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EXHIBIT 4.7
NEW VASCO CONVERTIBLE NOTE AGREEMENT
This Agreement is by and among VASCO Data Security
International, Inc., a Delaware corporation ("New VASCO"), VASCO CORP., a
Delaware corporation ("Current VASCO") and the undersigned (the "Convertible
Noteholder"), which is the holder of the note convertible into shares of common
stock of Current VASCO attached hereto as Schedule _____ (the "Current VASCO
Convertible Note").
Pursuant to the New VASCO Prospectus dated ______, 1997, as
supplemented and amended prior to the Expiration Date as defined therein (the
"Prospectus"), New VASCO has offered to the Convertible Noteholder the
opportunity to amend the terms of the Current VASCO Convertible Note to provide
for conversion into the same number of shares of common stock of New VASCO on
the same terms and conditions provided for in the Current VASCO Convertible
Note, in exchange for the release set forth in Section 2 below in favor of
Current VASCO or any of its predecessor entities (the "VASCO Predecessors")
consisting of VASCO Corp., a corporation incorporated in Delaware on May 22,
1984 ("Old VASCO"), and Ridge Point Enterprises, Inc., incorporated in Utah on
January 7, 1985 and subsequently renamed VASCO Corp. ("VASCO Utah"), and the
respective successors and assigns of each of the foregoing, including New VASCO
(Current VASCO, New VASCO, the VASCO Predecessors and all such successors and
assigns being collectively referred to hereinafter as "VASCO"). Current VASCO
hereby agrees to amend the Current VASCO Convertible Note in accordance with and
subject to the provisions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which hereby is acknowledged, the parties hereto agree as follows:
1. AMENDMENT TO CURRENT VASCO CONVERTIBLE NOTE. New VASCO,
Current VASCO and the Convertible Noteholder hereby agree to amend the terms of
the Current VASCO Convertible Note to provide that each reference in the Current
VASCO Convertible Note to a right or option on the part of Current VASCO or the
Convertible Noteholder to convert the Current VASCO Convertible Note into shares
of Current VASCO common stock shall be replaced by the right or option to
convert the Current VASCO Convertible Note into shares of New VASCO common stock
on the same terms and conditions, including without limitation the conversion
price; provided, that to the extent such conversion price is to be determined by
reference to any market or trading price of Current VASCO common stock, the
Current VASCO Convertible Note is hereby amended to provide that the conversion
price shall be determined by reference to the market or trading price of New
VASCO common stock in accordance with the formula set forth in the Current VASCO
Convertible Note. It is further agreed by the parties that terms of the Current
VASCO Convertible Note shall be amended to provide that the conversion price per
share of New VASCO common stock and the number of such shares convertible
pursuant to a New VASCO Warrant shall be adjusted from time to time
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as provided in Exhibit A hereto. It is agreed and understood by the parties that
the Current VASCO Convertible Note shall remain a valid and binding obligation
of Current VASCO and conversion of the Current VASCO Convertible Note into
shares of New VASCO common stock shall constitute payment under the Current
VASCO Convertible Note as if converted into shares of Current VASCO common
stock. The Convertible Noteholder acknowledges that the amendment to the Current
VASCO Convertible Note may result in the recognition of gain or loss for tax
purposes, and further the Convertible Noteholder agrees that such tax
consequences are solely his, her or its responsibility, and not that of Current
VASCO or New VASCO. The Convertible Noteholder shall have no rights as a
stockholder with respect to the New VASCO common stock into which the Current
VASCO Convertible Note is convertible until proper exercise of a conversion
right and delivery to the Convertible Noteholder of certificates for the shares
of New VASCO common stock pursuant to the conversion of the Current VASCO
Convertible Note. All shares acquired by the Convertible Noteholder pursuant to
this Agreement and the Current VASCO Convertible Note shall be subject to any
restrictions on sale, encumbrance and other disposition under applicable
securities laws.
2. RELEASE. The Convertible Noteholder hereby forever releases
and fully discharges VASCO, and each of them, from and against all direct or
indirect demands, claims, payments, obligations, actions or causes of action,
assessments, losses, liabilities, damages (including without limitation special,
consequential, exemplary, punitive and similar damages), reasonable costs and
expenses paid or incurred, or diminutions in value of any kind or character
(whether or not known or asserted prior to the date hereof, fixed or unfixed,
conditional or unconditional, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise), that the
Convertible Noteholder now has or ever had against VASCO or the assets of
Current VASCO or any of the VASCO Predecessors as a result of acts or omissions
occurring on or before the date of the Prospectus which arise from or are in
connection with
(i) any prior authorization, designation or issuance of stock,
any stock split, reclassification, redesignation, dividend or
distribution of or upon stock, any amendment to the certificate or
articles of incorporation or bylaws including those affecting the
amount, rights, powers or preferences of stock, and any failure to
properly authorize, approve or effect any of the foregoing actions,
including (a) the failure by Old VASCO to document whether an amendment
to its Certificate of Incorporation was duly authorized or to file a
Certificate of Amendment with the Delaware Secretary of State to amend
its Certificate of Incorporation in 1984 to effect a three-for-one
stock split of its common stock and to provide for 600,000 shares of
non-voting common stock prior to purportedly effecting the stock split
and issuing such non-voting common shares, (b) the failure by Old VASCO
to document whether director and stockholder approval was obtained for
an amendment to its Certificate of Incorporation increasing the number
of authorized shares of common stock in 1986, (c) the purported
issuance of Series A preferred stock in 1989 by VASCO Utah at a time
when the issuance of preferred shares was not authorized by VASCO
Utah's charter, and (d) the purported issuance of preferred stock by
Current VASCO in connection with the 1990 merger, when the rights,
powers and preferences of which such stock were not specified in
Current VASCO's Certificate of Incorporation and
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when its Certificate of Incorporation did not provide its Board of
Directors the power to designate such rights, powers and preferences;
(ii) any failure to properly design, approve, adopt,
administer, or authorize the number of shares subject to, any stock
option plan or program, including actions required to allow for options
awarded thereunder to be treated as incentive stock options under the
Internal Revenue Code of 1986, as amended (the "Code"), including the
failure by Old VASCO, VASCO Utah and/or Current VASCO to (a) document
approval by the Board of Directors and stockholders of stock option
plans, (b) specify and authorize the number of shares of stock to be
subject to such plans, (c) reserve the number of shares subject to such
plans, (d) document the authorization for the grant of options pursuant
to such plans and the issuance of shares upon exercise of such options,
and (e) design such plans in a manner that would ensure options granted
thereunder would be treated as incentive stock options;
(iii) any organization or any merger, consolidation, share
exchange, reorganization, recapitalization, sale of assets or like
event, or any failure properly to authorize, approve, effect or
consummate same, including (a) the failure to document the approval by
Old VASCO's stockholders of the 1986 reorganization through the share
exchange undertaken by Old VASCO and Ridge Point Enterprises,
Inc./VASCO Utah, (b) the failure to document whether all stockholders
of Old VASCO voluntarily exchanged their shares for shares of Ridge
Point Enterprises, Inc./VASCO Utah, (c) the failure to document the
mechanics of the exchange of Old VASCO shares for shares of Ridge Point
Enterprises, Inc./VASCO Utah, and (d) the following procedural
irregularities which call into question the validity of the intended
1990 merger of VASCO Utah and Current VASCO, as well as Current VASCO's
title to the assets of VASCO Utah purportedly succeeded to by Current
VASCO by virtue of the merger: (1) the incorporation of Current VASCO,
after the date of the 1990 merger agreement, (2) Current VASCO's
approval of the plan of merger, including approval of the plan of
merger prior to the incorporation of Current VASCO, the lack of
documented stockholder approval as called for by the plan of merger and
the effectiveness of the approval by Current VASCO's then Board of
Directors, (3) the authorization and issuance of stock by Current VASCO
pursuant to the merger, (4) the adoption of Current VASCO's initial
bylaws, appointment of Current VASCO's initial directors and the
election of its initial officers, and (5) the administrative
dissolution of VASCO Utah prior to the filing of a Certificate of
Merger with the State of Delaware, (6) the failure to file Articles of
Merger with the State of Utah in connection with the intended merger of
VASCO Utah and Current VASCO;
(iv) the dissolution, liquidation or winding up of any of
Current VASCO's predecessors, or any failure properly to approve or
effect said dissolution, liquidation or winding up, including (a) the
failure to properly document any stockholder approval of the
dissolution of Old VASCO and to document actions taken to dissolve,
liquidate and wind-up Old VASCO in 1987, (b) the failure to vest
effectively title and ownership in VASCO Utah of Old VASCO's assets and
to document the assumption by VASCO Utah of Old VASCO's liabilities,
and (c) the administrative dissolution of VASCO Utah in
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1990 prior to the intended merger transaction with Current VASCO and
before the filing of a Certificate of Merger with the State of
Delaware; and
(v) any failure to afford security holders any appraisal,
preemptive or other rights, whether accorded by statute or by the
articles of incorporation, certificate of incorporation or bylaws of
Current VASCO or any of its predecessors, in connection with any of the
matters described in the foregoing clauses (i), (ii), (iii) or (iv)
including (a) the failure of Old VASCO to document whether it afforded
its stockholders, in connection with issuances of Old VASCO capital
stock, the preemptive rights to purchase, upon the issuance or sale of
Old VASCO stock (or securities convertible into Old VASCO stock),
shares (or securities) in proportion to the amount of Old VASCO common
stock then owned by such holder, subject to conditions and time
limitations prescribed (and at a price determined as permitted by law),
by Old VASCO's Board of Directors, as provided for in the Old VASCO
Certificate of Incorporation and (b) the failure of VASCO Utah to
document whether it afforded its stockholders the appraisal rights
provided for by Utah law in connection with the intended 1990 merger of
VASCO Utah with Current VASCO.
(The matters listed in the foregoing clauses (i), (ii), (iii),
(iv) and (v) are collectively referred to in this document and the Prospectus as
the "Corporate Matters").
The Convertible Noteholder hereby irrevocably waives his
rights under any applicable statute, rule, regulation, legal principle, or legal
doctrine that provides that a general release does not extend to claims which a
releasing party does not know or suspect to exist in its favor at the time of
executing such release, which if known by the releasing party would have
materially affected its settlement with the released party.
3. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS OF
CONVERTIBLE NOTEHOLDER. The Convertible Noteholder hereby represents, warrants
and covenants that (i) the Convertible Noteholder has received and adequately
studied the Prospectus, (ii) the Convertible Noteholder has had adequate
opportunity to consult legal counsel of the Convertible Noteholder's choice
regarding this Agreement, (iii) the Convertible Noteholder has executed and
delivered this Agreement and the release set forth herein pursuant to the free
will of the Convertible Noteholder with the intention that the release be a
general release to the full extent provided herein, (iv) the Convertible
Noteholder has not sold, assigned or otherwise transferred any rights or
remedies arising from or in connection with the Corporate Matters, and (v) the
Current VASCO Convertible Notes are the only convertible notes held by the
Convertible Noteholder to acquire capital stock of Current VASCO or any of the
VASCO Predecessors. Current VASCO and the Convertible Noteholder each
acknowledges and agrees that this Agreement does not affect any rights or claims
the Convertible Noteholder may have against VASCO arising out of any matter or
transaction arising from and after the date of the Prospectus. Further, it is
expressly understood that this Agreement (i) will effect a release of any and
all Associated Corporate Matter Claims (as defined in the Prospectus) the
Convertible Noteholder may have even if less than all of the Convertible
Noteholder's Current VASCO Securities (as defined in the Prospectus) are
exchanged in the Exchange Offer (as defined in the Prospectus), and (ii) does
not release and discharge (a) any rights or remedies Current VASCO in its own
right, or as successor to the
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rights of the VASCO Predecessors, may have against any person or entity arising
out of the Corporate Matters, or (b) any rights or remedies unrelated to the
Corporate Matters the Convertible Noteholder has as a current security holder of
Current VASCO.
4. EXCHANGE OFFER; EFFECTIVE DATE. This Agreement is subject
to the terms and conditions of the Exchange Offer, as defined in the Prospectus,
and will become effective and binding on the parties hereto upon acceptance by
New VASCO of shares of common stock of Current VASCO tendered pursuant to the
Exchange Offer. Without limiting the foregoing, the Convertible Noteholder has
the right to withdraw this Agreement in accordance with the specific provisions
in the Prospectus under the heading "THE EXCHANGE OFFER - Withdrawal Rights."
5. GENERAL. This Agreement shall be governed by and construed
in accordance with the internal laws and not the conflicts of law rules of the
State of Illinois, and the invalidity or unenforceability of any term or
provision of this Agreement shall not affect the validity or enforceability of
any other term or provision hereof. This Agreement is binding on and inures to
the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns and in addition, the provisions of the
release set forth in Section 2 inure to the benefit of each of the persons and
entities included within the above definition of VASCO.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement.
New VASCO: VASCO DATA SECURITY INTERNATIONAL, INC.
By
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Its
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Current VASCO: VASCO CORP.
By
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Its
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Convertible Noteholder: Printed Name
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Signature
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Title
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Address
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Dated , 1997
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EXHIBIT A
ADJUSTMENT OF CONVERSION PRICE AND
NUMBER OF SHARES CONVERTIBLE
1. In case, prior to the expiration of a Current VASCO
Convertible Note by conversion or by its terms, New VASCO shall issue any shares
of New VASCO common stock as a stock dividend or subdivide the number of
outstanding shares of New VASCO common stock into a greater number of shares,
then in either of such cases, the then applicable conversion price per share of
the shares of New VASCO common stock convertible pursuant to that Current VASCO
Convertible Note in effect at the time of such action shall be proportionately
reduced and the number of shares at that time convertible pursuant to that
Current VASCO Convertible Note shall be proportionately increased; and
conversely, in the event New VASCO shall contract the number of outstanding
shares of New VASCO common stock by combining such shares into a smaller number
of shares, then, in such case, the then applicable conversion price per share of
the shares of New VASCO common stock convertible pursuant to that Current VASCO
Convertible Note in effect at the time of such action shall be proportionately
increased and the number of shares of NEW VASCO common stock convertible
pursuant to that Current VASCO Convertible Note shall be proportionately
decreased. If New VASCO shall, at any time during the term of a Current VASCO
Convertible Note, declare a dividend payable in cash on the New VASCO common
stock and shall, at substantially the same time, offer to its stockholders a
right to purchase new shares of New VASCO common stock from the proceeds of such
dividend or for an amount substantially equal to the dividend, all New VASCO
common stock so issued shall, for the purpose of that Current VASCO Convertible
Note, be deemed to have been issued as a stock dividend. Any dividend paid or
distributed upon the New VASCO common stock shall be treated as a dividend paid
in New VASCO common stock to the extent that shares of New VASCO common stock
are issuable upon conversion thereof.
2. In case, prior to the expiration of a Current VASCO
Convertible Note by conversion or by its terms, New VASCO shall be recapitalized
by reclassification of its outstanding New VASCO common stock (other than a
change in par value to no par value), or New VASCO or a successor corporation
shall consolidate or merge with or convey all or substantially all of its or of
any successor corporation's property and assets to any other corporation or
corporations (any such other corporations being included within the meaning of
the term "successor corporation" hereinbefore used in the event of any
consolidation or merger of any such other corporation with, or the sale of all
or substantially all of the property of any such other corporation to, another
corporation or corporations), then, as a condition of such recapitalization,
consolidation, merger or conveyance, lawful and adequate provision shall be made
whereby the Convertible Noteholder shall thereafter have the right to purchase,
upon the basis and on the terms and conditions specified in that Current
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VASCO Convertible Note, in lieu of the shares of New VASCO common stock
theretofore convertible upon the conversion of that Current VASCO Convertible
Note, such shares of stock, securities or assets of the other corporation as to
which the Convertible Noteholder would have been entitled had that Current VASCO
Convertible Note been converted immediately prior to such recapitalization,
consolidation, merger or conveyance; and in any such event, the rights of that
Convertible Noteholder to any adjustment in the number of shares of New VASCO
common stock convertible upon the conversion of that Current VASCO Convertible
Note, as hereinbefore provided, shall continue and be preserved in respect of
any stock which the Convertible Noteholder becomes entitled to purchase.
3. In case, prior to the expiration of a Current VASCO
Convertible Note by conversion or by its terms, New VASCO shall sell all or
substantially all of its property or dissolve, liquidate or wind up its affairs,
lawful provision shall be made as part of the terms of any such sale,
dissolution, liquidation or winding up, so that the Convertible Noteholder may
thereafter receive upon conversion hereof in lieu of each share of New VASCO
common stock which he would have been entitled to receive, the same kind and
amount of any securities or assets as may be issuable, distributable or payable
upon any such sale, dissolution, liquidation or winding up with respect to each
share of New VASCO common stock; provided, however, that in any case of any such
sale or of dissolution, liquidation or winding up, the right to convert that
Current VASCO Convertible Note shall terminate on a date fixed by New VASCO.
Such date so fixed shall be no earlier than 3:00 p.m., New York City time, on
the forty-fifth (45th) day next succeeding the date on which notice of such
termination of the right to convert that Current VASCO Convertible Note has been
given by mail to the Convertible Noteholder.
4. Upon any conversion of a Current VASCO Convertible Note by
the Convertible Noteholder, New VASCO shall not be required to deliver fractions
of one share, but may adjust the conversion price payable by that Current VASCO
Convertible Note in respect of any such fraction of one share on the basis of
the conversion price per share then applicable upon conversion of that Current
VASCO Convertible Note.
5. In case, prior to the expiration of a Current VASCO
Convertible Note by conversion or by its terms, New VASCO shall determine to
take a record of is stockholders for the purpose of determining stockholders
entitled to receive any dividend, stock dividend, distribution or other right
whether or not it may cause any change or adjustment in the number, amount,
price or nature of the securities or assets deliverable upon the conversion of
that Current VASCO Convertible Note pursuant to the foregoing provisions, New
VASCO shall give at least ten (10) days' prior written notice to the effect that
it intends to take such record to the Convertible Noteholder, said notice to
specify the date as of which such record is to be taken, the purpose for which
such record is to be taken, and the effect which the action which may be taken
will have upon that Current VASCO Convertible Note.
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SCHEDULE _____
ATTACHED HERETO
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