Escrow Agreement, Dated 21 December 2004

Exhibit 10.1


Final

ESCROW AGREEMENT

THIS AGREEMENT dated as of the 21st day of December 2004.

BETWEEN:


The parties listed in Schedule A


(the "Warrantors". )


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Activcard Corp. (a corporation registered in the State of Delaware, USA

whose registered address is at 6623, Dumbarton Circle, Fremont, California 94555, USA)

(the "Purchaser" )

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Osborne Clarke

a partnership, of One London Wall, London EC2Y 5EB


(the "Escrow Agent" )

RECITALS


1. The Purchaser proposes to acquire all the issued and to be issued Ordinary shares of a30.01 each in the share capital of the Company (the "Ordinary Shares" ) and all the issued and to be issued "A" Shares of a30.01 each in the share capital of the Company ("A Shares" and, together with the Ordinary Shares, the "Shares" ) in the share capital of Aspace Solutions Limited (the "Company" ) not already owned by it under the terms of an agreement (the "Acquisition Agreement" ) dated December 2004 among (1) the Vendors and (2) the Purchaser.


2. The Purchaser has agreed to purchase the Shares in reliance upon the Warranties and Indemnities given by the Warrantors set out in the Acquisition Agreement.

3. Terms defined in the Acquisition Agreement shall have the same meaning, unless the context requires otherwise, in this Agreement.

4. Pursuant to the Acquisition Agreement, the Purchaser will issue inter alia, to the Warrantors, certain amounts of its common stock of par value $0.001, (the "Consideration Shares" ), in partial consideration for the Shares. Schedule A sets out against each Warrantor's name the number of Consideration Shares receivable by that Warrantor and the number of Deposited Securities (as defined below) to be held on behalf of that Warrantor subject to the escrow arrangements set out in this Agreement. As to the remainder of the consideration payable for the Shares, the Purchaser will (subject to the terms and conditions of the Acquisition Agreement) pay the Cash Consideration to the Vendors and Schedule A sets out the amount of the Cash Consideration receivable (subject to the terms and conditions of the Acquisition Agreement) by each Warrantor and the amount of the Deposited Cash (as defined below) to be held on behalf of that Warrantor subject to the escrow arrangements set out in this Agreement.


5. Within ten (10) Business Days after the respective dates on and to the extent to which the Purchaser becomes obliged to issue and allot the Consideration Shares to the Warrantors pursuant to and in accordance with Clauses 3.1 and 3.2 of the Acquisition Agreement, certificates representing those Consideration Shares which must be deposited with the Escrow Agent pursuant to clause 3.3 of the Acquisition Agreement will be deposited by the Purchaser on behalf of the Warrantors with the Escrow Agent (the "Deposited Securities" ). Additionally, within the same period after the date of this Agreement, each of the Warrantors shall deliver to the Escrow Agent a duly executed form of stock transfer or stock power with respect to the Deposited Securities, in such form as the Escrow Agent or the Purchaser may reasonably request so as to enable the Escrow Agent to deal with and satisfy claims (if any) for a partial release only of Deposited Securities pursuant to and in accordance with Part 3 of this Agreement. The Escrow Agent shall not be obliged to make any partial release of any Deposited Securities to a Warrantor who has failed to provide such duly executed stock power or transfer form. The Escrow Agent shall hold all such stock power or transfer forms as stakeholder pursuant to the terms of this Agreement.

6. On the respective dates on and to the extent to which the Purchaser becomes obliged to pay the Cash Consideration to the Vendors pursuant to and in accordance with Clauses 3.1 and 3.2 of the Acquisition Agreement, the Purchaser shall pay to and deposit with the Escrow Agent on behalf of the Warrantors pursuant to and in accordance with Clause 3.3 of the Acquisition Agreement the amounts of Cash Consideration becoming due to the Warrantors (the "Deposited Cash" ).

7. The parties have entered into this Agreement to provide for the escrow of the Deposited Securities and the Deposited Cash.

8. The foregoing recitals are made by the Warrantors and the Purchaser and not by the Escrow Agent.

For good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties covenant and agree as follows:


PART 1 - APPOINTMENT


1.01 Appointment of Escrow Agent. The Warrantors and the Purchaser hereby appoint the Escrow Agent, and the Escrow Agent hereby agrees to act as Escrow Agent to hold the property and rights herein mentioned as stakeholder, in accordance with the terms and conditions of this Agreement.

PART 2 - ESCROW OF DEPOSITED SECURITIES AND DEPOSITED CASH


2.01 Escrow of Deposited Securities. On receipt of the certificates representing the same, the Escrow Agent will hold the Deposited Securities in escrow and undelivered to the Purchaser and the Warrantors and, subject to the provisions of Part 3 herein, the Escrow Agent is hereby irrevocably authorized and directed to release and deliver the Deposited Securities to the Warrantors in the proportions to which they are entitled to them pursuant to Clause 3.2 of the Acquisition Agreement on or as soon as reasonably practicable following March 31, 2006 (hereinafter referred to as the " Release Date").


2.02 No Transfer of Deposited Securities . So long as any Deposited Securities remain subject to escrow in accordance with the provisions of this Agreement, each of the Warrantors hereby agrees not to sell, transfer, assign, pledge, mortgage, charge or otherwise dispose of or grant any security interest over his Deposited Securities or any interest therein in whole or in part or enter into any arrangement or agreement, or otherwise purport, to do so.


2.03 Rights of Ownership of Deposited Securities . Any income, additional securities and rights or proceeds (other than by way of cash) received by the Escrow Agent with respect to the Deposited Securities, while such Deposited Securities are held in escrow under this Agreement, (the " Additional Escrow Property") shall be deemed to have been received by the Warrantors and deposited into escrow by such Warrantors and shall be held in escrow in the same manner as the Deposited Securities relating thereto, and shall be considered as part of the Deposited Securities for purposes of administration of the escrow.


2.04 Escrow of Deposited Cash . On receipt of funds representing the same, the Escrow Agent will procure that the Deposited Cash is credited to an interest-bearing deposit account with its bank (the " Cash Account") and will hold the same in escrow and undelivered to the Purchaser and the Warrantors and, subject to the provisions of Part 3 herein, the Escrow Agent is hereby irrevocably authorised and directed to release and pay the Deposited Cash to the Warrantors in the proportions to which they are entitled to it pursuant to clause 3.2 of the Acquisition Agreement on or as soon as reasonably practicable following the Release Date.


2.05 No Transfer of Deposited Cash . So long as any Deposited Cash remains subject to escrow in accordance with the provisions of this Agreement, each of the Warrantors hereby agrees not to sell, transfer, assign, pledge, mortgage, change or otherwise dispose of or grant any security interest over his Deposited Cash in whole or in part or enter into any arrangement or agreement, or otherwise purport, to do so.

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2.06 Rights of Ownership of Deposited Cash . Any interest, additional income and other rights and proceeds by way of cash received by the Escrow Agent with respect to the Deposited Securities or the Deposited Cash, while such Deposited Cash is held in escrow under this Agreement (the " Additional Escrow Cash") shall be deemed to have been received by the Warrantors and deposited into escrow by such Warrantors and shall be held in escrow in the same manner as the Deposited Cash relating thereto and shall be considered as part of the Deposited Cash for the purposes of administration of the escrow.


2.07 Voting Rights . The Warrantors shall be entitled to direct the Escrow Agent (at their expense) to exercise or, as may be required, concur in the exercise of, all voting and other rights attaching to the Deposited Securities and the Additional Escrow Property from time to time and at all times while such Deposited Securities and the Additional Escrow Property are still held in escrow pursuant to this Agreement.


PART 3 ? SATISFACTION OF CLAIMS


3.01 Without prejudice to the other clauses in this Part 3, prior to the Release Date, the Purchaser shall, pursuant to Clause 14.12 of the Acquisition Agreement, have the right to satisfy the amount of any Claim or other claim under the Acquisition Agreement against a Warrantor (whether in his capacity as a Warrantor or otherwise) by set-off or otherwise, as appropriate, in such manner as the Purchaser may elect as permitted by law, against the Deposited Cash and/or the Deposited Securities held by the Escrow Agent in respect of that Warrantor (an "Escrow Claim" ). Accordingly, no Deposited Cash or Deposited Securities shall be released to that Warrantor prior to the Release Date unless the Purchaser shall give its prior written consent in its absolute discretion. The Deposited Cash and the Deposited Securities, together with all Additional Escrow Property and Additional Escrow Cash (the aggregate thereby being the " Deposited Funds"), shall be held by the Escrow Agent in respect of that Warrantor until either:

(a) the amount of the liability of the relevant Warrantor with respect to any Escrow Claim made by the Purchaser on or before the Release Date, such amount either having been agreed upon by the Purchaser and the relevant Warrantor in writing or having been finally determined in accordance with clause 3.05 (the " Specified Amount"), when the terms of clause 3.02 or 3.03 shall apply (as the case may be); or


(b) the Release Date when, subject to the provisions of clause 3.04, the Escrow Agent is hereby irrevocably instructed to release the Deposited Funds (or so much of them as remains after the operation of the provisions of this Agreement) held in respect of a Warrantor, to the relevant Warrantor.

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3.02 If the Escrow Agent receives prior to the Release Date a disbursement certificate in substantially the form attached hereto as Exhibit A (a "Disbursement Certificate") , executed by a Warrantor or the Warrantors' Representative in respect of more than one Warrantor and ...