EX-10.4






EMPLOYMENT AGREEMENT




This employment agreement (hereinafter referred to as the “Agreement”) has been entered into
this 28th day of February with an effective date of April 1, 2010 by and between SCM
Microsystems, Inc., a Delaware corporation d/b/a Identive Group, having its principal executive
offices at 1900-B Carnegie Ave., Santa Ana, CA 92705, United States of America (hereinafter
together with all the companies directly and indirectly controlled by it referred to as the
“Company”) and Manfred Mueller, an individual being resident at Milanstrasse 14, 80435 Landshut,
Germany (hereinafter referred to as the “Executive”).



The Executive is appointed Executive Vice President of Identive Group and CEO of the SCM business,
responsible for the overall management and operations of the SCM business unit including its global
sales, manufacturing and technology operations. The Executive shall be responsible for implementing
the Company policies and strategies within the business units that maybe assigned to the Executive.
The Executive in addition shall be an officer of the Company and part of its top management team
with expected contribution to the overall direction of the Company.



1. POSITION AND RESPONSIBILITIES



Executive shall serve the Company in the capacity of Executive Vice President, and CEO of the SCM
business and shall fully and faithfully perform such duties and exercise such powers as are
incidental to such position including those duties set out in the following paragraphs in
connection with the business of the Company and its affiliates.



The Executive shall have overall responsibility management and operations of the SCM business unit
including its global sales, manufacturing and technology operations. The Executive shall be
responsible for implementing the Company policies and strategies within the business units that
maybe assigned to the Executive from time to time. The Executive in addition shall be an officer of
the Company and part of its top management team with expected contribution to the overall direction
of the Company. Executive shall fully and faithfully perform such duties and fulfil such
obligations, as are commensurate with his appointment as Executive. Executive shall devote his
full attention by using his best efforts to apply his skills and experience to perform his duties
hereunder and promote the interests of the business and projects of the Company.



The Executive acknowledges that he may be required to work beyond the normal work week for the
proper performance of his duties, and that he shall not receive further remuneration in respect of
such additional hours.



The Executive shall be normally based in Ismaning, Germany; however the Company will cover all of
the Executive’s reasonable travel and communication costs to the Company’s other offices.



The Executive agrees to travel on the Company’s business as may be required for the proper
performance of his duties under this Agreement.



2. COMPENSATION



a) Fixed salary: During the term of this Agreement, the Executive shall be paid an amount of Euro
150’000 per year, payable in 12 equal monthly instalments, as fixed salary, less the Executive’s
share of social costs.



b) Bonus: For services rendered during the term of this Agreement the Executive shall be paid an
annual bonus (hereinafter referred to as the “Bonus”) depending on EBIT growth both organic and
acquisitive allowing for 100% of salary to be received 50% cash and 50% in shares of the Company
with a 36 months lock up or deferral. The exact amount of the Bonus and the criteria for achieving
the bonus shall be subject to change and shall be determined by the CEO & Chairman and the
compensation committee of the Company.



c) Peak Bonus: For services rendered during the term of this Agreement the Executive shall be paid
a peak bonus (hereinafter referred to as the “Peak Bonus”) on achieving further growth of the EBIT
figure of the Company and the share price of the Company payable in 36 months options, vesting
after 12 months equivalent in number to salary and bonus in U.S. Dollars. For example, if the
annual salary amounts to $100’000 U.S. Dollars and the Bonus to $75’000 U.S. Dollars then the
Executive will be entitled to get the equivalent of $175’000 U.S. Dollars in share options. The
Executive acknowledges and agrees that the exact structure of the Peak Bonus may have to be
adjusted to fit with applicable law and stock exchange requirements, including the laws of Germany,
and the requirements of the NASDAQ Stock Market and the Frankfurt Stock Exchange, and that the
exact amount of the Peak Bonus and the criteria for achieving the Peak Bonus shall be subject to
change and shall be determined by the CEO & Chairman and the compensation committee of the Company.



d) Break-up Fee. The break-up fee of Fifty Thousand Euro (€50,000) (the “Break-up Fee”) that the
Company shall pay at a time to be mutually agreed upon by the Company and the Executive pursuant to
the terms of the certain Termination Agreement and Release, dated the date hereof, among the
Company, SCM Microsystems GmbH, and the Executive, shall be deducted from the future cash bonus
payments that the Executive would otherwise be entitled to receive under Sections 2(b) and 2(c)
hereof.



3. BENEFITS, PERQUISITES AND BUSINESS EXPENSES



a) The Executive shall be entitled to participate in any Stock Option Plan of the Company on such
terms as may be determined by the Chairman or the Board of Directors of the Company.



b) The Executive shall be entitled to be reimbursed for all reasonable expenses incurred by the
Executive in connection with the conduct of the business of the Company pursuant to this Agreement.
Such expenses shall be reimbursed within thirty (30) days following presentation of sufficient
evidence of such expenditures.



c) The Company shall provide the Executive with customary benefits which are subject to change from
time to time at the discretion of the Company.



d) The Executive shall be entitled to five (5) weeks of paid vacation per annum in addition to all
the local holidays in Germany.



e) The Company shall provide the Executive with a Company car in accordance with its Company Car
policy which may also be used privately. By mutual agreement the Executive may receive a
respective car allowance instead of a company car according to the Company’s car guideline. The
Company’s car guideline as in force from time to time shall apply additionally.



4. TERM AND TERMINATION



a) The initial term of this Agreement begins on March 1, 2010 and runs for a 24-month period (the
“Initial Term”), which term may be extended for an additional 24-month period by the mutual consent
of the parties hereto prior to the expiration of the Initial Term.



b) Termination by the Company or Executive without cause: The Company or the Executive shall be
entitled to terminate this Agreement at any time without cause by giving the other party twelve
(12) months prior written notice of the termination but the Company shall be required to continue
to pay the Executive’s monthly fixed salary and the bonus payments pro rata until the end of the
notice period.



c) Termination by the Company for cause: The Company shall be entitled to terminate this Agreement
for cause at any time without notice and without any payment in lieu of notice. In the event of
termination for cause, the Company’s obligations hereunder shall immediately cease and terminate
and Executive shall be immediately relieved of all of his responsibilities and authorities as an
officer, director and employee of the Company and as an officer, director and employee of each and
every affiliate in the Company and in such an event there will be no continued monthly salary, fee
or any other payments by the Company to the Executive. For purposes of this paragraph 4(c), “cause”
shall include, without limitation, the following circumstances:




	 	i)	 	The Executive has committed a criminal offence involving moral turpitude or has
improperly enriched himself at the expense of the Company.






	 	ii)	 	Executive, in carrying out his duties hereunder, (i) has been wilfully and grossly
negligent, or (ii) has committed wilful and gross misconduct or, (iii) has failed to comply
with a lawful instruction or directive from the CEO, CFO or the COO of the Company and
which is not otherwise cured within thirty (30) days of notice of such breach,






	 	iii)	 	The Executive has breached a material term of this Agreement and which is not cured
within ninety (90) days.





Termination of this Agreement for cause shall be effective upon the date of the notice of
termination given to the Executive and the lapse of any applicable cure period without remedy of
the matters set out in such notice.



d) Effect of Termination: The Executive agrees that, upon termination of this Agreement for any
reason whatsoever, Executive shall thereupon be deemed to have immediately resigned any position
that Executive may have as an officer, director or employee of the Company and each and every
affiliate of the Company. In such event, Executive shall, at the request of the Company or any
affiliate in the Company, forthwith execute any and all documents appropriate to evidence such
resignation. The Executive shall not be entitled to any payment in respect of such resignation in
addition to those provided for herein, except as expressly provided for pursuant to any other
agreement entered into with any affiliate in the Company.



e) Survival of Terms: It is expressly agreed that notwithstanding termination of this Agreement for
any reason or cause or in any circumstances whatsoever, such termination shall be without prejudice
to the rights and obligations of the Executive and the Company respectively in relation to the time
up to and including the date of termination and the provisions of paragraphs 3(b), 7 and 8 of this
Agreement, all of which shall remain and continue in full force and effect.



5. CONFIDENTIAL INFORMATION



a) The Executive agrees not to disclose, either during the term of this Agreement or at any time
for a period of three years thereafter, to any person not employed by the Company or by any
affiliate of the Company or not engaged to render services to the Company or to any affiliate in
the Company, any trade secrets or confidential information of or relating to the Company or any
affiliate of the Company obtained by the Executive during the term hereof; provided, however, that
this provision shall not preclude the Executive from the use or disclosure of information known
generally to the public (other than that which the Executive may have disclosed in breach of this
Agreement) or of information required to be disclosed by law or court order applicable to the
Executive or information authorized to be disclosed by the CEO, COO or the CFO of the Company.



b) The Executive also agrees that upon termination of this Agreement for any reason whatsoever,
Executive will not take, without the prior written consent of the CEO, COO or CFO of the Company,
any drawing, blueprint, specification, report or other document belonging or relating to the
Company or to any affiliate in the Company.



6. NON-COMPETITION, NON-SOLICITATION



a) The Executive agrees that during the period of this Agreement, the Executive shall not engage in
or participate in any entity in any industry that competes, directly or indirectly, with the
businesses of the Company or any affiliate in the Company. The Executive agrees that during the
period of this Agreement and for 12 months thereafter, the Executive shall not solicit any business
or any employee or any consultant from the Company or any of its affiliates.



b) During the Term of this Agreement, the Executive undertakes to seek the prior written approval
of the CEO, COO or the CFO of the Company before accepting any new board or advisory positions.



7. NOTICES



Any notices, requests, demands or other communications provided for by this Agreement shall be in
writing and shall be sufficiently given when and if mailed by registered or certified mail, return
receipt requested, postage prepaid, or sent by personal delivery, overnight courier or by facsimile
to the party entitled thereto at the address stated at the beginning of this Agreement or at such
other address as the parties may have specified by similar notice.



Any such notice shall be deemed delivered on the tenth business day following the mailing thereof
if delivered by prepaid post or if given by means of personal delivery on the day of delivery
thereof or if given by means of courier or facsimile transmission on the first business day
following the dispatch thereof.



8. ASSIGNMENT



The respective rights and obligations of the Company under this Agreement shall be assignable to
SCM Microsystems GmbH, a wholly-owned subsidiary of the Company (the “Permitted
Assignment”). With the exception of the Permitted Assignment, the respective rights and
obligations of the Executive and the Company under this Agreement shall not be assignable by either
party without the written consent of the other party and shall, subject to the foregoing, ensure to
the benefit of and be binding upon the Executive and the Company and their permitted successors or
assigns. Nothing herein expressed or implied is intended to confer on any person other than the
parties hereto any rights, remedies, obligations or liabilities under or by reason of this
Agreement.



9. APPLICABLE LAW



This Agreement shall be deemed a contract under, and for all purposes shall be governed by and
construed in accordance with the law of Germany. This Agreement has been drafted in English. In
case of contradictions between the English version and a version prepared in any other language,
the English version shall prevail.



10. ARBITRATION



In the event of any dispute, claim, question, or disagreement arising from or relating to this
Agreement or the breach thereof, the parties hereto shall use their best efforts to settle the
dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with
each other in good faith and, recognizing their mutual interests, attempt to reach a just and
equitable solution satisfactory to both parties. If they do not reach such solution within a period
of 60 days, then, upon notice by either party to the other, all disputes, claims, questions, or
differences shall be finally settled by arbitration administered by the American Arbitration
Association in accordance with the provisions of its Commercial Arbitration Rules. The proceedings
shall be held in the English language and the seat of the arbitral tribunal shall be in the city of
Munich, Germany, with one arbitrator and with each party bearing their own costs.



11. AMENDMENT OR MODIFICATION; WAIVER



No provision of this Agreement may be amended or waived unless such amendment or waiver is
authorized by the Company (including any authorized officer or committee of the Board of Directors)
and signed by the Executive. Except as otherwise specifically provided in this Agreement, no waiver
by either party hereto of any breach by the other party of any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar
breach, condition or provision at the same time or at any prior or subsequent time.



12. ENTIRE AGREEMENT



This Agreement contains the entire agreement between the parties hereto with respect to the matters
herein and supersedes all prior agreements and understandings, oral or written, between the parties
hereto, relating to such matters.



In witness whereof, the parties hereto have duly executed this Agreement in two counterparts on the
date first above written.



	 	 	 
	SCM Microsystems, Inc.	 	EXECUTIVE
	By: /s/ Ayman S. Ashour

	 	By: /s/ Manfred Mueller
	 

	 	 
	Name: Ayman S. Ashour

	 	Name: Manfred Mueller






Title: Chairman of the Board