Exhibit 10.5

VASCO DATA SECURITY INTERNATIONAL, INC.

EMPLOYMENT AGREEMENT AMENDMENT

WHEREAS, VASCO Data Security International, Inc. a Delaware corporation (the
“Company”) entered into an Employment Agreement (the “Original Agreement”),
dated January 1, 2003, with CLIFFORD K. BOWN (“Executive”);

WHEREAS, the Company and Executive entered into a letter agreement (the
“Letter”), dated February 26, 2007, to supplement the Original Agreement; and

WHEREAS, the Company and Executive would like to amend the Original Agreement
and the Letter to comply with applicable provisions of Section 409A of the
Internal Revenue Code of 1986, as amended;

NOW, THEREFORE, Executive and the Company hereby agree to amend the Original
Agreement and Letter, effective December 31, 2008 (the “Effective Date”), as
follows:

1. Section 4(b) of the Original Agreement is revised by adding the following
sentence at the end thereof:

Any such incentive compensation shall be paid to Executive in accordance with
the terms of the governing incentive plan document.

2. Section 6(d) of the Original Agreement is revised by adding the following new
paragraph at the end thereof:

For purposes of payments to Executive under this Agreement after an involuntary
termination of employment or termination for Good Reason, Executive must have
incurred a separation from service, as such term is defined under Section 409A
of the Code (as defined in Section 8).

3. Section 6 of the Original Agreement is revised by adding the following new
subsection (e) at the end thereof:

(e) Payments to Executive as a Specified Employee. In the event of any payments
to Executive after a termination of employment, as described in sections
(a)(iii) and (b)(ii) above and in Section 7 while Executive is a “specified
employee” (as defined in Code Section 409A), no payments will be made to
Executive during the first six months following his separation from service
date.

4. Section 7(a) of the Original Agreement is revised by substituting the
following therefor:

(a) For purposes hereof, a “Section 7 Termination” will have occurred if
Executive’s employment is terminated by the Company other than for Cause or by
Executive for Good Reason (as defined in Section 6(b)(ii)) within two years
following the occurrence of a Change in Control of VASCO Data Security
International, Inc. (the “Parent Company”) or the Company. Any payments made due
to a Section 7 Termination must be on account of Executive’s separation from
service and shall be subject to Section 6(e).

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5. Section 7(b) of the Original Agreement is revised by substituting the
following therefor:

(b) “Change in Control” has the meaning set forth in the VASCO Data Security
International, Inc. 2008 Equity Incentive Plan, which is intended to meet the
definition of a change in control under Code Section 409A.

6. Section 7(c) of the Original Agreement is revised by substituting the
following therefor:

(c) If a Section 7 Termination occurs, the Company shall pay Executive, as
severance compensation, his Base Salary and Incentive Compensation at the rate
then in effect for the period set forth in Exhibit A, from the date of
Executive’s separation from service. Subject to Section 6(e), such payment will
be made within 90 days following Executive’s separation from service date and
will be made in a lump sum payment equal to the present value of the stream of
monthly payments due. For purposes of this computation, present value will be
calculated on the basis of the prime rate of interest announced by the Company’s
principal bank, or if it has no principal bank, as published in The Wall Street
Journal on the business day immediately preceding the payment.

7. Section 7(d) of the Original Agreement is deleted in its entirety.

8. Section 8 of the Original Agreement is revised by adding the following
sentence at the end thereof:

For purposes of complying with Code Section 409A, in no event will any Gross-Up
Payment be made to Executive later than the end of the calendar year following
the calendar year in which Executive remits the tax payments to the appropriate
taxing authorities.

9. The Letter is amended by adding the following new Section as the last
paragraph thereof:

Compliance with Code Section 409A

For purposes of complying with Section 409A of the Internal Revenue Code of
1986, as amended, all reimbursements and in-kind benefits provided pursuant to
this Letter or the Employment Agreement are subject to this Section. Any taxable
reimbursements or in-kind benefits provided by the Company to Executive will be
made no later than the end of the calendar year following the calendar year the
expense was incurred or right to the in-kind benefit accrued. Further,
(a) payment of such reimbursements or in-kind benefits during one calendar year
will not affect the amount of such reimbursement or in-kind benefits provided
during a subsequent calendar year; and (b) such reimbursement benefit or rights
or in-kind benefits may not be exchanged or substituted for another form of
compensation to Executive.

All other terms, conditions and provisions of the Original Agreement and Letter
not herein modified shall remain unchanged and in full force and effect.

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This Employment Agreement Amendment may be executed in one or more counterparts,
and each such counterpart shall be deemed an original, but all such counterparts
together shall constitute but one Employment Agreement Amendment. In the event
that any signature to this Employment Agreement Amendment is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

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SIGNATURE PAGE TO EMPLOYMENT AGREEMENT AMENDMENT

IN WITNESS WHEREOF, the Company and Executive have caused this Employment
Agreement Amendment to be executed effective as of the Effective Date.

 

VASCO DATA SECURITY INTERNATIONAL, INC.

      EXECUTIVE By:  

/s/ T. Kendall Hunt

     

/s/ Clifford K. Bown

Its:

  Chief Executive Officer       CLIFFORD K. BOWN