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Item 1.01
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Entry into a Material Definitive Agreement.
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30,000,000 RMB Credit Facility
On May 7, 2019, Global Technology, Inc. (“Global
Technology”), a wholly owned subsidiary of Applied Optoelectronics, Inc. entered into a one-year credit facility totaling
30,000,000 RMB (the “¥30M Credit Facility”), with Shanghai Pudong Development Bank Co., Ltd., in Ningbo City, China
(the “Bank”). Borrowing under the ¥30M Credit Facility will be used to repay the Company’s outstanding
loans with China Construction Bank.
Borrowing under the ¥30M Credit Facility
will mature on May 7, 2020 and will bear interest equal to the Bank’s published twelve (12) month prime loan rate in effect
on the date of the draw, plus 0.2475%. As of the execution of the Credit Facility agreement, the Bank’s published 12 months
prime loan rate is 4.32%. Under the ¥30M Credit Facility, Global Technology will make monthly payments of accrued interest;
principal shall be repaid upon maturity.
Global Technology’s obligations under
the ¥30M Credit Facility is unsecured. The agreement for the ¥30M Credit Facility also contains rights and obligations,
representations and warranties, and events of default applicable to the Company that are customary for agreements of this type.
The foregoing description of the ¥30M
Credit Facility do not purport to be a complete statement of the parties’ rights and obligations under the agreements and
is qualified in its entirety by reference to the translation of the full text of the Working Capital Loan Contract which is attached
as Exhibit 10.1 to this Current Report on Form 8-K and are incorporated by reference herein.
2,000,000 USD Credit Facility
On May 8,2019, Global Technology also entered
into a six-month credit facility totaling 2,000,000 USD (the “$2M Credit Facility”) with Bank. Borrowing under
the $2M Credit Facility will be used to repay the Company’s outstanding loans with China Construction Bank and for general
corporate purposes.
Borrowing under the $2M Credit Facility will
mature on November 7, 2019 and will bear interest equal to the Bank’s published six (6) month LIBOR in effect on the date
of the draw, plus 1.48%. As of the execution of the Credit Facility agreement, the Bank’s published 6 months LIBOR rate was
2.59438%. Under the $2M Credit Facility, Global Technology will make quarterly payments of accrued interest; principal shall be
repaid upon maturity.
Global Technology’s obligations under
the $2M Credit Facility is unsecured. The agreement for the $2M Credit Facility also contains rights and obligations, representations
and warranties, and events of default applicable to the Company that are customary for agreements of this type.
The foregoing description of the $2M Credit
Facility do not purport to be a complete statement of the parties’ rights and obligations under the agreements and is qualified
in its entirety by reference to the translation of the full text of the Working Capital Loan Contract which is attached as Exhibit
10.2 to this Current Report on Form 8-K and are incorporated by reference herein.
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Item 1.02
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Termination of a Material Definitive Agreement.
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On May 10, 2019, Global Technology used
a portion of the ¥30M Credit Facility and $2M Credit Facility to repay certain amounts outstanding under its 5-year revolving
credit line with China Construction Bank (the “CCB Credit Line”), entered into on September 21, 2018.
Under the CCB Credit Line, the Company
was allowed up to 129,000,000 RMB of borrowing capability for general corporate and capital investment purposes. Global repaid
the total outstanding balances under the CCB Credit Line which amounted to 30,000,000 RMB and 1,224,387.28 USD. Upon repayment,
Global Technology terminated the agreements associated with the CCB Credit Line. There were no penalties associated with either
of the above mentioned early payments.