Exhibit 10.40
SUPPLY CONTRACT
Advanced Power Technology intends to
secure silicon wafers for the manufacture of power switch devices.
Siltronic Corporation manufactures silicon wafers and intends to
supply this material. Set forth is the “Silicon Supply
Agreement” between Advanced Power Technology (APT) located in
Bend, OR and Siltronic Corporation (SCO) located in Portland,
OR.
1.0 Term of Agreement
1.1 Twelve (12) month agreement
commencing on January 1, 2006 and expiring on
December 31, 2006.
1.2 Renegotiating discussions will
commence one month before contract expiration; extension period to
be agreed upon.
1.3 Cause for early termination of
this agreement would be for non-performance by SCO and/or APT,
including but not limiting non-payment by APT.
2.0 Volume – [ * ].
3.0 Pricing
3.1 Pricing is set forth in
attachment #1.
3.2 Where possible, SCO will
“help” keep APT competitive in both price and
technology through cost reduction programs and technology
improvements.
4.0 Payment and Freight
Terms
4.1 Net [ * ] days from date of SCO
invoice. Currency in US dollars.
4.2 F.O.B. Siltronic Corporation,
Portland, OR, freight collect. Freight carrier as specified by
APT.
4.3 Freight costs for expedited
shipments, if requested by APT, will be the responsibility of APT.
SCO will incur all expedited freight costs for late shipments
caused by SCO. Substrate Buffer Stock.
[ * ] = CONFIDENTIAL TREATMENT
REQUESTED
5.0 Substrate Buffer
Stock
5.1 For AMT reactor
material:
5.1.1 SCO agrees to maintain a three
week inventory equivalent to APT’s consumption of one common
substrate. This substrate inventory will be maintained in
Portland.
5.1.2 SCO agrees to replenish the
Substrate Buffer Stock within four weeks.
5.2 For GIll reactor
material:
5.2.1 SCO will not maintain a buffer
stock. Material will be built and shipped on a quarterly basis.
Material ordered outside of the quarterly forecast will be built on
substrate as available. All GIll orders must be submitted at one
time to allow allotment of reactor resources.
6.0 Lead-time
6.1 For AMT reactor
material:
6.1.1 SCO will
commit to a three-week lead-time provided the forecast is not in-
creased more than [ * ] in the same lead-time period and that it is
a current product. Lead-time for non-regular material is 4-6 weeks
after specification has been accepted.
6.1.2 APT agrees to give SCO a five
week “rolling forecast”. The first and second week will
be firm, which means no cancellations, reductions, or push-outs are
allowed Clarification: The week the updated forecast is submitted
is considered week zero, and the schedules in this week are already
considered completed and in shipping or in transit. Open schedules
during the next two weeks, first and second week, are considered
firm.
6.1.3 APT agrees to give SCO an
additional eight week visibility beyond the five we
