Exhibit 10.1


 


ACTIVIDENTITY CORPORATION


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
(the “Agreement”)
is made and entered into as of August 1, 2008 by and between ActivIdentity
Corporation, a Delaware corporation (the “Company”), and Jacques Kerrest (the “Employee”).


 


1.                                       Position.  You will serve
as the Chief Financial Officer and Chief Operating Officer of the Company.  You will be responsible for all of the duties
normally attributed to the offices of the Chief Financial Officer and Chief Operating
Officer of similar publicly traded companies. 
Your office will be located at the Company’s headquarters at 6623
Dumbarton Circle, Fremont, California. 
Your service will commence on a part-time basis on August 4, 2008
(the “Effective Date”) and will
commence on a full-time basis on August 18, 2008.  You will report to the Company’s Chairman and Chief
Executive Officer and shall perform such duties as the Chairman and Chief
Executive Officer may from time to time require.  You will be employed on an at-will basis,
which means that you may resign and the Company may terminate your employment
or change your job title and duties at any time for any reason or for no
reason.


 


You agree to the best of your ability and experience
that you will at all times loyally and conscientiously perform all of the
duties and obligations required of you pursuant to the terms of this Agreement,
and will do so to the reasonable satisfaction of the Chairman and Chief
Executive Officer.  During the term of
your full-time employment, you further agree that you will devote all of your
business time and attention to the business of the Company.  The Company will be entitled to all of the
benefits and profits arising from or incident to all such work services and
advice.  You will not render commercial
or professional services of any nature to any person or organization, whether
or not for compensation, without the prior written consent of the  Board of Directors.  You will not directly or indirectly engage or
participate in any business that is competitive in any manner with the business
of the Company.  Nothing in this
Agreement will prevent you from accepting speaking or presentation engagements
in exchange for honoraria or from serving on boards or charitable
organizations, or from owning no more than one percent (1%) of the outstanding
equity securities of a corporation whose stock is listed on a national stock
exchange.


 


2.                                       Compensation.


 


a.                                       Salary.  You will be paid
a monthly salary of $27,083.33, which is equivalent to $325,000 on an annualized
basis.  Your salary will be payable twice
a month pursuant to the Company’s regular payroll practices (or in the same
manner as other employees of the Company), and shall be subject to the usual,
required withholding of income and employment taxes.  Your annual salary of $325,000, together with
any increases thereto, shall be referred to as your “Base
Salary.”  Base Salary will
be subject to annual review by the Compensation Committee of the Board of
Directors (the “Compensation
Committee”).


 

















 


b.                                      Bonus.  You will be
eligible for a target bonus (“Target Bonus”) equivalent to a certain percentage of
your Base Salary, which for fiscal 2008 has been set at 65% of your Base
Salary, with the potential for payment of up to two times that amount in a given
year for extraordinary performance (the actual bonus amount for fiscal 2008 is
expected to be pro rated for a partial year). 
Your Target Bonus percentage, the performance goals and objectives that
your Target Bonus will be based upon and ultimate determination of the Target
Bonus payment you receive will be determined by the Compensation Committee.


 


c.                                       Equity Awards.  On the Effective Date, you will be awarded
the two stock options described below to purchase 650,000 and 700,000 shares of
Company common stock, respectively.  The
options will be exercisable at a price per share equal to the last reported
closing price of the Company’s common stock on the day before the Effective
Date, as reported on the Nasdaq Global Market, and the options will be granted
outside of the Company’s stockholder-approved equity compensation plans as an “inducement
award,” but will be subject to the terms and conditions of the Company’s 2004
Equity Incentive Plan as if granted thereunder.


 


(i)                                     The first
option, which represents the right to purchase up to 650,000 shares of common
stock, (the “First Option”) will vest with
respect to one-quarter of the underlying shares on the first anniversary of the
Effective Date and then with respect to the remaining shares monthly thereafter
over the next three years so that it is fully vested on the fourth anniversary
of the Effective Date.  The First Option
will vest immediately if, following a Change of Control (defined below), you
are removed as Chief Financial Officer or Chief Operating Officer and such
removal is other than for Cause (defined below).


 


(ii)                                  The second
option, which represents the right to purchase up to 700,000 shares of common
stock, (the “Second Option”) will vest
only in the event that the Company’s average closing price of its common stock
over a 90-day period, as reported on the Nasdaq Global Market, is equal to or
greater than $4.50 per share (the “Stock Target”).  Once the Stock Target has been satisfied, the
Second Option will vest immediately with respect to 350,000 shares and will
then vest with respect to the remaining shares monthly thereafter over the next
12 months, provided that you continue to provide service to the Company during
that time.  If the Stock Target is not
achieved by the fourth anniversary of the Effective Date, then the Second
Option will be forfeited in its entirety. 
The Second Option will vest immediately if, following a Change of
Control (defined below), you are removed as Chief Financial Officer or Chief
Operating Officer and such removal is other than for Cause (defined below).


 


(iii)                               Both options
will have a seven-year term and will be treated as non-qualified under the
Internal Revenue Code.


 


3.                                       Employee
Benefits.  You will be
eligible to participate in the employee benefits plan currently and hereafter
maintained by the Company of general applicability to other senior


 


2

















 


executives
of the Company, including the Company group health insurance, dental insurance
and 401(k) plans.  The Company
reserves the right to cancel or change the employee benefit plans and programs
it offers to its employees at any time. 
You will be given a copy of, and must abide by, the Company’s employee
handbook and employee benefit plan documents which will describe more fully
these and other benefits of your employment, as well as the personal policies
and procedures which apply to employment with the Company.


 


4.                                       Relocation and Expense Reimbursement.


 


a.                                       Relocation Reimbursement. You will be entitled to reimbursement
of all reasonable and properly documented expenses, up to a reasonable limit to
be mutually agreed upon, incurred by you in connection with your relocation to
the Bay Area, which expenses may include moving expenses, temporary housing and
expenses relating the sale of your home in McLean.


 


b.                                      Expense Reimbursement. 
You will be entitled to reimbursement of all reasonable and properly
documented expenses incurred by you in the performance of your duties, in
accordance with the Company’s policies and procedures.


 


5.                                       Severance.  In the absence of a Change of Control, if
your employment with the Company is terminated by the Company without “Cause” (as defined below) or you
resign your employment for “Good Reason”
(as defined below), then you shall be entitled to receive the following
severance benefits:


 


a.                                       You will receive 12 months’
Base Salary, plus the Target Bonus for that year, less applicable withholding
taxes (the “Severance Payment”).


 


b.                                      The same level of health
(i.e. medical and dental) coverage and benefits as in effect for you on the day
immediately preceding the day of termination of employment; provided however,
that (i) you constitute a qualified beneficiary, as defined in Section 4980B(g)(1) of
the Internal Revenue Code of 1986, as amended (the “Code”); and (ii) you
elect continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”),
within the time period prescribed pursuant to COBRA.  The Company shall continue to provide you
with such health coverage until the earlier of (i) the date you are no
longer eligible to receive continuation coverage pursuant to COBRA, or (ii) 12  months from termination date.


 


c.                                       Partial acceleration of the
vesting of the First Option such that it vests with respect to an additional
162,500 shares as of the date of termination.


 


The Severance Payment will be paid as a single lump
sum upon termination.  Payment by the
Company of any of the foregoing severance benefits is conditioned upon your
resignation from the Board of Directors, if applicable, and your execution of a
general release in the form of the Settlement Agreement and Release attached
hereto as Exhibit A (the “Release”)
no later than 21 days of your termination date.


 


3

















 


6.                                       Change of Control Termination.  If there is a “Change of Control” (as defined
below) and within one year following the Change of Control, the Company or
successor corporation terminates your employment without “Cause”
(as defined below) or you resign your employment for “Good
Reason” (as defined below), then you shall be entitled to
receive the following severance benefits:


 


a.                                       You will
receive 18 months’ Base Salary, plus the Target Bonus for that year, less
applicable withholding taxes (the “Change of Control
Severance Payment”).


 


b.                                      The same level
of health (i.e. medical and dental) coverage and benefits as in effect for you
on the day immediately preceding the day of termination of employment; provided
however, that (i) you constitute a qualified beneficiary, as defined in Section 4980B(g)(1) of
the Code; and (ii) you elect continuation coverage pursuant to COBRA,
within the time period prescribed pursuant to COBRA.  The Company shall continue to provide you
with such health coverage until the earlier of (i) the date you are no
longer eligible to receive continuation coverage pursuant to COBRA, or (ii) 12  months from termination date.


 


c.                                       Accelerated
vesting of both the First Option and the Second Option such that they are fully
vested and immediately exercisable upon termination.


 


The Change of Control Severance Payment will be paid
as a single lump sum upon termination. 
Payment by the Company of any of the foregoing severance benefits is
conditioned upon your resignation from the Board of Directors, if applicable,
and your execution and delivery of the Release no later than 21 days of your
termination date.


 


7.                                       Confidential Information and Invention Assignment Agreement.  Your acceptance
of this offer and commencement of employment with the Company is contingent
upon the execution, and delivery to an officer of the Company, of the Company’s
Proprietary Information and Inventions Agreement (the “Confidentiality Agreement”)
a copy of which is enclosed for your review and execution.


 


8.                                       Certain Definitions.


 


a.                                       “Good
Reason.”  As used in
this Agreement, a resignation for “Good Reason” will occur if you comply with
the Good Reason Process and resign your employment as a result of (a) a
material reduction without Cause in your primary duties and responsibilities as
Chief Financial Officer and Chief Operating Officer, or (b) a reduction
without Cause by more than fifteen percent (15%) in your starting Base Salary,
or (c) a relocation to an office or location that is more than 50 miles
from the office you were originally hired to work for the Company.  “Good Reason Process”
shall mean that (1) you reasonably determine in good faith that a “Good
Reason” condition has occurred; (2) you notify the Company in writing of
the occurrence of the Good Reason condition within 60 days of the occurrence of
such condition; (3) you cooperate in good faith with the Company’s
efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the
condition; (4) notwithstanding such efforts, the Good 


 


4

















 


Reason condition continues to exist; and (5) you terminate your
employment within 60 days after the end of the Cure Period.  If the Company cures the Good Reason
condition during the Cure Period, Good Reason shall be deemed not to have
occurred.


 


b.                                      “Cause.”  As used in this Agreement, “Cause” shall mean any
of the following:


 


(i)                                     Failure to
Perform Duties.  You
continue to fail to perform your duties for the Company after a written demand
for performance has been delivered to you by the Board of Directors that
identifies with reasonable specificity how you have failed to perform;


 


(ii)                                  Adverse
Conduct.  You are convicted of, plea “guilty”
or “no contest” to a felony offense or any unlawful act which would be
materially detrimental to the reputation of the Company, or commit a material
act of dishonesty, fraud, embezzlement, misappropriation or financial
dishonesty against the Company; or


 


(iii)                               Breach
Agreement or Policy.  You materially
breach this Agreement, the Proprietary Information and Inventions Agreement, or
any other material written agreement between you and the Company or you
materially breach or violate any lawful material employment policy of the
Company, including those prohibiting harassment of another employee.


 


c.                                       “Change of
Control.”  As used in
this Agreement, “Change
of Control” shall mean (i) the sale of all or substantially
all of the assets of the Company to a non-affiliate, (ii) any merger or
consolidation of the Company with or into another corporation or other
transaction in each case in which the holders of more than 50% of the shares of
capital stock of the Company outstanding immediately prior to such transaction
do not continue to hold (either by the voting securities remaining outstanding
or by their being converted into voting securities of the surviving entity) 50%
or more of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction or (iii) as
a result of, or in connection with, a contested election of directors of Board
of Directors of the Company, the persons who were directors of the Company
immediately prior to the election cease to constitute a majority of the Board
of Directors.  For further clarification,
a reorganization or similar transaction among the Company and/or its
affiliates  shall not be deemed to
constitute a Change of Control.


 


9.                                       Applicable Law;
Severability.  This
Agreement shall be governed by the laws of the State of California, without
reference to rules relating to conflicts of law.  In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction or
arbitrator to be illegal, unenforceable, or void, this Agreement shall continue
in full force and effect without said provision.


 


5

















 


10.                                 Successors and
Assigns.  This Agreement shall be
binding upon the Company’s successors and assigns and upon your heirs,
executors, administrators, estate, successors and assigns.  For all purposes under this Agreement, the
term “Company” shall include any affiliates of the Company and any successor to
the Company’s business and/or assets, which becomes bound by this
Agreement.  You may not assign this
Agreement.


 


11.                                 No Inconsistent
Obligations.  By signing
this Agreement and accepting this offer of employment, you represent and
warrant to the Company that you are under no obligations or commitments,
whether contractual or otherwise, that are inconsistent with your obligations
set forth in this Agreement.  You also
represent and warrant that you will not use or disclose, in connection with
your employment by the Company, any trade secrets or other proprietary information
or intellectual property in which you or any other person has any right, title,
or interest and that your employment by the Company as contemplated by this
Agreement will not infringe upon or violate the rights of any other person or
entity.  You represent and warrant to the
Company that you have returned all property and confidential information
belonging to any prior employers.


 


12.                                 Section 409A.


 


a.                                       Anything in this Agreement
to the contrary notwithstanding, if at the time of your separation from service
within the meaning of Section 409A of the Code, the Company determines
that you are a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code, then to the extent any payment or benefit that you become entitled to
under this Agreement would be considered deferred compensation subject to the
20 percent additional tax imposed pursuant to Section 409A(a) of the
Code as a result of the application of Section 409A(a)(2)(B)(i) of
the Code, such payment shall not be payable and such benefit shall not be
provided until the date that is the earlier of (A) six months and one day
after your separation from service, or (B) your death.  The determination of whether and when a
separation from service has occurred shall be made in accordance with the
presumptions set forth in Treasury Regulation Section 1.409A-1(h).


 


b.                                      You and the Company intend
that this Agreement will be administered in accordance with Section 409A
of the Code.  To the extent that any
provision of this Agreement is ambiguous as to its compliance with Section 409A
of the Code, the provision shall be read in such a manner so that all payments
hereunder comply with Section 409A of the Code.  You and the Company agree that this Agreement
may be amended, as reasonably requested by either party, and as may be necessary
to fully comply with Section 409A of the Code and all related rules and
regulations in order to preserve the payments and benefits provided hereunder
without additional cost to either party.


 


c.                                       The Company makes no
representation or warranty and shall have no liability to you or any other
person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but do not
satisfy an exemption from, or the conditions of, such Section.


 


6

















 


13.                                 Entire
Agreement.  This
Agreement together with the Confidentiality Agreement, sets forth the full and
complete agreement between the Company and you regarding the subject matter
hereof and supersedes any and all prior representations or agreements between
you and the Company, if any, whether written or oral.  This Agreement may not be modified or amended
except by a written agreement, signed by you and the Company’s Chief Executive
Officer or other agent authorized by the Board of Directors.  No failure on the part of the Company or you
to exercise any power, right or privilege or remedy under this Agreement, and
no delay on the part of the Company or you in such exercise shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
further exercise thereof or any other power, right, privilege or remedy.  Any waiver must be in writing and executed by
the parties.  The captions contained in
this Agreement are for convenience only and shall not be considered part of
this Agreement.


 


 




	
  DATED:
  August 1, 2008

  	
  ActivIdentity
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Grant Evans

  
	
   

  	
  Name:

  	
  Grant Evans

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED: August 1, 2008

  	
  Jacques
  Kerrest

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jacques Kerrest

  
	
   

  	
  (Signature)

  






 


 


7