Document:

Exhibit

Exhibit 10.15

EXECUTION VERSION

JOINDER AND SEVENTH AMENDMENT TO  
CREDIT AND SECURITY AGREEMENTS  

THIS JOINDER AND SEVENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS (the “Amendment”), dated as of October 7, 2016, is entered into by and among DASAN ZHONE SOLUTIONS, INC. (f/k/a Zhone Technologies, Inc.), a Delaware corporation (“DZS”),  ZTI MERGER SUBSIDIARY III, INC., a Delaware corporation (“ZTI”; DZS and ZTI are sometimes referred to herein individually as a “Borrower” and collectively as the “Borrowers”), PREMISYS COMMUNICATIONS, INC., a Delaware corporation (“Premisys”), ZHONE TECHNOLOGIES INTERNATIONAL, INC., a Delaware corporation, (“Zhone International”), PARADYNE NETWORKS, INC., a Delaware corporation (“Paradyne Networks”), PARADYNE CORPORATION, a Delaware corporation (“Paradyne Corporation”; Premisys, Zhone International, Paradyne Networks, and Paradyne Corporation are sometimes referred to herein individually as a “Guarantor” and collectively as the “Guarantors”), DASAN NETWORK SOLUTIONS, INC., a California corporation (“DNS”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).
RECITALS
A.    Borrowers, Guarantors, and Lender are parties to (i) a Credit and Security Agreement, dated March 13, 2012 (as amended by that certain First Amendment to Credit and Security Agreements, dated as of March 13, 2013 (the “First Amendment”), that certain Second Amendment to Credit and Security Agreements, dated September 30, 2013 (the “Second Amendment”), that certain Third Amendment to Credit and Security Agreements, dated March 5, 2014 (the “Third Amendment”), that certain Fourth Amendment to Credit and Security Agreements, dated March 6, 2015 (the “Fourth Amendment”), that certain Fifth Amendment to Credit and Security Agreements, dated March 23, 2016 (the “Fifth Amendment”), and that certain Sixth Amendment to Credit and Security Agreements and Consent, dated September 9, 2016 (the “Sixth Amendment”), and as further amended from time to time, the “Domestic Credit Agreement”), and (ii) a Credit and Security Agreement (Ex-Im Subfacility), dated March 13, 2012 (as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, and the Sixth Amendment, and as further amended from time to time, the “Ex-Im Credit Agreement”; and together with the Domestic Credit Agreement, collectively, the “Credit Agreements”).  Capitalized terms used in this Amendment have the meanings given to them in the Credit Agreements unless otherwise specified in this Amendment.
B.    Lender and Borrowers now wish for Lender to (i) add DNS as a “Guarantor” and a “Loan Party” under, and as a party to, the Credit Agreements and as a “Company” under, and as a party to, the Intercompany Subordination Agreement, and (ii) amend the Credit Agreements on the terms and conditions set forth herein. 
C.    Borrowers are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of the Lender’s rights and remedies 

    

as set forth in the Credit Agreements or any other Loan Document is being waived or modified by the terms of this Amendment.  
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1.Addition and Joinder of DNS.
1.1    Upon the date and effectiveness of this Amendment, Borrowers, Guarantors and Lender agree that DNS shall be deemed to be a “Guarantor” and a “Loan Party” under the Credit Agreements and the other Loan Documents.
1.2    Upon the date and effectiveness of this Amendment, DNS agrees (i) that it shall be deemed to be a party to the Credit Agreements as a “Guarantor” and a “Loan Party” thereunder and a party to the Intercompany Subordination Agreement as a “Company” thereunder, (ii) each reference to “Guarantor” and “Loan Party” in any Loan Document shall be deemed to include DNS, (iii) subject to Annex A attached to this Amendment, that it shall be deemed to have made all of the representations and warranties of a “Guarantor” and a “Loan Party” under the Credit Agreements (and, with respect to any such representations and warranties that are made as of the Closing Date, DNS shall be deemed to have made such representations and warranties as to itself (as a Guarantor or Loan Party) as of the date of this Amendment) and to have agreed to be bound, jointly and severally with all other “Guarantors”, “Loan Parties” and “Companies”, as applicable, by all of the conditions, obligations, appointments, covenants, representations, warranties and other agreements of a “Guarantor”, “Loan Party” and “Company” under and as set forth in the Credit Agreements, this Amendment and the Intercompany Subordination Agreement, as applicable, and (iv) to promptly execute all further documentation, amendments, supplements, schedules, agreements and/or financing statements reasonably required by Lender consistent with and in furtherance of the Credit Agreement, the other Loan Documents and this Amendment.  Without limiting the generality of the foregoing, DNS hereby unconditionally grants, assigns, and pledges to Lender for the benefit of Lender and each Bank Product Provider, to secure payment and performance of the Obligations, a continuing security interest in and Lien on all of DNS’s right, title, and interest in and to the Collateral, as security for the payment and performance of all Obligations.  
2.    Amendments to Credit Agreements.  The Credit Agreements are amended as follows:
2.1    General.
(a)    Each reference to “Subsidiary”, “Subsidiary’s”, “Subsidiaries”, and “Subsidiaries’” in the Credit Agreements and the Exhibits and Schedules thereto shall include DNS and its Subsidiaries except that such references that appear in Sections 2.4(f)(ii) through (iv), 6.14, 7.5, 7.7(a)(i), 7.11(b), 7.16, 7.17 and 9.3 through 9.7 of the Credit Agreements, Schedule 6.2 to the Credit Agreements, and Sections 5.2(b)(ii), 5.6, 5.15 and 5.29 of Exhibit D to the Credit Agreements are hereby replaced with references to “Restricted Subsidiary”, “Restricted Subsidiary’s”, “Restricted Subsidiaries”, and “Restricted Subsidiaries’”, respectively.  

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(b)    Notwithstanding anything to the contrary contained in the last sentence of paragraph b. of Schedule 1.1 to the Credit Agreements or Section 1.1(b) of the Third Amendment: (i) the phrase “Borrowers’ consolidated net income (or loss)” in the definition of “EBITDA” is hereby replaced with the phrase “Borrowers’ consolidated net income (or loss) (excluding the consolidated net income (or loss) of DNS and any DNS Subsidiary)”, (ii) each reference to “each Borrower and its Subsidiaries” in the definition of “Excess Availability” is hereby replaced with a reference to “each Borrower and its Restricted Subsidiaries (other than DNS)”, (iii) the phrase “Borrowers and their Subsidiaries” in the definition of “Fixed Charge Coverage Ratio” is hereby replaced with the phrase “Borrowers and their Restricted Subsidiaries (other than DNS)”, (iv) the phrase “Borrowers and their Subsidiaries determined on a consolidated basis in accordance with GAAP” in the definition of “Fixed Charges” is hereby replaced with “Borrowers and their Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP (excluding the Fixed Charges of DNS and any DNS Subsidiary)”, and (v) the phrase “each Borrower for such period, determined on a consolidated basis in accordance with GAAP” in the definition of “Interest Expense” is hereby replaced with the phrase “Borrowers and their Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding Interest Expense of DNS and any DNS Subsidiary)”.  For the avoidance of doubt, each reference to “Borrowers’ cash” in the definition of “Liquidity” shall not include cash of any Subsidiary of any Borrower (other than a Subsidiary that is a Borrower).  
(c)    Notwithstanding anything to the contrary in the Credit Agreements (including Sections 6.12 and 6.15), the Stock owned by DNS in each of Dasan Network Solutions Japan, Inc. and Dasan Vietnam Co., Ltd. shall not constitute “Collateral,” “Investment Related Property” or “Pledged Interests” for any purpose hereunder or thereunder nor be subject to any Lien granted to Lender thereunder so long as, with respect to each such Subsidiary, the revenue of such Subsidiary does not exceed $3,000,000 during any fiscal year.
2.2    Section 6.13 of the Credit Agreements.  Section 6.13 of the Credit Agreements is amended to read in its entirety as follows:
“6.13    Material Contracts.  Contemporaneously with the delivery of each Compliance Certificate pursuant to Section 6.1, provide Lender with copies of (a) each Material Contract of any Loan Party or any of its Restricted Subsidiaries entered into since the delivery of the previous Compliance Certificate, and (b) each material amendment or modification of any Material Contract of any Loan Party or any of its Restricted Subsidiaries entered into since the delivery of the previous Compliance Certificate.  Borrower shall maintain all Material Contracts of any Loan Party or any of its Restricted Subsidiaries in full force and effect and shall not default in the payment or performance of its obligations thereunder, except in respect of a bona fide dispute as to such contract.”
2.3    Section 7.7 of the Credit Agreements.  Clauses (b)(i) and (ii) of Section 7.7 of the Credit Agreements are hereby amended to read in their entirety as follows:
“(i)    any agreement, instrument, document, indenture, or other writing evidencing  or concerning Permitted Indebtedness other than (A) the Obligations in 

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accordance with this Agreement, (B) Permitted Intercompany Advances, and (C) Indebtedness permitted under clauses (c), (e), (f) and (k) of the definition of Permitted Indebtedness;
(ii)    any Material Contract of any Loan Party or its Restricted Subsidiary except to the extent that such amendment, modification, or change could not, individually or in the aggregate, reasonably be expected to be materially adverse to the interests of Lender; or”
2.4    Section 7.14 of the Credit Agreements.  Section 7.14 of the Credit Agreements is amended to read in its entirety as follows:
“7.14    Limitation on Issuance of Stock.  Except for the issuance or sale of (i) common stock or Permitted Preferred Stock by the Borrowers or the other Loan Parties and (ii) other Stock that is not Prohibited Preferred Stock by DASAN Zhone Solutions, Inc. as compensation to its employees, directors or consultants in the ordinary course of business, issue or sell or enter into any agreement or arrangement for the issuance and sale of any of their Stock; provided that, after giving effect to any issuance of Stock permitted under clause (ii) above, no such employee, director or consultant shall own more than 5% of the aggregate Stock of Dasan Zhone Solutions, Inc.”
2.5    Section 7.15 of the Credit Agreements.  Section 7.15 of the Credit Agreements is amended to read in its entirety as follows:
“7.15    Consignments.  Consign the Inventory of any Loan Party or its Restricted Subsidiaries or sell any such Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale, except as set forth on Schedule 7.15 to the Information Certificate.”
2.6    Section 9.9 of the Credit Agreements.  Section 9.9 of the Credit Agreements is hereby amended to read in its entirety as follows:
“9.9    If the obligation of any Guarantor under a Guaranty is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement or the Guaranty), or if any Guarantor fails to perform any obligation under a Guaranty, or repudiates or revokes or purports to repudiate or revoke any obligation under a Guaranty, or any individual Guarantor dies or becomes incapacitated, or any other Guarantor ceases to exist for any reason;”
2.7    Schedule 1.1 to the Credit Agreements.
(a)    The following definition of “DNS Subsidiary” is hereby added in alphabetical order to Schedule 1.1 to the Credit Agreements:
““DNS Subsidiary” means any Subsidiary of DNS existing as of Seventh Amendment Effective Date.

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(b)    The definition of “Guarantors” that appears in Schedule 1.1 to the Credit Agreements is hereby amended to read in its entirety as follows:
““Guarantors” means (a) Premisys Communications, Inc., a Delaware corporation, Zhone Technologies International, Inc., a Delaware corporation; Paradyne Networks, Inc., a Delaware corporation, Paradyne Corporation, a Delaware corporation, and DNS, and (b) each other Person that becomes a guarantor after the Closing Date pursuant to Section 6.15 of this Agreement, and “Guarantor” means any one of them.”
(c)    The definition of “Guaranty” that appears in Schedule 1.1 to the Credit Agreements is hereby amended to read in its entirety as follows:
““Guaranty” means any guaranty that may be executed and delivered from time to time by a Guarantor in favor of Lender in form and substance reasonably satisfactory to Lender.”
(d)    The following definition of  “Restricted Subsidiary” is hereby added in alphabetical order to Schedule 1.1 to the Credit Agreements:
““Restricted Subsidiary” means any Subsidiary of a Loan Party other than a DNS Subsidiary.
(e)    The definition of “Permitted Indebtedness” that appears in Schedule 1.1 to the Credit Agreements is amended by deleting the “and” at the end of clause (i) thereof, replacing the “.” at the end of clause (j) thereof with “; and”, and adding a new clause (k) at the end thereof to read in its entirety as follows:
“(k)    Indebtedness of any DNS Subsidiary.”  
(f)    The definition of “Permitted Liens” that appears in Schedule 1.1 to the Credit Agreements is amended by deleting the “and” at the end of clause (h) thereof, replacing the “.” at the end of clause (i) thereof with “; and”, and adding a new clause (j) at the end thereof to read in its entirety as follows:
“(j)    Liens of any DNS Subsidiary.”
(g)    The following definition of “Seventh Amendment Effective Date” is hereby added in alphabetical order to Schedule 1.1 to the Credit Agreements:
““Seventh Amendment Effective Date” means October 7, 2016.
2.8    Exhibit A to the Credit Agreements.  Exhibit A to the Credit Agreements is hereby replaced in its entirety with Annex A attached to this Amendment.   

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2.9    Exhibit D to the Credit Agreements.  
(a)    Clauses (b), (c) and (d) of Section 5.1 of Exhibit D to the Credit Agreements are amended to read in their entirety as follows:
“(b)    Set forth on Schedule 5.1(b) to the Information Certificate is a complete and accurate description of the authorized capital Stock of each Loan Party, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding.  Other than as described on Schedule 5.1(b) to the Information Certificate and other than Stock (that is not Prohibited Preferred Stock) issued by DASAN Zhone Solutions, Inc. as compensation to its employees, directors and consultants in the ordinary course of business, there are no subscriptions, options, warrants, or calls relating to any shares of any Loan Party’s capital Stock, including any right of conversion or exchange under any outstanding security or other instrument.  No Loan Party is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.
(c)    Set forth on Schedule 5.1(c) to the Information Certificate (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement), is a complete and accurate list of the Loan Parties’ direct and indirect Subsidiaries (excluding the Loan Parties themselves), showing: (i) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by each Loan Party.  All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.
(d)    Except as set forth on Schedule 5.1(c) to the Information Certificate there are no subscriptions, options, warrants, or calls relating to any shares of any capital Stock of any Loan Party’s Subsidiaries (excluding the Loan Parties themselves), including any right of conversion or exchange under any outstanding security or other instrument.  The Loan Party’s Subsidiaries (excluding the Loan Parties themselves) are not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of such Loan Party’s Subsidiaries’ capital Stock or any security convertible into or exchangeable for any such capital Stock.”
(b)    Section 5.17 of Exhibit D to the Credit Agreements is amended to read in its entirety as follows:
“5.17    Material Contracts.  Set forth on Schedule 5.17 to the Information Certificate (as such Schedule may be updated from time to time in accordance herewith) is a reasonably detailed description of the Material Contracts of each Loan Party and its Restricted Subsidiaries as of the most recent date on which Borrowers provided their Compliance Certificate pursuant to Section 6.1; provided, however, that any Borrower may amend Schedule 5.17 to the Information Certificate to add additional Material 

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Contracts so long as such amendment occurs by written notice to Lender on the date that such Borrower provides its Compliance Certificate.  Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change, each Material Contract of each Loan Party and its Restricted Subsidiaries (other than those that have expired at the end of their normal terms) (a) is in full force and effect and is binding upon and enforceable against the applicable Loan Party or its Restricted Subsidiary and, to such Borrower’s knowledge, after due inquiry, each other Person that is a party thereto in accordance with its terms, (b) has not been otherwise amended or modified (other than amendments or modifications permitted by Section 7.7(b)), and (c) is not in default due to the action or inaction of the applicable Loan Party or its Restricted Subsidiary.”
(c)    Clause (c)(v) of Section 5.26 of Exhibit D to the Credit Agreements is amended to read in its entirety as follows:
“(v) to the extent required under Section 6, each Loan Party has delivered to and deposited with Lender all certificates representing the Pledged Interests owned by such Loan Party to the extent such Pledged Interests are represented by certificates, and undated powers (or other documents of transfer acceptable to Lender) endorsed in blank with respect to such certificates.”
2.10    Exhibit E to the Credit Agreements.  Each Information Certificate dated March 13, 2012 attached as Exhibit E to the applicable Credit Agreement (each, an “Existing Information Certificate”) is hereby supplemented with the additional information attached hereto as Annex B, and such Existing Information Certificate, as so supplemented, shall constitute the Information Certificate for all purposes under the applicable Credit Agreement.  
2.11    Schedule A-2 to the Credit Agreements.  Schedule A-2 to the Credit Agreements is hereby replaced in its entirety with Annex C attached to this Amendment.   
3.    No Other Changes.  Except as explicitly amended by this Amendment or the other Loan Documents delivered in connection with this Amendment, all of the terms and conditions of the Credit Agreements and the other Loan Documents shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.  This Amendment shall be deemed to be a “Loan Document” (as defined in the Credit Agreements).
4.    Amendment Fee.  [Intentionally Omitted]. 
5.    Conditions Precedent.  This Amendment shall be effective when Lender shall have received a duly executed original of this Amendment, together with each of the following, each in substance and form acceptable to Lender in its reasonable discretion and duly executed by all relevant parties:
5.1    A Pledged Interests Addendum by DNS relating to a pledge of 65% of the outstanding voting Stock of Dasan Network Solutions, Inc., a company incorporated under the laws of Korea, and related stock certificates and stock powers;

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5.2    Such forms and verifications as reasonably requested by Lender prior to the date of this Amendment as Lender may need to comply with the Patriot Act and any other regulatory or internal policies applicable to or mandated by Lender;
5.3    A perfected first priority security interest in the Collateral of DNS (subject to Permitted Liens), other than the deposit accounts described on Schedule 5.15 of the Information Certificate of DNS;
5.4    Certificates of Authority from the corporate secretaries of the Borrowers, Guarantors and DNS; and
5.5    The representations and warranties set forth in this Amendment must be true and correct.
6.    Post-Closing Covenant.  By no later than January 31, 2017 (or such longer period as agreed to by Lender in its sole discretion), DNS shall close each deposit account described on Schedule 5.15 of the Information Certificate of DNS (and transfer all funds remaining in such deposit accounts to one or more deposit accounts maintained at Lender).  The failure by DNS to comply with the foregoing covenant shall constitute an immediate Event of Default.  
7.    Representations and Warranties.  Borrowers, Guarantors and DNS hereby represent and warrant to Lender as follows:
7.1    Borrowers, Guarantors and DNS have all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of their obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by Borrowers, Guarantors and DNS and constitute the legal, valid and binding obligation of Borrowers, Guarantors and DNS, enforceable against Borrowers, Guarantors and DNS in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally.
7.2    The execution, delivery and performance by Borrowers, Guarantors and DNS of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action on the part of Borrowers, Guarantors and DNS and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, other than authorizations, consents or approvals that have been obtained and are in full force and effect or as contemplated by Section 4.2, (ii) violate any material provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to Borrowers, Guarantors or DNS, or the certificates or articles of incorporation or by-laws of Borrowers, Guarantors or DNS, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other Material Contract to which Borrowers, Guarantors or DNS are a party or by which Borrowers, Guarantors and DNS or their respective properties may be bound or affected, except to the extent that any such breach or default could not individually or in the aggregate reasonably be expected to cause a Material Adverse Change.

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7.3    All of the representations and warranties contained in Section 5 and Exhibit D of the Credit Agreements are true and correct in all material respects on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties continue to be true and correct in all material respects as of such earlier date).
8.    References.  All references in the Credit Agreements to “this Agreement” shall be deemed to refer to the Credit Agreements as amended hereby; and any and all references in the other Loan Documents to the Credit Agreements shall be deemed to refer to the Credit Agreements as amended hereby.
9.    No Waiver.  The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreements or a waiver of any breach, default or event of default under any Loan Document or other document held by Lender, whether or not known to Lender and whether or not existing on the date of this Amendment.
10.    Release.  Borrowers, Guarantors and DNS hereby absolutely and unconditionally release and forever discharge Lender, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents, attorneys, and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Borrowers, Guarantors or DNS have had, now have or have made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.  It is the intention of the Borrowers, Guarantors and DNS in executing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified and in furtherance of this intention each of the Borrowers, Guarantors and DNS waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California, which provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MIGHT HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
The parties acknowledge that each may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agree that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.

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11.    Costs and Expenses.  Borrowers agree to pay all reasonable out-of-pocket fees and disbursements of counsel to Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto.  Borrowers hereby agree that Lender may, at any time or from time to time in its sole discretion and without further authorization by Borrowers, make a loan to Borrowers under the Credit Agreements, or apply the proceeds of any loan, for the purpose of paying any such reasonable out-of-pocket fees, disbursements, costs and expenses.
12.    Miscellaneous.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument.  Transmission by facsimile or “pdf” file of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart.  Any party hereto may request an original counterpart of any party delivering such electronic counterpart.  This Amendment and the rights and obligations of the parties hereto shall be construed in accordance with, and governed by, the laws of the State of California.  In the event of any conflict between this Amendment and the Credit Agreements, the terms of this Amendment shall govern.
[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

BORROWERS:

DASAN ZHONE SOLUTIONS, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

ZTI MERGER SUBSIDIARY III, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

[SIGNATURES CONTINUED ON NEXT PAGE]

WFB/Zhone
Joinder and Seventh Amendment to  
Credit and Security Agreements
S-1

GUARANTORS:

PREMISYS COMMUNICATIONS, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

ZHONE TECHNOLOGIES INTERNATIONAL, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

PARADYNE NETWORKS, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

PARADYNE CORPORATION
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

DNS:

DASAN NETWORK SOLUTIONS, INC.
By: /s/ Kirk Misaka_______________________ 
Name:  Kirk Misaka 
Title:  Chief Financial Officer

WFB/Zhone
Joinder and Seventh Amendment to  
Credit and Security Agreements
S-2

LENDER:
WELLS FARGO BANK, NATIONAL ASSOCIATION 
 
By: /s/ Harry L. Joe______________________ 
Name:  Harry L. Joe 
Title:  Authorized Signatory

WFB/Zhone
Joinder and Seventh Amendment to  
Credit and Security Agreements
S-3

ANNEX A

EXHIBIT A

TO CREDIT AND SECURITY AGREEMENT
FORM OF COMPLIANCE CERTIFICATE

[on Borrower’s letterhead]

To:    Wells Fargo Bank, National Association
2450 Colorado Ave., Suite 3000W
Santa Monica, CA  90404
Attn:  Relationship Manager—DASAN Zhone Solutions, Inc.

Re:    Compliance Certificate dated [        ], [___], 201[__]
Ladies and Gentlemen:
Reference is made to that certain Credit and Security Agreement [(Ex-Im Subfacility)] (the “Credit Agreement”) dated as of March 13, 2012, by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, (“Lender”), and DASAN ZHONE SOLUTIONS, INC., and ZTI MERGER SUBSIDIARY III, INC. (the “Borrowers”), and PREMISYS COMMUNICATIONS, INC., ZHONE TECHNOLOGIES INTERNATIONAL, INC., PARADYNE NETWORKS, INC., and PARADYNE CORPORATION (the “Guarantors”).  Capitalized terms used in this Compliance Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.
Pursuant to Schedule 6.1 of the Credit Agreement, the undersigned officer of DASAN Zhone Solutions, Inc., a Delaware corporation, hereby certifies, on behalf of itself and the other Borrowers and Guarantors, that:
1.    The financial information of Borrower and its Subsidiaries furnished to Lender pursuant to Section 6.1 of the Credit Agreement has been prepared in accordance with GAAP (except for year-end adjustments and the lack of footnotes), and fairly presents in all material respects the financial condition of Borrower and its Subsidiaries.
2.    Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of Borrower and its Subsidiaries during the accounting period covered by the financial statements delivered pursuant to Schedule 6.1 of the Credit Agreement.
3.    Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event or condition that constitutes a Default or Event of Default.

4.    The representations and warranties of Borrower and its Subsidiaries set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the date hereof (except to the extent they relate to a specified date). 
5.    Borrower and its Subsidiaries are in compliance with the applicable covenants contained in Section 8 of the Credit Agreement as demonstrated on Schedule 1 hereof.
IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this [_____] day of [_______________], 201[__].
DASAN ZHONE SOLUTIONS, INC.

By:                         
Name:                         
Title:                        

SCHEDULE 1 TO COMPLIANCE CERTIFICATE

Financial Covenants

1.    Minimum Liquidity.  
Borrowers’ Liquidity, as of ___________ ___, 201___ is $_____________, which [does/does not] satisfy the minimum Liquidity requirement set forth in Section 8(a) of the Credit Agreement for such test date.
2.    Minimum Excess Availability.  
Excess Availability under this Agreement plus Excess Availability under the [Ex-Im Credit Agreement/Domestic Credit Agreement], as of ___________ ___, 201___ is $_____________, which [does/does not] satisfy the minimum requirement set forth in Section 8(b) of the Credit Agreement for such test date.
3.    Minimum EBITDA.
If, in accordance with Section 8(c) of the Credit Agreement, EBITDA is required to be tested, EBITDA, measured on a quarter-end basis for the ___ month period ending _________ ___, 20___, is $___________, which [is/is not] greater than or equal to the amount set forth in Section 8(c) of the Credit Agreement for the corresponding period.
4.    Minimum Fixed Charge Coverage Ratio.
If, in accordance with Section 8(d) of the Credit Agreement, the Fixed Charge Coverage Ratio is required to be tested, the Fixed Charge Coverage Ratio for the twelve-month period ending _________ ___, 20___ is _____ to 1.0, which [is/is not] greater than or equal to required minimum Fixed Charge Coverage Ratio of 1.20 to 1.0 set forth in Section 8(d) of the Credit Agreement for such period.

1 NOTE:  only those financial covenants that are to be tested as of the Reporting Date, as provided in Section 8 of the Credit Agreement, should be included on this Schedule 1.
2 NOTE:  select correct reference depending on whether this Schedule 1 is being used in connection with a Compliance Certificate that is submitted for the Domestic Credit Agreement or the Ex-Im Credit Agreement.

ANNEX B

Supplement to Information Certificate 

[see attached]

Page 1

ATTACHMENT TO EXHIBIT E

TO CREDIT AND SECURITY AGREEMENT

INFORMATION CERTIFICATE
OF
DASAN NETWORK SOLUTIONS, INC.

Dated:  October 7, 2016

Wells Fargo Bank, National Association
2450 Colorado Ave., Suite 3000W
Santa Monica, CA 90404
Attn:  Relationship Manager—DASAN Zhone Solutions, Inc.

In connection with the execution of that certain Joinder and Seventh Amendment to Credit and Security Agreements by Dasan Network Solutions, Inc., a California corporation (“DNS”), the Borrowers and other Guarantors party thereto and Wells Fargo Bank, National Association (“Lender”), DNS represents and warrants to Lender the following information about DNS and its Subsidiaries in connection with: (i) that certain Credit and Security Agreement, dated as of March 13, 2012 (as amended, restated, supplemented, renewed, extended or otherwise modified from time to time, the “Domestic Credit Agreement”), by and among Lender and the Borrowers and Guarantors party thereto and (ii) that certain Credit and Security Agreement (Ex-Im Subfacility), dated as of March 13, 2012 (as amended, restated, supplemented, renewed, extended or otherwise modified from time to time, the “Ex-Im Credit Agreement” and, together with the Domestic Credit Agreement, collectively, the “Credit Agreements”), by and among Lender and the Borrowers and Guarantors party thereto.  Capitalized terms not specifically defined shall have the meaning set forth in the Credit Agreements.  

		
	1.
	Attached as Schedule 5.1(b) is a complete and accurate description of (i) the authorized capital Stock of DNS, by class and, as of the Seventh Amendment Effective Date, a description of the number of shares of each such class that are issued and outstanding, (ii) all subscriptions, options, warrants or calls relating to any shares of DNS’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument; (iii) each stockholders’ agreement, restrictive agreement, voting agreement or similar agreement relating to any such capital Stock; and (iv) an organization chart of DNS and its Subsidiaries.

		
	2.
	Attached as Schedule 5.1(c) is a complete and accurate list of (i) DNS’ direct and indirect Subsidiaries, showing the number of shares of each class of common or preferred Stock authorized for each such Subsidiary and the number and percentage of outstanding shares, by class, that are owned, directly or indirectly, by DNS, as of the Seventh Amendment Effective Date, and (ii) all subscriptions, options, warrants or calls relating to any shares of any such Subsidiary’s capital Stock, including any right of conversion or exchange under any outstanding security or other instrument.  

		
	3.
	DNS uses the following trade name(s) in the operation of its business (e.g. billing, advertising, etc.):

None.

		
	4.
	DNS is a registered organization of the following type:

DASAN NETWORK SOLUTIONS, INC. – a California corporation
    

Exhibit E
Page 2

		
	5.
	The exact legal name (within the meaning of Section 9-503 of the Code) of DNS as set forth in its certificate of incorporation, organization or formation, or other public organic document, as amended to date, is set forth in Schedule 5.6(a).

		
	6.
	DNS is organized solely under the laws of the State set forth on Schedule 5.6(a).  DNS is in good standing in the State of its organization.

		
	7.
	The chief executive office and mailing address of DNS is located at the address set forth on Schedule 5.6(b) hereto.

		
	8.
	The books and records of DNS (if any) pertaining to Accounts, contract rights, Inventory, and other assets are located at the addresses specified on Schedule 5.6(b). 

		
	9.
	The identity and Federal Employer Identification Number of DNS and organizational identification number, if any, is set forth on Schedule 5.6(c). 

		
	10.
	DNS does not have any Commercial Tort Claims, except as set forth on Schedule 5.6(d). 

		
	11.
	There are no judgments, actions, suits, proceedings or other litigation pending by or against or threatened by or against DNS, any of its Subsidiaries or any of their respective officers or principals, in each case as of the Seventh Amendment Effective Date, except as set forth on Schedule 5.7(b). 

		
	12.
	During the past five (5) years, the name as set forth in DNS’ organizational documentation filed of record with the applicable state authority has been changed as follows:

Dasan Network Solutions, Inc. has changed its name from Dasan Networks USA, Inc. to Dasan Solutions, Inc. on February 6, 2015, and from Dasan Solutions, Inc. to Dasan Network Solutions, Inc. on July 13, 2015. 

		
	13.
	Since the date of its organization, DNS has made or entered into the following Acquisitions:

    
In 2015, DASAN’s communications network equipment businesses were spun off and incorporated as Dasan Network Solutions, Inc., a company incorporated under the laws of Korea (“DNS Korea”), which subsequently became a subsidiary of DNS.

In December 2015, DNS acquired a 69.06% interest in Dasan Network Solutions Japan, Inc.

On September 9, 2016, Dragon Acquisition Corporation merged with and into DNS, with DNS as the surviving corporation.

		
	14.
	DNS’ assets are owned and held free and clear of Liens (other than Permitted Liens and other than those certain Security Interests granted under the Credit Agreement), except as set forth below: 

None. 

		
	15.
	DNS and its Subsidiaries have been and remain in compliance with all Environmental Laws applicable to their business or operations except as set forth on Schedule 5.12. 

		
	16.
	DNS does not have any Deposit Accounts, investment accounts, Securities Accounts or similar accounts with any bank, securities intermediary or other financial institution, except as set forth on Schedule 5.15 for the purposes and of the types indicated therein. 

		
	17.
	DNS is not a party to or bound by a collective bargaining or similar agreement with any union, labor organization or other bargaining agent except as set forth below: (indicate date of agreement, parties to agreement, description of employees covered, and date of termination)

Exhibit E
Page 3

None.

		
	18.
	Set forth on Schedule 5.17 is a reasonably detailed description of each Material Contract of DNS as of the Seventh Amendment Effective Date.  

		
	19.
	Set forth on Schedule 5.19 is a true and complete list of all Indebtedness of DNS and its Subsidiaries outstanding as of September 30, 2016.  DNS has no Indebtedness outstanding as of the Seventh Amendment Effective Date. 

		
	20.
	DNS has not made any loans or advances or guaranteed or otherwise become liable for the obligations of any others (other than pursuant to a Guaranty), except as set forth below:

None. 

		
	21.
	DNS does not have any Chattel Paper (whether tangible or electronic) or instruments as of the Seventh Amendment Effective Date, except as follows:

None. 

		
	23.
	Schedule 5.26(a) sets forth all Real Property owned by DNS as of the Seventh Amendment Effective Date. 

		
	22.
	DNS does not own or licenses any Trademarks, Patents, Copyrights or other Intellectual Property, and is not a party to any Intellectual Property License, in each case as of the Seventh Amendment Effective Date, except as set forth on Schedule 5.26(b) (indicate type of Intellectual Property and whether owned or licensed, registration number, date of registration, and, if licensed, the name and address of the licensor). 

		
	24.
	The Inventory, Equipment and other goods of DNS are located only at the locations set forth on Schedule 5.29. 

		
	25.
	DNS maintains Cash Management Services of a type and on terms reasonably satisfactory to Lender at one or more of the banks set forth on Schedule 6.12(j). 

		
	26.
	As of the Seventh Amendment Effective Date, DNS has no delinquent taxes due (including, but not limited to, all payroll taxes, personal property taxes, real estate taxes or income taxes) except as follows:  

None.

		
	27.
	Except as set forth on Schedule 7.15, DNS has no consignment, bill and hold, sale or return, sale on approval or conditional sale arrangements. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Exhibit E
Page 4

Lender shall be entitled to rely upon the foregoing in all respects and the undersigned is duly authorized to execute and deliver this Information Certificate on behalf of each Loan Party.

Very truly yours,

DASAN NETWORK SOLUTIONS, INC.

By:/s/ Kirk Misaka_______________________
Name: Kirk Misaka
Title:   Chief Financial Officer

Exhibit E
Page 4

Schedule 5.1(b)
TO INFORMATION CERTIFICATE

Capitalization of DNS
Organization Chart

(i): 
	
					
	Loan Party
	

Authorized Shares/Issued Shares
	Holder
	Type of Rights/Stock 
(common/preferred/option/ class)
	Percent Interest (on a fully diluted basis)

	DASAN NETWORK SOLUTIONS, INC.
	100/10
	DASAN Zhone Solutions, Inc.
	Common
	100%

(ii):    None. 

(iii):    None. 

(iv):    

Schedule 5.1(b)
Page 1

Schedule 5.1(c)
TO INFORMATION CERTIFICATE

Subsidiaries

(i)

	
				
	Subsidiary
	State or Other Jurisdiction of Incorporation or Organization
	Authorized Shares/ Issued Shares Owned (Directly or Indirectly) By DNS
	Percentage Ownership

	Dasan Network Solutions, Inc.
	Republic of Korea
	1,000,000,000/10,000,000
	100%

	Dasan Network Solutions Japan, Inc.
	Japan
	24,640/6,400
	69.06%

	Dasan Vietnam Co., Ltd.
	Vietnam
	1/1
	100%

(ii)    None. 

Schedule 5.1(c)
Page 1

Schedule 5.6(a)
TO INFORMATION CERTIFICATE

Exact Legal Name 

Dasan Network Solutions, Inc.

Jurisdiction of Organization

	
		
	Name
	Jurisdiction of Organization 

	DASAN NETWORK SOLUTIONS, INC.
	California

Schedule 5.6(b)
Page 1

Schedule 5.6(b)
TO INFORMATION CERTIFICATE
 
Locations

Part 1 - Chief Executive Office and Mailing Address of DNS

7195 Oakport Street 
Oakland, California  94621

Part 2 - Location of Books and Records of DNS

7195 Oakport Street 
Oakland, California  94621

Schedule 5.6(b)
Page 2

Schedule 5.6(c)
TO INFORMATION CERTIFICATE

Federal Employer Identification Number
Organizational Identification Number

	
		
	Name
	Organizational Identification Number

	DASAN NETWORK SOLUTIONS, INC.
	FEIN:   27-3063221
California ID: C3303680

.

Schedule 5.6(c)
Page 1

Schedule 5.6(d)
TO INFORMATION CERTIFICATE

Commercial Tort Claims

None.

Schedule 5.6(d)
Page 1

Schedule 5.7(b)
TO INFORMATION CERTIFICATE
 
Judgments/ Pending Litigation

None.

Schedule 5.7(b)
Page 1

Schedule 5.12
TO INFORMATION CERTIFICATE

Environmental Compliance

None.

Schedule 5.7(b)
Page 2

Schedule 5.15
TO INFORMATION CERTIFICATE

Deposit Accounts; Investment Accounts

Part 1 - Deposit Accounts 

	
				
	Name and Address of Bank
	Loan  
Party
	Account No.(1)
	Purpose∗

	Bank of America - Dasan Network Solutions
	Dasan Network Solutions, Inc.
	3340 4679 4814
	Not in use

	Bank of America - Dasan Solutions
	Dasan Network Solutions, Inc.
	3340 4446 5896
	Not in use

	Bank of America - Sales (9987)
	Dasan Network Solutions, Inc.
	3340 4109 9987
	Payments to suppliers and vendors

	Bank of America - Dasan Main Account
	Dasan Network Solutions, Inc.
	0012 6287 3420
	Payment of operational expenses, payroll and benefits, & office expenses

	Bank of America - Busi. Interest Maximizer
	Dasan Network Solutions, Inc.
	0012 6287 3449
	Not in use

	Bank of America - Business Checking
	Dasan Network Solutions, Inc.
	4815 8810 0437 8832
	Not in use

(1) The aggregate account balance for the accounts listed above as of September 30, 2016 was less than $300,000.  

Part 2 - Investment and Other Accounts 

None.

		
	*
	For “Purpose” indicate either: “collection account” if proceeds of receivables or other assets are deposited in it, and note “lockbox” if it is subject to lockbox servicing arrangements with the applicable bank or “disbursement account” if it is a checking account or account used for transferring funds to third parties and note if it is used for a specific purpose, e.g., “payroll”, “medical”, “insurance”, “escrow” etc.  Also, please note any “zero balance” or other automatic sweep or investment accounts.

Schedule 5.15
Page 1

Schedule 5.17
TO INFORMATION CERTIFICATE
 
Material Contracts 

None.

Schedule 5.17
Page 1

Schedule 5.19
TO INFORMATION CERTIFICATE
 
Existing Indebtedness

	
					
	Obligor
	Bank or Financial Institution
	Type of Indebtedness
	Facility size
	Principal Amount Outstanding as of September 30, 2016

	DNS Korea
	Industrial Bank of Korea, Bundang Sunaeyeok Branch, 216, Hwangsaeul-ro, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea
	B2B payment
	KRW 3,000,000,000
	KRW 703,775,563

	Employee loans secured by DNS Korea deposit
	KRW 1,600,000,000
	KRW 711,065,375

	Letter of credit facility
	USD 7,000,000
	USD 3,728,783.55

	DNS Korea
	Shinhan Bank, Gwanggyo Corporate Finance Center, 54, Cheonggyecheon-ro, Jung-gu, Seoul, Korea
	B2B payment
	KRW 6,000,000,000
	KRW 1,092,547,359

	Short-term loans
	KRW 4,000,000,000
	KRW 4,000,000,000

	Discounting of bills
	Not applicable
	USD 3,100,000

	DNS Korea
	NH Bank, Eunhaeng-dong Branch, 
469, Sanseong-daero, Sujeong-gu, Seongnam-si, Gyeonggi-do, Korea
	B2B payment
	KRW 1,000,000,000
	-

	Letter of credit facility
	USD 5,000,000
	USD 2,544,809.17

	DNS Korea
	The Export-Import Bank of Korea,
38, Eunhaeng-ro, Yeongdeungpo-gu, Seoul, Korea
	Revolving line of credit
	KRW 9,000,000,000
	KRW 9,000,000,000

	DNS Korea
	KEB Hanabank, Sunaedong Branch, 12, Sunae-ro 46beon-gil, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea

	Revolving line of credit
	USD 4,000,000
	JPY 408,100,000(1)

	Issuance of guaranty bonds
	Not applicable
	EUR 56,653.67

	DNS Korea
	State bank of India, Seoul Branch, 
20th Floor, Kyobo Life Building, 
Jongno 1-ga , Jongno-gu , Seoul, Korea
	Issuance of guaranty bonds
	Not applicable
	INR 5,000,000

	DNS Korea
	Samsung Futures,
67, Sejong-daero, Jung-gu, Seoul, Korea

	Hedging arrangements
	Not applicable
	USD 10,400,000 and
JPY 132,000,000

(1) Although facility size is denominated in USD, DNS Korea may borrow in other currencies.

Schedule 5.7(b)
Page 1

Schedule 5.26(a)
TO INFORMATION CERTIFICATE

Owned Real Estate

None. 

Schedule 5.26(a)
Page 1

Schedule 5.26(b)
TO INFORMATION CERTIFICATE
 
Intellectual Property 

None.

Schedule 5.26
Page 1

Schedule 5.29
TO INFORMATION CERTIFICATE

Locations of Inventory and Equipment

Locations of Inventory, Equipment and Other Assets

	
			
	Address
	Owned/Leased/Third Party∗
	Name/Address of Lessor or Third Party, as Applicable

	7195 Oakport Street
Oakland, California
	Leased
	LBA Realty, LLC

	4400 College Blvd. Suite# 325, Overland Park, KS 66211 (1)
	Third Party
	Dixon Lumber Company, P.O. Box 907, Galax, VA 24333

	800 Atlanta South Parkway # 100, College Park, GA 30349 (2)
	Third Party
	Top Trans Logistics, LLC.

	7340 Bryan Dairy Road, Largo, Florida 33777
	Leased
	BACM 2005-3 BRYAN DAIRY INDUSTRIAL, LLC                         1601 Washington Avenue, Suite 700
Miami Beach, Florida 33139

	1317, Jungwon-daero, Janghowon-eup, Icheon-si, Gyeonggi-do, Korea
	Third Party
	Dasan Networks Inc.

	49, Daewangpangyo-ro 644beon-gil, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea
	Third Party
	Dasan Networks Inc.

(1) Kansas location currently contains office furniture and demo equipment.
(2) Atlanta warehouse currently contains approximately $400,000 of inventory which is in the process of being moved to DASAN Zhone Solutions, Inc.’s facility in Largo, Florida.

*  Indicate in this column next to applicable address whether the locations is owned by the Company, leased by the Company or owned and operated by a third party (e.g., warehouse, processor, consignee, etc.)

Schedule 5.29

Schedule 6.12(j)
TO INFORMATION CERTIFICATE

Collection Account Bank

See Schedule 5.15 to Information Certificate.

Schedule 6.12(j)
Page 1

Schedule 7.15
TO INFORMATION CERTIFICATE 

Consignment, Bill and Hold, Sale or Return, Sale on Approval or Conditional Sale Arrangements
None.

Schedule 7.15
Page 1
US-DOCS\70943621.7

Schedule 7.16
TO INFORMATION CERTIFICATE 

Inventory With Bailee, Warehouseman, Processor, etc.

None.

ANNEX C

Schedule A-2

TO CREDIT AND SECURITY AGREEMENT 

Authorized Person

NAME                        TITLE
	
		
	Kirk Misaka
	Chief Financial Officer

	James Norrod
	Co-Chief Executive Officer

	Katheryn Root
	Assistant ControllerEX-10.1

 Exhibit 10.1 

EMPLOYMENT AGREEMENT 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made effective as of December 1, 2015 (the “Effective
Date”), by and between VASCO Data Security International, Inc. (the “Company”), and Scott Clements (“Executive”). 

WHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, as the Company’s Executive Vice
President and Chief Strategy Officer, on the terms set forth in this Agreement. 
 NOW, THEREFORE, in consideration of the mutual
undertakings of the parties hereto, the Company and Executive agree as follows: 
 ARTICLE I 

EMPLOYMENT SERVICES 

1.1 Term of Employment. The term of Executive’s employment under this Agreement shall commence on the Effective Date and
continue until the second anniversary of such date (the “Initial Term”), which shall automatically renew on the second and each following anniversary of the Effective Date for successive one (1) year terms (each, a
“Successive Term”) (the Initial Term, together with all Successive Terms, if any, are collectively referred to herein as the “Employment Period”), unless either party provides the other party with written notice at
least six (6) months prior to the expiration of the Initial Term, or any Successive Term, of its or his intent not to renew the Initial Term, or any Successive Term, respectively. The Employment Period may be terminated earlier pursuant to the
terms of Article III below. 
 1.2 Position and Duties. On the terms and subject to the conditions set forth in this
Agreement, commencing on the Effective Date and thereafter during the Employment Period, Executive shall hold the position of Executive Vice President and Chief Strategy Officer and shall report to the Chief Executive Officer. Executive shall
perform such duties and responsibilities as are consistent with Executive’s position and as may be reasonably assigned to Executive by the Chief Executive Officer from time to time. Executive shall devote Executive’s full business time,
attention, skill and energy to the business and affairs of the Company, and shall use Executive’s reasonable best efforts to perform such responsibilities in a diligent, loyal, and businesslike manner so as to advance the best interests of the
Company. Executive shall act in conformity with the Company’s Code of Conduct and Ethics (or similar successor document) as in effect from time to time (the “Code of Conduct”) and the Company’s policies, and within the
limits, budgets and business plans set by the Company, and shall adhere to all rules and regulations in effect from time to time relating to the conduct of executives of the Company. 

1.3 Other Activities. Notwithstanding Section 1.2, Executive shall be permitted to devote a reasonable amount
of time and effort to professional, industry, civic and charitable organizations and managing personal investments; but only to the extent that such activities, individually or as a whole, do not materially interfere with the execution of
Executive’s duties hereunder, or otherwise violate any provision of this Agreement. Executive shall not become 

  
 1 

 
involved in the management of any for profit corporation, partnership or other for profit entity, including serving on the board of directors (or similar governing body) of any such entity,
without the prior consent of the Company’s Board of Directors (“Board”) and the Chief Executive Officer; provided, however, that this restriction shall not apply to any subsidiary of the Company. Executive will serve without
additional compensation as an officer and director of any of the Company’s subsidiaries. Any compensation or other remuneration received from such service may be offset against the amounts due hereunder. 

1.4 Location. Subject to Executive complying with Swiss immigration laws and visa requirements, during the first twelve months
of the Employment Term Executive’s place of business shall be at the Company’s office in Zurich, Switzerland, and thereafter his place of business shall be the Company’s headquarters in Oakbrook Terrace, Illinois; provided that
Executive may elect to move his principal place of business to the Company’s headquarters in Oakbrook Terrace, Illinois earlier with the approval of the Chief Executive Officer. Pending issuance of necessary Swiss visas and work permits that
will enable him to work from the Company’s Zurich, Switzerland offices Executive shall travel as needed to perform his services for the Company hereunder. If by February 28, 2016 Executive has not obtained necessary Swiss visas and work
permits that will enable him to work from the Company’s Zurich, Switzerland offices, Executive shall promptly relocate to the Chicago area at his expense, and his place of business shall be the Company’s headquarters in Oakbrook Terrace,
Illinois. Executive’s principal place of business shall not be relocated outside a 40 mile radius of such office without the written consent of Executive. Executive will travel as reasonably necessary to perform his duties under this Agreement,
which may include significant travel, including internationally. 
 ARTICLE II 

COMPENSATION 
 2.1
Base Salary. The Company shall pay Executive an annual base salary (“Base Salary”) of $365,000, payable in accordance with payroll practices in effect for senior executive officers of the Company generally. Base Salary
shall be subject to review in accordance with the Company’s normal practice for executive salary review from time to time in effect, and may be increased, but will not be reduced without the prior written consent of Executive except for a
reduction that is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company. 

2.2 Annual Incentive Compensation. During the Employment Period, Executive shall participate in the Company’s Executive
Incentive Plan and any successor thereto (the “Annual Bonus Plan”) in accordance with the terms and conditions thereof and on the same basis as other senior executives of the Company. For the portion of the Employment Period
occurring in 2016, subject to and in accordance with the terms of the Annual Bonus Plan, Executive shall be provided a target bonus equal to 80% of his Base Salary (the “2016 Bonus”). For the portion of the Employment Period
occurring in 2015 Executive shall be entitled to a guaranteed pro rata bonus under the Annual Bonus Plan which is equal to twenty four thousand three hundred thirty three dollars ($24,333) (the “2015 Bonus”). 

  
 2 

 2.3 Long-Term Incentive Compensation.  

(a) During the Employment Period, Executive shall participate in the Company’s 2009 Equity Incentive Plan and any
successor thereto (the “Long-Term Incentive Plan”) in accordance with the terms and conditions thereof and on the same basis as other senior executives of the Company, subject to Section 2.3 (b) below for 2016. In
connection with his commencing employment with the Company, on the Effective Date Executive is being awarded under the Long Term Incentive Plan a time vesting restricted stock grant (the “Initial Grant”) for six hundred thousand
dollars ($600,000) of the Company common stock, valued as of market closing on the date of grant, and vesting in equal semi-annual installments over 4 years from the Effective Date. The terms and conditions of the Initial Grant shall be governed by
the Long Term Incentive Plan and an award agreement determined by the Compensation Committee of the Board (“Committee”). 

(b) For 2016, upon recommendation and approval of the Committee, Executive shall be entitled to receive under the Long Term
Incentive Plan (a) a restricted stock grant for three hundred sixty five thousand dollars ($365,000) of the Company’s common stock, valued as of market closing on the date of grant, which would be earned based upon the Company achieving
performance targets for 2016 as determined by the Committee, and if earned, would vest 25% upon the Committee’s determination that such performance targets were achieved, and 25% on each of the subsequent anniversaries of the date of such grant
(the “2016 One Year Performance Grant”) and (b) a restricted stock grant for three hundred sixty five thousand dollars ($365,000) of the Company’s common stock, valued as of market closing on the date of grant, which would
be earned based upon the Company achieving three year cumulative performance targets for 2016, 2017, and 2018 as determined by the Committee, and if earned, would vest 100% upon the Committee’s determination that such performance target was
achieved (“2016 Three Year Performance Grant”). The terms and conditions of the 2016 One Year performance Grant and 2016 Three Year Performance Grant shall be governed by the Long Term Incentive Plan and an award agreement
determined by the Committee consistent with corresponding grants provided to other senior executive officers of the Company for 2016. 

2.4 Employee Benefit Plans. Executive will be eligible to participate on substantially the same basis as the Company’s
other senior executive officers in any other employee benefit plans offered by the Company including, without limitation, medical, dental, short-term and long-term disability, life insurance, pension and profit sharing (in each case, subject to the
eligibility requirements of such plans). The Company reserves the right to modify, suspend or discontinue any and all of its employee benefit plans, practices, policies and programs at any time without recourse by Executive, so long as the Company
takes such action generally with respect to other similarly situated senior executive officers. 
 2.5 Vacation. Executive
will be entitled to vacation in accordance with the Company’s vacation policy for senior executive officers, officers, but in no event less than four weeks per calendar year of paid vacation. 

2.6 Business Expenses. The Company will reimburse Executive for all reasonable and necessary business expenses incurred in the
performance of services with the Company, according to Company’s policies and upon Executive’s presentation of an itemized written statement and such verification as the Company may require. 

  
 3 

 2.7 Expat Allowance. Through February 28, 2016 and thereafter, if applicable,
for so long as Executive is working at the Company’s office in Zurich, Switzerland, the Company shall (i) pay the Executive a gross monthly cash allowance of $14,091 for the reimbursement of certain living expenses incurred by Executive,
and (ii) reimburse Executive for the cost of two coach round trip air fares from the US to Zurich and back to the US for two dependents of Executive during each consecutive 12 months of the Employment Period that begins on the Effective Date
(i.e. 4 roundtrip tickets per year). 
 ARTICLE III 

TERMINATION OF EMPLOYMENT 

3.1 Voluntary Resignation. Executive may terminate his employment for any reason by giving the Company 90 days prior written
notice of a voluntary resignation date (“Resignation Date”). Upon receiving Executive’s notice of intent to resign, the Company may require that Executive cease performing services for the Company at any time before the
Resignation Date, so long as the Company continues Executive’s Base Salary, service for purposes of the Annual Bonus Plan and Long-Term Incentive Plan, and employee benefits under Section 2.4 through the Resignation Date. Except as
otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any compensation or benefits from the
Company after the Resignation Date. For the avoidance of doubt, any annual incentive bonus that has not been paid as of the Resignation Date will not be payable and is forfeited. 

3.2 Termination By Company for Cause. The Company may terminate Executive’s employment for Cause (as defined below) by
giving written notice to Executive designating an immediate or future termination date. Such notice shall indicate the specific provisions of this Agreement relied upon as the basis of such termination. In the event of a termination for Cause, the
Company shall pay Executive his Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any
other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any compensation or benefits from the Company after the termination date. 

For purposes of this Agreement, “Cause” means: 

(i) Executive materially breaches Executive’s obligations under this Agreement, the Company’s Code of Conduct and
Ethics (or any successor thereto) or an established policy of the Company; 
 (ii) Executive engages in conduct prohibited by
law (other than minor violations), commits an act of dishonesty, fraud, or serious or willful misconduct in connection with his job duties, or engages in unethical or immoral conduct that, in the reasonable judgment of the Committee, could injure
the integrity, character or reputation of Company; 

  
 4 

 (iii) Executive fails or refuses to perform, or habitually neglects,
Executive’s duties and responsibilities hereunder (other than on account of Disability (as defined below), and continues such failure, refusal or neglect after having been given written notice by the Company that specifies what duties Executive
failed to perform and an opportunity to cure of 30 days; 
 (iv) Use or disclosure by Executive of confidential information
or trade secrets other than in the furtherance of the Company’s (or its subsidiaries’) business interests, or other violation of a fiduciary duty to the Company (including, without limitation, entering into any transaction or contractual
relationship causing diversion of business opportunity from the Company (other than with the prior written consent of the Board)); or 

(v) Executive fails to reasonably cooperate with any audit or investigation involving the Company or its business practices
after having been given written notice by the Company that specifies Executive’s failure to cooperate and an opportunity to cure of 10 days. 

3.3 Termination By Company Without Cause or Termination by Executive for Good Reason. The Company may terminate Executive’s
employment without Cause at any time during the Employment Period by giving written notice to Executive designating an immediate or future termination date. 

Executive may resign from employment during the Employment Period due to: 

(i) a failure to provide the compensation and benefits required by this Agreement, including a reduction in Executive’s
Base Salary below the Base Salary in effect during the immediately preceding year, unless such reduction is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company or agreed to in writing
by Executive; 
 (ii) a failure to appoint or elect Executive as Executive Vice President and Chief Strategy Officer of the
Company, in accordance with Section 1.2 hereof; 
 (iii) any material diminution of Executive’s authority,
duties or responsibilities; or 
 (iv) the Company requiring Executive to be based at any office or location other than the
office provided for in Section 1.4 hereof; 
 (each of which shall constitute a “Company Breach” or “Good
Reason”) and such resignation shall be treated as a termination by Executive for Good Reason; provided that, (a) Executive’s voluntary resignation occurs within 90 days following the initial occurrence of a Company Breach,
(b) Executive provided written notice describing such Company Breach in reasonable 

  
 5 

 
detail to the Committee within 30 days of the initial occurrence of such Company Breach, and (c) the Company failed to cure such Company Breach within 30 days of receipt of such written
notice from Executive; and provided, further, that in the case of subsections (ii) and (iii), an act or omission shall not constitute a Company Breach if Executive has incurred a Disability (as defined below). 

The election by Executive to not renew the Initial Term or any Successive Terms pursuant to Section 1.1 shall not be a termination
for Good Reason and shall not entitle Executive to Severance Pay. However, the election by the Company to not renew the Initial Term or any Successive Terms pursuant to Section 1.1 shall be deemed to be a termination without Cause
effective as of the termination of the Initial Term or Successive Term as applicable, and shall entitle Executive to Severance Pay as hereinafter provided. 

In the event of a termination by the Company without Cause or a termination by Executive for Good Reason, the Company shall pay Executive his
Base Salary and provide employee benefits under Section 2.4 through the termination date. In addition, subject to the requirements set forth in Section 3.7, Section 3.8, and Section 3.9, the Company
will provide the following compensation and benefits to Executive (collectively, the “Severance Pay”): 

(A) an amount equal to six (6) months of Executive’s then current Base Salary, plus an amount equal to 50% of his
target bonus under the Annual Bonus Plan for the current year in which Executive’s employment terminates, or if such target has not been established for such current year, then the most recently established target bonus under the Annual Bonus
Plan, each less applicable withholdings, payable in equal installments on each regularly scheduled payroll pay date during the six (6) month period that begins on the first day immediately after the Release Effective Date (as defined in
Section 3.7); and 
 (B) Awards, if any, under the Long Term Incentive Plan shall be paid in accordance with the
terms and conditions of the Long-Term Incentive Plan and the applicable awards. 
 Except as otherwise provided under law, or the terms of
the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any additional compensation or benefits from the Company after the termination date.

 3.4 Death. The Employment Period shall terminate automatically upon Executive’s death. In the event of
Executive’s death during the Employment Period, the Company shall pay Executive’s Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of
the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, no other compensation or benefits from the Company shall be payable after the termination date. 

  
 6 

 3.5 Disability. “Disability” means Executive being unable to
perform his duties to the Company as Executive Vice President and Chief Strategy Officer as provided in this Agreement for a period of at least 180 continuous days as a result of a mental or physical condition. The Company may terminate
Executive’s employment for Disability during the Employment Period by giving written notice to Executive designating a termination date that is at least 30 days after the date of the notice of termination, provided that Executive does
not return to work on a substantially full-time basis within 30 days after notice of termination on account of Disability is provided to Executive. A return to work of less than 30 continuous days on a substantially
full-time basis shall not interrupt a continuous period of Disability. In the event of termination of the Employment Period on account of Executive’s Disability, the Company shall pay Executive’s
Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in
which Executive participates, no other compensation or benefits from the Company shall be payable after the termination date. 
 3.6
Change in Control. “Change in Control” has the meaning assigned to such term in the Long Term Incentive Plan as in effect from time to time. Notwithstanding anything in this Agreement to contrary, a Change in Control will
have occurred only if such change in ownership constitutes a change in control under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and other guidance in effect thereunder
(“Section 409A”). 
 If contemporaneous with or within eighteen (18) months after a Change in Control that occurred
during the Employment Period (a) the Company terminates Executive’s employment without Cause or (b) Executive terminates his employment for Good Reason, then, provided Executive complies with the requirements set forth in
Section 3.7, Section 3.8, and Section 3.9, Executive will be eligible to receive Severance Pay described in Section 3.3 (collectively, the “Change in Control Payments”). 

The Change in Control Payment which is a cash payment (and not securities) will be made in a lump sum cash payment as soon as practicable, but
in no event more than ten (10) days after Release Effective Date. Except as otherwise provided under law or the terms of any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any additional
compensation or benefits from the Company after the termination date. 
 3.7 Execution of Separation Agreement. As a condition
to receiving Severance Pay or Change in Control Payments, Executive must execute and return to the Company, and not revoke any part of, a general release and waiver of claims against the Company and its officers, directors, stockholders, employees
and affiliates with respect to Executive’s employment (including, without limitation, a release of claims under the Age Discrimination in Employment Act (the “ADEA Release”)), and other customary terms, in a form and substance
reasonably acceptable to the Company (the “Release”). Executive must deliver the executed Release within the minimum time period required by law or, if none, within twenty-one (21) days after Executive receives the Release from
the Company, which shall not be more than fifteen (15) days after Executive’s termination of Employment. The Release will become effective on the date the revocation period of the ADEA Release expires without Executive revoking the ADEA

  
 7 

 
Release (the “Release Effective Date”). Any obligation of the Company to provide the Severance Pay shall cease: (i) if Executive materially breached or breaches his
contractual obligations to the Company, including those set forth in Article IV or Article V herein, or in the Release or (ii) if, after Executive’s termination, the Company discovers facts and circumstances that would have
justified a termination for Cause during the Employment Period. 
 3.8 Timing of Payments; Section 409A. 

(a) Notwithstanding any other provision of this Agreement, in the event of a payment to be made, or a benefit to be provided,
pursuant to this Agreement based upon Executive’s “separation from service” (as defined below) for a reason other than death at a time when Executive is a Specified Employee (as defined below) and such payment or provision of such
benefit is not exempt or otherwise permitted under Section 409A without the imposition of any Section 409A Penalty (as defined below), such payment shall not be made, and such benefit shall not be provided, before the earlier of the date
which is the first day of the seventh month after Executive’s separation from service or 30 days after Executive’s death. All payments or benefits delayed pursuant to this Section 3.8 shall be aggregated into one lump sum
payment to be made as of the Company’s first business day following the first day of the seventh month after Executive’s separation from service (or if earlier, as of 30 days after Executive’s death). 

(b) For purposes of this Agreement: 

(i) “Separation from service” has the meaning provided under Code Section 409A and Treas. Reg.
1.409A-1(h); 
 (ii) “Specified Employee” has the meaning given that term in Code Section 409A and
Treas. Reg. 1.409A-1(c)(i) as determined in accordance with the Company’s policy for determining Specified Employees; 

(iii) “Section 409A Penalty” means any increase in tax or any other penalty pursuant to Section 409A; and

 (iv) All payments of “deferred compensation,” as defined in Code Section 409A, due to Executive’s
“termination of employment” shall be payable upon Executive’s separation from service. 
 (c) This Agreement
is intended not to result in the imposition of any Section 409A Penalty and shall be administered, interpreted and construed in a manner consistent with such intent. 

(d) Executive and the Company agree to cooperate to amend this Agreement from time to time as appropriate to avoid the
imposition of any Section 409A Penalty. 
 (e) In no event shall the Company be required to provide a tax gross-up
payment to Executive with respect to any Section 409A Penalty. 
 (f) Notwithstanding any provision of this Agreement to
the contrary, this Agreement is intended to be exempt from or, in the alternative, comply with Section 409A and the interpretive guidance in effect thereunder, including the exceptions for short-term deferrals, separation pay arrangements,
reimbursements, and in-kind distributions. The Agreement shall be construed and interpreted in accordance with such intent. 

  
 8 

 3.9 Excess Parachute Payments; No Excise Tax Gross-Up. Notwithstanding any
provision of this Agreement to the contrary, if it is determined by the Company’s independent auditors that any amount or benefit to be paid or provided under this Agreement or otherwise, whether or not in connection with a Change in Control,
would be an “Excess Parachute Payment” within the meaning of Code Section 280G but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement will be reduced to the minimum
extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction will be made only if and to
the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Code Section 4999, any tax imposed by any
comparable provision of state law, and any applicable federal, state and local income and employment taxes). 
 The fact that
Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 3.9 will not of itself limit or otherwise affect any other rights of Executive other than pursuant to this Agreement. In
the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 3.9, the Company will effect such reduction by reducing the lump sum cash payment related
to Base Salary (a “Reduction”). In the event that, after such Reduction any payment or benefit intended to be provided under this Agreement or otherwise is still required to be reduced pursuant to this Section 3.9, the
Company will effect such reduction by reducing other consideration due to Executive. 
 3.10 Removal from any Boards and
Positions. If Executive’s employment is terminated for any reason under this Agreement, this Agreement will constitute his automatic resignation from (i) if a member, the board of directors of any subsidiary of the Company or any
other board to which he has been appointed or nominated by or on behalf of the Company, (ii) any position with the Company or any subsidiary of the Company, including, but not limited to, as an officer of the Company or any of its subsidiaries,
and (iii) any fiduciary positions with respect to the Company’s benefit plans. 
 ARTICLE IV 

EXCLUSIVITY OF SERVICES AND RESTRICTIVE COVENANTS 

4.1 Confidential Information. Executive acknowledges and agrees that the Confidential Information (as defined below) of the
Company and its subsidiaries and any other entity related to the Company (each, a “VASCO Entity”) that he obtained during the course of his employment by the Company is the property of the Company or such other VASCO Entity.
Executive will never, directly or indirectly, disclose, publish or use any Confidential Information 

  
 9 

 
of which Executive has become aware, whether or not such information was developed by him. All duties and obligations set forth in this Agreement regarding Confidential Information shall be in
addition to those which exist under the Illinois Trade Secrets Act and at common law. 
 As used in this Agreement, “Confidential
Information” means information that is not generally known to the public and that was or is used, developed or obtained by the Company or any other VASCO Entity, in connection with its businesses, including but not limited to: 

(i) products or services, unannounced products or services, product or service development information (or other proprietary
product or service information); 
 (ii) fees, costs, bids and pricing structures and quotations or proposals given to
agents, distributors, vendors, contractors, licensors, licensees, customers, or prospective agents, distributors, vendors, contractors, licensors, licensees or customers, or received from any such person or entity; 

(iii) accounting or financial records; 

(iv) strategic business plans; 

(v) information system applications or strategies; 

(vi) customer and vendor lists and employee lists and directories; 

(vii) marketing plans, bidding strategies and processes, and negotiation strategies, whether past, current, or future; 

(viii) accounting and business methods; 

(ix) legal advice and/or attorney work product; 

(x) trade secrets and other proprietary information; 

(xi) information, analysis or strategies regarding acquisitions, mergers, other business combinations, divestitures,
recapitalizations, or new ventures; and 
 (xii) nonpublic information that was acquired by Executive concerning the
requirements and specifications of the Company’s or any other VASCO Entity’s agents, distributors, vendors, contractors, licensors, licensees, customers, or potential customers. 

Notwithstanding anything to the contrary, Confidential Information does not include any information that: (a) is publicly disclosed by
law or pursuant to, and to the extent required by, an order of a court of competent jurisdiction or governmental agency; (b) becomes publicly available through no fault of Executive; or (c) has been published in a form generally available
to the public before Executive proposes to disclose, publish, or use such information. 

  
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 4.2 Noncompetition. During the Employment Period and for the 12-month period
following the termination of the Employment Period for any reason (the “Restricted Period”), Executive will not, on behalf of himself or any other entity, have an ownership interest in or become employed or engaged by, or otherwise
participate in or render services to, any business or enterprise (including, without limitation, any division, group or franchise of a larger organization) within the Geographical Area (as defined below) that engages in any data security business or
any other business engaged in by the Company; provided, however, that the this restriction shall not prohibit Executive from passive beneficial ownership of less than two percent of any class of securities of a publicly-held
corporation whose stock is traded on a U.S. national securities exchange or traded in the over-the-counter market. For the purpose of this provision, “Geographical Area” means North America, Central America, South America, the
Caribbean, Europe, the Middle East, Africa, India, the Australian continent and Asia. 
 4.3 Non-Solicitation. During the
Restricted Period, Executive shall not (other than in furtherance of Executive’s legitimate job duties on behalf of Company), directly or indirectly, on Executive’s own behalf or for any other person or entity: (i) solicit for
employment, hire or engage, or attempt to solicit for employment, hire or engage, any person who is or was employed by the Company within the six month period prior to the date of solicitation, hire or engagement, or (ii) otherwise interfere
with the relationship between any such person and the Company. 
 4.4 Non-Interference with Business Relationships. During the
Restricted Period, Executive shall not (other than in furtherance of Executive’s legitimate job duties on behalf of the Company), directly or indirectly, on Executive’s own behalf or for any other person or entity: (i) induce or
attempt to induce any customer, distributor, agent, licensor, licensee, contractor, vendor or other business relation that was doing business with any VASCO Entity during the one-year period prior to the inducement or attempted inducement to reduce
or cease doing business with the Company or any VASCO Entity, or otherwise interfere with the relationship between such person (or entity) and any VASCO Entity; (ii) induce or attempt to induce any prospective customer, distributor, agent,
licensor, licensee, contractor, vendor or other prospective business relation located in the Geographical Area with which any VASCO Entity has had communications during the six-month period prior to the inducement or attempted inducement regarding
doing business with the Company or any other VASCO Entity to not do business or to do reduced business with the Company or any other VASCO Entity, or otherwise interfere with the relationship between such person (or entity) and any VASCO Entity.

 4.5 Equitable Modification. If any court of competent jurisdiction shall deem any provision in this Article IV too
restrictive, the other provisions shall stand, and the court shall modify the unduly restrictive provision to the point of greatest restriction permissible by law. 

4.6 Remedies. Executive acknowledges that the agreements and covenants contained in this Article IV are essential to
protect the Company and its business and are a condition precedent to entering into this Agreement. Should Executive breach any covenants in this Article IV, then among other remedies, the duration of the covenant shall be extended by the
period of any such breach. Executive agrees that irreparable harm would result from Executive’s breach or threat to breach any provision of this Article IV, and that monetary damages alone would not provide adequate relief to the Company
for the harm incurred. Executive agrees that in addition to money damages, the Company shall be entitled to seek and obtain temporary, 

  
 11 

 
preliminary and permanent injunctive relief restraining Executive from committing or continuing any breach without being required to post a bond. Without limiting the foregoing, upon a breach by
Executive of any provision of this Article IV, any outstanding Severance Pay shall cease and be forfeited, and Executive shall immediately reimburse the Company for any Severance Pay previously paid. 

ARTICLE V 

POST-TERMINATION OBLIGATIONS 

5.1 Return of Company Materials. No later than three business days following the termination of Executive’s employment for
any reason, Executive shall return to the Company all company property that is then in Executive’s possession, custody or control, including, without limitation, all keys, access cards, credit cards, computer hardware and software, documents,
records, policies, marketing information, design information, specifications and plans, data base information and lists, and any other property or information that Executive has or had relating to the Company (whether those materials are in paper or
computer-stored form), and including but not limited to any documents containing, summarizing, or describing any Confidential Information. 

5.2 Executive Assistance. During Executive’s employment with the Company and for a period of 3 years after the termination
of such employment, Executive shall, upon reasonable notice, furnish the Company with such information as may be in Executive’s possession or control, and cooperate with the Company in any reasonable manner that the Company may request,
including without limitation conferring with the Company with regard to any litigation, claim, or other dispute in which the Company is or may become a party. The Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred
by Executive in fulfilling Executive’s obligations under this Section 5.2. The Company will make any such reimbursement within 30 days of the date Executive provides the Company with documentary evidence of such expense consistent
with the policies of the Company. The Company will also pay Executive a reasonable fee per hour for his assistance during the two years commencing on the first anniversary of termination of his employment with the Company. Notwithstanding anything
to the contrary, any such reimbursement shall be administered so as to comply with Treasury Regulation Section 1.409A-3(i)(1)(iv). 

  
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 ARTICLE VI 

MISCELLANEOUS 
 6.1
Notices. Any notices, consents or other communications required or permitted to be sent or given hereunder shall be in writing and shall be deemed properly served if (a) delivered personally, in which case the date of such notice
shall be the date of delivery; (b) delivered prepaid to a nationally recognized overnight courier service, in which case the date of delivery shall be the next business day; or (c) sent by facsimile transmission (with a copy sent by
first-class mail), in which case the date of delivery shall be the date of transmission, or if after 5:00 P.M., the next business day. If not personally delivered, notice shall be sent using the addresses set forth below: 

If to Executive, to the address listed on the signature page or the last address on file in the records of the Company. 

If to the Company: 
 VASCO Data Security International, Inc.

 1901 South Meyers Road 
 Suite 210 

Oakbrook Terrace, IL 60181-5206 
 Attention: Chief Executive
Officer 
 Telecopy: (630) 932-8852 
 with a copy to: 

Katten Muchin Rosenman LLP 
 525 West Monroe St. 

Chicago, IL 60661 
 Attention Matthew Brown 

Telecopy: (312) 902-1061 
 or such other address as may
hereafter be specified by notice given by either party to the other party. Executive shall promptly notify the Company of any change in his address set forth on the signature page. 

6.2 Withholding. The Company may withhold from any payment that it is required to make under this Agreement amounts sufficient
to satisfy applicable withholding requirements under any federal, state or local law, as well as any other amounts due and owing to the Company from Executive. 

6.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns; provided that Executive may not assign any of his rights or obligations under this Agreement without the Company’s prior written consent. 

6.4 Nonalienation of Benefits. Benefits payable under this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, prior to actually being received by Executive, and any such attempt to dispose of any right to benefits
payable hereunder shall be void. 
 6.5 Amendment; Waiver. No failure or delay by the Company or Executive in enforcing or
exercising any right or remedy hereunder will operate as a waiver thereof. No modification, amendment or waiver of this Agreement or consent to any departure by Executive from any of the terms or conditions thereof, will be effective unless in
writing and signed by the Chairman of the Committee. Any such waiver or consent will be effective only in the specific instance and for the purpose for which given. 

  
 13 

 6.6 Severability; Survivability. If any term or provision of this Agreement shall
be held to be invalid or unenforceable, the remaining terms and provisions hereof shall not be affected thereby and shall be enforced to the fullest extent permitted under law. Executive’s obligations in Articles IV and V shall
survive and continue in full force notwithstanding the termination of this Agreement or Executive’s employment for any reason. 

6.7 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same agreement. 
 6.8 Governing Law; Consent to Jurisdiction;
Waiver of Jury. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois, without regard to its conflict of law principles. For the purposes of any suit, action, or other proceeding
arising out of this Agreement or with respect to Executive’s employment hereunder, the parties: (i) agree to submit to the exclusive jurisdiction of the federal courts located in the Northern District of Illinois or state courts located in
DuPage County, Illinois; (ii) waive any objection to personal jurisdiction or venue in such jurisdiction, and agree not to plead or claim forum non conveniens; and (iii) waive their respective rights to a jury trial of any claims and
causes of action, and agree to have any matter heard and decided solely by the court. 
 6.9 Construction. The language used
in this Agreement will be deemed to be the language chosen by Executive and the Company to express their mutual intent, and no rule of strict construction will be applied against Executive or the Company. The heading in this Agreement are for
convenience of reference only and will not limit or otherwise affect the meaning of the provision. 
 6.10 Entire Agreement;
Amendments. This Agreement contains the entire understanding of the parties hereto with regard to the subject matter contained herein, and supersedes all prior agreements, understandings or letters of intent with regard to the subject matter
contained herein between the parties hereto. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by each of the parties hereto. 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Employment Agreement. 

 

							
		 		 	VASCO DATA SECURITY INTERNATIONAL, INC.
				
	Date: December 1, 2015	 		 	By:	 	 /s/ T. Kendall Hunt

				
		 		 	Name:	 	T. Kendall Hunt
		 		 	Title:	 	CEO
			
		 		 	SCOTT CLEMENTS
				
	Date: December 1, 2015	 		 		 	 /s/ Scott Clements

  
 14 

 AMENDMENT NO.1 TO EMPLOYMENT AGREEMENT 

This AMENDMENT NO.1 TO EMPLOYMENT AGREEMENT (this “Amendment”) is made effective as of November 15, 2016 (the
“Effective Date”), by and between VASCO Data Security International, Inc. (the “Company”), and Scott Clements (“Executive”). 

WHEREAS, the Company currently employs Executive as the Company’s Executive Vice President and Chief Strategy Officer, and the parties
mutually agree to change Executive’s position to President and Chief Operating Officer. 
 NOW, THEREFORE, in consideration of the
mutual undertakings of the parties hereto, the Company and Executive agree as follows: 
 1. Position and
Duties. On the terms and subject to the conditions set forth in the Employment Agreement, commencing on the Effective Date and thereafter during the Employment Period, Executive shall hold the position of President and Chief Operating
Officer and shall report to the Chief Executive Officer. Executive shall perform such duties and responsibilities as are consistent with Executive’s position and as may be reasonably assigned to Executive by the Chief Executive Officer from
time to time. 
 2. References. References in the Employment Agreement to position and title for Executive
shall now refer to the new position of President and Chief Operating Officer. 
 3. Effect. The remaining
provisions of the Employment Agreement not modified as set forth above shall remain in full force and effect. 
 IN WITNESS WHEREOF,
each of the parties hereto has duly executed this Amendment. 
  

							
		 		 	VASCO DATA SECURITY INTERNATIONAL, INC.
				
	Date: November 15, 2016	 		 	By:	 	 /s/ T. Kendall Hunt

				
		 		 	Name:	 	T. Kendall Hunt
		 		 	Title:	 	CEO
			
		 		 	SCOTT CLEMENTS
				
	Date: November 15, 2016	 		 		 	 /s/ Scott Clements

  
 15

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