EXHIBIT 10.14

EMPLOYMENT AGREEMENT

This Employment Agreement (this "AGREEMENT") is entered into as of June 1, 1998, but shall be effective only at the Effective Date as set forth below, by and between RF Power Products, Inc., a New Jersey corporation (the "COMPANY"), having its principal place of business at Voorhees, New Jersey, and Joseph Stach ("EXECUTIVE"), an individual resident of the State of New Jersey.

R E C I T A L S

A. Executive has heretofore been employed as an executive officer of Company.

B. Company, Advanced Energy Industries, Inc., a Delaware corporation ("PARENT"), and Warpspeed, Inc., a New Jersey corporation and wholly owned subsidiary of Parent ("MERGER SUB"), are parties to that certain Agreement and Plan of Reorganization, dated as of June 1, 1998 (the "REORGANIZATION AGREEMENT"), pursuant to which Merger Sub shall be merged with and into Company (the "MERGER"), and pursuant to which Company shall be a wholly owned subsidiary of Parent.

C. Company desires to retain the services of Executive and Executive desires to be employed by Company subsequent to the effective time of the Merger (the "EFFECTIVE DATE") as such date is defined in Section 1.3 of the Reorganization Agreement.

In consideration of the promises, the respective undertakings of Company and Executive set forth below, and as an inducement to Parent and Merger Sub to effect the Merger described above, Company and Executive agree as follows:

1. POSITION. During the term of this Agreement, Company will employ Executive, and Executive will serve as President and Chief Executive Officer of Company, and as a Senior Vice President of Parent. Executive's responsibilities and authority in such capacity, subject to Section 2 hereof, may be different than those pertaining to Executive's position on the date of this Agreement. Executive will report to the CEO of Parent ("PARENT CEO").

2. DUTIES. Executive will serve Company and its affiliated business entities in such capacities and with such duties and responsibilities consistent with Executive's position as the Board of Directors of Company (the "COMPANY BOARD") and Parent CEO may from time to time determine. Such duties and responsibilities shall include, without limitation, researching, design engineering, and exploring the application of radio frequency ("RF") products, and evaluating potential business acquisitions of Parent and its affiliated business entities. Executive shall devote his best efforts and the equivalent of full time employment to the performance of services customarily incident to Executive's office and to such other services as may be reasonably requested by Company Board and Parent CEO, PROVIDED HOWEVER, that nothing in this Agreement shall preclude Executive from devoting reasonable periods of his own time required for (i) participating in professional, educational, philanthropic, public interest, charitable, social or community activities, (ii) serving as a director or advisor of any corporation, trade association or

other entity that Executive is serving as of the Effective Date or that is not in direct competition with Company or (iii) managing his personal investments, provided that in any such case that such activities do not materially interfere with Executive's regular performance of his duties and responsibilities hereunder. Executive will perform his principal duties under this Agreement at the offices of Company in Voorhees, New Jersey, and neither Company nor Parent shall require Executive to relocate permanently from the State of New Jersey to perform his duties under this Agreement, unless Executive agrees to do so. Executive may be required to do a reasonable amount of traveling in connection with the performance of his duties hereunder. Executive hereby represents and warrants that he is free to enter into and fully perform this Agreement and the agreements referred to herein without breach of any agreement or contract to which he is a party or by which he is bound.

3. OBLIGATION NOT TO COMPETE. Executive hereby agrees that (a) while he is employed by Company and (b) for a period of one (1) year following the earlier of (i) the fifth (5th) anniversary of the Effective Date or (ii) the date Executive's employment is terminated as set forth in
Section 7 hereunder (the "RESTRICTED PERIOD"), Executive shall not engage in or provide services to any business that is competitive with any present business of Company or Parent known to Executive in any geographic area where Company or Parent engages in such business or maintains sales or service representatives or employees at the time Executive separates from Company. Each of the following activities shall, without limitation, be deemed to constitute engaging in business within the meaning of this Section 3: to engage in, work with, have an interest or concern in, advise, lend money to, guarantee the debts or obligations of, or permit one's name or any party thereof to be used in connection with, an enterprise or endeavor, either individually, in partnership, or in conjunction with any person or persons, firms, associations, companies, or corporations, whether as a principal, agent, shareholder, employee, officer, director, partner, consultant or in any other manner whatsoever; PROVIDED HOWEVER, that Executive shall retain the right to invest in or have an interest in securities traded on any national stock exchange or recognized over-the-counter market, if such interest does not exceed two percent (2%) of the voting control of such entity if an equity interest and in any case any traded debt. In addition, Executive may make passive investments in privately held entities that are determined by Company Board or Parent CEO not to be competitors of Company or Parent. Executive also agrees that he shall not in any manner attempt to induce or assist others to attempt to induce any customer or client of Company or Parent to terminate association with Company or Parent, nor do anything directly or indirectly to interfere with the relationship between Company or Parent and any such persons or concerns through the Restricted Period. Executive is privy to trade secrets and confidential proprietary information of Company, and hereby agrees that this clause is necessary to protect that information from willful or inevitable disclosure, among other reasons.

4. TERM OF AGREEMENT. This Agreement will commence on the Effective Date, and will terminate as of the fifth (5th) anniversary date of the Effective Date as set forth in Section 7 of this Agreement.

5. COMPENSATION AND BENEFITS.

5.1 BASE SALARY. Company agrees to pay Executive a base salary ("BASE SALARY") of $250,000 per year during the term of this Agreement. Executive's salary will be payable as earned, in accordance with Company's customary payroll practice. Executive's Base Salary shall be reviewed annually by the Parent Board of Directors (the "PARENT BOARD") for consideration of appropriate merit increases.

5.2 ADDITIONAL BENEFITS. Executive will be eligible to participate in Company's and Parent's employee benefit plans of general application, including without limitation Parent's 401(k) pension plan that shall match fifty percent (50%) of Executive's contributions to such plan up to six percent (6%) of Executive's Base Salary (subject to IRS limitations), and any plans covering pension and profit sharing, stock purchases, stock options, and those plans covering life, health, and dental insurance in accordance with the general rules established for individual participation in any such plan and applicable law. Executive will receive such other benefits, including fringes, perquisites and holidays and leave policies , as Company and Parent generally provide to its employees holding similar positions as that of Executive. Company shall provide Executive four (4) weeks paid vacation per year and an annual physical at company expense. Company will continue to reimburse Executive for New Jersey living expenses until he disposes of his former Florida home, in accordance with prior Company Practice.

5.3 STOCK OPTIONS. On the Effective Date, Executive shall be granted an option to purchase Two Hundred Twenty-Five Thousand (225,000) shares of Common Stock of Parent at the fair market value as determined by Compensation Committee of Parent on the date of grant. To the extent permitted by IRS regulations, such options shall be Incentive Stock Options. Twenty percent (20%) of such options shall become exercisable ("vest") on the Effective Date and the balance shall vest pro rata on a monthly basis at the end of each of the first forty-eight months following the Effective Date.

5.4 OFFICERS' COMPENSATION PLAN. Executive will also be eligible to participate in the executive officers' incentive compensation plan of Parent under guidelines determined by the Compensation Committee of Parent, with a target bonus of $200,000 if applicable bonus targets are achieved. Such annual bonuses shall be consistent with the Company's variable compensation plans for its executives. Executive shall also participate in any long-term incentive compensation plan of Parent on terms equivalent to similarly situated executives.

5.5 AUTOMOBILE. Company shall provide Executive with a Company owned or leased automobile (which shall be a Mercedes SL 600 or an equivalent model).

5.6 PROMISSORY NOTE. As of the Effective Date, Executive shall deliver to Parent a promissory note (the "NOTE"), substantially in the form of EXHIBIT A hereto, which will state an original principal amount of approximately One Hundred Seventy-Five Thousand Dollars ($175,000), and which shall be payable to Parent in accordance with the terms set forth in the Note. Upon delivery of such Note, Parent shall pay the proceeds to Executive by wire transfer to any bank account designated by Executive at a bank located in the United States. The Note shall

bear interest at the rate of six percent (6%) per annum. The repayment terms set forth in the Note notwithstanding, Executive shall pay the following amounts toward repayment of the Note until such time that the Note is paid in full: (a) fifteen percent (15%) of Executive's Base Salary, payable at such times such Base Salary is paid, in accordance with Company's customary payroll practice, (b) sixty percent (60%) of annual bonuses paid to Executive by Company or Parent pursuant to Section 5.4, and (c) sixty percent (60%) of all proceeds from the sale of Common Stock of Company received in connection with the Merger and beneficially held by Executive. The Note shall be due immediately in full upon termination of Executive pursuant to Sections 7.1(a) or 7.1(c) hereunder.

5.7 LIFE INSURANCE. Company shall maintain a term life insurance policy with a life insurance company rated "A" by A.M. Best Company covering Executive, with a death benefit payable to such beneficiary as Executive properly may designate, in the minimum amount of $1,000,000. Such amount shall include any amount of term life insurance provided to Executive or his beneficiary under employee benefit plans of general application of Company and Parent.

5.8 EXPENSES. Company will reimburse Executive for all reasonable and necessary expenses incurred by Executive in connection with Company's business including, without limitation, professional society dues of Executive and reasonable relocation expenses incurred by Executive in connection with his relocation from Florida to New Jersey.

6. PROPRIETARY RIGHTS. Executive hereby agrees to execute an Executive Invention, Assignment and Confidentiality Agreement with Parent and Company in substantially the form attached hereto as EXHIBIT B.

7. TERMINATION.

7.1 EVENTS OF TERMINATION. Executive's employment with Company shall terminate upon any one of the following:

(a) Company's determination made in good faith that it is terminating Executive for "cause" as defined under Section 7.2 below ("TERMINATION FOR CAUSE");

(b) the effective date of a written notice sent to Executive stating that Company is terminating his employment, without cause, which notice can be given by Company at any time after the Effective Date at Company's sole discretion, for any reason or for no reason ("TERMINATION WITHOUT CAUSE");

(c) the effective date of a written notice sent to Company from Executive stating that Executive is electing to terminate his employment with Company ("VOLUNTARY TERMINATION"); or

(d) termination of employment by reasons of Executive's disability (determined in accordance with the requirements for eligibility of benefits under Company's long-term disability insurance plan).

7.2 "CAUSE" DEFINED. For purposes of this Agreement, "cause" for Executive's termination will exist at any time after the happening of one or more of the following events: (i) the conviction of Executive of a felony under the laws of the United States or any state thereof; (ii) the willful misconduct of Executive, or the willful or continued failure by Executive to substantially perform his duties hereunder, in either case which has a material adverse effect on Company; or (iii) the fraud or material dishonesty of Executive in connection with his performance of duties to Company. However, in no event shall Executive's employment be considered to have been terminated for "Cause" unless and until Executive receives a copy of a resolution adopted by the Parent Board finding that, in the good faith opinion of the Parent Board, Executive is guilty of acts or omissions constituting Cause, which resolution has been duly adopted by an affirmative vote of a majority of the Parent Board. Any such vote shall be taken at a meeting of the Parent Board called and held for such purpose, after reasonable written notice is provided to Executive setting forth in reasonable detail the facts and circumstances claimed to provide a basis of termination for Cause and Executive is given an opportunity, together with counsel, to be heard before the Parent Board. Executive shall have the opportunity to cure any such acts or omissions within 30 days of Executive's receipt of such resolution. The foregoing shall not limit the right of Company to suspend Executive from his day-to-day responsibilities with Company pending the completion of such notice and cure procedures.

8. EFFECT OF TERMINATION.

8.1 TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION. In the event of any termination of this Agreement pursuant to Sections 7.1(a) or 7.1(c), Company's obligations under this Agreement, including without limitation payment of Base Salary, shall cease and none of Executive, his representatives, administrators or conservators nor his estate shall be entitled thereafter to (i) any further payments of Base Salary, except for unpaid Base Salary attributable to days worked prior to the effective date of the termination, (ii) any benefits or reimbursements provided by Company to Executive during the term of this Agreement, or (iii) any severance compensation, except in any such case as required by applicable law or an employee benefit plan or stock option or incentive compensation plan in which Executive participates prior to termination.

8.2 TERMINATION WITHOUT CAUSE. In the event of any termination of this Agreement pursuant to Section 7.1(b),

(a) through the fifth (5th) anniversary of the Effective Date, Company shall continue to pay Executive his Base Salary under Section 5.1 above, less applicable withholding taxes, payable on Company's normal payroll dates.

(b) Executive's rights under Company's benefit plans of general application shall be determined under the provisions of each such plan and any applicable provisions of law.

(c) Company shall provide to Executive all payments accrued but unpaid under any incentive compensation plan in which Executive participates for any completed year or performance period (as applicable), as well as a pro rata payment for any partial period through the date of termination, based on the target bonus amount measured at the end of the year (not including personal subjective bonus criteria).

8.3 TERMINATION FOR DISABILITY. In the event of any termination of this Agreement pursuant to Section 7.1(d),

(a) through the fifth (5th) anniversary of the Effective Date, Company shall continue to pay or cause to be paid to Executive sixty percent (60%) of his Base Salary under Section 5.1 above, less applicable withholding taxes, payable on Company's normal payroll dates.

(b) Executive's rights under Company's benefit plans of general application shall be determined under the provisions of each such plan and any applicable provisions of law.

(c) Company shall provide to Executive all payments accrued but unpaid under any incentive compensation plan in which Executive participates for any completed year or performance period (as applicable), as well as a pro rata payment for any partial period through the date of termination, based on the target bonus amount measured at the end of the year (not including personal subjective bonus criteria).

8.4 RESIGNATIONS. Upon termination of his employment, Executive shall be deemed to have resigned from all offices and directorships then held with Company and Parent and its affiliated business entities, and will execute a letter of resignation if requested.

9. NON-SOLICITATION. So long as Executive is an employee of Company or Parent and for the Restricted Period, Executive shall not, directly or indirectly, either for himself or for any other person or entity, directly or indirectly, solicit, induce or attempt to induce any employee of Company to terminate his or her employment with Company or Parent.

10. MISCELLANEOUS.

10.1 ARBITRATION. Executive and Company shall submit to mandatory binding arbitration in any controversy or claim arising out of, or relating to, Executive's employment, this Agreement or any breach hereof; PROVIDED HOWEVER, that Company retains its right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining equitable relief with respect to Sections 3 or 9 hereof from a court having jurisdiction over the parties. This provision includes, but is not limited to, statutory claims of employment discrimination. Such

arbitration shall be conducted in the State of New Jersey in accordance with the commercial arbitration rules of the American Arbitration Association in effect at that time, and judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Executive's obligations under this Section 10.1 shall survive termination of his employment and the expiration of this Agreement.

10.2 SEVERABILITY. If any provision of this Agreement shall be found by any arbitrator or court of competent jurisdiction to be invalid or unenforceable, then the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable and to the extent that to do so would not deprive one of the parties of the substantial benefit of its bargain. Such provision shall, to the extent allowable by law and the preceding sentence, be modified by such arbitrator or court so that it becomes enforceable and, as modified, shall be enforced as any other provision hereof, all the other provisions continuing in full force and effect.

10.3 REMEDIES. Company and Executive acknowledge that the service to be provided by Executive is of a special, unique, unusual, extraordinary and intellectual character, which gives it peculiar value the loss of which cannot be reasonably or adequately compensated in damages in an action at law. Accordingly, Executive hereby consents and agrees that for any breach or violation by Executive of Sections 3 and 9 of this Agreement, a restraining order and/or injunction may be issued against Executive, in addition to any other rights and remedies Company may have, at law or equity, including without limitation the recovery of money damages.

10.4 NO WAIVER. The failure by either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way affect the right to require such performance or compliance at any time thereafter. The waiver by either party of a breach of any provision hereof shall not be taken or held to be a waiver of any preceding or succeeding breach of such provision or as a waiver of the provision itself. No waiver of any kind shall be effective or binding, unless it is in writing and is signed by the party against whom such waiver is sought to be enforced.

10.5 ASSIGNMENT. This Agreement and all rights hereunder are personal to Executive and may not be transferred or assigned by Executive at any time. Company may assign its rights, together with its obligations hereunder, to any successor, in connection with any sale, transfer or other disposition of all or substantially all of its business and assets; PROVIDED HOWEVER, that any such assignee assumes Company's obligations hereunder.

10.6 WITHHOLDING. All sums payable to Executive hereunder shall be reduced by all federal, state, local and other withholding and similar taxes and payments required by applicable law.

10.7 INDEMNIFICATION. Company agrees to provide to Executive all rights of indemnification and all director's and officer's insurance coverage required under Section 5.16 of the Reorganization Agreement.

10.8 GUARANTEE. By execution of this Agreement, Parent hereby agrees to guarantee the performance by Company of all of its obligations under this Agreement and to be jointly and severally liable to Executive for all financial liabilities of Company hereunder.

10.9 NO MITIGATION OR OFFSET. Executive shall not be required to seek other employment or to reduce any severance benefit payable to him under Section 8.2 hereof, and no such severance benefit shall be reduced on account of any compensation received by Executive from other employment. Company's obligations to Executive under this Agreement, including, without limitation, any obligation to provide severance benefits, shall not be subject to set-off or counterclaim in respect of any debts or liabilities of Executive to Company except for payments on the Note as set forth in
Section 5.6.

10.10 ENTIRE AGREEMENT. This Agreement constitutes the entire and only agreement between the parties relating to employment of Executive with Company, and this Agreement supersedes and cancels any and all previous contracts, arrangements or understandings with respect thereto, including, without limitation, that certain employment agreement between Executive and Company, dated as of December 1, 1993.

10.11 AMENDMENT. This Agreement may be amended, modified, superseded, canceled, renewed or extended only by an agreement in writing executed by the parties hereto.

10.12 NOTICES. All notices and other communications required or permitted under this Agreement shall be in writing and hand delivered, sent by Telecopier, sent by certified first class mail, postage pre-paid, or sent by nationally recognized express courier service. Such notices and other communications shall be effective upon receipt if hand delivered or sent by telecopier, five (5) days after mailing if sent by mail, and one (1) day after dispatch if sent by express courier, to the following addresses, or such other addresses as any party shall notify the other parties:

If to Company:

       Facsimile:      (970) 407-5315
       Attention:      Douglas S. Schatz

With copies to:

If to Executive:

       Facsimile:      (609) 627-1103
       Attention:      Joseph Stach

With copies to:

Dewey Ballantine LLP
1301 Avenue of the Americas New York, NY 10019-6092 Attention: Paul J. Wessel, Esq.

10.13 BINDING NATURE. This Agreement shall be binding upon, and inure to the benefit of, the successors and personal representatives of the respective parties hereto.

10.14 HEADINGS. The headings contained in this Agreement are for reference purposes only and shall in no way affect the meaning or interpretation of this Agreement. In this Agreement, the singular includes the plural, the plural included the singular, the masculine gender includes both male and female referents, and the word "or" is used in the inclusive sense.

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

10.16 GOVERNING LAW. This Agreement and the rights and obligations of the parties hereto shall be construed in accordance with the laws of the State of New Jersey, without giving effect to the principles of conflict of laws (except as otherwise specified herein).

IN WITNESS WHEREOF, Company and Executive have executed this Employment Agreement as of the date first above written.

EXECUTIVE:                             Joseph Stach


                                       /S/ JOSEPH STACH
                                       -------------------------------
COMPANY:                               RF Power Products, Inc.


                                       By:  /S/ PAUL S. ZAUN
                                          ----------------------------
                                       Name: PAUL S. ZAUN
                                            --------------------------
                                       Title: TREASURER AND CONTROLLER
                                             -------------------------

PARENT (as Guarantor):                 Advanced Energy Industries, Inc.


                                       By: /S/ DOUGLAS S. SCHATZ
                                          ----------------------------
                                       Name: DOUGLAS S. SCHATZ
                                            --------------------------
                                       Title: PRESIDENT, CEO & CHAIRMAN
                                                OF THE BOARD
                                             -------------------------

EXHIBIT A

UNSECURED PROMISSORY NOTE

$175,000.00 Voorhees, New Jersey October 8, 1998

For value received, the undersigned, Joseph Stach, ("OBLIGOR"), promises to pay to the order of Advanced Energy Industries, Inc., a Delaware corporation (collectively with its successors and assigns, "HOLDER"), in lawful money of the United States and in immediately available funds, the principal sum of ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($175,000.00) and interest on the outstanding principal amount in accordance with the terms of this Note, until paid in full.

1. ISSUANCE. This Note is issued pursuant to the terms of that certain Employment Agreement (the "EMPLOYMENT AGREEMENT") by and among Obligor and RF Power Products, Inc., a New Jersey corporation (the "COMPANY"), dated as of the date hereof, pursuant to which Obligor has agreed to issue this Note as consideration for the delivery by Holder of One Hundred Seventy-Five Thousand Dollars ($175,000.00). Capitalized terms used but not otherwise defined in this Note have the meanings given them in the Employment Agreement.

2. PAYMENT. Payment shall be made in the following manner:

(a) PRINCIPAL PAYMENT AMOUNTS. Obligor shall pay to Holder the following amounts until such time that the unpaid outstanding principal amount under this Note is paid in full:

(i) Fifteen percent (15%) of Obligor's Base Salary at such times Base Salary is paid (each such date, a "SALARY DEDUCTION DATE"), in accordance with Company's customary payroll practice;

(ii) Sixty percent (60%) of annual bonuses paid to Obligor by Company or Holder pursuant to Section 5.4 of the Employment Agreement;

(iii) Sixty percent (60%) of all proceeds from the sale of Common Stock of Holder received in connection with the Merger and beneficially held by Obligor, within three (3) business days after such proceeds are payable to Obligor or his designated representative.

(b) INTEREST. Obligor shall pay to Holder interest on the outstanding principal amount under this Note at a fixed interest rate equal to six percent (6%) (computed on the basis of a 360-day year). Obligor shall pay interest to Holder on each Salary Deduction Date.

3. ACCELERATION OF PAYMENT. The entire sum of unpaid principal amount under this Note and all interest accrued thereon shall become due and payable upon termination of Obligor's employment with the Company pursuant to Sections 7.1(a) or 7.1(c) of the Employment Agreement.

4. METHOD OF PAYMENT. The payment hereunder shall be made by payment in immediately available funds to Holder at 1625 Sharp Point Drive, Fort Collins, CO 80525, or by wire transfer to any bank account designated by Holder at a bank located in the United States, or at such other place as Holder may specify to Obligor in writing.

5. PREPAYMENT. Notwithstanding the foregoing, any amounts due hereunder may be prepaid in whole or in part at any time by Obligor without penalty or premium.

6. WAIVER. Obligor, to the extent allowed by law, waives any applicable statute of limitations, presentment, demand for payment, protest and notice of dishonor in connection with the delivery, acceptance, performance, default or enforcement of this Note.

7. GOVERNING LAW. This Note shall be governed by, and construed, interpreted and enforced in accordance with, the laws of the State of New Jersey, excluding the body of law relating to conflicts of law.

8. EXPENSES; ATTORNEYS' FEES. In the event action is instituted to enforce any of the provisions contained in this Note, the party prevailing in such action shall be entitled to recover from the other party thereto reasonable attorneys' fees and costs of such suit as part of the judgment.

IN WITNESS WHEREOF, Obligor has executed this Unsecured Promissory Note as of the day and year first above written.

OBLIGOR:                               Joseph Stach


                                       /S/ JOSEPH STACH
                                       --------------------------

EXHIBIT B

CONFIDENTIALITY AGREEMENT

THIS AGREEMENT is entered into as of the 8th day of October, 1998, between Advanced Energy Industries, Inc. and its subsidiaries, divisions, and other related entities (the "Company") and Joseph Stach (the "Employee").

WHEREAS, the Employee is considered a valuable member of the Company and as such has accepted either initial or continued employment with the Company through the parent company or any of its related entities, or has accepted an increase in compensation or other beneficial charge of position by the Company; and

WHEREAS, out of respect for the Employee's integrity and abilities the Company is placing trust in the Employee by placing him/her in a position where the Employee may have access to or may be exposed to Confidential Information; and

WHEREAS, the Company's present and future competitive position in the international marketplace is largely dependent upon the confidentiality of such information;

NOW, THEREFORE, the parties agree as follows:

1. CONFIDENTIAL INFORMATION: As used in this Agreement, Confidential Information shall include all information considered by the Company to provide it a competitive advantage to the extent it cannot be clearly established that such information either was known by the Employee prior to the Employee's employment by the Company or is publicly available as assembled information from one library source. As an example, but without limitations, Confidential Information shall include the information set forth in Exhibit A.

2. NONDISCLOSURE OF CONFIDENTIAL INFORMATION: The Employee agrees that he/she shall take all reasonable steps to maintain and hold confidential all Confidential Information only for the benefit of the Company. The Employee understands that all documents and materials which contain Confidential Information are the property of the Company; the Employee agrees to return all such items and any copies thereof upon any termination of employment with the Company or upon the request of the Company.

3. ENFORCEABILITY: The Employee understands that the Company's competitive position is highly dependent on its Confidential Information. Accordingly, the Employee recognizes that any disclosure of Confidential Information will cause immediate, irreparable harm to the Company. Any breach or threatened breach of this Agreement, therefore, may be presented without notice to either a court or arbitration panel for enforcement by both injunction and damages. All obligations of this Agreement shall survive any termination of employment for the Company whether by the Employee or the Company and shall remain in effect for the longer of a four year period following any termination of employment with the Company and so long thereafter as each particular item of Confidential Information remains not rightfully and publicly available as assembled information from one library source. In the event litigation or arbitration is instituted seeking the enforcement of this Agreement, the prevailing party shall be entitled to recover reasonable attorney fees and costs incurred in such litigation or arbitration; however, such attorney fees and costs shall not be assessed against the Employee in the event that the Employee consents, prior to a preliminary hearing, to a permanent injunction as requested by the Company.

4. GENERAL PROVISIONS. This Agreement shall be construed and enforced in accordance with the laws and jurisdiction of the State of Colorado in the United States of America and all parties submit to jurisdiction and venue in Larimer County, Colorado except to the extent such enforcement must be and is required to be enforced by the law of another state, country, or other such forum, in which case, and only to the extent required, such law and/or jurisdiction shall control. Recognizing that the Employee is submitting to resolution of any dispute in the parent Company's jurisdiction, venue, and law, the Company agrees that should it lose any such dispute, the court or arbitrator shall have discretion to award the reasonable out of pocket travel costs of the Employee. In the event any provision of this Agreement is found to be unenforceable, void, or invalid or to be unreasonable in scope, such provision shall be modified to the extent necessary to make it enforceable, and as so modified, this Agreement shall remain in full force and effect. Failure to exercise any rights contained in this Agreement shall not be construed as a waiver of such rights. All terms of this Agreement shall be independent and unconditional so that the performance of any one term shall not be subject to any setoff or counterclaim. This Agreement shall be freely assignable by the Company only. In the event of any conflict between the terms of this Agreement and any statement of employees policies or other document of the Company, the terms of this Agreement shall be deemed superior and shall supersede such conflicting terms. Other than that injunctive relief by the Company which must be pursued in a court, the parties agree to submit any dispute arising hereunder or in any way arising from the employment relationship to binding arbitration pursuant to the rules of the American Arbitration Association or such other rules as may be decided by a majority of the arbitrators, and each party hereby submits to such arbitration in Fort Collins, Colorado, unless oterwise agreed in writing.

Entered into as of the day referenced above.

                                       Advanced Energy Industries, Inc.

/S/ JOSEPH STACH                       By: /S/ RICHARD P. BECK
--------------------------                ---------------------------
Employee Signature

EXHIBIT A

As used in the associated document, "Confidential Information" shall include by example, but not as a limitation, the following information:

1. All development or design information relating to existing products of the Company or relating to products under development or planned by the Company or on its behalf, such as the information contained in:

a. schematics
b. circuitry descriptions and drawings
c. parts designed by the Plaintiff or on its behalf
d. descriptions of product problems or limitations
e. technical and scientific information f information relating to key research and development areas
g. consulting source's documents, notes and correspondence
h. descriptions of development efforts, whether successful or not
i. flow charts
j. source code listings

2. All manufacturing information of existing products of and products under development or planned by the Company or on its behalf such as:

a. materials sources
b. vendors
c. costs
d. manufacturing methods
e. purchasing sources

3. All business, marketing and financial information of the Company including but not limited to:

a. research and development strategies
b. employee responsibilities other than generic titles
c. development schedules
d. business forecasts
e. client and customer lists f past, present and future financial information about the Company
g. consultant identities and capabilities
h. materials and component supplies
i. Company opportunity lists or items

4. All other information which is or may be subject to trade secret, copyright, mask, or other proprietary protection whether or not registration has been sought for such.

5. All information relative to patents either issued, pending, or contemplated by the Company.

ADVANCED ENERGY INDUSTRIES, INC.
1995 STOCK OPTION PLAN

ADOPTED JUNE 6, 1993
AS AMENDED AND RESTATED SEPTEMBER 20, 1995
AND AS FURTHER AMENDED FEBRUARY 10, 1998 AND FEBRUARY 9, 1999

1. PURPOSES.

(a) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company, and its Affiliates, may be given an opportunity to purchase stock of the Company.

(b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Options issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either Incentive Stock Options or Nonstatutory Stock Options. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(c) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan.

(e) "COMPANY" means Advanced Energy Industries, Inc., a Delaware corporation.

(f) "CONSULTANT" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors.

(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the employment or relationship as a Director or Consultant is not interrupted or terminated. The Board, in its sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors.

(h) "COVERED EMPLOYEE" means the Chief Executive Officer and the four
(4) other highest compensated officers of the Company.

(i) "DIRECTOR" means a member of the Board.

(j) "DISINTERESTED PERSON" means a Director who either (i) was not during the one year prior to service as an administrator of the Plan granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its affiliates entitling the participants therein to acquire equity securities of the Company or any of its affiliates except as permitted by Rule 16b-3(c)(2)(i); or (ii) is otherwise considered to be a "disinterested person" in accordance with Rule 16b-3(c)(2)(i), or any other applicable rules, regulations or interpretations of the Securities and Exchange Commission.

(k) "EMPLOYEE" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.

(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(m) "FAIR MARKET VALUE" means the value of the common stock as determined in good faith by the Board and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations.

(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option.

(p) "OFFICER" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(q) "OPTION" means a stock option granted pursuant to the Plan.

(r) "OPTION AGREEMENT" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(s) "OPTIONEE" means an Employee, Director or Consultant who holds an outstanding Option.

(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (as defined in the Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an affiliated corporation receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an affiliated corporation at any time, and is not currently receiving compensation for personal services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

(u) "PLAN" means this 1995 Stock Option Plan.

(v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

3. ADMINISTRATION.

(a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(1) To determine from time to time which of the persons eligible under the Plan shall be granted Options; when and how each Option shall be granted; whether an Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the provisions of each Option granted (which need not be identical), including the time or times such Option may be exercised in whole or in part; and the number of shares for which an Option shall be granted to each such person.

(2) To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(3) To amend the Plan as provided in Section 11.

(c) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee shall be Disinterested Persons and may also be, in the discretion of the Board, Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Additionally, prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act, and notwithstanding anything to the contrary contained

herein, the Board may delegate administration of the Plan to any person or persons and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. Notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Options to eligible persons who (1) are not then subject to Section 16 of the Exchange Act and/or
(2) are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Option, or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code.

(d) Any requirement that an administrator of the Plan be a Disinterested Person shall not apply (i) prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act, or (ii) if the Board or the Committee expressly declares that such requirement shall not apply. Any Disinterested Person shall otherwise comply with the requirements of Rule 16b-3.

4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to Options shall not exceed in the aggregate five million six hundred twenty-five thousand (5,625,000) shares of the Company's common stock. If any Option shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not purchased under such Option shall revert to and again become available for issuance under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY.

(a) Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options may be granted only to Employees, Directors or Consultants.

(b) A Director shall in no event be eligible for the benefits of the Plan unless at the time discretion is exercised in the selection of the Director as a person to whom Options may be granted, or in the determination of the number of shares which may be covered by Options granted to the Director: (i) the Board has delegated its discretionary authority over the Plan to a Committee which consists solely of Disinterested Persons; or (ii) the Plan otherwise complies with the requirements of Rule 16b-3. The Board shall otherwise comply with the requirements of Rule 16b-3. This subsection 5(b) shall not apply (i) prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act, or (ii) if the Board or Committee expressly declares that it shall not apply.

(c) No person shall be eligible for the grant of an Option if, at the time of grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

(d) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, no person shall be eligible to be granted Options covering more than three hundred thousand (300,000) shares of the Company's common stock in any calendar year.

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

(b) PRICE. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, either at the time of the grant or exercise of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board.

In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

(d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by such person. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order satisfying the requirements of Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person or any transferee pursuant to a QDRO. The person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to

the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option.

(e) VESTING. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary but in each case will provide for vesting of at least twenty percent (20%) per year of the total number of shares subject to the Option. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised.

(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act

of 1933, as amended (the "Securities Act"), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock.

(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (or such longer or shorter period, which in no event shall be less than thirty (30) days, specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period, which in no event shall be less than six (6) months, specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination,

the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(i) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or within a period specified in the Option after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period, which in no event shall be less than six (6) months, specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(j) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option. Any unvested shares so purchased shall be subject to a repurchase right in favor of the Company, with the repurchase price to be equal to the original purchase price of the stock, or to any other restriction the Board determines to be appropriate; PROVIDED, HOWEVER, that (i) the right to repurchase at the original purchase price shall lapse at a minimum rate of twenty percent (20%) per year over five (5) years from the date the Option was granted, and (ii) such right shall be exercisable only within (A) the ninety (90) day period following the termination of employment or

the relationship as a Director or Consultant, or (B) such longer period as may be agreed to by the Company and the Optionee (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code (regarding "qualified small business stock")), and (iii) such right shall be exercisable only for cash or cancellation of purchase money indebtedness for the shares. Should the right of repurchase be assigned by the Company, the assignee shall pay the Company cash equal to the difference between the original purchase price and the stock's Fair Market Value if the original purchase price is less than the stock's Fair Market Value.

(k) WITHHOLDING. To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any federal, state or local tax withholding obligation relating to the exercise of such Option by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise of the Option; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the Options, the Company shall keep available at all times the number of shares of stock required to satisfy such Options.

(b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Options; PROVIDED, HOWEVER, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Option or any stock issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Options unless and until such authority is obtained.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Options shall constitute general funds of the Company.

9. MISCELLANEOUS.

(a) Neither an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Option unless and until such person has satisfied all requirements for exercise of the Option pursuant to its terms.

(b) Throughout the term of any Option, the Company shall deliver to the holder of such Option, not later than one hundred twenty (120) days after the close of each of the Company's fiscal years during the Option term, a balance sheet and an income statement. This section shall not apply when issuance is limited to key employees whose duties in connection with the Company assure them access to equivalent information.

(c) Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Employee, Director, Consultant or Optionee any right to continue in the employ of the Company or any Affiliate or to continue acting as a Director or Consultant or shall affect the right of the Company or any Affiliate to terminate the employment or relationship as a Director or Consultant of any Employee, Director, Consultant or Optionee with or without cause.

(d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options granted after 1986 are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

(e) (1) The Board or the Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding Options under the Plan and/or (ii) with the

consent of the affected holders of Options, the cancellation of any outstanding Options and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock, but having an exercise price per share not less than eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option or, in the case of a ten percent (10%) stockholder (as defined in subsection 5(c), not less than one hundred and ten percent (110%) of the Fair Market Value) per share of Common Stock on the new grant date.

(2) Shares subject to an Option canceled under this subsection 9(e) shall continue to be counted against the maximum award of Options permitted to be granted pursuant to subsection 5(d) of the Plan. The repricing of an Option under this subsection 9(e), resulting in a reduction of the exercise price, shall be deemed to be a cancellation of the original Option and the grant of a substitute Option; in the event of such repricing, both the original and the substituted Options shall be counted against the maximum awards of Options permitted to be granted pursuant to subsection 5(d) of the Plan. The provisions of this subsection 9(e) shall be applicable only to the extent required by
Section 162(m) of the Code.

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject to any Option (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise), the Plan will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan pursuant to subsection 4(a) and the maximum number of shares subject to award to any person during any calendar year pursuant to subsection 5(d), and the outstanding Options will be appropriately adjusted in the class(es) and number of shares and price per share of stock subject to such outstanding Options.

(b) In the event of: (1) a merger or consolidation in which the Company is not the surviving corporation or (2) a reverse merger in which the Company is the surviving corporation

but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise then to the extent permitted by applicable law: (i) any surviving corporation shall assume any Options outstanding under the Plan or shall substitute similar Options for those outstanding under the Plan, or (ii) such Options shall continue in full force and effect. In the event any surviving corporation refuses to assume or continue such Options, or to substitute similar options for those outstanding under the Plan, then such Options shall be terminated if not exercised prior to such event. In the event of a dissolution or liquidation of the Company, any Options outstanding under the Plan shall terminate if not exercised prior to such event.

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will:

(1) Increase the number of shares reserved for Options under the Plan;

(2) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code); or

(3) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code or to comply with the requirements of Rule 16b-3.

(b) The Board may in its sole discretion submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations promulgated thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide Optionees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

(d) Rights and obligations under any Option granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Option was granted and (ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on June 5, 2003 which shall be within ten (10) years from the date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier. No Options may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the Option was granted.

13. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Options granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board, and, if required, an appropriate permit has been issued by the Commissioner of Corporations of the State of California.

ADVANCED ENERGY INDUSTRIES, INC.
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON SEPTEMBER 20, 1995,
AS AMENDED ON FEBRUARY 9, 1999

1. PURPOSE.

(a) The purpose of the 1995 Non-Employee Directors' Stock Option Plan, as amended (the "Plan") is to provide a means by which each director of Advanced Energy Industries, Inc. (the "Company") who is not otherwise an employee of or consultant to the Company or of any Affiliate of the Company (a "Non-Employee Director") will be given an opportunity to purchase stock of the Company.

(b) The word "Affiliate" as used in the Plan means any parent corporation or subsidiary corporation of the Company as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended from time to time (the "Code").

(c) The Company, by means of the Plan, seeks to retain the services of persons now serving as Non-Employee Directors of the Company, to secure and retain the services of persons capable of serving in such capacity, and to provide incentives for such persons to exert maximum efforts for the success of the Company.

2. ADMINISTRATION.

(a) The Plan shall be administered by the Board of Directors of the Company (the "Board") unless and until the Board delegates administration to a committee, as provided in subparagraph 2(b).

(b) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members of the Board (the "Committee"). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, subject, however, to such resolutions, not

inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to options granted under the Plan shall not exceed in the aggregate One Hundred Thousand (100,000) shares of the Company's common stock. If any option granted under the Plan shall for any reason expire or otherwise terminate without having been exercised in full, the stock not purchased under such option shall again become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

4. ELIGIBILITY.

Options shall be granted only to Non-Employee Directors of the Company.

5. NON-DISCRETIONARY GRANTS.

(a) Each person who, on September 20, 1995, is a Non-Employee Director automatically shall be granted on that date an option to purchase Seven Thousand Five Hundred (7,500) shares of common stock of the Company (an "Initial Grant") on the terms and conditions set forth herein.

(b) Each person who, after September 20, 1995, is elected for the first time to be a Non-Employee Director automatically shall, upon the date of his or her initial election to be a Non-Employee Director by the Board or stockholders of the Company, receive an Initial Grant on the terms and conditions set forth herein.

(c) Each Non-Employee Director automatically shall be granted, on the first and each subsequent anniversary of his or her Initial Grant, an option to purchase Two Thousand Five Hundred (2,500) shares of common stock of the Company (an "Annual Grant") on the terms and conditions set forth herein.

6. OPTION PROVISIONS.

Each option shall be subject to the following terms and conditions:

(a) The term of each option commences on the date it is granted and, unless sooner terminated as set forth herein, expires on the date ("Expiration Date") ten (10) years from the date of grant. If the optionee's service as director or employee of or consultant to the Company or any Affiliate of the Company terminates for any reason or for no reason, the option shall terminate on the earlier of the Expiration Date or the date six (6) months following the date of termination of service. In any and all circumstances, an option may be exercised following termination of the optionee's service as a director or employee of or consultant to the Company or any Affiliate of the Company only as to that number of shares as to which it was exercisable on the date of termination of such service under the provisions of subparagraph 6(e).

(b) The exercise price of each option shall be one hundred percent (100%) of the fair market value of the stock subject to such option on the date such option is granted.

(c) Payment of the exercise price of each option is due in full in cash upon any exercise when the number of shares being purchased upon such exercise is less than 1,000 shares; but when the number of shares being purchased upon an exercise is 1,000 or more shares, the optionee may elect to make payment of the exercise price under one of the following alternatives:

(i) Payment of the exercise price per share in cash at the time of exercise; or

(ii) Provided that at the time of the exercise the Company's common stock is publicly traded and quoted regularly in the Wall Street Journal, payment by delivery of shares of common stock of the Company already owned by the optionee, held for the period required to avoid a charge to the Company's reported earnings, and owned free and clear of any liens, claims, encumbrances or security interest, which common stock shall be valued at its fair market value on the date preceding the date of exercise; or

(iii) Payment by a combination of the methods of payment specified in subparagraph 6(c)(i) and 6(c)(ii) above.

Notwithstanding the foregoing, this option may be exercised pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt of cash (or check) by the Company prior to the issuance of shares of the Company's common stock.

(d) An option shall not be transferable except by will or by the laws of descent and distribution, or pursuant to a domestic relations order satisfying the requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "DRO"), and shall be exercisable during the lifetime of the person to whom the option is granted only by such person or by his or her guardian or legal representative or transferee pursuant to a DRO. The person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option.

(e) Upon an Initial Grant, one-third of the Option (2,500 shares) shall be fully vested and exercisable. On each of the second and third anniversaries of an Initial Grant, an additional one-third of the Option (2,500 shares) shall become fully vested and exercisable, provided that the optionee has, during the entire period prior to such vesting date, continuously served as a director or employee of or consultant to the Company or any Affiliate of the Company. The Option representing an Annual Grant shall become fully vested and exercisable on the third anniversary of the Annual Grant, provided that the optionee has, during the entire period prior to such vesting date, continuously served as a director or employee of or consultant to the Company or any Affiliate of the Company.

(f) The Company may require any optionee, or any person to whom an option is transferred under subparagraph 6(d), as a condition of exercising any such option: (i) to give written assurances satisfactory to the Company as to the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the option for such person's own account and not with any present intention of selling or otherwise distributing the stock. These

requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the option has been registered under a then-currently-effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (ii), as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then-applicable securities laws.

(g) Notwithstanding anything to the contrary contained herein, an option may not be exercised unless the shares issuable upon exercise of such option are then registered under the Securities Act or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the options granted under the Plan, the Company shall keep available at all times the number of shares of stock required to satisfy such options.

(b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the options granted under the Plan; PROVIDED, HOWEVER, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any option granted under the Plan, or any stock issued or issuable pursuant to any such option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such options.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to options granted under the Plan shall constitute general funds of the Company.

9. MISCELLANEOUS.

(a) Neither an optionee nor any person to whom an option is transferred under subparagraph 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such option unless and until such person has satisfied all requirements for exercise of the option pursuant to its terms.

(b) Throughout the term of any option granted pursuant to the Plan, the Company shall make available to the holder of such option, not later than one hundred twenty (120) days after the close of each of the Company's fiscal years during the option term, upon request, such financial and other information regarding the Company as comprises the annual report to the stockholders of the Company provided for in the Bylaws of the Company and such other information regarding the Company as the holder of such option may reasonably request.

(c) Nothing in the Plan or in any instrument executed pursuant thereto shall confer upon any Non-Employee Director any right to continue in the service of the Company or any Affiliate or shall affect any right of the Company, its Board or stockholders or any Affiliate to terminate the service of any Non-Employee Director with or without cause.

(d) No Non-Employee Director, individually or as a member of a group, and no beneficiary or other person claiming under or through him or her, shall have any right, title or interest in or to any option reserved for the purposes of the Plan except as to such shares of common stock, if any, as shall have been reserved for him or her pursuant to an option granted to him or her.

(e) In connection with each option made pursuant to the Plan, it shall be a condition precedent to the Company's obligation to issue or transfer shares to a Non-Employee Director, or to evidence the removal of any restrictions on transfer, that such Non-Employee Director make arrangements satisfactory to the Company to insure that the amount of any federal or other withholding tax required to be withheld with respect to such sale or transfer, or such removal or lapse, is made available to the Company for timely payment of such tax.

(f) As used in this Plan, fair market value means, as of any date, the value of the common stock of the Company determined as follows:

(i) If the common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;

(ii) If the common stock is quoted on The Nasdaq SmallCap Market or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;

(iii) In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board.

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject to any option granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise), the Plan and outstanding options will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and number of shares and price per share of stock subject to outstanding options.

(b) In the event of: (1) a merger or consolidation in which the Company is not the surviving corporation; (2) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are

converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (3) any other capital reorganization in which more than fifty percent (50%) of the shares of the Company entitled to vote are exchanged, the time during which options outstanding under the Plan may be exercised shall be accelerated and the options terminated if not exercised prior to such event.

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan, PROVIDED, HOWEVER, that the Board shall not amend the plan more than once every six (6) months, with respect to the provisions of the Plan which relate to the amount, price and timing of grants, other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules thereunder. Except as provided in paragraph 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will:

(i) Increase the number of shares which may be issued under the Plan;

(ii) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires stockholder approval in order for the Plan to comply with the requirements of Rule 16b-3); or

(iii) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to comply with the requirements of Rule 16b-3.

(b) Rights and obligations under any option granted before any amendment of the Plan shall not be altered or impaired by such amendment unless
(i) the Company requests the consent of the person to whom the option was granted and (ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on September 20, 2005. No options may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the option was granted.

(c) The Plan shall terminate upon the occurrence of any of the events described in Section 10(b) above.

13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.

(a) The Plan shall become effective upon adoption by the Board of Directors, subject to the condition subsequent that the Plan is approved by the stockholders of the Company.

(b) No option granted under the Plan shall be exercised or exercisable unless and until the condition of subparagraph 13(a) above has been met.