<PAGE>

                                                                   EXHIBIT 10.28

                    AMENDED AND RESTATED SEVERANCE AGREEMENT

         This Amended and Restated Severance Agreement (this "AGREEMENT") is
made by and between SCM Microsystems, Inc. ("SCM"), and You, Andrew Warner
("You" and "Your"), as of August 13, 2003 (the "EFFECTIVE DATE"). This Amended
and Restated Severance Agreement amends and restates in its entirety that
certain Agreement by and between SCM and You, dated as of June 29,2003 (the
"ORIGINAL AGREEMENT").

         1.       Resignation. Effective June 29, 2003 (the "RESIGNATION DATE"),
You resigned as an employee of SCM and/or any of its subsidiaries and all
officer or director positions with SCM and/or any of its subsidiaries. All
options or other awards You hold under SCM's 1997 Stock Plan (or any other
similar options or awards) ceased vesting as of the Resignation Date and all
post-termination exercise periods will commence as of the Resignation Date (as
provided in the respective agreements between You and the Company). Your PTO
ceased accruing as of the Resignation Date.

         2.       Severance and Other Payments. Subject to You signing and not
revoking the settlement agreement and release in the form attached hereto as
Exhibit A (the "SETTLEMENT AGREEMENT AND RELEASE"), within 5 days of the date
hereof SCM will pay You $341,538.48 in cash, by check or wire transfer. Such
payment is in consideration of Your execution of the Settlement Agreement and
Release and is comprised of the following:

                  (a)      A $115,000 transaction bonus related to SCM's sale
of substantially all of the digital video assets related to its former Digital
Media and Video division to Pinnacle Systems, Inc.; and

                  (b)      A $251,000 severance payment (less $24,461.52
previously paid to You before the date hereof) in satisfaction of all salary,
wages, bonus (including second quarter MBO), severance, accrued PTO or similar
amounts that SCM owes You as of the Resignation Date and as of the date hereof.

         You acknowledge that SCM has paid all salary, wages, bonuses, accrued
vacation and PTO, commissions, ESPP refunds and any and all other
employment-related benefits due to You once the payments and benefits referenced
in Sections 2 and 3 are received.

         3.       Medical Benefits. Subject to You executing and not revoking
the Settlement Agreement and Release, SCM will continue coverage of Your
existing medical benefits from the Resignation Date through September 30,2003
consistent with the medical benefits SCM provided You immediately prior to the
Resignation Date.

         4.       Invention and Assignment Agreement. You and SCM have executed
and delivered an Invention Assignment Agreement (the "INVENTION AND ASSIGNMENT
AGREEMENT").

         5.       Removal of Files. To the extent You have not done so already,
You may remove Your personal files from SCM's premises. Any file containing
"Confidential Information" of the

<PAGE>

Company (as that term is defined in the Invention and Assignment Agreement) may
not be removed from SCM's premises without the written consent of the Board of
Directors or the CEO of SCM.

         6.       Assignment. This Agreement will be binding upon and inure to
the benefit of (a) Your heirs, executors and legal representatives upon Your
death and (b) any successor of SCM. Any such successor of SCM will be deemed
substituted for SCM under the terms of this Agreement for all purposes. For this
purpose, "successor" means any person, firm, corporation or other business
entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires all or substantially all of the assets or business of SCM.
None of Your rights to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by the written consent of SCM,
by will or by the laws of descent and distribution. Any other attempted
assignment, transfer, conveyance or other disposition of Your right to
compensation or other benefits will be null and void.

         7.       Notices. All notices, requests, demands and other
communications called for hereunder will be in writing and will be deemed given
(a) on the date of delivery if delivered personally or by facsimile, (b) one (1)
day after being sent by a well established commercial overnight service, or (c)
four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:

                  If to SCM:

                  SCM Microsystems, Inc.
                  466 Kato Terrace
                  Fremont, California 94539
                  Fax:(510)360-0211
                  Telephone: (510) 360-2300
                  Attn: Steven L. Moore and Stuart Arnott

                  With a copy to :

                  Wilson Sonsini Goodrich & Rosati, P.C.
                  650 Page Mill Road
                  Palo Alto, CA 94304
                  Fax :(650) 493-6811
                  Telephone: (650) 493-9300
                  Attn : Kurt J. Berney, Esq.

                  If to You, to You at:

                  Andrew Warner 18660 Castle Lake Drive
                  Morgan Hill, CA 95037
                  Fax: (408) 779-4775

                                        2

<PAGE>

                  Tel: (408) 779-2339

                  With a copy to:

                  Bingham McCutchen LLP
                  150 Federal
                  Street Boston, MA 02110
                  Fax:(617)
                  951-8736 Telephone: (617) 951-8000
                  Attn: John Utzschneider, Esq.

         8.       Severability. In the event that any provision of this
Agreement (other than Section 2) becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement will continue
in full force and effect without said provision.

         9.       Confidentiality. You agree to maintain in confidence the
existence of this Agreement, the contents and terms of this Agreement, including
any documents incorporated by reference, and the consideration for this
Agreement.

         10.      Non-Disparagement. You and SCM agree to refrain from making
any negative comments about the other concerning their respective business,
products or services, officers, employees and directors and to refrain from any,
defamation, libel or slander of the other and their respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations, and assigns or
tortious interference with the contracts and relationships of the other and
their respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns.

         11.      Entire Agreement. This Agreement (including Exhibit A),
together with the Invention and Assignment Agreement, represents the entire
agreement and understanding between SCM and You concerning the subject matter
hereof and supersedes and replaces any and all prior agreements (including,
without limitation, the Original Agreement) and understandings concerning Your
employment relationship with SCM, except for such agreements, policies or plans
that govern Your medical, retirement or pension benefits and except for any
stock option or similar agreements between You and SCM.

                                        3

<PAGE>

         12.      Arbitration and Equitable Relief.

                  (a)      Except as provided in Section 12(d) below, You and
SCM agree that to the extent permitted by law, any dispute or controversy
arising out of, relating to, or in connection with this Agreement (including the
Settlement Agreement and Release and any agreement referenced in Section 11
hereof), or the interpretation, validity, construction, performance, breach, or
termination thereof will be settled by arbitration to be held in the County of
Santa Clara, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the "RULES"). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator will be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction.

                  (b)      The arbitrator will apply California law to the
merits of any dispute or claim (with the exception of its conflict of laws
provisions). You hereby expressly consent to the personal jurisdiction of the
state and federal courts located in California for any action or proceeding
arising from or relating to this Agreement and/or relating to any arbitration in
which the parties are participants.

                  (c)      SCM will pay the direct costs and expenses of the
arbitration. SCM and You each will pay Your own counsel fees and expenses.

                  (d)      SCM or You may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary to enforce the provisions of this
Agreement, without breach of this arbitration agreement and without abridgement
of the powers of the arbitrator.

                  (e)      YOU HAVE READ AND UNDERSTAND THIS SECTION 12, WHICH
DISCUSSES ARBITRATION. YOU UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU AGREE
TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT OF,
RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF YOUR RIGHT
TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:

                           (i)      ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT
OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION;

                                        4

<PAGE>

                           (ii)     ANY AND ALL CLAIMS FOR VIOLATION OF ANY
FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, THE AMERICANS
WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, AND ANY LAW OF ANY
STATE; AND

                           (iii)    ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

         13.      Cooperation with SCM. You will, for a period of six (6) months
after the date hereof, cooperate fully with SCM to the extent of your
availability, including, but not limited to, (a) responding to the reasonable
requests of SCM's Board or counsel, in connection with any and all existing or
future litigation, arbitrations, mediations or investigations brought by or
against SCM or any of its affiliates, agents, officers, directors or employees,
whether administrative, civil or criminal in nature, in which SCM reasonably
deems Your cooperation necessary or desirable and, (b) responding to reasonable
requests and providing information reasonably within Your knowledge regarding
SCM's results of operations, financial condition and performance, internal
controls, disclosure controls and procedures, accounting practices and policies,
reporting procedures and practices, other related information and any other
information reasonably within Your knowledge that is necessary or appropriate
for SCM to satisfy its obligations under the Securities Exchange Act of 1934, as
amended. During such period, You agree to provide reasonable advice, assistance
and information, including offering and explaining evidence, providing sworn
statements, participating in discovery and trial preparation and testimony as
may reasonably be deemed necessary or desirable by SCM relating to its position
in any such legal proceedings. During such period, You also agree to promptly
send SCM copies of all correspondence (for example, but not limited to,
subpoenas) received by You in connection with any such legal proceedings, unless
You are expressly prohibited by law from so doing. During such period, You will
act in good faith to furnish the information and cooperation required by this
Section 13 and SCM will act in good faith so that the requirement to furnish
such information and cooperation does not create an undue hardship for You. SCM
will advance to You all out-of-pocket expenses which you reasonably anticipate
You will incur as a result of Your cooperation, provided that You will provide
appropriate documentation thereof within ten (10) days of incurring any such
expenses, and, at the termination of the cooperation period, a reconciliation
shall be completed including appropriate credits or debits as necessary (i) to
reimburse You fully for all such expenses or (ii) to repay SCM any amounts you
owe for previous expense advancements. The failure by You to cooperate fully
with SCM in accordance with this Section 13 will be a material breach of the
terms of this Agreement. Notwithstanding anything in this Section 13, it is
agreed that if possible SCM will provide You with reasonable advance notice
regarding these activities, and that any requests made hereunder by SCM will be
made in good faith and reasonable.

         14.      No Oral Modification. Cancellation or Discharge. This
Agreement may be changed or terminated only in writing (signed by You and the
Chief Executive Officer of SCM (on behalf of SCM)).

                                        5

<PAGE>

         15.      Waiver of Breach. The waiver of a breach of any term or
provision of this Agreement, which must be in writing, will not operate as or be
construed to be a waiver of any other previous or subsequent breach of this
Agreement. No breach of any covenant hereunder by You will relieve SCM of any
obligation to make any payment required hereunder; provided, however, that the
foregoing does not require SCM to make any payment hereunder unless and until
the satisfaction or waiver of the conditions precedent to the making of such
payment. For the avoidance of doubt, nothing contained in this Section 15 limits
SCM's right to take any action against you, whether equitable or legal, as a
result of Your breach of a covenant hereunder.

         16.      Headings. All captions and section headings used in this
Agreement are for convenient reference only and do not form a part of this
Agreement.

         17.      Withholding. SCM is authorized to withhold, or cause to be
withheld, from any payment or benefit under this Agreement the full amount of
any withholding taxes required by applicable law.

         18.      Governing Law. This Agreement will be governed by the laws of
the State of California (with the exception of its conflict of laws provisions).

         19.      Authority. SCM represents and warrants that the person signing
this Agreement on its behalf has full authority to act for SCM.

         20.      Counterparts. This Agreement may be executed in counterparts,
and each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                        6

<PAGE>

         21.      Acknowledgement. You acknowledge that You (i) have read this
Agreement, (ii) have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of Your own choice or that You
voluntarily have declined to seek counsel, (iii)understand the terms and
consequences of this Agreement, and (iv) are fully aware of the legal and
binding effect of this Agreement.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the respective dates set forth above.

                                       ANDREW WARNER

                                       /s/ Andrew Warner
                                       ----------------------------------
                                       Andrew Warner

                                       SCM MICROSYSTEMS, INC.

                                       By: /s/ [ILLEGIBLE]
                                           ------------------------------

                                       Title: Chief executive Officer

                      [Andrew Warner/SCM Microsystems, Inc.
            Amended and Restated Severance Agreement Signature Page]
<PAGE>

         21.      Acknowledgment. You acknowledge that You (i) have read this
Agreement, (ii) have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of Your own choice or that You
voluntarily have declined to seek councel, (iii) understand the terms and
consequences of this Agreement, and (iv) are fully aware of the legal and
binding effect of this Agreement.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the respective dates set forth above.

                                       ANDREW WARNER

                                       /s/ Andrew Warner
                                       -----------------------------------------
                                       Andrew Warner

                                       SCM MICROSYSTEMS, INC.

                                       By: /s/ [ILLEGIBLE]
                                           -------------------------------------

                                       Title: Chief Executive Officer

                      [Andrew Warner/SCM Microsystems, Inc.
            Amended and Restated Severance Agreement Signature Page]

<PAGE>

                                    EXHIBIT A

                        SETTLEMENT AGREEMENT AND RELEASE

                                    RECITALS

         This Settlement Agreement and Release ("RELEASE") is by and between
Andrew Warner ("EMPLOYEE") and SCM Microsystems, Inc. ("COMPANY") (collectively
referred to as the "PARTIES"):

         WHEREAS, Employee has been an employee of the Company;

         WHEREAS, Employee and the Company have entered into an Amended and
Restated Severance Agreement dated August 13,2003 (the "AGREEMENT");

         WHEREAS, the Parties, and each of them, wish to resolve any and all
disputes, claims, complaints, grievances, charges, actions, petitions and
demands that the Employee may have against the Company as defined herein,
including, but not limited to, any and all claims arising or in any way related
to Employee's employment with, or separation from, the Company;

         NOW THEREFORE, in consideration of the promises made herein, the
Parties hereby agree as follows:

                                    COVENANTS

         1.       Release of Claims. Employee agrees that the receipt of the
consideration set forth in the Agreement represents settlement in full of all
outstanding obligations owed to Employee by the Company and its officers,
managers, supervisors, agents and employees with respect to Employee's
employment relationship. Employee, on his own behalf, and on behalf of his
respective heirs, family members, executors, agents, and assigns, hereby fully
and forever releases the Company and its officers, directors, employees, agents,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns (the "RELEASEES"), from, and
agrees not to sue concerning, any claim, duty, obligation or cause of action
relating to any Employee's employment relationship with the Company, whether
presently known or unknown, suspected or unsuspected, that Employee may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Release including, without limitation:

                  (a)      any and all claims relating to or arising from
Employee's employment relationship with the Company and the termination of that
relationship;

                  (b)      any and all claims relating to, or arising from,
Employee's right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation,

<PAGE>

any claims for fraud, misrepresentation, breach of fiduciary duty, breach of
duty under applicable state corporate law, and securities fraud under any state
or federal law; provided, however, that this release shall not affect, waive or
modify Employee's rights to purchase Company securities under the terms of any
agreement between Employee and the Company;

                  (c)      any and all claims under the law of any jurisdiction
including, but not limited to, wrongful discharge of employment; constructive
discharge from employment; termination in violation of public policy;
discrimination; harassment; retaliation; breach of contract, both express and
implied; breach of a covenant of good faith and fair dealing, both express and
implied; promissory estoppel; negligent or intentional infliction of emotional
distress; negligent or intentional misrepresentation; negligent or intentional
interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; assault;
battery; invasion of privacy; false imprisonment; and conversion;

                  (d)      any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee Retirement Income Security Act of 1974, The
Worker Adjustment and Retraining Notification Act, Older Workers Benefit
Protection Act; the Family and Medical Leave Act; the California Family Rights
Act; the California Fair Employment and Housing Act, and the California Labor
Code, including, but not limited to California Labor Code Sections 1400-1408;

                  (e)      any and all claims for violation of the federal, or
any state, constitution;

                  (f)      any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

                  (g)      any claim for any loss, cost, damage, or expense
arising out of any dispute over the non-withholding or other tax treatment of
any of the proceeds received by Employee as a result of this Release; and

                  (h)      any and all claims for attorneys' fees and costs.

         The Parties agree that the release set forth in this section will be
and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend, waive, modify or alter any
rights or obligations of the respective parties (or any of their affiliates)
under (i) this Release, (ii) the Agreement or (iii) that certain Asset Purchase
and Supply Agreement dated as of June 29, 2003 between the Company and Zio
Corporation (f/k/a Reader Acquisition Corporation), a Delaware corporation, as
amended, or any agreement, document, certificate or instrument executed or
delivered in connection therewith (collectively, the "ASSET AGREEMENTS").
Notwithstanding anything to the contrary, nothing contained herein shall limit
Employee's rights to claim indemnification from the Company for any claim
brought against him by third parties in his capacity as an officer of the
Company; and Company further acknowledges such obligations and agrees to fully
indemnify, save, defend and hold harmless

                                        2

<PAGE>

Employee to the maximum extent permitted by law and by the Certificate of
Incorporation of the Company (as the same may be in effect from time to time)
with respect to acts or omissions taken in his capacity as an employee of the
Company before the date hereof.

         2.       Acknowledgement of Waiver of Claims Under ADEA. Employee
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Release. Employee acknowledges that the
consideration given for the Release contained herein is in addition to anything
of value to which Employee was already entitled. Employee further acknowledges
that he has been advised by this writing that

                  (a)      he should consult with an attorney prior to executing
this Release;

                  (b)      he has up to twenty-one (21) days within which to
consider this Release;

                  (c)      he has seven (7) days following his execution of this
Release to revoke this Release;

                  (d)      this Release will not be effective until the
revocation period has expired; and,

                  (e)      nothing in this Release prevents or precludes
Employee from challenging or seeking a determination in good faith of the
validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties or costs for doing so, unless specifically authorized by
federal law.

         3.       Company Release of Claims. The Company and its officers,
directors, employees, agents, investors, shareholders, administrators,
affiliates, divisions, subsidiaries, predecessor and successor corporations, and
assigns, hereby fully and forever releases Employee, and his respective heirs,
family members, executors, agents, and assigns, from, and agree not to sue
concerning, any claim, duty, obligation or cause of action relating to
Employee's employment relationship with the Company, whether presently known or
unknown, suspected or unsuspected, that Company may possess arising from any
omissions, acts or facts that have occurred up until and including the Effective
Date of this Release including, without limitation:

                  (a)      any and all claims relating to or arising from
Employee's employment relationship with the Company;

                  (b)      any and all claims relating to, or arising from,
Employee's service as an officer or director of the Company, including, without
limitation, any claims for breach of fiduciary duty or similar claims;

                  (c)      any and all claims under the law of any jurisdiction
including, but not limited to discrimination; breach of contract, both express
and implied; breach of a covenant of

                                        3

<PAGE>

good faith and fair dealing, both express and implied; promissory estoppel;
negligent or intentional infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; unfair business practices;
defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;

                  (d)      any and all claims for violation of the federal, or
any state, constitution; and

                  (e)      any and all claims for attorneys' fees and costs.

         The Parties agree that the release set forth in this section will be
and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred under
the Agreement, this Release or the Asset Agreements. The Parties further agree
that the release set forth in this section shall not release Employee from acts
of fraud, embezzlement or other intentional misconduct against the Company.

         4.       Civil Code Section 1542. The Parties represent that they are
not aware of any claim by either of them other than the claims that are released
by this Release. The Parties each acknowledge that they have had the opportunity
to seek the advice of legal counsel and are familiar with the provisions of
California Civil Code Section 1542, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         The Parties, each being aware of said code section, agree to expressly
waive any rights they may have thereunder, as well as under any other statute or
common law principles of similar effect.

         5.       No Pending or Future Lawsuits. Employee represents that he has
no lawsuits pending, claims pending, or actions pending, in each case in his
name or on behalf of any other person or entity, against the Company. Employee
also represents that he does not intend to bring and is not aware of any claims
on his own behalf or on behalf of any other person or entity against the Company
of which the Company is unaware. The Company represents that it has no lawsuits
pending, claims pending, or actions pending, in each case in its name or on
behalf of any other person or entity, against Employee. The Company also
represents that it does not intend to bring and is not aware of any claims on
its own behalf or on behalf of any other person or entity against Employee.

         6.       Confidentiality. The Parties acknowledge that Employee's
agreement to keep the terms and conditions of the Agreement and this Release
confidential was a material factor on which all Parties relied in entering into
the Agreement and this Release. Employee hereto agrees

                                        4

<PAGE>

to use his best efforts to maintain in confidence: (i) the existence of the
Agreement and this Release, (ii) the contents and terms of the Agreement and
this Release, (iii) the consideration for the Agreement and this Release, and
(iv) any allegations relating to the Company or its officers or employees with
respect to Employee's employment with the Company, except as otherwise provided
for in the Agreement and this Release (hereinafter collectively referred to as
"SETTLEMENT INFORMATION"). Employee agrees to take reasonable precautions to
prevent disclosure of any Settlement Information to third parties and agrees
that there will be no publicity, directly or indirectly, concerning any
Settlement Information. Employee agrees to disclose Settlement Information only
to those attorneys, accountants, governmental entities, and family members who
have a reasonable need to know of such Settlement Information.

         7.       No Admission of Liability. The Parties understand and
acknowledge that this Release constitutes a compromise and settlement of
potential claims. No action taken by the Parties hereto, or either of them,
either previously or in connection with the Agreement or this Release will be
deemed or construed to be: (a) an admission of the truth or falsity of any
claims heretofore made or (b) an acknowledgment or admission by either party of
any fault or liability whatsoever to the other party or to any third party.

         8.       Costs. The Parties will each bear their own costs, expert
fees, attorneys' fees and other fees incurred in connection with the Agreement
and this Release.

         9.       [INTENTIONALLY OMITTED]

         10.      Severabilitv. In the event that any non-material provision
hereof becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Release will continue in full force and
effect without said provision so long as the remaining provisions remain
intelligible and continue to reflect the original intent of the Parties.

         11.      No Waiver. The failure of any Party to insist upon the
performance of any of the terms and conditions in this Release, or the failure
to prosecute any breach of any of the terms and conditions of this Release, will
not be construed thereafter as a waiver of any such terms or conditions. This
entire Release will remain in full force and effect as if no such forbearance or
failure of performance had occurred.

         12.      No Oral Modification. Any modification or amendment of this
Release, or additional obligation assumed by either party in connection with
this Release, will be effective only if placed in writing and signed by both
Parties or by authorized representatives of each Party.

         13.      Governing Law. This Release will be deemed to have been
executed and delivered within the State of California, and it will be construed,
interpreted, governed, and enforced in accordance with the laws of the State of
California, without regard to conflict of law principles. To the extent that
either party seeks injunctive relief in any court having jurisdiction for any
claim relating to the alleged misuse or misappropriation of trade secrets or
confidential or proprietary information, each party hereby consents to personal
and exclusive jurisdiction and venue in the state and federal courts of the
State of California.

                                        5

<PAGE>

         14.      Attorneys' Fees. In the event that either Party brings an
action to enforce or effect its rights under this Release, the prevailing party
will be entitled to recover its costs and expenses, including the costs of
mediation, arbitration, litigation, court fees, plus reasonable attorneys' fees,
incurred in connection with such an action.

         15.      Effective Date. This Release is effective after it has been
signed by the Parties and after seven (7) days have passed since Employee has
signed this Release (the "EFFECTIVE DATE"), unless revoked by Employee within
seven (7) days after the date this Release was signed by Employee.

         16.      Counterparts. This Release may be executed in counterparts,
and each counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.

         17.      Voluntary Execution of This Release. This Release is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

                  (a)      They have read this Release;

                  (b)      They have been represented in the preparation,
negotiation, and execution of this Release by legal counsel of their own choice
or that they have voluntarily declined to seek such counsel;

                  (c)      They understand the terms and consequences of this
Release and of the releases it contains; and

                  (d)      They are fully aware of the legal and binding effect
of this Release.

                                        6

<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Release on the
respective dates set forth below.

                                       SCM Microsystems, Inc.

Dated: August 13, 2003                 By /s/ Robert Schinder
                                          --------------------------------------

                                       Name: Robert Schinder

                                       Title: Chief Executive Officer

                                       Andrew Warner, an individual

Dated: August 13, 2003                 _________________________________________

      [Andrew Warner/SCM Microsystems, Inc. Second Release Signature Page]

<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Release on the
respective dates set forth below.

                                          SCM Microsystems, Inc.

Dated: August 13, 2003                    By __________________________

                                          Name: _______________________

                                          Title: ______________________

                                          Andrew Warner, an individual

Dated: August 13, 2003                      /s/ Andrew Warner
                                            --------------------------

      [Andrew Warner/SCM Microsystems, Inc. Second Release Signature Page]