Applied Optoelectronics, Inc. (NASDAQ:AAOI) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
On September 28, 2017, Applied Optoelectronics, Inc. (the “Company”) entered into a Loan Agreement, a Promissory Note, an Addendum to the Promissory Note, a BB&T Security Agreement, a Trademark Security Agreement, and a Patent Security Agreement (together the “Credit Facility”) with Branch Banking and Trust Company (the “Bank”). The Credit Facility provides the Company with a three year, $50 million, revolving line of credit. Borrowings under the Credit Facility will be used for general corporate purposes.
The Company will make monthly payments of accrued interest with the final monthly payment being for all principal and all accrued interest not yet paid.
The Company’s obligations under the Credit Facility will be secured by the Company’s accounts receivable, inventory, intellectual property, all business assets with the exception of real estate and equipment. Borrowings under the Credit Facility will bear interest at a rate equal to the one-month London Interbank Offered Rate (LIBOR) plus 1.50%.
The Credit Facility requires the Company to maintain certain financial covenants and also contains representations and warranties, and events of default applicable to the Company that are customary for agreements of this type.
The foregoing description of the Credit Facility does not purport to be a complete statement of the parties’ rights and obligations under the Credit Facility and is qualified in its entirety by reference to the full text of the Loan Agreement, the Promissory Note, the Addendum to the Promissory Note, the BB&T Security Agreement, the Trademark Security Agreement, and the Patent Security Agreement, all dated September 28, 2017, copies of which are attached as Exhibit 10.1 through 10.6 to this Current Report on Form 8-K and incorporated by reference herein.
| Item 1.02 | Termination of a Material Definitive Agreement. |
On September 28, 2017, the Company terminated its First Amendment to Credit Agreement and Limited Consent, with East West Bank and Comerica Bank (individually referred to as the "Lender" and collectively as the “Lenders”); the Company also terminated, with each Lender, its $17.5 million Amended and Restated Revolving Credit Note, its $2.5 million Amended and Restated Revolving Credit Note, its $5 million Term Note, and First Modification to Promissory Note, all dated June 24, 2016, (the “Revolving Credit Notes”). The Revolving Credit Notes amends and restates in-part the Company’s existing credit facility with the Lenders that were originally entered into on June 30, 2015.
The Company also repaid the outstanding balance and terminated its Change in Terms Agreement and Notice of Final Agreement and Second Modification to the Construction Loan Agreement with East West Bank, dated October 5, 2016, (the “Construction Loan”). The Construction Loan amended and restated the Company’s Promissory Note and Construction Loan Agreement executed with East West Bank on January 26, 2015, with a subsequent amendment occurring on June 14, 2016.
Termination of the Construction Loan and Revolving Credit Notes results in the termination of (i) a $17.5 million revolving credit note with East West Bank, (ii) a $2.5 million revolving credit note with East West Bank, (iii) a $5 million term note with East West Bank, (iv) a $17.5 million revolving credit note with Comerica Bank, (v) a $2.5 million revolving credit note with Comerica Bank, (vi) a $5 million term note with Comerica Bank, and (vii) a $22 million construction loan with East West Bank.
Upon repayment and/or termination of the Revolving Credit Notes and Construction Loan the Company has no further obligations with either Lender.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the Credit Facility is incorporated by reference herein and made a part hereof.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
APPLIED OPTOELECTRONICS, INC. ExhibitEX-10.1 2 ao_ex1001.htm LOAN AGREEMENT Exhibit 10.1 BB&T Loan Agreement XXXXXXXXX Account Number This Loan Agreement (the “Agreement”) is made this 28th day of September,…To view the full exhibit click here
About Applied Optoelectronics, Inc. (NASDAQ:AAOI)
Applied Optoelectronics, Inc. is a vertically integrated provider of fiber-optic networking products. The Company offers its products for approximately three networking end markets, such as Internet data center; cable television (CATV), and fiber-to-the-home (FTTH). The Company designs and manufactures a range of optical communications products at varying levels of integration, from components, subassemblies and modules to turnkey equipment. The Company’s customers in the Internet data center market include Internet-based (Web 2.0) data center operators, to whom it supplies optical transceivers that plug into switches and servers within the data center, and allow these network devices to send and receive data over fiber optic cables. To the CATV market, it supplies a range of products, including lasers, transmitters and turnkey equipment, as well as headend, node and distribution equipment. Its manufacturing sites are located at Sugar Land, Texas; Ningbo, China, and Taipei, Taiwan.