FORM OF UNDERWRITING AGREEMENT

EXHIBIT 1.1
R&W Draft
9/3/97

2,620,000 Shares

SCM MICROSYSTEMS, INC.

Common Stock

U.S. UNDERWRITING AGREEMENT


_____________, 1997

COWEN & COMPANY
HAMBRECHT & QUIST LLC
As Representatives of the several U.S. Underwriters
c/o Cowen & Company
Financial Square
New York,
New York 10005


Dear Sirs:

1 Introductory. SCM Microsystems, Inc., a Delaware corporation (the
"Company"), and the selling stockholders named in Schedule B hereto
(the "Selling Stockholders") propose to sell, pursuant to the terms
of this Agreement, to the several U.S. Underwriters named in
Schedule A hereto (the "U.S. Underwriters," or, each, a "U.S.
Underwriter"), an aggregate of 2,620,000 shares of Common Stock,
$0.001 par value per share (the "Common Stock"), of the Company.
The aggregate of 2,620,000 shares so proposed to be sold is
hereinafter referred to as the "Firm Stock." The Company also
proposes to sell to the U.S. Underwriters, upon the terms and
conditions set forth in Section 3 hereof, up to an additional
393,000 shares of Common Stock (the "Optional Stock"). The Firm
Stock and the Optional Stock are hereinafter collectively referred
to as the "Stock." Cowen & Company ("Cowen") and Hambrecht & Quist
LLC are acting as representatives of the several U.S. Underwriters
and in such capacity are hereinafter referred to as the
"Representatives."

It is understood by all parties that the Company and the Selling
Stockholders are concurrently entering into an agreement dated the
date hereof (the "International Underwriting Agreement") providing
for the sale by the Company and the Selling Stockholders of an
aggregate of 750,000 shares of Common Stock (the "International
Stock") through arrangements with certain international managers
outside the United States (the "International Managers"), for whom
Cowen International L.P., Hambrecht & Quist LLC and Westdeutsche
Landesbank Girozentrale are acting as lead manager (the "Lead
Managers"). The U.S. Underwriters and the International Managers
simultaneously are entering into an agreement among the U.S. and
International underwriting syndicates (the "Agreement Among U.S.
Underwriters and International Managers") which provides for, among
other things, the transfer of shares of Common Stock between the
two syndicates. Two forms of prospectus are to be used in
connection with the offer and sale of shares


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of Common Stock contemplated by the foregoing, one relating to the
Stock and the other relating to the International Stock. In
addition, the International version of the prospectus will be
translated into German for purposes of the application to list the
International Stock on the Neuer Markt of the Frankfurt Stock
Exchange. Except as used in the first paragraph hereof and in
Section 3 and 8 herein, and except as the context may otherwise
require, references herein to the Stock shall include all the
shares of Common Stock which may be sold pursuant to both this
Agreement and the International Underwriting Agreement, and
references herein to any prospectus whether in preliminary or final
form, and whether as amended or supplemented, shall include the
U.S. and the International versions thereof and the German
translation version of the International version.

2a. Representations and Warranties of the Company and its Subsidiaries.
The Company hereby represents and warrants to, and agrees with, the
several U.S. Underwriters that:

(a) A registration statement on Form S-1 (File No.
333-29073) in the form in which it became or becomes
effective and also in such form as it may be when any
post-effective amendment thereto shall become
effective with respect to the Stock, including any
pre-effective prospectuses included as part of the
registration statement as originally filed or as part
of any amendment or supplement thereto, or filed
pursuant to Rule 424 under the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission")
promulgated thereunder, copies of which have
heretofore been delivered to you, has been prepared by
the Company in conformity with the requirements of the
Securities Act and has been filed with the Commission
under the Securities Act; one or more amendments to
such registration statement, including in each case an
amended pre- effective prospectus, copies of which
amendments have heretofore been delivered to you, have
been so prepared and filed. If it is contemplated, at
the time this Agreement is executed, that a
post-effective amendment to the registration statement
will be filed and must be declared effective before
the offering of the Stock may commence, the term
"Registration Statement" as used in this Agreement
means the registration statement as amended by said
post-effective amendment. The term "Registration
Statement" as used in this Agreement shall also
include any registration statement relating to the
Stock that is filed and declared effective pursuant to
Rule 462(b) under the Securities Act. The term
"Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration
Statement, or, (A) if the prospectus included in the
Registration Statement omits information in reliance
on Rule 430A under the Securities Act and such
information is included in a prospectus filed with the
Commission pursuant to Rule 424(b) under the
Securities Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in
the Registration Statement as supplemented by the
addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule
424(b) and (B) if prospectuses that meet the
requirements of Section 10(a) of the Securities Act
are delivered pursuant to Rule 434 under the
Securities Act, then (i) the term "Prospectus" as used
in this Agreement means the "prospectus subject to
completion" (as such term is defined in Rule 434(g)
under the Securities Act) as supplemented by (a) the
addition of Rule 430A information or other information
contained in the form of prospectus delivered pursuant
to Rule 434(b)(2) under the Securities Act or (b) the
information contained in the term sheets described in
Rule 434(b)(3) under the Securities Act, and (ii) the
date of such prospectuses shall be deemed to be the
date of the term sheets. The term "Pre-effective
Prospectus" as used in this Agreement means the
prospectus


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subject to completion dated September __, 1997, and as
such prospectus shall have been amended from time to
time prior to the date of the Prospectus.

(b) The Commission has not issued or, to the Company's
knowledge, threatened to issue any order preventing or
suspending the use of any Pre-effective Prospectus,
and, at its date of issue, each Pre-effective
Prospectus complied in all material respects with the
applicable provisions of the Securities Act and did
not contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which
they were made, not misleading, other than any
nonconformance or untrue statement or omission in a
Pre-effective Prospectus that has been corrected in
the Prospectus; and, when the Registration Statement
becomes effective and at all times subsequent thereto
up to and including each of the Closing Dates (as
hereinafter defined), the Registration Statement and
the Prospectus and any amendments or supplements
thereto contained and will contain all material
statements and information required to be included
therein by the Securities Act and complied and will
comply in all material respects with the applicable
provisions of the Securities Act and neither the
Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, contained or will
contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary in order to make the statements
therein, in light of the circumstances under which
they were made, not misleading; provided, however,
that the foregoing representations and warranties
shall not apply to information contained in or omitted
from any Pre-effective Prospectus or the Registration
Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by
the Representatives on behalf of the several U.S.
Underwriters, directly or through you, specifically
for use in the preparation thereof. With respect to
the preceding sentence, the Company acknowledges that
the only information furnished in writing by the
Representatives on behalf of the several U.S.
Underwriters for use in the Pre-effective Prospectus,
the Registration Statement and the Prospectus is the
paragraph with respect to stabilization on the inside
front cover page of the Prospectus and the statements
contained under the caption "Underwriting" in the
Prospectus.

(c) The Registration Statement is effective under the
Securities Act and no stop order suspending
effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has
been issued and no proceedings for that purpose have
been instituted or, to the Company's knowledge, are
threatened under the Securities Act; any required
filing of the Prospectus and any amendment or
supplement thereto pursuant to Rule 424(b) of the
Rules and Regulations has been or will be made in the
manner and within the time period required by Rule
424(b).

(d) There is no document, contract or other agreement of a
character required to be described in the Registration
Statement or Prospectus or to be filed as an exhibit
to the Registration Statement which is not described
or filed as required by the Securities Act or the
Rules and Regulations. Each agreement described in the
Registration Statement and the Prospectus or listed in
the Exhibits to the Registration Statement is in full
force and effect and is valid and enforceable by and
against the Company or its subsidiaries in accordance
with its terms, except to the extent that rights to
indemnity and contribution hereunder may be limited by
applicable bankruptcy, insolvency and other similar
laws affecting conditions,


3




rights and rules of law governing specific
performance, injunctive relief and other equitable
remedies. Neither the Company nor any subsidiary is in
default in the observance or performance of any
material term or obligation to be performed by it
under any such agreement, and no event has occurred
which, with notice or lapse of time or both, would
constitute such a default, in any such case which
default or event would have a material adverse effect
on the Company and its subsidiaries taken as a whole.
No default exists, and, to the knowledge of the
Company, no event has occurred which, with notice or
lapse of time or both would constitute a default, in
the due performance and observance of any term,
covenant or condition, by the Company or any of its
subsidiaries of any other agreement or instrument to
which the Company or any of its subsidiaries is a
party or by which any of them or their respective
properties or businesses may be bound or affected, in
any case which default or event could reasonably be
expected to have a material adverse effect on the
operations of the Company and its subsidiaries
considered as a whole.

(e) None of the Company or its subsidiaries is in
violation of any franchise, license, permit, judgment,
decree, order, statute or rule or regulation, which
could reasonably be expected to have a material
adverse effect on the operations of the Company and
its subsidiaries considered as a whole, or any term or
provision of its certificate of incorporation or
by-laws.

(f) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and except as set forth or contemplated in
the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or
obligations, direct or contingent, nor entered into
any transactions not in the ordinary course of
business, and there has not been any material adverse
change in the condition (financial or otherwise),
properties, business, management, net worth or results
of operations of the Company and its subsidiaries
considered as a whole, or any change in the capital
stock, short-term or long-term debt of the Company and
its subsidiaries considered as a whole, except for
issuances of Common Stock pursuant to the Company's
1997 Stock Plan, 1997 Employee Stock Purchase Plan,
1997 Director Option Plan, 1997 Stock Option Plan for
French Employees and the 1997 Employee Stock Purchase
Plan for Non-U.S. Employees (collectively, the "1997
Plans").

(g) The financial statements, together with the related
notes and schedules, set forth in the Prospectus and
elsewhere in the Registration Statement fairly
present, the financial position and the results of
operations and changes in financial position of the
Company and its consolidated subsidiaries at the
respective dates or for the respective periods therein
specified. Such statements and related notes and
schedules have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis except as may be set forth in the
Prospectus. The summary and selected financial and
statistical data set forth in the Prospectus under the
captions "Summary Consolidated Financial Data,"
"Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and
Results of Operations-- Results of Operations" and "--
Quarterly Results of Operations" fairly present, on
the basis stated in the Registration Statement, the
information set forth therein as at the respective
dates and for the respective periods specified, and
such data have been presented on a basis consistent
with the financial statements so set forth in the
Prospectus and other financial information.


4




(h) To the Company's knowledge, KPMG Peat Marwick LLP, who
have expressed their opinions on the audited financial
statements and related schedules included in the
Registration Statement and the Prospectus are
independent public accountants as required by the
Securities Act and the Rules and Regulations.

(i) The Company and each of its subsidiaries have been
duly organized and are validly existing and in good
standing as corporations under the laws of their
respective jurisdictions of organization, with power
and authority (corporate and other) to own or lease
their properties and to conduct their businesses as
described in the Registration Statement and the
Prospectus; each of the Company and its subsidiaries
is in possession of and operating in compliance with
all material franchises, grants, authorizations,
licenses, permits, easements, consents, certificates
and orders required for the conduct of its business,
all of which are valid and in full force and effect;
and each of the Company and its subsidiaries is duly
qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where
its ownership or leasing of properties or the conduct
of its businesses requires such qualification, except
where failure to so qualify would not have a material
adverse effect on the Company and its subsidiaries
considered as a whole. The Company has and each of its
subsidiaries have all requisite power and authority,
and all necessary consents, approvals, authorizations,
orders, registrations, qualifications, licenses and
permits of and from all public regulatory or
governmental agencies and bodies to own, lease and
operate its properties and conduct its business as now
being conducted and as described in the Registration
Statement and the Prospectus, and no such consent,
approval, authorization, order, registration,
qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the
Registration Statement and the Prospectus. The Company
owns or controls, directly or indirectly, only the
corporations, associations or other entities named in
Schedule C hereto.

(j) The Company's authorized and outstanding capital stock
is on the date hereof, and will be on the Closing
Dates, as set forth under the heading "Capitalization"
in the Prospectus; the outstanding shares of Common
Stock of the Company conform to the description
thereof in the Prospectus and have been duly
authorized and validly issued and are fully paid and
nonassessable; and have been issued in compliance with
all federal and state securities laws and were not
issued in violation of or subject to any pre-emptive
rights or similar rights to subscribe for or purchase
securities. Except as disclosed in and or contemplated
by the Prospectus and the consolidated financial
statements of the Company and related notes thereto
included in the Prospectus, the Company does not have
outstanding any options or warrants to purchase, or
any pre-emptive rights or other rights to subscribe
for or to purchase any securities or obligations
convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such
options, rights, convertible securities or
obligations, except for options granted subsequent to
the date of information provided in the Prospectus
pursuant to the Company's employee and stock option
plans as disclosed in the Prospectus. The description
of the Company's stock option and other stock plans or
arrangements, and the options or other rights granted
or exercised thereunder, as set forth in the
Prospectus, accurately and fairly presents the
information required to be shown with respect to such
plans, arrangements, options and rights. All
outstanding shares of capital stock of each subsidiary
have been duly authorized and validly issued, and are
fully paid and nonassessable and are owned directly by
the Company or by another wholly owned subsidiary of
the Company free and clear of any liens, encumbrances,
equities or claims.


5




(k) The Stock to be issued and sold by the Company to the
U.S. Underwriters hereunder and the International
Stock to be issued and sold by the Company to the
International Managers under the International
Underwriting Agreement has been duly and validly
authorized and, when issued and delivered against
payment therefor as provided herein and therein, will
be duly and validly issued, fully paid and
nonassessable and free of any pre-emptive or similar
rights and will conform to the description thereof in
the Prospectus and the U.S. Underwriters and the
International Managers will receive good title to the
Stock and the International Stock, respectively, free
and clear of all liens, security interests, pledges,
charges, claims and encumbrances.

(l) Except as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of
which any property of the Company or any subsidiary is
subject, which, if determined adversely to the Company
or any such subsidiary, could individually or in the
aggregate be reasonably expected to (i) prevent or
adversely affect the transactions contemplated by this
Agreement, (ii) suspend the effectiveness of the
Registration Statement, (iii) prevent or suspend the
use of the Pre-effective Prospectus in any
jurisdiction or (iv) result in a material adverse
change in the condition (financial or otherwise),
properties, business, management, net worth or results
of operations of the Company and its subsidiaries
considered as a whole and the Company is not aware of
any valid basis for any such legal or governmental
proceeding; and, to the Company's knowledge, no such
proceedings are threatened or contemplated against the
Company or any subsidiary by governmental authorities
or others. Neither the Company nor any subsidiary is a
party nor subject to the provisions of any material
injunction, judgment, decree or order of any court,
regulatory body or other governmental agency or body.
The description of the Company's litigation under the
heading "Legal Proceedings" in the Prospectus is true
and correct and complies with the Rules and
Regulations and no other suit or proceeding before any
court or governmental authority known to the Company
is required to be disclosed in the Prospectus that is
not so disclosed.

(m) The execution, delivery and performance of this
Agreement and the International Underwriting Agreement
and the consummation of the transactions herein and
therein contemplated (A) will not result in any
violation of the provisions of the certificate of
incorporation, by-laws or other organizational
documents of the Company or its subsidiary, or any
law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over
the Company or its subsidiaries or any of their
respective properties or assets, and (B) will not
conflict with or result in a breach or violation of
any of the terms or provision of or constitute a
default under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a
party or by which it or any of their respective
properties is or may be bound nor will such delivery
and performance result in the creation of a security
interest, lien, encumbrance, charge or claim.

(n) No consent, approval, authorization or order of any
court or governmental agency or body is required for
the execution, delivery and performance of this
Agreement and the International Underwriting Agreement
by the Company or its subsidiaries and the
consummation of the transactions contemplated hereby
and thereby (including the


6




issuance, sale and delivery of the Stock), except such
as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), the Neuer Markt
of the Frankfurt Stock Exchange or under the
Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or the securities or
"Blue Sky" laws of any jurisdiction in connection with
the purchase and distribution of the Stock by the U.S.
Underwriters and the International Stock by the
International Managers.

(o) The Company has the full corporate power and authority
to enter into this Agreement and the International
Underwriting Agreement and to perform its obligations
hereunder and thereunder (including to issue, sell and
deliver the Stock and the International Stock), and
this Agreement and the International Underwriting
Agreement have each been duly and validly authorized,
executed and delivered by the Company and each
constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance
with their respective terms, except to the extent that
rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or the
public policy underlying such laws and except as may
be limited by applicable bankruptcy, insolvency and
other similar laws affecting conditions, rights and
rules of law governing specific performance,
injunctive relief and other equitable remedies.

(p) The Company and its subsidiaries are in all material
respects in compliance with, and conduct their
respective businesses in conformity with, all
applicable federal, state, local and foreign laws,
rules and regulations or any court or governmental
agency or body; to the knowledge of the Company,
otherwise than as set forth in the Registration
Statement and the Prospectus, no prospective change in
any of such federal or state laws, rules or
regulations has been adopted which, when made
effective, could reasonably be expected to have a
material adverse effect on the operations of the
Company and its subsidiaries considered as a whole.

(q) The Company and its subsidiaries have filed all
necessary federal, state, local and foreign income,
payroll, franchise and other tax returns and have paid
all taxes shown as due thereon or with respect to any
of their properties, and there is no tax deficiency
that has been or to the knowledge of the Company is
reasonably likely to be, asserted against the Company
or any of its subsidiaries or any of their respective
properties or assets that would materially and
adversely affect the financial position, business or
operations of the Company and its subsidiaries
considered as a whole.

(r) No person or entity has the right to require
registration of shares of Common Stock or other
securities of the Company because of the filing or
effectiveness of the Registration Statement or
otherwise, except for persons and entities who have
expressly waived such right or who have been given
proper notice and have failed to exercise such right
within the time or times required under the terms and
conditions of such right.

(s) Neither the Company nor any of its officers, directors
or affiliates has taken or will take, directly or
indirectly, any action designed or intended to
stabilize or manipulate the price of the Common Stock
in violation of Regulation M of the Exchange Act, or
which caused or resulted in, or which might in the
future reasonably be expected to cause or result in,
stabilization or manipulation of the price of the
Common Stock in violation of Regulation M of the
Exchange Act.


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(t) Each of the Company and each of its subsidiaries owns,
or possesses adequate and enforceable rights, either
as owner or licensee, to use all patents, trademarks
(including "SwapBox(TM)," "SwapSmart(TM),"
"SwapAcces(TM)" and "SmartOS(TM)"), trademark
registrations, service marks, service mark
registrations, trade names, copyrights, licenses,
inventions, trade secrets, know-how and other similar
rights described in the Prospectus as being owned or
licensed by them and except as described in the
Prospectus the Company is not aware of any claim to
the contrary or any challenge by any other person to
the rights of the Company and its subsidiaries with
respect to the foregoing. The Company's business as
now conducted and as proposed to be conducted does not
and will not infringe or conflict with in any material
respect any patents, trademarks, service marks, trade
name, copyright, trade secrets, know-how, licenses or
other intellectual property or franchise right of any
person. Except as described in the Prospectus, no
claim has been made against the Company alleging the
infringement by the Company of any patent, trademark,
service mark, trade name, copyright, trade secret,
know-how, license in or other intellectual property
right or franchise right of any person.

(u) The Company is not involved in any labor dispute nor,
to the knowledge of the Company, is any such dispute
threatened. Except as described in the Prospectus, the
Company is not aware that (A) any executive, key
employee or significant group of employees of the
Company or any subsidiary plans to terminate
employment with the Company or any such subsidiary or
(B) any such executive or key employee is subject to
any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement that would
be violated by the present or proposed business
activities of the Company and its subsidiaries.
Neither the Company nor any subsidiary has or expects
to have any liability for any prohibited transaction
or funding deficiency or any complete or partial
withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any
subsidiary makes or ever has made a contribution and
in which any employee of the Company or any subsidiary
is or has ever been a participant. With respect to
such plans, the Company and each subsidiary is in
compliance in all material respects with all
applicable provisions of ERISA.

(v) No transaction has occurred, and no relationship,
direct or indirect, exists, between or among the
Company or its subsidiaries, on the one hand, and any
of its stockholders, officers, directors, customers or
suppliers of the Company or its subsidiaries or any
affiliate or affiliates of any such stockholder,
officer, director, customer or supplier, on the other
hand, that is required to be described and is not so
described in the Prospectus.

(w) The Company and its subsidiaries have, and the Company
and its subsidiaries as of the Closing Dates will
have, good and marketable title to all personal
property owned by them which is material to the
business of the Company or of its subsidiaries, in
each case free and clear of all liens, encumbrances
and defects except such as are described in the
Prospectus or such as would not have


8




a material adverse effect on the Company and its
subsidiaries considered as a whole; and any real
property and buildings held under lease by the Company
and its subsidiaries are, or will be as of each of the
Closing Dates, held by them under valid, subsisting
and enforceable leases with such exceptions as would
not have a material adverse effect on the Company and
its subsidiaries considered as a whole, in each case
except as described in or contemplated by the
Prospectus.

(x) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility
against such losses and risks and in such amounts as
are customary in the businesses in which they are
engaged or propose to engage after giving effect to
the transactions described in the Prospectus; and
neither the Company nor any subsidiary of the Company
has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue their
business at a cost that would not have a material
adverse effect on the Company and its subsidiaries
considered as a whole, except as described in or
contemplated by the Prospectus.

(y) Other than as contemplated by this Agreement and the
International Underwriting Agreement, there is no
broker, finder or other party that is entitled to
receive from the Company any brokerage or finder's fee
or other fee or commission as a result of any of the
transactions contemplated by this Agreement or the
International Underwriting Agreement.

(z) The Stock has been duly authorized for (i) quotation
on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System,
subject to official Notice of Issuance, and (ii)
listing on the Neuer Markt of the Frankfurt Stock
Exchange, and a registration statement has been filed
on Form 8-A pursuant to Section 12 of the Exchange
Act, which registration statement complies in all
material respects with the Exchange Act.

(aa) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in all
material respects, the transactions in, and
dispositions of, the assets of, and the results of
operation of, the Company and its subsidiaries. The
Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions
are executed in accordance with management's general
or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of
financial statements in conformity with generally
accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is
permitted only in accordance with management's general
or specific authorization; and (iv) the recorded
accountability for assets is compared with existing
assets at reasonable intervals and appropriate action
is taken with respect to any differences.

(bb) To the Company's knowledge, neither the Company nor
any of its subsidiaries nor any employee or agent of
the Company or any of its subsidiaries has made any
payment of funds of the Company or any of its
subsidiaries or received or retained any funds in
violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.

(cc) Neither the Company nor any of its subsidiaries is or,
after application of the net proceeds of this offering
as described under the caption "Use of Proceeds" in
the Prospectus, will become an "investment company" or
an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act
of 1940, as amended.


9




(dd) Each certificate signed by any officer of the Company
and delivered to the U.S. Underwriters or counsel for
the U.S. Underwriters shall be deemed to be a
representation and warranty by the Company as to the
matters covered thereby.

(ee) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or
any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity;
made any direct or indirect unlawful payment to any
foreign or domestic government official or employee
from corporate funds; or has violated or is in
violation of any provision of the Foreign Corrupt
Practices Act of 1977.

2b. Representations and Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder represents and warrants to,
and agrees with, the several U.S. Underwriters that such Selling
Stockholder:

(a) Now has, and on the Closing Date will have, valid and
marketable title to the Stock and the International
Stock to be sold by such Selling Stockholder, free and
clear of any lien, claim, security interest or other
encumbrance, including, without limitation, any
restriction on transfer, and has full right, power and
authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement (each as
hereinafter defined).

(b) Now has, and on the Closing Date will have, upon
delivery of and payment for each share of Stock
hereunder and the International Stock under the
International Underwriting Agreement, full right,
power and authority, and approval required by law to
sell, transfer, assign and deliver the Stock being
sold by such Selling Stockholder hereunder and the
International Stock being sold by such Selling
Stockholder under the International Underwriting
Agreement, and each of the several U.S. Underwriters
will acquire valid and marketable title to all of the
Stock being sold to the U.S. Underwriters by such
Selling Stockholder, free and clear of any liens,
encumbrances, equities claims, restrictions on
transfer or other defects whatsoever.

(c) For a period of 180 days after the date of this
Agreement, without the consent of Cowen, such Selling
Stockholder will not offer, sell, assign, transfer,
encumber, contract to sell, grant an option to
purchase or otherwise dispose of any Stock or
securities convertible into or exchangeable for Stock,
including, without limitation Stock which may be
deemed to be beneficially owned by such Selling
Shareholder in accordance with the Rules and
Regulations, except for the Stock being sold hereunder
and the International Stock being sold under the
International Underwriting Agreement.

(d) Has duly executed and delivered a power of attorney,
in substantially the form heretofore delivered by the
Representatives (the "Power of Attorney"), appointing
and and each of them, as attorney-in-fact (the
"Attorneys-in-fact") with authority to execute and
deliver this Agreement and the International
Underwriting Agreement on behalf of such Selling
Stockholder, to authorize the delivery of the shares
of Stock to be sold by such Selling Stockholder
hereunder and the shares of International Stock to be
sold by such Selling Stockholder under the
International Underwriting Agreement and otherwise to
act


10




on behalf of such Selling Stockholder in connection
with the transactions contemplated by this Agreement
and the International Underwriting Agreement.

(e) Has duly executed and delivered a custody agreement,
in substantially the form heretofore delivered by the
Representatives ( the "Custody Agreement"), with
_______________________ as custodian (the
"Custodian"), pursuant to which certificates in
negotiable form for the shares of Stock and
International Stock to be sold by such Selling
Stockholder hereunder have been placed in custody for
delivery under this Agreement and the International
Underwriting Agreement.

(f) Has, by execution and delivery of each of this
Agreement, the International Underwriting Agreement,
the Power of Attorney and the Custody Agreement,
created valid and binding obligations of such Selling
Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, except to
the extent that rights to indemnity hereunder may be
limited by federal or state securities laws or the
public policy underlying such laws.

(g) The performance of this Agreement, the International
Underwriting Agreement, the Custody Agreement and the
Power of Attorney, and the consummation of the
transactions contemplated hereby and thereby will not
result in a breach or violation by such Selling
Stockholder of any of the terms or provisions of, or
constitute a default by such Selling Stockholder
under, any material indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or
instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any of
its properties is bound, or any judgement of any court
or governmental agency or body applicable to such
Selling Stockholder or any of its properties, or to
such Selling Stockholder's knowledge, any statute,
decree, order, rule or regulation of any court or
governmental agency or body applicable to such Selling
Stockholder or any of its properties.

Each Selling Stockholder agrees that the shares of
Stock and International Stock represented by the
certificates held in custody under the Custody
Agreement are for the benefit of and coupled with and
subject to the interests of the U.S. Underwriters, the
International Managers, the Selling Stockholders, and
the Company hereunder, and that the arrangement for
such custody and the appointment of the
Attorneys-in-fact are irrevocable; that the
obligations of such Selling Stockholder hereunder
shall not be terminated by operation of law, whether
by the death or incapacity, liquidation or
distribution of such Selling Stockholder, or any other
event, that if such Selling Stockholder should die or
become incapacitated or any other event occurs, before
the delivery of the Stock hereunder and the
International Stock under the International
Underwriting Agreement, certificates for the Stock and
International Stock to be sold by such Selling
Stockholder shall be delivered on behalf of such
Selling Stockholder in accordance with the terms and
conditions of this Agreement, the International
Underwriting Agreement and the Custody Agreement, and
action taken by the Attorneys- in-fact or any of them
under the Power of Attorney shall be as valid as if
such death, incapacity, or other event had not
occurred, whether or not the Custodian, the Attorneys-
in-fact or any of them shall have notice of such
death, incapacity or other event.


11




3 Purchase by, and Sale and Delivery to, U.S. Underwriters
--Closing Dates. The Company and the Selling Stockholders
agree, severally and not jointly, to sell to the U.S. Underwriters
the Firm Stock with the number of shares to be sold by the
Company and each Selling Stockholder being the number of shares set
forth opposite his, her or its name in Schedule B, and on the basis
of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set
forth, the U.S. Underwriters agree, severally and not jointly,
to purchase the Firm Stock from the Company and the Selling
Stockholders, the number of shares of Firm Stock to be purchased by
each U.S. Underwriter being set opposite its name in Schedule
A, subject to adjustment in accordance with Section 12 hereof. The
number of shares of Stock to be purchased by each U.S. Underwriter
from each Selling Stockholder hereunder shall bear the same
proportion to the total number of shares of Stock to be purchased
by such U.S. Underwriter hereunder as the number of shares of
stock being sold by each Selling Stockholder bears to the total
number of shares of Stock being sold by all Selling Stockholders,
subject to adjustment by the Representatives to eliminate
fractions.

The purchase price per share to be paid by the U.S. Underwriters
to the Company and the Selling Stockholders will be the
price per share set forth in the "Per Share" row of the table on
the cover page of the Prospectus under the heading "Proceeds to
Company" and "Proceeds to Selling Stockholders," respectively (the
"Purchase Price").

The Company and the Selling Stockholders will deliver the Firm
Stock to the Representatives for the respective accounts of the
several U.S. Underwriters (in the form of definitive
certificates, issued in such names and in such denominations as the
Representatives may direct by notice in writing to the Company and
the Selling Stockholders given at or prior to 12:00 Noon, New York
Time, on the second full business day preceding the First Closing
Date (as defined below) or, if no such direction is received, in
the names of the respective U.S. Underwriters or in such other
names as Cowen may designate (solely for the purpose of
administrative convenience) and in such denominations as Cowen
may determine), against payment of the aggregate Purchase
Price therefore by wire transfer in immediately available funds
(same day funds), to the Company and ______________________ as
Custodian for the Selling Stockholders, all at the offices of
Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California 94304. The time and date of the delivery and closing
shall be at 10:00 A.M., New York Time, on _________, 1997. The time
and date of such payment and delivery are herein referred to as the
"First Closing Date". The First Closing Date and the location of
delivery of, and the form of payment for, the Firm Stock may be
varied by agreement among the Company, Cowen and the Selling
Stockholders. The First Closing Date may be postponed pursuant to
the provisions of Section 12.

The Company and the Selling Stockholders shall make the
certificates for the Stock available to the Representatives for
examination on behalf of the U.S. Underwriters not later than 10:00
A.M., New York time, on the business day preceding the First
Closing Date at the offices of Cowen & Company, Financial Square,
New York, New York 10005.

It is understood that Cowen or the other Representative,
individually and not as Representatives of the several U.S.
Underwriters, may (but shall not be obligated to) make payment to
the Company or to the Selling Stockholders on behalf of any U.S.
Underwriter or U.S. Underwriters, for the Stock to be purchased by
such U.S. Underwriter or U.S. Underwriters. Any such payment by
Cowen or other Representatives shall not relieve such U.S.
Underwriter or U.S. Underwriters from any of its or their other
obligations hereunder.


12




The several U.S. Underwriters agree to make an initial public
offering of the Firm Stock at the initial public offering price set
forth on the cover page of the Prospectus as soon after the
effectiveness of the Registration Statement as in their judgment is
advisable. The Representatives shall promptly advise the Company
and the Selling Stockholders of the making of the initial public
offering.

For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Stock as contemplated by the
Prospectus, the Company hereby grants to the U.S. Underwriters an
option to purchase, severally and not jointly, up to an aggregate
of 393,000 shares of Optional Stock. The price per share to be paid
for the Optional Stock shall be the Purchase Price. The option
granted hereby may be exercised as to all or any party of the
Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the effective date of this
Agreement. No Optional Stock shall be sold and delivered unless the
Firm Stock previously has been, or simultaneously is, sold and
delivered. The right to purchase the Optional Stock or any portion
thereof may be surrendered and terminated at any time upon notice
by the U.S. Underwriters to the Company.

The option granted hereby may be exercised by the U.S. Underwriters
by giving written notice from Cowen to the Company setting forth
the number of shares of the Optional Stock to be purchased by them
and the date and time for delivery of and payment for the Optional
Stock. Each date and time for delivery of and payment for the
Optional Stock (which may be the First Closing Date, but not
earlier) is herein called an "Option Closing Date" and shall in no
event be earlier than two (2) business days nor later than ten (10)
business days after written notice is given. (The Option Closing
Date and the First Closing Date are herein called the "Closing
Dates".) Optional Stock shall be purchased for the account of each
U.S. Underwriter in the same proportion as the number of shares of
Firm Stock set forth opposite such U.S. Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock
(subject to adjustment by the U.S. Underwriters to eliminate odd
lots). Upon exercise of the option of the U.S. Underwriters, the
Company agrees to sell to the U.S. Underwriters the number of
shares of Optional Stock set forth in the written notice of
exercise and the U.S. Underwriters agree, severally and not jointly
and subject to the terms and conditions herein set forth, to
purchase the number of such shares determined as aforesaid.

The Company will deliver the Optional Stock to the U.S.
Underwriters (in the form of definitive certificates, issued in
such names and in such denominations as the Representatives may
direct by notice in writing to the Company given at or prior to
12:00 Noon, New York Time, on the second full business day
preceding the Option Closing Date or, if no such direction is
received, in the names of the respective U.S. Underwriters or in
such other names as Cowen may designate (solely for the purpose of
administrative convenience) and in such denominations as Cowen may
determine), against payment of the aggregate Purchase Price
therefor by wire transfer in immediately available funds (same day
funds), to the Company, all at the offices of Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304.
The Company shall make the certificates for the Optional Stock
available to the U.S. Underwriters for examination not later than
10:00 A.M., New York Time, on the business day preceding the Option
Closing Date at the offices of Cowen & Company, Financial Square,
New York, New York 10005. The Option Closing Date and the location
of delivery of, and the form of payment for, the Option Stock may
be


13




varied by agreement between the Company and Cowen. The Option
Closing Date may be postponed pursuant to the provisions of Section
12.


4 Covenants and Agreements of the Company. The Company covenants and
agrees with the several U.S. Underwriters that:

(a) The Company will (i) if the Company and the
Representatives have determined not to proceed
pursuant to Rule 430A of the Rules and Regulations,
use its best efforts to cause the Registration
Statement to become effective, (ii) if the Company and
the Representatives have determined to proceed
pursuant to Rule 430A of the Rules and Regulations,
use its best efforts to comply with the provisions of
and make all requisite filings with the Commission
pursuant to Rule 430A and Rule 424 of the Rules and
Regulations and (iii) if the Company and the
Representatives have determined to deliver
Prospectuses pursuant to Rule 434 of the Rules and
Regulations, to use its best efforts to comply with
all the applicable provisions thereof. The Company
will advise the Representatives promptly as to the
time at which the Registration Statement becomes
effective, will advise the Representatives promptly of
the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for
that purpose, and will use its best efforts to prevent
the issuance of any such stop order and to obtain as
soon as possible the lifting thereof, if issued. The
Company will advise the Representatives promptly of
the receipt of any comments of the Commission or any
request by the Commission for any amendment of or
supplement to the Registration Statement or the
Prospectus or for additional information and will not
at any time file any amendment to the Registration
Statement or supplement to the Prospectus which shall
not previously have been submitted to the
Representatives a reasonable time prior to the
proposed filing thereof or to which the
Representatives shall reasonably object in writing or
which is not in compliance with the Securities Act and
the Rules and Regulations.

(b) The Company will prepare and file with the Commission,
promptly upon the request of the Representatives, any
amendments or supplements to the Registration
Statement or the Prospectus which in the opinion of
the Representatives may be necessary to enable the
several U.S. Underwriters to continue the distribution
of the Stock and the several International Managers to
continue the distribution of the International Stock
and will use its best efforts to cause the same to
become effective as promptly as possible.

(c) If, at any time after the effective date of the
Registration Statement when a prospectus relating to
the Stock is required to be delivered under the
Securities Act, any event relating to or affecting the
Company or any of its subsidiaries occurs as a result
of which the Prospectus or any other prospectus as
then in effect would contain any untrue statement of a
material fact, or omit to state any material fact
necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend
the Prospectus to comply with the Securities Act, the
Company will promptly notify the Representatives
thereof and will prepare an amended or supplemented
prospectus which will correct such statement or
omission; and in case any U.S. Underwriter is required
to deliver a prospectus relating to the Stock nine (9)
months or more after the effective date of the
Registration Statement, the Company upon the request
of the Representatives and at the expense of such U.S.
Underwriter will prepare promptly


14




such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section
10(a)(3) of the Securities Act.

(d) The Company will deliver to each of the
Representatives, at or before the Closing Dates, one
signed copy of the Registration Statement, as
originally filed with the Commission, and one signed
copy of all amendments thereto including all financial
statements and exhibits thereto and will deliver to
the Representatives such number of unsigned copies of
the Registration Statement, including such financial
statements but without exhibits, and all amendments
thereto, as the Representatives may reasonably
request. The Company will deliver or mail to or upon
the order the Representatives, from time to time until
the effective date of the Registration Statement, as
many copies of the Pre-effective Prospectus as the
Representatives may reasonably request. The Company
will deliver or mail to or upon the order of the
Representatives on the date of the initial public
offering, and thereafter from time to time during the
period when delivery of a prospectus relating to the
Stock is required under the Securities Act, as many
copies of the Prospectus, in final form or as
thereafter amended or supplemented as the
Representatives may reasonably request; provided,
however, that the expense of the preparation and
delivery of any prospectus required for use nine (9)
months or more after the effective date of the
Registration Statement shall be borne by the U.S.
Underwriters required to deliver such prospectus.

(e) The Company will make generally available to its
stockholders as soon as practicable, but not later
than fifteen (15) months after the effective date of
the Registration Statement, an earnings statement
which will be in reasonable detail (but which need not
be audited) and which will comply with Section 11(a)
of the Securities Act, covering a period of at least
twelve (12) months beginning after the "effective
date" (as defined in Rule 158 under the Securities
Act) of the Registration Statement.

(f) The Company will cooperate with the Representatives to
enable the Stock to be registered or qualified for
offering and sale by the U.S. Underwriters and by
dealers under the securities laws of such
jurisdictions as the Representatives may designate and
at the request of the Representatives will make such
applications and furnish such consents to service of
process or other documents as may be required of it as
the issuer of the Stock for that purpose; provided,
however, that the Company shall not be required to
qualify to do business or to file a general consent
(other than that arising out of the offering or sale
of the Stock) to service of process in any such
jurisdiction where it is not now so subject. The
Company will, from time to time, prepare and file such
statements and reports as are or may be required of it
as the issuer of the Stock to continue such
qualifications in effect for so long a period as the
Representatives may reasonably request for the
distribution of the Stock. The Company will advise the
Representatives promptly after the Company becomes
aware of the suspension of the qualifications or
registration of (or any such exception relating to)
the Common Stock of the Company for offering, sale or
trading in any jurisdiction or of any initiation or
threat of any proceeding for any such purpose, and in
the event of the issuance of any orders suspending
such qualifications, registration or exception, the
Company will, with the cooperation of the
Representatives use its best efforts to obtain the
withdrawal thereof.


15




(g) The Company will furnish to its stockholders annual
reports containing financial statements certified by
independent public accountants.

(h) The Company will maintain a transfer agent and
registrar for its Common Stock.

(i) For a period of one year after the date hereof, prior
to filing its quarterly statements on Form 10-Q, the
Company will have its independent auditors perform a
limited quarterly review of its quarterly numbers.

(j) The Company will not offer, sell, assign, transfer,
encumber, contract to sell, register for sale, grant
an option to purchase or otherwise dispose of, other
than by operation of law, gifts, pledges or
dispositions by estate representatives, any shares of
Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock of the
Company which may be deemed to be beneficially owned
by the Company in accordance with the Rules and
Regulations) during the 180 days following the date on
which the price of the Common Stock to be purchased by
the U.S. Underwriters is set, other than (i) the
Company's sale of Common Stock hereunder, (ii)
issuances of Common Stock, stock options, stock
purchase rights or other similar rights issued
pursuant to the 1997 Plans as described in the
Prospectus, and (iii) any Common Stock or preferred
stock issued by the Company in any transaction of the
type described in Rule 145 under the Securities Act or
otherwise issued by the Company in exchange for
technology or other non-cash assets of any third
party.

(k) The Company will file with the Commission any reports
on Form SR required pursuant to Rule 463 of Rules and
Regulations, and will deliver promptly to the
Representatives a signed copy of each report on Form
SR filed by it with the Commission.

(l) The Company will apply the net proceeds from the sale
of the Stock as set forth in the description under
"Use of Proceeds" in the Prospectus.

(m) The Company will supply you with copies of all
correspondence to and from, and all documents issued
to and by, the Commission in connection with the
registration of the Stock under the Securities Act and
the Neuer Markt of the Frankfurt Stock Exchange in
connection with the sale of the International Stock
pursuant to the International Underwriting Agreement.

(n) Prior to each of the Closing Dates the Company will
furnish to you, as soon as they have been prepared,
copies of any unaudited interim consolidated financial
statements of the Company and its subsidiaries for any
periods subsequent to the periods covered by the
financial statements appearing in the Registration
Statement and the Prospectus.

(o) Prior to the Closing Dates the Company will issue no
press release or other public communications directly
or indirectly and hold no press conference with
respect to the Company (other than customary product
related sales and marketing communications) or any of
its subsidiaries, the financial condition, results of
operations, business, prospects, assets or liabilities
of the Company any of them, or the offering of the
Stock, without your prior written consent, which shall
not be unreasonably withheld.


16




(p) During the period of five (5) years hereafter, the
Company will furnish to the Representatives, and upon
request of the Representatives, to each of the
Underwriters: (i) as soon as practicable after the end
of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the
Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash
flows for the year then ended and the opinion thereon
of the Company's independent public accountants; (ii)
as soon as practicable after the filing thereof,
copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Report on Form
8-K or other report filed by the Company with the
Commission, or the NASD or any securities exchange;
(iii) as soon as available, copies of any report or
communication of the Company mailed generally to
holders of its Common Stock; and (iv) from time to
time such other information concerning the Company as
you may reasonably request.

5 Payment of Expenses.

(a) The Company will pay (directly or by reimbursement)
all costs, fees and expenses incurred in connection
with the performance of the obligations of the Company
and of the Selling Stockholders under this Agreement
and the International Underwriting Agreement and in
connection with the transactions contemplated hereby,
including but not limited to (i) all expenses and
taxes incident to the issuance and delivery of the
Stock to the Representatives; (ii) all expenses
incident to the registration of the Stock and the
International Stock under the Securities Act; (iii)
the costs of preparing stock certificates (including
printing and engraving costs); (iv) all fees and
expenses of the registrar and transfer agent of the
Stock and the International Stock; (v) all necessary
issue, transfer and other taxes in connection with the
issuance and sale of the Stock to the U.S.
Underwriters; (vi) fees and expenses of the Company's
counsel and the Company's independent accountants;
(vii) all costs and expenses incurred by the Company
in connection with the preparation, printing, filing,
shipping and distribution of the Registration
Statement, each Pre-effective Prospectus and the
Prospectus (including all exhibits and financial
statements) and all amendments and supplements
provided for herein, the Selling Stockholders' Power
of Attorney, the Custody Agreement, the "Agreement
Among U.S. Underwriters and International Managers"
between the Representatives and Lead Managers, the
"Agreement Among U.S. Underwriters" between the
Representatives and the U.S. Underwriters, the Master
Selected Dealers' Agreement, the U.S. Underwriters'
Questionnaire and the Blue Sky memoranda (including
related fees and expenses of counsel to the
Underwriters) and this Agreement; (viii) all filing
fees, attorneys' fees and expenses incurred by the
Company or the U.S. Underwriters in connection with
exemptions from the qualifying or registering (or
obtaining qualification or registration of) all or any
part of the Stock for offer and sale and determination
of its eligibility for investment under the Blue Sky
or other securities laws of such jurisdictions as the
Representatives may designate; (ix) all fees and
expenses paid or incurred in connection with filings
made with the NASD and the Neuer Markt of the
Frankfurt Stock Exchange; and (x) all other costs and
expenses incurred by the Company and the Selling
Stockholders incident to the performance of their
obligations hereunder which are not otherwise
specifically provided for in this Section.


17




(b) In addition to their other obligations under Section
6(a) hereof, the Company and the Selling Stockholders
agree that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon (i) any
statement or omission or any alleged statement or
omission by the Company or the Selling Stockholders or
(ii) any breach or inaccuracy in their representations
and warranties contained in this Agreement, they will
reimburse each U.S. Underwriter on a quarterly basis
for all reasonable legal or other expenses incurred in
connection with investigating or defending any such
claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability
of the Company's and each Selling Stockholder's
obligation to reimburse each U.S. Underwriter for such
expenses and the possibility that such payments might
later be held to have been improper by a court of
competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been
improper, each U.S. Underwriter shall promptly return
it to the Company or such Selling Stockholder, as the
case may be, together with interest, compounded daily,
determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest
credit standing) announced from time to time by
Citibank, N.A., New York, New York (the "Prime Rate").
Any such interim reimbursement payments which are not
made to a U.S. Underwriter in a timely manner as
provided below shall bear interest at the Prime Rate
from the due date for such reimbursement. This expense
reimbursement agreement will be in addition to any
other liability which the Company or any Selling
Stockholder may otherwise have. The request for
reimbursement will be sent to the Company with a copy
to each Selling Stockholder.

(c) In addition to its other obligations under Section
6(b) hereof, each U.S. Underwriter severally agrees
that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement
or omission, or any alleged statement or omission,
described in Section 6(b) hereof which relates to
information furnished to the Company pursuant to
Section 6(c) hereof, it will reimburse the Company
(and, to the extent applicable, each officer,
director, controlling person or Selling Stockholder)
on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or
defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the
propriety and enforceability of the U.S. Underwriters'
obligation to reimburse the Company (and, to the
extent applicable, each officer, director, controlling
person or Selling Stockholder) for such expenses and
the possibility that such payments might later be held
to have been improper by a court of competent
jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable,
each officer, director, controlling person or Selling
Stockholder) shall promptly return it to the U.S.
Underwriters together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made to
the Company within thirty (30) days of a request for
reimbursement shall bear interest at the Prime Rate
from the date of such request. This indemnity
agreement will be in addition to any liability which
such U.S. Underwriter may otherwise have.

(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements
set forth in paragraph (b) and/or (c) of this Section
5, including the amounts


18




of any requested reimbursement payments and the method
of determining such amounts, shall be settled by
arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the
Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written
demand for arbitration or written notice of intention
to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration
does not make such designation of an arbitration
tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to
do so. Such an arbitration would be limited to the
operation of the interim reimbursement provisions
contained in paragraph (b) and/or (c) of this Section
5 and would not resolve the ultimate propriety or
enforceability of the obligation to reimburse expenses
which is created by the provisions of Section 6.


19




6 Indemnification and Contribution.


20




(a) The Company and SCM Microsystems GmbH jointly
and severally agree to indemnify and hold harmless
each U.S. Underwriter and each person, if any, who
controls such U.S. Underwriter within the meaning of
the Securities Act and the respective officers,
directors, partners, employees, representatives and
agents of each of such U.S. Underwriter (collectively,
the "Underwriter Indemnified Parties" and, each, an
"Underwriter Indemnified Party"), against any losses,
claims, damages, liabilities or expenses (including
the reasonable cost of investigating and defending
against any claims therefor and counsel fees incurred
in connection therewith), joint or several, which may
be based upon the Securities Act, or any other statute
or at common law, (i) on the ground or alleged ground
that any Pre-effective Prospectus, the Registration
Statement or the Prospectus (or any Pre-effective
Prospectus, the Registration Statement or the
Prospectus as from time to time amended or
supplemented) includes or allegedly includes an untrue
statement of a material fact or omits to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading, unless such statement or omission was
made in reliance upon, and in conformity with, written
information furnished to the Company by any U.S.
Underwriter, directly or through the Representatives,
specifically for use in the preparation thereof and
provided that the foregoing indemnity agreement with
respect to any Pre-effective Prospectus shall not
inure to the benefit of any U.S. Underwriter from whom
the person asserting any such losses, claims, damages
or liabilities purchased Stock, or any person
controlling such U.S. Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on
behalf of such U.S. Underwriter to such person, if
required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Stock
to such person, and the Prospectus (as so amended or
supplemented) would have cured the defect giving rise
to such losses, claims, damages or liabilities, unless
such failure to deliver the Prospectus (as so amended
or supplemented) resulted from the Company's failure
to perform its obligations pursuant to Section 4(c)
above or (ii) for any act or failure to act or any
alleged act or failure to act by any U.S. Underwriter
in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and which
is included as part of or referred to in any loss,
claim, damage, liability or expense arising out of or
based upon matters covered by clause (i) above
(provided that the Company shall not be liable under
this clause (ii) to the extent that it is determined
in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, or
liability or expense resulted directly from any such
acts or failures to act undertaken or omitted to be
taken by such U.S. Underwriter through its gross
negligence or willful misconduct). The Company will be
entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if
the Company elects to assume the defense, such defense
shall be conducted by counsel chosen by it and
reasonably acceptable to the U.S. Underwriters. In the
event the Company elects to assume the defense of any
such suit and retain such counsel, any Underwriter
Indemnified Parties, defendant or defendants in the
suit, may retain additional counsel but shall bear the
fees and expenses of such counsel unless (i) the
Company shall have specifically authorized the
retaining of such counsel or (ii) the parties to such
suit include both any such Underwriter Indemnified
Party and the Company, and such Underwriter
Indemnified Parties have been advised by counsel to
the U.S. Underwriters that one or more legal defenses
may be available to it or them which may not be
available to the Company, in which case the Company
shall not be entitled to assume the defense of such


21




suit without the written consent of the Underwriter
Indemnified Parties party to such suit notwithstanding
its obligation to bear the fees and expenses of such
counsel. In circumstances where the Company does not
assume the defense of a suit for which indemnification
is sought by one or more Underwriter Indemnified
Parties, the Company will be obligated to bear the
fees and expenses of only one firm on behalf of all
Underwriter Indemnified Parties (plus local counsel,
if, in the judgment of the primary counsel to the
Underwriter Indemnified Parties use of such local
counsel is necessary). This indemnity agreement is not
exclusive and will be in addition to any liability
which the Company might otherwise have and shall not
limit any rights or remedies which may otherwise be
available at law or in equity to each Underwriter
Indemnified Party.

(b) Each Selling Stockholder severally and not jointly
agrees to indemnify and hold harmless each Underwriter
Indemnified Party against any losses, claims, damages,
liabilities or expenses (including, unless such
Selling Stockholder elects to assume the defense, the
reasonable cost of investigating and defending against
any claims therefor and counsel fees incurred in
connection therewith), joint or several, which may be
based upon the Securities Act, or any other statute or
at common law, on the ground or alleged ground that
any Pre-Effective Prospectus, the Registration
Statement or the Prospectus (or any Pre-Effective
Prospectus, the Registration Statement or the
Prospectus, as from time to time amended and
supplemented) includes an untrue statement of a
material fact or omits to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not
misleading, unless such statement or omission was made
in reliance upon, and in conformity with, written
information furnished to the Company by any U.S.
Underwriter, directly or through the Representatives
specifically for use in the preparation thereof;
provided however that with respect to any untrue
statement or omission or alleged untrue statement or
omission made in any Pre-Effective Prospectus, the
indemnity agreement contained in this subsection (b)
shall not inure to the benefit of any Underwriter
Indemnified Party from whom the person asserting any
such losses, claims, damages or liabilities purchased
the shares of Stock concerned to the extent that any
such loss, claim, damage or liability of such
Underwriter Indemnified Party results from the fact
that a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of
the sale of such shares of Stock, as required by the
Securities Act, and if the untrue statement or
omission concerned has been corrected in the
Prospectus. Such Selling Stockholder shall be entitled
to participate at his own expense in the defense, or,
if he so elects, to assume the defense of any suit
brought to enforce any such liability, but, if such
Selling Stockholder elects to assume the defense, such
defense shall be conducted by counsel chosen by him.
In the event that any Selling Stockholder elects to
assume the defense of any such suit and retain such
counsel, the Underwriter Indemnified Parties,
defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and
expenses of such counsel unless (i) such Selling
Stockholder shall have specifically authorized the
retaining of such counsel or (ii) the parties to such
suit include both such Underwriter Indemnified Parties
and such Selling Stockholder and such Underwriter
Indemnified Parties have been advised by counsel that
one or more legal defenses may be available to it or
them which may not be available to such Selling
Stockholder, in which case such Selling Stockholder
shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the fees
and expenses of such counsel. This indemnity agreement
is not exclusive and will be in addition to any
liability which such Selling Stockholder might
otherwise have and shall not limit any rights


22





or remedies which may otherwise be available at law or
in equity to each Underwriter Indemnified Party. The
Company and the Selling Stockholders may agree, as
among themselves and without limiting the rights of
the U.S. Underwriters under this Agreement, as to
their respective amounts of such liability for which
they each shall be responsible.

Notwithstanding any other provision of this Agreement
or the International Underwriting Agreement, the
liability of each Selling Stockholder to the U.S.
Underwriters and International Managers under this
Agreement, the International Underwriting Agreement or
otherwise shall be limited to an amount equal to the
aggregate initial public offering price of the shares
of Common Stock sold by such Selling Stockholder in
the initial public offering.

(c) Each U.S. Underwriter severally and not jointly agrees
to indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed
the Registration Statement and each person, if any,
who controls the Company within the meaning of the
Securities Act (collectively, the "Company Indemnified
Parties") and each Selling Stockholder (the "Selling
Stockholder Indemnified Parties") against any losses,
claims, damages, liabilities or expenses (including,
unless the U.S. Underwriter or U.S. Underwriters elect
to assume the defense, the reasonable cost of
investigating and defending against any claims
therefor and counsel fees incurred in connection
therewith), joint or several, which arise out of or
are based in whole or in part upon the Securities Act,
the Exchange Act or any other federal, state, local or
foreign statute or regulation, or at common law, on
the ground or alleged ground that any Pre-effective
Prospectus, the Registration Statement or the
Prospectus (or any Pre-effective Prospectus, the
Registration Statement or the Prospectus, as from time
to time amended and supplemented) includes an untrue
statement of a material fact or omits to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances in which they were made,
not misleading, but only insofar as any such statement
or omission was made in reliance upon, and in
conformity with, written information furnished to the
Company by such U.S. Underwriter, directly or through
the Representatives, specifically for use in the
preparation thereof. Such U.S. Underwriter shall be
entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but,
if such U.S. Underwriter elects to assume the defense,
such defense shall be conducted by counsel chosen by
it. In the event that any U.S. Underwriter elects to
assume the defense of any such suit and retain such
counsel, the Company Indemnified Parties or Selling
Stockholders Indemnified Parties and any other U.S.
Underwriter or U.S. Underwriters or controlling person
or persons, defendant or defendants in the suit, shall
bear the fees and expenses of any additional counsel
retained by them, respectively. The U.S. Underwriter
against whom indemnity may be sought shall not be
liable to indemnify any person for any settlement of
any such claim effected without such U.S.
Underwriter's consent. This indemnity agreement is not
exclusive and will be in addition to any liability
which such U.S. Underwriter might otherwise have and
shall not limit any rights or remedies which may
otherwise be available at law or in equity to any
Company Indemnified Party or Selling Stockholder
Indemnified Party.

(d) If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an
indemnified party under subsection (a), (b) or (c)
above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect
thereof) referred to


23




herein, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company
and the Selling Stockholders on the one hand and the
U.S. Underwriters on the other from the offering of
the Stock. If, however, the allocation provided by the
immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also
the relative fault of the Company and the Selling
Stockholders on the one hand and the U.S. Underwriters
on the other in connection with the statements or
omissions which resulted in such losses, claims,
damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant
equitable considerations. The relative benefits
received by the Company and the Selling Stockholders
on the one hand and the U.S. Underwriters on the other
shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts
and commissions received by the U.S. Underwriters, in
each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be
determined by reference to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to
state a material fact relates to information supplied
by the Company, the Selling Stockholders or the U.S.
Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such statement or omission. The
Company, the Selling Stockholders and the U.S.
Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata
allocation (even if the U.S. Underwriters were treated
as one entity for such purpose) or by any other method
of allocation which does not take account of the
equitable considerations referred to above. The amount
paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses
(or actions in respect thereof) referred to above
shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in
connection with investigating, defending, settling or
compromising any such claim. Notwithstanding the
provisions of this subsection (d), no U.S. Underwriter
shall be required to contribute any amount in excess
of the amount by which the total price at which the
shares of the Stock underwritten by it and distributed
to the public were offered to the public exceeds the
amount of any damages which such U.S. Underwriter has
otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or
alleged omission. The U.S. Underwriters' obligations
to contribute are several in proportion to their
respective underwriting obligations and not joint. No
person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.

(e) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the
commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection,
notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify
the indemnifying party shall not relieve the
indemnifying party from any liability that it may have
to any indemnified party except to the extent that any
such delay results in


24




the loss of the ability to assert any affirmative or
negative defense the loss of which is materially
prejudicial to the disposition of this matter.

7 Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations,
warranties and other statements of the Company and its
subsidiaries, the Selling Stockholders and the several U.S.
Underwriters, as set forth in this Agreement or made by them
respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation made by or on
behalf of any U.S. Underwriter, the Selling Stockholders, the
Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock
until all applicable statutes of limitation have expired.

8 Conditions of U.S. Underwriters' Obligations. The respective
obligations of the several U.S. Underwriters hereunder shall be
subject to the accuracy, at and (except as otherwise stated herein)
as of the date hereof and at and as of each of the Closing Dates,
of the representations and warranties made herein by the Company
and the Selling Stockholders to compliance at and as of each of the
Closing Dates by the Company and the Selling Stockholders with
their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to each of the
Closing Dates, and to the following additional conditions:

(a) The Registration Statement shall have become effective
and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that
purpose shall have been initiated or, to the knowledge
of the Company or the Representatives, shall be
threatened by the Commission, and any request for
additional information on the part of the Commission
(to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with
to the reasonable satisfaction of the Representatives.
Any filings of the Prospectus, or any supplement
thereto, required pursuant to Rule 424(b) or Rule 434
of the Rules and Regulations, shall have been made in
the manner and within the time period required by Rule
424(b) and Rule 434 of the Rules and Regulations, as
the case may be.

(b) The Representatives shall have been satisfied that
there shall not have occurred any change prior to each
of the Closing Dates, in the condition (financial or
otherwise), properties, business, management, net
worth or results of operations of the Company and its
subsidiaries considered as a whole, or any change in
the capital stock, short-term or long-term debt of the
Company and its subsidiaries considered as a whole,
such that (i) the Registration Statement or the
Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact which, in the
reasonable opinion of the Representatives, is
material, or omits to state a fact which, in the
reasonable opinion of the Representatives, is required
to be stated therein or is necessary to make the
statements therein not misleading or (ii) it is
impracticable in the reasonable judgment of the
Representatives to proceed with the public offering or
purchase the Stock as contemplated hereby.

(c) The Representatives shall be satisfied that no legal
or governmental action, suit or proceeding affecting
the Company which is material and adverse to the
Company or which affects or may affect the Company's
or the Selling Stockholders' ability to perform their
respective obligations under this Agreement shall have
been instituted or threatened and


25




there shall have occurred no material adverse
development in any existing such action, suit or
proceeding.

(d) At the time of execution of this Agreement, the
Representatives shall have received from KPMG Peat
Marwick LLP, independent certified public accountants,
a letter, dated the date hereof, in form and substance
satisfactory to the U.S. Underwriters to the effect
set forth in Exhibit I hereto.

(e) The Representatives shall have received from KPMG Peat
Marwick LLP, independent certified public accountants,
letters, dated each of the Closing Dates, to the
effect that such accountants reaffirm, as of each of
the Closing Dates, and as though made on each of the
Closing Dates, the statements made in the letter
furnished by such accountants pursuant to paragraph
(d) of this Section 8.

(f) The Representatives shall have received (i) from
Wilson Sonsini Goodrich & Rosati, Professional
Corporation, United States securities counsel for the
Company; (ii) from ______________, German counsel for
the Company; and (iii) from ______________,
intellectual property counsel to the Company, an
opinion, dated each of the Closing Date, to the effect
set forth in Exhibits II, III and IV hereto,
respectively.

(g) The Representatives shall have received from Rogers &
Wells, counsel for the U.S. Underwriters, their
opinion dated each of the Closing Dates with respect
to the incorporation of the Company, the validity of
the Stock, the Registration Statement and the
Prospectus and such other related matters as it may
reasonably request, and the Company shall have
furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon
such matters.

(h) The Representatives shall have received from _______
______________, counsel for the Selling Stockholders,
an opinion dated the Closing Date, to the effect set
forth in Exhibit V.

(i) The Representatives shall have received a certificate
or certificates, dated each of the Closing Dates, of
the chief executive officer or the President and the
chief financial or accounting officer of the Company
to the effect that:

(i) No stop order suspending the
effectiveness of the Registration
Statement has been issued, and, to the
knowledge of the signers, no proceedings
for that purpose have been instituted or
are pending or contemplated under the
Securities Act;

(ii) Neither any Pre-effective Prospectus, as
of its date, nor the Registration
Statement nor the Prospectus, nor any
amendment or supplement thereto, as of
the time when the Registration Statement
became effective and at all times
subsequent thereto up to the delivery of
such certificate, contained any untrue
statement of a material fact or omitted
to state any material fact required to be
stated therein or necessary to make the
statements therein, in light of the
circumstances under which they were made,
not misleading;

(iii) The representations and warranties of the
Company in this Agreement are true and
correct at and as of each of the Closing
Dates, and the Company has complied with


26




all the agreements and performed or
satisfied all the conditions on its part
to be performed or satisfied at or prior
to the Closing Dates; and

(iv) Since the respective dates as of which
information is given in the Registration
Statement and the Prospectus, and except
as disclosed in or contemplated by the
Prospectus, (i) there has not been any
material adverse change or a development
involving a material adverse change in
the condition (financial or otherwise),
properties, business, management, net
worth or results of operations of the
Company and its subsidiaries considered
as a whole; (ii) the business and
operations conducted by the Company and
its subsidiaries have not sustained a
loss by strike, fire, flood, accident or
other calamity (whether or not insured)
of such a character as to interfere
materially with the conduct of the
business and operations of the Company
and its subsidiaries considered as a
whole; (iii) no legal or governmental
action, suit or proceeding is pending or
to the knowledge of the signers
threatened against the Company which is
material to the Company, whether or not
arising from transactions in the ordinary
course of business, or which may
materially and adversely affect the
transactions contemplated by this
Agreement; (iv) since such dates and
except as so disclosed, the Company has
not incurred any material liability or
obligation, direct, contingent or
indirect, made any change in its capital
stock (except pursuant to the 1997
Plans), made any material change in its
short-term or funded debt or repurchased
or otherwise acquired any of the
Company's capital stock; and (v) the
Company has not declared or paid any
dividend, or made any other distribution,
upon its outstanding capital stock
payable to stockholders of record on a
date prior to the Closing Date.

(j) The Selling Stockholders shall have furnished to the
Representatives certificates as to the accuracy, at
and as of each of the Closing Dates, of the
representations and warranties made herein by them and
as to compliance at and as of each of the Closing
Dates by them with their covenants and agreements
herein contained and other provisions hereof to be
satisfied at or prior to each of the Closing Dates,
and as to satisfaction of the other conditions to the
obligations of the U.S. Underwriters hereunder.

(k) Cowen shall have received the written agreements,
substantially in the form of Exhibit V hereto, of the
officers, directors and certain holders of Common
Stock that each will not offer, sell, assign,
transfer, encumber, contract to sell, register for
sale, grant an option to purchase or otherwise dispose
of, other than by operation of law, gifts, pledges or
dispositions by estate representatives, any shares of
Common Stock (including, without limitation, Common
Stock which may be deemed to be beneficially owned by
such officer, director or holder in accordance with
the Rules and Regulations) during the 180 days
following the date of the final Prospectus except as
provided therein.

(l) The Nasdaq National Market shall have approved the
Stock for listing, subject only to official notice of
issuance.

(m) The International Stock to be issued and sold by the
Company and the Selling Stockholders shall have been
duly authorized for listing by the Neuer Markt of the
Frankfurt Stock Exchange.


27




(n) The Closing under the International Underwriting
Agreement shall have occurred concurrently with the
Closing hereunder on the Closing Date.

All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are
reasonably satisfactory in form and substance to the
Representatives. The Company will furnish to the Representatives
conformed copies of such opinions, certificates, letters and other
documents as the Representatives shall reasonably request. If any
of the conditions hereinabove provided for in this Section shall
not have been satisfied when and as required by this Agreement,
this Agreement may be terminated by the Representatives by
notifying the Company of such termination in writing or by telegram
at or prior to each of the Closing Dates, but Cowen, on behalf of
the Representatives, shall be entitled to waive any of such
conditions.

9 Effective Date. This Agreement shall become effective immediately
as to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to
all other provisions, at 11:00 a.m. New York City time on the first
full business day following the effectiveness of the Registration
Statement or at such earlier time after the Registration Statement
becomes effective as the Representatives may determine on and by
notice to the Company or by release of any of the Stock for sale to
the public. For the purposes of this Section 9, the Stock shall be
deemed to have been so released upon the release for publication of
any newspaper advertisement relating to the Stock or upon the
release by you of notices (i) advising U.S. Underwriters that the
shares of Stock are released for public offering or (ii) offering
the Stock for sale to securities dealers, whichever may occur
first.

10 Termination. This Agreement (except for the provisions of Section
5) may be terminated by the Company at any time before it becomes
effective in accordance with Section 9 by notice to the
Representatives and may be terminated by the Representatives at any
time before it becomes effective in accordance with Section 9 by
notice to the Company. In the event of any termination of this
Agreement under this or any other provision of this Agreement,
there shall be no liability of any party to this Agreement to any
other party, other than as provided in Sections 5, 6 and 11 and
other than as provided in Section 12 as to the liability of
defaulting U.S. Underwriters.

This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the
First Closing Date trading in securities on any of the New York
Stock Exchange or the Nasdaq National Market System shall have been
suspended (other than any short term suspension of trading pursuant
to any "circuit breaker" provisions of the New York Stock Exchange)
or minimum or maximum prices shall have been established on any
such exchange or market, or a banking moratorium shall have been
declared by New York or United States authorities; (ii) trading of
any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) if at or prior to
the First Closing Date there shall have been (A) an outbreak or
escalation of hostilities between the United States and any foreign
power or of any other insurrection or armed conflict involving the
United States or (B) any material change in financial markets or
any calamity or crisis which, in the reasonable judgment of the
Representatives, makes it


28




impractical or inadvisable to offer or sell the Stock on the terms
contemplated by the Prospectus; (iv) if there shall have been any
development or prospective development involving particularly the
business or properties or securities of the Company or any of its
subsidiaries or the transactions contemplated by this Agreement,
which, in the reasonable judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Stock on the
terms contemplated by the Prospectus; (v) if there shall be any
litigation or proceeding, pending or threatened, which, in the
reasonable judgment of the Representatives, makes it impracticable
or inadvisable to offer or deliver the on the terms contemplated by
the Prospectus; or (vi) if there shall have occurred any of the
events specified in the immediately preceding clauses (i) - (v)
together with any other such event that makes it, in the reasonable
judgment of the Representatives, impractical or inadvisable to
offer or deliver the Stock on the terms contemplated by the
Prospectus.

11 Reimbursement of U.S. Underwriters. Notwithstanding any other
provisions hereof, if this Agreement shall not become effective by
reason of any election of the Company or the Selling Stockholder
pursuant to the first paragraph of Section 10 or shall be
terminated by the Representatives under Section 8 (excluding
Section 8(g)) or Section 10, the Company will bear and pay the
expenses specified in Section 5 hereof and, in addition to their
obligations pursuant to Section 6 hereof, the Company will
reimburse the reasonable out-of-pocket expenses of the several U.S.
Underwriters (including reasonable fees and disbursements of
counsel for the U.S. Underwriters) incurred in connection with this
Agreement and the proposed purchase of the Stock, and promptly upon
demand the Company will pay such amounts to you as Representatives.

12 Substitution of U.S. Underwriters. If any U.S. Underwriter or U.S.
Underwriters shall default in its or their obligations to purchase
shares of Stock hereunder and the aggregate number of shares which
such defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other U.S. Underwriters shall be
obligated severally, in proportion to their respective commitments
hereunder, to purchase the shares which such defaulting U.S.
Underwriter or U.S. Underwriters agreed but failed to purchase. If
any U.S. Underwriter or U.S. Underwriters shall so default and the
aggregate number of shares with respect to which such default or
defaults occur is more than ten percent (10%) of the total number
of shares underwritten and arrangements satisfactory to the
Representatives and the Company for the purchase of such shares by
other persons are not made within forty-eight (48) hours after such
default, this Agreement shall terminate.

If the remaining U.S. Underwriters or substituted U.S. Underwriters
are required hereby or agree to take up all or part of the shares
of Stock of a defaulting U.S. Underwriter or U.S. Underwriters as
provided in this Section 12, (i) the Company and the Selling
Stockholders shall have the right to postpone the Closing Dates for
a period of not more than five (5) full business days in order that
the Company may effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any
other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the
respective numbers of shares to be purchased by the remaining U.S.
Underwriters or substituted U.S. Underwriters shall be taken as the
basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting
U.S. Underwriter of its liability to the Company, the Selling
Stockholders or the other U.S. Underwriters for damages occasioned
by its default hereunder. Any termination of this Agreement
pursuant to this Section 12 shall be without liability on the part
of any non-defaulting U.S. Underwriter, the Selling Stockholders or
the Company, except for expenses to be paid or reimbursed pursuant
to Section 5 and except for the provisions of Section 6.

13 Notices. All communications hereunder shall be in writing and, if
sent to the U.S. Underwriters shall be mailed, delivered or
facsimilied and confirmed to you, as their Representatives c/o
Cowen & Company at Financial Square, New York. New York 10005
except that notices given to a U.S. Underwriter pursuant to Section
6 hereof shall be sent to such U.S. Underwriter at the address


29




furnished by the Representatives or, if sent to the Company, shall
be mailed, delivered or facsimilied and confirmed c/o SCM
Microsystems, Inc., 131 Albright Way, Los Gatos, California 95030,
Attention: President.

14 Successors. This Agreement shall inure to the benefit of and be
binding upon the several U.S. Underwriters, the Company and the
Selling Stockholders and their respective successors and legal
representatives. Nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable
right, remedy or claim under or in respect of this Agreement, or
any provisions hereby contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no
other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company and the
Selling Stockholders contained in this Agreement shall also be for
the benefit of the person or persons, if any, who control any U.S.
Underwriter or U.S. Underwriters within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and the
indemnities of the several U.S. Underwriters shall also be for the
benefit of each director of the Company, each of its officers who
has signed the Registration Statement and the person or persons, if
any, who control the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act.

15 Applicable Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of New York.

16 Authority of the Representatives. In connection with this
Agreement, you will act for and on behalf of the several U.S.
Underwriters, and any action taken under this Agreement by Cowen,
as Representative, will be binding on all the U.S. Underwriters;
and any action taken under this Agreement by any of the
Attorneys-in-fact will be binding all the Selling Stockholders.

17 Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect
the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and
enforceable.

18 General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral
and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.

In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties
only and will not affect the construction or interpretation of this
Agreement. This Agreement may be amended or modified, and the
observance of any term of this Agreement may be waived, only by a
writing signed by the party or parties to this Agreement directly
affected by such amendment, modification or waiver.

19 Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.


30




If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us.

Very truly yours,

SCM MICROSYSTEMS, INC.


By:
Name:
Title:


For purposes of agreeing to the indemnification provisions set forth in Section
6 of this agreement:

SCM MICROSYSTEMS GmbH

By:_____________________________________
Name:
Title:



Accepted and delivered in SELLING STOCKHOLDERS
- as of LISTED IN SCHEDULE B
the date first above written.

COWEN & COMPANY By:__________________________
HAMBRECHT & QUIST LLC
Acting on their own behalf
and as Representatives of the several By:__________________________
U.S. Underwriters referred to in the Attorney-in-fact
foregoing Agreement.

By: COWEN & COMPANY
By: Cowen Incorporated,
its general partner

By:_____________________________________
Name:
Title:


31


SCHEDULE A

U.S. UNDERWRITERS