EXHIBIT 4.1
FIFTH
AMENDED AND RESTATED
RIGHTS AGREEMENT
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THIS FIFTH AMENDED AND RESTATED RIGHTS AGREEMENT is entered into as of the
27th day of April 1995, by and among Power Integrations, Inc., a California
corporation (the "Company"), the undersigned holders of common stock of the
Company (the "Common Shareholders"), the undersigned holders of Preferred Stock
of the Company (the "Preferred Shareholders") and the undersigned purchasers of
Series F Preferred Stock (the "Purchasers").
RECITALS:
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A. The Company, the Common Shareholders and the Preferred Shareholders
are parties to that certain Fourth Amended and Restated Rights Agreement dated
as of March 11, 1994, as amended (the "Prior Rights Agreement"), pursuant to
which the Common Shareholders, the holders of outstanding shares of Series A
Preferred Stock of the Company, the holders of outstanding shares of Series B
Preferred Stock of the Company, the holders of outstanding shares of or warrants
to purchase Series C Preferred Stock of the Company, the holders of outstanding
shares of Series D Preferred Stock of the Company, and the holders of
outstanding shares of Series E Preferred Stock of the Company (the "Prior
Holders") have been granted by the Company certain registration rights (the
"Prior Registration Rights") and a right of first refusal (the "Right of First
Refusal") and pursuant to which certain of the Prior Holders have agreed as to
the voting of their shares of the Company with respect to the number of
authorized directors of the Company and the election of certain designees to the
Company's Board of Directors.
B. The Company and the Purchasers are entering into a Series F Preferred
Stock Purchase Agreement (the "Series F Agreement") of even date herewith
pursuant to which the Company is selling and issuing up to 9,091,000 shares of
Series F Preferred Stock and, in connection therewith, the parties hereto desire
that (i) the Prior Rights Agreement be forever waived and terminated and be
superseded and replaced in its entirety by this Agreement; (ii) the Company
grant the parties certain registration rights and rights of first refusal as set
forth herein; (iii) the Common Shareholders, the Preferred Shareholders and the
Purchasers enter into the voting agreements set forth herein; and (iv) all such
rights be conformed and coordinated upon the terms hereinafter set forth. The
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, all
shares of Series C Preferred Stock issuable upon exercise of any outstanding
warrant to purchase Series C Preferred Stock, and the shares of Series F
Preferred Stock to be issued pursuant to the Series F Agreement are hereinafter
collectively referred to as the "Preferred Shares".
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C. The Company has agreed to grant to two equipment lessors, the
placement agent for its March 1994 Series E Preferred Stock financing, and a
bank certain registration rights, in the case of one lessor, with respect to
shares of Common Stock issuable upon exercise of warrants held by such lessor,
and in the case of the other lessor, the placement agent and the bank, with
respect to shares of Common Stock issuable upon conversion of shares of
Preferred Stock issuable upon exercise of warrants held by them.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the parties hereby agree as follows:
1. Waiver and Termination of Prior Rights and Prior Voting Agreement.
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(a) Upon the execution and delivery of this Agreement by the Company
and the holders of more than 50% of the Registrable Securities (as that term is
defined in the Prior Rights Agreement and not as defined in Section 2 below),
Section 2 of the Prior Rights Agreement shall be terminated and shall be of no
further force and effect. Each holder of Registrable Securities (as that term
is defined in the Prior Rights Agreement) who has not executed and delivered
this Agreement (including without limitation Comdisco, Inc. and MMC/GATX
Partnership No. 1) shall be entitled to all rights of a Holder hereunder as if
such holder of Registrable Securities had executed and delivered this Agreement,
and the only registration rights of the Prior Holders (and any other holders of
such Registrable Securities) shall be as set forth in this Agreement.
(b) Upon the execution and delivery of this Agreement by the Company
and holders of more than 50% of the outstanding Preferred Shares held by the
Prior Holders having rights under Section 3 of the Prior Rights Agreement and
more than 50% of the Company's stock held by the Common Shareholders, all rights
under Section 3 of the Prior Rights Agreement of all of the Common Shareholders
and all of the Prior Holders (and all other persons, if any, having rights under
Section 3 of the Prior Rights Agreement), including (i) the right to buy shares
of Series F Preferred Stock issuable under the Series F Agreement (or the
securities issuable upon conversion thereof), and (ii) any right to acquire a
warrant issued to Imperial Bank in connection with its establishment of a
secured line of credit for the Company (or the Imperial Warrant Shares or the
securities issuable upon conversion thereof), shall be waived and terminated and
shall be of no further force and effect. Each Prior Holder who has not executed
and delivered this Agreement shall be entitled to all rights of a Prior Holder
hereunder as if such person had executed this Agreement and the only right of
first refusal of the Prior Holders and the Common Shareholders shall be as set
forth in this Agreement.
(c) Upon the execution and delivery of this Agreement by the Company
and holders of more than 50% of the outstanding Series A Preferred Stock,
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Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock of the Company and the holders of more than 50% of the
Company's stock held by the Common Shareholders, the terms of Section 4 of the
Prior Rights Agreement shall be terminated and superseded in their entirety by
Section 4 of this Agreement.
2. Registration Rights.
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2.1 Certain Definitions. As used in this Agreement, the following
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terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
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Commission or any other federal agency at the time administering the Securities
Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of
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1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(c) "Holder" shall mean any holder of Registrable Securities
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which have not been sold to the public.
(d) "Initiating Holders" shall mean any Holder or Holders who in
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the aggregate are Holders of not less than 35% of the aggregate of the
Registrable Securities.
(e) "Securities Act" shall mean the Securities Act of 1933, as
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amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(f) "Registrable Securities" means (i) any shares of common
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stock of the Company issued or issuable upon conversion of the Preferred Shares,
(ii) shares of common stock of the Company issuable upon exercise of warrants
dated July 31, 1989 and June 8, 1988 issued to Comdisco, Inc. (the "Comdisco
Warrant Shares"), (iii) shares of common stock of the Company issuable upon
conversion of the shares of Series D Preferred Stock and Series E Preferred
Stock issuable upon exercise of warrants dated December 29, 1993 and December
27, 1994 issued to MMC/GATX Partnership No. 1 (the "MMC/GATX Warrant Shares"),
(iv) for purposes of all of Section 2 of this Agreement other than subsection
2.3 ("The Company Registration"), shares of common stock of the Company issuable
upon conversion of a total of 132,120 shares of Series E Preferred Stock
issuable upon exercise of warrants dated March 11, 1994 issued to ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ Securities, Inc. and related persons (the "BMFSI Warrant Shares"), (v)
for purposes of all of Section 2 of this Agreement other than subsection 2.2
("Requested Registrations") and subsection 2.4 ("Form S-3"), shares of common
stock of the Company issuable upon
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conversion of the shares of Series E Preferred Stock or Series F Preferred Stock
issuable upon exercise of a warrant dated February 27, 1995 issued to Imperial
Bank (the "Imperial Warrant Shares"), and (vi) any shares of common stock of the
Company issued as (or issuable upon the exercise or conversion of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to or in replacement of the Preferred Shares, the Comdisco Warrant
Shares, the MMC/GATX Warrant Shares, the BMFSI Warrant Shares (subject to the
limitations set forth above), the Imperial Warrant Shares (subject to the
limitations set forth above), or common stock issued upon conversion of the
Preferred Shares.
(g) The terms "register", "registered" and "registration" refer
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to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(h) "Registration Expenses" shall mean all expenses incurred or
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assumed by the Company in complying with Section 2 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, reasonable fees
and disbursements of one special counsel for the Holders for each such
registration, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company and excluding the fees of counsel other than one special counsel for the
Holders).
(i) "Selling Expenses" shall mean all underwriting discounts and
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selling commissions applicable to the sale of the Registrable Securities and all
fees and expenses of legal counsel for a Holder, other than the special counsel
referred to in section 2.1(h) above.
2.2 Requested Registration.
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(a) Request for Registration. In case the Company shall receive
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from the Initiating Holders a written request that the Company effect any
registration with respect to at least 25% of the Registrable Securities
(provided that all securities to be included in the offering, including all
shares included by the Company, shall have an aggregate proposed offering price
to the public of at least $5,000,000) the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts
to effect all such registrations, qualifications, or compliances (including,
without
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limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable requirements or regulations) as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within fifteen (15) business days after such written
notice from the Company is given; provided that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this subsection 2.2:
(A) Prior to six (6) months after the effective date of the
Company's first registered offering to the general public of its securities for
its own account;
(B) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(C) After the Company has effected two (2) such
registrations pursuant to this subsection 2.2, which have been declared or
ordered effective and the securities offered pursuant to such registrations have
been sold; or
(D) Within one (1) year of the effective date of a prior
registration effected pursuant to this subsection 2.2 or within six (6) months
of the effective date of a prior registration effected pursuant to subsection
2.3 or 2.4.
Subject to the foregoing clauses the Company shall file a registration
statement as soon as practicable after receipt of the request or requests of the
Initiating Holders but in any event within ninety (90) days of receipt of such
request; provided, however, that if the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed on or before the date filing would be required and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a single additional period of not more
than one hundred eighty (180) days after receipt of the request of the
Initiating Holders.
(b) Underwriting. If the Initiating Holders intend to distribute the
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Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this
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subsection 2.2 and the Company shall include such information in the written
notice referred to in subsection 2.2(a)(i). In such event, the Company shall
select a nationally-recognized underwriter or underwriters (the "Underwriter"),
reasonably acceptable to a majority in interest of the Initiating Holders, with
regard to the underwriting of such requested registration. The right of any
Holder to registration pursuant to subsection 2.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the Underwriter. Notwithstanding any other provision of this
subsection 2.2, if the Underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, the Initiating Holders shall so advise all Holders, and the number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, as the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the Underwriter's
marketing limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the Underwriter and the Initiating Holders. The Registrable
Securities and/or other securities so withdrawn shall also be withdrawn from
registration; provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the Underwriter), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportion used in determining the
underwriter limitation in this subsection 2.2.
If the Underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may, and employees and other holders of the
Company's Common Stock may, include securities for their own accounts (with such
shareholders who have rights to "piggyback" on the registration being given
first priority to include their shares) in such registration if the Underwriter
so agrees and if the number of Registrable Securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.
However, nothing herein shall be interpreted as granting any registration rights
to any person who is not a party to this Agreement or expressly granted such
rights, even though not a party to this Agreement in Section 2.
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2.3 The Company Registration.
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(a) If at any time or from time to time, the Company shall
determine to register any of its securities, other than (i) a registration
relating solely to employee benefit plans on Form ▇-▇, ▇-▇ or similar forms
which may be promulgated in the future, or (ii) a registration on Form S-4 or
similar forms which may be promulgated in the future relating solely to a
Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within thirty (30) days after receipt of such written notice
from the Company, by any Holder or Holders, except as set forth in subsection
2.3(b).
(b) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an the Company shall so
advise the Holders as a part of the written notice given pursuant to subsection
2.3(a)(i). In such event the right of any Holder to registration pursuant to
this subsection 2.3 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other shareholders, if any, distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the Underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this subsection 2.3, after the first sale
by the Company of its securities to the public in a firmly underwritten public
offering (from which offering any or all shares of Registrable Securities and
other shareholders' securities may be excluded by the Underwriter if the
Underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten), if the Underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
Underwriter may limit the amount of securities to be included in the
registration and underwriting by the Company's shareholders; provided, however,
the number of shares to be included in such registration and underwriting by the
Holders and other shareholders possessing registration rights shall not be
reduced to less than 20% of the aggregate securities included therein without
the prior written consent of all of such shareholders requesting inclusion of
their shares therein. The number of shares that may be included in the
registration and underwriting shall be allocated first among the Holders in
proportion to the number of Registrable Securities then held by each, and
thereafter among all other shareholders in proportion, as nearly as
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practicable, to the respective amounts of securities entitled to inclusion in
such registration held by such shareholders at the time of filing of the
registration statement. If any such shareholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the Underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall be excluded from such registration.
2.4 Form S-3. After the Company has qualified for the use of Form S-3
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or a successor form, Holders of Registrable Securities shall have, in addition
to the rights set forth in subsection 2.2 above, the right to request an
unlimited number of registrations on Form S-3 (such requests shall be made by
the Initiating Holders, shall be in writing and shall state the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of shares by such Holders), subject only to the following:
(1) The Company shall not be required to effect a registration
pursuant to this subsection 2.4 within one (1) year of the effective date of a
prior registration effected pursuant to subsections 2.2, 2.3 or 2.4.
(2) The Company shall not be required to effect a registration
pursuant to this subsection 2.4 unless the Holder or Holders requesting
registration propose to dispose of shares of Registrable Securities having an
aggregate price to the public (before deduction of underwriting discounts and
expenses of sale) of at least $1,000,000.
The Company shall give written notice to all Holders of Registrable
Securities of the receipt of a request for registration pursuant to this
subsection 2.4 and shall provide a reasonable opportunity for other Holders to
participate in the registration and in any event at least fifteen (15) days
after receipt of such notice by such Holders, provided that if the registration
is for an underwritten offering, the terms of subsection 2.2(b) shall apply to
all participants in such offering. Subject to the foregoing, the Company will
use its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 to the extent requested by the Holder or
Holders thereof for purposes of disposition.
2.5 Expenses of Registration. All Registration Expenses incurred in
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connection with any registration, qualification or compliance pursuant to
subsections 2.2 or 2.3 or with respect to the first two registrations under
subsection 2.4 shall be borne by the Company; provided, however, that the
Registration Expenses for any registration proceeding begun pursuant to
subsection 2.2 or 2.4 and subsequently withdrawn by the Holders registering
shares therein, unless such withdrawal results from a material adverse change in
the Company which is not within the control of such Holders, shall be borne by
such Holders, unless the Holders holding a majority of the Registrable
Securities agree to
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forfeit their right to one demand registration pursuant to subsection 2.2 or
2.4, respectively. All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to subsection 2.4 after two
registrations have been effected pursuant to subsection 2.4 shall be borne by
the Holders pro rata on the basis of the number of Registrable Securities
included by each in the registration. Unless otherwise stated, all other
Registration Expenses and all Selling Expenses relating to securities registered
by the Holders shall be borne by the Holders of such securities pro rata on the
basis of the number of Registrable Securities so registered.
2.6 Registration Procedures. In the case of each registration,
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qualification or compliance effected by the Company pursuant to this Agreement,
the Company will, upon request, inform each Holder as to the status of each such
registration, qualification and compliance. At its expense the Company will:
(a) Keep such registration, and any qualification or compliance
under state securities laws which the Company determines to obtain, effective
for a period of one hundred eighty (180) days or until the Holder or Holders
have completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(b) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(c) Supply to each Holder who is named in the prospectus and who
is or will be the beneficial owner of five percent (5%) or more of any class of
the Company's voting securities as of the effective date of the registration
statement, drafts of the registration statement for its review and each such
Holder shall have the right to approve the portions of the registration
statement which relate, either directly or indirectly, to such Holder, prior to
filing, provided that such approval is not to be unreasonably withheld;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions; and
(e) Notify each Holder of Registrable Securities covered by such
registration statement, when a prospectus relating thereto is required to be
delivered under the Securities Act, at any time that the Company becomes aware
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to
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make the statements therein not misleading in the light of the circumstances
then existing.
2.7 Delay of Registration. No Holder shall have any right to take any
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action to restrain, enjoin or otherwise delay any registration pursuant to
subsection 2.3 hereof as a result of any controversy that may arise with respect
to the interpretation or implementation of this Agreement.
2.8 Indemnification.
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(a) The Company will indemnify each Holder, each of its
officers, directors, employees, partners, legal counsel and accountants, and
each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which any registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses, damages
and liabilities (or action in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act, Exchange
Act or state securities laws applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, employees, partners, legal counsel and accountants, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by or on behalf of such
Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers, employees, partners, legal counsel and accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who
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controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors,
employees, partners, legal counsel and accountants, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, employees, partners, legal
counsel, accountants, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent that such untrue statement or omission is made in
such registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by or on behalf of such Holder and stated
to be specifically for use therein. Notwithstanding the foregoing, in no event
shall a Holder be liable for any such claims, losses, damages, or liabilities in
excess of the proceeds, net of underwriting discounts and commissions, received
by such Holder in the offering, except in the event of intentional fraud by such
Holder.
(c) Each party entitled to indemnification under this subsection
2.8 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, provided
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, unless such failure is prejudicial to the Indemnifying Party in
defending such claim or litigation. The Indemnified party shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's expense
provided that if the named parties to a proceeding include both the Indemnified
Party and the Indemnifying Party and representation of both parties would be
inappropriate due to actual different interests between them, then the
Indemnified Party may retain its own counsel (who is reasonably satisfactory to
the Indemnifying Party) at the Indemnifying Party's expense, but, despite the
foregoing, an Indemnifying Party will have no obligation in any proceeding or
related proceedings to pay for more than one additional counsel for all
Indemnified Parties. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified
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Party of a release from all liability in respect to such claim or litigation.
Subject to the foregoing, the Indemnifying Party shall promptly advance all
expenses incurred by the Indemnified party in connection with the investigation
and defense of any claim as to which indemnity may be sought pursuant to this
Agreement after written request therefor (but no earlier than incurred) by the
Indemnified Party to the Indemnifying Party. The Indemnified Party shall repay
such amounts advanced if and to the extent that it is ultimately determined that
the Indemnified Party is not entitled to indemnification or contribution under
this Agreement.
(d) If the indemnification provided for in this subsection 2.8
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling.
2.9 Lockup Agreement. In consideration for the Company agreeing to
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its obligations under this Section 2, each Holder of one percent (1%) or more of
the Company's voting securities agrees in connection with the initial
registration of the Company's securities, upon the request of the Company or the
Underwriter, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Registrable Securities (other than
those included in the registration) without the prior written consent of the
Company or Underwriter, as the case may be, for a period of 120 days after the
effective date of such registration; provided, however, that such Holder shall
have no obligation to enter into the agreement described herein unless all
executive officers, directors and other 1% shareholders of the Company enter
into similar agreements.
12
2.10 Information by Holder. As a condition to the inclusion of their
---------------------
Registrable Securities, the Holder or Holders of Registrable Securities included
in any registration shall furnish to the Company such information regarding such
Holder or Holders and the distribution proposed by such Holder or Holders as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in subsections
2.2, 2.3 or 2.4 of this Agreement.
2.11 Rule 144 Reporting. With a view to making available to the
------------------
Holders the benefits of certain rules and regulations of the Commission which at
any time permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration statement under the
Securities Act filed by the Company for an offering of its securities to the
general public;
(b) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
(c) So long as a Holder owns any unregistered Registrable
Securities, furnish to such Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as such Holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing a Purchaser to sell any such
securities without registration.
2.12 Transfer of Registration Rights. Subject to any limitations on
-------------------------------
transfer of stock set forth in any written agreement between any of the Holders
and the Company, the rights to cause the Company to register their Registrable
Securities granted to the Holders by the Company under subsections 2.2, 2.3 and
2.4 may be assigned by a Holder (i) to an affiliate of the Holder (including any
Partner of a Holder) or (ii) to a transferee or assignee of at least 50,000
shares, as adjusted for any stock split, stock dividend or other
recapitalization, of the Holder's Registrable Securities; provided, that the
Company is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address
13
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
2.13 Termination of Registration Rights. The obligations of the
----------------------------------
Company pursuant to this Section 2 shall terminate ten years after the effective
date of the Company's first registered offering to the general public of its
securities.
2.14 Limitations on Subsequent Registration Rights. The Company may
---------------------------------------------
extend registration rights under this Agreement to future issuees of Equity
Securities (as hereinafter defined) which are exempt from the right of first
refusal set forth in Section 3 below by virtue of subsections 3.5(b) or (c)
below. The issuees of such Equity Securities may become parties to this
Agreement by execution of this Agreement or an addendum to this Agreement, as
required by the Company, without the consent of the Holders. Other than such
grants of registration rights, from and after the date of this Agreement, the
Company shall not, without the prior written consent of the Holders of a
majority of the outstanding Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company which
would allow such holder or prospective holder (a) to include such securities in
any registration filed under Section 2.2 or 2.3 hereof, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of his securities
will not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the date set forth in
subsection 2.2(a)(ii)(A). The Holders understand that the Company may grant
"piggyback" registration rights to officers, directors, employees and
consultants who purchase at least 100,000 shares of the Company's stock. Such
rights shall be subordinate to the rights granted herein and shall not result in
a reduction of the amount of Registrable Securities of the Holders that may be
included in a registration under this Agreement.
2.15 Amendment. Any modification, amendment, or waiver of this
---------
Section 2 or any provision hereof shall be in writing and executed by Holders
(as defined in subsection 2.1 hereof) of not less than a majority of the
Registrable Securities; provided, however, that no such modification, amendment
or waiver shall reduce the aforesaid percentage of Registrable Securities
without the consent of all of the Holders of the Registrable Securities.
3. Right of First Refusal.
----------------------
3.1 Subsequent Issuances, Right to Purchase. If, at any time prior to
---------------------------------------
the expiration of the period set forth in Section 3.7 below, the Company should
desire to issue any Equity Securities (as hereinafter defined), it shall give
each Purchaser, Prior Holder, Common Shareholder and Additional Shareholder (as
14
defined below), who then owns at least 250,000 shares of the Company's common
stock (including all securities issued or issuable upon conversion of the
Preferred Shares or exchange of the Preferred Shares and as adjusted for stock
dividends, stock splits, recapitalizations and the like), the first right to
purchase the Purchaser's or such Prior Holder's, Common Shareholder's and
Additional Shareholder's pro rata share (or any part thereof) of all of such
Equity Securities on the same terms as the Company is willing to sell such
Equity Securities to any other person. Each of the Purchaser's or each Prior
Holder's, Common Shareholder's and Additional Shareholder's pro rata share of
the Equity Securities shall be equal to that percentage determined by dividing
(i) all shares of common stock of the Company owned by the Purchaser or such
Prior Holder, Common Shareholder and Additional Shareholder on the date of the
Company's written notification referred to in Section 3.2 below (including all
securities issued or issuable upon conversion of any shares of preferred stock
of the Company held by such person or issuable to such person upon exercise of
warrants held by such person and as adjusted for stock splits, stock dividends,
recapitalization and the like) by (ii) the "Fully Diluted" common stock of the
Company. For purposes of the prior sentence, the Fully Diluted common stock of
the Company shall include all outstanding common stock of the Company as
adjusted for stock dividends, stock splits, recapitalizations and the like, and
shall include all shares of common stock of the Company ultimately issuable upon
exercise, exchange and conversion of all outstanding securities of the Company
directly or indirectly exercisable or exchangeable or convertible into shares of
the Company's common stock (including, without limitation, all outstanding
options, warrants and shares of preferred stock). For purposes of this Section
3, the term "Additional Shareholder" shall mean any shareholder who then owns at
least 250,000 shares of the Company's common stock (including all securities
issuable upon conversion of the Company's preferred stock and as adjusted for
stock dividends, stock splits, recapitalizations and the like) and to whom the
Company has granted the right of first refusal set forth in this Section 3.
3.2 Notice. Prior to any sale or issuance by the Company of any
------
Equity Securities, the Company shall notify each of the Purchaser and each Prior
Holder, Common Shareholder and Additional Shareholder who qualifies under
Section 3.1 above in writing, of its intention to sell and issue such
securities, setting forth the terms under which it proposes to make such sale,
including the number of shares and the price therefor. Within twenty (20) days
after delivery of such notice, each of the Purchasers and each Prior Holder,
Common Shareholder and Additional Shareholder shall notify the Company whether
he or it will purchase his or its pro rata share (or any part thereof) of the
Equity Securities so offered.
3.3 Company's Right to Sell. If, within twenty (20) days after
-----------------------
delivery of aforesaid notice, the Purchasers, Prior Holders, Common Shareholders
and Additional Shareholders do not notify the Company that they desire, or
notify the Company that they do not desire, to purchase all of their pro rata
portion of the
15
Equity Securities described in such notice upon the terms and conditions set
forth in such notice, the Company may, during a period of sixty (60) days
following the end of such twenty (20) day period, sell and issue such securities
as to which the Purchasers, Prior Holders, Common Shareholders and Additional
Shareholders do not indicate a desire to purchase to another person upon the
same terms and conditions as those set forth in the notice to the Purchasers,
the Prior Holders, Common Shareholders and Additional Shareholders. In the event
the Company has not sold the Equity Securities within said sixty (60) day
period, the Company shall not thereafter issue or sell any Equity Securities
without first offering such securities to the Purchasers, Prior Holders, Common
Shareholders and Additional Shareholders who qualify under Section 3.1 above in
the manner provided above.
3.4 Payment. If a Purchaser, Prior Holder, Common Shareholder or
-------
Additional Shareholder gives the Company notice that he or it desires to
purchase any of the Equity Securities offered by the Company, payment for the
Equity Securities shall be by check or wire transfer against delivery of the
securities at the closing for the sale of such Equity Securities.
3.5 Exceptions. The right of first refusal contained in this Section
----------
3 shall not apply to (a) the issuance by the Company of Equity Securities to
directors, officers, employees or consultants of the Company pursuant to any
employee stock option or stock purchase plan or agreement approved by the
Company's Board of Directors or the Compensation Committee thereof, (b) the
issuance by the Company of up to 500,000 shares of an existing or newly created
series of Preferred Stock having a purchase price per share greater than or
equal to $1.25 (appropriately adjusted for stock splits, stock dividends,
recapitalizations and the like) (c) the issuance by the Company of Equity
Securities in a transaction not covered under clause (a) or (b) above pursuant
to equipment leasing arrangements or other arrangements to acquire equipment or
other capital assets for use in the Company's operations approved by the
Company's Board of Directors, (d) the issuance of Equity Securities or any
Common shares upon conversion of any Preferred Shares, (e) the issuance by the
Company of Equity Securities for any consideration other than cash, cancellation
of indebtedness or services, (f) the issuance of Equity Securities in a public
offering registered under the Securities Act or in connection with a merger or
acquisition, (g) Equity Securities issued in connection with any stock split,
stock dividend or recapitalization or (h) the issuance of any shares upon
exercise of any outstanding warrants of the Company listed in Section 3.4 of the
Series F Agreement.
3.6 Termination Upon Decrease in Shares Held. The right of first
----------------------------------------
refusal contained in this Section 3 shall terminate as to a Purchaser or a Prior
Holder, Common Shareholder or Additional Shareholder when he or it, together
with his or its affiliates, ceases to own at least 250,000 shares of common
stock (calculated as provided in the first sentence of Section 3.1).
16
3.7 Termination Upon Public Offering. The right of first refusal
--------------------------------
contained in this Section 3 shall terminate upon the closing of the issuance of
Equity Securities with an aggregate offering price of at least Five Million
Dollars ($5,000,000) in an underwritten public offering registered under the
Securities Act.
3.8 Definition of Equity Securities. The term "Equity Securities"
-------------------------------
mean (i) common stock, preferred stock, rights, options or warrants to purchase
common stock or preferred stock; or (ii) any security convertible into or
exchangeable for common stock or preferred stock.
3.9 Waivers and Amendments. With the written consent of the Company,
----------------------
the record or beneficial holders of a majority of the outstanding Preferred
Shares held by persons having rights under this Section 3 and the record or
beneficial owners of at least a majority of the Company's stock then owned by
the Common Shareholders and Additional Shareholders having rights under this
Section 3 (including in both cases any Common Stock or any and all securities
obtained upon conversion of the Preferred Shares or exchange of the Preferred
Shares or Common Stock and as adjusted for stock dividends, stock splits,
recapitalizations and the like), any provision of this Section 3 may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely), or
amended. Any waiver or amendment to which such consents are obtained will be
binding upon all holders having rights under this Section 3. Upon the
effectuation of each such waiver or amendment, the Company shall promptly give
written notice thereof to the record holders of the Preferred Shares and the
Common Shareholders and Additional Shareholders who have not previously received
notice thereof or consented thereto in writing. In addition, each holder, as to
such holder only, may consent in writing to any such waiver or amendment, which
will be binding upon such holder. No amendment or waiver to this Section 3 will
be effective unless agreed to in writing by the party against whom enforcement
is sought or, in the case of any holder, by such holder or holders of more than
the minimum amounts of shares described above in this Section 3.9.
3.10 Aggregation of Stock. All Preferred Shares and Common shares
--------------------
held or by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Section 3.
4. Voting Agreement.
----------------
4.1 Agreement. The Common Shareholders, the Preferred Shareholders
---------
and the Purchasers will use their best efforts to cause the Company's Board of
Directors to consist of seven directors. Each of the Common Shareholders, the
Preferred Shareholders (other than MagneTek, Inc. ("MagneTek")) and the
Purchasers agrees to vote his or its shares of the Company's stock to elect six
persons to the Board of Directors, four of whom shall be nominated by the
Preferred
17
Shareholders owning a majority of the outstanding Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series E Preferred Stock and
Series F Preferred Stock taken together (including Common Stock issuable upon
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock), and two
of whom shall be nominated by Common Shareholders owning a majority of the
Company's stock held by the Common Shareholders. The seventh authorized director
will be (i) elected by the holders of the Company's Series D Preferred Stock
pursuant to the Company's Articles of Incorporation or (ii) nominated pursuant
to Section 4.2 (a) below if the conditions to the effectiveness of Section 4.2
(a) pertain.
4.2 Alternate Voting Agreements.
---------------------------
(a) In the event of a conversion of all of the Preferred Shares
to Common Stock of the Company other than in consequence of the closing of the
issuance of equity securities with an aggregate offering price of at least Five
Million Dollars ($5,000,000) in an underwritten public offering registered under
the Securities Act, then for so long as MagneTek is a Qualified Purchaser within
the meaning of Section 6.1 of the Series D Preferred Stock Purchase Agreement
dated February 19, 1993 ("the Series D Agreement") the second sentence of
Section 4.1 above shall be deemed amended to read in full as follows:
MagneTek and each of the other Preferred Shareholders, Common
Shareholders, and Purchasers agree to vote his or its shares of the Company's
stock to elect seven persons to the Board of Directors, five of whom shall be
nominated by the Preferred Shareholders and Purchasers owning a majority of the
outstanding Common Stock issued upon conversion of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock, the Series E Preferred Stock, and the Series F Preferred Stock,
and two of whom shall be nominated by Common Shareholders owning a majority of
the Company's stock held by the Common Shareholders.
(b) In the event that neither the provisions of Section 4.1 nor
Section 4.2 (a) are in effect and the holders of the Series D Preferred Stock,
voting separately a series, are not entitled to elect at least one director of
the Company pursuant to the provisions of the Company's Articles of
Incorporation, as amended, then, for so long as MagneTek is a Qualified
Purchaser within the meaning of Section 6.1 of the Series D Agreement, neither
the Company with any of the other Preferred Shareholders or the Purchasers nor
any of the other Preferred Shareholders or Purchasers with any of the other
Preferred Shareholders will enter into an agreement respecting the voting of the
Preferred Shareholders' or Purchasers' shares of the Company's Stock with
respect to the size of the Company's Board of Directors or the election or
nomination of persons to serve on the Company's Board of Directors without the
prior written consent of MagneTek. Despite the provisions of Section 4.4
18
below, the provisions of this Section 4.2 (b) cannot be waived, amended or
terminated without the prior written consent of MagneTek.
4.3 Termination of Agreement. The provisions of Sections 4.1 and 4.2
------------------------
(a) shall terminate upon termination of the right of first refusal pursuant to
Section 3.7.
4.4 Waivers and Amendments. With the written consent of the Company
----------------------
and the record or beneficial holders of a majority of the outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock,
and the record or beneficial owners of a majority of the Company's stock then
owned by the Common Shareholders (including in each case any Common Stock or any
and all securities obtained upon conversion of the Preferred Shares or exchange
of the Preferred Shares or Common Stock and as adjusted for stock dividends,
stock splits, recapitalization and the like), subject to the provisions of
Section 4.2 (b), any provision of this Section 4 may be waived (either generally
or in a particular instance, either retroactively or prospectively and either
for a specified period of time or indefinitely), or amended. Any waiver or
amendment to which such consents are obtained will be binding upon all holders
having rights under this Section 4. Upon the effectuation of each such waiver or
amendment, the Company shall promptly give written notice thereof to the record
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock, and the Common Shareholders who have not previously received
notice thereof or consented thereto in writing. In addition, each holder, as to
such holder only, may consent in writing to any such waiver or amendment, which
will be binding upon such holder. No amendment or waiver to this Section 4 will
be effective unless agreed to in writing by the party against whom enforcement
is sought or, in the case of any holder, by such holder or, subject, in the case
of MagneTek, to Section 4.2(b) above, holders of more than the minimum amounts
of shares described above in this Section 4.4.
4.5 Common Shareholders. Notwithstanding any other provision of this
-------------------
Agreement, pursuant to Section 2.1.4 of an agreement dated as of April __, 1994
between ▇▇▇▇ ▇▇▇▇▇▇ and the Company, ▇▇. ▇▇▇▇▇▇ will not be a "Common
Shareholder" for any purpose of Section 4 of this Agreement.
5. Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
6. Successors and Assigns. Except as otherwise expressly provided herein,
----------------------
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
19
7. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof and supersedes any and all prior agreements or understandings,
including, without limitation, the Prior Rights Agreement and any term sheets or
other summaries of proposed terms delivered to any party hereto.
8. Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be either mailed by air mail,
certified mail or registered mail, postage prepaid, or personally delivered by
courier, in each case addressed (a) if to a Purchaser, a Holder, Common
Shareholder, or Prior Holder, as the case may be, at such person's address set
forth in the records of the Company or at such other address as such person
shall have furnished to the Company in writing, or (b) if to the Company: Power
Integrations, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, or at such other address as the Company shall have
furnished to the parties in writing. If a Purchaser, a Holder, Common
Shareholder or Prior Holder has provided a facsimile transmission number to the
Company, the Company will also deliver any notice given to such person by
facsimile transmission to the facsimile transmission number provided by such
person.
9. Severability. If any provision of this Agreement, or the application
------------
thereof, is for any reason and to any extent determined by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of this Agreement and
the application of such provision to other persons or circumstances will be
interpreted so as best to reasonably effect the intent of the parties hereto.
The parties agree to use their best efforts to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve, to the extent greatest possible, the economic, business and
other purposes of the void or unenforceable provision.
10. Titles and Subtitles. The titles of the sections and subsections of
--------------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. If any signatory executes a signature page to
this Agreement as a previous shareholder rather than as a new investor, or as a
new investor rather than as a previous shareholder, or in only one such
capacity when both are applicable, the signatory will be deemed for all purposes
to have executed and delivered a signature page to this Agreement in all
capacities applicable to such signatory.
20
12. Effectiveness of Agreement. This Agreement, even if executed and
--------------------------
delivered by all of the parties hereto, shall be of no force and effect unless
the First Closing (as defined in the Series F Agreement) has occurred. No
person executing and delivering this Agreement as a Purchaser in connection with
any Closing (as defined in the Series F Agreement) shall have any rights
hereunder unless such person has purchased shares of the Company's Series F
Preferred Stock at such Closing.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed themselves or by their respective representatives thereunto duly
authorized as of the day and year first above written.
21
AMENDMENT NUMBER 1 TO
FIFTH AMENDED AND RESTATED RIGHTS AGREEMENT
THIS AMENDMENT NUMBER 1 (the "Amendment") is dated as of August 22, 1995,
to the Fifth Amended and Restated Rights Agreement dated as of April 27, 1995
(the "Rights Agreement") by and among Power Integrations, Inc., a California
corporation (the "Company"), and the undersigned holders of Common Stock of the
Company (the "Common Shareholders"), the undersigned holders of Preferred Stock
of the Company (the "Preferred Shareholders") and the undersigned holders of
Series F Preferred Stock of the Company (the "Series F Holders"). Unless
specifically designated otherwise, capitalized terms used herein shall have the
same meanings given them in the Rights Agreement.
RECITALS
A. The Company, the Common Shareholders, the Preferred Shareholders and
the Series F Holders are parties to the Rights Agreement pursuant to which the
Company has granted the Common Shareholders, the Preferred Shareholders and the
Series F Holders certain registration rights and a right of first refusal, and
the Common Shareholders, the Preferred Shareholders and the Series F Holders
have agreed to vote their shares of the Company with respect to the authorized
directors of the Company and the election of certain designees to the Company's
Board of Directors.
B. The Company, the Common Shareholders, the Preferred Shareholders and
the Series F Holders wish to amend the Rights Agreement in order to provide that
the Common Shareholders, the Preferred Shareholders and the Series F Holders
will use their best efforts to cause the Company's Board of Directors to consist
of six (6) directors.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto agree to amend certain
provisions of the Rights Agreement as set forth below:
1. Section 4.1 of the Rights Agreement shall be amended and restated
to read in full as follows:
"4.1 Agreement. The Common Shareholders, the Preferred Shareholders and the
---------
Series F Holders will use their best efforts to cause the Company's Board of
Directors to consist of six directors. Each of the Common Shareholders, the
Preferred Shareholders (other than MagneTek, Inc. ("MagneTek")) and the Series F
Holders agrees to vote his or its shares of the Company's stock to elect five
persons to the Board of Directors, three
1
of whom shall be nominated by the Preferred Shareholders owning a majority of
the outstanding Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock taken
together (including Common Stock issuable upon conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock), and two of whom shall be
nominated by Common Shareholders owning a majority of the Company's stock held
by the Common Shareholders. The sixth authorized director will be (i) elected by
the holders of the Company's Series D Preferred Stock pursuant to the Company's
Articles of Incorporation or (ii) nominated pursuant to Section 4.2 (a) below if
the conditions to the effectiveness of Section 4.2 (a) pertain."
2. This Amendment may be executed in multiple counterparts, each of
which when so executed shall be deemed an original, and all counterparts shall
constitute but one and the same instrument.
3. Except as amended hereby, the Rights Agreements remains in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
POWER INTEGRATIONS, INC.
By:____________________________________
(Please print or type)
Title:_________________________________
(Please print or type)
Signature:_____________________________
2
AMENDMENT NUMBER 2 TO
FIFTH AMENDED AND RESTATED RIGHTS AGREEMENT
THIS AMENDMENT NUMBER 2 (the "Amendment") is dated as of September 9, 1997,
to the Fifth Amended and Restated Rights Agreement dated as of April 27, 1995,
as amended by Amendment Number 1 to Fifth Amended and Restated Rights Agreement
dated August 22, 1995 (the "Rights Agreement"), by and among Power Integrations,
Inc., a California corporation (the "Company"), and the undersigned Holders.
Unless specifically designated otherwise, capitalized terms used herein shall
have the same meanings given them in the Rights Agreement.
RECITALS
A. The Company and the Holders are parties to the Rights Agreement
pursuant to which the Company has granted the Holders, among other things,
certain registration rights.
B. The Company is currently contemplating filing a registration statement
on Form S-1 in order to register shares of its Common Stock (the "Offering").
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, ▇▇▇▇▇▇▇▇▇▇ Securities and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company
LLC have agreed to act as managing underwriters (the "Managing Underwriters") of
the Offering.
C. The Managing Underwriters have requested that each of the Company's
shareholders agrees not to sell or otherwise dispose of any stock, or rights to
acquire stock (other than those included in the Offering), within one hundred
eighty (180) days after the effective date of the Offering.
D. The Company and the Holders wish to amend the Rights Agreement in order
to provide that the Holders agree not to sell any of their Registrable
Securities (other than those included in the Offering) for a period of one
hundred eighty (180) days after the effective date of the Offering.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto, pursuant to Section 2.15
of the Rights Agreement, agree to amend certain provisions of the Rights
Agreement as set forth below:
1. Section 2.9 of the Rights Agreement shall be amended and restated to
read in full as follows:
"2.9 Lockup Agreement. In consideration for the Company agreeing to its
----------------
obligations under this Section 2, each Holder agrees in connection with the
initial registration of the Company's securities, upon the request of the
Company or the Underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the written consent of
the Company or
Underwriter, as the case may be, for a period of 180 days after the effective
date of such registration."
2. This Amendment may be executed in multiple counterparts, each of which
when so executed shall be deemed an original, and all counterparts shall
constitute but one and the same instrument.
3. Except as amended hereby, the Rights Agreement remains in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
POWER INTEGRATIONS, INC.
By:
------------------------------
HOLDER:
By:
------------------------------
(Please print or type)
Title:
---------------------------
(Please print or type)
Signature:
-----------------------
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