Exhibit 10.3

 

BB&T

 

ADDENDUM TO PROMISSORY NOTE

BB&T Account No. XXXXXX

 

 

THIS ADDENDUM TO PROMISSORY NOTE (“Addendum”) is hereby made a part of the
Promissory Note dated September 28, 2017, from APPLIED OPTOELECTRONICS, INC.
(“Borrower”) payable to the order of BRANCH BANKING AND TRUST COMPANY (“Bank”)
in the principal amount of $50,000,000.00 (including all renewals, extensions,
modifications and substitutions thereof, the “Note”).

 

I.       DEFINITIONS.

 

1.1       Adjusted LIBOR Rate means a rate of interest per annum equal to the
sum obtained (rounded upwards, if necessary, to the next higher 1/16th of 1.0%)
by adding (i) the One Month LIBOR plus (ii) one and one-half percent (1.50%) per
annum, which shall be adjusted monthly on the first day of each LIBOR Interest
Period. The Adjusted LIBOR Rate shall be adjusted for any change in the LIBOR
Reserve Percentage so that Bank shall receive the same yield. The interest rate
will in no instance exceed the maximum rate permitted by applicable law and if
checked here [_] the interest rate will not decrease below a fixed minimum rate
of ______%. If checked here [_] the interest rate will not exceed [_] a fixed
maximum rate of _______% or [_] an average maximum rate of      %. If an average
maximum rate is specified, a determination of any required reimbursement of
interest by Bank will be made: [_] when the Note is repaid in full by Borrower
or [_] annually beginning on __________. If the loan has been repaid prior to
this date, no reimbursement will be made.

 

1.2       Business Day means a day other than a Saturday, Sunday, legal holiday
or any other day when the Bank is authorized or required by applicable law to be
closed.

 

1.3       LIBOR Advance means the advances made by Bank to Borrower evidenced by
this Note upon which the Adjusted LIBOR Rate of interest shall apply.

 

1.4       LIBOR Interest Period means the period, as may be elected by the
Borrower applicable to any LIBOR Advance, commencing on the date the Note is
first made (or the date of any subsequent LIBOR addendum to the Note) and (i) if
adjusted monthly, ending on the day that is immediately prior to the numerically
corresponding day of each month thereafter or (ii) if adjusted quarterly, ending
on the day that is immediately prior to the numerically corresponding day of
each quarter thereafter; provided that:

 

(a) any LIBOR Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such LIBOR Interest
Period shall end on the next preceding Business Day; and

 

(b) any LIBOR Interest Period which begins on a day for which there is no
numerically corresponding day in a subsequent month if adjusted monthly or in a
subsequent quarter if adjusted quarterly, shall end on the last Business Day of
each subsequent month if adjusted monthly or on the last Business Day of each
subsequent quarter if adjusted quarterly.

 

1.5       LIBOR Reserve Percentage means the maximum aggregate rate at which
reserves (including, without limitation, any marginal supplemental or emergency
reserves) are required to be maintained under Regulation D by member banks of
the Federal Reserve System with respect to dollar funding in the London
interbank market. Without limiting the effect of the foregoing, the LIBOR
Reserve Percentage shall reflect any other reserves required to be maintained by
such member banks by reason of any applicable regulatory change against (i) any
category of liability which includes deposits by reference to which the Adjusted
LIBOR Rate is to be determined or (ii) any category of extensions of credit or
other assets related to LIBOR.

 

1.6       One Month LIBOR means the average rate quoted by Bloomberg Finance
L.P., or any quoting service or commonly available source utilized by the Bank,
on the determination date for deposits in U. S. Dollars offered in the London
interbank market for one month determined at approximately 11:00 am London time
two (2) Business Days prior to the commencement of the applicable LIBOR Interest
Period; provided that if the above method for determining one month LIBOR shall
not be available, the rate quoted in The Wall Street Journal, or a rate
determined by a substitute method of determination agreed on by Borrower and
Bank; provided, if such agreement is not reached within a reasonable period of
time (in Bank's reasonable judgment), a rate reasonably determined by Bank in
its sole discretion as a rate being paid, as of the determination date, by first
class banking organizations (as determined by Bank) in the London interbank
market for U. S. Dollar deposits; and provided further that if One Month LIBOR
determined as provided above would be less than zero percent (0%), then One
Month LIBOR shall be deemed to be zero percent (0%).

 

 

 

 

 1 

 

 

1.7       Standard Rate means, for any day, a rate per annum equal to the Prime
Rate Equivalent (as defined in that certain Loan Agreement dated the date hereof
between Borrower and Bank), and each change in the Standard Rate shall be
effective on the date any change in the Prime Rate is publicly announced as
being effective.

 

II.       LOAN BEARING ADJUSTED LIBOR RATE

 

2.1       Application of Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall
apply to the entire principal balance outstanding of a LIBOR Advance for any
LIBOR Interest Period.

 

2.2       Adjusted LIBOR Based Rate Protections.

 

(a)       Inability to Determine Rate. In the event that Bank shall have
determined, which determination shall be final, conclusive and binding, that by
reason of circumstances occurring after the date of this Note affecting the
London interbank market, adequate and fair means do not exist for ascertaining
the One Month LIBOR on the basis provided for in this Note, Bank shall give
notice (by telephone confirmed in writing (which may be delivered by electronic
means)) to Borrower of such determination, whereupon (i) no LIBOR Advance shall
be made until Bank notifies Borrower that the circumstances giving rise to such
notice no longer exist, and (ii) any request by Borrower for a LIBOR Advance
shall be deemed to be a request for an advance at the Standard Rate.

 

(b)       Illegality; Impracticability. In the event that Bank shall determine,
which determination shall be final, conclusive and binding, that the making,
maintaining or continuance of any portion of a LIBOR Advance (i) has become
unlawful as a result of compliance by Bank with any law, treaty, governmental
rule, regulation, guideline or order (or would conflict with any of the same not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause Bank material
hardship, as a result of contingencies occurring after the date of this Note
materially and adversely affect the London interbank market or Bank's ability to
make LIBOR Advances generally, then, and in any such event, Bank shall give
notice (by telephone confirmed in writing (which may be delivered by electronic
means)) to Borrower of such determination. Thereafter, (x) the obligation of
Bank to make any LIBOR Advances or to convert any portion of the loan to a LIBOR
Advance shall be suspended until such notice shall be withdrawn by Bank, and (y)
any request by Borrower for a LIBOR Advance shall be deemed to be a request for
an advance at the Standard Rate.

 

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

 

 

 

 

 

 

 

 

 

 

 2