# EDGAR Filing Document

**Accession Number:** 0001101680
**File Stem:** 0000950170-23-003081
**Filing Date:** 2023-2
**Character Count:** 54389
**Document Hash:** 3560d473826b2377fb097f8d12675520
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-003081.hdr.sgml**: 20230216

**ACCESSION NUMBER**: 0000950170-23-003081

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230215

**ITEM INFORMATION**: Entry into a Material Definitive Agreement

**ITEM INFORMATION**: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230216

**DATE AS OF CHANGE**: 20230216

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DZS INC.
- **CENTRAL INDEX KEY:** 0001101680
- **STANDARD INDUSTRIAL CLASSIFICATION:** TELEPHONE & TELEGRAPH APPARATUS [3661]
- **IRS NUMBER:** 223509099
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-32743
- **FILM NUMBER:** 23639255

**BUSINESS ADDRESS:**
- **STREET 1:** 5700 TENNYSON PARKWAY
- **STREET 2:** SUITE 400
- **CITY:** PLANO
- **STATE:** TX
- **ZIP:** 75024
- **BUSINESS PHONE:** 4693271531

**MAIL ADDRESS:**
- **STREET 1:** 5700 TENNYSON PARKWAY
- **STREET 2:** SUITE 400
- **CITY:** PLANO
- **STATE:** TX
- **ZIP:** 75024

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DASAN ZHONE SOLUTIONS INC
- **DATE OF NAME CHANGE:** 20160912

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ZHONE TECHNOLOGIES INC
- **DATE OF NAME CHANGE:** 20031114

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TELLIUM INC
- **DATE OF NAME CHANGE:** 20000911

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM** 8-K

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Date of Report (Date of Earliest Event Reported):** February 15, 2023

DZS INC.

**(Exact name of registrant as specified in its charter)**

---

| | | |
|:---|:---|:---|
| Delaware | 000-32743 | 22-3509099 |
| **(State or Other Jurisdiction**<br>**of Incorporation)** | **(Commission**<br>**File No.)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

5700 Tennyson Parkway**,** Suite 400

Plano**,** TX 75024

**(Address of Principal Executive Offices, Including Zip Code)**

(469) 327-1531

**(Registrant's Telephone Number, Including Area Code)**

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock, $0.001 par value | DZSI | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

**Item 1.01 Entry into a Material Definitive Agreement.**

On February 15, 2023, DZS Inc. (the "Company") entered into a Second Amendment to Credit Agreement (the "Amendment"), which amends the Credit Agreement dated February 9, 2022 (as previously amended, the "Credit Facility") with the Company, as borrower, certain subsidiaries of the Company, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Facility provides for (i) revolving loans in an aggregate principal amount of up to $30 million, up to $15 million of which is available for letters of credit, with a scheduled maturity date of May 27, 2025 and (ii) a term loan in an original principal amount of $25 million with a scheduled maturity date of May 27, 2027.

The Amendment, among other things, (1) modifies the financial covenants to (i) suspend the maximum leverage ratio requirement of 2.50 to 1.00 until the fiscal quarter ending September 30, 2023 and (ii) suspend the minimum fixed charge coverage ratio requirement of 1.25 to 1.00 until the fiscal quarter ending December 31, 2023, (2) adds new financial covenants to require (i) minimum liquidity of $30 million for the fiscal quarter ending March 31, 2023, $35 million for the fiscal quarters ending June 30, 2023 and September 30, 2023, and $20 million at any time until September 30, 2023, and (ii) minimum EBITDA (as defined in the Credit Facility) of ($1 million) for the fiscal quarter ending March 31, 2023 and $1 for the fiscal quarter ending June 30, 2023, (3) increases the applicable margin for adjusted term SOFR borrowings and prime rate borrowings to 4.0% and 3.0%, respectively, when the Company's leverage ratio exceeds 2.00 to 1.00, (4) increases the commitment fee on the unused portion of the revolving commitment to 0.40% per year when the Company's leverage ratio exceeds 2.00 to 1.00, and (5) prohibits dividends and other distributions and tightens certain covenants.

Except as amended by the Amendment, the remaining terms of the Credit Facility remain in full force and effect. The foregoing description of the Amendment is only a summary, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

**Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.** 

The information required by this item is included in Item 1.01 and incorporated herein by reference.

**Item 9.01 Financial Statements and Exhibits.**

(d) <u>Exhibits</u>.

---

| | |
|:---|:---|
| Exhibit No. | Description |
| 10.1 | [<u>Second Amendment to Credit Agreement, dated as of February 15, 2023, among DZS Inc., as Borrower, the other Loan Parties party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.</u>](dzsi-ex10_1.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: February 16, 2023 | DZS INC. | DZS INC. |
|  | By: | /s/ Misty Kawecki |
|  |  | Misty Kawecki |
|  |  | Chief Financial Officer |

---

------

## Ex-10

<u>SECOND AMENDMENT TO CREDIT AGREEMENT</u>

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "<u>Amendment</u>"), dated as of February 15, 2023 (the "<u>Amendment Effective Date</u>"), is among DZS Inc., a Delaware corporation, as Borrower, the other Loan Parties party hereto, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

RECITALS:

WHEREAS, the Borrower, the other Loan Parties party thereto, the Administrative Agent, and the lenders listed on the signature pages thereto have entered into that certain Credit Agreement dated as of February 9, 2022 (as the same has been or may hereafter be amended or otherwise modified and as amended hereby, the "<u>Credit Agreement</u>").

WHEREAS, the Borrower has requested that the Administrative Agent and the Required Lenders agree to certain amendments to the financial covenants in the Credit Agreement, and the Administrative Agent and the Required Lenders have agreed to amend the financial covenants, subject in all cases to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows effective as of the Amendment Effective Date unless otherwise indicated:

ARTICLE 1<u><br>Definitions</u>

Section 1.1<u>Definitions</u>. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement, as amended hereby.

ARTICLE 2<u><br>Amendments</u>

Subject to satisfaction of the conditions of effectiveness set forth in <u>Article 4</u> of this Amendment, the parties hereto agree that, effective as of the Amendment Effective Date, the Credit Agreement is hereby amended as follows:

Section 2.1<u>Amendments to Section 1.01</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)The definition of "Applicable Rate" set forth in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

"<u>Applicable Rate</u>" means, for any day, with respect to any Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "CBFR Spread", "Term Benchmark/RFR Spread" or "Commitment Fee Rate", as the case may be, based upon the Leverage Ratio as of the most recent determination date; <u>provided</u> that until the delivery to the Administrative Agent, pursuant to <u>Section 5.01</u>, of the Borrower's consolidated financial information for the Borrower's first fiscal quarter ending after the Second Amendment Effective Date, the "Applicable Rate" shall be the applicable rates per annum set forth below in Category 1:

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Category** | &nbsp;&nbsp;**Leverage Ratio** | &nbsp;&nbsp;**Term Benchmark/RFR Spread** | &nbsp;&nbsp;**CBFR Spread** | &nbsp;&nbsp;**Commitment Fee Rate** |
| &nbsp;&nbsp;1 | &nbsp;&nbsp;Greater than or equal to 2.50 to 1.00 | &nbsp;&nbsp;4.00% | &nbsp;&nbsp;3.00% | &nbsp;&nbsp;0.40% |
| &nbsp;&nbsp;2 | &nbsp;&nbsp;Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00 | &nbsp;&nbsp;3.50% | &nbsp;&nbsp;2.50% | &nbsp;&nbsp;0.35% |
| &nbsp;&nbsp;3 | &nbsp;&nbsp;Greater than or equal to 1.50 to 1.00, but less than 2.00 to 1.00 | &nbsp;&nbsp;3.25% | &nbsp;&nbsp;2.25% | &nbsp;&nbsp;0.30% |
| &nbsp;&nbsp;4 | &nbsp;&nbsp;Less than 1.50 to 1.00 | &nbsp;&nbsp;3.00% | &nbsp;&nbsp;2.00% | &nbsp;&nbsp;0.25% |

---

For purposes of the foregoing, (a) the Applicable Rate shall be determined as of the end of each fiscal quarter of the Borrower, based upon the Borrower's annual or quarterly consolidated financial statements delivered pursuant to <u>Section 5.01</u> and (b) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; <u>provided</u>, at the option of the Administrative Agent or at the request of the Required Lenders, if the Borrower fails to deliver the annual or quarterly consolidated financial statements required to be delivered by it pursuant to <u>Section 5.01</u>, the Leverage Ratio shall be deemed to be in Category 1 during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered.

If at any time the Administrative Agent determines that the financial statements upon which the Applicable Rate was determined were incorrect (whether based on a restatement, fraud or otherwise), or any ratio or compliance information in a Compliance Certificate or other certification was incorrectly calculated, relied on incorrect information or was otherwise not accurate, true or correct, the Borrower shall be required to retroactively pay any additional amount that the Borrower would have been required to pay if such financial statements, Compliance Certificate or other information had been accurate and/or computed correctly at the time they were delivered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The definition of "Payment Condition" set forth in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

"<u>Payment Condition</u>" shall be deemed to be satisfied with respect to a transaction if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) no Event of Default has occurred and is continuing or would result immediately after giving effect to such transaction;

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 2

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) immediately after giving effect to and at all times during the 30 consecutive day period immediately prior to such transaction, the Borrower shall have (A) Liquidity (or with respect to such 30 consecutive day period, an average of Liquidity for such 30 days) calculated on a pro forma basis after giving effect to such transaction of not less than $20,000,000 and (B) a Leverage Ratio for the most recently ended four fiscal quarter period for which financial statements have been delivered pursuant to <u>Section 5.01</u>, calculated on a pro forma basis after giving effect to such transaction, of not more than 2.25 to 1.00; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the Borrower has delivered to the Administrative Agent a Compliance Certificate for the fiscal quarter ending December 31, 2023 demonstrating compliance with the financial covenants set forth in <u>Section 6.12</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)The following definition is hereby added to Section 1.01 of the Credit Agreement in appropriate alphabetical order to read in its entirety as follows:

"<u>Second Amendment Effective Date</u>" means February 15, 2023.

Section 2.2<u>Amendment to Section 5.01(d)</u>. Section 5.01(d) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) on or before the last Business Day of each calendar month, a 13-week rolling cash flow forecast in form and substance satisfactory to the Administrative Agent, which shall detail all sources and uses of cash on a weekly basis and which shall report any variances from the prior report;

Section 2.3<u>Amendment to Section 5.02</u>. Section 5.02 of the Credit Agreement is hereby amended by deleting the amount to "$10,000,000" in each instance therein and inserting the amount "$5,000,000" in lieu thereof.

Section 2.4<u>Amendments to Section 6.01</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Section 6.01(i) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) [intentionally omitted];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Section 6.01(j) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Indebtedness of any Person that becomes a Subsidiary after the date hereof; <u>provided</u> that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this clause (j) together with any Refinance Indebtedness in respect thereof permitted by clause (f) above, shall not exceed $5,000,000 at any time outstanding;

Section 2.5<u>Amendment to Section 6.02</u>. Section 6.02 of the Credit Agreement by (i) inserting the word "and" at the end of clause (k) thereof, (ii) deleting the semicolon and the word "and" at the end of clause (l) thereof and inserting a period in lieu thereof, and (iii) deleting clause (m) thereof in its entirety.

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 3

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Section 2.6<u>Amendments to Section 6.04</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Section 6.04(f) of the Credit Agreement is hereby amended by deleting the amount "$2,500,000" therein and inserting the amount "$1,000,000" in lieu thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Section 6.04(n) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) so long as (i) no Event of Default exists immediately at the time of such Investment or immediately after giving effect thereto and (ii) the Borrower has delivered to the Administrative Agent a Compliance Certificate for the fiscal quarter ending December 31, 2023 demonstrating compliance with the financial covenants set forth in <u>Section 6.12</u>, Investments made in an aggregate amount not to exceed $1,000,000 at any time outstanding; and

Section 2.7<u>Amendment to Section 6.08(a)</u>. Section 6.08(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree to declare or make, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except (i) the Borrower may declare and pay dividends with respect to its common Equity Interests payable solely in additional shares of its common Equity Interests, and, with respect to its preferred Equity Interests, payable solely in additional shares of such preferred Equity Interests or in shares of its common Equity Interests, (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Borrower may make Restricted Payments, not exceeding $5,000,000 during any fiscal year, pursuant to and in accordance with stock option plans or other incentive or benefit plans for management, directors or employees of the Borrower and its Subsidiaries, (iv) so long as no Event of Default has occurred and is continuing or would result after giving effect to such payment, the Borrower and its Subsidiaries may make repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such repurchased Equity Interests represents a portion of the exercise price of such options or warrants, and (v) so long as no Event of Default has occurred and is continuing or would result after giving effect to such payment, repurchases of Equity Interests deemed to occur upon the withholding of a portion of the Equity Interests granted or awarded to a current or former officer, director, employee or consultant to pay for the taxes payable by such Person upon such grant or award (or upon vesting thereof).

Section 2.8<u>Amendment to Section 6.12</u>. Section 6.12 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:

SECTION 6.12 <u>Financial Covenants</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Leverage Ratio</u>. The Borrower will not permit the Leverage Ratio, on the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending September 30, 2023 and each fiscal quarter thereafter during the term of this Agreement, to be greater than the ratio set forth below opposite such period below:

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 4

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| | |
|:---|:---|
| &nbsp;&nbsp;Fiscal Quarters Ending | &nbsp;&nbsp;Leverage Ratio |
| &nbsp;&nbsp;September 30, 2023 | &nbsp;&nbsp;2.50 to 1.00 |
| &nbsp;&nbsp;December 31, 2023 and thereafter | &nbsp;&nbsp;2.00 to 1.00 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fixed Charge Coverage Ratio</u>. The Borrower will not permit the Fixed Charge Coverage Ratio, on the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2023 and each fiscal quarter thereafter during the term of this Agreement and calculated for the period of the four consecutive fiscal quarters ending on such date, to be less than 1.25 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Minimum Liquidity</u>. The Borrower will not permit the Liquidity of the Borrower and its Subsidiaries, calculated on a consolidated basis, on or prior to September 30, 2023:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) to be less than (A) $30,000,000 on the last day of the fiscal quarter ending March 31, 2023 and (B) $35,000,000 on the last day of each of the fiscal quarters ending June 30, 2023 and September 30, 2023; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) to be less than $20,000,000 at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Minimum EBITDA</u>. The Borrower will not permit EBITDA, calculated as of the end of the fiscal quarters of the Borrower ending March 31, 2023 and June 30, 2023 and, in each case, calculated for the fiscal quarter (and not the four quarter period) then ending, to be less than (i) ($1,000,000) for the fiscal quarter ending March 30, 2023 and (ii) $1 for the fiscal quarter ending June 30, 2023.

Section 2.9<u>Amendment to Exhibit D</u>. Exhibit D to the Credit Agreement is hereby amended in its entirety to read as set forth in the <u>Exhibit D</u> attached hereto.

ARTICLE 3<u><br>Conditions Precedent</u>

Section 3.1<u>Conditions</u>. The effectiveness of <u>Article 2</u> of this Amendment is subject to the satisfaction of the following conditions precedent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)The Administrative Agent (or its counsel) shall have received (i) from each party hereto a counterpart of this Amendment signed on behalf of such party (which, subject to Section 9.06(b) of the Credit Agreement, may include any Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) and (ii) duly executed copies of any other Loan Documents and such other certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request at least two Business Days prior to the Amendment Effective Date in connection with the transactions contemplated by this Amendment, the Credit Agreement and the other Loan Documents, all in form and substance satisfactory to the Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)The Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), on or before the Amendment Effective Date;

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 5

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Immediately after giving effect to this Amendment, the representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct in all material respects with the same effect as though made on and as of the Amendment Effective Date (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Immediately after giving effect to this Amendment, no Default shall have occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)No event shall have occurred and no condition shall exist which has or could be reasonably expected to have a Material Adverse Effect; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)The Administrative Agent and its counsel shall have completed all legal due diligence, the results of which shall be reasonably satisfactory to Administrative Agent in its sole discretion.

ARTICLE 4<u><br>Ratifications, Representations and Warranties</u>

Section 4.1<u>Ratifications</u>. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement, and except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. The Borrower, the other Loan Parties, the Administrative Agent, and the Lenders party hereto agree that the Credit Agreement and the other Loan Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. For all matters arising prior to the Amendment Effective Date (including, without limitation, the accrual and payment of interest and fees and compliance with financial covenants), the terms of the Credit Agreement (as unmodified by this Amendment) shall control and are hereby ratified and confirmed; <u>provided</u>, notwithstanding the foregoing or anything to the contrary contained in the Credit Agreement, the parties hereto acknowledge and agree that the financial covenants set forth in Section 6.12 of the Credit Agreement (as unmodified by this Amendment) shall not be tested for the fiscal quarter ended December 31, 2022.

Section 4.2<u>Representations and Warranties</u>. Each of the Loan Parties hereby represents and warrants to the Administrative Agent and the Lenders as follows: (a) immediately after giving effect to this Amendment, no Default has occurred and is continuing; (b) immediately after giving effect to this Amendment, the representations and warranties of the Loan Parties set forth in the Loan Documents are true and correct in all material respects with the same effect as though made on and as of the Amendment Effective Date (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects); (c) the execution, delivery and performance of this Amendment has been duly authorized by all necessary organizational action and, if required, actions by the equity holders of such Loan Party and: (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents and routine Tax filings; (ii) will not violate any Requirement of Law applicable to any Loan Party or any Subsidiary; (iii) will not violate any of the organizational documents of any Loan Party or any

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 6

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Subsidiary; (iv) will not violate or result in a default under any material indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or the assets of any Loan Party or any Subsidiary, or give rise to a right thereunder to require any payment to be made by any Loan Party or any Subsidiary; or (v) result in the creation or imposition of any Lien on any asset of any Loan Party or any Subsidiary, except Liens created pursuant to the Loan Documents; and (d) this Amendment constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

ARTICLE 5<u><br>Miscellaneous</u>

Section 5.1<u>Survival of Representations and Warranties</u>. All representations and warranties made in this Amendment or any other Loan Document including any Loan Document furnished in connection with this Amendment shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by the Administrative Agent or any Lender or any closing shall affect the representations and warranties or the right of the Administrative Agent or any Lender to rely upon them.

Section 5.2<u>Reference to Credit Agreement</u>. Each of the Loan Documents, including the Credit Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Credit Agreement shall mean a reference to the Credit Agreement as amended hereby.

Section 5.3<u>Loan Document</u>. This Amendment is a Loan Document and is subject to the terms of the Credit Agreement.

Section 5.4<u>Expenses</u>. As provided in the Credit Agreement, the Loan Parties, jointly and severally, agree to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the preparation and administration of this Amendment or any other documentation prepared in connection therewith (whether or not the transactions contemplated hereby or thereby shall be consummated).

Section 5.5<u>Severability</u>. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 5.6<u>Applicable Law</u>. This Amendment and all other Loan Documents executed pursuant hereto shall be governed by and construed in accordance with the internal laws of the State of Texas, but giving effect to federal laws applicable to national banks.

Section 5.7<u>Successors and Assigns</u>. This Amendment is binding upon and inures to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (a) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void)

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 7

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and (b) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with Section 9.04 of the Credit Agreement.

Section 5.8<u>Counterparts</u>. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of (x) this Amendment, (y) any other Loan Document and/or (z) any Ancillary Document that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Amendment, the Credit Agreement, such other Loan Document or such Ancillary Document, as applicable.

Section 5.9<u>Effect of Waiver</u>. No consent or waiver, express or implied, by the Administrative Agent or any Lender to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any other Loan Party shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.

Section 5.10<u>Headings</u>. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

Section 5.11<u>ENTIRE AGREEMENT</u>. This Amendment, the Credit Agreement and the other Loan Documents, embody the final, entire agreement among the parties relating to the subject matter hereof and supersede any and all previous commitments, agreements, representations and understandings, whether oral or written, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.

[Signatures on following pages]

SECOND AMENDMENT TO CREDIT AGREEMENT, Page 8

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Executed as of the date first written above.

DZS INC.****<br>By: <u>/s/ Justin Ferguson</u>

Justin Ferguson

Chief Legal Officer and Secretary

DZS CALIFORNIA INC.<br>By: <u>/s/ Justin Ferguson</u>

Justin Ferguson

Chief Legal Officer and Secretary

DZS INTERNATIONAL INC.

<br>By: <u>/s/ Justin Ferguson</u>

Justin Ferguson

Chief Legal Officer and Secretary

DZS SERVICES INC.****<br>By: <u>/s/ Justin Ferguson</u>

Justin Ferguson

Chief Legal Officer and Secretary

SECOND AMENDMENT TO CREDIT AGREEMENT, Signature Page

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JPMORGAN CHASE BANK, N.A., individually, and as Administrative Agent and Issuing Bank<br>By: <u>/s/ Shiv Kariwala</u>

Shiv Kariwala

Authorized Signatory

SECOND AMENDMENT TO CREDIT AGREEMENT, Signature Page

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TEXAS CAPITAL BANK,

as a Lender

<br>By: <u>/s/ William J. Rolley</u>

William J. Rolley

Executive Vice President

SECOND AMENDMENT TO CREDIT AGREEMENT, Signature Page

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<u>EXHIBIT D</u>

COMPLIANCE CERTIFICATE

To: The Lenders party to the<br>Credit Agreement described below

This Compliance Certificate ("<u>Certificate</u>"), for the period ended [_________], 20[__], is furnished pursuant to that certain Credit Agreement dated as of February 9, 2022 (as amended, restated, modified, renewed or extended from time to time, the "<u>Agreement</u>") among DZS Inc., a Delaware corporation (the "<u>Borrower</u>"), the other Loan Parties, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders and as the Issuing Bank. Unless otherwise defined herein, capitalized terms used in this Certificate have the meanings ascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES, SOLELY IN HIS OR HER CAPACITY AS A FINANCIAL OFFICER ON BEHALF OF THE BORROWER AND NOT INDIVIDUALLY, THAT:

1. I am the [_________________] of the Borrower and, as such, am familiar with the business, operations, affairs, financial condition, properties and assets of each of the Loan Parties.

2. The attached financial statements of the Borrower present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied[, subject to normal year-end audit adjustments and the absence of footnotes].

3. Except as set forth in paragraph 6 below, (i) no Default has occurred which is continuing as of the date of this Certificate, (ii) no change in GAAP or in the application thereof has occurred since the date of the audited financial statements most recently delivered pursuant to Section 5.01(a) of the Agreement, and (iii) no Immaterial Subsidiary has ceased to be an Immaterial Subsidiary.

4. <u>Schedule I</u> attached hereto sets forth financial data and computations evidencing the Borrower's compliance with Section 6.12 of the Agreement, all of which data and computations are true, complete and correct.

5. <u>Schedule II</u> hereto sets forth the computations necessary to determine the Applicable Rate commencing on the Business Day this Certificate is delivered.

6. Described below are the exceptions, if any, referred to in paragraph 3 hereof by listing, in detail, the (i) nature of the Default, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event, (ii) change in GAAP or the application thereof and the effect of such change on the attached financial statements, or (iii) the Immaterial Subsidiaries that have ceased to be Immaterial Subsidiaries.

EXHIBIT D – Page 1

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The foregoing certifications, together with the computations set forth in <u>Schedules I</u> and <u>II</u> hereto and the financial statements attached hereto as <u>Annex A</u> delivered with this Certificate in support hereof, are made and delivered this [___] day of [__________, ____].

DZS INC.

By: <br>Name: <br> Title:

EXHIBIT D – Page 2

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Annex A to Compliance Certificate

Financial Statements

[See Attached.]

EXHIBIT D – Page 3

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Schedule I to Compliance Certificate

Compliance as of _________, ____ with<br>Provisions of the Agreement

<u>Leverage Ratio</u>. The Borrower will not permit the Leverage Ratio, on the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending September 30, 2023 and each fiscal quarter thereafter during the term of this Agreement, to be greater than the ratio set forth below opposite such period below:

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| | |
|:---|:---|
| &nbsp;&nbsp;ARTICLE IFiscal Quarters Ending | &nbsp;&nbsp;ARTICLE IILeverage Ratio |
| &nbsp;&nbsp;ARTICLE IIISeptember 30, 2023 | &nbsp;&nbsp;ARTICLE IV2.50 to 1.00 |
| &nbsp;&nbsp;ARTICLE VDecember 31, 2023 and thereafter | &nbsp;&nbsp;ARTICLE VI2.00 to 1.00 |

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| | |
|:---|:---|
| A) Funded Indebtedness | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- lesser of (i) Unrestricted Cash or (ii) one-half of B Total below | $_______________ |
| **A TOTAL (NET FUNDED INDEBTEDNESS)** | $_______________ |
| B) Net income | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ interest expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ income tax expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ depreciation expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ amortization expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ extraordinary non-cash charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ other non-cash charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-cash stock based compensation expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ business restructuring charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any proposed or actual Investment or issuance or incurrence of any Indebtedness not prohibited by the Agreement | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ cost savings, operating expense reductions and cost synergies in connection with Permitted Acquisitions net of actual benefits realized | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ one-time expenses for bad debt not to exceed $14,206,000 | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any proposed issuance of Equity Interests which is not consummated, not to exceed $1,000,000 | $_______________ |

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EXHIBIT D – Page 4

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any actual issuance of Equity Interests not prohibited by the Agreement | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- any cash payments made in respect of non-cash charges taken in a prior period | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- extraordinary gains and any non-cash items of income | $_______________ |
| **B TOTAL (EBITDA)** | $_______________ |
| **A Total / B Total = Leverage Ratio**<br>| **to 1.00** |

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As of the Compliance Test Date shown above, the **Leverage Ratio** is _________ to 1.00

Compliance as of the Compliance Test Date shown above: [__] Yes [__] No

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fixed Charge Coverage Ratio</u>. The Borrower will not permit the Fixed Charge Coverage Ratio, on the last day of any fiscal quarter of the Borrower, commencing with the fiscal quarter ending December 31, 2023 and each fiscal quarter thereafter during the term of this Agreement and calculated for the period of the four consecutive fiscal quarters ending on such date, to be less than 1.25 to 1.00.

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| | |
|:---|:---|
| A) EBITDA (B Total above) | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- Unfinanced Capital Expenditures | $_______________ |
| **A TOTAL**  | $_______________ |
| B) cash Interest Expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ scheduled principal payments on Indebtedness actually made | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ expense for taxes paid in cash | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ Restricted Payments paid in cash | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ Capital Lease Obligation payments | $_______________ |
| **B TOTAL (FIXED CHARGES)** | $_______________ |
| **A Total / B Total = Fixed Charge Coverage Ratio**<br>| **to 1.00** |

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As of the Compliance Test Date shown above, the **Fixed Charge Coverage Ratio** is _________ to 1.00

Compliance as of the Compliance Test Date shown above: [__] Yes [__] No

EXHIBIT D – Page 5

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Minimum Liquidity</u>. The Borrower will not permit the Liquidity of the Borrower and its Subsidiaries, calculated on a consolidated basis, on or prior to September 30, 2023:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i) to be less than (A) $30,000,000 on the last day of the fiscal quarter ending March 31, 2023 and (B) $35,000,000 on the last day of each of the fiscal quarters ending June 30, 2023 and September 30, 2023; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii) to be less than $20,000,000 at any time.

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| | |
|:---|:---|
| Unrestricted Cash | $_______________ |
| + Permitted Investments | $_______________ |
| + Availability | $_______________ |
| **TOTAL (LIQUIDITY)** | $_______________ |

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As of the Compliance Test Date shown above, **Liquidity** is $_________

Compliance as of the Compliance Test Date shown above: [__] Yes [__] No

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Minimum EBITDA</u>. The Borrower will not permit EBITDA, calculated as of the end of the fiscal quarters of the Borrower ending March 31, 2023 and June 30, 2023 and, in each case, calculated for the fiscal quarter (and not the four quarter period) then ending, to be less than (i) ($1,000,000) for the fiscal quarter ending March 30, 2023 and (ii) $1 for the fiscal quarter ending June 30, 2023.

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| | |
|:---|:---|
| Net income | $_______________ |
| + interest expense | $_______________ |
| + income tax expense | $_______________ |
| + depreciation expense | $_______________ |
| + amortization expense | $_______________ |
| + extraordinary non-cash charges | $_______________ |
| + other non-cash charges | $_______________ |
| + non-cash stock based compensation expense | $_______________ |
| + business restructuring charges | $_______________ |
| + non-recurring expenses, fees, costs and charges incurred in connection with any proposed or actual Investment or issuance or incurrence of any Indebtedness not prohibited by the Agreement | $_______________ |
| + cost savings, operating expense reductions and cost synergies in connection with Permitted Acquisitions net of actual benefits realized | $_______________ |
| + one-time expenses for bad debt not to exceed $14,206,000 | $_______________ |
| + non-recurring expenses, fees, costs and charges incurred in connection with any proposed issuance of Equity Interests which is not consummated, not to exceed $1,000,000 | $_______________ |

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EXHIBIT D – Page 6

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| | |
|:---|:---|
| + non-recurring expenses, fees, costs and charges incurred in connection with any actual issuance of Equity Interests not prohibited by the Agreement | $_______________ |
| - any cash payments made in respect of non-cash charges taken in a prior period | $_______________ |
| - extraordinary gains and any non-cash items of income | $_______________ |
| **TOTAL (EBITDA)** | $_______________ |

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As of the Compliance Test Date shown above, **EBITDA** is $_________

Compliance as of the Compliance Test Date shown above: [__] Yes [__] No

EXHIBIT D – Page 7

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Schedule II to Compliance Certificate

Borrower's Applicable Rate Calculation

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| | |
|:---|:---|
| A) Funded Indebtedness | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- lesser of (i) Unrestricted Cash or (ii) one-half of B Total below | $_______________ |
| **A TOTAL (NET FUNDED INDEBTEDNESS)** | $_______________ |
| B) Net income | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ interest expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ income tax expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ depreciation expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ amortization expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ extraordinary non-cash charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ other non-cash charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-cash stock based compensation expense | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ business restructuring charges | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any proposed or actual Investment or issuance or incurrence of any Indebtedness not prohibited by the Agreement | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ cost savings, operating expense reductions and cost synergies in connection with Permitted Acquisitions net of actual benefits realized | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ one-time expenses for bad debt not to exceed $14,206,000 | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any proposed issuance of Equity Interests which is not consummated, not to exceed $1,000,000 | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;+ non-recurring expenses, fees, costs and charges incurred in connection with any actual issuance of Equity Interests not prohibited by the Agreement | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- any cash payments made in respect of non-cash charges taken in a prior period | $_______________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- extraordinary gains and any non-cash items of income | $_______________ |
| **B TOTAL (EBITDA)** | $_______________ |
| **A Total / B Total = Leverage Ratio**<br>| **to 1.00** |

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As set forth above, as of the Compliance Test Date, the **Leverage Ratio** is _________ to 1.00.

EXHIBIT D – Page 8

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Category** | &nbsp;&nbsp;**Leverage Ratio** | &nbsp;&nbsp;**Term Benchmark/RFR Spread** | &nbsp;&nbsp;**CBFR Spread** | &nbsp;&nbsp;**Commitment Fee Rate** |
| &nbsp;&nbsp;1 | &nbsp;&nbsp;Greater than or equal to 2.50 to 1.00 | &nbsp;&nbsp;4.00% | &nbsp;&nbsp;3.00% | &nbsp;&nbsp;0.40% |
| &nbsp;&nbsp;2 | &nbsp;&nbsp;Greater than or equal to 2.00 to 1.00, but less than 2.50 to 1.00 | &nbsp;&nbsp;3.50% | &nbsp;&nbsp;2.50% | &nbsp;&nbsp;0.35% |
| &nbsp;&nbsp;3 | &nbsp;&nbsp;Greater than or equal to 1.50 to 1.00, but less than 2.00 to 1.00 | &nbsp;&nbsp;3.25% | &nbsp;&nbsp;2.25% | &nbsp;&nbsp;0.30% |
| &nbsp;&nbsp;4 | &nbsp;&nbsp;Less than 1.50 to 1.00 | &nbsp;&nbsp;3.00% | &nbsp;&nbsp;2.00% | &nbsp;&nbsp;0.25% |

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Based on such Leverage Ratio, the Applicable Rate is determined by reference to Category ___

EXHIBIT D – Page 9

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