8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 29, 2009

SCM Microsystems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-29440	77-0444317
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1900-B Carnegie Avenue,
Santa Ana, California		92705
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (949) 250-8888

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets

     On January 4, 2010, SCM Microsystems, Inc., a Delaware corporation (“SCM” or the “Company”) completed its previously announced acquisition (the “Business Combination”) of Bluehill ID AG, a stock corporation incorporated in Switzerland (“Bluehill ID”), in accordance with the Business Combination Agreement between SCM and Bluehill ID, dated as of September 20, 2009, as amended (the “Business Combination Agreement”).

     Under the terms of the Business Combination Agreement, SCM made an offer to the Bluehill ID shareholders to acquire all of the Bluehill ID shares and issued 0.52 new shares of SCM’s common stock for every one share of Bluehill ID tendered. Approximately 29,422,714, or 92% of Bluehill ID shares outstanding were tendered in the offer and exchanged for a total of approximately 15,299,797 new shares of SCM common stock. Following the close of the transaction, approximately 38% of the outstanding shares of SCM are now held by former Bluehill ID shareholders. The issuance of the shares of SCM common stock to the former shareholders of Bluehill ID was approved by the stockholders of SCM at a special meeting held on December 18, 2009 and the transfer of the new shares is expected to be initiated by SCM on January 7, 2009.

     The foregoing description of the Business Combination Agreement is a summary only and is qualified in its entirety by reference to the full text of the Business Combination Agreement, a copy of which was filed by SCM as Exhibit 2.1 to its Current Report on Form 8-K filed on September 21, 2009 and is incorporated herein by reference.

     A copy of the press release announcing the closing of the Business Combination is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

     Item 5.02 Election of Directors; Appointment of Certain Officers

     (b)

     Effective December 29, 2009, Werner Koepf resigned from SCM’s board of directors (the “SCM Board”).

     (c)

     Effective January 4, 2010, Melvin Denton-Thompson has been designated Chief Financial Officer of SCM, replacing Stephan Rohaly, who left the position in September 2009. Denton-Thompson brings 25 years’ international financial management experience in a number of industries, particularly with security companies. He served as CFO and Chief Operating Officer of Bluehill ID since May 2008. Previously, he was CFO and Deputy CEO of the Hospitality division of Assa Abloy, a security solutions firm.

     As disclosed in the Form S-4 Registration Statement filed by SCM with the SEC on October 22, 2009, as amended in an Amendment No. 1 to the Form S-4 filed by SCM with the SEC on November 10, 2009, Bluehill ID, through its wholly-owned subsidiary Bluehill Micro Tech GmbH, entered into an agreement, dated April 29, 2008, with Missions-Cadres SARL to secure the services Mr. Denton-Thompson as Bluehill ID’s Chief Operating Officer and Chief Financial Officer (the “Denton-Thompson Employment Agreement”). The Denton-Thompson Employment Agreement is effective for a three-year term, commencing May 1, 2008, and is renewable at the option of Bluehill ID for an additional 36 months. The agreement may be terminated by either party with or without cause upon six months’ notice.

     Under the Denton-Thompson Employment Agreement, Mr. Denton-Thompson, through Missions-Cadres SARL, is entitled to an annual base salary of €150,000 (approximately $220,805) in cash, payable in monthly installments, and €50,000 (approximately $73,602) in bearer shares in Bluehill ID, which stock will be valued at the time of issuance and subject to a 12-month lockup period from the date of issuance. Mr. Denton-Thompson, through Missions-Cadres SARL, is also entitled to an annual base bonus of up to 100% of the base cash salary amount (Base Bonus), based upon Bluehill ID’s financial performance in

Europe, payable 50% in cash and 50% in bearer shares in Bluehill ID, which stock will be valued at the time of issuance and subject to a 36-month lockup period from the date of issuance. The exact amount of the Base Bonus is subject to determination by the compensation committee of Bluehill ID’s board of directors. Mr. Denton-Thompson, through Missions-Cadres SARL, is also entitled to receive an additional bonus (Peak Bonus) subject to Bluehill ID’s achievement of certain financial goals and share price targets determined by the compensation committee of Bluehill ID’s board of directors, payable in 36-month options, vesting 12 months after issuance, with such options granted under the Bluehill ID Option Plans. The number of shares subject to the option is equal to the total amount of received by Mr. Denton-Thompson, through Missions-Cadres SARL, in cash salary and annual base bonus, calculated in Euros, divided by the price per share at the time of issuance.

     Mr. Denton-Thompson is entitled to costs relating to social, pension and health insurance in France or elsewhere, as well as five weeks of annual vacation.

     The Denton-Thompson Employment Agreement is subject to certain other terms and provision and includes a confidentiality and non-disclosure undertaking, which expires three years after expiration of the term. Following the closing of the transaction, Bluehill ID, SCM and Mr. Denton-Thompson intend to review the terms of Denton-Thompson Employment Agreement to determine whether any changes are necessary in light of the business combination and the role of Mr. Denton-Thompson with the combined companies, including the possibility of entering into an agreement directly with Mr. Denton-Thompson.

     (d)

     On January 4, 2010, Ayman S. Ashour, Chief Executive Officer of Bluehill ID, joined SCM’s board of directors and was named Executive Chairman of the Board. Also on January 4, 2010, Dr. Cornelius Boersch and Daniel S. C. Wenzel, both former directors of Bluehill ID, joined SCM’s board of directors.

     Bluehill ID has granted to BH Capital Management AG, a company controlled and owned by Mr. Ashour and Mountain Partners AG, which is an affiliate of Mr. Wenzel and Dr. Boersch, an option to purchase up to 3,914,790 bearer shares in Bluehill ID at an exercise price of CHF 1.00 per share until June 30, 2014 pursuant to a Call Option Agreement dated September 8, 2009, which were converted at the closing of the transaction into an option to purchase up to 2,035,691 shares of SCM common stock at an exercise price of euro 1.28 per share. Additionally, following the Business Combination, Mr. Ashour beneficially owns, directly or indirectly, approximately 10.8% of the outstanding shares of SCM common stock, Dr. Boersch beneficially owns, directly or indirectly, approximately 23.4% of the outstanding shares of SCM common stock, and Mr. Wenzel beneficially owns, directly or indirectly, approximately 25.2% of the outstanding shares of SCM common stock.

     Mr. Ashour was appointed as a Class II director and his term will expire at the annual meeting of SCM stockholders to be held in 2012. The SCM Board has not yet determined on what committees, if any, Mr. Ashour may serve. Mr. Ashour was appointed to the SCM Board pursuant to the terms of the Business Combination Agreement, which provided that Mr. Ashour would be appointed to the SCM board as [Executive] Chairman immediately following the effective time of the Business Combination. Other than the Business Combination Agreement, there is no arrangement or understanding between Mr. Ashour and any other persons pursuant to which he was selected as a director. There are no transactions, or proposed transactions, to which SCM is or was to be party and in which Mr. Ashour had a direct or indirect material interest that are required to be disclosed under Item 404(a) of Regulation S-K. There are no related party transactions between SCM and Mr. Ashour reportable under Item 404(a) of Regulation S-K. There are no family relationships among Mr. Ashour and any other directors or officers of SCM.

     Bluehill ID, through its wholly-owned subsidiary Bluehill ID Services AG, entered into an employment agreement, dated December 1, 2009, with Mr. Ashour (the “Ashour Employment Agreement”). Pursuant to the terms of the Ashour Employment Agreement, Mr. Ashour will serve as Bluehill ID’s Chief Executive Officer and President of its board of directors. The Ashour Employment Agreement is effective for a three-year term, commencing December 1, 2009, and may be renewed on terms acceptable to both parties for an additional three years. If Mr. Ashour is terminated without cause, Mr. Ashour is entitled to receive (i) the base monthly compensation until the earlier to expire of 24 months from the date of termination or the then current term of the agreement and (ii) bonus payments and benefits until the expiry of the current term. Under the Ashour Employment Agreement, Mr. Ashour is entitled to annual compensation (the “Fees”) in the amount of CHF 300,000 (approximately $290,827), payable in monthly installments. Mr. Ashour is also entitled to an annual bonus (the “Base Bonus”) of up to CHF 300,000 (approximately $290,827), based upon Bluehill ID’s financial performance and other criteria, payable 50% in cash and 50% in bearer shares in Bluehill ID, which stock will be valued at the time of issuance and subject to a 36-month lock-up period from the date of issuance. The exact amount of the Base Bonus is subject to determination by the compensation committee of Bluehill ID’s board of directors. Mr. Ashour is entitled to receive an additional bonus subject to achievement of certain financial goals and share price targets (the “Peak Bonus”) determined by the compensation committee of Bluehill ID’s board of directors, payable in 36-month options which vest 12 months after issuance, with such options granted under the Bluehill ID Option Plans. The number of shares subject to the option is equal to the total amount received by Mr. Ashour in Fees and Base Bonus, calculated in Euros, divided by the price per share at the time of issuance. The Ashour Employment Agreement provides that any and all consideration due in bearer shares in Bluehill ID will be discharged in shares of SCM common stock, and any and all consideration due in options of Bluehill ID will be discharged in securities of SCM, in each case subject to and following the closing of the business combination transaction. The foregoing description of the terms and conditions of the Ashour Employment Agreement does not describe all terms and conditions thereof, and is expressly qualified by reference to the specific text of the Ashour Employment Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by this reference. As an incoming director of SCM, Mr. Ashour is also entitled to receive an initial stock option grant for 10,000 shares of SCM common stock, based on the closing price of SCM’s shares on the date of his appointment to the board.

     Dr. Boersch was appointed as a Class III director and his term will expire at the annual meeting of SCM stockholders to be held in 2010. The SCM Board has not yet determined on what committees, if any, Dr. Boersch may serve. Dr. Boersch was appointed to the SCM Board pursuant to the terms of the Business Combination Agreement, which provided that two additional members of the board of directors of Bluehill ID would be appointed to the SCM board immediately following the effective time of the Business Combination. Other than the Business Combination Agreement, there is no arrangement or understanding between Dr. Boersch and any other persons pursuant to which he was selected as a director. Other than the Business Combination Agreement, there are no transactions, or proposed transactions, to which SCM is or was to be party and in which Dr. Boersch had a direct or indirect material interest that are required to be disclosed under Item 404(a) of Regulation S-K. There are no related party transactions between SCM and Dr. Boersch reportable under Item 404(a) of Regulation S-K. There are no family relationships among Dr. Boersch and any other directors or officers of SCM.

     As an incoming director of SCM, Dr. Boersch is entitled to receive an initial stock option grant for 10,000 shares of SCM common stock, based on the closing price of SCM’s shares on the date of his appointment to the board.

     Mr. Wenzel was appointed as a Class I director and his term will expire at the annual meeting of SCM stockholders to be held in 2011. The SCM Board has not yet determined on what committees, if any, Mr. Wenzel may serve. Mr. Wenzel was appointed to the SCM Board pursuant to the terms of the Business Combination Agreement, which provided that Bluehill ID might appoint two directors to the SCM Board immediately following the effective time of the Business Combination. Other than the Business Combination Agreement, there is no arrangement or understanding between Mr. Wenzel and any other persons pursuant to which he was selected as a director. Other than the Business Combination Agreement, there are no transactions, or proposed transactions, to which SCM is or was to be party and in which Mr. Wenzel had a direct or indirect material interest that are required to be disclosed under Item 404(a) of Regulation S-K. There are no related party transactions between SCM and Mr. Wenzel reportable under

Item 404(a) of Regulation S-K. There are no family relationships among Mr. Wenzel and any other directors or officers of SCM.

     As an incoming director of SCM, Mr. Wenzel is entitled to an initial stock option grant for 10,000 shares of SCM common stock, based on the closing price of SCM’s shares on the date of his appointment to the board.

Item 8.01 Other Events

     In accordance with the terms of the Business Combination Agreement and following the completion of the Business Combination, a new corporate identity has been developed for the combined company that is designed to reflect its core activities in security and identification technology. Beginning January 4, 2010, SCM will start doing business under the name “Identive Group.” In connection with the new corporate identity, SCM also plans to file to change its ticker symbol on the NASDAQ Stock Exchange to “INVE” and on the regulated market (Prime Standard) of the Frankfurt Stock Exchange to “INV.” It is currently expected that the change in ticker symbols will occur on January 15, 2010. Identive Group intends to seek stockholder approval in the future to amend its certificate of incorporation to officially change its name to “Identive Group,” and in the interim will continue to file its annual, quarterly and current reports under SCM Microsystems, Inc. Additionally, Bluehill ID, as a majority-owned subsidiary, will change its name to “Identive Group AG” and will seek regulatory approval for such change, but is expected to continue to trade at the open market of the Frankfurt Stock Exchange under the symbol BUQ. The individual operating businesses of Identive Group will continue to use their existing brands, which include SCM Microsystems, Hirsch, Multicard, Tagstar, Arygon, Syscan and ACiG Technology.

Item 9.01 Financial Statements and Exhibits

     (b)-(c)

     The registrant intends to file the Bluehill ID financial statements required under this Item, as well as any required pro forma financial information, by amendment to this Form 8-K within 71 calendar days of the date that this report is required to be filed.

     (d) Exhibits

Exhibit	Description
10.1	Employment Agreement, dated December 1, 2009, by and between Bluehill ID Services AG and Ayman S. Ashour
99.1	Press Release issued on January 4, 2010 announcing closing of transaction

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SCM Microsystems, Inc.
January 4, 2010	By:	/s/ Martin Wimmer
		Martin Wimmer
		Vice President, Interim Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Employment Agreement, dated December 1, 2009, by and between Bluehill ID Services AG and Ayman S. Ashour
99.1	Press release issued by SCM on January 4, 2010 announcing closing of transaction

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This employment agreement (hereinafter referred to as the “Agreement”) has been entered into with effect as of this 1^st day of December 2009 by and between Bluehill ID Services AG, a company limited by shares under Swiss law, having its registered office at Etzelblickstasse 1, CH-8834 Schindellegi (hereinafter referred to as the “Company”) and Mr. Ayman S. Ashour resident at Etzelblickstrasse 1, 8834 Schindellegi, Switzerland (hereinafter also referred to as the “Executive”).

The Company is a service company fully owned by Bluehill ID AG and was set up to provide management and administrative services to the companies directly or indirectly held and/or controlled by Bluehill ID AG, an industrial holding company having its registered office at Dufourstrasse 124, CH-9001 St. Gallen (hereinafter collectively referred to as the “Bluehill ID Group”).

The Company acknowledges and agrees that the Executive acts as the Principal of Newton International Management LLC and that the Executive holds the position of adjunct lecturer at Suffolk University in Boston.

1. POSITION AND RESPONSIBILITIES

Executive shall serve the Company and any of its present and future affiliates, subsidiaries and group companies in the capacity of CEO and president of the board of directors, as the case may be, 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 Bluehill ID Group, its affiliates and joint ventures and such other compatible duties and powers as may from time to time be assigned to the Executive by the board of directors of the Company (the “Board of Directors”).

Executive is to have responsibility for the supervision, and direction of the Bluehill ID Group with the obligation, duty, authority, and power to do all acts and things as are customarily done by persons holding the position of Executive in companies/corporations of similar size to the Bluehill ID Group and to do all acts and things as are reasonably necessary for the efficient and proper operation and development of the Bluehill ID Group.

Such responsibilities shall include, but shall not be limited to, (i) reporting to the Boards of Directors of the Bluehill ID Group, (ii) supervising and directing the senior officers of the Bluehill ID Group and its affiliates with a view to growing the business of the Bluehill ID Group and increasing its sales and revenues, (iii) and liaising with the shareholders of Bluehill ID AG and increasing the existing investor base of Bluehill ID AG.

Executive shall fully and faithfully perform such duties and fulfil such obligations, as are commensurate with his appointment. Executive shall devote full attention using his best efforts to apply his skill and experience to perform his duties hereunder and promote the interests of the business and projects of the Bluehill ID Group.

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.

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The Executive shall be based in London, England, and the Company shall supply the Executive with appropriate accommodation, transportation, including a company car, and work permits when in Switzerland.

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. TERM

The term of this Agreement (the “Term”) shall be effective for a three-year period from 1 December 2009 and shall continue until 30 November 2012.

This Agreement and the continuation of Executive’s services to the Company, along with his positions and titles within the Bluehill ID Group may be renewed at the end of the said Term on conditions mutually acceptable to the Executive and the Company for an additional three year period.

If the same are not renewed, this Agreement shall terminate on 30 November 2012 without further requirement of notice or pay in lieu thereof. The Company will provide notice of at least 1 year (360) days if it intends to renew this Agreement.

3. COMPENSATION

a) Salary: For services rendered by Executive during the term of this Agreement, the Executive shall be paid a salary in the amount of CHF 300,000 (less Executive’s share of social costs) per year, payable in 12 equal monthly instalments with the first instalment becoming due and payable immediately on 31^st December 2009.

b) Bonus: For services rendered by the Executive 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 the equivalent of CHF 300,000 to be received per year payable 50% in cash and 50% in shares of Bluehill ID AG with a lock-up or deferral period of 36 months from the date when such Bonus has become due and payable. The exact amount of the Bonus shall be determined by the compensation committee of the Bluehill ID Group.

c) Peak Bonus: For services rendered by the Executive 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 Bluehill ID AG and the share price of Bluehill ID AG payable in 36 months options, vesting after 12 months equivalent in number to the Salary and the Bonus. For example if the annual Salary amounts to CHF 300,000 and the Bonus to CHF 100,000 then the Executive will be entitled to get the equivalent of CHF 400,000 in share options. Executive acknowledges and agrees that the exact structure of the Peak Bonus may have to be adjusted to fit with applicable stock exchange requirements.

4. BENEFITS, PERQUISITES AND BUSINESS EXPENSES

a) The Executive shall be entitled to participate in any future Stock Option Plan of Bluehill ID AG on such terms as may be determined by the Board of Directors.

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b) The Company shall provide the Executive with a company car in accordance with its policies at his normal base of business, currently in the UK, with all related expenses covered by the Company. The Company shall provide the Executive with a monthly car and housing allowance of CHF 1,500 to cover the Executive’s car and housing expenses in Switzerland.

c) 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 Bluehill ID Group pursuant to this Agreement. Such expenses shall be reimbursed within thirty (10) days following presentation of sufficient evidence of such expenditures.

d) The Company shall provide the Executive with a comprehensive health insurance and plan. These costs shall be reimbursed by the Company. The Company shall be responsible for the executive pension plans of the Executive as agreed between the Company and the Executive.

e) The Executive shall be entitled to 5 weeks of paid vacation per annum.

5. TERMINATION

a) Termination by the Company without cause: The Company shall be entitled to terminate this Agreement at any time without cause by giving the Executive twelve (12) months prior written notice of the termination but the Company shall be required to continue to pay the Executive’s monthly salary payments until the earlier of either the expiry of 24 months from the date of such termination or the then current Term of this Agreement. In the event of termination of this Agreement hereunder without cause, 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 effective as of the date of termination hereof fixed by the Company. In the event of termination without cause, rights and benefits of the Executive under the employee benefits plans and programs of the Company including all bonus payments and company car shall continue until expiry of the then current Term of this Agreement. If any such benefit or program cannot be so continued, Executive shall be entitled to receive a cash payment equal to the value of such benefits for such period. The Company expressly agrees that any change in the scope of authority and responsibly of the Executive mandated by the Board of Directors which has not been agreed to by the Executive including but not limited to title or removal from the office of President of the Board of Directors of Bluehill ID AG shall constitute an act of Termination without cause.

b) 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 fee payments by the Company to the Executive. For purposes of this paragraph 5(b), “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 Bluehill ID Group;
ii)	The 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

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	comply with a lawful instruction or directive from the Board of Directors (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);
iv)	The Executive shall be entitled to terminate this Agreement at any time without cause by giving the Company twelve (12) months prior written notice of the termination. The Company shall have the right to require the Executive to continue in his capacity as CEO and President of the Board during the twelve (12) months period.

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.

c) Disability: This Agreement shall terminate automatically upon written notice from the Company in the event of Executive’s absence or inability to render the services required hereunder due to disability, illness, incapacity or otherwise for an aggregate of one hundred and eighty (180) days during any twelve (12) month period, provided that such disability, illness, incapacity or other cause has not occurred during the execution of the business of the Company by the Executive. In the event of any such absence or inability, the Executive shall be entitled to receive the compensation provided for herein for the first three hundred and sixty (360) days thereof, whereafter it shall only be entitled to receive such compensation, if any, as may be determined by the Board of Directors. The Company shall also provide the Executive with customary Disability Insurance at no cost to the Executive.

d) Death: In the event of the death of Executive during the term of this Agreement, the Executive’s monthly fee payments shall continue to be paid to the Executive through the end of the twelfth month following the month in which Executive’s death occurs.

e) 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 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.

f) 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.

6. 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

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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 Board of Directors.

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 Board of Directors, any drawing, blueprint, specification, report or other document belonging or relating to the Company or to any affiliate of the Company.

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. APPLICABLE LAW

This Agreement shall be deemed a contract under, and for all purposes shall be governed by and construed in accordance with, the laws of state of Switzerland.

9. ARBITRATION

Any dispute, controversy or claim arising out of or in relation to this Agreement, including the validity, invalidity, breach or termination thereof, shall be settled by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the Notice of Arbitration is submitted in accordance with these Rules.

The number of arbitrators shall be one and the seat of the arbitration shall be in the city of Zurich, Switzerland. The arbitral proceedings shall be conducted in the English language.

10. 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 is in writing signed by the Executive and by a duly authorized representative of the Company. 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.

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11. 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.

12. GUARANTEES OF PERFORMANCE

a) Bluehill ID AG hereby guarantees to and in favour of the Executive the due and timely performance and payment of all obligations, duties and liabilities of the Company under this Agreement and agrees to perform all obligations and pay all amounts due hereunder to Executive forthwith upon any breach or failure by the Company or its affiliates in the performance of the terms and conditions hereof.

b) The Executive hereby guarantees to and in favour of the Company the due and timely performance of all obligations, duties and responsibilities of the Executive under this Agreement and agrees to perform all obligations as required hereunder or as the Executive shall be directed by the Company’s and Bluehill ID’s Board of Directors and by the shareholders’ meetings of the Company and Bluehill ID AG.

13. TRANSFER OF RIGHTS AND OBLIGATIONS

With the consent of the Executive the rights and obligations of Bluehill ID Services AG under this Agreement may be transferred to and assumed by Bluehill ID AG.

In witness whereof, the parties hereto have duly executed this Agreement in three counterparts.

BLUEHILL ID Services AG

By:   /s/ Werner Vogt  

Name: Werner Vogt

Title: Board Member

EXECUTIVE

By:   /s/ Ayman S. Ashour  

Name: Ayman S. Ashour

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Acknowledged and agreed with respect to the Guarantee Undertaking contained in Article 12 a and to Article 13 of this Agreement.

BLUEHILL ID AG

By:   /s/ Daniel S. Wenzel  

Name: Daniel S. Wenzel

Title: Director

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Exhibit 1 to the Employment Agreement between Bluehill ID Services AG and Mr Ayman S. Ashour (the “Agreement”)

With effect as of 4 January 2010, and subject to the condition that the voluntary exchange offer by SCM Microsystems, Inc. for the shares of Bluehill ID AG (the “Exchange Offer”) is being closed in accordance with the terms of the Exchange Offer, Bluehill ID Services AG and Ayman S. Ashour herewith agree to amend the Agreement as follows:

1. Any and all consideration due in shares of Bluehill ID AG shall be discharged in shares of SCM Microsystems, Inc. (“SCM Shares”).

2. Any and all consideration due in options of Bluehill ID AG shall be discharged in exchange tradable warrants of SCM Microsystems, Inc.

IN WITNESS WHEREOF, Bluehill ID Services AG and Ayman S. Ashour have executed this Exhibit 1 to the Agreement in three originals, of which the Parties have taken one each.

Place:		Place: Zurich
Date:		Date: 30 November 2009
Bluehill ID Services AG
By:	/s/ Werner Vogt	/s/ Ayman S. Ashour
	Werner Vogt	Ayman S. Ashour
Title: Board Member
Place: Wallisellen		Place:
Date: 22 December 2009		Date:
Acknowledged and agreed:
Bluehill ID AG
By:	/s/ Daniel S. Wenzel
	Daniel S. Wenzel
Title: Director

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EX-99.1

Exhibit 99.1

SCM MICROSYSTEMS AND BLUEHILL ID AG
COMPLETE BUSINESS COMBINATION

Combined Company to Adopt New Name: Identive Group

SANTA ANA, Calif., ISMANING, Germany and St. Gallen, Switzerland, January 4, 2010 — SCM Microsystems, Inc. (NASDAQ: SCMM; Prime Standard: SMY), a leading provider of solutions for secure access, secure identity and secure exchange, and Bluehill ID AG (FSE: BUQ), a leading provider of automatic identification and RFID technologies, products, services and solutions, announced today that the transaction to combine their respective businesses has closed. Under the terms of the Business Combination Agreement, SCM made an offer to the Bluehill ID shareholders to acquire all of the Bluehill ID shares and issued 0.52 new shares of SCM’s common stock for every one share of Bluehill ID tendered. Approximately 92% of Bluehill ID shares outstanding were tendered in the offer and will be exchanged for a total of approximately 15,299,979 new shares of SCM common stock. Following the closing of the transaction, approximately 38% of the outstanding shares of the new combined company are now held by former Bluehill ID shareholders. The issuance of shares of SCM common stock to the former shareholders of Bluehill ID was approved by the stockholders of SCM at a special meeting held on December 18, 2009 and the transfer of the new shares is expected to be initiated by SCM on January 7, 2010.

     “The business combination with Bluehill ID is a crucial step in our joint strategy to create the signature company for security and identity-based technologies and solutions,” said Felix Marx, Chief Executive Officer of SCM Microsystems. “Our two businesses are complementary in terms of products, market focus, geographic distribution and coverage across the identification industry generally and the identity management and access control value chains in particular. As a combined company we stand in a unique position, at the center of three convergence trends: the integration of physical and logical access systems , the enhancement of smart cards with contactless technologies, and the marriage of identification technologies with mobile communication. We are therefore able to provide identification and authentication solutions for applications ranging from security to asset tracking to transaction processing for mobile and fixed installations.”

Combined Company Adopts New Corporate Identity

     In accordance with the terms of the Business Combination Agreement, a new corporate identity has been developed for the combined company that is designed to reflect its core activities in security and identification technology. Beginning January 4, 2010, SCM Microsystems, Inc. will start doing business under the name “Identive Group.” In connection with the new corporate identity, SCM also plans to file to change its ticker symbol on the

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NASDAQ Stock Exchange to “INVE” and on the regulated market (Prime Standard) of the Frankfurt Stock Exchange to “INV.” It is currently expected that the change in ticker symbols will occur on January 15, 2010. SCM intends to seek stockholder approval in the future to amend its certificate of incorporation to officially change its name to “Identive Group,” and in the interim will continue to file its annual, quarterly and current reports under SCM Microsystems, Inc. Additionally, Bluehill ID, as a majority-owned subsidiary, will change its name to “Identive Group AG” and will seek regulatory approval for such change, but is expected to continue to trade at the open market of the Frankfurt Stock Exchange under the symbol BUQ. The individual operating businesses of Identive Group will continue to use their existing brands, which include SCM Microsystems, Hirsch, Multicard, Tagstar Arygon, Syscan and ACiG Technology.

Additions to Management and Board

     Following the closing of the transaction, Ayman S. Ashour, Chief Executive Officer of Bluehill ID, has joined the board of directors of Identive Group and has been named Executive Chairman of the Board. Additionally, Dr. Cornelius Boersch and Daniel S. Wenzel, both former directors of Bluehill ID, have also joined the board of directors of Identive Group.

     Melvin Denton-Thompson has been designated as the new Chief Financial Officer of Identive Group, replacing Stephan Rohaly, who left the position in September 2009. Denton-Thomson brings 25 years’ international financial management experience in a number of industries, particularly with security companies. He served as CFO and Chief Operating Officer of Bluehill ID since May 2008. Previously, he was CFO and Deputy CEO of the Hospitality division of Assa Abloy, a security solutions firm.

     “The new Identive Group now holds a position that is unmatched in the identification and security markets,” said Ayman Ashour. “The combined company brings together a broad set of top-tier products and technologies, as well as a strong management team with a clear vision. Our immediate focus will be on continuing to execute our buy, build and grow strategy, with an emphasis on driving consolidation in the highly fragmented ID market. We recognize that in addition to our leadership goals we must deliver improved financial performance to support our growth, and our management team is fully committed to this.”

About Identive Group

Identive Group is an international operating organization focused on building the world’s signature company in secure identification-based technologies. Through its group of recognized brands, Identive provides leading-edge products and solutions in the areas of physical and logical access control, identity management and RFID systems to governments, commercial and industrial enterprises and consumers. The organization’s growth model is based on a combination of disciplined acquisitive development and strong technology-driven organic growth from its member companies. For additional info visit: www.identive-group.com.

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About SCM Microsystems, Inc.

SCM Microsystems (NASDAQ: SCMM; Prime Standard: SMY) d.b.a Identive Group is a global leader in security and identity solutions for secure access, secure identity and secure exchange. Together with its Hirsch Electronics subsidiary, SCM provides complete, integrated solutions that secure digital assets, electronic transactions and facilities. The company offers the world’s broadest range of contact, contactless and mobile smart card reader technology; physical and logical access control systems; digital identity transaction platforms; biometrics; and digital video. SCM’s solutions enable a wide variety of applications including enterprise security, identity management, contactless payment, e-health and electronic government services. For additional information, visit www.scmmicro.com, and www.identive-group.com.

About Bluehill ID

Bluehill ID AG (www.bluehill-id.com) is an international operating company with headquarters in Switzerland and listed on the Frankfurt Stock Exchange (ISIN CH0031958629; Symbol BUQ). Bluehill ID is dedicated to the responsible use and development of RFID and other automatic identification technologies. These technologies are used in the fields of security, identification, tracking and further growing applications. The business model of the company is based on combining disciplined acquisitive growth with sustainable organic growth from its Group of companies.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. These include, without limitation, our statements contained above regarding potential benefits and synergies of the business combination, the timing of the change to trading under a new ticker symbol on the NASDAQ Global Market and Frankfurt Stock Exchanges, our ability to establish a market leadership position, our ability to successfully execute a buy, build and grow strategy, our ability to improve our financial performance and other statements that are not historical facts. These statements involve risks and uncertainties that could cause actual results and events to differ materially. For a discussion of further risks and uncertainties related to SCM’s business, please refer to our public company reports and the Risk Factors enumerated therein, including our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 31, 2009, and subsequent filings. SCM undertakes no duty to update any forward-looking statement to reflect any change in SCM’s expectations or any change in events, conditions or circumstances on which any such statements are based.

Note: The SCM logo is a trademark of SCM Microsystems, Inc. and the Hirsch logo is a trademark Hirsch Electronics or its affiliates in the United States and certain other countries. Identive Group is a trademark of SCM Microsystems. Additional company and product names may be trademarks or registered trademarks of the individual companies and are respectfully acknowledged.

Contacts:

United States:
Darby Dye, SCM Microsystems, +1 949 553-4251, ddye@scmmicro.com

Europe:
Fabien B. Nestmann, Bluehill ID, +41 44 783 8043, fbn@bluehill-id.com

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