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EXHIBIT 10.16
CONVERTIBLE
LOAN AGREEMENT
This Convertible Loan Agreement is made on August 4, 1997
BETWEEN: VASCO DATA SECURITY EUROPE S.A., a
societe anonyme existing under the laws of the Kingdom of
Belgium having its registered office at 00 Xxxxxxxxx, 0000
Xxxxxxxx and registered with the Register of Commerce of
Brussels under number 614.370,
hereinafter referred to as "VDSE";
AND: BANQUE PARIBAS BELGIQUE S.A., a societe
anonyme existing under the laws of Belgium, having its
registered office at 162 Xxxxx Xxxxxxxxxxxx, 0000 Xxxxxxxx,
hereinafter referred to as "Paribas";
AND: Mr. T. Xxxxxxx Xxxx, domiciled at 00000 Xxxxxxxxx Xxxxx,
Xxxx Xxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of America,
hereinafter referred to as Pledgor;
AND VASCO Corp., a Delaware Corporation having its executive
office at 0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000-X, Xxxxxxx,
Xxxxxxxx 00000, Xxxxxx Xxxxxx of America,
hereinafter referred to as "Corporation";
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WHEREAS VDSE pursuant to a resolution of its Board of Directors has
decided to issue a convertible loan due September 30, 2002 having a
principal amount of USD 3,400,000 (three million four hundred
thousand US Dollars) (hereinafter referred to as the "Loan", or the
"Convertible Loan").
WHEREAS VDSE has outstanding an obligation to Digiline International S.A.
in the principal amount of USD 3,400,000 (three million four
hundred thousand US dollars) pursuant to the agreement called "Heads
of Agreement" dated as of May 13, 1996 (the "Digiline Debt") which amount
is guaranteed by Paribas (the "Bank Guarantee").
WHEREAS Paribas in lieu of the Bank Guarantee is willing to provide for the
payment of the Digiline Debt pursuant to the Convertible Loan and to
substitute the Convertible Loan for the Bank Guarantee.
WHEREAS subject to the terms and conditions of the present agreement,
Paribas is willing to subscribe to the Convertible Loan.
NOW THEREFORE, IT HAS BEEN AGREED AS FOLLOWS:
1. ISSUE AND SUBSCRIPTION
VDSE agrees to issue the Convertible Loan on a date between August 20 and
September 30, 1997 ("the Subscription date") at a price equal to 100 per cent
of its principal amount. On the terms and conditions set forth in this
Agreement, Paribas hereby agrees to subscribe to the Convertible Loan having
terms and conditions as set forth in this Agreement.
2. REPRESENTATIONS AND WARRANTIES
VDSE represents and warrants to Paribas that to the best of its knowledge:
(1) it is duly incorporated and validly existing under the laws of the
Kingdom of Belgium and that it has full corporate power to conduct its
business and to execute, deliver and comply with the provisions of this
Agreement;
(2) all necessary consents, authorizations, notifications, registrations and
filings required in connection with the obligations and liabilities of
the company under the terms and conditions of the Loan and the present
Agreement have been obtained or made and are in full force and effect;
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(3) the execution and delivery of and compliance with the terms and
conditions of the Loan have been duly authorized by VDSE and will not
conflict with or constitute a breach of or a default under any
indenture, agreement or other instrument to which VDSE is a party
or by which it is bound, its Articles of Association or any law,
administrative regulation or court decree applicable to VDSE;
(4) no events exist which, had the Loan been issued, would (or with the
giving of notice or lapse of time or both, could) constitute an event
of default under the Loan;
(5) no litigation, arbitration or administrative proceedings are presently
current or pending or threatened, to the knowledge of VDSE, which
would or might have a material adverse effect on VDSE or on the
ability of VDSE to perform its obligations under this Agreement;
(6) it has not taken any corporate action nor have any other steps been
taken or legal proceedings been started or threatened against VDSE to
obtain relief from its creditors under any applicable bankruptcy,
insolvency or other law now or hereafter in effect or for ordering its
winding-up, liquidation, dissolution or reorganization or for the
appointment of a receiver, liquidator, sequestrator (or other similar
officer) of it or of any or all of its assets or revenues;
(7) it is not in breach of or in default under any agreement to which it is
a party or which is binding on it or any of its assets to an extent or
in a manner which might have a material adverse effect on its ability to
perform its obligations under this Agreement.
3. TERMS AND CONDITIONS OF THE LOAN
3.1. Principal Amount and Maturity
The principal amount of the Loan is 3,400,000 USD (three million four
hundred thousand US Dollars).
The Loan is issued for a period of 5 years commencing on the
Subscription date and ending on September 30, 2002.
Paribas subscribes to the Loan by issuing bank cheques at the
request of VDSE to the order of Digiline International S.A. for a
total amount of 3,400,000 USD (three million four hundred thousand US
Dollars).
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3.2. Interest
3.2.1 The Loan will bear interest at the rate of 3.25 % (three and a
quarter percentage points) per annum from and including the Subscription
date. Accrued Interest shall be payable annually on September 30 in
each year, for the first time on September 30, 1998, and/or on the
Conversion Date as provided for in Article 8 hereafter. When interest
is required to be calculated for a period other than one year, it shall
be calculated on the basis of a 360 days year, consisting of 12 months
of 30 days each, and in case of an incomplete month, the number of days
elapsed in such incomplete month.
3.2.2 In the event of the completion of the Offering (as defined in
Section 8) and if pursuant to Section 3.3 the Loan is repaid within
seven days of receipt by VDSE of the Payment Notice (as defined in
Section 3.3), VDSE shall pay additional interest in cash at the time
of the repayment of the Loan as follows:
(I) If the Loan is repaid before or on June 30, 1998, the sum of USD
340,000 (three hundred forty thousand US Dollars);
(II) If the Loan is repaid between July 1, 1998 and December 31,
1998, both dates inclusive, the sum of USD 510,000 (five hundred
ten thousand US Dollars); or
(III) If the Loan is repaid on January 1, 1999 or later, the sum of
USD 680,000 (six hundred eighty thousand US Dollars)
3.3. Repayment
Unless previously repaid (upon occurrence of an event of default as
described under Article 7 or upon conversion of the Loan at the option of
PARIBAS as provided for in Article 8), VDSE shall repay the Loan at par
on September 30, 2002; provided, however, that in the event of the
completion of the Offering (as defined in Section 8) PARIBAS may at
its option, by written notice ("Payment Notice") delivered to VDSE
within seven days after the receipt of proceeds by the
Corporation at the closing of the Offering, require VDSE to repay in
cash the Loan at par from the proceeds of the Offering within seven
days of the receipt of the Payment Notice. At the time of the
repayment of the Loan at par, VDSE shall also pay pursuant to
subsection 3.2.1 any accrued and unpaid interest at the rate of 3,25%
for the period ending on the repayment date of the principal and, if
applicable, shall also pay the additional interest under subsection
3.2.2.
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3.4. Payments
Each payment by VDSE under this Agreement shall be made in US Dollars
on the date that payment is due, to Paribas by deposit to the account
no 00000000 maintained at Citibank N.A. New York or to such other
account as Paribas may have last designated by written notice to the
VDSE.
3.5. Register
VDSE shall hold a register of bondholders at its offices. It will
provide Paribas with a certificate of inscription in this register.
VDSE will issue on first demand of Paribas nominative securities
evidencing the Loan and mandates Paribas to ensure the materiality of
these securities.
4. USE OF PROCEEDS
VDSE shall use the proceeds of the Loan to pay all amounts it is due
to pay to DIGILINE INTERNATIONAL S.A. - with registered office at Luxembourg,
rue Aldringen 14 - pursuant to the agreement called "Heads of Agreement"
entered into between VDSE and Digiline International S.A. dated as of May 13,
1996. This "Heads of Agreement" sets forth the terms and conditions of the
acquisition by VDSE of 100 % of the shares of S.A. Digipass, a company with
registered office at 32 Xxxxxxxxx, 0000 Xxxxxxxx, presently called
VASCO DATA SECURITY N.V./S.A..
It is understood that upon receipt by Digiline International S.A.
of such payment Paribas will be automatically liberated of all its
obligations and liabilities under the USD 3,400,000 (three million four
hundred thousand US Dollars) Bank Guarantee, related to the above mentioned
Heads of Agreement, delivered to Digiline International S.A. by Paribas on
behalf and for the account of VDSE on June 27, 1996. The bank
guarantee and all rights and obligations in connection therewith (including
all ancillary agreements) shall be cancelled and of no further force and
effect.
5. CONDITIONS PRECEDENT
5.1. The obligation of Paribas to subscribe to the Loan is subject
to the condition that Paribas receives on or before the fifth banking
day before the subscription date an irrevocable written acceptance
by DIGILINE INTERNATIONAL S.A., confirming that:
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(i) upon receipt by DIGILINE INTERNATIONAL S.A. of USD 3,400,000
(three million four hundred thousand US Dollars) from VDSE,
Paribas will automatically be liberated of all its obligations
and liabilities under the USD 3,400,000 (three million four
hundred thousand US Dollars) Bank Guarantee related to the above
mentioned Heads of Agreement delivered to Digiline International
S.A. by Paribas on behalf and for the account of VDSE on June
27, 1996.
(ii) therefore Digiline International S.A. agrees that the
amount of USD 3,400,000 (three million four hundred thousand US
Dollars) it is due to receive from VDSE will only be used to
satisfy all amounts VDSE is due to pay to Digiline
International S.A. pursuant to the above mentioned Heads of
Agreement.
5.2. The obligation of Paribas to subscribe the Loan is subject to the
further conditions that:
(i) Banque Paribas S.A., London Branch, is designated as global
co-ordinator, lead-manager and bookrunner of the stock offering
and listing on EASDAQ and/or NASDAQ of VDSE's parent company
VASCO CORP. which is expected to take place by the end of the
fourth quarter of 1997.
(ii) Paribas shall have received a legal opinion on the validity and
enforceability of the collateral arrangements, in form and
substance satisfactory to it.
6. COLLATERAL
As security for the prompt and complete payment when due of all amounts
payable by VDSE under the Loan, Mr. T. Xxxxxxx Xxxx, domiciled at 00000
Xxxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of America, shall
pledge in favour of Paribas 1,416,666 (one million four hundred sixteen
thousand six hundred sixty-six) shares of VASCO CORP., a company existing
under the laws of the State of Delaware with executive office at 0000, X.
Xxxxxxxx Xxxxxx Xxxxx 000-X, Xxxxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of
America.
Throughout the duration of the Loan the market value of the pledged shares
must at least be equal to 125 % of USD 3,400,000 (three million four
hundred thousand US Dollars).
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If at any time the average market value of the pledged shares over 5
continuous trading days, calculated in good faith by Paribas, is less than
125 % of USD 3,400,000 (three million four hundred thousand US Dollars), Mr.
T. Xxxxxxx Xxxx shall within one calendar week on simple demand by
PARIBAS evidenced by written request by Paribas, pledge additional
Vasco Corp. shares in aggregate countervalue (or amount) so as to ensure
that the above ratio is respected.
If the average market value of the pledged shares over 5 (five) continuous
trading days is in excess of 150% of USD 3,400,000 PARIBAS will waive
its pledge on all securities in excess of 150% of USD 3,400,000 upon simple
and first written demand by the Pledgor.
Pursuant to the pledge agreement Mr. T. Xxxxxxx Xxxx grants to Paribas a
first lien on and a first and prior security interest in and right of set
off against the collateralized assets.
If at any time the Company has fully satisfied all its obligations under
the Loan, Paribas shall return all the collateralized assets.
Unless an event of default has occurred, the Pledgor shall be entitled to
receive (and to the extent the same come into possession of Paribas or its
agents, Paribas shall remit to the order of the Pledgor) any dividends or
interest paid in cash in respect of collateralized assets. Paribas
shall have no liability, however, for any failure by it to collect such
payments not forwarded to it by the payor thereof.
7. EVENTS OF DEFAULT
7.1 Events of Default
If one or more of the following events of default (each an "Event of
Default") shall occur and be continuing, Paribas shall be entitled
to the remedies set forth in subsection 7.2.:
(i) VDSE fails to pay any amount payable hereunder as and when such
amount becomes payable pursuant to this Agreement and such unpaid
amounts remain unpaid for 10 days after the respective due date; or
(ii) VDSE commits any breach of or default in the due performance
or observance of any of its obligations or undertakings
contained in this Agreement other than those referred to in
subsection 7.1. (i), if that breach or default is not remedied on
or before the tenth day after it occurs (or before any later date
determined in good faith by PARIBAS which reasonably allows VDSE to
remedy the default); or
(iii) any representation, warranty or statement made or deemed made by
VDSE in this Agreement or any other document delivered in connection
with this Agreement proves to have been incorrect, incomplete or
misleading in any material respect as of the date on which it was
made; or
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(iv) any other indebtedness of the VDSE in respect of a sum in excess
of BEF 10,000,000 (ten million Belgian Francs) or the equivalent in
any other currency is not paid when due for payment, after
application of the applicable grace periods, except for nonpayments
as to which its creditor has consented or has waived the payment; or
(v) any mortgage, charge, pledge, lien, hypothecation, title retention,
right in rem or any other security interest of VDSE (being material
to the undertaking or assets of VDSE) becomes enforceable in respect
of a sum in excess of BEF 10,000,000 (ten million Belgian Francs) or
the equivalent in any other currency and the person or persons
entitled to benefit thereof shall initiate legal collection to
enforce the same; or
(vi) all or any substantial part of the property of VDSE shall be
condemned, seized or otherwise appropriated in a manner which
Paribas reasonably considers may have a material adverse effect on the
business of VDSE or VDSE shall be prevented from exercising normal
managerial control over any substantial part of its property by any
person acting under the authority of any government, in a manner
which Paribas considers may have a material adverse effect on the
business of VDSE; or
(vii) there shall have occurred the liquidation or bankruptcy of VDSE
or any order is made or resolution, tax or regulation
passed or other action taken for or with a view to the dissolution,
termination, liquidation or bankruptcy of VDSE (other than for
the purposes of and followed by an amalgamation or reconstruction
the terms of which have been approved in writing by Paribas); or
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(viii) any court, tribunal or other authority makes an order for the
appointment of any administrator, receiver, liquidator,
curator, sequestrator, trustee or other similar officer of VDSE or
of all or any material part of the assets of VDSE; or
(ix) VDSE stops payment generally or ceases or threatens to cease
to carry on its business or admits in writing its inability to
pay its debts as they fall due or makes a general assignment for the
benefit of creditors or enters into a general arrangement or
composition with or for the benefit of creditors or a general
moratorium (however declared or promulgated) is imposed or
threatened on the payment of indebtedness of VDSE; or
(x) all or any material part of the assets of VDSE are attached,
levied or distrained upon or become subject to any order of court
or other process and such attachment, levy, distraint, order or
process remains in effect and not discharged for 60 days; or
(xi) this Agreement or any of the provisions hereof, with material
effect to the liabilities of both parties, shall at any time for
any reason cease to be in full force and effect, be declared to be
void or shall be repudiated or the validity or
enforceability hereof or thereof shall at any time be contested by
VDSE or VDSE shall deny that it has any or any further liability
or obligation under this Agreement; or
(xii) the Pledgor does not fulfill his obligations under the pledge
agreement, drawn up in Brussels on July 15, 1997.
7.2. Default Remedies
Paribas may at any time after the occurrence of an Event of Default
that is not remedied under Art. 7.1 and so long as the same is
continuing, by notice in writing to VDSE declare that the Loan and all
interest accrued and all other sums payable pursuant to this
Agreement have become immediately due and payable whereupon the same
shall become immediately due and payable.
If the principal is not paid at the agreed due date, additional
interest shall automatically be due to Paribas on the sums not paid
in time, as from the due date in question and up to the actual date of
payment, calculated at the interest rate of the Loan plus 0,50% per
annum.
8. CONVERSION RIGHT
Paribas has the optional right to convert the Loan into shares (hereinafter
called the "Shares" or "Share") of VDSE's parent company VASCO CORP
(hereinafter called the "Corporation"), a company existing under the laws of
the State of Delaware with executive office at 0000 X. Xxxxxxxx
Xxxxxx Xxxxx 000-X, Xxxxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of America.
If Paribas decides to exercise its right of conversion, VDSE will be obliged
to repay the Loan to Paribas not by way of cash reimbursement but by
transfer and delivery to Paribas of a number of Shares of the Corporation
that is sufficient to reimburse completely Paribas claim out of the Loan.
After transfer and delivery of these Shares in accordance with this clause
VDSE will be liberated of its obligations under this Convertible Loan
Agreement.
The Corporation undertakes to provide VDSE with a sufficient number of
Shares in order for VDSE to be able fulfill its obligation to transfer
and deliver these Shares.
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Paribas can exercise its right of conversion on any day falling in the
period commencing with and including the earlier of the date of the
Share Offering of the Corporation on EASDAQ and/or NASDAQ (the "Offering")
so as to allow Paribas to include the Shares it converts the Loan into, in
the Offering, and January 1, 1999, and terminating with and including
August 31, 2002, i.e. one month before the maturity date of the Loan.
Subject to the structuring of the Offering, VDSE accepts that the Shares
Paribas has converted the Loan into, can be included in the Offering.
If the conversion takes place after the Offering, the Loan will be
converted in Shares listed on NASDAQ and/or EASDAQ.
Paribas will give notice of exercise of its right of conversion by
sending registered letters to that effect to the Corporation and to VDSE.
In these registered letters the number of Shares to be transferred and
delivered will be calculated at the applicable conversion rate as determined
below, varying according to the time and circumstances (whether the
Offering has taken place or not) of Paribas exercise of its right of
conversion.
The conversion rate will be at a price per Share equal to the Offering Price.
If the Offering does not occur before January 1, 1999, Paribas has the
right to convert the Loan into Shares of the Corporation at the average
closing market price of the Corporation s Shares traded 'over the counter'
during the 20 trading days prior to the date of the notice of exercise of
the right of conversion, less a discount of 10 %.
If the number of Shares calculated at the conversion rate, is not a
whole number, the number will be rounded up to the next higher whole number.
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The date of acknowledgement by the Corporation of the receipt of the
notice of exercise is the conversion date, i.e. date on which property of the
Shares is transferred to Paribas.
The Corporation undertakes to fulfil within the shortest possible delays the
formalities completing the transfer of title of the Shares. The transfer
of title of the Shares must give Paribas full, free and clear property on the
Shares. The Shares will therefor be free of any charge, lien, security
interest, attachment or any other such encumbrance.
In the event the public offering referred to in this section is a public
offering by a new company ( Newco ) specifically set up by VASCO CORP.
for the purpose of this public offering, references herein to the Offering
shall mean the "Offering" by Newco and references to the "Shares" will mean
the shares of Newco.
9. ASSIGNMENT
This agreement shall be binding upon and inure to the benefit of all
parties and their respective successors and assigns; provided however that
VDSE may not assign or transfer any of its obligations or rights
hereunder without the prior written consent of Paribas.
Paribas may at any time assign or transfer to any third party all or any of
its rights or obligations hereunder, but if in part for a minimum
principal amount of the countervalue in USD of BEF 10,000,000 (ten
million Belgian Francs).
Paribas will however never directly or indirectly assign its right to
convert the Loan, or after conversion transfer the Shares, to any person
or company outside of its group without written notice to VDSE stating
its intention to assign or transfer, the identity of the potential
beneficiary (which can be a broker or a market maker) and the conditions of
assignment or transfer.
In the event that the transfer of Shares (or the assignment of the
right to convert the Loan) by Paribas is for a number of Shares (or for a
right to convert the Loan into a number of Shares) in excess of 1% (one
percentage point) of the total number of shares of the Corporation at the
moment of the above mentioned written notice, VDSE or any company or person
of its group will have two weeks to exercise a right of first refusal of
the assignment or transfer on the conditions specified in the notice mentioned
in this section. This right of first refusal is not applicable when the
Shares that Paribas converts the Loan into, are included in the Offering.
10. NOTICES AND COMMUNICATIONS
Each notice and communication to be made under this Agreement shall be
made by registered letter.
Any notice or communication to be made by one person to another person
pursuant to this Agreement shall (unless that other person has by 10 days
prior written notice specified another address) be made to that other
person at the address identified above in the preamble to this Agreement and
shall be deemed to have been made when left at that address.
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11. GOVERNING LAW AND JURISDICTION
This Agreement is governed by and construed in all respects in
accordance with the law of the Kingdom of Belgium.
The parties hereto irrevocably agree that the courts of Brussels shall have
exclusive jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and for such purposes irrevocably submit to
the jurisdiction of such courts.
The submission to the said jurisdiction shall not (and shall not be
construed so as to) limit the right of Paribas to take proceedings to
obtain protective or conservatory relief for the protection of assets or
for the enforcement of any judgement obtained by Paribas in any other court
of competent jurisdiction nor shall the taking of such proceedings in
any one or more jurisdictions, preclude the taking of such proceedings in
any one or other jurisdiction, whether concurrently or not.
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IN WITNESS whereof the parties have executed this Agreement on August
4, 1997 in four originals, each party recognizing to have received its
original.
VASCO DATA SECURITY EUROPE BANQUE PARIBAS BELGIQUE S.A.
S.A.
By : /s/ Xxxxxxx X. Xxxxxxx By : /s/ Xxxxxxx Xxxxxxxx
name : Xxxxxxx X. Xxxxxxx name : Xxxxxxx Xxxxxxxx
title : Director title : Director
By : By : /s/ G. Milants
name : Xxxxxx X. Xxxxxxxx name : G. Milants
title : Director title : Senior Investment Banker
VASCO Corp. The Pledgor
By : /s/ Xxxxx Xxxxxxxxx /s/ T. Xxxxxxx Xxxx
---
name : Xxxxxxxxx, Xxxxx
title : Agent and Officer
