Document:

Exhibit 10.2

 

	MAKER:	Applied Optoelectronics,
    Inc.	 

    NOTE MODIFICATION
    AGREEMENT

     
	 
	ADDRESS:	13139 Jess Pirtle Blvd	Account Number
	 	Sugar Land, Texas	00001
	 	77478	Note Number
	 	 	 

 

 

	$20,000,000.00	$60,000,000.00	September 28, 2017	April 5, 2021
	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 TRUIST BANK, a North Carolina banking corporation f/k/a
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.
		☒	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      .
		☒	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.

 

Principal
and interest are payable as follows:

 

		☒	Principal (plus
                                            any accrued interest not otherwise scheduled herein) is due in full at maturity on October
                                            15, 2022.
		☐	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           .

		☒	Accrued interest
                                            is payable monthly commencing on April 5, 2021 and continuing on the same day of each calendar
                                            period thereafter, with one final payment of all remaining interest due on October 15, 2022.
		☐	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.
		☒	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”). 
		☒	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.
		☐	          .

 

 

 

    	 	1	 

     

    

 

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.

 

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:      	 

 

☐       ________________________________________________________________________________________________________________

 

 

 

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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.

 

 

 

    	 	3	 

     

    

 

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)

 

 

 

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NOTE MODIFICATION
SIGNATURE PAGE

 

	Borrower: Applied Optoelectronics, Inc.	 
	Account Number:	 	   Note Number:	00001
	Modification Amount:	$20,000,000.00	   Modification Date:	April 5, 2021

  

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	 
	 	 	 	 
	 	 	 	 

 

 

 

    	 	5Exhibit 10.3

 

LIBOR ADDENDUM TO PROMISSORY NOTE

 

THIS LIBOR ADDENDUM TO PROMISSORY
NOTE (“Addendum”) is entered this 5th day of April, 2021 and is hereby made a part of the Promissory Note dated September
28, 2017, from APPLIED OPTOELECTRONICS, INC., a Delaware corporation (“Borrower”) payable to the order of TRUIST
BANK, a North Carolina banking corporation f/k/a Branch Banking and Trust Company, a North Carolina banking corporation (including
its successors and assigns, hereinafter referred to as “Bank”) in the principal amount of $20,000,000.00 (including all renewals,
extensions, modifications and substitutions thereof, the “Note”).

 

1.       APPLICATION
OF INTEREST RATE.

 

1.1       Interest
Rate. Interest shall accrue at the 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) USD LIBOR for one month (or any subsequent Benchmark) determined as of the Reference Time
as quoted by Bloomberg Finance L.P., or any quoting service or commonly available source utilized by Bank, on the determination date plus
(ii) one-half percent (1.50%) per annum (the “Margin”) (“Interest Rate”), which shall be adjusted on the first
day of each Interest Period and shall apply to the entire principal balance outstanding for any Interest Period. The Interest Rate shall
be adjusted for any Changes in Costs and Reserve Requirements so that Bank shall receive the same yield. Should USD LIBOR, or any subsequent
Benchmark, be less than three quarters of one percent (0.75%), then USD LIBOR, or the applicable Benchmark as the case may be, shall be
deemed to be three quarters of one percent (0.75%).

 

1.2       Minimum
and Maximum Interest Rate. If checked here ☒ the Interest Rate will not decrease
below a fixed minimum rate of 2.25% (“Minimum Rate”). If checked here ☐ the
Interest Rate will not exceed ☐ a fixed maximum rate of _______% or ☐ an average
maximum rate of      % (“Maximum Rate”). 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. For avoidance of doubt, upon the replacement of USD LIBOR, or any subsequent Benchmark, with a Benchmark
Replacement, the Interest Rate shall equal the then current Benchmark plus the Margin and shall be subject to any Minimum Rate or
Maximum Rate.

 

1.3       Inability
to Determine Index.  In the event Bank determines in its sole discretion that Bank cannot make, fund,
or maintain a loan based upon the Benchmark (provided a Benchmark Transition Event has not occurred), for any reason, including without
limitation illegality or the inability to ascertain or determine said rate on the basis provided for herein, then Bank shall give notice
to Borrower of such determination. Thereafter, Bank will have no obligation to make, fund or maintain a loan based on such Benchmark and
the Interest Rate shall convert to the Standard Rate for purposes of any fundings or advances requested by Borrower and shall apply to
any outstanding balance and, thereafter, the Interest Rate on the Note shall adjust simultaneously with any fluctuation in the Standard
Rate. In the event Bank determines that the circumstances giving rise to a notice pursuant to this Section 1.3 have ended, Bank shall
provide notice of same at which time the Interest Rate will revert to the prior rate based upon the Benchmark (provided a Benchmark Transition
Event has not occurred).

 

2.       BENCHMARK
REPLACEMENT SETTING.

 

2.1        Benchmark
Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an
Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect
of any setting of the then-current Benchmark, then, (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2)
of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, in connection with a Benchmark Transition
Event, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such
Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this
Addendum or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of
“Benchmark Replacement” for such Benchmark Replacement Date, or in connection with an Early Opt-in Election, such Benchmark
Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at
or after 5:00 p.m. (Charlotte, North Carolina) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is
provided to Borrower without any amendment to this Addendum or any other Loan Document, or further action or consent of Borrower.

 

 

 

    	 	1	 

     

    

 

2.2       Benchmark
Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, Bank will have the right to make
Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action
or consent of Borrower.

 

2.3       Notices;
Standards for Decisions and Determinations. Bank will promptly notify Borrower of (i) any occurrence of a Benchmark Transition Event
or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement,
(iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark
pursuant to Section 2.4 below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision
or election that may be made by Bank pursuant to Section 2, including any determination with respect to a tenor, rate or adjustment or
of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any
selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from Borrower.

 

2.4       Unavailability
of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection
with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR)
and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time
to time as selected by Bank in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has
provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative,
then Bank may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such
unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently
displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject
to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then Bank may
modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously
removed tenor.

 

2.5       Benchmark Unavailability Period. Upon Borrower’s receipt of notice
of the commencement of a Benchmark Unavailability Period, Borrower may revoke any request for an advance based upon USD LIBOR, conversion
to or continuation of loans based upon USD LIBOR to be made, converted or continued during any Benchmark Unavailability Period and, failing
that, Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to the Standard Rate.
During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the
component of Standard Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in
any determination of Standard Rate.

 

2.6        Definitions.
In addition to the terms defined in the Note, the following definitions shall apply:

 

“Available Tenor”
means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark
or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the
length of an Interest Period pursuant to this Addendum as of such date and not including, for the avoidance of doubt, any tenor for such
Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.4.

 

“Benchmark”
means, initially, USD LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable,
and its related Benchmark Replacement Date have occurred with respect to USD LIBOR or the then-current Benchmark, then “Benchmark”
means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant
to Section 2.1.

 

“Benchmark Replacement”
means, for any Available Tenor, the first alternative set forth in the order below that can be determined by Bank for the applicable
Benchmark Replacement Date:

 

(1)             
the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

(2)             
the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

 

 

 

    	 	2	 

     

    

 

(3)       the
sum of: (a) the alternate benchmark rate that has been selected by Bank as the replacement for the then-current Benchmark for the applicable
Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for
determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a
benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated or bilateral credit facilities at
such time and (b) the related Benchmark Replacement Adjustment;

 

provided that, in the
case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate
from time to time as selected by Bank in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (1),
(2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Addendum
and the other Loan Documents.

 

“Benchmark Replacement
Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement
for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

 

(1)             
for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in
the order below that can be determined by Bank:

 

(a) the spread adjustment,
or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference
Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental
Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

 

(b)  the spread adjustment
(which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest
Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index
cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

 

(2)       for
purposes of clause (3) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining
such spread adjustment, (which may be a positive or negative value or zero) that has been selected by Bank for the applicable Corresponding
Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining
such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental
Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment,
or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted
Benchmark Replacement for U.S. dollar-denominated syndicated or bilateral credit facilities;

 

provided that, in the
case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement
Adjustment from time to time as selected by Bank in its reasonable discretion.

 

“Benchmark Replacement
Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes
(including changes to the definition of “Standard Rate,” the definition of “Business Day,” the definition of “Interest
Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical, administrative
or operational matters) that Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement
and to permit the administration thereof by Bank in a manner substantially consistent with market practice (or, if Bank decides that adoption
of any portion of such market practice is not administratively feasible or if Bank determines that no market practice for the administration
of such Benchmark Replacement exists, in such other manner of administration as Bank decides is reasonably necessary in connection with
the administration of this Addendum and the other Loan Documents).

 

 

 

    	 	3	 

     

    

 

“Benchmark Replacement
Date” means the earliest to occur of the following events with respect to the then-current Benchmark:

 

(1)             
in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the
public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the
published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark
(or such component thereof);

 

(2)             
in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication
of information referenced therein; or

 

(3)             
in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided
to Borrower.

 

For the avoidance of doubt,
(i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect
of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination
and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to
any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors
of such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition
Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(1)             
a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component
used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark
(or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is
no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(2)             
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published
component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York,
an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction
over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority
over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component)
has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided
that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor
of such Benchmark (or such component thereof); or

 

(3)             
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published
component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer
representative.

 

For the avoidance of doubt,
a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication
of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component
used in the calculation thereof).

 

“Benchmark Unavailability
Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or
(2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes
hereunder and under any Loan Document in accordance with Section 2 and (y) ending at the time that a Benchmark Replacement has replaced
the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.

 

 

    	 	4	 

     

    

 

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

 

“Changes in Costs
and Reserve Requirements” means any increased costs or a reduction in the amounts received or receivable on the Note by
Bank because of any change in any applicable law, regulation, rule, guideline or order, including without limitation the imposition, modification
or applicability of any reserves, deposits or capital adequacy with respect to dollar funding in the London interbank market or any Benchmark
Replacement.

 

“Corresponding Tenor”
with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having
approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

“Daily Simple SOFR”
means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by Bank in accordance
with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR”
for business loans; provided, that if Bank decides that any such convention is not administratively feasible for Bank, then Bank
may establish another convention in its reasonable discretion.

 

“Early Opt-in Election”
means, if the then-current Benchmark is USD LIBOR, the occurrence of:

 

(1)       a
determination by Bank that at least five currently outstanding U.S. dollar-denominated syndicated or bilateral credit facilities at such
time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based
upon SOFR) as a benchmark rate; and

 

(2)       the
election by Bank to trigger a fallback from USD LIBOR and the provision by Bank of written notice of such election to Borrower.

“Floor” means
the Benchmark rate floor, if any, provided in this Addendum initially (as of the execution of this Addendum, the modification, amendment
or renewal of this Addendum or otherwise) with respect to USD LIBOR.

 

“Interest Period”
means the one month period commencing on the date of the Note and each subsequent period shall commence on the same numerically corresponding
day; provided that, if any such subsequent period does not have such numerically corresponding day, it shall begin on the last day of
the immediately preceding period.

 

“ISDA Definitions”
means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto,
as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time
to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

“Loan Documents”
means the Note, this Addendum, any loan agreement including any schedule attached thereto, deed of trust, mortgage, security deed, assignment
of leases and rents, guaranty agreement, security agreement, financing statements, and all other documents, certificates, and instruments
executed in connection therewith, and all renewals, extensions, modifications, substitutions, and restatements thereof and therefor.

 

“Reference Time”
with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London time) on
the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time determined
by Bank in its reasonable discretion.

 

“Relevant Governmental
Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee
officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any
successor thereto.

 

“SOFR” means,
with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the
SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.

 

 

 

    	 	5	 

     

    

 

“SOFR Administrator”
means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

 

“SOFR Administrator’s
Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org,
or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

“Standard Rate”
means, for any day, a rate per annum equal to Bank's announced Prime Rate, and the Interest Rate shall change with each change in the
Standard Rate effective on the date any change in Bank’s Prime Rate is publicly announced as being effective.

 

“Term SOFR”
means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR
that has been selected or recommended by the Relevant Governmental Body.

 

“Unadjusted Benchmark
Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

“USD LIBOR”
means the London interbank offered rate for U.S. dollars.

 

3.       BENCHMARK
REPLACEMENT SETTING FOR LOANS WITH INTEREST RATE SWAPS. With respect to Loans evidenced by the Note is subject to an interest rate
swap agreement with Bank, the following provisions shall apply in lieu of Section 2:

 

3.1       Benchmark
Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Replacement Date has occurred
prior to the Reference Time in respect of any setting of the then-current Benchmark on any date, such Benchmark Replacement will replace
such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings
without any amendment to, or further action or consent of any other party to, this Addendum or any other Loan Document.

 

3.2       Benchmark
Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, Bank will have the right to make
Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan
Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action
or consent of Borrower.

 

3.3       Notices;
Standards for Decisions and Determinations. Bank will promptly notify Borrower of (i) any occurrence of a Benchmark Replacement Date,
(ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv)
the commencement or conclusion of any Benchmark Unavailability Period. Any determination or decision that may be made by Bank pursuant
to Section 3, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non- occurrence of an event,
circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent
manifest error and may be made in Bank’s sole discretion and without consent from Borrower.

 

3.4       Benchmark
Unavailability Period. Upon Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, Borrower
may revoke any request for a USD LIBOR borrowing, conversion to or continuation of USD LIBOR loans to be made, converted or continued
during any Benchmark Unavailability Period and, failing that, Borrower will be deemed to have converted any such request into a request
for a Borrowing of or conversion to the Standard Rate.

 

3.5       Certain
Defined Terms. In addition to the terms defined in the Note, the following definitions shall apply:

 

“Benchmark”
means, initially, USD LIBOR; provided that if a Benchmark Replacement Date has occurred with respect to USD LIBOR or the
then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement
has replaced such prior benchmark rate pursuant to Section 3.1.

 

“Benchmark
Replacement” means, for any Interest Period, the sum of the successor rate and any applicable spread adjustment that would
apply for derivatives transactions referencing the ISDA Definitions upon the occurrence of an index cessation effective date with respect
to the then-current Benchmark for the applicable tenor; provided that if the Benchmark Replacement would be less than the Floor,
the Benchmark Replacement will be deemed to be the Floor for the purposes of this Addendum and the other Loan Documents. In the event
of the payment of any principal prior to the last day of an Interest Period for any reason, any reference to the Benchmark Replacement
shall mean the most recent Benchmark Replacement rate available as determined by Bank in its reasonable discretion.

 

 

 

    	 	6	 

     

    

 

“Benchmark
Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational
changes (including changes to the definition of “Standard Rate,” the definition of “Business Day,” the definition
of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests
or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical,
administrative or operational matters) that Bank decides may be appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by Bank in a manner Bank decides is reasonably necessary in connection with the administration
of this Addendum and the other Loan Documents.

 

“Benchmark
Replacement Date” means the occurrence of an index cessation effective date with respect to an index cessation event for
the then-current Benchmark, upon which the then-current Benchmark would be replaced in derivatives transactions referencing the ISDA Definitions.

 

“Benchmark
Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred
if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document
in accordance with Section 3 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes
hereunder and under any Loan Document in accordance with Section 3.

 

“Changes
in Costs and Reserve Requirements” means any increased costs or a reduction in the amounts received or receivable on the
Note by Bank because of any change in any applicable law, regulation, rule, guideline or order, including without limitation the imposition,
modification or applicability of any reserves, deposits or capital adequacy with respect to dollar funding in the London interbank market
or any Benchmark Replacement.

 

“Floor”
means the Benchmark rate floor, if any, provided in this Addendum initially (as of the execution of this Addendum, the modification,
amendment or renewal of this Addendum or otherwise) with respect to USD LIBOR.

 

“Interest Period”
means the one month period commencing on the date of the Note and each subsequent period shall commence on the same numerically corresponding
day; provided that, if any such subsequent period does not have such numerically corresponding day, it shall begin on the last day of
the immediately preceding period.

 

“ISDA
Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any
successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published
from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

“Loan
Documents” means the Note, this Addendum, any loan agreement including any schedule attached thereto, deed of trust, mortgage,
security deed, assignment of leases and rents, guaranty agreement, security agreement, financing statements, and all other documents,
certificates, and instruments executed in connection therewith, and all renewals, extensions, modifications, substitutions, and restatements
thereof and therefor; provided however, for purposes of Section 3 any swap agreement shall not be deemed a Loan Document.

 

“Reference
Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is USD LIBOR, 11:00 a.m. (London
time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not USD LIBOR, the time
determined by Bank in its reasonable discretion.

 

“Standard
Rate” means, for any day, a rate per annum equal to Bank's announced Prime Rate, and each change in the Standard Rate shall
be effective on the date any change in Bank’s Prime Rate is publicly announced as being effective.

 

“USD LIBOR”
means the London interbank offered rate for U.S. dollars.

 

 

 

 

    	 	7	 

     

    

 

NOTICE OF BENCHMARK TRANSITION EVENT

 

On March 5, 2021, the United Kingdom’s Financial
Conduct Authority (FCA), the regulator of LIBOR, announced the final publication date for USD LIBOR is June 30, 2023. This announcement
is a Benchmark Transition Event as defined above and this constitutes notice of this event. If the promissory note matures after
the final publication date, at the appropriate time the USD LIBOR index will be replaced with the Benchmark Replacement in accordance
with the terms of this Addendum. The FCA’s public statement is available at:

 

https://www.fca.org.uk/publication/documents/future-cessation-loss-representativeness-libor-benchmarks.pdf.

 

 

 

[signatures on following page]

 

 

 

 

 

 

 

 

 

    	 	8	 

     

    

 

This Addendum is executed under seal and shall
have the effect of a sealed instrument according to law.

 

	If Borrower is an Entity:
	 	 	 	 
	 	 	APPLIED OPTOELECTRONICS, INC.	 
	WITNESS:	 	Name of Entity	 
	 	 	 	 
	_____________________________________	By:	/s/ Stefan Murry	 
	Print Name: ___________________________	Name:	Stefan Murry	 
	 	Title:	Chief Financial Officer	 
	 	 	 	 
	 	 	 	 
	If Borrower is an Individual:
	
    WITNESS:

     
	 	 	 
	_____________________________________	 	/s/ David Kuo	 
	Print Name: ___________________________	Name:	David Kuo	 
	 	Title:	Vice President, General Counsel and Secretary	 

 

 

 

 

 

 

    	 	9

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