ADVANCEDPOWER TECHNOLOGY, INC. INCENTIVE BONUS PLAN

Exhibit 10.32

ADVANCED POWER TECHNOLOGY, INC.

INCENTIVE BONUS PLAN

Plan Summary

Certain of Advanced Power Technology, Inc.’s (APT) management employees, including executive officers, are eligible for the Incentive Bonus Plan (Plan).

The bonus is based on APT’s consolidated pro forma profit before tax and before incentive bonus expense (PBT).  Pro forma profit before tax is the profit measure APT’s management uses to evaluate ongoing operations and excludes such items as non-cash acquisition related charges, restructuring activities, and deferred tax valuation charges.

Each Plan participant is eligible to receive a bonus up to a certain percentage of their annual salary (Participation Level).  The Participation Level for each eligible employee, except for the Executive Officers, is determined solely at APT management’s discretion. The Executive Officers’ Participation Level as well as the PBT target for 100% payout for all Plan participants is approved annually by APT’s Board of Directors. Payouts are calculated quarterly in direct proportion to the amount of PBT achieved in relation to the 100% PBT target set by the Board of Directors.  The following is an example of a quarterly payout for an eligible employee.

Payout Example

Executive Officer Participation Level

The Participation Level of APT’s executive officers are as follows: