Contract
Exhibit 10
Execution Copy
This TRANSACTION FEE AGREEMENT (this “Agreement”) is dated as of May 8, 2009 and is
between Power-One, Inc., a Delaware corporation (together with its successors, the
“Company”), and Silver Lake Management Company Sumeru, L.L.C., a Delaware limited liability
corporation (“SLS”).
BACKGROUND
1. The Company has entered into a Securities Purchase Agreement, dated as of April 23, 2009,
as it may be amended, supplemented or modified (the “SPA”), by and among the Company,
Silver Lake Sumeru Fund, L.P. and Silver Lake Technology Investors Sumeru, L.P. (collectively, the
“Purchasers”).
2. In accordance with the terms and conditions set forth in the SPA, the Company is issuing
and selling to the Purchasers, and the Purchasers are purchasing from the Company, the Securities
(as defined in the SPA) (the “Transaction”).
3. As an inducement to the Purchasers to enter into the SPA, the Company agreed to enter into
this Agreement and pay the fees and provide the expense reimbursement provided in this Agreement.
4. Capitalized terms used in this Agreement have the meanings ascribed to them in the SPA.
In consideration of the premises and agreements contained herein and of other good and
valuable consideration, the sufficiency of which are hereby acknowledged, the parties agree as
follows:
AGREEMENT
SECTION 1. Transaction Fee. The Company shall pay SLS at the closing of the
Transaction (the “Closing” and the date of such Closing, the “Closing Date”) a
non-refundable and irrevocable transaction fee of $1,000,000 by wire transfer of immediately
available federal funds to such account or accounts as specified by SLS to the Company prior to
such payment.
SECTION 2. Reimbursements. In addition to the fees payable pursuant to this
Agreement, the Indemnification provided under Section 3 hereof and any expense
reimbursement provided to any Preferred Directors or Nominated Directors in accordance with the
Company’s customary policies (none of which shall be subject to this Section 2), the
Company will pay, or cause to be paid, directly, or reimburse SLS and each of its affiliates for,
their respective Out-of-Pocket Expenses (as defined below). For the purposes of this Agreement, the
term “Out-of-Pocket Expenses” means the reasonable and documented out-of-pocket costs and
expenses incurred by SLS and its affiliates from time to time in connection with the ownership or
subsequent sale or transfer by SLS or its affiliates of securities of the Company or its successor,
including, without limitation, (a) fees and disbursements of any professionals and organizations,
including accountants, outside legal counsel or consultants, retained
by SLS or any of its
affiliates, (b) costs of any outside services or independent contractors such as financial
printers, couriers, business publications, on-line financial services or similar services,
retained or used by SLS or any of its affiliates, and (c) transportation, per diem costs, word
processing expenses or any similar expense not associated with SLS or its affiliates’ ordinary
operations. In no event will Out-of-Pocket Expenses (x) include any Transaction Expenses (as
defined in the SPA) or Registration Expenses (as defined in the Registration Rights Agreement) or
(y) exceed $50,000 in respect of any calendar year (or the prorated portion of any partial calendar
year this Agreement is in effect) excluding, in the case of clause (y), any Out-of-Pocket Expenses
incurred in connection with any acquisition, disposition, restructuring, debt or equity financing
or other extraordinary transaction of the Company as to the extent such Out-of-Pocket Expenses are
approved by the Company (such approval not to be unreasonably withheld). All payments or
reimbursements for Out-of-Pocket Expenses will be made within thirty (30) days of receipt of the
reasonably detailed request for payment or reimbursement in accordance with this Agreement, to the
account or accounts indicated to the Company by the relevant payee.
SECTION 3. Indemnification.
(a) The Company shall defend, indemnify, exonerate and hold free and harmless SLS, its
affiliates and their respective partners (both general and limited), members (both managing and
otherwise), managers, employees, agents and representatives (each such person being an “Indemnified
Party”) from and against any and all losses, damages, penalties, judgments, expenses, amounts paid
in settlement and costs (collectively “Liabilities”) directly or indirectly arising out of, based
upon or resulting from any actual or threatened actions, causes of action, suits, claims by third
parties and investigations by governmental authorities (collectively “Claims”) arising out of,
resulting from, or relating to the Transaction, any of the transactions contemplated by this
Agreement, and the other Transaction Agreements, or such Indemnified Party’s actual, alleged or
deemed control or ability to influence the Company or any of its Subsidiaries, whether or not
resulting in any Liability and whether or not such Claim is initiated by the Company,
provided that the Company shall not be liable under the foregoing indemnification provision
with respect to any Liability of an Indemnified Party that is determined by a court, in a final
judgment from which no further appeal may be taken, to have resulted solely from the gross
negligence or willful misconduct of such Indemnified Party or from its breach of any material
provision of any of the agreements entered into in connection with the Transaction. The Company
will reimburse any Indemnified Party for all reasonable and documented costs and expenses
(including reasonable attorneys’ fees and expenses and any other litigation-related expenses) as
they are incurred in connection with investigating, preparing, pursuing, defending or assisting in
the defense of any Claim for which the Indemnified Party would be entitled to indemnification under
the terms of the previous sentence, whether or not such Indemnified Party is a party thereto. The
Company agrees that it will not, without the prior written consent of the Indemnified Party,
settle, compromise or consent to the entry of any judgment in any Claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been threatened to be made
a party thereto) unless such settlement, compromise or consent includes an unconditional release of
the Indemnified Party from all liability, without future obligation or prohibition on the part of
the Indemnified Party, arising or that may arise out of such Claim, and does not contain an
admission of guilt or liability on the part of the Indemnified Party.
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(b) The rights of an Indemnified Party to indemnification hereunder will be cumulative and in
addition to any other rights and remedies any such person may have under any other agreement or
instrument to which each Indemnified Party is or becomes a party or is or otherwise becomes a
beneficiary or under any law or regulation. The indemnification provided in this Agreement will
inure to the benefit of the heirs, successors, assignees and administrators of each of the
Indemnified Parties.
(c) If the indemnification provided for in this Section 3 is unavailable in respect of
any Liabilities, then, in lieu of indemnifying an Indemnified Party, the Company agrees to
contribute to the amount paid or payable by such Indemnified Party in such proportion as is
appropriate to reflect the relative fault of the Company or any parent company or subsidiary
thereof (or any of them), on the one hand, and such Indemnified Party, on the other hand, in
connection with the actions which resulted in such Liabilities, as well as any other equitable
considerations.
SECTION 4. Term. This Agreement will become effective as of the Closing Date. In
the event that the SPA is terminated pursuant to Section 9 thereof, this Agreement shall be
void ab initio.
SECTION 5. Freedom to Pursue Opportunities. In recognition of the fact that SLS and
its affiliates, currently engage in, and may in the future engage in, the same or similar
activities or lines of business and have an interest in the same areas and types of corporate
opportunities, and in recognition of the benefits to be derived by the Company through its
continued contractual, corporate and business relations with SLS (including possible service of
directors, officers and employees of SLS as directors, officers and employees of the Company), the
Company renounces any interest or expectancy in, or in being offered the opportunity to participate
in, any corporate opportunity not allocated to it pursuant to this Section 5 to the fullest
extent permitted by Section 122(17) of the General Corporation Law of the State of Delaware (or any
successor provision). To the fullest extent permitted by applicable law, the Company acknowledges
and agrees that SLS and its affiliates (including, without limitation, each Investor
Securityholder, Appointed Director and Nominated Director (other than any Independent Directors))
currently have, and will in the future have or will consider acquiring, investments in numerous
companies with respect to which SLS or its affiliates may serve as an advisor, a director or in
some other capacity, in recognition that SLS and its affiliates have myriad duties to various
investors and partners, in anticipation that the Company, on the one hand, and SLS (or one or more
affiliates, associated investment funds or portfolio companies), on the other hand, may engage in
the same or similar activities or lines of business and have an interest in the same areas of
corporate opportunities, and in recognition of the benefits to be derived by the Company from the
consummation of the Transaction, the Company acknowledges and agrees that:
(a) SLS and its affiliates (including one or more associated investments funds or portfolio
companies and each Investor Securityholder and each Appointed Director and Nominated Director
(other than any Independent Directors)) shall have the right: (A) to directly or indirectly engage
in any business (including, without limitation, any business activities or lines of business that
are the same as or similar to those pursued by, or competitive with, the
Company and its subsidiaries); (B) to directly or indirectly do business with any client or
customer of the Company and its subsidiaries; (C) to take any other action that SLS or any such
person believes in good faith is necessary to or appropriate to fulfill its obligations as
described in the first sentence of this Section 5; and (D) not to present potential
transactions, matters or business opportunities to the Company or any of its subsidiaries, and to
pursue, directly or indirectly, any such opportunity for themselves, and to direct any such
opportunity to another person.
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(b) SLS and its affiliates (including its associated investments funds and portfolio
companies) and the Appointed Directors and Nominated Directors (other than any Independent
Directors) shall have no duty (contractual or otherwise) to communicate or present any corporate
opportunities to the Company or any of its affiliates or to refrain from any actions specified in
this Section 5, and the Company, on its own behalf and on behalf of its affiliates, hereby
irrevocably waives any right to require SLS or any of its affiliates (including its associated
investments funds and portfolio companies) and the Appointed Directors and Nominated Directors
(other than any Independent Directors) to act in a manner inconsistent with the provisions of this
Section 5.
(c) Neither SLS nor any of its affiliates (including its associated investments funds and
portfolio companies) and the Appointed Directors and Nominated Directors (other than any
Independent Directors) shall be liable to the Company or any of its affiliates for breach of any
duty (contractual or otherwise) by reason of any activities or omissions of the types referred to
in this Section 5 or of any such person’s participation therein.
SECTION 6. Miscellaneous.
(a) No amendment or waiver of any provision of this Agreement, or consent to any departure by
any party hereto from any such provision, will be effective unless it is in writing and signed by
each of the parties hereto. Any amendment, waiver or consent will be effective only in the specific
instance and for the specific purpose for which given. The waiver by any party of any breach of
this Agreement will not operate as or be construed to be a waiver by such party of any subsequent
breach.
(b) Any notices or other communications required or permitted to be given hereunder shall be
in writing and shall be deemed to be given when delivered in person or by private courier with
receipt, if telefaxed when verbal or email confirmation from the recipient is received, or three
(3) days after being deposited in the United States mail, first-class, registered or certified,
return receipt requested, with postage paid and,
if to SLS, to:
Silver Lake Management Company Sumeru, L.L.C.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
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with a copy (which copy shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
if to the Company, to:
Power-One, Inc.
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxxx, Esq.
Facsimile: (000) 000-0000
000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy (which copy shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Any party may change the address to which notices and communications to it are to be addressed by
notification as provided for herein.
(c) This Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof, and supersedes all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
(d) This Agreement will be governed by, and construed in accordance with, the laws of the
State of Delaware.
(e) Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in Delaware for the purpose of
any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or
investigation arising out of or based upon this Agreement or relating to the subject matter hereof,
(ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and
agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise,
in any such action, any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or execution, that any
such proceeding brought in one of the above-named courts is improper, or that this Agreement or the
subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees
not to commence or maintain any action, claim,
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cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising
out of or based upon this Agreement or relating to the subject matter hereof or thereof other than
before one of the above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of
the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding
the foregoing, to the extent that any party hereto is or becomes a party in any litigation in
connection with which it may assert indemnification rights set forth in this Agreement, the court
in which such litigation is being heard shall be deemed to be included in clause (i) above.
Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to
enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each
party hereto hereby consents to service of process in any such proceeding in any manner permitted
by Delaware law, and agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 6(b) hereof is reasonably
calculated to give actual notice.
(f) Neither this Agreement nor any of the rights or obligations hereunder may be assigned by
the Company without the prior written consent of SLS, provided that it may be so assigned
by the Company without such consent in connection with a Company Change in Control Event;
provided that such assignment will not relieve the Company of any of its obligations
hereunder; and provided, further, that SLS may assign or delegate its duties or
interests hereunder to any successor or assignee entity performing substantially the same functions
vis-à-vis the Purchasers (or their Permitted Transferees) as SLS performs on the date hereof and
which is an Affiliate of SLS at the sole discretion of SLS. Subject to the foregoing, the
provisions of this Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Subject to the next sentence, no person or party other
than the parties hereto and their respective successors or permitted assigns is intended to be a
beneficiary of this Agreement. The parties acknowledge and agree that (i) the Indemnified Parties
are intended to be third-party beneficiaries under Section 3 hereof and (ii) the Affiliates
of SLS and its associated investment funds and portfolio companies and each Appointed Director and
Nominated Director (other than any Independent Director) are intended to be third-party
beneficiaries under Section 5.
(g) This Agreement may be executed by one or more parties to this Agreement on any number of
separate counterparts (including by facsimile), and all of said counterparts taken together will be
deemed to constitute one and the same instrument.
(h) Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction will not invalidate or render unenforceable such provision in any other
jurisdiction.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this
Transaction Fee Agreement as of the date first written above.
| SILVER LAKE MANAGEMENT COMPANY SUMERU, L.L.C. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Managing Director | |||
| POWER-ONE, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
[Signature
Page to Transaction Fee Agreement]
