EXHIBIT 10.50
VASCO Data Security International, Inc.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
November 20, 2002 (the "Effective Date"), by and between VASCO Data Security
International, Inc., a Delaware corporation (the "Company"), and T. XXXXXXX XXXX
(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.
(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
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
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:
(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. 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.
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.
0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Compensation Committee Chairman
with a copy to:
Xxxxxxx X. Xxxxxxx, Esq
000 X. Xxxxxxxxx Xxx.
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
(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 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:
----------------------------------------
Xxxxxxx X. Xxxxxxx
Its: Compensation Committee Chairman
By:----------------------------------------
X. XXXXXXX XXXX
XXXXX Data Security International, Inc.
EMPLOYMENT AGREEMENT
EXHIBIT A
Address: T. Xxxxxxx Xxxx
00000 Xxxxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Salary: $260,000 annualized Effective: November 20, 2002
Title: Chairman and Chief Executive Officer
Duties: Executive shall act as Chairman of the Board of Directors and will
fulfill his duties as such. Additionally, he will serve as Chief
Executive Officer of the Company. In this role, the President and
Chief Operating Officer, and the Chief Financial Officer will report
to Executive. Executive will follow the rules set out by the
Xxxxxxxx-Xxxxx 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 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.
