EXHIBIT 10.54
VASCO DATA SECURITY INTERNATIONAL, INC.
AND SUBSIDIARIES
CODE OF CONDUCT AND ETHICS
INTRODUCTION
In this ever-changing business world, your Company is required to adhere to
many new rules, regulations, and laws. An example of this is the
Sarbanes-Oxley Act of 2002. This legislation requires that each public
company achieve and maintain a certain level of control over its business,
its officers, its employees and its Board of Directors. In VASCO's case,
this requires the commitment of its people to maintain the highest level of
integrity and ethics. Accordingly, your Company has established this VASCO
Code of Conduct and Ethics (the "Code") in order that we are all clear as
to what is required of each one of us.
This Code sets forth written standards that the Company's Board of
Directors believes are reasonably designed to deter wrongdoing and to
promote:
o Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interests between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports
and documents that the Company files with, or submits to the
Securities and Exchange Commission and in other public communications
made by the Company;
o Compliance with applicable governmental laws, rules and regulations;
o The prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
o Accountability for adherence to the Code.
The Code begins with the principle that all of the Company's directors,
executive officers and employees (collectively, "Employees and Directors")
will abide by and obey all laws and regulations that are applicable to our
business in whatever country we conduct business. We will not depart from
the letter and spirit of the law under any circumstances: not to make a
profit; not to make a customer happy; not to protect a fellow employee. If
the law conflicts with this Code, comply with the law. If the local custom
conflicts with this Code, comply with the Code.
This Code should serve as a framework for our Employees and Directors to
exercise their best efforts to conduct themselves at the highest possible
level of integrity and honesty. IF YOU ARE IN A SITUATION THAT YOU BELIEVE
MAY LEAD TO A VIOLATION OF THIS CODE, YOU SHOULD FOLLOW THE PROCEDURES
DESCRIBED IN SECTIONS 15-17 OF THIS CODE.
FOR PURPOSES OF THIS CODE, THE "CONTACT PERSON" WILL BE DIFFERENT FOR
EMPLOYEES, EXECUTIVE OFFICERS AND DIRECTORS. EMPLOYEES SHOULD CONTACT THE
CHIEF FINANCIAL OFFICER
(MR. CLIFF BOWN - 630 932 8844 EXTENSION 304 OR CBOWN@VASCO.COM), EXECUTIVE
OFFICERS SHOULD CONTACT THE CHAIRMAN OF THE BOARD'S GOVERNANCE COMMITTEE
(MR. JOHN WALTER) AND DIRECTORS SHOULD CONTACT EITHER THE CHIEF EXECUTIVE
OFFICER (MR. KEN HUNT) OR CHIEF FINANCIAL OFFICER.
From time to time, the Company may waive some provisions of this Code. Any
waiver or amendment of this Code for executive officers or directors of the
Company may only be made by the Board of Directors and must be promptly
disclosed as required by the Securities and Exchange Commission ("SEC") or
the rules of The Nasdaq Stock Market, Inc. ("Nasdaq"). Any waiver for other
persons may only be made by the appropriate Contact Person, the Governance
Committee or the Board.
We begin with ethical and moral objectives for "Which We Stand".
1. COMPLIANCE WITH LAWS
Obeying the law, both in letter and spirit, is the foundation on which this
Company's ethical standards are built. All Employees and Directors must
obey the laws of the cities, states, and countries in which we operate.
Although not every Employee and Director can be expected to know the
details of these laws, it is important to know enough to determine when to
seek advice from supervisors, managers or other appropriate personnel.
2. ETHICAL CONDUCT
Beyond compliance with laws, the Company requires that all Employees and
Directors act in a manner that meets the highest of ethical behavior. This
includes the obligation to avoid any actual or apparent conflicts of
interest in personal and professional relationships. The honesty and
integrity of the Company's business conduct must not be compromised. The
Company will not condone ethical violations for the sake of personal gain,
personal advantage, expediency or perceived business advantage.
3. RESPECT FOR PEOPLE
Every Employee and Director is important to the success of the Company and
so each is to be treated fairly and with respect. Being treated fairly
means that each such person is judged according to his or her own merit and
not according to arbitrary factors such as race, religion, color, sex, age,
national origin, or handicap. We are firmly committed to providing equal
opportunity in all aspects of employment and will not tolerate
discrimination, harassment or retaliation.
Because we value every Employee and Director, we encourage all to share
their ideas and express their concerns. Supervisors, managers and officers
should be especially careful to maintain open lines of communication and to
listen to all employees.
No Employee or Director will be discriminated against, in any way, for
having brought his or her concerns to the attention of VASCO's management
or to its Board of Directors.
4. NO TOLERANCE FOR DRUGS AND ALCOHOL
Our Company and our customers expect all of our Employees and Directors to
report to work fit for duty, drug and alcohol free. Fit for duty means
being mentally and physically able to perform our jobs in a safe, efficient
and reliable manner.
Not only do we have responsibility for our own behavior, but we also have a
responsibility for each other and for public safety. Therefore, when any
person recognizes a fitness for duty problem, he or she has an obligation
to report the condition to management.
Any Employee or Director who engages in the use, distribution, sale or
possession of illegal drugs or other controlled substances or who is
working while under the influence of illegal drugs, controlled substances
or alcohol is subject to disciplinary action, including dismissal.
5. A COMPANY FREE OF CONFLICTS OF INTEREST
In order to maintain the highest degree of integrity in the conduct of the
Company's business, no Employee or Director should engage in any activity
or advance any personal interest that conflicts, or appears to conflict,
with the interests of the Company. A "conflict of interest" occurs when an
individual's private interest interferes or appears to interfere with the
interests of the Company. A conflict of interest can arise when an Employee
or Director takes actions or has interests that may make it difficult to
perform his or her Company work objectively and effectively. Some of the
more common types of conflicts of interest are addressed here to provide
guidance.
Employees and Directors or members of their immediate families shall not
own a significant financial interest in, or be employed by, any business
organization that does or seeks to do business with the Company unless such
interest or employment has been disclosed in writing to and approved by the
appropriate Contact Person.
A general exception to this policy is the employment of a member of a
Employee's or Director's immediate family by a public utility, bank, or
other business enterprise that furnishes products or services to the
Company at prices, rates, or charges generally applicable to all customers
of such utility, bank, or other business enterprise. A "significant
financial interest" is an aggregate interest of an Employee or Director and
his or her immediate family members of more than 5% of the stock of a
corporation or more than 5% of the profits or assets of a partnership or
other venture.
A "member of your immediate family" means your spouse and your or your
spouse's parents, children, brothers and sisters, aunts and uncles and
nephews and nieces.
Questions regarding conflicts of interest should be addressed to your
respective Contact Person.
6. NO GRATUITIES IN THE FORM OF GIFTS AND ENTERTAINMENT
No Employee or Director nor any member of his or her immediate family may
accept from a vendor or customer money or a gift that is, or could
reasonably be considered to be, intended to influence your behavior toward
that vendor or customer. However, you may accept a gift of nominal value
when the vendor or customer customarily offers it to others.
If you are offered money or a gift, or if either arrives at your office or
home, inform your Contact Person immediately. Appropriate arrangements will
be made to return or dispose of what has been received, and the vendor or
customer will be reminded of the Company's policy on gifts.
Entertainment should be viewed in the same way as gifts. An occasional meal
or outing with a vendor or customer at their expense is permissible if
there is a valid business purpose involved and the expense is not
extravagant. Travel or lodging should not be accepted unless previously
approved by your Contact Person.
7. SAFEGUARDING OF COMPANY ASSETS
We each have a duty to safeguard the Company assets that are entrusted to
our care and to ensure that transactions are only executed in accordance
with managements' authorization. Company assets include our records,
product designs, strategic business plans, customer information, and
people. Company assets should be used for Company business only; they are
not to be used for any Employee's or Director's personal benefit and are
not to be sold, loaned, or given away except with proper authorization. Any
suspected incident of fraud or theft should be immediately reported to the
appropriate Contact Person for investigation.
Other Company assets are our Company names and our trademarks. Others may
not use these without proper written authorization. As a general rule, we
do not endorse other companies, products, or services.
8. CONFIDENTIAL INFORMATION
Confidential information includes all non-public information that might be
of use to competitors or harmful to the Company or its customers, if
disclosed. Much of the information the Company uses is confidential or
proprietary. Sometimes confidential information has been developed by the
Company; other times it belongs to others and we have contracted to keep it
confidential. In both instances we must be careful to guard against
disclosure of the information to people outside the Company.
In particular, computer software may only be used for Company business. It
may not be copied without our specific approval. Our investment in computer
software is substantial and contributes to our ability to conduct our
business in a cost-efficient manner. As such, it is extremely valuable and
should never be treated casually or left unprotected.
Almost every department has software and information that the Company
considers to be confidential. All Employees and Directors must maintain the
confidentiality of the information entrusted to them by the Company or its
customers, except when disclosure is authorized by the Chief Executive
Officer, the President and Chief Operating Officer, the Chief Financial
Officer, the Company's counsel, or required by law. The obligation to
preserve confidential information continues even after employment ends.
9. EXCELLENT TREATMENT OF OUR VALUED CUSTOMERS
Our customers are extremely important to us. They are the reason the
Company exists and our success depends upon their satisfaction. Customers
are always to be treated with the utmost respect and courtesy. They are
also to be treated fairly. No customer should be given preferential
treatment.
Information that we have regarding our customers is to be kept confidential
and used only for Company purposes. Customer satisfaction is the job of
every employee.
10. PROVIDING SHAREHOLDER VALUE THROUGH ACCURATE AND RELIABLE FINANCIAL
STATEMENTS
We are in business to create value for our shareholders. Our shareholders
have chosen to invest with us because they are encouraged by the Company's
past financial performance and their perceptions of its prospects for the
future. They want a fair return on their investment. Many of us own shares
in the Company as well, and we have the same concerns as our other
investors.
It is very important to our investors that the information they receive is
accurate and properly reflects the financial condition and results of
operations of the Company. The books and records of the Company are to be
kept according to generally accepted accounting principles and in a manner
whereby an accurate and auditable record of all financial transactions is
maintained. The Accounting Departments, as well as our independent public
accountants, help to ensure that all of the Company's books and records are
accurate. Employees are to cooperate fully with these groups and provide
complete and accurate information to them. It is prohibited under U.S.
Federal law and the Company policy to fraudulently influence, coerce,
manipulate or mislead the Company's independent public accountants for the
purpose of rendering the Company's financial statements materially
misleading.
The Company's requirement that all Employees and Directors follow the
highest ethical standards applies directly to all actions that involve
business accounting, financial reporting, internal accounting controls,
auditing matters and public disclosure obligations. Full, fair, accurate,
timely and understandable disclosure is required in all reports and
documents that the company files with, or submits to, the SEC and in any
other public communications.
The Audit Committee of the Board of Directors has adopted special
procedures for the receipt, retention and treatment of complaints regarding
accounting, internal accounting controls or auditing matters. These
procedures are set out in Sections 16 and 17 of this Code.
Business records and communications often become public and all Employees
and Directors should avoid exaggeration, derogatory remarks, guesswork or
inappropriate characterizations of people and companies that can be
misunderstood. This applies equally to email, internal memos and formal
reports. Records should always be retained or destroyed according to the
Company's policies. In accordance with those policies, in the event of
litigation or governmental investigation, please consult the Company's
counsel.
11. INTOLERANCE TO QUESTIONABLE PAYMENTS
It is the responsibility of all Employee and Directors to keep accurate
books and records regarding Company assets and funds. All receipts and
disbursements are to be fully and accurately described. No Employee or
Director may participate in any way in unethical receipts or payments of
Company funds or the maintenance of any unrecorded cash or non-cash funds
for the purpose of any such receipts or payments.
The U.S. Foreign Corrupt Practices Act prohibits giving anything of value,
directly or indirectly, to officials of foreign governments or foreign
political candidates in order to obtain or retain business. It is strictly
prohibited to make illegal payments to government officials of any country.
We will not take part in any improper payments to government officials,
bribes or kickbacks, or influence payments to any party. Any information
regarding potential improper payments to foreign officials should be
reported to the appropriate Contact Person immediately.
12. INSIDER INFORMATION
From time to time you may receive information that could be valuable to an
investor if it were made public. This information could be about the
Company, one of its affiliates, or about another company we do business
with. Using this information to make money for yourself or for someone you
know is not only against the Company policy but it also may be a violation
of securities laws. Examples of types of information that could be
considered "insider" information include revenue or profit achievements not
generally known to the public; dividend declarations; financing plans;
acquisitions, mergers, or sales; major contracts and developments in major
litigation. If you have any questions regarding this type of information,
call your respective Contact Person for advice.
13. CORPORATE CITIZENSHIP
We all understand the importance of being good citizens of our respective
communities, states, provinces, and nations. When we become involved in the
charitable affairs of the communities in which we live and work, we
increase the quality of life for everyone. Employees are encouraged to
participate in the United Way, Red Cross Blood Drives, and in other
charitable organizations, activities and fund-raisers.
As individuals, we may have community or charitable interests that are
important to each one of us. This is not only desirable, but also necessary
if we are to be responsible, contributing
citizens. Any leadership position, however, should be carefully examined to
be sure that it does not cause or appear to cause any conflict of interest
or embarrassment to the Company.
From time to time we may also receive requests for money or other Company
resources to benefit a particular charity or civic group. These should be
referred the appropriate supervisor within your business unit or to one of
the Company's executive officers.
14. POLITICAL ACTIVITIES
As a good corporate citizen, the Company supports the political process.
However, we have decided that, even if allowed by law, no corporate funds,
assets, materials, or services may be used to support a particular
candidate or political party.
All Employees and Directors are encouraged to exercise their rights as
citizens by voting.
15. PERSONAL RESPONSIBILITY
It is essential that the Company ensure prompt and consistent action
against violations of this Code. However, in some situations it is
difficult to know right from wrong. Since Employees and Directors cannot
anticipate every situation that will arise, it is important to have
guidelines on how to approach a new question or problem. These are the
steps to keep in mind:
o Make sure you have all the facts. In order to reach the right
solutions, we must be as fully informed as possible.
o Ask yourself: What specifically am I being asked to do? Does it seem
unethical or improper? This will enable you to focus on the specific
question you are faced with and the alternatives you have. Use your
judgment and common sense; if something seems unethical or improper,
it probably is.
o Clarify your responsibility and role. In most situations, there is
shared responsibility. Are your colleagues informed? It may help to
get others involved and discuss the problem.
o Discuss the problem with your supervisor. This is the basic guidance
for all situations. In many cases, your supervisor will be more
knowledgeable about the question and will appreciate being brought
into the decision-making process. Remember that it is your
supervisor's responsibility to help solve problems.
o Seek help from Company resources. If you believe that it is not
appropriate to discuss an issue with your supervisor, or you do not
feel comfortable approaching your supervisor with your question,
discuss it locally with your office manager or with the Director of
Human Resources. If that also is not appropriate, call your respective
Contact Person.
o You may report ethical violations in confidence and without fear of
retaliation. If your situation requires that your identity be kept
secret, your anonymity will be protected. The Company does not permit
retaliation of any kind against any Employee or Director for good
faith reports of ethical violations.
o Always ask first, act later. If you are unsure of what to do in any
situation, seek guidance before you act.
16. REPORTING/INVESTIGATION PROCEDURES
The Governance Committee is responsible for applying this Code to specific
situations in which questions are presented to it and has the authority to
interpret the Code in any particular situation. Any Employee or Director
who reasonably believes that there has been a violation or potential
violation of this Code should report it immediately to his or her
respective Contact Person. If the violation or potential violation is
related to questionable accounting or auditing matters, the Employee or
Director may submit an anonymous complaint as discussed in Section 17. Upon
receipt of a complaint, the particular Contact Person or other designee
shall promptly investigate the matter and will treat the matter as
confidential to the fullest extent possible consistent with the need to
investigate. Absolute confidentiality of the complaint, however, cannot be
guaranteed because the very fact of conducting an investigation may lead
employees or other persons to reach conclusions of their own. Anyone
involved in an investigation under these procedures, whether as witnesses,
participants in the performance of the investigation or otherwise, will be
informed of their obligation to maintain confidentiality and will be asked
to sign an acknowledgment of this obligation. There shall be no
discrimination or retaliation against any Employee or Director for bringing
a complaint under these procedures or against any person for participating
in the investigation. If the investigation leads to a conclusion that a
material violation of the Code has occurred, the Governance Committee will
inform the Company's Board of Directors who will take such disciplinary or
preventative action as it deems appropriate, up to and including dismissal
or, in the event of criminal or other serious violations of law,
notification of appropriate governmental authorities.
The Company recognizes the potentially serious impact of a false
accusation. All Employees and Directors are expected as part of the ethical
standards required by this Code to act responsibly in making complaints.
Making a complaint in bad faith will be subject to appropriate corrective
action, including dismissal.
17. PROCEDURES FOR SUBMITTING CONFIDENTIAL, ANONYMOUS COMPLAINTS REGARDING
ACCOUNTING AND AUDITING MATTERS
Beginning after the Company's 2004 Annual Meeting of Stockholders, any
Employee or Director who reasonably believes that there has been a material
violation of this Code caused by questionable accounting or auditing
matters may submit confidential, anonymous complaints via a toll-free
telephone hotline (specific telephone numbers may vary by office location -
please refer to the information distributed for your location) or via the
Internet (please refer to the information distributed with the telephone
information).