# EDGAR Filing Document

**Accession Number:** 0000833640
**File Stem:** 0000833640-26-000078
**Filing Date:** 2026-5
**Character Count:** 287268
**Document Hash:** 355066bbbe3ca1009298b627598527f3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000833640-26-000078.hdr.sgml**: 20260507

**ACCESSION NUMBER**: 0000833640-26-000078

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 75

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260507

**DATE AS OF CHANGE**: 20260507

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** POWER INTEGRATIONS INC
- **CENTRAL INDEX KEY:** 0000833640
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEMICONDUCTORS & RELATED DEVICES [3674]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 943065014
- **STATE OF INCORPORATION:** CA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-23441
- **FILM NUMBER:** 26953562

**BUSINESS ADDRESS:**
- **STREET 1:** 5245 HELLYER AVE
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95138
- **BUSINESS PHONE:** 4084149200

**MAIL ADDRESS:**
- **STREET 1:** 5245 HELLYER AVE
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95138

?xml version='1.0' encoding='ASCII'? POWER INTEGRATIONS, INC._March 31, 2026

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

(Mark One)

☒**Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the quarterly period ended March 31, 2026**

**or**

☐**Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the transition period from ______ to ______**

**Commission File Number 000-23441**

**POWER INTEGRATIONS, INC.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **94-3065014** |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |

---

---

| | | |
|:---|:---|:---|
| **5245 Hellyer Avenue** | **5245 Hellyer Avenue** |  |
| **San Jose,** | **California** | **95138** |
| (Address of Principal Executive Offices) | (Address of Principal Executive Offices) | (Zip Code) |

---

**(408) 414-9200**

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock | **POWI** | The Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ <br> Non-accelerated Filer ☐ Smaller Reporting Company ☐ <br> Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

---

| | |
|:---|:---|
| **Class** | **Shares Outstanding at May 4, 2026** |
| Common Stock, $0.001 par value | 55719984 |

---

------

[**Table of Contents**](#TOC)

#### POWER INTEGRATIONS, INC.
**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [PART I. FINANCIAL INFORMATION](#PARTI_FINANCIAL_INFORMATION) | [PART I. FINANCIAL INFORMATION](#PARTI_FINANCIAL_INFORMATION) |  |
| [Item 1.](#ITEM1FINANCIALSTATEMENTS_166783) | [Financial Statements](#ITEM1FINANCIALSTATEMENTS_166783) |  |
|  | [Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (Unaudited)](#CONDENSEDCONSOLIDATEDBALANCESHEETS_30472) | 4 |
|  | [Condensed Consolidated Statements of Income for the three months ended March 31, 2026 and 2025 (Unaudited)](#CONDENSEDCONSOLIDATEDSTATEMENTSOFINCOME_) | 5 |
|  | [Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025 (Unaudited)](#CONDENSEDCONSOLIDATEDSTATEMENTSOFCOMPREH) | 6 |
|  | [Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2026 and 2025 (Unaudited)](#CONDENSEDCONSOLIDATEDSTATEMENTSOFSTOCKHO) | 7 |
|  | [Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (Unaudited)](#CONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLO) | 8 |
|  | [Notes to Unaudited Condensed Consolidated Financial Statements](#NOTESTOUNAUDITEDCONDENSEDCONSOLIDATEDFIN) | 9 |
| [Item 2.](#ITEM2MANAGEMENTSDISCUSSIONANDANALYSISOFF) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ITEM2MANAGEMENTSDISCUSSIONANDANALYSISOFF) | 21 |
| [Item 3.](#ITEM3QUANTITATIVEANDQUALITATIVEDISCLOSUR) | [Quantitative and Qualitative Disclosures About Market Risk](#ITEM3QUANTITATIVEANDQUALITATIVEDISCLOSUR) | 27 |
| [Item 4.](#ITEM4CONTROLSANDPROCEDURES_705676) | [Controls and Procedures](#ITEM4CONTROLSANDPROCEDURES_705676) | 28 |
| [PART II. OTHER INFORMATION](#PARTIIOTHERINFORMATION_42343) | [PART II. OTHER INFORMATION](#PARTIIOTHERINFORMATION_42343) | 28 |
| [Item 1.](#ITEM1LEGALPROCEEDINGS_682443) | [Legal Proceedings](#ITEM1LEGALPROCEEDINGS_682443) | 28 |
| [Item 1A.](#ITEM1ARISKFACTORS_784513) | [Risk Factors](#ITEM1ARISKFACTORS_784513) | 28 |
| [Item 5.](#ITEM5_OTHER_INFORMATION) | [Other Information](#ITEM5_OTHER_INFORMATION) | 41 |
| [Item 6.](#ITEM6EXHIBITS_162095) | [Exhibits](#ITEM6EXHIBITS_162095) | 43 |
| [SIGNATURES](#SIGNATURES_232613) |  | 44 |

---

[**Table of Contents**](#TOC)

#### Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements identifiable by the use of the words "would," "could," "will," "may," "expect," "believe," "should," "anticipate," "if," "future," "intend," "plan," "estimate," "potential," "target," "seek," or "continue" and similar words and phrases, including the negatives or other variations of these terms, that denote future events. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and/or adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: changes in global trade policy, including tariffs, could reduce demand for end products that incorporate our products, which could have a material adverse effect on our revenue and operating results; if demand for our products declines in our major end markets, our net revenue will decline; we do not have long-term contracts with any of our customers and if they fail to place orders for our products, or if they cancel or reschedule orders, our operating results and our business may suffer; our products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our ability to forecast sales and increasing the complexity of our business; if our products do not penetrate additional markets, our business will not grow as we expect; intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products; we depend on third-party suppliers to provide us with wafers for our products, and if they fail to provide us sufficient quantities of wafers, our business may suffer; if we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations and negatively impact our profitability; and the other risk factors described under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025, in this Quarterly Report on Form 10-Q and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q. We make these forward-looking statements based upon information available on the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information or otherwise, except as required by laws.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

[**Table of Contents**](#TOC)

#### PART I. FINANCIAL INFORMATION

#### ITEM 1. FINANCIAL STATEMENTS

#### POWER INTEGRATIONS, INC.

#### CONDENSED CONSOLIDATED BALANCE SHEETS
**(Unaudited)**

---

| | | |
|:---|:---|:---|
| **(In thousands)** | **March 31, 2026** | **December 31, 2025** |
| ASSETS |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $63390 | $58755 |
| &nbsp;&nbsp;Short-term investments | 193814 | 190755 |
| &nbsp;&nbsp;Accounts receivable, net | 14407 | 18254 |
| &nbsp;&nbsp;Inventories | 162982 | 166887 |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 23747 | 23678 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 458340 | 458329 |
| Property and equipment, net | 143630 | 146536 |
| Intangible assets, net | 7061 | 7244 |
| Goodwill | 95271 | 95271 |
| Other non-current assets | 66385 | 64827 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL ASSETS | $770687 | $772207 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable | $31407 | $33963 |
| &nbsp;&nbsp;Accrued payroll and related expenses | 13224 | 13840 |
| &nbsp;&nbsp;Other accrued liabilities | 21958 | 22558 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 66589 | 70361 |
| Other liabilities | 32292 | 29001 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES | 98881 | 99362 |
| Commitments and contingencies (Note 11) |  |  |
| STOCKHOLDERS' EQUITY: |  |  |
| &nbsp;&nbsp;Common stock, $0.001 par value, 140,000 shares authorized; and 55,600 and 55,339 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | 20 | 20 |
| &nbsp;&nbsp;Additional paid-in capital | 8997 |  |
| &nbsp;&nbsp;Accumulated other comprehensive loss | (2491) | (1105) |
| &nbsp;&nbsp;Retained earnings | 665280 | 673930 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL STOCKHOLDERS' EQUITY | 671806 | 672845 |
| &nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $770687 | $772207 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### POWER INTEGRATIONS, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF INCOME
**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands, except per share amounts)** | **2026** | **2025** |
| Net revenue | $108308 | $105529 |
| Cost of revenue | 51370 | 47294 |
| Gross profit | 56938 | 58235 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;Research and development | 26255 | 24095 |
| &nbsp;&nbsp;Selling, general and administrative | 24444 | 27422 |
| &nbsp;&nbsp;Other operating expenses | (1419) |  |
| &nbsp;&nbsp;Restructuring and related charges | 6204 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 55484 | 51517 |
| Income from operations | 1454 | 6718 |
| Other income | 2466 | 3167 |
| Income before income taxes | 3920 | 9885 |
| Provision for income taxes | 620 | 1095 |
| NET INCOME | $3300 | $8790 |
| Earnings per share: |  |  |
| &nbsp;&nbsp;Basic | $0.06 | $0.15 |
| &nbsp;&nbsp;Diluted | $0.06 | $0.15 |
| Shares used in per share calculation: |  |  |
| &nbsp;&nbsp;Basic | 55506 | 56871 |
| &nbsp;&nbsp;Diluted | 55874 | 57123 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### POWER INTEGRATIONS, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Net income | $3300 | $8790 |
| &nbsp;&nbsp;Other comprehensive income (loss), net of tax: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation adjustments, net of $0 tax in each of the three months ended March 31, 2026 and 2025 | (389) | 390 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on investments, net of ($250) and ($116) tax in the three months ended March 31, 2026 and 2025, respectively | (999) | 451 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of defined benefit pension items, net of tax of $0 in each of the three months ended March 31, 2026 and 2025 | 2 | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other comprehensive income (loss) | (1386) | 840 |
| TOTAL COMPREHENSIVE INCOME | $1914 | $9630 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### POWER INTEGRATIONS, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** |
|  | **Common Stock** | **Common Stock** | | | | |
| **(In thousands)** | **Shares** | **Amount** | <br>**Additional**<br>**Paid-In**<br>**Capital** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Loss** | <br>**Retained**<br>**Earnings** | <br>**Total**<br>**Stockholders'**<br>**Equity** |
| BALANCE AT DECEMBER 31, 2025 | 55339 | $20 | $— | $(1105) | $673930 | $672845 |
| Issuance of common stock under employee stock option and stock award plans | 192 |  |  |  |  |  |
| Issuance of common stock under employee stock purchase plan | 69 |  | 2690 |  |  | 2690 |
| Stock-based compensation expense related to employee stock awards |  |  | 5917 |  |  | 5917 |
| Stock-based compensation expense related to employee stock purchases |  |  | 390 |  |  | 390 |
| Payment of dividends to stockholders |  |  |  |  | (11950) | (11950) |
| Unrealized actuarial gain on pension benefits |  |  |  | 2 |  | 2 |
| Unrealized loss on investments |  |  |  | (999) |  | (999) |
| Foreign currency translation adjustment |  |  |  | (389) |  | (389) |
| Net income |  |  |  |  | 3300 | 3300 |
| BALANCE AT MARCH 31, 2026 | 55600 | $20 | $8997 | $(2491) | $665280 | $671806 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
|  | **Common Stock** | **Common Stock** | | | | |
| **(In thousands)** | **Shares** | **Amount** | <br>**Additional**<br>**Paid-In**<br>**Capital** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Loss** | <br>**Retained**<br>**Earnings** | <br>**Total**<br>**Stockholders'**<br>**Equity** |
| BALANCE AT DECEMBER 31, 2024 | 56837 | $22 | $18734 | $(3023) | $734039 | $749772 |
| Issuance of common stock under employee stock option and stock award plans | 207 |  |  |  |  |  |
| Repurchase of common stock | (404) |  | (23098) |  |  | (23098) |
| Issuance of common stock under employee stock purchase plan | 53 |  | 2787 |  |  | 2787 |
| Stock-based compensation expense related to employee stock awards |  |  | 8329 |  |  | 8329 |
| Stock-based compensation expense related to employee stock purchases |  |  | 354 |  |  | 354 |
| Payment of dividends to stockholders |  |  |  |  | (11959) | (11959) |
| Unrealized actuarial loss on pension benefits |  |  |  | (1) |  | (1) |
| Unrealized gain on investments |  |  |  | 451 |  | 451 |
| Foreign currency translation adjustment |  |  |  | 390 |  | 390 |
| Net income |  |  |  |  | 8790 | 8790 |
| BALANCE AT MARCH 31, 2025 | 56693 | $22 | $7106 | $(2183) | $730870 | $735815 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### POWER INTEGRATIONS, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| Net income | $3300 | $8790 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;Depreciation | 6380 | 7244 |
| &nbsp;&nbsp;Amortization of intangibles | 183 | 207 |
| &nbsp;&nbsp;Loss on disposal of property and equipment | 49 |  |
| &nbsp;&nbsp;Stock-based compensation expense | 6307 | 8683 |
| &nbsp;&nbsp;Accretion of discount on investments | (156) | (346) |
| &nbsp;&nbsp;Decrease in accounts receivable allowance for credit losses |  | (381) |
| &nbsp;&nbsp;Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 3847 | 4747 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 3905 | (3456) |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 3414 | 832 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (4072) | 4002 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other accrued liabilities | (3112) | (3936) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NET CASH PROVIDED BY OPERATING ACTIVITIES | 20045 | 26386 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| &nbsp;&nbsp;Purchases of property and equipment | (1998) | (5726) |
| &nbsp;&nbsp;Purchases of investments | (14807) | (5630) |
| &nbsp;&nbsp;Proceeds from sales and maturities of investments | 10655 | 15882 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (6150) | 4526 |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;Issuance of common stock under employee stock plans | 2690 | 2787 |
| &nbsp;&nbsp;Repurchase of common stock |  | (23098) |
| &nbsp;&nbsp;Payments of dividends to stockholders | (11950) | (11959) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NET CASH USED IN FINANCING ACTIVITIES | (9260) | (32270) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 4635 | (1358) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 58755 | 50972 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $63390 | $49614 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

1. BASIS OF PRESENTATION:

The condensed consolidated financial statements include the accounts of Power Integrations, Inc., a Delaware corporation (the "Company"), and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior-period amounts have been reclassified to conform to current year presentation. These reclassifications had no effect on the reported results of operations.

While the financial information furnished is unaudited, the condensed consolidated financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair presentation of the results of operations for the interim periods covered and the financial condition of the Company at the date of the interim balance sheet in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The results for interim periods are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and the notes thereto for the year ended December 31, 2025, included in its Form 10-K filed on February 6, 2026, with the Securities and Exchange Commission.

2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS:

***Significant Accounting Policies and Estimates***

No material changes have been made to the Company's significant accounting policies disclosed in Note 2, *Significant Accounting Policies and Recent Accounting Pronouncements*, of the Company's financial statements set forth in Item 8 of the Company's Annual Report on Form 10-K, filed on February 6, 2026, for the year ended December 31, 2025.

***Recent Accounting Pronouncements***

In November 2024, the FASB issued ASU 2024-03, *Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)* which requires additional disclosure of certain costs and expenses, including inventory purchases, employee compensation, selling expense and depreciation expense within the notes to financial statements. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact that the updated standard will have on its financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, *Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40)* which amends certain aspects of the accounting for and disclosure of software costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact that the updated standard will have on its financial statement disclosures.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

3. CONDENSED CONSOLIDATED BALANCE SHEET COMPONENTS AND OTHER INFORMATION:

#### Accounts Receivable

---

| | | |
|:---|:---|:---|
|  | **March 31,**  | **December 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Accounts receivable trade | $51519 | $54177 |
| Allowance for ship and debit | (33659) | (33601) |
| Allowance for stock rotation and rebate | (3359) | (2228) |
| Allowance for credit losses | (94) | (94) |
| &nbsp;&nbsp;Total | $14407 | $18254 |

---

#### Inventories

---

| | | |
|:---|:---|:---|
|  | **March 31,**  | **December 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Raw materials | $99517 | $101366 |
| Work-in-process | 29944 | 27905 |
| Finished goods | 33521 | 37616 |
| &nbsp;&nbsp;Total | $162982 | $166887 |

---

#### Other non-current assets

---

| | | |
|:---|:---|:---|
|  | **March 31,**  | **December 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Deferred tax assets | $34797 | $35594 |
| Right of use for leased properties | 22718 | 19325 |
| Prepaid expenses | 6753 | 6863 |
| Other non-current assets | 2117 | 3045 |
| &nbsp;&nbsp;Total | $66385 | $64827 |

---

#### Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income for the three months ended March 31, 2026 and 2025, were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Unrealized Gains** | **Unrealized Gains** |  |  |  |  |  |  |
|  | **and Losses on** | **and Losses on** | **Defined Benefit** | **Defined Benefit** | **Foreign Currency**  | **Foreign Currency**  |  |  |
|  | **Investments** | **Investments** | **Pension Items** | **Pension Items** | **Items** | **Items** | **Total** | **Total** |
|  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  | **March 31,**  | **March 31,**  | **March 31,**  | **March 31,**  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** | **2026** | **2025** | **2026** | **2025** | **2026** | **2025** |
| Beginning balance | $1751 | $693 | $(32) | $99 | $(2824) | $(3815) | $(1105) | $(3023) |
| &nbsp;&nbsp;Other comprehensive income (loss) before reclassifications | (999) | 451 |  |  | (389) | 390 | (1388) | 841 |
| &nbsp;&nbsp;Amounts reclassified from accumulated other comprehensive income (loss) |  |  | 2<br><sup>(1)</sup> | (1)<br><sup>(1)</sup> |  |  | 2 | (1) |
| &nbsp;&nbsp;Net-current period other comprehensive income (loss) | (999) | 451 | 2 | (1) | (389) | 390 | (1386) | 840 |
| Ending balance | $752 | $1144 | $(30) | $98 | $(3213) | $(3425) | $(2491) | $(2183) |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost for the three months ended March 31, 2026 and 2025.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

4. RESTRUCTURING:

The Company continuously evaluates its operations to better align the organization with market opportunities, increase operational efficiency, decrease costs and increase profitability. During the three months ended March 31, 2026, the Company undertook a restructuring plan, reducing its workforce by approximately 7% to better align expenses with revenue and create flexibility to invest in the products, people, and markets that are expected to drive long-term growth and profitability. In conjunction with this restructuring plan, restructuring charges of $6.6 million were recognized during the first quarter of 2026, primarily composed of severance costs. The restructuring plan was substantially completed in the first quarter of 2026. No restructuring charges were incurred in fiscal 2025. Restructuring liabilities are included in other accrued liabilities in the accompanying unaudited condensed consolidated balance sheets, and are summarized in the following table:

---

| | | | |
|:---|:---|:---|:---|
|  | **2026 Plan** | **2026 Plan** | |
| **(in thousands)** | **Employee severance** | **Other** | <br>**Total** |
| Restructuring liability as of January 1, 2026 | $— | $— | $— |
| Charges | 4591 | 151 | 4742 |
| Cash payments | (3745) | (55) | (3800) |
| Non-cash and other |  |  |  |
| Restructuring liability as of March 31, 2026 | $846 | $96 | $942 |

---

Cash severance charges of $0.4 million related to the departure of an executive officer are included in the table hereto. In addition, stock-based compensation expense of $1.8 million was recognized in the three months ended March 31, 2026 due to the acceleration of equity awards in accordance with the terms of the executive's severance agreement.

The following table provides a summary of restructuring-related charges as presented in the unaudited condensed consolidated statements of income:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(in thousands)** | **2026** | **2025** |
| Restructuring and related charges in cost of revenue | $365 | $— |
| Restructuring and related charges in operating expenses | 6204 |  |
|  | $6569 | $— |

---

In conjunction with the restructuring actions, certain engineers were moved from sales and marketing projects to product development priorities. In accordance with this, $3.0 million of related department costs have been classified as research and development expense in the accompanying condensed consolidated statement of income this quarter and will be accounted for accordingly going forward*.* 

5. FAIR VALUE MEASUREMENTS:

The FASB established a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices for identical assets in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company's cash equivalents and short-term investments are classified within Level 1 or Level 2 of the fair-value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

The fair-value hierarchy of the Company's cash equivalents and short-term investments at March 31, 2026 and December 31, 2025, was as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Fair Value Measurement at** | **Fair Value Measurement at** | **Fair Value Measurement at** |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| **(In thousands)** | <br>**Total Fair Value** | **Quoted Prices in**<br>**Active Markets for**<br>**Identical Assets**<br> **(Level 1)** | <br>**Significant Other**<br>**Observable Inputs**<br> **(Level 2)** |
| Commercial paper | $7234 | $— | $7234 |
| Corporate securities | 192275 |  | 192275 |
| Money market funds | 1396 | 1396 |  |
| &nbsp;&nbsp;Total | $200905 | $1396 | $199509 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Fair Value Measurement at** | **Fair Value Measurement at** | **Fair Value Measurement at** |
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| **(In thousands)** | <br>**Total Fair Value** | **Quoted Prices in**<br>**Active Markets for**<br>**Identical Assets**<br> **(Level 1)** | <br>**Significant Other**<br> **Observable Inputs**<br>**(Level 2)** |
| Commercial paper | $5555 | $— | $5555 |
| Corporate securities | 189258 |  | 189258 |
| Money market funds | 3559 | 3559 |  |
| U.S. government securities | 999 |  | 999 |
| &nbsp;&nbsp;Total | $199371 | $3559 | $195812 |

---

The Company did not transfer any investments between Level 1 and Level 2 of the fair-value hierarchy in the three months ended March 31, 2026 and the twelve months ended December 31, 2025.

6. INVESTMENTS:

Amortized cost and estimated fair market value of investments classified as available-for-sale (excluding cash equivalents) at March 31, 2026, were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized** | **Gross Unrealized** | |
| **(In thousands)** | **Amortized**<br>**Cost** | **Gains** | **Losses** | **Estimated Fair**<br>**Market Value** |
| **Investments due in 3 months or less:** |  |  |  |  |
| &nbsp;&nbsp;Commercial paper | $1538 | $— | $— | $1538 |
| &nbsp;&nbsp;Corporate securities | 8300 | 9 |  | 8309 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 9838 | 9 |  | 9847 |
| **Investments due in 4-12 months:** |  |  |  |  |
| &nbsp;&nbsp;Corporate securities | 78626 | 460 |  | 79086 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 78626 | 460 |  | 79086 |
| **Investments due in 12 months or greater:** |  |  |  |  |
| &nbsp;&nbsp;Corporate securities | 104659 | 389 | (167) | 104881 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 104659 | 389 | (167) | 104881 |
| **Total investments** | $193123 | $858 | $(167) | $193814 |

---

Accrued interest receivable was $1.8 million at March 31, 2026, and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

Amortized cost and estimated fair market value of investments classified as available-for-sale (excluding cash equivalents) at December 31, 2025, were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Gross Unrealized** | **Gross Unrealized** | |
| **(In thousands)** | **Amortized**<br>**Cost** | **Gains** | **Losses** | **Estimated Fair**<br>**Market Value** |
| **Investments due in 3 months or less:** |  |  |  |  |
| &nbsp;&nbsp;Commercial paper | $1498 | $— | $— | $1498 |
| &nbsp;&nbsp;Corporate securities | 8152 | 8 |  | 8160 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 9650 | 8 |  | 9658 |
| **Investments due in 4-12 months:** |  |  |  |  |
| &nbsp;&nbsp;Corporate securities | 32256 | 267 |  | 32523 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 32256 | 267 |  | 32523 |
| **Investments due in 12 months or greater:** |  |  |  |  |
| &nbsp;&nbsp;Corporate securities | 146910 | 1665 | (1) | 148574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 146910 | 1665 | (1) | 148574 |
| **Total investments** | $188816 | $1940 | $(1) | $190755 |

---

Accrued interest receivable was $2.3 million at December 31, 2025, and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

The following table summarizes investments classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at March 31, 2026:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Less Than 12 Months** | **Less Than 12 Months** | **12 Months or Longer** | **12 Months or Longer** | **Total** | **Total** |
| **(In thousands)** | **Estimated** <br>**Fair Market** <br>**Value** | **Gross**<br>**Unrealized** <br>**Losses** | **Estimated** <br>**Fair Market** <br>**Value** | **Gross**<br>**Unrealized** <br>**Losses** | **Estimated** <br>**Fair Market** <br>**Value** | **Gross**<br>**Unrealized** <br>**Losses** |
| &nbsp;&nbsp;Corporate securities | $30224  | $(167) | $— | $— | $30224 | $(167) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total investments | $30224 | $(167) | $— | $— | $30224 | $(167) |

---

In the three months ended March 31, 2026 and 2025, no unrealized losses on investments were recognized in the condensed consolidated statements of income.

The Company does not intend to sell, and it is unlikely that it will be required to sell the securities held prior to their anticipated recovery. The issuers are high quality (investment grade) and the decline in fair value is largely due to changes in interest rates. Additionally, the issuers continue to make timely interest payments on the investments with the fair value expected to recover as they reach maturity.

7. STOCKHOLDERS' EQUITY:

#### Cash Dividends
In October 2024, the Company's board of directors declared dividends of $0.21 per share to be paid to stockholders of record at the end of each quarter in 2025. In October 2025, the Company's board of directors raised the quarterly cash dividend with the declaration of four cash dividends of $0.215 per share to be paid at the end of each quarter in 2026.

For the three months ended March 31, 2026 and 2025, cash dividends declared and paid were as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands, except per share amounts)** | **2026** | **2025** |
| Dividends declared and paid | $11950 | $11959 |
| Dividends declared per common share | $0.215 | $0.21 |

---

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

#### Common Stock Repurchases
From time to time, the Company's board of directors has authorized the use of funds to repurchase shares of the Company's common stock. As of December 31, 2025, the Company did not have any amount authorized to repurchase shares of its common stock.

#### Employee Stock Incentive Plans
The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Cost of revenue | $469 | $657 |
| Research and development | 1904 | 2250 |
| Selling, general and administrative | 3526 | 5776 |
| Other operating expenses (see note below) | (1419) |  |
| Restructuring and related charges | 1827 |  |
| &nbsp;&nbsp;Total stock-based compensation expense | $6307 | $8683 |

---

#### Other Operating Expenses
In connection with his retirement in July 2025, the Company's former chief executive officer, Balu Balakrishnan, entered into a transition agreement and a consulting agreement with the Company. Pursuant to these agreements, Mr. Balakrishnan's outstanding equity awards continue to vest subject to his continuous service and the applicable award agreements. The majority of these awards are subject to performance criteria established at the time of grant and will only be earned to the extent that the Company's performance satisfies such criteria at the conclusion of the applicable performance periods. As the services to be performed by Mr. Balakrishnan under the transition agreement and the consulting agreement do not qualify as "substantive services" under ASC 718, *Compensation–Stock Compensation,* the continued vesting of the outstanding equity awards represents a modification of the original awards. Consequently, in the year ended December 31, 2025, the Company recognized stock-based compensation in the amount of $8.4 million in other operating expenses. In the quarter ended March 31, 2026, the Company recorded a $1.4 million credit in other operating expenses on the condensed consolidated statements of income, reversing a portion of the previously recognized stock-based compensation expense. The reversal reflects our revised estimate of the portion of the awards that will ultimately vest. Subsequent changes in our estimates could result in further adjustments in future periods until the vesting of these equity awards.

8. REVENUE:

#### Customer Concentration
The Company's top ten customers accounted for approximately 80% of net revenue in both the three months ended March 31, 2026 and 2025. A significant portion of revenue is attributable to sales of the Company's products to distributors of electronic components. These distributors sell the Company's products to a broad, diverse range of end users, including original equipment manufacturers ("OEMs") and merchant power-supply contract manufacturers ("CMs"). Similarly, merchant power-supply manufacturers sell power supplies incorporating the Company's products to a broad range of OEMs.

Sales to distributors and direct sales to OEMs and power-supply CMs contributed to the Company's net revenue as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |

---

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

---

| | | |
|:---|:---|:---|
| Sales to distributors | $76739 | $75164 |
| Sales to OEMs and CMs | 31569 | 30365 |
| Total net revenue | $108308 | $105529 |

---

During the three months ended March 31, 2026 and 2025, 15% and 13% of net revenue related to an OEM that fulfilled its purchases through the Company's CM customers in each respective quarter.

The following customers represented 10% or more of the Company's net revenue for the respective periods:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **Customer** | **2026** | **2025** |
| Customer A | 30% | 32% |
| Customer B | 10% | \* |
| Customer C | 10% | \* |
| Customer D | 10% | \* |

---

\*Total customer revenue was less than 10% of net revenue.

No other customers accounted for 10% or more of the Company's net revenue in the periods presented.

#### Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables. The Company does not have any off-balance-sheet credit exposure related to its customers.

As of March 31, 2026 and December 31, 2025, 87% and 89% of accounts receivable were concentrated with the Company's top ten customers.

The following customers represented 10% or more of accounts receivable at March 31, 2026 and December 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **March 31,**  | **December 31,**  |
| **Customer** | **2026** | **2025** |
| Customer A | 30% | 32% |
| Customer B | 14% | 11% |
| Customer C | 14% | 18% |
| Customer D | 11% | \* |

---

\*Total customer accounts receivable was less than 10% of accounts receivable.

No other customers accounted for 10% or more of the Company's accounts receivable in the periods presented.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

#### Net Revenue by Geography
The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors. Net revenue by region and country with 10% or more of the Company's revenue during any of the periods presented, based on "bill to" customer locations were as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Americas | $7083 | $5717 |
| EMEA | 15125 | 11291 |
| APAC: |  |  |
| &nbsp;&nbsp;Hong Kong/China | 49971 | 56488 |
| &nbsp;&nbsp;Korea | 10747 | 12269 |
| &nbsp;&nbsp;Other APAC | 25382 | 19764 |
| Total net revenue | $108308 | $105529 |

---

9. EARNINGS PER SHARE:

Basic earnings per share are calculated by dividing net income by the weighted-average shares of common stock outstanding during the period. Diluted earnings per share are calculated by dividing net income by the weighted-average shares of common stock and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares included in this calculation consist of the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock method.

A summary of the earnings per share calculation is as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands, except per share amounts)** | **2026** | **2025** |
| Basic earnings per share: |  |  |
| &nbsp;&nbsp;Net income  | $3300 | $8790 |
| &nbsp;&nbsp;Weighted-average common shares | 55506 | 56871 |
| &nbsp;&nbsp;Basic earnings per share | $0.06 | $0.15 |
| Diluted earnings per share: <sup>(1)</sup> |  |  |
| &nbsp;&nbsp;Net income  | $3300 | $8790 |
| &nbsp;&nbsp;Weighted-average common shares | 55506 | 56871 |
| &nbsp;&nbsp;Effect of dilutive awards: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Employee stock plans | 368 | 252 |
| &nbsp;&nbsp;Diluted weighted-average common shares | 55874 | 57123 |
| &nbsp;&nbsp;Diluted earnings per share | $0.06 | $0.15 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company includes the shares underlying performance-based awards in the calculation of diluted earnings per share if the performance conditions have been satisfied as of the end of the reporting period and excludes such shares when the necessary conditions have not been met. The Company has excluded the shares underlying the outstanding performance-based awards in the 2026 and 2025 calculations as the shares were not contingently issuable as of the end of the reporting period.

10. INCOME TAXES:

Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for certain discrete items which are fully recognized in the period they occur. Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

The Company's effective tax rate for the three months ended March 31, 2026, was 15.8% and 11.1% in the corresponding period of 2025. The effective tax rate in these periods were lower than the statutory federal income-tax rate of 21% due to the geographic distribution of the Company's world-wide earnings in lower-tax jurisdictions and federal tax credits. In the three months ended March 31, 2026, the Company's effective tax rate was affected by the recognition of a tax accounting shortfall associated with share-based payments. Additionally, in the three months ended March 31, 2025, the Company's effective tax rate was unfavorably impacted by the recognition of share-based payments and foreign income subject to U.S. tax. The Company has not been granted any incentivized tax rates and does not operate under any tax holidays in any jurisdiction.

11. COMMITMENTS AND CONTINGENCIES:

#### Supplier Agreements
Under the terms of the Company's wafer-supply agreements with various foundries, the wafers purchased from these suppliers are priced in U.S. dollars, with mutual sharing of the impact of fluctuations in the exchange rate between the Japanese yen and the U.S. dollar on future purchases. Each year, the Company's management and several suppliers review and negotiate future pricing; the negotiated pricing is denominated in U.S. dollars but is subject to contractual exchange-rate true-up provisions. The fluctuation in the exchange rate is shared between the Company and each of these suppliers on future purchases.

#### Warranty
The Company generally warrants that its products will substantially conform to the published specifications for 12 months from the date of shipment. Under the terms and conditions of sale, the Company's liability is limited generally to either a credit equal to the purchase price or replacement of the part.

#### Legal Proceedings
From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers and distributors may make claims against the Company. In accordance with ASC 450-10, *Contingencies*, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

During the year ended December 31, 2025, the Company had been defending against patent-infringement claims filed by a third party against a customer of the Company, including claims filed in 2019 and a follow-on claim filed in the first quarter of 2025. The Company intervened on behalf of its customer and sought a declaration of non-infringement with respect to use of the Company's products. In the second half of 2025, the Company successfully obtained verdicts of noninfringement and invalidity of all asserted claims, and as part of the noninfringement verdict, the jury found that no products incorporating the Company's specified products met the specific requirements of the claimant's asserted claims. The Court thereafter entered judgment in favor of the Company and also dismissed the follow-on claim. In April 2026, the Company executed a settlement in which the claimant granted the Company a full release and covenant not to assert any claims against the Company or its customers on any of the claimant's patents based on the use or incorporation of any product. The Company did not provide any payment to the claimant in exchange for the resolution of the dispute. Pursuant to the settlement, all pending motions in the case have been terminated and the matter is now closed.

As of December 31, 2025, the Company had reserved approximately $11.3 million for an employee relations dispute including legal fees which is pending ongoing court proceedings. While the court ruled in favor of the plaintiff in the second quarter of 2025, the Company disagrees with the jury's verdict and court's orders related to plaintiff attorney fees and related costs against the Company and has appealed the judgement. The charges associated with the established reserve were recognized in other operating expenses in the accompanying condensed consolidated statements of income.

The Company is unable to predict the outcome of any further proceedings with certainty, and there can be no assurance that the Company will prevail in the hereto-mentioned litigation. The Company evaluates, at least on a quarterly

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

basis, developments in its legal matters that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable. These litigations, whether or not determined in the Company's favor or settled, will be costly and will divert the efforts and attention of the Company's management and technical personnel from normal business operations, potentially causing a material adverse effect on the business, financial condition and operating results. In addition, adverse determinations in patent litigation could result in the loss of proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties or prevent the Company from licensing the technology, and incur monetary losses, any of which could have a material adverse effect on the Company's business, financial condition and operating results.

#### Indemnifications
The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements ("DSA"). Each DSA contains the relevant terms of the contractual arrangement with the distributor, and generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company's products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party ("Customer Indemnification"). The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product. The Company also, from time to time, has granted a specific indemnification right to individual customers.

The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees' development work to the Company. While the Company has on occasion been made aware of claims against its distributors or customers that may trigger an indemnification claim, to date, the Company has not had to reimburse any of its distributors or customers for any losses related to these indemnifications and no material claims were outstanding as of March 31, 2026. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications.

12. SEGMENT REPORTING:

The Company is organized and operates as one operating and reportable segment; the design, development, manufacture and marketing of integrated circuits and related components for use primarily in high-voltage power conversion. This determination is based on the management approach which designates internal information regularly available to the Chief Operating Decision Maker ("CODM") for making decisions and assessing performance as the source of determination of the Company's reportable segments. The Company's CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for the purpose of making operating decisions and assessing financial performance.

The CODM uses net income as the measure of profit or loss to allocate resources and assess performance. The CODM regularly reviews net income as reported on the Company's consolidated statements of income. Financial forecasts and budget to actual results used by the CODM to assess performance and allocate resources, as well as those used for strategic decisions related to headcount and capital expenditures, are also reviewed on a consolidated basis. The CODM considers the impact on net income of the significant segment expenses in the table below when deciding whether to reinvest profits, propose dividends or share repurchase, or pursue strategic mergers and acquisitions.

The measure of segment assets is reported on the balance sheet as total assets. The CODM does not review segment assets at a level other than that presented in the Company's consolidated balance sheets.

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

The table below presents the Company's consolidated operating results including significant segment expenses:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| Net revenue | $108308 | $105529 |
| Less:  |  |  |
| &nbsp;&nbsp;Stock-based compensation (1) | 6307 | 8683 |
| &nbsp;&nbsp;Amortization of acquisition-related intangible assets (2) | 147 | 147 |
| &nbsp;&nbsp;Cost of revenue (excluding 1 & 2) | 50754 | 46490 |
| &nbsp;&nbsp;Research and development (excluding 1) | 24351 | 21845 |
| &nbsp;&nbsp;Selling, general and administrative (excluding 1) | 20918 | 21646 |
| &nbsp;&nbsp;Other operating expenses (excluding 1) |  |  |
| &nbsp;&nbsp;Restructuring and related charges in operating expenses (excluding 1) | 4377 |  |
| Income from operations | 1454 | 6718 |
| Other income | 2466 | 3167 |
| Provision for income taxes | 620 | 1095 |
| NET INCOME | $3300 | $8790 |

---

[**Table of Contents**](#TOC)

**POWER INTEGRATIONS, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

The table below presents other segment information:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(In thousands)** | **2026** | **2025** |
| &nbsp;&nbsp;Depreciation | $6380 | $7244 |
| &nbsp;&nbsp;Amortization of intangibles  | $183 | $207 |
| &nbsp;&nbsp;Interest income | $2524 | $3360 |

---

13. BANK LINES OF CREDIT

In 2016, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the "Prior Credit Agreement") that provided the Company with a $75.0 million revolving line of credit to use for general corporate purposes and a $20.0 million sub-limit for the issuance of standby and trade letters of credit with an interest rate based on the Secured Overnight Financing Rates ("SOFR"). The Prior Credit Agreement had a term which originally extended to June 7, 2026; the Prior Credit Agreement was terminated on April 10, 2026. The Company was compliant with all covenants and had no advances outstanding under the Prior Credit Agreement as of termination of the Prior Credit Agreement.

On February 24, 2026, the Company entered into that certain Loan Agreement with PNC Bank, National Association (the "PNC Loan Agreement") to replace the Prior Credit Agreement. The PNC Loan Agreement became effective and available for use on April 10, 2026 when the Company terminated the Prior Credit Agreement. The PNC Loan Agreement provides the Company with a $100.0 million revolving line of credit with a $25.0 million sub-limit for the issuance of standby and trade letters of credit. The interest rate on outstanding borrowings under the PNC Loan Agreement is based on SOFR plus 1.60%. The Company's obligations under the PNC Loan Agreement are unsecured. The PNC Loan Agreement term extends through February 24, 2031; all advances under the revolving line of credit, together with all accrued and unpaid interest, fees and other obligations owing thereon, will become due on such date, or earlier upon the occurrence of an Event of Default (as defined in the PNC Loan Agreement).

The PNC Loan Agreement requires the Company to maintain a Minimum Liquidity of at least $50.0 million as of the last day of each fiscal quarter and a ratio of Funded Indebtedness to Adjusted EBITDA (each as defined in the PNC Loan Agreement) of less than 2.00 to 1.00 as of the last day of each fiscal quarter and determined on a rolling four-quarter basis.

The PNC Loan Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type. The PNC Loan Agreement contains negative covenants, including negative covenants that restrict, subject to certain exceptions, the Company's ability to:

● use the proceeds of any credit extended under the PNC Loan Agreement except to refinance all indebtedness outstanding under the Prior Credit Agreement and for working capital or other general business purposes;

● create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances;

● mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of the Company's assets;

● guarantee or become liable for any obligations or liabilities of any other person or entity;

● purchase or hold beneficially any stock, or other securities or evidence of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity; and

● liquidate, dissolve, merge or consolidate with or into any person, firm, corporation or other entity, or make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of the Company's property, assets, operations or business.

The Company was compliant with all covenants and had no advances outstanding under the PNC Loan Agreement as of April 10, 2026.

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#### ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
*The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations. It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management's discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 6, 2026. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the caption "Risk Factors" included in this report. See also "Cautionary Note Regarding Forward-Looking Statements" at the beginning of this report.*

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors that could cause actual results to differ materially from those predicted include, but are not limited to:

● The demand for our products declining in the major end markets we serve and the ability of our products to penetrate additional markets; which may occur due to competitive factors, supply-chain fluctuations, rising inflation or other changes in macroeconomic or geopolitical conditions;

● the volume and timing of orders received from customers;

● our ability to develop and bring to market new products and technologies, including on a timely basis;

● reliance on international sales activities for a substantial portion of our net revenue;

● the lengthy timing of our sales cycle;

● sales of our products through distributors, which limits our direct interaction with our end customers, reducing our ability to forecast sales and increasing the complexity of our business;

● the cyclical nature of the power supply industry and cyclical market patterns across different end markets for which our products are used;

● competitive pressures on selling prices;

● risks associated with our supply chain including, the volume, cost and timing of delivery of orders placed by us with our wafer foundries and assembly subcontractors, and their ability to procure materials;

● undetected defects, quality issues, warranty claims or product recalls related to our products;

● our ability to attract and retain qualified personnel;

● changes in global trade policy, including tariffs, could reduce demand for end products that incorporate our products, which could have a material adverse effect on our revenue and operating results;

● our ability to realize the expected benefits of restructuring initiatives designed to reduce costs and create a more efficient organization;

● debt obligations we incur in the future could adversely affect our financial condition;

● the inability to adequately protect or enforce our intellectual property rights;

● we have been and may be subject to or involved in litigation, threatened litigation or other disputes, the outcome of which may be difficult to predict, and which may be costly to defend, divert management attention, require us to pay damages or other payments, or restrict the operation of our business;

● expenses we are required to incur (or choose to incur) in connection with litigation;

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● changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits may increase the amount of taxes we are required to pay and require management time and attention;

● changes in environmental laws and regulations, including with respect to energy consumption and climate change;

● continued impact of changes in securities laws and regulations, including potential risks resulting from our evaluation of our internal controls over financial reporting;

● current or potential war, domestic or international conflict, political or social instability, or military actions, including the conflicts in Ukraine and the Middle East;

● failure, disruption, security breaches, or other incidents impacting our information technology infrastructure or information management systems;

● interruptions in our information technology systems;

● unfavorable or uncertain market conditions and risks relating to the adoption, use or application of emerging technologies, including AI, by our customers and in our business;

● fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, the Euro and the Swiss franc;

● earthquakes, fire, global health crises, or other disasters;

● risks associated with acquisitions and strategic investments; and

● our ability to successfully integrate, or realize the expected benefits from, our acquisitions.

#### Overview
Power Integrations is a leading innovator in semiconductor technologies for high-voltage power conversion. Our products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts.

Our net revenue was $108.3 million and $105.5 million in the three months ended March 31, 2026 and 2025, respectively. The increase in net revenue for the three-months period was primarily due to higher sales in the industrial end-market.

Our top ten customers, including distributors that resell to OEMs and merchant power-supply manufacturers, accounted for approximately 80% of our net revenue for both of the three months ended March 31, 2026 and 2025. International sales accounted for approximately 98% and 99% of our net revenue for the three months ended March 31, 2026 and 2025, respectively.

Our gross margin was 53% for the three months ended March 31, 2026 and 55% in the corresponding period in 2025. The decrease in gross margin was primarily due to the unfavorable impact of the dollar/yen exchange rate and restructuring related costs.

Total operating expenses were $55.5 million and $51.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase in operating expenses for the three-month period was primarily due to restructuring and related charges of $6.6 million for severance and benefit costs associated with the workforce reduction described in Note 4 of this report herein. These increases were offset in the three months ended March 31, 2026, by a $1.4 million credit in other operating expenses related to stock-based compensation expense associated with the changes in performance criteria measurement as described in Note 7 of this report herein.

Our management team continuously evaluates operations to better align our organization with market opportunities, increase operational efficiency, decrease costs and increase profitability. In connection with this, a restructuring plan was undertaken in the first quarter of 2026, reducing the Company's workforce by approximately 7% to better align our expenses with revenue and create flexibility to invest in the products, people, and markets that are expected to drive long-term growth and profitability. As a result, we recognized restructuring charges of $6.6 million

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during the first quarter of 2026, primarily composed of severance costs. The restructuring plan was substantially completed in the first quarter of 2026.

*Capital Return Program.* We remain committed to delivering stockholder value through our stock repurchase and dividend programs. Under future programs authorized by our Board of Directors, we may repurchase shares of our common stock in the open-market or through privately negotiated transactions. The extent to which we repurchase our stock and the timing of such repurchases will depend upon market conditions, legal rules and regulations and other corporate considerations, as determined by our management team.

During the three months ended March 31, 2026, we returned $12.0 million of capital to stockholders through the payment of cash dividends.

We continue to monitor the environment for potential long-term impact on supply and demand from tariffs.

#### Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.

Critical accounting policies are important to the portrayal of our financial condition and results of operations and require us to make judgments and estimates about matters that are inherently uncertain. There have been no material changes to our critical accounting policies and estimates disclosed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates" and Note 2, *Significant Accounting Policies and Recent Accounting Pronouncements*, in each case in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 6, 2026. Currently, our only critical accounting policies relate to revenue recognition and estimating write-downs for excess and obsolete inventory.

#### Results of Operations
The following table sets forth certain operating data as a percentage of net revenue for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
|  | **2026** | **2025** |
| Net revenue | 100.0% | 100.0% |
| Cost of revenue | 47.4 | 44.8 |
| Gross profit | 52.6 | 55.2 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;Research and development | 24.3 | 22.8 |
| &nbsp;&nbsp;Selling, general and administrative | 22.6 | 26.0 |
| &nbsp;&nbsp;Other operating expenses | (1.3) |  |
| &nbsp;&nbsp;Restructuring and related charges | 5.7 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 51.3 | 48.8 |
| Income from operations | 1.3 | 6.4 |
| Other income | 2.2 | 3.0 |
| Income before income taxes | 3.5 | 9.4 |
| Provision for income taxes | 0.6 | 1.0 |
| Net income | 2.9%  | 8.4%  |

---

*Comparison of the three months ended March 31, 2026 and 2025*

*Net revenue.* Net revenue consists of revenue from product sales, net of returns and allowances. Net revenue for the three months ended March 31, 2026 was $108.3 million compared to $105.5 million in the corresponding period of 2025. The increase was due primarily to higher sales in the industrial end-market.

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Our revenue mix by end market for the three months ended March 31, 2026 and 2025 was as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **End Market** | **2026** | **2025** |
| Communications | 10% | 10% |
| Computer | 11% | 12% |
| Consumer | 38% | 44% |
| Industrial | 41% | 34% |

---

International sales, consisting of sales outside of the United States based on "bill to" customer locations, were $106.5 million in the three months ended March 31, 2026, and $104.2 million in the corresponding period of 2025. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented approximately 80% of our net revenue in the three months ended March 31, 2026, and 84% in the corresponding period of 2025. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenue in the future.

Sales to distributors accounted for approximately 71% of our net revenue in both of the three months ended March 31, 2026 and 2025. Direct sales to OEMs and merchant power-supply manufacturers accounted for the remainder.

*Gross profit.* Gross profit is net revenue less cost of revenue. Our cost of revenue consists primarily of the purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors, product testing performed in our own facility, overhead associated with the management of our supply chain and the amortization of acquired intangible assets. The following table compares gross profit and gross margin for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(dollars in millions)** | **2026** | **2025** |
| Net revenue | $108.3 | $105.5 |
| Gross profit | $56.9 | $58.2 |
| Gross margin | 52.6% | 55.2% |

---

The decrease in gross margin was primarily due to the unfavorable impact of the dollar/yen exchange rate and restructuring related costs.

*Research and development expenses.* Research and development ("R&D") expenses consist primarily of employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers related to new products until the products are released to production. The following table compares R&D expenses for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(dollars in millions)** | **2026** | **2025** |
| Research and development expenses | $26.3 | $24.1 |

---

R&D expenses increased for the three months ended March 31, 2026 as compared to the corresponding period of 2025. As described in Note 4 Restructuring of this report herein, $3.0 million of application engineer project costs have been recognized in the three months ended March 31, 2026 related to customer product development projects. This increase was partially offset by lower stock-based compensation expense and by lower equipment-related expenses.

*Selling, General and Administrative.* Selling, general and administrative ("SG&A") expenses consist primarily of employee-related expenses, including salaries, commissions and stock-based compensation for personnel across our sales representatives, administration, finance, human resources, and general management functions. SG&A expenses also include facilities-related costs associated with our regional sales and support offices, as well as consulting, professional

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services, legal and auditing expenses. The following table below compares SG&A expenses for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(dollars in millions)** | **2026** | **2025** |
| Selling, general and administrative expenses | $24.4 | $27.4 |

---

SG&A expenses decreased for the three months ended March 31, 2026 as compared to the corresponding period of 2025 primarily related to the restructuring actions taken in the three-months ended March 31, 2026 as described in Note 4 Restructuring of this report herein.

*Other operating expenses.* Other operating expenses were a credit of $1.4 million in the three months ended March 31, 2026 related to the equity award modification associated with the retirement of our former chief executive officer (refer to Note 7, *Stockholders' Equity*, in our Notes to Unaudited Condensed Consolidated Financial Statements for details).

*Restructuring and related charges.* Restructuring and related charges were $6.6 million in the three months ended March 31, 2026. The charges were primarily related to severance and benefit costs associated with the workforce reduction described in Note 4 Restructuring.

*Other income*. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other short-term investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(dollars in millions)** | **2026** | **2025** |
| Other income | $2.5 | $3.2 |

---

Other income decreased for the three months ended March 31, 2026 as compared to the corresponding period of 2025 primarily due to lower interest income.

*Provision for income taxes*. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **March 31,**  | **March 31,**  |
| **(dollars in millions)** | **2026** | **2025** |
| Provision for income taxes | $0.6 | $1.1 |
| Effective tax rate | 15.8% | 11.1% |

---

Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to us and our subsidiaries, adjusted for certain discrete items which are fully recognized in the period in which they occur. Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.

Our effective tax rate for the three months ended March 31, 2026, was 15.8%, and 11.1% in the corresponding period of 2025. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal tax credits. In the three months ended March 31, 2026, our effective tax rate was affected by the recognition of a tax accounting shortfall associated with share-based payments. Additionally, in the three months ended March 31, 2025, our effective tax rate was unfavorably impacted by the recognition of share-based payments and foreign income subject to U.S. tax. We have not been granted any incentivized tax rates and do not operate under any tax holidays in any jurisdiction.

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#### Liquidity and Capital Resources
As of March 31, 2026, we had $257.2 million in cash, cash equivalents and short-term investments, an increase of $7.7 million from $249.5 million as of December 31, 2025. As of March 31, 2026, we had working capital, defined as current assets less current liabilities, of $391.8 million, an increase of approximately $3.8 million from $388.0 million as of December 31, 2025.

In 2016, we entered into the Prior Credit Agreement with Wells Fargo Bank, National Association, which provided us with a $75.0 million revolving line of credit to use for general corporate purposes and a $20.0 million sub-limit for the issuance of standby and trade letters of credit with an interest rate based on SOFR. The Prior Credit Agreement had a term which originally extended to June 7, 2026; the Prior Credit Agreement was terminated on April 10, 2026. We were compliant with all covenants and had no advances outstanding under the Prior Credit Agreement as of termination of the Prior Credit Agreement.

On February 24, 2026, we entered into the PNC Loan Agreement to replace the Prior Credit Agreement, which became effective and available for use on April 10, 2026 when we terminated the Prior Credit Agreement. The PNC Loan Agreement provides us with a $100.0 million revolving line of credit with a $25.0 million sub-limit for the issuance of standby and trade letters of credit. The interest rate on outstanding borrowings under the PNC Loan Agreement is based on SOFR plus 1.60%. The Company's obligations under the PNC Loan Agreement are unsecured. The PNC Loan Agreement term extends through February 24, 2031; all advances under the revolving line of credit, together with all accrued and unpaid interest, fees and other obligations owing thereon, will become due on such date, or earlier upon the occurrence of an Event of Default.

The PNC Loan Agreement requires us to maintain a Minimum Liquidity of at least $50.0 million as of the last day of each fiscal quarter and a ratio of Funded Indebtedness to Adjusted EBITDA of less than 2.00 to 1.00 as of the last day of each fiscal quarter and determined on a rolling four-quarter basis.

The PNC Loan Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type. The PNC Loan Agreement contains negative covenants, including negative covenants that restrict, subject to certain exceptions, our ability to:

● use the proceeds of any credit extended under the PNC Loan Agreement except to refinance all indebtedness outstanding under the Prior Credit Agreement and for working capital or other general business purposes;

● create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances;

● mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of our assets;

● guarantee or become liable for any obligations or liabilities of any other person or entity;

● purchase or hold beneficially any stock, or other securities or evidence of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity; and

● liquidate, dissolve, merge or consolidate with or into any person, firm, corporation or other entity, or make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of our property, assets, operations or business.

We were compliant with all covenants and had no advances outstanding under the PNC Loan Agreement as of April 10, 2026.

*Cash from Operating Activities*

Our operating activities generated $20.0 million of cash in the three months ended March 31, 2026. Net income for this period was $3.3 million; we also incurred non-cash depreciation, stock-based compensation expense, amortization of intangibles and accretion of discount on investments of $6.4 million, $6.3 million, $0.2 million and $0.2 million, respectively. Sources of cash included a $3.9 million decrease in inventories, a $3.8 million decrease in accounts receivable due to timing of receipts and $3.4 million decrease in prepaid expenses and other assets. These sources of cash were

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partially offset by a $4.1 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $3.1 million decrease in other accrued liabilities.

Our operating activities generated $26.4 million of cash in the three months ended March 31, 2025. Net income for this period was $8.8 million; we also incurred non-cash stock-based compensation expense and depreciation of $8.7 million and $7.2 million, respectively. Sources of cash included a $4.7 million decrease in accounts receivable due to timing of receipts, an increase of $4.0 million in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $3.4 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $3.9 million decrease in other accrued liabilities and a $3.5 million increase in inventories.

*Cash from Investing Activities*

Our investing activities in the three months ended March 31, 2026, resulted in a $6.2 million net use of cash, primarily consisting of $4.2 million for purchases of investments, net of sales and maturities and $2.0 million for purchases of property and equipment (primarily production-related machinery and equipment).

Our investing activities in the three months ended March 31, 2025, generated $4.5 million of cash, primarily consisting of $10.3 million from sales and maturities of investments, net of purchases, offset by $5.7 million for purchases of property and equipment (primarily production-related machinery and equipment).

*Cash from Financing Activities*

Our financing activities in the three months ended March 31, 2026 resulted in a $9.3 million net use of cash, consisting of $12.0 million for the payment of dividends to stockholders, partially offset by proceeds of $2.7 million from the issuance of shares through our employee stock purchase plan.

Our financing activities in the three months ended March 31, 2025 resulted in a $32.3 million net use of cash, consisting of $23.1 million for the repurchase of our common stock and $12.0 million for the payment of dividends to stockholders, partially offset by proceeds of $2.8 million from the issuance of shares through our employee stock purchase plan.

*Other Information*

Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes. Accordingly, as of March 31, 2026, our worldwide cash and short-term investments are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.

If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments, use our current financing or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months. Our uses of cash beyond the next 12 months will depend on many uncertain factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, but include funding our operations and additional capital expenditures.

#### ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our interest rate risk and foreign currency exchange risk during the first three months of 2026. For a discussion of our exposure to interest rate risk and foreign currency exchange risk, refer to our market risk disclosures set forth in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of the 2025 Form 10-K.

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#### ITEM 4. CONTROLS AND PROCEDURES
*Limitation on Effectiveness of Controls*

Any control system, no matter how well designed and operated, can provide only reasonable assurance as to the tested objectives. The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty, and that reduced effectiveness in controls can occur because of simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.

*Evaluation of Disclosure Controls and Procedures*

Management is required to evaluate our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Disclosure controls and procedures are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on our management's evaluation (with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.

*Changes in Internal Control over Financial Reporting*

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

#### PART II. OTHER INFORMATION

#### ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item may be found in Note 11, *Commitments and Contingencies,* in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

#### ITEM 1A. RISK FACTORS
*Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes, before making a decision to invest in our common stock. Our business, financial condition, results of operations, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material. If any of the risks actually occur, our business, financial condition, results of operations, and prospects could be adversely affected. In that event, the market price of our common stock could decline, and you could lose all or part of your investment.*

**Risks Related to Ownership of Our Common Stock**

*Our operating results are volatile and difficult to predict. If we fail to meet the expectations of public market analysts or investors, the market price of our common stock may decrease significantly*. Our net revenue and operating results have varied significantly in the past, are difficult to forecast, are subject to numerous factors both within and outside of our control and may fluctuate significantly in the future. As a result, our operating results could fall below the expectations of public market analysts or investors. If that occurs, the price of our stock may decline.

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Some of the factors that could affect our operating results and the price of our stock include but are not limited to the following:

**Risks Related to the Operation and Growth of Our Business**

● The demand for our products may decline in the major end markets we serve and reduce the ability of our products to penetrate additional markets; which may occur due to competitive factors, supply-chain fluctuations, rising inflation or other changes in macroeconomic or geopolitical conditions;

● the volume and timing of orders received from customers;

● our ability to develop and bring to market new products and technologies, including on a timely basis;

● reliance on international sales activities for a substantial portion of our net revenue;

● the lengthy timing of our sales cycle;

● sales of our products through distributors, which limits our direct interaction with our end customers, reducing our ability to forecast sales and increasing the complexity of our business;

● the cyclical nature of the power supply industry and cyclical market patterns across different end markets for which our products are used;

● competitive pressures on selling prices;

● risks associated with our supply chain including the volume, cost and timing of delivery of orders placed by us with our wafer foundries and assembly subcontractors, and their ability to procure materials;

● undetected defects, quality issues, warranty claims or product recalls related to our products;

● our ability to attract and retain qualified personnel;

● changes in global trade policy, including tariffs, could reduce demand for end products that incorporate our products, which could have a material adverse effect on our revenue and operating results;

● our ability to realize the expected benefits of restructuring initiatives designed to reduce costs and create a more efficient organization;

● debt obligations we incur in the future could adversely affect our financial condition;

**Risks Related to Laws and Regulations**

● the inability to adequately protect or enforce our intellectual property rights;

● we have been and may be subject to or involved in litigation, threatened litigation or other disputes, the outcome of which may be difficult to predict, and which may be costly to defend, divert management attention, require us to pay damages or other payments, or restrict the operation of our business;

● expenses we are required to incur (or choose to incur) in connection with litigation;

● changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits may increase the amount of taxes we are required to pay and require management time and attention;

● changes in environmental laws and regulations, including with respect to energy consumption and climate change;

● continued impact of changes in securities laws and regulations, including potential risks resulting from our evaluation of our internal controls over financial reporting;

**General Risk Factors**

● current or potential war, domestic or international conflict, political or social instability, or military actions, including the conflicts in Ukraine and the Middle East;

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● failure, disruption, security breaches, or other incidents impacting our information technology infrastructure or information management systems;

● interruptions in our information technology systems;

● unfavorable or uncertain market conditions and risks relating to the adoption, use or application of emerging technologies, including AI, by our customers and in our business;

● fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, the Euro and the Swiss franc;

● earthquakes, fire, global health crises, or other disasters;

● risks associated with acquisitions and strategic investments; and

● our ability to successfully integrate, or realize the expected benefits from, our acquisitions.

**Risks Related to the Operation and Growth of Our Business**

*If demand for our products declines in our major end markets and we do not penetrate additional markets, our net revenue will decrease.* When our customers are not successful in maintaining high levels of demand for their products, their demand for our products decreases, which adversely affects our operating results. A limited number of applications of our products, such as consumer appliances and cellphone chargers, make up a significant percentage of our net revenue. We expect that a significant level of our net revenue and operating results will continue to be dependent upon these applications in the near term. Demand for end products incorporating our products has been highly cyclical over time and has been impacted by economic downturns; our recent results have been impacted by economic conditions, including softness in housing markets, which affects demand for consumer appliances and inflation. Any economic slowdown or disruption in the end markets that we serve could cause a slowdown in demand for our ICs, causing our net revenue to decline and potentially result in write-offs of excess or obsolete inventory, which could cause the price of our stock to fall.

We believe that our future success depends in part upon our ability to penetrate additional markets for our products. We cannot assure that we will be able to overcome the marketing or technological challenges necessary to penetrate additional markets. To the extent that a competitor penetrates additional markets before we do, or takes market share from us in our existing markets, our net revenue and financial condition could be materially adversely affected.

*We do not have long-term contracts with any of our customers and if they fail to place, or if they cancel or reschedule orders for our products, our operating results and our business may suffer.* Our business is characterized by short-term customer orders and shipment schedules, and the ordering patterns of some of our large customers have been unpredictable in the past and will likely remain unpredictable in the future. Not only does the volume of units ordered by particular customers vary substantially from period to period, but also purchase orders received from particular customers often vary substantially from early oral estimates provided by those customers for planning purposes. In addition, customer orders can be canceled or rescheduled without significant penalty to the customer. In the past, we have experienced customer cancellations of substantial orders for reasons beyond our control, and significant cancellations could occur again at any time. Also, a relatively small number of distributors, OEMs and merchant power-supply manufacturers account for a significant portion of our revenue. As a result, any challenges that we face with a key distributor, including the loss of a key distributor, could harm our business. Similarly, although we sell through various distributors, certain end customers account for a significant portion of our revenue. As such, the loss of demand for our products by customers who purchase through different distributors could harm our business even if the impacts through a single distributor are immaterial.

*If our efforts to enhance existing products and introduce new products are not successful, we may not be able to generate demand for our products*. Our success depends in significant part upon our ability to develop new ICs for high-voltage power conversion for existing and new markets, to introduce these products in a timely manner and to have these products selected for design into products. New product introduction schedules are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects. We have experienced delays from time to time in completing new product development. If we fail to develop and sell new products in a timely manner in the future, then our net revenue and ability to compete domestically or internationally could decline.

In addition, we cannot be sure that we will be able to adjust to changing market demands as quickly and cost-effectively as necessary to compete successfully. Furthermore, we cannot assure that we will be able to introduce new

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products in a timely and cost-effective manner or in sufficient quantities to meet customer demand or that these products will achieve market acceptance. Our failure, or our customers' failure, to develop and introduce new products successfully and in a timely manner would harm our business. In addition, customers may defer or return orders for existing products. While we maintain reserves for potential customer returns, we cannot assure that these reserves will be adequate.

*Our international sales activities account for a substantial portion of our net revenue, which subjects us to substantial risks.* Sales to customers outside of the U.S. account for, and have accounted for, a large portion of our net revenue. Approximately 98% of our net revenue for each of the years ended December 31, 2025, 2024 and 2023 was generated by sales to customers outside of the U.S. If our international sales decline and we are unable to increase domestic sales, our revenue and operating results would be harmed. International sales and global conditions involve a number of risks to our business, including:

● tariffs, protectionist measures and other trade barriers and restrictions;

● potential insolvency of international distributors and representatives;

● reduced protection for intellectual property rights in some countries;

● the impact of recessionary environments and inflation in the U.S. and other economies where we do business;

● global, regional, and local circumstances, including, but not limited to, social, economic, political, and supply chain instability related to the uncertainty regarding relationships among countries, including tensions between China and Taiwan and between China and other countries;

● ongoing, escalating or potential conflicts between countries or regions, including those currently involving Russia, Ukraine, Israel, Gaza, Lebanon, Iran and the United States, as well as the the risk of broader regional destabilization in the Middle East, and the related disruption to global energy supplies, volatility in oil and commodity prices, and adverse macroeconomic effects;

● the burdens of complying with a variety of foreign and applicable U.S. Federal and state laws; and

● foreign-currency exchange fluctuations.

Our failure to adequately address these risks could reduce our international sales and materially and adversely affect our operating results. Furthermore, because substantially all of our foreign sales are denominated in U.S. dollars, increases in the value of the dollar cause the price of our products in foreign markets to rise, making our products more expensive relative to competing products priced in local currencies.

*Because the sales cycle for our products can be lengthy, we may incur substantial expenses before we generate significant revenue, if any.* Our products are generally incorporated into a customer's products at the design stage. However, customer decisions to use our products, commonly referred to as design wins, can often require us to expend significant research and development and sales and marketing resources without any assurance of success. These significant research and development and sales and marketing resources often precede volume sales, if any, by a year or more. The value of any design win will largely depend upon the commercial success of the customer's product. We cannot assure that we will continue to achieve design wins or that any design win will result in future revenue. If a customer decides at the design stage not to incorporate our products into its product, we may not have another opportunity for a design win with respect to that product for many months or years.

*Our products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our ability to forecast sales and increasing the complexity of our business.* Sales to distributors account for a significant portion of our net revenue. Selling through distributors reduces our ability to forecast sales and creates challenges for our business by requiring us, among other things, to:

● manage a more complex supply chain;

● monitor the level of inventory of our products at each distributor, and

● monitor the financial condition and credit-worthiness of our distributors, many of which are located outside of the United States and are not publicly traded.

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Since we have limited ability to forecast inventory levels at our end customers, it is possible that there may be significant build-up of inventories in the distributor channel, with the OEM or the OEM's contract manufacturer. Such a buildup could result in a slowdown in orders, requests for returns from customers, or requests to move out planned shipments. This could adversely impact our revenue and profits. Any failure to manage these complexities could disrupt or reduce sales of our products and unfavorably impact our financial results.

In addition, to the extent we are not able to keep our products away from unintended markets, demand and pricing dynamics can become distorted in our distributor channel and certain geographies, which could adversely affect our revenue. Further, customers purchasing our products on unintended markets may use our products for purposes for which they were not intended, or may purchase counterfeit or substandard products, for instance that have been altered or damaged, which could harm our business and cause our reputation to be adversely affected.

*The power supply industry routinely experiences cyclical market patterns and our products are used across different end markets. A significant downturn in the industry or in any of these end markets could cause a meaningful reduction in demand for our products and adversely affect our operating results.* The power supply industry is highly cyclical and subject to downturns, such as we have recently seen, and our revenue and gross margin can fluctuate significantly due to such downturns. These downturns can be severe and prolonged and can result in price erosion and weak demand for our products. Weak demand for our products resulting from general economic conditions affecting the end markets we serve, or the power supply industry specifically, and reduced spending by our customers can result, and in the past has resulted, in diminished product demand, high inventory levels, erosion of average selling prices, excess and obsolete inventories and corresponding inventory write-downs. Our expense levels are based, in part, on our expectations of future sales. Many of our expenses, particularly those relating to facilities, capital equipment, and other overhead, are relatively fixed. We might be unable to reduce spending quickly enough to compensate for reductions in sales. Accordingly, shortfalls in sales could adversely affect our operating results. Furthermore, any significant upturn in the power supply industry could result in increased competition for access to raw materials and third-party service providers. For example, infrastructure investments in AI have increased substantially, driving significant demand increases in the data center computing market and straining the supply chain. If we are unable to manage our supply chain or timely or efficiently scale to meet growing demand or if we have not accurately assessed the magnitude or sustainability of such demand, our results of operations could be adversely impacted.

Additionally, our products are used across different end markets, and demand for our products is difficult to predict and may vary within or among our end markets. Our target markets may not grow or develop as we currently expect, and demand may increase or change in one or more of our end markets, and changes in demand may reduce our revenue, lower our gross margin and effect our operating results. Any deterioration in these end markets, reductions in the magnitude of revenue streams, our inability to meet design and pricing requirements, or volatility in demand for our products could lead to a reduction in our revenue and adversely affect our operating results. Our success in our end markets depends on many factors, including the strength or financial performance of the customers in our end markets, our ability to timely meet rapidly changing product requirements, market needs, and our ability to maintain design wins across different markets and customers to dampen the effects of market volatility. The dynamics of the markets in which we operate make prediction of and timely reaction to such events difficult.

In addition, expectations and front-loaded investment related to AI may increase the magnitude and volatility of industry cycles, making downturns more abrupt or recoveries more uneven. Recent industry investment and customer spending patterns have been influenced by heightened interest in AI and AI-related applications. To the extent that current levels of investment in AI-related infrastructure, products, or end-market demand reflect expectations that are not ultimately realized, or if customer spending related to AI moderates, is delayed, or declines more rapidly than anticipated, the industry could experience an accelerated or more pronounced downturn.

Due to these and other factors, our past results may not be reliable predictors of our future results. If we are unable to accomplish any of the foregoing, or to offset the volatility of cyclical changes in the power supply industry or our end markets through diversification into other markets, these factors could materially and adversely affect our business, financial condition, and operating results.

*Intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products.* The high-voltage power supply industry is intensely competitive and characterized by significant price sensitivity. Our products face competition from alternative technologies, such as linear

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transformers, discrete switcher power supplies, and other integrated and hybrid solutions. If the price of competing solutions decreases significantly, the cost effectiveness of our products will be adversely affected. If power requirements for applications in which our products are currently utilized go outside the cost-effective range of our products, some of these alternative technologies can be used more cost effectively. In addition, as our patents expire, our competitors could legally begin using the technology covered by the expired patents in their products, potentially increasing the performance of their products and/or decreasing the cost of their products, which may enable our competitors to compete more effectively. Our current patents may or may not inhibit our competitors from getting any benefit from an expired patent.

Additionally, we compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we do. In addition, some governments, such as China, may provide, or have provided and may continue to provide, significant assistance financial or otherwise, to some of our competitors, or to new entrants, and may intervene in support of national industries and/or competitors, including to try to disrupt the U.S. semiconductor industry. The semiconductor industry has experienced significant consolidation in recent years which has resulted in several of our competitors becoming much larger in terms of revenue, product offerings and scale. We may be unable to compete successfully in the future, which could harm our business.

We have experienced in the past, and may experience in the future, competitive pricing pressures on our products. We may be unable to maintain average selling prices due to increased pricing pressure, including as a result of actions taken by foreign governments such as China to favor companies located in their own country, which could adversely impact our operating results.

We, and our competitors, seek to improve yields, which could result in significant increases in worldwide supply and downward pressure on prices. Increases in worldwide supply of semiconductor products, if not accompanied by commensurate increases in demand, could lead to declines in average selling prices for our products, and could materially adversely affect our business, results of operations, or financial condition.

*We depend on third-party suppliers to provide us with wafers for our products and if they fail to provide us sufficient quantities of wafers, our business may suffer*. Our primary supply arrangements for the production of wafers are with several fabs located in Japan and the U.S. Our contracts with these suppliers expire on varying dates through 2035. Although some aspects of our relationships with our fabs are contractual, many important aspects of these relationships depend on their continued cooperation. We cannot assure that we will continue to work successfully with our wafer suppliers in the future, and that the wafer foundries' capacity will meet our needs. Additionally, one or more of these wafer foundries could seek an early termination of their wafer supply agreements with us. Any serious disruption in the supply of wafers from our wafer suppliers could harm our business. We estimate that it would take 12 to 24 months from the time we identified an alternate manufacturing source to produce wafers with acceptable manufacturing yields in sufficient quantities to meet our needs.

Although we provide our foundries with rolling forecasts of our production requirements, their ability to provide wafers to us is ultimately limited by the available capacity of the wafer foundry. Any reduction in wafer foundry capacity available to us could require us to pay amounts in excess of contracted or anticipated amounts for wafer deliveries or require us to make other concessions to meet our customers' requirements or may limit our ability to meet demand for our products. Further, to the extent demand for our products exceeds wafer foundry capacity, this could inhibit us from expanding our business and harm relationships with our customers. Any of these concessions or limitations could harm our business.

If our third-party suppliers and independent subcontractors do not produce our wafers and assemble our finished products at acceptable yields, our net revenue may decline. We depend on independent foundries to produce wafers, and independent subcontractors to assemble and test finished products, at acceptable yields and to deliver them to us in a timely manner. The failure of the foundries to supply us wafers at acceptable yields could prevent us from selling our products to our customers and would likely cause a decline in our net revenue and gross margin. In addition, our IC assembly process requires our manufacturers to use a high-voltage molding compound that has been available from only a few suppliers. These compounds and their specified processing conditions require a more exacting level of process control than normally required for standard IC packages. Unavailability of assembly materials or problems with the assembly process can materially and adversely affect yields, timely delivery and cost to manufacture. We may not be able to maintain acceptable yields in the future.

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In addition, if prices for commodities used in our products increase significantly, raw material costs would increase for our suppliers which could result in an increase in the prices our suppliers charge us. To the extent we are not able to pass these costs on to our customers; this would have an adverse effect on our gross margins.

Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals. Trade disputes, geopolitical tensions, economic circumstances, transit disruptions, political conditions, or public health issues, may limit our ability to obtain materials or equipment. Although rare earth and other materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials. If China were to restrict or stop exporting these materials, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China or other countries.

*Our products must meet exacting specifications, and undetected defects, failures or other quality issues may occur which may cause customers to return or stop buying our products and/or impose significant costs to us.* Our customers generally establish demanding specifications for quality, performance and reliability, and our products must meet these specifications. ICs encounter development delays and may contain undetected defects, failures or other quality issues when first introduced or after commencement of commercial shipments. We have from time to time in the past experienced product quality, performance or reliability problems. If defects and failures occur in our products or if or any such failures are alleged to result in bodily injury, death, and/or property damage, we could experience lost revenue, decreased ability to compete, increased costs (including product warranty or liability claims) and costs associated with customer support and product recalls, delays in or cancellations or rescheduling of orders or shipments and product returns or discounts. Some OEMs expect suppliers to warrant their products for longer periods of time and are increasingly looking to them for contribution when faced with product liability claims or recalls. While we specifically exclude consequential damages in our standard terms and conditions, certain of our contracts may not exclude such liabilities. We carry various commercial liability policies, including umbrella/excess policies which cover certain damages arising out of product defects. These policies may not cover all claims or be of a sufficient amount to fully protect against such claims, and a successful warranty or product liability claim against us in excess of our available insurance coverage, or a requirement that we participate in a product recall, could have adverse effects on our business results. Further, in the future, it is possible that we will not be able to obtain insurance coverage in the amounts and for the risks we seek at policy costs and terms we desire. Additionally, if our products fail to perform as expected or such failure of our products results in a recall, our reputation may be damaged, which could make it more difficult for us to sell our products to existing and prospective customers and could materially and adversely affect our business, results of operations and financial condition.

*We must attract and retain qualified personnel to be successful and competition for qualified personnel is intense in our market.* Our success depends to a significant extent upon the continued service of our executive officers and other key management and technical personnel, and on our ability to continue to attract, retain and motivate qualified personnel, such as experienced analog design engineers and systems applications engineers. The competition for these employees is intense, particularly in Silicon Valley. The loss of the services of one or more of our engineers, executive officers or other key personnel could harm our business. In addition, if qualified personnel leave our employ, and we are unable to quickly and efficiently replace those individuals with qualified personnel who can smoothly transition into their new roles, our business may suffer. We do not have long-term employment contracts with, and we do not have in place key person life insurance policies on, any of our employees.

Changes in our management team can also disrupt our business and adversely affect our results of operations, given the lengthy sales cycle for our products and the large capital investments over a long time period required for our operations. We have had a number of changes in our senior leadership team in recent years, including, for example, the retirement of our former chief executive officer and the departure of our former chief financial officer in 2025. To the extent we do not effectively hire, onboard, retain, and motivate key employees and leadership, our business may be harmed.

*Changes in global trade, in particular the escalation and imposition of new and higher tariffs and additional export controls, could reduce demand for end products that incorporate our products, which could have a material adverse effect on our revenue and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on them. Compliance with import and export controls could impair our ability to compete in international markets or subject us to liability if we violate these controls.*

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Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia. As a result, our business is subject to risks related to tariffs and other trade protection measures put in place by the United States or other countries, as well as evolving international trade relations, including but not limited to those between the U.S., China, countries in the APAC region and the EU.

During the year 2025, the United States government imposed and threatened significant additional tariffs on goods imported into the U.S. from most of its trading partners, and, in response, multiple countries imposed or threatened retaliatory tariffs and other actions. Trade tensions between the U.S. and China have escalated and may continue to escalate, including the U.S. increasing tariffs on goods originating in China and China increasing tariffs on goods originating in the U.S. Changes in trade policies and a heightened risk of further increased tariffs or other barriers to international trade could further decrease international demand as many of our customers sell products incorporating our products into international markets.

Existing or future tariffs proposed or imposed on our customers' products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products or other products that they purchase. In addition, tariffs could make our customers' products less attractive relative to products offered by their competitors, that may not be subject to, or as significantly impacted by, similar tariffs. Further or sustained increases in tariffs on imported goods or the failure to resolve current or new international trade disputes could further decrease demand and have a material adverse effect on our business and operating results. Even if we are able to take measures to mitigate the impacts of existing or future tariffs, there is no guarantee that our efforts will be successful, or that we will be able to fully mitigate such impacts.

Resulting trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries or among countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit our ability to obtain equipment, components or raw materials, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively affect our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty also has and may continue to contribute to volatility in the price of our common stock.

In some cases, our products and power supplies using our products are subject to import and export control laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce and trade and economic sanctions, including those administered by the U.S. Treasury Department's Office of Foreign Assets Control. As such, licenses and notices may be required to import, export, or re-export our products and power supplies using our products to certain countries and end users or for certain end uses. The process for obtaining necessary licenses or making required notices may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities. Trade controls are complex and dynamic regimes and monitoring and ensuring compliance can be challenging. Failure to adhere to such rules and regulations can result in the incurrence of fines, loss of import or export privileges, seizure of products, loss of reputation and other penalties, any of which could have a material adverse effect on our business, sales and earnings. A change in laws and regulations could restrict our ability to transfer products to previously permitted countries, customers, distributors or others. It is also possible that evolving U.S. export controls may encourage non-U.S. governments to request that our customers purchase from companies not subject to U.S. export controls, thereby harming our business, market position, and financial results. Excessive export controls increase the risk of investing in U.S. semiconductor products, because by the time a new product is ready for market, it may be subject to new unilateral export controls restricting its sale. At the same time, such controls may increase investment in foreign competitors, which would be less likely to be restricted by U.S. controls.

Furthermore, compliance with import and export controls and implementation of additional tariffs may increase regulatory compliance costs and further affect our business and operating results.

*We may incur higher than expected expenses or not realize the expected benefits, or any benefits, of restructuring initiatives designed to reduce costs and create a more efficient organization.* We have pursued in the past and may pursue in the future restructuring initiatives designed to reduce costs and create a more efficient organization to support our business, including reductions in our workforce or relocating certain operations. Any restructuring initiatives could result in potential adverse effects on employee capabilities; our continued ability to recruit, hire, retain and motivate highly skilled personnel; our ability to maintain and grow our customer base; or our ability to effectively operate other aspects of our business. Adverse effects of our restructuring activities could lead to additional costs, harm our efficiency or impact

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our ability to effectively operate our business. In addition, we may be unsuccessful in our efforts to realign our organizational structure and shift our investments. The potential negative impact of restructuring efforts on our business may have a material impact on our business, financial condition and results of operations.

*Our reduction in force announced in February 2026 may not result in anticipated cost savings and could disrupt our business.* In February 2026, we announced a reduction in force that resulted in the termination of approximately 7% of our global workforce in order to decrease our costs and create a more efficient organization to support our business. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our operating structure from our new strategic efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the reduction in force, our results of operation and financial condition would be adversely affected. We also cannot guarantee that we will not have to undertake additional workforce reductions or related activities in the future. Such cost reduction efforts may in the future adversely affect our ability to attract and retain employees, and may adversely affect our culture and impact our ability to effectively pursue our business strategy. For example, our workforce reduction could yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and reduced employee morale. If employees who were not affected by the reduction in force seek alternate employment, this could result in us seeking contract support which may result in unplanned additional expense or harm our productivity. Our workforce reduction could also harm our ability to attract and retain key management and technical personnel who are critical to our business.

*Debt obligations we incur in the future could adversely affect our financial condition.* On April 10, 2026, the PNC Loan Agreement became effective and available for use when we terminated our Prior Credit Agreement. We had no advances outstanding under the PNC Loan Agreement as of April 10, 2026. We may incur, under the PNC Loan Agreement or otherwise in the future, debt to finance our capital investments, general corporate purposes and other activities. Any debt obligations could adversely impact us as follows

● require us to use a large portion of our cash flow to pay principal and interest on debt, which will reduce the amount of cash flow available to fund our business activities;

● adversely impact our credit rating, which could increase borrowing costs and reduce our ability to raise funds on favorable terms;

● limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, R&D, and other general corporate requirements;

● restrict our ability to incur specified indebtedness, create or incur certain liens, and enter into sale-leaseback financing transactions;

● increase our vulnerability to adverse economic and industry conditions;

● increase our exposure to rising interest rates from variable rate indebtedness; and

● result in certain of our debt instruments becoming immediately due and payable or being deemed to be in default if applicable cross default, cross-acceleration and/or similar provisions are triggered.

Our ability to meet the payment obligations under any debt instruments in the future will depend on our ability to generate significant cash flows or obtain external financing in the future. This, to some extent, is subject to market, economic, financial, competitive, legislative, and regulatory factors, as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in amounts sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. Additionally, events and circumstances may occur which would cause us to not be able to satisfy applicable draw-down conditions and utilize our PNC Loan Agreement. If we are unable to generate sufficient cash flows to service our debt payment obligations or satisfy our debt covenants, we may need to refinance, restructure, or amend the terms of our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results of operations, or financial condition.

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**Risks Related to Laws and Regulations**

*If we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations and negatively impact our profitability.* Our success depends upon our ability to continue our technological innovation and protect our intellectual property, including patents, trade secrets, copyrights and know-how. We cannot assure that the steps we have taken to protect our intellectual property will be adequate to prevent misappropriation, or that others will not develop competitive technologies or products. From time to time, we have received, and we may receive in the future, communications alleging possible infringement of patents or other intellectual property rights of others. Costly litigation may be necessary to enforce our intellectual property rights or to defend us against claimed infringement. The failure to obtain necessary licenses and other rights, and/or litigation arising out of infringement claims could cause us to lose market share and harm our business.

Our U.S. patents have expiration dates ranging from 2026 to 2046. We cannot assure that our products will continue to compete favorably or that we will be successful in the face of increasing competition from new products and enhancements introduced by existing competitors or new companies entering this market. We believe our failure to compete successfully in the high-voltage power supply business, including our ability to introduce new products with higher average selling prices, would materially harm our operating results. As our patents expire, we will lose intellectual property protection previously afforded by those patents. Additionally, the laws of some foreign countries in which our technology is or may in the future be licensed may not protect our intellectual property rights to the same extent as the laws of the United States, thus limiting the protections applicable to our technology.

*If we do not prevail in our litigation, we will have expended significant financial resources, potentially without any benefit, and may also suffer the loss of rights to use some technologies.* We recently successfully defended a patent litigation matter. See Note 11, *Commitments and Contingencies*, in our Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. In the event of an adverse outcome in any litigation, we may be required to pay substantial damages, stop our manufacture, use, sale, or importation of infringing products, or obtain licenses to any intellectual property found to have been infringed. We have incurred significant legal costs in conducting lawsuits, and our involvement in any future intellectual property litigation could adversely affect sales and divert the efforts and attention of our technical and management personnel, whether or not such litigation is resolved in our favor.

*We have been and may be subject to or involved in litigation, threatened litigation or other disputes, the outcome of which may be difficult to predict, and which may be costly to defend, divert management attention, require us to pay damages or other payments, or restrict the operation of our business.* From time to time, we have been and may be subject to disputes and litigation, with and without merit, that may be costly and which may divert the attention of our management and our resources in general. Such disputes and litigation are various and may include, but are not limited to, indemnification claims, employment-related claims, including claims of wrongful termination, discrimination, harassment, retaliation, and wage and hour disputes, claims of alleged infringement of patents, trademarks, copyrights and other IP rights, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. The results of complex legal proceedings are difficult to predict. Moreover, complaints filed against us may not specify the amount of damages that plaintiffs seek, and we therefore may be unable to estimate the possible range of damages that might be incurred should these lawsuits be resolved against us. Even if we are able to estimate losses related to these actions, the ultimate amount of loss may be materially higher than our estimates. Any resolution of litigation, threatened litigation, or other disputes, could involve the payment of damages, payments or expenses by us, which may be significant or involve an agreement with terms that restrict the operation of our business. Even if any future lawsuits are not resolved against us, the costs of defending such lawsuits may be significant. It is possible that we will not be able to obtain insurance coverage for our litigation and disputes in the amounts and for the risks we seek at policy costs and terms we desire. Allegations made in the course of legal proceedings may also harm our reputation, regardless of whether there is merit to such claims. We can provide no assurance that additional litigation will not be filed against us in the future. The impacts of litigation, threatened litigation or other disputes could be harmful to our business and results of operations.

*Changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits may increase the amount of taxes we are required to pay*. Our operations are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions and to review or audit by the U.S. Internal Revenue Service and state, local and foreign tax authorities. In addition, the United States, countries in Asia and other

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countries where we do business have recently enacted or are considering changes in relevant tax, accounting and other laws, regulations and interpretations, including changes to tax laws applicable to multinational companies. For example, on July 4, 2025, the United States enacted federal tax legislation commonly referred to as the "One Big Beautiful Bill Act", which, among other changes, allows domestic research and development expenditures to be expensed for tax years beginning on or after January 1, 2025 and modifies certain international tax provisions for tax years starting on or after January 1, 2026. This legislation or other potential changes could adversely affect our effective tax rates or result in other costs to us.

The EU member states formally adopted the EU's Pillar Two Directive, which was established by the Organization for Economic Cooperation and Development (the "OECD"), and which generally provides for a 15 per cent minimum effective tax rate for multinational corporations, in all jurisdictions in which they operate ("Pillar Two"). However, on January 5, 2026, the OECD announced a "side-by-side" elective safe harbor that exempts U.S.-parented multinational corporations from certain provisions of Pillar Two for fiscal years beginning on or after January 1, 2026.

The foregoing items could have a material effect on our business, cash flow, results of operations or financial conditions.

*Changes in environmental laws and regulations, including with respect to energy consumption and climate change, may have a negative impact on our business*. Changing environmental regulations and the timetable to implement them continue to impact our customers' demand for our products. Currently we have limited visibility into our customers' strategies to implement these changing environmental regulations into their business. The inability to accurately determine our customers' strategies could increase our inventory costs related to obsolescence.

The semiconductor industry is subject to environmental regulations, particularly those that control and restrict the sourcing, use, transportation, storage, and disposal of certain mineral, chemicals, and materials used in the semiconductor manufacturing process. We expect the heightened worldwide awareness regarding climate change and the environmental impact to continue, which may result in new environmental laws and regulations that could affect us, our suppliers and/or our customers. New environmental laws and regulations could require us or our suppliers to obtain alternative materials that may increase our costs more or be less available, which may adversely affect our operating results.

Additionally, the heightened worldwide awareness regarding climate change could also result in risks such as shifting customer preferences. Changing customer preferences may result in increased expectations regarding our solutions, products, and services, including the use of packaging materials and other components in our products and their environmental impact. These expectations may cause us to incur additional costs or make other changes to our operations to respond to them, which could adversely affect our financial results. If we fail to manage transition risks and customer expectations in an effective manner, customer demand for our solutions, products, and services could diminish, and our profitability could suffer. Concerns over climate change, as well as the adoption of new laws or regulations, may also impact market dynamics and may result in shifts in customer expectations, preferences, or requirements, which may require us to change our practices or incur increased costs or adversely impact customer demand for our products and services.

*Securities laws and regulations, including potential risk resulting from our evaluation of internal controls over financial reporting, will continue to impact our results*. Complying with the requirements of the federal securities laws, state laws, stock exchange requirements, and other legal requirements has imposed significant legal and financial compliance costs, and are expected to continue to impose significant costs and management burden on us. These rules and regulations also may make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly qualified members to serve on our audit committee.

Additionally, because these laws, regulations and standards are expected to be subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

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**General Risk Factors**

*Current or potential war, domestic or international conflict, political or social instability, or military actions could adversely affect our business.* Like other U.S. companies, our business and operating results are subject to uncertainties arising out of economic consequences of current and potential military actions, civil unrest (including theft, looting or vandalism), terrorist activities or other acts of violence and associated political instability, and the impact of heightened security concerns on domestic and international travel and commerce. These uncertainties could also lead to delays or cancellations of customer orders, a general decrease in corporate spending or our inability to effectively market and sell our products. Any of these results could substantially harm our business and results of operations, causing a decrease in our revenue.

The ongoing military conflict involving the United States, Israel, Iran and other countries in the Middle East and beyond, has increased regional and global tensions. As a result, actions have been taken that impact trade, including imposing sanctions that limit access to the Strait of Hormuz. This conflict may continue to cause instability in the Middle East, disruption to global energy supplies and transportation routes, and volatility or sustained increase in oil, other energy and commodity prices. Such developments could further increase costs to us, our customers or our supplies, contribute to inflationary pressures, and adversely affect global economic conditions, which may have an adverse effect on our business. If these conflicts, sanctions, or geopolitical tensions worsen, we cannot provide assurances that our business will not be impacted negatively in the future.

*Any failure, disruption or security breach or incident otherwise affecting our information technology infrastructure or information management systems could have an adverse impact on our business and operations.* Cyber-attacks have become increasingly more prevalent and much harder to detect, defend against or prevent. As the frequency of cyber-attacks and resulting breaches reported by other businesses and governments increases, we expect to continue to devote significant resources to improve and maintain our IT infrastructure and its security. We have incurred and may in the future incur significant costs in order to implement, maintain and/or update security systems we believe are necessary to protect our IT infrastructure. As the techniques used to obtain unauthorized access to or to sabotage or otherwise disrupt systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures. A breakdown in existing controls and procedures around our cyber-security environment may prevent us from detecting, reporting or responding to cyber incidents in a timely manner and any such breakdown, or any security breach or incident suffered by us of our third-party service providers, could have a material adverse effect including but not limited to interruptions, other disruptions or delays in our business operations, loss of existing or future customers, claims, demands and liabilities and damage to our reputation, which could adversely affect our business, reputation, and financial results. We cannot guarantee that our implemented processes for IT and risk mitigation measures will be effective for IT systems under our control.

Furthermore, we rely on products and services provided by third-party suppliers to operate certain critical business systems. We cannot guarantee that third parties and infrastructure in our supply chain or our partners' supply chains have not been or will not be compromised or that they do not or will not in the future contain exploitable defects or bugs that could result in a breach of or disruption to or other incident impacting our IT infrastructure, including our products and services, or the third-party information technology systems that support our services.

We have limited insight into the data privacy or security practices of third-party service providers. Our ability to monitor these third parties' information security practices is limited, and they may not have adequate information security measures in place. If one of our third-party suppliers suffers a security breach or incident, our response may be limited or more difficult because we may not have direct access to their systems, logs and other information related to the security breach or incident.

*Interruptions in our information technology systems could adversely affect our business.* We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our business. Any significant system or network disruption, including but not limited to new system implementations, faulty software provided by one of our security vendors, computer viruses, security breaches or incidents, or energy blackouts could have a material adverse impact on our operations, sales and operating results. We have implemented measures to manage our risks related to such disruptions, but such disruptions could still occur and negatively impact our operations and financial results. Furthermore, the risk of state-supported and geopolitically motivated cybersecurity incidents may increase due to geopolitical instability. In addition, we may incur additional costs to remedy any damages caused by these disruptions, security breaches or other security incidents.

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*Unfavorable or uncertain market conditions and risks relating to the adoption, use or application of emerging technologies, including AI, by our customers and in our business, may impact financial results and could result in reputational and financial harm and liability.* The adoption of AI solutions and other emerging technologies may not develop in the manner or in the time periods we anticipate, and as these markets are still developing and continue to evolve, demand for products and solutions related to or that support such technologies may be unpredictable and may vary significantly from one period to another. In addition, market enthusiasm and capital spending for AI-related infrastructure and applications may be cyclical or volatile. If customers or end markets materially reduce, delay or redirect spending (including due to macroeconomic conditions, budget constraints, changes in technology architectures, a perceived overbuild of AI capacity or other unanticipated reasons), demand for our products could be adversely affected.

These markets may also not develop as anticipated if AI training and inference costs drop materially due to customer adoption of less expensive alternative technologies or approaches, or if customers achieve desired performance using alternative solutions that reduce the need for certain components. Even if these markets evolve in the manner we anticipate, if we do not have timely, competitively priced and market-accepted products available to meet customer needs in these areas, we may miss significant opportunities business, financial condition and results of operations could be materially and adversely affected.

*Fluctuations in exchange rates, particularly the exchange rate between the U.S. dollar and the Japanese yen, Swiss franc and euro, may impact our gross margin and net income*. Our exchange rate risk related to the Japanese yen includes several suppliers with which we have wafer supply agreements based in U.S. dollars; however, these agreements also allow for mutual sharing of the impact of the exchange rate fluctuation between Japanese yen and the U.S. dollar. Each year, our management and these suppliers review and negotiate pricing; the negotiated pricing is denominated in U.S. dollars but is subject to contractual exchange rate provisions. The fluctuation in the exchange rate is shared between Power Integrations and each of these suppliers. We maintain cash denominated in Swiss francs and euros to fund the operations of our Swiss subsidiary. The functional currency of our Swiss subsidiary is the U.S. dollar; gains and losses arising from the remeasurement of non-functional currency balances are recorded in other income in our consolidated statements of income, and material unfavorable exchange-rate fluctuations with the Swiss franc could negatively impact our net income.

*In the event of an earthquake, fire, other pandemics, natural or other disasters, including with respect to climate change, our operations may be interrupted and our business would be harmed.* Our principal executive offices and operating facilities are situated near San Francisco, California, and most of our major suppliers, which are wafer foundries and assembly houses, are located in areas that have been subject to severe earthquakes, such as Japan. Many of our suppliers are also susceptible to other disasters such as tropical storms, typhoons, tsunamis or other catastrophic events, including those caused by climate change. In the event of a disaster, we or one or more of our major suppliers may be temporarily unable to continue operations and may suffer significant property damage. Additionally, our business or the business of our suppliers may in the future be adversely impacted by world-wide responses to any global health or other crises. Such impacts could include public health measures, travel restrictions, business shutdowns, border closures, delivery and freight delays and other disruptions. Any interruption in our ability, or that of our major suppliers, to continue operations could delay the development and shipment of our products and have a substantial negative impact on our financial results.

*We are exposed to risks associated with acquisitions and strategic investments*. We have made, and in the future intend to make, acquisitions of, and investments in, companies, technologies or products in existing, related or new markets. Acquisitions involve numerous risks, including but not limited to:

● inability to realize anticipated benefits, which may occur due to any of the reasons described below, or for other unanticipated reasons;

● the risk of litigation or disputes with customers, suppliers, partners or stockholders of an acquisition target arising from a proposed or completed transaction;

● impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance, which would adversely affect our financial results; and

● unknown, underestimated and/or undisclosed commitments, liabilities or issues not discovered in our due diligence of such transactions.

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We also in the future may have strategic relationships with other companies, which may decline in value and/or not meet desired objectives. The success of these strategic relationships depends on various factors over which we may have limited or no control and requires ongoing and effective cooperation with strategic partners. Moreover, these relationships are often illiquid, such that it may be difficult or impossible for us to monetize such relationships.

*Our inability to successfully integrate, or realize the expected benefits from, our acquisitions could adversely affect our results.* We have made, and in the future intend to make, acquisitions of other businesses and with these acquisitions there is a risk that integration difficulties may cause us not to realize expected benefits. The success of the acquisitions could depend, in part, on our ability to realize the anticipated benefits and cost savings (if any) from combining the businesses of the acquired companies and our business, which may take longer to realize than expected.

#### ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.

#### ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

#### ITEM 4. MINE SAFETY DISCLOSURES
None.

#### ITEM 5. OTHER INFORMATION
**Rule 10b5-1 Trading Plans**

During the three months ended March 31, 2026, none of our directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement" as defined in Item 408(c) of Regulation S-K.

**Termination of Prior Credit Agreement; Entry into PNC Loan Agreement**

In 2016, we entered into the Prior Credit Agreement with Wells Fargo Bank, National Association, which provided us with a $75.0 million revolving line of credit to use for general corporate purposes and a $20.0 million sub-limit for the issuance of standby and trade letters of credit with an interest rate based on SOFR. The Prior Credit Agreement had a term which originally extended to June 7, 2026; the Prior Credit Agreement was terminated on April 10, 2026. We were compliant with all covenants and had no advances outstanding under the Prior Credit Agreement as of March 31, 2026.

On February 24, 2026, we entered into the PNC Loan Agreement to replace the Prior Credit Agreement, which became effective and available for use on April 10, 2026 when we terminated the Prior Credit Agreement. The PNC Loan Agreement provides us with a $100.0 million revolving line of credit with a $25.0 million sub-limit for the issuance of standby and trade letters of credit. The interest rate on outstanding borrowings under the PNC Loan Agreement is based on SOFR plus 1.60%. The Company's obligations under the PNC Loan Agreement are unsecured. The PNC Loan Agreement term extends through February 24, 2031; all advances under the revolving line of credit, together with all accrued and unpaid interest, fees and other obligations owing thereon, will become due on such date, or earlier upon the occurrence of an Event of Default.

The PNC Loan Agreement requires us to maintain a Minimum Liquidity of at least $50.0 million as of the last day of each fiscal quarter and a ratio of Funded Indebtedness to Adjusted EBITDA of less than 2.00 to 1.00 as of the last day of each fiscal quarter and determined on a rolling four-quarter basis.

The PNC Loan Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type. The PNC Loan Agreement contains negative covenants, including negative covenants that restrict, subject to certain exceptions, our ability to:

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● use the proceeds of any credit extended under the PNC Loan Agreement except to refinance all indebtedness outstanding under the Prior Credit Agreement and for working capital or other general business purposes;

● create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances;

● mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of our assets;

● guarantee or become liable for any obligations or liabilities of any other person or entity;

● purchase or hold beneficially any stock, or other securities or evidence of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity; and

● liquidate, dissolve, merge or consolidate with or into any person, firm, corporation or other entity, or make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of our property, assets, operations or business.

We were compliant with all covenants and had no advances outstanding under the PNC Loan Agreement as of April 10, 2026.

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#### ITEM 6. EXHIBITS

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | **Incorporation by Reference** | **Incorporation by Reference** | **Incorporation by Reference** | **Incorporation by Reference** | **Incorporation by Reference** |
| <br>**EXHIBIT**<br>**NUMBER** | <br>**Exhibit Description** | **Form** | **File**<br>**Number** | **Exhibit/Other Reference** | **Filing**<br>**Date** | **Filed**<br>**Herewith** |
| 3.1 | [Amended and Restated Bylaws](https://www.sec.gov/Archives/edgar/data/833640/000083364026000016/powi-20260127xex3d1.htm) | 8-K | 000-23441 | 3.1 | 1/30/2026 |  |
| 10.1 | [Cash Compensation of Outside Directors](powi-20260331xex10d1.htm) |  |  |  |  | X |
| 10.2 | [Loan Agreement dated February 24, 2026, by and between Power Integrations, Inc. and PNC Bank, National Association](powi-20260331xex10d2.htm) |  |  |  |  | X |
| 10.3 | [Form of Indemnity Agreement for directors and officers](https://www.sec.gov/Archives/edgar/data/833640/000083364026000028/powi-20260201xex10d1.htm) | 8-K | 000-23441 | 10.1 | 2/5/2026 |  |
| 10.4 | [Amended and Restated 2025 Inducement Award Plan](https://www.sec.gov/Archives/edgar/data/833640/000083364026000016/powi-20260127xex10d1.htm) | 8-K | 000-23441 | 10.1 | 1/30/2026 |  |
| 31.1 | [Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](powi-20260331xex31d1.htm) |  |  |  |  | X |
| 31.2 | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](powi-20260331xex31d2.htm) |  |  |  |  | X |
| 32.1\*\* | [Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](powi-20260331xex32d1.htm) |  |  |  |  | X |
| 32.2\*\* | [Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](powi-20260331xex32d2.htm) |  |  |  |  | X |
| 101.INS | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |  | X |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  | X |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  | X |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  | X |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  | X |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  | X |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |  |  |  |  |  |

---

All references in the table hereto previously filed documents or descriptions are incorporating those documents and descriptions by reference thereto.

\*\* The certifications attached as Exhibits 32.1 and 32.2 accompanying this Quarterly Report on Form 10-Q, are not deemed filed with the SEC, and are not to be incorporated by reference into any filing of Power Integrations, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made 

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before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

#### SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  | POWER INTEGRATIONS, INC. | POWER INTEGRATIONS, INC. |
| Dated: | May 7, 2026 | By: | /s/ NANCY ERBA |
|  |  |  | Nancy Erba |
|  |  |  | Chief Financial Officer |
|  |  |  | (Duly Authorized Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 10.1

**Exhibit 10.** **1**

**Cash Compensation of Outside Directors**

Cash Compensation of Non-Employee Directors is as follows:

Annual Retainer: $60,000

Additional Annual Retainer for Lead Independent Director of the Board (if an independent member of the Board): $30,000

Additional Annual Retainer for Cybersecurity members:

---

| | |
|:---|:---|
| Chairman:<br>| $7500<br>|
| Other members:<br>| $3000<br>|

---

Additional Annual Retainer for Audit Committee members:

---

| | |
|:---|:---|
| Chairman:<br>| $25000<br>|
| Other members:<br>| $10000<br>|

---

Additional Annual Retainer for Talent and Compensation Committee members:

---

| | |
|:---|:---|
| Chairman:<br>| $20000<br>|
| Other members:<br>| $9000<br>|

---

Additional Annual Retainer for Nominating and Governance Committee members:

---

| | |
|:---|:---|
| Chairman:<br>| $10000<br>|
| Other members:<br>| $5000<br>|

---

Fees are paid quarterly in arrears. There are no per meeting fees.

------

## Exhibit 10.2

**Exhibit 10.2**![Graphic](powi-20260331xex10d2001.jpg)

**Loan Agreement**

**THIS LOAN AGREEMENT** (the "**Agreement**"), is entered into as of February 24, 2026, between **POWER INTEGRATIONS, INC.**, a Delaware corporation (the "**Borrower**"), with an address at 5245 Hellyer Avenue, San Jose, California 95138, and **PNC BANK, NATIONAL ASSOCIATION** (the "**Bank**"), with an address at 201 Mission Street, 25<sup>th</sup> Floor, San Francisco, California 94105.

The Borrower and the Bank, with the intent to be legally bound, agree as follows:

**1.** **Loan.** The Bank has made or may make one or more loans (each, a "**Loan**" and collectively, the "**Loans**") to the Borrower subject to the terms and conditions and in reliance upon the representations and warranties of the Borrower set forth in this Agreement. Each Loan shall be used for business purposes (and not for personal, family or household use) and is or will be evidenced by a promissory note or notes of the Borrower and all renewals, extensions, amendments and restatements thereof (whether one or more, collectively, the "**Note**") acceptable to the Bank, which shall set forth the interest rate, repayment and other provisions of the respective Loan, the terms of which are incorporated into this Agreement by reference.

The Loans governed by this Agreement shall include the Loans specifically described below, if any, and any additional lines of credit or term loans that the Bank has made or may, in its sole discretion, make to the Borrower in the future.

**1.1. Line of Credit.** One of the Loans governed by this Agreement is a committed revolving line of credit under which the Borrower may request and the Bank, subject to the terms and conditions of this Agreement, will make advances to the Borrower from time to time until the Expiration Date, in an aggregate amount outstanding at any time not to exceed **ONE HUNDRED MILLION AND 00/100 DOLLARS** (**$100,000,000.00)** (the "**Line of Credit**")**.** The "**Expiration Date**" shall have the meaning set forth in the Note evidencing the Line of Credit. The Borrower acknowledges and agrees that in no event will the Bank be under any obligation to extend or renew the Line of Credit beyond the Expiration Date. In no event shall the aggregate unpaid principal amount of advances under the Line of Credit exceed the maximum amount of the Line of Credit. All advances and other credit extensions under the Line of Credit will be used (i) to refinance all indebtedness outstanding under that certain Credit Agreement, dated as of July 27, 2016 (as amended, restated, supplemented and/or modified from time to time), among Borrower and Wells Fargo Bank, National Association, and (ii) for working capital or other general business purposes of the Borrower.

If at any time (i) there is no outstanding principal balance or unpaid interest under the Line of Credit or the Letter of Credit subfeature described in **Section 1.1.1** hereof, (ii) there are no issued and outstanding Letter(s) of Credit under the Letter of Credit subfeature or any outstanding obligations in respect of any Letter of Credit, and (iii) there are no other payment obligations of Borrower to Bank outstanding hereunder or under any other Loan Document, then Borrower, upon written notice to Bank, may request that the Line of Credit be terminated with no prepayment fees.

**1.1.1.** The Borrower may request that the Bank, in lieu of cash advances, issue letters of credit (each individually a "**Letter of Credit**" and collectively, the "**Letters of Credit**"**)** under the Line of Credit (including all banker's acceptances issued up to 180 days under the terms of any trade Letter of Credit) with an aggregate amount outstanding at any time not to exceed **TWENTY FIVE MILLION AND 00/100 DOLLARS** (**$25,000,000.00**); provided, however, that after giving effect to the amount of such Letter of Credit, the sum of the aggregate outstanding advances under the Line of Credit

------

and the aggregate amount of all Letters of Credit issued and outstanding shall not exceed the maximum amount of the Line of Credit. The amount available under the Line of Credit shall be reduced by the amount of each Letter of Credit (whether drawn or undrawn, but without duplicating any drawing amount that has been paid and is treated as an advance under the Line of Credit). For purposes of this Agreement, the "amount" of any Letter of Credit is its maximum amount and includes any available increases in or reinstatements of the amounts available to be drawn under the terms of such Letter of Credit, whether or not any such increase or reinstatement has become effective, including any increase that could result from any tolerance set forth in a commercial Letter of Credit.

The Letters of Credit shall be governed by the terms of this Agreement and by a reimbursement agreement, in form and content satisfactory to the Bank, executed by the Borrower in favor of the Bank (the "**Reimbursement Agreement**"). Unless otherwise consented to by the Bank in writing, each Letter of Credit shall have an expiry date which is not later than twelve (12) months following the Expiration Date (the "**Final LC Expiration Date**"). Each request for a Letter of Credit must be accompanied by an application in a form approved by the Bank and executed by the Borrower, together with all supporting documentation. Each Letter of Credit will be issued in the Bank's sole discretion and in a form acceptable to the Bank. This Agreement and the other Loan documents do not obligate the Bank or any other person to issue, amend, extend, refrain from terminating, or take or omit any other action as to any Letter of Credit, unless otherwise expressly agreed in writing by the Bank. Each unreimbursed payment by the Bank under a Letter of Credit shall constitute an advance of principal under the Line of Credit and shall be evidenced by the applicable Note; provided, however, that to the extent that such advances are not available or are legally prohibited at such time, the Borrower shall reimburse the Bank in accordance with the Reimbursement Agreement and applicable law.

The Borrower shall pay the Bank's standard fees and charges, including but not limited to an issuance fee, with respect to each Letter of Credit from time to time as shall be required by the Bank. In addition, the Borrower shall pay to the Bank a fee (the "**Commission**"), calculated for each day (on the basis of a year of 360 days) on the aggregate amount of all Letters of Credit then outstanding under the Line of Credit, at a rate of one hundred twenty-five (125) basis points (1.25%) per annum; provided, however, that in no event shall the Commission for any Letter of Credit be less than the minimum commission as established by the Bank from time to time. The Borrower shall pay the Commission quarterly in arrears on the first day of each fiscal quarter, beginning on the first day of the first fiscal quarter following the issuance of the first Letter of Credit hereunder, and on the Final LC Expiration Date.

On the Expiration Date, in addition to any other amounts payable to the Bank, the Borrower shall deliver to the Bank in immediately available funds an amount equal to 105% of the aggregate outstanding amount of any and all Letters of Credit. The Borrower hereby pledges and grants to the Bank a security interest in all such funds as security for the Obligations, acknowledges that the Bank shall at all times have control of such funds and shall be authorized to dispose or give disposition instructions or entitlement orders (as defined in the Uniform Commercial Code) with respect to such funds, without further consent of the Borrower or any other person, and shall promptly to do all further things that the Bank may deem necessary in order to grant and perfect the Bank's security interest therein.

**2.** **Obligations and Loan Documents.** The payment and performance of the Loan and all other loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Bank described therein (hereinafter referred to collectively as the "**Obligations**") shall be guaranteed jointly and severally by any current or hereafter created or acquired domestic subsidiary of the Borrower, as evidenced by and subject to the terms of guaranties in form and substance satisfactory to the Bank.

This Agreement, the Note, the Reimbursement Agreement, any security documents (if applicable) and all other agreements and documents executed and/or delivered pursuant or subject hereto, as each may

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be amended, modified, extended or renewed from time to time, are collectively referred to as the "**Loan Documents.**" Capitalized terms not defined herein shall have the meanings ascribed to them in the Loan Documents.

**3.** **Representations and Warranties.** The Borrower hereby makes the following representations and warranties, which shall be continuing in nature and remain in full force and effect until the Obligations are paid in full, and which shall be true and correct except as otherwise set forth on the Addendum attached hereto and incorporated herein by reference (the "**Addendum**"):

**3.1.** **Existence, Power and Authority.** If not a natural person, the Borrower is duly organized, validly existing and in good standing under the laws of the State of its incorporation or organization and has the power and authority to own and operate its assets and to conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing, except in those jurisdictions in which the failure to so qualify or to be so licensed could not reasonably be expected to have a material adverse effect on Borrower. The Borrower is duly authorized to execute and deliver the Loan Documents, all necessary action to authorize the execution and delivery of the Loan Documents has been properly taken and upon their execution and delivery in accordance with the provisions hereof, the Loan Documents will constitute legal, valid and binding agreements and obligations of the Borrower or the party which executes the same, as applicable, enforceable in accordance with their respective terms, and the Borrower is and will continue to be duly authorized to borrow under this Agreement and to perform all of the other terms and provisions of the Loan Documents.

**3.2.** **Financial Statements.** The Borrower has delivered or caused to be delivered to the Bank its most recent Financial Statements (as defined herein). The Financial Statements are true, complete and accurate in all material respects and fairly present the Borrower's financial condition, assets and liabilities and the results of the Borrower's operations for the period specified therein. The Financial Statements have been prepared in accordance with the Applicable Accounting Standards. Other than Permitted Liens, Borrower has not mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of the Bank or as otherwise permitted by the Bank in writing.

As used herein:

"**Applicable Accounting Standards**" shall mean generally accepted accounting principles in effect from time to time ("**GAAP**"), consistently applied from period to period, subject in the case of interim statements to normal year-end adjustments and to any comments and notes acceptable to the Bank in its sole discretion.

"**Financial Statements**" shall mean (i) with respect to an entity that is not a natural person, consolidated and, if required by the Bank in its sole discretion, consolidating balance sheets and statements of income and cash flows for the year, month or quarter together with year-to-date figures and comparative figures for the corresponding periods of the prior year, prepared in accordance with the Applicable Accounting Standards, consistently applied from period to period; and (ii) with respect to natural persons, means personal financial statements and federal income tax returns.

"**Permitted Liens**" shall mean (i) liens for taxes or other governmental or regulatory assessments which are not delinquent, or which are contested in good faith by the appropriate proceedings, and for which appropriate reserves are maintained in accordance with the Applicable Accounting Standards; (ii) liens on any property held or acquired by Borrower securing indebtedness not to exceed the amounts set forth in **Section 5.2(iii)** below incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property or existing on such property when acquired; (iii) liens arising from judgments,

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decrees or attachments in circumstances not constituting a Default or an Event of Default, as hereinafter defined; (iv) liens and setoff rights in favor of other financial institutions arising in connection with Borrower's deposit accounts held at such institutions, provided the existence of such accounts does not conflict with the provisions of **Section 4.8** hereof; (v) liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (vi) liens incurred or deposits made in the ordinary course of business with utility companies; (vii) liens incurred or deposits or pledges made to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), public or statutory or regulatory obligations, surety, stay, appeal, indemnity, performance or other similar bonds, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations arising in the ordinary course of business; (viii) materialmen's, landlord's, mechanics', repairmen's, workmen's, employees' or other like liens arising in the ordinary course of business; (ix) non-exclusive license of intellectual property granted to third parties in the ordinary course of business, and licenses of intellectual property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States; (x) liens on insurance proceeds in favor of insurance companies granted solely as security for financed premiums; (xi) easements, reservations, rights-of-way, minor defects or irregularities in title and other similar charges or encumbrances affecting real property; and (xii) any interest or title of a lessor or sub-lessor under any lease of real property in the ordinary course of business. Notwithstanding the foregoing, nothing contained herein shall prevent Borrower from selling, transferring, abandoning or otherwise disposing of intellectual property that is, in the reasonable judgment of the management of Borrower, no longer economically practicable to maintain or useful in the conduct of the business of Borrower.

**3.3.** **No Material Adverse Change.** Since the date of the most recent Financial Statements, the Borrower has not suffered any damage, destruction or loss, and no event or condition has occurred or exists, which has resulted or could result in a material adverse change in its business, assets, operations, condition (financial or otherwise) or results of operation.

**3.4.** **Binding Obligations.** The Borrower has full power and authority to enter into the transactions provided for in this Agreement and has been duly authorized to do so by appropriate action of its Board of Directors if the Borrower is a corporation, its members and/or managers, as applicable, if the Borrower is a limited liability company, all its general partners if the Borrower is a partnership or otherwise as may be required by law, charter, other organizational documents or agreements; and the Loan Documents, when executed and delivered by the Borrower, will constitute the legal, valid and binding obligations of the Borrower enforceable in accordance with their terms.

**3.5.** **No Defaults or Violations.** There does not exist any Default or Event of Default, as hereinafter defined, under this Agreement, or any default or violation by the Borrower of or under any of the terms, conditions or obligations of: (i) its partnership agreement if the Borrower is a partnership, its articles or certificate of incorporation, regulations and bylaws if the Borrower is a corporation, its articles or certificate of organization and operating agreement if the Borrower is a limited liability company, or its other organizational documents as applicable; or (ii) except to the extent such default or violation would not reasonably be expected to have a material adverse effect on the Borrower, any law, ordinance, regulation, ruling, order, injunction, decree, condition or other requirement applicable to or imposed upon it by any law, the action of any court or any governmental authority or agency; and the consummation of this Agreement and the transactions set forth herein will not result in any such Default, Event of Default or violation.

**3.6.** **Title to Assets.** The Borrower has good and marketable title to the assets reflected on the most recent Financial Statements (other than any such assets that are leased by the Borrower and are reflected in such Financial Statements due to the requirements of the Applicable Accounting Standards),

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free and clear of all liens and encumbrances, except for (i) liens in favor of the Bank; (ii) Permitted Liens; and (iii) those liens or encumbrances, if any, specified on the Addendum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.7.** **Other Obligations.** The Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation, in each case under any agreements involving monetary liability, which default or defaults result in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any indebtedness in excess of Five Million and 00/100 Dollars ($5,000,000.00).

**3.8.** **Litigation.** There are no pending, or to Borrower's knowledge threatened in writing, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency involving more than Two Million Dollars and 00/100 Dollars ($2,000,000.00) individually, or Fifteen Million and 00/100 Dollars ($15,000,000.00) in the aggregate, or which would reasonably be expected to have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing or in Borrower's periodic and other reports, proxy statements and other materials filed with the SEC (as defined below) or distributed to its stockholders (the "**SEC Filings**") prior to the date hereof. As used in this Agreement, "**SEC**" means the Securities and Exchange Commission, any entity succeeding to any or all of the functions of the Securities and Exchange Commission or any national securities exchange or analogous agency, authority, instrumentality, regulatory body, court or other entity. All pending and threatened litigation against the Borrower is listed on the Addendum attached hereto.

**3.9.** **Tax Returns.** The Borrower has filed all returns and reports that are required to be filed by it in connection with any federal, state or local tax, duty or charge levied, assessed or imposed upon it or its property or withheld by it, including income, unemployment, social security and similar taxes, and all of such taxes have been either paid or adequate reserves or other provision has been made therefor. The Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year, except as disclosed in SEC reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.10.** **No Subordination.** There is no agreement, indenture, contract or instrument to which the Borrower is a party or by which the Borrower may be bound that requires the subordination in right of payment of any of the Borrower's obligations subject to this Agreement to any other obligation of the Borrower.

**3.11.** **Employee Benefit Plans.** The Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("**ERISA**"); the Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "**Plan**"); no Reportable Event (as defined in ERISA) has occurred and is continuing with respect to any Plan initiated by the Borrower; the Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

**3.12.** **Environmental Matters.** The Borrower is in compliance, in all material respects, with all Environmental Laws (as hereinafter defined), including, without limitation, all Environmental Laws in jurisdictions in which the Borrower owns or operates, or has owned or operated, a facility or site, stores collateral (if applicable), arranges or has arranged for disposal or treatment of hazardous substances, solid waste or other waste, accepts or has accepted for transport any hazardous substances, solid waste or other wastes or holds or has held any interest in real property or otherwise. Except as otherwise disclosed on the Addendum, no litigation or proceeding arising under, relating to or in connection with any Environmental Law is pending or, to the best of the Borrower's knowledge, threatened against the Borrower, any real

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property in which the Borrower holds or has held an interest or any past or present operation of the Borrower. No release, threatened release or disposal of hazardous waste, solid waste or other wastes is occurring, or to the best of the Borrower's knowledge has occurred, on, under or to any real property in which the Borrower holds or has held any interest or performs or has performed any of its operations, in violation of any Environmental Law. As used in this Section, "**litigation or proceeding**" means any demand, claim notice, suit, suit in equity, action, administrative action, investigation or inquiry whether brought by a governmental authority or other person, and "**Environmental Laws**" means all provisions of laws, statutes, ordinances, rules, regulations, permits, licenses, judgments, writs, injunctions, decrees, orders, awards and standards promulgated by any governmental authority concerning health, safety and protection of, or regulation of the discharge of substances into, the environment.

**3.13.** **Permits, Franchises, Intellectual Property.** The Borrower possesses, and will hereafter possess, all material permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

**3.14.** **Regulatory Matters.** Neither the Borrower nor any subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any Loan, the Line of Credit or any Letter of Credit will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. Following the application of the proceeds of the Line of Credit or Letter of Credit, not more than twenty-five percent (25%) of the value of the assets (either of Borrower only or of Borrower and its subsidiaries on a consolidated basis) will constitute "margin stock." If requested by Bank, Borrower will furnish to Bank a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U 1 referred to in Regulation U.

**3.15.** **Solvency.** As of the date hereof and after giving effect to the transactions contemplated by the Loan Documents, (i) the aggregate value of the Borrower's assets will exceed its liabilities (including contingent, subordinated, unmatured and unliquidated liabilities); (ii) the Borrower will have sufficient cash flow to enable it to pay its debts as they become due; and (iii) the Borrower will not have unreasonably small capital for the business in which it is engaged.

**3.16.** **Disclosure.** None of the Loan Documents contains or will contain any untrue statement of material fact or omits or will omit to state a material fact necessary in order to make the statements contained in this Agreement or the Loan Documents not misleading. There is no fact known to the Borrower which materially adversely affects or, so far as the Borrower can now foresee, might materially adversely affect the business, assets, operations, condition (financial or otherwise) or results of operation of the Borrower and which has not otherwise been fully set forth in this Agreement or in the Loan Documents.

**3.17.** **Beneficial Owners.** If the Borrower is or was required to execute and deliver to the Bank a Certification of Beneficial Owner(s) (individually and collectively, as updated from time to time, the "**Certification of Beneficial Owners**"), the information in the Certification of Beneficial Owners, as updated from time to time in accordance with this Agreement, is true, complete and correct as of the date thereof, as of the date hereof and as of the date any such update is delivered to the Bank. The Borrower acknowledges and agrees that the Certification of Beneficial Owners is a Loan Document.

**3.18.** **Anti-Corruption Laws and International Trade Laws; Anti-Money Laundering Laws; Certain Definitions.** Each Covered Entity, and its directors and officers, and, to

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Borrower's knowledge, each employee, agent or affiliate acting on behalf of such Covered Entity: (a) is not a Sanctioned Person; (b) does not do any business in or with, or derive any of its operating income from direct or indirect investments in or transactions involving, any Sanctioned Jurisdiction or Sanctioned Person; and (c) is not in violation of, and has not, during the past five (5) years, directly or indirectly, taken any act that could cause any Covered Entity to be in violation of, applicable International Trade Laws or Anti-Corruption Laws.

No Covered Entity nor any of its directors, officers, employees, or to the knowledge of the Borrower, any agents or affiliates acting on behalf of any Covered Entity has, during the past five (5) years, received any notice or communication from any Person that alleges, or been involved in an internal investigation involving any allegations relating to, potential violation of any International Trade Laws or Anti-Corruption Laws, or received a request for information from any Official Body regarding International Trade Law matters or Anti-Corruption Law matters. There is no Blocked Property pledged as Collateral.

As used herein:

"**Anti-Corruption Laws**" means (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the U.K. Bribery Act 2010, as amended, and (c) any other applicable Law relating to anti-bribery or anti-corruption in any jurisdiction in which any Loan Party is located or doing business.

"**Anti-Money Laundering Laws**" means (a) the Bank Secrecy Act and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001; (b) the U.K. Proceeds of Crime Act 2002, the Money Laundering Regulations 2017, as amended and the Terrorist Asset-Freezing etc. Act 2010; and (c) any other applicable Law relating to anti-money laundering and countering the financing of terrorism in any jurisdiction in which any Loan Party is located or doing business.

"**Blocked Property**" means any property (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by the Bank of any applicable International Trade Law if the Bank were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.

"**Collateral**" means any collateral securing any debt, liabilities, or other obligations of any Loan Party to the Bank.

"**Compliance Authority**" means (a) the United States government or any agency or political subdivision thereof, including, without limitation, the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury and its Office of Foreign Assets Control, and the U.S. Customs and Border Protection agency; (b) the government of Canada or any agency thereof; (c) the European Union or any agency thereof; (d) the government of the United Kingdom or any agency thereof; (e) the United Nations Security Council; and (f) any other Official Body with jurisdiction to administer Anti-Corruption Laws, Anti-Money Laundering Laws or International Trade Laws with respect to the conduct of a Covered Entity.

"**Covered Entity**" means (a) the Borrower and each of the Borrower's subsidiaries; (b) each Guarantor and any pledgor of Collateral; and (c) each Person that directly or indirectly controls a Person described in clause (a) or (b) above.

"**International Trade Laws**" means all Laws relating to economic and financial sanctions, trade embargoes, export controls, customs, and anti-boycott measures.

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"**Law**" means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award, or any settlement arrangement, by agreement, consent or otherwise, of any Official Body, foreign or domestic.

"**Loan Parties**" means the Borrower and any Guarantors.

"**Official Body**" means the government of the United States of America or of any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).

"**Person**" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Official Body, or other entity.

"**Sanctioned Jurisdiction**" means, at any time, a country, area, territory, or jurisdiction that is the subject or target of comprehensive U.S. sanctions.

"**Sanctioned Person**" means any Person (a) located in, organized under the laws of, or ordinarily resident in a Sanctioned Jurisdiction; (b) identified on any sanctions-related list maintained by any Compliance Authority; or (c) owned 50% or more, in the aggregate, directly or indirectly by, controlled by, or acting for, on behalf of, or at the direction of, one or more Persons described in clauses (a) or (b) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.19.** **Outbound Investment Rules.** Neither the Borrower nor any of its subsidiaries is a "covered foreign person" as that term is used in the Outbound Investment Rules. Neither the Borrower nor any of its subsidiaries currently engages, or has any present intention to engage in the future, directly or indirectly, in (i) a "covered activity" or a "covered transaction", as each such term is defined in the Outbound Investment Rules, (ii) any activity or transaction that would constitute a "covered activity" or a "covered transaction", as each such term is defined in the Outbound Investment Rules, or (iii) any other activity that would cause the Bank to be in violation of the Outbound Investment Rules or cause the Bank to be legally prohibited by the Outbound Investment Rules from performing under this Agreement.

As used herein, "**Outbound Investment Rules**" means the regulations administered and enforced, together with any related public guidance issued, by the United States Treasury Department under U.S. Executive Order 14105 of August 9, 2023, or any similar law or regulation; as of the date of this Agreement, and as codified at 31 C.F.R. § 850.101 et seq.

**3.20.** **Double Negative Pledge.** The Borrower has not entered into any agreement with any Person, other than in connection with this Agreement, which prohibits or limits the ability of the Borrower to create, incur, assume or suffer to exist any lien in favor of the Bank upon or with respect to any intellectual property of the Borrower, whether now owned or hereafter acquired or created.

**4.** **Affirmative Covenants.** The Borrower agrees that from the date of execution of this Agreement and so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until all Obligations have been paid in full (other than inchoate indemnity obligations), the Borrower shall, unless the Bank otherwise consents in writing:

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**4.1.** **Books and Records.** Maintain books and records in accordance with the Applicable Accounting Standards and give representatives of the Bank access thereto at all reasonable times, including permission to examine, copy and make abstracts from any of such books and records and such other information as the Bank may from time to time reasonably request, and the Borrower will make available to the Bank for examination copies of any reports, statements and returns which the Borrower may make to or file with any federal, state or local governmental department, bureau or agency, and will allow representatives of the Bank to inspect the properties of the Borrower. If at any time any change in the Applicable Accounting Standards would affect the computation of any covenant (including the computation of any financial covenant) and/or pricing grid, if any, set forth in this Agreement or any other Loan Document, the Borrower and the Bank shall negotiate in good faith to amend such covenant and/or pricing grid, if any, to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant and/or pricing grid, if any, shall continue to be computed in accordance with the application of the Applicable Accounting Standards prior to such change and (ii) the Borrower shall provide to the Bank a written reconciliation in form and substance reasonably satisfactory to the Bank, between calculations of such covenant and/or pricing grid made before and after giving effect to such change in the Applicable Accounting Standards.

**4.2.** **Financial Reporting.** Deliver or cause to be delivered to the Bank (i) the Financial Statements, reports and certifications, if any, set forth on the Addendum and (ii) such other information about Borrower's or Guarantor's financial condition, properties and operations as and when requested by the Bank, from time to time. As used herein, "**Guarantor**" shall collectively refer to each Entity Guarantor and Individual Guarantor of the Obligations, jointly and severally; "**Entity Guarantor**" shall mean each Guarantor who is not a natural person; and "**Individual Guarantor**" shall mean each Guarantor who is a natural person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3.** **[Reserved].**

**4.4.** **Payment of Taxes and Other Charges.** Pay and discharge when due all indebtedness and all taxes, obligations, assessments, charges, levies and other liabilities, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments imposed upon the Borrower, its income, profits, property or business, except those which currently are being contested in good faith by appropriate proceedings or as to which a bona fide dispute may arise and for which the Borrower shall have set aside adequate reserves under the Applicable Accounting Standards or made other adequate provision with respect thereto acceptable to the Bank in its sole discretion.

**4.5.** **Maintenance of Existence, Operation and Assets.** Do all things necessary to (i) maintain, renew and keep in full force and effect its organizational existence and all rights, privileges, permits, licenses, governmental approvals and franchises necessary to enable it to continue its business as currently conducted; (ii) comply with the provisions of all documents pursuant to which the Borrower is organized and/or which govern Borrower's continued existence; (iii) continue in operation in substantially the same manner as at present; (iv) keep all properties useful or necessary to Borrower's business in good operating condition and repair; and (v) make all necessary and proper repairs, renewals, replacements, additions and improvements thereto so that such properties shall be fully and efficiently preserved and maintained.

**4.6.** **Insurance.** Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including, but not limited to, fire, extended coverage, public liability, flood (to the extent applicable), and workers' compensation, with all such insurance carried in amounts satisfactory to the Bank, and deliver to the Bank

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from time to time at the Bank's request, schedules setting forth all insurance then in effect. Such insurance may be obtained from an insurer or through an insurance agent of Borrower's choice, provided that any insurer chosen by Borrower is acceptable to Bank on such reasonable grounds as may be permitted under applicable law. In the event of a conflict between the provisions of this Section and the terms of any security documents (if applicable) relating to insurance, the provisions in any such security documents (if applicable) will control.

**4.7.** **Compliance with Laws.** Comply with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to the Borrower and/or its business, the noncompliance with or violation of which could reasonably be expected to have a material adverse effect on Borrower's business.

**4.8.** **Bank Accounts.** Establish and maintain at the Bank the Borrower's primary disbursement deposit accounts.

**4.9.** **Financial Covenants.** Comply with all of the financial and other covenants, if any, set forth on the Addendum.

**4.10.** **Additional Reports.** Provide prompt (but in no event more than ten (10) days after the Borrower knows or should reasonably have known of the occurrence of each such event or matter) written notice to the Bank in reasonable detail of the occurrence of any of the following (together with a description of the action which the Borrower proposes to take with respect thereto): (i) any Event of Default or any event, act or condition which, with the passage of time or the giving of notice, or both, would constitute an Event of Default (a "**Default**"); (ii) any change in the name or the organizational structure of Borrower; (iii) any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; (iv) any event which might result in a material adverse change in the business, assets, operations, condition (financial or otherwise) or results of operation of the Borrower; or (v) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting the Borrower's property

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.11.** **Litigation.** Except as disclosed in the SEC Filings, promptly give notice in writing to the Bank of any litigation pending or threatened in writing against the Borrower involving more than Two Million and 00/100 Dollars ($2,000,000.00) individually, or Fifteen Million and 00/100 Dollars ($15,000,000.00) in the aggregate.

**4.12.** **Certification of Beneficial Owners and Other Additional Information.** Provide: (i) such information and documentation as may reasonably be requested by the Bank from time to time for purposes of compliance by the Bank with applicable laws (including without limitation the USA PATRIOT Act and other "know your customer" and anti-money laundering rules and regulations), and any policy or procedure implemented by the Bank to comply therewith; and (ii) if the Borrower is or was required to deliver a Certification of Beneficial Owners to the Bank, (a) confirmation of the accuracy of the information set forth in the most recent Certification of Beneficial Owners provided to the Bank, as and when requested by the Bank; and (b) a new Certification of Beneficial Owners in form and substance acceptable to the Bank when the individual(s) identified as a controlling party and/or a direct or indirect individual owner on the most recent Certification of Beneficial Owners provided to the Bank have changed.

**4.13.** **Compliance with Anti-Corruption Laws; Anti-Money Laundering Laws and International Trade Laws.** (a) Promptly notify the Bank in writing upon the occurrence of a Reportable Compliance Event; (b) [reserved]; and (c) conduct its business in compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws and maintain in effect

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policies and procedures reasonably designed to ensure compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and International Trade Laws by each Covered Entity, and its directors and officers, and any employee, agent or affiliate acting on behalf of such Covered Entity in connection with this Agreement.

"**Reportable Compliance Event**" as used herein means (1) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, by, or enters into a settlement with an Official Body in connection with any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law, or any predicate crime to any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a violation of any Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (2) any Covered Entity engages in a transaction that has caused or would cause the Bank to be in violation of any International Trade Law or Anti-Corruption Law, including a Covered Entity's use of any proceeds of the Loans hereunder to directly or indirectly fund any activities or business of, with or for the benefit of any Sanctioned Person, or to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction; (3) any Collateral qualifies as Blocked Property, or (4) any Covered Entity otherwise violates, or reasonably believes it will violate, any of the International Trade Law- or Anti-Corruption Law-specific representations and covenants herein.

**5.** **Negative Covenants.** The Borrower covenants and agrees that from the date of this Agreement and so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until all Obligations have been paid in full (other than inchoate indemnity obligations), except as set forth in the Addendum, the Borrower will not, without the Bank's prior written consent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1.** **Use of Funds.** Use any of the proceeds of any credit extended hereunder except for the purposes stated in **Section 1.1** hereof.

**5.2.** **Indebtedness.** Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (i) the liabilities of the Borrower to the Bank under the Loan Documents; (ii) any other liabilities of Borrower existing as of, and disclosed to the Bank prior to, the date hereof; (iii) new purchase money debt and other term debt in amounts not to exceed an aggregate of Twenty Million and 00/100 Dollars ($20,000,000.00) at any time (provided that, for the avoidance of doubt, this **Section 5.2(iii)** shall not permit to exist any revolving or working capital debt other than the liabilities of Borrower to Bank under the Loan Documents); (iv) the issuance of unsecured, subordinated convertible debt, provided, however, that such debt is subordinated in writing on terms reasonably acceptable to the Bank and that the Borrower is in pro forma compliance with each of the financial covenants hereunder both pre and post issuance of debt; (v) indebtedness to trade creditors incurred in the ordinary course of business; (vi) indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business; (vii) indebtedness secured by Permitted Liens; (viii) indebtedness between Borrower and its subsidiaries in the ordinary course of business; and (ix) extensions, refinancings, modifications and restatements of the foregoing provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3.** **Liens and Encumbrances.** Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of the Borrower's assets now owned or hereafter acquired, except any of the foregoing (i) in favor of the Bank, (ii) which is existing as of, and disclosed to the Bank in writing

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prior to, the date hereof (and which is specified on the Addendum hereto), or (iii) which constitutes a Permitted Lien.

**5.4.** **Guarantees.** Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except (i) any of the foregoing in favor of Bank and (ii) in the ordinary course of Borrower's business.

**5.5.** **Loans or Advances.** Purchase or hold beneficially any stock, other securities or evidence of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity, except (i) investments disclosed on the Borrower's Financial Statements that have been provided to the Bank on or before the date hereof, or that are otherwise acceptable to the Bank in its sole discretion, (ii) loans, advances or investments made in accordance with **Section 5.2** above, (iii) additional loans, advances or investments in or to Borrower's subsidiaries in the ordinary course of business, (iv) investments made pursuant to a board-approved investment policy, or (v) loans or advances to and equity investments in third party entities, so long as the Borrower is in pro forma compliance with each of the financial covenants hereunder both before and after each such loan, advance or equity investment.

**5.6.** **Merger, Consolidation, Transfer of Assets.** Liquidate or dissolve, or merge or consolidate with or into any person, firm, corporation or other entity, or make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of its property, assets, operations or business, whether now owned or hereafter acquired; provided, however, that the Borrower may enter into mergers or acquisitions with, and sell, lease or transfer assets to third party entities so long as the Borrower is the surviving entity (as applicable) and the Borrower is in pro forma compliance with each of the financial covenants hereunder both before and after each such merger, consolidation, acquisition, sale, lease or transfer of assets.

**5.7.** **Anti-Corruption Laws; Anti-Money Laundering Laws; International Trade Laws.** (I) Do any of the following, nor permit any of its directors, officers, employees, agents or affiliates acting on behalf of any Loan Party in connection with this Agreement, nor such Loan Party's subsidiaries to (a) become a Sanctioned Person; (b) directly or indirectly provide, use, or make available the proceeds of any Loan hereunder (i) to fund any activities or business of, with, or for the benefit of any Person that, at the time of such funding or facilitation, is a Sanctioned Person, (ii) to fund or facilitate any activities or business of or in any Sanctioned Jurisdiction, (iii) in any manner that could result in a violation by any Person (including the Bank) of Anti-Corruption Laws, Anti-Money Laundering Laws or International Trade Laws or (iv) in violation of any applicable Law, including, without limitation, any applicable Anti-Corruption Law, Anti-Money Laundering Law or International Trade Law; (c) repay any Loan with Blocked Property or funds derived from any unlawful activity; or (d) permit any Collateral to become Blocked Property; nor (II) directly or indirectly provide, use, or make available the proceeds of any Loan hereunder to any such Loan Party's subsidiaries that is not party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.8.** **Outbound Investment Rules.** (a) Be or become a "covered foreign person", as that term is defined in the Outbound Investment Rules, or (b) engage, directly or indirectly, in (i) a "covered activity" or a "covered transaction", as each such term is defined in the Outbound Investment Rules, (ii) any activity or transaction that would constitute a "covered activity" or a "covered transaction", as each such term is defined in the Outbound Investment Rules, or (iii) any other activity that would cause the Bank to be in violation of the Outbound Investment Rules or cause the Bank to be legally prohibited by the Outbound Investment Rules from performing under this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.9.** **Double Negative Pledge.** Enter into any agreement with any Person, other than in connection with this Agreement, which prohibits or limits the ability of the Borrower to create, incur, assume or suffer to exist any lien in favor of the Bank upon or with respect to any intellectual property of the Borrower, whether now owned or hereafter acquired or created.

**6.** **Events of Default.** The occurrence of any of the following will be deemed to be an "**Event of Default**":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1.**Borrower shall fail to pay any principal, interest, fees or other amounts payable under any of the Loan Documents.

**6.2.**Any financial statement or certificate furnished to the Bank in connection with, or any representation or warranty made by the Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

**6.3.**Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an "Event of Default" in this **Section 6**), and with respect to any such default that by its nature can be cured, such default shall continue for a period of thirty (30) days from its occurrence.

**6.4.**Any default in the payment or performance of any monetary obligation in excess of Five Million and 00/100 Dollars ($5,000,000.00), or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which the Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a "**Third Party Obligor**") has incurred any debt for borrowed money in an amount greater than Five Million and 00/100 Dollars ($5,000,000.00).

**6.5.**Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (the "**Bankruptcy Code**"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or the Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or the Borrower or any Third Party Obligor shall be adjudicated bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

**6.6.**The filing of a notice of judgment lien against Borrower in an amount of at least Five Million and 00/100 Dollars ($5,000,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier), which shall remain unsatisfied for sixty (60) days and is not discharged or stayed (whether through the posting of a bond or otherwise) within sixty (60) days; or the recording of any abstract of judgment against Borrower in an amount of at least Five Million and 00/100 Dollars ($5,000,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) and the same is not, within sixty (60) days after the occurrence

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thereof, discharged or stayed (whether through the posting of a bond or otherwise) in any county in which Borrower has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower and the same is not, within sixty (60) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); or the entry of one or more final judgments, orders, or decrees for the payment of money in an amount, individually or in the aggregate, of at least Five Million and 00/100 Dollars ($5,000,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower and the same is/are not, within sixty (60) days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor.

**6.7.**The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor.

**6.8.**The occurrence of any Change in Control of the Borrower.

As used herein:

"**Change in Control**" means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) any Exchange Act Person (as hereinafter defined) becomes the Owner, directly or indirectly, of securities of the Borrower representing more than fifty percent (50%) of the combined voting power of Borrower's then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the acquisition of securities of Borrower directly from Borrower, (B) on account of the acquisition of securities of Borrower by an investor, any affiliate thereof or any other Exchange Act Person that acquires Borrower's securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for Borrower through the issuance of equity securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the "**Subject Person**") exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by Borrower reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by Borrower, and after such share acquisition, the Subject Person becomes the Owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur; or (ii) there is consummated a merger, consolidation or similar transaction involving (directly or indirectly) Borrower and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of Borrower immediately prior thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving corporation, partnership, limited liability company or other entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving corporation, partnership, limited liability company or other entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting securities of the Borrower immediately prior to such transaction.

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"**Exchange Act Person**" means any natural person, corporation, partnership, limited liability company or other entity, or "group" (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "**Exchange Act**")), except that "Exchange Act Person" shall not include (i) Borrower or any subsidiary of Borrower, (ii) any employee benefit plan of Borrower or any subsidiary of Borrower or any trustee or other fiduciary holding securities under an employee benefit plan of Borrower or any subsidiary of Borrower, (iii) an underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) a corporation, partnership, limited liability company or other entity Owned, directly or indirectly, by the stockholders of Borrower in substantially the same proportions as their Ownership of stock of Borrower; or (v) any natural person, corporation, partnership, limited liability company or other entity or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the date hereof, is the Owner, directly or indirectly, of securities of Borrower representing more than fifty percent (50%) of the combined voting power of Borrower's then outstanding securities.

A person or corporation, partnership, limited liability company or other entity shall be deemed to "**Own**," to have "**Owned**," to be the "**Owner**" of, or to have acquired "**Ownership**" of securities if such person or corporation, partnership, limited liability company, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to direct the voting, with respect to such securities.

**7. Remedies.** Upon the occurrence of any Event of Default: (i) all principal, unpaid interest outstanding and other indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice (except as expressly provided in any mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on any real property collateral) become immediately due and payable without presentment, demand, protest or any notices of any kind, including without limitation, notice of nonperformance, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are hereby expressly waived by Borrower; (ii) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (iii) Bank shall have all rights, powers and remedies available under the Note and each of the other Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

**8.** **Conditions.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1.** **Conditions of Initial Extension of Credit.** The Bank's obligation to make any advance under any Loan, or to issue any Letter of Credit, is subject to the fulfillment to Bank's satisfaction of all of the following conditions:

(i)**No Event of Default.** No Event of Default or Default shall have occurred and be continuing.

(ii)**Authorization Documents.** The Bank shall have received certified copies of resolutions of the board of directors, the general partners or the members or managers of any partnership, corporation or limited liability company that executes this Agreement, the Note or any of the other Loan Documents; or other proof of authorization satisfactory to the Bank, together with a certificate of incumbency of the Borrower and any such entity that executes any of the Loan Documents.

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(iii)**Receipt of Loan Documents.** The Bank shall have received the Loan Documents and such other instruments and documents which the Bank may reasonably request in connection with the transactions provided for in this Agreement, which may include an opinion of counsel in form and substance satisfactory to the Bank for any party executing any of the Loan Documents.

(iv)**Fees.** The Bank shall have received all fees owing in respect of the Loan.

(v) **Approval of Bank Counsel.** All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank's counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)**Financial Condition.** There shall have been no material adverse change, as determined by Bank, in the financial condition or business of the Borrower or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such Third Party Obligor, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)**Insurance.** Borrower shall have delivered to Bank evidence of insurance coverage, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with lender loss payable and/or additional insured endorsements in favor of Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.2.** **Conditions of Each Extension of Credit.** The Bank's obligation to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)**Compliance.** The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and, except as disclosed to Bank or in the SEC Filings, on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Default or Event of Default shall have occurred and be continuing or shall exist.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)**Documentation.** Bank shall have received all additional documents which may be required in connection with such extension of credit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)**Letter of Credit Documentation.** Prior to the issuance of any Letter of Credit, Bank shall have received an application for such Letter of Credit, in form and substance acceptable to the Bank, and any other letter of credit documentation required by Bank, in each case completed and duly executed by Borrower.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)**No Material Adverse Change.** There shall not exist or have occurred any event or condition that impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower of its obligations under any of the Loan Documents.

**9.** **Fees; Expenses.** The Borrower agrees to reimburse the Bank, upon the execution of this Agreement, and thereafter on demand, all reasonable fees due and payable to the Bank hereunder and under the other Loan Documents and all actual out-of-pocket costs and expenses reasonably incurred by the Bank in connection with the preparation, negotiation and delivery of this Agreement and the other Loan Documents, and any modifications or amendments thereto or renewals thereof, and the collection of all of the Obligations, including but not limited to enforcement actions, relating to the Loan, whether through judicial proceedings or otherwise, or in defending or prosecuting any actions or proceedings arising out of or relating to this Agreement, including (i) reasonable fees and expenses of counsel (which may include

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costs of in-house counsel); (ii) all costs related to conducting UCC, title and other public record searches; (iii) fees for filing and recording documents in the public records to perfect the Bank's liens and security interests; (iv) expenses for auditors, appraisers and environmental consultants; and (v) taxes. The Borrower hereby authorizes and directs the Bank to charge Borrower's deposit account(s) with the Bank for any and all of the foregoing fees, costs and expenses.

**10.** **Increased Costs.** On written demand, together with written evidence of the justification therefor, the Borrower agrees to pay the Bank all direct costs incurred, any losses suffered or payments made by the Bank as a result of any Change in Law (hereinafter defined), imposing any reserve, deposit, allocation of capital or similar requirement (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) on the Bank, its holding company or any of their respective assets relative to the Loan. "**Change in Law**" means the occurrence, after the date hereof, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty; (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (b) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.

**11.** **Miscellaneous.**

**11.1.** **Notices.** All notices, demands, requests, consents, approvals and other communications required or permitted hereunder ("**Notices**") must be in writing (except as may be agreed otherwise above with respect to borrowing requests or as otherwise provided in this Agreement) and will be effective upon receipt. Notices may be given in any manner to which the parties may agree. Without limiting the foregoing, first-class mail, postage prepaid, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices. In addition, the parties agree that Notices may be sent electronically to any electronic address provided by a party from time to time. Notices may be sent to a party's address as set forth above or to such other address as any party may give to the other for such purpose in accordance with this section.

**11.2.** **Preservation of Rights; Waivers of Marshalling, Setoff, and Certain Other Rights.** No delay or omission on the Bank's part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Bank's action or inaction impair any such right or power. The Bank's rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Bank may have under other agreements, at law or in equity. In addition to the other waivers hereunder, the Borrower waives, to the extent permitted by applicable law, (i) any and all rights to require the Bank to marshal assets or collateral, to proceed first against, or realize on, any assets or collateral or other credit support before proceeding against or realizing on any other assets or collateral or other credit support, or to otherwise require the Bank to exercise rights or remedies in any particular sequence, in connection with any of the Obligations, and (ii) any and all rights, during the existence of an Event of Default, to set off or reduce the amount of the Obligations or any related deficiency against any obligations of the Bank, or on account of the value of any collateral or other credit support, or otherwise, whether any such rights described in this sentence are based on or asserted under any statutory provision, common law, equity or otherwise.

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**11.3.** **Illegality.** If any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, it shall not affect or impair the validity, legality and enforceability of the remaining provisions of this Agreement.

**11.4.** **Changes in Writing.** No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Agreement will be effective unless made in a writing signed by the party to be charged, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Notwithstanding the foregoing, the Bank may modify this Agreement or any of the other Loan Documents for the purposes of completing missing content or correcting erroneous content, without the need for a written amendment, provided that the Bank shall send a copy of any such modification to the Borrower (which notice may be given by electronic mail). No notice to or demand on the Borrower will entitle the Borrower to any other or further notice or demand in the same, similar or other circumstance.

**11.5.** **Entire Agreement.** This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. The representations, warranties, covenants, and agreements in this Agreement regarding Anti-Corruption Laws, International Trade Laws and Anti-Money Laundering Laws will control to the extent of any inconsistency between any such provisions and any provision in any Note regarding such matters.

**11.6.** **Counterparts.** This Agreement and any other Loan Document may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement or any other Loan Document by facsimile transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Agreement or any other Loan Document by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

**11.7.** **Successors and Assigns.** This Agreement will be binding upon and inure to the benefit of the Borrower and the Bank and their respective heirs, executors, administrators, successors and assigns; <u>provided</u>, <u>however</u>, that the Borrower may not assign this Agreement in whole or in part without the Bank's prior written consent and the Bank at any time may assign this Agreement in whole or in part.

**11.8.** **Interpretation.** In this Agreement, unless the Bank and the Borrower otherwise agree in writing, the singular includes the plural and the plural the singular; words importing any gender include the other genders; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; the word "or" shall be deemed to include "and/or", the words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; references to articles, sections (or subdivisions of sections) or exhibits are to those of this Agreement; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Unless otherwise specified in this Agreement, all accounting terms shall be interpreted and all accounting determinations shall be made in accordance with the Applicable Accounting Standards. If this Agreement is executed by more than one party as Borrower, the obligations of such persons or entities will be joint and several.

**11.9.** **No Consequential Damages, Etc..** Neither party will be responsible for any consequential, incidental, special or punitive damages, that may be incurred or alleged by any person or

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entity as a result of this Agreement, the other Loan Documents, the transactions contemplated hereby or thereby, or the use of the proceeds of the Loan.

**11.10.** **Assignments and Participations.** At any time, without any notice to the Borrower, the Bank may sell, assign, transfer, negotiate, grant participations in, or otherwise dispose of all or any part of the Bank's interest in the Loan. The Borrower hereby authorizes the Bank to provide, without any notice to the Borrower, any information concerning the Borrower, including information pertaining to the Borrower's financial condition, business operations or general creditworthiness, to any assignee of or participant in or any prospective assignee of or participant in all or any part of the Bank's interest in the Loan.

**11.11.** **USA PATRIOT Act Notice. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each Borrower that opens an account. What this means: when the Borrower opens an account, the Bank will ask for the business name, business address, taxpayer identifying number and other information or documentation that will allow the Bank to identify the Borrower, such as organizational documents. For some businesses and organizations, the Bank may also need to ask for identifying information and documentation relating to certain individuals associated with the business or organization.** 

**11.12.** **Important Information about Phone Calls.** By providing telephone number(s) to the Bank, now or at any later time, the Borrower hereby authorizes the Bank and its affiliates and designees to contact the Borrower regarding the Borrower's account(s) with the Bank or its affiliates, whether such accounts are Borrower's individual accounts or business accounts for which Borrower is a contact, at such numbers using any means, including but not limited to placing calls using an automated dialing system to cell, VoIP or other wireless phone number, or by leaving prerecorded messages or sending text messages, even if charges may be incurred for the calls or text messages. Borrower hereby consents that any phone call with the Bank may be monitored or recorded by the Bank.

**11.13.** **Confidentiality.** In connection with the Obligations, this Agreement and the other Loan Documents, the Bank and the Borrower will be providing to each other, whether orally, in writing or in electronic format, nonpublic, confidential or proprietary information (collectively, "**Confidential Information**"). Each of the Borrower and the Bank agrees (i) to hold the Confidential Information of the other in confidence; and (ii) not to disclose or permit any other person or entity access to the Confidential Information of the other party, except for disclosure or access (a) to a party's affiliates and its or their employees, officers, directors, agents, representatives, (b) to other third parties that provide or may provide ancillary support relating to the Obligations, this Agreement and/or the other Loan Documents, (c) in connection with the exercise of any remedies or enforcement of rights under this Agreement or any action or proceeding relating to the Obligations, this Agreement and/or the other Loan Documents, (d) to its external or internal auditors or regulatory authorities, or (e) upon the order of a court or other governmental agency having jurisdiction over a party. It is understood and agreed that the obligation to protect such Confidential Information shall be satisfied if the party receiving such Confidential Information utilizes the same control (but no less than reasonable) as it does to avoid disclosure of its own confidential and valuable information. It is also understood and agreed that no information shall be within the protection of this Agreement where such information: (w) is or becomes publicly available through no fault of the party to whom such Confidential Information has been disclosed, (x) is released by the originating party to anyone without restriction, (y) is rightly obtained from third parties who are not, to such receiving party's knowledge, under an obligation of confidentiality, or (z) is required to be disclosed by subpoena or similar process of applicable law or regulations.

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For the purposes of this Agreement, Confidential Information of a party shall include, without limitation, any financial information, scientific or technical information, design, process, procedure or improvement and all concepts, documentation, reports, data, data formats, specifications, computer software, source code, object code, user manuals, financial models, screen displays and formats, software, databases, inventions, knowhow, showhow and trade secrets, whether or not patentable or copyrightable, whether owned by a party or any third party, together with all memoranda, analyses, compilations, studies, notes, records, drawings, manuals or other documents or materials which contain or otherwise reflect any of the foregoing information.

Each of the Borrower and the Bank agrees to return to the other or destroy all Confidential Information of the other upon the termination of this Agreement; provided, however, each party may retain such limited information for customary archival and audit purposes only for reference with respect to prior dealings between the parties subject at all times to the continuing terms of this **Section 11.13**.

The Borrower agrees not to use the Bank's name or logo in any marketing, advertising or related materials, without the prior written consent of the Bank. With the Borrower's consent (not to be unreasonably withheld, conditioned or delayed), the Bank may use the Borrower's name or logo in any marketing, advertising or related materials.

**11.14.** **Sharing Information with Affiliates of the Bank.** The Borrower acknowledges that from time to time other financial and banking services may be offered or provided to the Borrower or one or more of its subsidiaries and/or affiliates (in connection with this Agreement or otherwise) by the Bank or by one or more subsidiaries or affiliates of the Bank or of The PNC Financial Services Group, Inc., and the Borrower hereby authorizes the Bank to share any information delivered to the Bank by the Borrower and/or its subsidiaries and/or affiliates pursuant to this Agreement or any of the Loan Documents to any subsidiary or affiliate of the Bank and/or The PNC Financial Services Group, Inc., subject to any provisions of confidentiality in this Agreement or any other Loan Documents.

**11.15.** **Electronic Signatures and Records.** Notwithstanding any other provision herein, the Borrower agrees that this Agreement, the Loan Documents, any amendments thereto, and any other information, notice, signature card, agreement or authorization related thereto (each, a "**Communication**") may, at the Bank's option, be in the form of an electronic record. Any Communication may, at the Bank's option, be signed or executed using electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention.

**11.16.** **Governing Law and Jurisdiction.** This Agreement has been delivered to and accepted by the Bank and will be deemed to be made in the State where the Bank's office indicated above is located. **This Agreement will be interpreted and the rights and liabilities of the Bank and the Borrower determined in accordance with the laws of the state where the Bank's office indicated above is located, excluding its conflict of laws rules, including without limitation the Electronic Transactions Act (or equivalent) in effect in the state where the Bank's office indicated above is located (or, to the extent controlling, the laws of the United States Of America, including without limitation the Electronic Signatures in Global and National Commerce Act)**. The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where the Bank's office indicated above is located; provided that nothing contained in this Agreement will prevent the Bank from bringing any action, enforcing any award or judgment or exercising any rights against the Borrower individually, against any security or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction. The Bank and the Borrower agree that the venue provided above is

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the most convenient forum for both the Bank and the Borrower. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Agreement.

**11.17** **Dispute Resolution.**

**(a)** **TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER HEREBY KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT RELATING TO THE OBLIGATIONS, OR ANY CLAIM, COUNTERCLAIM, OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. THE BANK IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE BORROWER.**

(b)Notwithstanding the foregoing to the contrary, in the event that the jury trial waiver contained herein shall be held or deemed to be unenforceable, the Borrower hereby agrees that any controversy, dispute, or claim between the parties arising out of or relating to this Agreement (a "Dispute") shall be resolved by a reference proceeding in California in accordance with the provisions of Section 638 of the California Code of Civil Procedure. The referee shall be a retired California state court judge selected by mutual written agreement of the parties. If the parties are unable to agree upon a referee within ten (10) calendar days after one party serves a written notice of its intent to commence a judicial reference proceeding on the other party, then the referee will be selected by the court in accordance with Section 640(b) of the California Code of Civil Procedure. The referee shall be appointed to sit as a temporary judge, with all of the powers of a temporary judge, as authorized by law, and upon selection should take and subscribe to the oath of office as provided for in Rule 244 of the California Rules of Court (or any subsequently enacted Rule). The referee shall determine the manner in which the reference proceeding is conducted including the time and place of all hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. The referee shall render a written statement of decision and shall conduct the proceedings in accordance with the California Code of Civil Procedure, the California Rules of Court, and the California Evidence Code, except as otherwise specifically agreed by the parties (including as set forth in this Agreement) and approved by the referee. The referee's statement of decision shall set forth findings of fact and conclusions of law. The referee's decision shall be entered as a judgment in the court in accordance with the provisions of Sections of 644 and 645 of the California Code of Civil Procedure, and shall be appealable in accordance with California law.

(c)Nothing in this Agreement shall be deemed to apply to or limit the Bank's right, during the existence of an Event of Default, to: (i) exercise self-help remedies such as (but not limited to) setoff; (ii) foreclose judicially or nonjudicially against any real or personal property collateral, or to exercise judicial or nonjudicial power of sale rights; (iii) obtain from a court provisional or ancillary remedies (including, without limitation, injunctive relief, a writ of possession, prejudgment attachment, a protective order, or the appointment of a receiver); or (iv) pursue its rights against any person or entity in a third-party proceeding in any action brought against the Bank (including, without limitation, actions in bankruptcy court). Neither the exercise of any self-help remedies nor the institution or maintenance of an action for foreclosure or provisional or ancillary remedies, or the opposition to any such provisional remedies, shall constitute a waiver of the right of any party, including, without limitation, the claimant in any such action, to require submission to judicial reference the merits of the dispute occasioning resort to such remedies. No

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provision in this Agreement or any other document or agreement relating to the Obligations regarding submission to jurisdiction or venue in any court is intended to or shall be construed to be in derogation of the foregoing general judicial reference.

(d)The foregoing judicial reference procedure constitutes a full and complete waiver of the right to a trial by jury that the parties may otherwise have and this waiver and judicial reference procedure is a material consideration to each party hereto.

(e)If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by the reference procedure herein described will be resolved and determined by arbitration. The arbitration will be conducted by a retired California state court judge, in accordance with Sections 1280 through 1294.2 of the California Code of Civil Procedure and the California Arbitration Act, each as amended from time to time, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Such arbitration shall be conducted in a mutually acceptable location. Except as expressly set forth below, the procedures specified herein shall be the sole and exclusive procedures for the resolution of Disputes; provided, however, that the Borrower or the Bank may seek provisional or ancillary remedies, such as preliminary injunctive relief, from a court having jurisdiction, before, during or after the pendency of any arbitration proceeding. The institution and maintenance of any action for such judicial relief, or pursuit of provisional or ancillary remedies, shall not constitute a waiver of the right or obligation of any party to submit any claim or dispute to arbitration. Nothing herein shall in any way limit or modify any remedies available to the Bank under this Agreement or otherwise at law or in equity. In addition:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)<u>Motion Practice</u>. In any arbitration hereunder, the arbitrator(s) shall decide any pre-hearing motions which are substantially similar to pre-hearing motions to dismiss for failure to state a claim or motions for summary adjudication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)<u>Discovery</u>. Discovery shall be limited to the pre-hearing exchange of all documents which the Borrower and the Bank intend to introduce at the hearing and any expert reports prepared by any expert who will testify at the hearing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)<u>Sequential Hearing Days</u>. At the administrative conference conducted by the arbitrator(s), the Borrower and the Bank and the arbitrator(s) shall determine how to ensure that the hearing is started and completed on sequential hearing days. Potential arbitrators shall be informed of the anticipated length of the hearing and they shall not be subject to appointment unless they agree to abide by the parties' intent that, absent exigent circumstances, the hearing shall be conducted on sequential days.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)<u>Award</u>. The award of the arbitrator(s) shall be accompanied by a statement of the reasons upon which such award is based.

(f)The Borrower and the Bank shall each bear equally all fees and costs and expenses of the arbitration, and each shall bear its own legal fees and expenses and the costs of its experts and witnesses; provided, however, that if the arbitration panel shall award to a party substantially all relief sought by such party, then, notwithstanding any applicable governing law provisions, the other party shall pay all costs, fees and expenses incurred by the prevailing party and such costs, fees and expenses shall be included in such award.

(g)The entire procedure shall be confidential and none of the parties nor arbitrator(s) may disclose the existence, content, or results of any arbitration hereunder without the written consent of all parties to the Dispute, except (i) to the extent disclosure is required to enforce any applicable arbitration

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award or may otherwise be required by law and (ii) that either party may make such disclosures to its regulators, auditors, accountants, attorneys and insurance representatives. No conduct, statements, promises, offers, views, or opinions of any party involved in an arbitration hereunder shall be discoverable or admissible for any purposes in litigation or other proceedings involving the parties to the Dispute and shall not be disclosed to anyone not an agent, employee, expert, witness, or representative for any of such parties.

(h)**CLASS ACTION WAIVER. THE BORROWER HEREBY WAIVES, WITH RESPECT TO ANY DISPUTE: (I) THE RIGHT TO PARTICIPATE IN A CLASS ACTION, PRIVATE ATTORNEY GENERAL ACTION OR OTHER REPRESENTATIVE ACTION IN COURT OR IN ARBITRATION, EITHER AS A CLASS REPRESENTATIVE OR CLASS MEMBER; AND (II) THE RIGHT TO JOIN OR CONSOLIDATE CLAIMS WITH CLAIMS OF ANY OTHER PERSON.** The foregoing waiver is referred to herein as the "class action waiver". The Bank and the Borrower agree that no arbitrator shall have authority to conduct any arbitration in violation of the class action waiver or to issue any relief that applies to any person or entity other than the Borrower and/or the Bank individually. The parties acknowledge that this class action waiver is material and essential to the arbitration of any claims and is non-severable from this Dispute Resolution section. If the class action waiver is voided, found unenforceable, or limited with respect to any claim for which the Borrower seeks class-wide relief, then this Dispute Resolution section (except for this sentence) shall be null and void with respect to such claim, subject to the right to appeal the limitation or invalidation of the class action waiver. However, this Dispute Resolution section shall remain valid with respect to all other claims and Disputes. The parties acknowledge and agree that under no circumstances will a class action be arbitrated.

**The Borrower acknowledges that it has read and understands all the provisions of this Agreement, including the alternative dispute resolution (arbitration) and class action waiver provisions, and has been advised by counsel as necessary or appropriate.**

**REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

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**WITNESS** the due execution hereof as a document under seal, as of the date first written above.

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| |
|:---|
| &nbsp;&nbsp;<br>**POWER INTEGRATIONS, INC.**<br>|
| &nbsp;&nbsp;By: /s/ NANCY ERBA |
| &nbsp;&nbsp;(SEAL) |
| &nbsp;&nbsp;Name: Nancy Erba |
| &nbsp;&nbsp;Title: Chief Financial Officer<br>|

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| |
|:---|
| &nbsp;&nbsp;**PNC BANK, NATIONAL ASSOCIATION** |
| &nbsp;&nbsp;By: /s/ JACK DICANIO |
| &nbsp;&nbsp;(SEAL) |
| &nbsp;&nbsp;Name: Jack DiCanio |
| &nbsp;&nbsp;Title: Vice President  |

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**ADDENDUM**

**ADDENDUM** to that certain Loan Agreement, dated as of February 24, 2026, between **POWER INTEGRATIONS, INC.**, a Delaware corporation, as the Borrower and **PNC BANK, NATIONAL ASSOCIATION**, as the Bank (the "**Agreement**"). Capitalized terms used in this Addendum and not otherwise defined shall have the meanings given them in the Agreement. Section numbers below refer to the sections of the Agreement. This Addendum is incorporated into and made a part of the Agreement. All references in the Agreement and this Addendum to the "Agreement" shall include both the Agreement and this Addendum.

**3.6.** **Title to Assets.** Describe additional liens and encumbrances below:

None.

**3.8.** **Litigation.** Describe pending and threatened litigation, investigations, proceedings, etc. below:

&nbsp;&nbsp;&nbsp;&nbsp;● On December 18, 2019, CogniPower LLC ("CogniPower") filed a complaint against a customer of the Borrower, in the United States District Court for the District of Delaware (the "Court") for infringement of two patents; the Borrower thereafter intervened and sought a declaration of non-infringement with respect to use of the Borrower's products. Following a trial in August 2025, the Borrower successfully obtained verdicts of noninfringement and invalidity of all asserted claims, and as part of the noninfringement verdict, the jury found that no products incorporating the Borrower's InnoSwitch products met the specific requirements of CogniPower's asserted claims. The Court thereafter entered judgment in favor of the Borrower. Briefing on post-trial motions is complete, with rulings expected in the coming months. On January 16, 2025, CogniPower filed a follow-on complaint against the same customer asserting the same two patents in the United States District Court for the District of Delaware, but no schedule has been set for the follow-on case. The Borrower believes it has strong claims and defenses with respect to all of CogniPower's asserted patents and intends to vigorously defend itself against CogniPower's claims against the Borrower's technology, with appeals to follow if necessary.

&nbsp;&nbsp;&nbsp;&nbsp;● On May 11, 2022, a former employee of the Borrower filed a first amended complaint in the Superior Court of California, County of Santa Clara alleging several violations of the Fair Employment and Housing Act. The complaint named the Borrower and one of its vice presidents and alleged, among other things, that the former employee was discriminated against and harassed based on age and disability, was retaliated against, and was wrongfully terminated in violation of public policy. Two of the plaintiff's claims were dismissed with prejudice in response to the Borrower's demurrer motions. Prior to trial, the plaintiff dismissed with prejudice the claims against the Borrower's vice president and the claim of wrongful termination in violation of public policy. In June 2025, the remaining claims in the matter were tried before a jury. The jury reached a verdict and ruled in favor of the Borrower on the claims of age and disability discrimination and harassment based on age. The jury ruled in favor of the plaintiff and against the Borrower on the claims of harassment based on disability and retaliation and awarded compensatory damages of $3.2 million and punitive damages of $6.0 million. In the quarter ending June 30, 2025, the Borrower recognized a charge in the amount of $9.2 million in other operating expenses **  on the condensed consolidated statements of income. In the quarter ended September 30, 2025, the Borrower recognized in other operating expenses on the consolidated statements of income an additional $0.7 million related to plaintiff attorney fees and related costs. The plaintiff had filed claims for attorney fees and other costs totaling $5.9 million; the Borrower was thus

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potentially exposed to an additional $5.2 million in expenses related to this matter. On December 9, 2025, the court issued orders on the parties' motions on attorneys' fees and costs, awarding claims for attorney fees and other costs totaling $2.1 million. As a result, in the quarter ended December 31, 2025, the Borrower recognized in other operating expenses on the consolidated statements of income an additional $1.4 million to reflect the court determination of plaintiff attorney fees and related costs. The Borrower disagrees with the jury's verdicts and court's orders against the Company and has appealed the judgement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.12.** **Environmental Matters .** Describe pending or threatened litigation or proceeding arising under, relating to or in connection with any Environmental Law below:

None.

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**CONTINUATION OF ADDENDUM**

**4.2.** **Financial Reporting Requirements.** 

**1.** **Borrower's Financial Reporting.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)**Interim Financial Statements.** Within forty-five (45) days after the end of each quarter, the Borrower's Financial Statements for such period, in reasonable detail, certified by an authorized officer of the Borrower and prepared in accordance with the Applicable Accounting Standards, consistently applied from period to period.

(b)**Annual Financial Statements.** Within one hundred twenty (120) days after the end of each fiscal year, the Borrower's annual Financial Statements. The Financial Statements will be prepared on an audited basis in accordance with the Applicable Accounting Standards by an independent certified public accountant selected by the Borrower and satisfactory to the Bank. Audited Financial Statements shall contain the unqualified opinion of an independent certified public accountant and all accountant examinations shall have been made in accordance with the Applicable Accounting Standards consistently applied from period to period.

**2.** **Compliance Certificate.** Together with each of the interim and annual Financial Statements required to be delivered for the Borrower under this Agreement, a certificate, certifying compliance with all applicable financial covenants (containing detailed calculations of such financial covenants) for the period then ended, whether any Event of Default exists, and, if so, the nature thereof and the corrective measures the Borrower proposes to take with respect to such Event of Default. Such certificate shall be duly executed by either the Chief Financial Officer, another responsible senior financial officer, or an authorized officer of the Borrower.

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**CONTINUATION OF ADDENDUM**

**4.9.** **Financial Covenants.** 

(1)The Borrower will maintain at all times a Minimum Liquidity of at least Fifty Million and 00/100 Dollars ($50,000,000.00), measured on a consolidated basis at each fiscal quarter end.

(2)The Borrower will maintain at all times a ratio of Funded Debt to Adjusted EBITDA of less than 2.00 to 1.00, measured as of each fiscal quarter end and determined on a rolling four-quarter basis.

As used herein:

"**Adjusted EBITDA**" means, for any period, with respect to the Borrower and its subsidiaries, Consolidated Net Income (as defined below), <u>minus</u> without duplication and to the extent included in determining such Consolidated Net Income, extraordinary or other non-recurring non-cash gains and interest income <u>plus</u>, without duplication and to the extent excluded in determining such Consolidated Net Income, (i) extraordinary or other non-recurring non-cash losses, including any non-cash charges for stock-based compensation expenses and impairment of intangibles, (ii) consolidated interest expense, (iii) income taxes, (iv) depreciation and amortization, (v) amortization of acquired inventory write-up to fair market value in accordance with the Applicable Accounting Standards, and (vi) expenses incurred in connection with certain one-time events as may in the future occur, subject to the mutual agreement of the Borrower and Bank, in each case for such period, as determined in accordance with the Applicable Accounting Standards.

"**Consolidated Net Income**" means, for any specified period, the net income or loss of the Borrower and its subsidiaries determined for such period on a consolidated basis in accordance with the Applicable Accounting Standards.

"**Funded Debt**" means, as of any date of determination, with respect to the Borrower and its subsidiaries on a consolidated basis, determined in accordance with the Applicable Accounting Standards, the outstanding principal amount of all indebtedness owing by Borrower and its subsidiaries, whether current or long-term, including, without limitation, the obligations under this Agreement and all obligations evidenced by notes, loan agreements or other similar instruments, bonds, debentures, reimbursement agreements, bankers' acceptances, bank guaranties, capital leases, synthetic leases, surety bonds and similar instruments and the maximum drawing amount of all standby and commercial letters of credit outstanding (other than any standby or commercial letters of credit to the extent that they are cash collateralized).

If, at any time, any change in the Applicable Accounting Standards would affect the definition of Funded Debt and either Borrower or Bank shall so request, Bank and Borrower shall negotiate in good faith to amend such ratio or requirements to preserve the original intent thereof in light of such change in the Applicable Accounting Standards; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with the Applicable Accounting Standards prior to such change therein and (ii) Borrower shall provide to Bank the financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in the Applicable Accounting Standards.

"**Minimum Liquidity**" means, as of any date of determination, with respect to the Borrower and its subsidiaries on a consolidated basis, determined in accordance with the Applicable Accounting Standards, the sum of unrestricted cash and unrestricted short-term and long-term marketable securities.

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All of the above financial covenants shall be computed and determined in accordance with the Applicable Accounting Standards applied on a consistent basis (subject to normal year-end adjustments).

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## Exhibit 31.1

**Exhibit 31.1** 

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER** 

I, Jennifer Lloyd certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Form 10-Q of Power Integrations, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | | |
|:---|:---|:---|:---|
| Dated:<br>| May 7, 2026<br>| By:<br>| /s/ JENNIFER LLOYD<br>|
|  |  |  | Jennifer Lloyd<br>Chief Executive Officer<br>|

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER** 

I, Nancy Erba, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Form 10-Q of Power Integrations, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | | |
|:---|:---|:---|:---|
| Dated:<br>| May 7, 2026<br>| By:<br>| /s/ NANCY ERBA<br>|
|  |  |  | Nancy Erba<br>Chief Financial Officer<br>|

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## Exhibit 32.1

**Exhibit 32.1** 

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER** 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Power Integrations, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jennifer Lloyd, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), certify to the best of my knowledge that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | | |
|:---|:---|:---|:---|
| Dated:<br>| May 7, 2026<br>| By:<br>| /s/ JENNIFER LLOYD<br>|
|  |  |  | Jennifer Lloyd<br>Chief Executive Officer<br>|

---

*A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.* 

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## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER** 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Power Integrations, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Nancy Erba, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ("Section 906"), certify to the best of my knowledge that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | | |
|:---|:---|:---|:---|
| Dated:<br>| May 7, 2026<br>| By:<br>| /s/ NANCY ERBA<br>|
|  |  |  | Nancy Erba <br>Chief Financial Officer<br>|

---

*A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.* 

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