WARRENT ISSUANCE AND COMMON STOCK AGREEMENT

EXHIBIT 10.33


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SCM MICROSYSTEMS, INC.


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WARRANT ISSUANCE AND COMMON STOCK PURCHASE AGREEMENT





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SEPTEMBER 5, 1997









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SCHEDULE OF EXHIBITS

Exhibit A and B - Form of Common Stock Purchase Warrants

Exhibit C - Schedule of Exceptions to Representations and Warranties of the
Company

Exhibit D - Form of Amendment to Amended and Restated Stockholders' Agreement

Exhibit E - Form of Settlement and Mutual General Release Agreement

Exhibit F - Form of License Agreement

Exhibit G - Form of Memorandum of Understanding






























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SCM MICROSYSTEMS, INC.

WARRANT ISSUANCE AND COMMON STOCK PURCHASE AGREEMENT


THIS WARRANT ISSUANCE AND COMMON STOCK PURCHASE AGREEMENT (the
"Agreement") is entered into as of September 5, 1997, by and between SCM
Microsystems, Inc., a Delaware corporation (the "Company"), and Gemplus, a legal
entity under the laws of France (the "Purchaser"). On or before the First and
Second Closing (as defined below), the Purchaser may designate in writing one of
its wholly-owned subsidiaries which shall take title to the Warrants issuable,
and Common Shares purchasable, hereunder and, in such event, the term
"Purchaser" shall be deemed to include such subsidiary.

RECITALS

The Company and the Purchaser are currently involved in a
patent infringement dispute ("Dispute") pending in France, which the parties
desire to settle by entering into a settlement and mutual general release
agreement in the form attached to this Agreement (the "Settlement Agreement")
providing that the Company and Purchaser will settle and forever discharge and
release each other from all present and future liability arising out of the
Dispute;

As part of the settlement of the Dispute, and in consideration
of the Purchaser's agreement to withdraw its lawsuit currently pending in
France against the Company and release the Company from any liability arising
out of the Dispute in accordance with the Settlement Agreement, the Company
desires to (i) issue to the Purchaser warrants having a one-year term, to
purchase 200,000 shares of Common Stock of the Company at an exercise price of
$13.00 per share and an additional 200,000 shares of Common Stock at an
exercise price of $14.00 per share (together, the "Warrants"); (ii) enter into
a patent cross-license agreement pursuant to which the Company and the
Purchaser shall grant each other non-exclusive license rights under certain of
each other's patents; and (iii) enter into a non-binding memorandum of
understanding with the Purchaser setting forth the principal terms of a product
development and supply agreement for the development, manufacture, marketing
and distribution rights of products incorporating the parties' respective
technologies;

Following settlement of the Dispute with the Purchaser upon
the terms described above, the Company and the Purchaser desire to establish a
long-term relationship and, accordingly, the Company shall offer to sell and
issue to the Purchaser, upon the effectiveness of the Company's registration
statement on Form S-1 and initial public offering of shares of its Common Stock
thereunder (the "IPO"), up to 200,000 shares of the Company's Common Stock (the
"Common Shares") for an aggregate purchase price of $1,800,000 and to register
such Common Shares and the Common Stock issuable upon exercise of the Warrants
pursuant to a registration statement to be filed by the Company within 180 days
after the IPO, and to provide the Purchaser the opportunity to purchase an
additional 200,000 shares of the Company's Common Stock being registered as
part of the IPO at a price equal to the IPO price to the public but in no event
greater than $15.00 per share; and





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In connection with the Purchaser's acquisition of the Warrants
as described above, and the subsequent issuance and sale of the Common Shares
as described above, the Company desires to include Purchaser as a party to the
Company's Amended and Restated Stockholders' Agreement and thereby grant to
Purchaser substantially similar rights as provided to the other investors that
are parties thereto;

NOW, THEREFORE, in consideration of the mutual promises,
covenants and conditions hereinafter set forth, the parties hereto mutually
agree as follows:


1. Authorization of Issuance of Warrants and Sale of Common Shares..

1.1 Authorization of Warrants; Amended and Restated Certificate of
Incorporation. Pursuant to the terms and conditions hereof, the Company has
authorized the issuance to the Purchaser of two warrants to purchase up to a
total of 400,000 shares of Common Stock of the Company.

1.2 Issuance of Warrants. Subject to the terms and conditions
hereof, at the First Closing (as is defined in Section 2.1 below), the Company
shall issue to the Purchaser warrants to purchase up to 200,000 shares of
Common Stock of the Company at an exercise price of $13.00 per share, and up to
200,000 additional shares of Common Stock of the Company at an exercise price
of $14.00 per share, pursuant to the terms and conditions set forth in two
Common Stock Purchase Warrants, in the forms attached hereto as Exhibits A and
B (together, the "Warrants"). The shares of Common Stock issuable upon
exercise of the Warrants are collectively referred to herein as the "Warrant
Shares".

1.3 Authorization of Common Shares; Amended and Restated
Certificate of Incorporation. Pursuant to the terms and conditions hereof, the
Company has authorized the sale and issuance to the Purchaser of 200,000 shares
of its Common Stock (the "Common Shares").

1.4 Sale of Common Shares. Subject to the terms and conditions
hereof, at the Second Closing (as is defined in Section 2.2 below), for an
aggregate purchase price of $1,800,000 the Company will issue and sell to the
Purchaser, and the Purchaser will purchase from the Company, the Common Shares.

2. Closing Matters

2.1 First Closing. The closing of the issuance of the Warrants
pursuant to Section 1.2 above (the "First Closing") shall be held at the
offices of Morrison & Foerster LLP, at 755 Page Mill Road, Palo Alto,
California 94304 on September 5, 1997, or on such later date as shall be
acceptable to the Company and the Purchaser (the "First Closing Date").

2.2 Second Closing. The closing of the purchase and sale of the
Common Shares pursuant to Section 1.4 above (the "Second Closing") shall be
held at the offices of Wilson Sonsini Goodrich & Rosati at 650 Page Mill Road,
Palo Alto, California 94304 on the date that the conditions set forth in
Section 5.1(b) below are satisfied, or on such later date as shall be
acceptable to the Company and the Purchaser (the "Second Closing Date").





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2.3 Delivery. At the First Closing, the Company shall deliver to
the Purchaser warrant certificates representing the Warrants, pursuant to
Section 1.2 above. At the Second Closing, the Company shall deliver to
Purchaser a certificate registered in the Purchaser's name representing the
aggregate number of Common Shares to be issued and sold by the Company to the
Purchaser and the Purchaser shall deliver to the Company by check or wire
transfer payment for the Common Shares being purchased in the amount as set
forth in Section 1.4 above.



3. Representations and Warranties of the Company. The Company represents
and warrants and agrees with the Purchaser that, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit C, which exceptions shall be
deemed to be representations and warranties as if made hereunder:

3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State
of Delaware and is in good standing under such laws.

3.2 Corporate Power. The Company has all requisite legal and
corporate power to enter into this Agreement, the Warrants, that certain waiver
and amendment to the Amended and Restated Stockholders' Agreement to be entered
into among the Company, the Purchaser and certain existing stockholders of the
Company in the form attached hereto as Exhibit D (the "Amendment to
Stockholders' Agreement"), the settlement and mutual general release agreement
to be entered into among the Company and the Purchaser in the form attached
hereto as Exhibit E (the "Settlement and Mutual General Release Agreement"),
the license agreement to be entered into among the Company and the Purchaser in
the form attached hereto as Exhibit F (the "License Agreement"), and the
memorandum of understanding between the Company and the Purchaser in the form
attached hereto as Exhibit G (the "MOU"), and to issue the Warrants hereunder
and to sell the Common Shares and to carry out and perform its obligations
under the terms of this Agreement, the Warrants, the Amendment to Stockholders'
Agreement, the Settlement and Mutual General Release Agreement, the License
Agreement and the MOU.

3.3 Capitalization. At the First Closing Date and Second Closing
Date, the authorized capital stock of the Company will consist of 40,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock, of which
854,038 shall be designated Series A Preferred Stock, 1,211,914 shall be
designated Series B Preferred Stock, 653,642 shall be designated Series C
Preferred Stock, 857,162 shall be designated Series D Preferred Stock, 462,985
shall be designated Series E Preferred Stock and 1,600,000 shall be designated
Series F Preferred Stock. Immediately prior to the issuance of the Common
Shares and Warrants hereunder, 1,866,710 shares of Common Stock, 854,038 shares
of Series A Preferred Stock, 1,211,914 shares of Series B Preferred Stock,
653,642 shares of Series C Preferred Stock, 765,864 shares of Series D
Preferred Stock, 463,285 shares of Series E Preferred Stock and 849,790 shares
of Series F Preferred Stock will be issued and outstanding. Except for the (a)
the conversion privileges of the Preferred Stock of the Company, (b) the right
of first refusal granted to the stockholders of the Company pursuant to the
Stockholders' Agreement, (c) warrants exercisable for up to an aggregate of
51,191 shares of Series D Preferred Stock, and (d) options to purchase up to an
aggregate of 1,017,426 shares of Common Stock of the Company held by employees
and consultants of the Company, there are no outstanding options, warrants,
rights (including





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conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock.

3.4 Authorization

(a) All corporate action on the part of the Company, its
officers, directors and stockholders necessary for (i) the issuance of the
Warrants pursuant to this Agreement, (ii) the issuance and sale of the Warrant
Shares upon exercise of the Warrants and (iii) the execution, performance and
delivery by the Company of this Agreement, the Warrants, the Amendment to
Stockholders' Agreement, the Settlement and Mutual General Release Agreement,
and the License Agreement, have been taken or will be taken prior to the First
Closing hereunder, and all corporate action on the part of the Company, its
officers, directors and stockholders necessary for the sale and issuance of the
Common Shares pursuant to this Agreement have been taken or will be taken prior
to the Second Closing hereunder. This Agreement, the Warrants, the Amendment
to Stockholders' Agreement, the Settlement and Mutual General Release
Agreement, and the License Agreement, are valid and binding obligations of the
Company enforceable against it in accordance with their terms except as limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies and (ii) with respect to
the indemnification provisions of the Stockholders' Agreement, as limited by
applicable law.

(b) The Warrant Shares issuable upon exercise of the
Warrants have been duly reserved for issuance, and upon issuance in accordance
with the terms of the Warrants, will be validly and duly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided, however,
that such Warrants and the Warrant Shares may be subject to restrictions on
transfer under the Stockholders' Agreement and under applicable state or
federal securities laws as set forth herein or otherwise required by such laws
at the time a transfer is proposed. The Common Shares to be issued and sold
hereunder, when issued in compliance with the provisions of this Agreement and
the Certificate of Incorporation, will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided,
however, that such Common Shares may be subject to restrictions on transfer
under the Stockholders' Agreement and under applicable state or federal
securities laws as set forth herein or otherwise required by such laws at the
time a transfer is proposed.

3.5 Securities Laws; Governmental Consent, etc. No consent,
approval or authorization of, or designation, declaration or filing with any
governmental authority on the part of the Company is required in connection
with the valid execution and delivery of this Agreement, the Warrants, the
Amendment to Stockholders' Agreement, the Settlement and Mutual General Release
Agreement, the License Agreement and the MOU, or the issuance of the Warrants
and Warrant Shares to be issued and sold pursuant to this Agreement and the
Warrants, or the offer, sale or issuance of the Common Shares to be issued and
sold pursuant to this Agreement, or the consummation of any other transaction
contemplated hereby or thereby, except, if required, qualifications or filings
under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws which qualifications or filings, if required,
will be obtained or made and will be effective within the time periods required
by law. The issuance of the Warrants and the Warrant Shares as provided in
this Agreement and the offer,





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sale and issuance of the Common Shares are and will be exempt from the
registration and prospectus delivery requirements of the Securities Act and
have been registered or qualified, or will be registered or qualified in a
timely manner (or are exempt from registration or qualification) under all
applicable state registration or qualification requirements.

3.6 Material Permits; Compliance with Laws The Company has all
permits, licenses, orders and approvals of any federal, state, local or foreign
governmental or regulatory body (collectively, the "Permits") that are material
to or necessary in the conduct of its business as now conducted; and all
Permits are in full force and effect, no violations have been recorded in
respect of any such Permits, and no proceeding is pending or threatened to
revoke or limit any such Permits. The Company is conducting, and has
conducted, its business and operations in compliance in all material respects
with all governmental laws, rules and regulations applicable thereto and is not
in violation or default in any material respect under any statute, regulation,
order, decree or governmental authorization applicable to it or any of its
properties or business as presently conducted or proposed to be conducted,
including without limitation environmental and health and safety laws, rules
and regulations.

3.7 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds valid leasehold interests free of any liens, claims or encumbrances.

3.8 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws, or of any instrument or contract to which it is a party or by which it
is bound, except where such violation or default would not have a material
adverse effect on the financial condition or results of operations of the
Company. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such
provision, instrument or contract or an event which results in the creation of
any lien, charge or encumbrance upon any assets of the Company.

3.9 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company or its assets that questions the validity of this
Agreement, the Warrants, the Amendment to Stockholders' Agreement, the
Settlement and Mutual General Release Agreement, the License Agreement or the
MOU, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse
changes in the financial condition or results of operations of the Company, nor
is the Company aware that there is any basis for the foregoing. The Company is
not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or agency or instrumentality.

3.10 Subsidiaries. Except for SCM Microsystems GmbH, which is a
wholly-owned subsidiary of the Company, the Company does not own or control,
directly or indirectly, any





5



interest in any corporation, association or other business entity. The Company
is not a participant in any joint venture, partnership or similar arrangement.

3.11 Material Contracts and Other Commitments. The Company does
not have any contract, agreement, lease or other commitment, written or oral,
absolute or contingent, other than (i) contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve future payments by the Company in excess of $100,000; (ii) sales
contracts entered into in the ordinary course of business; (iii) license
agreements entered into in the ordinary course of business; and (iv) contracts
terminable at will by the Company on no more than sixty (60) days notice
without cost or liability to the Company. For purposes of this section,
employment contracts and contracts with labor unions and agreements pursuant to
which the Company licenses its intellectual property to third parties shall not
be considered contracts or agreements entered into in the ordinary course of
business.

3.12 Intellectual Property and Other Rights. The Company has all
franchises, permits, licenses and other similar authority necessary for the
conduct of its business as now being conducted by it (including products and
technology currently under development), the lack of which would materially and
adversely affect the financial condition and results of operations of the
Company. The Company is not in default under any such franchises, permits,
licenses or other similar authority, except where such default would not
materially and adversely affect the financial condition and results of
operations of the Company. To its knowledge, the Company has sufficient title
and ownership of all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights and copyrights material to the conduct of its
business as now conducted (including products and technology currently under
development) without any conflict with or infringement of the rights of others
except, in all instances, the lack of title and ownership which would not have
a material adverse effect on the financial condition or results of operations
of the Company. The Company has not received any communications alleging that
the Company has violated or would violate any of the patents, trademarks, trade
names or copyrights of any other person or entity.

3.13 Financial Condition.

(a) The Company has delivered to the Purchaser its (i)
unaudited financial statements for the period ended June 30, 1997, and (ii)
audited financial statements for the year ended December 31, 1996
(collectively, the "Financial Statements"). The Financial Statements (i) are
complete and correct in all material respects, (ii) fairly present the
financial condition of the Company as of the date of the balance sheets
contained therein (the "Balance Sheets"), and the statement of operations
contained therein accurately presents the operating results of the Company
during the periods indicated therein, (iii) are in accordance with the books
and records of the Company, and (iv) have been prepared in accordance with
generally accepted accounting principles consistently applied; provided,
however, that the unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles.

(b) As of June 30, 1997, the Company had no liabilities
of any nature (matured or unmatured, fixed or contingent) required by generally
accepted accounting principles to be provided for in the Balance Sheets which
were not provided for in the Balance Sheets.





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3.14 Changes. Since June 30, 1997, there has not been:

(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse; or

(b) to the Company's knowledge, any other event or
condition of any character which might materially and adversely affect the
assets, financial condition, operating results or business of the Company (as
such business is presently conducted).

3.15 Employees. The Company does not have any collective
bargaining agreements with any of its employees, and, to the Company's
knowledge, no labor union organizing activity is pending or threatened with
respect to the Company. To the Company's knowledge, no employee is obligated
under any agreement or judgment that would materially conflict with such
employee's obligation to use his or her best efforts to promote the interests
of the Company or that would materially conflict with the Company's business.
To the Company's knowledge, no employee is in material violation of the terms
of any employment agreement, proprietary information agreement, noncompetition
agreement or any other agreement relating to such employee's relationship with
any previous employer. Neither the execution nor delivery of this Agreement,
nor the carrying on of the Company's business by the employees of the Company,
nor the conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company is
not a party to or bound by any currently effective employment contract,
deferred compensation agreement, bonus plan, incentive plan, profit sharing
plan, retirement agreement, or other employee compensation agreement. The
Company does not maintain, sponsor, or contribute to any program or arrangement
that is an "employee pension benefit plan," and "employee welfare benefit
plan," or a "multiemployer plan," as those terms are defined in Sections 3(2),
3(1) and 3(37) of the Employee Retirement Income Security Act of 1974, as
amended.

3.16 Registration Rights. Except as set forth in the Stockholders'
Agreement and Section 6.1 of this Agreement, the Company is not under any
obligation to register pursuant to the Securities Act any of its currently
outstanding securities or any of its securities that may hereafter be issued.

3.17 Tax Matters. The Company has accurately and timely filed all
federal income tax returns and all state and municipal tax returns that are
required to be filed by it and has paid or made provision for the payment of
all amounts due pursuant to such returns. The federal income tax returns of
the Company have not been audited by the Internal Revenue Service, and there
are no waivers in effect of the applicable statute of limitations for any
period. No deficiency assessment or proposed adjustment of federal income
taxes or state or municipal taxes of the Company is pending and the Company has
no knowledge of any proposed liability for any tax to be imposed.

3.18 Interested Party Transactions. No officer or director of the
Company has, either directly or indirectly, (a) an interest in any corporation,
partnership, proprietorship, association or





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other person or entity that, as presently contemplated, will furnish or sell
services or products to the Company or purchase services or products from the
Company or whose services or products are similar to those to be furnished or
sold by the Company or (b) a beneficial interest in any contract, agreement or
commitment to which the Company is a party or may be bound. No employee,
shareholder, officer or director of the Company is indebted (or committed to
make loans or extend or guarantee credit) to the Company nor is the Company
indebted to any of them. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.

3.19 Disclosure. No statement by the Company contained in this
Agreement and the exhibits attached hereto, the Financial Statements and any
written statement or certificate furnished or to be furnished to the Purchasers
pursuant hereto or in connection with the transactions contemplated hereby
(when read together) contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.

4. Representations and Warranties of Purchaser and Restrictions on
Transfer Imposed by the Securities Act of 1933 and Applicable State Securities
Laws.

4.1 Representations and Warranties by Purchaser. Purchaser
represents and warrants to the Company as follows:

(a) The Common Shares, the Warrants, and the Warrant
Shares are being acquired for the Purchaser's own account, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act or the
applicable securities laws.

(b) The Purchaser understands that the Common Shares, the
Warrants, and the Warrant Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act pursuant to Section
4(2) thereof and Regulation D promulgated thereunder, that the Company has no
present intention of registering the Warrants or the Warrant Shares, that the
Common Shares, the Warrants, or the Warrant Shares must be held by the
Purchaser indefinitely, and that the Purchaser must therefore bear the economic
risk of such investment indefinitely, unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from registration.

(c) During the negotiation of the transactions
contemplated herein, the Purchaser and its representatives and legal counsel
have been afforded full and free access to corporate books, financial
statements, records, contracts, documents and other information concerning the
Company and to its offices and facilities, have been afforded an opportunity to
ask such questions of the Company's officers, employees, agents, accountants
and representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.





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(d) The Purchaser and its representatives have been
solely responsible for the Purchaser's own "due diligence" investigation of the
Company and its management and business, for its own analysis of the merits and
risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. In taking any action or
performing any role relative to the arranging of the proposed investment, the
Purchaser has acted solely in its own interest, and neither the Purchaser, nor
any of its agents or employees, has acted as an agent of the Company. The
Purchaser has such knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and risks of the
purchase of the Common Shares and Warrants pursuant to the terms of this
Agreement and of protecting Purchaser's interests in connection therewith.

(e) The Purchaser is an "Accredited Investor" as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act. The Purchaser is able to bear the economic risk of the purchase of the
Common Shares and Warrants pursuant to the terms of this Agreement, including a
complete loss of the Purchaser's investment in the Common Shares and Warrants.

(f) The Purchaser has the full right, power and authority
to enter into and perform the Purchaser's obligations under this Agreement, the
Warrants and the Stockholders' Agreement, and this Agreement, the Warrants and
the Stockholders' Agreement constitute valid and binding obligations of the
Purchaser enforceable in accordance with their terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and rules or laws concerning equitable remedies.

(g) No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchaser is required in connection with the valid execution and
delivery of this Agreement, the Warrants or the Stockholders' Agreement.

4.2 Legends. Each certificate representing the Common Shares or
the Warrant Shares may be endorsed with the following legends:

(a) "THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE
144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE ACT, OR (II) IN COMPLIANCE WITH RULE 144
OR (III) PURSUANT TO AN OPINION OF COUNSEL TO THE
CORPORATION THAT SUCH





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REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SUCH SALE, OFFER OR
DISTRIBUTION."

(b) Any other legends required by applicable blue sky or
securities laws.

The Company need not register a transfer of any Common Shares or Warrant
Shares, and may also instruct its transfer agent not to register the transfer
of the Common Shares or Warrant Shares, unless the conditions specified in the
foregoing legends are satisfied.

4.3 Removal of Legend and Transfer Restrictions.

(a) Any legend endorsed on a certificate pursuant to
subsection 4.2(a) and the stop transfer instructions with respect to such
Common Shares or Warrant Shares shall be removed and the Company shall issue a
certificate without such legend to the holder thereof if such Common Shares or
Warrant Shares are registered under the Securities Act and a prospectus meeting
the requirements of Section 10 of the Securities Act is available, if such
legend may be properly removed under the terms of Rule 144 promulgated under
the Securities Act or if such holder provides the Company with an opinion of
counsel for such holder, reasonably satisfactory to legal counsel for the
Company, to the effect that a sale, transfer or assignment of such Common
Shares or Warrant Shares may be made without registration.

(b) Any legend endorsed on a certificate pursuant to
subsection 4.2(b) and the stop transfer instructions with respect to such
Common Shares or Warrant Shares shall be removed upon receipt by the Company of
an order of an appropriate state securities authority authorizing such removal.

5. Conditions to Closing.

5.1 Conditions to Obligations of the Company.

(a) First Closing. The obligation of the Company to
issue the Warrants to Purchaser at the First Closing is subject to the
fulfillment on or prior to the First Closing Date of the following conditions,
any of which may be waived by the Company:

(1) Representations and Warranties. The
representations and warranties made by the Purchaser in Section 4 hereof shall
be true and correct when made, and shall be true and correct on such First
Closing Date with the same force and effect as if they had been made on and as
of said date.

(2) Consents and Waivers. The Company shall have
obtained any and all consents (including all governmental or regulatory
consents, approvals or authorizations required in connection with the valid
execution and delivery of this Agreement and the Amendment to Stockholders'
Agreement), permits and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement, the Warrants, the Amendment to
Stockholders' Agreement, the Settlement and Mutual General Release Agreement,
the License Agreement and the MOU.








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(3) Stockholders' Agreement. The Company, the
Purchaser and the other parties holding at least a majority of the Registrable
Securities (as defined in the Stockholders Agreement) and listed as signatories
thereto shall have executed and delivered the Amendment to Stockholders'
Agreement in the form attached hereto as Exhibit D.

(4) Settlement and Mutual General Release
Agreement. The Company and the Purchaser (including, if necessary, its
affiliates, subsidiaries or authorized representatives) shall have executed and
delivered the Settlement and Mutual General Release Agreement in the form
attached hereto as Exhibit E.

(5) License Agreement. The Company and the
Purchaser (including, if necessary, its affiliates, subsidiaries or authorized
representatives) shall have executed and delivered the License Agreement in the
form attached hereto as Exhibit F.

(6) Memorandum of Understanding. The Company and
the Purchaser (including, if necessary, its affiliates, subsidiaries or
authorized representatives) shall have executed the MOU attached hereto as
Exhibit G setting forth the principal terms of a product development and supply
agreement governing the development, manufacture and distribution rights of the
Company and the Purchaser with respect to products incorporating the parties'
respective technologies. The parties shall use their reasonable efforts to
agree upon and execute such an agreement within ninety (90) days after the
Closing.

(7) Legal Investment. At the time of the First
Closing, the issuance of the Warrants by the Company to the Purchaser hereunder
shall be legally permitted by all laws and regulations to which the Purchaser
and the Company are subject.

(b) Second Closing. The obligation of the Company to
sell and issue the Common Shares to the Purchaser at the Second Closing is
subject to the fulfillment on or prior to the Second Closing Date of the
following conditions, any of which may be waived by the Company:

(1) Incorporation of Conditions. The conditions
set forth in subsection 5.1(a)(1) through (a)(7) above shall have been
fulfilled.

(2) Legal Investment. At the time of the Second
Closing, the issuance and sale of the Common Shares by the Company to the
Purchaser hereunder shall be legally permitted by all laws and regulations to
which the Purchaser and the Company are subject.

(3) Effectiveness of Initial Public Offering.
The SEC shall have declared effective, and the Company begun its initial public
offering of shares of its Common Stock pursuant to, the Company's Registration
Statement No. 333-29073 on Form S-1 (the "Effective Date").

5.2 Conditions to Obligations of the Purchaser.

(a) First Closing. The Purchaser's obligation at the
First Closing to execute and deliver the Stockholders' Agreement, the
Settlement and Mutual General Release





11

Agreement, the License Agreement and the MOU, is subject to the fulfillment on
or prior to the First Closing Date of the following conditions, any of which
may be waived by the Purchaser:

(1) Representations and Warranties Correct;
Performance of Obligations. The representations and warranties made by the
Company in Section 3 above shall be true and correct when made, and shall be
true and correct on the First Closing Date with the same force and effect as if
they had been made on and as of said date and the Company shall have performed
all obligations and conditions herein required to be performed or observed by
it on or prior to the First Closing Date.

(2) Incorporation of Conditions. The conditions
set forth in subsections (a)(2) through (a)(7) of Section 5.1 above shall have
been fulfilled.

(3) Common Stock Purchase Warrants. The Company
shall have executed and delivered the Warrants on the form attached hereto as
Exhibits A and B.

(4) Compliance Certificate. The Company shall
have delivered to the Purchaser a certificate, executed by the President of the
Company, dated as of the First Closing Date, certifying the fulfillment of the
conditions specified in subsection (a)(1) of this Section 5.2 and in subsection
(a)(2) of Section 5.1 above.

(5) Secretary's Certificate. The Company shall
have delivered to the Purchaser a certificate, executed by the Secretary of the
Company, dated as of the First Closing Date, certifying the authenticity of
attached copies of the Company's Certificate of Incorporation, Bylaws and
resolutions of the Board of Directors approving the transactions contemplated
hereby.

(6) Opinion of Company Counsel. The Purchaser
shall have received a legal opinion of counsel to the Company in form and
substance acceptable to the Purchaser and the Company.

(b) Second Closing. The Purchaser's obligation to
purchase the Common Shares at the Second Closing is subject to fulfillment on
or prior to the Second Closing Date of the following conditions, any of which
may be waived by the Purchaser:

(1) Incorporation of Conditions. The conditions
set forth in subsections (a)(1) through (a)(6) of this Section 5.2, and in
subsections (b)(2) and (b)(3) of Section 5.1 above, shall have been fulfilled.

6. Miscellaneous.

6.1 Filing of Registration Statement on Form S-3 for Common
Shares. The Company acknowledges and agrees that it shall, within one hundred
eighty (180) days after the Effective Date (as defined in Section 5.1(b)(3)
above) file with the SEC a registration statement on Form S-3 registering not
less than the aggregate number of Warrant Shares issuable upon exercise of the
Warrants and Common Shares purchased by the Purchaser at the Second Closing.





12

6.2 Directed Shares in IPO. Subject to the fulfillment on or
prior to the Second Closing Date of the conditions set forth in subsections
(b)(1) through (b)(3) of Section 5.1 above, the Company shall provide Purchaser
the opportunity to purchase in the IPO up to 200,000 shares of Common Stock of
the Company being registered as part of the Company's IPO at a price equal to
the IPO offering price but in no event greater than $15.00 per share.

6.3 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.

6.4 Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchaser.

6.5 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.

6.6 Entire Agreement. This Agreement, the exhibits to this
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.

6.7 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be sent via facsimile,
overnight courier service or mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed or sent (a) if to the Purchaser,
at the address or facsimile number of the Purchaser set forth below such
party's name on Exhibit A, or at such other address or number as the Purchaser
shall have furnished to the Company in writing, or (b) if to the Company, at
131 Albright Way, Los Gatos, California 95030 USA, Attn: President, or at such
other address or number as the Company shall have furnished to the Purchaser in
writing.

6.8 Severability. In case any provision of this Agreement shall
be declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the parties shall insert in place of the invalid or
unenforceable provision one of similar economic effect and intent.

6.9 Expenses. The Company and the Purchaser shall each bear their
respective expenses and legal fees incurred with respect to this Agreement and
the transactions contemplated hereby.

6.10 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.

6.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.







13


IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.



SCM MICROSYSTEMS, INC.

a Delaware corporation





By:
---------------------------------
Steven Humphreys, President





GEMPLUS
a legal entity under the laws of France





By:
---------------------------------


------------------------------------
(Print Name)



Title:
------------------------------





COUNTERPART SIGNATURE PAGE TO COMMON
STOCK PURCHASE AGREEMENT





14


SCHEDULE OF EXHIBITS

Exhibit A and B - Form of Common Stock Purchase Warrants

Exhibit C - Schedule of Exceptions to Representations and Warranties of the
Company

Exhibit D - Form of Waiver and Amendment to Amended and Restated Stockholders'
Agreement

Exhibit E - Form of Settlement and Mutual General Release Agreement

Exhibit F - Form of License Agreement

Exhibit G - Form of Memorandum of Understanding
































15


EXHIBIT A AND B

COMMON STOCK PURCHASE WARRANTS
























EXHIBIT C

SCHEDULE OF EXCEPTIONS

The following are the exceptions to the representations and warranties
made by SCM Microsystems, Inc. (the "Company") in Section 3 of the Warrant
Issuance and Common Stock Purchase Agreement dated as of September 5, 1997
(the "Agreement") at and as of the First Closing and Second Closing; provided,
however, that at and as of the Second Closing the representations and
warranties, and this Schedule of Exceptions (except as expressly indicated
herein), shall not reflect the transactions occurring at the First Closing
contemplated by the Agreement. Capitalized terms used in this exhibit, unless
otherwise specified, have the same meaning given them in the Agreement. Unless
otherwise expressly stated, the section references used herein are to the
particular subsections in Section 3 of the Agreement.

3.3 (Capitalization)

Immediately prior to the issuance and sale of the Common Shares to
Purchaser at the Second Closing, the capitalization of the Company as set forth
in Section 3.3 of the Agreement will not reflect (i) the issuance of the
Warrants to Purchaser at the First Closing and reservation of the Warrant
Shares by the Company for issuance upon exercise of the Warrants; (ii) the
Company's obligation to sell the Common Shares to Purchaser at the Second
Closing contingent upon satisfaction of the conditions set forth in Section
5.1(b) of the Agreement; (iii) the Company's obligation under Section 6.2 of
the Agreement to provide the Purchaser the opportunity to purchase in the IPO
up to 200,000 shares of Common Stock of the Company; and (iv) the shares of
Common Stock of the Company issued in its IPO.

3.5 (Securities Laws; Governmental Consent, etc.)

Pursuant to Section 6.1 of this Agreement, within 180 days after the
Effective Date (defined in Section 5.1(b)(3) of this Agreement), the Company
shall file with the SEC a registration statement on Form S-3 covering not less
than the aggregate number of Warrant Shares issuable upon exercise of the
Warrants to be issued to the Purchaser at the First Closing and the Common
Shares to be purchased by Purchaser at the Second Closing hereunder.

3.9 (Litigation) and 3.12 (Intellectual Property and Other Rights)

On April 28, 1997, Purchaser served the Company with a complaint
alleging that the Company's SwapSmart product infringes certain claims of a
French patent held by Purchaser. In an unrelated context, Purchaser has
indicated that it will offer licenses to the relevant patent on a
non-exclusive, non-discriminatory basis for a royalty not to exceed 1% of the
net selling price of products practicing the patent. While the outcome of any
litigation is uncertain, management of the Company believes that, based upon
the defenses available to the Company and Purchaser's stated licensing
position, the matter can be resolved without a material adverse effect on the
Company's business and operating results.




The Company received a cease and desist letter dated July 31, 1995,
from the attorneys for Smith Corona Machines, Inc., regarding the alleged use
of "SCM" by the Company in its trade name as part of its trademark SCM SwapBox
for use with the combination floppy disk drive and PCCard slot product. Smith
Corona asserts that such use by the Company constitutes trademark infringement
and unfair competition under federal statutes and common law. Smith Corona had
demand the Company discontinue such alleged trade name and trademark uses of
the "SCM" mark. Gray Cary Ware and Friedenrich responded to the cease and
desist on behalf of the Company by letter dated January 8, 1996, denying Smith
Corona's claim. Smith Corona responded to our letter on February 22, 1996,
reiterating its demand.



3.11 (Material Contracts and Other Commitments)



The Company has the following material agreements:



- In May 1997, the Company and Telenor entered into a development and
supply agreement pursuant to which the Company will design,
manufacture, test and supply DVB-CAM modules to Telenor. Pursuant
to this agreement, Telenor may pay up to an aggregate of $1.2
million to the Company for development costs as the Company
achieves certain development milestones. Once the prototype has
been approved by Telenor, the Company will supply these modules
pursuant to the terms of the agreement. As part of this
arrangement, Telenor also made an equity investment of
approximately $5.5 million in the Company. Furthermore, the
Company has issued 34, 965 shares of Preferred Stock to a Telenor
affiliate, fifty percent (50%) of which will remain unvested until
the Company achieves the mid-point milestone of the project and has
been paid by Telenor for such milestone completion. Each party
will retain rights to its preexisting intellectual property, and it
is expected that any intellectual property that is jointly
developed under the agreement will be jointly owned.

- Supply agreement for fabricated metal components with Robinson
Nugent dated November 1996. The total obligations of the Company
under this agreement are estimated to be $300,000.

- Advanced purchase components agreement with Intellicard Systems,
dated May 1996. The total obligations of the Company under this
agreement are estimated to be $100,000.

- Purchase agreement for smart card reader modules with Avnet France,
dated October 1996. The total obligations of the Company under
this agreement are estimated to be $150,000.

3.12 (Intellectual Property and Other Rights)

See Item 3.9 above.

3.15 (Employees)

The Company is aware that Purchaser has filed a criminal lawsuit
against one of the Company's current employees and a former Purchaser employee
alleging, among other things, theft by such employee of Purchaser's
intellectual property prior to such employee's commencement of employment with
the Company.

3.16 (Registration Rights)



See Item 3.5 above.

















EXHIBIT D

AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT



















EXHIBIT E

SETTLEMENT AND MUTUAL GENERAL RELEASE AGREEMENT

















EXHIBIT F

LICENSE AGREEMENT

















EXHIBIT G

MEMORANDUM OF UNDERSTANDING