Document:

exv10w2

Exhibit 10.2

Certain confidential information contained in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

AMENDMENT NUMBER FOUR

TO

AMENDED AND RESTATED WAFER SUPPLY AGREEMENT

This Amendment Number Four (the “Amendment”), effective as of June 13, 2008 (the “Amendment
Effective Date”), amends the Amended and Restated Wafer Supply Agreement effective as of April 1,
2003 (as further amended by Amendment Number One, effective August 11, 2004, Amendment Number Two,
effective April 1, 2008, and Amendment Number Three, effective June 9, 2008) (the “Agreement”), by
and between OKI Electric Industry Co., Ltd. (“OKI ELECTRIC” or “OKI”), a Japanese corporation
having its registered head office at 7-12, Toranomon 1-chome, Minato-ku, Tokyo 105-8460, Japan, and
Power Integrations International, Ltd. (“PI”) a Cayman Islands corporation having its principal
place of business at 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322, Grand
Cayman KY1-1209. Unless specifically designated otherwise, capitalized terms used herein shall
have the same meanings given them in the Agreement.

RECITALS

     WHEREAS, pursuant to the terms of the Agreement, PI grants to OKI ELECTRIC licenses of certain
of PI’s intellectual property for the sole purpose of PI acquiring from OKI ELECTRIC the
fabrication and supply of wafers of certain power IC products; and

     WHEREAS, PI and OKI ELECTRIC desire to amend the terms of the Agreement; and

     WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only
by an instrument in writing duly executed by authorized officers of OKI ELECTRIC and PI.

     Now, Therefore, in consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby amend the Agreement as follows:

AGREEMENT

	1.	 	The following new definitions are inserted in Section 1:

	 	1.25	 	DM WAFER(S): Non-probed [*] inch WAFERS that are processed in

Confidential

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	 	 	accordance with the DM WAFER COMMON SPECIFICATION.

	 	1.26	 	DS WAFER(S): A subset of DC WAFERS comprised of non-probed [*]
inch WAFERS that are processed in accordance with the DS WAFER COMMON
SPECIFICATION.

	2.	 	Section 3.3 is deleted in its entirety and replaced with the following:

	 	3.3	 	The WAFERS sold hereunder shall be SC WAFERS processed at OKI’s [*] plant,
DC WAFERS processed at OKI’s [*] plant and/or [*] plant, and VC WAFERS and DM
WAFERS processed at OKI’s [*] plant or other plants of OKI as mutually agreed in
writing by OKI and PI.

	3.	 	The following is added as a new Section 12.9:

	 	12.9	 	Without limiting OKI’s other obligations under this Agreement, and
notwithstanding anything to the contrary herein, OKI shall ensure that (a) all
CONFIDENTIAL INFORMATION of PI is secured so that any direct or indirect affiliate,
division, or business unit of OKI that develops, markets, or sells semiconductor
products (a “RELATED PARTY”) has no access to such CONFIDENTIAL INFORMATION of PI
excluding any employee or contractor, of a RELATED PARTY, that conducts
manufacturing services for PI under this Agreement, (b) no OKI employee or
contractor shall disclose the CONFIDENTIAL INFORMATION of PI to any RELATED PARTY
or any employee or contractor of a RELATED PARTY (even if such employee or
contractor also performs work for OKI) except to any employee or contractor, of a
RELATED PARTY, that conducts manufacturing services for PI under this Agreement,
and (c) OKI shall limit disclosure of CONFIDENTIAL INFORMATION OF PI solely to
those employees or contractors of OKI or a RELATED PARTY that have a need to know
such CONFIDENTIAL INFORMATION to provide manufacturing services to PI under this
Agreement.

	4.	 	The following is added as a new Article 21:
	 
	 	 	Article 21. WAFER ADVANCE.

	 	21.1	 	Payment of Advance. After execution by both parties of Amendment Number
Four to this Agreement, PI will pay to OKI an amount equal to
327,600,000¥ (the “WAFER
ADVANCE”).

Confidential

Certain confidential information contained in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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	 	21.2	 	Discount on Purchases. The purchase price payable by PI for each [*] inch
WAFER in the DC, DS or DM Process, purchased under this Agreement will be
discounted by [*]¥. This discount will apply until a total of [*] discounted [*]
inch WAFERS are received and accepted by PI under this Agreement. This discount
does not apply to VC wafers. If this Agreement expires or terminates for any
reason before the total of [*] discounted [*] inch WAFERS are purchased and
accepted by PI under this Agreement, then OKI will pay to PI an amount equal to
[*]¥ times the remaining number of WAFERS required to reach the total of [*]
discounted [*] inch WAFERS. This payment obligation will survive expiration or
termination of this Agreement, and OKI will pay such amount within [*] days after
any such expiration or termination.

	5.	 	The following is inserted immediately after the statement of the VC WAFERS BASE_PRICE in
Exhibit B:
	 
	 	 	For orders placed prior to [*], [*] inch DS WAFERS BASE_PRICE: [*]¥
	 
	 	 	For orders placed after [*]:

	 	 	 	 	 	 	 	 	 
	Monthly number	 	 	 	 
	 of WAFERS	 	[*] inch DS WAFERS	 	[*] inch DM WAFERS
	purchased	 	BASE_PRICE	 	BASE_PRICE
	Less than [*] WAFERS
	 	 	[*]¥	 	 	 	[*]¥	 
	 
	 	 	 	 	 	 	 	 
	[*] WAFERS
	 	 	[*]¥	 	 	 	[*]¥	 
	 
	 	 	 	 	 	 	 	 
	[*] or more WAFERS
	 	 	[*]¥	 	 	 	[*]¥	 

	 	 	The above “Monthly number of WAFERS purchased” will be calculated based on the number of
WAFERS PI purchases in each calendar month.
	 
	6.	 	[*]
	 
	7.	 	Effective as of the Amendment Effective Date, all references in the Agreement to the
“Agreement” or “this Agreement” shall mean the Agreement as amended by this Amendment.
Except as expressly amended herein, the terms of the Agreement continue unchanged and shall
remain in full force and effect. This Amendment may be executed in one or more counterparts,
each of which shall be considered an original, but all of which counterparts together shall
constitute one and the same instrument.

Confidential

Certain confidential information contained in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

3

 

[Remainder of Page Intentionally Left Blank]

Confidential

Certain confidential information contained in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized
representatives, effective as of the Amendment Effective Date.

	 	 	 
	OKI ELECTRIC INDUSTRY CO., LTD.

	 	POWER INTEGRATIONS INTERNATIONAL, LTD.
	 
	 	 
	By: /s/ Akira Arimatsu

	 	By: /s/ John L. Tomlin
	Name: Akira Arimatsu

	 	Name: John L. Tomlin
	Title: General Manager

	 	Title: President

Confidential

Certain confidential information contained in this document, marked by brackets, has been
omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

5exv10w4

Exhibit 10.4

     In December 2008, the shares available under the Power Integrations
1997 Outside Directors Stock Option Plan (the “Directors Plan”) will run out,
and there will not be sufficient shares to fully grant the last grant to be made
under the Directors Plan. By determination of the Board of Directors, at such time
of the last grant to be made under the Directors Plan, the shares unable to be
granted will be granted out of the Power Integrations 2007 Equity Incentive Plan
(the “2007 Plan”).

     Beginning in 2009, initial and annual grants will be made to outside directors
under the Power Integrations 2007 Plan as follows (the “Directors Compensation
Program”):

     1. each current participant and each individual who would be eligible to
participate in the Directors Plan shall be a participant in the Directors
Compensation Program;

     2. the initial and annual options that would have been granted to the company’s
outside directors under the Directors Plan shall be granted using the shares
available for issuance under the 2007 Plan; provided, however, that the size of the
initial and annual options to be granted under the Directors Compensation Program
shall be 24,000 shares and 8,000 shares, respectively;

     3. the initial and annual option grants shall be granted automatically without
any further action by the Board or committee thereof, on such dates as would have
been granted under the Directors Plan;

     4. the initial and annual options granted under the Directors Compensation
Program shall be made pursuant to a Non-Statutory Initial Stock Option Agreement and
Non-Statutory Annual Stock Option Agreement in the forms approved by the Board;

     5. the exercise price per share for the initial and annual options to be
granted under the Directors Compensation Program shall be the Fair Market Value of a
share of the Company’s Common Stock on the grant date as determined in accordance
with the Option Agreements;

     6. notwithstanding the differences in the sizes of the initial and annual
option grants, the respective terms and conditions (including vesting schedules) of
the options granted under the Directors Compensation Program shall be identical to
the respective terms and conditions of the options that would have been granted
under the Directors Plan except as set forth in the Option Agreements; and

     7. the Directors Compensation Program shall terminate upon the approval of an
increase in the share reserve of the Directors Plan or adoption of a similar plan by
the Board and stockholders of the Company, or otherwise at the discretion of the
Board or the Compensation Committee.

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