<SUBMISSION>
<ACCESSION-NUMBER>0000912057-00-034775
<TYPE>S-1/A
<PUBLIC-DOCUMENT-COUNT>15
<FILING-DATE>20000804
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ADVANCED POWER TECHNOLOGY INC
<CIK>0001114973
<ASSIGNED-SIC>3674
<IRS-NUMBER>930875072
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-1/A
<ACT>33
<FILE-NUMBER>333-38418
<FILM-NUMBER>686630
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>405 SW COLUMBIA STREET
<CITY>BEND
<STATE>OR
<ZIP>97702
<PHONE>5413828028
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>405 SW COLUMBIA STREET
<CITY>BEND
<STATE>OR
<ZIP>97702
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-1/A
<SEQUENCE>1
<FILENAME>s-1a.txt
<DESCRIPTION>FORM S-1/A
<TEXT>

<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 2000

                                                      REGISTRATION NO. 333-38418
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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


                               AMENDMENT NO. 3 TO


                                    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. / /

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

    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>

                                EXPLANATORY NOTE



    The purpose of this Amendment No. 3 is solely to update Item 13 of Part II
of the Registration Statement, and to file certain exhibits to the Registration
Statement as set forth below as Item 16(a) of Part II.

<PAGE>

                                    PART II
                     INFORMATION NOT REQUIRED IN 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..........................    69,375.00
Legal fees and expenses.....................................   275,000.00
Accounting fees and expenses................................   200,000.00
Printing and engraving expenses.............................   150,000.00
Transfer agent and registrar fees...........................       500.00*
Miscellaneous expenses......................................     9,509.00
TOTAL.......................................................  $730,000.00
</TABLE>


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


*   Per month


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
</TABLE>


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


<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER           NAME OF DOCUMENT
---------------------   ----------------
<C>                     <S>
        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, as amended

        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

        10.18           Credit Agreement with Silicon Valley Bank

         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. The omitted portions have been filed separately with the
    SEC.


+   Previously filed.

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.

                                      II-2
<PAGE>
ITEM 17. UNDERTAKINGS. (CONTINUED)
    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 Amendment No. 3 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of
Portland, Oregon on August 3, 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>


    Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to 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         August 3, 2000
                 Patrick P.H. Sireta                     executive officer)

                 */s/ GREG M. HAUGEN                   Chief Financial Officer
     -------------------------------------------         (principal financial and     August 3, 2000
                   Greg M. Haugen                        accounting officer

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

               */s/ JAMES E. PETERSEN
     -------------------------------------------       Director                       August 3, 2000
                  James E. Petersen
</TABLE>


<TABLE>
<S>  <C>                                                    <C>                                  <C>
*                   /s/ PATRICK P.H. SIRETA
            --------------------------------------
                       ATTORNEY-IN-FACT
</TABLE>

                                      II-4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1.1
<SEQUENCE>2
<FILENAME>ex-1_1.txt
<DESCRIPTION>EXHIBIT 1.1
<TEXT>

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                               3,500,000 SHARES*

                                  COMMON STOCK

                                ($0.01 PAR VALUE)

                             UNDERWRITING AGREEMENT

Stephens Inc.
Needham & Company, Inc.
First Security Van Kasper
  As Representatives of the several
  Underwriters named in Schedule I hereto.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas  72201

Gentlemen:

         Advanced Power Technology, Inc., a Delaware corporation (the
"Company"), and the entities named in Schedule II hereto (the "Selling
Stockholders"), including Advanced Energy Industries, Inc. ("Advanced Energy
Industries"), confirm their agreement with the several underwriters (the
"Underwriters") for whom you are acting as representatives (the
"Representatives") for the Company to issue and sell 2,400,000 shares of the
Company's common stock, par value $0.01 per share, to the Underwriters, and for
the Selling Stockholders to sell an aggregate of 1,100,000 shares of the
Company's common stock to the Underwriters (said shares to be issued and sold by
the Company and shares to be sold by the Selling Stockholders collectively being
hereinafter called the "Underwritten Shares"). The Company's common stock is
more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.

         For the sole purpose of covering over-allotments in connection with the
sale of the Underwritten Shares, the Company and Advanced Energy Industries
shall grant to the Underwriters the option (the "Option") described in Section 2
hereof to purchase all or any part of an additional 525,000 shares of the
Company's common stock (the "Option Shares"). The Underwritten Shares and the
Option Shares purchased pursuant to this Underwriting Agreement (this
"Agreement") are herein called the "Shares" and the proposed offering of the
Shares by the Underwriters is hereinafter referred to as the "Public Offering."

         The Company has filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the "Act"),
and published

-------------------
         *Plus up to 525,000 additional shares of common stock to cover
over-allotments.

<PAGE>

rules and regulations adopted by the Commission under the Act (the "Rules"), a
registration statement on Form S-1 ("Form S-1") (File No. 333-38418), including
a Preliminary Prospectus, relating to the Shares, and such amendments to such
registration statement as may have been filed with the Commission to the date of
this Agreement. The Company will also file with the Commission one of the
following: (A) prior to effectiveness of such registration statement, a further
amendment to such registration statement, including the form of final
prospectus, and/or (B) after effectiveness of such registration statement, a
final prospectus in accordance with Rules 430A and 424(b). The Company has
furnished to the Representatives copies of such registration statement, each
amendment to it filed by the Company with the Commission, and each Preliminary
Prospectus filed by the Company with the Commission. The registration statement
as amended at the time it becomes or became effective (the "Effective Date"),
including financial statements and all exhibits and any information deemed to be
included by Rule 430A, is called the "Registration Statement." The term
"Preliminary Prospectus" means the Preliminary Prospectus dated July 11, 2000
and any Preliminary Prospectus (as referred to in Rule 430 or Rule 430A of the
Rules) included at any time after July 11, 2000 as a part of the registration
statement, and the term "Prospectus" means the prospectus relating to the Shares
that is first filed pursuant to Rule 424(b) after the date hereof.

         Any reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein on or before the Effective Date or
the date of such Preliminary Prospectus or the Prospectus, as the case may be.

         As the Representatives, you have advised the Company and the Selling
Stockholders that (a) you are authorized to enter into this Agreement on behalf
of the several Underwriters and (b) the Underwriters are willing, acting
severally and not jointly, to purchase the amounts of the Underwritten Shares
set forth opposite their respective names in Schedule I hereto, plus their pro
rata portion of the Option Shares if you elect to exercise the over-allotment
Option in whole or in part for the accounts of the several Underwriters.

         In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the Company,
the Selling Stockholders and the Underwriters hereby agree as follows:

         1.       REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         (a)      The Company and the Selling Stockholders, other than Advanced
Energy Industries, jointly and severally, represent and warrant to, and agree
with, each Underwriter as follows:

                  (i)      The Company has been duly organized, is in compliance
         with its Certificate of Incorporation, and is validly existing as a
         corporation in good standing under the laws of the State of Delaware,
         with full power and authority (corporate and other) to own its
         properties and conduct its business as described in the Prospectus.
         Each significant subsidiary (as defined by the Act) of the Company
         (each a "Subsidiary" and collectively, the "Subsidiaries") has been
         duly incorporated and is validly existing as a corporation in good
         standing under the laws of the jurisdiction of its organization, with
         full power and


                                       2
<PAGE>

         authority (corporate and other) to own or lease its properties, and
         conduct its business. The Company and the Subsidiaries are duly
         qualified to transact business in all jurisdictions in which the
         conduct of its business or the ownership or lease of its properties
         requires such qualifications except where the failure to be so
         qualified would not reasonably be expected to have a Material Adverse
         Effect (as defined below). The Company owns all of the outstanding
         capital stock of its Subsidiaries free and clear of any pledge, lien,
         security interest, encumbrance, claim or equitable interest.

                  (ii)     The outstanding shares of common stock of the Company
         have been duly and validly authorized and issued and are fully paid and
         non-assessable; the Shares are duly and validly authorized, and, if not
         now issued, when issued and paid for as contemplated herein, will be
         fully paid and non-assessable. As of the Closing Date, there will be no
         preemptive or other similar rights to subscribe for or to purchase, or
         any restriction upon the voting or transfer of the Shares pursuant to
         the Company's Certificate of Incorporation, bylaws, or other governing
         documents or any agreement or other instrument to which the Company or
         any of its Subsidiaries is a party or by which any of them may be
         bound. Neither the filing of the Registration Statement nor the
         offering of the Shares as contemplated by this Agreement gives rise to
         any rights, other than those which have been waived or satisfied, for
         or relating to the registration of any shares of any class of the
         Company's capital stock. The Shares have been approved for listing on
         The Nasdaq National Market, subject to official notice of issuance.

                  (iii)    The Shares conform in all material respects with the
         statements concerning them in the Prospectus. As of the Closing Date
         (as defined below) and any Option Closing Date (as defined below), if
         applicable, the Company will have the authorized capital stock set
         forth under the caption "Description of Capital Stock" in the
         Prospectus. No further corporate approval or authority on behalf of the
         Company will be required for the issuance and sale of the Shares to be
         sold by the Company as contemplated herein.

                  (iv)     Any Preliminary Prospectus, the Prospectus and the
         Registration Statement comply as to form with the requirements of the
         Act and the Rules, including Form S-1.

                  (v)      Neither the Commission nor any other agency, body,
         authority, court or arbitrator of competent jurisdiction has, by order
         or otherwise, prohibited or suspended the use of any Preliminary
         Prospectus or the Prospectus relating to the proposed offering of the
         Shares or, to the Company's knowledge, instituted proceedings for that
         purpose. The Registration Statement, the Prospectus and any Preliminary
         Prospectus and any amendments or supplements thereto at the time they
         became or become effective or were filed or are filed with the
         Commission contained or will contain all statements which are required
         to be stated therein by, and in all material respects conformed or will
         conform to the requirements of, the Act and the Rules. Neither the
         Registration Statement nor any Preliminary Prospectus nor any amendment
         thereto, and neither the Prospectus nor any supplement thereto, as of
         its date and while effective, contained any untrue statement of a
         material fact or omitted to state any material fact required to be
         stated therein or necessary to make the statements therein, in light of
         the circumstances under which they were made, not misleading; PROVIDED,
         HOWEVER, that the Company does not make any representations or


                                       3
<PAGE>

         warranties as to information contained in or omitted from the
         Registration Statement or any Preliminary Prospectus or the Prospectus,
         or any such amendment or supplement, in reliance upon, and in
         conformity with, written information furnished to the Company by or on
         behalf of any Underwriter through the Representatives, expressly for
         use in the preparation thereof as hereinafter set forth in Section 15.

                  (vi)     The consolidated financial statements of the Company
         and the Subsidiaries, together with related notes and schedules as set
         forth in the Registration Statement, present fairly the consolidated
         financial condition and the results of operations of the Company and
         the Subsidiaries, at the indicated dates and for the indicated periods.
         Such financial statements have been prepared in accordance with
         generally accepted accounting principles ("GAAP"), consistently applied
         throughout the periods involved, and all adjustments necessary for a
         fair presentation of results for such periods have been made. The
         summary financial information and the selected financial data included
         in the Prospectus present fairly in accordance with GAAP the
         information shown therein and have been compiled on a basis consistent
         with that of the audited and unaudited financial statements from which
         they were derived.

                  (vii)    Except as is disclosed in the Prospectus, there is no
         action or proceeding pending or, to the knowledge of the Company,
         threatened against the Company, any of its Subsidiaries or any of their
         respective officers or any of their properties, assets or rights before
         any court or administrative or governmental agency or other body which
         reasonably would be expected to (A) result in any material adverse
         change in the financial condition, or in the earnings, business,
         affairs, properties, business prospects or results of operations of the
         Company and its Subsidiaries taken as a whole ("Material Adverse
         Change" or "Material Adverse Effect," as the case may be), whether or
         not arising in the ordinary course of business, (B) adversely affect
         the performance of this Agreement or the consummation of the
         transactions herein contemplated, except as disclosed in the Prospectus
         and for which the Company maintains a reserve in an amount which it
         believes is adequate to cover potential liabilities, or (C) be required
         to be disclosed in the Registration Statement.

                  (viii)   The Company and each of its Subsidiaries are not in
         violation of any law, ordinance, governmental rule or regulation or
         court decree to which they may be subject which violation reasonably
         would be expected to have a Material Adverse Effect.

                  (ix)     The Company and its Subsidiaries have valid title to
         all assets reflected in the consolidated financial statements
         hereinabove described or as described in the Prospectus as being owned
         by them, subject to no lien, mortgage, pledge, charge or encumbrance of
         any kind except those securing indebtedness described in such financial
         statements or as described in the Prospectus or which do not materially
         affect the present or proposed use of such properties or assets or
         would not cause a Material Adverse Effect. The Company and its
         Subsidiaries occupy their leased properties under valid, subsisting and
         binding leases with only such exceptions as in the aggregate are not
         material and do not interfere with the conduct of the business of the
         Company and its Subsidiaries. There


                                       4
<PAGE>

         exists no default under the provisions of any lease, contract or other
         obligation to which the Company is a party which may result in a
         Material Adverse Change.

                  (x)      The Company and its Subsidiaries have filed all
         federal, state and other tax returns and reports which have been
         required to be filed and have paid all taxes indicated by said returns
         and all assessments received by them to the extent that such taxes have
         become due and there is no tax deficiency that has been or, to the
         Company's knowledge, might be asserted against the Company or any of
         its Subsidiaries that might have a Material Adverse Effect. All
         material tax liabilities are adequately provided for on the books of
         the Company and its Subsidiaries.

                  (xi)     Since the respective dates as of which information is
         given in the Registration Statement and the Prospectus, as they may be
         amended or supplemented, and except as set forth in the Registration
         Statement, (A) there has not been any Material Adverse Change nor, to
         the knowledge of the Company, is any such change threatened, (B) there
         has not been any transaction entered into by the Company or its
         Subsidiaries that is material to the earnings, business, affairs,
         properties, business prospects or operations of the Company and its
         Subsidiaries taken as a whole, other than transactions in the ordinary
         course of business and changes and transactions contemplated by the
         Registration Statement and the Prospectus, as they may be amended or
         supplemented, (C) other than changes in the amounts outstanding under
         the Company's and its Subsidiaries' revolving credit facilities, there
         has not been any material change in the capital stock, long term debt
         or material liabilities of the Company or its Subsidiaries, and (D)
         there has not been any dividend or distribution of any kind declared,
         paid or made on the capital stock of the Company or any of its
         Subsidiaries. Neither the Company nor any Subsidiary has any contingent
         obligations or liabilities which are required to be but are not
         disclosed in the Registration Statement and the Prospectus.

                  (xii)    The filing of the Registration Statement and related
         Prospectus and the execution and delivery of this Agreement have been
         duly authorized by the Board of Directors of the Company; this
         Agreement constitutes a valid and legally binding obligation of the
         Company enforceable in accordance with its terms except as
         enforceability may be limited by bankruptcy, insolvency, fraudulent
         conveyance, reorganization, moratorium and other laws affecting
         creditors' rights generally and by general principles of equity and
         federal and state securities laws. The Company is not in breach or
         violation of or default under any indenture, mortgage, deed of trust,
         lease, contract, note or other agreement or instrument to which it is a
         party or by which it or any of its properties is bound and which
         breach, violation or default would reasonably be expected to have a
         Material Adverse Effect. The consummation of the transactions herein
         contemplated and the fulfillment of the terms hereof will not result in
         a breach or violation of any of the material terms and provisions of,
         or constitute a default under, any indenture, mortgage, deed of trust,
         lease, contract, note or other agreement or instrument to which the
         Company or any Subsidiary is a party, or of the Company's or any
         Subsidiary's charter documents or any law, decree, order, rule, writ,
         injunction or regulation applicable to the Company or any Subsidiary of
         a court or of any regulatory body or administrative agency or other
         governmental body having jurisdiction over the Company and its
         Subsidiaries


                                       5
<PAGE>

         except for such breaches, violations or defaults as would not
         reasonably be expected to have a Material Adverse Effect.

                  (xiii)   Each approval, consent, order, authorization,
         designation, declaration or filing by or with any regulatory,
         administrative or other governmental body necessary in connection with
         the execution and delivery by the Company of this Agreement and
         performance of its obligations hereunder (except such additional steps
         as may be necessary to qualify the Shares for public offering by the
         Underwriters under state securities or Blue Sky laws, and filing the
         Prospectus under Rule 424(b)) has been obtained or made and is in full
         force and effect.

                  (xiv)    The Company and each Subsidiary hold all material
         licenses, authorizations, charters, certificates and permits from
         governmental authorities which are necessary to the conduct of their
         businesses and neither the Company nor any Subsidiary has received
         notice of any proceeding relating to the revocation or modification of
         any of such licenses, authorizations, charters, certificates or
         permits. The Company and its Subsidiaries own or otherwise possess
         rights to the patents, patent rights, licenses, inventions, copyrights,
         trademarks, service marks and trade names presently employed by them in
         connection with the businesses now operated by them as described in the
         Prospectus, and neither the Company nor any of its Subsidiaries has
         infringed or received any notice of infringements of or conflict with
         asserted rights of others with respect to any of the foregoing, except
         where such infringement or conflict would not reasonably be expected to
         result in a Material Adverse Effect.

                  (xv)     KPMG LLP, independent auditors, who have certified
         certain of the financial statements filed with the Commission and
         included as part of the Registration Statement and Prospectus, are
         independent public accountants within the meaning of the Act, the Rules
         and Regulation S-X of the Commission and Rule 101 of the Code of
         Professional Ethics of the American Institute of Certified Public
         Accountants.

                  (xvi)    There are no agreements, contracts or other documents
         of a character required to be described in the Registration Statement
         or the Prospectus or required by Form S-1 to be filed as exhibits to
         the Registration Statement or incorporated by reference in the
         Registration Statement which are not described, filed or incorporated
         as required.

                  (xvii)   No labor dispute is pending or, to the knowledge of
         the Company, threatened by the Company's or any Subsidiary's employees
         which could result in a Material Adverse Effect. No collective
         bargaining agreement exists with any of the Company's employees and, to
         the Company's knowledge, no agreement is imminent.

                  (xviii)  Except as contemplated by Section 2 hereof and as
         disclosed in the Prospectus and permitted by the Rules, the Company has
         not (itself or through any person) taken and will not take, directly or
         indirectly, any action designed to or which might reasonably be
         expected to, cause or result in a violation of Section 5 of the Act or
         Regulation M under the Act or in stabilization or manipulation of the
         price of the Company's common stock.


                                       6
<PAGE>

                  (xix)    Without limiting the generality of any of the
         foregoing representations and warranties and except to the extent no
         Material Adverse Effect would reasonably be expected to occur, (a) none
         of the operations of the Company or its Subsidiaries is in violation of
         any material environmental law, regulation or any permit; (b) neither
         the Company nor any of its Subsidiaries has been notified that it is
         under investigation or under review by any governmental agency with
         respect to compliance therewith or with respect to the generation, use,
         treatment, storage or release of hazardous material; (c) neither the
         Company nor any of its Subsidiaries have any material liability in
         connection with the past generation, use, treatment, storage, disposal
         or release of any hazardous material; (d) there is no hazardous
         material that may reasonably be expected to pose any material risk to
         safety, health, or the environment, on, under or about any property
         owned, leased or operated by the Company or any of its Subsidiaries or,
         to the knowledge of the Company, any property adjacent to any such
         property; and (e) there has heretofore been no release of any hazardous
         material on, under or about such property, or, to the knowledge of the
         Company, any such adjacent property. None of the present or, to the
         knowledge of the Company, past property of the Company or any of its
         Subsidiaries is listed or proposed for listing on the National
         Priorities List pursuant to the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as amended ("CERCLA"), or on
         the Comprehensive Environmental Response Compensation Liability
         Information System List ("CERCLIS") or any similar state list of sites
         requiring remedial action. Neither the Company nor any of its
         Subsidiaries is subject to any state Environmental Property Transfer
         Act, or to the extent that any such statute is applicable to any
         property, the Company and its Subsidiaries have fully complied with
         their obligations under such statute(s), and neither has any
         outstanding obligations or liabilities under any state Environmental
         Property Transfer Act.

                  (xx)     The Company and its Subsidiaries maintain insurance
         of the types and in the amounts customary for their businesses,
         including, but not limited to, insurance covering liability and real
         and personal property owned or leased by the Company against theft,
         damage, destruction, acts of vandalism and all other risks customarily
         insured against, all of which insurance is in full force and effect.

                  (xxi)    Neither the Company nor any Subsidiary has at any
         time during the last five years (a) made any unlawful contribution to
         any candidate for foreign office, or failed to disclose fully any
         contribution in violation of law, or (b) made any payment to any
         federal or state governmental officer or official, or other person
         charged with similar public or quasi-public duties, other than payments
         required or permitted by the laws of the United States or any
         jurisdiction thereof.

                  (xxii)   Except for stockholders owning an aggregate of 520
         shares of the Company's common stock, each executive officer, director
         and stockholder of the Company has executed a lock-up agreement, a form
         of which is attached hereto as Exhibit "A" (the "Lock-Up Agreement").


                                       7
<PAGE>

         Any certificate signed by any officer of the Company or a Selling
Stockholder, other than Advanced Energy Industries, and delivered to you or
counsel for the Underwriters shall be deemed a representation and warranty by
the Company and the Selling Stockholders to the Underwriters as to the matters
covered thereby.

         (b)      Each Selling Stockholder, severally, but not jointly,
represents and warrants to, and agrees with, each Underwriter as follows:

                  (i)      The Selling Stockholder is the record and beneficial
         owner of the Shares to be sold by it hereunder free and clear of all
         liens, encumbrances, equities and claims and has duly endorsed such
         Shares in blank, and, assuming that each underwriter acquires its
         interest in the Shares it has purchased from the Selling Stockholder
         without notice of any adverse claim (within the meaning of Section
         8-105 of the Uniform Commercial Code ("UCC")), each Underwriter that
         has purchased such Shares delivered on the Closing Date to The
         Depository Trust Company or other securities intermediary by making
         payment therefor as provided herein, and that has had such Shares
         credited to the securities account or accounts of such Underwriters
         maintained with The Depository Trust Company or such other securities
         intermediary will have acquired such Shares free and clear of any
         adverse claim (within the meaning of Section 8-105 of the UCC).

                  (ii)     The Selling Stockholder has not taken and will not
         take, directly or indirectly, any action designed to or which might
         reasonably be expected to cause or result in a violation of Section 5
         of the Act or Regulation M under the Act or in stabilization or
         manipulation of the price of the Company's common stock.

                  (iii)    Certificates in negotiable form for the Shares to be
         sold by the Selling Stockholder hereunder have been placed in custody,
         or delivery pursuant to the terms of this Agreement, under a Custody
         Agreement and Power of Attorney duly executed and delivered by the
         Selling Stockholder, in the form heretofore furnished to you, with the
         Company, as Custodian (the "Custodian"); and the Shares represented by
         the certificates so held in custody for the Selling Stockholder are
         subject to the interests hereunder of the Underwriters.

                  (iv)     No consent, approval, authorization or order of any
         court or governmental agency or body is required for the consummation
         by the Selling Stockholder of the transactions contemplated herein,
         except such as may have been obtained under the Act and such as may be
         required under the securities or blue sky laws of any jurisdiction in
         connection with the purchase and distribution of the Shares by the
         Underwriters and such other approvals as have been obtained.

                  (v)      Neither the sale of the Shares being sold by the
         Selling Stockholder nor the consummation of any other of the
         transactions herein contemplated by the Selling Stockholder or the
         fulfillment of the terms hereof by the Selling Stockholder will result
         in a breach or violation of, or constitute a default under any law or
         the terms of any indenture or other agreement or instrument to which
         the Selling Stockholder is a party or bound, or any judgment, order or
         decree applicable to the Selling Stockholder of any court, regulatory


                                       8
<PAGE>

         body, administrative agency, governmental body or arbitrator having
         jurisdiction over the Selling Stockholder.

                  (vi)     The information in the Registration Statement, the
         Preliminary Prospectus and the Prospectus under the caption "Principal
         and Selling Stockholders" that specifically relates to such Selling
         Stockholder has been furnished to the Company in writing by such
         Selling Stockholder expressly for use therein and does not, and will
         not on the date of the execution of this Agreement or on the Closing
         Date or the Option Closing Date, contain any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary to make the statements therein, in the light of
         the circumstances under which they were made, not misleading.

                  (vii)    In the case of Advanced Energy Industries only, it
         has no reason to believe that the representations and warranties of the
         Company and the other Selling Stockholder contained in this Section
         1(a) are not true and correct, is familiar with the Registration
         Statement and has no knowledge of any material fact, condition or
         information not disclosed in the Prospectus or any supplement thereto
         which has adversely affected or is reasonably expected to adversely
         affect the business of the Company or any of its subsidiaries; and the
         sale of Shares by Advanced Energy Industries pursuant hereto is not
         prompted by any information concerning the Company or any of its
         subsidiaries which is not set forth in the Prospectus or any supplement
         thereto.

                  Any certificate signed by a Selling Stockholder and delivered
to you or counsel for the Underwriters shall be deemed a representation and
warranty by that Selling Stockholder as to matters covered thereby.

         2.       PURCHASE, SALE AND DELIVERY OF THE UNDERWRITTEN SHARES. On the
basis of the representations, warranties and covenants herein contained, and
subject to the terms and conditions herein set forth, the Company and the
Selling Stockholders, severally and not jointly, agree to sell each Underwriter,
severally and not jointly, and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholders, at a price
of $_____ per share, the number of the Underwritten Shares set forth on Schedule
I attached hereto, subject to adjustment in accordance with Section 12 hereof.

         Payment for the Underwritten Shares shall be made by wire transfer of
immediately available U.S. Funds to the designated accounts of the Company and
each Selling Stockholder, respectively, to the order of the Company and each
Selling Stockholder, respectively, against delivery of certificates for the
Shares to the Representatives for the accounts of the several Underwriters.
Delivery of certificates shall be to the Representatives c/o Stephens Inc.
("Stephens"), 111 Center Street, Little Rock, Arkansas 72201, or at such other
address as Stephens may designate in writing. Payment will be made at the
offices of Stephens, or at such other place as shall be agreed upon by Stephens,
the Company and the Selling Stockholders, at approximately 9:00 a.m., central
time, on August __, 2000, such time and date being herein referred to as the
"Closing Date." The certificates for the Underwritten Shares will be delivered
in such denominations and in such registrations as Stephens reasonably requests
in writing and will be


                                       9
<PAGE>

made available for inspection at such locations as Stephens may reasonably
request at least one full business day prior to the Closing Date.

         In addition, on the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, Advanced Energy Industries hereby grants the Option
to the several Underwriters to purchase up to 150,000 of the Option Shares and
the Company hereby grants the Option to the several Underwriters to purchase the
remaining Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The Option may be exercised in whole or in part on
one occasion upon written notice (or oral notice, subsequently confirmed in
writing) given not more than thirty (30) days following the date of this
Agreement, by Stephens, on behalf of the Representatives of the several
Underwriters, to the Company and Advanced Energy Industries setting forth the
number of Option Shares as to which the several Underwriters are exercising the
Option and the names and denominations in which the Option Shares are to be
registered. If the Option is exercised in part, the number of Option shares to
be purchased from Advanced Energy Industries and from the Company, respectively,
shall be in the same proportion as the number of Option Shares granted by
Advanced Energy Industries and the Company, respectively, bears to the total
number of Option Shares. The Closing on the purchase of the Option Shares (the
"Option Closing Date"), if any, shall occur no later than three (3) business
days following the date upon which notice of exercise of the Option is given to
the Company and Advanced Energy Industries, and shall take place at the offices
of Stephens, or at such other place as shall be agreed upon by Stephens and the
Company. Subject to Section 12, the number of Option Shares to be purchased by
each Underwriter shall be in the same proportion to the total number of shares
of the common stock being purchased by such Underwriter bears to 3,500,000
shares, adjusted by you in such manner as to avoid fractional shares. The Option
may be exercised only to cover over-allotments in the sale of the Underwritten
Shares by the Underwriters. Stephens, on behalf of the Representatives of the
several Underwriters, may cancel such option at any time prior to its expiration
by giving written notice (or oral notice, subsequently confirmed in writing) of
such cancellation to the Company and Advanced Energy Industries. To the extent,
if any, that the Option is exercised, payment for the Option Shares shall be
made by wire transfer of immediately available U.S. Funds to designated accounts
of the Company and Advanced Energy Industries, to the order of the Company and
Advanced Energy Industries. Certificates for the Option Shares shall be
delivered in the same manner and upon the same terms as the Underwritten Shares.

         3.       [Intentionally Omitted].

         4.       OFFERING BY THE UNDERWRITERS. It is understood that the Public
Offering of the Underwritten Shares is to be made as soon as the Representatives
deem it advisable to do so after the Registration Statement has become
effective. The Underwritten Shares are to be initially offered to the public at
the public offering price set forth in the Prospectus. The Representatives may
from time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.


                                       10
<PAGE>

         It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares, in accordance with an
Agreement Among Underwriters which has been entered into by you and the several
other Underwriters.

         5. COVENANTS.

         (a)      The Company covenants and agrees with each of the several
Underwriters that:

                  (i)      The Company will use its best efforts to cause the
         Registration Statement to become effective and will not, either before
         or after effectiveness, file any amendment thereto or supplement to the
         Prospectus (including a prospectus filed pursuant to Rule 424(b) which
         differs from the Prospectus on file at the time the Registration
         Statement becomes effective) or file any documents under the Exchange
         Act before the earlier to occur of (A) the 35th day following the
         Effective Date or (B) the closing date of the Underwriters' purchase of
         the Option Shares if such document would be deemed to be incorporated
         by reference into the Registration Statement, the Preliminary
         Prospectus or the Prospectus of which the Representatives shall not
         previously have been advised and furnished with a copy or to which the
         Representatives shall have reasonably objected in writing or which is
         not in compliance with the Act or Rules.

                  (ii)     The Company will advise the Representatives promptly
         of any request of the Commission or other securities regulatory agency
         ("Other Securities Regulator") for amendment of the Registration
         Statement or for supplement to the Prospectus or for any additional
         information, or of the issuance by the Commission of any stop order
         suspending the effectiveness of the Registration Statement or the use
         of the Prospectus or of the institution of any proceedings for that
         purpose, or comparable action taken or initiated by any Other
         Securities Regulator, and the Company will use its reasonable efforts
         to prevent the issuance of any such stop order preventing or suspending
         the use of the Prospectus and to obtain as soon as possible the lifting
         thereof, if issued.

                  (iii)    The Company will use its reasonable efforts with the
         Representatives in endeavoring to qualify the Shares for sale under the
         securities laws of such jurisdictions (including foreign jurisdictions)
         as the Representatives may reasonably designate, and will make such
         applications, file such documents, and furnish such information as may
         be reasonably required for that purpose; PROVIDED, HOWEVER, the Company
         shall not be required to qualify as a foreign corporation or to file a
         general consent to service of process in any jurisdiction where it is
         not so qualified or required to file such a consent. The Company will,
         from time to time, prepare and file such statements, reports, and other
         documents, as are or may be required to continue such qualifications in
         effect for so long a period as the Representatives may reasonably
         request for distribution of the Shares.

                  (iv)     The Company will deliver to, or upon the order of,
         the Representatives, from time to time, as many copies of any
         Preliminary Prospectus or the Prospectus as the Representatives may
         reasonably request. The Company will deliver to, or upon the order of,
         the Representatives, on the Trade Date and thereafter from time to time
         during the period necessary to effect the distribution of the Shares as
         many copies of the Prospectus in


                                       11
<PAGE>

         final form, or as thereafter amended or supplemented, as the
         Representatives may reasonably request. The Company will deliver to
         each of the Representatives at or before the Closing Date, one (1)
         manually signed copy of the Registration Statement and all amendments
         thereto including all exhibits filed therewith (including any document
         filed under the Exchange Act and deemed to be incorporated by reference
         into the Registration Statement, the Preliminary Prospectus or the
         Prospectus) and will deliver to the Representatives such number of
         copies of the Registration Statement, but without exhibits, and of all
         amendments thereto, as the Representatives may reasonably request.

                  (v)      During the time necessary to effect the distribution
         of the Shares, the Company shall comply with all requirements imposed
         upon it by the Act, as now and hereafter amended, and by the Rules, as
         from time to time in force, so far as is necessary to permit the
         continuance of sales of or dealings in the Shares as contemplated by
         the provisions hereof and the Prospectus. If, during the period
         necessary to effect the distribution of the Shares, any event shall
         occur as a result of which, in the judgment of the Company or in the
         opinion of counsel for the Underwriters, it becomes necessary to amend
         or supplement the Prospectus in order to make the statements therein,
         in the light of the circumstances existing at the time the Prospectus
         is delivered to a purchaser, not misleading, or, if it is necessary at
         any time to amend or supplement the Prospectus to comply with any law
         or to file under the Exchange Act any document which would be deemed to
         be incorporated by reference in the Prospectus in order to comply with
         the Act or the Exchange Act, the Company promptly will notify the
         Representatives and, subject to the Representatives' prior review,
         prepare and file with the Commission and any appropriate Other
         Securities Regulator an appropriate amendment or supplement to the
         Prospectus (at the expense of the Company) so that the Prospectus as so
         amended or supplemented will not, in light of the circumstances when it
         is so delivered, be misleading, or so that the Prospectus will comply
         with the law.

                  (vi)     The Company will make generally available to its
         security holders in the manner contemplated by Rule 158(b) under the
         Act, as soon as it is practicable to do so, but in any event not later
         than the 90th day after the end of the fiscal quarter first occurring
         one year after the Effective Date, an earnings statement in reasonable
         detail, covering a period of at least twelve consecutive months
         beginning after the Effective Date, which earnings statement shall
         satisfy the requirements of Section 11(a) of the Act and will advise
         you in writing when such statement has been so made available.

                  (vii)    For a period of three years from the date of this
         Agreement, the Company will furnish to the Representatives (a)
         concurrently with furnishing of such reports to its stockholders,
         statements of income of the Company for each quarter in the form
         furnished to the Company's stockholders and certified by the Company's
         principal financial or accounting officer; (b) concurrently with
         furnishing to its stockholders, a balance sheet of the Company as at
         the end of such fiscal year, together with statements of earnings,
         stockholders' equity and cash flow of the Company for such fiscal year,
         all in reasonable detail and accompanied by a copy of the certificate
         or report thereon of independent public accountants; (c) as soon as
         they are available, copies of all reports (financial or other) mailed
         to stockholders; (d) as soon as they are available, copies of all
         reports and financial


                                       12
<PAGE>

         statements furnished to or filed with the Commission; (e) every press
         release which was released or prepared by the Company; and (f) any
         additional information of a public nature concerning the Company or its
         business which you may reasonably request. During such period, if the
         Company shall have active subsidiaries the foregoing financial
         statements shall be on a consolidated basis to the extent that the
         accounts of the Company and its subsidiaries are consolidated, and
         shall be accompanied by similar financial statements for any
         significant subsidiary (as defined by the Act) which is not so
         consolidated.

                  (viii)   Promptly after the Company is advised thereof, it
         will advise the Representatives, and confirm in writing, that the
         Registration Statement and any amendments shall have become effective.

                  (ix)     The Company will use the net proceeds from the sale
         of the Shares substantially in the manner set forth in the Prospectus
         under the caption "Use of Proceeds."

                  (x)      Other than as permitted by the Act and the Rules, the
         Company will not distribute any prospectus or offering materials in
         connection with the offering and sale of the Shares and prior to the
         Closing Date or the Option Closing Date will not issue any press
         releases or other communications directly or indirectly and will hold
         no press conferences with respect to the Company, the financial
         condition, results of operations, business, properties, assets or
         liabilities of the Company, or the offering of the Shares, without the
         prior written consent of Stephens.

                  (xi)     The Company will maintain a transfer agent and, if
         necessary under the jurisdiction of incorporation of the Company, a
         registrar for its common stock and will use its best efforts to
         maintain the listing of the Shares on The Nasdaq National Market.

                  (xii)    Except as contemplated hereby or by the Prospectus,
         the Company will not, directly or indirectly, for a period of one
         hundred eighty (180) days after the Effective Date of the Registration
         Statement, offer to sell, contract to sell, sell or otherwise dispose
         of any shares of the Company's common stock or securities convertible
         into or exercisable or exchangeable for shares of the Company's common
         stock without the prior written consent of Stephens.

         The foregoing covenants and agreements shall apply to any successor of
the Company, including without limitation, any entity into which the Company
might consolidate or merge.

         (b)      Each of the Selling Stockholders, severally and not jointly,
covenants and agrees with each of the several Underwriters that:

                  (i)      The Selling Stockholder will not, directly or
         indirectly, for a period of one hundred eighty (180) days from the
         Effective Date of the Registration Statement, offer to sell, contract
         to sell, sell or otherwise dispose of any shares of the Company's
         common stock or securities convertible into or exercisable or
         exchangeable for shares of the Company's common stock without the prior
         written consent of Stephens.


                                       13
<PAGE>

                  (ii)     The Selling Stockholder will advise you promptly, and
         if requested by you, will confirm such advice in writing, so long as
         delivery of a prospectus relating to the Shares by an Underwriter or
         dealer may be required under the Act, of any change in information in
         the Registration Statement or the Prospectus relating to the Selling
         Stockholder.

         (c)      Tremoliere, L.L.C. agrees that it will use a portion of its
net proceeds from the Offering to repay in full the $3.3 million note payable
plus accrued interest thereon by Tremoliere, L.L.C. to Hamilton Sundstrand and
the $3.1 million notes payable plus accrued interest thereon by Tremoliere,
L.L.C. to the Company.

         6.       COSTS AND EXPENSES. Whether or not the Registration Statement
becomes effective, the Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to Underwriters copies of the
Registration Statement, any Preliminary Prospectus, the Prospectus, this
Agreement, the Agreement Among Underwriters, the Selected Dealer Agreement,
Underwriters' Questionnaire and Power of Attorney, and the Blue Sky Survey and
any supplements thereto; the filing fees of the Commission; the filing fees
incident to securing any required review by the NASD of the terms of the sale of
the Shares on behalf of the Representatives and the fees and disbursements of
counsel to the Underwriters in connection therewith; the cost of printing
certificates representing the Shares; and the cost and charges of any transfer
agent or registrar. Any transfer taxes imposed on the sale of the Shares to the
Underwriters will be paid by the Company. The Company shall not, however, be
required to pay for any of the Underwriters' expenses (other than those related
to qualification under State securities or Blue Sky laws) except that, if the
Public Offering shall not be consummated because the conditions in Section 8
hereof are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 7 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on their part to be performed, unless such failure to satisfy said
condition or to comply with said terms is due to the default or omission of any
Underwriter, then the Company shall reimburse the several Underwriters for all
costs and expenses, including attorney fees and out-of-pocket expenses,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder.

         7.       CONDITIONS TO OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters to purchase and pay for the Shares as provided
herein, are subject to the accuracy, as of the Closing Date and as of the Option
Closing Date, of the representations and warranties and agreements of the
Company and the Selling Stockholders contained herein, to the performance by the
Company and the Selling Stockholders of their respective obligations hereunder
and to the following additional conditions:

                  (a)      The Registration Statement shall have become
         effective not later than 2:00 p.m., central time, on the date of this
         Agreement, unless a later time and date is agreed to by the
         Representatives, and no stop order or other order suspending the
         effectiveness


                                       14
<PAGE>

         thereof or the qualification of the Shares under the State securities
         or Blue Sky laws of any jurisdiction shall have been issued and no
         proceeding for that purpose shall have been taken or, to the knowledge
         of the Company, shall be contemplated or threatened by the Commission
         or any Other Securities Regulator. If the Company has elected to rely
         upon Rule 430A of the Rules, the price of the Shares and any
         price-related information previously omitted from the effective
         Registration Statement pursuant to such Rule 430A shall have been
         transmitted to the Commission for filing pursuant to Rule 424(b) of the
         Act within the prescribed time period, and prior to the Closing Date
         the Company shall have provided evidence satisfactory to the
         Representatives of such timely filing, or a post-effective amendment
         providing such information shall have been promptly filed and declared
         effective in accordance with the requirements of Rule 430A under the
         Act. All requests for additional information on the part of the
         Commission or any other government or regulatory authority with
         jurisdiction (to be included in the Registration Statement or
         Prospectus or otherwise) shall be complied with to the satisfaction of
         the Commission or such authorities.

                  (b)      The Representatives shall have received on the
         Closing Date and on the Option Closing Date the opinion of Davis Wright
         Tremaine LLP, counsel for the Company, with respect to matters set
         forth below dated the Closing Date and the Option Closing Date,
         addressed to the Underwriters in form and substance satisfactory to
         O'Melveny & Myers LLP, counsel to the Underwriters, to the effect that:

                           (i)      The Company and the Subsidiaries have been
                  duly organized and are validly existing in good standing under
                  the laws of the state(s) or similar foreign jurisdictions
                  (with respect to the Subsidiaries) of their organization with
                  corporate power to own their properties and conduct their
                  business as described in the Registration Statement and
                  Prospectus; the Company and the Subsidiaries are duly
                  qualified to transact business in each state in which the
                  Company or the Subsidiaries own or lease properties as shown
                  in the Prospectus; all of the outstanding shares of capital
                  stock of each Subsidiary has been duly authorized and are duly
                  issued, fully paid and non-assessable; and except as set forth
                  in the Prospectus and the Registration Statement, no options,
                  warrants or other rights to purchase, agreements or other
                  obligations to issue or other rights to convert any
                  obligations into any shares of capital stock of the Company or
                  any Subsidiary are outstanding.

                           (ii)     The Company has authorized and outstanding
                  the capital stock set forth under the caption "Description of
                  Capital Stock" in the Registration Statement and Prospectus;
                  all of the outstanding shares of the capital stock of the
                  Company have been duly authorized and are validly issued,
                  fully paid and non-assessable; all of the Shares conform to
                  the description thereof contained in the Prospectus; the
                  Shares to be sold pursuant to this Agreement have been duly
                  authorized and, upon payment for and delivery of the Shares
                  and the countersigning of the certificates representing the
                  Shares by a duly authorized signatory, the Shares will be
                  validly issued, fully paid and non-assessable when issued and
                  paid for as contemplated by this Agreement; there are no
                  preemptive or other restrictive rights to subscribe for


                                       15
<PAGE>

                  or to purchase or any restriction upon the voting or transfer
                  of the Shares pursuant to the Company's Certificate of
                  Incorporation, bylaws, other governing documents or, to such
                  counsel's knowledge, any material agreement or other
                  instrument to which the Company is a party or by which it is
                  bound; and neither the filing of the Registration Statement
                  nor the offering or sale of the Shares as contemplated by this
                  Agreement gives rise to any rights, other than those which
                  have been waived or satisfied, for or relating to the
                  registration of any class of the Company's capital stock.

                           (iii)    The Registration Statement has been declared
                  effective under the Act and to the knowledge of such counsel
                  no stop order proceedings with respect thereto have been
                  instituted by the Commission or threatened and all filings
                  required by Rule 424 and Rule 430A of the Rules have been
                  made.

                           (iv)     The Registration Statement, all Preliminary
                  Prospectuses, the Prospectus and each amendment or supplement
                  thereto, as of their respective dates they were filed,
                  appeared on their face to comply as to form in all material
                  respects with the requirements of the Act and the Rules,
                  except that such counsel need express no opinion as to the
                  information supplied by the Underwriters or the financial
                  statements, schedules and other financial or statistical
                  information included therein.

                           (v)      Except as set forth in the Registration
                  Statement and the Prospectus, to the knowledge of such
                  counsel, there are no contracts, agreements or understandings
                  between the Company and any person granting such person the
                  right to require the Company to file a registration statement
                  under the Act with respect to any securities of the Company
                  owned or to be owned by such person or to require the Company
                  to include such securities in the securities being registered
                  pursuant to a registration statement filed by the Company
                  under the Act.

                           (vi) The Company's execution and delivery of, and
                  performance of its obligations under, this Agreement do not
                  (A) violate the Company's and its Subsidiaries' respective
                  charter or bylaws, (B) breach or otherwise violate any
                  existing obligation of or restriction on the Company or its
                  Subsidiaries under any order, judgment or decree of any
                  federal or Delaware or Oregon court or government authority
                  binding on the Company or its Subsidiaries or (C) result in a
                  breach or constitute a default under any indenture, mortgage,
                  deed of trust, lease, contract, note or other agreement or
                  instrument to which the Company or any Subsidiary is a party
                  or to which any of their assets is bound. The execution and
                  delivery by the Company of, and performance of its obligations
                  under, the Agreement, do not violate any Delaware, Oregon or
                  federal statute or regulation that such counsel has, in the
                  exercise of customary professional diligence, recognized as
                  applicable to the Company or its Subsidiaries or to
                  transactions of the type contemplated by the Agreement, except
                  that such counsel need express no opinion regarding any
                  federal securities laws or Blue Sky or state securities laws.


                                       16
<PAGE>

                           (vii)    This Agreement has been duly authorized,
                  executed and delivered by the Company and is a valid and
                  binding obligation of the Company.

                           (viii)   No approval, consent, order or permit of any
                  Delaware, Oregon or any Federal governmental authority is
                  required on the part of the Company for the execution and
                  delivery of this Agreement or for the issuance and sale of the
                  Shares by the Company herein contemplated (other than required
                  by NASD regulation or state securities and Blue Sky laws, as
                  to which such counsel need express no opinion), except such as
                  have been obtained or made, specifying the same.

                           (ix)     The Company is not and, after giving effect
                  to the sale of the Shares and the application of the net
                  proceeds thereof as described in the Prospectus, will not be
                  an "investment company" required to register under the
                  Investment Company Act of 1940, as amended.

                           (x)      There are no actions or proceedings pending,
                  or to the knowledge of such counsel, threatened against the
                  Company, any of its Subsidiaries or any of their respective
                  officers or any of their properties, assets or rights before
                  any court or administrative or governmental agency or other
                  body which are not disclosed in the Prospectus and which
                  reasonably would be expected to have a Material Adverse Effect
                  or adversely affect the performance of this Agreement or the
                  consummation of the transactions herein contemplated.

                           (xi)     Such counsel does not know of any contract
                  or other document of a character required to be filed as an
                  exhibit to or described in the Registration Statement which is
                  not filed as required or disclosed.

         In addition to the matters set forth above, such counsel shall also
         include a statement to the effect that such counsel has participated in
         the preparation of the Registration Statement and the Prospectus and,
         based on such participation, no facts have come to the attention of
         such counsel which caused such counsel to believe that any part of the
         Registration Statement or any amendment thereto (other than the
         financial statements and other financial data contained therein, as to
         which such counsel may express no belief), as of its effective date,
         contained any untrue statement of a material fact or omitted to state
         any material fact required to be stated therein or necessary to make
         the statements therein not misleading or that the Prospectus or any
         amendment or supplement thereto (other than the financial statements
         and other financial data contained therein, as to which such counsel
         may express no belief), as of their respective dates and as of the date
         of the opinion contained or contains any untrue statement of a material
         fact or omitted or omits to state any material fact necessary in order
         to make the statements therein, in light of the circumstances under
         which they were made, not misleading.

                  Such counsel may state that its opinion is limited to the
         applicable law of the United States of America, the Delaware General
         Corporation Law, the laws of Oregon and the general corporate law of
         jurisdictions under which the Subsidiaries are organized, and that such
         counsel renders no opinion with respect to the law of any other
         jurisdiction. Such


                                       17
<PAGE>

         opinion shall contain only those qualifications as O'Melveny & Myers
         LLP, counsel to the Underwriters, may reasonably request or allow.

                  (c)      The Representatives shall have received on the
         Closing Date and on the Option Closing Date the opinion of Karnopp,
         Petersen, Noteboom, Hansen, Arnett & Sayeg LLP as to Tremoliere,
         L.L.C., and Thelen, Reid & Priest, as to Advanced Energy Industries,
         with respect to the matters set forth below dated the Closing Date and
         the Option Closing Date, as the case may be, addressed to the
         Underwriters in form and substance satisfactory to O'Melveny & Myers
         LLP, counsel to the Underwriters, to the effect that:

                  (i)      The Selling Stockholder has been duly organized and
         is validly existing in good standing under the laws of the state of its
         organization with corporate power to own the Shares owned by it and
         enter into this Agreement, the Custody Agreement and the Power of
         Attorney.

                  (ii)     Each of this Agreement, the Custody Agreement and the
         Power of Attorney has been duly authorized by all necessary corporate
         action on the part of the Selling Stockholder and has been duly
         executed and delivered by the Selling Stockholder.

                  (iii)    The Custody Agreement constitutes the legally valid
         and binding obligation of the Selling Stockholder, enforceable against
         the Selling Stockholder in accordance with its terms, except as may be
         limited by bankruptcy, insolvency, moratorium or similar laws relating
         to or affecting creditors' rights generally (including, without
         limitation, fraudulent conveyance laws) and by general principles of
         equity, including, without limitation, concepts of materiality,
         reasonableness, good faith and fair dealing and the possible
         unavailability of specific performance or injunctive relief, regardless
         of whether considered in a proceeding in equity or at law.

                  (iv)     Upon payment for and delivery to the Underwriters of
         the Shares sold by the Selling Stockholder in accordance with this
         Agreement, assuming each of the Underwriters is acquiring the Shares
         sold by the Selling Stockholder without notice of any adverse claim,
         the Underwriters will acquire the Shares free and clear of any adverse
         claim as defined in Article 8 of the UCC.

                  (v)      No order, consent, permit or approval of any
         Delaware, Oregon or federal governmental authority is required on the
         part of the Selling Stockholder for the execution and delivery of this
         Agreement, the Custody Agreement or the Power of Attorney or the sale
         of the Shares sold by the Selling Stockholder, except such as have been
         obtained under the Act and such as may be required under the securities
         or blue sky laws of any other jurisdiction.

                  (vi)     The Selling Stockholder's execution and delivery of,
         and performance of its obligations under, this Agreement, the Custody
         Agreement and the Power of Attorney do not (A) violate the Selling
         Stockholder's charter or bylaws, (B) breach or otherwise violate any
         existing obligation of or restriction on the Selling Stockholder under
         any order,


                                       18
<PAGE>

         judgment or decree of any federal or Delaware or Oregon court or
         government authority binding on the Selling Stockholder or (C) result
         in a breach or constitute a default under any indenture, mortgage, deed
         of trust, lease, contract, note or other agreement or instrument to
         which the Selling Stockholder is a party or to which any of its assets
         is bound. The execution and delivery by the Selling Stockholder of, and
         performance of its obligations under, the Agreement, the Custody
         Agreement and the Power of Attorney do not violate any Delaware, Oregon
         or federal statute or regulation that such counsel has, in the exercise
         of customary professional diligence, recognized as applicable to the
         Selling Stockholder or to transactions of the type contemplated by the
         Agreement, the Custody Agreement or the Power of Attorney, except that
         such counsel need express no opinion regarding any federal securities
         laws or blue sky or state securities laws.

                  (d)      The Representatives shall have received on the
         Closing Date and on the Option Closing Date from O'Melveny & Myers LLP,
         counsel to the Underwriters, an opinion dated the Closing Date and the
         Option Closing Date, substantially to the effects specified in
         subparagraph (iii) and (iv) of paragraph (b) of this Section 7, and
         that the Company is a validly organized and existing corporation under
         the laws of the State of Delaware. In addition to the matters set forth
         above, such opinion shall also include a statement to the effect that
         nothing has come to the attention of such counsel which leads them to
         believe that the Registration Statement or any amendment thereto at the
         time the Registration Statement or amendment became effective contained
         any untrue statement of a material fact or omitted to state a material
         fact required to be stated therein or necessary to make the statements
         therein not misleading or the Prospectus or any amendment or supplement
         thereto as of their respective dates or as of the date of the opinion,
         contained or contains an untrue statement of a material fact or omitted
         or omits to state a material fact necessary in order to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading (except that such counsel need express no view as
         to financial statements and other financial information included
         therein).

                  (e)      The Representatives shall have received at or prior
         to the Closing Date from O'Melveny & Myers LLP a memorandum or summary,
         in form and substance satisfactory to the Representatives, with respect
         to the qualification or exemption therefrom for offering and sale by
         the Underwriters of the Shares under the State securities or Blue Sky
         laws of such jurisdictions as the Representatives may reasonably have
         designated.

                  (f)      The Representatives shall have received on the
         Closing Date and on the Option Closing Date, as the case may be, signed
         letters from KPMG LLP, addressed to the Underwriters dated as of the
         Effective Date and again dated as of the Closing Date and as of the
         Option Closing Date, as the case may be, with respect to the financial
         statements and certain financial and statistical information contained
         in the Registration Statement and the Prospectus. All such letters
         shall be in form and substance satisfactory to the Representatives and
         O'Melveny & Myers LLP, counsel to the Underwriters.

                  (g)      The Representatives shall have received on the
         Closing Date and on the Option Closing Date, as the case may be, a
         certificate or certificates of the President & Chief Executive Officer
         and Vice President and Chief Financial Officer of the Company to


                                       19
<PAGE>

         the effect that, on and as of the Closing Date and on and as of the
         Option Closing Date, as the case may be, each of them severally
         represents as follows:

                           (i)      The Registration Statement has become
                  effective under the Securities Act and no stop order
                  suspending the effectiveness of the Registration Statement has
                  been issued, and no proceedings for such purpose have been
                  taken or are, to his knowledge, contemplated by the
                  Commission.

                           (ii)     He has examined the Registration Statement
                  and the Prospectus and, in his opinion, as of the effective
                  date of the Registration Statement, the statements contained
                  in the Registration Statement and the Prospectus were true and
                  correct in all material respects, and such Registration
                  Statement and Prospectus did not omit to state a material fact
                  required to be stated therein or necessary in order to make
                  the statements therein, in light of the circumstances in which
                  they were made, not misleading and, in his opinion, since the
                  effective date of the Registration Statement, no event has
                  occurred which should have been set forth in a supplement to
                  or an amendment of the Prospectus which has not been so set
                  forth in such supplement or amendment.

                  (h)      The Company and each Selling Stockholder shall have
         furnished to the Representatives such additional information and
         further certificates and documents confirming the representations and
         warranties contained herein and related matters as the Representatives
         may reasonably have requested.

                  (i)      Since the respective dates as of which information is
         given in the Prospectus, there shall not have been any Material Adverse
         Change.

                  (j)      The Shares shall have been approved for listing on
         The Nasdaq National Market, subject to official notice of issuance.

         The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and O'Melveny & Myers LLP,
counsel for the Underwriters.

         If any of the conditions hereinabove provided for in this Section 7
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Selling Stockholders of
such termination in writing or by confirmed telefax at or prior to the Closing
Date. In such event, neither the Company, the Selling Stockholders or any of the
Underwriters shall be under any obligation to the other (except to the extent
provided in Sections 6, 9 and 10 hereof).

         8.       CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The obligations of the Company and the Selling Stockholders to
sell and deliver the Shares are subject to the conditions that (a) at or before
2:00 p.m., central time, on the date of this Agreement, or such later time and
date as the Company and the Representatives may from time to time consent to in
writing or by confirmed telefax, the Registration Statement shall have become
effective, and


                                       20
<PAGE>

(b) at the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued or proceedings therefor initiated
or threatened. If either of the conditions hereinabove provided for in this
Section 8 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, this Agreement may be terminated by the Company and the Selling
Stockholders jointly by notifying the Representatives of such termination in
writing or by confirmed telefax at or prior to the Closing Date.

         9.       INDEMNIFICATION.

         (a)      The Company and Tremoliere, L.L.C., jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the Act, the Rules and the
Exchange Act from and against any and all losses, claims, damages, liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon any breach of any representation or warranty of the Company
or Tremoliere, L.L.C. contained in Section 1(a) or any agreement or covenant of
the Company contained herein, or any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company and Tremoliere, L.L.C.,
jointly and severally, will reimburse each Underwriter and each such controlling
person for legal and other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; PROVIDED, HOWEVER, that neither the Company nor Tremoliere, L.L.C.
will be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement made in, or omission or alleged omission from, the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically for use
in the preparation thereof, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in Section 15 below; and PROVIDED FURTHER, that with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from any Preliminary Prospectus, the indemnity agreement contained in this
Section 9(a) shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Shares concerned, to the extent that a prospectus relating to such Shares was
required to be delivered by such Underwriter under the Act in connection with
such purchase and any such loss, claim, damage or liability of such Underwriter,
results from the fact that there was not sent or given to such person, at or
prior to the written confirmation of the sale of such Shares to such person, a
copy of the Prospectus as then amended or supplemented (excluding any documents
incorporated by reference therein) if the Company had previously furnished
copies thereof to such Underwriter. This indemnity agreement will be in addition
to any liability which the Company or Tremoliere, L.L.C. may otherwise have.

         (b)      Each Selling Stockholder, severally, but not jointly, agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the


                                       21
<PAGE>

meaning of the Act, the Rules and the Exchange Act from and against any and all
losses, claims, damages, liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any breach of any
representation or warranty of such Selling Stockholder contained in Section 1(b)
or any agreement or covenant of such Selling Stockholder contained herein and
each Selling Stockholder will reimburse each Underwriter and each such
controlling person for legal and other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding. This indemnity agreement will be in addition to
any liability which each Selling Stockholder may otherwise have.

         (c)      Each Underwriter severally, but not jointly, will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, and each person, if any, who controls
the Company, within the meaning of the Act, the Rules and the Exchange Act and
each of the Selling Stockholders from and against any losses, claims, damages or
liabilities to which the Company, or any such director, officer, or controlling
person or Selling Stockholder may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made; and will reimburse any legal or
other expenses reasonably incurred by the Company, or any such director,
officer, controlling person or Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; PROVIDED, HOWEVER, that each Underwriter will be liable in such case
only to the extent that such untrue statement, or alleged untrue statement or
omission or alleged omission has been made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company by or
through the Representatives expressly for use in the preparation thereof, which
information is described in Section 15. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.

         (d)      Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action or proceeding, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 9, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 9, except to the extent that the indemnifying
party is substantially prejudiced by the omission of such notification. In case
any such action or proceeding is brought against any party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses


                                       22
<PAGE>

subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding. Any indemnified party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel has
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party has failed to assume the defense and employ counsel, or (iii)
the named parties to any such action (including any impleaded parties) include
such indemnified party and the indemnifying party, as the case may be, and such
indemnified party shall have been advised in writing by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party, in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that (A) the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such indemnified parties, which firm shall be designated in
writing by the indemnified parties, and that (B) all such fees and expenses
shall be reimbursed as they are incurred. Subject to the foregoing provisions of
this Section 9(c), the indemnifying party shall not be liable for the costs and
expenses of any settlement of any action without the consent of the indemnifying
party.

         (e)      In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 9 is for
any reason held to be unavailable to an indemnified party under subsection (a)
or (b) above in respect to any losses, claims, damages, liabilities or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the parties in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholders on the one hand and the Underwriters on the other
hand shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholders bears to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of a party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.


                                       23
<PAGE>

The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any such action or claim.

         The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriters have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute shall be several in proportion to their respective
underwriting obligations and not joint.

         (f)      In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 9 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.

         (g)      The liability of Advanced Energy Industries under Section 9(b)
shall be limited to an amount equal to the net proceeds to Advanced Energy
Industries from the sale of the Shares sold by Advanced Energy Industries to the
Underwriters.

         10.      Upon the liquidation and winding up of Tremoliere, L.L.C., the
members of Tremoliere, L.L.C. executing this Agreement, jointly and severally,
will assume the obligations of Tremoliere, L.L.C. under this agreement;
PROVIDED, HOWEVER, that the liability of each member of Tremoliere, L.L.C. shall
be limited to an amount equal to the greater of (i) such member's proportionate
share of the net proceeds from the sale of the Shares sold by Tremoliere, L.L.C.
or (ii) the fair market value of the assets distributed to such member upon the
liquidation and winding up of Tremoliere, L.L.C.

         11.      REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements of the Company or its
officers and of the Selling Stockholders herein or in certificates delivered
pursuant hereto, and the indemnity and contribution agreements contained in
Section 9 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriters or any controlling
person, or by or on behalf of any Selling Stockholder or the Company or any of
its officers,


                                       24
<PAGE>

directors or controlling persons, and shall survive delivery of the Underwritten
Shares and, if appropriate, the Option Shares to the Representatives or
termination of this Agreement.

         12.      DEFAULT BY UNDERWRITERS. If any Underwriter shall fail to
purchase and pay for the Shares which such Underwriter has agreed to purchase
and pay for hereunder (otherwise than by reason of any default on the part of
the Company), you, as the Representatives of the Underwriters, shall use your
best efforts to procure within twenty-four hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon and upon the terms set forth
herein, the Shares which the defaulting Underwriter or Underwriters failed to
purchase. If during such twenty-four hours you, as such Representatives, shall
not have procured such other Underwriters, or any others, to purchase the Shares
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Shares which the Underwriters are obligated to
purchase hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective number of Shares which they are obligated to
purchase hereunder, to purchase the Shares which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of Shares with
respect to which such default shall occur exceeds 10% of the Company's common
stock covered hereby, the Company or you, as the Representatives of the
Underwriters will have the right, by written notice given within the next
twenty-four hour period to the parties to this Agreement, to terminate this
Agreement without liability on the part of the non-defaulting Underwriters, the
Company or the Selling Stockholders, except to the extent provided in Section 9
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 12, the time of closing may be postponed for such period,
not to exceed seven days, as you, as the Representatives, may determine in order
that the required changes in the Registration Statement, the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriters"
includes any person substituted for a defaulting Underwriter. Any action taken
under Section 12 shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.

         13.      NOTICES. All communications hereunder shall be in writing and,
except as otherwise provided in, will be mailed, delivered or telefaxed and
confirmed as follows: if to the Underwriters, c/o the Representatives as
follows: to Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201,
Attention: Sandra Farmer, with a copy to O'Melveny & Myers LLP, 400 South Hope
Street, 15th Floor, Los Angeles, California 90071, Attention: Richard Boehmer;
if to the Company, to Advanced Power Technology, Inc., 405 SW Columbia Street,
Bend, Oregon 97702, Attention: Patrick Sireta, with a copy to Karnopp, Petersen,
Noteboom, Hansen, Arnett & Sayeg LLP, 1201 NW Wall Street, Suite 300, Bend,
Oregon 97701-1936, Attention: James E. Petersen, and with a copy to Davis Wright
Tremaine LLP, 1300 S.W. Fifth Avenue, Suite 2300, Portland, Oregon 97201,
Attention: Dave Baca; if to Advanced Energy Industries, to Advanced Energy
Industries, Inc., 1625 Sharp Point Drive, Fort Collins, Colorado 80525,
Attention: Douglas Schatz.


                                       25
<PAGE>

         14.      TERMINATION. This Agreement may be terminated by notice to the
Company and the Selling Stockholders as follows:

                  (a)      at any time prior to the Closing Date if any of the
         following has occurred: (i) since the respective dates as of which
         information is given in the Registration Statement and the Prospectus,
         any Material Adverse Change which would, in your reasonable judgment,
         materially make it impracticable to market the Shares in the manner
         contemplated by the Prospectus, (ii) any outbreak of hostilities or
         other national or international calamity or crisis or change in
         economic or political conditions if the effect of such outbreak,
         calamity, crisis or change on the financial markets of the United
         States would, in your reasonable judgment, make the offering or
         delivery of the Shares impracticable, (iii) suspension of trading or
         general trading halts in securities on the New York Stock Exchange, the
         American Stock Exchange, The Nasdaq National Market or the
         over-the-counter market or limitation on prices (other than limitations
         on hours or numbers of days or trading) for securities on either such
         Exchange, The Nasdaq National Market or the over-the-counter market,
         (iv) the enactment, publication, decree or other promulgation of any
         federal or state statute, regulation, rule or order of any court or
         other governmental authority which in your reasonable opinion
         materially and adversely affects or will materially or adversely affect
         the business or operations of the Company, (v) declaration of a banking
         moratorium by either federal or state authorities, or (vi) the taking
         of any action by any federal, state or local government or agency in
         respect of its monetary or fiscal affairs which in your reasonable
         opinion has a material adverse effect on the securities markets in the
         United States; or

                  (b)      as provided in Sections 7 and 12 of this Agreement.

         15.      INFORMATION FURNISHED BY UNDERWRITERS. The information set
forth in the Prospectus: (a) in the last paragraph on the cover page, (b) (i) in
the table under the caption "Underwriting" on page 52, listing the Underwriters
and the number of shares each has agreed to purchase, (ii) in the first
paragraph below said table on page 52, relating to the concession to dealers and
the reallowance to certain other dealers under the caption "Underwriting" in the
Prospectus and (c) in the four paragraphs on page 53 of the Prospectus under the
caption "Stabilization," constitute the written information furnished by or on
behalf of any Underwriters referred to in paragraph (a) (v) of Section 1 hereof
and in paragraphs (a) and (b) of Section 9 hereof.

         16.      SUCCESSORS. This Agreement has been and is made solely for the
benefit of the Underwriters, the Company and their respective successors,
executors, administrators, heirs, and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Shares merely because of such purchase.

         17.      MISCELLANEOUS. The Representatives will act for the several
Underwriters in connection with this offering, and any action under this
Agreement taken by the Representatives jointly or by Stephens Inc. will be
binding upon all of the Underwriters.


                                       26
<PAGE>

         This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

         This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Arkansas, without giving effect to the choice of law or
conflict of law principles thereof.

                            [Signature Page Follows]


                                       27
<PAGE>

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.

                                    Very truly yours,

                                    Advanced Power Technology, Inc.

                                    By:
                                       ------------------------------------
                                         Patrick P.H. Sireta
                                         President and Chief Executive Officer

                                    Tremoliere, L.L.C.

                                    By:
                                       ------------------------------------
                                         Name:
                                         Title:

                                    Advanced Energy Industries, Inc.

                                    By:
                                       ------------------------------------
                                         Name:
                                         Title:

                                   MEMBERS (as to Section 10 only):

                                   ----------------------------------------
                                               Patrick P.H. Sireta

                                   ----------------------------------------
                                                  Dah Wen Tsang

                                   ----------------------------------------
                                                  John I. Hess


                                      S-1
<PAGE>
                                    MEMBERS (as to Section 10 only):



                                   ----------------------------------------
                                                Thomas A. Loder

                                   ----------------------------------------
                                              Russell J. Crecraft

                                   ----------------------------------------
                                                  Greg M. Haugen

The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first above written.

Stephens Inc.
Needham & Company, Inc.
First Security Van Kasper

By:  Stephens Inc.

By:
   -------------------------------------------
     Name:
     Title:

As Representatives of the several Underwriters
named in Schedule I hereto


                                      S-2
<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>

Name                                                               No. of Underwritten Shares
----                                                               --------------------------

<S>                                                                      <C>
Stephens Inc..............................................
Needham & Company, Inc....................................
First Security Van Kasper.................................               -------------


Total                                                                        3,500,000
                                                                             =========
</TABLE>

                                  Schedule I-1
<PAGE>

                                   SCHEDULE II
<TABLE>
<CAPTION>

Selling Stockholder:                                                                  No. of Underwritten Shares:
--------------------                                                                  ---------------------------

<S>                                                                                                <C>
Tremoliere, L.L.C...............................................................                     930,000
Advanced Energy Industries, Inc.................................................                     170,000

      Total.....................................................................                   1,100,000
                                                                                                   =========

</TABLE>


                                 Schedule II-1
<PAGE>

                                    EXHIBIT A

                              _______________, 2000

Stephens Inc.
Needham & Company, Inc.
First Security Van Kasper
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas  72201

Re:      AGREEMENT NOT TO SELL ADVANCED POWER TECHNOLOGY, INC. STOCK

Ladies and Gentlemen:

         This letter is provided, at the request of Advanced Power Technology,
Inc. (the "Company"), for the benefit of the Company and the Underwriters in
connection with the proposed public offering of shares of the Company's Common
Stock. As an inducement to the Underwriters to (a) enter into an Underwriting
Agreement with the Company and the Selling Stockholders and (b) consummate the
transactions contemplated in such Underwriting Agreement, the undersigned hereby
represents and agrees as follows:

         1. Upon the closing of the Company's initial public offering, the
undersigned will beneficially own the number of shares of the Company's Common
Stock set forth below opposite the signature of the undersigned (the "Shares"),
and no others.

         2. The undersigned agrees that, for a period of [180 days*] from the
effective date of the Registration Statement, the undersigned will not directly
or indirectly, offer to sell, contract to sell, sell or otherwise dispose of any
of the Shares or securities convertible into or exercisable or exchangeable for
the Company's Common Stock, without the prior written consent of Stephens Inc.,
on behalf of the Representatives of the Underwriters.

Shares of Common Stock:                   Very truly yours,

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

[* 90 days with respect to Finova Technology Finance, Inc.]

                                  Exhibit A-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>3
<FILENAME>ex-4_1.txt
<DESCRIPTION>EXHIBIT 4.1
<TEXT>

<PAGE>
<TABLE>
<S><C>
NUMBER                                                                                                                      SHARES

APT
                                                             ADVANCED
                                                               POWER
                                                            TECHNOLOGY

                                                           COMMON STOCK
INCORPORATED UNDER THE LAWS                                                                                   CUSIP  00761E  10  8
OF THE STATE OF DELAWARE                                                                       SEE REVERSE FOR CERTAIN DEFINITIONS

THIS IS TO CERTIFY THAT






Is the owner of

                           fully paid and non-assessable shares, $0.01 par value, of the COMMON STOCK of
                                                  ADVANCED POWER TECHNOLOGY, INC.

(hereinafter called the "Corporation"), transferable on the books of the Corporation in person, or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned by a Transfer Agent and
registered by a Registrar.

         WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:
                                                  ADVANCED POWER TECHNOLOGY, INC.
                                                          CORPORATE SEAL
                                                          MARCH 23, 1992
                                                             DELAWARE
         SECRETARY AND CHIEF FINANCIAL OFFICER                                     PRESIDENT, CHAIRMAN AND CHIEF EXECUTIVE OFFICER



                                                                          COUNTERSIGNED AND REGISTERED
                                                                                   AMERICAN SECURITIES TRANSFER & TRUST, INC.
                                                                                   P.O. BOX 1596, Denver, Colorado 80201

                                                                          BY

                                                                             TRANSFER AGENT AND REGISTRAR AUTHORIZED SIGNATURE
</TABLE>
<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

         A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of determination, the
number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
from the Secretary of the Corporation at the principal office of the
Corporation.

         The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S><C>
         TEN COM    -as tenants in common                 UNIF GIFT MIN ACT_________Custodian__________
         TEN ENT    -as tenants by the entireties                           (Cust)             (Minor)
         JT TEN     -as joint tenants with right          Under Uniform Gifts to Minors
                     of survivorship and not as tenants   Act___________________________________________
                     in common                                               (State)
         COM PROP   -as community property
                                                          UNIF TRF MIN ACT_________Custodian (until age ___)
                                                                           (Cust)
                                                          __________under Uniform Transfers to Minors Act
                                                           (Minor)
                                                          ---------------------------------------------
                                                                              (State)
</TABLE>

     Additional abbreviations may also be used though not in the above list

         FOR VALUE RECEIVED, _______________________________________ hereby
sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

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

--------------------------------------------------------------------------------
 (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

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

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

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

__________________________________________________________________________SHARES
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

________________________________________________________________________ATTORNEY
To transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated__________________________

                                            X
                                            ------------------------------------

                                            X
                                            ------------------------------------
Signature(s) Guaranteed             NOTICE: The signature to
                                            this assignment must correspond with
                                            the name(s) as written upon the face
                                            of the Certificate in every
                                            particular, without alteration or
                                            enlargement or any change whatever.



By_________________________________________________
The signature(s) must be guaranteed by an eligible
guarantor institution (banks, Stockbrokers,
savings and loan associations and credit unions
with membership In an approved signature guarantee
medallion program), pursuant to S.E.C. Rule
17Ad-15.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>ex-5_1.txt
<DESCRIPTION>EXHIBIT 5.1
<TEXT>

<PAGE>

                                  [LETTERHEAD]

August 3, 2000



Board of Directors
Advanced Power Technology, Inc.
405 SW Columbia St.
Bend, OR  97702

Re:      Registration Statement on Form S-1

Dear Sirs:

We have acted as counsel to Advanced Power Technology, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission"), under the Securities
Act of 1933, as amended (the "Securites Act") of the Company's Registration
Statement on Form S-1 (Registration No. 333-38418), as amended by pre-effective
Amendment nos. 1, 2 and 3 thereto (the "Registration Statement"). The
Registration Statement relates to the sale of up to 4,025,000 shares of the
Company's common stock, $.01 par value (the "Common Stock"), to be sold pursuant
to the terms of an underwriting agreement among the Company and Stephens Inc.,
Needham & Company, Inc., and First Security Van Kasper (the "Underwriting
Agreement").

In our capacity as such counsel, we have examined and relied upon the originals,
or copies certified or otherwise identified to our satisfaction, of the
Registration Statement and such corporate records, documents, certificates and
other agreements and instruments that we have deemed necessary or appropriate to
enable us to render the opinions hereinafter expressed.

Based on the foregoing, and having regard for such legal considerations as we
deem relevant, we are of the following opinion:

         1.       The Common Stock has been duly authorized by all necessary
                  corporate action of the Company;

         2.       When issued and sold by the Company against payment therefore
                  pursuant to the terms of the Underwriting Agreement, the
                  Common Stock issued by the Company

<PAGE>

Page 2

                  will be validly issued, validly paid and nonassessable. The
                  Common Stock to be sold by the Selling Stockholders, as that
                  term is defined in the Underwriting Agreement, is validly
                  issued, fully paid and nonassessable.

We are members of the Bar of the State of Oregon and are expressing our opinion
only as to matters of Oregon law and the Delaware General Corporations Law.

We hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and it is referenced to us under the heading "Legal Matters" in the
related prospectus.

Very truly yours,

Davis Wright Tremaine LLP



/s/ Davis Wright Tremaine LLP
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>5
<FILENAME>ex-10_5.txt
<DESCRIPTION>EXHIBIT 10.5
<TEXT>

<PAGE>

                                                                   Exhibit 10.5

                            ADVANCED POWER TECHNOLOGY

                    CHANGE TO EMPLOYMENT AGREEMENT AMENDMENT
                                  DATED 3/5/86



This change to the employment agreement amendment dated March 5, 1986
(attached), by and between Advanced Power Technology, Inc. ("Company") and John
Hess, VP Marketing and Discrete Product Operations ("Employee").

CHANGE:
FROM: Should the Agreement terminate upon the happenings of any of the events
defined in subparagraphs 2.1.a, 2.1.b, 2.1.c, 2.1.d, 2.1.f, the Company will pay
the Employee a severance pay equal to three months of salary upon termination,
in the event Employee would not have secured alternate employment. Should
Employee secure alternate employment earlier than three months after
termination, then the prorata temporaris portion of the severance pay paid to
the employee would become reimbursable to the Company.

TO: (f) Unilaterally by the Company without cause, in which event (Section 2.2
to the contrary notwithstanding) the Company will continue to pay Employee the
full amount due as salary for a period of thirty days following notice of
termination.

This change is made effective as of July 10, 2000.





                                       By:              /s/ John Hess
                                            ------------------------------------
                                            John Hess, VP Marketing & Discrete
                                            Product Operations

<PAGE>

                         ADVANCED POWER TECHNOLOGY, INC.

                              EMPLOYMENT AGREEMENT
                       (MANAGEMENT & TECHNICAL PERSONNEL)

         THIS EMPLOYMENT AGREEMENT is made and entered into this 6TH day of
November, 1985, by and between ADVANCED POWER TECHNOLOGY, INC., an Oregon
corporation ("Company") and John I. Hess, 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 employs Employee as Vice-President of Operations of
Company with the powers and 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 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

<PAGE>

                                                                              2

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

                  (f) Without cause, in which event (Section 2.2 to the contrary
                  notwithstanding) 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
         Sections 4-9 shall survive termination.

         2.3      This Agreement shall not be terminated by any:

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

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

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

                  (d) Consolidation to which Company is a party.

<PAGE>

                                                                             3

                  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 the services which Employee
         agrees to render hereunder, Employee is entitled to the following:

                  (a) Beginning on October 22, 1985, an annual base salary of $
                  75,000 , subject to increase 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 reasonable and documented
                  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 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
                  vacation is noncumulative and must be taken during the twelve
                  (12) months following accrual.

<PAGE>

                                                                             4


                  (e) Such other fringe 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 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 pay relocation expenses paid by Company if he
         or she voluntarily terminates employment 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 secret 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

         5.       ASSIGNMENT OF PROPRIETARY INTERESTS

                  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 frorn 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,

<PAGE>

                                                                             6


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.

         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 or customer 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.       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>

                                                                             7


         9.       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.

         10.      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.

         11.      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.

         12.      BINDING AGREEMENT

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

         13.      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.

<PAGE>

                                                                             8


         14.      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 herein. No modification of this Agreement shall
be valid unless made in writing and signed by the parties hereto.

         15.      GOVERNING LAW

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

         16.      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 set forth below:

                  If to Company:

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

                  With a copy to:

                  Thomas J. Poletti, Esq.
                  Freshmen, Marantz, Orlanski, Comsky & Deutsch
                  9100 Wilshire Blvd., Ste. 8-E
                  Beverly Hills, CA  90212

                  If to EMPLOYEE:

                  John I. Hess
                  60246 Woodside Road
                  Bend, Oregon  97702

<PAGE>

                                                                             9


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. an Oregon
                                  corporation ("Company")


                               -------------------------------------------------
                               RU   /s/ Patrick Sireta     11.6.85
                                 -------------------------

                               Patrick Sireta
                               President and Chief Executive Officer




                                      /s/ John I. Hess          11/6/85
                               -------------------------------------------------
                               John I. Hess

<PAGE>

                            ADVANCED POWER TECHNOLOGY

                        AMENDMENT TO EMPLOYMENT AGREEMENT

This amendment to the employment agreement signed on November 6, 1985, is made
and entered into this 5th day of March 1986, by and between Advanced Power
Technology, Inc. an Oregon Corporation ("Company") and John Hess an individual
("Employee").

Whereas, Employee is an employee of Company upon the terms and conditions
defined in Employment Agreement signed on November 6, 1985.

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

Should the Agreement terminate upon the happening of any of the events defined
in subparagraphs 2.1.a, 2.1.b, 2.1.c, 2.1.d, 2.1.f, the Company will pay
Employee a severance pay equal to three months of salary upon termination, in
the event Employee would not have secured alternate employment. Should Employee
secure alternate employment earlier than three months after termination, then
the prorata temporaris portion of the severance pay payed to the Employee would
become reimbursable to the Company.

This amendment is made effective as of March 5, 1986 and for a period of 12
months.

In witness whereof, the parties have executed this Amendment on the day and year
first written above.

                                     ADVANCED POWER TECHNOLOGY, INC.
                                     an Oregon Corporation "Company":


                                     By:       /s/ Patrick Sireta
                                        ----------------------------------------
                                           Patrick Sireta
                                           President & Chief Executive Officer


                                     Employee

                                      /s/ John Hess                    3/5/86
                                     -------------------------------------------
                                          John Hess
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>6
<FILENAME>ex-10_10.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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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>7
<FILENAME>ex-10_11.txt
<DESCRIPTION>EXHIBIT 10.11
<TEXT>

<PAGE>

                              MANUFACTURING AGREEMENT

















[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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.






[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          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>8
<FILENAME>ex-10_12.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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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:

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

PRICETABLE

------------------------------------------------------------------------------
1) Cost for starting material is only a indication. Real cost can be fixed
   after Wacker has offered.
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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
1) Cost for starting material is only a indication. Real cost can be fixed
   after Wacker has offered.
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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
1) Cost for starting material is only a indication. Real cost can be fixed
   after Wacker has offered.
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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

PRICETABLE

--------------------------------------------------------------------------------
1) Cost for starting material is only a indication. Real cost can be fixed
   after Wacker has offered.
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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

PRICETABLE

-------------------------------------------------------------------------------
1) Cost for starting material is only a indication. Real cost can be fixed
   after Wacker has offered.
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         [*]                    [*]                    [*]               [*]          [*]

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

<PAGE>

  AMENDMENT TO THE AGREEMENT FOR WAFER PRODUCTION AND TESTING BETWEEN ADVANCED
              POWER TECHNOLOGY AND SIEMENS AS OF FEBRUARY 11, 1998

         This Amendment ("Amendment") is entered into as of the 19th day of July
2000

         By and between

         Infineon Technologies AG, a German corporation located at Balanstrasse
73, 81541 Munchen, Federal Republic of Germany (referred to as "INFINEON"),

         And

         Advanced Power Technology, Inc., a Delaware corporation located at 405
S.W. Columbia Street, Bend, Oregon, USA (referred to as "APT").

         WHEREAS, INFINEON's predecessor, Siemens Aktiongesellschaft, (referred
to as "SIEMENS") and APT have entered into an Agreement for Wafer Production and
Testing on February 11, 1998; and

         NOW, THEREFORE the parties agree to partly amend the Agreement and
agree as follows:

         1. INFINEON and APT agree that, while they intend to keep a very open
communication between their respective people, as has been the case since the
beginning of the cooperation between the two companies, they will also establish
a more formal set of communications for all matters relative to these
agreements. Such communications will be directly between INFINEON's Dr. Ploss
and APT's Mr. Sireta. They will include monthly telephone calls to review the
state of the business relationship and forecasts and plans for the future.

         2. INFINEON and APT reconfirm their mutual commitment to a continued
strong cooperation between the two companies, as governed by the two agreements
between them and taking into account the situation of their respective
businesses.

         3. INFINEON and APT agree that APT will consider a capital investment
in INFINEON's wafer fab to help relieve capacity bottle necks, or increase
capacity or capability and that INFINEON will consider such investment.

         4. INFINEON assumes liability for any personal injury for which it is
found responsible without limitation. If found responsible for property damages
of APT, INFINEON shall indemnify APT for expenses incurred for restoration of
the damaged property up to a maximum amount of DM 1 Million per damaging event.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

PAGE 1 - AMENDMENT

<PAGE>

Apart from warranties and liabilities expressly stipulated in the Agreement,
INFINEON disclaims all 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
the liability is mandatory at law.

         5.       Committed Capacity

         INFINEON agrees to commit the following capacity of wafer starts per
week to APT:

         [*]

         6.       Art. 4.1 and Art. 4.2 of the Agreement will be amended as
follows:

         For all quantities purchased by APT, the price for good Dies will be
fixed through [*] at the price level as of the date of signature of this
Amendment for the capacity committed in Art. 5, based on the [*] wafers/week of
Exhibit 7 of the Agreement and on the wafer transfer cost agreed as of this date
("Fixed Price").

         The provision concerning the price splitting - Exhibit 7.2 of the
Agreement - is hereby expressly amended. The Fixed Price is a combined price of
starting material and wafer processing.

         Parties agree to enter into annual negotiations concerning prices and
volumes starting with the annual period starting in [*]. In case no agreement
can be achieved, the prices and volumes then in existence will continue to
apply.

         7.       Termination

         Art. 12.1 of the Agreement is hereby amendment as follows:

         Each party may terminate the Agreement with two years prior written
notice to the end of a calendar year unless mutually agreed to reduce this
notice time. Infineon cannot give notice before the end of the calendar year of
2002.

         Art. 12.4 of the Agreement is hereby expressly abolished.

         8.       Penalty

         In case of material breach of the confidentiality clause as stipulated
in Art. 8 of the Agreement, each party agrees without the other party
substantiating any damage occurred to pay the penalty of $5,000, notwithstanding
the other party's right to claim damages exceeding aforementioned amount if it
may so prove.

         9.       Infineon hereby expressly gives its consent to have this
Amendment filed with the US SEC.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

PAGE 2 - AMENDMENT

<PAGE>

         10.      Other Changes

         The price for wafers out of risk production as stated in Art. 2.3.3
will be amended to be the Fixed Price as agreed in Article 6.

         Prices for the wafers as stated in Art. 2.3.4 will be amended to be the
Fixed Prices.

         Art. 3.1 of the Agreement will be abolished. The forecasts in Art. 3.5
have to stay within the committed capacity. In case of lost opportunity charges
as stipulated in Art. 3.4, instead of paying the processing price for all wafers
below the minimum quantity, APT will pay [*] of the Fixed Price.

         Art. 3.3 will be amended so that the price of such wafers and/or good
Die will be [*] of the Fixed Prices for the Committed Capacity effective at that
time.

         Art. 3.13 shall be amended to mean that the Fixed Price shall be paid.

Representative of                        Representative of
Infineon Technologies AG                 Advanced Power Technology, Inc.
Federal Republic of Germany              U.S.A.

(Signature)_____________________         (Signature)_____________________

Name: Dr. Ploss                          Name: Patrick Sireta
Position: Vice President and General     Position: President and Chief Executive
Manager, Industrial Power                Officer

(Signature)_____________________

Name: Ms. Sieglinde Feist
Position: Senior Director, Industrial Power






[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

PAGE 3 - AMENDMENT


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>9
<FILENAME>ex-10_13.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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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:                      [ * ]

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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)

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<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>10
<FILENAME>ex-10_14.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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       4



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>11
<FILENAME>ex-10_15.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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                      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 US$12,000,000,
comprising:

         -        A cash and asset investment by LHPE in an amount of
US$9,000,000 for a 75% ownership in JVC,

         -        A initial technology and asset investment by APT US
$3,000,000 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.

                                      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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                      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:

<TABLE>
<CAPTION>
         MILESTONES                                                      AMOUNTS
         <S>                                                            <C>
         - Signature of Agreement                                        [ * ]

         - Transfer of Documentation -- 50%                              [ * ]

         - Phase 1 and Phase 2 training -- 20%                           [ * ]

         - First 22 Functional MOSFET/IGBT/FRED Producted at JVC         [ * ]
           Meeting APT specification and 168 hours HTRB and HTGB
           with characterization report -- 15%

         - Finished products from 3 lots of 20 wafers or 1200V,          [ * ]
           30 or 50A, IGBT at 80% of APT overall yield -- 15%
</TABLE>

         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:

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                      6/11
<PAGE>

<TABLE>
<CAPTION>
         MILESTONE                                                      AMOUNTS
         <S>                                                            <C>
         - Signature of Agreement                                        [ * ]

         - Transfer of Documentation -- 50%                              [ * ]

         - Phase 1 and Phase 2 training -- 20%                           [ * ]

         - First 10 Functional ASPM of one selected type                 [ * ]
           produced at JVC meeting APT specification
           with characterization report--15%

         - 100 units of the ASPM defined by JVC per Exhibit 4 -- 15%     [ * ]
</TABLE>

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>

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                      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>12
<FILENAME>ex-10_16.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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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.

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.


                                       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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.


                                       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>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       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-10.17
<SEQUENCE>13
<FILENAME>ex-10_17.txt
<DESCRIPTION>EXHIBIT 10.17
<TEXT>

<PAGE>





BETWEEN THE UNDERSIGNED:

              1.  -  Mr. FAUGERAS - residing in MERIGNAC, 8 avenue des Martyrs
de la Liberation,

                            Born in VERTHEUIL (33) on June 27, 1923.

              2. - CENTRE FRANCAIS DU SPORT, a limited liability company with a
capital of twenty thousand francs, whose head office is located in MERIGNAC on
avenue Kennedy - chemin de Magret, registered with the Bordeaux Corporate and
Trade Register under No. 321831281 81B447,

                            Represented     by    its     manager,     Ms.
              Fabienne QUENNOUELLE,     residing    in ST-MEDARD-EN-JALLES, 26
              rue Jean Valmy Baysse - born in Paris 8th on January 25, 1957,

              3. - Mr. Jean-Marc CHICCO - residing in BOUSCAT at 320 avenue Leon
Blum, Residence Medicis acting on his own behalf as well as in the name of and
on behalf of POWER COMPACT - a business corporation that is being set up with a
capital of 400,000 Francs whose head office shall be located on avenue Kennedy,
chemin de Magret,

                            Born in MARSEILLE on December 26, 1951,

              WHEREAS:

              Through a private writing attached hereto and dated in MERIGNAC on
March 30, 1981, Mr. FAUGERAS leased premises to CENTRE FRANCAIS DU SPORT located
in MERIGNAC on chemin de Magret, avenue Kennedy, having an approximate area of
200 square metres built on fenced land with an approximate area of 1,200 square
metres, with an office, water, drive force electricity, W.C. and sink, lighting
by 4 neon tubes, telephone owned by the lessor, as well as forced air heating
with a fuel tank.

              This lease went into effect on April 1, 1981 in consideration of
annual rent of THIRTY-NINE THOUSAND, SIX HUNDRED Francs (39,600 F) duty free
plus right to the lease.

              Among the other clauses, the lease of March 30, 1981 contained
(translation) "There may be assignment with the consent of the owners".

              Contrary to the clauses of the attached lease, Mr. Chicco
acknowledges having only half of the raw land at his disposal (illegible). The
other half of the land being reserved to the other lease.

              NOW THEREFORE, IT WAS THEN AGREED AS FOLLOWS:

              "Effective NOVEMBER 1, 1982, Mr. CHICCO, acting in his capacity,
takes the place of CENTRE FRANCAIS DU SPORT in its rights and obligations toward
Mr. FAUGERAS and thus becomes the new lessee of the aforementioned premises
located in MERIGNAC avenue Kennedy - chemin de Magret."

              A copy of the assigned lease remains attached hereto and was
initialled by all the undersigned parties.

              Mr. FAUGERAS hereby authorizes CENTRE FRANCAIS DU SPORT to
transfer his rights to the premises forming the subject hereof to Mr. CHICCO,
acting in his capacity, through a private writing, whose activity shall


<PAGE>
                                                                             -2-


be (translation) "The design, manufacture and marketing of electronic-based
products".

              Moreover, Mr. FAUGERAS relieves the parties from the services to
be made in application of Article 1690 of the Civil Code.

              Upon the execution of the March 30, 1981 lease, CENTRE FRANCAIS DU
SPORT paid Mr. FAUGERAS a security deposit of 9,900 F plus a security for the
telephone in the amount of 1,000 adjustable to twice the bimonthly invoices. Mr.
FAUGERAS shall reimburse the sums he held as security deposits directly to
CENTRE FRANCAIS DU SPORT.

              On the other hand, Mr. CHICCO, acting in his capacity, undertakes
to provide, within the month following the execution hereof, a contract of
suretyship in the amount of 7,000 Francs as security deposit, guaranteeing, at
the end of the lessee's enjoyment and for one month after all has been moved and
all keys returned, any and all sums that may be owed by the lessee as rent,
refundable tax expenses, repairs or in any other way as well as those for which
the lessor may be held liable.

              Moreover, within the month following the execution hereof, Mr.
CHICCO shall also provide a second contract of suretyship in the amount of 6,000
Francs corresponding to the telephone.

              These sums shall not be interest bearing.

                          DECLARATION FOR REGISTRATION

              The parties declare that the right to the transferred lease was
not the subject of any payment whatsoever. However and for the collection of
duties, the parties assess it at ONE THOUSAND Francs.

              Mr. CHICCO shall assume the expenses, duties and fees hereof.

              Executed in BORDEAUX, in four counterparts including one for
registration.

              This third day of November,
              in the year one thousand, nine hundred and eighty-two.

Read and approved                           Read and approved
(s)                                         (s)



                                            Read and approved
                                            (s)
                                            F. Quennouelle, Manager
                                            CENTRE FRANCAIS DU SPORT



                                            Registered in Bordeaux (West)
                                            On 17/11/82, Bord. 288 No.2
                                            Receipt: fifty francs
                                            (s)


<PAGE>






LEASE 3/6/9/







OWNER:        Mr. FAUGERAS







LESSEE:       CENTRE FRANCAIS DU SPORT, whose manager is
              Ms. FABIENNE QUENNOUELLE
              Residing in Saint Medard-en-Jalles
              26 rue Jean Valmy Baysse.


<PAGE>
                                                                             -1-


                                      LEASE



BETWEEN THE UNDERSIGNED:

              Mr. Jean FAUGERAS, residing at 8 avenue des Martyrs de la
Liberation, 33700 MERIGNAC, owner

                                                        Party of the first part,

AND:

              CENTRE FRANCAIS DU SPORT, whose manager is Ms. FABIENNE
QUENNOUELLE, residing at 26 rue Jean Valmy Baysse in Saint Medard-en-Jalles,

acting on behalf of CENTRE FRANCAIS DU SPORT, whose head office is located in
MERIGNAC on avenue Kennedy- chemin de Magret,

                                                       Party of the second part,

IT WAS AGREED AND DECIDED AS FOLLOWS:

              Mr. Jean Faugeras leases to CENTRE FRANCAIS DU SPORT, which
accepts, for a term of nine years effective April 1, 1981, the lessee's only
option being to end it upon expiry of each three-year period and to notify the
owner at least six months in advance.

DESIGNATION:

              Premises located in MERIGNAC 33700, chemin de Magret, with an
approximate area of 200 square metres built on fenced land having an approximate
area of 1,200 square metres with an office, water, drive force electricity, W.C.
and sink, lighting by 4 neon tubes, telephone owned by the lessor, as well as
forced air heating with a fuel tank.

EXPENSES AND CONDITIONS:

              This rental takes place in accordance with the customary legal
expenses and conditions and moreover under the following conditions:

              1.     The premises shall be used as warehouse and workshop and to
                     sell various material related to the lessee's business as
                     described in the Trade Register.

              2.     The lessee undertakes to maintain the leased premises in
                     good condition.

              3.     At the end of the lease, it shall return the leased
                     premises in the condition they are in on this date after
                     having seen and accepted them. As the parties expressly
                     agree, the lessee undertakes in the stead and place of the
                     lessors to make all repairs that may be necessary in the
                     leased premises except however major repairs as defined in
                     Artice 606 of the Civil Code which remain incumbent upon
                     the lessors.

              4.     The lessee shall accurately pay personal property taxes,
                     all tenants' expenses and quantity charges related thereto,
                     it shall pay all city and police costs which lessees are
                     normally required


<PAGE>
                                                                             -2-


                     to pay, the whole so that the lessors are never worried or
                     required to pay them.

                     Throughout the term of the lease, the lessee alone shall
                     assume water and electricity consumption costs, subscriber
                     fees and telephone tolls and eventually gas supply and
                     garbage removal expenses.

                     The lessee further undertakes not to pollute in any way La
                     Dovozo stream where waste water from the premises flows.

              5.     The lessee shall take out insurance with a solvent company
                     to cover risks of fire, theft, tenants' risks, water
                     damage; it shall show proof of such insurance and the
                     payment of related premiums upon request by the lessors.

                     In the event of changes to the current layout and in the
                     event stored products would entail an extra insurance
                     premium, the lessee shall pay the lessor the surcharge
                     calculated over and above the simple risk.

              6.     There may be assignment with the consent of the owners.

              7.     The lessee shall not sublet all or part of the leased
                     premises without the consent of the owners.

              8.     However, the lessee may assign its right to this lease to
                     the successor of its business, provided it remains
                     guarantor and is jointly and severally liable with its
                     successor for the payment of rent and the execution of all
                     the clauses and conditions of this lease.

              9.     The lessee make carry out all work and make all
                     improvements it shall deem necessary in the leased
                     premises, however, once the lease has expired, such work
                     shall remain, without compensation, vested with the owners.

              10.    The annual maintenance contract with Aircalo effective the
                     upcoming July 81-82 season.

RENT:

              This rental is granted and accepted in consideration of an annual
rent of THIRTY-NINE THOUSAND, SIX HUNDRED FRANCS (39,600 F) duty free, payable
in advance at the lessors' domicile effective April 1, 1981, in addition to the
rent, the tax to the right to the lease is 2.50 % and shall be paid with each
term.

SECURITY DEPOSIT:

              Upon the execution of this lease, the leasing corporation paid Mr.
FAUGERAS, who acknowledges such, the sum of NINE THOUSAND, NINE HUNDRED FRANCS
(9,900 F) as security deposit.

              This security deposit shall be returned to the lessee upon
termination of the enjoyment, less any sums it might owe to the lessor.

              The telephone deposit is one thousand francs, adjustable to twice
the bimonthly invoices.


<PAGE>
                                                                             -3-


              In that it is a commercial premise, the aforementioned rent shall
be adjusted every three (3) years in accordance with the conditions provided for
by law (INSEE Index).

              It is expressly agreed that failure to pay just one term of the
rent or appurtenances when due or in the event of the evidenced non-performance
of just one condition of the lease and one month after simple summons to pay or
execute sent to the person or to the elected domicile, containing a reference to
this clause that has remained without effect, this lease shall be automatically
terminated, at the lessor's discretion, even in the event of payment or
performance subsequent to the expiry of the above time period and the eviction
shall take place upon simple summary order.

              The lessee shall assume the expenses, costs and fees of Agence
DUBOIS in this lease.

         For the execution hereof, each of the parties elects domicile in
its/his/her respective residence.

              Executed in triplicate in MERIGNAC on March 30, 1981.

         Mr. (illegible) is civilly liable with respect to the rent and the
various expenses ensuing from the leasing of said immovable.

Read and approved                              Read and approved
(s)                                            (s)
Fabienne Quennouelle

                                               Read and approved
                                               (s)


<PAGE>


             Professional Civil
                Parrtnership               NOTICE WITH OFFER OF RENEWAL TENDING
                                           TO ADJUST THE RENT

             Jean-Michel LACAZE
               Claude ROCHER
               Denis LE PUIL               ON THIS TWELFTH DAY OF APRIL, IN THE
                 Yves MAS                  YEAR ONE THOUSAND, NINE HUNDRED AND
                 Bailiffs                  EIGHTY-ONE
                 Partners
           Cours Alsace Lorraine
              33000 BORDEAUX



                                           At the request of:

                                           Mr. Jean  FAUGERAS,  born in
                  VERTHEUIL (33) on  June 27, 1923, residing in MERIGNAC (33700)
                  16 rue Andre Malraux.

                                           Electing domicile at our law firm.

                                           We, the undersigned, the Professional
                  Civil Partnership of Jean-Michel LACAZE - Claude ROCHER -
                  Denis LE PUIL - Yves MAS, Bailiffs, Partners, Residence de
                  BORDEAUX 33000, domiciled at 7 cours Alsace et Lorraine,

                  HAVE NOTIFIED AND INFORMED:

                                           Mr. Jean Marc CHICCO, POWER COMPACT,
                  chemin de Magret, avenue Kennedy, 33700 MERIGNAC referred to
                  hereinafter as such:

                                           That, according to the lease under
                  private writing dated November 3, 1982, my petitioner leased
                  him premises for commercial use located in MERIGNAC (33700)
                  chemin de Magret, avenue Kennedy, for a term of nine years
                  which shall expire on October 31, 1991.

                                           That my petitioner, through this
                  notification, intends to terminate said lease and consequently
                  serve notice on Mr. Jean Marc CHICCO, POWER COMPACT, for the
                  THIRTY FIRST DAY OF OCTOBER, ONE THOUSAND NINE HUNDRED AND
                  NINETY-ONE.

                                           Informing him that my petitioner does
                  not intend to object, in principle, to the renewal of the
                  lease for a term of nine years effective the expiry date of
                  the prior notice period set out in this notice, if Mr. Jean
                  Marc CHICCO, POWER COMPACT, intends to avail himself thereof;
                  but that he intends to forthwith subject said renewal to the
                  condition that the annual rent be raised to the sum of
                  TWENTY-SIX THOUSAND, FOUR HUNDRED FRANCS (26,400 F).

                                           That consequently, he offers to grant
                  Mr. Jean Marc CHICCO, POWER COMPACT, in accordance with
                  Article 6-1 of the Order-in-Council dated September 30, 1953
                  amended by the Order-in-Council dated July 3, 1972, effective
                  November 1, 1991 a new nine-year lease as per the conditions
                  of the prior lease and in consideration of annual rent of
                  TWENTY-SIX THOUSAND, FOUR HUNDRED FRANCS (26,400 F), payable
                  quarterly and in advance according to the same terms and
                  conditions.

                                           That if he intends either to contest
                  this notice or request payment of an eviction compensation, he
                  shall, on pain of foreclosure, petition the high court of
                  justice by summons before expiry of a two-year period
                  effective the date for which this notice is given to him.


<PAGE>
                                                                             -2-


                                           That if he just intends to discuss
                  the amount of the above proposed rent, by accepting the
                  principle of the renewal of his lease, Mr. Jean Marc CHICCO.
                  POWER COMPACT, shall have the option of petitioning the
                  presiding judge of the high court as per the conditions set
                  out in Articles 29 and following of the order-in-council dated
                  September 30, 1953, one month after receipt by my petitioner
                  of a preliminary factum in accordance with the provisions of
                  these texts, my petitioner reserving the same option if his
                  proposal is not accepted.

Fees       126.00
SCT         24.05
1/2 DP
Art. 2      63.00
Copy P.
Art. 14                    WITHOUT PREJUDICE
Postage      2.30
          -------
D.F.       215.35          RECORDED
VAT 18.6%
Reg.        40.06
          -------

Total      255.41          COST: TWO HUNDRED AND FIFTY-FIVE FRANCS, 41 CENTIMES


<PAGE>
                                                                             -3-


                                COMMERCIAL LEASE



       BETWEEN THE UNDERSIGNED:

                            MR. Jean FAUGERAS residing in MERIGNAC - 8 avenue
       des Martyrs de la Liberation -

                            Born in VERTHEUIL (33 - Gironde) on June 27, 1923,

                            HEREINAFTER REFERRED TO AS THE "LESSOR",

                                                        PARTY OF THE FIRST PART,

                            Mr. Jean Marc CHICCO - residing in BOUSCAT -
       Residence Medicis - 320 avenue Leon Blum - born in MARSEILLE on December
       26, 1951, acting on his own behalf as well as in the name of and on
       behalf of POWER COMPACT- a business corporation with a capital of 400,000
       Francs, in the process of being set up whose head office shall be located
       in the premises forming the subject matter hereof,

                            HEREINAFTER REFERRED TO AS THE "LESSEE",

                                                        PARTY OF THE SECOND PART


                            IT HAS BEEN AGREED AND DECIDED AS FOLLOWS:

                            The aforementioned LESSOR hereby leases, in
       accordance with the provisions of Order-in-Council No. 53-960 dated
       September 30, 1953,

                            To Mr. Jean Marc CHICCO acting in his capacity,

                            The immovable property designated hereinafter
       located in MERIGNAC - on chemin de Magret - avenue Kennedy -

                                           DESIGNATION

                            New premises, bare, with an area of 200 square
       metres, no water, electricity or toilet. These premises are built on land
       measuring 1,200 square metres, only half of which is at the disposal of
       the LESSEE.

                                   AS SAID PROPERTY EXISTS IN ITS CURRENT STATE,
                            LESSEE DECLARING THAT HE IS FAMILIAR WITH IT HAVING
                            VISITED IT WITH A VIEW TO THIS LEASE.

                               INTENDED USE OF THE LEASED PREMISES

                            The property presently leased shall be used
       exclusively to design, manufacture and market electronic-based products.

                                              TERM

                            This lease is granted and accepted for a term of
       nine full and consecutive years to take effect on November 1, 1982 and to
       end on October 31, 1991.

                            In accordance with the provisions of Article 3-1 of
       the September 30, 1953 Order-in-Council, the LESSEE shall have the option
       of cancelling the lease upon expiry of each three-year period in
       consideration of a


<PAGE>

                                                                            -4-


       prior notice of at least six months by registered letter with
       acknowledgement of receipt.

                                 GENERAL EXPENSES AND CONDITIONS

                            This lease is granted and accepted subject to the
       customary and legal expenses and conditions and further subject to the
       following ones that the LESSEE undertakes to perform without being
       entitled to any compensation or decrease in the rent determined
       hereinafter.

                            I -- The LESSEE shall take the leased premises in
       their condition on the effective day of the enjoyment.

                            II -- He undertakes to maintain the leased premises
       in good condition.

                            III -- At the end of the lease, he shall return the
       leased premises to the condition in which they are on this date, after
       having seen and accepted them.

                            As the parties expressly agree, the LESSEE
       undertakes in the stead and place of the LESSOR to carry out all repairs
       that may be required in the leased premises except however major repairs
       as defined in Article 606 of the Civil Code which remain incumbent upon
       the LESSOR.

                            IV -- The LESSEE shall accurately pay personal
       property taxes, all tenants' expenses and quantity charges related
       thereto, he shall pay all city and police costs which lessees are
       normally required to pay, the whole so that the LESSOR is never worried
       or required to pay them.

                            Throughout the term of the lease, the LESSEE alone
       shall assume water and electricity consumption costs, subscriber fees and
       telephone tolls and eventually gas supply and garbage removal expenses.

                            V -- He shall take out insurance with a solvent
       company to cover risks of fire, theft, tenants' risks, water damage; he
       shall show proof of such insurance and the payment of related premiums
       when so asked.

                            In the event of changes to the current layout and in
       the event stored products would entail an extra insurance premium, the
       LESSEE shall pay the LESSOR the surcharge calculated over and above the
       simple risk.

                            VI -- There may only be assignment with the consent
       of the LESSOR.

                            VII -- However, the LESSEE may assign his right to
       this lease to the successor of his business, provided he remains
       guarantor and is jointly and severally liable with his successor for the
       payment of rent and the execution of all the clauses and conditions of
       this lease.

                            VIII -- The LESSEE shall not sublet the premises
       forming the subject hereof without the consent of the LESSOR.

                            IX -- The LESSEE shall assume the cost of all
       changes or improvements required to carry on its business. However,
       unless he has the LESSOR's express written permission, he shall not, in
       the leased premises, carry out any demolition, drill holes in walls or
       partitions, change the layout or increase the height. In any event, once
       the lease has expired, such work shall remain, without compensation,
       vested with the LESSOR.



<PAGE>
                                                                             -5-


                                      RENT

                            This lease is entered into and accepted in
       consideration of an annual rent of EIGHTEEN THOUSAND FRANCS (18,000 F)
       duty free plus the right to the lease.

                            The LESSEE undertakes to pay the above fixed rent in
       four equal instalments payable in advance at regular intervals, that is,
       on January 1, April 1, July 1 and October 1 of each year. The rent shall
       be payable at the domicile of the LESSOR or his agent.

                            In that it is a commercial premise, the
       aforementioned rent shall be adjusted every three (3) years in accordance
       with the time restrictions, format and merits of Articles 26 and 27 of
       the September 30, 1953 Order-in-Council, as amended. The base index to be
       considered to review the rent is the INSEE Index of the construction cost
       for the second quarter of 1982 totalling 717.

                            It is expressly agreed that failure to pay just one
       term of the rent or appurtenances when due or in the event of the
       evidenced non-performance of just one condition of the lease and one
       month after simple summons to pay or execute sent to the person or to the
       elected domicile, containing a reference to this clause that has remained
       without effect, this lease shall be automatically terminated, at the
       LESSOR's discretion, even in the event of payment or performance
       subsequent to the expiry of the above time period and the eviction shall
       take place upon simple summary order.

                                SECURITY DEPOSIT

                            Within the month following the execution hereof, Mr.
       CHICCO, acting in his capacity, undertakes to provide a contract of
       suretyship in the amount of THREE THOUSAND Francs as security deposit,
       guaranteeing, until the end of the LESSEE's enjoyment and for one month
       after all has been moved and all keys returned, any and all sums that may
       be owed by the LESSEE as rent, refundable tax expenses, repairs or in any
       other way as well as those for which the LESSOR may be held liable.

                            This sum shall not bear interest.

                                      FEES

                            The LESSEE shall be responsible for and shall assume
       legal fees and expenses, stamp duties and registration costs.

                              ELECTION OF DOMICILE

                            For the execution hereof and, in particular, for the
       service of any extrajudicial documents or proceedings, the LESSEE elects
       domicile at the leased premises and the LESSOR at his abovementioned
       residence.

                            Executed in duplicate, one counterpart remitted to
                            each party in BORDEAUX
                            On this third day of November, in the year one
                            thousand, nine hundred and eighty-two.

                            Read and approved                  Read and approved

                            (s)                                (s)


<PAGE>


                                COMMERCIAL LEASE

BETWEEN THE UNDERSIGNED: HEREINAFTER REFERRED TO AS THE LESSEE

Mr. Jean Marc Chicco residing at Residence Medecis, 320 avenue Leon Blum, in
Bouscat, born in Marseille on 26/12/51, acting on his own behalf as well as in
the name and on behalf of Power Compact, a business corporation with a capital
of 11,232,500.00, whose head office is on avenue Magret in Merignac, party of
the first part

AND THE LESSOR, Mr. Jean Faugeras, residing at 8 avenue des Martyrs de la
Liberation, Merignac 33700

The above parties shall be referred to hereinafter as the "Lessee" and "Lessor"
respectively

IT IS AGREED AS FOLLOWS:

Mr. Jean Faugeras enters into this lease with and leases to Mr. Jean Marc
Chicco, representing Power Compact, who accepts, the premises designated
hereinafter, appurtenance of an immovable located on avenue de Magret in
Merignac and belonging to Mr. Jean Faugeras.

                                   DESIGNATION

A 3rd hangar of an approximate area of 269 square meters adjoining the leased
hangar. Access to the hangar either by the inside or by the far side of Parc
Cadera, in accordance with the undertaking of 15/6/88.

As said premises continue and conform and without the need for further
designation, the Lessee declaring that he is familiar with the property having
seen and visited it with a view hereto and finding it in the condition necessary
for the use for which it is intended.

                                      TERM

This lease is granted and accepted for a term of 9 full and consecutive years to
commence on January 1, 1989 and to end on October 31, 1997.

Upon expiry of each three-year period, the Lessee shall have the option to end
this lease by sending the Lessor a prior notice of at least six months by an
extrajudicial document.

                                      RENT

This lease is granted and accepted in consideration of an annual rent in
principal of eighty thousand francs, duty free, Value Added Tax extra.

                                 RENT ADJUSTMENT

This rent is fixed for the first three-year period only and shall be adjusted at
the outset of each of the other periods under conditions provided by applicable
legislation.

Until the new rent is fixed, the past rent shall continue to apply, subject to
later adjustment.

                               PRICE INDEX CLAUSE

The base index is that of the second quarter of 1988, namely, 912.


<PAGE>

                             EXPENSES AND CONDITIONS

This lease is granted and accepted pursuant to the following expenses, clauses
and conditions, notwithstanding those ensuing from law or custom, that the
Lessee undertakes to respect, on pain of immediate cancellation, without
prejudice of all other indemnities and damages, namely:

                                  I - EXPENSES

1.   Reimburse the Lessor or his agent by paying with each installment of the
     rent, even on an interim basis, the share of expenses and services, garbage
     disposal, sewer spill, sweeping and other taxes incumbent upon the
     immovable and the half or any other legal quota of the special tax to
     benefit the FOND NATIONAL D'AMELIORATION DE L'HABITAT, (National Housing
     Improvement Fund), all new levies, taxes, income tax increases legally
     incumbent upon tenants; said expenses, services and taxes calculated in
     proportion to the rent or on the basis of the apportionments set out in the
     part ownership regulation
2.   Further, directly pay all personal water, gas, electricity, telephone and
     other consumptions, as per his meter readings and statements as well as all
     income taxes incumbent upon him, such as personal property tax and business
     licenses, without the Lessor being held liable.

                          II -- OCCUPANCY - ENJOYMENT

3.   In the leased premises, only to carry on trades corresponding to those
     carried on by the Lessee, excluded are car bodyworks, boiler works and
     other trades that might adversely affect the environment as well as other
     products emitting harmful products.
4.   Not to assign or sublet, in whole or in part, any right to this lease, on
     pain of cancellation, except to a successor to his business and provided he
     remains as guarantor and is jointly and severally liable with his successor
     for the payment of the rent and the execution of the lease's conditions. In
     the event of assignment, a copy of the assignment shall be remitted at no
     cost to the owner no later than ten days before the expiry of the time
     period to contest.
5.   Keep the premises furnished, supplied with material and goods to at all
     times meet the payment of the rent and the execution of the lease's
     conditions. At all times, keep the premises open and filled with customers.

                            III - MAINTENANCE - WORK

6.   Accept the premises in their current and overall state without asking the
     Lessor for any repair of any kind; carry out at the outset of this lease as
     well as throughout its duration, all repairs, small or large, without
     exception, maintain the front, locks and grounds of the leased premises,
     this statement being simply an indication and not limitative, in that once
     the enjoyment has ended, the Lessee returns the premises in a perfect state
     of repair and maintenance. The Lessor shall maintain responsibility for the
     major repairs under Article 606 of the Civil Code.
     If required by one of the parties, a site inventory in several copies,
     which shall be attached hereto, shall be prepared by the Lessor's architect
     at the Lessee's expense.

7.   Maintain, repair and change where necessary, at his expense, water tanks,
     conduits, gutters, rain water downpipes, etc., that might affect the leased
     premises, gas and electricity lines, plumbing fixtures, such as W.C.s,
     flushes, etc. guarantee them against freezing.
     Maintain, repair or replace, at his expense, glazing that might cover
     certain portions of the leased premises and not exercise any recourse
     against the Lessor because of seepage through such glazing.

<PAGE>

8.   Not to make any change, demolish, drill holes in walls or partitions, etc.,
     without the express written consent of the Lessor or his agent. All
     authorized work shall be carried out on contract by the immovable and under
     the direction of the Lessor's architect whose fees shall be assumed by the
     Lessee.
     Upon expiry of the lease, all embellishments and improvements shall
     remain the Lessor's property unless he prefers the remittance of the
     premises in their original state.

9.   At his expense and as many times as necessary or required by law, have the
     chimneys, stoves and furnaces of the leased premises swept. The Lessee
     acknowledges having been informed that he cannot hook up slow combustion or
     gas burning heating devices to the existing chimneys.
10.  Without the power to discuss the urgency or claim any compensation or
     decrease in rent, suffer and permit all work the Lessor shall deem
     necessary, any blocking of yard and courtyard spaces, borrowed light and
     all neighboring construction that could decrease daylight and the view,
     regardless of the duration, not to exceed 40 days, allowing the architects,
     contractors, workers responsible for carrying out the work to access the
     leased premises.
11.  Agree directly with any company on the use and consumption of gas and
     electricity and, as the case may be, water, without any guarantee by the
     Lessor. The Lessee shall reimburse the Lessor for the cost of any
     alteration or change in the main water and gas lines, main electricity
     lines and transformers, resulting from a change by the Lessee in the supply
     of water, gas and electricity.
12.  At the end of the enjoyment, return the premises in good state of repair of
     all types. At his expense, have the Lessor's architect prepare a list of
     the Lessee's repairs and pay the amount.

                          IV -- LIABILITY - RECOURSES

13.  Insure himself with a reputable company against the breakage of glass,
     fire, explosions and water damage to cover his movables, material and goods
     as well as to cover tenants' risks and recourses by neighbors, with
     assignment in favour of the Lessor. The insurance policies shall contain a
     waiver to all recourses against the owner and his agent. Justify any
     request regarding the existence and the terms and conditions of said
     policies and the payment of the premiums.
     Pay or reimburse all insurance premiums or extra premiums that would be
     claimed from the Lessor because of the exercise of his business or the
     nature of his goods.
14.  Immediately notify the Lessor or his agent of accidents that might occur in
     the water, gas or electricity lines, otherwise he shall be liable for the
     damages these accidents might cause: by his own means and at his own
     expense, he shall protect the immovable's fixtures against detected leaks
     during the time it takes to notify the contractors and carry out the work.

15.  Waive any recourse in liability against the Lessor:
     a) - in the event of theft, breaking and entering or any delictual or
          criminal act of which the Lessee may be a victim in the leased
          premises or the appurtenances of the immovable;
     b) - in the event of change or cutback in the guard services of the
          immovable, for all consequences that would result from the remittance
          of keys by the Lessee to the janitor;
     c) - in the event the premises would be destroyed in whole or in part or
          expropriated;
     d) - in the event of trouble affecting the enjoyment by the fault of
          third parties regardless of their capacity, the Lessee to act directly
          against them without impleading the Lessor or his agent;
     e) - in the event of humidity, leaks, seepage or any other cause as well
          as leaks in common lines obscured by housing set up by the Lessor. The
          Lessee shall moreover insure himself against such risks;


<PAGE>

     f) - in the event of the interruption, even prolonged, of water, gas,
          electricity, heating or elevator;
     g) - in the event of the lack of aeration or lighting in basements, if
          any, as in the case of flood, even by sewer backup, the Lessor not
          being liable for damaged goods or for any other damage.

                              V - IMMOVABLE BY-LAW

16.  Refrain from anything that could disrupt, by his action or the action of
     people working for him, other businesses in the immovable, the tranquility
     of other occupants and the orderly conduct of business. Not to package or
     unpackage in the common areas of the immovable. Not allow any vehicle to
     access the immovable's yard. Apart from the front, not to display any sign,
     crate or flower pot in the windows and doors of the immovable, or any other
     item of whatever nature. Not have any noisy or dirty animal. Not conduct or
     allow any sale by public auction in the leased premises, in any event
     whatsoever, even after death. Comply with the by-laws established by the
     Lessor or his agent for the beating of carpets, the removal of garbage, the
     proper running and the tranquility of the immovable or the part ownership
     regulation.
17.  Pay all city and police expenses usually incumbent upon tenants. Correctly
     pay all taxes and personal levies, movable or otherwise, incumbent upon
     tenants so that the Lessor is never worried or sought after in any way in
     this respect. Assume personal responsibility for all administrative or
     other authorizations that may be necessary.
18.  Allow the Lessor, his representative, architect or contractors to access
     the leased premises as often as shall be necessary. Where a notice shall
     have been given within the prescribed time limits or six months before
     expiry of this lease, the Lessor shall be entitled to post a sign at the
     location of his choosing and the Lessee shall be obliged to allow the
     leased premises to be visited during business days and hours on pain of
     damages.
19.  Not to overload the floors and, in the case of doubt, ascertain the
     authorized weight with the immovable's architect.
20.  Not install any machine or motor without the Lessor's written
     authorization. Immediately remove those installed after authorization if
     their operation would warrant justified claims from tenants or neighbours.
21.  It is formally agreed that all tolerances by the Lessor regarding the above
     conditions regardless of the frequency and duration cannot be considered as
     amending or deleting these conditions or as generating any right
     whatsoever. The Lessor or his agent may always terminate it.

                                     SPECIAL CLAUSES

Harmful products or chemical products may not be stored without the Lessor's
consent.

                                     SECURITY DEPOSIT

Upon the execution hereof, the Lessee pays the Lessor or his representative the
sum of fifteen thousand francs which may eventually be replaced by a contract of
suretyship for the same value which shall neither bear interest nor be
chargeable for the last months of the enjoyment and which shall be returned to
him upon termination of the enjoyment less any sums the Lessee may owe the
Lessor or for which the Lessee may be liable.

                                                               INCLUDING RECEIPT

In the event of a change in rent, the security deposit shall be adjusted
accordingly.


<PAGE>

                               CANCELLATION CLAUSE

     It is expressly agreed that failure to pay just one installment of the rent
and appurtenances when due or in the event of the non-performance of just one
condition of the lease and one month after simple summons that remains
unanswered, this lease shall be automatically terminated, at the Lessor's
discretion, without the need for further formalities except simple summary order
to, if need be, compel the Lessee to vacate the premises and order the sale of
the movables and goods, notwithstanding any subsequent offers and conciliations;
in this case, the Lessor shall keep the rent paid in advance as compensation
without prejudice to his right to the payment of the rent accrued or to accrue
including the term commenced upon the vacancy of the premises, the price of
tenants' repairs and subject to all other rights and actions.

     In the event of the Lessee's death, his heirs and representatives shall be
jointly and severally liable for the payment of the rent and the performance of
the conditions of the lease.

                                  REGISTRATION

     The parties require the registration until _______________________________.

     For the registration only, the extraordinary expenses of the lease are
evaluated at __________________________________________________________________.

                                      FEES

     The Lessee is bound to pay all the current and future costs, duties and
fees hereof,

                                  JURISDICTION

     For any disputes involving this lease or its consequences, the parties
elect the exclusive jurisdiction of the Bordeaux court system.

                              ELECTION OF DOMICILE

     For the execution hereof, the parties elect domicile, namely:

     -Lessor: 8 avenue des Martyrs de la Liberation, 33700 Merignac
     -Lessee: In the leased premises

Executed in three counterparts, in Merignac, on January 1, 1989.


(s)                                                          (s)


<PAGE>


ON THIS THIRD DAY OF NOVEMBER,
IN THE YEAR ONE THOUSAND, NINE HUNDRED
AND EIGHTY-NINE

AT THE REQUEST OF:

              Mr. FAUGERAS

              16 rue Andre Malraux

              33700 MERIGNAC

Electing domicile at our law firm

One of the undersigned partners of the Professional Civil Partnership of Paul
CELLE, Catherine CELLE and Michel LICHTWITZ, Bailiffs, in BORDEAUX, 8 rue
Castelnau dAuros,

HAVING STATED AND DECLARED TO:
         1.-      Mr. Jean Marc CHICCO
                  Avenue Leon Blum
                  320 Residence Medicis
                  33110 LE BOUSCAT
         2.-      POWER COMPACT
                  Chemin Magret
                  Avenue Kennedy
                  MERIGNAC
                  33700 MERIGNAC
                  represented by its legal representatives domiciled
                  in such capacity at said head office

That according to the rider dated November 3, 1982, Mr. FAUGERAS, owner, leased
commercial premises located in MERIGNAC, chemin Magret, avenue Kennedy, to Mr.
Jean Marc CHICCO and to POWER COMPACT.

That this rider was concluded for a term of 3, 6, 9 years expiring on April 1,
1990 and in consideration of annual rent which, after adjustment, was: 56,448.00
Frs. (INSEE Index, 3rd quarter, 1986).

That to terminate such lease, our petitioner gives NOTICE and further refers to
the SIX MONTH period set out in the first paragraph of Article 5 of the
September 30, 1953 Order-in-Council.

That this notice is given to give rise to the right to renewal of the tenant and
to determine the conditions of the new lease.

That the petitioner wants this renewal to occur according to the following new
conditions:
-   Adjustment in the price of the rent which shall be 60,578.34 Frs. Annually.

Bearing in mind that pursuant to Article 1 of the Act of January 2, 1970; the
5th paragraph of Article 5 of Order-in-Council No. 53960 dated September 30,
1953 is thus amended; "The notice must be given by extrajudicial document. It
must on pain of nullity: stipulate the reasons for which it is given and
indicate that the tenant who intends to either contest the notice or request the
payment of an eviction compensation, must, ON PAIN OF FORECLOSURE, petition the
court before expiry of a period of TWO YEARS effective the date for which the
notice was given."


<PAGE>
                                                                             -2-


WITHOUT PREJUDICE
RECORDED

COST OF THE INSTRUMENT

         Fees               63.00
         S.C.T. (1)         23.26
         Postal charges      4.50
         Fixed duty         31.50

***      Interim cost      144.89
Including V.A.T.            22.73

         (1)      S.C.T.: Service de Compensation des Transports (Conveyance
                  Compensation Service)


                               ** FILE NO. 10065**

                                 DEED NO. 83265

                            **** VERY IMPORTANT ****
                   ** REMEMBER THE ABOVE FILE NUMBER FOR EACH
                               SETTLEMENT OR MAIL.



<PAGE>
                                                                             -3-


                          This instrument was remitted by a sworn clerk in
                          accordance with the conditions indicated under the
                          below item marked by an "X' and in accordance with the
                          statements made to said clerk.

<TABLE>
<S>            <C>
                  (...)
               -----------------------------------------------------------------------------
                 (LEGAL      /X/      To MR.                    Name CARDOLACCIA
                 PERSON)                                             -----------
                                      First name Christian  Title Director of Administration
                                                 ---------        --------------------------
                                      and Finance for POWER COMPACT who declared
                                      -----------
                                      being the legal representative (the
                                      document was remitted in a sealed envelope
                                      under the conditions set out in Article
                                      657 of the NCCP). Notification card
                                      provided for by law was remitted and the
                                      simple letter under Article 658 of the
                                      NCCP containing a copy of the instrument
                                      was sent on the first  business day following the date
                                      of this instrument.
               -----------------------------------------------------------------------------
 (REMITTED AT   / /      As  circumstances  made it  impossible  to serve  the  person,  the
THE DOMICILE,            instrument   was  remitted  in  a  sealed   envelope   without  any
    AT THE               references  except,  on one  side,  the  name  and  address  of the
 RESIDENCE OR            recipient of the  instrument  and, on the other side, the Bailiff's
AT CITY HALL)            stamp affixed to the flap of the envelope A  notification  card was
                         left at the domicile.



               -----------------------------------------------------------------------------
                  (...)
                  (...)
                  (...)
               -----------------------------------------------------------------------------
                /X/     no one was able or wanted to accept the instrument and
                        verifications indicate that the recipient clearly lives at the
                        indicated address.
                        To the city hall of Bruges
                        where  acknowledgement  of receipt was given. A  notification  card
                        was left at the domicile and the letter  under  Article 658  of the
                        New Code of Civil  Procedure  was sent to  Mr. J.  Marc  Chicco  on
                        8/11/89
               -----------------------------------------------------------------------------
                  (...)
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>14
<FILENAME>ex-10_18.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>

<PAGE>

                                 SILICON VALLEY BANK


                             LOAN AND SECURITY AGREEMENT


BORROWER:             Advanced Power Technology, Inc.
ADDRESS:              405 S.W. Columbia Street
                      Bend, Oregon 97702

DATE:                 September 6, 1995


       THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive,
Santa Clara, California 95054-2895 and the borrower named above (the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").

1.     LOANS.

       1.1    LOANS.  Silicon will make loans to the Borrower (the "Loans") in
amounts determined by Silicon up to the amounts (the "Credit Limits") shown on
the Schedule to this Agreement (the "Schedule"), the terms of which are
incorporated into this Agreement.  The Borrower is responsible for monitoring
the total amount of Loans and other Obligations outstanding from time to time,
and the Borrower shall not permit that amount, at any time, to exceed the Credit
Limit.  If at any time the total of all outstanding Loans and all other
Obligations exceeds the Credit Limits, the Borrower shall immediately pay the
amount of the excess to Silicon, without notice or demand.

       1.2    INTEREST; REQUEST TO DEBIT ACCOUNTS.   All Loans and all other
monetary Obligations shall bear interest at the rate shown on the Schedule
hereto.  Interest shall be payable monthly, on the due date shown on the monthly
billing from Silicon to the Borrower.  The Borrower hereby requests and
authorizes Silicon to debit any of the Borrower's accounts with Silicon,
including without limitation account no. _______________, for payments of
interest and principal due on the Loans and all other obligations owing by the
Borrower to Silicon.  Silicon shall promptly notify the Borrower of all debits
which Silicon makes against the Borrower's accounts.  Any such debit against the
Borrower's accounts shall in no way be deemed a setoff by Silicon.

       1.3    FEES.  The Borrower shall pay to Silicon the commitment fees in
the amounts shown on the Schedule hereto concurrently herewith.  These fees are
in addition to all interest and other sums payable to Silicon and are not
refundable.


Page 1 - LOAN AND SECURITY AGREEMENT

<PAGE>

2.     GRANT OF SECURITY INTEREST.

       2.1    OBLIGATIONS.  The term "Obligations" as used in this Agreement
means the following: the obligation to pay all Loans and all interest thereon
when due, and to pay and perform when due all other present and future
indebtedness, liabilities, obligations, guarantees, covenants, agreements,
warranties and representations of the Borrower to Silicon, whether joint or
several, monetary or non-monetary, and whether created pursuant to this
Agreement or any other present or future agreement or otherwise.  Silicon may,
in its discretion, require that the Borrower pay monetary Obligations in cash to
Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans.

       2.2    COLLATERAL.  As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's assets,
including but not limited to all of the Borrower's interest in the types of
property described below, whether now owned or hereafter acquired, and wherever
located (collectively, the "Collateral"): (a) all accounts; (b) all chattel
paper; (c) all documents; (d) all instruments; (e) all inventory; (f) all
equipment, except such equipment that is or will be sold to and leased back from
Financing for Science, Inc.; (g) all goods; (h) all fixtures (except as provided
below in this Section 2.2); (i) all general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trademark applications, trade
secrets, drawings, blueprints, customer lists, patents, patent applications,
copyrights, copyright applications, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (j) all books and
records, whether stored on computers or otherwise maintained; (k) all of the
Borrower's cash; and (l) all substitutions, additions and accessions to any of
the foregoing, and all products, proceeds and insurance proceeds of the
foregoing, and all guaranties of and security for the foregoing; and all books
and records relating to any of the foregoing.  Notwithstanding anything to the
contrary in this paragraph 2.2, Borrower does not grant to Silicon a security
interest in any intellectual property consisting of any patents, patent
applications or other forms of process technology or product designs, although
Borrower does grant to Silicon a continuing security interest in proceeds of the
sale of these assets.  All terms used above in this Section 2.2 that are defined
in the Oregon Uniform Commercial Code shall have the meaning given to such terms
in the Oregon Uniform Commercial Code.   Silicon's security interest in
equipment includes equipment of the Borrower that is attached to the real
property occupied by the Borrower, but Silicon shall not have a security
interest in any tenant improvements of Borrower that are part of the real
property occupied by Borrower.  The Borrower shall, at least every six months,
provide a written Schedule to Silicon showing (i) all applications for the
registration of any patent, trademark, or copyright with the U.S. Patent and
Trademark Office, the U.S. Copyright Office, or any similar office or agency in
any other country, state, or any political subdivision (the "Offices") filed by
Borrower or any agent, employee, licensee or designee of Borrower, and (ii) all
assignments of any patent, trademark, or copyright which Borrower has acquired
from a third party with any one of the Offices.

3.     REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

       The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:


Page 2 - LOAN AND SECURITY AGREEMENT
<PAGE>

       3.1    CORPORATE EXISTENCE AND AUTHORITY.   The Borrower is and will
continue to be duly authorized, validly existing and in good standing under the
laws of the state of Delaware.  The Borrower is and will continue to be
qualified and licensed to do business in all jurisdictions in which any failure
to do so would have a material adverse effect on the Borrower.  The execution,
delivery and performance by the Borrower of this Agreement, and all other
documents contemplated hereby have been duly and validly authorized, are
enforceable against the Borrower in accordance with their terms, subject to
applicable bankruptcy law and equitable principles of law, and do not violate
any law or any provision of, and are not grounds for acceleration under, any
agreement or instrument which is binding upon the Borrower.

       3.2    NAME, TRADE NAMES AND STYLES.   The name of the Borrower set forth
in the heading to this Agreement is its correct name. Listed on the Schedule
hereto are all prior names of the Borrower and all of the Borrower's present and
prior trade names.  The Borrower shall give Silicon 15 days' prior written
notice before changing its name or doing business under any other name.  The
Borrower has complied, and will in the future comply, with all laws relating to
the conduct of business under a fictitious business name.

       3.3    PLACE OF BUSINESS; LOCATION OF COLLATERAL.  The address set forth
in the heading to this Agreement is the Borrower's chief executive office.  In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement.  The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or moving the Collateral to any other location.

       3.4    TITLE TO COLLATERAL; PERMITTED LIENS.  The Borrower is now, and
will at all times in the future be, the sole owner of all the Collateral, except
for general intangibles licensed to the Borrower and items of equipment which
are leased by the Borrower.  The Collateral now is and will remain free and
clear of any and all liens, charges, security interests, encumbrances and
adverse claims, except for the following ("Permitted Liens"): (i) purchase money
security interests in specific items of equipment; (ii) licenses of general
intangibles and leases of specific items of equipment, including without
limitation the lease of equipment from Financing for Science, Inc.; (iii) liens
for taxes not yet payable; (iv) additional security interests and liens
consented to in writing by Silicon in its sole discretion; and (v) security
interests being terminated substantially concurrently with this Agreement.
Silicon will have the right to require, as a condition to its consent under
subparagraph (iv) above, that the holder of the additional security interest or
lien sign an intercreditor agreement on terms satisfactory to Silicon in its
sole discretion, acknowledge that the holder's security interest is subordinate
to the security interest in favor of Silicon, and that the Borrower agree that
any uncured default in any obligation secured by the subordinate security
interest shall also constitute an Event of Default under this Agreement.
Silicon now has, and will continue to have, a first priority, perfected and
enforceable security interest in all of the Collateral.  The Collateral shall
not be subject to any other liens or security interests of any type except for
the Permitted Liens.  The Borrower will at all times defend Silicon and the
Collateral against all claims of others.  None of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture.

       3.5    MAINTENANCE OF COLLATERAL.  The Borrower will maintain the
Collateral in good working condition, and the Borrower will not use the
Collateral for any unlawful purpose.  The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.


Page 3 - LOAN AND SECURITY AGREEMENT
<PAGE>

       3.6    DEPOSIT SWEEP.  The Borrower will enter into a written contract,
in a form satisfactory to Silicon, with either U.S. Bank or First Interstate
Bank of Oregon (individually the "Depository Bank" ) whereby all of Borrower's
funds in its account with the Depository Bank are transferred to Silicon account
no.              on a daily basis.

       3.7    BOOKS AND RECORDS.  The Borrower has maintained and will maintain
at the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

       3.8    FINANCIAL CONDITION AND STATEMENTS.  All financial statements now
or in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated.  Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower.  The Borrower is now and shall
continue to be solvent.  The Borrower shall provide Silicon: (a) within 30 days
after the end of each month, a monthly financial statement (consisting of an
income statement and a balance sheet) prepared by the Borrower; (b) within 15
days after the end of each month, an accounts receivable report and an accounts
payable report in such form as Silicon shall reasonably specify; (c) within 15
days after the end of each month, a Borrowing Base Certificate in the form
attached to this Agreement as Exhibit A, as Silicon may reasonably modify such
Certificate from time to time, signed by the President or Chief Financial
Officer of the Borrower; and (d) within 30 days after the end of each quarter of
each fiscal year, a Compliance Certificate in such form as Silicon shall
reasonably specify, signed by the President or Chief Financial Officer of the
Borrower, certifying that throughout such quarter the Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth on
the Schedule hereto and such other information as Silicon shall reasonably
request.  The Borrower shall provide Silicon, within 90 days following the end
of the Borrower's fiscal year, complete CPA-audited financial statements with
details on Borrower, such review being conducted by independent certified public
accountants reasonably acceptable to Silicon.

       3.9    TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS.  The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower.  The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral.  The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower.  The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


Page 4 - LOAN AND SECURITY AGREEMENT

<PAGE>

       3.10   COMPLIANCE WITH LAW.  The Borrower has complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Borrower, including, but not limited
to, those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.

       3.11   LITIGATION.  Except as disclosed in the Schedule hereto, there is
no claim, suit, litigation, proceeding or investigation pending or (to best of
the Borrower's knowledge) threatened by or against or affecting the Borrower in
any court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted.  The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.

       3.12   USE OF PROCEEDS.  All proceeds of all Loans shall be used solely
for lawful business purposes.

       3.13   NO PATENTS, TRADEMARKS OR COPYRIGHTS.  The attached Schedule 3.13
shows the patents (including pending applications, if any), trademarks and
copyrights with the U.S. Patent and Trademark Office, the U.S. Copyright Office
or any similar office or agency of any state, of the United States of America or
of any foreign jurisdiction that the Borrower owns.  The Borrower has not
granted a security interest in, assigned, or pledged any of the foregoing in any
manner to secure any obligations of the Borrower.

       3.14   HAZARDOUS SUBSTANCES.  The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section  9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section  1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section  6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing.  Except as disclosed to and acknowledged by Silicon in
writing, the Borrower represents and warrants that:  (a) the Borrower has no
knowledge of (i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance by any prior
owners or occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters; (b)
Except as set forth in Schedule 3.14, neither the Borrower nor any subtenant,
contractor, agent or other user authorized by Borrower of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, or about any of the properties owned or
operated by the Borrower; and any such activity shall be conducted in compliance
with all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above.  The Borrower authorizes Silicon and its agents, upon 24 hours prior
notice (which need not be in writing), to enter upon the properties to make such
inspections and tests as Silicon may deem appropriate to determine compliance of
the properties owned or operated by the Borrower with this section of the
Agreement.  Any inspections or tests made by Silicon shall be for Silicon's
purposes only and shall not be construed to create any responsibility or
liability on the part of Silicon to the Borrower or to any other person.  The
Borrower hereby (a) releases and waives any future claims against Silicon for
indemnity or contribution in the event the Borrower becomes liable for


Page 5 - LOAN AND SECURITY AGREEMENT
<PAGE>

cleanup or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Silicon against any and all claims, losses, liabilities, damages,
penalties, and expenses which Silicon may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or
threatened release occurring prior to the Borrower's ownership or interest in
the properties, whether or not the same was or should have been known to the
Borrower.  The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and the
termination or expiration of this Agreement and shall not be affected by
Silicon's acquisition of any interest in ny of the properties, whether by
foreclosure or otherwise.

4.     ADDITIONAL DUTIES OF THE BORROWER.

       4.1    COVENANTS.  The Borrower shall at all times comply with the
covenants set forth in the Schedule to this Agreement.

       4.2    OVERADVANCE; PROCEEDS OF ACCOUNTS.  If for any reason the total of
any outstanding Loan and all other Obligations exceeds the applicable Credit
Limit, without limiting Silicon's other remedies, and whether or not Silicon
declares an Event of Default, the Borrower shall remit to Silicon all checks and
other proceeds of the Borrower's accounts and other Collateral, in the same form
as received by the Borrower, within one day after the Borrower's receipt of the
same, to be applied to the Obligations in such order as Silicon shall determine
in its discretion.

       4.3    INSURANCE.  The Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require.  All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon.  Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its sole and absolute discretion,
except that, provided no Event of Default has occurred, Silicon shall release to
the Borrower insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Borrower for the replacement of the
equipment with respect to which the insurance proceeds were paid.  Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used.  If the Borrower fails to provide or pay for any insurance, Silicon may,
but is not obligated to, obtain the same at the Borrower's expense.  The
Borrower shall promptly deliver to Silicon copies of all reports made to
insurance companies.

       4.4    REPORT.  The Borrower shall provide Silicon with such written
reports with respect to the Borrower, as Silicon shall from time to time
reasonably specify.

       4.5    ACCESS TO COLLATERAL, BOOKS AND RECORDS.  At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral.  Silicon shall take reasonable
steps to keep confidential all information obtained in any such inspection or
audit, but Silicon shall have the right to disclose any such information to its
auditors, regulatory agencies and attorneys, and pursuant to any subpoena or
other legal process.  Borrower shall reimburse Silicon for up to $1,250.00 per
audit for Silicon's out-of-pocket costs for semi-annual accounts receivable
audits, and Silicon may debit the


Page 6 - LOAN AND SECURITY AGREEMENT

<PAGE>

Borrower's deposit accounts with Silicon for the actual, reasonable
out-of-pocket cost of such accounts receivable audits (up to the limit stated
above), in which event Silicon shall send notification thereof to the
Borrower. Notwithstanding the foregoing, during the continuation of an Event
of Default all audits shall be at the Borrower's expense.

       4.6    NEGATIVE COVENANTS.  Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except that
the Borrower may merge or consolidate with another corporation if the Borrower
is the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined herein) as of the end of the month prior to the effective date of the
merger, and the assets of the corporation acquired in the merger are not subject
to any liens or encumbrances, except Permitted Liens; (ii) acquire any assets
outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined herein) as of the end
of the month prior to the effective date of the acquisition; (iii) enter into
any other transaction outside the ordinary course of business (except as
permitted by the other provisions of this Section); (iv) sell or transfer any
Collateral, except for the sale of finished inventory in the ordinary course of
the Borrower's business (which inventory shall be released from the security
interest granted in Section 2.2 upon completion of such sales), and except for
the sale of obsolete or unneeded equipment in the ordinary course of business;
(v) make any loans of any money or any other asset to any subsidiary or
affiliate of Borrower; (vi) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on the Borrower or on the
prospect of repayment of the Obligations; (vii) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (viii) pay or
declare any dividends on the Borrower's stock (except for dividends payable
solely in stock of the Borrower); (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of the Borrower's stock, except as the
Borrower may decide in order to satisfy stock warrants granted to Silicon,
Financing for Science International, Inc., Advanced Energy Industries, Inc., or
Bridgewater Capital Corporation; (x) make any change in the Borrower's capital
structure which has a material adverse effect on the Borrower or on the prospect
of repayment of the Obligations; (xi) dissolve or elect to dissolve; (xii) pay
bonuses or cash compensation to employees or officers for any fiscal year in
excess of net after tax earnings for the fiscal year; or (xiii) pledge or
otherwise encumber any patents, trademarks or other intellectual property of any
type owned or controlled by Borrower.  "Tangible Net Worth" means stockholders'
equity plus debt that is subordinated to the Loans pursuant to a written
subordination agreement satisfactory to Silicon and accrued interest thereon,
less goodwill, patents, capitalized software costs, tradenames, trademarks, and
all other assets which would be classified as intangible assets under generally
accepted accounting principles.  Transactions permitted by the foregoing
provisions of this Section are only permitted if no Event of Default is pending
at the time.

       4.7    LITIGATION COOPERATION.  Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to Silicon,
make available the Borrower and its officers, employees and agents and the
Borrower's books and records to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.

       4.8    VERIFICATION.  Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the
Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior


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<PAGE>

notification shall be required following an Event of Default.  Silicon shall not
be required to obtain the Borrower's consent prior to any such verification of
accounts, whether or not an Event of Default has occurred.

       4.9    EXECUTE ADDITIONAL DOCUMENTATION.  The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.

5.     TERM.

       5.1    MATURITY DATE.  This Agreement shall continue in effect until the
payment in full of the Obligations, provided, however, that the Borrower shall
repay the Loans in full, with all accrued but unpaid interest, not later than
the "Maturity Date" for each such Loan set forth on the Schedule.

       5.2    EARLY TERMINATION.  Subject to Section 5.3, this Agreement may be
terminated, without penalty, prior to the latest Maturity Date for any Loan as
follows: (i) by the Borrower, effective three business days after written notice
of termination is given to Silicon; or (ii) by Silicon at any time after the
occurrence of an Event of Default, without notice, effective immediately.

       5.3    PAYMENT OF OBLIGATIONS.  On the due dates stated in the
Schedule, or on any earlier effective date of termination, the Borrower shall
pay and perform in full all Obligations, whether evidenced by installment
notes or otherwise, and whether or not all or any part of such Obligations
are otherwise then due and payable.  Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and
all of the terms and provisions of this Agreement shall continue in full
force and effect until all Obligations have been paid and performed in full;
provided that, without limiting the fact that Loans are discretionary on the
part of Silicon, Silicon may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or
impair any right or remedy of Silicon, nor shall any such termination relieve
the Borrower of any Obligation to Silicon, until all of the Obligations have
been paid and performed in full. Upon payment and performance in full of all
the Obligations, Silicon shall promptly deliver to the Borrower termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests.

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<PAGE>

6.     EVENTS OF DEFAULT AND REMEDIES.

       6.1    EVENTS OF DEFAULT.  The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof:  (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; (b) the Borrower
shall fail to pay when due any Loan or any interest thereon or any other
monetary Obligation; (c) the total Loans and other Obligations outstanding at
any time exceed the applicable Credit Limits; (d) the Borrower shall fail to
comply with any of the covenants set forth in the Schedule to this Agreement or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured; (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, under this Agreement or any other agreement or document
relating to any Loan; (f) any levy, assessment, attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral; (g) dissolution,
termination of existence, insolvency or business failure of the Borrower, or
appointment of a receiver, trustee or custodian, for all or any part of the
property of, assignment for the benefit of creditors by, or the commencement of
any proceeding by the Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; (h) the commencement of any
proceeding against the Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 30 days
after the date commenced; (i) revocation or termination of, or limitation of
liability upon, any guaranty of the Obligations; (j) commencement of proceedings
by any guarantor of any of the Obligations under any bankruptcy or insolvency
law; (k) the Borrower makes any payment on account of any indebtedness or
obligation which has been subordinated to the Obligations, unless such payment
is permitted in the applicable subordination agreement, or if any person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; (l) the Borrower shall generally not pay its debts
as they become due; or the Borrower shall conceal, remove or transfer any part
of its property, with intent to hinder, delay or defraud its creditors, or make
or suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; (m) either the Borrower or any
other party thereto shall breach any subordination agreement executed in
connection with the Loan; (n) the sale or transfer of fifty percent or more of
the outstanding shares of stock of the Borrower; (o) the Borrower shall fail to
pay when due, or within any applicable grace periods, any amount due to
Sundstrand Corporation or the Oregon Economic Development Commission that is
secured by a lien on the Borrower's real property located in Deschutes County,
Oregon, or any such creditor shall commence a foreclosure on such real property;
or (p) the Borrower shall breach any of its obligations under the Deed of Trust,
Assignment of Rents and Leases, and Security Agreement given by the Borrower to
Silicon with respect to Borrower's real property located in Deschutes County,
Oregon.  If any of the foregoing defaults is curable and if Borrower has not
been given more than one prior notice of default within the preceding twelve
months, it may be cured (and no Event of Default will have occurred) if
Borrower, after receiving written notice from Lender demanding cure of such
default cures the failure within thirty days.  Silicon may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an Event
of Default has occurred.

       6.2    REMEDIES.  Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under Section 6.1, and at any time
thereafter, Silicon, at its option, and without


Page 9 - LOAN AND SECURITY AGREEMENT
<PAGE>

notice or demand of any kind (all of which are hereby expressly waived by the
Borrower), may do any one or more of the following: (a) Cease making Loans or
otherwise extending credit to the Borrower under this Agreement or any other
document or agreement; (b) Accelerate and declare all or any part of the
Obligations to be immediately due, payable, and performable, notwithstanding any
deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose the Borrower hereby authorizes
Silicon without judicial process to enter onto any of the Borrower's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any or all of the Collateral by Court
process, the Borrower hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (d) Require the Borrower to
assemble any or all of the Collateral and make it available to Silicon at places
designated by Silicon which are reasonably convenient to Silicon and the
Borrower, and to remove the Collateral to such locations as Silicon may deem
advisable; (e) Require the Borrower to deliver to Silicon, in kind, all checks
and other payments received with respect to all accounts and other Collateral,
together with any necessary endorsements, within one day after the date received
by the Borrower; (f) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use the Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (g) Sell, lease or otherwise dispose of any of the Collateral in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at any one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on credit,
and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale.  Silicon shall have the right to
conduct such disposition on the Borrower's premises without charge, for such
time or times as Silicon deems reasonable, or on Silicon's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Silicon may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under applicable
law, at any private disposition.  Any sale or other disposition of Collateral
shall not relieve the Borrower of any liability the Borrower may have if any
Collateral is defective as to title or physical condition or otherwise at the
time of sale; (h)  Demand payment of, and collect any accounts and general
intangibles comprising Collateral and, in connection therewith, the Borrower
irrevocably authorizes Silicon to endorse or sign the Borrower's name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to the Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon's
sole discretion, to grant extensions of time to pay, compromise claims and
settle accounts and the like for less than face value; (i) Offset against any
sums in any of the Borrower's general, special or other deposit accounts with
Silicon, including but not limited to account no.                    ; and (j)
Demand and receive possession of any of the Borrower's federal and state income
tax and the books and records utilized in the preparation thereof or referring
thereto.  All reasonable fees of professionals (including attorneys' fees),
expenses, costs, liabilities and obligations incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.  Without limiting any of Silicon's rights
and remedies, from and after the failure of


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<PAGE>

Borrower to cure any Event of Default, Silicon shall have the right to increase
the interest rate applicable to the Obligations by an additional four percent
per annum.

       6.3    STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS.  The Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the Collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same.  Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.

       6.4    POWER OF ATTORNEY.  Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Borrower or Silicon, or
in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Borrower, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements.  Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate


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<PAGE>

applicable to any of the Obligations.  In no event shall Silicon's rights under
the foregoing power of attorney or any of Silicon's other rights under this
Agreement be deemed to indicate that Silicon is in control of the business,
management or properties of the Borrower.

       6.5    APPLICATION OF PROCEEDS.  All proceeds realized as the result of
any sale of the Collateral shall be applied by Silicon first to the costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion.  Any surplus shall be
paid to the Borrower or other persons legally entitled thereto; the Borrower
shall remain liable to Silicon for any deficiency.  If Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale or other disposition of
Collateral, Silicon shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Silicon of the cash therefor.

       6.6    REMEDIES CUMULATIVE.  In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Oregon Uniform Commercial Code and under all
other applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights and
remedies are cumulative and none is exclusive.  Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies.  The failure or delay of Silicon to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.

7.     GENERAL PROVISIONS.

       7.1    NOTICES.  All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party.  All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.

       7.2    SEVERABILITY.  Should any provision of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement, which shall continue in full
force and effect.

       7.3    INTEGRATION.  This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement.  UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING,


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<PAGE>

EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO BE ENFORCEABLE.

       7.4    WAIVERS.  The failure of Silicon at any time or times to require
the Borrower to strictly comply with any of the provisions of this Agreement or
any other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith.  Any waiver of any default shall not waive or affect any
other default, whether prior or subsequent thereto.  None of the provisions of
this Agreement or any other agreement now or in the future executed by the
Borrower and delivered to Silicon shall be deemed to have been waived by any act
or knowledge of Silicon or its agents or employees, but only by a specific
written waiver signed by an officer of Silicon and delivered to the Borrower.
The Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, document or
guaranty at any time held by Silicon on which the Borrower is or may in any way
be liable, and notice of any action taken by Silicon, unless expressly required
by this Agreement.

       7.5    [INTENTIONALLY OMITTED].

       7.6    AMENDMENT.  The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

       7.7    TIME OF ESSENCE.  Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.

       7.8    ATTORNEYS' FEES AND COSTS.  The Borrower shall reimburse Silicon
for all reasonable attorneys' fees and fees of other professionals, and all
filing, recording, search, title insurance, appraisal, audit, and other
reasonable costs incurred by Silicon, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys' fees and costs Silicon incurs in order
to do the following: prepare and negotiate this Agreement and the documents
relating to this Agreement; obtain legal advice in connection with this
Agreement; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, account debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of the Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon's security
interest in, the Collateral and otherwise represent Silicon in any litigation
relating to the Borrower.  If either Silicon or the Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and
professionals' fees, including (but not limited to) reasonable attorneys' fees
and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment.  All fees and costs to which Silicon may be
entitled pursuant to this Paragraph shall immediately become part of the
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.

       7.9    BENEFIT OF AGREEMENT; CONFIDENTIALITY.  The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of the parties
hereto; provided, however, that the Borrower may not assign or transfer any of
its rights under this Agreement without the prior written consent of Silicon,
and any prohibited


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<PAGE>

assignment shall be void.  No consent by Silicon to any assignment shall release
the Borrower from its liability for the Obligations.  The Borrower agrees and
consents to Silicon's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether related
or unrelated to Silicon.  Silicon may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Silicon may have about the Borrower or about any other
matter relating to the Loan and the Borrower hereby waive any rights to privacy
it may have with respect to such matters.  The Borrower additionally waives any
and all notices of sale of participation interests, as well as all notices of
any repurchase of such participation interests.  The Borrower also agrees that
the purchasers of any such participation interests shall be considered as the
absolute owners of such interests in the Loans and shall have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests.  The Borrower unconditionally agrees that either
Silicon or such purchaser may enforce the Borrower's obligations under the Loans
irrespective of the failure or insolvency of any holder of any interest in the
Loans.

       7.10   JOINT AND SEVERAL LIABILITY.  If the Borrower consists of more
than one person, their liability shall be joint and several, and the compromise
of any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

       7.11   PARAGRAPH HEADINGS; CONSTRUCTION.  Paragraph headings are only
used in this Agreement for convenience.  The Borrower acknowledges that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement.  This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Silicon or the Borrower under any rule of construction or otherwise.

       7.12   MUTUAL WAIVER OF JURY TRIAL.  THE BORROWER AND SILICON  EACH
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT
OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY
CONDUCT, ACTS OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
SILICON OR THE BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE.

       7.13   GOVERNING LAW; JURISDICTION; VENUE.  This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of the
State of Oregon.  Any undefined term used in this Agreement that is defined in
the Oregon Uniform Commercial Code shall have the meaning assigned to that term
in the Oregon Uniform Commercial Code.  As a material part of the consideration
to Silicon to enter into this Agreement, the Borrower agrees (subject to the
parties right to require arbitration under Section 7.13 of this Agreement) that
all actions and proceedings relating directly or indirectly hereto shall be
litigated in courts located within Oregon, and that the exclusive venue therefor
shall be Washington County.


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<PAGE>

                            BORROWER:

                                          ADVANCED POWER TECHNOLOGY, INC.



                                          By:
                                             ----------------------------------
                                          Title:
                                                -------------------------------


                                          SILICON:

                                          SILICON VALLEY BANK


                                          By:
                                             ----------------------------------
                                          Title:
                                                -------------------------------


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<PAGE>

                       SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:             Advanced Power Technology, Inc.

Address:              405 S.W. Columbia Street
                      Bend, Oregon 97702

Date:                 September 6, 1995


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:
(Section 1. 1)        An amount not to exceed the lesser of: (i) $2,500,000.00
                      at any one time outstanding; or (ii) the amount of the
                      "Borrowing Base", as defined below.

                      For purposes of this Schedule, the "Borrowing Base" shall
                      mean the sum of (i) 80% of the Net Amount of Borrower's
                      eligible accounts receivable, plus (ii) 25% of Borrower's
                      "Eligible Inventory" (as defined below), up to a maximum
                      advance of $500,000.00 against Eligible Inventory.   With
                      respect to Borrower's accounts, "Net Amount" means the
                      gross amount of the account, minus all applicable sales,
                      use, excise and other similar taxes and minus all
                      discounts, credits and allowances of any nature granted
                      or claimed.  Borrower's "Eligible Inventory" means the
                      Borrower's inventory held for sale in the United States
                      or Canada, valued at the lower of wholesale cost or
                      market value, which Silicon in its reasonable discretion
                      deems eligible for borrowing, subject to the Backlog
                      Covenant described below.

                      The amount of all letters of credit issued by Silicon at
                      the request of the Borrower shall reduce, dollar for
                      dollar, the amount otherwise available to be borrowed
                      under the formulas described in this paragraph and the
                      paragraphs below.

                      Without limiting the fact that the determination of which
                      accounts are eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing:  accounts outstanding for more
                      than 90 days from the invoice date unless otherwise
                      agreed to in writing by Silicon, accounts subject to any
                      contingencies, accounts owing from an account debtor
                      outside the United States or billed or payable outside
                      the United States (except for those backed by a letter of
                      credit satisfactory to Silicon), accounts owing from
                      governmental agencies unless otherwise agreed to in
                      writing by Silicon, accounts owing from one account
                      debtor to the extent they exceed 25% of the total
                      eligible accounts outstanding, accounts owing from an
                      affiliate of the Borrower, accounts owing from an
                      affiliate of Borrower, and accounts subject to


Page 16 - LOAN AND SECURITY AGREEMENT
<PAGE>

                      setoff, recoupment, counterclaim or any other demand by
                      the account debtor.  In addition, if more than 50% of the
                      accounts owing from an account debtor are outstanding
                      more than 120 days from the invoice date or are otherwise
                      not eligible accounts, then all accounts owing from that
                      account debtor shall be deemed ineligible for borrowing.

                      Without limiting the fact that the determination of which
                      inventory is eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing: any inventory other than finished
                      goods that are owned by Borrower and located in Bend,
                      Oregon; inventory that is used, obsolete or returned
                      goods; inventory that is stored at a location other than
                      the Borrowers' Address or any location owned, leased or
                      rented by Borrowers and previously identified to Silicon;
                      inventory that is subject to a landlord's lien; and
                      inventory that is not in the possession of the Borrower.

INTEREST RATE:
(Section 1.2)         The interest rate applicable to the Secured Accounts
                      Receivable Line of Credit shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 2.0% per
                      annum.  In the event that the Borrower's ratio of total
                      liabilities to tangible net worth falls below 1.75, and
                      the Borrower realizes net profits after taxes, the
                      interest rate shall decrease to the Prime Rate, plus
                      1.75% per annum.  Interest calculations shall be made on
                      the basis of a 360-day year and the actual number of days
                      elapsed.  Interest is payable monthly.

                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.

COMMITMENT
FEE: (Section 1.3)    $25,000.00, which is fully earned and payable at closing.
                      (Any Commitment Fee previously paid by the Borrower in
                      connection with this loan shall be credited against this
                      Fee.)

MATURITY DATE:
(Section 1.3)         One year from the date of this Schedule, at which time
                      all unpaid principal and accrued but unpaid interest
                      shall be due and payable.

MATURITIES OF
LETTERS OF CREDIT:    Commercial or standby letters of credit issued by Silicon
                      shall have a maximum maturity of not later than the
                      Maturity Date for the Secured Accounts Receivable Line of
                      Credit.

REPAYMENT:            The Borrower shall repay on demand any amount drawn on a
                      letter of credit issued by Silicon.  Silicon may, but is
                      not obligated to, add to the principal amount outstanding
                      under the Secured Accounts Receivable Line of Credit any


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<PAGE>

                      amount drawn on a letter of credit issued by Silicon.
                      Any such amount shall be subject to the terms applicable
                      to the Secured Accounts Receivable Line of Credit.

ISSUANCE:             The issuance of any letter of credit under this Agreement
                      is subject to Silicon's written approval and must be in
                      form and content satisfactory to Silicon and in favor of
                      a beneficiary reasonably acceptable to Silicon.  The
                      Borrower shall execute Silicon's then-current application
                      forms, reimbursement agreement and related documents as a
                      condition to Silicon's issuance of any letter of credit.

FEES:                 The Borrower shall pay Silicon the fees and costs
                      customarily charged by Silicon (at the time of issuance
                      of the letter of credit) with respect to the issuance of
                      letters of credit.


SECURED TERM LOAN

CREDIT LIMIT:         An amount not to exceed $1,000,000.00.

INTEREST RATE:        The interest rate applicable to the Secured Term Loan
                      shall be a rate equal to the "Prime Rate" in effect from
                      time to time, plus 1.75% per annum.  Interest
                      calculations shall be made on the basis of a 360-day year
                      and the actual number of days elapsed.  "Prime Rate"
                      means the rate announced from time to time by Silicon as
                      its "prime rate"; it is a base rate upon which other
                      rates charged by Silicon are based, and it is not
                      necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.
                      Interest is payable monthly.

MATURITY DATE:        Two years from the date of this Schedule, at which time
                      all unpaid principal and accrued but unpaid interest
                      shall be due and payable.

COMMITMENT
FEE: (Section 1.3)    1,000.00.



PRIOR NAMES OF
BORROWER:             See Exhibit B

TRADE NAMES OF
BORROWER:             See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:        See Exhibit B

MATERIAL ADVERSE
LITIGATION:           See Exhibit B


Page 18 - LOAN AND SECURITY AGREEMENT

<PAGE>

FINANCIAL
COVENANTS:
(Section 4.1)         The Borrower shall comply with all of the following
                      covenants, all of which shall be determined and measured
                      in accordance with generally accepted accounting
                      principles, except as otherwise stated below:

TANGIBLE NET
WORTH:                Borrower shall at all times maintain a Tangible Net Worth
                      (defined below) of not less than $4,250,000, measured
                      quarterly.


DEBT TO TANGIBLE
NET WORTH RATIO:      Borrower shall maintain a ratio of total liabilities to
                      Tangible Net Worth of not more than 2.75:1.0, measured
                      quarterly.  Upon maturity of the Interim Bridge Loan,
                      Borrower shall maintain a ratio of total liabilities to
                      Tangible Net Worth of not more than 2.50:1.0, measured
                      quarterly.  For purposes of this calculation, total
                      liabilities shall exclude deferred revenues and debt, if
                      any, that has been subordinated to the Loans in a written
                      subordination agreement on terms satisfactory to Silicon.


QUICK RATIO:          Borrower shall maintain a ratio of Quick Assets (defined
                      below) to current liabilities of not less than 0.50:1,
                      measured quarterly.  Upon maturity of the Interim Bridge
                      Loan, Borrower shall maintain a ratio of Quick Assets to
                      current liabilities of not less than 0.55:1, measured
                      quarterly.
BACKLOG TO
INVENTORY RATIO:      Borrower shall maintain a ratio of Backlog (as defined
                      below) to the book value of inventory of at least
                      2.50:1.0, measured monthly on a rolling three month
                      average.  In the event that the ratio of Backlog to book
                      value of inventory is less than 2.50:1.0 for two
                      consecutive months, the definition of Borrowing Base for
                      the Secured Accounts Receivable Line of Credit shall be
                      revised to prohibit borrowing against Eligible Inventory
                      for a period of 30 consecutive days each year.

PROFITABILITY:        Borrower shall not incur a quarterly loss in excess of
                      $500,000 for one quarter, $750,000 for two quarters, nor
                      incur losses in any amount in more than three or more
                      consecutive quarters.  For purposes of this paragraph,
                      "loss" means net sales, less cost of goods sold, less
                      operating expenses excluding non-cash expenses.


DEFINITIONS:          "Tangible Net Worth" means stockholders' equity plus debt,
                      if any, that has been subordinated to the Loans in a
                      written subordination agreement on terms satisfactory to
                      Silicon, and accrued interest thereon, less goodwill,
                      patents, capitalized software costs, deferred
                      organizational costs, tradenames, trademarks, and all
                      other assets which would be classified as intangible
                      assets


Page 19 - LOAN AND SECURITY AGREEMENT

<PAGE>

                      under generally accepted accounting principles.  "Quick
                      Assets" means cash on hand or on deposit in banks,
                      readily marketable securities issued by the United
                      States, readily marketable commercial paper rated "A-I"
                      by Standard & Poor's Corporation (or a similar rating by
                      a similar rating organization), certificates of deposit
                      and banker's acceptances, and accounts receivable (net of
                      allowance for doubtful accounts).  "Backlog" is defined
                      as the book value of orders received by Borrower, backed
                      by purchase orders, for shipment of product within 12
                      months.

OTHER COVENANTS:
(Section 4.1)         Borrower shall at all times comply with all of the
                      following additional covenants:

                      BANKING RELATIONSHIP.  Borrower shall at all times
                      maintain its primary banking relationship with Silicon.

CONDITIONS TO
CLOSING:              Without in any way limiting the discretionary nature of
                      advances under this Agreement, before requesting any such
                      advance, the Borrower shall satisfy each of the following
                      conditions:

1.  LOAN DOCUMENTS:

                      Silicon shall have received this Agreement, the Schedule,
                      and such other loan documents as Silicon shall require,
                      each duly executed and delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                      Silicon shall have received each of the following in form
                      and substance satisfactory to it:

                      (a)   Certified Copies of the Articles of Incorporation
                      and Bylaws of the Borrower;

                      (b)  A Certificate of Good Standing issued by the
                      Secretary of State of the Borrower's state of
                      incorporation and such other states as Silicon may
                      reasonably request with respect to the Borrower;

                      (c)  A certified copy of a Resolution adopted by the
                      Board of Directors of the Borrower authorizing the
                      execution, delivery and performance of this Agreement,
                      and any other documents or certificates to be executed by
                      the Borrower in connection with this transaction; and

                      (d)  Incumbency Certificates describing the office and
                      identifying the specimen signatures of the individuals
                      signing all such loan documents on behalf of the
                      Borrower.


Page 20 - LOAN AND SECURITY AGREEMENT
<PAGE>

                      (e)  A Subordination Agreement executed by all
                      shareholders of Borrower to whom Borrower is indebted.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been
                      duly perfected and that such security interest is prior
                      to all other liens, charges, security interests,
                      encumbrances and adverse claims in or to the Collateral
                      other than Permitted Liens, which evidence shall include,
                      without limitation, a certificate from the Oregon
                      Secretary of State showing the due filing and first
                      priority of the UCC Financing Statements to be signed by
                      the Borrower covering the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, including a copy of the documents
                      relating to the purchase of shares of Borrower from
                      Sundstrand Corporation, all of which must be acceptable
                      to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its
                      sole discretion.

6.  EQUITY INVESTMENT:

                      Management in the Borrower shall have contributed not
                      less than $250,000 to purchase capital stock the Borrower
                      from Sundstrand Corporation.


       Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      --------------------------------------
                                   Title:
                                         -----------------------------------


Page 21 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      ---------------------------------------
                                   Title:
                                         ------------------------------------









Page 22 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]













Page 23 - LOAN AND SECURITY AGREEMENT


<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]

















Page 24 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                    SCHEDULE 3.13















Page 25 - LOAN AND SECURITY AGREEMENT

<PAGE>

                                    SCHEDULE 3.14




















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<PAGE>

                               SILICON VALLEY BANK


                           LOAN AND SECURITY AGREEMENT

                                 (EXIM PROGRAM)


BORROWER:                  Advanced Power Technology, Inc.
ADDRESS:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

DATE:                      September 6, 1995


         THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
between SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive,
Santa Clara, California 95054-2895 and the borrower named above (the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address").

1.       LOANS.

         1.1 LOANS. Silicon will make loans to the Borrower (the "Loans") in
amounts determined by Silicon up to the amount (the "Credit Limit") shown on the
Schedule to this Agreement (the "Schedule"), the terms of which are incorporated
into this Agreement. The Borrower is responsible for monitoring the total amount
of Loans and other Obligations outstanding from time to time, and the Borrower
shall not permit that amount, at any time, to exceed the Credit Limit. If at any
time the total of all outstanding Loans and all other Obligations exceeds the
Credit Limit, the Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand.

         1.2 INTEREST; REQUEST TO DEBIT ACCOUNTS. All Loans and all other
monetary Obligations shall bear interest at the rate shown on the Schedule
hereto. Interest shall be payable monthly, on the due date shown on the monthly
billing from Silicon to the Borrower. The Borrower hereby requests and
authorizes Silicon to debit any of the Borrower's accounts with Silicon,
including without limitation account no. _______________, for payments of
interest and principal due on the Loan and all other obligations owing by the
Borrower to Silicon. Silicon shall promptly notify the Borrower of all debits
which Silicon makes against the Borrower's accounts. Any such debit against the
Borrower's accounts shall in no way be deemed a setoff by Silicon.

         1.3 FEES. The Borrower shall pay to Silicon a commitment fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.


Page 1 - LOAN AND SECURITY AGREEMENT
<PAGE>

2.       GRANT OF SECURITY INTEREST.

         2.1 OBLIGATIONS. The term "Obligations" as used in this Agreement means
the following: the obligation to pay all Loans and all interest thereon when
due, and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon, whether joint or several, monetary
or non-monetary, and whether created pursuant to this Agreement or any other
present or future agreement or otherwise. Silicon may, in its discretion,
require that the Borrower pay monetary Obligations in cash to Silicon, or charge
them to Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans.

         2.2 COLLATERAL. As security for all Obligations, the Borrower hereby
grants Silicon a continuing security interest in all of the Borrower's assets,
including but not limited to all of the Borrower's interest in the types of
property described below, whether now owned or hereafter acquired, and wherever
located (collectively, the "Collateral"): (a) all accounts; (b) all chattel
paper; (c) all documents; (d) all instruments; (e) all inventory; (f) all
equipment, except such equipment that is or will be sold to and leased back from
Financing for Science, Inc.; (g) all goods; (h) all fixtures (except as provided
below in this Section 2.2); (i) all general intangibles including, but not
limited to, deposit accounts, goodwill, names, trade names, trademarks and the
goodwill of the business symbolized thereby, trademark applications, trade
secrets, drawings, blueprints, customer lists, patents, patent applications,
copyrights, copyright applications, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (j) all books and
records, whether stored on computers or otherwise maintained; (k) all of the
Borrower's cash; and (l) all substitutions, additions and accessions to any of
the foregoing, and all products, proceeds and insurance proceeds of the
foregoing, and all guaranties of and security for the foregoing; and all books
and records relating to any of the foregoing. Notwithstanding anything to the
contrary in this paragraph 2.2, Borrower does not grant to Silicon a security
interest in any intellectual property consisting of any patents, patent
applications or other forms of process technology or product designs, although
Borrower does grant to Silicon a continuing security interest in proceeds of the
sale of these assets. All terms used above in this Section 2.2 that are defined
in the Oregon Uniform Commercial Code shall have the meaning given to such terms
in the Oregon Uniform Commercial Code. Silicon's security interest in equipment
includes equipment of the Borrower that is attached to the real property
occupied by the Borrower, but Silicon shall not have a security interest in any
tenant improvements of Borrower that are part of the real property occupied by
Borrower. The Borrower shall, at least every six months, provide a written
Schedule to Silicon showing (i) all applications for the registration of any
patent, trademark, or copyright with the U.S. Patent and Trademark Office, the
U.S. Copyright Office, or any similar office or agency in any other country,
state, or any political subdivision (the "Offices") filed by Borrower or any
agent, employee, licensee or designee of Borrower, and (ii) all assignments of
any patent, trademark, or copyright which Borrower has acquired from a third
party with any one of the Offices.

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

         The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:


Page 2 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.1 CORPORATE EXISTENCE AND AUTHORITY. The Borrower is and will
continue to be duly authorized, validly existing and in good standing under the
laws of the state of Delaware. The Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would have a material adverse effect on the Borrower. The execution, delivery
and performance by the Borrower of this Agreement, and all other documents
contemplated hereby have been duly and validly authorized, are enforceable
against the Borrower in accordance with their terms, subject to applicable
bankruptcy law and equitable principles of law, and do not violate any law or
any provision of, and are not grounds for acceleration under, any agreement or
instrument which is binding upon the Borrower.

         3.2 NAME, TRADE NAMES AND STYLES. The name of the Borrower set forth in
the heading to this Agreement is its correct name. Listed on the Schedule hereto
are all prior names of the Borrower and all of the Borrower's present and prior
trade names. The Borrower shall give Silicon 15 days' prior written notice
before changing its name or doing business under any other name. The Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.

         3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is the Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or moving the Collateral to any other location.

         3.4 TITLE TO COLLATERAL; PERMITTED LIENS. The Borrower is now, and will
at all times in the future be, the sole owner of all the Collateral, except for
general intangibles licensed to the Borrower and items of equipment which are
leased by the Borrower. The Collateral now is and will remain free and clear of
any and all liens, charges, security interests, encumbrances and adverse claims,
except for the following ("Permitted Liens"): (i) purchase money security
interests in specific items of equipment; (ii) licenses of general intangibles
and leases of specific items of equipment, including without limitation the
lease of equipment from Financing for Science, Inc.; (iii) liens for taxes not
yet payable; (iv) additional security interests and liens consented to in
writing by Silicon in its sole discretion; and (v) security interests being
terminated substantially concurrently with this Agreement. Silicon will have the
right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on terms satisfactory to Silicon in its sole discretion,
acknowledge that the holder's security interest is subordinate to the security
interest in favor of Silicon, and that the Borrower agree that any uncured
default in any obligation secured by the subordinate security interest shall
also constitute an Event of Default under this Agreement. Silicon now has, and
will continue to have, a first priority, perfected and enforceable security
interest in all of the Collateral. The Collateral shall not be subject to any
other liens or security interests of any type except for the Permitted Liens.
The Borrower will at all times defend Silicon and the Collateral against all
claims of others. None of the Collateral now is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture.

         3.5 MAINTENANCE OF COLLATERAL. The Borrower will maintain the
Collateral in good working condition, and the Borrower will not use the
Collateral for any unlawful purpose. The Borrower will immediately advise
Silicon in writing of any material loss or damage to the Collateral.


Page 3 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.6 DEPOSIT SWEEP. The Borrower will enter into a written contract, in
a form satisfactory to Silicon, with either U.S. Bank or First Interstate Bank
of Oregon (individually the "Depository Bank" ) whereby all of Borrower's funds
in its account with the Depository Bank are transferred to Silicon account no.
___________ on a daily basis.

         3.7 BOOKS AND RECORDS. The Borrower has maintained and will maintain at
the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

         3.8 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
in the future delivered to Silicon have been, and shall be, prepared in
conformity with generally accepted accounting principles and now and in the
future shall completely and accurately reflect the financial condition of the
Borrower, at the times and for the periods therein stated. Since the last date
covered by any such statement, there has been no material adverse change in the
financial condition or business of the Borrower. The Borrower is now and shall
continue to be solvent. The Borrower shall provide Silicon: (a) within 30 days
after the end of each month, a monthly financial statement (consisting of an
income statement and a balance sheet) prepared by the Borrower; (b) within 15
days after the end of each month, an accounts receivable report and an accounts
payable report in such form as Silicon shall reasonably specify; (c) within 15
days after the end of each month, a Borrowing Base Certificate as required by
the rules and regulations of the Export-Import Bank of the United States in the
form attached to this Agreement as Exhibit A, as Silicon may reasonably modify
such Certificate from time to time, signed by the President or Chief Financial
Officer of the Borrower; and (d) within 30 days after the end of each quarter of
each fiscal year, a Compliance Certificate in such form as Silicon shall
reasonably specify, signed by the President or Chief Financial Officer of the
Borrower, certifying that throughout such quarter the Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth on
the Schedule hereto and such other information as Silicon shall reasonably
request. The Borrower shall provide Silicon, within 90 days following the end of
the Borrower's fiscal year, complete CPA-audited financial statements with
details on Borrower, such review being conducted by independent certified public
accountants reasonably acceptable to Silicon.

         3.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and the Borrower has timely paid, and
will timely pay, all foreign, federal, state and local taxes, assessments,
deposits and contributions now or in the future owed by the Borrower. The
Borrower may, however, defer payment of any contested taxes, provided that the
Borrower (i) in good faith contests the Borrower's obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Silicon in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. The Borrower is unaware of any claims or adjustments proposed for
any of the Borrower's prior tax years which could result in additional taxes
becoming due and payable by the Borrower. The Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future pension,
profit sharing and deferred compensation plans in accordance with their terms,
and the Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could result in any liability of the
Borrower, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


Page 4 - LOAN AND SECURITY AGREEMENT
<PAGE>

         3.10 COMPLIANCE WITH LAW. The Borrower has complied, and will comply,
in all material respects, with all provisions of all foreign, federal, state and
local laws and regulations relating to the Borrower, including, but not limited
to, those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.

         3.11 LITIGATION. Except as disclosed in the Schedule hereto, there is
no claim, suit, litigation, proceeding or investigation pending or (to best of
the Borrower's knowledge) threatened by or against or affecting the Borrower in
any court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.

         3.12 USE OF PROCEEDS. All proceeds of all Loans shall be used solely
for lawful business purposes.

         3.13 NO PATENTS, TRADEMARKS OR COPYRIGHTS. The attached Schedule 3.13
shows the patents (including pending applications, if any), trademarks and
copyrights with the U.S. Patent and Trademark Office, the U.S. Copyright Office
or any similar office or agency of any state, of the United States of America or
of any foreign jurisdiction that the Borrower owns. The Borrower has not granted
a security interest in, assigned, or pledged any of the foregoing in any manner
to secure any obligations of the Borrower.

         3.14 HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in this
Agreement, shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to any
of the foregoing. Except as disclosed to and acknowledged by Silicon in writing,
the Borrower represents and warrants that: (a) the Borrower has no knowledge of
(i) any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance by any prior owners or
occupants of any of the properties, or (ii) any actual or threatened litigation
or claims of any kind by any person relating to such matters; (b) Except as set
forth in Schedule 3.14, neither the Borrower nor any subtenant, contractor,
agent or other user authorized by Borrower of any of the properties shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous waste
or substance on, under, or about any of the properties owned or operated by the
Borrower; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. The Borrower authorizes Silicon and its agents, upon 24 hours prior
notice (which need not be in writing), to enter upon the properties to make such
inspections and tests as Silicon may deem appropriate to determine compliance of
the properties owned or operated by the Borrower with this section of the
Agreement. Any inspections or tests made by Silicon shall be for Silicon's
purposes only and shall not be construed to create any responsibility or
liability on the part of Silicon to the Borrower or to any other person. The
Borrower hereby (a) releases and waives any


Page 5 - LOAN AND SECURITY AGREEMENT
<PAGE>

future claims against Silicon for indemnity or contribution in the event the
Borrower becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Silicon against any and all claims,
losses, liabilities, damages, penalties, and expenses which Silicon may directly
or indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to the Borrower's
ownership or interest in the properties, whether or not the same was or should
have been known to the Borrower. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the payment of
the Indebtedness and the termination or expiration of this Agreement and shall
not be affected by Silicon's acquisition of any interest in any of the
properties, whether by foreclosure or otherwise.

4.       ADDITIONAL DUTIES OF THE BORROWER.

         4.1 COVENANTS. The Borrower shall at all times comply with the
covenants set forth in the Schedule to this Agreement.

         4.2 OVERADVANCE; PROCEEDS OF ACCOUNTS. If for any reason the total of
all outstanding Loans and all other Obligations exceeds the Credit Limit,
without limiting Silicon's other remedies, and whether or not Silicon declares
an Event of Default, the Borrower shall remit to Silicon all checks and other
proceeds of the Borrower's accounts and other Collateral, in the same form as
received by the Borrower, within one day after the Borrower's receipt of the
same, to be applied to the Obligations in such order as Silicon shall determine
in its discretion.

         4.3 INSURANCE. The Borrower shall, at all times insure all of the
tangible personal property Collateral and carry such other business insurance,
with insurers reasonably acceptable to Silicon, in such form and amounts as
Silicon may reasonably require. All such insurance policies shall name Silicon
as an additional loss payee, and shall contain a lenders loss payee endorsement
in form reasonably acceptable to Silicon. Upon receipt of the proceeds of any
such insurance, Silicon shall apply such proceeds in reduction of the
Obligations as Silicon shall determine in its sole and absolute discretion,
except that, provided no Event of Default has occurred, Silicon shall release to
the Borrower insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Borrower for the replacement of the
equipment with respect to which the insurance proceeds were paid. Silicon may
require reasonable assurance that the insurance proceeds so released will be so
used. If the Borrower fails to provide or pay for any insurance, Silicon may,
but is not obligated to, obtain the same at the Borrower's expense. The Borrower
shall promptly deliver to Silicon copies of all reports made to insurance
companies.

         4.4 REPORT. The Borrower shall provide Silicon with such written
reports with respect to the Borrower, as Silicon shall from time to time
reasonably specify.

         4.5 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy the Borrower's
accounting books, records, ledgers, journals, or registers and the Borrower's
books and records relating to the Collateral. Silicon shall take reasonable
steps to keep confidential all information obtained in any such inspection or
audit, but Silicon shall have the right to disclose any such information to its
auditors, regulatory agencies and attorneys, and pursuant to any subpoena or
other legal process. Borrower shall reimburse Silicon for up to $1,250.00 per
audit for Silicon's out-of-pocket costs


Page 6- LOAN AND SECURITY AGREEMENT
<PAGE>

for semi-annual accounts receivable audits, and Silicon may debit the Borrower's
deposit accounts with Silicon for the actual, reasonable out-of-pocket cost of
such accounts receivable audits (up to the limit stated above), in which event
Silicon shall send notification thereof to the Borrower. Notwithstanding the
foregoing, during the continuation of an Event of Default all audits shall be at
the Borrower's expense.

         4.6 NEGATIVE COVENANTS. Except as may be permitted in the Schedule
hereto, the Borrower shall not, without Silicon's prior written consent, do any
of the following: (i) merge or consolidate with another corporation, except that
the Borrower may merge or consolidate with another corporation if the Borrower
is the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined herein) as of the end of the month prior to the effective date of the
merger, and the assets of the corporation acquired in the merger are not subject
to any liens or encumbrances, except Permitted Liens; (ii) acquire any assets
outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined herein) as of the end
of the month prior to the effective date of the acquisition; (iii) enter into
any other transaction outside the ordinary course of business (except as
permitted by the other provisions of this Section); (iv) sell or transfer any
Collateral, except for the sale of finished inventory in the ordinary course of
the Borrower's business (which inventory shall be released from the security
interest granted in Section 2.2 upon completion of such sales), and except for
the sale of obsolete or unneeded equipment in the ordinary course of business;
(v) make any loans of any money or any other asset to any subsidiary or
affiliate of Borrower; (vi) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on the Borrower or on the
prospect of repayment of the Obligations; (vii) guarantee or otherwise become
liable with respect to the obligations of another party or entity; (viii) pay or
declare any dividends on the Borrower's stock (except for dividends payable
solely in stock of the Borrower); (ix) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of the Borrower's stock, except as the
Borrower may decide in order to satisfy stock warrants granted to Silicon,
Financing for Science International, Inc., Advanced Energy Industries, Inc., or
Bridgewater Capital Corporation; (x) make any change in the Borrower's capital
structure which has a material adverse effect on the Borrower or on the prospect
of repayment of the Obligations; (xi) dissolve or elect to dissolve; (xii) pay
bonuses or cash compensation to employees or officers for any fiscal year in
excess of net after tax earnings for the fiscal year; or (xiii) pledge or
otherwise encumber any patents, trademarks or other intellectual property of any
type owned or controlled by Borrower. "Tangible Net Worth" means stockholders'
equity plus debt that is subordinated to the Loans pursuant to a written
subordination agreement satisfactory to Silicon and accrued interest thereon,
less goodwill, patents, capitalized software costs, tradenames, trademarks, and
all other assets which would be classified as intangible assets under generally
accepted accounting principles. Transactions permitted by the foregoing
provisions of this Section are only permitted if no Event of Default is pending
at the time.

         4.7 LITIGATION COOPERATION. Should any third-party suit or proceeding
be instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to Silicon,
make available the Borrower and its officers, employees and agents and the
Borrower's books and records to the extent that Silicon may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.

         4.8 VERIFICATION. Silicon may, from time to time, following prior
notification to the Borrower, verify directly with the respective account
debtors the validity, amount and other matters relating to the Borrower's
accounts, by means of mail, telephone or otherwise, either in the name of the


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<PAGE>

Borrower or Silicon or such other name as Silicon may reasonably choose,
provided that no prior notification shall be required following an Event of
Default. Silicon shall not be required to obtain the Borrower's consent prior to
any such verification of accounts, whether or not an Event of Default has
occurred.

         4.9 EXECUTE ADDITIONAL DOCUMENTATION. The Borrower agrees, at its
expense, on request by Silicon, to execute from time to time all documents in
form satisfactory to Silicon, as Silicon may deem reasonably necessary or useful
in order to perfect and maintain Silicon's perfected security interest in the
Collateral, and in order to fully consummate all of the transactions
contemplated by this Agreement.

5.       TERM.

         5.1 MATURITY DATE. This Agreement shall continue in effect until the
payment in full of the Obligations, provided, however, that the Borrower shall
repay the Loans in full, with all accrued but unpaid interest, not later than
the "Maturity Date" for each such Loan set forth on the Schedule.

         5.2 EARLY TERMINATION. Subject to Section 5.3, this Agreement may be
terminated, without penalty, prior to the Maturity Date as follows: (i) by the
Borrower, effective three business days after written notice of termination is
given to Silicon; or (ii) by Silicon at any time after the occurrence of an
Event of Default, without notice, effective immediately.

         5.3 PAYMENT OF OBLIGATIONS. On the due dates stated in the Schedule, or
on any earlier effective date of termination, the Borrower shall pay and perform
in full all Obligations, whether evidenced by installment notes or otherwise,
and whether or not all or any part of such Obligations are otherwise then due
and payable. Notwithstanding any termination of this Agreement, all of Silicon's
security interests in all of the Collateral and all of the terms and provisions
of this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without limiting the fact
that Loans are discretionary on the part of Silicon, Silicon may, in its sole
discretion, refuse to make any further Loans after termination. No termination
shall in any way affect or impair any right or remedy of Silicon, nor shall any
such termination relieve the Borrower of any Obligation to Silicon, until all of
the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations, Silicon shall promptly deliver to
the Borrower termination statements, requests for reconveyances and such other
documents as may be required to fully terminate any of Silicon's security
interests.


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<PAGE>

6.       EVENTS OF DEFAULT AND REMEDIES.

         6.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and the Borrower
shall give Silicon immediate written notice thereof: (a) any warranty,
representation, statement, report or certificate made or delivered to Silicon by
the Borrower or any of the Borrower's officers or employees, now or in the
future, shall be untrue or misleading in any material respect; (b) the Borrower
shall fail to pay when due any Loan or any interest thereon or any other
monetary Obligation; (c) the total Loans and other Obligations outstanding at
any time exceeds the Credit Limit; (d) the Borrower shall fail to comply with
any of the covenants set forth in the Schedule to this Agreement or shall fail
to perform any other non-monetary Obligation which by its nature cannot be
cured; (e) the Borrower shall fail to pay or perform any other non-monetary
Obligation, which failure is not cured within 15 days after the occurrence of
the same; (f) any levy, assessment, attachment, seizure, lien or encumbrance is
made on all or any part of the Collateral; (g) dissolution, termination of
existence, insolvency or business failure of the Borrower, or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by the Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; (h) the commencement of any
proceeding against the Borrower or any guarantor of any of the Obligations under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 60 days
after the date commenced; (i) revocation or termination of, or limitation of
liability upon, any guaranty of the Obligations; (j) the Borrower makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations, unless such payment is permitted in the applicable
subordination agreement, or if any person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; (k)
the Borrower shall generally not pay its debts as they become due; or the
Borrower shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of any
of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; (m) either the Borrower or any other party thereto
shall breach any subordination agreement executed in connection with the Loan;
(n) the sale or transfer of fifty percent or more of the outstanding shares of
stock of the Borrower; (o) the Borrower shall fail to pay when due, or within
any applicable grace periods, any amount due to Sundstrand Corporation or the
Oregon Economic Development Commission that is secured by a lien on the
Borrower's real property located in Deschutes County, Oregon, or any such
creditor shall commence a foreclosure on such real property; or (p) the Borrower
shall breach any of its obligations under the Deed of Trust, Assignment of Rents
and Leases, and Security Agreement given by the Borrower to Silicon with respect
to Borrower's real property located in Deschutes County, Oregon. If any of the
foregoing defaults is curable and if Borrower has not been given more than one
prior notice of default within the preceding twelve months, it may be cured (and
no Event of Default will have occurred) if Borrower, after receiving written
notice from Lender demanding cure of such default cures the failure within
thirty days. Silicon may cease making any Loans hereunder during any of the
above cure periods, and thereafter if an Event of Default has occurred.
         6.2 REMEDIES. Upon the occurrence of any Event of Default and the
expiration of any applicable cure period under Section 6.1, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
Accelerate and declare all or any part of


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<PAGE>

the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
the Borrower hereby authorizes Silicon without judicial process to enter onto
any of the Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive
control thereof without charge for so long as Silicon deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Silicon seek
to take possession of any or all of the Collateral by Court process, the
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii)
any requirement that Silicon retain possession of and not dispose of any such
Collateral until after trial or final judgment; (d) Require the Borrower to
assemble any or all of the Collateral and make it available to Silicon at
places designated by Silicon which are reasonably convenient to Silicon and
the Borrower, and to remove the Collateral to such locations as Silicon may
deem advisable; (e) Require the Borrower to deliver to Silicon, in kind, all
checks and other payments received with respect to all accounts and other
Collateral, together with any necessary endorsements, within one day after
the date received by the Borrower; (f) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such
purpose and for the purpose of removal, Silicon shall have the right to use
the Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all
other property without charge; (g) Sell, lease or otherwise dispose of any of
the Collateral in its condition at the time Silicon obtains possession of it
or after further manufacturing, processing or repair, at any one or more
public and/or private sales, in lots or in bulk, for cash, exchange or other
property, or on credit, and to adjourn any such sale from time to time
without notice other than oral announcement at the time scheduled for sale.
Silicon shall have the right to conduct such disposition on the Borrower's
premises without charge, for such time or times as Silicon deems reasonable,
or on Silicon's premises, or elsewhere and the Collateral need not be located
at the place of disposition. Silicon may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition, and
if permissible under applicable law, at any private disposition. Any sale or
other disposition of Collateral shall not relieve the Borrower of any
liability the Borrower may have if any Collateral is defective as to title or
physical condition or otherwise at the time of sale; (h) Demand payment of,
and collect any accounts and general intangibles comprising Collateral and,
in connection therewith, the Borrower irrevocably authorizes Silicon to
endorse or sign the Borrower's name on all collections, receipts, instruments
and other documents, to take possession of and open mail addressed to the
Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant
extensions of time to pay, compromise claims and settle accounts and the like
for less than face value; (i) Offset against any sums in any of the
Borrower's general, special or other deposit accounts with Silicon, including
but not limited to account no.         ; and (j) Demand and receive
possession of any of the Borrower's federal and state income tax and the
books and records utilized in the preparation thereof or referring thereto.
All reasonable fees of professionals (including attorneys' fees), expenses,
costs, liabilities and obligations incurred by Silicon with respect to the
foregoing shall be added to and become part of the Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations. Without limiting any of Silicon's
rights and remedies, from and after the failure of Borrower to cure any Event
of Default, Silicon shall have the right to increase the interest rate
applicable to the Obligations by an additional four percent per annum.


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<PAGE>

         6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. The Borrower
and Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the Collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.

         6.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, the Borrower grants to
Silicon an irrevocable power of attorney coupled with an interest, authorizing
and permitting Silicon (acting through any of its employees, attorneys or
agents) at any time, at its option, but without obligation, with or without
notice to the Borrower, and at the Borrower's expense, to do any or all of the
following, in the Borrower's name or otherwise: (a) Execute on behalf of the
Borrower any documents that Silicon may, in its sole and absolute discretion,
deem advisable in order to perfect and maintain Silicon's security interest in
the Collateral, or in order to exercise a right of the Borrower or Silicon, or
in order to fully consummate all the transactions contemplated under this
Agreement, and all other present and future agreements; (b) Execute on behalf of
the Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Silicon's Collateral or in which
Silicon has an interest; (c) Execute on behalf of the Borrower, any invoices
relating to any account, any draft against any account debtor and any notice to
any account debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
the Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into Silicon's possession; (e) Endorse all checks and
other forms of remittances received by Silicon; (f) Pay, contest or settle any
lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (g) Grant extensions of time to pay, compromise
claims and settle accounts and general intangibles for less than face value and
execute all releases and other documents in connection therewith; (h) Pay any
sums required on account of the Borrower's taxes or to secure the release of any
liens therefor, or both; (i) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements. Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's
rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of the Borrower.


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<PAGE>

         6.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the exercise
of its rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Silicon shall determine in its sole discretion. Any surplus shall be paid to the
Borrower or other persons legally entitled thereto; the Borrower shall remain
liable to Silicon for any deficiency. If Silicon, in its sole discretion,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale or other disposition of Collateral,
Silicon shall have the option, exercisable at any time, in its sole discretion,
of either reducing the Obligations by the principal amount of purchase price or
deferring the reduction of the Obligations until the actual receipt by Silicon
of the cash therefor.

         6.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the Oregon Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or
in the future entered into between Silicon and the Borrower, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be
deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but
all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.

7.       GENERAL PROVISIONS.

         7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.

         7.2 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.

         7.3 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. UNDER
OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY SILICON AFTER
OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY SILICON TO
BE ENFORCEABLE.

         7.4 WAIVERS. The failure of Silicon at any time or times to require the
Borrower to strictly


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<PAGE>

comply with any of the provisions of this Agreement or any other present or
future agreement between the Borrower and Silicon shall not waive or diminish
any right of Silicon later to demand and receive strict compliance therewith.
Any waiver of any default shall not waive or affect any other default, whether
prior or subsequent thereto. None of the provisions of this Agreement or any
other agreement now or in the future executed by the Borrower and delivered to
Silicon shall be deemed to have been waived by any act or knowledge of Silicon
or its agents or employees, but only by a specific written waiver signed by an
officer of Silicon and delivered to the Borrower. The Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, document or guaranty at any time held by
Silicon on which the Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.

         7.5 [INTENTIONALLY OMITTED]

         7.6 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by the Borrower and a duly
authorized officer of Silicon.

         7.7 TIME OF ESSENCE. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.

         7.8 ATTORNEYS' FEES AND COSTS. The Borrower shall reimburse Silicon for
all reasonable attorneys' fees and fees of other professionals, and all filing,
recording, search, title insurance, appraisal, audit, and other reasonable costs
incurred by Silicon, pursuant to, or in connection with, or relating to this
Agreement (whether or not a lawsuit is filed), including, but not limited to,
any reasonable attorneys' fees and costs Silicon incurs in order to do the
following: prepare and negotiate this Agreement and the documents relating to
this Agreement; obtain legal advice in connection with this Agreement; enforce,
or seek to enforce, any of its rights; prosecute actions against, or defend
actions by, account debtors; commence, intervene in, or defend any action or
proceeding; initiate any complaint to be relieved of the automatic stay in
bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party
claim, or other claim; examine, audit, copy, and inspect any of the Collateral
or any of the Borrower's books and records; protect, obtain possession of,
lease, dispose of, or otherwise enforce Silicon's security interest in, the
Collateral and otherwise represent Silicon in any litigation relating to the
Borrower. If either Silicon or the Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and professionals' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of the Borrower's Obligations, shall be
due on demand, and shall bear interest at a rate equal to the highest interest
rate applicable to any of the Obligations.

         7.9 BENEFIT OF AGREEMENT; CONFIDENTIALITY. The provisions of this
Agreement shall be binding upon and inure to the benefit of the respective
successors, assigns, heirs, beneficiaries and representatives of the parties
hereto; provided, however, that the Borrower may not assign or transfer any of
its rights under this Agreement without the prior written consent of Silicon,
and any prohibited assignment shall be void. No consent by Silicon to any
assignment shall release the Borrower from its liability for the Obligations.
The Borrower agrees and consents to Silicon's sale or transfer, whether now or
later, of one or more participation interests in the Loans to one or more
purchasers, whether related or


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<PAGE>

unrelated to Silicon. Silicon may provide, without any limitation whatsoever, to
any one or more purchasers, or potential purchasers, any information or
knowledge Silicon may have about the Borrower or about any other matter relating
to the Loan and the Borrower hereby waive any rights to privacy it may have with
respect to such matters. The Borrower additionally waives any and all notices of
sale of participation interests, as well as all notices of any repurchase of
such participation interests. The Borrower also agrees that the purchasers of
any such participation interests shall be considered as the absolute owners of
such interests in the Loans and shall have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests. The Borrower unconditionally agrees that either Silicon or such
purchaser may enforce the Borrower's obligations under the Loans irrespective of
the failure or insolvency of any holder of any interest in the Loans.

         7.10 JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than
one person, their liability shall be joint and several, and the compromise of
any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.

         7.11 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used
in this Agreement for convenience. The Borrower acknowledges that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly against
Silicon or the Borrower under any rule of construction or otherwise.

         7.12 MUTUAL WAIVER OF JURY TRIAL. THE BORROWER AND SILICON EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND THE BORROWER, OR ANY CONDUCT, ACTS
OR OMISSIONS OF SILICON OR THE BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR THE
BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.

         7.13 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and construed in accordance with, the laws of the
State of Oregon. Any undefined term used in this Agreement that is defined in
the Oregon Uniform Commercial Code shall have the meaning assigned to that term
in the Oregon Uniform Commercial Code. As a material part of the consideration
to Silicon to enter into this Agreement, the Borrower agrees (subject to the
parties right to require arbitration under Section 7.13 of this Agreement) that
all actions and proceedings relating directly or indirectly hereto shall be
litigated in courts located within Oregon, and that the exclusive venue therefor
shall be Washington County.

                                    BORROWER:

                                                 ADVANCED POWER TECHNOLOGY, INC.



                                                 By:____________________________
                                                 Title:_________________________


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<PAGE>

                                    SILICON:

                                                 SILICON VALLEY BANK


                                                 By:____________________________
                                                 Title:_________________________


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<PAGE>





                     SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                 (Exim Program)

Borrower:                  Advanced Power Technology, Inc.

Address:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

Date:                      September 6, 1995


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:

                           Silicon and the Borrower are parties to that certain
                           other Loan and Security Agreement of even date (the
                           "Non-Exim Agreement"). Both this Agreement and the
                           Non-Exim Agreement shall continue in full force and
                           effect, and all rights and remedies under this
                           Agreement and the Non-Exim Agreement are cumulative.
                           The term "Obligations" as used in this Agreement and
                           in the Non-Exim Agreement shall include without
                           limitation the obligation to pay when due all Loans
                           made pursuant to this Agreement (the "Exim Loans")
                           and all interest thereon and the obligation to pay
                           when due all Loans made pursuant to the Non-Exim
                           Agreement (the "Non-Exim Loans") and all interest
                           thereon. Without limiting the generality of the
                           foregoing, all "Collateral" as defined in this
                           Agreement and as defined in the Non-Exim Agreement
                           shall secure all Exim Loans and all Non-Exim Loans
                           and interest thereon, and all other Obligations. Any
                           Event of Default under this Agreement shall
                           constitute an Event of Default under the Non-Exim
                           Agreement, and any Event of Default under the
                           Non-Exim Agreement shall also constitute an Event of
                           Default under this Agreement. In the event Silicon
                           assigns its rights under this Agreement and/or under
                           any Note evidencing Exim Loans and/or its rights
                           under the Non-Exim Agreement and/or under any Note
                           evidencing Non-Exim Loans, to any third party,
                           including without limitation the Export-Import Bank
                           of the United States ("Exim Bank"), whether before or
                           after the occurrence of any Event of Default, Silicon
                           shall have the right (but not any obligation), in its
                           sole discretion, to allocate and apportion Collateral
                           to the Agreement and/or Note assigned and to specify
                           the priorities of the respective security interests
                           in such Collateral between itself and the assignee,
                           all without notice to or consent of the Borrower.

                           This Agreement is subject to all of the terms and
                           conditions of the Borrower Agreement attached hereto
                           as Exhibit A, and all documents attached to such
                           Borrower Agreement (collectively, the "Exim
                           Documents"), all of which are hereby incorporated
                           herein by this reference. Borrower shall perform all
                           of the obligations and comply with all of the
                           affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Documents
                           as though such


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<PAGE>

                           obligations and covenants were expressly set forth
                           herein, and all of which are hereby incorporated
                           herein by this reference. In the event of any
                           conflict between the terms of the Exim Documents and
                           the terms of the Exim Loan Agreement or the Schedule
                           or any related promissory note, whichever terms are
                           more restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1.1)
EXIM LOANS:                An amount not to exceed the lesser of:

                           (a) $1,750,000 at any one time outstanding; or

                           (b) a total of (i) 90% of the value of Borrower's
                           eligible export receivables, which are eligible for
                           borrowing as provided below, plus (ii) 70% of the
                           value of Borrower's eligible exportable inventory
                           which is eligible for borrowing as provided below,
                           which Silicon in its reasonable discretion deems
                           eligible for borrowing.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: accounts outstanding
                           for more than 90 days from the invoice date unless
                           otherwise agreed to in writing by Silicon, accounts
                           subject to any contingencies, accounts billed or
                           payable outside the United States (except for those
                           backed by a letter of credit satisfactory to
                           Silicon), accounts owing from governmental agencies
                           unless otherwise agreed to in writing by Silicon,
                           accounts owing from one account debtor to the extent
                           they exceed 25% of the total eligible accounts
                           outstanding, accounts owing from an affiliate of the
                           Borrower, accounts subject to setoff, recoupment,
                           counterclaim or any other demand by the account
                           debtor. In addition, if more than 50% of the accounts
                           owing from an account debtor are outstanding more
                           than 120 days from the invoice date or are otherwise
                           not eligible accounts, then all accounts owing from
                           that account debtor shall be deemed ineligible for
                           borrowing.

                           Without limiting the fact that the determination of
                           which inventory is eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: any inventory other
                           finished goods that are owned by Borrower and located
                           in Bend, Oregon; inventory that is used, obsolete or
                           returned goods; inventory that is stored at a
                           location other than the Borrowers' Address or any
                           location owned, leased or rented by Borrowers and
                           previously identified to Silicon; inventory that is
                           subject to a landlord's lien; and inventory that is
                           not in the possession of the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                     This Agreement is subject to all of the terms and
                           conditions of the Exim Guarantee (including without
                           limitation the Transaction Attachment thereto and


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<PAGE>

                           Special Conditions thereto) which are hereby
                           incorporated herein by this reference. Borrower
                           expressly agrees to perform all of the obligations
                           and comply with all of the affirmative and negative
                           covenants and all other terms and conditions set
                           forth in the Exim Guarantee as though the same were
                           expressly set forth herein, and all of the same are
                           hereby incorporated herein by this reference. In the
                           event of any conflict between the terms of the Exim
                           Guarantee and the other terms of this Agreement,
                           whichever terms are more restrictive shall apply.
                           Borrower shall reimburse Silicon for all fees and out
                           of pocket expenses incurred by Silicon with respect
                           to the Exim Guarantee, including without limitation
                           all facility fees and usage fees, and Silicon is
                           authorized to debit Borrower's account with Silicon
                           for such fees, costs and expenses when paid by
                           Silicon.

INTEREST RATE:
(Section 1.2)              The interest rate applicable to the Export Line of
                           Credit shall be a rate equal to the "Prime Rate" in
                           effect from time to time, plus 1.0% per annum.
                           Interest calculations shall be made on the basis of a
                           360-day year and the actual number of days elapsed.
                           "Prime Rate" means the rate announced from time to
                           time by Silicon as its "prime rate"; it is a base
                           rate upon which other rates charged by Silicon are
                           based, and it is not necessarily the best rate
                           available at Silicon. The interest rate applicable to
                           the Obligations shall change on each date there is a
                           change in the Prime Rate.

LOAN ORIGINATION
FEE: (Section 1.3)         $26,250.00, which is fully earned and payable at
                           closing. (Any Commitment Fee previously paid by the
                           Borrower in connection with this loan shall be
                           credited against this Fee.)

MATURITY DATE:
(Section 1.3)              One year from the date first written above, at which
                           time all unpaid principal and accrued but unpaid
                           interest shall be due and payable.

PRIOR NAMES OF
BORROWER:                  See Exhibit B

TRADE NAMES OF
BORROWER:                  See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:             See Exhibit B

MATERIAL ADVERSE
LITIGATION:                See Exhibit B

FINANCIAL
COVENANTS:
(Section 4.1)              The Borrower shall comply with all of the following
                           covenants, all of which


Page 18 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           shall be determined and measured in accordance with
                           generally accepted accounting principles, except as
                           otherwise stated below:

TANGIBLE NET
WORTH:                     Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $4,250,000,
                           measured quarterly.


DEBT TO TANGIBLE
NET WORTH RATIO:           Borrower shall maintain a ratio of total liabilities
                           to Tangible Net Worth of not more than 2.75:1.0,
                           measured quarterly. Upon maturity of the Interim
                           Bridge Loan, Borrower shall maintain a ratio of total
                           liabilities to Tangible Net Worth of not more than
                           2.50:1.0, measured quarterly. For purposes of this
                           calculation, total liabilities shall exclude deferred
                           revenues and debt, if any, that has been subordinated
                           to the Loans in a written subordination agreement on
                           terms satisfactory to Silicon.


QUICK RATIO:               Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities of not less
                           than 0.50:1, measured quarterly. Upon maturity of the
                           Interim Bridge Loan, Borrower shall maintain a ratio
                           of Quick Assets to current liabilities of not less
                           than 0.55:1, measured quarterly.

BACKLOG TO
INVENTORY RATIO:           Borrower shall maintain a ratio of Backlog (as
                           defined below) to the book value of inventory of at
                           least 2.50:1.0, measured monthly on a rolling three
                           month average. In the event that the ratio of Backlog
                           to book value of inventory is less than 2.50:1.0 for
                           two consecutive months, the definition of Borrowing
                           Base for the Secured Accounts Receivable Line of
                           Credit shall be revised to prohibit borrowing against
                           Eligible Inventory for a period of 30 consecutive
                           days each year.

PROFITABILITY:             Borrower shall not incur a quarterly loss in excess
                           of $500,000 for one quarter, $750,000 for two
                           quarters, nor incur losses in any amount in more than
                           three or more consecutive quarters. For purposes of
                           this paragraph, "loss" means net sales, less cost of
                           goods sold, less operating expenses excluding
                           non-cash expenses.


DEFINITIONS:               "Tangible Net Worth" means stockholders' equity plus
                           debt, if any, that has been subordinated to the Loans
                           in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less goodwill, patents, capitalized software
                           costs, deferred organizational costs, tradenames,
                           trademarks, and all other assets which would be
                           classified as intangible assets under generally
                           accepted accounting principles. "Quick Assets" means
                           cash on hand or on deposit in banks, readily
                           marketable securities issued by the United States,
                           readily marketable commercial paper rated "A-I" by
                           Standard & Poor's Corporation (or a similar rating by
                           a similar rating organization), certificates of


Page 19 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           deposit and banker's acceptances, and accounts
                           receivable (net of allowance for doubtful accounts).
                           "Backlog" is defined as the book value of orders
                           received by Borrower, backed by purchase order, for
                           shipment of product within 12 months.

OTHER COVENANTS:
(Section 4.1)              Borrower shall at all times comply with all of the
                           following additional covenants:

                           BANKING RELATIONSHIP.  Borrower shall at all
                           times maintain its primary banking relationship
                           with Silicon.

                           EXIM BANK REQUIREMENTS.  Borrower shall at all
                           times conform the rules and regulations of the
                           Export-Import Bank of the United States.

CONDITIONS TO
CLOSING:                   Without in any way limiting the discretionary
                           nature of advances under this Agreement, before
                           requesting any such advance, the Borrower shall
                           satisfy each of the following conditions:

1.  LOAN DOCUMENTS:

                           Silicon shall have received this Agreement, the
                           Schedule, and such other loan documents as Silicon
                           shall require, each duly executed and delivered by
                           the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                           Silicon shall have received each of the following in
                           form and substance satisfactory to it:

                           (a) Certified Copies of the Articles of Incorporation
                           and Bylaws of the Borrower;

                           (b) A Certificate of Good Standing issued by the
                           Secretary of State of the Borrower's state of
                           incorporation and such other states as Silicon may
                           reasonably request with respect to the Borrower;

                           (c) A certified copy of a Resolution adopted by the
                           Board of Directors of the Borrower authorizing the
                           execution, delivery and performance of this
                           Agreement, and any other documents or certificates to
                           be executed by the Borrower in connection with this
                           transaction; and

                           (d) Incumbency Certificates describing the office and
                           identifying the specimen signatures of the
                           individuals signing all such loan documents on behalf
                           of the Borrower.


Page 20 - LOAN AND SECURITY AGREEMENT
<PAGE>

                           (e) A Subordination Agreement executed by all
                           shareholders of Borrower to whom Borrower is
                           indebted.

3.  PERFECTION AND
PRIORITY OF SECURITY:      Silicon shall have received evidence satisfactory to
                           it that its security interest in the Collateral has
                           been duly perfected and that such security interest
                           is prior to all other liens, charges, security
                           interests, encumbrances and adverse claims in or to
                           the Collateral other than Permitted Liens, which
                           evidence shall include, without limitation, a
                           certificate from the Oregon Secretary of State
                           showing the due filing and first priority of the UCC
                           Financing Statements to be signed by the Borrower
                           covering the Collateral.

4. INSURANCE:              Silicon shall have received evidence satisfactory to
                           it that all insurance required by this Agreement is
                           in full force and effect, with loss payee
                           designations and additional insured designations as
                           required by this Agreement.

5. OTHER INFORMATION:

                           Silicon shall have received such other statements,
                           opinions, certificates, documents and information
                           with respect to matters contemplated by this
                           Agreement as it may reasonably request, all of which
                           must be acceptable to Silicon.

                           Silicon shall have conducted an examination of the
                           Borrower's books, records, ledgers, journals, and
                           registers, as Silicon may deem necessary, and shall
                           be satisfied with the results of such examination in
                           its sole discretion.

                           Exim Bank shall have agreed to guarantee payment of
                           ninety percent (90%) of the Loan and all interest
                           accrued thereon, subject to the terms of a master
                           guarantee agreement between Exim Bank and Silicon.


         Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule.

                                            BORROWER:

                                            ADVANCED POWER TECHNOLOGY, INC.


                                            By:_________________________________
                                            Title:______________________________

                                            SILICON:

                                            SILICON VALLEY BANK


Page 21 - LOAN AND SECURITY AGREEMENT
<PAGE>

                                            By:_________________________________
                                            Title:______________________________


Page 22 - LOAN AND SECURITY AGREEMENT
<PAGE>




                                    EXHIBIT A

                        [INSERT EXIM BORROWER AGREEMENT]


Page 23 - LOAN AND SECURITY AGREEMENT
<PAGE>





                                    EXHIBIT B

                          [INSERT BORROWER DISCLOSURES]


Page 24 - LOAN AND SECURITY AGREEMENT
<PAGE>





                                  SCHEDULE 3.13


Page 25 - LOAN AND SECURITY AGREEMENT
<PAGE>


                                  SCHEDULE 3.14


Page 26 - LOAN AND SECURITY AGREEMENT
<PAGE>

                             LOAN MODIFICATION AGREEMENT


BETWEEN:      Advanced Power Technology, Inc., a Delaware corporation
              ("Borrower"), whose address is 405 S.W. Columbia Street, Bend,
              Oregon 97702;

AND:          Silicon Valley Bank ("Silicon"), whose address is 3003 Tasman
              Drive, Santa Clara, California 95054;

DATE:         December 18, 1997.

       This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.

       1.     BACKGROUND.  Borrower entered into a Loan and Security Agreement
(as amended from time to time, the "Loan Agreement") and a Loan and Security
Agreement (Exim Program) (as amended from time to time, the "Exim Loan
Agreement") with Silicon in September 1995.  Capitalized terms used in this Loan
Modification Agreement shall, unless otherwise defined in this Agreement, have
the meaning given to such terms in the Loan Agreement and the Exim Loan
Agreement.

       Silicon and Borrower are entering into this Agreement to state the terms
and conditions of certain modifications to the Loan Agreement and Schedule
thereto, and the Exim Loan Agreement and Schedule thereto.

       2.     MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE, AND EXIM LOAN
              AGREEMENT AND SCHEDULE.

              2.1     The Schedule to the Loan Agreement is hereby deleted and
replaced by the Amended and Restated Schedule to Loan and Security Agreement
attached to this Agreement as EXHIBIT A.

              2.2     The Schedule to the Exim Loan Agreement is hereby deleted
and replaced by the Amended and Restated Schedule to Loan and Security Agreement
(Exim Program) attached to this Agreement as EXHIBIT B.

              2.3     Borrower acknowledges and agrees that all Obligations,
including without limitation Borrower's obligation to repay amounts advanced by
Silicon to Borrower on the terms of the Loan Agreement and Schedule, and the
Exim Loan Agreement and Schedule, as modified by this Loan Modification
Agreement, are secured by all liens and security interests granted by Borrower
to Silicon in the Loan Agreement and the Exim Loan Agreement.  Borrower shall
not grant a lien on, or security interest in, any of its patents, maskworks,
copyrights, trademarks, tradenames, or service marks (in each case whether
registered or not), or any applications for any of the foregoing, or any other
intellectual property of Borrower without Silicon's prior written consent.

              2.4     Notwithstanding any provision of the Loan Agreement,
provided that no Event of Default is then pending or would result from such loan
by Borrower, Borrower shall be permitted to loan up to $3,000,000 to a limited
liability company owned by Borrower's management, to finance the acquisition by
such limited liability company of the stock in Borrower owned by Sundstrand
Corporation.

       3.     CONDITIONS PRECEDENT.  This Loan Modification Agreement shall not
take effect until Borrower delivers to Silicon a Certified Resolution of
Borrower, an Acknowledgment of Guarantor by the guarantor of the Loan in the
form attached hereto, joint and several Continuing Guaranties executed by the


Page 1 - LOAN MODIFICATION AGREEMENT


<PAGE>

members of management of Borrower who are also direct or indirect shareholders
of Borrower, in the form attached hereto, and such other documents as Silicon
shall reasonably require to give effect to the terms of this Loan Modification
Agreement.

       4.     NO OTHER MODIFICATIONS.  Except as expressly modified by this
Loan Modification Agreement, the terms of the Loan Agreement and the Exim
Loan Agreement shall remain unchanged and in full force and effect.
Silicon's agreement to modify the Loan Agreement and the Exim Loan Agreement
pursuant to this Loan Modification Agreement shall not obligate Silicon to
make any future modifications to the Loan Agreement, Exim Loan Agreement or
any other loan document.  Nothing in this Loan Modification Agreement shall
constitute a satisfaction of any indebtedness of any Borrower to Silicon.  It
is the intention of Silicon and Borrower to retain as liable parties all
makers and endorsers of the Loan Agreement, Exim Loan Agreement or any other
loan document. No maker, endorser, or guarantor shall be released by virtue
of this Loan Modification Agreement.  The terms of this paragraph shall apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.

       5.     REPRESENTATIONS AND WARRANTIES.

              5.1     The Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within the Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of the Borrower's articles of incorporation, bylaws or of any
undertaking to which the Borrower is a party or by which it is bound.

              5.2     The Borrower understands and agrees that in entering into
this Agreement, Silicon is relying upon the Borrower's representations,
warranties and agreements as set forth in the Loan Agreement, Exim Loan
Agreement and other loan documents.  Borrower hereby reaffirms all
representations and warranties in the Loan Agreement, all of which are true as
of the date of this Agreement.

                                   BORROWER:

                                          ADVANCED POWER TECHNOLOGY, INC.


                                          By:
                                                 ------------------------------
                                          Title:
                                                 ------------------------------

                                   SILICON:

                                          SILICON VALLEY BANK



                                          By:
                                                 ------------------------------
                                          Title:
                                                 ------------------------------


Page 2 - LOAN MODIFICATION AGREEMENT

<PAGE>

                             ACKNOWLEDGMENT OF GUARANTOR

       The undersigned guarantor (1) consents to the modifications to the Loan
Agreement and Schedule and the Exim Loan Agreement and Schedule stated in the
attached Loan Modification Agreement between Silicon and the Borrower, and (2)
ratifies the provisions of the guaranty executed by such guarantor for the
benefit of Silicon and confirms that all provisions of such guaranty are in full
force and effect and apply to the $2,500,000 Term Loan (as defined in such
guaranty) notwithstanding the terms of the Loan Modification Agreement.  Nothing
in this Acknowledgment of Guarantor increases the obligations of such guarantor
as stated in such guaranty.

                                                 ADVANCED ENERGY INDUSTRIES,
                                                 INC.



                                                 By:
                                                     --------------------------
                                                        Its:
                                                             ------------------






Page 3 - LOAN MODIFICATION AGREEMENT

<PAGE>

                        [ATTACH FORM OF CONTINUING GUARANTY]
















Page 4 - LOAN MODIFICATION AGREEMENT
<PAGE>

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:             Advanced Power Technology, Inc.

Address:              405 S.W. Columbia Street
                      Bend, Oregon 97702

Date:                 December 18, 1997


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:         An amount not to exceed the lesser of: (i) $3,000,000 at
                      any one time outstanding; or (ii) the amount of the
                      "Borrowing Base", as defined below.

                      For purposes of this Schedule, the "Borrowing Base" shall
                      mean the sum of (i) 80% of the Net Amount of Borrower's
                      eligible accounts receivable, plus (ii) 50% of Borrower's
                      "Eligible Inventory" (as defined below), up to a maximum
                      advance of $1,250,000 against Eligible Inventory.
                      Notwithstanding the foregoing, however, (a) the 50%
                      advance rate as stated in clause (i) above shall be
                      decreased to 25% beginning October 1, 1998, and
                      continuing thereafter; and (b) the $1,250,000 sublimit on
                      inventory advances as stated in clause (ii) above shall
                      be decreased to $500,000 beginning October 1, 1998, and
                      continuing thereafter.  With respect to Borrower's
                      accounts, "Net Amount" means the gross amount of the
                      account, minus all applicable sales, use, excise and
                      other similar taxes and minus all discounts, credits and
                      allowances of any nature granted or claimed.  Borrower's
                      "Eligible Inventory" means the Borrower's inventory held
                      for sale in the United States or Canada, valued at the
                      lower of wholesale cost or market value, which Silicon in
                      its reasonable discretion deems eligible for borrowing,
                      subject to the Backlog Covenant described below.

                      The amount of all letters of credit issued by Silicon at
                      the request of the Borrower shall reduce, dollar for
                      dollar, the amount otherwise available to be borrowed
                      under the Borrowing Base formula described above.  The
                      amount otherwise available to be borrowed under the
                      Borrowing Base formula described above shall also be
                      reduced by one-half of the outstanding balance of Secured
                      Term Loan No. 3 described below.

                      Without limiting the fact that the determination of which
                      accounts are eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing:  accounts outstanding for more
                      than 90 days from the invoice date unless otherwise
                      agreed to in writing by Silicon, accounts subject to any
                      contingencies, accounts owing from an account debtor
                      outside the United States or billed or payable outside
                      the United States (except for those backed by a letter of
                      credit satisfactory to Silicon), accounts owing from
                      governmental agencies unless otherwise agreed to in
                      writing by Silicon, accounts owing from one account
                      debtor to the extent they exceed 25% of the total
                      eligible accounts outstanding,


Page 1 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                      accounts owing from an affiliate of the Borrower, and
                      accounts subject to setoff, recoupment, counterclaim or
                      any other demand by the account debtor.  In addition, if
                      more than 50% of the accounts owing from an account
                      debtor are outstanding more than 90 days from the invoice
                      date or are otherwise not eligible accounts, then all
                      accounts owing from that account debtor shall be deemed
                      ineligible for borrowing.

                      Without limiting the fact that the determination of which
                      inventory is eligible for borrowing is a matter of
                      Silicon's discretion, the following shall not be deemed
                      eligible for borrowing: any inventory other than raw
                      materials, work-in-process and finished goods that are
                      owned by Borrower and located in Bend, Oregon; inventory
                      that is used, obsolete or returned goods; inventory that
                      is stored at a location other than the Borrowers' Address
                      or any location owned, leased or rented by Borrowers and
                      previously identified to Silicon; inventory that is
                      subject to a landlord's lien; and inventory that is not
                      in the possession of the Borrower.

INTEREST RATE:              If Borrower's Debt to Tangible Net Worth ratio is
                      greater than 2.00:1.00, the interest rate applicable to
                      the Secured Accounts Receivable Line of Credit shall be a
                      rate equal to the "Prime Rate" in effect from time to
                      time, plus 1.25% per annum.  If Borrower's Debt to
                      Tangible Net Worth ratio is 2.00:1.00 or less, the
                      interest rate applicable to the Secured Accounts
                      Receivable Line of Credit shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.00% per
                      annum.  Interest calculations shall be made on the basis
                      of a 360-day year and the actual number of days elapsed.
                      Changes in interest rate resulting from changes in
                      Borrower's Debt to Tangible Net Worth ratio shall be
                      effective on the first day of the month following the day
                      on which Silicon receives Borrower's quarterly financial
                      statement and calculation of its Debt to Tangible Net
                      Worth ratio.  Interest is payable monthly.

                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate.

COMMITMENT FEE:       $7,500, which is fully earned and payable at closing.

MATURITY DATE:        December 17, 1998, at which time all unpaid principal and
                      accrued but unpaid interest shall be due and payable.

LETTERS OF CREDIT:    Subject to the terms of this Agreement, as amended from
                      time to time, Silicon shall issue or cause to be issued
                      under the Credit Limit standby and commercial letters of
                      credit for the account of Borrower in an aggregate face
                      amount not to exceed $1,000,000.  Each such letter of
                      credit shall have an expiry date of no later than the
                      Maturity Date.  All such letters of credit shall be, in
                      form and substance, acceptable to Silicon in its sole
                      discretion and shall be subject to the terms and
                      conditions of Silicon's form application and letter of
                      credit agreement, as executed by the Borrower from time
                      to time.


Page 2 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

FEES:                 The Borrower shall pay Silicon the fees and costs
                      customarily charged by Silicon (at the time of issuance
                      of the letter of credit) with respect to the issuance of
                      letters of credit.


SECURED TERM LOAN NO. 1

CREDIT LIMIT:         An amount not to exceed $2,500,000.

PURPOSE:              Borrower shall use the proceeds of this Secured Term Loan
                      No. 1 to assist in financing the purchase of Sundstrand
                      Corporation's 49% ownership interest in Borrower by a
                      limited liability company owned by Borrower's management.


INTEREST RATE:        If Borrower's Debt to Tangible Net Worth ratio is greater
                      than 2.00:1.00, the interest rate applicable to the
                      Secured Term Loan No. 1 shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.50% per
                      annum.  If Borrower's Debt to Tangible Net Worth ratio is
                      2.00:1.00 or less, the interest rate applicable to the
                      Secured Term Loan No. 1 shall be a rate equal to the
                      "Prime Rate" in effect from time to time, plus 1.25% per
                      annum.  Interest calculations shall be made on the basis
                      of a 360-day year and the actual number of days elapsed.
                      "Prime Rate" means the rate announced from time to time
                      by Silicon as its "prime rate"; it is a base rate upon
                      which other rates charged by Silicon are based, and it is
                      not necessarily the best rate available at Silicon.  The
                      interest rate applicable to the Obligations shall change
                      on each date there is a change in the Prime Rate. Changes
                      in interest rate resulting from changes in Borrower's
                      Debt to Tangible Net Worth ratio shall be effective on
                      the first day of the month following the day on which
                      Silicon receives Borrower's quarterly financial statement
                      and calculation of its Debt to Tangible Net Worth ratio.
                       Interest is payable monthly.

MATURITY DATE:        December 17, 1999, at which time all unpaid principal and
                      accrued but unpaid interest shall be due and payable.

COMMITMENT
FEE:                  $1,500, which is fully earned and payable at closing.


SECURED EQUIPMENT TERM LOAN NO. 2

CREDIT LIMIT:         An amount not to exceed the lesser of (i) $500,000 at any
                      one time outstanding; or (ii) the amount of the
                      "Equipment Borrowing Base", as defined below.  For
                      purposes of this Schedule, the "Equipment Borrowing Base"
                      shall mean 90% of the invoice value of equipment
                      purchased by Borrower after August 31, 1996.  Silicon
                      shall have no obligation to advance against taxes,
                      freight charges, installation charges or other similar
                      amounts relating to Borrower's equipment, whether or not
                      such amounts are identified on the invoices submitted to
                      Silicon.  Equipment to be included in the Equipment
                      Borrowing Base must be new equipment, at the time of
                      purchase by Borrower, owned by Borrower, in good working
                      order, must not be subject to any liens in favor of any
                      person or entity other than Silicon, and must be subject
                      to a first priority, perfected security interest


Page 3 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                      in favor of Silicon.  Silicon shall have no obligation to
                      make advances against non-standard equipment, such as
                      tooling, software and custom equipment.  Silicon shall
                      have no obligation to make advances on this Secured
                      Equipment Term Loan after September 6, 1997.  Silicon
                      shall make advances under this Secured Equipment Term
                      Loan No. 2 from time to time, based on invoices and other
                      documentation as shall be requested by Silicon to support
                      such advances.  The Borrower's indebtedness to Silicon
                      with respect to this Secured Equipment Term Loan No. 2
                      shall be evidenced by this Schedule and the Loan
                      Agreement, not by a separate promissory note unless
                      required by Silicon.

                      Borrower shall submit to Silicon such invoices, advance
                      requests and other information, in form acceptable to
                      Silicon, as Silicon shall reasonably require from time to
                      time.

                      Once the maximum amount of the principal has been
                      advanced under this Secured Equipment Term Loan No. 2,
                      Borrower is no longer entitled to further advances on
                      this Loan.  Advances may be requested in writing by
                      Borrower or an authorized person.  Silicon may, but need
                      not, require that all oral requests be confirmed in
                      writing.  The unpaid principal balance owing on this
                      Secured Equipment Term Loan No. 2 at any time may be
                      evidenced by Silicon's internal records, including daily
                      computer print-outs (which Silicon shall provide to
                      Borrower periodically).

PURPOSE:              Borrowers shall use the proceeds of this Secured
                      Equipment Term Loan No. 2 to finance the purchase of new
                      equipment.

INTEREST RATE:        The interest rate applicable to the Secured Equipment
                      Term Loan shall be a rate equal to the "Prime Rate" (as
                      defined above) in effect from time to time, plus 1.50%
                      per annum.  Interest calculations shall be made on the
                      basis of a 360-day year and the actual number of days
                      elapsed.  The interest rate applicable to the Obligations
                      shall change on each date there is a change in the Prime
                      Rate.

AMORTIZATION:         Borrower shall pay Silicon monthly payments of interest
                      only on the last day each month commencing with September
                      30, 1996.  In addition, Borrower shall pay Silicon
                      commencing on October 6, 1997, and continuing on the same
                      day of each month thereafter, the amount necessary to
                      repay fully the amount of the Secured Equipment Term Loan
                      No. 2 in 30 equal month payments.

MATURITY DATE:        March 6, 2000, at which time all unpaid principal and
                      accrued but unpaid interest, fees and other charges shall
                      be due and payable.

COMMITMENT
FEE:                  $1,000, was paid at closing.  This fee is fully earned at
                      closing and is non-refundable.


Page 4 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

SECURED TERM LOAN NO. 3

CREDIT LIMIT:         An amount not to exceed $500,000, in a single advance.

PURPOSE:              Borrowers shall use the proceeds of this Secured Term
                      Loan No. 3 to assist in financing the purchase of
                      Sundstrand Corporation's 49% ownership interest in
                      Borrower by a limited liability company owned by
                      Borrower's management.

INTEREST RATE:        If Borrower's Debt to Tangible Net Worth ratio is greater
                      than 2.00:1.00, the interest rate applicable to the
                      Secured Term Loan No. 3 shall be a rate equal to the
                      "Prime Rate" (as defined above) in effect from time to
                      time, plus 1.75% per annum.  If Borrower's Debt to
                      Tangible Net Worth ratio is 2.00:1.00 or less, the
                      interest rate applicable to the Secured Term Loan No. 3
                      shall be a rate equal to the "Prime Rate" in effect from
                      time to time, plus 1.50% per annum  Interest calculations
                      shall be made on the basis of a 360-day year and the
                      actual number of days elapsed.  Changes in interest rate
                      resulting from changes in Borrower's Debt to Tangible Net
                      Worth ratio shall be effective on the first day of the
                      month following the day on which Silicon receives
                      Borrower's quarterly financial statement and calculation
                      of its Debt to Tangible Net Worth ratio.  The interest
                      rate applicable to the Obligations shall change on each
                      date there is a change in the Prime Rate.

AMORTIZATION:         Borrower shall pay Silicon monthly payments of interest
                      on the last day each month commencing with January, 1998.
                      In addition, Borrower shall pay Silicon on the last day
                      of each month, commencing with January, 1998, the amount
                      necessary to repay fully the amount of the Secured Term
                      Loan No. 3 in 36 equal monthly payments.

MATURITY DATE:        December 17, 2000, at which time all unpaid principal and
                      accrued but unpaid interest, fees and other charges shall
                      be due and payable.

COMMITMENT
FEE:                  $1,250, payable at closing.  This fee is fully earned at
                      closing and is non-refundable.


PRIOR NAMES OF
BORROWER:             See Exhibit B

TRADE NAMES OF
BORROWER:             See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:        See Exhibit B

MATERIAL ADVERSE
LITIGATION:           See Exhibit B


Page 5 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

FINANCIAL
COVENANTS:            The Borrower, exclusive of the results of operations of
                      Advanced Power Technology Europe, S.A. ("APT-Europe"),
                      shall comply with all of the following covenants, all of
                      which shall be determined and measured quarterly in
                      accordance with generally accepted accounting principles,
                      except as otherwise stated below:

TANGIBLE NET
WORTH:                Borrower shall at all times maintain a Tangible Net Worth
                      (defined below) of not less than $2,250,000 (the "Initial
                      Minimum Tangible Net Worth) for the quarter ending
                      December 31, 1997, and increasing by $500,000 for each
                      quarter thereafter, measured quarterly.

DEBT TO TANGIBLE
NET WORTH RATIO:      Borrower shall maintain a ratio of total book liabilities
                      (less the outstanding balance of Secured Term Loan No. 1
                      and accrued interest thereon, less debt, if any, that has
                      been subordinated to the Loans in a written subordination
                      agreement on terms satisfactory to Silicon, and accrued
                      interest thereon, less deferred revenue) to Tangible Net
                      Worth, measured quarterly, of:

                      -     Not more than 3.50:1.00 for the quarter ending
                            December 31, 1997
                      -     Not more than 3.25:1.00 for the quarter ending
                            March 31, 1998
                      -     Not more than 2.75:1.00 for the quarter ending
                            June 30, 1998
                      -     Not more than 2.00:1.00 for the quarter ending
                            September 30, 1998, and each quarter thereafter

QUICK RATIO:          Borrower shall maintain a ratio of Quick Assets (defined
                      below) to current liabilities of not less than 0.50:1.00
                      through March 31, 1998, and not less than 0.60:1.00
                      thereafter, measured quarterly.
BACKLOG TO
INVENTORY RATIO:      Borrower shall maintain a ratio of Backlog (as defined
                      below) to the book value of inventory of at least
                      2.00:1.00, measured monthly on a rolling three month
                      average.  In the event that the ratio of Backlog to book
                      value of inventory is less than 2.00:1.00 for two
                      consecutive months, the definition of Borrowing Base for
                      the Secured Accounts Receivable Line of Credit shall be
                      revised to prohibit borrowing against Eligible Inventory
                      for a period of 30 consecutive days each year.

PROFITABILITY:        Borrower shall not incur a loss in any amount for any
                      quarter.  For purposes of this paragraph, "loss" means
                      net book income, plus any loss from APT-Europe, plus
                      depreciation and amortization, less any income from
                      APT-Europe.

DEBT SERVICE
COVERAGE RATIO:       Borrower shall maintain on an annualized basis a Debt
                      Service Coverage Ratio of not less than 2.00:1.00,
                      measured as of the end of each fiscal quarter of
                      Borrower.


Page 6 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

LOANS TO
SUBSIDIARY:           Borrower shall limit its loans to its wholly owned
                      subsidiary, APT-Europe, to a maximum of $950,000 plus 25%
                      of any new equity at any one time, measured monthly.

RELEASE OF
GUARANTIES:           At such time as Silicon releases the Continuing
                      Guaranties provided by direct or indirect shareholders of
                      Borrower, as a result of additional equity contributions
                      to Borrower of at least $2,000,000 after the date hereof,
                      the Initial Minimum Tangible Net Worth stated above would
                      immediately increase by 75% of such additional equity,
                      the Debt to Tangible Net Worth covenant would immediately
                      reduce to not more than 2.00:1.00, and the Quick Ratio
                      would immediately increase to not less than 0.60:1.00.

DEFINITIONS:          "Backlog" is defined as the book value of orders received
                      by Borrower, backed by purchase orders, for shipment of
                      product within 12 months.

                      "Debt Service Coverage Ratio" means quarterly net book
                      income, plus any loss from APT-Europe, plus depreciation
                      and amortization, less any income from APT-Europe, plus
                      interest, plus taxes (EBITDA) multiplied by four (4),
                      divided by the Current Maturities of Long-Term Debt
                      (CMLTD) plus  interest for that quarter multiplied by
                      four (4).

                      "Quick Assets" means cash on hand or on deposit in banks,
                      readily marketable securities issued by the United
                      States, readily marketable commercial paper rated "A-I"
                      by Standard & Poor's Corporation (or a similar rating by
                      a similar rating organization), certificates of deposit
                      and banker's acceptances, and accounts receivable
                      (including accounts owing to Borrower's affiliate
                      APT-Europe) net of allowance for doubtful accounts.

                      "Tangible Net Worth" means stockholders' equity plus the
                      outstanding balance of the Secured Term Loan No. 1 and
                      accrued interest thereon, plus debt, if any, that has
                      been subordinated to the Loans in a written subordination
                      agreement on terms satisfactory to Silicon, and accrued
                      interest thereon, plus the amount of Borrower's negative
                      equity investment in Borrower's affiliate APT-Europe,
                      less goodwill, patents, capitalized software costs,
                      deferred organizational costs, tradenames, trademarks,
                      and all other assets which would be classified as
                      intangible assets under generally accepted accounting
                      principles, less the note receivable from Tremoliere LLC,
                      less the note receivable from Borrower's affiliate
                      APT-Europe, less the amount of Borrower's positive equity
                      investment in APT-Europe.

OTHER COVENANTS:      Borrower shall at all times comply with all of the
                      following additional covenants:

                      BANKING RELATIONSHIP.  Borrower shall at all times
                      maintain its primary banking relationship with Silicon.

                      FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                      provide Silicon:  (a) within 30 days after the end of
                      each month, a monthly financial statement for Borrower
                      and APT-Europe (consisting of a income statement and a
                      balance sheet)


Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                      prepared by the Borrower in accordance with generally
                      accepted accounting principles; (b) within 20 days after
                      the end of each month, an accounts receivable aging
                      report, an inventory report and an accounts payable aging
                      report, in such form as Silicon shall reasonably specify;
                      (c) within 20 days after the end of each month, a
                      Borrowing Base Certificate in the form attached to this
                      Agreement as Exhibit A, as Silicon may reasonably modify
                      such Certificate from time to time, signed by the Chief
                      Financial Officer of the Borrower; (d) within 30 days
                      after the end of each month, a Compliance Certificate in
                      such form as Silicon shall reasonably specify, signed by
                      the Chief Financial Officer of the Borrower, setting
                      forth calculations showing compliance (at the end of each
                      such calendar month) with the financial covenants set
                      forth on the Schedule, and certifying that throughout
                      such month the Borrower was in full compliance with all
                      other terms and conditions of this Agreement and the
                      Schedule, and providing such other information as Silicon
                      shall reasonably request; and (e) within 90 days
                      following the end of the Borrower's fiscal year, complete
                      annual CPA-audited financial statements, such audit being
                      conducted by independent certified public accountants
                      reasonably acceptable to Silicon, together with an
                      unqualified opinion of such accountants.

CONDITIONS TO
CLOSING:              Without in any way limiting the discretionary nature of
                      advances under this Agreement, before requesting any such
                      advance, the Borrower shall satisfy each of the following
                      conditions:

1.  LOAN DOCUMENTS:

                      Silicon shall have received this Agreement, the Schedule,
                      joint and several Continuing Guaranties and such other
                      loan documents as Silicon shall require, each duly
                      executed and delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                      Silicon shall have received each of the following in form
                      and substance satisfactory to it:

                      (a)   Certified Copies of the Articles of Incorporation
                      and Bylaws of the Borrower;

                      (b)  A Certificate of Good Standing issued by the
                      Secretary of State of the Borrower's state of
                      incorporation and such other states as Silicon may
                      reasonably request with respect to the Borrower;

                      (c)  A certified copy of a Resolution adopted by the
                      Board of Directors of the Borrower authorizing the
                      execution, delivery and performance of this Agreement,
                      and any other documents or certificates to be executed by
                      the Borrower in connection with this transaction; and




Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                      (d)  Incumbency Certificates describing the office and
                      identifying the specimen signatures of the individuals
                      signing all such loan documents on behalf of the
                      Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been
                      duly perfected and that such security interest is prior
                      to all other liens, charges, security interests,
                      encumbrances and adverse claims in or to the Collateral
                      other than Permitted Liens, which evidence shall include,
                      without limitation, a certificate from the Oregon
                      Secretary of State showing the due filing and first
                      priority of the UCC Financing Statements to be signed by
                      the Borrower covering the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, all of which must be reasonably
                      acceptable to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its
                      sole discretion.


       Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      ---------------------------------------
                                   Title:
                                         ------------------------------------

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      --------------------------------------
                                   Title:
                                         -----------------------------------


Page 9 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]



















Page 10 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]


















Page 11 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                    (EXIM PROGRAM)


Borrower:                Advanced Power Technology, Inc.

Address:                 405 S.W. Columbia Street
                         Bend, Oregon 97702

Date:                    December 18, 1997


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:

                         Silicon and the Borrower are parties to that certain
                         other Loan and Security Agreement of even date (the
                         "Non-Exim Agreement").  Both this Agreement and the
                         Non-Exim Agreement shall continue in full force and
                         effect, and all rights and remedies under this
                         Agreement and the Non-Exim Agreement are cumulative.
                         The term "Obligations" as used in this Agreement and in
                         the Non-Exim Agreement shall include without limitation
                         the obligation to pay when due all Loans made pursuant
                         to this Agreement (the "Exim Loans") and all interest
                         thereon and the obligation to pay when due all Loans
                         made pursuant to the Non-Exim Agreement (the "Non-Exim
                         Loans") and all interest thereon.  Without limiting the
                         generality of the foregoing, all "Collateral" as
                         defined in this Agreement and as defined in the
                         Non-Exim Agreement shall secure all Exim Loans and all
                         Non-Exim Loans and interest thereon, and all other
                         Obligations.  Any Event of Default under this Agreement
                         shall constitute an Event of Default under the Non-Exim
                         Agreement, and any Event of Default under the Non-Exim
                         Agreement shall also constitute an Event of Default
                         under this Agreement.  In the event Silicon assigns its
                         rights under this Agreement and/or under any Note
                         evidencing Exim Loans and/or its rights under the
                         Non-Exim Agreement and/or under any Note evidencing
                         Non-Exim Loans, to any third party, including without
                         limitation the Export-Import Bank of the United States
                         ("Exim Bank"), whether before or after the occurrence
                         of any Event of Default, Silicon shall have the right
                         (but not any obligation), in its sole discretion, to
                         allocate and apportion Collateral to the Agreement
                         and/or Note assigned and to specify the priorities of
                         the respective security interests in such Collateral
                         between itself and the assignee, all without notice to
                         or consent of the Borrower.

                         This Agreement is subject to all of the terms and
                         conditions of the Borrower Agreement attached hereto as
                         Exhibit A, and all documents attached to such Borrower
                         Agreement (collectively, the "Exim Documents"), all of
                         which are hereby incorporated herein by this reference.
                         Borrower shall perform all of the obligations and
                         comply with all of the affirmative and negative
                         covenants and all other terms and conditions set forth
                         in the Exim Documents as though such

Page 1
<PAGE>

                         obligations and covenants were expressly set forth
                         herein, and all of which are hereby incorporated herein
                         by this reference.  In the event of any conflict
                         between the terms of the Exim Documents and the terms
                         of the Exim Loan Agreement or the Schedule or any
                         related promissory note, whichever terms are more
                         restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1. 1)
EXIM LOANS:              An amount not to exceed the lesser of:

                         (a) $1,750,000 at any one time outstanding; or

                         (b) a total of (i) 90% of the value of Borrower's
                         eligible export receivables, which are eligible for
                         borrowing as provided below, plus (ii) 70% of the value
                         of Borrower's eligible exportable inventory which is
                         eligible for borrowing as provided below, which Silicon
                         in its reasonable discretion deems eligible for
                         borrowing.

                         Without limiting the fact that the determination of
                         which accounts are eligible for borrowing is a matter
                         of Silicon's discretion, the following shall not be
                         deemed eligible for borrowing:  accounts outstanding
                         for more than 90 days from the invoice date unless
                         otherwise agreed to in writing by Silicon, accounts
                         subject to any contingencies, accounts billed or
                         payable outside the United States (except for those
                         backed by a letter of credit satisfactory to Silicon),
                         accounts owing from governmental agencies unless
                         otherwise agreed to in writing by Silicon, accounts
                         owing from one account debtor to the extent they exceed
                         25% of the total eligible accounts outstanding,
                         accounts owing from an affiliate of the Borrower,
                         accounts subject to setoff, recoupment, counterclaim or
                         any other demand by the account debtor.  In addition,
                         if more than 50% of the accounts owing from an account
                         debtor are outstanding more than 90 days from the
                         invoice date or are otherwise not eligible accounts,
                         then all accounts owing from that account debtor shall
                         be deemed ineligible for borrowing.

                         Without limiting the fact that the determination of
                         which inventory is eligible for borrowing is a matter
                         of Silicon's discretion, the following shall not be
                         deemed eligible for borrowing: any inventory other than
                         raw materials, work-in-process and finished goods that
                         are owned by Borrower and located in Bend, Oregon;
                         inventory that is used, obsolete or returned goods;
                         inventory that is stored at a location other than the
                         Borrowers' Address or any location owned, leased or
                         rented by Borrowers and previously identified to
                         Silicon; inventory that is subject to a landlord's
                         lien; and inventory that is not in the possession of
                         the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                   This Agreement is subject to all of the terms and
                         conditions of the Exim Guarantee (including without
                         limitation the Transaction Attachment thereto and
                         Special Conditions thereto) which are hereby
                         incorporated herein by this reference.  Borrower
                         expressly agrees to perform all of the obligations and
                         comply with all of

Page 2
<PAGE>

                         the affirmative and negative covenants and all other
                         terms and conditions set forth in the Exim Guarantee as
                         though the same were expressly set forth herein, and
                         all of the same are hereby incorporated herein by this
                         reference.  In the event of any conflict between the
                         terms of the Exim Guarantee and the other terms of this
                         Agreement, whichever terms are more restrictive shall
                         apply.  Borrower shall reimburse Silicon for all fees
                         and out of pocket expenses incurred by Silicon with
                         respect to the Exim Guarantee, including without
                         limitation all facility fees and usage fees, and
                         Silicon is authorized to debit Borrower's account with
                         Silicon for such fees, costs and expenses when paid by
                         Silicon.

INTEREST RATE:           If Borrower's Debt to Tangible Net Worth ratio is
                         greater than 2.00:1.00, the interest rate applicable to
                         the Export Line of Credit shall be a rate equal to the
                         "Prime Rate" in effect from time to time, plus 1.25%
                         per annum.  If Borrower's Debt to Tangible Net Worth
                         ratio is 2.00:1.00 or less, the interest rate
                         applicable to the Export Line of Credit shall be a rate
                         equal to the "Prime Rate" in effect from time to time,
                         plus 1.00% per annum.  Interest calculations shall be
                         made on the basis of a 360-day year and the actual
                         number of days elapsed.  Changes in interest rate
                         resulting from changes in Borrower's Debt to Tangible
                         Net Worth ratio shall be effective on the first day of
                         the month following the day on which Silicon receives
                         Borrower's quarterly financial statement and
                         calculation of its Debt to Tangible Net Worth ratio.
                         Interest is payable monthly.

                         "Prime Rate" means the rate announced from time to time
                         by Silicon as its "prime rate"; it is a base rate upon
                         which other rates charged by Silicon are based, and it
                         is not necessarily the best rate available at Silicon.
                         The interest rate applicable to the Obligations shall
                         change on each date there is a change in the Prime
                         Rate.

LOAN ORIGINATION
FEE:                     $26,250, which is fully earned and payable at closing.

MATURITY DATE:           December 17, 1998, at which time all unpaid principal
                         and accrued but unpaid interest shall be due and
                         payable.

PRIOR NAMES OF
BORROWER:                See Exhibit B

TRADE NAMES OF
BORROWER:                See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:           See Exhibit B

MATERIAL ADVERSE
LITIGATION:              See Exhibit B

FINANCIAL
COVENANTS:               The Borrower, exclusive of the results of operations of
                         Advanced Power Technology Europe, S.A. ("APT-Europe")
                         shall comply with all of the following

Page 3
<PAGE>

                         covenants, all of which shall be determined and
                         measured quarterly in accordance with generally
                         accepted accounting principles, except as otherwise
                         stated below:

TANGIBLE NET
WORTH:                   Borrower shall at all times maintain a Tangible Net
                         Worth (defined below) of not less than $2,250,000 (the
                         "Initial Minimum Tangible Net Worth") for the quarter
                         ending December 31, 1997, and increasing by $500,000
                         for each quarter thereafter, measured quarterly.

DEBT TO TANGIBLE
NET WORTH RATIO:         Borrower shall maintain a ratio of total book
                         liabilities (less the outstanding balance of Secured
                         Term Loan No. 1 and accrued interest thereon, less
                         debt, if any, that has been subordinated to the Loans
                         in a written subordination agreement on terms
                         satisfactory to Silicon, and accrued interest thereon,
                         less deferred revenue) to Tangible Net Worth, measured
                         quarterly, of:

                         -    Not more than 3.50:1.00 for the quarter ending
                              December 31, 1997
                         -    Not more than 3.25:1.00 for the quarter ending
                              March 31, 1998
                         -    Not more than 2.75:1.00 for the quarter ending
                              June 30, 1998
                         -    Not more than 2.00:1.00 for the quarter ending
                              September 30, 1998, and each quarter thereafter

QUICK RATIO:             Borrower shall maintain a ratio of Quick Assets
                         (defined below) to current liabilities of not less than
                         0.50:1.00 through March 31, 1998, and not less than
                         0.60:1.00 thereafter, measured quarterly.
BACKLOG TO
INVENTORY RATIO:         Borrower shall maintain a ratio of Backlog (as defined
                         below) to the book value of inventory of at least
                         2.00:1.00, measured monthly on a rolling three month
                         average.  In the event that the ratio of Backlog to
                         book value of inventory is less than 2.00:1.00 for two
                         consecutive months, the definition of Borrowing Base
                         for the Secured Accounts Receivable Line of Credit
                         shall be revised to prohibit borrowing against Eligible
                         Inventory for a period of 30 consecutive days each
                         year.

PROFITABILITY:           Borrower shall not incur a loss in any amount for any
                         quarter.  For purposes of this paragraph, "loss" means
                         net book income, plus any loss from APT-Europe, plus
                         depreciation and amortization, less any income from
                         APT-Europe.

DEBT SERVICE
COVERAGE RATIO:          Borrower shall maintain on an annualized basis a Debt
                         Service Coverage Ratio of not less than 2.00:1.00,
                         measured as of the end of each fiscal quarter of
                         Borrower.

LOANS TO
SUBSIDIARY:              Borrower shall limit its loans to its wholly owned
                         subsidiary, APT-Europe, to a maximum of $950,000 plus
                         25% of any new equity at any one time, measured
                         monthly.

RELEASE OF

Page 4
<PAGE>

GUARANTIES:              At such time as Silicon releases the Continuing
                         Guaranties provided by direct or indirect shareholders
                         of Borrower, as a result of additional equity
                         contributions to Borrower of at least $2,000,000 after
                         the date hereof, the Initial Minimum Tangible Net Worth
                         stated above would immediately increase by 75% of such
                         additional equity, the Debt to Tangible Net Worth
                         covenant would immediately reduce to not more than
                         2.00:1.00, and the Quick Ratio would immediately
                         increase to not less than 0.60:1.00.

DEFINITIONS:             "Backlog" is defined as the book value of orders
                         received by Borrower, backed by purchase order, for
                         shipment of product within 12 months.

                         "Debt Service Coverage Ratio" means quarterly net book
                         income, plus any loss from APT-Europe, plus
                         depreciation and amortization, less any income from
                         APT-Europe, plus interest, plus taxes (EBITDA)
                         multiplied by four (4), divided by the Current
                         Maturities of Long-Term Debt (CMLTD) plus  interest for
                         that quarter multiplied by four (4).

                         "Quick Assets" means cash on hand or on deposit in
                         banks, readily marketable securities issued by the
                         United States, readily marketable commercial paper
                         rated "A-I" by Standard & Poor's Corporation (or a
                         similar rating by a similar rating organization),
                         certificates of deposit and banker's acceptances, and
                         accounts receivable (including accounts owing to
                         Borrower's affiliate of APT-Europe) net of allowance
                         for doubtful accounts.

                         "Tangible Net Worth" means stockholders' equity plus
                         the outstanding balance of the Secured Term Loan No. 1
                         and accrued interest thereon, plus debt, if any, that
                         has been subordinated to the Loans in a written
                         subordination agreement on terms satisfactory to
                         Silicon, and accrued interest thereon, plus the amount
                         of Borrower's negative equity investment in Borrower's
                         affiliate APT-Europe, less goodwill, patents,
                         capitalized software costs, deferred organizational
                         costs, tradenames, trademarks, and all other assets
                         which would be classified as intangible assets under
                         generally accepted accounting principles, less the note
                         receivable from Tremoliere LLC, less the note
                         receivable from Borrower's affiliate APT-Europe, less
                         the amount of Borrower's positive equity investment in
                         APT-Europe.

OTHER COVENANTS:         Borrower shall at all times comply with all of the
                         following additional covenants:

                         BANKING RELATIONSHIP.  Borrower shall at all times
                         maintain its primary banking relationship with Silicon.

                         EXIM BANK REQUIREMENTS.  Borrower shall at all times
                         conform the rules and regulations of the Export-Import
                         Bank of the United States.

                         FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                         provide Silicon: (a) within 30 days after the end of
                         each month, a monthly financial statement for Borrower
                         and APT-Europe (consisting of a income statement and a
                         balance sheet) prepared by the Borrower in accordance
                         with generally accepted accounting principles; (b)
                         within 20 days after the end of each month, an accounts
                         receivable aging report, an inventory report and an
                         accounts payable aging report, in such

Page 5
<PAGE>

                         form as Silicon shall reasonably specify; (c) within 20
                         days after the end of each month, a Borrowing Base
                         Certificate in the form attached to this Agreement as
                         Exhibit A, as Silicon may reasonably modify such
                         Certificate from time to time, signed by the Chief
                         Financial Officer of the Borrower; (d) within 30 days
                         after the end of each month, a Compliance Certificate
                         in such form as Silicon shall reasonably specify,
                         signed by the Chief Financial Officer of the Borrower,
                         setting forth calculations showing compliance (at the
                         end of each such calendar month) with the financial
                         covenants set forth on the Schedule, and certifying
                         that throughout such month the Borrower was in full
                         compliance with all other terms and conditions of this
                         Agreement and the Schedule, and providing such other
                         information as Silicon shall reasonably request; and
                         (e) within 90 days following the end of the Borrower's
                         fiscal year, complete annual CPA-audited financial
                         statements, such audit being conducted by independent
                         certified public accountants reasonably acceptable to
                         Silicon, together with an unqualified opinion of such
                         accountants.

CONDITIONS TO
CLOSING:                 Without in any way limiting the discretionary nature of
                         advances under this Agreement, before requesting any
                         such advance, the Borrower shall satisfy each of the
                         following conditions:

1.  LOAN DOCUMENTS:

                         Silicon shall have received this Agreement, the
                         Schedule, joint and several Continuing Guaranties, and
                         such other loan documents as Silicon shall require,
                         each duly executed and delivered by the parties
                         thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                         Silicon shall have received each of the following in
                         form and substance satisfactory to it:

                         (a)  Certified Copies of the Articles of Incorporation
                         and Bylaws of the Borrower;

                         (b)  A Certificate of Good Standing issued by the
                         Secretary of State of the Borrower's state of
                         incorporation and such other states as Silicon may
                         reasonably request with respect to the Borrower;

                         (c)  A certified copy of a Resolution adopted by the
                         Board of Directors of the Borrower authorizing the
                         execution, delivery and performance of this Agreement,
                         and any other documents or certificates to be executed
                         by the Borrower in connection with this transaction;
                         and

                         (d)  Incumbency Certificates describing the office and
                         identifying the specimen signatures of the individuals
                         signing all such loan documents on behalf of the
                         Borrower.

3.  PERFECTION AND

Page 6
<PAGE>

PRIORITY OF SECURITY:    Silicon shall have received evidence satisfactory to it
                         that its security interest in the Collateral has been
                         duly perfected and that such security interest is prior
                         to all other liens, charges, security interests,
                         encumbrances and adverse claims in or to the Collateral
                         other than Permitted Liens, which evidence shall
                         include, without limitation, a certificate from the
                         Oregon Secretary of State showing the due filing and
                         first priority of the UCC Financing Statements to be
                         signed by the Borrower covering the Collateral.

4.  INSURANCE:           Silicon shall have received evidence satisfactory to it
                         that all insurance required by this Agreement is in
                         full force and effect, with loss payee designations and
                         additional insured designations as required by this
                         Agreement.

5.  OTHER INFORMATION:

                         Silicon shall have received such other statements,
                         opinions, certificates, documents and information with
                         respect to matters contemplated by this Agreement as it
                         may reasonably request, all of which must be acceptable
                         to Silicon.

                         Silicon shall have conducted an examination of the
                         Borrower's books, records, ledgers, journals, and
                         registers, as Silicon may deem necessary, and shall be
                         satisfied with the results of such examination in its
                         sole discretion.

                         Exim Bank shall have agreed to guarantee payment of
                         ninety percent (90%) of the Loan and all interest
                         accrued thereon, subject to the terms of a master
                         guarantee agreement between Exim Bank and Silicon.


     Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                                   BORROWER:

                                   ADVANCED POWER TECHNOLOGY, INC.


                                   By:
                                      ----------------------------------
                                   Title:
                                         -------------------------------

                                   SILICON:

                                   SILICON VALLEY BANK


                                   By:
                                      ----------------------------------
                                   Title:
                                         -------------------------------

Page 7
<PAGE>

                                      EXHIBIT A

                           [INSERT EXIM BORROWER AGREEMENT]









Page 8
<PAGE>

                                      EXHIBIT B

                            [INSERT BORROWER DISCLOSURES]















Page 9
<PAGE>

                             LOAN MODIFICATION AGREEMENT



BETWEEN:  Advanced Power Technology, Inc., a Delaware corporation ("Borrower"),
          whose address is 405 S.W. Columbia Street, Bend, Oregon 97702;

AND:      Silicon Valley Bank ("Silicon"), whose address is 3003 Tasman Drive,
          Santa Clara, California 95054;

DATE:     January 6, 2000


     This Loan Modification Agreement is entered into on the above date by
Borrower and Silicon.

     1.   BACKGROUND.  Borrower entered into a Loan and Security Agreement (as
amended from time to time, the "Loan Agreement") and a Loan and Security
Agreement (Exim Program) (as amended from time to time, the "Exim Loan
Agreement") with Silicon in December, 1997.  Capitalized terms used in this Loan
Modification Agreement shall, unless otherwise defined in this Agreement, have
the meaning given to such terms in the Loan Agreement and the Exim Loan
Agreement.

     Silicon and Borrower are entering into this Agreement to state the terms
and conditions of certain modifications to the Loan Agreement and Schedule
thereto, and the Exim Loan Agreement and Schedule thereto.

     2.   MODIFICATIONS TO LOAN AGREEMENT AND SCHEDULE, AND EXIM LOAN AGREEMENT
          AND SCHEDULE.

          2.1  The Schedule to the Loan Agreement is hereby deleted and replaced
by the Amended and Restated Schedule to Loan and Security Agreement attached to
this Agreement as EXHIBIT A.

          2.2  The Schedule to the Exim Loan Agreement is hereby deleted and
replaced by the Amended and Restated Schedule to Loan and Security Agreement
(Exim Program) attached to this Agreement as EXHIBIT B.

          2.3  Borrower acknowledges and agrees that all Obligations, including
without limitation Borrower's obligation to repay amounts advanced by Silicon to
Borrower on the terms of the Loan Agreement and Schedule, and the Exim Loan
Agreement and Schedule, as modified by this Loan Modification Agreement, are
secured by all liens and security interests granted by Borrower to Silicon in
the Loan Agreement and the Exim Loan Agreement.  Borrower shall not grant a lien
on, or security interest in, any of its patents, maskworks, copyrights,
trademarks, tradenames, or service marks (in each case whether registered or
not), or any applications for any of the foregoing, or any other intellectual
property of Borrower without Silicon's prior written consent.

     3.   CONDITIONS PRECEDENT.  This Loan Modification Agreement shall not take
effect until Borrower delivers to Silicon a Certified Resolution of Borrower, an
Acknowledgment of Guarantor by all of the guarantors of the Loan in the form
attached hereto, in the form attached hereto, and such other documents as
Silicon shall reasonably require to give effect to the terms of this Loan
Modification Agreement.

Page 1
<PAGE>

     4.   NO OTHER MODIFICATIONS.  Except as expressly modified by this Loan
Modification Agreement, the terms of the Loan Agreement and the Exim Loan
Agreement shall remain unchanged and in full force and effect.  Silicon's
agreement to modify the Loan Agreement and the Exim Loan Agreement pursuant
to this Loan Modification Agreement shall not obligate Silicon to make any
future modifications to the Loan Agreement, Exim Loan Agreement or any other
loan document.  Nothing in this Loan Modification Agreement shall constitute
a satisfaction of any indebtedness of any Borrower to Silicon.  It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of the Loan Agreement, Exim Loan Agreement or any other loan
document. No maker, endorser, or guarantor shall be released by virtue of
this Loan Modification Agreement.  The terms of this paragraph shall apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.

     5.   REPRESENTATIONS AND WARRANTIES.

          5.1  The Borrower represents and warrants to Silicon that the
execution, delivery and performance of this Agreement are within the Borrower's
corporate powers, and have been duly authorized and are not in contravention of
law or the terms of the Borrower's articles of incorporation, bylaws or of any
undertaking to which the Borrower is a party or by which it is bound.

          5.2  The Borrower understands and agrees that in entering into this
Agreement, Silicon is relying upon the Borrower's representations, warranties
and agreements as set forth in the Loan Agreement, Exim Loan Agreement and other
loan documents.  Borrower hereby reaffirms all representations and warranties in
the Loan Agreement, all of which are true as of the date of this Agreement.

                         BORROWER:

                              ADVANCED POWER TECHNOLOGY, INC.


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


                         SILICON:

                              SILICON VALLEY BANK


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


Page 2
<PAGE>

                                     EXHIBIT A

            AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT


Borrower:           Advanced Power Technology, Inc.

Address:            405 S.W. Columbia Street
                    Bend, Oregon 97702

Date:               January 6, 2000


SECURED ACCOUNTS RECEIVABLE LINE OF CREDIT

CREDIT LIMIT:       An amount not to exceed the lesser of: (i) $3,000,000 at any
                    one time outstanding; or (ii) the amount of the "Borrowing
                    Base", as defined below.

                    For purposes of this Schedule, the "Borrowing Base" shall
                    mean the sum of (i) 80% of the Net Amount of Borrower's
                    eligible accounts receivable, plus (ii) 50% of Borrower's
                    "Eligible Inventory" (as defined below), up to a maximum
                    advance of $1,250,000 against Eligible Inventory.  With
                    respect to Borrower's accounts, "Net Amount" means the gross
                    amount of the account, minus all applicable sales, use,
                    excise and other similar taxes and minus all discounts,
                    credits and allowances of any nature granted or claimed.
                    Borrower's "Eligible Inventory" means the Borrower's
                    inventory held for sale in the United States or Canada,
                    valued at the lower of wholesale cost or market value, which
                    Silicon in its reasonable discretion deems eligible for
                    borrowing, subject to the Backlog Covenant described below.

                    The amount of all letters of credit issued by Silicon at the
                    request of the Borrower shall reduce, dollar for dollar, the
                    amount otherwise available to be borrowed under the
                    Borrowing Base formula described above.  The amount
                    otherwise available to be borrowed under the Borrowing Base
                    formula described above shall also be reduced by one-half of
                    the outstanding balance of Secured Term Loan No. 3 described
                    below.

                    Without limiting the fact that the determination of which
                    accounts are eligible for borrowing is a matter of Silicon's
                    discretion, the following shall not be deemed eligible for
                    borrowing:  accounts outstanding for more than 90 days from
                    the invoice date unless otherwise agreed to in writing by
                    Silicon, accounts subject to any contingencies, accounts
                    owing from an account debtor outside the United States or
                    billed or payable outside the United States (except for
                    those backed by a letter of credit satisfactory to Silicon),
                    accounts owing from governmental agencies unless otherwise
                    agreed to in writing by Silicon, accounts owing from one
                    account debtor to the extent they exceed 25% of the total
                    eligible accounts outstanding, accounts owing from an
                    affiliate of the Borrower, and accounts subject to setoff,
                    recoupment, counterclaim or any other demand by the account
                    debtor.  In addition, if more than 50% of the accounts owing
                    from an account debtor are outstanding

Page 1
<PAGE>

                    more than 90 days from the invoice date or are otherwise
                    then all accounts owing from that account debtor shall be
                    deemed ineligible for borrowing.

                    Without limiting the fact that the determination of which
                    inventory is eligible for borrowing is a matter of Silicon's
                    discretion, the following shall not be deemed eligible for
                    borrowing: any inventory other than raw materials,
                    work-in-process and finished goods that are owned by
                    Borrower and located in Bend, Oregon; inventory that is
                    used, obsolete or returned goods; inventory that is stored
                    at a location other than the Borrowers' Address or any
                    location owned, leased or rented by Borrowers and previously
                    identified to Silicon; inventory that is subject to a
                    landlord's lien; and inventory that is not in the possession
                    of the Borrower.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Accounts Receivable Line of Credit shall be a rate equal to
                    the "Prime Rate" in effect from time to time, plus 1.25% per
                    annum.  If Borrower's Debt to Tangible Net Worth ratio is
                    2.00:1.00 or less, the interest rate applicable to the
                    Secured Accounts Receivable Line of Credit shall be a rate
                    equal to the "Prime Rate" in effect from time to time, plus
                    1.00% per annum.  Interest calculations shall be made on the
                    basis of a 360-day year and the actual number of days
                    elapsed.  Changes in interest rate resulting from changes in
                    Borrower's Debt to Tangible Net Worth ratio shall be
                    effective on the first day of the month following the day on
                    which Silicon receives Borrower's quarterly financial
                    statement and calculation of its Debt to Tangible Net Worth
                    ratio.  Interest is payable monthly.

                    "Prime Rate" means the rate announced from time to time by
                    Silicon as its "prime rate"; it is a base rate upon which
                    other rates charged by Silicon are based, and it is not
                    necessarily the best rate available at Silicon.  The
                    interest rate applicable to the Obligations shall change on
                    each date there is a change in the Prime Rate.

LOAN FEE:           No new fee.

MATURITY DATE:      March 31, 2000, at which time all unpaid principal and
                    accrued but unpaid interest shall be due and payable.

LETTERS OF CREDIT:  Subject to the terms of this Agreement, as amended from time
                    to time, Silicon shall issue or cause to be issued under the
                    Credit Limit standby and commercial letters of credit for
                    the account of Borrower in an aggregate face amount not to
                    exceed $1,000,000.  Each such letter of credit shall have an
                    expiry date of no later than the Maturity Date.  All such
                    letters of credit shall be, in form and substance,
                    acceptable to Silicon in its sole discretion and shall be
                    subject to the terms and conditions of Silicon's form
                    application and letter of credit agreement, as executed by
                    the Borrower from time to time.

FEES:               The Borrower shall pay Silicon the fees and costs
                    customarily charged by Silicon (at the time of issuance of
                    the letter of credit) with respect to the issuance of
                    letters of credit.

Page 2
<PAGE>

SECURED TERM LOAN NO. 1

CREDIT LIMIT:       An amount not to exceed $2,500,000.

PURPOSE:            Borrower used the proceeds of this Secured Term Loan No. 1
                    to assist in financing the purchase of Sundstrand
                    Corporation's 49% ownership interest in Borrower by a
                    limited liability company owned by Borrower's management.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Term Loan No. 1 shall be a rate equal to the "Prime Rate" in
                    effect from time to time, plus 1.50% per annum.  If
                    Borrower's Debt to Tangible Net Worth ratio is 2.00:1.00 or
                    less, the interest rate applicable to the Secured Term Loan
                    No. 1 shall be a rate equal to the "Prime Rate" in effect
                    from time to time, plus 1.25% per annum.  Interest
                    calculations shall be made on the basis of a 360-day year
                    and the actual number of days elapsed.  "Prime Rate" means
                    the rate announced from time to time by Silicon as its
                    "prime rate"; it is a base rate upon which other rates
                    charged by Silicon are based, and it is not necessarily the
                    best rate available at Silicon.  The interest rate
                    applicable to the Obligations shall change on each date
                    there is a change in the Prime Rate. Changes in interest
                    rate resulting from changes in Borrower's Debt to Tangible
                    Net Worth ratio shall be effective on the first day of the
                    month following the day on which Silicon receives Borrower's
                    quarterly financial statement and calculation of its Debt to
                    Tangible Net Worth ratio.    Interest is payable monthly.

MATURITY DATE:      March 31, 2000, at which time all unpaid principal and
                    accrued but unpaid interest shall be due and payable.

CONTINUING
GUARANTY:           This facility is guaranteed by Advanced Energy Industries,
                    Inc., pursuant to that certain Amended and Restated Guaranty
                    and Subordination Agreement dated as of December 22, 1997.

SECURED EQUIPMENT TERM LOAN NO. 2

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the "Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" meant 90% of the
                    invoice value of equipment purchased by Borrower after
                    August 31, 1996.  Silicon had no obligation to advance
                    against taxes, freight charges, installation charges or
                    other similar amounts relating to Borrower's equipment,
                    whether or not such amounts were identified on the invoices
                    submitted to Silicon.  Equipment included in the Equipment
                    Borrowing Base was required to be new equipment, at the time
                    of purchase by Borrower, owned by Borrower, in good working
                    order, not subject to any liens in favor of any person or
                    entity other than Silicon, and were subject to a first
                    priority, perfected security interest in favor of Silicon.
                    Silicon had no obligation to make advances against
                    non-standard equipment, such as tooling, software and custom
                    equipment.  Silicon had no obligation to make advances on
                    this Secured Equipment Term Loan after September 6, 1997.
                    Silicon made

Page 3
<PAGE>

                    advances under this Secured Equipment Term Loan No. 2 from
                    time to time, based on invoices and other documentation as
                    requested by Silicon to support such advances.  The
                    Borrower's indebtedness to Silicon with respect to this
                    Secured Equipment Term Loan No. 2 shall be evidenced by this
                    Schedule and the Loan Agreement, not by a separate
                    promissory note unless required by Silicon.

                    Borrower shall submit to Silicon such invoices, advance
                    requests and other information, in form acceptable to
                    Silicon, as Silicon shall reasonably require from time to
                    time.

                    Once the maximum amount of the principal was advanced under
                    this Secured Equipment Term Loan No. 2, Borrower was no
                    longer entitled to further advances on this Loan.  Advances
                    were to be requested in writing by Borrower or an authorized
                    person.  Silicon may, but need not, require that all oral
                    requests be confirmed in writing.  The unpaid principal
                    balance owing on this Secured Equipment Term Loan No. 2 at
                    any time may be evidenced by Silicon's internal records,
                    including daily computer print-outs (which Silicon shall
                    provide to Borrower periodically).

PURPOSE:            Borrowers used the proceeds of this Secured Equipment Term
                    Loan No. 2 to finance the purchase of new equipment.

INTEREST RATE:      The interest rate applicable to the Secured Equipment Term
                    Loan shall be a rate equal to the "Prime Rate" (as defined
                    above) in effect from time to time, plus 1.50% per annum.
                    Interest calculations shall be made on the basis of a
                    360-day year and the actual number of days elapsed.  The
                    interest rate applicable to the Obligations shall change on
                    each date there is a change in the Prime Rate.

AMORTIZATION:       Borrower shall pay Silicon monthly payments of interest only
                    on the last day each month commencing with September 30,
                    1996.  In addition, Borrower shall pay Silicon commencing on
                    October 6, 1997, and continuing on the same day of each
                    month thereafter, the amount necessary to repay fully the
                    amount of the Secured Equipment Term Loan No. 2 in 30 equal
                    month payments.

MATURITY DATE:      March 6, 2000, at which time all unpaid principal and
                    accrued but unpaid interest, fees and other charges shall be
                    due and payable.
COMMITMENT
FEE:                $1,000, was paid at closing.  This fee was fully earned
                    at closing and is non-refundable.

SECURED TERM LOAN NO. 3

CREDIT LIMIT:       An amount not to exceed $500,000, in a single advance.

PURPOSE:            Borrowers used the proceeds of this Secured Term Loan No. 3
                    to assist in financing the purchase of Sundstrand
                    Corporation's 49% ownership interest in Borrower by a
                    limited liability company owned by Borrower's management.

INTEREST RATE:      If Borrower's Debt to Tangible Net Worth ratio is greater
                    than 2.00:1.00, the interest rate applicable to the Secured
                    Term Loan No. 3 shall be a rate equal to the

Page 4
<PAGE>

                    "Prime Rate" (as defined above) in effect from time to time,
                    plus 1.75% per annum.  If Borrower's Debt to Tangible Net
                    Worth ratio is 2.00:1.00 or less, the interest rate
                    applicable to the Secured Term Loan No. 3 shall be a rate
                    equal to the "Prime Rate" in effect from time to time, plus
                    1.50% per annum  Interest calculations shall be made on the
                    basis of a 360-day year and the actual number of days
                    elapsed.  Changes in interest rate resulting from changes in
                    Borrower's Debt to Tangible Net Worth ratio shall be
                    effective on the first day of the month following the day on
                    which Silicon receives Borrower's quarterly financial
                    statement and calculation of its Debt to Tangible Net Worth
                    ratio.  The interest rate applicable to the Obligations
                    shall change on each date there is a change in the Prime
                    Rate.

AMORTIZATION:       Borrower shall pay Silicon monthly payments of interest on
                    the last day each month commencing with January, 1998.  In
                    addition, Borrower shall pay Silicon on the last day of each
                    month, commencing with January, 1998, the amount necessary
                    to repay fully the amount of the Secured Term Loan No. 3 in
                    36 equal monthly payments.

MATURITY DATE:      December 17, 2000, at which time all unpaid principal and
                    accrued but unpaid interest, fees and other charges shall be
                    due and payable.

COMMITMENT
FEE:                $1,250, was paid at closing.  This fee was fully earned at
                    closing and is non-refundable.

SECURED TERM LOAN NO. 4

The Borrower may choose one of the following term loan options:

               A.   RE-FINANCE OF EXISTING LEASE:

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the "Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" shall mean 80% of
                    the fair market value ("FMV") of certain equipment subject
                    to an existing lease from Finova Capital.  FMV shall be
                    determined by Finova Capital, pursuant to the terms of the
                    lease agreement between Borrower and Finova Capital.  This
                    facility may only be drawn in one advance, and Silicon shall
                    have no obligation to make an advance on this facility after
                    January 31, 2000.  The Borrower's indebtedness to Silicon
                    with respect to this facility shall be evidenced by this
                    Schedule and the Loan Agreement, not by a separate
                    promissory note unless required by Silicon.

                    Borrower shall not have the right to reborrow any amount on
                    this facility that has been repaid by Borrower.  The advance
                    may be requested in writing by Borrower or an authorized
                    person.  Silicon may, but need not, require that an oral
                    request be confirmed in writing.  The unpaid principal
                    balance owing on this facility at any time may be evidenced
                    by Silicon's internal records, including daily computer
                    print-outs (which Silicon shall provide to Borrower
                    periodically).

Page 5
<PAGE>

PURPOSE:            Borrowers shall use the proceeds of this facility to
                    refinance an existing lease from Finova Capital.

INTEREST RATE:      The applicable interest rate shall be either:

                    (a)  A floating rate equal to the "Prime Rate" (as defined
                         above) in effect from time to time, plus 1.75% per
                         annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.  The interest rate applicable to the
                         Obligations shall change on each date there is a change
                         in the Prime Rate; or

                    (b)  A fixed rate equivalent to the rate for three-year
                         Treasury bills as of the date of advance, plus 4.00%
                         per annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.

                    If Borrower selects the floating rate option, Borrower shall
                    make thirty-six (36) equal monthly payments of principal,
                    plus interest, sufficient to fully amortize the facility in
                    thirty-six (36) months.  If Borrower selects the fixed rate
                    option, Borrower shall make thirty-six (36) equal monthly
                    payments, including both principal and interest, sufficient
                    to fully amortize the facility in thirty-six (36) months.

MATURITY DATE:      December         , 2002, at which time all unpaid principal
                    and accrued but unpaid interest, fees and other charges
                    shall be due and payable.

COMMITMENT FEE:     $5,000, payable at closing.  This fee is fully earned at
                    closing and is non-refundable.  (Any Commitment Fee
                    previously paid by the Borrower in connection with this loan
                    shall be credited against this Fee.).

     ---OR---

               B.   NEW SECURED EQUIPMENT TERM LOAN:

CREDIT LIMIT:       An amount not to exceed the lesser of (i) $500,000 at any
                    one time outstanding; or (ii) the amount of the Equipment
                    Borrowing Base," as defined below.  For purposes of this
                    Schedule, the "Equipment Borrowing Base" shall mean 90% of
                    the invoice value of equipment, software and leasehold
                    improvements purchased by Borrower after
                                           , 2000.  Up to 25% of the amount
                    outstanding under this facility may be used to fund the
                    purchase of software and leasehold improvements.  Silicon
                    shall have no obligation to advance against taxes, freight
                    charges, installation charges or other similar amounts
                    relating to Borrower's equipment, software or leasehold
                    improvements, whether or not such amounts are identified on
                    the invoices submitted to Silicon.  Equipment to be included
                    in the Equipment Borrowing Base must be new equipment, at
                    the time of purchase by Borrower, owned by Borrower, in good
                    working order, must not be subject to any liens in favor of
                    any person or entity other than Silicon, and must be subject
                    to a first priority, perfected security interest in favor of
                    Silicon.  Silicon shall have no obligation to make advances
                    against non-standard equipment, such as tooling and custom
                    equipment.  Silicon shall have no obligation to make
                    advances on this

Page 6
<PAGE>

                    facility after January         , 2001.  Silicon shall make
                    advances under this facility from time to time during the
                    twelve (12) month period between the date of this Agreement
                    and January         , 2001 (the "Draw Period"), based on
                    invoices and other documentation as shall be requested by
                    Silicon to support such advances.  The Borrower's
                    indebtedness to Silicon with respect to this facility shall
                    be evidenced by this Schedule and the Loan Agreement, not by
                    a separate promissory note unless required by Silicon.

                    Borrower shall submit to Silicon such invoices, advance
                    requests and other information, in form acceptable to
                    Silicon, as Silicon shall reasonably require from time to
                    time.

                    Once the maximum amount of the principal has been advanced
                    under this facility, Borrower is no longer entitled to
                    further advances on this Loan.  Borrower shall not have the
                    right to reborrow any amount on this facility that has been
                    repaid by Borrower.  Advances may be requested in writing by
                    Borrower or an authorized person.  Silicon may, but need
                    not, require that all oral requests be confirmed in writing.
                    The unpaid principal balance owing on this facility at any
                    time may be evidenced by Silicon's internal records,
                    including daily computer print-outs (which Silicon shall
                    provide to Borrower periodically).

PURPOSE:            Borrowers hall use the proceeds of this facility to finance
                    the purchase of new equipment.

INTEREST  RATE:     During the Draw Period, the applicable interest rate shall
                    be the floating rate option below.  After the Draw Period,
                    the applicable interest rate shall be either:

                    (a)  A floating rate equal to the "Prime Rate" (as defined
                         above) in effect from time to time, plus 1.75% per
                         annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.  The interest rate applicable to the
                         Obligations shall change on each date there is a change
                         in the Prime Rate; or

                    (b)  a fixed rate equivalent to the rate for two-year
                         Treasury bills as of the date of advance, plus 4.00%
                         per annum.  Interest calculations shall be made on the
                         basis of a 360-day year and the actual number of days
                         elapsed.

                    Borrower shall pay interest only on a monthly basis during
                    the Draw Period.  If Borrower selects the floating rate
                    option after the Draw Period, Borrower shall make
                    twenty-four (24) equal monthly payments of principal, plus
                    interest, beginning on January        , 2001, or on the
                    first day of the first full month following that month in
                    which the full $500,000 has been advanced, sufficient to
                    fully amortize the facility in twenty-four (24) months.  If
                    Borrower selects the fixed rate option after the Draw
                    Period, Borrower shall make twenty-four (24) equal monthly
                    payments, including both principal and interest, sufficient
                    to fully amortize the facility in twenty-four (24) months.

MATURITY DATE:      December        , 2002, at which time all unpaid principal
                    and accrued but unpaid interest, fees and other charges
                    shall be due and payable.


Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

COMMITMENT FEE:     $5,000, payable at closing.  This fee is fully earned at
                    closing and is non-refundable.  (Any Commitment Fee
                    previously paid by the Borrower in connection with this loan
                    shall be credited against this Fee.)

PRIOR NAMES OF
BORROWER:           See Exhibit B

TRADE NAMES OF
BORROWER:           See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:      See Exhibit B

MATERIAL ADVERSE
LITIGATION:         See Exhibit B

FINANCIAL
COVENANTS:          The Borrower, exclusive of the results of operations of
                    Advanced Power Technology Europe, S.A. ("APT-Europe"), shall
                    comply with all of the following covenants, all of which
                    shall be determined and measured quarterly in accordance
                    with generally accepted accounting principles, except as
                    otherwise stated below:

TANGIBLE NET
WORTH:              Borrower shall at all times maintain a Tangible Net Worth
                    (defined below) of not less than $3,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO:    Borrower shall maintain a ratio of total book liabilities
                    (less the outstanding balance of Secured Term Loan No. 1 and
                    accrued interest thereon, less debt, if any, that has been
                    subordinated to the Loans in a written subordination
                    agreement on terms satisfactory to Silicon, and accrued
                    interest thereon, less deferred revenue) to Tangible Net
                    Worth, measured quarterly, of not more than 2.50:1.00.


QUICK RATIO:        Borrower shall maintain a ratio of Quick Assets (defined
                    below) to current liabilities of not less than 0.45:1.00,
                    measured quarterly.

PROFITABILITY:      Borrower shall earn net income of not less than $250,000 for
                    each quarterly period.

DEBT SERVICE
COVERAGE RATIO:     Borrower shall maintain, on an annualized basis, a Debt
                    Service Coverage Ratio of not less than 2.00:1.00.

LOANS OR EQUITY
CONTRIBUTIONS TO
SUBSIDIARY:         Borrower shall limit its loans or equity contributions to
                    its wholly-owned subsidiary, APT-Europe, to a maximum of
                    $1,250,000 plus 25% of any new equity at any one time,
                    measured quarterly.

Page 8 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

RELEASE OF
GUARANTIES:         Silicon shall release the Continuing Guaranties provided by
                    direct or indirect shareholders of Borrower at such time as
                    the Borrower satisfies all of the criteria described below:

                    (i)   Borrower raises a minimum of $2,000,000 in new equity
                          after April 1, 1999;

                    (ii)  Borrower achieves a Debt to Tangible Net Worth Ratio
                          of not more than 2.00:1.00;

                    (iii) Borrower achieves a Quick Ratio of not less than
                          0.60:1.00; and

                    (iv)  Borrower is able to reduce its reliance on
                          inventory-secured borrowings such that the advance
                          rate against inventory for purposes of the Borrowing
                          Base for the Secured Accounts Receivable Line of
                          Credit may be reduced from 50% to 25%, and the maximum
                          advance against Eligible Inventory may be reduced from
                          $1,250,000 to $500,000.

DEFINITIONS:        "Debt Service Coverage Ratio" means quarterly net book
                    income, plus any loss from APT-Europe, plus depreciation and
                    amortization, less any income from APT-Europe, plus
                    interest, plus taxes (EBITDA) multiplied by four (4),
                    divided by the Current Maturities of Long-Term Debt (CMLTD)
                    plus interest for that quarter multiplied by four (4).

                    "Quick Assets" means cash on hand or on deposit in banks,
                    readily marketable securities issued by the United States,
                    readily marketable commercial paper rated "A-I" by Standard
                    & Poor's Corporation (or a similar rating by a similar
                    rating organization), certificates of deposit and banker's
                    acceptances, and accounts receivable (including accounts
                    owing to Borrower's affiliate APT-Europe) net of allowance
                    for doubtful accounts.

                    "Tangible Net Worth" means stockholders' equity plus the
                    outstanding balance of the Secured Term Loan No. 1 and
                    accrued interest thereon, plus debt, if any, that has been
                    subordinated to the Loans in a written subordination
                    agreement on terms satisfactory to Silicon, and accrued
                    interest thereon, plus the amount of Borrower's negative
                    equity investment in Borrower's affiliate APT-Europe, less
                    goodwill, patents, capitalized software costs, deferred
                    organizational costs, tradenames, trademarks, and all other
                    assets which would be classified as intangible assets under
                    generally accepted accounting principles, less the note
                    receivable from Tremoliere LLC, less the note receivable
                    from Borrower's affiliate APT-Europe, less the amount of
                    Borrower's positive equity investment in APT-Europe.

OTHER COVENANTS:    Borrower shall at all times comply with all of the following
                    additional covenants:

                    BANKING RELATIONSHIP.  Borrower shall at all times maintain
                    its primary banking relationship with Silicon.

                    FINANCIAL STATEMENTS AND REPORTS.  The Borrower shall
                    provide Silicon:  (a) within 30 days after the end of each
                    month, a monthly financial statement for

Page 9 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                    Borrower and APT-Europe (consisting of an income statement
                    and a balance sheet) prepared by the Borrower in accordance
                    with generally accepted accounting principles; (b) within 20
                    days after the end of each month, an accounts receivable
                    aging report, an inventory report and an accounts payable
                    aging report, in such form as Silicon shall reasonably
                    specify; (c) within 20 days after the end of each month, a
                    Borrowing Base Certificate in the form attached to this
                    Agreement as Exhibit A, as Silicon may reasonably modify
                    such Certificate from time to time, signed by the Chief
                    Financial Officer of the Borrower; (d) within 30 days after
                    the end of each quarter, a Compliance Certificate in such
                    form as Silicon shall reasonably specify, signed by the
                    Chief Financial Officer of the Borrower, setting forth
                    calculations showing compliance (at the end of each such
                    calendar month) with the financial covenants set forth on
                    the Schedule, and certifying that throughout such month the
                    Borrower was in full compliance with all other terms and
                    conditions of this Agreement and the Schedule, and providing
                    such other information as Silicon shall reasonably request;
                    and (e) within 90 days following the end of the Borrower's
                    fiscal year, complete annual CPA-audited financial
                    statements, such audit being conducted by independent
                    certified public accountants reasonably acceptable to
                    Silicon, together with an unqualified opinion of such
                    accountants.

CONDITIONS TO
CLOSING:            Without in any way limiting the discretionary nature of
                    advances under this Agreement, before requesting any such
                    advance, the Borrower shall satisfy each of the following
                    conditions:

1.  LOAN DOCUMENTS:

                    Silicon shall have received this Agreement, the Schedule,
                    joint and several Continuing Guaranties and such other loan
                    documents as Silicon shall require, each duly executed and
                    delivered by the parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                    Silicon shall have received each of the following in form
                    and substance satisfactory to it:

                    (a)   Certified Copies of the Articles of Incorporation and
                          Bylaws of the Borrower;

                    (b)   A Certificate of Good Standing issued by the Secretary
                          of State of the Borrower's state of incorporation and
                          such other states as Silicon may reasonably request
                          with respect to the Borrower;

                    (c)   A certified copy of a Resolution adopted by the Board
                          of Directors of the Borrower authorizing the
                          execution, delivery and performance of this Agreement,
                          and any other documents or certificates to be executed
                          by the Borrower in connection with this transaction;
                          and

Page 10 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
<PAGE>

                      (d) Incumbency Certificates describing the office and
                          identifying the specimen signatures of the individuals
                          signing all such loan documents on behalf of the
                          Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY: Silicon shall have received evidence satisfactory to it
                      that its security interest in the Collateral has been duly
                      perfected and that such security interest is prior to all
                      other liens, charges, security interests, encumbrances and
                      adverse claims in or to the Collateral other than
                      Permitted Liens, which evidence shall include, without
                      limitation, a certificate from the Oregon Secretary of
                      State showing the due filing and first priority of the UCC
                      Financing Statements to be signed by the Borrower covering
                      the Collateral.

4.  INSURANCE:        Silicon shall have received evidence satisfactory to it
                      that all insurance required by this Agreement is in full
                      force and effect, with loss payee designations and
                      additional insured designations as required by this
                      Agreement.

5.  OTHER INFORMATION:

                      Silicon shall have received such other statements,
                      opinions, certificates, documents and information with
                      respect to matters contemplated by this Agreement as it
                      may reasonably request, all of which must be reasonably
                      acceptable to Silicon.

                      Silicon shall have conducted an examination of the
                      Borrower's books, records, ledgers, journals, and
                      registers, as Silicon may deem necessary, and shall be
                      satisfied with the results of such examination in its sole
                      discretion.


     Silicon and the Borrower agree that the terms of this Schedule supplement
the Loan and Security Agreement between Silicon and the Borrower and agree to be
bound by the terms of this Schedule.

                              BORROWER:

                              ADVANCED POWER TECHNOLOGY, INC.


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------


                              SILICON:

                              SILICON VALLEY BANK


                              By:
                                     -------------------------------------
                              Name:
                                     -------------------------------------
                              Title:
                                     -------------------------------------

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<PAGE>

                                      EXHIBIT A

                         [INSERT BORROWING BASE CERTIFICATE]








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<PAGE>

                                      EXHIBIT B

                              [DISCLOSURES BY BORROWER]















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<PAGE>

                                    EXHIBIT B

          AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                 (EXIM PROGRAM)


Borrower:                  Advanced Power Technology, Inc.

Address:                   405 S.W. Columbia Street
                           Bend, Oregon 97702

Date:                      January ____, 2000


NON-EXIM AGREEMENT;
CROSS-COLLATERALIZATION;
CROSS-DEFAULT:
                           Silicon and the Borrower are parties to that certain
                           other Loan and Security Agreement of even date (the
                           "Non-Exim Agreement"). Both this Agreement and the
                           Non-Exim Agreement shall continue in full force and
                           effect, and all rights and remedies under this
                           Agreement and the Non-Exim Agreement are cumulative.
                           The term "Obligations" as used in this Agreement and
                           in the Non-Exim Agreement shall include without
                           limitation the obligation to pay when due all Loans
                           made pursuant to this Agreement (the "Exim Loans")
                           and all interest thereon and the obligation to pay
                           when due all Loans made pursuant to the Non-Exim
                           Agreement (the "Non-Exim Loans") and all interest
                           thereon. Without limiting the generality of the
                           foregoing, all "Collateral" as defined in this
                           Agreement and as defined in the Non-Exim Agreement
                           shall secure all Exim Loans and all Non-Exim Loans
                           and interest thereon, and all other Obligations. Any
                           Event of Default under this Agreement shall
                           constitute an Event of Default under the Non-Exim
                           Agreement, and any Event of Default under the
                           Non-Exim Agreement shall also constitute an Event of
                           Default under this Agreement. In the event Silicon
                           assigns its rights under this Agreement and/or under
                           any Note evidencing Exim Loans and/or its rights
                           under the Non-Exim Agreement and/or under any Note
                           evidencing Non-Exim Loans, to any third party,
                           including without limitation the Export-Import Bank
                           of the United States ("Exim Bank"), whether before or
                           after the occurrence of any Event of Default, Silicon
                           shall have the right (but not any obligation), in its
                           sole discretion, to allocate and apportion Collateral
                           to the Agreement and/or Note assigned and to specify
                           the priorities of the respective security interests
                           in such Collateral between itself and the assignee,
                           all without notice to or consent of the Borrower.

                           This Agreement is subject to all of the terms and
                           conditions of the Borrower Agreement attached hereto
                           as Exhibit A, and all documents attached to such
                           Borrower Agreement (collectively, the "Exim
                           Documents"), all of which are hereby incorporated
                           herein by this reference. Borrower shall perform all
                           of the obligations and comply with all of the
                           affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Documents
                           as though such


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         (EXIM PROGRAM)

<PAGE>

                           obligations and covenants were expressly set forth
                           herein, and all of which are hereby incorporated
                           herein by this reference. In the event of any
                           conflict between the terms of the Exim Documents and
                           the terms of the Exim Loan Agreement or the Schedule
                           or any related promissory note, whichever terms are
                           more restrictive on Borrower shall apply.

EXPORT LINE OF CREDIT
CREDIT LIMIT:
(Section 1. 1)
EXIM LOANS:                An amount not to exceed the lesser of:

                           (a) $2,000,000 at any one time outstanding; or

                           (b) a total of (i) 90% of the value of Borrower's
                           eligible export receivables, which are eligible for
                           borrowing as provided below, plus (ii) 70% of the
                           value of Borrower's eligible exportable inventory
                           which is eligible for borrowing as provided below,
                           which Silicon in its reasonable discretion deems
                           eligible for borrowing.

                           Without limiting the fact that the determination of
                           which accounts are eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: accounts outstanding
                           for more than 90 days from the invoice date unless
                           otherwise agreed to in writing by Silicon, accounts
                           subject to any contingencies, accounts billed or
                           payable outside the United States (except for those
                           backed by a letter of credit satisfactory to
                           Silicon), accounts owing from governmental agencies
                           unless otherwise agreed to in writing by Silicon,
                           accounts owing from one account debtor to the extent
                           they exceed 25% of the total eligible accounts
                           outstanding, accounts owing from an affiliate of the
                           Borrower, accounts subject to setoff, recoupment,
                           counterclaim or any other demand by the account
                           debtor. In addition, if more than 50% of the accounts
                           owing from an account debtor are outstanding more
                           than 90 days from the invoice date or are otherwise
                           not eligible accounts, then all accounts owing from
                           that account debtor shall be deemed ineligible for
                           borrowing.

                           Without limiting the fact that the determination of
                           which inventory is eligible for borrowing is a matter
                           of Silicon's discretion, the following shall not be
                           deemed eligible for borrowing: any inventory other
                           than raw materials, work-in-process and finished
                           goods that are owned by Borrower and located in Bend,
                           Oregon; inventory that is used, obsolete or returned
                           goods; inventory that is stored at a location other
                           than the Borrowers' Address or any location owned,
                           leased or rented by Borrowers and previously
                           identified to Silicon; inventory that is subject to a
                           landlord's lien; and inventory that is not in the
                           possession of the Borrower.

AGREEMENT SUBJECT
TO EXIM GUARANTEE;
COSTS:                     This Agreement is subject to all of the terms and
                           conditions of the Exim Guarantee (including without
                           limitation the Transaction Attachment thereto and
                           Special Conditions thereto) which are hereby
                           incorporated herein by this reference. Borrower
                           expressly agrees to perform all of the obligations
                           and comply with all of


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         (EXIM PROGRAM)

<PAGE>

                           the affirmative and negative covenants and all other
                           terms and conditions set forth in the Exim Guarantee
                           as though the same were expressly set forth herein,
                           and all of the same are hereby incorporated herein by
                           this reference. In the event of any conflict between
                           the terms of the Exim Guarantee and the other terms
                           of this Agreement, whichever terms are more
                           restrictive shall apply. Borrower shall reimburse
                           Silicon for all fees and out of pocket expenses
                           incurred by Silicon with respect to the Exim
                           Guarantee, including without limitation all facility
                           fees and usage fees, and Silicon is authorized to
                           debit Borrower's account with Silicon for such fees,
                           costs and expenses when paid by Silicon.

INTEREST RATE:             If Borrower's Debt to Tangible Net Worth ratio is
                           greater than 2.00:1.00, the interest rate applicable
                           to the Export Line of Credit shall be a rate equal to
                           the "Prime Rate" in effect from time to time, plus
                           1.25% per annum. If Borrower's Debt to Tangible Net
                           Worth ratio is 2.00:1.00 or less, the interest rate
                           applicable to the Export Line of Credit shall be a
                           rate equal to the "Prime Rate" in effect from time to
                           time, plus 1.00% per annum. Interest calculations
                           shall be made on the basis of a 360-day year and the
                           actual number of days elapsed. Changes in interest
                           rate resulting from changes in Borrower's Debt to
                           Tangible Net Worth ratio shall be effective on the
                           first day of the month following the day on which
                           Silicon receives Borrower's quarterly financial
                           statement and calculation of its Debt to Tangible Net
                           Worth ratio. Interest is payable monthly.

                           "Prime Rate" means the rate announced from time to
                           time by Silicon as its "prime rate"; it is a base
                           rate upon which other rates charged by Silicon are
                           based, and it is not necessarily the best rate
                           available at Silicon. The interest rate applicable to
                           the Obligations shall change on each date there is a
                           change in the Prime Rate.

LOAN FEE:                  $30,000, was paid at closing. This fee was fully
                           earned at closing and is non-refundable.

MATURITY DATE:             March 31, 2000, at which time all unpaid principal
                           and accrued but unpaid interest shall be due and
                           payable.

PRIOR NAMES OF
BORROWER:                  See Exhibit B

TRADE NAMES OF
BORROWER:                  See Exhibit B

OTHER LOCATIONS
AND ADDRESSES:             See Exhibit B

MATERIAL ADVERSE
LITIGATION:                See Exhibit B

FINANCIAL
COVENANTS:                 The Borrower, exclusive of the results of operations
                           of Advanced Power Technology Europe, S.A.
                           ("APT-Europe") shall comply with all of the following


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         (EXIM PROGRAM)

<PAGE>

                           covenants, all of which shall be determined and
                           measured quarterly in accordance with generally
                           accepted accounting principles, except as otherwise
                           stated below:

TANGIBLE NET
WORTH:                     Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $3,000,000.

DEBT TO TANGIBLE
NET WORTH RATIO:           Borrower shall maintain a ratio of total book
                           liabilities (less the outstanding balance of
                           Secured Term Loan No. 1 and accrued interest thereon,
                           less debt, if any, that has been subordinated to the
                           Loans in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less deferred revenue) to Tangible Net
                           Worth, measured quarterly, of not more than
                           2.50:1.00.

QUICK RATIO:               Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities of not less
                           than 0.45:1.00, measured quarterly.

PROFITABILITY:             Borrower shall earn net income of not less than
                           $250,000 for each quarterly period.

DEBT SERVICE
COVERAGE RATIO:            Borrower shall maintain, on an annualized basis, a
                           Debt Service Coverage Ratio of not less than
                           2.00:1.00.

LOANS OR EQUITY
CONTRIBUTIONS TO
SUBSIDIARY:                Borrower shall limit its loans or equity
                           contributions to its wholly owned subsidiary,
                           APT-Europe, to a maximum of $1,250,000 plus 25% of
                           any new equity at any one time, measured quarterly.

RELEASE OF
GUARANTIES:                Silicon shall release the Continuing Guaranties
                           provided by direct or indirect shareholders of
                           Borrower at such time as the Borrower satisfies all
                           of the criteria described below:

                           (i)      Borrower raises a minimum of $2,000,000 in
                                    new equity after April 1, 1999;

                           (ii)     Borrower achieves a Debt to Tangible Net
                                    Worth Ratio of not more than 2.00:1.00;

                           (iii)    Borrower achieves a Quick Ratio of not less
                                    than 0.60:1.00; and

                           (iv)     Borrower is able to reduce its reliance on
                                    inventory-secured borrowings such that the
                                    advance rate against inventory for purposes
                                    of the Borrowing Base for the Secured
                                    Accounts Receivable Line of Credit may be
                                    reduced from 50% to 25%, and the maximum
                                    advance against Eligible Inventory may be
                                    reduced from $1,250,000 to $500,000.

DEFINITIONS:               "Debt Service Coverage Ratio" means quarterly net
                           book income, plus any loss from APT-Europe, plus
                           depreciation and amortization, less any income from
                           APT-



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         (EXIM PROGRAM)

<PAGE>

                           Europe, plus interest, plus taxes (EBITDA) multiplied
                           by four (4), divided by the Current Maturities of
                           Long-Term Debt (CMLTD) plus interest for that quarter
                           multiplied by four (4).

                           "Quick Assets" means cash on hand or on deposit in
                           banks, readily marketable securities issued by the
                           United States, readily marketable commercial paper
                           rated "A-I" by Standard & Poor's Corporation (or a
                           similar rating by a similar rating organization),
                           certificates of deposit and banker's acceptances, and
                           accounts receivable (including accounts owing to
                           Borrower's affiliate of APT-Europe) net of allowance
                           for doubtful accounts.

                           "Tangible Net Worth" means stockholders' equity plus
                           the outstanding balance of the Secured Term Loan No.
                           1 and accrued interest thereon, plus debt, if any,
                           that has been subordinated to the Loans in a written
                           subordination agreement on terms satisfactory to
                           Silicon, and accrued interest thereon, plus the
                           amount of Borrower's negative equity investment in
                           Borrower's affiliate APT-Europe, less goodwill,
                           patents, capitalized software costs, deferred
                           organizational costs, tradenames, trademarks, and all
                           other assets which would be classified as intangible
                           assets under generally accepted accounting
                           principles, less the note receivable from Tremoliere
                           LLC, less the note receivable from Borrower's
                           affiliate APT-Europe, less the amount of Borrower's
                           positive equity investment in APT-Europe.

OTHER COVENANTS:           Borrower shall at all times comply with all of the
                           following additional covenants:

                           BANKING RELATIONSHIP. Borrower shall at all times
                           maintain its primary banking relationship with
                           Silicon.

                           EXIM BANK REQUIREMENTS. Borrower shall at all times
                           conform the rules and regulations of the
                           Export-Import Bank of the United States.

                           FINANCIAL STATEMENTS AND REPORTS. The Borrower shall
                           provide Silicon: (a) within 30 days after the end of
                           each month, a monthly financial statement for
                           Borrower and APT-Europe (consisting of an income
                           statement and a balance sheet) prepared by the
                           Borrower in accordance with generally accepted
                           accounting principles; (b) within 20 days after the
                           end of each month, an accounts receivable aging
                           report, an inventory report and an accounts payable
                           aging report, in such form as Silicon shall
                           reasonably specify; (c) within 20 days after the end
                           of each month, a Borrowing Base Certificate in the
                           form attached to this Agreement as Exhibit A, as
                           Silicon may reasonably modify such Certificate from
                           time to time, signed by the Chief Financial Officer
                           of the Borrower; (d) within 30 days after the end of
                           each quarter, a Compliance Certificate in such form
                           as Silicon shall reasonably specify, signed by the
                           Chief Financial Officer of the Borrower, setting
                           forth calculations showing compliance (at the end of
                           each such calendar month) with the financial
                           covenants set forth on the Schedule, and certifying
                           that throughout such month the Borrower was in full
                           compliance with all other terms and conditions of
                           this Agreement and the Schedule, and providing such
                           other information as Silicon shall reasonably
                           request; and (e) within 90 days following the end of
                           the Borrower's fiscal year, complete annual
                           CPA-audited financial statements, such audit being
                           conducted by independent certified public accountants


Page 5 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

                           reasonably acceptable to Silicon, together with an
                           unqualified opinion of such accountants.

CONDITIONS TO
CLOSING:                   Without in any way limiting the discretionary nature
                           of advances under this Agreement, before requesting
                           any such advance, the Borrower shall satisfy each of
                           the following conditions:

1.  LOAN DOCUMENTS:
                           Silicon shall have received this Agreement, the
                           Schedule, joint and several Continuing Guaranties,
                           and such other loan documents as Silicon shall
                           require, each duly executed and delivered by the
                           parties thereto.

2.  DOCUMENTS RELATING
TO AUTHORITY, ETC.:

                           Silicon shall have received each of the following in
                           form and substance satisfactory to it:

                           (a)      Certified Copies of the Articles of
                                    Incorporation and Bylaws of the Borrower;

                           (b)      A Certificate of Good Standing issued by the
                                    Secretary of State of the Borrower's state
                                    of incorporation and such other states as
                                    Silicon may reasonably request with respect
                                    to the Borrower;

                           (c)      A certified copy of a Resolution adopted by
                                    the Board of Directors of the Borrower
                                    authorizing the execution, delivery and
                                    performance of this Agreement, and any other
                                    documents or certificates to be executed by
                                    the Borrower in connection with this
                                    transaction; and

                           (d)      Incumbency Certificates describing the
                                    office and identifying the specimen
                                    signatures of the individuals signing all
                                    such loan documents on behalf of the
                                    Borrower.

3.  PERFECTION AND
PRIORITY OF SECURITY:      Silicon shall have received evidence satisfactory
                           to it that its security interest in the Collateral
                           has been duly perfected and that such security
                           interest is prior to all other liens, charges,
                           security interests, encumbrances and adverse claims
                           in or to the Collateral other than Permitted Liens,
                           which evidence shall include, without limitation, a
                           certificate from the Oregon Secretary of State
                           showing the due filing and first priority of the
                           UCC Financing Statements to be signed by the
                           Borrower covering the Collateral.

4.  INSURANCE:             Silicon shall have received evidence satisfactory to
                           it that all insurance required by this Agreement is
                           in full force and effect, with loss payee
                           designations and additional insured designations as
                           required by this Agreement.


Page 6 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

5.  OTHER INFORMATION:

                           Silicon shall have received such other statements,
                           opinions, certificates, documents and information
                           with respect to matters contemplated by this
                           Agreement as it may reasonably request, all of which
                           must be acceptable to Silicon.

                           Silicon shall have conducted an examination of the
                           Borrower's books, records, ledgers, journals, and
                           registers, as Silicon may deem necessary, and shall
                           be satisfied with the results of such examination in
                           its sole discretion.

                           Exim Bank shall have agreed to guarantee payment of
                           ninety percent (90%) of the Loan and all interest
                           accrued thereon, subject to the terms of a master
                           guarantee agreement between Exim Bank and Silicon.


         Silicon and the Borrower agree that the terms of this Schedule
supplement the Loan and Security Agreement between Silicon and the Borrower and
agree to be bound by the terms of this Schedule.

                                 BORROWER:

                                 ADVANCED POWER TECHNOLOGY, INC.


                                 By:
                                        --------------------------------------
                                 Name:
                                        --------------------------------------
                                 Title:
                                        --------------------------------------


                                 SILICON:

                                 SILICON VALLEY BANK


                                 By:
                                        --------------------------------------
                                 Name:
                                        --------------------------------------
                                 Title:
                                        --------------------------------------


Page 7 - AMENDED AND RESTATED SCHEDULE TO LOAN AND SECURITY AGREEMENT
         (EXIM PROGRAM)

<PAGE>

                                    EXHIBIT A

                        [INSERT EXIM BORROWER AGREEMENT]






















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         (EXIM PROGRAM)

<PAGE>

                                    EXHIBIT B

                          [INSERT BORROWER DISCLOSURES]























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         (EXIM PROGRAM)

<PAGE>

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of April 7, 2000 by
and between Advanced Power Technology, Inc. ("Borrower") and Silicon Valley Bank
("Silicon") whose address is 3003 Tasman Drive, Santa Clara, CA 95054.

1.       DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated September 6,
1995, together with any and all Schedules attached thereto, as amended from time
to time, (the "Loan Agreement"). The Loan Agreement provided for, among other
things, a Secured Accounts Receivable Line of Credit in the original principal
amount of Two Million Five Hundred Dollars ($2,500,000) (the "Line of Credit").
The Loan Agreement has been modified pursuant to among other documents, an
Amended and Restate Schedule to Loan and Security Agreement dated December 18,
1997, which the Line of Credit was increased to Three Million Dollars
($3,000,000). Additionally, Borrower is indebted to Silicon pursuant to, among
other documents, a Loan and Security Agreement (and Schedules thereto), dated
September 6, 1995, as may be amended from time to time (the "Exim Loan
Agreement"). The Exim Loan Agreement provided for, among other things, an Export
Line of Credit in the original principal amount of One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000) (the "Exim Line of Credit"). The Exim Loan
Agreement has been modified pursuant to among other documents, an Amended and
Restated Schedule to Loan and Security Agreement, dated April 1, 1999, which the
Exim Line of Credit was increased to Two Million Dollars ($2,000,000). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement and the Exim Loan Agreement, respectively.

Hereinafter, all indebtedness owing by Borrower to Silicon shall be referred to
as the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by, among other things, the Collateral as described in the Loan
Agreement. In addition, repayment of the Indebtedness is guaranteed by Advanced
Energy Industries, Inc., Russell J. Crecraft, Marla K. Crecraft, John I. Hess,
Kimberly A. Hess, Patrick P. Sireta, Dah-Wen D. Tsang, Yvonne S. Tsang, Thomas
A. Loder, Patricia D. Loder, Greg M. Haugen and Bettina Haugen (each a
"Guarantor"), pursuant to 1 Amended and Restated Guaranty and Subordination
Agreement (executed by Advanced Energy Industries, Inc. and guaranteeing only
the Indebtedness under the Secured Term Loan No. 1) and 6 Continuing Guaranty
agreement (each a "Guaranty")

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       MODIFICATION(S) TO LOAN AGREEMENT.

                  1.       The "Secured Accounts Receivable Line of Credit" in
                           the Amended and Restated Schedule to Loan and
                           Security Agreement, dated January, 6, 2000, is hereby
                           amended in part as follows:

                           (A) The first 3 paragraphs under the term "Credit
                           Limit" are amended to read as follows:

                           An amount not to exceed the lesser of (i) $3,500,000
                           at any one time outstanding; or (ii) the amount of
                           the "Borrowing Base", as defined below:


                                       1
<PAGE>

                           For purposes of this Schedule, the "Borrowing Base"
                           shall mean the sum of (i) 80% of the Net Amount of
                           Borrower's eligible accounts receivable, plus (ii)
                           50% of Borrower's "Eligible Inventory" (as defined
                           below), up to a maximum advance of $875,000 against
                           Eligible Inventory. Notwithstanding the foregoing,
                           effective July 1, 2000, item "(ii)" of the preceding
                           paragraph shall read as 25% of Borrower's "Eligible
                           Inventory" (as defined below), up to a maximum
                           advance of $500,000 against Eligible Inventory. "Net
                           Amount" means the gross amount of the account, minus
                           all applicable sales, use, excise and other similar
                           taxes and minus all discounts, credits and allowances
                           of any nature granted or claimed. Borrower's
                           "Eligible Inventory" means the Borrower's inventory
                           held for sale in the United States or Canada, valued
                           at the lower of wholesale cost or market value, which
                           Silicon in its reasonable discretion deems eligible
                           for borrowing.

                           The amount of all letters of credit issued by Silicon
                           at the request of the Borrower shall reduce, dollar
                           for dollar, the amount otherwise available to be
                           borrowed under the Borrowing Base formula described
                           above.

                           (B) The item entitled "Maturity Date" under the term
                           "Credit Limit" is amended to read as follows:

                           May 31, 2001, at which time all unpaid principal and
                           accrued but unpaid interest shall be due and payable.

                  2.       The item entitled "Maturity Date" under the term
                           "Credit Limit" under "Secured Term Loan No. 1" in the
                           Amended and Restated Schedule to Loan and Security
                           Agreement, dated January, 6, 2000, amended to read as
                           follows:

                           Borrower will pay 6 equal installments of principal
                           (each principal payment to be equal to 1/48th of the
                           outstanding principal balance of the Secured Term
                           Loan No. 1 as of the date of this Loan Modification
                           Agreement) plus Interest (the "Secured Term Loan No.
                           1 Payment"). Each Secured Term Loan No. 1 Payment is
                           payable on the last day of each month during the term
                           of the loan. Borrower's final Secured Term Loan No. 1
                           Payment, due on September 30, 2000, includes all
                           outstanding Secured Term Loan No. 1 principal and
                           accrued but unpaid interest.

          B.      MODIFICATION(S) TO EXIM LOAN AGREEMENT.

                  1.       Item "(a)" under the Section entitled "Export Line of
                           Credit, Credit Limit (Section 1.1) Exim Loans" in the
                           "Amended and Restated Schedule to Loan and Security
                           Agreement (Exim Program)" is hereby amended to read
                           as follows:

                           (a) $2,500,000 at any one time outstanding; or

                  2.       The item entitled "Maturity Date" under the Section
                           entitled "Export Line of Credit, Credit Limit
                           (Section 1.1) Exim Loans" in the "Amended and
                           Restated Schedule to Loan and Security Agreement
                           (Exim Program)" is hereby amended to read as follows:

                           May 31, 2001, at which time all unpaid principal and
                           accrued but unpaid interest shall be due and payable.

         C.       MODIFICATION(S) TO LOAN AGREEMENT AND  EXIM LOAN AGREEMENT.

                  1.       The "Financial Covenants" Section entitled "Tangible
                           Net Worth" is hereby amended to read as follows:


                                       2
<PAGE>

                           Borrower shall at all times maintain a Tangible Net
                           Worth (defined below) of not less than $3,500,000, on
                           a quarterly basis.

                  2.       The Section entitled "Debt to Tangible Net Worth
                           Ratio" is hereby amended to read as follows:

                           Borrower shall maintain a ratio of total book
                           liabilities (less the outstanding balance of Secured
                           Term Loan No. 1 and accrued interest thereon, less
                           debt, if any, that has been subordinated to the Loans
                           in a written subordination agreement on terms
                           satisfactory to Silicon, and accrued interest
                           thereon, less deferred revenue) to Tangible Net
                           Worth, measured quarterly, of not more than 2.25 to
                           1.00, decreasing to 2.00 to 1.00 beginning with the
                           quarter ending December 31, 2000 and quarterly
                           thereafter.

                  3.       The Section entitled "Quick Ratio" is hereby amended
                           to read as follows:

                           Borrower shall maintain a ratio of Quick Assets
                           (defined below) to current liabilities (excluding the
                           current portion of long term debt of Secured Term
                           Loan No. 1) of not less than 0.50 to 1.00, measured
                           quarterly.

                  4.       The Section entitled "Profitability" is hereby
                           deleted.

                  5.       The Section entitled "Loans or Equity Contributions
                           to Subsidiary" is hereby amended to read as follows:

                           Borrower shall limit its loans or equity
                           contributions to its wholly-owned subsidiary,
                           APT-Europe, to a maximum of $375,000 plus 25% of any
                           new equity at any one time, measured quarterly.

                  6.       The following Section is hereby incorporated under
                           "Financial Covenants":

                           Maximum Loans to Tremoliere LLC. Borrower shall limit
                           its loans to Tremoliere to a maximum of $4,500,000 at
                           any one time, measured quarterly.

                  7.       The defined term "Debt Service Coverage Ratio" is
                           hereby amended to read as follows:

                           "Debt Service Coverage Ratio" means quarterly net
                           book income, plus any loss from APT-Europe, plus
                           depreciation and amortization, less any income from
                           APT-Europe, plus interest, plus taxes (EBITDA)
                           multiplied by four (4), divided by the sum of Current
                           Maturities of Long Term Debt (CMLTD) (excluding CMLTD
                           associated with the Secured Term Loan No. 1) plus the
                           interest for that quarter including interest under
                           the Secured Term Loan No. 1, multiplied by four (4).

                  8.       Borrower's fiscal year end complete annual
                           CPA-audited financial statements shall be due within
                           120 (rather than 90) days after the end of each
                           fiscal year end.

         D.       MODIFICATION(S) TO GUARANTY.

                  1.       Notwithstanding the terms and conditions contained in
                           each Guaranty, each Guarantor shall deliver to
                           Silicon complete and current financial statements as
                           requested and tax returns within 15 days of filing
                           and such other financial information about Guarantor
                           as Silicon may reasonably request.


                                       3
<PAGE>

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEE. Borrower shall pay to Silicon a fee in the amount
of Nine Thousand Four Hundred Eighty Dollars ($9,480) (the "Domestic Loan Fee")
plus Forty Thousand Six Hundred Twenty Five Dollars ($40,625) (the "Exim Loan
Fee") (collectively, the "Loan Fee") plus all out-of-pocket expenses.

6.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

7.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness,
Silicon is relying upon Borrower's representations, warranties, and agreements,
as set forth in the Existing Loan Documents. Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect. Silicon's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Silicon to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Silicon and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Silicon in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan Modification
Agreement. The terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.

8.       CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.

         This Loan Modification Agreement is executed as of the date first
written above.

BORROWER:                                    SILICON:

ADVANCED POWER TECHNOLOGY, INC.              SILICON VALLEY BANK

By:                                          By:
   -----------------------------                ------------------------------
Name:                                        Name:
     ---------------------------                  ----------------------------
Title:                                       Title:
      --------------------------                   ---------------------------


                                       4
<PAGE>

The undersigned hereby consent to the modifications to the Indebtedness pursuant
to this Loan Modification Agreement, hereby ratify all the provisions of the
GUARANTY and confirms that all provisions of that document are in full force and
effect.

GUARANTOR:
Advanced Energy Industries, Inc.

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------


----------------------------------
Russell J. Crecraft

----------------------------------
Marla K. Crecraft

----------------------------------
John I. Hess

----------------------------------
Kimberly A. Hess

----------------------------------
Patrick P. Sireta

----------------------------------
Dah-Wen D. Tsang

----------------------------------
Yvonne S. Tsang

----------------------------------
Thomas A. Loder

----------------------------------
Patricia D. Loder

----------------------------------
Greg M. Haugen

----------------------------------
Bettina Haugen


                                       5
<PAGE>


[LOGO]
                               SILICON VALLEY BANK


                       PRO FORMA INVOICE FOR LOAN CHARGES



BORROWER:                  ADVANCE POWER TECHNOLOGY, INC.


LOAN OFFICER:              RON SHERMAN

DATE:                      APRIL 7, 2000

                           DOMESTIC LINE OF CREDIT            $9,480.00
                           EXIM LINE OF CREDIT                40,625.00
                           DOCUMENTATION FEE                     750.00

                           TOTAL FEE DUE                     $50,855.00
                           -------------                     ==========



PLEASE INDICATE THE METHOD OF PAYMENT:

         {   }   A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.

         {   }   DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.

         {   }   LOAN PROCEEDS





-------------------------------               ----------------------------
                         (DATE)                                     (DATE)


-------------------------------
SILICON VALLEY BANK      (DATE)
ACCOUNT OFFICER'S SIGNATURE


                                       6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>15
<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
July 27, 2000
</TEXT>
</DOCUMENT>
</SUBMISSION>
