EXHIBIT 10.1
VASCO Data Security International, Inc.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
January 1, 2005 (the "Effective Date"), by and between VASCO Data Security
International, Inc., a Delaware corporation (the "Company"), and E-SECUVISION
BVBA (incorporated on 17.11.1999), having its registered office at 8501
Bissegem, Dumortierlaan 9, hereby represented by Mr. Jan VALCKE, Managing
Director, who, as an Independent Contractor, commits himself jointly and
severally; hereinafter referred to as (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) Executive shall devote such portion of his business time and attention
as is necessary to appropriately and efficiently discharge his duties and
responsibilities as herein set forth. If Executive so discharges his duties, he
may engage in other business and civic activities, in addition to those relating
to the Company's business, if such activities are not otherwise prohibited by
the terms of this Agreement, or do not substantially interfere with the
performance of such responsibilities.
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
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) Taxes. The Executive shall be solely responsible for the payment of
any and all taxes and social contributions assessed by any and all government
agencies including, but not limited to, income and social security taxes related
to the compensation referred to in Section 4(a) and 4(b) of this Agreement
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 other business related expenses. The Company will also pay to
Executive a car allowance, in lieu of reimbursing Executive for car-related
expenses, of EURO 868 monthly. 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; any violation of the Company's then
published Code of Ethics; 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 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; or
(3) 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:
(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.
(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. 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.
9. 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.
10. 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
(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
specifically includes the Agreement signed between the Executive and VASCO Data
Security NV, a wholly owned subsidiary of VASCO Data Security Europe which, in
turn, is a wholly owned subsidiary of the Parent Company, VASCO Data Security
International, Inc., effective November 1, 1999, which is hereby rendered null
and void. 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 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 June 29, 2005.
VASCO Data Security International, Inc.
By: /s/ Michael A. Mulshine
-------------------------------------
Michael A. Mulshine
Its: Compensation Committee Chairman
By: /s/ Jan Valcke
------------------------------------
Jan VALCKE
VASCO Data Security International, Inc.
EMPLOYMENT AGREEMENT
EXHIBIT A
Address: Jan Valcke
Managing Director
E-SECUVISION BVBA
8501 Bissegem, Dumortierlaan 9
Belgium
Salary: EURO 260,000 annualized to be billed to the appropriate subsidiary or
subsidiaries of the Company as determined by the Executive
Incentive Compensation: EURO 75,000 annually based upon achievement of
performance objectives set by the Compensation Committee of the Board of
Directors
Effective Date: January 1, 2005
Title: President and Chief Operating Officer
Duties: Executive shall act as President and Chief Operating Officer of
the Company and shall report directly to the Company's Chief Executive
Officer. His responsibilities shall include overseeing and managing the
day-to-day operations of the Company including sales, marketing, R&D,
manufacturing, human resources, shipping, and all other operations,
with the exception of finance and administration which reports to the
Company's Chief Financial Officer. Executive will comply with all rules
and regulations set out by the Sarbanes-Oxley Act of 2002 including,
but not limited to, the active, constructive support of the Company's
Code of Ethics 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 24 months
Non-compete Yes 12 months
2. Terminated by the Company with Cause:
Severance No 0 months
Non-compete Yes 12 months
3. Executive quits without Good Reason:
Severance Yes 0 months
Non-compete Yes 12 months
4. Executive quits with Good Reason:
Severance Yes 24 months
Non-compete Yes 24 months
Executive Leaves In The Event of a Change of Control:
1. Terminated
Severance Yes 24 months
Non-compete Yes 24 months
2. Executive quits for Good Reason:
Severance Yes 24 months
Non-compete Yes 24 months
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.