Employment Agreement

Letter Agreement

Amendment 1 to Employment Agreement

Amendment 2 to Employment Agreement

 

 

EX-10.1 2 dex101.htm AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of the 1st day of January, 2011 (the “Effective Date”), by and between VASCO Data Security International, Inc. (the “Company”), and T. Kendall Hunt (“Executive”) and restates that certain employment agreement dated as of November 20, 2002 by and between the Company and Executive, as amended prior to the date hereof (the “Prior Agreement”).

WHEREAS, Executive is currently serving as Chairman of the Company’s Board of Directors (the “Board”), Chief Executive Officer of the Company and a member of the Board;

WHEREAS, the Compensation Committee of the Board (the “Committee) has adopted a policy that prohibits golden parachute excise tax gross ups in certain employment agreements that are materially amended after December 15, 2010, and Executive has agreed to forego eligibility for the excise tax gross up he would have been entitled to receive under the Prior Agreement in order to conform this Agreement to such policy;

WHEREAS, Executive and the Company have agreed to amend and restate the Prior Agreement effective as of the Effective Date and Executive is willing to continue to his employment with the Company on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual undertakings of the parties hereto, the Company and Executive agree as follows:

ARTICLE I

EMPLOYMENT SERVICES

1.1 Term of Employment. Unless earlier terminated as provided in this Agreement, the term of Executive’s employment under this Agreement (the “Employment Period”) shall commence on the Effective Date and continue until the third anniversary of such date.

1.2 Position and Duties. On the terms and subject to the conditions set forth in this Agreement, during the Employment Period, Executive shall hold the position of Chairman and Chief Executive Officer and shall report to the Board. Executive shall perform such duties and responsibilities as are consistent with Executive’s position and as may be reasonably assigned to Executive by the Board from time to time. It is contemplated that, in connection with each annual meeting of stockholders (or action by written consent in lieu thereof) of the Company during the Employment Period, the stockholders of the Company will elect Executive to the Board. Executive shall devote Executive’s full business time, attention, skill and energy to the business and affairs of the Company, and shall use Executive’s reasonable best efforts to perform such responsibilities in a diligent, loyal, and businesslike manner so as to advance the best interests of the Company. Executive shall act in conformity with the Company’s Code of Conduct and Ethics (or similar successor document) as in effect from time to time (the “Code of Conduct”) and the Company’s policies, and within the limits, budgets and business plans set by the Company, and shall adhere to all rules and regulations in effect from time to time relating to the conduct of executives of the Company.


1.3 Other Activities. Notwithstanding Section 1.2, Executive shall be permitted to devote a reasonable amount of time and effort to professional, industry, civic and charitable organizations and managing personal investments; but only to the extent that such activities, individually or as a whole, do not materially interfere with the execution of Executive’s duties hereunder, or otherwise violate any provision of this Agreement. Executive shall not become involved in the management of any for profit corporation, partnership or other for profit entity, including serving on the board of directors (or similar governing body) of any such entity, without the Board’s prior consent; provided, however, that this restriction shall not apply to any subsidiary of the Company. Executive will serve without additional compensation as a member of the Board and as an officer and director of any of the Company’s subsidiaries. Any compensation or other remuneration received from such service may be offset against the amounts due hereunder.

1.4 Location. Executive’s place of business shall be at the Company’s headquarters in Oakbrook Terrace, Illinois. Executive’s principal place of business shall not be relocated outside a 40 mile radius of the Company’s current headquarters in Oakbrook Terrace, Illinois without the written consent of Executive. Executive will travel as reasonably necessary to perform his duties under this Agreement, which may include significant travel, including internationally.

ARTICLE II

COMPENSATION

2.1 Base Salary. The Company shall pay Executive an annual base salary (“Base Salary”) of $390,000, payable in accordance with payroll practices in effect for senior executive officers of the Company generally. 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 may be increased, but will not be reduced without the prior written consent of Executive except for a reduction that is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company.

2.2 Annual Incentive Compensation. During the Employment Period, Executive shall participate in the Company’s Executive Incentive Plan and any successor thereto (the “Annual Bonus Plan”) in accordance with the terms and conditions thereof and on the same basis as other senior executives of the Company.

2.3 Long-Term Incentive Compensation. During the Employment Period, Executive shall participate in the Company’s 2009 Equity Incentive Plan and any successor thereto (the “Equity Incentive Plan” and together with the Company’s 1997 Stock Compensation Plan (which expired in 2009 and in which Executive was a participant) the “Long-Term Incentive Plan”) in accordance with the terms and conditions thereof and on the same basis as other senior executives of the Company.

 

2


2.4 Employee Benefit Plans. Executive will be eligible to participate on substantially the same basis as the Company’s other senior executive officers in any other employee benefit plans offered by the Company including, without limitation, medical, dental, short-term and long-term disability, life insurance, pension and profit sharing (in each case, subject to the eligibility requirements of such plans). The Company reserves the right to modify, suspend or discontinue any and all of its employee benefit plans, practices, policies and programs at any time without recourse by Executive, so long as the Company takes such action generally with respect to other similarly situated senior executive officers.

2.5 Vacation. Executive will be entitled to vacation in accordance with the Company’s vacation policy for senior executive officers, officers, but in no event less than four weeks per calendar year of paid vacation.

2.6 Business Expenses. The Company will reimburse Executive for all reasonable and necessary business expenses incurred in the performance of services with the Company, according to Company’s policies and upon Executive’s presentation of an itemized written statement and such verification as the Company may require.

ARTICLE III

TERMINATION OF EMPLOYMENT

3.1 Voluntary Resignation. Executive may terminate his employment for any reason by giving the Company 90 days prior written notice of a voluntary resignation date (“Resignation Date”). Upon receiving Executive’s notice of intent to resign, the Company may require that Executive cease performing services for the Company at any time before the Resignation Date, so long as the Company continues Executive’s Base Salary, service for purposes of the Annual Bonus Plan and Long-Term Incentive Plan, and employee benefits under Section 2.4 through the Resignation Date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any compensation or benefits from the Company after the Resignation Date.

3.2 Termination By Company for Cause. The Company may terminate Executive’s employment for Cause (as defined below) by giving written notice to Executive designating an immediate or future termination date. Such notice shall indicate the specific provisions of this Agreement relied upon as the basis of such termination. In the event of a termination for Cause, the Company shall pay Executive his Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any compensation or benefits from the Company after the termination date.

For purposes of this Agreement, “Cause” means:

(i) Executive materially breaches Executive’s obligations under this Agreement, the Code of Conduct or an established policy of the Company;

 

3


(ii) Executive engages in conduct prohibited by law (other than minor violations), commits an act of dishonesty, fraud, or serious or willful misconduct in connection with his job duties, or engages in unethical or immoral conduct that, in the reasonable judgment of the Committee, could injure the integrity, character or reputation of Company;

(iii) Executive fails or refuses to perform, or habitually neglects, Executive’s duties and responsibilities hereunder (other than on account of Disability (as defined below), and continues such failure, refusal or neglect after having been given written notice by the Company that specifies what duties Executive failed to perform and an opportunity to cure of 30 days;

(iv) Use or disclosure by Executive of confidential information or trade secrets other than in the furtherance of the Company’s (or its subsidiaries’) business interests, or other violation of a fiduciary duty to the Company (including, without limitation, entering into any transaction or contractual relationship causing diversion of business opportunity from the Company (other than with the prior written consent of the Board)); or

(v) Executive fails to reasonably cooperate with any audit or investigation involving the Company or its business practices after having been given written notice by the Company that specifies Executive’s failure to cooperate and an opportunity to cure of 10 days.

3.3 Termination By Company Without Cause or Termination by Executive for Good Reason. The Company may terminate Executive’s employment without Cause during the Employment Period by giving written notice to Executive designating an immediate or future termination date.

The Executive may resign from employment during the Employment Period due to:

(i) a failure to provide the compensation and benefits required by this Agreement, including a reduction in Executive’s Base Salary below the Base Salary in effect during the immediately preceding year, unless such reduction is commensurate with and part of a general salary reduction program applicable to all senior executives of the Company.

(ii) a failure to appoint or elect Executive as Chief Executive Officer of the Company, Chairman of the Board or a member of the Board during the Employment Period;

(iii) any material diminution of Executive’s authority, duties or responsibilities; or

(iv) the Company requiring Executive to be based at any office or location other than the office occupied by Executive in Oakbrook Terrace, Illinois as of the Effective Date or a reasonably comparable office located within a 40-mile radius of such current office;

 

4


(each of which shall constitute a “Company Breach” or “Good Reason”) and such resignation shall be treated as a termination by the Executive for Good Reason; provided that, (a) Executive’s voluntary resignation occurs within 90 days following the initial occurrence of a Company Breach, (b) Executive provided written notice describing such Company Breach in reasonable detail to the Committee within 30 days of the initial occurrence of such Company Breach, and (c) the Company failed to cure such Company Breach within 30 days of receipt of such written notice from Executive; and provided, further, that in the case of subsections (ii) and (iii), an act or omission shall not constitute a Company Breach if Executive has incurred a Disability (as defined below).

For the avoidance of doubt, the expiration of the Employment Period shall not be a termination without Cause or a termination for Good Reason and shall not entitle Executive to Severance Pay.

In the event of a termination by the Company without Cause or a termination by Executive for Good Reason, the Company shall pay Executive his Base Salary and provide employee benefits under Section 2.4 through the termination date. In addition, subject to the requirements set forth in Section 3.7, Section 3.8, and Section 3.9, the Company will provide the following compensation and benefits to Executive:

(A) An amount equal to 24 months of the Executive’s then current Base Salary, less applicable withholdings. This amount will be paid in equal installments on each regularly scheduled payroll pay date during the 24-month period that begins on the first day immediately after the Release Effective Date (as defined in Section 3.7);

(B) Amounts, if any, payable under the Annual Bonus Plan shall be paid in accordance with the terms and conditions of the Annual Bonus Plan and the applicable awards.

(C) Awards, if any, under the Long-Term Incentive Plan shall be paid in accordance with the terms and conditions of the Long-Term Incentive Plan and the applicable awards.

Except as otherwise provided under law, or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any additional compensation or benefits from the Company after the termination date.

3.4 Death. The Employment Period shall terminate automatically upon Executive’s death. In the event of Executive’s death during the Employment Period, the Company shall pay Executive’s Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, no other compensation or benefits from the Company shall be payable after the termination date.

 

5


3.5 Disability. “Disability” means Executive being unable to perform his duties to the Company as Chairman and Chief Executive Officer as provided in this Agreement for a period of at least 180 continuous days as a result of a mental or physical condition. The Company may terminate Executive’s employment for Disability during the Employment Period by giving written notice to Executive designating a termination date that is at least 30 days after the date of the notice of termination, provided that Executive does not return to work on a substantially full-time basis within 30 days after notice of termination on account of Disability is provided to Executive. A return to work of less than 30 continuous days on a substantially full-time basis shall not interrupt a continuous period of Disability. In the event of termination of the Employment Period on account of Executive’s Disability, the Company shall pay Executive’s Base Salary and provide employee benefits under Section 2.4 through the termination date. Except as otherwise provided under law or the terms of the Annual Bonus Plan, the Long-Term Incentive Plan, or any other employee benefit plan in which Executive participates, no other compensation or benefits from the Company shall be payable after the termination date.

3.6 Change in Control. “Change in Control” has the meaning assigned to such term in the Equity Incentive Plan as in effect from time to time. Notwithstanding anything in this Agreement to contrary, a Change in Control will have occurred only if such change in ownership constitutes a change in control under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and other guidance in effect thereunder (“Section 409A”).

If contemporaneous with or within 18 months after a Change in Control that occurred during the Employment Period, (a) the Company terminates the Executive’s employment without Cause, or (b) Executive terminates his employment for Good Reason, Executive will be eligible to receive:

(a) the payments described in Section 3.3; and

(b) an additional amount equal to two times the amount payable to him under the Annual Bonus Plan in connection with a Change in Control

(together, the “Change in Control Payment”), subject to the requirements set forth in Section 3.7, Section 3.8, and Section 3.9. The Change in Control Payment will be made in a lump sum cash payment as soon as practicable, but in no event more than 10 days after Executive’s termination of employment (on or after the date of the Change in Control). Except as otherwise provided under law or the terms of any other employee benefit plan in which Executive participates, Executive shall not be entitled to receive any additional compensation or benefits from the Company after the termination date.

 

6


3.7 Execution of Separation Agreement. As a condition to receiving the payments set forth in Section 3.3 or Section 3.6 (such payments are sometimes referred to herein as the “Severance Pay”), Executive must execute and return to the Company, and not revoke any part of, a general release and waiver of claims against the Company and its officers, directors, stockholders, employees and affiliates with respect to Executive’s employment (including, without limitation, a release of claims under the Age Discrimination in Employment Act (the “ADEA Release”)), and other customary terms, in a form and substance reasonably acceptable to the Company (the “Release”) . Executive must deliver the executed Release within the minimum time period required by law or, if none, within 14 days after Executive receives the Release from the Company. The Release will become effective on the date the revocation period of the ADEA Release expires without Executive revoking the ADEA Release (the “Release Effective Date”). Any obligation of the Company to provide the Severance Pay shall cease: (i) if Executive materially breached or breaches his contractual obligations to the Company, including those set forth in Article IV or Article V herein, or in the Release or (ii) if, after Executive’s termination, the Company discovers facts and circumstances that would have justified a termination for Cause during the Employment Period.

3.8 Timing of Payments; Section 409A.

(a) Notwithstanding any other provision of this Agreement, in the event of a payment to be made, or a benefit to be provided, pursuant to this Agreement based upon Executive’s “separation from service” (as defined below) for a reason other than death at a time when the Executive is a Specified Employee (as defined below) and such payment or provision of such benefit is not exempt or otherwise permitted under Section 409A without the imposition of any Section 409A Penalty (as defined below), such payment shall not be made, and such benefit shall not be provided, before the earlier of the date which is six months and one day after the Executive’s separation from service or 30 days after the Executive’s death. All payments or benefits delayed pursuant to this Section 3.8 shall be aggregated into one lump sum payment to be made as of the Company’s first business day following the first day of the seventh month after Executive’s separation from service (or if earlier, as of 30 days after Executive’s death).

(b) For purposes of this Agreement:

(i) “Separation from service” has the meaning provided under Code Section 409A and Treas. Reg. 1.409A-1(h);

(ii) “Specified Employee” has the meaning given that term in Code Section 409A and Treas. Reg. 1.409A-1(c)(i) as determined in accordance with the Company’s policy for determining Specified Employees;

(iii) “Section 409A Penalty” means any increase in tax or any other penalty pursuant to Section 409A; and

(iv) All payments of “deferred compensation,” as defined in Code Section 409A, due to the Executive’s “termination of employment” shall be payable upon the Executive’s separation from service.

 

7


(c) This Agreement is intended not to result in the imposition of any Section 409A Penalty and shall be administered, interpreted and construed in a manner consistent with such intent.

(d) Executive and the Company agree to cooperate to amend this Agreement from time to time as appropriate to avoid the imposition of any Section 409A Penalty.

(e) In no event shall the Company be required to provide a tax gross-up payment to Executive with respect to any Section 409A Penalty.

(f) Notwithstanding any provision of this Agreement to the contrary, this Agreement is intended to be exempt from or, in the alternative, comply with Section 409A and the interpretive guidance in effect thereunder, including the exceptions for short-term deferrals, separation pay arrangements, reimbursements, and in-kind distributions. The Agreement shall be construed and interpreted in accordance with such intent.

3.9 Excess Parachute Payments; No Excise Tax Gross-Up. Notwithstanding any provision of this Agreement to the contrary, if it is determined by the Company’s independent auditors that any amount or benefit to be paid or provided under this Agreement or otherwise, whether or not in connection with a Change in Control, would be an “Excess Parachute Payment” within the meaning of Code Section 280G but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Code Section 4999, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes).

The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 3.9 will not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement. In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 3.9, the Company will effect such reduction by reducing the lump sum cash payment related to Base Salary (a “Reduction”). In the event that, after such Reduction any payment or benefit intended to be provided under this Agreement or otherwise is still required to be reduced pursuant to this Section 3.9, the Company will effect such reduction by reducing other consideration due to Executive.

3.10 Removal from any Boards and Positions. If Executive’s employment is terminated for any reason under this Agreement, this Agreement will constitute his automatic resignation from (i) if a member, the Board as well as the board of directors of any subsidiary of the Company or any other board to which he has been appointed or nominated by or on behalf of the Company, (ii) any position with the Company or any subsidiary of the Company, including, but not limited to, as an officer of the Company or any of its subsidiaries, and (iii) any fiduciary positions with respect to the Company’s benefit plans.

 

8


ARTICLE IV

EXCLUSIVITY OF SERVICES AND RESTRICTIVE COVENANTS

4.1 Confidential Information. Executive acknowledges and agrees that the Confidential Information (as defined below) of the Company and its subsidiaries and any other entity related to the Company (each, a “VASCO Entity”) that he obtained during the course of his employment by the Company is the property of the Company or such other VASCO Entity. The Executive will never, directly or indirectly, disclose, publish or use any Confidential Information of which the Executive has become aware, whether or not such information was developed by him. All duties and obligations set forth in this Agreement regarding Confidential Information shall be in addition to those which exist under the Illinois Trade Secrets Act and at common law.

As used in this Agreement, “Confidential Information” means information that is not generally known to the public and that was or is used, developed or obtained by the Company or any other VASCO Entity, in connection with its businesses, including but not limited to:

(i) products or services, unannounced products or services, product or service development information (or other proprietary product or service information);

(ii) fees, costs, bids and pricing structures and quotations or proposals given to agents, distributors, vendors, contractors, licensors, licensees, customers, or prospective agents, distributors, vendors, contractors, licensors, licensees or customers, or received from any such person or entity;

(iii) accounting or financial records;

(iv) strategic business plans;

(v) information system applications or strategies;

(vi) customer and vendor lists and employee lists and directories;

(vii) marketing plans, bidding strategies and processes, and negotiation strategies, whether past, current, or future;

(viii) accounting and business methods;

(ix) legal advice and/or attorney work product;

(x) trade secrets and other proprietary information;

(xi) information, analysis or strategies regarding acquisitions, mergers, other business combinations, divestitures, recapitalizations, or new ventures; and

 

9


(xii) nonpublic information that was acquired by Executive concerning the requirements and specifications of the Company’s or any other VASCO Entity’s agents, distributors, vendors, contractors, licensors, licensees, customers, or potential customers.

Notwithstanding anything to the contrary, Confidential Information does not include any information that: (a) is publicly disclosed by law or pursuant to, and to the extent required by, an order of a court of competent jurisdiction or governmental agency; (b) becomes publicly available through no fault of Executive; or (c) has been published in a form generally available to the public before Executive proposes to disclose, publish, or use such information.

4.2 Noncompetition. During the Employment Period and for the 24-month period following the termination of the Employment Period for any reason (the “Restricted Period”), the Executive will not, on behalf of himself or any other entity, have an ownership interest in or become employed or engaged by, or otherwise participate in or render services to, any business or enterprise (including, without limitation, any division, group or franchise of a larger organization) within the Geographical Area (as defined below) that engages in any data security business or any other business engaged in by the Company; provided, however, that the this restriction shall not prohibit the Executive from passive beneficial ownership of less than two percent of any class of securities of a publicly-held corporation whose stock is traded on a U.S. national securities exchange or traded in the over-the-counter market. For the purpose of this provision, “Geographical Area” means North America, Central America, South America, the Caribbean, Europe, the Middle East, Africa, India, the Australian continent and Asia.

4.3 Non-Solicitation. During the Restricted Period, Executive shall not (other than in furtherance of Executive’s legitimate job duties on behalf of Company), directly or indirectly, on Executive’s own behalf or for any other person or entity: (i) solicit for employment, hire or engage, or attempt to solicit for employment, hire or engage, any person who is or was employed by the Company within the six month period prior to the date of solicitation, hire or engagement, or (ii) otherwise interfere with the relationship between any such person and the Company.

4.4 Non-Interference with Business Relationships. During the Restricted Period, Executive shall not (other than in furtherance of Executive’s legitimate job duties on behalf of the Company), directly or indirectly, on Executive’s own behalf or for any other person or entity: (i) induce or attempt to induce any customer, distributor, agent, licensor, licensee, contractor, vendor or other business relation that was doing business with any VASCO Entity during the one-year period prior to the inducement or attempted inducement to reduce or cease doing business with the Company or any VASCO Entity, or otherwise interfere with the relationship between such person (or entity) and any VASCO Entity; (ii) induce or attempt to induce any prospective customer, distributor, agent, licensor, licensee, contractor, vendor or other prospective business relation located in the Geographical Area with which any VASCO Entity has had communications during the six-month period prior to the inducement or attempted inducement regarding doing business with the Company or any other VASCO Entity to not do business or to do reduced business with the Company or any other VASCO Entity, or otherwise interfere with the relationship between such person (or entity) and any VASCO Entity.

 

10


4.5 Equitable Modification. If any court of competent jurisdiction shall deem any provision in this Article IV too restrictive, the other provisions shall stand, and the court shall modify the unduly restrictive provision to the point of greatest restriction permissible by law.

4.6 Remedies. Executive acknowledges that the agreements and covenants contained in this Article IV are essential to protect the Company and its business and are a condition precedent to entering into this Agreement. Should Executive breach any covenants in this Article IV, then among other remedies, the duration of the covenant shall be extended by the period of any such breach. Executive agrees that irreparable harm would result from Executive’s breach or threat to breach any provision of this Article IV, and that monetary damages alone would not provide adequate relief to the Company for the harm incurred. Executive agrees that in addition to money damages, the Company shall be entitled to seek and obtain temporary, preliminary and permanent injunctive relief restraining Executive from committing or continuing any breach without being required to post a bond. Without limiting the foregoing, upon a breach by Executive of any provision of this Article IV, any outstanding Severance Pay shall cease and be forfeited, and Executive shall immediately reimburse the Company for any Severance Pay previously paid.

ARTICLE V

POST-TERMINATION OBLIGATIONS

5.1 Return of Company Materials. No later than three business days following the termination of Executive’s employment for any reason, Executive shall return to the Company all company property that is then in Executive’s possession, custody or control, including, without limitation, all keys, access cards, credit cards, computer hardware and software, documents, records, policies, marketing information, design information, specifications and plans, data base information and lists, and any other property or information that Executive has or had relating to the Company (whether those materials are in paper or computer-stored form), and including but not limited to any documents containing, summarizing, or describing any Confidential Information.

5.2 Executive Assistance. During Executive’s employment with the Company and for a period of 12 months after the termination of such employment, Executive shall, upon reasonable notice, furnish the Company with such information as may be in Executive’s possession or control, and cooperate with the Company in any reasonable manner that the Company may request, including without limitation conferring with the Company with regard to any litigation, claim, or other dispute in which the Company is or may become a party. The Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred by Executive in fulfilling Executive’s obligations under this Section 5.2. The Company will make any such reimbursement within 30 days of the date the Executive provides the Company with documentary evidence of such expense consistent with the policies of the Company. Notwithstanding anything to the contrary, any such reimbursement shall be administered so as to comply with Treasury Regulation Section 1.409A-3(i)(1)(iv).

 

11


ARTICLE VI

MISCELLANEOUS

6.1 Notices. Any notices, consents or other communications required or permitted to be sent or given hereunder shall be in writing and shall be deemed properly served if (a) delivered personally, in which case the date of such notice shall be the date of delivery; (b) delivered prepaid to a nationally recognized overnight courier service, in which case the date of delivery shall be the next business day; or (c) sent by facsimile transmission (with a copy sent by first-class mail), in which case the date of delivery shall be the date of transmission, or if after 5:00 P.M., the next business day. If not personally delivered, notice shall be sent using the addresses set forth below:

If to Executive, to the address listed on the signature page or the last address on file in the records of the Company.

If to the Company:

VASCO Data Security International, Inc.

1901 South Meyers Road

Suite 210

Oakbrook Terrace, IL 60181-5206

Attention:    Secretary

Telecopy:    (630) 932-8852

with a copy to:

Katten Muchin Rosenman LLP

525 West Monroe St.

Chicago, IL 60661

Telecopy:    (312) 577-8755

or such other address as may hereafter be specified by notice given by either party to the other party. Executive shall promptly notify the Company of any change in his address set forth on the signature page.

6.2 Withholding. The Company may withhold from any payment that it is required to make under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state or local law, as well as any other amounts due and owing to the Company from Executive.

6.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns; provided that Executive may not assign any of his rights or obligations under this Agreement without the Company’s prior written consent.

 

12


6.4 Nonalienation of Benefits. Benefits payable under this Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, prior to actually being received by Executive, and any such attempt to dispose of any right to benefits payable hereunder shall be void.

6.5 Amendment; Waiver. No failure or delay by the Company or the Executive in enforcing or exercising any right or remedy hereunder will operate as a waiver thereof. No modification, amendment or waiver of this Agreement or consent to any departure by Executive from any of the terms or conditions thereof, will be effective unless in writing and signed by the Chairman of the Committee. Any such waiver or consent will be effective only in the specific instance and for the purpose for which given.

6.6 Severability; Survivability. If any term or provision of this Agreement shall be held to be invalid or unenforceable, the remaining terms and provisions hereof shall not be affected thereby and shall be enforced to the fullest extent permitted under law. Executive’s obligations in Articles IV and V shall survive and continue in full force notwithstanding the termination of this Agreement or Executive’s employment for any reason.

6.7 Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement.

6.8 Governing Law; Consent to Jurisdiction; Waiver of Jury. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois, without regard to its conflict of law principles. For the purposes of any suit, action, or other proceeding arising out of this Agreement or with respect to Executive’s employment hereunder, the parties: (i) agree to submit to the exclusive jurisdiction of the federal courts located in the Northern District of Illinois or state courts located in DuPage County, Illinois; (ii) waive any objection to personal jurisdiction or venue in such jurisdiction, and agree not to plead or claim forum non conveniens; and (iii) waive their respective rights to a jury trial of any claims and causes of action, and agree to have any matter heard and decided solely by the court.

6.9 Construction. The language used in this Agreement will be deemed to be the language chosen by Executive and the Company to express their mutual intent, and no rule of strict construction will be applied against Executive or the Company. The heading in this Agreement are for convenience of reference only and will not limit or otherwise affect the meaning of the provision.

6.10 Entire Agreement; Amendments. This Agreement contains the entire understanding of the parties hereto with regard to the subject matter contained herein, and supersedes all prior agreements, understandings or letters of intent with regard to the subject matter contained herein between the parties hereto. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by each of the parties hereto.

 

13


IN WITNESS WHEREOF, each of the parties hereto has duly executed this Employment Agreement.

 

 

 

VASCO DATA SECURITY INTERNATIONAL, INC.

Date: December 17, 2010

 

 

By:

 

/s/ John N. Fox

 

 

Name:

 

John N. Fox

 

 

Title:

 

Director and Chair of the Compensation

Committee of the Board of Directors

 

 

T. KENDALL HUNT

Date: December 17, 2010

 

 

/s/ T. Kendall Hunt

 

 

Address:

 

c/o VASCO Data Security International, Inc.

 

 

 

1901 South Meyers Road

 

 

 

Oakbrook Terrace, Illinois 60181

 

 

Phone:

 

(630) 932-8844

 

 

Fax:

 

(630) 932-8852

 

14

 

 

EX-10.1 2 dex101.htm LETTER AGREEMENT

Exhibit 10.1

Letter Agreement dated February 15, 2011, by and between VASCO Data Security International, Inc. and T. Kendall Hunt.

February 15, 2011

Mr. T. Kendall Hunt

Chairman & CEO

VASCO Data Security International, Inc.

1901 South Myers Road, Suite 210

Oakbrook Terrace, IL 60181

Dear Mr. Hunt:

This letter confirms our mutual understanding of the terms and conditions applicable to your assignment to work in Switzerland.

VASCO Data Security International, Inc. (the “Company”) and you ( “you” or “Executive”) have entered into an Amended and Restated Employment Agreement dated as of December 15, 2010 (the “Employment Agreement”).

The Company has requested that, during the period beginning on October 1, 2011 (or earlier, depending on the availability of housing) through the end of the Employment Period (as defined in the Employment Agreement) (the “Assignment Term”) , Executive relocate his place of business from Oakbrook Terrace, Illinois to Zurich, Switzerland to lead certain business initiatives of the Company and its subsidiaries (the “Swiss Assignment”).

 

A-1.

Location.

During the Assignment Term, Executive shall perform his duties (as described in Section 1.2 of the Employment Agreement) primarily at the Company’s offices in Zurich, Switzerland. Executive will travel as reasonably necessary to perform his duties, which may include significant travel, including internationally. Notwithstanding the Swiss Assignment, Executive is expected to attend meetings of the Board of Directors of the Company in person, regardless of the location of such meetings.

 

A-2.

Transition Support and Allowances.

The Company shall pay for the following expenses, allowances and benefits with respect to the Swiss Assignment. Such allowances and benefits shall not be considered for purpose of any calculations under the Company’s benefit plans.

(a) Work Permits/Visas. The Company will assist in obtaining the proper work permits and/or visas necessary for the provision of services in Switzerland and reimburse Executive for any work permit/visa, passport and immigration expenses, including expenses for Executive’s spouse.


Mr. T. Kendall Hunt

Page 2

February 15, 2011

 

(b) Transportation and Expenses.

(i) Move-Related Transportation and Expenses. The Company shall reimburse Executive for actual and reasonable expenses incurred in connection the Swiss Assignment, including temporary living expenses (e.g., hotel costs, meals, transportation, etc.) and expenses relating to the shipping of clothing, personal effects and household goods. Executive agrees to secure independent housing in Switzerland no later than October 1, 2011.

(ii) Furniture and Settling-In Allowance. The Company will pay Executive USD 100,000 immediately prior to the Assignment Term to cover furniture (whether leased or purchased) at Executive’s independent housing in Switzerland during the Assignment Term and to assist with home finding and language training in Switzerland.

(iii) Personal Air Travel. The Company shall provide reimbursement for personal air travel between Switzerland and the U.S. for Executive and his spouse four times during each of the 12-month periods beginning on October 1, 2011, October 1, 2012 and October 1, 2013. Reimbursements will be made according to the Company’s business travel policy. Alternative travel or cash substitution is not permitted.

(c) Cost-of-Living Allowance. During the Assignment Term, but beginning when Executive secures independent housing and the reimbursement of move-related expenses described in Section A-2(b)(i) ceases, the Company shall pay Executive:

(i) an aggregate monthly allowance of USD 11,903 to compensate Executive for the costs of housing and utilities in Switzerland during the Assignment Term (the “Housing Allowance”);

(ii) an aggregate monthly allowance of USD 2,940 to compensate Executive for transportation costs (including use of a car, whether leased or owned) in Switzerland during the Assignment Term (the “Transportation Allowance”); and

(iii) an aggregate monthly allowance of USD 9,721 to compensate Executive for the higher cost of goods and services in Switzerland during the Assignment Term (the “Cost of Living Allowance”).


Mr. T. Kendall Hunt

Page 3

February 15, 2011

 

The Housing Allowance, Transportation Allowance and Cost of Living Allowance shall be reviewed by the Compensation Committee of the Company’s Board of Directors and Executive annually so that changes in the cost of housing and utilities, transportation, and goods and services in Switzerland, as compared to the U.S., as well as the exchange rate, can be reflected.

(d) Medical Coverage. To the extent U.S. medical coverage is not available in Switzerland, the Company shall pay for the cost of securing substantially similar coverage in Switzerland for Executive and his spouse.

(e) Seconded Arrangement; Other Benefits. Executive shall be seconded to VASCO Data Security International GmbH in Switzerland and shall continue to remain an employee of the Company. Executive shall remain eligible to participate in the Company’s Annual Bonus Plan and Equity Incentive Plan (as such terms are defined in the Employment Agreement) and other employee benefit plans in accordance with Section 2.4 of the Employment Agreement and will continue to contribute to U.S. social security benefits.

(f) Tax Equalization. Under tax equalization, Executive’s obligation for income taxes on his compensation from the Company shall not exceed the amount of income tax calculated on such compensation as if Executive had remained at the Company’s Oakbrook Terrace office (the “Hypothetical Tax”). Executive will be subject to applicable withholdings on his compensation from employment with the Company. After the end of each calendar year that occurs during the Assignment Term, the Hypothetical Tax will be compared with Executive’s estimated U.S. federal and Illinois income taxes and a settlement made. In return, the Company will pay all actual U.S. federal, Illinois and Swiss income taxes payable by Executive with respect to his compensation from the Company paid during the Assignment Term.

(g) Tax Return Preparation and Counseling Services. The Company shall retain the services of Aon Hewitt (or another firm reasonably acceptable to the Company and Executive) to counsel Executive with respect to the tax implications of the Swiss Assignment and to prepare Executive’s and his spouse’s U.S. and Switzerland income tax returns and reconciliation as required by law.

(h) Tax Gross-Up. To the extent that the provision of assignment benefits described in Section A-2(a) through and including Section A-2(g) results in taxable income to Executive, the Company shall pay Executive an amount to satisfy Executive’s U.S. income tax obligation. Such payment shall be made as soon as practicable after the tax liability arises but in no event later than the end of the year following the year in which the tax is due. For the avoidance of doubt, any amount paid to Executive pursuant to this Section A-2(h) shall not also be subject to a tax gross-up.


Mr. T. Kendall Hunt

Page 4

February 15, 2011

 

A-3.

Repatriation.

At the end of the Assignment Term, the Company will pay Executive’s and his spouse’s actual and reasonable expenses associated with repatriation to Oak Park, Illinois (location of their residence as of the date of this Assignment Letter).

 

A-4.

Termination of Employment During Assignment Term.

If Executive’s employment is terminated for any reason during the Assignment Term, the terms of Article III of the Employment Agreement shall control; provided, that Executive’s relocation to Switzerland shall not constitute an event giving rise to a termination by Executive for Good Reason under Section 3.3(iv) of the Employment Agreement. If the termination is for any reason other than for Cause, the Company shall pay the actual and reasonable expenses associated with repatriation of Executive and his spouse to the U.S.

 

A-5.

Application of Section 409A to Benefits-in-Kind, Expense Reimbursements and Allowances

(a) Benefits-in-Kind; Expense Reimbursements. Benefits-in-kind and any provision for reimbursement of expenses during the assignment period will be subject to the following rules, as required to comply with Code Section 409A (as such terms are defined in the Employment Agreement):

(i) The amount of in-kind benefits provided or expenses eligible for reimbursement in one calendar year may not affect in-kind benefits or reimbursements to be provided in any other calendar year.

(ii) Expenses will be reimbursed as soon as administratively possible, but in no event shall expenses be reimbursed later than December 31st of the year following the year in which the expense was incurred.

(iii) The right to an in-kind benefit or reimbursement may not be subject to liquidation or exchange for another benefit.

(b) Allowances. Allowances generally shall be paid monthly. In no event shall the payment of any allowance be made later than March 15th of the year following the year in which Executive is entitled to payment.

 

A-6.

Miscellaneous.

(a) Except as otherwise specifically modified by this Assignment Letter, the Employment Agreement remains in full force and effect.


Mr. T. Kendall Hunt

Page 5

February 15, 2011

 

(b) This Assignment Letter contains the entire understanding of the parties hereto with regard to the Swiss Assignment and supersedes all prior agreements or understandings with respect thereto.

(c) This Assignment Letter shall be governed by and construed in accordance with the internal laws of the State of Illinois, without regard to its conflict of law principles.

(d) This Assignment Letter may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement.

Sincerely,

VASCO Data Security International, Inc.

 

By:

 

/s/ John N. Fox, Jr.

John N. Fox, Jr.

Director and Chair of the Compensation Committee of the Board of Directors

Acknowledged and Agreed to

as of the date first set forth above:

 

/s/ T. Kendall Hunt

T. Kendall Hunt

 

 

 

EX-10.1 2 d716954dex101.htm EX-10.1

EXHIBIT 10.1

FIRST AMENDMENT TO

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT (the “Amendment”), dated as of April 23, 2014 (the “Effective Date”), amends that certain Amended and Restated Employment Agreement, effective as of January 1, 2011 (the “Agreement”), by and between VASCO Data Security International, Inc., a Delaware limited liability company (the “Company”), and T. Kendall Hunt (“Employee”). Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.

RECITALS

WHEREAS, the Company and Employee are party to that certain Letter Agreement, dated as of February 15, 2011 (the “Letter Agreement”), which provides for the terms and conditions applicable to Employee’s assignment to work in Switzerland;

WHEREAS, the Assignment Term (as defined in the Letter Agreement) expires at the end of the Employment Period;

WHEREAS, the Company and Employee desire to amend the Agreement and the Letter Agreement in order to extend the term of the Employment Period and the Assignment Term, as applicable;

WHEREAS, Section 6.10 of the Agreement permits the amendment of the Agreement with the written consent of the Company and Employee; and

WHEREAS, extending the term of the Employment Period will extend the term of the Assignment Term.

NOW, THEREFORE, in consideration of the foregoing premises, the terms and conditions hereinafter set forth, the mutual benefits to be gained by the performance thereof, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and accepted, the parties hereto agree as follows:

AGREEMENT

 

1.

Section 1.1 of the Agreement is amended in its entirety to read as follows:

“Unless earlier terminated as provided in this Agreement, the term of Executive’s employment under this Agreement (the “Employment Period”) shall commence on the Effective Date and continue until the fourth anniversary of such date.”

 

2.

In all other respects, the Agreement shall remain in full force and effect.

[Signature Page Follows]


IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed by a duly authorized officer thereof, and Employee has hereunto set his hand, all as of the Effective Date.

VASCO DATA SECURITY INTERNATIONAL, INC.

 

By:

 

/s/ John N. Fox

Name:

 

John N. Fox

Its:

 

Compensation Committee Chairman

    /s/ T. Kendall Hunt

T. Kendall Hunt

 

 

 

EX-10.1 2 d826764dex101.htm EX-10.1

EXHIBIT 10.1

SECOND AMENDMENT TO

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT (the “Amendment”), dated as of November 24, 2014 (the “Amendment Effective Date”), amends that certain Amended and Restated Employment Agreement, effective as of January 1, 2011, as amended by the First Amendment to Amended and Restated Employment Agreement, dated as of April 23, 2014 (the “Agreement”), by and between VASCO Data Security International, Inc., a Delaware limited liability company (the “Company”), and T. Kendall Hunt (“Employee”). Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.

RECITALS

WHEREAS, the Company and Employee are party to that certain Letter Agreement, dated as of February 15, 2011 (the “Letter Agreement”), which provides for the terms and conditions applicable to Employee’s assignment to work in Switzerland;

WHEREAS, the Assignment Term (as defined in the Letter Agreement) expires at the end of the Employment Period;

WHEREAS, the Company and Employee desire to amend the Agreement and the Letter Agreement in order to extend the term of the Employment Period and the Assignment Term, as applicable;

WHEREAS, Section 6.10 of the Agreement permits the amendment of the Agreement with the written consent of the Company and Employee; and

WHEREAS, extending the term of the Employment Period will extend the term of the Assignment Term.

NOW, THEREFORE, in consideration of the foregoing premises, the terms and conditions hereinafter set forth, the mutual benefits to be gained by the performance thereof, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and accepted, the parties hereto agree as follows:

AGREEMENT

 

1.

Section 1.1 of the Agreement is amended in its entirety to read as follows:

“Unless earlier terminated as provided in this Agreement, the term of Executive’s employment under this Agreement (the “Employment Period”) shall commence on the Effective Date and continue until the fifth anniversary of such date (i.e. January 1, 2016).”

 

2.

In all other respects, the Agreement shall remain in full force and effect.

[Signature Page Follows]


IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed by a duly authorized officer thereof, and Employee has hereunto set his hand, all as of the Amendment Effective Date.

VASCO DATA SECURITY INTERNATIONAL, INC.

 

By:

 

/s/ John N. Fox

Name:

 

John N. Fox

Its:

 

Compensation Committee Chairman

/s/ T. Kendall Hunt

T. Kendall Hunt