Exhibit 10.11


 


ACTIVIDENTITY
CORPORATION


EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is made and entered into as of December 7, 2008 (the “Effective
Date”), by and between ActivIdentity Corporation, a Delaware
corporation (the “Company”), and Michael
Sotnick (“you”).


 


1.                                       Position.  You will serve as the Executive Vice
President, Worldwide Sales and Field Operations of the Company.  You will have the duties and responsibilities
customarily associated with such position. 
Your office will be located at the Company’s headquarters at 6623
Dumbarton Circle, Fremont, California. 
You will report to the Company’s Chief Executive Officer.  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. 
During the term of your employment, you further agree that you will
devote all of your business time and attention to the business of the Company.  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 Company.  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 of 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
$20,833.33, which is equivalent to $250,000 on an annualized basis.  Your salary will be payable twice each 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 $250,000, 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 (the “Compensation Committee”)
of the Company’s Board of Directors (the “Board of Directors”).


 


b.                                      Bonus.  You will be eligible for a target bonus (“Target Bonus”) equivalent to a
certain percentage of the Base Salary, which unless has been otherwise agreed,
has been set at the rate of one hundred percent (100%) of the Base Salary, with
the potential for payment of up to two (2X) times the amount of the Target
Bonus attributed to factors related to the Company’s financial plan (and not
amounts related to Management by Objective (MBO) factors) in a given year for
extraordinary performance (the actual bonus amount for fiscal 2009 is expected
to be prorated at eighty-three and three tenths percent (83.3%) 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. 
The Target Bonus, or any portion thereof, will be paid as soon as
practicable after the 


 

















 


Compensation Committee determines that the Target
Bonus has been earned, but in no event shall the Target Bonus be paid after the
later of (i) March 15 following the calendar year in which such
Target Bonus is earned or (ii) the 15th day of the 3rd month following the
close of the Company’s fiscal year in which such Target Bonus is earned.


 


c.                                       Equity
Awards.


 


(i)                           On your
first day of employment with the Company, subject to approval by the Board of
Directors or a committee thereof, you will be awarded a stock option to
purchase up to 600,000 shares of the Company’s common stock (the “First Option”).  The First Option will be exercisable at a
price per share equal to the closing price of the Company’s common stock on the
grant date, as reported on the Nasdaq Global Market, and the First Option 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.  Subject to your continuing service with the
Company, the First Option will vest with respect to one-quarter of the
underlying shares on the first anniversary of the grant date and then with
respect to the remaining shares monthly thereafter equally over the next three
years so that he is fully vested on the fourth anniversary of the grant
date.  The First Option will have a
seven-year term and will be treated as non-qualified under the Internal Revenue
Code.


 


(ii)                        You shall
be eligible to receive a stock option to purchase up to 350,000 shares of the
Company’s common stock (the “Second Option”)
upon the Company exceeding its revenue goal for the nine month period running
from January 1, 2009, through September 30, 2009, as established in
the Company’s Fiscal Year 2009 Business Plan (the “Business
Plan”).  To the extent
there is any uncertainty as to whether the Company’s revenue goal is exceeded
from the amounts established in the Business Plan, the Compensation Committee,
in its reasonable discretion and good faith, shall make the final
determination.  The Second Option shall be
granted by the Board of Directors or a committee thereof as soon as
administratively feasible after the satisfaction of the revenue goal, subject
to your continued employment on such grant date.  The Second Option will be exercisable at a
price per share equal to the closing price of the Company’s common stock on the
grant date, as reported on the Nasdaq Global Market, and the Second Option will
be granted under the Company’s 2004 Equity Incentive Plan.  Subject to your continuing service with the
Company, the Second Option will vest with respect to one-quarter of the
underlying shares on the grant date and then with respect to the remaining
shares monthly thereafter equally over the next three years so that he is fully
vested on the third anniversary of the grant date.  The Second Option will have a seven-year term
and, to the extent possible, will be treated as an incentive stock option 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 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.  In all
policies of officer liability insurance, you 


 


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shall be named as an insured in such a manner as to
provide you the same rights and benefits as are accorded to the Company’s other
officers.


 


4.                                       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 if you
resign your employment for “Good Reason”
(as defined below), then you shall be entitled to receive the following
severance benefits:


 


a.                                       Twelve
(12) months’ Base Salary, 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 and your immediate family 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.


 


The Severance Payment
will be paid as a single lump sum upon termination.  The receipt of the Severance Payment pursuant
to this Agreement is subject to your signing and not revoking a separation and
release of claims agreement in a form reasonably and mutually acceptable to the
Company and Employee (the “Release”),
which must become effective no later than the 60th day following your
termination of employment (the “Release Deadline”),
and if not, you will forfeit any right to severance under this Agreement.  To become effective, the Release must be
executed by you and any revocation periods (as required by statute, regulation,
or otherwise) must have expired without you having revoked the Release.  In addition, the Severance Payment will not
be paid or provided until the Release actually becomes effective.  In the event your termination of employment
occurs at a time during the calendar year where the Release Deadline could
occur in the calendar year following the calendar year in which your
termination occurs, then the Severance Payments under this Agreement that would
be considered deferred compensation pursuant to Section 409A of the Code
(as described in Section 12(a)) will be paid on the first payroll date to
occur during the calendar year following the calendar year in which such
termination occurs, or such later time (i) as required by the payment
schedule applicable to each payment or benefit as set forth in Section 5, (ii) the
date the Release becomes effective or (iii) as required by Section 12(a).


 


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:


 


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a.                                       Twelve
(12) months’ Base Salary, 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 and your immediate family 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 the First Option and the Second Option, to the extent that it is
granted, 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.    The receipt of the Change of Control
Severance Payment pursuant to this Agreement is subject to your signing and not
revoking the Release, in the manner prescribed by Section 5b above, which
must become effective no later than the Release Deadline, and if not, you will
forfeit any right to severance under this Agreement.  To become effective, the Release must be executed
by you and any revocation periods (as required by statute, regulation, or
otherwise) must have expired without you having revoked the Release.  In addition, the Severance Payment will not
be paid or provided until the Release actually becomes effective.  In the event your termination of employment
occurs at a time during the calendar year where the Release Deadline could
occur in the calendar year following the calendar year in which your
termination occurs, then the Change of Control Severance Payment under this
Agreement that would be considered deferred compensation pursuant to Section 409A
of the Code (as described in Section 12(a)) will be paid on the first
payroll date to occur during the calendar year following the calendar year in
which such termination occurs, or such later time (i) as required by the
payment schedule applicable to each payment or benefit as set forth in Section 6,
(ii) the date the Release becomes effective or (iii) as required by Section 12(a).


 


7.                                       Confidential
Information and Invention Assignment Agreement.  This Agreement  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 has been provided previously 
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
title or primary duties and responsibilities as Executive Vice President,
Worldwide Sales and Field Operations, 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, or (d) the Company
materially breaches this Agreement or any other material written agreement
between you and the Company or the Company materially breaches or violates any
lawful material employment policy of the Company applicable to you.  “Good Reason Process”
shall mean 


 


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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 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 Company 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 Confidentiality 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.


 


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. 



 


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For all purposes under this Agreement, the term “Company”
shall include any affiliates of the Company and any successor to the Company’s
business, stock 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.


 


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 an officer of the Company.  No
failure on the part of the 


 


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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: December 4, 2008

  	
   

  	
  ActivIdentity Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Grant Evans

  
	
   

  	
   

  	
  Name:

  	
  Grant Evans

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATED: December 4, 2008

  	
   

  	
  Michael Sotnick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
           /s/ Michael
  Sotnick

  
	
   

  	
   

  	
  (Signature)

  



 


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