Document:

exv10w2

 

Exhibit
10.2

[Translation from the German language]

Severance Agreement

between

SCM Microsystems GmbH

legally represented by its

managing director Robert Schneider

Oskar-Messter-Strasse 13

D-85737 Ismaning

- hereinafter referred to as “Employer” -

and

Mr.

Colas Overkott

6, Villa Sans Souci

92140 Clamart

France

- hereinafter referred to as “Employee” -

Preamble

To avoid a dismissal for operational reasons, the employment relationship between the
Parties shall be terminated by mutual consent as per 15 January 2006.

Until such time, the Employee shall receive his basic remuneration as agreed by contract.

The Parties hereby conclude the following

Severance Agreement:

§ 1

The Employee and the Employer agree that the employment relationship between the
Employee and the Employer shall end effective 15 January 2006 (“Termination Date”).

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[Translation from the German language]

The Employer undertakes to fulfil all claims arising from the Employment Contract
until termination of the employment relationship.

§ 2

The Employer shall pay the Employee severance compensation in accordance with Secs. 9, 10
of the German Dismissal Protection Act [Kündigungsschutzgesetz – KSchG] in the amount of
US$ 220,000.00 gross (in words: US$ two hundred and twenty thousand) for the loss of his
job. The amount of the severance payment is subject to deduction of wage tax and income
tax; such deduction shall be borne by the Employee.

The severance payment shall be due on the Termination Date.

The Employee shall continue to be available to the Employer after the Termination Date in
a part-time advisory capacity until the end of the transfer, that is until 28 February
2006. This shall not give rise to any remuneration claims for the Employee.

§ 3

On the Termination Date, the Employer shall issue and send to the Employee a favourable,
qualified testimonial [wohlwollendes, qualifiziertes Zeugnis].

§ 4

The Parties agree that the granted stock options shall vest and be exercised in accordance
with the SCM Microsystems, Inc. 1997 Stock Option Plan. However, subject to the consent by
the Board of Directors of SCM Microsystems, Inc., the Employer permits the Employee to
exercise options already vested on the Termination Date until 31 December 2006 at the
latest, in accordance with the Insider Trading Policy.

§ 5

The Employee’s (post-)contractual obligation to maintain confidentiality/secrecy under
clause 9 of his Employment Contract shall survive the Termination Date. The Employee shall
not disclose to third parties and shall not use for his own purposes any business,
operational or technical information entrusted to him or having become known to him which
information relates to the Employer or its group companies or customers and is of a
confidential nature.

In addition, the Employee undertakes, also after the Termination Date, to not direct any
business-detrimental and adverse statements to third parties and/or employees of SCM
Microsystems GmbH and its affiliates about SCM Microsystems GmbH or its shareholders.

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[Translation from the German language]

§ 6

The Parties undertake to maintain secrecy towards third parties with respect to the
financial details of this Contract, except where they are obliged by law to provide
information.

§ 7

The Employee undertakes to return in proper condition all work materials provided to him
and all other company property, such as in particular laptop, printer, telephone, mobile
phone etc. (including communication of any passwords as well as PIN codes), as well as any
other equipment provided to the Employee and/or owned by the Employer or provided to the
Employee as work equipment and supplies, by 28 February 2006 at the latest.

The same shall apply for business records, in whatever form recorded, and for all copies
of such records and documents. The same shall apply for the work results produced by the
Employee during the employment relationship.

The Employee undertakes to delete by 28 February 2006 any software for which the Employer
or an affiliate owns the licence and which is installed on a device owned by him or owned
by a third party and accessible to him. He also undertakes to transfer to suitable data
carriers of the Employer and then delete from the hard disk any data stored in electronic
form on such devices or on diskettes in his possession or ownership or on other storage
media which relate to matters of the Employer or an affiliate or their customers,
suppliers or business partners; he shall not make and/or retain any copies of the same.
The Employee will provide the Employer with any passwords for EDP files only known to him.

The Employee has to return his company vehicle (type BMW X5, registration no. M-O 5466) by
28 February 2006. Until then, the regulations on company vehicles shall continue to apply.
As before, the use of the vehicle is subject to tax.

The vehicle is to be returned in proper condition. No right of retention shall exist with
respect to the company vehicle.

§ 8

Upon the signing of this Contract, only those claims of the Employee against the Employer
or against an affiliate of the Employer as set out in this Contract shall exist.

Upon fulfilment of these claims by the Employer, any claims of the Employee against the
Employer as well as against an affiliate based on the employment relationship and its
termination as well as on any other legal ground shall be completely and finally settled.

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[Translation from the German language]

The Parties agree that, until beyond the Termination Date, the Employee shall not be
entitled to any claims on the basis of the SCM Employee Stock Purchase Plan (ESPP).

§ 9

The Employee is aware that information about possible effects of this Contract on social
security payments (in particular waiting period) as well as tax obligations and privileges
is provided by the social security agencies (in particular the employment offices and the
tax authorities, respectively). Insofar, he shall refrain from requesting any further
information from the Employer.

The Employee is informed of the need for own initiatives in the search for a new
employment and of the obligation to immediately register with the Federal Employment
Agency.

As a precaution, in the event that a “right of revocation in the case of doorstep
transactions” pursuant to Sec. 312 I sentence 1 no. 1 of the German Civil Code
[Bürgerliches Gesetzbuch - BGB] applies on the basis of the legal situation regarding the
“consumer” status of the Employee which has yet to be clarified, the Employee is advised
as follows.

Revocation
notice:

“You may revoke your contractual declaration in text form (e.g. letter, fax, e-mail)
without stating reasons for revocation within two weeks of receipt.
The time limit shall commence upon receipt of this notice at the earliest. For the
observance of the revocation time limit, timely sending of the revocation shall suffice.
Such revocation is to be addressed to SCM Microsystems GmbH, D-85737 Ismaning,
Oskar-Messter-Strasse 13”.

Changes and/or amendments to this Contract as well as side agreements must be agreed by
the Parties in writing to be valid. This shall also apply to the contracting-out of this
written form requirement.

Should any provisions of this Contract or parts thereof be invalid, the remaining
provisions of this Agreement shall not be affected thereby.
This Agreement is governed by the laws of the Federal Republic of Germany.
The agreed place of performance is Munich.

Ismaning, 19 January 2006

	 	 	 	 	 	 	 	 	 
	 

	 	/s/: Robert Schneider
	 	 	 	/s/ Colas Overkott	 	 
	 

	 	 

Managing Director
	 	 	 	 

Colas Overkott
	 	 
	 

	 	SCM Microsystems GmbH	 	 	 	 	 	 

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Exhibit
10.3

Date: January 17, 2006

Steven L. Moore

2083 Tenth Avenue

San Francisco, California 94116

Dear Steven:

     This letter is to confirm the terms of your continued employment arrangement with SCM
Microsystems, Inc. (the “Company”) as its Chief Financial Officer and Secretary. Under
these terms, you will continue to receive an annual base salary of $200,000.00, which will be paid
in accordance with the Company’s normal payroll procedures. You will also continue to be eligible
to receive an annual bonus up to a maximum bonus of 100% of your annual base salary, all in
accordance with the terms of the Company’s existing MBO bonus plan, as currently in effect and as
it may be amended in the future. In addition, you will be eligible to receive two transaction
bonuses as follows: (1) $75,000 payable upon the completion of a transaction involving the
Company’s Digital TV business, as contemplated by the engagement letter between the Company and
Avondale Partners dated February 14, 2005 (the “DTV Bonus”), and (2) $150,000 (less any DTV
Bonus previously received) payable upon completion of a transaction involving the Company, as
contemplated by the engagement letter between the Company and Thomas Weisel Partners dated July 27,
2005 (together with the DTV Bonus, the “Transaction Bonuses”). As an employee, you will
also be eligible to receive those employee benefits generally available to the Company’s employees.
You should note that the Company may modify job titles, salaries, bonuses and benefits from time
to time as it deems necessary.

     In addition, in the event the Company terminates your employment with the Company for any
reason other than “cause” (as defined below), or you terminate your employment with the Company
within 90 days of an event constituting “good reason” (as defined below), then you will be entitled
to receive a severance package consisting of (1) payment of your then-current monthly base salary
for a 12-month period following your termination of employment, (2) a bonus payment equal to your
2005 MBO bonus (to the extent it has not already been paid to you) and a pro-rata portion of your
2006 bonus under the MBO bonus plan, if termination of your employment occurs during 2006, and (3)
the Transaction Bonus for any transaction that is completed prior to or within 180 days following
the date of the termination of your employment. In the event of a payment of your pro-rata 2006
bonus as described in the preceding sentence, such amount shall be calculated based on the
annualization of year-to-date actual results through

 

 

the date of your termination and the Board of Directors approved good faith forecast results
through year end.

     All severance payments based on base salary shall be paid in accordance with the Company’s
standard payroll policies over a period of 12 months and all severance payments related to a MBO
bonus shall be paid no later than 30 days following your termination of employment. Any
Transaction Bonus shall be paid no later than 30 days following the completion of the applicable
transaction. Further, the obligations of the Company to make, and your entitlement to receive, any
such severance payments shall be subject to (1) you executing an effective general release of
claims in customary form, and (2) you continuing to comply with the terms and conditions of the
Employee Confidential Information, Inventions and Proprietary Rights Assignment Agreement entered
into between yourself and the Company dated                      (the “NDA”), a copy of which is
attached as Exhibit A hereto.

     The following actions, failures and events by or affecting you shall constitute “cause” for
termination within the meaning of this letter agreement: (A) an act of dishonesty made by you in
connection with your responsibilities as an employee, (B) your conviction of, or plea of nolo
contendere to, a felony, (C) you gross misconduct, (D) your continued substantial violations of
your employment duties after you have received a written demand for performance from the Company
that specifically sets forth the factual basis for the Company’s belief that you have not
substantially performed your duties, or (E) your willful and material breach of the NDA. The
following actions and events by the Company or affecting you shall constitute “good reason” for
your resignation within the meaning of this letter agreement: (A) the relocation of your primary
work place for the Company or the relocation of the place from which the Company directs that the
responsibilities of the Chief Financial Officer be discharged, in either case, to a location more
than fifty (50) miles from its current location in Fremont, California, or (B) without your written
consent, a material diminution in your title, reporting relationships, or scope of responsibilities
or authority. In no event shall the communication by the Company of its intent to take an action
in the future which, if taken, would constitute “good reason”, constitute “good reason” solely as a
result of the communication of its intent to you. In addition, following your termination without
cause or your resignation with good reason, you will be entitled to receive coverage under the
Company’s group health insurance programs as permitted pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”). The Company shall pay the full amount of
your group health coverage premiums as determined under COBRA until the earlier of (1) your
subsequent employment and eligibility for group health coverage under the plan of your new employer
or (2) one year from the date of your termination or resignation. Nothing in this letter affects
your legal rights to health care continuation coverage under COBRA or any other applicable law.

     While it is the current intent that your employment shall continue until the earlier of (i)
March 31, 2006 or (ii) 60 days following a change of control of the ownership of the Company, you
should be aware that your employment with the Company is for no specified period and constitutes
at-will employment. As a result, you are free to resign at any time, for any reason or for no
reason and the Company is free to conclude its employment relationship with you at any time, with
or without cause, and with or without notice, subject to the Company’s obligations to you under the
immediately preceding paragraphs in the event of a termination without cause or

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resignation with good reason. We request that, in the event of resignation, you give the
Company at least two weeks notice.

     During the term of your employment with the Company, you continue to agree that you will not
engage in any other employment, occupation, consulting or other business activity directly related
to the business in which the Company is now involved or becomes involved during the term of your
employment, nor will you engage in any other activities that conflict with your obligations to the
Company. Similarly, you continue to agree not to bring any third party confidential information to
the Company, including that of your former employer, and that in performing your duties for the
Company you will not in any way utilize any such information.

     As a condition of your continued employment, you are also required to sign and comply with the
NDA that requires, among other provisions, the assignment of patent rights to any invention made
during your employment at the Company, and non-disclosure of Company proprietary information.

     In the event of any dispute or claim relating to or arising out of our employment
relationship, you and the Company agree that (i) any and all disputes between you and the Company
shall be fully and finally resolved by binding arbitration, (ii) you are waiving any and all rights
to a jury trial but all court remedies will be available in arbitration, (iii) all disputes shall
be resolved by a neutral arbitrator who shall issue a written opinion, (iv) the arbitration shall
provide for adequate discovery, and (v) the Company shall pay all but the first $125 of the
arbitration fees.

     This letter agreement, along with any agreements relating to proprietary rights between you
and the Company and any agreements documenting the terms of compensatory stock options previously
granted to you, set forth the entire agreement for your continued employment with the Company and
supersede any prior agreements or understandings, whether oral or written, concerning the subject
matter set forth herein, including, but not limited to, the offer letter dated June 29, 2003 and
any amendments thereto. This letter, including, but not limited to, its at-will employment
provision, may not be modified or amended except by a written agreement signed by the Chief
Executive Officer of the Company and you. This letter may be signed in one or more counterparts.
This letter will be governed by the laws of the State of California, other than its conflict-of-law
provisions.

[Signature Page Follows]

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     We look forward to your continued relationship with SCM Microsystems, Inc.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sincerely,	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	SCM MICROSYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Robert Schneider	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Robert Schneider, Chief Executive Officer
	 
	 	 	 	 	 	 	 	 	 	 
	Agreed to and accepted:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signature:

	 	/s/ Steven L. Moore	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Steven L. Moore	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:  January 17, 2006	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Enclosure:

	 	NDA	 	 	 	 	 	 	 	 

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