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
2
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 eli
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