agreement by Employee, or
          misconduct by Employee having a substantial adverse effect on the
          business of the Company.


<PAGE>

          (f)  Unilaterally by the Company without cause, in which event
          (Section 2.2 to the contrary not withstanding) the Company will
          continue to pay Employee the full amount due as salary for a period of
          thirty days following notice of termination.

     2.2  In the event that this Agreement is terminated pursuant to Paragraph
     2.1, neither Company nor Employee shall have any remaining duties or
     obligations hereunder, except that Company shall pay to Employee, or his or
     her representatives, such compensation as is due pursuant to Sub-Section
     2.1(f) and Section 3. The provisions of Section 4-9 shall survive
     termination.

     2.3  This Agreement shall not be terminated by any:

          (a)  Merger, whether the Company is or is not the surviving
          corporation; or

          (b)  Transfer of all or substantially all of the assets of the
          Company; or

          (c)  Voluntary or involuntary dissolution or liquidation of the
          Company; or

          (d)  Consolidation to which the Company is a party.

     In the event of any such merger, transfer of assets, dissolution,
     liquidation, or consolidation, the surviving corporation or transferee, as
     the case may be, shall be bound by and shall have the benefits of this
     Agreement, and Company shall take all action to ensure that such
     corporation or transferee is bound by the provisions of this Agreement.

3.   COMPENSATION

     3.1  As the total consideration for services which Employee agrees to
     render hereunder, Employee is entitled to the following:

          (a)  Beginning on JANUARY 12, 1987, an annual base salary at the rate
          of EIGHTY-SEVEN THOUSAND Dollars ($87,000), subject to increases at
          the discretion of Company, in accordance with the regular and ordinary
          payment practices of Company. All payroll payments shall be subject to
          deduction of payroll taxes and related deductions as required by law.

          (b)  Participation in all plans or programs sponsored by Company for
          employees in general, including without limitation participation in
          any group health plan, medical reimbursement plan and life insurance
          plan, pension and profit sharing plan.

          (c)  Reimbursement of any and all necessary and reasonable expenses
          incurred by Employee from time to time in the performance of his or
          her duties hereunder, including without limitation entertainment
          expenses and air fare, taxi, automobile, and other traveling expenses.

          (d)  After six (6) months of continuous employment, Employee shall be
          eligible for five (5) working days of paid vacation; after twelve (12)
          months of


<PAGE>

          continuous employment, Employee shall be eligible for ten (10) working
          days of paid vacation; thereafter, Employee shall be eligible for ten
          (10) working days of paid vacation upon the completion of each
          successive twelve (12) month period of continuous employment. Paid
          vacations non-cumulative and must be taken during the twelve (12)
          months following accrual.

          (e)  Such other benefits as Company, in its sole discretion, may from
          time to time provide.

     3.2  Subject to the limitations contained in Paragraph 2.1, if Employee
     shall be absent on account of personal injuries or physical or mental
     disability, Employee shall continue to receive all payments provided in
     this Agreement; provided, however, that any such payments may, at the sole
     option of Company, be reduced by any amount that Employee receives for the
     period covered by such payments as disability compensation under insurance
     policies maintained by Company or under governmental programs.

     3.3  Company shall have the right to deduct from the compensation due to
     Employee hereunder any and all sums required for social security and
     withholding taxes and for any other federal, state, or local tax or charge
     which may be in effect or hereafter enacted or required as a charge on the
     compensation of Employee.

     3.4  Employee shall repay relocation expenses paid by Company if he or she
     voluntarily terminates employment, or is terminated for cause within one
     year from date of employment.

     3.5  Any payments, whether incurred by the Company or by an employee or
     officer of the Company on behalf of and reimbursed b the Company,
     including, without limitation, salary, commission, bonus, interest, rent or
     travel and entertainment expenses, which are disallowed in whole or in part
     as a deductible expense for federal income tax purposes on the grounds that
     said payments constitute unreasonable compensation to an employee or
     officer, shall be repaid by the employee or officer to the Company to the
     full extent of the disallowance, if the Board, in its discretion, agrees to
     enforce the repayment of each such amount disallowed.

4.   NON-DISCLOSURE

     Employee shall not disclose or use in any way, either during his or her
employment with Company or thereafter, except as required in the course of his
or her employment with Company, any confidential business or technical
information or trade secrets acquired during his or her employment by Company,
whether or not conceived of, discovered, developed or prepared by Employee,
including without limitation any formulae, patterns, inventions, procedures,
processes, plans, devices, products, operations, techniques, know-how,
specifications, data, compilations of information, customer lists, records,
financing or production methods, costs, employees, and information concerning
specific customer requirements, preferences, practices and methods of doing
business, all of which are exclusive and valuable property of Company.


<PAGE>

5.   ASSIGNMENT OF PROPRIETARY INTEREST

     Employee hereby assigns and transfers to Company his or her entire right,
title and interest in and to any and all inventions, improvements, processes,
sketches, methods of production, designs, discoveries, ideas (whether or not
shown or described in writing) or services (collectively "inventions") whether
or not patentable, which are made, conceived or first reduced to practice by
Employee with Company's equipment, supplies, facilities, or trade secrets and on
Company's time, or which relates to the business of Company or Company's actual
or anticipated research or business development, or which results from any work
performed by the Employee for Company. Employee agrees that Company shall have
the right to keep such inventions as trade secrets. To permit Company to claim
rights to which it may be entitled, the Employee agrees to promptly disclose to
Company in confidence all inventions which the employee makes, conceives, or
first reduces to practice during the course of his or her employment or within
one year after termination thereof if such inventions relate to a product,
process or service upon which Employee worked during the period of his or her
employment by Company, and all patent or copyright applications filed by the
Employee within a year after termination of this Agreement. Both during and
after the period of employment with Company, Employee shall further assist
Company in obtaining patents or copyrights on all inventions deemed patentable
or copyrightable by Company in the United States and in all foreign countries,
and shall execute all documents and do all things necessary to obtain letters
patent and/or copyrights, to vest Company with full and extensive title thereto,
and to protect Company's rights against infringement by others. Employee further
agrees that any patent application filed within a year after termination of his
or her employment on an invention for which the Employee was partially or
totally responsible shall be presumed to relate to an invention made during the
term of the Employee's employment unless the Employee can provide evidence to
the contrary.

6.   TANGIBLE ITEMS AS PROPERTY OF COMPANY

     Excluding any personal property owned by Employee prior to the date hereof,
all files, records, documents, drawings, plans, specifications, manuals, books,
forms, receipts, notes, reports, memoranda, studies, data, calculations,
recordings, catalogues, compilations of information, correspondence and all
copies, abstracts and summaries of the foregoing, instruments, tools and
equipment and all other physical items related to the business of Company, other
than a merely personal item of a general professional nature, whether of a
public nature or not, and whether prepared by Employee or not, are and shall
remain the exclusive property of Company and shall not be removed from the
premises of Company under any circumstances whatsoever without the prior written
consent of Company, and the same shall be promptly returned to Company by
Employee on the expiration or termination of his or her employment with Company
or at any time prior thereto upon the request of Company.


<PAGE>

7.   SOLICITATION OF CUSTOMERS AND EMPLOYEES

     Both during and within one year after the period of employment, Employee
shall not in any way attempt to interfere with the business of Company and,
shall not call on, solicit, interfere with or attempt to entice away, either
directly or indirectly, any employee of Company with whom he or she became
acquainted during his or her employment with Company, either for his or her own
benefit or purposes or for the benefit or purposes of any other person,
partnership, corporation, firm, association or other business organization,
entity or enterprise.

8.   NONCOMPETITION

     Except as set forth in this Section 8, for a period of 18 months after
termination of this Agreement, Employee shall not, directly or indirectly,
engage or participate in, assist or have any interest in any person,
partnership, corporation, firm, association or other business organization,
entity or enterprise (whether as an employee, officer, director, agent, security
holder, creditor, consultant or otherwise) which, directly or indirectly,
manufactures, designs, develops, engineers, markets or otherwise produces or
offers for sale or sells inventions, products, processes, systems or services
the same as, similar to or competitive with any devices, inventions, products,
processes, systems or services manufactured, designed, developed, engineered,
marketed or otherwise produced or offered for sale or sold by Company (or any
successor thereof) in the United States or abroad.

     The parties intend that the covenant contained in this Section 8 shall be
construed as a series of separate covenants. If, in any judicial or arbitration
proceeding, a court shall refuse to enforce any of the separate covenants deemed
included in this paragraph, then this unenforceable covenant shall be deemed
eliminated from these provisions for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be enforced.
Moreover, if, in any judicial or arbitration proceedings, the term of
non-competition shall be determined to be unreasonable, the parties agree that
the term shall be shortened to the maximum period deemed reasonable under the
laws of the state of Oregon, and that modified period shall be enforceable as
though originally set forth herein.

9.   INJUNCTIVE RELIEF

     Employee hereby acknowledges and agrees that it would be difficult to fully
compensate Company for damages resulting from the breach or threatened breach of
Sections 4, 5, 6, 7 or 8 of this Agreement, and accordingly, that Company shall
be entitled to temporary and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages therewith. This
provision with respect to injunctive relief shall not, however, diminish
Company's right to claim and recover damages.


<PAGE>

10.  INDEMNIFICATION

     Company shall, to the maximum extent permitted by law, indemnify and hold
Employee harmless against expenses, including reasonable attorney's fees,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of Employee's
employment with Company if Employee, in incurring the above expenses, acted in
good faith and in a manner Employee believed to be in the best interests of
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe Employee's conduct was unlawful.

11.  COPIES OF AGREEMENT

     Employee authorizes Company to send a copy of this Agreement to any and all
future employers which he or she may have, and to any and all persons, firms,
and corporations, with whom he or she may become affiliated in a business or
commercial enterprise, and to inform any and all such employers, persons, firms
or corporations that Company intends to exercise its legal rights should
Employee breach the terms of this Agreement or should another party induce a
breach of Employee's part.

12.  SEVERABLE PROVISIONS

     The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.

13.  BINDING AGREEMENT

     This Agreement shall inure to the benefit of and shall be binding upon
Company, its successors and assigns.

14.  CAPTIONS

     The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.

15.  ENTIRE AGREEMENT

     This Agreement contains the entire agreement of the parties relating to the
subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth in these documents. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto.

16.  GOVERNING LAW

     This Agreement shall be governed and construed in accordance with the laws
of the state of Oregon.


<PAGE>

17.  NOTICES

     Any notice or demand required or permitted to be given hereunder shall be
in writing and shall be deemed effective upon the personal delivery thereof or,
if mailed, forty-eight hours after having been deposited in the United States
mails, postage prepaid, and addressed to the party to whom it is directed at the
address et forth below:

     If to Company:

     ADVANCED POWER TECHNOLOGY, INC.
     405 S. W. Columbia Street
     Bend, Oregon 97702

     With a copy to:
     Thomas J. Poletti, Esq.
     Freshman, Marantz, Orlanski, Comsky & Deutsch
     9100 Wilshire Blvd., Ste. 8-E
     Beverly Hills, CA 90212

     If to EMPLOYEE:

     -----------------------------
     -----------------------------
     -----------------------------


Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.

          IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first written above.



ADVANCED POWER TECHNOLOGY, INC.
a Delaware corporation ("Company")


By:   S/S
      Patrick Sireta
      President and Chief Executive Officer



         S/S
------------
("Employee")

I have previously developed MOSFET analysis programs which I will share with the
corporation but retain the right to possess a copy for myself.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>10
<FILENAME>ex-108.txt
<DESCRIPTION>EXHIBIT 10.8
<TEXT>

<PAGE>

                               LEASE MODIFICATION
PARTIES:

LANDLORD:                  David E.  Cookson

TENANT:                    Advanced Power Technology, Inc.

PROPERTY:                  405 S.W.  Columbia, Bend, Oregon 97702

The parties agree to modify that certain lease dated August 27, 1985 and
modified September 15, 1995 as follows:

BASIC RENT:       The base rent shall be $14,900.00 per month beginning
                  September 15, 1999 and continuing through September 14, 2001,
                  and the greater of $15,950.00 per month or previous base
                  ($14,900) plus percent change in CPI from June 30, 1999 to
                  June 30, 2001 beginning September 15, 2001 and continuing
                  through September 14, 2003.

LEASE TERM:       The term of the lease shall be from September 15, 1999
                  through September 14, 2003.

CAM CHARGES:      The CAM charges will continue to be assessed as per the
                  original lease dated March 21, 1985.

TERMS:            All other terms and conditions of the original lease dated
                  March 21, 1985, will remain in full force and effect except
                  for the remaining renewal options which are void and replaced
                  by the four year renewal option now being exercised.

The CPI index will be based on the Consumer Price Indexes, Pacific Cities and
U.S. City Average, All Items Indexes, West - B/C, see copy attached.

DISCLOSURE: Tenant acknowledges that C G Properties, agent for owners, is
licensed by the State of Oregon, as a real estate broker. Said agent is not
representing Tenant in any manner.

DISCLAIMER: This lease modification has been prepared and approved upon the
instruction of the Landlord. C G Properties claims no responsibility for the
legal consequences of the above lease modification and has only acted as the
scribner to fill in the blanks as directed by the parties.
<PAGE>

This modification is effective September 15, 1999. All other provisions of the
original lease shall remain in full force and effect.

LANDLORD:                                  TENANT:
DAVID E. COOKSON                           ADVANCED POWER TECHNOLOGY, INC.


BY:                                        BY:
   -------------------------                  -------------------------

Dated:                                     Dated:
      ----------------------                     ----------------------


                                       2
<PAGE>

                                 LEASE AGREEMENT

THIS LEASE is made this 21st day of March, 1985, between SHEVLIN NO. ONE, an
Oregon joint venture, hereinafter called "Landlord," and ADVANCED POWER
TECHNOLOGY, INC., hereinafter called "Tenant."

                                LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby rents from Landlord, subject
to all of the terms and conditions hereinafter set forth, those certain premises
(hereinafter called the "Premises") shown in the drawings attached hereto as
Exhibit "A" and "A-l" and situated on that certain real property (the
"Property"), the legal description of which is set forth on Exhibit "A." The
Property shall be improved with landscaping, parking facilities and other
improvements. The structure located upon the Property in which the Premises is
located is referred to herein as the "Building," a site plan of which is
attached hereto as Exhibit "B."

                             BASIC LEASE PROVISIONS

A.       Project Name:              Columbia Business Center
         Address:                   405 SW Columbia St.  Building No: 1
                                    Bend, Oregon  97701

B.       Rentable Area:             18,250        square feet for Building
                                    18,250        square feet for Premises

C.       Pro-Rata Share of Operating Costs: 100%

D.       Basic Annual Rental

         Yrs. One through Four                  $137,970 per year

         Yrs. Five through Eight                $146,730 per year

         Yrs. Nine and Ten                      $155,490 per year

         Yrs. Eleven through Fifteen            $166,440 per year

         Yrs. Sixteen through Twenty            $190,530 per year

         Yrs. 21 through 25                     $227,760 per year



E.       Monthly Rental Installments

         Yrs. One through  Four                 $11,497.50 per month

         Yrs. Five through Eight                $12,227.50 per month

         Yrs. Nine and Ten                      $12,957.50 per month

         Yrs. Eleven through Fifteen            $13,870.00 per month

         Yrs. Sixteen through Twenty            $15,877.50 per month
<PAGE>

         Yrs. 21 through 25                     $18,980.00 per month

F.       Estimated Total Operating Expenses for First Year
         $26,280.00
         $2,190.00/month ($.12 sq.ft. of area)

G.       Term: Ten (lO) years with three (3) five (5) year options

H.       Target Commencement Date:  September 15, 1985

I.       Security Deposit/Prepaid Rent:  $ 11 , 497.50

J.       Address for Payment and Notices to Landlord:

                  Emkay Development Company
                  c/o Scott B. Osborne
                  Ferguson & Burdell
                  2900 One Union Square
                  Seattle, Washington 98101

         Address for Notices to Tenant:

                  Advanced Power Technology, Inc.
                  15 N.W. Colorado Avenue
                  Bend, Oregon 97701

K.       Exhibits:

         A        =        Legal Description
         B        =        Building Site Plan
         C        =        Use of Premises and Trade Name
         D        =        CC&Rs
         E        =        Work Letter
         F        =        Rules and Regulations


                                        2
<PAGE>

                                TABLE OF CONTENTS


ARTICLE 1      TERM...........................................................1

ARTICLE 2      RENT...........................................................1

ARTICLE 3      RENT ADJUSTMENT................................................2

ARTICLE 4      SECURITY DEPOSIT/PREPAID RENT..................................5

ARTICLE 5      UTILITIES AND SERVICES.........................................5

ARTICLE 6      USE OF PREMISES................................................5

ARTICLE 7      ACCEPTANCE OF PREMISES.........................................6

ARTICLE 8      ALTERATIONS AND EQUIPMENT......................................6

ARTICLE 9      LIENS..........................................................7

ARTICLE 10        TAX ON TENANT'S PROPERTY....................................7

ARTICLE 11        MAINTENANCE AND REPAIR......................................7

ARTICLE 12        ENTRY AND INSPECTION........................................8

ARTICLE 13        HOLD HARMLESS AND NON-LIABILITY.............................8

ARTICLE 14        WAIVER OF SUBROGATION.......................................9

ARTICLE 15        ASSIGNMENT AND SUBLETTING...................................9

ARTICLE 16        TRANSFER OF LANDLORD'S INTEREST............................10

ARTICLE 17        DAMAGE OR DESTRUCTION......................................11

ARTICLE 18        EMINENT DOMAIN.............................................12

ARTICLE 19        DEFAULTS AND REMEDIES......................................12

ARTICLE 20        SURRENDER OF PREMISES; REMOVAL OF PROPERTY.................15

ARTICLE 21        COSTS OF SUIT..............................................16

ARTICLE 22        WAIVER.....................................................16

ARTICLE 23        HOLDING OVER...............................................16

ARTICLE 24        SUBORDINATION..............................................17

ARTICLE 25        RULES AND REGULATIONS......................................17

ARTICLE 26        DEFINED TERMS..............................................17

ARTICLE 27        HEIRS AND ASSIGNS..........................................17


                                       i
<PAGE>

ARTICLE 28        TIME OF ESSENCE............................................18

ARTICLE 29        SEPARABILITY...............................................18

ARTICLE 30        ENTIRE AGREEMENT...........................................18

ARTICLE 31        WORK LETTER................................................18

ARTICLE 32        RIGHT OF LANDLORD TO PERFORM...............................18

ARTICLE 33        INTEREST ON TENANT'S OBLIGATIONS...........................19

ARTICLE 34        NOTICES....................................................19

ARTICLE 35        QUIET ENJOYMENT............................................19

ARTICLE 36        ESTOPPEL CERTIFICATES......................................19

ARTICLE 37        ACCESS, CHANGES IN BUILDING FACILITIES, NAME...............20

ARTICLE 38        OPTION TO RENEW............................................20


                                       ii
<PAGE>

                          ADDITIONAL LEASE PROVISIONS

ARTICLE 1         TERM.

         1.1 COMMENCEMENT DATE AND DURATION. The term of this Lease shall be as
shown in Item G of the Basic Lease Provisions and shall commence on the Target
Commencement Date as shown in Item H of the Basic Lease Provisions or such later
date as the Premises shall be tendered to Tenant ready for occupancy as set
forth in Section 1.2 below, or upon such earlier date as Tenant takes possession
or commences use of the Premises for any purpose other than construction. The
date of commencement as defined above, hereinafter called the "Commencement
Date," shall be confirmed in writing by the parties promptly upon such
commencement.

         1.2 DELIVERY OF PREMISES. Landlord may tender the Premises to Tenant on
or after the Target Commencement Date upon not less than thirty (30) days prior
written notice stating that the Premises will be ready for occupancy on the date
specified in such notice. The Premises shall be deemed ready for occupancy upon
the expiration of thirty (30) days from the date such notice is given, and when
Landlord (a) has put in operation all building services essential for the use of
the Premises by Tenant, (b) has provided reasonable access to the Premises for
Tenant, its agents, employees, licensees and invitees so that the same may be
used without unnecessary interference, and (c) has substantially completed all
the work required to be done by Landlord or its obligation to complete such work
has been suspended as provided in the Work Letter executed by the parties
contemporaneously herewith.

         1.3 DELAY IN DELIVERY OF PREMISES. Lessor fully anticipates that the
Premises will be ready for occupancy by the Target Commencement Date. However,
if Lessor is unable to deliver possession of the leased Premises by such Target
Commencement Date, then neither the Lessor nor his agent shall be liable for any
damages caused to Lessee by reason of the delay nor shall this Lease become void
or voidable; but Lessee will not be liable for payment of rent until Lessor
delivers possession of the leased Premises to Lessee. If for any reason Lessor
fails to deliver possession of the Premises to Lessee on or before January 1,
1986, either party shall have a right to terminate and cancel this Lease by
giving written notice to that effect within thirty (30) days after such date.
Upon such notice, this Lease shall terminate, be null and void and without any
further force and effect, and there shall be no further rights or obligations of
either party against the other.

ARTICLE 2         RENT.

         Tenant shall pay a basic annual rent (the "Basic Rent") for the
Premises in the amount shown in Item D of the Basic Lease Provisions for the
specified lease year, in equal monthly installments as shown in Item E of the
Basic Lease Provisions. All rent shall be paid on the first day of each month in
advance, except-that if the Commencement Date occurs on a day other than the
first day of a month, then the basic rent for the fraction of the month starting
with the Commencement Date shall be paid on said Commencement Date, prorated on
the basis of the actual number of days in said month. If the term of this Lease
ends on a day other than the last day of a month, then the basic rent for the
month during which such termination occurs shall be prorated on the basis of the
actual number of days in said month. As used in reference to


                                       1
<PAGE>

Item D, "year" shall mean each succeeding period of twelve full calendar months
during the term following the Commencement Date, except that the first such
period shall include any partial month if the Commencement Date is not the first
day of a month in addition to the Basic Rent, Tenant shall pay additional rent
as and when hereinafter provided in this Lease. The Basic Rent and additional
rent are hereinafter sometimes referred to collectively as the "rent." The rent
shall be payable to Landlord, without deduction or offset, in lawful money of
the United States of America at the address for Landlord as shown in Item J of
the Basic Lease Provisions, or to such other person or at such other place as
Landlord may from time to time designate in writing.

ARTICLE 3         RENT ADJUSTMENT.

         3.1 INCREASED EXPENSES. With respect to each calendar year during the
lease term, the Tenant shall pay in the installments provided below in Sections
3.3'and 3.4, as additional rent, in addition to the Basic Rent specified in
Article 2 above, an amount equal to the Tenant's Proportionate Share (as
hereinafter defined) of the amount of actual Total Operating Expenses (as
hereinafter defined). All such payments shall be made together with the Basic
Rent, shall be due without the necessity of further demand, and shall not be
subject to any claim of offset or deduction.

         3.2 PROPORTIONATE SHARE. "Tenant's Proportionate Share" shall be
computed by dividing the average net rentable area leased in the Building by
Tenant during the calendar year in question by the total net rentable area of
the Building in Item B of the Basic Lease Provisions.

         3.3 ESTIMATE OF EXPENSES. For the period from the Commencement Date
through December 31st first occurring thereafter, Tenant shall pay, in equal
monthly installments, the amount of Estimated Total Operating Expenses for the
First Year as shown in Item F of the Basic Lease Provisions. Landlord shall
provide to Tenant a written estimate of Total Operating Expenses at least thirty
(30) days prior to the start of each succeeding calendar year of the lease term
following the Commencement Date. With respect to each such succeeding calendar
year during the lease term, the Tenant shall pay to Landlord, monthly in
advance, one-twelfth (1/12) of the amount by which Tenant's Proportionate Share
of the estimated Total Operating Expenses for such year is greater than the
Estimate Total Operating Expenses for the Base Year.

         3.4 ADJUSTMENT. Within one hundred twenty (120) days after the end of
every calendar year during the lease term, the Landlord shall provide the Tenant
with a written statement of the actual Total Operating Expenses for that year.
If actual Total Operating Expenses should exceed the estimated amount previously
paid by Tenant with respect to such year, then the Tenant shall pay to the
Landlord the additional amount due to the Landlord within thirty (30) days. If
actual Total Operating Expenses are less than the estimated amount paid by
Tenant with respect to such year, then the Landlord shall credit against future
additional rent due under this Article the amount of overpayment by Tenant.

         3.5 DEFINITION. Total Operating Expenses are defined as all those
expenses necessary to operate and maintain the Building and the Property in a
manner deemed reasonable and appropriate by the Landlord, provided that such
expenses are reasonable and are supported


                                       2
<PAGE>

by documentation. Such Total Operating Expenses include, but are not limited to,
the following:

              (a) Wages, salaries and fringe benefits of all employees engaged
in the operation and maintenance of the Building; employer's Social Security
taxes, unemployment taxes or insurance, and any other taxes which may be levied
on such wages and salaries; the cost of disability and hospitalization insurance
and pension or retirement benefits for such employees;

              (b) All supplies and materials used in operation and maintenance
of the Building;

              (c) Cost of water and power, heating, lighting, air conditioning
and ventilating the Building;

              (d) Cost of replacement of equipment and all maintenance and
service agreements on equipment, including alarm service, building mechanical
equipment and window cleaning;

              (e) Cost of casualty and liability insurance applicable to the
Building and Landlord's personal property used in connection therewith;

              (f) Cost of repairs and general maintenance;

              (g) Any capital improvements made or installed after the Base Year
for purposes of saving labor or otherwise reducing applicable operating costs,
not to exceed the aggregate estimated cost savings annualized on a straight line
basis over the useful life of the capital improvements as determined by Landlord
in accordance with generally accepted accounting principles and practices in
effect at the time of acquisition of the capital item;

              (h) Costs incurred in connection with maintaining any landscaping,
parking lots, pedestrian walkways, roadways or other improvements installed upon
the Property and which are for the benefit of the tenants of the Building;

              (i) All real property taxes and assessments and governmental
charges whether federal , state, county or municipal, and whether they be taxing
districts or authorities presently taxing the Premises or by others,
subsequently created or otherwise, and any other taxes and assessments
attributable to the Property, the Building or its operation, including, but not
limited to, any tax or other levy, however denominated, on or measured by the
rent collected by the Landlord with respect to the Property and/or the Building,
or on the Landlord's business of leasing the Building, but excluding federal and
state taxes on income.

              (j) A management fee , not-to exceed four and one-half percent
(4-1/2%) of gross Basic Rents which may be payable to the Landlord. There will
be no management fee charged so long as the property is owned by Shevlin No.
One.

         3.6 CONFIRMATION. The Landlord and the Tenant shall each from time to
time upon request of the other sign a written memorandum confirming the amount
of the additional rent as adjusted from time to time hereunder.


                                       3
<PAGE>

         3.7 EXCLUSIONS. Notwithstanding the foregoing, Total Operating Expenses
shall not include expenses for which the Landlord is reimbursed or indemnified
(either by an insurer, condemnor, tenant or otherwise); interest or amortization
of payments on any mortgage or mortgages, and rental under any ground or
underlying lease or leases; the cost of any work or service performed for or
facilities furnished to a tenant at the tenant's cost; the cost of correcting
defects (latent or otherwise) in the construction of the Building or in the
Building equipment, except that conditions (not occasioned by construction
defects) resulting from ordinary wear and tear shall not be deemed defects; and
the cost of capital improvements and depreciation or amortization (except as
provided in Section 3.5(g) or otherwise above).

         3.8 PRORATION. Any operating expense increase for any calendar year
during the term of this Lease shall be apportioned so that the Tenant shall pay
its proportionate share of only that portion of the increase for such year as
falls within the term. This provision shall survive the expiration or earlier
termination of the term of this Lease.

         3.9 INSTALLMENTS. If any special assessments are included as part of
the real estate taxes and such assessment may be paid in installments, the
tenant shall be obligated to pay only the tenant's proportionate share of the
installment falling within the term whether or not the landlord pays such
assessment in installments.

         3.10 AREA. Unless otherwise stated in this Lease, all areas are stated
herein in square feet and are computed as "Rentable Area" as that term is
defined in American National Standard Z65.1-1980 (Reprinted May, 1981), or
otherwise known as the "BOMA Standard."

ARTICLE 4         SECURITY DEPOSIT/PREPAID RENT.

         Tenant has deposited with Landlord the sum set forth in Item I of the
Basic Lease Provisions as security for the full and faithful performance of
every provision of this Lease to be performed by Tenant. If Tenant defaults with
respect to any provision of this Lease, including but not limited to the
provisions relating to the payment of rent, the repair of damage to the-
Premises caused by Tenant and/or cleaning the Premises upon termination of this
Lease, Landlord may use, apply or retain all or any part of this security
deposit for the payment of any rent or any other sum in default, the repair of
such damage to the Premises, to the cost of such cleaning or for the payment of
any other amount which Landlord may spend or become obligated to spend by reason
of Tenant's default or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant's default to the full extent permitted
by law. If any portion of said deposit is so used or applied during the terms of
this Lease, Tenant shall within ten (10) days after written demand therefore
deposit cash with Landlord in an amount sufficient to restore the security
deposit to its original amount and Tenant's failure to do so shall be a material
breach of this Lease. Landlord shall not be required to keep this security
deposit separate from its general' funds, and Tenant shall not be entitled to
interest on such deposit. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the security deposit or any
balance thereof shall be returned to Tenant (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder) at the expiration of the lease
term. If Tenant is not in default under this Lease Agreement and the deposit is
not otherwise applied in accordance


                                       4
<PAGE>

with this Article 4, then the deposit shall be applied as payment of Basic Rent
for the sixtieth (60th) month of the lease term hereunder.

ARTICLE 5         UTILITIES AND SERVICES

         Tenant shall pay for all water, gas, heat, light, power, telephone and
other utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered to Tenant, Tenant shall
pay a proportion of such charges attributed to the entire Building equal to
Tenant's Pro-Rata Share of Operating Costs set forth as Item C in the Basic
Lease Provisions. Tenant shall be responsible for inspecting the utility
services available to the Premises to determine that such services are available
to the Premises to determine that such services are available in the quantity
necessary for Tenant's conduct of business within the Premises.

ARTICLE 6         USE OF PREMISES.

         Tenant shall use and occupy the Premises only for purposes and under
the trade name set forth in Exhibit "C" attached hereto and incorporated by this
reference herein, and shall not use or occupy the Premises for any other
purpose, including, without limiting the generality of the foregoing, any
medical or dental office, clinic, laboratory or similar business, without the
prior written consent of Landlord. Tenant shall not use or occupy the Premises
in violation of law and shall, upon five (5) days' written notice from Landlord,
discontinue any use of Premises which is declared by any governmental authority
having jurisdiction to be a violation of law. Tenant, at its sole cost and
expense, shall comply with any direction of any governmental authority having
jurisdiction which shall impose any duty upon Tenant or Landlord with respect to
the Premises or the use or occupation thereof, by reason of the nature of
Tenant's use or occupancy of the Premises. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of any fire and
extended coverage insurance policy covering the Building. Tenant shall promptly
upon demand reimburse Landlord for any additional premium charged for such
policy by reason of Tenant's failure to comply with the provisions of this
Article. Tenant shall be responsible for examining the zoning and use
restrictions applicable to the Premises to determine the suitability of the
Premises for Tenant's intended use. At times, Tenant shall use the Premises in a
manner which conforms to the Covenants, Conditions and Restrictions encumbering
the Property, a copy of which is attached hereto as Exhibit "D" and incorporated
by this reference herein.

ARTICLE 7         ACCEPTANCE OF PREMISES.

Tenant acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or the Building or with
respect to the suitability or fitness of either for the conduct of Tenant's
business or for any other purpose. The taking of possession or use of the
Premises by Tenant for any purpose other than construction shall conclusively
establish that the Premises and the Building were at such time in satisfactory
condition (except for latent defects) and in conformity with the provisions of
this Lease in all respect. Prior to delivery of possession of the Premises,
Landlord shall install within the Premises those improvements identified on
Exhibit "E" attached hereto as "Landlord's Work Letter."


                                       5
<PAGE>

ARTICLE 8         ALTERATIONS AND EQUIPMENT.

         8.1 NO ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises, other than usual and customary installation of
trade fixtures, interior doors, walls, partitions and equipment necessary for
Tenant's business, without the prior written consent of Landlord, such consent
not to be unreasonably withheld, and Landlord may impose as a condition to such
consent such requirements as Landlord may reasonably deem necessary or
desirable, including, without limiting the generality of the foregoing,
requirements as to the manner in which, and the time or times at which such work
shall be done and the right to approve the contractor selected by Tenant to
perform such work.

         8.2 TENANT'S PROPERTY. All articles of personal property and all
business and trade fixtures, machinery and equipment, cabinet work, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense and
in the premises shall be and remain the property of Tenant and may be removed by
Tenant at any time during the lease term when Tenant is not in default
hereunder, provided that Tenant repairs any damage to the Premises or the
Building caused by such removal. On the expiration of the term of this Lease, or
on any earlier termination of this Lease, Tenant shall- remove all such personal
property, etc., in accordance with the provisions of Article 20 below.

ARTICLE 9         LIENS.

  Tenant shall keep the Premises and the Property free from any mechanic's liens
arising out of any work performed, materials furnished or obligations incurred
by Tenant, and agrees to defend, indemnify and hold harmless Landlord from and
against any such lien or claim or action thereon, together with costs of suit
and reasonable attorneys' fees incurred by Landlord in connection with any such
claim or actions.

ARTICLE 10        TAX ON TENANT'S PROPERTY.

         Tenant shall be liable for and shall pay not later than ten (10) days
before delinquency, all taxes levied against any personal property or trade
fixtures placed by Tenant in or about the Premises. If any such taxes on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property and if Landlord, after thirty (30) days' written, notice to
Tenant, pays the same, which Landlord shall have the right to do regardless of
the validity of such levy, but only under proper protest if requested by Tenant,
or if the assessed value of Landlord's property is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessment, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall upon demand, as the case may be, repay to Landlord the
taxes so levied against Landlord, or the proportion of such taxes resulting from
such increase in the assessment; provided that, in any such event Tenant shall
have the right, in the name of Landlord and with Landlord's full cooperation,
but at no cost to Landlord, to bring suit in any court of competent jurisdiction
to recover the amount of any such taxes so paid under protest, any amount so
recovered to belong to Tenant.


                                       6
<PAGE>

ARTICLE 11        MAINTENANCE AND REPAIR.

         11.1 TENANT'S OBLIGATIONS. Subject to the provisions of Section 11.2
below, Tenant shall take good care of the Premises and fixtures therein, and all
utility systems and improvements installed within the Premises. Subject to the
provisions of Article 17 below, Tenant shall reimburse Landlord for all repairs
thereto or to the Building which are made necessary as a result of any misuse or
neglect by Tenant or any of its officers, agents, employees, contractors,
licensees, visitors, guests or invitees.

         11.2 LANDLORD'S OBLIGATIONS. Subject to the provisions of. Article 5
and Article 17 hereof, Landlord shall repair and maintain the Building structure
and the plumbing, air conditioning and electrical systems serving the Premises.
Landlord shall not be liable for any failure to make any repairs or to perform
any maintenance unless such failure shall persist for an unreasonable time after
written notice of the need for such repairs or maintenance is given to Landlord
by Tenant. Except as provided in Article 17 hereof, there shall be no abatement
of rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant's business in the Premises.

ARTICLE 12        ENTRY AND INSPECTION.

         Tenant will permit Landlord and its agents at all reasonable times
during normal business hours and at any time in case of emergency, in such
manner as to cause as little disturbance to Tenant as reasonably practicable,
(i) to enter into and upon the Premises for the purpose of inspecting the same,
or for the purpose of protecting the interest therein of Landlord, and (ii) to
take all required materials and equipment into the Premises, and perform all
required work therein, including the erection of scaffolding, props, or other
mechanical devices, for the purpose of making alterations, repairs or additions
to the Premises or to any other portion of the Building in which the Premises
are situated as may be provided for by this Lease or as may be mutually agreed
upon by the parties or as Landlord may be required to make by law or for
maintaining, any service provided by Landlord to Tenant hereunder, including
window cleaning and janitor service, without any rebate of rent to Tenant for
any loss of occupancy or quiet enjoyment of the Premises, or damage, injury or
inconvenience thereby occasioned. Tenant shall also permit Landlord and its
agents, upon request, to enter and/or pass through the Premises or any part
thereof, at reasonable times during normal business hours to show the Premises
to holders of encumbrances on the interest of Landlord under the Lease, or
prospective purchasers, mortgagees or lessees of the Building as an entirety,
and during the period of six (6) months prior to the expiration date of this
Lease, Landlord may exhibit the Premises to prospective tenants. Landlord shall
also have the right to enter on and/or pass through the Premises, or any part
thereof, at such times as such entry shall be required by circumstances of
emergency affecting the Premises or any other portion of the Building in which
the Premises are located. If during the last month of the term hereof Tenant
shall have removed substantially all of Tenant's property and personnel from the
Premises, Landlord may enter the Premises and repair, alter and redecorate the
same, without abatement of rent and without liability to Tenant, and such acts
shall have no effect on this Lease. Notwithstanding the foregoing, Tenant may
refuse entry of any person into Tenant's fabrication area during hours of
operation and may restrict access to


                                       7
<PAGE>

secure areas at any time, except that Tenant shall admit persons absolutely
necessary in the event of an emergency or to prevent further damage to the
Premises.

ARTICLE 13        HOLD HARMLESS AND NON-LIABILITY.

         Tenant agrees to hold harmless and to indemnify Landlord and any and
all affiliates of Landlord, including, without limitation, any corporations or
other entities controlling, controlled by or under common control with Landlord,
from and against any and all claims arising from injury to persons, loss of life
or damage to property occurring in or about the Premises and from and against
any and all costs, expenses and liabilities (including without limitation
reasonable attorneys' fees) incurred by Landlord, and/or said affiliates, or any
of them in or in connection with any such claim or any proceeding based thereon,
to the extent such injury, loss of life or damage arises out of the negligent or
willful act or failure to act of Tenant, or any of its officers, employees,
agents, contractors, licensees, visitors, guests or invitees. Throughout the
term of this Lease Tenant shall maintain the effect public liability/and
property damage insurance with limits of liability of not less than $1,000,000
single limit and showing Landlord as additional named insured under the policy.
Landlord agrees to save Tenant harmless from and to indemnify Tenant against any
and all claims arising from injury to persons, loss of life or damage to
property occurring in or about the Premises and from and 'against any and all
costs, expenses and liabilities incurred by Tenant in or in connection with any
such claim or any proceeding based thereon, to the extent such injury, loss of
life or damage arises out of the negligence or willful act or failure to act of
Landlord, of any of its officers, employees, servants, agents, contractors, or
licensees, provided, however, that in no event shall Landlord be liable to
Tenant for any damage to the Premises or for any loss, damage or injury to any
property of Tenant therein or thereon occasioned by bursting, rupture, leakage
or overflow of any plumbing or other pipes (including without limitation, water,
steam and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains
or washstands, or other similar cause in, above, upon or about the Premises or
the Building in which the Premises are located, as long as such loss, damage or
injury is not caused by Landlord's negligence or fault.

ARTICLE 14        WAIVER OF SUBROGATION.

    It is agreed by the Landlord and Tenant that each party hereby releases the
other from any and all liability from or to the other party of every kind and
nature which may result from the perils of fire, lightning or extended coverage
perils which either originates, occurs or causes damage on the Premises herein
described, such waiver to include situations where the negligence of one of the
parties hereto or his agent, servant or representative causes or contributes to
the occurrence or the result of damage. Each party agrees to furnish appropriate
subrogation waiver endorsements of their respective fire insurance companies.-

ARTICLE 15        ASSIGNMENT AND SUBLETTING.

         15.1 NO TRANSFER. Tenant shall not, either voluntarily or by operation
of law, assign, sell, encumber, pledge or otherwise transfer all or any part of
Tenant's leasehold estate hereunder, or permit the Premises to be occupied by
anyone other than Tenant or Tenant's employees or sublet-the Premises to be
occupied by anyone other than Tenant or Tenant's employees or sublet the
Premises or any portion thereof, without Landlord's prior written consent


                                       8
<PAGE>

in each instance. Landlord's consent shall not be unreasonably withheld. In
reviewing such request, Landlord may consider the proposed transferee's credit,
proposed business use, and affect upon other -tenants of the Building or Project
of such assignment or subletting. Consent by Landlord to one or more assignments
of this lease or to one or more sublettings of the Premises shall not operate to
exhaust Landlord's rights under this paragraph. The voluntary or other surrender
of this lease by Tenant or a mutual cancellation hereof shall not work a merger,
and shall at the option of Landlord, terminate all or any existing subleases or
subtenancies or shall operate as an assignment to Landlord of such subleases or
subtenancies. If Tenant is a corporation which, or is an unincorporated
association or partnership, the transfer, assignment or hypothecation of any
stock or interest in such corporation, association or partnership in the
aggregate in excess of twenty-five percent (25%) of the total outstanding shall
be deemed an assignment within the meaning and provisions of this Article.
Tenant agrees to reimburse Landlord for Landlord's reasonable costs and
attorneys' fees incurred in connection with the processing and documentation of
any such requested assignment, subletting, transfer, change ownership or
hypothecation of this Lease or Tenant's interest in and to the Premises. The
transfer, sale or division of stock in Tenant to one or more persons or
entities, shall not constitute an assignment or subletting requiring Landlord's
written approval hereunder, unless the effect of such sale, transfer or division
would impair the financial condition of Tenant.

         15.2 INFORMATION. If Tenant desires at any time to assign this Lease or
to sublet the Premises or any portion thereof, it shall first notify Landlord of
its desire to do so and shall submit in writing to Landlord (i) the name of the
proposed subtenant or assignee; (ii) the nature of the proposed subtenant's or
assignee's business to be carried on the Premises; (iii) the terms and
provisions of the proposed sublease or assignment; and (iv) such reasonable
financial information as Landlord may request concerning the proposed subtenant
within thirty (30) days of the request for Landlord's consent.

         15.3 CONSENT. At any time within fifteen (15) days after Landlord's
receipt of the information specified in Section 15.2 above, Landlord may by
written notice to Tenant elect to (i) consent to the subletting or assignment
upon the terms and to the subtenant or assignee proposed; (ii) refuse to give
its consent after considering the factors specified in Section 15.1 above.
Tenant further agrees that no assignment or subletting consented to by Landlord
shall impair or diminish any covenant, condition or obligation imposed upon
Tenant by this Lease or any right, remedy or benefit afforded Landlord by this
Lease. If Landlord consents to such assignment or subletting, Tenant may, within
ninety (90) days after the date of Landlord's consent, enter into a valid
assignment or sublease of the Premises or portion thereof upon the terms and
conditions described in the information required to be furnished by Tenant to
Landlord pursuant to Section 15.2 above, or upon other terms not more favorable
to Tenant; provided, however, that any material change in such terms shall be
subject to Landlord's consent as provided in this Article 15. Notwithstanding
the foregoing, Landlord may condition consent to a proposed assignment or
sublease upon receipt of fifty percent (50%) of any consideration received by
Tenant as a result of such proposed assignment or sublease, which is in excess
of the rental payments due Landlord under this Lease.

         15.4 NO RELEASE. No subletting or assignment, even with the consent of
Landlord, shall relieve Tenant of its obligation to pay the rent and to perform
all of the other obligations to


                                       9
<PAGE>

be performed by Tenant hereunder. The acceptance by Landlord of any payment due
hereunder from any other person shall not be deemed to be a waiver by Landlord
of any provision of this Lease or to be a consent to any assignment or
subletting.

ARTICLE 16        TRANSFER OF LANDLORD'S INTEREST.

In the event of any transfer or transfers of Landlord's interest in the
Premises, the Building or Property of which the Premises are a part, other than
a transfer for security purposes only, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer, including, without
limitation, the obligation of Landlord under Article 4 above to return the
security deposit as provided therein, provided such obligations and liabilities
are assumed in writing by the transferee.

ARTICLE 17        DAMAGE OR DESTRUCTION.

         17.1 REPAIRS. If the Premises are damaged by any casualty, the damage
shall be repaired by and at the expense of Landlord, provided such repairs can
be made within one (1) year after notice to Landlord of the occurrence of such
damage, and, except as set forth herein below, until such repairs are completed,
the rent shall be abated in proportion to the part of the Premises which is
unusable by Tenant in the conduct of its business. There shall be no abatement
of rent by reason of any portion of the Premises being unusable for a period
equal to one day or less.

         17.2 TERMINATION. If such repairs cannot be made within such one (1)
year period Landlord may, at its option, make them within a reasonable time and
in such event this Lease shall continue in effect and the rent shall be abated
in the manner and to the extent provided above. Landlord's election to make such
repairs must be evidenced by written notice to Tenant within thirty (30) days
after notice to Landlord of the occurrence of the damage advising Tenant whether
or not Landlord will make such repairs and the estimated time for completing the
same. If Landlord does not so elect to make such repairs which cannot be made
within such one (1) year period, then Tenant may either, by written notice to
Landlord, cancel this Lease as of the date of the occurrence of such damage or
elect itself to undertake the repairs and continue this Lease in full force and
effect. In the event that Tenant elects to undertake the repairs, Landlord will
reimburse Tenant up to an amount equal to the insurance proceeds available to
Landlord by reason of such damage or destruction.

         17.3 TENANT'S RIGHT TO TERMINATE. In case of any damage or destruction
mentioned in this Article which Landlord is required or undertakes to repair as
provided herein, Tenant may terminate this Lease by notice to Landlord any time
prior to completion of the required repairs if Landlord has not restored and
rebuilt the Premises (exclusive of any property of Tenant or improvements
installed by Tenant located. therein) to substantially the same condition as
existed immediately prior to such damage or destruction within one (1) year
after notice to Landlord of the occurrence of such damage or destruction, or
such longer period as Landlord as estimated pursuant to Section 17.2, plus such
additional period thereafter (not exceeding six months) as shall equal the
aggregate period Landlord may have been delayed in doing so by acts of God,
adjustment of insurance, labor trouble, governmental controls, unavailability of
materials, or any other cause beyond Landlord's reasonable control.


                                       10
<PAGE>

         17.4 NO DAMAGES. No damages, compensation or claim shall be payable by
Landlord for inconvenience, loss of business or annoyance arising from any
repair or restoration of any portion of the Premises or other portion of the
Building, unless such repair or restoration is necessitated by the negligence or
fault of Landlord or any of its officers, employees, servants, agents,
contractors or licensees. Landlord shall use its best efforts to effect such
repair or restoration promptly and in such manner as not unreasonably to
interfere with Tenant's use and occupancy.

         17.5 LANDLORD'S INSURANCE. Landlord shall not be required to carry
insurance of any kind on Tenant's property and, except by reason of the breach
by Landlord of any of its obligations hereunder (subject to the provisions of
Article 14 above), shall not be obligated to repair any damage thereto to
replace the same.

         17.6 TOTAL DESTRUCTION. A total destruction of the Building shall
automatically terminate this Lease.

ARTICLE 18        EMINENT DOMAIN.

         18.1 EMINENT DOMAIN. If the whole of the Premises or so much thereof as
to render the balance unusable by Tenant shall be taken under power of eminent
domain, this Lease shall automatically terminate as of the date of such
condemnation, or as of the date possession is taken by the condemning authority,
whichever is earlier. No award for any partial or entire taking or compensation
paid as a result of a deed in lieu of condemnation, shall be apportioned, and
Tenant hereby assigns to Landlord any award which may be made in such taking or
condemnation, together with any and all rights of Tenant now or hereafter
arising in or to the same or any part thereof, provided, however, that nothing
contained herein shall be deemed to give Landlord any interest in or to require
Tenant to assign to Landlord any award made to Tenant for the taking of personal
property and fixtures belonging to Tenant and/or for the interruption of or
damage to Tenant's business and/or for Tenant's unamortized cost of leasehold
improvements if such awards are separately available to Tenant and such awards
do not diminish the award to Landlord.

         18.2 PARTIAL TAKING. In the event of a partial taking which does not
result in a termination of this Lease, rent shall be abated in proportion to the
part of the Premises so made unusable by Tenant.

         18.3 TEMPORARY TAKING. No temporary taking of the Premises and/or of
Tenant's rights therein or under this Lease shall terminate this Lease or give
Tenant any right to any abatement of rent hereunder; any award made to Tenant by
reason of any such temporary taking shall belong entirely to Tenant and Landlord
shall not be entitled to share therein.

ARTICLE 19        DEFAULTS AND REMEDIES.

         19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:


                                       11
<PAGE>

                  (i) Any failure by Tenant to pay the rental or to make any
         other payment required to be made by Tenant hereunder, where such
         failure continues for fifteen (15) days after written notice thereof by
         Landlord to Tenant;

                  (ii) The abandonment or vacation of the Premises by Tenant.

                  (iii) Any failure by Tenant to observe and perform any other
         material provision of this Lease to be observed or performed by Tenant,
         where such failure continues for thirty (30) days (except where a
         different period of time is specified in this Lease) after written
         notice by Landlord to Tenant; If the nature of such default is such
         that the same cannot reasonably be cured within such thirty (30) day
         period, Tenant shall not be deemed to be in default if Tenant shall
         within such period commence such cure and thereafter diligently
         prosecute the same to completion.

                  (iv) The making by Tenant of any general assignment for the
         benefit of creditors; the filing by or against Tenant of a petition to
         have Tenant adjudged a bankrupt or of a petition for reorganization or
         arrangement under any law relating to bankruptcy (unless, in the case
         of a petition filed against Tenant, the same is dismissed within sixty
         (60) days); the appointment of a trustee or receiver to take possession
         of substantially all of Tenant's assets located at the Premises or of
         Tenant's interest in this Lease, where possession is not restored to
         Tenant within thirty (30) days; or the attachment, execution or other
         judicial seizure of substantially all of Tenant's assets located at the
         Premises or of Tenant's interest in this Lease, where such seizure is
         not discharged within thirty (30) days.


         19.2 REMEDIES. In the event of any such default by Tenant, then, in
addition to any other' remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder by giving Tenant written notice of such election to
terminate. In the event that Landlord shall elect to so terminate this Lease
then Landlord may recover from Tenant:

                  (i) The worth at the time of award of any unpaid rent which
         had been earned at the time of such termination; plus

                  (ii) The worth at the time of award of the amount by which the
         unpaid rent which would have been earned after termination until the
         time of award exceeds the amount of such rental loss Tenant proves
         could have been reasonably avoided; plus

                  (iii) The worth at the time of award of the amount by which
         the unpaid rent for the balance of the term after the time of award
         exceeds the amount of such rental loss that Tenant proves could be
         reasonably avoided; plus

                  (iv) Any other amount necessary to compensate Landlord for all
         the detriment proximately caused by Tenant's failure to perform its
         obligation under this Lease or which in the ordinary course of things
         would be likely to result therefrom; and


                                       12
<PAGE>

                  (v) At Landlord's election, such other amounts in addition to
         or in lieu of the foregoing as may be permitted from time to time by
         applicable law.

The term "rent" as used herein shall be deemed to be and to mean the Basic Rent
and all other sums required to be paid by Tenant pursuant to the terms of this
Lease. As used in subparagraphs (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest at the rate of twelve percent (12%) per
annum. As used in subparagraph (iii) above, the "worth at the time of award" is
computed by discounting such amount at twelve percent (12X) per annum.

         19.3 RE-ENTRY. In the event of any such default by Tenant, Landlord
shall also-have the right, with or without terminating this Lease, to re-enter
the Premises and remove all persons and property from the Premises. Such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Tenant.

         19.4 CONTINUING OBLIGATION. In the event of the vacation or abandonment
of the Premises by Tenant or in event that Landlord shall elect to re-enter as
provided above or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in this Article 19, then Landlord may
from time to time, without terminating this Lease, either recover all rental as
it becomes due or relet the Premises or any part thereof for such term or terms
and at such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right to make
alterations and repairs to the Premises.

         19.5 RELETTING. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied; first,
to the payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any cost of such reletting; third, to the
payment of the cost of any alterations and repairs to the Premises; fourth; to
the payment of rent due and unpaid hereunder; and the residue, if any, shall be
held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. Should that portion of such rentals received from
such reletting, during any month which is applied by the payment of rent
hereunder, be less than the rent payable during that month by Tenant hereunder,
then Tenant shall pay such deficiency to Landlord immediately upon demand
therefore by Landlord. Such deficiency shall be calculated and paid monthly.
Tenant shall also pay to Landlord as soon as ascertained, any costs and expenses
incurred by Landlord in such reletting or in making such alterations and repairs
not covered by the rentals received from such reletting.

         19.6 NO ELECTION. No re-entry or taking possession of the Premises by
Landlord pursuant to this Article 19 shall be construed as an election to
terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such default.


                                       13
<PAGE>

ARTICLE 20        SURRENDER OF PREMISES; REMOVAL OF PROPERTY.

         20.1 NO MERGER. The voluntary or other surrender of this Lease by
Tenant to Landlord, or a mutual termination thereof, shall not work a merger,
and shall at the option of Landlord, operate as an assignment to it of any or
all subleases or subtenancies affecting the Premises.

         20.2 CONDITION. Upon the expiration of the term of this Lease, or upon
any earlier termination of this Lease, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order and condition as the
same are now or hereafter may be improved by Landlord or Tenant, reasonable wear
and tear and repairs which are Landlord's obligation excepted, and shall,
without expense to Landlord, remove or cause to be removed from the Premises all
debris and rubbish, all furniture, equipment, business and trade fixtures,
free-standing cabinet work, moveable partitioning and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises (exclusive of any items described in Section 20.4 below) and all
similar articles of any other persons claiming under Tenant unless Landlord
exercises its option to have any subleases or subtenancies assigned to it, and
Tenant shall repair all damages to the Premises resulting from such removal.

         20.3 STORAGE. Whenever Landlord shall re-enter the Premises as provided
in Article 19 hereof, or as otherwise provided in this Lease, any property of
Tenant not removed by Tenant upon the expiration of the term of this Lease (or
within forty-eight (48) hours after a termination by reason of Tenant's
default), as provided in this Lease, shall be considered abandoned and Landlord
may remove any or all of such items and dispose of the same in any manner or
store the same in a public warehouse or elsewhere for the account and at the
expense and risk of Tenant, and if Tenant shall fail to pay the cost of storing
any such property after it has been stored for a period of ninety (90) days or
more, Landlord may sell any or all of such property at public or private sale,
in such manner and at such times and places as Landlord, in its sole.
discretion, may deem proper, after notice to Tenant, for the payment of all or
any part of such charges or the removal of any such property, and shall apply
the proceeds of such sale: first, to the cost and expenses of such sale,
including reasonable attorneys' fees actually incurred; second, to the payment
of the cost of or charges for storing any such property; third, to the payment
of any other sums of money which may then or thereafter be due to Landlord from
Tenant under any of the terms hereof; and fourth, the balance, if any, to
Tenant.

         20.4 FIXTURES. All equipment, whether or not attached, electrical
panels and furniture, including but not limited to modular office units, may be
removed by Tenant at the end of the term. Tenant shall be responsible for
repairing any damage caused by the removal of any equipment, panels, or
furniture from the Premises. All other fixtures, alterations, additions,
improvements and/or appurtenances attached to or built into the Premises prior
to or during the term, including, but not limited to, cabinetry, sinks, and
other similar Tenant improvements, shall be and remain part of the Premises and
shall not be removed by Tenant at the end of the term unless otherwise expressly
provided for in the Lease or unless such removal is required by Landlord
pursuant to the provisions of Article 8, above.


                                       14
<PAGE>

         20.5 NOTICE. Tenant shall, at least ninety(90) days before the last day
of the term hereof, give to Landlord a written notice of intention to surrender
the Premises on that date, but nothing contained herein shall be construed as an
extension of the term hereof or as consent of Landlord to any holding over by
Tenant.

ARTICLE 21        COSTS OF SUIT.

         RIGHT TO FEES. If Tenant or Landlord shall bring any action for any
relief against the other, declaratory or otherwise, arising out of or under this
Lease, including any suit by Landlord for the recovery of rent or possession of
the Premises, the losing party shall pay the successful party a reasonable sum
for attorneys' fees in such suit, including attorneys' fees incurred in any
appeal. Such attorneys' fees shall be deemed to have accrued on the commencement
of such action and shall be paid whether or not such action is prosecuted to
judgment.

ARTICLE 22        WAIVER.

         The waiver by Landlord or Tenant of any breach of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition as to any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to-be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent.

ARTICLE 23        HOLDING OVER.

         If Tenant holds over after the term-hereof, with or without the express
or implied consent of Landlord, such tenancy shall be from month to month only,
and not a renewal hereof or any extension for any further term, and in such case
rent shall be payable in the amount and at the time specified in Articles 2 and
3 hereof, and such month to month tenancy shall be subject to every other term,
covenant and agreement contained herein. Nothing contained in this Article 23
shall be construed as consent by Landlord to any holding over by Tenant and
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in Article 20 above forthwith upon the
expiration of the term of this Lease or other termination of this Lease.

ARTICLE 24        SUBORDINATION.

         Tenant agrees that this Lease shall be subject and subordinate to any
first mortgage, trust deed or like encumbrance heretofore or hereafter placed by
Landlord or its successors in interest upon its interest in said Premises to
secure the payment of monies loaned, interest thereon, and other obligation;
provided, that, the mortgagees or beneficiaries named in said mortgages, trust
deeds, or like encumbrances placed on Landlord's interest in the Premises
subsequent to this Lease Agreement shall agree to recognize the interest of
Tenant under this Lease Agreement in the event of foreclosure, if Tenant is not
then in default. Tenant agrees to execute and deliver, upon demand of Landlord,
any and all instruments desired by Landlord subordinating in the manner
requested by Landlord in this Lease to such mortgage, trust, deed or


                                       15
<PAGE>

like encumbrance. Tenant further appoints Landlord as its attorney in fact for
the term of this Lease to execute on behalf of Tenant any such instruments
subordinating this Lease to such mortgage, trust, deed or like encumbrance. The
subordination of this Lease to any such mortgage, deed of trust or other
encumbrance shall, however, be subject to the condition that in the event of the
sale of the real property of which the Premises are a part upon foreclosure or
upon the exercise of a power of sale, Tenant will, upon written request of the
purchaser, attorn to the purchaser and recognize the purchaser as the Landlord
under this Lease.

ARTICLE 25        RULES AND REGULATIONS

         Landlord reserves the right to adopt reasonable rules and regulations
governing the use of the Premises and the Property from time to time. A copy of
Landlord's initial Rules and Regulations is attached hereto as Exhibit "F" and
incorporated by this reference herein.

ARTICLE 26        DEFINED TERMS.

         The words "Landlord" and "Tenant," as used herein, shall include the
plural as well as the singular. Words used in neuter gender include the
masculine and feminine and words in the masculine or feminine gender include the
neuter. If there be more than one Tenant, the obligations hereunder imposed upon
Tenant shall be joint and several. The headings or titles to the articles of
this Lease are not a part of this Lease and shall have no effect upon the
construction or interpretation of any part thereof.

ARTICLE 27        HEIRS AND ASSIGNS.

         Subject to the provisions of Article 15 hereof relating to assignment
and subletting, this Lease is intended to and does bind the heirs, executors,
administrators, personal representatives, successors and assigns of any and all
of the parties hereto.

ARTICLE 28        TIME OF ESSENCE.

         Time is of the essence of this Lease.

ARTICLE 29        SEPARABILITY.

         If any term or provision of this Lease, the deletion of which would not
adversely affect the receipt of any material benefit by either party hereunder,
shall be held invalid or unenforceable to any extent, the remainder of this
Lease shall not be affected thereby and each term and provision of this Lease
shall be valid and enforceable to the fullest extent permitted by law.

ARTICLE 30        ENTIRE AGREEMENT.

         This instrument along with any exhibits and attachments or other
documents affixed hereto or referred to herein (including without limitation the
Work Letter) constitutes the entire and exclusive agreement between Landlord and
Tenant relative to the Premises herein described, and this agreement and said
exhibits and attachments and other documents may be


                                       16
<PAGE>

altered, amended or revoked only by an instrument in writing signed by both
Landlord and Tenant. Landlord and Tenant hereby agree that all prior or
contemporaneous oral agreements, understandings, and/or practices relative to
the leasing of the Premises are merged in or revoked by this agreement.

ARTICLE 31        WORK LETTER.

         The Premises shall be finished in accordance with the separate
agreement of the parties executed contemporaneously herewith, which agreement is
entitled and is referred to herein as "Work Letter," and attached hereto as
Exhibit "E."

ARTICLE 32        RIGHT OF LANDLORD TO PERFORM.

         All covenants and agreements to be performed by Tenant under any of the
Terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent. If Tenant shall fail to pay any sum
of money, other than rent, required to be paid by it hereunder or shall fail. to
perform any other act on its part to be performed hereunder, and such failure
shall continue beyond any applicable grace period set forth in Article 19,
Landlord may, but shall not be obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such payment or
perform any such other act on Tenant's part to be made or performed as in this
Lease provided. All sums so paid by Landlord and all necessary incidental costs,
together with interest thereon at the rate of twelve percent (12%) per annum
from the date of such payment by Landlord, shall be payable to Landlord on
demand and Tenant covenants to pay any such sums, and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of the nonpayment thereof by Tenant as in the case of default by
Tenant in the payment of the rent.

ARTICLE 33        INTEREST ON TENANT'S OBLIGATIONS.

         Any amount due from Tenant to Landlord which is not paid when due shall
bear interest at the rate of twelve percent (12%) per annum until paid (to the
extent enforceable by law), but the payment of such interest shall not excuse or
cure the default.

ARTICLE 34        NOTICES.

  All notices which Landlord or Tenant may be required, or may desire, to serve
on the other may be served, as an alternative to personal service, by mailing
the same by registered or certified mail, postage prepaid, addressed as set
forth in Item J of the Basic Lease Provisions, or from and after the
Commencement Date, to the Tenant at the Premises whether or not Tenant has
departed from, abandoned or vacated the Premises, or addressed to such other
address or addresses as either Landlord or Tenant may from time to time
designate to the other in writing.

ARTICLE 35        QUIET ENJOYMENT.

         Landlord covenants and agrees that Tenant, upon paying the basic rent,
additional rent and all other charges herein provided for and observing and
keeping the covenants, agreements


                                       17
<PAGE>

and conditions of this Lease on its part to be kept, shall lawfully and quietly
hold, occupy and enjoy the Premises during the term of this Lease without
hindrance or molestation of anyone lawfully claiming by, through or under
Landlord, subject, however, to the matters herein set forth.

ARTICLE 36        ESTOPPEL CERTIFICATES.

         36.1 OBLIGATION TO EXECUTE. Tenant agrees at any time and from time to
time upon not less than twenty (20) days' prior notice by Landlord to execute,
acknowledge and deliver to Landlord a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), and the dates to which the basic rent, additional rent and
other charges have been paid in advance, if any, and stating whether or not to
the best knowledge of the signer of such certificate, Landlord is in default in
performance of any covenant,' agreement or condition contained in this Lease
and, if so, specifying each such default of which the signer may have knowledge,
it being intended that any such statement delivered pursuant to this section may
be relied upon by any prospective purchaser of the fee of the Property or any
mortgagee thereof or any assignee of any mortgagee upon the fee of the Property.

         36.2 LANDLORD'S CERTIFICATE. Landlord agrees at any time and from time
to time upon not less than twenty (20) days' prior notice by Tenant to execute,
acknowledge and deliver to Tenant a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if there shall have been
modifications, that the same is in full force and effect as modified and stating
the modifications) and the dates to which the basic rent, additional rent and
other charges have been paid in advance, if any, and stating whether or not to
the best knowledge of the signer of such certificate Tenant is in default in the
performance of any covenant, agreement or condition contained in this Lease and,
if so, specifying each such default of which the signer may have knowledge, it
being intended that any such statement delivered pursuant to this Section may be
relied upon by any prospective assignee of the Tenant's interest in this Lease.

ARTICLE 37        ACCESS, CHANGES IN BUILDING FACILITIES, NAME.

         37.1 RESERVATION. All except the inside surfaces of all walls, windows
and doors bounding the Premises (including exterior building walls, core
corridor walls and doors and any core corridor entrance), and any space in or
adjacent to the Premises used for shafts, stacks, pipes, conduits, fan rooms,
ducts, electric or other utilities, sinks or other Building facilities, signage,
and the use thereof, as well as access thereto through the Premises for the
purposes of operation, maintenance, decoration and repair, are reserved to
Landlord.

         37.2 RIGHT TO REPAIR. Tenant shall permit Landlord to install, use and
maintain pipes, ducts and conduits within the demising walls, bearing columns
and ceilings of the Premises.

ARTICLE 38        OPTION TO RENEW.

Tenant shall have an option to renew this Lease Agreement for __________
additional five-year periods. In order to exercise said option to renew, Tenant
must notify Landlord in writing at least sixty (60) days prior to the expiration
of the term of this Lease Agreement or any renewal


                                       18
<PAGE>

thereof. The same terms and conditions provided in this Lease Agreement will
apply to any renewal thereof, except that Basic Rent, as provided for in Basic
Lease Provision D and Article 2 herein, shall escalate as __________ on page i
hereof.

         IN WITNESS WHEREOF, this Lease is made and entered into as of the day
and year first above written.

                           LANDLORD:    SHEVLIN NO.  ONE
                                        By:  Emkay Development Company, Inc.,
                                               its managing partner

                                        By:
                                           ----------------------------------
                                        Ray K. Settle,  Area Manager

                           TENANT:      ADVANCED POWER TECHNOLOGY, INC.
                                        Patrick Sireta

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

STATE OF WASHINGTON )
                    ) ss:
COUNTY OF  KING     )
         On this_______ day of _________, 1985, before me personally appeared
_______________ to me known to be the_______________ of __________________, the
corporation that executed the within and foregoing instrument, and acknowledged
the said instrument to be the free and voluntary act and deed of said
corporation, for the uses and purposes therein mentioned, and on oath stated
that he was authorized to execute said instrument and that the seal affixed is
the corporate seal of said corporation.

         WITNESS my hand and official seal hereto affixed the day and year first
above written.


                                       19
<PAGE>

                                    EXHIBIT C

                                 USE OF PREMISES

         Tenant may use the Premises only for the purpose of office or
production of semiconductor and related activity or for other light
manufacturing or warehousing purposes.





                              TRADE NAME OF TENANT

 Tenant shall operate the premises under the trade name of Advanced Power
Technology, Inc., or such other business or- corporate name as tenant may from
time to time assume.


                                       20
<PAGE>

                                    EXHIBIT E

                                   WORK LETTER

         This agreement supplements the Lease dated March 21, 1985 executed
concurrently herewith by SHEVLIN NO. ONE, as Landlord, and ADVANCED POWER
TECHNOLOGY, INC., as Tenant.

         1. Tenant shall devote such time in consultation with Landlord as may
be necessary to enable the latter to complete and obtain Tenant's written
approval within thirty working days after the execution hereof, the final
working drawings for Tenant's Premises showing, among other things, the location
of standard partitions, doors, light fixtures, electrical outlets, telephone
outlets and other standard installations required by Tenant, as well as wall
finishes and floor coverings. Construction drawings for special installations
shall be furnished by Tenant, who shall be responsible for the design, function
and maintenance of such special improvements, whether or not installed by
Landlord at Tenant's request.

         2. Landlord's Tenant Improvements, as set out in the architectural
drawings currently in the bid package and approved by both Landlord and Tenant,
plus any changes that may occur during the course of construction,-shall be.
supplied and installed in Tenants' Premises, at Landlord's expense; provided,
that the total amount of such improvements does not exceed Three Hundred
Thousand % - Dollars ($300,000). Any Tenant Improvement costs over and above the
$300,000 ceiling shall be paid by Tenant to Landlord upon satisfactory
completion of the improvements. Up to $225,000 of such costs over the $300,000
ceiling shall be paid in the form of a Note in favor of SHEVLIN NO. ONE, payable
at the rate of thirteen (13) percent amortized over five years. The balance
shall be paid in cash.

         3. Promptly upon completion of working drawings, Landlord shall notify
Tenant in writing of the cost to Tenant for quantities in excess of Landlord's
standards, as described in Paragraph 2 above. Tenant and Landlord will agree
upon an amortization schedule for such excess tenant improvements plus interest.
Tenant shall, by signing and returning to Landlord a copy of such notice, give
Landlord authorization to complete the Premises in accordance with such working
drawings and shall accompany said authorization with the amount of Tenant's cost
for the authorized excess over Landlord's standards. Tenant may, in such
authorization, delete any or all of such items of extra cost. If such written
authorization and check are not received by Landlord within five (5) working
days after delivery of such notice to Tenant, Landlord shall not be obligated to
commence work on Tenant's Premises, and Tenant shall be chargeable with any
delay in the completion of the Premises resulting therefrom.

         4. If Tenant shall request any change, addition or alteration in the
approved working drawings, Landlord shall promptly give Tenant a written
estimate of the maximum cost of engineering and design services to prepare
working drawings in accordance with such request. If Tenant approves such
estimate in writing, Landlord shall have such working drawings prepared and
Tenant shall promptly reimburse Landlord for the cost thereof not in excess of
such estimate. Promptly upon completion of such working drawings, Landlord shall
notify Tenant in writing of the cost which will be chargeable to Tenant by
reason of such change, addition or deletion. Tenant shall within three (3)
business days notify Landlord in writing whether it desires to


                                       21
<PAGE>

proceed with such change, addition or deletion, and in the absence of such
written authorization, Landlord shall not be obligated to continue work on
Tenant's Premises and Tenant shall be chargeable with any delay in the
completion of the Premises resulting therefrom. If any alterations, additions or
improvements are to be installed by Tenant or its contractors, such work shall
be done in compliance with the following:


                                       22
<PAGE>

                                    EXHIBIT F

                         RULES AND REGULATIONS ATTACHED
                       TO AND MADE A PART OF OFFICE LEASE

         1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or used for any purpose
other than ingress and egress. The halls, passages, entrances, elevators,
stairways, balconies and roof are not for the use of the general public, and
Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence in the judgment of the Landlord shall be
prejudicial to the safety, character, reputation or interests of the Building
and its tenants, provided that nothing herein contained shall be construed to
prevent such access by persons with whom the tenant normally deals in the
ordinary course of its business unless such persons are engaged in illegal
activities. No tenant and no employees of any tenant shall go upon the roof of
the Building without the written consent of Landlord.

         2. No awnings or other projections shall be attached to the outside
walls of the Building without the prior written consent of the Landlord.

         3. No signs,, advertisement or notice shall be exhibited, painted or
affixed by any tenant on any part of, or so as to be seen from the outside of,
the Premises of the Building without the prior written consent of Landlord. In
the event of the violation of the foregoing by any tenant, Landlord may remove
same without any liability, and may charge the expense incurred in such removal
to the tenant violating this rule. Interior signs on doors and directory tablet
shall be inscribed, painted or affixed for each tenant by the Landlord at the
expense of such tenant, and shall be of a size, color and type acceptable to the
Landlord. All signs and advertising must comply with the recorded Shevlin Center
Covenants, Conditions and Restrictions and design guidelines.

         4. The wash room partitions, mirrors, wash basins and other plumbing
fixtures shall not be used for any purpose other than those for which they were
constructed, and no sweepings, rubbish, rags or other substances shall be thrown
therein. All damage resulting from any misuse of the fixtures shall be borne by
the tenant who, or whose servants, employees, agents, visitors or licensees,
shall have caused the same.

         5. No tenant shall mark, paint, drill into, or in no way deface any
part of the Premises or the Building.

         6. No bicycles, vehicles, vending machines or animals of any kind shall
be brought into or kept in or about the Premises and no cooking shall be done or
permitted by any tenant on the Premises except that the preparation of coffee,
tea, hot chocolate and similar items for the tenant and its employees and
business visitors shall be permitted. No tenant shall cause or permit any
unusual or objectionable, odors to escape from the Premises.

         7. No tenant shall make, or permit to be made any unseemly or
disturbing noises, sounds or vibrations or disturb or interfere with occupants
of this or neighboring buildings or


                                       23
<PAGE>

premises or those having business with them whether by the use of any musical
instrument, radio, phonograph, unusual noise, or in any other way.

         8. No tenant shall throw anything out of doors or down the passageways.

         9. The Landlord shall have the right to prohibit any advertising by any
tenant which, in Landlord's opinion, tends to impair the reputation of the
Building or its desirability as an office building and upon written notice from
Landlord any tenant shall refrain from or discontinue such advertising.

         10. All doors opening into public corridors shall be kept closed,
except when in use for ingress and egress.

         11. All pedestrian walkways, plaza and other public areas forming a
part of the Building shall be under the sole and absolute control of Landlord
with the exclusive right to reasonably regulate and control these areas. Tenant
agrees to conform to the rules and regulations that may be established by
Landlord for these areas from time to time. Landlord may from time to time adopt
reasonable regulations to. control the access of the general public to and from
such public areas.

          A.   No such work shall proceed without Landlord's prior written
               approval of (i) Tenant's contractor, (ii) Certificate of
               Insurance from an approved company, furnished to Landlord by
               Tenant's contractor, in an amount of not less than
               $200,000/$500,000 for public liability and automobile liability
               endorsed to show Landlord as an additional insured, and (iii)
               detailed plans and specifications for such work.

          B.   All such work shall be done in conformity with a valid building
               permit when required, a copy of which shall be furnished to
               Landlord before the work is commenced, and any work not so
               conforming shall be promptly replaced at Tenant's expense.
               Notwithstanding any failure by Landlord to object to any such
               work, Landlord shall have no responsibility therefore.

          C.   All work by Tenant or its contractor shall be scheduled through
               Landlord.

          D.   Tenant shall reimburse Landlord for any extra expense incurred by
               Landlord by reason of such faulty work done by Tenant or its
               contractors, or by reason of delays caused by such work, or by
               reason of inadequate cleanup.

          E.   Tenant or its contractors will in no event be allowed to install
               plumbing, mechanical, electrical wiring or fixtures, acoustical
               or integrated ceilings, or partitions over the ceiling height
               partition unless approved by Landlord.

          F.   All data processing and other special electrical equipment shall
               be installed in conformance with the available electrical supply.


                                       24
<PAGE>

                  5. If the completion of Landlord's work in Tenant's Premises
         is delayed by Tenant's failure to comply with the foregoing provisions,
         or by Tenant's requirement of materials or installations different from
         Landlord's Standard Installations, or by changes in the work ordered by
         Tenant then notwithstanding the provisions of Article 9 of the Basic
         Lease Provisions of said lease, the lease term shall commence and the
         rent shall commence to accrue on August 1, 1985. September 1, 1985.


"LANDLORD"                                    "TENANT"

 By:                                          By:
    -----------------------------                 -----------------------------


By:                                           By:
    -----------------------------                 -----------------------------


                                       25
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>11
<FILENAME>ex-109.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>

<PAGE>

                                 LEASE ADDENDUM

DATE:             July 8, 1998
PARTIES:          Glassow Ventures, L.L.C.           ("Landlord")
                  2002 N.W. Glassow Drive
                  Bend, OR 97701

                  Advanced Power Technology, Inc.    ("Tenant")
                  405 SW Columbia Street
                  Bend, OR 97702-1000

PREMISES:         307 SW Columbia Street
                  Bend, OR 97702

LEASE AMENDED:
         That Commercial Lease between Landlord and Tenant dated March 6, 1996
(the "Lease").

RECITALS:
              A.  Tenant is in possession of the Premises under the terms of
                  the Lease.

              B.  Tenant wishes to extend fiber optic and copper cables from its
                  offices at 296 SW Columbia Street, Bend, Oregon, and 397 SW
                  Columbia Street, Bend, Oregon to the Premises. Landlord has
                  agreed to such installation.

              C.  The parties wish to amend the Lease to provide for the
                  installation of cables and the restoration and maintenance of
                  areas though which cable will be installed.

It is, therefore, agreed that the Lease be amended to include the following
terms:

AGREEMENT:
1.       PERMISSION TO INSTALL CONDUITS AND CABLES. Landlord grants to Tenant
         the right to install and maintain underground conduits containing fiber
         optic and copper cables on and under the property of Landlord on which
         the premises are located. Installation shall be at the location
         identified on Exhibit A attached hereto and incorporated herein by
         reference.

2.       TENANT'S OBLIGATIONS. Tenant shall have the following obligations
         with regard to the cable:

              2.1 Restoration of the surface of the ground, including asphalt
              and concrete surfaces, immediately following underground
              installation.

              2.2 Installation in a prompt and workmanlike manner, including
              appropriate signage during excavation.

3.       LANDLORD'S OBLIGATIONS. Landlord shall have no responsibility for
         maintenance and/or


<PAGE>

         repair of the cable.

4.       LEASE PRESERVED. Upon execution, this Addendum shall be attached to and
         become a part of the Lease. Except as specifically set forth herein,
         the terms of the Lease remain unmodified and fully enforceable.


Landlord:                         Tenant:

                                  Advanced Power Technology, Inc.

----------------------------      --------------------------------
Benji Gilchrist                   Greg Haugen
                                  Vice-President, Finance and Administration





                                   2

<PAGE>

                            LEGAL DESCRIPTION EXHIBIT
                       LOCATED IN THE NE i/4 OF SECTION 6,
                     TOWNSHIP 18 SOUTH, RANGE 12 EAST, W.M.
                          BEND DESCHUTES COUNTY OREGON





                                 SHEVLIN CENTER
                                    CS 09725

                                     BLOCK 5

                                      LOT 2



                                      LOT 3



         SO3;53;48:R
         7.45;
                                     [MAP]





                                EXISTING BUILDING

<PAGE>










                                COMMERCIAL LEASE

                               DATED MARCH 6, 1996

                            GLASSOW VENTURES, L.L.C.

                                       AND

                         ADVANCED POWER TECHNOLOGY, INC.






<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>                                                                                                               <C>
SECTION 1.        OCCUPANCY.......................................................................................1

   1.1   ORIGINAL TERM............................................................................................1
   1.2   POSSESSION...............................................................................................1
   1.3   RENEWAL OPTION...........................................................................................1

SECTION 2.        RENT............................................................................................2

   2.1   BASE RENT................................................................................................2
   2.2   SECURITY DEPOSIT.........................................................................................2
   2.3   ADDITIONAL RENT..........................................................................................3
   2.4   ESCALATION...............................................................................................3

SECTION 3.        USE OF THE PREMISES.............................................................................3

   3.1   PERMITTED USE............................................................................................3
   3.2   RESTRICTIONS ON USE......................................................................................3

SECTION 4.        REPAIRS AND MAINTENANCE.........................................................................4

   4.1   LANDLORD'S OBLIGATIONS...................................................................................4
   4.2   TENANT'S  OBLIGATIONS....................................................................................5
   4.3   LANDLORD'S INTERFERENCE WITH TENANT......................................................................5
   4.4   REIMBURSEMENT FOR REPAIRS ASSUMED........................................................................5
   4.5   INSPECTION OF PREMISES...................................................................................5

SECTION 5.        ALTERATIONS.....................................................................................6

   5.1   ALTERATIONS PROHIBITED...................................................................................6
   5.2   OWNERSHIP AND REMOVAL OF ALTERATIONS.....................................................................6

SECTION 6.        INSURANCE.......................................................................................6

   6.1   INSURANCE REQUIRED.......................................................................................6
   6.2   PAYMENT OF PREMIUMS......................................................................................6
   6.3   DETERMINATION OF REPLACEMENT VALUE.......................................................................7
   6.4   WAIVER OF SUBROGATION....................................................................................7

SECTION 7.        TAXES; UTILITIES................................................................................7

   7.1   PROPERTY TAXES...........................................................................................7
   7.2   SPECIAL ASSESSMENTS......................................................................................7
   7.3   CONTEST OF TAXES.........................................................................................8
   7.4   PRORATION OF TAXES.......................................................................................8
   7.5   NEW CHARGES OR FEES......................................................................................8
   7.6   PAYMENT OF MAINTENANCE COSTS AND  UTILITIES  CHARGES.....................................................8

SECTION 8.        DAMAGE AND DESTRUCTION..........................................................................8

   8.1   PARTIAL DAMAGE...........................................................................................8
   8.2   DESTRUCTION..............................................................................................8
   8.3   RENT ABATEMENT...........................................................................................9
   8.4   DAMAGE LATE IN TERM......................................................................................9

SECTION 9.        EMINENT DOMAIN..................................................................................9

   9.1   PARTIAL TAKING...........................................................................................9
   9.2   TOTAL TAKING............................................................................................10
   9.3   SALE IN LIEU OF CONDEMNATION............................................................................10

SECTION 10.       LIABILITY AND INDEMNITY........................................................................10

   10.1     LIENS................................................................................................10
   10.2     INDEMNIFICATION......................................................................................11



<PAGE>

<CAPTION>
<S>                                                                                                              <C>
   10.3     LIABILITY INSURANCE..................................................................................11

SECTION 11.       QUIET ENJOYMENT; MORTGAGE PRIORITY.............................................................11

   11.1     LANDLORD'S WARRANTY..................................................................................11
   11.2     TRUST DEED PRIORITY..................................................................................11
   11.3     ESTOPPEL CERTIFICATE.................................................................................12

SECTION 12.       ASSIGNMENT AND SUBLETTING......................................................................12

   12.1     ASSIGNMENT AND SUBLETTING............................................................................12
   12.2     PERMITTED ASSIGNMENTS AND SUBLETTING.................................................................13
   12.3     RELEASE OF LIABILITY.................................................................................13

SECTION 13.       DEFAULT........................................................................................13

   13.1     DEFAULT IN RENT......................................................................................13
   13.2     DEFAULT IN OTHER COVENANTS...........................................................................14
   13.3     INSOLVENCY...........................................................................................14
   13.4     ABANDONMENT..........................................................................................14

SECTION 14.       REMEDIES ON DEFAULT............................................................................14

   14.1     TERMINATION..........................................................................................15
   14.2     RELETTING............................................................................................15
   14.3     DAMAGES..............................................................................................15
   14.4     RIGHT TO SUE MORE THAN ONCE..........................................................................16
   14.5     LANDLORD'S RIGHT TO CURE DEFAULTS....................................................................16
   14.6     REMEDIES CUMULATIVE..................................................................................16

SECTION 15.       SURRENDER AT EXPIRATION........................................................................16

   15.1     CONDITION OF PREMISES................................................................................16
   15.2     FIXTURES.............................................................................................17
   15.3     HOLDOVER.............................................................................................17

SECTION 16.       MISCELLANEOUS..................................................................................17
   16.1     NONWAIVER............................................................................................17
   16.2     ATTORNEY FEES........................................................................................18
   16.3     NOTICES..............................................................................................18
   16.4     SUCCESSION...........................................................................................18
   16.5     RECORDATION..........................................................................................18
   16.6     ENTRY FOR INSPECTION.................................................................................18
   16.7     INTEREST ON RENT AND OTHER CHARGES...................................................................18
   16.8     PRORATION OF RENT....................................................................................18
   16.9     TIME  OF ESSENCE.....................................................................................19

</TABLE>


<PAGE>


                                COMMERCIAL LEASE

DATE:              March 6, 1996


BETWEEN:          GLASSOW VENTURES L.L.C.
                  2002 N.W. GLASSOW DRIVE
                  BEND, OR 97701
                                            ("Landlord")

AND:              ADVANCED POWER TECHNOLOGY, INC.
                  405 S.W. COLUMBIA.ST.
                  BEND, OR  97702
                                            ("Tenant")

         Landlord leases to Tenant and Tenant leases from Landlord the following
described property (the "Premises") on the terms and conditions stated below:

                  Lot 3, Block 5, Shevlin Center, City of Bend, Deschutes
                  County, Oregon, and the North 20 feet of Lot. 4, Block 5, as
                  shown on the official plat of Shevlin Center, City of Bend,
                  Deschutes County, Oregon.

SECTION 1.                 OCCUPANCY

         1.1 ORIGINAL TERM. The term of this lease shall commence on the date
set forth above and continue through the last day of February 2011, unless
sooner terminated or extended as hereinafter provided.

         1.2 POSSESSION. Tenant's right to possession and obligations under the
lease shall commence on March 6, 1996.

         1.3 RENEWAL OPTION. If the lease is not in default at the time each
option is exercised or at the time the renewal term is to commence, Tenant shall
have the option to renew this lease for two successive terms of five years each,
as follows:

                  A. Each of the renewal terms shall commence on the day
following expiration of the preceding term.

                  B. The option may be exercised by written notice to Landlord
given not less than 180 days prior to the last day of the expiring term. The
giving of such notice shall be



<PAGE>

sufficient to make the lease binding for the renewal term without further act of
the parties. Landlord and Tenant shall then be bound to take the steps required
in connection with the determination of rent as specified below.

                  C. The terms and conditions of the lease for each renewal term
shall be identical with the original term except for rent and except that Tenant
will no longer have any option to renew this lease that has been exercised. Rent
for a renewal term shall be the fair market rental value of the Premises. As
used herein, the "fair market rental rate" shall be the monthly rent (triple
net) then being obtained for five year fixed rate leases of comparable terms for
premises on property within the same geographical area, of similar types and
identity, quality and location as the Premises.

                  D. If the parties do not agree on the rent within 30 days
after notice of election to renew, the rent shall be determined by a qualified,
independent real property appraiser familiar with commercial rental values in
the area and not affiliated in any way with Landlord or Tenant. The appraiser
shall be chosen by Tenant from a list of not fewer than five such individuals
submitted by Landlord. If Tenant does not make the choice within five days after
submission of the list, Landlord may do so. If Landlord does not submit such a
list within 10 days after written request from Tenant to.do so, Tenant may name
as an appraiser any individual with such qualifications. Within 30 days after
appointment, the appraiser shall return a decision; which shall be final and
binding upon both parties. The cost of the appraisal shall be borne equally by
both parties.

SECTION 2.                 RENT

         2.1 BASE RENT. During the original term, Tenant shall pay to Landlord
as base rent the sum of $16,500 per month. Rent shall be payable on the first
day of each month in advance at such place as may be designated by Landlord.

         2.2 SECURITY DEPOSIT. To secure Tenant's compliance with all terms of
this lease, Tenant has paid Landlord the sum of $22,000 as a deposit. The
deposit shall be a debt from Landlord to Tenant, refundable within 30 days after
expiration of the lease term or other termination not caused by Tenant's
default. Landlord shall deposit the security deposit in a money market or other
interest bearing account reasonably agreeable to Tenant. Landlord shall have the
right to offset against the deposit any sums owing from Tenant to Landlord and
not paid


                                       2
<PAGE>

when due, any damages caused by Tenant's default, the cost of curing any default
by Tenant should Landlord elect to do so, and the cost of performing any repair
or cleanup that is Tenant's responsibility under this lease. Offset against the
deposit shall not be an exclusive remedy in any of the above cases, but may be
invoked by Landlord, at its option, in addition to any other remedy provided by
law or this lease for Tenant's nonperformance. Landlord shall give notice to
Tenant each time an offset is claimed against the deposit, and, unless the lease
is terminated, Tenant shall within 10 days after such notice deposit with
Landlord a sum equal to the amount of the offset so that the total deposit
amount, net of offset, shall remain constant throughout the lease term.

         2.3 ADDITIONAL RENT. All taxes, insurance costs, utility charges that
Tenant is required to pay by this lease, and any other sum that Tenant is
required to pay to Landlord or third parties shall be additional rent.

         2.4 ESCALATION. The base rent provided in Section 2.1 shall be
increased to $19,000 per month beginning with the sixth lease year and
continuing through the tenth lease year, and shall be increased to $22,000 per
month beginning with the eleventh lease year and continuing through the
remainder of the original term. The base lease year is the 12-month period
commencing with the first full month during which this lease is in effect. Lease
years thereafter shall be each corresponding 12-month period during the term of
this lease.

SECTION 3.                 USE OF THE PREMISES

         3.1 PERMITTED USE. The Premises shall be used for the design,
manufacture and sale of semi-conductors and other related products (and in the
case of any permitted assignee or sublessee any use permitted' by local
government authorities pursuant to applicable zoning ordinances) and for no
other purpose without the consent of Landlord, which consent shall not be
withheld unreasonably.

         3.2 RESTRICTIONS ON USE. In connection with the use of the Premises,
Tenant shall:

                  A. Conform to all applicable laws and regulations of any
public authority affecting the premises and the use, and correct at Tenant's own
expense any failure of compliance created through Tenant's fault or by reason of
Tenant's use, but Tenant shall not be required to make any structural changes to
effect such compliance.


                                       3
<PAGE>

                  B. Refrain from any activity that would make it impossible to
insure the Premises against casualty, would increase the insurance rate, or
would prevent Landlord from taking advantage of any ruling of the Oregon
Insurance Rating Bureau, or its successor, allowing Landlord to obtain reduced
premium rates for long-term fire insurance policies, unless Tenant pays the
additional cost of the insurance.

                  C. Refrain from any use that would be reasonably offensive to
other tenants or. owners or users of neighboring premises or that would tend to
create a nuisance or damage the reputation of the premises.

                  D. Tenant shall not cause or permit any Hazardous Substance to
be spilled, leaked, disposed of, or otherwise released on or under the Premises.
Tenant may use or otherwise handle on the Premises only those Hazardous
Substances typically used or sold in the prudent and safe operation of the
business specified in Section 3.1. Tenant may store such Hazardous Substances on
the Premises only in quantities necessary to satisfy Tenant's reasonably
anticipated needs. Tenant shall comply with all Environmental Laws and exercise
the highest degree of care in the use, handling, and storage of Hazardous
Substances and shall take all practicable measures to minimize the quantity and
toxicity of Hazardous Substances used, handled, or stored on the Premises. Upon
the expiration or termination of this Lease, Tenant shall remove all Hazardous
Substances from the Premises. The term Environmental Law shall mean any federal,
state, or local statute, regulation, or ordinance or any judicial or other
governmental order pertaining to the protection of health, safety or the
environment. The term Hazardous Substance shall mean any hazardous, toxic,
infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include, without limitation, petroleum oil and
its fractions.

SECTION 4.                 REPAIRS AND MAINTENANCE

         4.1 LANDLORD'S OBLIGATIONS. The following shall be the responsibility
of Landlord:

                  A.       On or before August 31, 1996, Landlord, at its
expense, shall perform the following maintenance:

                           (1)      Remove and replace approximately 21,000
square feet of the roof on the Premises; and


                                       4
<PAGE>

                           (2)      Paint the exterior of the Premises in a
color and with a paint that is reasonably acceptable to Tenant. The work
described above shall be performed by a licensed and bonded contractor
acceptable to both Landlord and Tenant and on days and at times reasonably
acceptable to Tenant.

                  B. Except for the work described above in subparagraph A and
for the repair of any defects that may occur in such work, Landlord shall have
no other obligations to repair or maintain the Premises.

         4.2      TENANT'S  OBLIGATIONS.  The following shall be the
responsibility of Tenant:

                  A.       All other repairs to the premises which Landlord is
not required to make under Section 4.1.

         4.3 LANDLORD'S INTERFERENCE WITH TENANT. In performing any repairs,
replacements, alterations, or other work performed on or around the Premises,
Landlord shall not cause unreasonable interference with use of the Premises by
Tenant. Tenant shall have no right to an abatement of rent nor any claim against
Landlord for any inconvenience or disturbance resulting from Landlord's
activities performed in conformance with the requirement of this provision.

         4.4 REIMBURSEMENT FOR REPAIRS ASSUMED. If either party fails or refuses
to make repairs that are required by this Section 4, the other party may make
the repairs and charge the actual costs of repairs to the first party. Such
expenditures by Landlord shall be reimbursed by Tenant on demand together with
interest at the rate of 12 percent per annum from the date of expenditure by
Landlord. Such expenditures by Tenant may be deducted from rent and other
payments subsequently becoming due or, at Tenant's election, collected directly
from Landlord. Except in an emergency creating an immediate risk of personal
injury or property damage, neither party may perform repairs which are the
obligation of the other party and charge the other party for the resulting
expense unless at least 10 days before work is commenced, the defaulting party
is given notice in writing outlining with reasonable particularity the repairs
required, and such party fails within that time to initiate such repairs in good
faith.

         4.5 INSPECTION OF PREMISES. Landlord shall have the right to inspect
the Premises at any reasonable time or times to determine the necessity of
repair. Whether or not such inspection


                                       5
<PAGE>

is made, the duty of Landlord to make repairs shall not mature until a
reasonable time after Landlord has received from Tenant written notice of the
repairs that are required.

SECTION 5.                 ALTERATIONS

         5.1 ALTERATIONS PROHIBITED. Tenant shall make no improvements or
alterations on the Premises of any kind without first obtaining Landlord's
written consent which consent may not be unreasonably withheld. All alterations
shall be made in a good and workmanlike manner, and in compliance with
applicable laws and building codes. As used herein, "alterations" does not
include the installation of computer and telecommunications wiring, cables, and
conduit and any further demising of the premises or rearrangement of interior
nonstructure supporting walls including the electrical, mechanical and plumbing
work connected-therewith, provided such installation does not diminish the value
of the Premises.

         5.2 OWNERSHIP AND REMOVAL OF ALTERATIONS. All improvements and
alterations performed on the Premises by either Landlord or Tenant shall be the
property of Landlord when installed unless the applicable Landlord's consent
specifically provides otherwise. Improvements and alterations installed by
Tenant shall, at Landlord's option, be removed by Tenant and the premises
restored unless the applicable Landlord's consent specifically provides
otherwise.

SECTION 6.                 INSURANCE

         6.1 INSURANCE REQUIRED. Tenant shall keep the Premises insured at the
full replacement value at Tenant's expense against fire and other risks covered
by a standard fire insurance policy with an endorsement for extended coverage.
Tenant shall bear the expense of any insurance insuring the property of Tenant
on the Premises against such risks. The policy shall name Landlord, Tenant and
Landlord's lender as insureds as their interests may appear and shall require
written notice to Landlord not less than 30 days prior to cancellation or
termination. Tenant shall furnish Landlord with a copy of all insurance policies
obtained by Tenant pursuant to this Section.

         6.2 PAYMENT OF PREMIUMS. Tenant shall reimburse Landlord for the
premiums paid by Landlord for maintaining the insurance required by paragraph
6.1. Reimbursement shall be made by Tenant within 10 days after Tenant receives
a copy of the premium notice. Tenant's


                                       6
<PAGE>

obligation to pay the insurance costs shall be prorated for any partial year at
the commencement and expiration or termination of the term.

         6.3 DETERMINATION OF REPLACEMENT VALUE. The "full replacement value" of
the building and other improvements to be insured under paragraph 6.1 shall be
determined by the company issuing the insurance policy at the time the policy is
initially obtained. Not more frequently than once every 3 years, either party
shall have the right to notify the other party that it elects to have the
replacement value redetermined by an insurance company. The redetermination
shall be made promptly and in accordance with the rules and practices of the
Board of Fire Underwriters, or a like board recognized and generally accepted by
the insurance company, and each party shall be promptly notified of the results
by the company. The insurance policy shall be adjusted according to the
redetermination.

         6.4 WAIVER OF SUBROGATION. . Neither party shall be liable to the other
(or to the other's successors or assigns) for any loss or damage caused by fire
or any of the risks enumerated in a standard fire insurance policy with an
extended coverage endorsement, and in the event of insured loss, neither party's
insurance company shall have a subrogated claim against the other. This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance company agrees in writing that such a waiver
will not affect coverage under the policies. Each party agrees to use best
efforts to obtain such an agreement from its insurer if the policy, does not
expressly permit a waiver of subrogation.

SECTION 7.                 TAXES; UTILITIES

         7.1 PROPERTY TAXES. Tenant shall pay as due all taxes on its personal
property located on the Premises. Tenant shall pay as due all real property
taxes and special assessments levied against the Premises. As used herein, real
property taxes includes any fee or charge relating to the ownership, use, or
rental of the Premises, other than taxes on the net income of Landlord or
Tenant. Each year Landlord shall notify Tenant of the real property taxes and
furnish Tenant with a copy of the tax bill. Tenant shall pay the real property
tax taxes not later than 10 days before the Deschutes County Assessor's
delinquency dates, including deferred payment dates.

         7.2 SPECIAL ASSESSMENTS. If an assessment for a public improvement is
made against the Premises, Tenant may elect to cause such assessment to be paid
in installments, in which case


                                       7
<PAGE>

only the installments payable during the lease term (including extensions
thereof) shall be treated the same as general real property taxes for purposes
of Section 7.1.

         7.3 CONTEST OF TAXES. Tenant shall be permitted to contest the amount
of any tax or assessment as long as such contest is conducted in a manner that
does not cause any risk that Landlord's interest in the Premises will be
foreclosed for nonpayment. Landlord shall cooperate in any reasonable manner
with such contest by Tenant.

         7.4 PRORATION OF TAXES. Tenant's share of real property taxes and
assessments for the years in which this lease commences or terminates shall be
prorated based on the portion of the tax year that this lease is in effect.

         7.5      NEW CHARGES OR FEES

         . If a new charge or fee relating to the ownership or use of the
Premises or the receipt of rental therefrom or in lieu of property taxes is
assessed or imposed, then, to the extent permitted by law, Tenant shall pay such
charge or fee. Tenant, however, shall have no obligation to pay any income,
profits, or franchise tax levied on the net income derived by Landlord from this
lease .

         7.6 PAYMENT OF MAINTENANCE COSTS AND UTILITIES CHARGES. Tenant shall
pay when due all charges for services and utilities incurred in connection with
the use, occupancy, operation, and maintenance of the Premises, including (but
not limited to) charges for fuel, water, gas, electricity, sewage disposal, snow
removal, power, refrigeration, air conditioning, telephone, and janitorial
services.

SECTION 8.                 DAMAGE AND DESTRUCTION

         8.1 PARTIAL DAMAGE. If the Premises are partly damaged and Section 8.2
does not apply, the Premises shall be repaired by Landlord at Landlord's
expense. Repairs shall be accomplished with all reasonable dispatch subject to
interruptions and delays from labor disputes and matters beyond the control of
Landlord and shall be performed in accordance with the provisions of Section
5.3.

         8.2 DESTRUCTION. If the Premises are destroyed or damaged such that the
cost of repair exceeds 50 percent of the value of the structure before the
damage, either party may elect to terminate the lease as of the date of the
damage or destruction by notice given to the other in


                                       8
<PAGE>

writing not more than 45 days following the date of damage. In such event all
rights and obligations of the parties shall cease as of the date of termination,
and Tenant shall be entitled to the reimbursement of any prepaid amounts paid by
Tenant and attributable to the anticipated term. If neither party elects to
terminate, Landlord shall proceed to restore the Premises to substantially the
same form as prior to the damage or destruction. Work shall be commenced as soon
as reasonably possible and thereafter shall proceed without interruption except
for work stoppages on account of labor disputes and matters beyond Landlord's
reasonable control.

         8.3 RENT ABATEMENT.  Rent shall be abated during the repair of any
damage to the extent the premises are untenantable.

         8.4 DAMAGE LATE IN TERM. If damage or destruction to which Section 8.2
would apply occurs within one year before the end of the then-current lease
term, Tenant may elect to terminate the lease by written notice to Landlord
given within 30 days after the date of the damage.

SECTION 9.                 EMINENT DOMAIN

         9.1 PARTIAL TAKING. If a portion of the Premises is condemned and
Section 9.2 does not apply, the lease shall continue on the following terms:

                  A. Landlord shall be entitled to all of the proceeds of
condemnation, and Tenant shall have no claim against Landlord as a result of the
condemnation except for that portion of the award specifically allocated to
compensate Tenant for its damages as a result of the condemnation.

                  B. Landlord shall proceed as soon as reasonably possible to
make such repairs and alterations to the Premises as are necessary to restore
the remaining Premises to a condition as comparable as reasonably practicable to
that existing at the time of the condemnation.

                  C. After the date on which title vests in the condemning
authority or an earlier date on which alterations or repairs are commenced by
Landlord to restore the balance of the Premises in anticipation of taking, the
rent shall be reduced in proportion to the reduction in Value of the Premises as
an economic unit on account of the partial taking. If the parties are


                                       9
<PAGE>

unable to agree on the amount of the reduction of rent, the amount shall be
determined by arbitration in the manner provided in Section 17.

                  D. If a portion of Landlord's property not included in the
Premises is taken, and severance damages are awarded on account of the Premises,
or an award is made for detriment to the Premises as a result of activity by a
public body not involving a physical taking of any portion of the Premises, this
shall be regarded as a partial condemnation to which Sections 9.1 applies, and
the rent shall be reduced to the extent of reduction in rental value of the
Premises as though a portion had been physically taken.

         9.2 TOTAL TAKING. If a condemning authority takes all of the Premises
or a portion sufficient to render the remaining premises reasonably unsuitable
for the use that Tenant was then making of the premises, the lease shall
terminate as of the date the title vests in the condemning authorities. Such
termination shall have the same effect as a termination under Section 9.1. The
parties shall be entitled to share in the condemnation proceeds in proportion to
the values of their respective interests in the Premises.

         9.3 SALE IN LIEU OF CONDEMNATION. Sale of all or part of the premises
to a purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 9 as a taking by condemnation.

SECTION 10.                LIABILITY AND INDEMNITY

         10.1     LIENS.

                  A. Except with respect to activities for which Landlord is
responsible, Tenant shall pay as due all claims for work done on and for
services rendered or material furnished to the Premises, and shall keep the
Premises free from any liens. If Tenant fails to pay any such claims or to
discharge any lien, Landlord may do so and collect the cost as additional rent.
Any amount so added shall bear interest at the rate of 12 percent per annum from
the date expended by Landlord and shall be payable on demand. Such action by
Landlord shall not constitute a waiver of any right or remedy which Landlord may
have on account of Tenant's default.

                  B. Tenant may withhold payment of any claim in connection with
a good-faith dispute over the obligation to pay, as long as Landlord's property
interests are not jeopardized. If a lien is filed as a result of nonpayment,
Tenant shall, within 10 days after


                                       10
<PAGE>

knowledge of the filing, secure the discharge of the lien or deposit with
Landlord cash or sufficient corporate surety bond or other surety satisfactory
to Landlord in an amount sufficient to discharge the lien plus any costs,
attorney fees, and other charges that could accrue as a result of a foreclosure
or sale under the lien.

         10.2 INDEMNIFICATION. Tenant shall indemnify and defend Landlord from
any claim, loss, or liability arising out of or related to any negligent
activity of Tenant on the Premises or any condition of the Premises in the
possession or under the control of Tenant including any such claim, loss, or
liability that may be caused or contributed to in whole or in part by Landlord's
own negligence or failure to effect any repair or maintenance required by this
lease.

         10.3 LIABILITY INSURANCE. Before going into possession of the Premises,
Tenant shall procure and thereafter during the term of the lease shall continue
to carry the following insurance at Tenant's cost: comprehensive general
liability insurance in a responsible company with limits of not less than
$1,000,000 for injury to one person, $3,000,000 for injury to two or more
persons in one occurrence, and $300,000 for damage to property. Such insurance
shall cover all risks arising directly or indirectly out of Tenant's activities
on or any condition of the premises whether or not related to an occurrence
caused or contributed to by Landlord's negligence. Such insurance shall protect
Tenant against the claims of Landlord on account of the obligations assumed by
Tenant under Section 10.2, and shall name Landlord as an additional insured.
Certificates evidencing such insurance and bearing endorsements requiring 10
days' written notice to Landlord prior to any change or cancellation shall be
furnished to Landlord prior to Tenant's occupancy of the property.

SECTION 11.                QUIET ENJOYMENT; MORTGAGE PRIORITY

         11.1 LANDLORD'S WARRANTY. Landlord warrants that it is the owner of the
Premises and has the right to lease them free of all encumbrances except those
set forth on the attached schedule entitled "Exceptions to Title." Landlord will
defend Tenant's right to quiet enjoyment of the Premises from the lawful claims
of all persons during the lease term.

         11.2 TRUST DEED PRIORITY. This lease is and shall be prior to any
mortgage or deed of trust ("Encumbrance") recorded after the date of this lease
and affecting the Premises. However, if any lender holding such an Encumbrance
requires that this lease be subordinate to the Encumbrance, then Tenant agrees
that the lease shall be subordinate to the Encumbrance if the


                                       11
<PAGE>

holder thereof agrees in writing with Tenant that as long as Tenant performs its
obligations under this lease no foreclosure, deed given in lieu of foreclosure,
or sale pursuant to the terms of the Encumbrance, or other steps or procedures
taken under the Encumbrance shall affect Tenant's rights under this lease. If
the foregoing condition is met, Tenant shall execute the written agreement and
any other documents required by the holder of the Encumbrance to accomplish the
purposes of this paragraph. If the premises are sold as a result of foreclosure
of any Encumbrance thereon, or otherwise transferred by Landlord or any
successor, Tenant shall attorn to the purchaser or transferee.

         11.3 ESTOPPEL CERTIFICATE. Either party will, within 20 days after
notice from the other, execute and deliver to the other party a certificate
stating whether or not this lease has been modified and is in full force and
effect and specifying any modifications or alleged breaches by the other party.
The certificate shall also state the amount of monthly base rent, the dates to
which rent has been paid in advance, and the amount of any security deposit or
prepaid rent and such other requirements as may reasonably be required by
Landlord's lender. Failure to deliver the certificate within the specified time
shall be conclusive proof upon the party from whom the certificate was requested
that the lease is in full force and effect and has not been modified except as
represented in the notice requesting the certificate.

SECTION 12.                ASSIGNMENT AND SUBLETTING

         12.1 ASSIGNMENT AND SUBLETTING. Landlord agrees that Tenant may assign
this lease (including, at Tenant's option, any renewal options) or sublease all
or a portion of the Premises in writing to any other party, with written consent
of Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned, provided that:

                  A. Any such assignee shall, in writing, assume and agree to
keep, observe and perform all of the agreements, conditions, covenants and terms
of this lease on the part of Tenant to be kept, observed and performed, and
shall be and become liable for the nonperformance thereof accruing from said
date; and

                  B. Any such subtenant shall, in writing, agree to be subject
to all of the agreements, conditions, covenants and terms of this Lease on the
part of Tenant to be kept, observed and performed; and


                                       12
<PAGE>

                  C. Except for Prestige Moving and Storage (see section 12.2),
Tenant furnishes Landlord with such financial and ownership information of such
subtenant as may be reasonably requested by Landlord.

                  D. No further or additional assignment or subletting of this
lease shall be made except upon compliance with and subject to the provisions of
this Section 12.

         12.2 PERMITTED ASSIGNMENTS AND SUBLETTING. Tenant may assign this lease
or sublet all or part of the Premises, without Landlord's approval, to Prestige
Moving & Storage, to a parent corporation of Tenant, or to any subsidiary,
affiliate, limited liability company or partnership where Tenant or any
affiliate of Tenant is the managing or a general partner or managing member, or
in connection with a merger, acquisition, reorganization or consolidation of
Tenant, or in connection with the sale or transfer of all or substantially all
of -Tenant's (or its parent's or affiliates') stock or assets. The term
"affiliate" as used herein shall mean any entity in which Tenant or its parent
corporation holds 30% or more of the ownership interests.

         12.3 RELEASE OF LIABILITY. No assignment shall relieve Tenant from
liability hereunder, unless Tenant can reasonably demonstrate to Landlord that
the assignee has a net worth on the date of assignment equal to or in excess of
$20,000,000 as prepared in accordance with generally accepted accounting
principles and has the ability to perform Tenant's obligations required by this
lease. In such event, Tenant shall be released from all liability hereunder
accruing after the date of assignment and Landlord shall execute such
instruments as Tenant may reasonably request to evidence such release of
liability. Before releasing Tenant from liability, Landlord may undertake
reasonable due diligence (but not including an audit) to confirm the prospective
Assignee's net worth, the cost of which shall be reimbursed by Tenant to
Landlord at the time of obtaining Landlord's release of liability.

SECTION 13.                DEFAULT

         The following shall be events of default:

         13.1 DEFAULT IN RENT. Failure of Tenant to pay any rent or other charge
within 10.days after it is due; provided that Tenant shall not be in default
until five days following receipt of a


                                       13
<PAGE>

notice from Landlord that the rent is past due and provided further that
Landlord shall not be required-tq give more than one such notice in any twelve
month period.

         13.2 DEFAULT IN OTHER COVENANTS. Failure of Tenant to comply with any
term or condition or fulfill any obligation of the lease (other than the payment
of rent or other charges) within 30 days after written notice by Landlord
specifying the nature of the default with reasonable particularity. If the
default is of such a nature that it cannot be completely remedied within the
30-day period, this provision shall be complied with if Tenant begins correction
of the default within the 30-day period and thereafter proceeds with reasonable
diligence and in good faith to effect the remedy as soon as practicable.

         13.3 INSOLVENCY. Insolvency of Tenant; an assignment by Tenant for the
benefit of creditors; the filing by Tenant of a voluntary petition in
bankruptcy; an adjudication that Tenant is bankrupt or the appointment of a
receiver of the properties of Tenant; the filing of any involuntary petition of
bankruptcy and failure of Tenant to secure a dismissal of the petition within 30
days after filing; attachment of or the levying of execution on the leasehold
interest and failure of Tenant to secure discharge of the attachment or release
of the levy of execution within 10 days shall constitute a default. If Tenant
consists of two or more individuals or business entities, the events of default
specified in this Section 13.3 shall apply to each individual unless within 10
days after an event of default occurs, the remaining individuals produce
evidence satisfactory to Landlord 'that they have unconditionally- acquired the
interest of the one causing the default. If the lease has been assigned, the
events of default so specified shall apply only with respect to the one then
exercising the rights of Tenant under the lease.

         13.4 ABANDONMENT. Failure of Tenant for 30 days or more to occupy the
Premises for one or more of the purposes permitted under this lease, unless such
failure is excused under other provisions of this lease.

SECTION 14.                REMEDIES ON DEFAULT

         14.1 TERMINATION. In the event of a default the lease may be terminated
at the option of Landlord by written notice to Tenant. Whether or not the lease
is terminated by the election of Landlord or otherwise, Landlord shall be
entitled to recover damages from Tenant for the default, and Landlord may
reenter, take possession of the premises, and remove any persons or


                                       14
<PAGE>

property by legal action or by self-help with the use of reasonable force and
without liability for damages and without having accepted a surrender.

         14.2 RELETTING. Following reentry or abandonment, Landlord may relet
the Premises and in that connection may make any suitable alterations or
refurbish the Premises, or both, or change the character or use of the Premises,
but Landlord shall not be required to relet for any use or purpose which
Landlord may reasonably consider injurious to the Premises, or to any tenant.
that Landlord may reasonably consider objectionable. Landlord may relet all or
part of the Premises, alone or in conjunction with other properties, for a term
longer or shorter than the term of this lease, upon any reasonable terms and
conditions, including the granting of some rent-free occupancy or other rent
concession.

         14.3 DAMAGES. In the event of termination or retaking of possession
following default, Landlord shall be entitled to recover immediately, without
waiting until the due date of any future rent or until the date fixed for
expiration of the lease term, the following amounts as damages:

                  A. The loss of rental from the date of default until a new
tenant is, or with the exercise of reasonable efforts could have been, secured
and paying rent.

                  B. The reasonable costs of reentry and reletting including
without limitation the cost of any cleanup, refurbishing, removal of Tenant's
property and fixtures, costs incurred under Section 14.5, or any other expense
occasioned by Tenant's default including but not limited to, any remodeling or
repair costs, attorney fees, court costs, broker commissions, and advertising
costs.

                  C. Any excess of the value of the rent and all of Tenant's
other obligations under this lease over the reasonable expected return from the
premises for the period commencing on the earlier of the date of trial or the
date the premises are relet, and continuing through the end of the term. The
present value of future amounts will be computed using a discount rate equal to
the prime loan rate of major Oregon banks in effect on the date of trial.

         14.4 RIGHT TO SUE MORE THAN ONCE. Landlord may sue periodically to
recover damages during the period corresponding to the remainder of the lease
term, and no action for damages shall bar a later action for damages
subsequently accruing.


                                       15
<PAGE>

         14.5 LANDLORD'S RIGHT TO CURE DEFAULTS. If Tenant fails to perform any
obligation under this lease, Landlord shall have the option to do so after 30
days' written notice to Tenant. All of Landlord's expenditures to correct the
default shall be reimbursed by Tenant on demand with interest at the rate of 10
percent annum from the date of expenditure by Landlord. Such action by Landlord
shall not waive any other remedies available to Landlord because of the default.

         14.6 REMEDIES CUMULATIVE. The foregoing remedies shall be in addition
to and shall not exclude any other remedy available to Landlord under applicable
law.

SECTION 15.                SURRENDER AT EXPIRATION

         15.1 CONDITION OF PREMISES. Upon expiration of the lease term or
earlier termination on account of default, Tenant shall deliver all keys to
Landlord and surrender the Premises broom clean and in the condition they were
in at the commencement of this lease except for reasonable wear and tear
associated with Tenant's permitted use. Alterations constructed by Tenant with
permission from Landlord shall not be removed or restored to the original
condition unless the terms of permission for the alteration so require. Tenant's
obligations under this section shall be subordinate to. the provisions of
Section 8 relating to destruction.

         15.2     FIXTURES

                  A. All fixtures existing or placed upon the Premises during
the term, other than Tenant's trade fixtures, shall, at Landlord's option,
become the property of Landlord, provided that Tenant shall maintain ownership
of and have the right to remove (i) the HVAC system associated with the wafer
fabrication area; (ii) the deionized water system; (iii) the acid water system;
(iv) any office areas constructed of de-mountable partition systems; and (v) all
additions or improvements to items (i) through (iv). If Landlord so elects,
Tenant shall remove any or all fixtures that would otherwise remain the property
of Landlord, and shall repair any physical damage resulting from the removal of
such fixtures and damage resulting from the removal of items (i) through (iv)
above. If Tenant fails to remove such fixtures, Landlord may do so and charge
the cost to Tenant with interest at the rate of 12 percent per annum from the
date of expenditure.


                                       16
<PAGE>

                  B. Prior to expiration or other termination of the lease term
Tenant shall remove all furnishings, furniture, and trade fixtures that remain
its property. If Tenant fails to do so, this shall be an abandonment of the
property, and Landlord may retain the property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within 20
days after removal was required, Landlord may elect to hold Tenant to its
obligation of removal. If Landlord elects to require Tenant to remove, Landlord
may effect a removal and place the property in public storage for Tenant's
account. Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.

         15.3     HOLDOVER

                  A. If Tenant does not vacate the Premises at the time
required, Landlord shall have the option to treat Tenant as a tenant from month
to month, subject to all of the provisions of this lease except the provisions
for term and renewal, or to eject Tenant from the Premises and recover damages
caused by wrongful holdover. Failure of Tenant to remove fixtures, furniture,
furnishings, or trade fixtures that Tenant is required to remove under this
lease shall constitute a failure to vacate to which this section shall apply if
the property not removed will substantially interfere with occupancy of the
Premises by another tenant or with occupancy by Landlord for any purpose
including preparation for a new tenant.

                  B. If a month-to-month tenancy results from a holdover by
Tenant under this. Section 15.3, the tenancy shall be terminable at the end of
any monthly rental period on written notice from Landlord given not less than 10
days prior to the termination date which shall be specified in the notice.
Tenant waives any notice that would otherwise be provided by law with respect to
a month-to-month tenancy.

SECTION 16.                MISCELLANEOUS

         16.1 NONWAIVER. Waiver by either party of strict performance of any
provision of this lease shall not be a .waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.

         16.2 ATTORNEY FEES. If suit or action is instituted in connection with
any controversy arising out of this lease, the prevailing party shall be
entitled to recover in addition


                                       17
<PAGE>

to costs such sum as the court may adjudge reasonable as attorney fees at trial,
on petition for review, and on appeal.

         16.3 NOTICES. . Any notice required or permitted under this lease shall
be given when actually delivered or 48 hours after deposit in United States mail
as certified mail addressed to the address first given in this lease or to such
other address as may be specified from time to time by either of the parties in
writing.

         16.4 SUCCESSION. . Subject to the above-stated limitations on transfer
of Tenant's interest, this lease shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.

         16.5 RECORDATION. This lease shall not be recorded without the written
consent of Landlord. Landlord shall execute and acknowledge a memorandum of this
lease in a form suitable for recording, and Tenant may record the memorandum.

         16.6 ENTRY FOR INSPECTION. Landlord shall have the right upon
reasonable advance notice to enter upon the Premises to determine Tenant's
compliance with this lease, to make necessary repairs to the building or to the
Premises, or to show the Premises to any prospective tenant or purchaser, and in
addition shall have the right, at any time during the last two months of the
term of this lease, to place and maintain upon the Premises notices for leasing
or selling of the Premises.

         16.7 INTEREST ON RENT AND OTHER CHARGES. Any rent or other payment
required of Tenant by this lease shall, if not paid within 10 days after it is
due, bear interest at the rate of 10 percent per annum (but not in any event at
a rate greater than the maximum rate of interest permitted by law) from the due
date until paid.

         16.8 PRORATION OF RENT. In the event of commencement or termination of
this lease at a time other than the beginning or end of one of the specified
rental periods, then the rent shall be prorated as of the date of commencement
or termination and in the event of termination for reasons other than default,
all prepaid rent shall be refunded to Tenant or paid on its account.


                                       18
<PAGE>

         16.9 TIME OF ESSENCE. Time is of the essence of the performance of each
of the parties obligations under this lease.

"LANDLORD"                                  "TENANT"

GLASSOW VENTURES, L.L.C.,                   ADVANCED POWER TECHNOLOGY, INC.
AN OREGON LIMITED LIABILITY COMPANY
COMPANY

-------------------------------------        -----------------------------------
By                                           By


                                       19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>12
<FILENAME>ex-1010.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                       NORTH AMERICA DISTRIBUTOR AGREEMENT

         This Agreement is made this 1st day of APRIL, 1997, by and between
Advanced Power Technology, Inc., a Delaware Corporation with its principal place
of business at 405 S. W. Columbia Street, Bend, Oregon 97702, U.S.A.
(hereinafter referred to as "Company"), and Richardson Electronics. Ltd. , a
company organized and existing under the laws of Delaware with its principal
place of business at 40W267 Keslinger Road, LaFox., Illinois 60147 (hereinafter
referred to as "Distributor").

                                    RECITALS

         A. Company is engaged in the business of manufacturing and selling
power transistors.

         B. Company wishes to supplement its own sales efforts through the
appointment of a non-exclusive and independent distributor.

         C. Distributor wishes to act as a distributor of Company's products.

         NOW, THEREFORE, in consideration of the mutual promises, terms,
provisions and conditions contained herein, the parties hereto agree as follows:

SECTION 1.  APPOINTMENT OF DISTRIBUTOR.

         Company hereby appoints Distributor, and Distributor hereby accepts
such appointment as a non-exclusive and authorized distributor of Company during
the term of this Agreement for the sale of Company's Products, as defined in
Section 2.1, from listed locations.

SECTION 2.  PRODUCTS.

         2.1 The products covered by this Agreement shall be those identified on
Exhibit "B," attached hereto (the "Products").

         2.2 Company may add Products to, or delete Products from, Exhibit "B"
upon written notice to the Distributor.

         2.3 Notwithstanding anything to the contrary contained herein,, Company
reserves the right, in its sole discretion and without notice, to modify
specifications and characteristics of its Products, to discontinue the
distribution and sale of such Products, and to cancel, modify or condition any
right of the Distributor to prevent a violation of law.


PAGE 1    NORTH AMERICA DISTRIBUTOR AGREEMENT

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

SECTION 3.  OBLIGATIONS OF DISTRIBUTOR.

         During the term of this Agreement, Distributor shall at all times use
best efforts and commensurate with distributor's overall business to enhance the
image and reputation of Company and the Products which are the subject matter
hereof, and agrees:

         3.1 Distributor shall not disclose information of Company considered by
Company to be confidential or proprietary including, but not limited to,
customer and price lists and data regarding the design or methods of manufacture
of the Products and will not use any such information except as contemplated by
this Agreement. Such information will be appropriately marked or identified by
Company and the obligation of Distributor not to disclose or improperly use such
information will survive the termination of this Agreement. Upon the termination
of this Agreement or the earlier request of Company, all such information will
be promptly returned to Company. The restrictions of this Section 3.1 are in
addition to any other agreement between the parties with respect to the
protection and use of information. ALL CONFIDENTIAL INFORMATION SUPPLIED TO
COMPANY (INCLUDING, WITHOUT LIMIT, CUSTOMER NAMES AND DATA) BY DISTRIBUTOR SHALL
REMAIN DISTRIBUTOR'S PROPERTY AND SHALL NOT BE DISCLOSED BY COMPANY OR USED TO
DISTRIBUTOR'S DETRIMENT.

         3.2 Distributor agrees that they will comply with all applicable
federal, state, and local laws or regulations in performing any act arising out
of or in connection with this Agreement. Distributor agrees to maintain such
records as are required by all applicable laws and regulations and this
Agreement and to promptly provide such records or written assurances as may be
required by Company in connection therewith.

                  The parties agree that each will use its best efforts to
secure any licenses or permits as may now or hereafter be required in connection
with the performance of its obligations under this Agreement, but this Agreement
shall not be deemed to require any performance on the part of either party which
cannot lawfully be done pursuant to the laws and regulations referred to above.

         3.3 Distributor shall sell only Company's Products that bear Company's
markings or trademarks and will not alter, modify or in any way change the
Products, marking or trademarks thereon without prior written approval of
Company.

         3.4 Distributor shall offer and sell Products only in accordance with
specifications and warranty schedules provided by Company.

         3.5 Distributor shall provide Company by the 15th day of each month a
report detailing the total sales and inventory levels of the Products for the
prior month.

         3.6 Distributor shall use its best efforts to actively promote the sale
of the Products to customers in its territory commensurate with its overall
business. Such efforts shall include, but not be limited to, promptly servicing
all customer accounts, soliciting new customer accounts, and cooperating and
participating in Company's advertising and sales promotional programs.


PAGE 2    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

         3.7 Distributor shall provide and maintain, without expense to Company,
a suitable place of business with adequate facilities and sufficient personnel
for the sale and distribution of the Products and to fulfill all other
additional objectives agreed to in writing by Company and Distributor.

         3.8 Distributor shall pay all fees, taxes and duties which may be
imposed on the Products purchased by Distributor. To the extent that Company
must pay any fees, taxes or duties on Products sold to Distributor, Distributor
shall promptly reimburse Company.

         3.9 Distributor shall refrain from any activities which are illegal,
unethical, or which might damage Company's reputation.

         3.10 Distributor shall fully comply with all agreements with Company,
including without limitation, the obligations to pay amounts due when due.

         3.11 Distributor shall use its best efforts to consolidate purchase
orders to promote efficiency and reduce supporting documentation.

SECTION 4.  OBLIGATIONS OF COMPANY.

         4.1 Company, in its sole discretion, shall maintain the necessary
personnel needed to fulfill the agreed upon sales objectives of Company and
Distributor.

         4.2 Company shall use its best efforts to manufacture sufficient
quantities of Products to meet the requirements of Distributor. Company shall
consult with Distributor regarding inventory levels, and shall advise
Distributor of promotional efforts to increase the sale of Products.

         4.3 Company shall subject all Products delivered to Distributor to its
usual standards of quality control and inspection and all Products sold or
delivered under this Agreement shall be subject to the limited warranty set
forth in paragraph 17 below.

SECTION 5.  DELIVERIES

         5.1 All deliveries of Products by Company pursuant to this Agreement
will be made F.O.B. Bend, Oregon. Products will be consigned to carriers for
shipment to Distributor, however, upon the written approval of Company and
Distributor, Company will consign Products to carriers for shipment directly to
Distributor's customers.

         5.2 Minimum order quantities: The minimum order quantities for all
products shall be the standard minimum order quantities in effect at the time of
acceptance by Company from the Distributor.

SECTION 6.  TITLE AND RISK OF LOSS.

         Title to and risk of loss of Products sold hereunder shall pass to the
Distributor upon delivery to the carrier at the F.O.B. point.


PAGE 3    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

SECTION 7.  PRICE.

         Company agrees to sell the Products to Distributor at the prices set
forth in the published Distributor Cost and Price Schedule. All prices are
subject to change by Company at any time upon written notice to Distributor.

         7.1 If the price for any Product is increased prior to full shipment of
any Order, the price charged to Distributor will be that in effect at the time
of Company's acceptance of Distributor's Order. If the price for any Product is
decreased, all Products shipped on or after the effective date of any price
decrease will be shipped and invoiced at the price in effect at the time of
shipment.

         7.2 In order to assist Distributor in competitive markets, Company
will, under certain limited circumstances, adjust the effective price of the
Products to Distributor. The unit price of any Product(s) as set forth in
Exhibit "B" shall be ultimately adjusted pursuant to the following procedure:
Distributor must contact Company, or Company's local representative, and provide
to the same the customer's name, Company part number, quantity, delivery
schedule, price per unit requested by Distributor, resale price per unit to
customer and competitive products available in the market. Upon acceptance by
Company of the information and approval of Distributor's request for a price
reduction, Company or Company's local representative shall provide Distributor
with the Company's authorized "ship and debit" price per unit for the particular
order and the Company's authorization number. Within 30 days from the invoice
date to Distributor's customer, Distributor shall provide Company with a copy of
the invoice, or a substitute deemed acceptable by Company, and a debit
memorandum with Company's authorization number to obtain a credit. Upon
Company's request, Distributor shall produce for inspection the original
invoice. Upon satisfaction of the conditions set forth above, Company shall
issue to Distributor, within 30 days of receipt of the supporting documentation
set forth above, a credit. A credit will only be issued for those amounts
authorized.

SECTION 8.  PAYMENTS.

         Payment for Products delivered to Distributor shall be in United States
dollars and is within [ * ] days of invoice date.

SECTION 9.  CANCELLATION OF ORDER.

         9.1 In the event Distributor cancels an Order for any customized
Product which has been accepted by Company, Distributor shall pay Company for
all direct and indirect costs incurred by Company as a result of such
cancellation.

         9.2 Distributor may reschedule delivery dates of production order by
written request to Company; provided, however, that no such changes shall be
allowed within thirty (30) days of first factory promise date.

         9.3 Distributor may cancel standard product by written notice to
Company; provided, however, that no orders may be canceled within thirty (30)
days of first factory promise date.


PAGE 4    NORTH AMERICA DISTRIBUTOR AGREEMENT

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

SECTION 10.  EXCUSABLE DELAYS AND FAILURES (Force Majeure)

         Company shall be excused for delays in performing and failures to
perform pursuant to this Agreement and to any Order issued hereunder to the
extent that any such delay or failure results from any cause beyond its control,
including, solely by way of example and without limitation, delays caused by
Distributor or a third party, acts of God, strikes, and other labor disputes,
government regulations, public disorders, international disputes, inability to
obtain or shortage of any material used in the manufacture or shipping and
delivery of the Products, transportation or trade embargoes, customs
restrictions, and catastrophes of nature, fire and explosion, whether any such
cause affects Company, any supplier or provider of service to Company. Company
agrees to exert reasonable effort to prevent such occurrences from affecting its
performance hereunder. Company shall not be liable for damages, general,
specific or otherwise resulting from such excusable delays and failures.

SECTION 11.  INVENTORY.

         11.1 Distributor shall maintain a minimum level of inventory of
Products. The level of inventory shall be established by Company and adjusted
from time to time as market conditions warrant. Company retains the right to
inspect Distributor's inventory at any time.

         11.2 In the event of a decrease in the price of any of Company's
Products, Distributor shall be entitled, within thirty (30) days following such
decrease, to apply for a credit in an amount equal to the difference in the
price of the Product(s) excluding transportation charges, duties and taxes)
before and after such decrease on the unsold Products) in Distributor's
inventory and/or the affected Product(s) in transit to Distributor. This credit
shall be calculated upon receipt of an itemized inventory from Distributor and
shall be applied against future Orders from Distributor. Company will have the
right to inspect the inventory subject to the credit and all records relating
thereto.

SECTION 12.  RETURNS.

         12.1 Company will accept returned Products only if such return is made
in accordance with Company's current procedures which are set forth in this
Section 12. Company reserves the right to unilaterally change these procedures,
such changes will become effective upon reasonable notice to Distributor.

         12.2 Distributor may return any and all Products within 6 months of the
delivery of the Initial Stocking Package recommended by Company after obtaining
Company's prior written authorization and the return material authorization
number given with such prior written authorization, and a dollar for dollar
off-setting order is received. Upon receipt of such Products in a condition
acceptable to Company, a credit, less shipping and handling costs, will be
issued to Distributor. After the Initial Stocking Package period has expired,
Products may be returned in accordance with Company's current return policy.

         12.3 Company shall give Distributor written notice of the
discontinuance of any Product. Within 30 days of receipt of such notice,
Distributor shall notify Company in writing of its intention to return
discontinued Products for credit. On receipt of such Product in a condition


PAGE 5    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

acceptable to Company, freight prepaid by Distributor, Company shall issue a
credit to Distributor.

         12.4 Distributor is authorized to return slow-moving items for
exchange in only the months of January and July. All such returns shall
require Company's prior written authorization and the return material
authorization number given with such prior written authorization, and a
dollar for dollar offsetting order is received, and shall be limited to [ * ]
of the U.S. dollar amount (excluding costs associated with shipping,
handling, duties and taxes) of standard purchases of Product over the prior
six months. All returned material must be returned in a condition acceptable
to Company.

SECTION 13.  ADVERTISING.

         13.1 Company and Distributor shall jointly agree from time to time
on advertising programs and other forms of promotion of the Products in the
Territory. Company shall share such expenses equally with Distributor;
provided, however, Company's share of such expenses shall not exceed [ * ] of
Company's prior 12 month's sales to Distributor.

         13.2 Company shall provide Distributor reasonable quantities of its
Product catalogs, data sheets and other promotional material free of charge.
Additional quantities of any such material requested by Distributor shall also
be supplied free of charge, F.O.B. point of origin.

         13.3 Distributor may conduct advertising programs other than those
programs undertaken with Company provided Distributor obtains Company's approval
of all aspects of the advertising program. Distributor shall refrain from making
any representations or claims concerning the Products which are inconsistent or
exceed Company's written representations.

SECTION 14.  DURATION AND TERMINATION.

         14.1 Unless terminated as provided for herein, this Agreement shall
continue in force for one year from the date first above mentioned. This
agreement shall continue thereafter unless either party gives written notice to
the other party of its intention to terminate the agreement, giving at least
thirty (30) days written notice.

         14.2 If either party commits a material breach of this Agreement or
becomes insolvent or bankrupt, or admits in writing its inability to pay its
debts as they mature, or makes an assignment for the benefit of creditors, or
ceases to function as a going concern or to conduct its operations in the normal
course of business, the other party shall have the right to cancel this
Agreement by giving immediate written notice of its election to do so.

         14.3 Upon expiration or termination of this Agreement by Distributor,
Distributor will return to Company at such place as Company may designate, all
promotional materials which had originally been furnished by Company to
Distributor. Distributor shall be responsible for all return charges. Upon
expiration or termination of this Agreement by Company, Company shall be
responsible for all return charges.

         14.4 Company and Distributor agree that upon the expiration or
termination of this Agreement, neither party shall be liable to the other for
any damages, expenditures, loss, of


PAGE 6    NORTH AMERICA DISTRIBUTOR AGREEMENT

[ * ] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

profits or prospective profits of any kind or nature sustained or arising out
of, or alleged to have been sustained or to have arisen out of, such
termination. The expiration or termination of this Agreement shall not, however,
release either party from making payments which may be owing to either party
under the terms of this Agreement.

         14.5 Upon termination or expiration of this Agreement by Company,
Company will accept, within 30 days after effective date of termination or
expiration, the Distributor's stock inventory valued at the effective
Distributor cost as of the date of termination or expiration or at Distributor's
acquisition price, whichever is lower. Upon termination or expiration of this
agreement by Distributor, Company will have the option. of accepting the
Distributor stock inventory valued at the effective Distributor cost as of the
date of termination or at Distributor acquisition price, whichever is lower.
Stock inventory not returned within the 30-day period will not be accepted by
Company. This reacquisition formula applies only to the Products shipped by
Company to Distributor within one year of the date of termination or expiration
of the Agreement. For Products which are custom Products, Company may repurchase
such items at prices within its sole discretion. Products specially prepared by
Company to Distributor's specifications will not be repurchased.

         14.6 In event of termination of this Agreement for any reason, APT
shall not be liable to the Distributor or any employee or agent of the
Distributor for compensation, reimbursement or damages on account of the loss of
prospective profits or anticipated sales or on account of expenditures,
investments, leases or commitments in connection with the business or goodwill
of the Distributor or for any reason arising out of such termination. The
Distributor hereby waives any and all rights it might have to compensation upon
termination of this agreement pursuant to the local and national laws of any
country within the territory and hereby agrees to indemnify APT and hold
harmless from any and all claims of its employees or subcontractors for similar
compensation or for severance, liability or other pay.

SECTION 15.  RELATIONSHIP BETWEEN PARTIES.

         15.1 This Agreement does not create an employer-employee relationship
between Company and Distributor, or a joint venture or partnership. The
relationship between Company and Distributor shall be that of seller and buyer
and in such relationship Distributor shall be an independent contractor and
shall have no authority to act for or to bind Company in any matter. Distributor
agrees to hold Company harmless from all claims, actions or judgments arising
from acts or omissions of Distributor, its agents or employees.

         15.2 Company shall indemnify, protect and save harmless Distributor
from and against all claims, demands and proceedings, actions, liabilities and
costs resulting from any actual or alleged infringement of any patent,
industrial and commercial property rights of third parties related to the
Products.

SECTION 16.  EXPORT CONTROLS.

         Distributor -acknowledges that exportation of the Products may be
subject to compliance with `various United States Export Administration Acts and
the rules and regulations promulgated from time to time thereunder, which
restrict the export and re-export of certain


PAGE 7    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

products, technical data and direct products of technical data. Distributor
agrees to comply with such United States export control laws, rules and
regulations and all other applicable laws and governmental regulations,
domestic, foreign and local.

SECTION 17.  WARRANTY

         17.1 Products sold pursuant hereto are covered by APT's standard
warranty in effect as set forth in the APT sales contract under which the
Products are sold provided that APT's obligations under such warranty are
limited to, and shall not run beyond, two years from the date of APT's shipment
of the Products, except where specific customer or user requirements are agreed
to by APT in writing. APT shall have no liability to Representative or to the
customer or user with respect to any alleged defective Products sold by APT
except as specifically set forth in APT's warranty, if any, included as part of
the terms and conditions of the sale made by APT. Representative shall have no
authority to and shall not make any warranty representation with respect to the
Products contrary to or inconsistent with APT's warranty.

         17.2 The products are not authorized for use as critical components of
life support systems. A critical component is any component of a life support
device or system whose failure to perform may be expected to cause the failure
of the life support device or to affect its safety or effectiveness.

SECTION 18.  MISCELLANEOUS.

         18.1 This Agreement does not convey, nor shall Distributor claim any
title or property interest in Company's trademarks, trade names, copyrights,
patents or other such property so marked by Company. Distributor acknowledges
ownership by Company of trademarks, names, copyrights, patents and other such
property so marked by Company, so identified or so identifiable.

         18.2 Distributor shall not delegate any duties or assign any rights
under this Agreement or any interest herein without Company's prior written
consent.

         18.3 The validity, meaning enforceability and effect of this Agreement,
and the rights and liabilities of the parties, shall be determined in accordance
with the laws of the State of Oregon.

         18.4 Except as specifically provided in a written waiver signed by a
duly authorized officer of the party or the party seeking enforcement, the
failure to enforce or the waiver of any term of this Agreement shall not
constitute the waiver of such term at any time or in any circumstance and shall
not give rise to any restriction on or condition to the prompt, full and strict
enforcement of the terms of this Agreement.

         18.5 All notices in connection with this Agreement shall be in writing
and shall be effective upon dispatch if by telex, telegram or similar means,
upon delivery if by hand delivery, and 3 days after deposit if deposited in the
channels of the United States mails, postage prepaid, in registered form, return
receipt requested. In all cases notices shall be delivered to the other party at
the address set forth above or such other address such party may have provided
by written notice.


PAGE 8    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

         18.6 This Agreement, including any exhibits, schedules and tables
attached hereto which either have been specifically referred to herein or have
been initialed by the parties, constitute the entire agreement between the
parties with respect to the subject matter. This Agreement supersedes all prior
discussions, understandings and agreements with respect to the subject matter.

         18.7 This Agreement may be amended or supplemented only in a writing
designated as such an amendment or supplement and signed by a duly authorized
officer of the party or the party against whom enforcement is sought.

         18.8 This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same Agreement

         18.9 If any provisions of this Agreement shall be held by a court of
competent jurisdiction to be invalid, the remaining provisions of this Agreement
shall remain in full force and effect.

SECTION 19.  COMPLIANCE WITH LAW.

         19.1 Distributor agrees that it will not violate any applicable law or
regulation of any country or political subdivision thereof in performing or
purporting to perform any act arising out of or in connection with this
Agreement. Pursuant thereto, Distributor agrees to maintain such records as are
required by all applicable laws and regulations and to provide such written
assurances as are required by APT in connection therewith.

         19.2 This Agreement is subject to all applicable laws, regulations and
other statutory and administrative acts, now or hereafter in effect of the
United States and the Territory. The Distributor agrees that it will use its
best efforts to secure any licenses or permits as may now or hereafter be
required in connection with the performance of its obligations under this
Agreement, but this Agreement shall not be deemed to require any performance on
the part of either party which cannot lawfully be done pursuant to the laws,
regulations and statutory and administrative acts referred to above.


PAGE 9    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

              IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this Agreement in duplicate as of the day and year first above written.

COMPANY:                                          DISTRIBUTOR:

ADVANCED POWER TECHNOLOGY,                        RICHARDSON ELECTRONICS,
INC., a Delaware corporation                      LTD.

By             S/S                                By          S/S
  --------------------------                         ------------------------
Its:     President                                Its:
    ------------------------                          -----------------------

Date                                              Date
    ------------------------                          -----------------------


PAGE 10    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

                                    EXHIBIT A
                              AUTHORIZED LOCATIONS

<TABLE>
<S>                                       <C>
          -     North America & Hawaii    -     China (including Hong Kong)
          -     Central America           -     Japan
          -     South America             -     Southeast Asia
          -     Africa                    -     France
          -     Australia & New Zealand   -     Spain
          -     India                     -     Portugal
          -     Korea                     -     Italy
</TABLE>




COMPANY:                                          DISTRIBUTOR:

ADVANCED POWER TECHNOLOGY,                        RICHARDSON ELECTRONICS
INC., a Delaware corporation                      LTD.

By             S/S                                By          S/S
  --------------------------                         ------------------------
Its:     President                                Its:
    ------------------------                          -----------------------

Date                                              Date
    ------------------------                          -----------------------


PAGE 11    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

                                    EXHIBIT B

         PRODUCTS

                                ALL APT PRODUCTS


PAGE 12    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>

         Page 11. NORTH AMERICA DISTRIBUTOR AGREEMENT               5/96


PAGE 13    NORTH AMERICA DISTRIBUTOR AGREEMENT
<PAGE>




PAGE 14    NORTH AMERICA DISTRIBUTOR AGREEMENT
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>13
<FILENAME>ex-1011.txt
<DESCRIPTION>EXHIBIT 10.11
<TEXT>

<PAGE>

                              MANUFACTURING AGREEMENT

















[*] = CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

This agreement is made as of ____________________, 1997 by and between SIEMENS
AG, a German corporation located in Munich, Germany, hereinafter referred to as
"SIEMENS", and Advanced Power Technology, a Delaware Corporation located in
Bend, Oregon, USA, and its subsidiaries and affiliates, hereinafter referred to
as "APT".



                                     WITNESSETH:

WHEREAS, APT desires to enter into a long-term  agreement with SIEMENS for the
procurement of products to be manufactured by SIEMENS in accordance with
specifications submitted by APT, including IGBT discrete products and IGBT
processed wafers as listed in ATTACHMENT A. Attachment A can be changed every
time if both parties mutually agree in this change in writing.



NOW, THEREFORE, and in consideration of the mutual promises contained herein,
APT and SIEMENS agree as follows:



1.     MANUFACTURE OF PRODUCTS

       SIEMENS hereby agrees to manufacture certain IGBT discrete products and
       IGBT processed wafers for APT in accordance with orders for specified
       products to be communicated to SIEMENS from to time to time via fax, and
       in a accordance with specifications for those ordered products to be
       provided to-SIEMENS by APT and APT agrees to pay for such products in
       U.S. Dollars in accordance with SIEMENS's price schedules contained in
       the attached quotations.  SIEMENS agrees to be bound by the terms and
       conditions of this Agreement in connection with the manufacture and sale
       of these products.  APT is not required to purchase any minimum quantity
       of products from, nor is APT required to purchase these or similar IGBT
       discrete products and IGBT processed wafers exclusively from SIEMENS

2.     COORDINATION

       APT has identified its Vice President, Discrete Power Products, currently
       Mr. John Hess as its coordinator.  SIEMENS has identified its Senior
       Director, Power Semiconductors, currently Mr. Claus Geisler, as its
       coordinator.  The coordinators represent their companies for the
       implementation and communications of all items contained in this
       Agreement.  In the event that a coordinator is changed by either party,
       notice of such change shall be made in writing to the other party.


                                          1

<PAGE>

3.     PAYMENT

       A.     APT shall pay SIEMENS by international bank transfer, [*],
              in accordance with the agreed upon fixed schedules of product and
              processed wafer shipments.

       B.     Prices will be in U.S. Dollar.

       C.     Prices in U.S. Dollar shall be as set forth in annual quotation
              and cannot be changed during a twelve-month period after signature
              unless otherwise agreed upon in writing by both parties.  All
              prices of products included in these quotations and any future
              prices or products will be reviewed annually by both parties.  Any
              prices agreed upon for products or wafers not included in an
              annual price quotation or review will be fixed until the end of
              these twelve-month period to ensure that all pricing remains on
              the same annual price cycle.

       D.     All APT divisions, subsidiaries and other affiliated companies,
              foreign and domestic are permitted to purchase all SIEMENS items
              at the prices which appear in the above referenced quotation and
              in accordance with the terms of this Agreement.

       E.     Price per good die and wafer quantities are set forth in
              Attachment A1 and A2.Siemens and APT will review quantities on a
              yearly basis to set up the pricing.  The prices for 1998 are
              agreed.

4.     INSPECTION

       SIEMENS agrees that APT Representatives, designated by APT's Coordinator,
       shall have the right of inspection of SIEMENS's manufacturing facilities,
       the manufacturing work in progress, and those offices areas containing
       documentation and records relevant of this Agreement at normal business
       hours and after at least two (2) weeks prior written notice once a year.


5.     RETURNS

       A.     SIEMENS agrees to supply products to APT which meet the mutually
              agreed upon specifications. If, within 3 months after delivery of
              products from SIEMENS, APT determines that the products do not
              meet those specifications, SIEMENS will replace the defective
              returned products at the SIEMENS expense. Immediately upon such
              determination and' prior to any return by APT of such products,
              SIEMENS shall be so notified and shall have the option of having a
              representative of SIEMENS inspect the products being returned,
              provided that such inspections takes place within two (2) weeks of
              such notification by APT. Following such inspection or expiration
              of the two-week period, APT will ship these products back to
              SIEMENS. SIEMENS will replace such returned defective products
              which meet the mutually agreed upon specification within six (6)
              weeks following SIEMENS's receipt of the returns at any SIEMENS
              location. SIEMENS

     [*] = CONFIDENTIAL TREATMENT REQUESTED


                                          2

<PAGE>

              shall be deemed to have met the six (6) week time table if, within
              six (6) weeks, such replacement products are shipped from a
              SIEMENS facility to a common carrier for shipment to APT. Upon
              SIEMENS's failure to so ship within (6) weeks, APT will be
              entitled to receive the next subsequent shipments of any products
              from SIEMENS at no cost to APT for the goods of the shipping
              thereof, until APT has received the equivalent value of goods
              which were not promptly replaced. In such circumstances the
              equivalent value shall be the original cost of the goods which
              were not properly replaced, without regard to any subsequent price
              changes for the same product.

       B.     No products, other than replacement products, will be accepted by
              APT with date codes older than six (6) months prior to the date of
              receipt at the APT facility. For replacement, date codes will be
              accepted which are up to six (6) months prior to the date of the
              receipt at SIEMENS of returned defective products. Under no
              circumstances will APT accept any replacement products with date
              codes older than 26 weeks prior to the date of receipt at the APT
              facility.

6.     PACKAGING BY SIEMENS

       A.     All packaging will be of anti static materials in accordance with
              the mutually agreed upon specifications.

       B.     Quantities must be packaged as described in Attachment B.

       C.     Boxes shall be taped closed and/or sealed in plastic.

       D.     Packaging must be resistant to lead bend or unit damage of any
              kind.

       E.     Changes in packaging, even if within the mutually agreed upon
              specifications, must be approved by both parties.

7.     QUALITY

       A.     After qualification, SIEMENS may not carry out any significant
              alteration to the product or process which affects the
              suitability, functions, processing or reliability, without
              previously informing the customer. The customer must be informed
              three (3) months before the planned commencement of delivery and
              must receive a detailed description of the alteration. The
              customer will announce his decision within 45 days.

       B.     Device marking will be in accordance with the mutually agreed upon
              specifications.

8.     SHIPPING PROCEDURES

       A.     SIEMENS shall provide APT's Coordinator with a confirmation of
              APT's order, in which the delivery date is announced.


                                          3
<PAGE>

       B.     APT agrees to pay shipping costs F.O.B. Germany for the wafers and
              products shipments other than replacement wafers and products.

       C.     SIEMENS may be required to make deliveries to other specified APT
              locations after procedures are established and agreed upon by both
              parties. Initially, product will be shipped to APT, Bend, USA or
              APTE, Merignac, France, only.

9.     ON-TIME DELIVERY/SCHEDULING

       A.     If the delivery date is by day, SIEMENS shall not deliver more
              than seven (7) days earlier or three (3) days later as the agreed
              delivery day.

              In case SIEMENS realizes that he cannot adhere to the agreed
              delivery date, he shall without delay inform APT and indicate the
              prospective duration of the delay. The Parties shall immediately
              endeavour to find reasonable remedial measures.

              If SIEMENS is in delay with deliveries for which he is responsible
              and if APT  substantiates that he has suffered damages due to the
              delay, he may claim per full  week of delay liquidated damages of
              0,5% of the price of the delayed SIEMENS  Products up to a maximum
              amount of 5% of such price. Any further claims for  damages due to
              the delay shall be excluded.

              APT may terminate the relevant separate purchase contract without
              incurring any liability, provided the Products have not been
              delivered within a reasonable grace period set by APT. Further APT
              may terminate this Agreement, if, during a  nine-week period,
              SIEMENS' on-time delivery performance is less than 85 % in
              quantity for any four (4) weeks of that nine-weeks period.

       B.     a)     Finished Goods

                     APT will provide a thirteen (13) week order requirement
                     schedule to  SIEMENS on a monthly basis with nine (9) weeks
                     being firm and four (4)  weeks floating. The fixed nine (9)
                     week requirement may only be modified  with the consent of
                     both parties. The four (4) week floating requirement
                     schedule may only be reduced by either party by up to 20 %
                     quantity.

              b)     Wafers/Die

                     APT will provide a fourteen (14) week order requirement
                     schedule to SIEMENS on a monthly basis with six (6) weeks
                     being firm and eight (8) weeks floating. The fixed six (6)
                     weeks requirement may only be modified with the consent of
                     both parties. The first four (4) week floating requirement
                     schedule may only be reduced by either party by up to 20 %
                     quantity. The next four (4) week floating requirement
                     schedule may only be reduced by either party by up to 40 %
                     quantity.


                                          4
<PAGE>

10.    PROPRIETARY RIGHTS

       A.     If a third party raises justified claims against APT for
              infringement of US Patents by wafers or other products supplied by
              SIEMENS (hereinafter "Products"), SIEMENS shall at its cost
              acquire for APT a right to use the 'Product. In case this is not
              possible at economically reasonable conditions, SIEMENS' liability
              for infringement of any intellectual property rights or copy
              rights shall be limited as follows:

              (a)    Seller shall indemnify and hold harmless Buyer against any
                     legal costs and  damages of Buyer caused by Protective
                     Right infringement by the Product  as such up to the amount
                     of an appropriate license fee, which the owner of    the
                     Protective Rights could claim directly from Seller for the
                     use of the  infringing Product.

              (b)    For future deliveries SIEMENS shall, if economically
                     reasonable, at its option and in compliance with the
                     specifications modify the Product to become non infringing
                     or deliver an equivalent non infringing product.

              Claims shall be deemed justified only if they are acknowledged as
              such by Seller or finally adjudicated as such by a court of
              competent jurisdiction.

       B.     The obligations of SIEMENS mentioned in Section 10.A above apply
              under the precondition that APT informs SIEMENS without delay in
              writing of any claims for infringement of Protective Rights, does
              not accept on its own any such claims and conducts any disputes,
              including settlements out of court, only in agreement with
              SIEMENS.

       C.     Any liability of SIEMENS shall also be excluded, if the
              infringement of US patents results from specific instructions
              given by APT or the fact that the Product has been changed by APT
              or is being used in conjunction with products not delivered by
              SIEMENS, which convert an otherwise non-infringing Product to an
              infringing Product.

       D.     Any liability of SIEMENS pursuant to Section 10.A shall be
              excluded, if the infringement of US patents is not caused by the
              Product itself, for example if such infringement results from the
              application of the Product (including any application specific
              circuitry implemented in the Product), unless SIEMENS did offer
              the Product especially for such infringing application.

11.    RISK, TITLE

       A.     Risk of loss or damages shall pass onto APT according to the
              clause of the incoterms 990 as defined in Section 8. B.

       B.     SIEMENS retains title to the Products until all payments due to
              SIEMENS have been finally effected by APT.


                                          5
<PAGE>

12.    WARRANTY

       A.     The warranty period shall be [*] starting on the date the risk of
              loss or damage has passed onto APT according to Section 11 A.

       B.     SIEMENS' liability for any further damages resulting from the
              defects) of the Products shall be limited pursuant to the
              stipulations of Section 13.

13.    LIABILITY

       A.     SIEMENS assumes liability for any personal injury for which he is
              found responsible without limitation. If found. responsible for
              property damages of APT, SIEMENS shall indemnify APT for expenses
              incurred for restoration of the damaged property up to a maximum
              amount of DM 1 Million per damage event.

       B.     Apart from warranties and liabilities expressly stipulated in this
              Agreement, SIEMENS disclaims ail liability regardless of the cause
              in law, in particular the liability for indirect or consequential
              damages arising from interrupted operation, loss of profits, loss
              of information and data, unless in cases of gross negligence,
              intent, lack of assured characteristics or in any cases where
              liability is mandatory at law.

14.    NON-DISCLOSURE

       A.     In consideration of the disclosure of Proprietary and Confidential
              information by both parties to each other, both parties agree that
              the information relating to requirements, processes,
              specifications, schedules, materials, financial data and pricing
              exchanged between parties is hereby designated as Proprietary and
              Confidential by APT and SIEMENS.

       B.      It is agreed that for a period of ten (10) years, both parties
              shall (1) restrict dissemination of the above as Proprietary and
              Confidential information to only those employees who must be
              directly involved in the manufacturing of wafers and products for
              APT and (2) use the same degree of care as its uses for its own
              information of like importance against disclosure to other
              employees within each party or others outside of it.

       C.     Any breach of these Non-Disclosure restrictions shall be deemed as
              a breach of the Manufacturing Agreement. Both Parties shall pursue
              all remedies of law for such breaches.

       D.     This obligation shall not apply to information, which is or
              becomes public knowledge or which is provably independently
              developed or lawfully received from a third party.

15.    NON-ASSIGNMENT

       Neither party is entitled to assign this Agreement without the prior
       written consent of the


       [*] = CONFIDENTIAL TREATMENT REQUESTED


                                          6
<PAGE>

       other party.

16.    APPLICABLE LAW AND JURISDICTION

       A.     This Agreement and individual purchase contracts signed between
              the Parties hereunder shall be governed by and construed in
              accordance with the law in force in Switzerland without reference
              to its conflicts of law provisions. The application of the United
              Nations Convention on Contracts for the International Sale of
              Goods of April 11, 1980 shall be excluded.

       B.      All disputes arising out of or in connection with this Agreement
              or individual  purchase contracts signed hereunder, including any
              question regarding their  existence, validity or termination,
              shall be finally settled under the Rules of  Arbitration of the
              International Chamber of Commerce, Paris ("Rules") by three
              arbitrators in accordance with the said Rules.

       C.     Each party shall nominate one arbitrator for confirmation by the
              competent  authority under the applicable Rules ("Appointing
              Authority"). Both arbitrators shall  agree on the third arbitrator
              within 30 days. Should the two arbitrators fail within  the above
              time-limit to reach agreement on the third arbitrator, he shall be
              appointed by the Appointing Authority.

       D.     The seat of arbitration shall be Zurich. The procedural law of
              this place shall apply  where the Rules are silent.

       E.     The language to be used in the arbitration proceeding shall be
              English.

17.    DURATION OF THIS AGREEMENT

       The effective date of this Agreement shall be the date on which it is
       signed by the last party to sign it. This Agreement shall continue until
       it is terminated by either party, provided such terminating party gives
       the other party twelve (12) months written notice.

       Upon such notice of termination, the Coordinators for both parties shall
       proceed with the details of reducing schedules and  returning to APT  any
       previously supplied documentation. The intent is to provide an orderly
       transition by both parties, during the notification period until the
       final date of termination.

18.    AMENDMENT AND WAIVER

       This Agreement may be amended from time to time only by written document
       signed by the parties. No provisions of this Agreement can be waived
       except by a written document signed by the party waiving the provision,
       nor shall any failure to object to any breach of a provision of this
       Agreement waive the right to object to a subsequent breach of the same or
       any other provision.


                                          7

<PAGE>

19.    PUBLICITY

       SIEMENS and APT shall consult with one another before issuing any press
       release or public announcement about the transactions contemplated by
       this Agreement. Except as required by applicable law, neither SIEMENS nor
       APT shall issue any press release or other public announcement without
       the consent of the other party, which consent shall not be unreasonably
       withheld.


20.    FORCE MAJEURE

       Neither party will be liable for delay in performance or failure to
       perform, in whole or in  part, the terms of this Agreement when due to
       labor dispute, strike, war or act of war  (whether an actual declaration
       is made or not), insurrection, riot, civil commotion, act of  public
       enemy, fire, flood, or other act of God, act of any governmental
       authority, judicial  actions, or other causes beyond the control of such
       party, which are similar to, but not  limited to, the matters herein
       enumerated, and any such delay or failure shall not be  considered a
       breach of the Agreement. Either party shall immediately notify the other
       party of any circumstances which occurs which may prevent or
       significantly delay delivery  of processed wafers and products as is
       provides herein.



The parties hereto have executed this Agreement as of the day and year written
below:



APT                                SIEMENS,


By:           S/S                  By:           S/S
   -------------------------          -------------------------------
Name: John Hess                    Name: Claus Geisler


Title: Vice President              Title: Senior Director, Power Semiconductors


-Date :       10/17/97             Date:         10/14/97
       -------------------------        -------------------------------


                                          8

<PAGE>

                                             1998 WAFER / DIE PRICING

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                     DIE         APPROX        1999       1998 COST
                        WAFER                CHIP       PART                        SIZE        GOOD DIE       WAFER       PER GOOD
TYPE                  SIZE INS     TECH      NAME        NO      VOLT    AMPS       SQ MN      PER WAFER     COST $US       DIE $US
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>      <C>        <C>       <C>     <C>       <C>         <C>           <C>          <C>
SIGC12T60                 5         PT      L7222B     BUP400     600    10.0       12.30         [*]
SIGC14T60                 5         PT      L7232B     BUP401     600    15.0       14.40         [*]
SIGC18T60                 5         PT      L7242B     BUP402     600    20.0       18.50         [*]
SIGC25T60                 5         PT      L7262B     BUP403     600    30.0       25.70         [*]
SIGC42T60                 5         PT      L7272B     BUP604     600    50.0       42.30         [*]
SIGC81T60R2               5         PT      L7162B      BSM...    600    75.0       81.00         [*]
SIGC156T60R2              5         PT      L7282B      BSM...    600    200.0     156.30         [*]

SIGC12T60N                5        NPT      L7222E      BSM...    600    10.0       12.30         [*]           [*]          [*]
SIGC14T60N                5        NPT      L7232E      BSM...    600    15.0       14.40         [*]           [*]          [*]
SIGC18T60N                5        NPT      L7242E      BSM...    600    20.0       18.50         [*]           [*]          [*]
SIGC25T60N                5        NPT      L7262E      BSM...    600    30.0       25.70         [*]           [*]          [*]
SIGC42T60N                5        NPT      L7272E      BSM...    600    50.0       42.30         [*]           [*]          [*]

SIGC6T120                 5        NPT                           1200     1.5       6.00                        [*]          [*]
SIGC14T120                5        NPT                           1200     5.0       14.40                       [*]          [*]
SIGC16T120                5        NPT                           1200     8.0       16.00                       [*]          [*]
SIGC25T120                5        NPT                           1200    15.0       25.70                       [*]          [*]
SIGC42T120                5        NPT                           1200    25.0       42.30                       [*]          [*]
SIGC81T120R2              5        NPT                           1200    50.0       81.00                       [*]          [*]
SIGC121T120R2             5        NPT                           1200    75.0      121.00                       [*]          [*]
SIGC156T120R2             5        NPT                           1200    100.0     156.30                       [*]          [*]

SIGC16T120C               6        NPT      L7131M      BSM...   1200     8.0       16.00         [*]           [*]          [*]
SIGC25T120C               6        NPT      L7141M     BUP213    1200    15.0       25.87         [*]           [*]          [*]
SIGC42T120C               6        NPT      L7151M     BUP314    1200    25.0       42.30         [*]           [*]          [*]
SIGC81T120R2C             6        NPT      L7161M      BSM...   1200    50.0       81.00         [*]           [*]          [*]
SIGC121T120R2C            6        NPT      L7171M      BSM...   1200    75.0      121.00         [*]           [*]          [*]
SIGC156T120R2C            6        NPT      L7181M      BSM...   1200    100.0     156.00         [*]           [*]          [*]

SIGC16T120CL              6        NPT      L7131P      BSM...   1200     8.0       16.00         [*]           [*]          [*]
SIGC25T120CL              6        NPT      L7141P      BSM...   1200    15.0       25.87         [*]           [*]          [*]
SIGC42T120CL              6        NPT      L7151P      BSM...   1200    25.0       42.30         [*]           [*]          [*]
SIGC81T120R2CL            6        NPT      L7161P      BSM...   1200    50.0       81.00         [*]           [*]          [*]
SIGC121T120R2CL           6        NPT      L7171P      BSM...   1200    75.0      121.00         [*]           [*]          [*]
SIGC156T120R2CL           6        NPT      L7181P      BSM...   1200    100.0     156.00         [*]           [*]          [*]

SIGC42T170                5        NPT      L7101B     BUP309    1700    15.0       42.30         [*]           [*]          [*]
SIGC144T170               5        NPT      L7071B      BSM...   1700    50.0      144.00         [*]           [*]          [*]
SIGC185T170               5        NPT      L7081B      BSM...   1700    75.0      185.00         [*]           [*]          [*]
</TABLE>


[*] = CONFIDENTIAL TREATMENT REQUESTED

                                       9

<PAGE>

                                   Attachment A2


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                   "price projection"
---------------------------------------------------------------------------------------------
                               1998                 1999                2000
---------------------------------------------------------------------------------------------
<S>                      <C>    <C>    <C>    <C>    <C>    <C>    <C>   <C>    <C>
number of 125mm
(total number of         1.0    1.5    3.5    3.5    6.5    13.5   5.0   10.0   20.0
wafer in thousands)
---------------------------------------------------------------------------------------------
SIGC42T60N               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIGC42T120               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIBC81T120R2C            [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
Price in U$ per wafer.



Die pricing related to above wafer quantities:
---------------------------------------------------------------------------------------------
SIGC42T60N               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIGC42T120               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIBC81T120R2C            [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
Price in U$ per wafer.
</TABLE>



All other types related to these manner.








[*] = CONFIDENTIAL TREATMENT REQUESTED

                                          10
<PAGE>

                                    ATTACHMENT B


             Semiconductor Group, Technical Regulation No. 19, Packing
                           A66003-R19-X-*-7635 dd. 07.96















                                          11

<PAGE>

                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S><C>
1    GENERAL INFORMATION ON PACKING. . . . . . . . . . . . . . . . . . . . . . . . .1

     1.1  Terminology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.2  Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     1.3  Contents labeling. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     1.4  Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

     1.5  Organizational units involved. . . . . . . . . . . . . . . . . . . . . . .5

     1.6  Documents referred to. . . . . . . . . . . . . . . . . . . . . . . . . . .5

     1.7  Other documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

2    PACKING FOR WAFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.1  Functional packing . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.2  Packing procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.3  Identification for internal transport from one site to another
     (including subcontractors). . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.4  Identification of incoming deliveries'to the VKL for external
     customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     2.5  Transport packing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     2.6  Identification of transport packing. . . . . . . . . . . . . . . . . . . .8

3    PACKING COMPONENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     3.1  Functional packing . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     3.2  Identification for transport to the VKL. . . . . . . . . . . . . . . . . .9

     3.3  Transport packing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

     3.4  Sending to Dispatch. . . . . . . . . . . . . . . . . . . . . . . . . . . .9

     3.4.1     Deliveries received infunctional packing. . . . . . . . . . . . . . .9

     3.4.2     Deliveries received in transport packing. . . . . . . . . . . . . . 10

4    APPENDIX: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10


<PAGE>

                                  TABLE OF CONTENTS

     4.1  Example: Wafer packing . . . . . . . . . . . . . . . . . . . . . . . . . 10

     4.2  Example: Module packing. . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
 RELEASE              OFFICE                  NAME             SITE          TELEPHONE       DATE           SIGNATURE
----------------------------------------------------------------------------------------------------------------------------
 <S>                  <C>                     <C>              <C>           <C>             <C>            <C>
 Author               HL DOK                  Diebold          Mch B         2865            7/10/96        sgd. Diebold
----------------------------------------------------------------------------------------------------------------------------
 Checked by           HL R STA LV             GraBinger        Rgb W         2682            7/10/96        sgd. GraBinger
----------------------------------------------------------------------------------------------------------------------------
 Checked by           HL R CI MT              Seitz            Rgb W         2020            15/10/96       sgd. Seitz
----------------------------------------------------------------------------------------------------------------------------
</TABLE>













<PAGE>

1.   GENERAL INFORMATION ON PACKING


The aim of this guideline is to ensure that the packing used for products of the
Semiconductor Group is appropriate for the conditions to which it will be
subject, and that the products arrive at the end of the transport chain
undamaged. The guideline describes the components which comprise the packing in
each case.  It sets out the general principles for the packing and transport of
HL products.


1.1  TERMINOLOGY

The following definitions of terms are based on DIN 55 405 (Packaging; Concepts;
Introduction; Pt1 to Pt7)


PACK GOODS

Goods which are to be packed or are packed. Examples: undiced wafers, diced
wafers, components.

FUNCTIONAL PACKING = PACKAGING

Product made of packing materials which is designed to enclose or hold together
the pack goods.  Functional packing means: the primary protection against
breakage, fixed quantities, and possibly also subsequent machine handling of the
pack goods.  Examples of functional packing/packaging: wafer boxes, wafer
canisters, foil rings for diced chips, foil bags, tape, reels, tubes, trays.

PACKING AIDS

A collective term for aids which are used in conjunction with the packing
materials for packing purposes. Examples of packing aids: adhesive tape, labels,
silica gel, foam padding, transparent foil.

PACKING MATERIAL

Materials/loose packing from which the packaging and packing aids are composed.

PRODUCT PACKING (ALSO REFERRED TO AS TRANSPORT PACKING)


Packing, the form of which is determined by the transport conditions, and which
generally serves as the outermost packing of the functional packing.

TRANSPORT PACKING

Cuboidal packing, consisting of one of more parts, which can be closed up, the
form of which is

<PAGE>

determined by the transport conditions, e.g. aluminum box, case made of solid
and/or corrugated cardboard.

PACKAGE

The result of combining the pack goods and the packing, particularly suitable
for transport.

AIRFREIGHT CONTAINER

A container for airfreight, with the following characteristics: durable
construction for repeated use, transport of goods without repacking, easy to
load and unload, simple to handle when moved from one mode of transport to
another, volume of at least 1 m3.


1.2  FUNDAMENTALS

The packing must be constructed so as to satisfy SN 10 250 Part 1 - Fundamentals
for Packaging Engineering (Planning and Objectives).


The functions of packing are described in SN 10 250, Part 2 - Functions. The
departments in the Semiconductor Group which deal with packing are responsible
for these functions.

New forms of packing must always be the subject of a request. The required
application is described in Org-Handbook Guideline B 5.6,Guideline of Packing
Materials - Part land 2.

HL Packing Coordination issues lists of each of the permitted packing materials.
In the case of new packing materials, for multi-use packing, and the recycling
of packaging and packing aids, the UAS section should also be involved. In this
context, refer to DIN 6120.

When planning and developing packing, reference should be made to SN 10 250,
Fundamentals for Packaging Engineering Attachment 1, "List of questions for use
in selecting the packing". Before new forms of packing, packaging and packing
aids are authorized, these questions should be considered (permitted packing
materials, multi-use, disposal, transport simulation, costs). Items of packing
which have already been authorized should be checked regularly to ensure that
they meet the requirements of their conditions of use (continual improvement
process).

Packaging and packing aids should be reused. The decisive factors are the
financial aspects of return transport and the environmental protection
regulations. Examples of reusable packaging are wafer boxes, wafer canisters,
transport containers with padded inserts, tubes and trays.


1.3  CONTENTS LABELING

The integrity or uniformity of the product within a packing unit must meet the
requirements of SN 72 500 Parts 2, 3, 21 and any additional agreed customer
requirements.

Every item of product packing must have an unambiguous and easily readable
statement of its

<PAGE>

contents affixed. This will take the form of an adhesive label, a tag or a
barcode product label (BPL) as described in TR 32.
The labels will be affixed to the functional/transport packing. The product will
be held in the VKL (sales store) with the label, so that it can be identified
for later processing.


1.4  SCOPE

This guideline applies throughout HL, for all Divisions (GGs) and sites.


1.5  ORGANIZATIONAL UNITS INVOLVED

<TABLE>
<CAPTION>
     -------------------------------------------------------------------------
     Unit                               Primary task(s) in relation to packing
     -------------------------------------------------------------------------
     <S>                                <C>
     MT                                 Devise forms of packing, simulate
                                        transport
     -------------------------------------------------------------------------
     Development, MT, Production        Request new forms of packing and
                                        changes to packing; draw up technical
                                        terms of supply for packing materials
     -------------------------------------------------------------------------
     HL Packing Coordinator             Check packing materials
     -------------------------------------------------------------------------
     Environmental section (UAS)        Check reuse / disposal of packaging
     -------------------------------------------------------------------------
     Production units involved,         Produce APAs and EPAs covering
     in the testing area, stores,       packing, carriage and unpacking
     dispatch
     -------------------------------------------------------------------------
     Wafer production test area         Pack wafers in their functional
                                        packing and affix identifiers
     -------------------------------------------------------------------------
     Module testing area                Pack modules in their product packing
                                        and affix identifiers
     -------------------------------------------------------------------------
     Goods receiving point              Take delivery of packages, check
                                        delivery, report damage
     -------------------------------------------------------------------------
     Dispatch point (VKL)               Prepare packages for dispatch and hand
                                        over to the carrier
     -------------------------------------------------------------------------
     Production, subsequent processing  Unpack, check and report damage
     -------------------------------------------------------------------------
</TABLE>

1.6    DOCUMENTS REFERRED TO

DIN 55 405           Packaging; Concepts; Introduction; Ptl to Pt7


SN 10 250            Fundamentals for Packaging Engineering
                     Part 1        Planning, Objects
                     Part 2        Function
                     Attachment

SN 72 500            Technical Terms of Delivery for electrical/ electronic
                     Components
                     Part 1        General
                     Part 2        Integrated Circuits
                     Part 3        Discrete Semiconductor Devices
                     Part 21       Semiconductor Dice

Org-Handbook Guideline B 5.6
                     Guideline of Packing Materials
                     Part 1 Shipping to Customer

<PAGE>

                     Part 2 Supplier's Packaging

DIN 6120             Marking of packaging materials and packages for reclaiming
                     recycling
                     Part 1: Plastic packaging materials and packages; Graphik
                     symboles.
                     Part 2: Supplementary marking

DIN EN 20 780        Packaging; Pictorial marking for the handling of goods (ISO
                     780:1985) German Version EN 20780:1993

SN 66 769            Shipping marks for packages; Pictorial labels

SN 68 425            Electrostatic sensitive devices; Labels for packages

APAs and EPAs        Process specifications/ Single process specifications

TR 32                Product Labels

SN 18630             Marking of packages; Machine-readable lettering
                     Part 1: Labels for shipping packages
                     Part 2: Labels for product packages


1.7    OTHER DOCUMENTS

Technical drawings and purchase specifications must be available for all the
packaging materials required for packing (functional, product and transport
packing). This is the responsibility of Development, MT and Production.


The instructions (APAs and/or EPAs) required at each of the workplaces concerned
must be produced by the responsible organizational units (FV, PPT) in the
various plants.


2.     PACKING FOR WAFERS

Wafers which are being transported off the site where they are produced
require special functional, product and transport packing, to prevent them
from being damaged.

2.1    FUNCTIONAL PACKING

Wafer diameter, wafer thickness and the transport route affect the packing
materials and aids which should be used. The requirements specified in the
applicable APAs must be adhered to.


Table 1 contains examples of forms of functional packing which are currently
being used for the delivery of wafers.

<PAGE>

TABLE I FORMS OF FUNCTIONAL PACKING FOR WAFERS FROM DP/ST/CI/OS (EXAMPLES)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
    Wafer                       Packing material          Packing aid
--------------------------------------------------------------------------------
<S>                         <C>                         <C>
Undiced                     Wafer box, foil bag
                            ----------------------------------------------------
                            Wafer canister              Support plates
                                                        Transparent foil disks
                                                        Foam inlays
--------------------------------------------------------------------------------
Diced                       Foil ring, foil tubing      Insulating pressboard
                                                        disks
                                                        Transparent foil disks
                            ----------------------------------------------------
                            Waffle pack                 Drying agent
                            Foil
                            Collapsible box
--------------------------------------------------------------------------------
</TABLE>

2.2    PACKING PROCEDURE

Various links in the transport chain connect the HL sites with external
customers, so that the packing will be designed for the corresponding
conditions. The various packing procedures are specified in the appropriate
process instructions (APAs).


2.3    IDENTIFICATION FOR INTERNAL TRANSPORT FROM ONE SITE TO ANOTHER (INCLUDING
       SUBCONTRACTORS)

The pack goods should be clearly identified by an adhesive label or barcode
label attached to an appropriate part of the packaging.
Adhesive labels or tags should be affixed to the box or canister. The
corresponding traveler protocol should be put with the packing.


2.4    IDENTIFICATION OF INCOMING DELIVERIES TO THE VKL FOR EXTERNAL CUSTOMERS

For unambiguous identification of pack goods, adhesive labels or barcode labels
should be affixed to a suitable item of the packaging, with its quality seal
intact.

The adhesive label or tag should be affixed to the box or canister before it is
sealed into heat-welded foil. The corresponding customer lot protocol should be
put with the packing.



2.5    TRANSPORT PACKING

The transport chain, the pack goods and the functional packing determine what
forms of transport packing should be used.
For consignments of undiced wafers which are being transported by heavy goods
vehicle, (e.g. from Villach to Munich), wafer transport containers or transport
boxes are used for transport packing.
Products which need special security, e.g. wafers for smart cards, must only be
transported in

<PAGE>

lockable wafer-transport containers.
Batches of wafers should not be split.
For consignments of chips (diced wafers) the form of packing used for transport
comprises containers with polystyrene foam covers in transport boxes, or special
boxes with foam in lays in transport boxes with rigid foam inserts. This type of
packing is intended for external customers, contract manufacturers or HL sites.
Transport boxes from blank wafer suppliers can be used if this saves time and
reduces costs. The external companies' designations can if necessary be covered
with neutral adhesive paper tape.
The appropriate handling icons and transport markings for the goods should be
affixed to the transport boxes. These should be printed as specified in DIN EN
20 780, Packaging; Pictorial marking for the handling of goods, and SN 66 769,
Shipping marks for packages; Pictorial labels.
When wafers are being air-freighted, the packages should be packed as 'loose
cargo' batches or in LD3 airfreight containers. When doing so, care must be
taken that any movement of the transport boxes is prevented by packing inserts.


2.6    IDENTIFICATION OF TRANSPORT PACKING

An adhesive address label will be put on the transport packing. The freight
documentation will be put into a pocket in the position provided for the
purpose.



3.     PACKING COMPONENTS

3.1    FUNCTIONAL PACKING

Table 2 shows examples of the functional packing currently used for the various
components.



TABLE 2 FUNCTIONAL PACKING FOR COMPONENTS (EXAMPLES)

<TABLE>
<CAPTION>
       ------------------------------------------------------------------
              Component                          Functional Packing
       ------------------------------------------------------------------
       <S>                                <C>
       Components                         Tube
       ------------------------------------------------------------------
                                          Tape and reel
       ------------------------------------------------------------------
                                          Tray
       ------------------------------------------------------------------
                                          Carrier
       ------------------------------------------------------------------
                                          Box
       ------------------------------------------------------------------
                                          Blister
       ------------------------------------------------------------------
       Modules                            Tape and reel
       ------------------------------------------------------------------
       Modules (SIMM/DIMM)                Tray
       ------------------------------------------------------------------
</TABLE>

The protection which is to be afforded to the components determines whether the
packaging used for the functional packing should be further enclosed, and how.

The type of component and the transport route determine whether the packaging is
heat-welded,


<PAGE>

whether in an atmosphere of air or N2 or evacuated, and whether protected from
moisture. Further details are laid down in the appropriate APAs.

3.2    IDENTIFICATION FOR TRANSPORT TO THE VKL

The BPL (= barcode product label) is affixed to the functional and product
packing in the test area.

Further details are laid down in the appropriate APAs.

3.3    TRANSPORT PACKING

The transport chain, the pack goods and the functional packing determine what
form of transport packing is to be used.


3.4    SENDING TO DISPATCH

On the basis of store withdrawal forms, the VKL collects together the components
to make up deliveries, and sends them to Dispatch.


Note: The functional packing must not be opened by the VKL or Dispatch.

3.4.1  DELIVERIES RECEIVED IN FUNCTIONAL PACKING

The items in their functional packing (e.g. bag), sealed and labeled (e.g. with
a BPL), are sent to Dispatch for each order separately, together with the
delivery documentation. Depending on their volume and transport route, one or
more items in their functional packing are packed into transport boxes. Empty
spaces must be filled with loose packing. An address label is affixed to each
package, and each delivery is provided with delivery documentation (e.g.
delivery note/customs documentation).


3.4.2  DELIVERIES RECEIVED IN TRANSPORT PACKING

Items in product packing, sealed and labeled (e.g. with a BPL), are sent to
Dispatch for each order separately, together with the delivery documentation.
Depending on the extent of the delivery, the packages are sent individually or
are collected together into a transport box. Empty spaces must be filled with
loose packing.

An address label is affixed to each package, and each delivery is provided with
delivery documentation (e.g. delivery note/customs documentation).




4.     APPENDIX:


4.1    EXAMPLE: WAFER PACKING

<PAGE>


                           Graphics Depicting:


       Pack goods           Functional packing          Functional packing

       System wafer         Wafer box                   Wafer canister



       Package                            Package
       Wafer box with wafers              Wafer canister with wafers













TRANSPORT PACKING FILLED WITH WAFER BOXES AND WAFER CANISTERS




<PAGE>


                           Graphics Depicting:


AIRFREIGHT CONTAINER FILLED WITH PACKAGES




4.2    EXAMPLE: MODULE PACKING













<TABLE>
<CAPTION>
Pack goods           Functional packing   Product packing
----------           ------------------   ---------------
<S>                  <C>                  <C>
                     = Packaging          in this case also: transport packing

Component            Bar
</TABLE>





<PAGE>


                           Graphics Depicting:


     PACKAGE                       TRANSPORT PACKING













TRANSPORT PACKING, FILLED










                         PACKAGE

<PAGE>




                                Graphics Depicting:
                             SIEMENS IGBT-PRODUCT RANGE


<PAGE>



                                Graphics Depicting:
                           SIEMENS DUO-PACK PRODUCT RANGE







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>14
<FILENAME>ex-1012.txt
<DESCRIPTION>EXHIBIT 10.12
<TEXT>

<PAGE>

                   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
<PAGE>

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.


<PAGE>

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.


<PAGE>

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.


<PAGE>

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.


<PAGE>

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
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>15
<FILENAME>ex-1013.txt
<DESCRIPTION>EXHIBIT 10.13
<TEXT>

<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


---------------------------------------------------------------
Comments
---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------
Kanban starts Nov. 99
---------------------------------------------------------------

---------------------------------------------------------------
will stay with IEC until 3-00
---------------------------------------------------------------
will stay with IEC until 3-00
---------------------------------------------------------------
Took off kanban 9/13 - Demand moved to 1541098
---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

---------------------------------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>16
<FILENAME>ex-1014.txt
<DESCRIPTION>EXHIBIT 10.14
<TEXT>

<PAGE>

                                 SUPPLY CONTRACT

Advanced Power Technology intends to secure silicon wafers for the manufacture
of power switch devices. Wacker 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
Wacker Siltronic Corporation (WSC) located in Portland, OR.

1.0  Term of Agreement

     1.1  Two (2) year agreement commencing January 01, 1999 and expiring on
          December 31, 2000.

     1.2  Renegotiating discussions will commence each September of the final
          year for an extension of an additional year.

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

2.0  Volume

     2.1  WSC will be given a [ * ] minimum member share of APT's [ * ]
          business per year.

     2.2  Should it become necessary, WSC agrees to support [ * ] of APT's
          requirements.

3.0  Pricing

     3.1  Pricing is set forth below:
          1999 = [ * ]
          2000 = [ * ]

          See attachment # 1

     3.2  WSC and APT agree, through a committed effort to come up with [ * ]
                                                                through a joint
          "Reduction of WSC Production Costs" project in 1999.
          [ * ]                                       . A list of ideas will be
          discussed between APT and WSC by the end of March 1999.

     3.3  Where possible, WSC will "help" keep APT competitive in both price and
          technology through cost reduction programs and technology
          improvements.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED


                                       1
<PAGE>

4.0  Payment and Freight Terms

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

     4.2  F.O.B. Wacker 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. WSC will incur all expedited freight costs
          for late shipments caused by WSC.

5.0  Substrate Buffer Stock

     5.1  WSC 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  WSC agrees to replenish the Substrate Buffer Stock within four weeks.

6.0  Lead-time

     6.1  WSC 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.

     6.2  APT agrees to give WSC a five week "rolling forecast". The first will
          be firm, the second and third week may change [ * ], the fourth week
          may change [ * ] and the fifth week may change [ * ].

     6.3  APT agrees to give WSC an additional eight week visibility beyond the
          five week "rolling forecast".

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

          See attachment # 2 for 6.2, 6.3, 6.4

7.0  Quality

     7.1  WSC warrants that their products shall, at the time of delivery, be 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 WSC Production
          Cost" project.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED


                                       2
<PAGE>

     8.2  WSC 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 WSC agree to keep secret such information and to take the
          necessary measures to prevent complete or partial disclosure to third
          parties.

10.0 Force Majeure

     10.1   Pertaining to Force Majeure, APT and/or WSC 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   WSC'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 WSC 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 WSC.

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



WACKER SILTRONIC CORPORATION           ADVANCED POWER TECHNOLOGY

By:   S/S                              By:   S/S
   ----------------------------           ----------------------------
Title:  Account Manager                Title:  C.E.O.
      -------------------------              -------------------------
Date:  12/17/98                        Date:  12/17/98
     --------------------------             --------------------------


                                       3
<PAGE>






                                  ATTACHMENT #1

                                     PRICING


<TABLE>
<CAPTION>
<S>           <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
PART NUMBER   1010-H    1020-I    1030-H    1040-I    1050-P    1060-M    1080-J    1100-K    1106-D    1120-E    1126-
1998 Price         [ * ]          [ * ]         [ * ]        [ * ]        [ * ]      [ * ]    [ * ]     [ * ]     [ * ]
1999 Price         [ * ]          [ * ]         [ * ]        [ * ]        [ * ]      [ * ]    [ * ]     [ * ]     [ * ]
2000 Price         [ * ]          [ * ]         [ * ]        [ * ]        [ * ]      [ * ]    [ * ]     [ * ]     [ * ]
</TABLE>

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                       4



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>17
<FILENAME>ex-1015.txt
<DESCRIPTION>EXHIBIT 10.15
<TEXT>

<PAGE>

                                MASTER AGREEMENT


         This Master Agreement ("Master Agreement") is entered into as of the
15th day of October, 1999

         By and between

         Liaoning Huahai Power Electronics Co. Ltd., a Chinese corporation
located at No. B Villa Area Xinghai Road JETDA, Jinzhou, Liaoning, China
(referred to as "LHPE"),

         And

         Advanced Power Technology, Inc., a Delaware corporation located at 405
S.W. Columbia Street, Bend, Oregon, USA (APT US) and its fully-owned subsidiary
Advanced Power Technology Europe SA, a French corporation, located at Chemin de
Magret, 33700 Merignac, France (APTE) (together referred to as "APT").

         WHEREAS, APT has been introduced to LHPE by Mr. Raymond Zhou from
ZaSTECH, Inc.; and

         WHEREAS, meetings and discussions have taken place on March 12, 1999
and on July 15, 1999 at APT US, on August 26, 1999 at APT Europe, on August 29,
1999 in Paris, France, and on October 13 to 15, 1999 in Jinzhou, Liaoning
Province, China; and

         WHEREAS, LHPE and APT have decided to enter into a strategic alliance.
Pursuant to this strategic alliance the parties will cooperate on:

         1. Distribution of APT products,

         2. Licensing and Transfer of Technology for MOSFET, IGBT and FRED as
            well as ASPM's,

         3. Research and Development Programs; and

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                      1/11
<PAGE>

         WHEREAS, LHPE and APT have decided to implement such cooperation in the
form of a Joint Venture between LHPE and APT; and

         WHEREAS, LHPE and APT desire to set forth the elements of the strategic
alliance in this Master Agreement; and

         WHEREAS, LHPE and APT acknowledge that this Master Agreement, which
represents their mutual intent, together with the. specific contracts which will
cover the various aspects of the strategic alliance, will become effective and
legally binding upon the signature by a "representative of each party and the
approval of the respective Boards of Directors; and

         WHEREAS, the defined terms in this Master Agreement will have the same
meaning as defined in the Licensing and Technology Transfer Contract.

         NOW, THEREFORE the parties agree as follows:

         1.       LHPE and APT will form a Joint Venture Company (JVC) to
implement the various elements of the strategic alliance.

         2.       The initial registered capital of JVC will be [ * ],
comprising:

         -        A cash and asset investment by LHPE [ * ] for a [ * ]
ownership in JVC,

         -        A initial technology and asset investment by APT [ * ] for a
25% ownership in JVC.

         3.       Pursuant to the intent to cooperate APT will contribute to the
JVC in the form of technology investment and technology transfer to produce
MOSFET, IGBT and FRED, and ASPM products. APT will enter into a Licensing and
Technology Transfer Contract with JVC. Elements of APT's technology investment
and technology transfer Will be in accordance with Exhibits 1 to 4.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                      2/11
<PAGE>

         4.       APT and JVC will enter into a Licensing and Technology
Transfer Contract pursuant to which APT US will grant to JVC certain license
rights permitting JVC on a nonexclusive basis to make, use and sell in the
Pacific Rim Area excluding Japan, MOSFET, IGBT and FRED products incorporating
Present APT Technology. Present APT Technology for MOSFET and IGBT is also
referred to as Power MOS V and Power MOS VI.

         5.       APT and JVC will enter into a Licensing and Technology
Transfer Contract pursuant to which both parties will cooperate to transfer
Present APT Technology to JVC wafer fabrication factory for production of
MOSFET, IGBT and FRED products.

                  It is LHPE and APT's intention that the technology transfer
will include training and practice in APT US factory for JVC engineers and that
APT US engineers will be involved, as appropriate, in supporting the trial and
pre-production MOSFET, IGBT and FRED in JVC wafer fabrication factory.

                  For those MOSFET, IGBT and FRED products that both JVC and APT
US will produce, it is the intention of both parties to take appropriate actions
to ensure continuing compatibility between those products so that they can be
used interchangeably by customers.

                  It is also LHPE and APT's intention to start the technology
transfer program expeditiously after signature of the Licensing and Technology
Transfer-Contract.

                  For the MOSFET, IGBT and FRED technology transfer, the
technology package will include the information outlined in Exhibit 1.

         6.       APT and JVC will enter into a Licensing and Technology
Transfer Contract pursuant to which APTE will grant to JVC certain license
rights permitting JVC on a nonexclusive basis to make, use and sell in the
Pacific Rim Area excluding Japan, Application Specific Power Modules (ASPM's)
incorporating Present APT Technology. Present APT


                                      3/11
<PAGE>

Technology for Power Modules is also referred to as APTE ASPM technology or APTE
Power Module technology.

         7.       APTE and JVC will enter into a Licensing and Technology
Transfer Contract pursuant to which both parties will cooperate to transfer APTE
ASPM technology to JVC factory for production of Application Specific Power
Modules (ASPM's).

         It is LHPE and APTE's intention that the technology transfer will
include training and practice in APTE factory for JVC engineers and that APTE
engineers will be involved, as appropriate, in supporting the trial and
pre-production of ASPM's in JVC factory.

         It is also LHPE and APTE's intention to start the technology transfer
program expeditiously after signature of the Licensing and Technology Transfer
Contract.

         For the ASPM technology transfer, the technology package will include
the information outlined in Exhibit 2.

         8.       JVC will purchase MOSFET, IGBT and FRED dies from APT US and
APT US will authorize JVC to use these dies for assembly in plastic packages and
test by JVC and to sell the finished products under JVC brand name in the
Pacific Rim Area excluding Japan. This is intended to establish a transition
between the date of the signature of the Licensing and Technology Transfer
Contract and the date when JVC will be producing MOSFET, IGBT and FRED dies in
JVC wafer fabrication factory.

         JVC will purchase ASPM design and production services from APTE to
establish a transition between the date of the signature of the Licensing and
Technology Transfer Contract and the date when JVC will be designing and
producing ASPM's in JVC factory. As part of these services, APTE will produce
standard catalog Power Modules for JVC at preferred prices for significant
quantities.


                                      4/11
<PAGE>

         9.       LHPE and APT intend for JVC and APT to cooperate on research
and development programs of mutual interest. Such research and development
programs will be governed by a Research and Development Contract defined at the
mutual convenience of both parties.

         10.      APT will assign employees or resources to provide the training
of JVC engineers. The training will cover both APT Present Technology for
MOSFET, IGBT and FRED and for Power Modules. The training will take place both
at APT US and APTE factories, and at JVC factory.

         APT will also support JVC in the various phases of the implementation.
of the strategic alliance. This support will cover subjects such as equipment
list and specifications, building design and specifications, staffing of JVC in
technical personnel. The corresponding assignment of APT employees or resources
will be within the limits of the requirements of the Licensing and Technology
Transfer Contract and will be limited to 120 APT man-hours. Beyond this number
of hours APT will charge JVC on an hourly basis as defined in the Licensing and
Technology Transfer Contract.

         The detail of the training program for both APT US MOSFET, IGBT and
FRED technology and APTE ASPM technology will be provided in the Licensing and
Technology Transfer Contract and is also given in Exhibit 3 and 4.

         For the MOSFET, IGBT and FRED technology, the contract will include
an aggregate of [ * ] of APT US man-hours. For the ASPM technology, the
contract will include an aggregate of [ * ] of APTE man-hours. The costs
associated with the training programs and the support from APT will be paid
by JVC, with the exception of the cost of the salaries of the APT employees
or resources for the number of man-hours mentioned in this paragraph, and of
the cost of 4 trips to JVC, which-will be paid by APT.

         11.      APT and JVC will enter into a nonexclusive Distributorship
Contract pursuant to which JVC will distribute APT US products in China.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                      5/11
<PAGE>

         12.      The financial terms of the Licensing and Technology Transfer
Contract between JVC and APT are summarized here under:

         The financial consideration for the MOSFET, IGBT and FRED License is
a total of US [ * ] of which US [ * ] at the signature of the License and
Technology Transfer Contract, forming the initial technology investment of
APT US in the capital of JVC for a 25% ownership in JVC. The balance of US
[ * ] will constitute a second APT technology investment. JVC will pay APT US
no royalties on the net sales' and net sales value of MOSFET, IGBT and FRED
products sold and used by JVC.

         The Licensing and Technology Transfer Contract comprehends specific
milestones and associated financial considerations to APT US for the transfer of
APT MOSFET, IGBT and FRED technology, as follows:

         MILESTONES                                                      AMOUNTS

[ * ]                                                                     [ * ]

         The financial consideration for the ASPM License is US [ * ] at the
signature of the Licensing and Technology Transfer Contract. JVC will pay
APTE no royalties on the net sales and net sales value of ASPM product sold
and used by JVC.

         The Licensing and Technology Transfer Contract comprehends specific
milestones and associated financial considerations to APTE for the transfer of
APTE ASPM technology as follows:

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                      6/11
<PAGE>

         MILESTONE                                                      AMOUNTS

[ * ]

This Master Agreement will be signed in both Chinese and English versions which
will be consistent and effective.

<TABLE>

Liaoning Huahai Power Electronics Co. Ltd                    Advanced Power Technology, Inc.


<S>                                                          <C>
By:      S/S                                                 By:      S/S

Name:                                                        Name:
       ----------------------------------                          ------------------------------------

Title:                                                       Title:
       ----------------------------------                          ------------------------------------

Advanced Power Technology Europe SA


By:      S/S

Name:
       ----------------------------------

Title:
       ----------------------------------

</TABLE>

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                      7/11
<PAGE>

                                    EXHIBIT 1


Information included in the MOSFET, IGBT and FRED technology package:


-        MOSFET Wafer Fabrication Specifications
         -        Lot Traveler
         -        Processing Specifications
         -        Material Specifications
         -        APT Equipment List
         -        Process Control and Inspection Specifications

-        IGBT Wafer Fabrication Specifications
         -        Lot Traveler
         -        Processing Specifications
         -        Material Specifications
         -        APT Equipment List
         -        Process Control and Inspection Specifications

-        FRED Wafer Fabrication Specifications
         -        Lot Traveler
         -        Processing Specifications
         -        Material Specifications
         -        APT Equipment List
         -        Process Control and Inspection Specifications

-        Calma Tape and Mask Set Copy for MOSFET Die xxx, IGBT die yyy, and FRED
         die zzz, or any other existing die as selected by JVC.

-        Design and Inspection
         -        Mask Tooling, Procurement, and Inspection Specifications
         -        Critical Dimension Specifications
         -        Design Rule Specifications

-        Access to complete library of additional existing APT MOS V, MOS VI and
         FRED standard dies through free of charge electronic file transfer or
         at JVC cost for the corresponding Mask Sets.


                                      8/11
<PAGE>

         EXHIBIT 2


Information included in the ASPM technology package:

- For each process step, defined by the list hereunder:
         -        Detailed manufacturing flow chart
         -        Description of each operation
         -        Material Specifications
         -        APTE Equipment List
         -        Process Control and Inspection Specifications

- List of processes:
         -        Thick film on ceramics : screen-printing & firing
         -        Die attach: onto ceramics, DBC, Insulated metal substrates
         -        Ultrasonic Wire bonding : for all supports used in die attach
                  process
         -        Die coating
         -        Ceramic substrate attach onto base-plate
         -        Terminals attach
         -        Connecting Printed circuit board onto the power stage
         -        Plastic frame attach
         -        Encapsulant
         -        Resistor trimming

To support the process documentation, APTE will provide JVC with an example of
ASPM documentation:
         -        Design file and artworks
         -        Part list and main specifications
         -        Dedicated manufacturing file
         -        Specifications for jigs and test fixtures
         -        Test specification

Access to all standard APTE Power Modules existing documentation


                                      9/11
<PAGE>

                                    EXHIBIT 3



For the MOSFET, IGBT and FRED technology, the training will include the
following:

Phase 1 - Technology Study

-        JVC study of all documentation described in the Basic Technology
Package.

-        Correspondence and visits to fill conceptual understanding gaps with
regards to process, design, equipment, or facilities.

-        Visits to China by APT engineers or to APT by JVC Engineers can be
arranged as required.

Phase 2 - Training of JVC Engineers at APT

-        Plasma Etch/Strip

         -        Equipment installation/start-up/maintenance
         -        Process review and equipment operation

-        Masking & Wet Etch
         -        Process review and equipment operation

-         Ion Implant/Diffusion
         -        Process review and equipment operation

-        Poly Deposition/Metal/P-ECVD
         -        Process review and equipment operation

-        Device Design
         -        Critical process steps and design rules

-        Wafer Probe
         -        Test programs review

-        Reliability
         -        HTRB & HTGB Bum-In Review

Phase 3 - Process fine-tuning at JVC Facility

-        Visits to China by APT engineers will be arranged as required.


                                     10/11
<PAGE>

                                    EXHIBIT 4


For the ASPM technology, the training will include the following:

Phase 1 - Technology study

-        JVC study of all documentation described in the Basic Technology
Package.

-        Correspondence and visits to fill conceptual understanding gaps with
regards to process, design, equipment, or facilities.

-        Visits to China by APTE engineers or-to APTE by JVC Engineers can be
arranged as required.

Phase 2 - Training of JVC Engineers at APTE

- ASPM design:

Design review of the ASPM product provided as support to the process
documentation selected as per Exhibit 2

Design of an ASPM product defined by JVC
         -        Artworks editing
         -        Tooling description
         -        Parts list
         -        Test specification

- Manufacturing file:
         -        Manufacturing flow chart description
         -        Manufacturing instructions
         -        Tooling (manufacturing and testing)

Phase 3 - Process Fine-tuning at JVC Facility

-        Visits to China by APTE engineers will be arranged as required.


                                     11/11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>18
<FILENAME>ex-1016.txt
<DESCRIPTION>EXHIBIT 10.16
<TEXT>

<PAGE>

                              SUBCONTRACT AGREEMENT

                                     Between

                            TEAM PACIFIC CORPORATION

                                       And

                         ADVANCED POWER TECHNOLOGY, INC.

                                January 26, 2000

                                       To

                                January 26, 2003

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                       1
<PAGE>

         This ASSEMBLY AGREEMENT (hereinafter referred to as "Agreement") is
entered into the 26th day of January year 2000 by and between:

         ADVANCED POWER TECHNOLOGY, INC., a corporation duly organized and
existing under the laws of the United States of America, having its principal
place of business at 405 S.W. Columbia Street, Bend, Oregon 97702, USA
(hereinafter referred to as "Customer") and

         TEAM PACIFIC CORPORATION, a company duly organized and existing under
the laws of the Republic of the Philippines, having its principal place of
business at Electronics Avenue. FTI Complex, Tagig, Metro Manila, Philippines
(hereinafter referred to as "TEAM")

                                   WITNESSETH:

         WHEREAS, TEAM has previously assembled electronics devices for Customer
and has the capacity to manufacture and test plastic and hermetic packages and
install semiconductor devices provided by Customer in such packages at its
facility in the Philippines; and

         WHEREAS, Customer desires to obtain a commitment from TEAM to make
available for Customer a portion of TEAM's production capacity described above:

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows;

AGREEMENT

1.0      DEFINITIONS

         1.1      "Electrically Sorted Dice" shall mean Customer's proprietary
                  semiconductor devices.

         1.2      "Production Materials" shall mean materials, including
                  electrically sorted dice, which Customer provides to TEAM.

         1.3      "Customer Forecasts" shall have the meaning set forth in
                  Section 3.1 below.

         1.4      "Finished Products shall mean the completed packages with
                  electrically sorted dice installed, which TEAM agrees to
                  assemble under this Agreement.

         1.5      "Year" shall mean a period of twelve months, and a year of
                  this agreement shall be a period of twelve (12) months from
                  the date of Agreement.

         1.6      "WIP" shall mean work in process.

2.0      MANUFACTURE AND ASSEMBLY AND TEST OF PACKAGES: MATERIALS

<PAGE>

         2.1      TEAM shall manufacture packages pursuant to orders received
                  from Customer and shall install electrically sorted dice in
                  the packages pursuant to Customer's process specifications as
                  set forth in Appendix I.

         2.2      TEAM agrees to provide all equipment, personnel, manufacturing
                  space needed to assemble Customer's finished product in the
                  monthly quantities set fort in Customer's monthly forecast.
                  TEAM also guarantees enough office space for its Customer's
                  representatives and storage space for all consigned materials
                  for module assembly. TEAM agrees to provide the materials
                  required for the assembly of the Finished Products other than
                  electrically sorted dice and items mentioned in Appendix II
                  and V.

         2.3      Customer shall supply TEAM with sufficient electrically sorted
                  dice to allow TEAM to meet Customer's first month's firm
                  commitment as provided for in Section 3.1.

         2.4      TEAM agrees to assemble Customers finished product in
                  accordance with Customer's process specifications indicated in
                  Appendix I of this Agreement. Customer will give TEAM
                  sixty-(60) days written notice of any changes or modifications
                  to those specifications if those changes affect Customer's
                  devices. TEAM agrees that no changes can take place without
                  Customer's expressed, written approval. TEAM agrees to furnish
                  Customer a full copy of the specs in Appendix IV in the event
                  of a change in revision.

         2.5      Customer agrees to give TEAM sixty-(60) day written notice if
                  Customer requires any material change to TEAM's standard
                  process specifications.

         2.6      Customer agrees to consign equipment in Appendix IV to TEAM
                  and TEAM understands they are responsible for calibration and
                  maintenance of this equipment. Customer maintains ownership of
                  this equipment.

         2.7      Customer agrees to pay for the price of the Finished Products
                  used for TEAM's Internal Reliability Monitors per Appendix
                  III. Customer will be copied on all reports.

3.0      CUSTOMER FORECASTS: ORDERS

         3.1      On or before the 15th day of each month, Customer will
                  provide TEAM with a three-(3) month rolling forecast of all
                  the production levels of TEAM (a "Customer Forecast"). The
                  first month forecast shall be [ * ] firm commitment. The
                  Customer Forecast for the second month shall be [ * ] firm
                  and the third month shall be a good faith estimate of
                  number of Finished Products to be assembled by TEAM.

         3.2      TEAM agrees to reserve sufficient production capacity for
                  manufacturing packages and assembling Finished Products in
                  accordance with Section 3.1 above. A [ * ] buffer capacity
                  shall be reserved by TEAM in order to handle upward
                  fluctuations of orders from customer.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                       3
<PAGE>

         3.3      Nothing in this Agreement shall restrict or prohibit Customer
                  from contracting with others for assembly services similar to
                  those provided by TEAM under this Agreement, provided that
                  TEAM shall be given priority with respect to volume covered by
                  the Customer Forecast and provided further that TEAM maintains
                  a leadership position with respect to price, delivery,
                  quality, and customer service.

         3.4      TEAM agrees to provide customer WIP reports including
                  scheduled ship dates twice per week and monthly yield
                  summaries.

         3.5      Customer will use a blanket purchase order for and every six
                  months.

         3.6      Subject to the terms set forth herein, TEAM shall provide
                  Finished Products to Customer consistent with the releases as
                  provided by the purchase order and supporting purchase order
                  number.

4.0      PAYMENT AND PRICING

         4.1      Customer shall pay TEAM for assembly and test of Finished
                  Products pursuant to invoices received by Customer within
                  thirty (30) days from invoice date. All invoices shall be in
                  U.S. Dollars and all payments shall be made to TEAM via
                  telegraphic transfer.

         4.2      Customer shall pay TEAM for non-trade expense within 7 days
                  from invoice date. Brokerage, releasing fee and shipping
                  charges, office supplies and other advances made by TEAM in
                  behalf of the Customer are classified as non-trade expenses.

         4.3      Subject to adjustment as provided in Section 4.4 below, prices
                  shall be as set forth in the price schedule shown in Appendix
                  II attached. All prices are quoted FOB, ex-TEAM's plant,
                  Manila.

         4.4      If TEAM's direct material or labor or overhead costs
                  related to TEAM's performance under this Agreement increase
                  by more than [ * ] percent during the first year of this
                  Agreement or by more than [ * ] percent during the
                  succeeding years of this Agreement, for any reason
                  whatsoever, TEAM may give customer written notice of a
                  proposal price increase. TEAM shall endeavor to provide the
                  justification for such price increase to the extent
                  possible without disclosing the details of its cost
                  structure. Customer shall thereafter within thirty (30)
                  days of the date of TEAM's notice either; (a) notify TEAM
                  that it accepts the price increase, in which case the
                  increase shall be effective for all Finished Products
                  delivered after the date of Customer's notice; or (b)
                  notify TEAM of its acceptable new price. Both parties agree
                  to exercise good faith and resolve on best effort basis any
                  differences on the proposed price increase within sixty
                  (60) days.

         4.5      TEAM will 100% test products for DVSD, final test and UIS on
                  testers supplied by Customer. TEAM and Customer recognize that
                  additional testing currently performed by Customer may be off
                  loaded to TEAM sometime in the future. Equipment consignment
                  and test charges will be mutually agreed upon at a later

[ * ] = CONFIDENTIAL TREATMENT REQUESTED

                                       4

<PAGE>

                  date. TEAM will also conduct isolation tests on SOT227 using
                  Customer's supplied isolation testers. All units, which pass
                  through isolation and open short test, shall be charged to
                  customer. All rejected units at isolation test are billable to
                  the customer.

         4.6      TEAM shall credit the price paid by Customer for any Finished
                  Products, which may not conform, to the specifications as
                  defined in Appendix I, or to any future updates to the
                  specifications duly approved by Customer.

5.0      SHIPMENTS

         5.1      Customer shall ship all Production Materials and Dice to
                  TEAM's plant in Manila at Customer's expense.

         5.2      TEAM shall ship all Finished Products assembled three (3)
                  times per week, unless otherwise mutually agreed upon on a
                  case to case basis. TEAM shall insure and arrange for shipment
                  of Finished Products by any reasonable method specified by
                  Customer. Customer shall pay all charges for shipping,
                  insurance and in land charges on Finished Products as well as
                  shipback of Production Materials and Dice.

6.0      TAXES, PERMITS, APPROVALS

         6.1      TEAM shall have the sole responsibility to pay any and all
                  import duties. taxes and other charges levied by government
                  authorities in the Philippines upon, or in connection with,
                  any transaction covered by this Agreement.

         6.2      TEAM shall have the sole responsibility to obtain all permits,
                  licenses and approval from government authorities in the
                  Philippines necessary for the performance of this Agreement to
                  comply with any requirement to file this Agreement with any
                  government authority in the Philippines.

         6.3      Upon Customer's request, TEAM shall promptly provide Customer
                  with any and information and documentation as may by required
                  for customs clearance into the United States or the
                  Philippines.

7.0      COMPLIANCE WITH LAWS

         Each party shall comply with laws and regulations applicable to it in
         the performance of its obligations pursuant to this Agreement.

8.0      OWNERSHIP

         All electrically sorted dice, Production Materials provided by Customer
         and Finished Products shall be and all times remain the property of
         Customer. TEAM agrees that it


                                       5
<PAGE>

         will not place nor permit to stand any lien of other encumbrance
         against electrically sorted dice, Production Materials provided by
         Customer or Finished Products.

9.0      WARRANTY

         TEAM warrants that the products to be assembled, open/short, final
         tested (on some package types), isolation tested and shipped hereunder
         shall have been assembled, open/short tested, final tested (on some
         package types), isolation tested and shipped in conformity with
         specifications of both TEAM and Customer. TEAM shall have no obligation
         under any warranty set forth above in the event that:
         a.       The Finished Products have failed as a result of catastrophe
             or fault or negligence of Customer or its Customers;
         b.       The Finished Products have been modified by Customer or its
             Customers in a way which affects the performance of the Finished
             Product;
         c.       The Finished Products have not been stored, maintained or used
             by Customer or its Customers in accordance with Customer's
             standard operating and/or maintenance instructions.
         TEAM makes no warranty of fitness for purpose in respect of the
         products assembled, open/short tested, isolation tested and shipped
         hereunder.

10.0     CONFIDENTIALITY

         TEAM and Customer agree, shall cause its employees, subcontractors,
         customers and agents, during the term of this Agreement and thereafter
         to keep confidential and not disclose to third parties or use, except
         as expressly authorized in writing by both parties or as required by
         legally constituted authority or in the course of performing it
         obligations hereunder, any confidential information covered by this
         Agreement. Confidential information shall include Customer's and TEAM's
         written specifications and all other information provided and
         identified by both parties as confidential or which TEAM or Customer
         has reason to know is treated by one party as confidential.

11.0     INDEMNIFICATION

         Each party shall defend and hold harmless the other party, its agents,
         employees and other representatives from and against and shall
         indemnify each such person for any liability, loss, costs expenses and
         damages to such person arising out of any act, neglect, default or
         omission of it or any agents, employees or other representatives in
         connection with this Agreement. The indemnifying party shall have the
         right to control the defense, compromise or settlement of any third
         party claim. action or suit involving the indemnifying party and the
         indemnified party shall cooperate and furnish such records, information
         and testimony as may reasonably be requested by the indemnifying party,
         the indemnified party shall be entitled to participate in, but no
         direct, the defense of any such claim, action or proceeding with
         counsel of its own choice. Nothing herein is intended to or shall
         relieve any party from liability for its own act, omission or
         negligence.


                                       6
<PAGE>

12.0     TERMS AND TERMINATION

         12.1     This Agreement shall continue in full force and effect for
                  a-period of thirty six (36) months from the date of this
                  Agreement unless earlier terminated as provided below in this
                  section. An annual review shall be done by either party in
                  order to consider any change that may affect the condition of
                  the business between TEAM and APT. Prices however, are subject
                  to change at any time if mutually agreed upon by TEAM and the
                  Customer.

         12.2     Either party may terminate this Agreement in the event that
                  the other party defaults in the performance of its obligations
                  under this Agreement and the default has not been remedied to
                  the reasonable satisfaction of the non defaulting party within
                  ninety (90) days after receipt by the defaulting party of
                  written notice of the default.

         12.3     Customer may terminate this Agreement after giving TEAM ninety
                  (90) days' written notice of its intention to do so if TEAM
                  and Customer cannot agree on (a) mutually acceptable price
                  increases as provided in section 4.4 or (b) any modification
                  to Customer's process specifications proposed by either party.

         12.4     Customer may terminate this Agreement immediately as provided
                  in Section 13.2. TEAM may terminate the Agreement immediately
                  in the event the Customer fails or refuses to pay any
                  outstanding billing of TEAM under this Agreement.

         12.5     Upon termination of this Agreement, at Customer's request,
                  TEAM shall immediately deliver to Customer all electrically
                  sorted dice, Production Materials provided by Customer, and
                  Finished Products in its possession. And the Customer shall
                  pay outstanding billing of TEAM consistent with the payment
                  terms as described in Section 4.1 including all materials
                  purchased by TEAM for the manufacture of the Customer's
                  products.

         12.6     Upon termination or expiration of the term of this Agreement,
                  the rights and obligations of the parties under this Agreement
                  shall end, and neither party shall have claim for termination
                  damages, against the other; provided, however; that the
                  following provisions shall survive termination of this
                  Agreement: (a) Customer's payment obligations specified in
                  Section 4; (b) Team's obligations specified in Section 6 and
                  8; (c) any law, order, proclamation, regulation, ordinance,
                  demand or requirement of any government or (d) any other acts
                  whatsoever, whether similar or dissimilar to those enumerated
                  above that are beyond the reasonable control of either party
                  to this Agreement, the party so affected, upon giving prompt
                  notice to the other party, shall be excused from the
                  performance of the obligation or obligations so prevented,
                  restricted or interfered with, provided the affected party
                  uses its best efforts to rectify, avoid or remove such causes
                  on nonperformance.


                                       7
<PAGE>

13.0     FORCE MAJEURE

         13.1     Subject to the limitation provided in 13.2 below, if the
                  performance of this Agreement or any obligation provided
                  herein is prevented, restricted or interfered with by reason
                  of (a) fire, explosion, plant breakdown, failure of machinery,
                  strike or labor dispute, whether creating significant property
                  damage or failure of sources of supply of raw materials,
                  supplies, power or water, (b) war, police actions, conflicts
                  involving armed forces, revolutions, insurrections or civil
                  commotion, (c) any law, order, proclamation, regulation,
                  ordinance demand or requirement of any government or (d) any
                  other acts whatsoever, whether similar or dissimilar to those
                  enumerated above that are beyond the reasonable control of
                  either party to this Agreement, the party so affected, upon
                  giving prompt notice to the other party, shall be excused from
                  the performance of the obligation or obligations so prevented,
                  restricted or interfered with, provided the affected party
                  uses its best efforts to rectify, avoid or remove such causes
                  of nonperformance.

         13.2     If any condition described in 13.1 above shall prevent,
                  restrict or interfere with TEAM's performance of any
                  obligation hereunder for a period of sixty (60) or more days,
                  Customer shall have the right immediately to terminate this
                  Agreement without prior notice to TEAM and at no cost to
                  Customer.

14.0     LIMITATIONS OF LIABILITY

         In no event shall customer have any liability to TEAM or any other
         person for consequential, incidental, indirect or special damages of
         any nature whatsoever (including without limitation, lost revenues,
         lost profits, delays or loss of use) arising out of or in any way
         related to Customer's performance or nonperformance of this Agreement.
         Customer's liability to TEAM upon expiration or termination of this
         Agreement for any reason, with or without causes, shall be limited to
         payment for Finished Products on order at the time of termination and
         materials purchased by TEAM for the manufacture of the Customer's
         products. These limits will apply to all claims, including without
         limitation contract, indemnify and tort.

15.0     GENERAL

         15.1     Interpretation and Governing Laws. This Agreement shall be
                  interpreted in accordance with the plain English meaning of
                  its terms except for the industry accepted abbreviations and
                  shall be governed by the laws of California, USA, excluding
                  choice of laws rules and excluding the United Nations
                  Convention on the International Sale of Goods.

         15.2     Venue, Attorneys Fees. TEAM consents to personal jurisdiction
                  over it by the state and federal courts of California in.
                  connection with any dispute arising out of this Agreement. In
                  any action to enforce or interpret this Agreement, the
                  prevailing party shall be entitled to recover reasonable costs
                  and attorneys fees at trial, on appeal, and on any petition
                  for review.


                                       8
<PAGE>

         15.3     Notices. Any notice or report permitted or required by this
                  Agreement shall be deemed given if delivered personally or
                  sent by First Class Mail, postage prepaid, addressed to the
                  other party at the address first written above or at such
                  other address as designated by the party by written notice, or
                  by confirmed telex or facsimile. If notice is given by mail
                  and the date of the notice affects either party's rights under
                  this Agreement, the effective date of the notice shall be
                  seven (7) days after the date of mailing or the date the
                  notice is received whichever is earlier.

         15.4     Entire Agreement: Modification. This Agreement contains the
                  entire agreement and understanding between and among the
                  parties with respect to the subject matter hereof. and unless
                  otherwise provided in this Agreement, no modification or
                  waiver of any of the provisions, or any future representation,
                  promise, or addition, shall be binding upon the parties unless
                  made in writing and signed by both parties.

         15.5     Waiver. The failure of either party to enforce at any time any
                  provisions of this Agreement shall not be construed to be a
                  waiver of such provision or of the right thereafter to enforce
                  each and every provision of this Agreement. No waiver by
                  either party to this Agreement, either express or implied, of
                  any breach of any term, condition or obligation of this
                  agreement shall be construed as a waiver of any subsequent
                  breach of that term, condition of obligation or of any other
                  term, condition or obligation or of any other term, condition
                  or obligation of this Agreement.

         15.6     Assignment: Binding Effect. Neither party shall assign,
                  transfer, or sell its rights under this Agreement or delegate
                  its duties hereunder without the prior written consent of the
                  other parties hereto. This Agreement shall be binding upon and
                  inure to the benefit of the parties hereto and their
                  successors and permitted assigns.

         15.7     Severability. If any provision, term or other portion of this
                  Agreement shall be held invalid, illegal or unenforceable by
                  any court of competent jurisdiction, the remaining portion
                  shall remain in force and effect.

         15.8     Heading. Headings used this agreement are for convenience only
                  and shall not be construed as apart of or affect the
                  construction or interpretation of any provision of this
                  Agreement.

         15.9     Export Control. TEAM understands that Customer is subject to
                  regulation by United States government agencies, which
                  restrict export or diversion of Finished Products and
                  Production Materials or information provided by Customer to
                  TEAM hereunder. Regardless of any disclosure by Customer to
                  TEAM of an ultimate destination of Finished Products or any
                  information disclosed hereunder, TEAM warrants that it will
                  not export in any manner, either directly or indirectly, any
                  product or information without fist obtaining all necessary
                  approvals from appropriate U.S. government agencies. TEAM
                  acknowledges that the regulation


                                       9
<PAGE>

                  of product export is in continuous modification. TEAM agrees
                  to complete all documents and meet all requirements arising
                  out of such modifications.

         15.10    Customer shall, at its expense, supply TEAM with jigs and
                  fixtures (i.e.: graphite boats) to allow TEAM to perform its
                  obligation under this agreement. If in case forecast goes up
                  and additional jigs and fixtures are required, Customer shall,
                  at its expense provide additional jigs and fixtures. This also
                  covers new devices with new configuration. TEAM, however, is
                  responsible for replacement of these jigs and fixtures in case
                  of damage and normal wear and tear.

         15.11    Governing Language. This Agreement may be translated into a
                  language other than English version of the Agreement control
                  the rights and obligations of the parties regardless of
                  subsequent translation and regardless of any reliance by any
                  party upon such translation. All communications and notices to
                  this Agreement shall be in English.

         In Witness whereof. the parties have caused the Agreement to be
         executed as of the date first set forth above.

TEAM PACIFIC CORPORATION               ADVANCED POWER TECHNOLOGY, INC.
By:      S/S                         By:     S/S



Ceferino F. Bautista                   Russell Creecraft
Senior Vice President - Sales          Vice President - Manufacturing Operations


                                       10

<PAGE>

                                   APPENDIX I

                             PROCESS SPECIFICATIONS

<TABLE>
<CAPTION>
REVISION NO.      DOCUMENT NO.         DOCUMENT TITLE
<S>               <C>                  <C>
15                TAFC-1064            TPC TO-247 ASSY. PROCESS FLOWCHART
11                TAFC-1066            TPC SOT-227 PROCESS FLOWCHART
7                 TAFC-1175            TPC TO-264 PROCESS FLOWCHART
4                 TAFC-1208            TPC TO-268 (D3PAK) PROCESS FLOWCHART
1                 TAFC-1211            TPC EXT TO-247 ASSEMBLY PROCESS
                                       FLOWCHART
F                 D3P ENGG             D3PAK PACKAGE OUTLINE DRAWING
3                 PD-247-5             TO-247 PACKAGE OUTLINE DRAWING
1                 PD-EXT-2473          EXT 247 PACKAGE OUTLINE DRAWING
                                       (MAX247, TO-247 HOLELESS)
1                 PD-0001-P            TO-264-PACKAGE OUTLINE DRAWING
                                       TEAM STANDARD
3                 TAFC-1213            TPC-APT Application Specific Power Module
                                       (ASPM) Assembly Process Flowchart
</TABLE>


                                       11

<PAGE>

APPENDIX PRICE LIST
STANDARD TO247 & HOLELESS TO247
<TABLE>
<S><C>
                  STD TO247 W/SINGLE DIE                                   KTMC                                    HYSOL
      TO-247 SINGEL DIE W/O CATHODE WIRE
                               AUTO TRIM
                                                         FIRST    EXCESS OF      EXCESS OF   HYSOL   FIRST    EXCESS OF   EXCESS OF
                                                                                             ADDER
                                                         [                   *           ]           [             *             ]
                                             BASE PRICE  [                   *           ]           [             *             ]

                    STD TO247 W/DUAL DIE                                   KTMC                                    HYSOL

                                                         FIRST    EXCESS OF      EXCESS OF   HYSOL   FIRST    EXCESS OF   EXCESS OF
                                                                                             ADDER
                                                         [                   *            ]          [             *             ]
                                             BASE PRICE  [                   *            ]  [  *  ] [             *             ]

  STD TO247 W/SINGLE DIE W/O CENTER LEAD                                   KTMC                                    HYSOL
                        (W/CATHODE WIRE)
                                                         FIRST    EXCESS OF      EXCESS OF   HYSOL   FIRST    EXCESS OF   EXCESS OF
                                                                                             ADDER
                                                         [                   *            ]          [             *             ]
                                             BASE PRICE  [                   *            ]  [  *  ] [             *             ]

                    STD TO247 RF-104/114                                   KTMC                                    HYSOL
                 APT SUPPLIES SUBSTRATES
                                                         FIRST    EXCESS OF      EXCESS OF   HYSOL   FIRST    EXCESS OF   EXCESS OF
                                                                                             ADDER
                                                         [                   *            ]          [             *             ]
                                             BASE PRICE  [                   *            ]  [  *  ] [             *             ]

                     STD TO247 RF105/125                                   KTMC                                    HYSOL
                 APT SUPPLIES SUBSTRATES
                                                         FIRST    EXCESS OF      EXCESS OF   HYSOL   FIRST    EXCESS OF   EXCESS OF
                                                                                             ADDER
                                                         [                   *            ]          [             *             ]
                                             BASE PRICE  [                   *            ]  [  *  ] [             *             ]

                          HOLELESS TO247                                   KTMC                                    HYSOL
                                                         ANY                                 HYSOL   ANY
                                                         VOLUME              *               ADDER   VOLUME
                                             BASE PRICE  [                   *            ]  [  * ]  [             *             ]
COST ADDER FOR MANUAL UIS                            [        *        ]
COST ADDER FOR SOLDER PLATE                          [        *        ]
COST ADDER FOR MANUAL FINAL TEST                     [        *        ]
COST DEDUCTION TO REPLACE O/S W/UIS                  [        *        ]
OR DVSD
COST DEDUCTION FOR DICE RCVD SAWN                    [        *        ]        (1 DIE)
COST DEDUCTION FOR DICE RCVD SAWN                    [        *        ]        (2 DIE)
                  QUICK TURN ADDER [ * ] SINGLE DIE [ * ] PCS MAX
                                   [ * ] ALL OTHER  [ * ] PCS MAX
</TABLE>

ADDITIONAL PROVISIONS
-        ALL T0247 BASE PRICES INCLUDE O/S TEST, MARK, SOLDER DIP, SHIPPING
         TUBES, & BOXES
-        TEAM SUPPLIES ALL MATERIALS EXCEPT DIE UNLESS OTHERWISE STATED HEREIN
-        IN DETERMINING WHICH DEVICE TYPE WILL FALL UNDER THE "IN EXCESS OF [*]
         UNITS PER MINTH" CATEGORY, THE INCREMENTAL VOLUME SHALL BE APPORTIONED
         TO EASH DEVICE TYPE'S PROPORTIONATE OF THE TOTAL ACTUAL VOLUME FOR THE
         RECKONING PERIOD.

[ * ] = CONFIDENTIAL TREATMENT REQUESTED


                                       12
<PAGE>

<TABLE>
<S><C>
SOT227
                             SINGLE DIE                                                                                      HYSOL
        USING THERMIC EDGE AND CERAMTEC                              FIRST    EXCESS OF         HYSOL           FIRST    EXCESS OF
                              SUBSTRATE                                                         ADDER
                                                                     [        *        ]                        [        *        ]
                                                         BASE PRICE  [        *        ]        [   *    ]      [        *        ]
                                            SUBSTRATE COST INCREASE  [        *        ]                        [        *        ]
                                           SUBSTRATE COST REDUCTION  [        *        ]                        [        *        ]
                                                              TOTAL

                                 DUAL DIE                                      KTMC                                          HYSOL
                                                                     FIRST    EXCESS OF         HYSOL           FIRST    EXCESS OF
                                                                                                ADDER
                                                                     [        *        ]                        [        *        ]
                                                         BASE PRICE  [        *        ]        [   *    ]      [        *        ]
                                            SUBSTRATE COST INCREASE  [        *        ]                        [        *        ]
                                                              TOTAL  [        *        ]                        [        *        ]

                           1/2H.P/AP/FRED                                                                                    HYSOL
                                                                     FIRST    EXCESS OF         HYSOL           FIRST    EXCESS OF
                                                                                                ADDER
                                                                     [        *        ]                        [        *        ]
                                                         BASE PRICE  [        *        ]        [   *    ]      [        *        ]
                                            SUBSTRATE COST INCREASE  [        *        ]                        [        *        ]
                                                              TOTAL  [        *        ]                        [        *        ]

                           1/2H.P/AP/FRED                                                                                    HYSOL
  15 MILS ALUMINA W/8 MILS DBC BOTH SIDES                            FIRST    EXCESS OF         HYSOL           FIRST    EXCESS OF
                                FROM IXYS                                                       ADDER
                                                                     [        *        ]                        [        *        ]
                                                         BASE PRICE  [        *        ]        [   *    ]      [        *        ]
                                            SUBSTRATE COST INCREASE  [        *        ]                        [        *        ]
                                                              TOTAL  [        *        ]                        [        *        ]

                                    PFC                                                                                      HYSOL
                                                                     FIRST    EXCESS OF         HYSOL           FIRST    EXCESS OF
                                                                                                ADDER
                                                                     [        *        ]                        [        *        ]
                                                         BASE PRICE  [        *        ]        [   *    ]      [        *        ]
                                            SUBSTRATE COST INCREASE  [        *        ]                        [        *        ]
                                                              TOTAL  [        *        ]                        [        *        ]
</TABLE>


[ * ] = CONFIDENTIAL TREATMENT REQUESTED


                                       13
<PAGE>

SOT-227 CO

                  COST ADDER FOR MANUAL UIS           [*]
                  COST ADDER FOR SOLDER PLATE         [*]
                  ADDER FOR MANUAL FINAL TEST         [*]
                  DUAL DIODE                          [*]
                  COST REDUCTION TO REPLACE O/S W/UIS [*]
                  OR DVSD                             [*]
                  ADDER DVSD FT,Q + & NO UIS          [*]
                  ADDER FOR UIS. DVSD. FT.Q+          [*]
                  COST REDUCTION FOR DICE RCVD SAWN   [*]     (AP)
                                                      [*]     (DUAL)
                                                      [*]     (P)
                                                      [*]     (SINGLE)
                                     QUICK TURN ADDER [*] SINGLE DIE [*] PCS MAX
                                                      [*] ALL OTHER,[*] PCS MAX



  ADDITIONAL PROVISIONS
  -ALL SOT227 BASE PRICES INCLUDE O/S & ISOLATION TEST MOUNTING HARDWARE
  (SCREWS/NUTS/WASHERS), SHIPPING TUBES, & BOXES
  -ALL SOT227 ASSEMBLY ASSUMES THE USE OF ALN SUBSTRATES (MIN. CONDUCTIVITY IS
  170 W/C)
  -VOLUME PRICE BREAKS DETERMINED BY TOTAL SOT227 VOLUME INCLUDING ALL
  CONFIGURATIONS
  -VOLUME PRICE BREAKS BASED ON MONTHLY LOAD/RECEIPTS FROM CUSTOMER
  -TEAM SUPPLIES ALL MATERIALS EXCEPT DICE UNLESS OTHERWISE STATED HEREIN


[ * ] CONFIDENTIAL TREATMENT REQUESTED


                                       14
<PAGE>

<TABLE>
<S><C>
                             RF (32W)                                                                                  HYSOL
           APT SUPPLIES CTR SUBSTRATE                              FIRST    EXCESS OF         HYSOL        FIRST
                                                                                              ADDER
                                                                   [        *        ]
                                                       BASE PRICE  [        *        ]        [  *  ]      [   *    ]

                        INDUCTOR COIL                                                                                  HYSOL
   APT SUPPLIES LEADFRAME & SUBSTRATE                              FIRST    EXCESS OF         HYSOL        FIRST
                                                                                              ADDER
                                                                   [        *        ]
                                                       BASE PRICE  [        *        ]        [  *  ]      [   *    ]
TO264
          SINGLE DIE                                     KTMC                                                    HYSOL
                                            FIRST [*]         EXCESS OF [*]       HYSOL ADDER          FIRST [*]          EXCESS OF
                                                                                                                             [*]
                             BASE PRICE        [*]                [*]                 [*]                [*]                 [*]

        DUAL DIE (8W)                                    KTMC                                                    HYSOL
                                            FIRST [*]         EXCESS OF [*]       HYSOL ADDER          FIRST [*]          EXCESS OF
                                                                                                                             [*]
                             BASE PRICE        [*]                [*]                 [*]                [*]                 [*]

        DUAL DIE (12W)                                   KTMC                                                    HYSOL
                                            FIRST [*]         EXCESS OF [*]       HYSOL ADDER          FIRST [*]          EXCESS OF
                                                                                                                             [*]
                             BASE PRICE        [*]                [*]                 [*]                [*]                 [*]

            3 DIE                                        KTMC                                                    HYSOL
                                            FIRST [*]         EXCESS OF [*]       HYSOL ADDER          FIRST [*]          EXCESS OF
                                                                                                                             [*]
                             BASE PRICE        [*]                [*]                 [*]                [*]                 [*]
</TABLE>

          COST ADDER FOR MANUAL UIS      [*]
         COST ADDER FOR THERMAPHASE      [*]
  COST REDUCTION FOR DICE RCVD SAWN      [*]      (SINGLE0
                                         [*]      (DUAL)

                  QUICK TURN ADDER [*] SINGLE DIE, [*] PCS MAX

ADDITIONAL PROVISIONS
o ALL TO264 BASE PRICES INCLUDE O/S TEST, MARK, SOLDER DIP, FINAL TEST, SHIPPING
TUBES, & BOXES o TEAM SUPPLIES ALL MATERIALS EXCEPT DIE UNLESS OTHERWISE STATED
HEREIN o IN DETERMINING WHICH DEVICE TYPE WILL FALL UNDER THE "IN EXCESS OF 200K
UNITS PER MONTH" CATEGORY, THE INCREMENTAL VOLUME SHALL BE APPORTIONED TO EACH
DEVICE THPE'S PROPORTIONATE OF THE TOTAL ACTUAL VOLUME FOR THE RECKONING PERIOD.

<TABLE>
<S><C>
      D3PAK
          SINGLE DIE                                      KTMC                                                      HYSOL
                                          ANY VOLUME                              HYSOL ADDER     ANY VOLUME
                             BASE PRICE   [*]                                         [*]         [*]

           DUAL DIE                                       KTMC                                                      HYSOL
                                          ANY VOLUME                              HYSOL ADDER     ANY VOLUME
                             BASE PRICE   [*]                                         [*]         [*]

            RF D3                                         KTMC                                                      HYSOL
                                          ANY VOLUME                              HYSOL ADDER     ANY VOLUME
                             BASE PRICE   [*]                                         [*]         [*]
         COST ADDER FOR MANUAL UIS          [*]
         COST ADDER FOR FINAL TEST          [*]
 COST REDUCTION FOR DICE RCVD SAWN          [*]
                  QUICK TURN ADDER  [*] SINGLE DIE, [*] PCS MAX
</TABLE>

ADDITIONAL PROVISIONS
ALL D3PAK BASE PRICES INCLUDE O/S TEST, MARK, SOLDER PLATE, SHIPPING TUBES &
BOXES TEAM SUPPLIES ALL MATERIALS EXCEPT DIE UNLESS OTHERWISE STATED HEREIN

                                                                   Page 4 of 6


                                       15
<PAGE>

<TABLE>
<S><C>
TO3
                  SINGLE DIE
         APT SUPPLIES HEADERS AND CANS                                          ANY
                                                                                VOLUME
                                                     BASE PRICE                 [*]

                                                         QUICK TURN ADDER 25% SINGLE DIE, 1000 PCS MAX

ADDITIONAL PROVISIONS
*ALL TO 3 BASE PRICES INCLUDE O/S TEST, MARK, SOLDER DIP, SHIPPING TUBES & BOXES

DIE PREP

         APT SUPPLIES WAFFLE PACK
                                                                                FIRST            EXCESS OF
                                                                                [*]              [*]
                                                     BASE PRICE                 [*]              [*]

         TEAM SUPPLIES WAFFLE PACK
                                                                                FIRST            EXCESS OF
                                                                                [*]              [*]
                                                     BASE PRICE                 [*]              [*]
</TABLE>


[ * ] = CONFIDENTIAL TREATMENT REQUESTED


                                       16
<PAGE>

<TABLE>
<CAPTION>
ASPM

DEVICE                                                   Base Price
<S>                                                      <C>
D2U2                                                         [*]
DRIVER                                                       [*]
FO2(SP2)                                                     [*]
FO2(SP2-INFINEON                                             [*]
FO2(SP2-WITH COPPER ATTACH)                                  [*]
FOH REWORK 1 DIE                                             [*]
FOH REWORK 2 DIE                                             [*]
FOH5010 (SP3)                                                [*]
FOH5010 (SP3) INFINEON                                       [*]
FOH5010 WITH COPPER ATTACH                                   [*]
REHM                                                         [*]
STRAND                                                       [*]
THERMAL DYNAMICS                                             [*]
STEALTH ARRAY                                                [*]
D4R60FD60                                                    [*]
SATCONWITH COPPER ATTACH                                     [*]
SATCON WITHOUT COPPER ATTACH                                 [*]
</TABLE>


[ * ] =  CONFIDENTIAL TREATMENT REQUESTION


                                       17
<PAGE>


                                  APPENDIX III

                             TEAM INTERNAL MONITORS

                                PERFORMED MONTHLY

<TABLE>
<CAPTION>
                        SOT-227       TO-247         D3PAK         TO-264       ASPM
<S>                     <C>           <C>            <C>           <C>          <C>
TEMPARATURE CYCLE       8 PCS.        22 PCS.        8 PCS.        8 PCS        3 PCS
PRESSURE POT            8 PCS.        22 PCS.        8 PCS.        8 PCS        3 PCS
85/85                   8 PCS.        22 PCS.        8 PCS.        8 PCS        3 PCS
CORRELATION             24 PCS.       66 PCS.        24 PCS.       24 PCS.      3 PCS.
</TABLE>


                                      18

<PAGE>

                                   APPENDIX IV

                           LIST OF CONSIGNED EQUIPMENT

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
   EQUIPMENT CONSIGNED                    MANUFACTURER              QUANTITY                   REMARKS
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                         <C>                 <C>
1.       ISOLATION TESTER             KIKUSU/TOSH651              1 SET               SERIAL # 28101279
----------------------------------------------------------------------------------------------------------------------
2.       UIS TESTER                   ITC/ITC5510                 2 UNITS             SERIAL # 9011
                                                                                      SERIAL # 9103
----------------------------------------------------------------------------------------------------------------------
3.       MICROPROBER                  MICROMANIPULATOR            I UNIT              SERIAL # 83010
                                      MODEL 6000
----------------------------------------------------------------------------------------------------------------------
4.       TO-247 120 CAVITIES MOLD     MOSPEC                      I SET               SERIAL # NOT AVAILABLE
         TOOL / LOADING FRAME
----------------------------------------------------------------------------------------------------------------------
5.       D3 MOLD TOOL / LOADING       Micro Precision Tooling     1 UNIT              PURCHASED JOINTLY W/ MOTOROLA
         FRAME, 120 CAVITIES
----------------------------------------------------------------------------------------------------------------------
6.       SOT-227 2 CHASES             Samtech/Sungwoo             1 - CHASE           DECOMMISSIONED
----------------------------------------------------------------------------------------------------------------------
7.       D3PAK TEST HANDLER           EXATRON                     1 SET               SERIAL # 5000H9801085
----------------------------------------------------------------------------------------------------------------------
8.       TESEC 8101T                  TESEC                       1 UNIT              SERIAL # 41840-0373
----------------------------------------------------------------------------------------------------------------------
9.       M20 WIREBONDER               ORTHODYNE                   2 UNITS             SERIAL # 101301
                                                                                      SERIAL # 8911002
----------------------------------------------------------------------------------------------------------------------
10.      TESEC HI-CURRANT UNIT        TESEC                       2 UNITS             SERIAL # 41950-0047
         8213-CU                                                                      SERIAL # 41950-0095
----------------------------------------------------------------------------------------------------------------------
11.      HIGH VOLTAGE MODEL 7818-HV   TESEC                       1 UNIT              SERIAL # 41640-0068
----------------------------------------------------------------------------------------------------------------------
12.      MANUAL TEST MODULE 80005-MB  TESEC                       1 UNIT              SERIAL # 41740-0130
----------------------------------------------------------------------------------------------------------------------
13.      DELTA TESTER     8114-KT     TESEC                       1 UNIT              SERIAL # 41890-0338
----------------------------------------------------------------------------------------------------------------------
14.      DELTA TESTER     8115-PU     TESEC                       1 UNIT              SERIAL # 41900-0338
----------------------------------------------------------------------------------------------------------------------
15.      CURVE TRACER 577 TECHRONIX   TUCKER                      1 UNIT              SERIAL # 810490
----------------------------------------------------------------------------------------------------------------------
16.      DEGREASER                    SONIO                       1 UNIT              SERIAL # ---------1298
----------------------------------------------------------------------------------------------------------------------
17.      GRANITE STONE                MESCO                       1 UNIT              SERIAL # RAHNTLR23800ly
----------------------------------------------------------------------------------------------------------------------
18.      ARBOR PRESS                                              1 UNIT
----------------------------------------------------------------------------------------------------------------------
19.      DIGIMATIC MINIPROCESSOR /    MITUTOYO                    1 UNIT              SERIAL # 7676256
         CALIPER
----------------------------------------------------------------------------------------------------------------------
20.      WEIGHING SCALE               FUJI                        1 UNIT              SERIAL # MHY00308
----------------------------------------------------------------------------------------------------------------------
21.      UIS TESTER INDUCTOR LOAD     ITC/ITC5514                 2 UNITS             SERIAL # 9104
                                                                                      SERIAL # 8836
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       19
<PAGE>

                                   APPENDIX V

                      LIST OF CONSIGNED MATERIALS FOR ASPM


Stock Number                                  Description
CIAN 46-3%                                    Chip Resistor 68K ohms 3%
CIAN46 5%                                     Chip Resistor
CIAN 46-10%                                   Chip Resistor
D88                                           Epoxy Haradener - Part B
E520                                          Resin Urethane U4745
MK0422A                                       Preform
MK0527A                                       Preform
Mk0659A                                       Preform
MK0685A                                       Power Terminal
MK0740A                                       Signal Terminal
MK0741A                                       Signal Terminal
MK0751A                                       Power Connector SP3
MK0752A                                       Power Connector SP2
MP0076A                                       Plastic Frame
MP0082C                                       Plastic Wall
MP0093C                                       Plastic Frame
MS0271B                                       Base Plate
MS2019B                                       DBC Substrate
MS2019C                                       DBC Substrate
MS2039B                                       Substrate DBC FOZU
TSE322                                        Sil Gel Rubber ADH Sealant
TSE25                                         Sil Rubber


                                       20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>19
<FILENAME>ex-211.txt
<DESCRIPTION>EXHIBIT 21.1
<TEXT>

<PAGE>


                                  EXHIBIT 21.1

                              LIST OF SUBSIDIARIES

Advanced Power Technology Europe, S.A., formed under the laws of France.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>20
<FILENAME>ex-23_1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>

                                                                  EXHIBIT 23.1

                         CONSENT OF INDEPENDENT AUDITORS





The Board of Directors
Advanced Power Technology, Inc.:

We consent to the use of our report included herein dated February 25, 2000,
relating to the consolidated balance sheets of Advanced Power Technology, Inc.
as of December 31, 1998 and 1999, and the related consolidated statements of
operations, stockholders' deficit and cash flows for each of the years in the
three-year period ended December 31, 1999 and to the reference to our firm
under the heading "Experts" and "Selected Consolidated Financial Data" in the
Prospectus.



                                                            /s/ KPMG LLP


Portland, Oregon
June 1, 2000
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>21
<FILENAME>ex-271.txt
<DESCRIPTION>EXHIBIT 27.1
<TEXT>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S>                                        <C>                     <C>                     <C>
<PERIOD-TYPE>                              YEAR                    YEAR                    3-MOS
<FISCAL-YEAR-END>                          DEC-31-1998             DEC-31-1999             DEC-31-2000
<PERIOD-START>                             JAN-01-1998             JAN-01-1999             JAN-01-2000
<PERIOD-END>                               DEC-31-1998             DEC-01-1999             MAR-31-2000
<CASH>                                              56                     316                     177
<SECURITIES>                                         0                       0                       0
<RECEIVABLES>                                    3,749                   4,509                   5,658
<ALLOWANCES>                                       110                      62                     103
<INVENTORY>                                      5,305                   5,153                   5,589
<CURRENT-ASSETS>                                10,423                  11,064                  12,386
<PP&E>                                          12,458                  13,129                  14,121
<DEPRECIATION>                                   9,384                  10,646                  10,848
<TOTAL-ASSETS>                                  14,200                  13,859                  15,871
<CURRENT-LIABILITIES>                            9,908                  12,087                  13,292
<BONDS>                                              0                       0                       0
<PREFERRED-MANDATORY>                                0                       0                       0
<PREFERRED>                                          0                       0                       0
<COMMON>                                            50                      50                      50
<OTHER-SE>                                     (2,501)                 (2,525)                 (2,187)
<TOTAL-LIABILITY-AND-EQUITY>                    14,200                  13,859                  15,871
<SALES>                                         24,851                  27,461                   9,561
<TOTAL-REVENUES>                                24,851                  27,461                   9,561
<CGS>                                           18,439                  18,000                   6,178
<TOTAL-COSTS>                                   18,439                  18,000                   6,178
<OTHER-EXPENSES>                                 8,037                   8,205                   2,532
<LOSS-PROVISION>                                     0                       0                       0
<INTEREST-EXPENSE>                               1,208                   1,308                     271
<INCOME-PRETAX>                                (2,775)                      25                     592
<INCOME-TAX>                                   (1,119)                     200                     348
<INCOME-CONTINUING>                            (1,656)                   (175)                     244
<DISCONTINUED>                                       0                       0                       0
<EXTRAORDINARY>                                      0                       0                       0
<CHANGES>                                            0                       0                       0
<NET-INCOME>                                   (1,656)                   (175)                     244
<EPS-BASIC>                                     (0.33)                  (0.04)                    0.05
<EPS-DILUTED>                                   (0.33)                  (0.04)                    0.04


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
