Document:

Exhibit 10.1

 

LOAN AGREEMENT

 

This agreement (“Amended AQT Loan
Agreement”) is entered into as of December 13, 2013 (“Effective Date”) between VelaTel Global Communications,
Inc., a US (Nevada) corporation (“VelaTel”), and AQT, LLC, a Delaware limited liability company (“AQT”).
In this Amended AQT Loan Agreement, VelaTel and AQT are each referred to as a “Party”, and together as the “Parties.”

 

RECITALS

 

A.              
VelaTel, through its subsidiary Gulfstream Capital Partners, Ltd., has acquired 100% of the capital stock of China Motion
Telecom (HK), Ltd. (“China Motion Stock”) subject to a Loan Agreement, a Share Charge, and an Option Deed in favor
of Xin Hua, copies of which are attached as Exhibits 1-3, respectively. The Xin Hua Loan Agreement calls for VelaTel to make a
payment of HK$7,800,000 [US$1,006,500] to Xin Hua plus HK$1,930,979.64 [US$249,200] to China Motion, both amounts on or before
December 15, 2013 (“First Xin Hua Installment”), plus a balloon payment to Xin Hua of HK$18,740,637.45 [US$2,418,100],
on or before February 28, 2014 (“Second Xin Hua Installment”).

 

B.              
The Parties have previously entered into a loan agreement dated August 16, 2013 (“Original AQT Loan Agreement”),
a copy of which is attached as Exhibit 4. Under the Original AQT Loan Agreement, AQT loaned VelaTel US$600,000. Under the Original
AQT Loan Agreement, the maturity date for repayment of the original principal amount plus accrued interest is January 27, 2014,
and VelaTel had the option to repay any or all of the balance due in the form China Motion Stock, 100% of which was valued for
purposes of repayment at US$6,437,100.

 

C.              
AQT is also familiar with the terms of the Cooperation Agreement between China Motion and StarHub Mobile Pte, Ltd. (“StarHub”),
a copy of which is attached as Exhibit 5.

 

D.              
All amounts payable pursuant to this Amended AQT Loan Agreement are expressed in Hong Kong dollars. For convenience only,
the approximate equivalent in US dollars is expressed in brackets (at a presumed exchange rate of US$1.00 = HK$7.75, with the US
dollar equivalent rounded to the nearest US$100) but such US dollar equivalent shall have no bearing on the amount actually payable.

 

AGREEMENT

 

1.               
Pursuant to this Amended AQT Agreement, the Parties agree to extend the Maturity Date under the Original AQT Loan until
April 2, 2014, to coincide with the Maturity Date under this Amended AQT Loan Agreement. In consideration of the extension, the
principal amount under the Original AQT Agreement is changed to HK$4,929,000 [US$636,000] as of and inclusive of an extension fee
plus interest accrued through the Effective Date (“Adjusted Original Principal Amount”).

 

2.               
VelaTel’s option to repay any or all of the amount due under the Original AQT Loan Agreement in the form of China
Motion Stock is withdrawn. Instead, AQT shall have the option to receive repayment of certain amounts due under this Amended AQT
Loan Agreement in the form of China Motion Stock, as further described herein.

 

    	1

    	 

    

 

3.               
AQT has loaned VelaTel the additional sum of HK$9,780,500 [US$1,262,000], which amount VelaTel has paid as required under
the First Xin Hua Installment. AQT shall have the option but not the obligation to loan VelaTel the additional amount of HK$18,740,637.45
[US$2,418,100] on or before the date required for VelaTel to pay the Second Xin Hua Installment.

 

4.               
VelaTel promises to repay AQT HK$ 14,709,500 [US$ 1,898,000] (“Principal Amount,” being the total of the Adjusted
Original Principal Amount plus the First Xin Hua Installment), together with interest at 10% per annum accruing on the outstanding
balance from the Effective Date (“Interest” and together with the Principal Amount, “Total Loan Amount”),
on or before April 2, 2014 (“Maturity Date”). If AQT exercises its option to loan VelaTel the Second Xin Hua Installment,
such amount shall be added to the Principal Amount, and shall accrue Interest from the date of such payment.

 

5.               
At AQT’s election in its sole discretion, VelaTel shall have the right to extend the Maturity Date for up to four
consecutive increments of three months each upon payment in cash to AQT of an extension fee (each an “Extension Fee”)
equal to 3% of the then current Principal Amount. After the Maturity Date, or any other default by VelaTel under this Amended AQT
Loan Agreement, interest shall accrue at the rate of 20% per annum (“Default Interest”).

 

6.               
Upon payment of the total amount due under the Xin Hua Loan Agreement, VelaTel shall arrange for AQT to receive an assignment
of Xin Hua’s collateral interest in 100% of the China Motion Stock pursuant to the Share Charge and the Option Deed, as security
against any default by VelaTel under this Amended AQT Loan Agreement (“AQT Security”). If an assignment of Xin Hua’s
rights cannot be secured, VelaTel shall grant the AQT Security by creation of new instruments in favor of AQT substantially identical
to the Share Charge and the Option Deed.

 

7.               
Upon payment of the total amount due under the Xin Hua Loan Agreement and subject to the limitation contained in Section
9 below, AQT shall have the option to receive repayment of any or all of the then current Total Amount Due, including any future
Extension Fee, in the form of China Motion Stock, 100% of which shall be valued for purposes of repayment at HK$49,827,585 [US$6,437,100]
(“AQT Option”). Any China Motion Stock transferred or issued to AQT pursuant to the AQT Option shall be subject to
full anti-dilution rights in favor of AQT. If AQT acquires more than 10% of the total China Motion Stock then outstanding, AQT
shall be entitled to one of not more than three seats on China Motion’s board of directors. At any time AQT holds any interest
in China Motion Stock under both the AQT Option and the AQT Security, such board representation shall be concurrent.

 

8.               
Notwithstanding anything in the AQT Security or the AQT Option to the contrary, during the time AQT holds any interest in
the China Motion Stock, AQT agrees to cooperate in the release from the AQT Security, and/or to transfer from the AQT Option, that
percentage of China Motion Stock as is required for VelaTel to fulfill its obligations to honor any exercise by StarHub of its
option to acquire up to 25% of the China Motion Stock pursuant to the Starhub Cooperation Agreement. If StarHub exercises its option,
the exercise price payable by StarHub shall be paid directly to AQT, and as to China Motion Stock released from the AQT Security
(but not as to China Motion Stock transferred by AQT from shares previously acquired pursuant to the AQT Option) shall reduce the
Total Loan Amount in the same ratio that 10% of the enterprise value of China Motion (as the term “enterprise value”
is used in the StarHub Cooperation Agreement) bears to the Total Loan Amount. For the avoidance of doubt and solely as a hypothetical
example, if StarHub agrees to pay HK$20,000,000 [US$2,580,600] for 20% of the China Motion Stock based on an enterprise value of
HK$100,000,000 [US$12,903,200] (whether such enterprise value is established by agreement or appraisal), the Total Loan Amount
shall be reduced by HK$10,000,000 [US$1,290,300]. In the event the total amount paid by StarHub exceeds the Total Loan Amount,
the excess shall be payable to VelaTel.

 

    	2

    	 

    

 

9.               
In no event shall the combined percentage of China Motion Stock transferred by VelaTel pursuant to (1) the AQT Option and
(2) the StarHub Cooperation Agreement exceed 49%. For the avoidance of doubt and solely as a hypothetical example, if StarHub exercises
its option as to 20% of the China Motion Stock and AQT has previously received 35% of the China Motion Stock pursuant to the AQT
Option, AQT shall transfer to StarHub 6% of the China Motion Stock (or more at AQT’s option), such that VelaTel will own
at least 51%, AQT 29% (or less) and StarHub 20% of the China Motion Stock then outstanding. AQT shall have the option to release
pursuant to the AQT Security and/or to transfer pursuant to the AQT Option in any combination that fulfills this requirement.

 

10.            
AQT acknowledges that until payment of all amounts due under the Xin Hua Loan Agreement, any rights in the China Motion
Stock granted pursuant to this Amended AQT Loan Agreement, including the AQT Security and the AQT Option, are subordinate to the
rights of Xin Hua under the Share Charge and the Option Deed, and that the rights of AQT shall be null and void upon the occurrence
of a default under the Xin Hua Loan Agreement by which Xin Hua’s option under the Option Deed would become exercisable. Any
default by VelaTel under the Xin Hua Loan Agreement shall also constitute a default under this Amended AQT Loan Agreement.

 

11.            
This Amended AQT Loan Agreement shall be governed by the laws of California, without regard to the conflict of laws principles
thereof, as the same apply to agreements executed solely between residents of California and wholly to be performed within California.
The Parties agree that all actions or proceedings arising in connection with this Agreement shall be brought exclusively in the
state or federal courts in San Diego County, California. The aforementioned choice of venue is intended by the Parties to be mandatory
and not permissive in nature, thereby precluding the possibility of litigation between the Parties with respect to or arising out
of this Agreement in any jurisdiction other than that specified in this Section. Each Party hereby waives any right it may have
to assert the doctrine of forum non conveniens or similar doctrine.

 

12.            
If any action at law or in equity is necessary to enforce or interpret the terms of any of this Agreement, the prevailing
Party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief
to which such Party may be entitled.

 

13.            
This Amended AQT Loan Agreement may be signed in as many counterparts as may be necessary, each of which so signed (including
any signed copy sent by electronic facsimile transmission) shall be deemed to be an original, such counterparts together shall
constitute one and the same instrument and, notwithstanding the date of the execution, shall be deemed to bear the Effective Date
as set forth above.

 

	VELATEL GLOBAL COMMUNICATIONS, INC.	 	AQT, LLC
	 	 	 
	By  /s/ George Alvarez	 	By /s/ David Somrack
	George Alvarez its Chief Executive Officer	 	David Somrack, its Manager

 

 

    	3Unassociated Document

Exhibit 10.1

 

TWELFTH AMENDMENT

 

TO

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Twelfth Amendment to Amended and Restated Loan and Security Agreement is entered into as of December 11, 2013 (the “Amendment”), by and between APPLIED OPTOELECTRONICS, INC. (“Borrower”) and EAST WEST BANK (“Bank”).

 

RECITALS

 

Borrower and Bank are parties to that certain Amended and Restated Loan and Security Agreement dated as of May 20, 2009 and as amended from time to time, including pursuant to that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of May 3, 2010, that certain Second Amendment to Amended and Restated Loan and Security Agreement dated as of October 28, 2010, that certain Third Amendment to Amended and Restated Loan and Security Agreement dated as of December 6, 2010, that certain Fourth Amendment to Amended and Restated Loan and Security Agreement dated as of May 5, 2011, that certain letter dated September 30, 2011, that certain Fifth Amendment to Amended and Restated Loan and Security Agreement dated as of November 30, 2011, that certain Sixth Amendment to Amended and Restated Loan and Security Agreement dated as of March 29, 2012, that certain Seventh Amendment to Amended and Restated Loan and Security Agreement dated as of June 29, 2012, that certain Eighth Amendment to Amended and Restated Loan and Security Agreement dated as of November 2, 2012, that certain Assignment, Assumption and Amendment Agreement dated as of March 25, 2013, that certain Ninth Amendment to Amended and Restated Loan and Security Agreement dated as of April 11, 2013, that certain Tenth Amendment to Amended and Restated Loan and Security Agreement dated as of September 10, 2013 and that certain Eleventh Amendment to Amended and Restated Loan and Security Agreement dated as of November 12, 2013 (collectively, the “Agreement”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.   The following definition in Section 1.1 is amended in its entirety to read as follows:

 

“Revolving Line Maturity Date” means November 15, 2015.

 

2.   The following is added as a new subsection (v) to the end of Section 2.1(b):

 

(v)           Letters of Credit.  At any time through the Revolving Maturity Date, and subject to the terms of this Agreement, Bank shall issue one or more standby or trade letters of credit for the account of Borrower (each, a “Letter of Credit” and collectively, the “Letters of Credit”) as Borrower may request by delivering to Bank a duly executed letter of credit application on Bank’s standard form; provided, however, that (A) the outstanding face amount of all Letters of Credit shall not at any time exceed the Revolving Line, and (B) the availability under the Revolving Facility to make Advances under Section 2.1(b)(i) shall be reduced by the outstanding face amount of all Letters of Credit. On any drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed an Advance under Section 2.1(b)(i).  All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion and shall be subject to the terms and conditions of Bank’s form application and letter of credit agreement (the “Application”), including payment of Bank’s standard fees, along with a fee equal to 0.75% of the face of amount of each standby Letter of Credit, per annum. The obligation of Borrower to reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, the Application, and such Letters of Credit, under all circumstances whatsoever.  Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense or liability, including, without limitation, attorneys’ fees, arising out of or in connection with any Letters of Credit, except for expenses caused by Bank’s gross negligence or willful misconduct. If at any time the Revolving Facility is terminated or otherwise ceases to exist, Borrower shall immediately secure to Bank’s satisfaction its obligations with respect to any outstanding Letters of Credit, and, effective as of such date, the balance in any deposit accounts held by Bank and the certificates of deposit issued by Bank in Borrower’s name (and any interest paid thereon or proceeds thereof, including any amounts payable upon the maturity or liquidation of such certificates), shall automatically secure such obligations to the extent of the then outstanding Letters of Credit; and Borrower authorizes Bank to hold such balances in pledge and to decline to honor any drafts thereon or any requests by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the Letters of Credit remain outstanding.

  

  

  

 

3.   Section 2.3(a) of the Agreement is amended in its entirety to read as follows:

 

(a)           Interest Rates.

 

(i)           Except as set forth in Section 2.3(b), the outstanding principal balance of each Revolving Advance shall bear interest at a variable rate per annum equal to the Prime Rate plus 0.5%; provided however, that following Bank’s receipt of Borrower’s consolidated financial statements evidencing Borrower’s achievement of net profitability for the two consecutive quarters ending December 31, 2013, in form and substance satisfactory to Bank (the “Milestone”), the outstanding principal balance of each Revolving Advance shall bear interest at a variable rate per annum equal to the Prime Rate minus 0.25%;

 

(ii)           Except as set forth in Section 2.3(b), the outstanding principal balance of each Real Estate Advance, shall bear interest at a variable rate per annum equal to the Prime Rate plus 0.75%;

 

(iii)           Except as set forth in Section 2.3(b), the outstanding principal balance of each Equipment II Advance shall bear interest at a variable rate per annum equal to the Prime Rate plus 0.75%; provided however that following the Milestone, the Equipment II Advance shall bear interest at a variable rate per annum equal to the Prime Rate; and

 

(iv)           Interest shall be computed daily on the basis of a 360 day year and actual days elapsed.

 

4.   Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remains in full force and effect in accordance with its terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all instruments, documents and agreements entered into in connection with the Agreement.

 

5.   Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.

 

6.   This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

7.   As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

(a)      this Amendment, duly executed by Borrower;

 

(b)      payment of all Bank Expenses incurred through the date of this Amendment; and

 

(c)      such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

 

  

  

  

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

 

APPLIED OPTOELECTRONICS, INC.

 

By: /s/ Chih-Hsiang (Thompson) Lin 

 

Title: President and Chief Executive Officer 

 

 

EAST WEST BANK

 

By: /s/ Lisa Chang                                                                

 

Title: Vice President

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