EX-10.1






SCM Microsystems, Inc.




Code of Conduct and Ethics





	1.	 	Introduction





At SCM Microsystems, Inc. (“SCM”), the members of SCM’s Board of Directors and the Chief
Executive Officer together with the Executive Management Team are responsible for defining
standards of ethical business conduct and for ensuring compliance with such standards. Each SCM
employee has the responsibility to read, understand and comply with this Code of Conduct and Ethics
(“Code of Conduct”).



Accountability and Application



This Code of Conduct applies to all employees of SCM, including, without limitation, SCM’s
Executive Management Team, and to all members of SCM’s Board of Directors (“Directors”). Directors
and employees are accountable for their adherence to this Code of Conduct. In addition to this Code
of Conduct, SCM also maintains specific employee guidelines, procedures, and insider trading
policies.



All Directors and employees of SCM must conduct themselves with integrity, honesty, fairness, and
in an ethical manner, and must seek to avoid even the appearance of improper behavior.



Conduct not in compliance with both the letter and spirit of these requirements may be grounds for
disciplinary action, which in serious cases may include termination of employment and, if
appropriate, referral to the relevant governmental compliance authorities.



While we have tried to make this Code of Conduct and the related Guide to Ethical Business Conduct
as thorough as possible, we do not expect it to cover every possible situation that may require
employees to think about ethical or legal conduct. If an employee encounters a situation that
cannot be resolved by reference to these policies or where the application of the policies to the
situation is unclear, the affected employee should consult with SCM management.



Compliance with Laws, Rules and Regulations



All Directors and employees are expected to conduct all business dealings and affairs in full
compliance with applicable laws, rules, and regulations, both to the letter and spirit. Under
certain circumstances local country laws may establish requirements that differ from this Code of
Conduct and in such cases, such differing legal requirements will apply.



Although SCM operates around the globe, as a U.S. company, some U.S. laws and regulations apply for
business dealings worldwide in addition to local regulations.



Specific areas of law that are relevant for SCM’s business and of which employees should be at
least aware are:




	 	•	 	Competition laws;






	 	•	 	Public sector procurement regulations;






	 	•	 	Export and import control laws and regulations;






	 	•	 	U.S. antiboycott law; and






	 	•	 	Environmental protection regulations.





Reporting Violations



In the event you have knowledge of a violation of this Code of Conduct or of any other
unlawful or illegal situation, it is your responsibility to report this to SCM management in person
or through the Confidential Employee Hotline. SCM will promptly review your report of unlawful or
unethical conduct and take appropriate action. SCM will not tolerate threats or acts of retaliation
against you for making the report.



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Reporting Accounting Irregularities



It is the obligation of any employee of SCM to immediately report any suspected accounting
irregularity or fraud to SCM management. It is SCM’s policy to investigate any suspected accounting
irregularities or fraud, and that there will be no retaliation against any employee reporting
suspected incidents. To ensure that employees can anonymously report suspected fraud or accounting
irregularities without fear of retaliation, SCM has set up the Confidential Employee Hotline and is
committed to communicate the reports made to the hotline frequently to our Executive Management
Team and the Audit Committee. If there is any doubt about a specific accounting or financial
situation, employees are encouraged to report it using the Confidential Employee Hotline.




	2.	 	Work Environment





SCM strives to maintain a healthy, safe and productive work environment which is free from all
discrimination or harassment based on race, color, religion, sex, sexual orientation, age, national
origin, disability, or other factors unrelated to SCM’s legitimate business interests.



Equal Opportunities



SCM is committed to the principle of equal employment opportunity. It is SCM’s policy to
provide equal employment opportunity and to make all employment related decisions without regard to
race, sex, age, marital status, sexual orientation, religion, national origin, disability or other
legally protected status. This policy applies to recruitment, hiring, promotion and all other
personnel actions and conditions of employment such as compensation, benefits, training and
disciplinary measures.



Harassment



It is the policy of SCM to foster a work environment free of all types of discrimination,
intimidation and insult. SCM will not tolerate sexual advances, actions or comments; racial or
religious slurs, jokes; or any other comments or conduct in the workplace that creates, encourages
or permits an offensive, intimidating or inappropriate work environment.



Sexual harassment is defined as unwelcome and unsolicited sexual advances, requests for sexual
favors or engaging in other verbal or physical conduct of a sexual nature when:




	 	•	 	submission to such conduct is made explicitly a term or condition of an employee’s
employment;






	 	•	 	submission to or rejection of such advances or requests is used as a basis for
employment decisions affecting the employee; or






	 	•	 	such conduct creates an intimidating, hostile or offensive working environment.





Sexual harassment is contrary to SCM’s values, guidelines and policies.



Health and Safety



SCM is committed to maintaining a safe and secure work environment. All employees need to
comply with safety, health and security procedures and any other applicable permits or regulations.



Violence in the Workplace



The company is committed to providing a safe working environment for all employees. SCM will
not tolerate acts or threats of violence.



Examples of conduct prohibited by this policy include, but are not limited to:




	 	•	 	deliberately inflicting physical harm to, or making unwelcome aggressive or intimidating
contact with, an individual;






	 	•	 	intentionally damaging or destroying property of an individual or of SCM;






	 	•	 	sending or conveying any anonymous, harassing, or obscene communications; and






	 	•	 	being in possession of any kind of firearm, offensive weapon, or explosive device or
substance.





SCM may refuse entry to any part of its premises, require immediate departure, or notify
appropriate personnel of anyone whom SCM, at its sole discretion, believes has violated or may
violate this policy.



Smoking, Alcohol & Drugs



Smoking is not permitted within SCM office space.



Drinking alcoholic beverages during working hours within SCM office space is generally not
permitted. Exemptions are subject to prior written approval from local management and only for
company-sponsored events.



The use, distribution, sale or possession of illegal drugs or other controlled substances for
non-medical purposes is strictly forbidden on SCM premises or in the SCM work environment.




	3.	 	Information Disclosure, Retention and Protection





Employee Data



HR maintains each employee’s personnel record, which is the property of SCM and includes all
records pertinent to an individual’s employment with SCM. SCM considers employees’ personnel
records to be confidential, and employees who have access to such information through their work
responsibilities must treat such information accordingly. No employee is allowed to see another
employee’s record unless it is required for legitimate business purposes of SCM.



Employee Privacy



Personal items, messages or information that you consider private should not be placed or kept
anywhere in the SCM workplace, such as in telephone systems, office systems, electronic files,
desks, cupboards, filing cabinets, office cabins or offices. SCM management has the right to access
those areas and any other SCM furnished facilities under certain circumstances. Additionally, in
order to protect its employees and assets, SCM may ask to search an employee’s personal property,
including briefcases and bags, located on or being removed from SCM locations and the employee is
expected to cooperate with such a request.



Employees should not access another employee’s work space, including electronic files, without
prior approval from the affected employee or from management.



Electronic Communications



Electronic communication resources refer to all communication equipment, systems, and services
provided to SCM employees in the course of their employment including, for example, telephone,
electronic mail, voice mail, fax, local and wide area networks, paging, and Internet access.



SCM’s electronic communication resources are provided for SCM employees to use in accomplishing
their work. Employees are expected to use these resources in a professional and appropriate manner,
in accordance with SCM policies.



Handling Company Assets and Information



SCM has many assets of great value to SCM’s competitiveness and success as a business that
must be protected. They include physical assets and proprietary information, such as SCM’s
intellectual property and confidential information. Misuse, loss or theft of assets puts the future
of the company at risk.



All employees are responsible for protecting SCM property that is entrusted to them and for helping
protect company assets in general. All situations that could lead to the misuse, damage, loss or
theft of SCM assets must be reported to SCM management promptly.



Public Disclosures



SCM periodically discloses information in accordance with the requirements and guidelines set
forth for public companies by the Securities and Exchange Commission, the NASDAQ Stock Market and
the Frankfurt Stock Exchange.



SCM is committed to full, fair, accurate, timely, and understandable public disclosures that are
not misleading. SCM’s Directors, Chief Executive Officer and Chief Financial Officer are
responsible for ensuring that SCM’s public disclosures meet these requirements and guidelines, and
that adequate financial and disclosure controls exist for this purpose.



In order to ensure that management is able to fulfill these requirements and guidelines, SCM’s
Directors and employees must promote the accurate and reliable preparation and maintenance of SCM’s
financial and other records and must ensure that any information or data they report to management
is accurate and honest.



SCM’s Directors and employees must ensure that no confidential or other non-public information is
disclosed accidentally or selectively. Directors and employees should never disclose any
confidential and non-public information to external third parties such as press, investors,
consultants or analysts unless expressly authorized to do so. Any such need for disclosure
authorization or any requests for non-public information should always be directed to the Chief
Financial Officer.



Intellectual Property



All SCM employees are required to sign an agreement under which they assume specific
obligations relating to intellectual property as well as the treatment of confidential information.
Among other things in the agreement, rights to intellectual property developed during employment in
certain capacities with SCM, are assigned to and owned by SCM.



Recording and Reporting Information



SCM employees must record and report all information accurately and honestly.



Every employee records information of some kind and submits it to the company. For example: a
production employee completes quality reports; an engineer makes a product test report; a project
manager records time spent on development of a specific product; a marketing representative reports
orders; an accountant records revenues and costs and all employees report expenses when they travel
on company business. Each employee must accurately and honestly complete reports. Dishonest
reporting to SCM management, to auditors, during an investigation or to organizations and people
outside the company is strictly prohibited. This includes presenting or organizing information in a
way that is intended to mislead or misinform.



All employees must retain, protect and dispose of records according to SCM’s retention policy.
Never alter or destroy records in response to an investigation or audit, or when an investigation
or audit is anticipated.



Dishonest reporting can lead to civil or even criminal liability for you or SCM. Laws in various
jurisdictions, such as tax laws or the U.S. Foreign Corrupt Practices Act (the “FCPA”), require SCM
to maintain books, records and accounts with reasonable detail and accuracy such that they fairly
reflect SCM’s transactions. SCM employees must follow all internal processes and controls,
applicable standards and practices, as well as rules and regulations for accounting and financial
reporting. False, misleading or other inaccurate entries are not to be made in the books and
records of SCM for any reason, including concealing the purpose or nature of payments.



Transaction documentation should fully and accurately describe the nature of the transaction. The
company prohibits the use of “side letters,” which are written or oral agreements with customers
and business partners that would modify or supersede the terms of current or previous purchase
orders or contracts. The existence of any side letters needs to be reported to the Chief Financial
Officer.




	4.	 	Representing SCM





SCM has a wide range of business relationships with other companies and organizations,
including authorized business partners, alliance companies and original equipment manufacturers. No
matter what type of organization you are dealing with or what its relationship is to SCM, you
should always observe the following standards:



Avoiding Misrepresentation



Never make misrepresentations or dishonest statements to any person or organization. If you
believe that the other person may have misunderstood you or that your communication was not clear
enough, promptly correct any misunderstanding. Clear, straightforward and honest communication is
an integral part of ethical conduct in business.



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Understanding Relationships



Frequently, other organizations have multiple relationships with SCM. A distributor may be
both an end user and a competitor. Another organization may be an SCM supplier and customer at the
same time. SCM also has relationships with many other types of organizations such as leasing
companies, software houses, original equipment manufacturers, third-party programmers and others
who compete with, buy from, or sell to, SCM. In any dealings, it is important that you understand
each one of the relationships involved, and act accordingly.




	 	 	Receiving & Using Information from Outside Parties





Employees may seek and acquire information about other companies, including competitors
provided such information is received using legal sources and methods and is used for an ethical
and legitimate business purpose. For example, SCM collects information from authorized and public
sources on competitors’ products in order to evaluate the relative merits of our own offerings.



No employee should use any improper means to acquire a competitor’s trade secrets or other
confidential information. Trespass, burglary, wiretapping, bribery and stealing are illegal. Other
attempts to acquire a competitor’s confidential information through methods such as soliciting
confidential data from competitors’ employees or hiring competitors’ employees are unethical. SCM
will not tolerate any form of questionable information gathering.



All properly acquired information about other companies should be treated with sensitivity and
discretion.



Furthermore, individuals, such as consumers, employees of customers, business partners and
suppliers, are also concerned with privacy. All SCM employees should take the appropriate steps
necessary to protect the privacy of all personal information.




	 	 	Acquiring Proprietary or Confidential Information





When an outside party discloses proprietary information to use for a specific purpose this
information should be treated with particular care and only within the scope of the intended
purpose. Employees must not use any confidential information belonging to any former employers.



If the information is confidential or restricted, it must not be received in written, verbal or
visual form until the terms of its use have been agreed in a signed agreement approved by SCM’s
legal counsel. Any receipt of outside confidential information must also have prior approval from
SCM Senior Management. Once the information has been received, it should be used only in strict
adherence to the terms of the relevant legal agreement.




	 	 	Acquiring Software





Software is protected by copyright as intellectual and commercial property, and may also be
protected by patent or trade secret laws. Software includes computer programs in test or finished
form, databases and related documentation. The software may be on CD-ROMs or other storage devices
or it may be stored on electronic online bulletin boards or databases.



No software or software license agreement should be accepted from a third party via any channel
without appropriate review and approval. It is the employee’s responsibility to ensure all
third-party software is appropriately licensed and used only in accordance with the terms of the
license or other agreement.




	 	 	Bribery, Gifts & Entertainment





Nearly all countries have adopted laws prohibiting the bribery of government officials,
including Germany (i.e. the Internationale Bestechungsgesetz, “IntBestG,” BGBI, I S.2329) and the
U.S. (i.e. the FCPA). Bribes are not limited to cash payments or commissions. For example,
providing gifts, travel or entertainment may be unlawful depending on the circumstances. Violations
of anti-bribery laws can lead to costly enforcement actions and criminal penalties against the
company and the individuals involved and damage to the reputation of the company and its employees.
Persons found guilty of bribery face possible imprisonment as well as fines. SCM categorically
forbids the giving or taking of bribes. It is the responsibility of each person to consult with the
Executive Management Team if he or she has any question about whether his or her action could
potentially violate anti-bribery laws.



It is acceptable, however, for employees to give and receive gifts of the appropriate level and in
the appropriate business culture and legal framework. Distinguishing between gifts and bribery is a
sensitive and subjective topic. The following are SCM’s general guidelines, the application of
which may vary slightly between locations according to local custom and law. Again, an employee
should consult with the Executive Management Team if he or she has any question about whether his
or her action could potentially violate anti-bribery laws.




	 	 	Business Hospitality





You may give or accept customary business hospitality, such as meals, entertainment, training
or briefing and travel to or from customers provided that the expenses involved are approved by SCM
management, kept at a reasonable level and are not prohibited by law or known customer business
practice.




	 	 	Receiving Gifts





Neither you nor any member of your family may solicit or accept from a supplier or customer
money or a gift that could influence or could reasonably give the appearance of influencing SCM’s
business relationship with that supplier or customer.



You may accept promotional premiums and discounts offered by, for example, transportation
companies, hotels, retail outlets and restaurants if they are based upon membership in bonus
programs for individuals and are offered to the public generally. You may also accept gifts of
nominal value which are normally offered to others having a similar relationship with the customer
or supplier.



Normal business entertainment such as meals, sporting or media events is appropriate if of a
reasonable nature and value and in the course of a meeting or another occasion, the purpose of
which is to hold a bona fide business discussion or to foster a better business relationship.




	 	 	Giving Gifts





You may not give money or any gift to an executive, official or employee of any supplier,
customer or any other organization if doing so would influence or could reasonably give the
appearance of influencing the organization’s business relationship with SCM. You may, however, with
management approval provide a gift of nominal value if it is not prohibited by law or the
customer’s known business practices and provided it is offered to others having a similar
relationship with SCM.




	 	 	Fees & Commissions





SCM employees may not accept any fee, commission or other compensation for referrals or
similar commercial activities from anyone except SCM.




	 	 	Government Employees





The above guidelines do not apply when it comes to dealing with government organizations in
any country where SCM does business. No SCM person may give, offer, promise or authorize the giving
of anything of value to a government official, directly or through an intermediary, such as an
agent or business consultant, in order to influence official action or obtain an improper
advantage.



Any proposed gift or gratuities of any kind, such as: travel meals, entertainment, contributions to
charity (even legitimate ones) specified by, or that would personally benefit, a government
official must therefore have prior review by the SCM Executive Management Team, even if such
gratuity is common in that country.



Furthermore, certain legal or ethical restrictions may exist with respect to the hiring by SCM of
current or former government employees or their family members. You should consult with SCM
Executive Management Team before any attempts are initiated to hire such people.




	 	 	Customers





SCM is committed to quality. The Executive Management Team has defined, documented, and
established the company’s commitment to quality by endorsing a Corporate Quality Policy. SCM will
provide products and solutions, which meet or exceed customer requirements, by doing it right the
first time and through following a process of continuous improvement. SCM employees are required to
represent our products and services fairly, accurately and truthfully.



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	 	 	Suppliers





Whenever you make a purchase on behalf of SCM, you need to decide among competing suppliers.
At SCM we make an objective data-based decision to determine which supplier to use regardless of
the scale or cost of the purchase.



You must not try or even appear to try to obtain any special treatment for a particular supplier.



Prices and other information submitted by suppliers and SCM’s evaluation of that information are
confidential to SCM.



Employees and former employees may not use any of this information outside of SCM without written
permission from management. It is essential that suppliers competing for SCM’s business have
confidence in the integrity of our selection process.



Seeking reciprocity is contrary to SCM policy and may also be unlawful in some countries. You
should never lead a prospective supplier to believe that SCM’s decision to buy its goods or
services is conditional on the supplier’s agreement to buy SCM products. SCM’s decision to buy
goods and services from a supplier must be made independently from that supplier’s decision to buy
SCM products and services.




	 	 	Competitors





In a sales, marketing or service activity, SCM expects you to compete not just vigorously and
effectively but lawfully and ethically as well.



In all contacts with competitors you must not discuss pricing policy, contract terms, costs,
marketing/product plans, inventory, production plans or any other proprietary or confidential
information. If a competitor raises these or related subjects with you – you should not engage in
any discussion. Do not enter into agreements with competitors to set prices, limit production or
divide up customers, suppliers or markets. SCM’s Executive Management Team, should be informed
about any incident involving a sensitive or proprietary subject with a competitor or of any
discussion with a competitor regarding anti-competitive behavior.



It is SCM’s policy to sell products and services on their merits. It is against policy to make any
false or misleading statements or suggestions about competitors, their products or their services.
You should ensure that any comparison to competitors and their products are accurate and
substantiated.




	 	 	Environment





SCM and its employees are fully committed to comply with applicable federal, state and local
environmental laws and other environmental requirements to which the company subscribes. SCM
recognizes that sound environmental management is a key contributor to customer and shareholder
value through a policy of continuous improvement and through the implementation of Environmental
Management Programs.




	5.	 	Conflicts of Interest





All employees have a private life and personal interests that are outside the scope of
employment with SCM. A conflict of interest may arise if you engage in any activities or advance
any personal interests at the expense of SCM’s interests. It is up to you to avoid situations in
which your personal interests and SCM’s are in conflict. Every individual faces a different
situation and should make his or her own assessment of the potential for a conflict of interest to
arise. A conflict of interest or potential conflict of interest may be resolved or avoided if it is
appropriately disclosed and approved by SCM. In some instances, disclosure may not be sufficient
and SCM may require that the conduct in question be stopped or that actions taken be reversed where
possible. Examples of potential conflicts of interest include, but are not limited to those
described below.




	 	 	Competing Against SCM





Many employees are engaged independently in activities that may relate closely to SCM’s
business. An example would be selling products or services via an internet auction house.
Generally, such activities do not damage SCM’s interests and therefore do not represent a conflict
of interest. You should be sure, however, that you do not commercially market any products or
services in competition with SCM’s current or potential future offerings. Such activities damage
SCM’s interests and therefore are unethical if you receive any direct or indirect payment. Thus,
such activities constitute a conflict of interest, and you may not participate in them.




	 	 	Assisting SCM Competition





A conflict of interest exists if you provide assistance in any form to an organization that
markets products and services in competition with SCM’s current or potential products or service
offerings. You may not, without SCM’s Executive Management Team’s consent, work for such an
organization in any capacity, such as an employee, a consultant or as a member of its board of
directors.




	 	 	Supplying SCM





You may not be a supplier to SCM, represent a supplier to SCM, work for a supplier to SCM or
be a member of its board of directors while you are an employee of SCM unless the relationship is
approved in advance by SCM’s Executive Management Team. Further, you may not accept money or
benefits of any kind for any advice or services you may provide to a supplier in addition to its
business with SCM.




	 	 	Using SCM Facilities & Time





You may not perform non-SCM work or solicit such business on SCM premises or while working on
SCM time. Also, you are not permitted to use SCM property or facilities, including offices,
equipment, telephones, materials, resources or proprietary information for any outside work.




	 	 	Personal Financial Interests





You should not have a financial interest in any organization that SCM does business with or
competes with if that interest would give you or would appear to give you a conflict of interest
with SCM. Such organizations include suppliers, competitors, customers, distributors and alliance
companies. Financial interests in competitors usually will present a conflict of interest.



You should not attempt to evade these guidelines on investments by acting indirectly through anyone
else.




	 	 	Exceptions and Questions





Any exceptions to these guidelines must be specifically approved by the Executive Management
Team with the advice of SCM legal counsel. Also, if you have any doubt about what you can or cannot
do in a specific situation or if you have a question about the applicability of these guidelines to
your circumstances, you should consult with SCM’s Executive Management Team.




	 	 	Insider Trading & Inside Information





Insider trading occurs when you use information about SCM or other companies that has not been
made publicly available and that you have received in the course of your employment with SCM for
your financial or other benefit. This would usually mean selling or buying SCM or other stock based
on such information.



SCM forbids insider trading. It is unethical and in most cases illegal. For example, U.S. law
specifically makes it unlawful for any person who has material, non-public information about a
company to trade the stock or other securities of the company or to disclose such information to
others who may trade. Violation of such laws may result in civil and criminal penalties, including
fines and jail sentences. These prohibitions also apply outside the U.S.




	 	 	Public Service





Your involvement in professional, civic or charitable organizations is encouraged, but also
has the potential to place you in conflict of interest with SCM.



For example, as a board or committee member or chairperson you may be involved in decisions to
purchase SCM products or advise on regulatory controls affecting SCM business. In such cases, you
should declare the potential for a conflict of interest and take advice from SCM’s Executive
Management Team on how best to act.




	 	 	Politics & Public Speaking





All employees are entitled to engage in political activities outside of SCM individually or on
behalf of political parties or organizations.



SCM will not make contributions or payments or otherwise give any endorsement of support which
would be considered a contribution directly or indirectly to political parties or candidates,
including through intermediary



organizations, such as political action committees or campaign funds. For example, SCM will not
purchase tickets or pay fees for you or anyone else to attend any event where any portion of the
funds will be used for election campaigns. In many countries, political contributions by
corporations are illegal. SCM will not make such contributions, even in countries where they are
legal. Also, the company will not provide any other form of support that may be considered a
contribution.



You must not make any political contribution of time or in kind as a representative of SCM. You may
not request reimbursement from SCM, nor will SCM reimburse you, for any personal contributions you
make. You will not be paid by SCM for any time spent running for public office, serving as an
elected official or campaigning for a political candidate, unless required by law. You can,
however, take reasonable time off without pay for such activities if your SCM duties permit the
time off and it is approved by your manager.



When you speak out on public issues in any forum it should be clear you do so as an individual and
that it does not appear that you are representing SCM.




	 	 	Friends & Relations





You may find yourself in a situation where your spouse, another member of your immediate
family or someone else you are close to is a competitor or supplier of SCM or is employed by a
competitor or supplier of SCM. While everyone is entitled to choose and pursue a career, such
situations call for extra sensitivity to security, confidentiality and conflicts of interest. The
closeness of the relationship might lead you to inadvertently compromise SCM’s interests.



There are several factors to consider in assessing such a situation. Among them are the
relationship between SCM and the other company, the nature of your responsibilities as an SCM
employee and those of the person close to you and the access each of you has to your respective
employer’s confidential information.




	6.	 	Waivers





Any waiver of this Code of Conduct may be made only by the Board of Directors, and any waivers
applicable to Directors or Corporate Officers will be promptly publicly disclosed in accordance
with applicable rules and regulations.




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