COOPERATION CONTRACT

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COOPERATION CONTRACT







SCM Microsystems GmbH

Luitpoldstrasse 6

85276 Pfaffenhofen

- hereinafter referred to as SCM -





STOCKO Metallwarenfabriken

Henkels und Sohn GmbH & Co

Simonshofchen 31

42327 Wuppertal (Vohwinkel)

- hereinafter referred to as STOCKO -





PREAMBLE



SCM has extensive know-how and experience in the area of the development and manufacture and the distribution of electronic devices, computer hardware and software, as well as silicon, particularly in the area of PCMCIA cards (so-called PC, Smart or Chip Cards).



STOCKO has extensive know-how in the area of the development, manufacture and distribution of housing, connectors and mechanical requirements for electronic devices.



SCM and Stocko have extensive customer contacts in the area of PCMCIA and Smart Card technology (such as, for example, national telecom companies, manufactures of electronic components, etc.). SCM is also a member of industrial consortia which deal with future applications of this technology.





1. PURPOSE



The purpose of this contract is the joint research and development of reader devices on the basis of PCMCIA housings for Smart Cards and other modules for an undetermined number of already existing and future applications (for example, Pay TV, DVB, DAB, banking, online services, patient cards, etc.) and the joint exploitation of the research and development results.











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2. DEFINITIONS



The following terms shall have the following meanings:



o Research and development: Acquisition of technical knowledge,

theoretical and practical analyzes, tests, including the test

manufacture and testing of products and processes, the establishment

of the installations and facilities necessary therefor.



o Contract processes: Processes which arise from research and



o Contract products: Products or services which arise from research and

development or are manufactured or rendered using the contract

processes; parts of such goods or services shall also be deemed to

constitute contracts products.



o Results of research and development: Industrial property rights and

know-how which contribute substantially to technical and economic

progress and which are critical for the manufacture of contract

products or the application of the contract processes.



o Exploitation of the products: Manufacture of contract products and

use of the contract processes, assignment of industrial property

rights, issuance of manufacturing and/or use licenses to said rights

and the dissemination of know-how with the goal of permitting such

manufacture or use. However, the term "exploitation" shall not

include the distribution of the contracts products.



o Technical knowledge: Knowledge of which an industrial property right

exists or which is not obvious (know-how).





3. JOINT RESEARCH AND DEVELOPMENT



3.1 DEVELOPMENT PROGRAM AND GOAL



It is intended that the joint research and development be carried out in the area of reader devices for Smart Cards and other reader devices in the form of a PCMCIA card or combined solutions and that said joint research and development pursue the goal of bringing customer-specific and standard products to serial readiness. SCM's contribution shall be the overall concept and the development of electronic components and software; Stocko's contribution shall be the entire housing mechanics, including connectors.



Development work shall not begin until each contracting party has signed the respective project plan set forth in appendix 1. Research and development shall be divided between the contracting parties on the basis of their respective specialization in such a manner that the contracting parties perform the development work independently and at their own expense and risk in accordance with the project plan and in accordance with their receptive know-how; in each instance, STOCKO shall be responsible for the development of housings and connectors and for the mechanical requirements and assembly technology of the reader device, SCM shall be in charge of the development of hardware, software and, if applicable, silicon, as well as for the test procedures and test software for service fabrication.













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3.2 DEVELOPMENT PROJECTS



3.2.1 CUSTOMER-SPECIFIC DEVELOPMENT PROJECTS



The details concerning the respective specific customer-specific development project shall be agreed upon between the contracting party who acquires the order and the respective contractor or purchaser; the other contracting party shall be included in the negotiations with the contractor as early as possible and to the extent necessary. A duty to provide complete information shall exist between the contracting parties.



Following the conclusion of, and in accordance with, the negotiations with the respective contractor or purchaser, the contracting parties shall create precise project plans for each development project in accordance with the model attached as appendix 1 to this contract; said plan shall define the technical specifications for the reader device which is to be developed--any licenses for the proprietary rights of third parties which must be acquired in connection with the development project, other technical details, scheduling, including the setting of milestones, testing parameters for prototypes, key financial data, including the projected development cost through serial readiness, as well as the intended return on investment (Rol), etc.--for the respective development project. The individual project plans shall be binding upon the contracting parties and shall, in each instance, constitute a component of this contract.



3.2.2 DEVELOPMENT PROJECTS FOR STANDARD PRODUCTS



For each development project for standard products, the contracting parties shall jointly create a precise project plan in accordance with appendix 1, which shall be binding upon the contracting parties, and shall in each instance, constitute a component of this contract.



3.4 PROTOTYPES



Following the su ...