On December 31, 2013, Applied Optoelectronics, Inc. entered into a Credit Facility Agreement with E. Sun Commercial Bank Co. Ltd. in Taipei for a $4 million, one year revolving credit facility. Borrowings under the Credit Facility will be used for general corporate purposes.

The company's obligations under the Credit Facility are secured by the company's $4 million cash deposit in a one-year CD with the Bank. Borrowings under the Credit Facility will bear interest at a rate (which adjusts quarterly) equal to either the Taiwan Time Deposit Interest Rate Index (the interest rate applicable to one-year time deposits adopted by various reference banks) plus 0.41% in the case of New Taiwan Dollar borrowings or LIBOR plus 1.28% in the case of US Dollar borrowings. The Credit Facility contains representations and warranties, affirmative, restrictive and financial covenants, and events of default which are customary for credit facilities of this type.