EXHIBIT 10.52
VASCO Data Security International, Inc.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
January 1, 2003 (the "Effective Date"), by and between VASCO Data Security
International, Inc., a Delaware corporation (the "Company"), and CLIFFORD K.
BOWN (the "Executive").
WHEREAS, the Company and the Executive desire to enter into this
Agreement to establish the rights and obligations of the Executive and the
Company in such employment relationship; and
WHEREAS, the terms of this Agreement have been approved by the Board of
Directors of the Company,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Executive and the Company
hereby agree as follows:
1. Employment of Executive.
As of the Effective Date, the Company hereby engages and employs
Executive in an executive capacity as described in Exhibit A attached hereto,
and Executive hereby accepts such employment and agrees to act as an employee of
the Company in accordance with the terms of employment hereinafter specified
("Executive Employment").
2. Term of Executive Employment.
The period of Executive Employment shall begin on the Effective Date
and continue until terminated as hereinafter provided (the "Employment Period").
3. Duties.
(a) Executive shall be employed by Company as an Officer of the Company
in the capacity and with the duties set forth in Exhibit A attached hereto.
(b) Nothing contained herein shall be construed so as to prohibit
Executive from performing such other or additional duties or responsibilities,
and exercising such other or additional authority in furtherance of the goals of
the Company, as the Executive and Chief Executive Officer and/or the Board of
Directors of the Company shall from time to time agree upon.
(c) With the exception of your current role as advisor to the Board of
Directors of Florstar Sales, Inc., you shall devote your entire time and
attention to VASCO's business. During business hours, you shall not engage in
any other form of business activity, regardless of whether it is pursued for
gain or profit.
(d) During Executive's employment hereunder, Executive shall not be
required to relocate his principal residence from his current location as a
result of the Company moving its principal executive offices or the Executive's
office to an address greater than forty (40) miles away from the Company's
principal executive offices (or the Executive's office) at the Effective Date
and shall not be required to perform services which could make the continuance
of Executive's principal residence in such location unreasonably difficult or
inconvenient for Executive except to the extent that the performance of such
services (and travel) is commensurate with Executive's duties specified
hereunder.
4. Executive Salary and Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay or
cause to be paid to Executive an initial base salary ("Base Salary") as set
forth in Exhibit A attached hereto and made a part hereof, payable to Executive
on a periodic basis in accordance with the Company's then current executive
salary payment practice; provided, however, that the installments may not be
made less frequently than on a monthly basis. Such 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 will not be
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reduced without the prior written consent of Executive. Any increase in Base
Salary shall be in writing and be attached to this Agreement as an amendment to
Exhibit A.
(b) Incentive Compensation The Compensation Committee of the Company's
Board of Directors (the "Committee")shall determine for each fiscal year of the
Company during the Employment Period the amount of incentive compensation, if
any, to be awarded to the Executive.
(c) Withholding of Certain Taxes. All compensation referred to in
Section 4(a) and 4(b) of this Agreement is stated in terms of gross amount, it
being understood that the Company will be required to withhold from such gross
amount deductions for federal, state and local income taxed (if any). F.I.C.A..
unemployment compensation taxes and the like.
5. Expenses. The Company shall pay or reimburse Executive in accordance with the
Company's policy for all expenses reasonably incurred by Executive during the
period of Executive's employment in connection with the performance of
Executive's duties under this Agreement, including, without limitation, travel,
entertainment and automobile expenses. As the Company may reasonably request,
Executive shall provide to the Company documentation or supporting information
relating to the expenses for which Executive seeks reimbursement.
6. (a) Termination of Executive Employment Other than by the Executive. The
Company shall have the option to terminate Executive's employment with or
without cause, for any reason whatsoever, without any breach of this Agreement
under the following circumstances:
(i) Death or Disability. The Executive's employment
hereunder shall terminate upon his death, and may be
terminated by the Company in the event of his
Disability, which for the purposes of this Agreement
shall mean being unable to perform his duties to the
Company as set forth herein for a continuous period
of at least one hundred and eighty (180) days,
provided that the Executive does not return to work
on a substantially full-time basis within thirty (30)
days after Notice of Termination is given by the
Company pursuant to the provisions of this paragraph.
A return to work of less than thirty (30) days shall
not interrupt a continuous period of Disability.
During any period that the Executive fails to perform
his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall
continue to receive his Base Salary at the rate then
in effect until the date his employment is
terminated.
(ii) Cause. The Company may terminate the Executive's
employment for cause. For the purpose of this
Agreement, "Cause" shall mean: any act by the
Executive that constitutes fraud, dishonesty, bad
faith or a felony toward the Company; the conviction
of the Executive of a felony or crime involving moral
turpitude; the Executive entering into any
transaction or contractual relationship causing
diversion of business opportunity from the Company
(other than on behalf of the Company, or with the
prior written consent of the Board of Directors of
the Company); or the Executive's willful and
continued neglect of his material duties hereunder
after thirty (30) days written notice to the
Executive by the Board of Directors. The Company will
pay to the Executive all compensation owing through
the date of termination; however, in no event will
any bonus be paid to an Executive terminated for
Cause. Executive is bound by the Non-Compete terms
contained in this Agreement for the period of time
set forth in Exhibit A.
(iii) Without Cause. The Company may terminate the
Executive's employment hereunder without cause. If
the Executive is terminated without Cause, the
Company shall continue to pay the Executive his Base
Salary at the rate then in effect for the period set
forth in Exhibit A, from the Date of Termination.
Executive is bound by the Non-Compete terms
contained in this Agreement for the period of time
set forth in Exhibit A.
(b) Termination of Employment by Executive.
(i) The Executive may terminate his employment at any
time. If the Executive terminates his employment with
the Company, the Company shall pay the Executive all
compensation owing through the Date of Termination.
Executive is bound by the Non-Compete terms contained
in this Agreement for the period of time set forth in
Exhibit A.
(ii) For Good Reason. If the Executive terminates his
employment for Good Reason, the Company shall
continue to pay the Executive his Base Salary at the
rate then in effect for the period set forth as
Severance in Exhibit A, from the Date of Termination.
Executive is bound by the Non-Compete terms contained
in this
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Agreement for the period of time set forth in Exhibit
A. For purposes of this Agreement, "Good Reason"
shall mean:
(1) the assignment to the Executive of any
duties inconsistent in any respect with the
Executive's position (including status,
offices, titles and reporting requirements),
authority, duties or responsibilities or any
other action by the Company which results in
a diminution in such position, authority,
duties or responsibilities, excluding for
this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith
and which is remedied by the Company
promptly after receipt of notice thereof
given by the Executive;
(2) any failure by the Company to comply with
any provision of any employment agreement
entered into between the Executive and the
Parent Company (or any direct or indirect
subsidiary thereof) other than an isolated,
insubstantial and inadvertent failure not
occurring in bad faith and which is remedied
by the Company promptly after receipt of
notice thereof given by the Executive;
(3) the Parent Company's (or any direct or
indirect subsidiary thereof) requiring the
Executive to be based at any office or
location other than the office occupied by
the Executive as of the date of this
Agreement or a reasonably comparable office
located within a 40-mile radius of such
current office; or
(4) any failure by the Company to continue at
least its customary base compensation
payments to the Executive.
Any good faith determination of "Good Reason" made by the
Executive shall be conclusive.
(c) Notice of Termination. Any termination of the Executive's
employment by the Company hereunder or by the Executive other than termination
upon the Executive's death, shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a "Notice of
Termination" means a notice that shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(d) Date of Termination. "Date of Termination" shall mean:
(i) If Executive's employment is terminated by his death,
the date of his death;
(ii) If the Executive's employment is terminated by the
Company as a result of Disability pursuant to this
paragraph, the date that is thirty (30) days after
Notice of Termination given; provided the Executive
shall not have returned to the performance of his
duties on a full-time basis during such thirty (30)
day period.
(iii) If the Executive terminates his employment at his
election pursuant to this paragraph, the date that is
ten (10) days after Notice of Termination is given.
(iv) If the Executive's employment is terminated by the
Company without Cause pursuant to this paragraph, the
date that is ten (10) days after Notice of
Termination is given.
(v) If the Executive's employment is terminated by the
Company for Cause pursuant to this paragraph, the
date on which Notice of Termination is given.
7. Change in Control.
(a) For purposes hereof, a "Section 7 Termination" shall have occurred
if Executive's employment is terminated by the Company other than for Cause, at
any time following the occurrence of a change in control of VASCO Data Security
International, Inc. (the "Parent Company") or the Company.
(b) "Change in Control" shall mean the happening of any of the
following events:
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(i) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of
either (1) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common
Stock") or (2) the combined voting power of the then
outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding,
however, the following: (1) any acquisition directly
from the Company, other than an acquisition by virtue
of the exercise of a conversion privilege unless the
security being so converted was itself acquired
directly from the Company, (2) any acquisition by the
Company; (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the
Company; or (4) any acquisition by any Person
pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) of this Section
7(b); or
(ii) Within any period of 24 consecutive months, a change
in the composition of the Board such that the
individuals who, immediately prior to such period,
constituted the Board (such Board shall be
hereinafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a
majority of the Board; provided, however, for
purposes of this Section 7(b)(ii), that any
individual who becomes a member of the Board during
such period, whose election, or nomination for
election by the Company's stockholders, was approved
by a vote of at least a majority of those individuals
who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as
though such individual were a member of the Incumbent
Board; but, provided further, that any such
individual whose initial assumption of office occurs
as a result of either an actual or threatened
election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or
(iii) The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the
assets of the Company ("Corporate Transaction");
excluding, however, such a Corporate Transaction
pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial
owners, respectively, of the outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate
Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined
voting power of the then outstanding voting
securities entitled to vote generally in the election
of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result
of such transaction owns the Company or all or
substantially all of the Company's assets, either
directly or through one or more subsidiaries) in
substantially the same proportions as their
ownership, immediately prior to such Corporate
Transaction, of the outstanding Company Common Stock
and Outstanding Company Voting Securities, as the
case may be, (2) no Person (other than the Company;
any employee benefit plan (or related trust)
sponsored or maintained by the Company, by any
corporation controlled by the Company, or by such
corporation resulting from such Corporate
Transaction) will beneficially own, directly or
indirectly, more than 25% of, respectively, the
outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the
combined voting power of the outstanding voting
securities of such corporation entitled to vote
generally in the election of directors, except to the
extent that such ownership existed with respect to
the Company prior to the Corporate Transaction, and
(3) individuals who were members of the Board
immediately prior to the approval by the stockholders
of the Corporation of such Corporate Transaction will
constitute at least a majority of the members of the
board of directors of the corporation resulting from
such Corporate Transaction; or
(iv) The approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company,
other than to a corporation pursuant to a transaction
which would comply with clauses (1), (2) and (3) of
subsection (iii) of this Section 7(b), assuming for
this purpose that such transaction were a Corporate
Transaction.
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(c) If a Section 7 Termination occurs, the Company shall continue to
pay to Executive, as severance compensation, his Base Salary and Incentive
Compensation at the rate then in effect for the period set forth in Exhibit A,
from the effective date of Executive's termination. Executive is bound by the
Non-Compete terms contained in this Agreement for the period of time set forth
in Exhibit A. In lieu of regular payments of Base Salary, the Executive shall be
entitled to receive, upon Executive's written election, a lump sum payment equal
to the present value of the stream of monthly payments due and unpaid. Executive
may also similarly elect to receive a lump sum payment equal to the present
value of the Incentive Compensation due pursuant to this Agreement. For purposes
of this computation, present value shall be calculated on the basis of the prime
rate of interest announced by the Company's principal bank, or if it has no such
bank, published in the Wall Street Journal, on the date of Executive's election
to receive the lump sum payments provided for herein.
(d) In the event of a Change in Control, if the Executive terminates
his employment for Good Reason, the Company shall continue to pay the Executive
his Base Salary and Incentive Compensation at the rate then in effect for the
period set forth as Severance in Exhibit A, from the Date of Termination. In
lieu of regular payments of Base Salary, the Executive shall be entitled to
receive, upon Executive's written election, a lump sum payment equal to the
present value of the stream of monthly payments due and unpaid. Executive may
also similarly elect to receive a lump sum payment equal to the present value of
the Incentive Compensation due pursuant to this Agreement. Executive is bound by
the Non-Compete terms contained in this Agreement for the period of time set
forth in Exhibit A.
8. Gross Up for Excise Tax Liability. If it shall be determined that any payment
or benefit received or to be received by Executive under this Agreement or any
other plan, arrangement or agreement of the Company or any person whose actions
result in a Change in Control of the Company or any affiliate thereof (all such
payments and benefits a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Internal revenue Code of 1986, as amended (the "Code")
(the "Excise Tax"), then the Company shall pay to Executive an additional
payment (a "Gross-Up Payment") in an amount necessary to reimburse Executive, on
an after-tax basis, for the Excise Tax and for any federal, state and local
income tax and excise tax (including any interest and penalties imposed with
respect to such taxes) that may be imposed by reason of the Payment. For
purposes of determining the amount of any Gross-Up Payment, Executive shall be
deemed to pay federal, state and local income taxes at the highest applicable
marginal rate of taxation in the calendar year in which the Gross-Up Payment is
to be made. All determinations required to be made under this Section 8,
including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment shall be made by the Accounting Firm which shall provide detailed
supporting calculations both to the Company and Executive within 15 business
days of the request for such determination. Such request may be made by either
party. The Company shall pay the fees and expenses of the Accounting Firm in
connection with any determinations hereunder. The Gross-Up Payment shall be paid
by the Company within 10 days of the Accounting Firm's determination of the
amount thereof.
9. Non-Compete. In the event Executive terminates his employment or is
terminated pursuant to this Agreement, Executive hereby agrees that he shall
not, directly or indirectly, as employee, agent, consultant, stockholder,
director, co-partner or in any other individual or representative capacity, own,
operate, manage, control, invest in or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in association with any
person, firm, corporation or entity), or otherwise assist any firm, corporation
or entity which is in direct competition with the Company ("Competitor") upon
the terms and conditions and for the term set forth in Exhibit A; provided,
however, that nothing contained herein shall be construed to prevent Executive
from investing in the stock of a Competitor, but only if Executive is not
involved in the business of said Competitor and if Executive and his associates
(as such term is defined in Regulation 14(A) promulgated under the Securities
Exchange Act of 1934, as in effect on the date hereof), collectively, do not own
more than an aggregate of two (2%) percent of the stock of such Competitor.
10. Mitigation of Amounts Payable Under This Agreement. The Executive shall not
be required to mitigate the amount of any payment provided for pursuant to this
Agreement by seeking other employment or otherwise, and, further, any payment or
benefit to be provided to Executive pursuant to this Agreement shall not be
reduced by any compensation or other amount earned or collected by Executive at
any time before or after the termination of Executive Employment hereunder.
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11. Miscellaneous.
(a) Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when delivered in person
or other forms of delivery including certified mail, fax, etc., to the following
addresses:
(i) if to the Company, to:
VASCO Data Security International, Inc.
1901 South Meyers Road, Suite 210
Oakbrook Terrace, IL 60181
Attn: Compensation Committee Chairman
with a copy to:
Forrest D. Laidley, Esq
339 N. Milwaukee Ave.
Suite 200
Libertyville, Illinois 60048
(ii) If to Executive to:
To the address set forth in Exhibit A.
Any party may change its address for notice hereunder by
notice to the other party hereto.
(b) Governing Law. The parties agree that this Agreement shall be
construed and governed in accordance with the laws of the State of Illinois
applicable to agreements made and to be performed entirely within such state.
(c) Binding Effect. This Agreement shall be binding upon and incur to
the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
(d) Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Entire Agreement. This Agreement represents the entire agreement
and understanding of the parties hereto with respect to the matters set forth
herein. This Agreement supersedes all prior negotiations, discussions
correspondence, communications, understandings and agreements between the
parties, written or oral, relating to the subject matter of this Agreement. This
Agreement may be amended, superseded, canceled, renewed, or extended and the
terms hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving compliance.
(f) Waivers. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Nor shall any
waiver on the part of any party of any such right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
(g) Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation or
construction of the provisions hereof.
(h) Arbitration. Except for any claim or dispute which gives rise or
could give rise to equitable relief under this Agreement, at the request of the
Executive any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be settled exclusively and
finally by arbitration. The arbitration shall be conducted in accordance with
such rules and before such arbitrator as the parties shall agree and if they
fail to so agree within 15 days after demand for arbitration, such arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (hereinafter referred to as "AAA Rules"). Such
arbitration shall be conducted in Chicago, Illinois, or in such other city as
the parties to the dispute may designate by mutual consent. The arbitral
tribunal shall consist of three arbitrators (or such lesser number as may be
agreed upon by the parties) selected according to the procedure set forth in the
AAA Rules in effect on the date hereof and the arbitrators shall be empowered to
order any remedy which is appropriate to the proceedings and issues presented to
them. The chairman of the arbitral tribunal shall be appointed by the
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American Arbitration Association from among the three arbitrators so selected.
Any party to a decision rendered in such arbitration proceedings may seek an
order enforcing the same by any court having jurisdiction.
(i) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the Executive and the Company to express
their mutual intent, and no rule of strict construction will be applied against
the Executive or Company.
IN WITNESS WHEREOF, the Company and Executive have signed this
Agreement as of the day and year written above.
VASCO Data Security International, Inc.
By:
------------------------------------------
T. Kendall Hunt
Its: CEO
By:__________________________________
CLIFFORD K. BOWN
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VASCO Data Security International, Inc.
EMPLOYMENT AGREEMENT
EXHIBIT A
Address: Clifford K. Bown
1035 Sheringham Dr.
Naperville, IL 60565
Salary: $150,000 annualized Effective: January 1, 2003
Title: Chief Financial Officer
Executive will direct the financial operations of the Company
worldwide, including financial reporting centers in Oakbrook Terrace,
Illinois, Brussels, Belgium and operations in Australia and Singapore.
He will be responsible for all accounting, treasury, investor
relations, SEC reporting and compliance, financial controls, capital
creation, Edgar reporting and compliance, IPO and secondary offerings,
and other financial matters. He will participate in the senior
management team that governs the Company's operations. Executive will
follow the rules set out by the Sarbanes-Oxley Act of 2002, and will
manage the Company in an honest and trustworthy manner. Executive will
also be charged with communicating clearly and truthfully with
investors, analysts, the press, and other individuals and institutions.
Executive Leaves Without a Change of Control:
1. Terminated by the Company without Cause:
----------------------------------------
Severance Yes 12 months
Non-compete Yes 12 months
2. Terminated by the Company with Cause:
-------------------------------------
Severance No 0 months
Non-compete Yes 3 months
3. Executive quits without Good Reason:
------------------------------------
Severance Yes 0 months
Non-compete Yes 3 months
4. Executive quits with Good Reason:
---------------------------------
Severance Yes 12 months
Non-compete Yes 12 months
Executive Leaves In The Event of a Change of Control:
1. Terminated
-----------
Severance Yes 12 months
Non-compete Yes 12 months
2. Executive quits for Good Reason:
--------------------------------
Severance Yes 12 months
Non-compete Yes 12 months
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Severance & Non-compete:
Severance is meant to provide the executive with a reasonable period of time in
which to find new employment. So long as Severance continues, the executive is
expressly prohibited from joining a firm that is competitive to the Company.
After the Severance period is complete, and through the last month of the
Non-compete period, the executive is prohibited from contacting in any manner, a
customer or prospect of the Company that existed at the time of the executive's
departure from the Company. If there is no Severance, for the defined
Non-compete period from the executive's separation from the Company, the
executive is prohibited from contacting in any manner, a customer or Prospect of
the Company that existed at the time of the executive's departure from the
Company. A Prospect is defined as an organization that is listed on the
Company's forecasting reporting system at the time of the executive's separation
from the Company.
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