Exhibit 10.2

 

MAKER: Applied Optoelectronics, Inc. BB&T xxxxxxxxx         ADDRESS: 13139 Jess
Pirtle Blvd NOTE MODIFICATION AGREEMENT Account Number   Sugar Land, Texas  
000001   77478   Note Number

 

 

$20,000,000.00 $60,000,000.00 September 28, 2017 September 30, 2019 Modified
Principal Amount Original Principal Amount Original Date Modification Date

 

This Note Modification Agreement (hereinafter referred to as “Agreement”) is
made and entered into as of this 30th day of September, 2019 by APPLIED
OPTOELECTRONICS, INC., as maker(s) and co-maker(s), if any, of the Promissory
Note as defined below (whether one or more, hereinafter referred to jointly and
severally as “Borrower”), in favor of BRANCH BANKING AND TRUST COMPANY, a North
Carolina banking corporation (including its successors and assigns, hereinafter
referred to as “Bank”).

 

Borrower previously executed a Promissory Note payable to Bank as more
particularly identified by the description of the original amount and date set
forth above (including all previous renewals, extensions and modifications
thereof, collectively the “Promissory Note”). Borrower and Bank hereby agree
that the Promissory Note shall be modified only to the limited extent as is
hereinafter set forth; that all other terms, conditions, and covenants of such
Promissory Note shall remain in full force and effect; and that this Agreement
shall constitute a renewal, extension and modification of the Promissory Note
and not a novation.

 

NOW, THEREFORE, in mutual consideration of the premises, the sum of One Dollar
($1.00) and other good and valuable consideration, each to the other parties
paid, the parties hereto agree that the Promissory Note is hereby amended as
follows (checked items contain applicable modifications):

 

[_] Borrower shall pay a prepayment fee as set forth in the Prepayment Fee
Addendum attached hereto.

[X] This Agreement hereby permanently reduces the principal amount of the loan
to Borrower to the Modified Principal Amount set forth above.

 

INTEREST RATE, PRINCIPAL AND INTEREST PAYMENT TERM MODIFICATIONS

 

Interest shall accrue from the date hereof on the unpaid balance outstanding
from time to time at the:

 

[_]Fixed rate of      % per annum.

[_]Variable rate of Bank's Prime Rate plus      % per annum to be adjusted      
as Bank's Prime Rate changes.

[_]As of the Modification Date, any fixed, floating or average maximum rate and
fixed minimum rate in effect by virtue of the Promissory Note(s) are hereby
deleted. If checked here [_], the interest rate will not exceed a(n) [_] fixed
[_] average maximum rate of      % or a [_] floating maximum rate of the greater
of      % or Bank's Prime Rate; and the interest rate will not decrease below a
fixed minimum rate of      %. If an average maximum rate is specified, a
determination of any required reimbursement of interest by Bank will be made:
[_] when the Promissory Note is repaid in full by Borrower [_] annually
beginning on      .

[X]The Adjusted LIBOR Rate as more specifically described in the Addendum to
Note attached hereto and incorporated herein.

 

The term “Prime Rate,” if used herein, means the rate of interest per annum
announced by Bank from time to time and adopted as its Prime Rate at its
executive offices in Winston-Salem, North Carolina. The Prime Rate is one of
several rate indexes employed by Bank when extending credit, and not necessarily
the lowest rate. Any change in the interest rate resulting from a change in
Bank’s Prime Rate shall become effective as of the opening of business on the
effective date of the change.

 

 

 

 1 

 

 

Principal and interest are payable as follows:

 

[X]Principal (plus any accrued interest not otherwise scheduled herein) is due
in full at maturity on April 2, 2021.

[_]Payable in consecutive       installments of [_] Principal [_] Principal and
Interest

commencing on       and continued on the same day of each calendar period
thereafter, in       equal payments of $     , with one final payment of all
remaining principal and accrued interest due on        .

[X]Accrued interest is payable monthly commencing on October 5, 2019 and
continuing on the same day of each calendar period thereafter, with one final
payment of all remaining interest due on April 2, 2021.

[_]Bank reserves the right in its sole discretion to adjust the fixed payment
due hereunder      [monthly, quarterly, annually] on       and continuing on the
same day of each calendar period thereafter, in order to maintain an
amortization period of no more than       months from the date of this
Agreement. Borrower understands the payment may increase if interest rates
increase.

[X]This Agreement evidences a revolving line of credit and advances under this
Agreement, as well as directions for payment from Borrower’s accounts, may be
requested orally or in writing by Borrower. Bank may, but need not, require that
all oral requests be confirmed in writing. Borrower agrees to be liable for all
sums either (i) advanced in accordance with the instructions of an authorized
person or (ii) credited to any of Borrower’s accounts maintained with Bank.
Prior to an Event of Default (as defined in the Loan Agreement, as hereinafter
defined), Borrower may borrow, repay, and reborrow pursuant to the terms of the
Loan Agreement dated September 28, 2017, between Borrower and Bank (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the “Loan Agreement”).

[X]Borrower hereby authorizes Bank to automatically draft from its demand
deposit or savings account(s) maintained with Bank or another bank, any
payment(s), including late fees and other fees and charges due under this
Agreement on the date(s) due. Borrower shall provide appropriate account
number(s) for account(s) at Bank or another bank.

[_]      .

 

The following scheduled payment(s) is (are) deferred:

 

[_] $       principal                     }

[_] $       interest                       } Payments due on      

 

is (are) hereby deferred. Payments will resume on       according to the
schedule contained herein or to the existing schedule (if no other changes are
made herein).

 

APPLICATION OF PAYMENTS. Unless otherwise expressly required by applicable law,
payments will be applied to any unpaid collection costs, late and other charges
and fees, accrued unpaid interest, and principal in such order as Bank may
determine in its sole and absolute discretion.

 

INTEREST CALCULATION; REAMORITIZATION. All interest shall be computed and
charged for the actual number of days elapsed on the basis of a year consisting
of three hundred sixty (360) days. In the event periodic accruals of interest
shall exceed any periodic fixed payment amount described above, the fixed
payment amount shall be immediately increased, or additional supplemental
interest payments required on the same periodic basis as specified above
(increased fixed payments or supplemental payments to be determined in Bank's
sole discretion), in such amounts and at such times as shall be necessary to pay
all accruals of interest for the period and all accruals of unpaid interest from
previous periods. Such adjustments to the fixed payment amount or supplemental
payments shall remain in effect for so long as any interest accruals shall
exceed the original fixed payment amount and shall be further adjusted upward or
downward to reflect changes in any variable interest rate; provided that unless
elected otherwise above, the fixed payment amount shall not be reduced below the
original fixed payment amount. However, Bank shall have the right, in its sole
discretion, to lower the fixed payment amount below the original payment amount.

 

LATE FEE; RETURNED ITEM FEE. Borrower shall pay to Bank, or order, a late fee in
the amount of five percent (5.0%) of any installment past due for ten (10) or
more days after written notice is received by Borrower regarding same. When any
installment payment is past due for ten (10) or more days, subsequent payments
shall first be applied to the past due balance. In addition, Borrower shall pay
to Bank a returned payment fee (currently $25.00) if Borrower or any other
obligor hereon makes any payment at any time by check or other instrument, or by
any electronic means, which is returned to Bank because of nonpayment due to
nonsufficient funds.

 

 

 

 2 

 

 

FEES AND CHARGES. Borrower agrees that the only interest charge is the interest
actually stated in the Promissory Note, as modified, and that any renewal or
origination fee shall be deemed charges rather than interest, which charges are
fully earned and non-refundable. It is further agreed that any late charges are
not a charge for the use of money but are imposed to compensate Bank for some of
the administrative services, costs and losses associated with any delinquency or
default under the Promissory Note, and such charges shall be fully earned and
non-refundable when accrued. All other charges imposed by Bank upon Borrower in
connection with the Promissory Note, as modified, and the loan evidenced thereby
including, without limitation, any commitment fees, loan fees, facility fees,
origination fees, discount points, default and late charges, prepayment fees,
reasonable attorneys’ fees and reimbursements for costs and expenses paid by
Bank to third parties or for damages incurred by Bank are and shall be deemed to
be charges made to compensate Bank for underwriting and administrative services
and costs, other services, and costs or losses incurred or to be incurred by
Bank in connection with the Promissory Note, as modified, and the loan and shall
under no circumstances be deemed to be charges for the use of money. Bank may,
at its option, charge any reasonable fees for the modification, renewal,
extension, or amendment of any of the terms of the Promissory Note(s) or this
Agreement not prohibited by applicable law. All such charges shall be fully
earned and non-refundable when due.

 

COLLATERAL. Unless otherwise provided herein, it is expressly understood and
agreed by Borrower that any and all real and personal property given or pledged,
whether by Borrower or a third party, as collateral to secure the Promissory
Note, shall remain as security for the Promissory Note as modified hereby. In
addition to Bank’s right of setoff and other liens and security interests
previously granted to Bank, Borrower hereby grants to Bank a security interest
in all of its deposit accounts maintained with Bank, which shall serve as
collateral for the indebtedness and obligations evidenced by the Promissory Note
and this Agreement.

 

ADDITIONAL COLLATERAL. [_] The Promissory Note, as modified, and the performance
of the terms of any agreement or instrument relating to, evidencing, or securing
the Promissory Note shall be additionally secured by the collateral hereinafter
described, a new security instrument shall be executed by Borrower and/or
Debtor(s)/Grantor(s), and all other steps necessary to perfect or record Bank’s
lien with priority acceptable to Bank shall be taken. All of the terms,
conditions and covenants of the below-described agreements (“Additional
Agreements”) are expressly made a part of the Promissory Note and this Agreement
by reference in the same manner and with the same effect as if set forth herein
at length, and Bank is entitled to the benefits of and remedies provided in the
Additional Agreements and any other related documents given by Borrower, any
guarantor, or any pledgor in favor of Bank.

 

Date:       Type of Agreement:          

From:      

  Date:       Type of Agreement:           From:             Date:       Type of
Agreement:           From:        

 

[_] 

 

[X]The security interest in the collateral hereinafter described is hereby
terminated with the consent of Bank and such collateral shall cease to serve as
security for payment of the Promissory Note or this Agreement: Equipment of
Borrower and certain real property of Borrower described on Exhibit A of that
certain Deed of Trust dated March 30, 2018, by Borrower in favor of Bank, and
more commonly referred to as 13139 Jess Pirtle Blvd, Sugar Land, Texas 77478.

 

 

 

 3 

 

 

JOINT AND SEVERAL OBLIGATION; NO NOVATION OR RELEASE. If the Promissory Note
being modified by this Agreement is signed by more than one person or entity,
the Promissory Note shall be the joint and several obligation and liability of
all of the undersigned. It is expressly agreed that this Agreement is a
modification of the Promissory Note only and not a novation. The original
indebtedness and obligation of Borrower evidenced by the Promissory Note is not
extinguished hereby and except for the modifications contained herein, the
Promissory Note, and any other loan documents securing or relating to the
Promissory Note, shall be and remain in full force and effect. This Agreement
shall not release or affect the liability of any guarantors, endorsers or
obligors of the Promissory Note. Borrower hereby represents and warrants to Bank
that all guarantors, endorsers, pledgors or other obligors of Borrower’s
indebtedness have approved and consented to the terms of this Agreement, have
waived any objection hereto, have affirmed any and all obligations to Bank and
certify that there are no defenses or offsets against such obligations to Bank,
including without limitation the Promissory Note. Bank expressly reserves all
rights as to any party with right of recourse on the Promissory Note.

 

WAIVER BY BORROWER. Each of the parties signing this Agreement regardless of the
time, order or place of signing waives presentment, demand, protest, and notices
of every kind, and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral by Bank, and to the additions or releases of any other
parties or persons primarily or secondarily liable herefor.

 

DEFAULT RATE OF INTEREST; ATTORNEY’S FEES AND COSTS. From and after any Event of
Default under this Agreement, the Promissory Note, or any related loan document,
including failure to pay upon final maturity, interest shall accrue on the sum
of the principal balance then outstanding at the rate of fifteen percent (15.0%)
per annum (“Default Rate”), until such principal and interest have been paid in
full; provided that such rate shall not exceed at any time the highest rate of
interest permitted by the laws of the State of Texas; and further that such rate
shall apply after judgment. If the Promissory Note and this Agreement are placed
with an attorney for collection, Borrower agrees to pay, in addition to
principal, interest, and late fees, if any, all costs of collection, including
but not limited to all reasonable attorneys' fees incurred by Bank, whether or
not there is a lawsuit, expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any court
costs.

 

FINANCIAL STATEMENTS. To the maximum extent permitted by applicable law,
Borrower hereby waives all rights, remedies, claims, and defenses based upon or
related to Sections 51.003, 51.004, and 51.005 of the Texas Property Code, to
the extent the same pertain or may pertain to any enforcement of this Note.
Unless otherwise required under the Loan Agreement, if applicable, and as long
as any indebtedness evidenced by the Promissory Note, as modified hereby,
remains outstanding or as long as Bank remains obligated to make advances, each
Borrower shall furnish annually an updated financial statement in a form
satisfactory to Bank, which, when delivered shall be the property of Bank.

 

GOVERNING LAW; CHOICE OF VENUE. All rights and obligations arising hereunder
shall be governed by and construed in accordance with the laws of the same state
which governs the interpretation and enforcement of the Promissory Note. Any
legal action with respect to the indebtedness evidenced by the Promissory Note
and this Agreement may be brought in the courts of the State of Texas and County
of Harris or in the appropriate United States District Court situated in Texas,
and Borrower hereby accepts and unconditionally submits to the jurisdiction of
such courts. Borrower hereby waives any objection to the laying of venue based
on the grounds of forum non conveniens with respect thereto.

 

REQUIRED INFORMATION. To help the government fight the funding of terrorism and
money laundering activities, federal law requires Bank to obtain, verify and
record information that identifies each person or entity obtaining a loan
including Borrower’s legal name, address, tax identification number, date of
birth, driver’s license, organizational documents or other identifying
documents. Failure to provide the required information will result in a
violation of the U.S. Patriot Act and will constitute a default under this
instrument. In addition, no Borrower, any of its affiliates, or any of their
respective directors, officers, managers, partners, or any other authorized
representatives is named as a “Specially Designated National and Blocked
Person”, on the list published by the U.S. Department of the Treasury Office of
Foreign Assets Control (OFAC) at its official website.

 

NON-WAIVER BY BANK. Borrower agrees that if Bank has released any collateral, it
shall not be required or obligated to take any further steps to release such
collateral from any lien or security interest unless Bank determines, in its
sole discretion, that it may do so without releasing or impairing its existing
liens and security interests or its priority in other collateral; and unless
Borrower bears the reasonable cost of such action. No delay or omission on the
part of Bank in exercising any right under the Promissory Note or this Agreement
shall operate as a waiver of such right or of any other right of Bank, nor shall
any delay, omission or waiver on any one occasion be deemed a bar to or waiver
of the same, or of any other right on any future occasion.

 

 

 

 

 4 

 

 

MISCELLANEOUS. Wherever possible, the provisions of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent of any such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same instrument. The headings in
this Agreement are included for convenience only and shall neither affect the
construction or interpretation of any provision in this Agreement nor affect any
of the rights or obligations of the parties to this Agreement. Time is of the
essence in the performance of this Agreement.

 

WAIVER OF JURY TRIAL. UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, BORROWER
AND BANK HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS
ARISING OUT OF THIS AGREEMENT, THE PROMISSORY NOTE OR ANY OF THE LOAN DOCUMENTS
EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIP
BETWEEN BORROWER AND BANK, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. BORROWER AND BANK AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT BORROWER OR BANK MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BANK AND BORROWER
TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR BANK TO MAKE THE LOAN AND BORROWER TO ENTER INTO THIS AGREEMENT.
FURTHER, BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR
BANK’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT
SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION. NO REPRESENTATIVE
OR AGENT OF BANK, NOR BANK’S COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR
MODIFY THIS PROVISION. BORROWER AND BANK EACH ACKNOWLEDGE THAT IT HAS HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS PARAGRAPH, THAT IT FULLY
UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND THAT IT VOLUNTARILY AND KNOWINGLY
AGREES TO THE TERMS OF THIS PARAGRAPH.

 

 

 

 

 

(SIGNATURES ON FOLLOWING PAGE)

 

 

 

 

 

 

 

 

 

 5 

 

 

BB&T

NOTE MODIFICATION SIGNATURE PAGE

 

Borrower: Applied Optoelectronics, Inc.   Account Number: xxxxxxxx   Note
Number: 00001 Modification Amount: $20,000,000.00   Modification Date: September
30, 2019

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Note Modification Agreement
to be executed, as of the date first written above.

 

            APPLIED OPTOELECTRONICS, INC.   WITNESS:   Name of Corporation      
    _____________________________________ By:             Print Name:
_____________________________________ Name: Stefan Murry     Title: Chief
Financial Officer           _____________________________________ By:          
  Print Name: _____________________________________ Name: David Kuo     Title:
Vice President, General Counsel and Secretary                  

 

 

 

 

 6