EXHIBIT 10.23
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as of October
16, 1998 by and between Power Integrations, Inc., a Delaware Corporation
("Borrower") and UNION BANK OF CALIFORNIA, N.A. ("Bank").
SECTION 1. THE LOAN
1.1.1 THE REVOLVING LOAN. Bank will loan to Borrower an amount not
to exceed Ten Million Dollars ($10,000,000) outstanding in the aggregate at any
one time (the "Revolving Loan"). All borrowings of the Revolving Loan must be
made before November 30, 2000 at which time all unpaid principal and interest of
the Revolving Loan shall be due and payable. The Revolving Loan shall be
evidenced by a promissory note (the "Revolving Note") on the standard form used
by Bank for commercial loans. Bank shall enter each amount borrowed and repaid
in Bank's records and such entries shall be deemed to be the amount of the
Revolving Loan outstanding. Omission of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed.
1.1.1.1 THE COMMERCIAL LETTER OF CREDIT SUBLIMIT. As a
sublimit to the Revolving Loan, Bank shall issue, for the account of Borrower,
one or more irrevocable commercial letters of credit (individually, an "L/C" and
collectively, the "L/Cs") and calling for drafts at sight covering the
importation or purchase of silicon wafers. The aggregate amount available to be
drawn under all outstanding L/Cs and the aggregate amount of unpaid
reimbursement obligations under drawn L/Cs shall not exceed Ten Million Dollars
($10,000,000) and shall reduce, dollar for dollar, the maximum amount available
under the Revolving Loan and Standby L/C sublimit. All such commercial L/Cs
shall be drawn on such terms and conditions as are acceptable to Bank and shall
be governed by the terms of (and Borrower agrees to execute) Bank's standard
form for commercial L/C applications and reimbursement agreement and shall not
have an expiration date more than 120 days from its date of issuance.
1.1.1.2 THE STANDBY L/C SUBLIMIT. As a sublimit to the
Revolving Loan, Bank shall issue, for the account of Borrower, one or more
irrevocable, Standby letters of credit (individually, a "Standby L/C" and
collectively, the "Standby L/Cs"). All such Standby L/Cs shall be drawn on such
terms and conditions as are acceptable to Bank. The aggregate amount available
to be drawn under all outstanding Standby L/Cs and the aggregate amount of
unpaid reimbursement obligations under drawn Standby L/Cs shall not exceed Ten
Million Dollars ($10,000,000) and shall reduce, dollar for dollar, the maximum
amount available under the Revolving Loan and Commercial L/C sublimit. No
Standby L/C shall have an expiry date more than 12 months from its date of
issuance (except for Amendment) and each Standby L/C shall be governed by the
terms of (and Borrower agrees to execute) Bank's standard form for Standby L/C
applications and reimbursement agreements.
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1.2 TERMINOLOGY. As used herein:
GAAP shall mean generally accepted accounting principals consistently applied.
GUARANTOR shall mean any new subsidiary of the Borrower formed under the laws of
any of the United States or any foreign law and having capitalization (through
equity and/or loans from its parent) of Two Million Five Hundred Thousand
Dollars ($2,500,000) or more. Borrower agrees that it shall cause each such
subsidiary to promptly execute a Continuing Guarantee of Borrower's obligation
to Bank, to be evidenced by a Continuing Guarantee in form and substance
satisfactory to Bank.
LIEN shall mean any mortgage, deed of trust, lien, pledge, charge, security
interest, hypothecation, assignment, deposit arrangement or encumbrance of any
kind in respect of any asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital or finance lease or
other title retention agreement relating to such asset.
LOAN shall mean, collectively, all the credit facilities described above.
LOAN DOCUMENTS shall mean all documents executed in connection with this
Agreement.
MATERIAL ADVERSE CHANGE AND/OR MATERIAL ADVERSE EFFECT as each of these terms
may appear in the Loan Documents, shall mean, each in context, a negative result
or potential result arising directly or indirectly from facts that, in the
totality of the circumstances, Bank considers substantive and germane to (a) the
business, assets, operations, prospects of financial or other condition of
Borrower or any Guarantor; (b) the ability of Borrower or any Guarantor to pay
or perform in accordance with the terms of this Agreement or any Loan Document
to which either or any are a party; or (c) the rights and remedies of Bank under
this Agreement or any of the Loan Documents.
NOTE shall mean, collectively, all the promissory notes described above.
SUBSIDIARY shall mean, as of the date of this Agreement, Power Integrations UK;
Power Integrations K. K.; and Power Integrations International Holdings, Inc.
1.3 PURPOSE OF LOAN. The proceeds of the Revolving Loan shall be used
for short-term working capital purposes only, and issuance of Commercial L/Cs
and Standby L/Cs in the normal course of business.
1.4 INTEREST. The unpaid principal balance of the Revolving Loan
shall bear interest at the rate or rates provided in the Revolving Note and
selected by Borrower.
1.5 UNUSED COMMITMENT FEE. On the last calendar day of the third
month following the execution of this Agreement and on the last calendar day of
each three-month period thereafter until November 30, 2000, or the earlier
termination of the Loan, Borrower shall pay to Bank a non-refundable fee of two-
tenths of one percent (0.20%) per year on the average unused portion of the Loan
for the preceding quarter computed on the basis of actual days elapsed of a year
of 360 days.
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1.6 BALANCES. Borrower shall maintain its primary operating accounts
with Bank until the Note and all sums payable pursuant to this Agreement have
been paid in full.
1.7 DISBURSEMENT. Upon execution hereof, Bank shall disburse the
proceeds of the Loan as provided in Bank's standard form Authorization executed
by Borrower.
1.8 CONTROLLING DOCUMENT. In the event of any inconsistency between
the terms of this Agreement and any Note or any of the other Loan Documents, the
terms of such Note or other Loan Documents will prevail over the terms of this
Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the proceeds
of the Loan unless at or prior to the time for the making of such disbursement,
the following conditions have been fulfilled to Bank's satisfaction:
2.1 COMPLIANCE. Borrower shall have performed and complied with all
terms and conditions required by this Agreement to be performed or complied with
by it prior to or at the date of the making of such disbursement and shall have
executed and delivered to Bank the Note and other documents deemed reasonably
necessary by Bank.
2.2 BORROWING RESOLUTION. Borrower shall have provided Bank with
certified copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such resolutions
shall also designate the persons who are authorized to act on Borrower's behalf
in connection with this Agreement and to do the things required of Borrower
pursuant to this Agreement.
2.3 CONTINUING COMPLIANCE. At the time any disbursement under the
Revolving Loan or the issuance by Bank of any Standby L/C or L/C is to be made,
there shall not exist any event, condition or act which constitutes an event of
default under Section 6 hereof or any event, condition or act which with notice,
lapse of time or both would constitute such event of default; nor shall there be
any such event, condition, or act immediately after the disbursement were it to
be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 BUSINESS ACTIVITY. The principal business of Borrower is
designing, developing, and marketing high voltage analog integrated circuits.
3.2 AFFILIATES AND SUBSIDIARIES. Borrower's affiliates and
subsidiaries (those entities in which Borrower has either a controlling interest
or at least a 25%
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ownership interest) and their addresses are as provided on a schedule delivered
to Bank on or before the date of this Agreement.
3.3 AUTHORITY TO BORROW. The execution, delivery and performance of
this Agreement, the Note and all other agreements and instruments required by
Bank in connection with the Loan are not in contravention of any of the terms of
any indenture, agreement or undertaking to which Borrower is a party or by which
it or any of its property is bound or affected.
3.4 FINANCIAL STATEMENTS. The financial statements of Borrower,
including both a balance sheet at June 30, 1998, together with supporting
schedules, and an income statement for the six (6) months ended June 30, 1998,
have heretofore been furnished to Bank, and are true and complete and fairly
represent the financial condition of Borrower during the period covered thereby.
Since June 30, 1998, there has been no material adverse change in the financial
condition or operations of Borrower.
3.5 TITLE. Except for assets which may have been disposed of in the
ordinary course of business, Borrower has good and marketable title to all of
the property reflected in its financial statements delivered to Bank and to all
property acquired by Borrower since the date of said financial statements, free
and clear of all liens, encumbrances, security interests and adverse claims
except those specifically referred to in said financial statements.
3.6 LITIGATION. Except as disclosed to Bank, prior to the date of
this Agreement, there is no litigation or proceeding pending or threatened
against Borrower or any of its property which is reasonably likely to affect the
financial condition, property or business of Borrower in a materially adverse
manner or result in liability in excess of Borrower's insurance coverage.
3.7 DEFAULT. Borrower is not now in default in the payment of any of
its material obligations, and there exists no event, condition or act which
constitutes an event of default under Section 6 hereof and no condition, event
or act which with notice or lapse of time, or both, would constitute an event of
default.
3.8 ORGANIZATION. Borrower is duly organized and existing under the
laws of the state of its organization, and has the power and authority to carry
on the business in which it is engaged and/or proposes to engage.
3.9 POWER. Borrower has the power and authority to enter into this
Agreement and to execute and deliver the Note and all of the other Loan
Documents.
3.10 AUTHORIZATION. This Agreement and all things required by this
Agreement have been duly authorized by all requisite action of Borrower.
3.11 QUALIFICATION. Borrower is duly qualified and in good standing
in any jurisdiction where such qualification is required and in jurisdictions
where the failure to qualify would have a Material Adverse Effect on Borrower
operations or financial condition.
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3.12 COMPLIANCE WITH LAWS. Borrower is not in violation with respect
to any applicable laws, rules, ordinances or regulations that materially affect
the operations or financial condition of Borrower.
3.13 ERISA. Any defined benefit pension plans as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of
Borrower meet, as of the date hereof, the minimum funding standards of Section
302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in
ERISA has occurred with respect to any such plan.
3.14 REGULATION U. No action has been taken or is currently planned
by Borrower, or any agent acting on its behalf, which would cause this Agreement
or the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.15 CONTINUING REPRESENTATIONS. These representations shall be
considered to have been made again at and as of the date of each disbursement of
the Loan and shall be true and correct as of such date or dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement or any other
of the Loan Documents have been paid in full, unless Bank waives compliance in
writing, Borrower agrees that:
4.1 USE OF PROCEEDS. Borrower will use the proceeds of the Loan only
as provided in subsection 1.3 above.
4.2 COLLATERAL SUPPORT FOR L/CS AND STANDBY L/CS. Borrower agrees
that if the Revolving Loan is terminated for any reason including termination,
and acceleration by Bank or if an L/C or Standby L/C by its terms will extend
beyond the Revolving Loan's termination date, then Borrower will immediately
cash collateralize and issued and outstanding L/Cs or Standby L/Cs in an amount
and pursuant to documentation in form and substance satisfactory to Bank.
4.3 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge promptly
all taxes, assessments and other governmental charges and claims levied or
imposed upon it or its property, or any part thereof, provided, however, that
Borrower shall have the right in good faith to contest any such taxes,
assessments, charges or claims and, pending the outcome of such contest, to
delay or refuse payment thereof provided that adequately funded reserves are
established by it to pay and discharge any such taxes, assessments, charges and
claims.
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4.4 MAINTENANCE OF EXISTENCE. Borrower will, in accordance with
generally accepted industry practice, maintain and preserve its existence and
assets and all rights, franchises, licenses and other authority necessary for
the conduct of its business and will maintain and preserve its property,
equipment and facilities in good order, condition and repair. Bank may, at
reasonable times during normal business hours, visit and inspect any of the
properties of Borrower.
4.5 RECORDS. Borrower will keep and maintain full and accurate
accounts and records of its operations according to generally accepted
accounting principles. Borrower will permit Bank to have access thereto, to
make examination and photocopies thereof, and to make audits, at the Bank's
expense, during regular business hours and limited to one per calendar year so
long as an event of default has not occurred or is continuing. When an event of
default has occurred or is continuing, the costs for such audits shall be paid
by Borrower.
4.6 INFORMATION FURNISHED. Borrower will furnish to Bank:
(a) Within Forty-Five (45) days after the close of each fiscal
quarter, except for the final quarter of each fiscal year, its consolidated,
unaudited balance sheet as of the close of such fiscal quarter, its
consolidated, unaudited income statement for the fiscal quarter then ended, its
consolidated, audited statement of cash flows for the fiscal quarter then ended,
and a consolidated, unaudited statement of changes in stockholders' equity
(deficit) for the fiscal quarter then ended, prepared in accordance with
generally accepted accounting principles;
(b) Within Ninety (90) days after the close of each fiscal year,
a copy of its statement of financial condition including at least its balance
sheet as of the close of such fiscal year, its income and expense statement and
retained earnings statement for such fiscal year, examined and prepared on an
audited basis by independent certified public accountants selected by Borrower
and reasonably satisfactory to Bank, in accordance with generally accepted
accounting principles applied on a basis consistent with that of the previous
year;
(c) Prompt written notice to Bank of all events of default under
any of the terms or provisions of this Agreement or of any other agreement,
contract, document or instrument entered, or to be entered into with Bank; and
of any litigation which, if decided adversely to Borrower, would have a Material
Adverse Effect on Borrower's financial condition; and of any other matter which
has resulted in, or is likely to result in, a Material Adverse Change in its
financial condition or operations;
(d) Promptly after the filing thereof, copies of all reports and
all registration statements filed by or on behalf of the Borrower with the
Securities and Exchange Commission or any national securities exchange,
excluding filings on Form S-8 (or any successor form) and any other filing
solely in respect of stock option plans of the Borrower;
(e) In connection with each financial statement provided
hereunder, a statement executed by the chief financial officer of Borrower,
certifying that no default has occurred and no event exists which with notice or
the lapse of time, or both, would constitute an Event of Default;
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(f) Prior written notice to Bank of any changes in Borrower's
name or in the location of Borrower's assets, principal place of business or
chief executive office.
(g) Promptly after its occurrence written notice to Bank of any
litigation awarded or judgement against Borrower in excess of One Million
Dollars ($1,000,000).
4.7 QUICK RATIO. Borrower shall maintain at all times a ratio of
unrestricted cash and short term investments with a maturity date of thirteen
months (13) or less, and accounts receivable to current liabilities (including
any outstandings under the Loan and amounts represented by issued and
outstanding L/Cs and Standby L/Cs) of not less than 1.25:1.0, as such terms are
defined by GAAP.
4.8 TANGIBLE NET WORTH. Starting with the fiscal quarter end June
30, 1998, Borrower will at all times maintain Tangible Net Worth of not less
than Thirty-four Million Dollars ($34,000,000) that increases from said amount
by Eighty-five percent (85%) of Borrower's net profit after taxes for the
quarter, plus 100% of any net equity proceeds. "Tangible Net Worth" shall mean
net worth decreased by patents, licenses, trademarks, trade names, goodwill and
other similar intangible assets, organizational expenses, and monies due from
affiliates (including officers, shareholders and directors).
4.9 DEBT TO TANGIBLE NET WORTH. Borrower will at all times maintain
a ratio of Total Liabilities to Tangible Net Worth of not greater than 1.0:1.0.
"Total Liabilities" shall mean all liabilities of Borrower, as determined in
accordance with GAAP.
4.10 PROFITABILITY. Borrower shall not suffer any two consecutive
fiscal quarter's losses after income taxes as reported at the end of each such
fiscal quarter. Any quarter's losses after income taxes not to exceed five
percent (5%) of prior quarters Tangible Net Worth.
4.11 INSURANCE. Borrower will keep all of its insurable property,
real, personal or mixed, insured against fire and such other risks as are
customarily insured against by companies conducting similar business with
respect to like properties. Borrower will maintain adequate worker's
compensation insurance and adequate insurance against liability for damages to
persons and property.
4.12 ADDITIONAL REQUIREMENTS. Borrower will:
(a) Promptly and in no event later than five business days after
becoming aware thereof, notify Bank if any written information, exhibits and
reports furnished to the Bank contained any untrue statement of material fact or
omitted to state any material fact or any fact necessary to make the statements
contained herein not misleading in light of the circumstances in which made, and
correct any defect or error that may be discovered therein or in the execution,
acknowledgment or recordation of any Loan Document.
(b) Promptly upon request by the Bank, execute, deliver,
acknowledge, file, re-file, register and re-register any and all such further
acts, security
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agreements, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments as the Bank may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document and (ii) to better assure,
convey, grant, assign, transfer, preserve, protect and confirm to Bank the
rights granted or now or hereafter intended to be granted to the Bank under any
Loan Document or under any other instrument executed in connection therewith.
4.13 LITIGATION AND ATTORNEYS' FEES. Borrower will pay promptly to
Bank upon demand, reasonable attorneys' fees (including but not limited to the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and legal staff) and all costs and other expenses paid or incurred by
Bank in collecting, modifying or compromising the Loan or in enforcing or
exercising its rights or remedies created by, connected with or provided for in
this Agreement or any of the Loan Documents, whether or not an arbitration,
judicial action or other proceeding is commenced. If such proceeding is
commenced, only the prevailing party shall be entitled to attorneys' fees and
court costs.
4.14 BANK EXPENSES. At Bank's request, Borrower will pay or
reimburse Bank for all costs, expenses and fees incurred by Bank in preparing
and documenting this Agreement and the Loan, and all amendments and
modifications thereof, including but not limited to all filing and recording
fees, costs of appraisals, insurance and attorneys' fees.
4.15 REPORTS UNDER PENSION PLANS. Borrower will furnish to Bank, as
soon as possible and in any event within 15 days after Borrower knows or has
reason to know that any event or condition with respect to any defined benefit
pension plans of Borrower described in Section 3.13 above has occurred, a
statement of an authorized officer of Borrower describing such event or
condition and the action, if any, which Borrower proposes to take with respect
thereto.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement or any
other Loan Document have been paid in full, unless Bank waives compliance in
writing, Borrower agrees that:
5.1 ENCUMBRANCES AND LIENS. Borrower will not, directly or directly
make, create, incur, assume or suffer to exist any Lien upon or with respect to
any part of its property or assets, whether now owned or hereafter acquired, or
become or remain bound by any agreement to do so, except:
(i) Any Lien (A) existing on the date of this Agreement
securing debt previously approved in writing by the Bank or (B) securing debt
incurred for capital expenditures as allowed in Section 5.9 or (C) granted to
secure any extension, renewal, refinancing or replacement of any such debt if
(x) the principal amount secured thereby is not increased and (y) the property
subject to the Lien so granted is limited to the property that was subject to
the original Lien and any accession, fixtures, improvements or equipment added
thereto in the ordinary course of business;
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(ii) Any Lien for taxes, fees, assessments or other governmental
charges which are not delinquent and remain payable without penalty or which are
being contested in good faith as permitted under Section 4.3;
(iii) Leases or subleases and licenses and sublicenses granted to
others not interfering in any material respect with the business of the Borrower
and its subsidiaries taken as a whole, and any interest or title of a lessor or
licensor or under any lease or license; and Further, Borrower agrees that it
will not give a negative pledge on any of its assets to any other party.
5.2 BORROWINGS. Except as provided in Section 5.1 and 5.9, and
except for lease indebtedness incurred to finance the equipment referenced in
Section 5.9, Borrower will not borrow any money or become contingently liable to
borrow money or enter into any agreement to directly or indirectly obtain
borrowed money except pursuant to its Agreements with Bank. Borrower will not
sell, discount or otherwise transfer any account receivable or any note, draft
or other evidence of indebtedness.
5.3 SALE OF ASSETS, LIQUIDATION OR MERGER. Borrower will neither
liquidate nor dissolve nor enter into any consolidation, merger, partnership or
other combination, nor convey, nor sell, nor lease all or the greater part of
its assets or business, nor purchase, acquire, or lease all or the greater part
of the assets or business of another.
5.4 LOANS, ADVANCES AND GUARANTIES. Borrower will not, except in the
ordinary course of business as currently conducted, make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any manner or
extend credit. Notwithstanding the foregoing, Borrower may extend credit to or
invest in its subsidiaries, and affiliates up to Five Million Dollars
($5,000,000) per transaction and in an aggregate amount not to exceed Fifteen
Million Dollars ($15,000,000).
5.5 INVESTMENTS. Except as may be otherwise provided in Borrower's
Corporate Investment Policy, Borrower will not purchase the debt or equity of
another person or entity except for savings accounts and certificates of deposit
of Bank, direct U.S. Government obligations and commercial paper issued by
corporations with the top ratings of Moody's or Standard & Poor's, provided all
such permitted investments shall mature within thirteen (13) months of purchase.
Notwithstanding the foregoing, Borrower's investment in its subsidiaries or
affiliates is limited as set forth in Section 5.4 above.
5.6 PAYMENT OF DIVIDENDS. Borrower will not declare or pay any
dividends, other than a dividend payable in its own common stock, or authorize
or make any other distribution with respect to any of its stock now or hereafter
outstanding.
5.7 RETIREMENT OF STOCK. Borrower will not acquire or retire any
share of its capital stock for value other than in connection with Borrower's
employee stock option and compensation plans.
5.8 PARENT AND SUBSIDIARY PROPERTY. Borrower will not transfer any
property to its parent or any affiliate of its parent, except for value received
in the normal course of business, as business would be conducted with an
unrelated or unaffiliated
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entity. In no event shall management fees or fees for services be paid by
Borrower to any such direct or indirect affiliate without Bank's prior written
approval.
5.9 CAPITAL EXPENDITURES. Borrower will not make capital
expenditures in excess of Ten Million Dollars ($10,000,000) in any fiscal year;
and shall only make such expenditures as are necessary for Borrower in the
conduct of its ordinary course of business. Expenditures as used in this
subsection shall include the current expense portion of all leases whether or
not capitalized and shall also include the current portion of any debt used to
finance capital expenditures.
5.10 LEASE OBLIGATIONS. Borrower will not incur new lease
obligations as lessee which would result in aggregate lease payments, including
rents for any fiscal year exceeding Three Million Dollars ($3,000,000). Each
said lease shall be for equipment or real property used by Borrower in the
ordinary course of its business.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ("Events of Default") shall
terminate any obligation on the part of Bank to make or continue the Loan and
automatically, unless otherwise provided under the Note, shall make all sums of
interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:
6.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan Documents; or
6.2 Any default shall occur under the Note; or
6.3 Borrower shall default in the due performance or observance of
any covenant or condition of the Loan Documents provided however that Borrower
shall have a fifteen day (15) grace period in which to cure defaults under
Sections 4.6; 5.1; 5.2; 5.4; 5.5; or;
6.4 There is a transaction or series of transactions by which any
person or group acquires beneficial ownership, directly or indirectly, of the
securities of the Borrower representing Twenty Five percent (25%) or more of the
combined voting power of all securities of the Borrower entitled to vote in the
election of directors.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL REMEDIES. The rights, powers and remedies given to
Bank hereunder shall be cumulative and not alternative and shall be in addition
to all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or banker's
lien.
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7.2 NONWAIVER. Any forbearance or failure or delay by Bank in
exercising any right, power or remedy hereunder shall not be deemed a waiver
thereof and any single or partial exercise of any right, power or remedy shall
not preclude the further exercise thereof. No waiver shall be effective unless
it is in writing and signed by an officer of Bank.
7.3 INUREMENT. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assignees of
Borrower, and any assignment by Borrower without Bank's consent shall be null
and void.
7.4 APPLICABLE LAW. This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the State of California.
7.5 SEVERABILITY. Should any one or more provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions
nevertheless shall be effective. In the event of any conflict between the
provisions of this Agreement and the provisions of any note or reimbursement
agreement evidencing any indebtedness hereunder, the provisions of such note or
reimbursement agreement shall prevail.
7.6 INTEGRATION CLAUSE. Except for documents and instruments
specifically referenced herein, this Agreement constitutes the entire agreement
between Bank and Borrower regarding the Loan and all prior communications verbal
or written between Borrower and Bank shall be of no further effect or
evidentiary value.
7.7 CONSTRUCTION. The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.8 AMENDMENTS. This Agreement may be amended only in writing signed
by all parties hereto.
7.9 COUNTERPARTS. Borrower and Bank may execute one or more
counterparts to this Agreement, each of which shall be deemed an original, but
when together shall be one and the same instrument.
7.10 ALTERNATIVE DISPUTE RESOLUTION. This Agreement incorporates
any Alternative Dispute Resolution Agreement previous concurrently or hereafter
executed between Bank and Borrower.
SECTION 8. SERVICE OF NOTICES
8.1 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the respective party at its address given with the signatures at
the end of this Agreement and shall be considered to have been validly given:
(a) upon delivery, if delivered personally; (b) upon receipt, if mailed, first
class postage prepaid, with the United
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States Postal Service; (c) on the next business day, if sent by overnight
courier service of recognized standing; and (d) upon telephoned confirmation of
receipt, if telecopied.
8.2 The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
THIS AGREEMENT is executed on behalf of the parties by duly authorized
officers as of the date first above written.
UNION BANK OF CALIFORNIA, N.A. POWER INTEGRATIONS, INC.
By: /s/ John Noble By: /s/ Robert Staples
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Name/Title: John Noble, Vice President Name/Title: Robert Staples, CFO
By: /s/ Christal A. Jensen
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Name/Title: Christal A. Jensen, Senior Vice
President
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