Document:

EXHIBIT 10.13

                             AMENDMENT NUMBER ONE TO
                           INVESTORS' RIGHT AGREEMENT

         THIS AMENTMENT NUMBER ONE TO INVESTORS' RIGHTS AGREEMENT (the
"AMENDMENT") is made as of the ____ day of July, 1999, by and among SmartDisk
Corporation, a Delaware corporation (the "COMPANY"), Toshiba Corporation,
Phoenix House Investments, L.L.C., and Fischer International Systems Corporation
(collectively, the "INVESTORS") and SCM Microsystems, Inc. ("SCM").

                                 R E C I T A L S

         A. The Company and the Investors have entered into an Investors' Rights
Agreement dated as of May 22, 1998 pursuant to which the Investors received
certain rights with respect to the registration with the Securities and Exchange
Commission of securities they hold in the Company (the "AGREEMENT").

         B. Pursuant to a Stock Subscription Agreement dated as of June 30, 1999
by and among the Company, SCM and certain other Buyers named therein, SCM
purchased 1,250,000 shares of Common Stock of the Company (the "SCM SHARES").

         C. The parties wish to amend the agreement to add SCM as a party with
respect to certain portions thereof.

         NOW THEREFORE, in reliance on the foregoing recitals and in
consideration of the mutual covenants contained herein, in the parties hereto
agree as follows:

                                    AGREEMENT

         1. Except as otherwise set forth herein, the Agreement shall be deemed
to be amended to add SCM as a party with respect to the following Sections of
the Agreement and, to the extent such Sections reference Registrable Securities,
the SCM Shares shall be deemed to be Registrable Securities:

         1.3, 1.4, 1.5, 1.7, 1.8, 1.9, 1.10, 1.11, 1.13, 1.15, 1.16, and 3, all
of which are attached hereto as Exhibit A.

         2. Notwithstanding Section 1 above, as a limitation thereto, SCM shall
not be deemed to be a party with respect to the rights set forth in Section 1.3
of the Agreement and the SCM Shares shall not be deemed to be Registrable
Securities for purposes of registrations of the Company's securities under the
Act in its initial offering of its securities.

         3. All capitalized terms appearing in this Amendment or in the Sections
of the Agreement set forth in Section 1 above shall be deemed to have the same
meanings ascribed to such terms as set forth in Section 1.1 of the Agreement, a
copy of which appears in Exhibit A attached hereto.

         4. All other terms and conditions of the Agreement shall remain in full
force and effect in their unnamed state.

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 2

         The parties have executed this Amendment Number One to Investors'
Rights Agreements as of the date first above written.
<TABLE>
<CAPTION>
<S>                                                          <C>
COMPANY:                                                     INVESTORS:

SMARTDISK CORPORATION                                        FISCHER INTERNATIONAL
                                                             SYSTEMS CORPORATION

By:   /S/  MICHAEL S. BATTAGLIA                              By:   /S/  RICHARD X. SZATKOWSKI
   --------------------------------------------------           --------------------------------------------------
Name:      Michael S. Battaglia                              Name:      Richard X. Szatkowski

Title:     President and Chief Executive Officer             Title:     President and Chief Executive Officer
Address    3506 Mercantile Avenue                            Address    3506 Mercantile Avenue
           Naples, Florida  34104-3310                                  Naples, Florida  34104-3310

SCM:

SCM MICROSYSTEMS, INC.                                       TOSHIBA CORPORATION

By:   /S/ STEVEN HUMPHREYS                                   By: /S/ SHIGEKI MORITA
   --------------------------------------------------           --------------------------------------------------
Name:     Steven Humphreys                                   Name: Shigeki Morita
                                                                  -
Title:    Chairman                                           Title: General Partner, Strategic Marketing Director,
                                                                    Semiconductor Company

Address:   160 Knowles Avenue                                Address:   1-1, Shibaura 1-Chome
           Los Gatos, California  95032                                 Minato-ku, Tokyo 105-01
                                                                        Japan

                                                             PHOENIX HOUSE INVESTMENTS, L.L.C.

                                                             By:  /S/  ADDISON M. FISCHER
                                                                --------------------------------------------------
                                                             Name:      Addison M. Fischer

                                                             Title:     General Manager

                                                             Address:   400 West King Street
                                                                        Carson City, Nevada  89703
</TABLE>

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 3

                                    EXHIBIT A

SECTION 1.1 OF THE AGREEMENT

     1.    REGISTRATION RIGHTS. The Company and the Investors covenant and
                                agree as follows:

           1.1    DEFINITIONS. For purposes of this Section 1:

                  1.1.1 The terms "REGISTER," "REGISTERED," and "REGISTRATION"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "ACT"), and the declaration or ordering of effectiveness of such
registration statement or document.

                  1.1.2 The term "REGISTRABLE SECURITIES" means (i) the shares
of Common Stock purchased by Investors under the Purchase Agreement (such shares
of Common Stock are collectively referred to hereinafter as the "STOCK"), and
(ii) any other shares of Common Stock or other securities of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock, provided that the foregoing
definition shall exclude in all cases any Registrable Securities sold by a
person in a transaction in which his or her rights under this Agreement are not
assigned. Notwithstanding the foregoing, Common Stock or other securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the Act
under Section 4(1) thereof so that all transfer restrictions, and restrictive
legends with respect thereto, if any, are removed upon the consummation of such
sale.

                  1.1.3 The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.

                  1.1.4 The term "HOLDER" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof.

                  1.1.5 The term "FORM S-3" means such form under the Act as in
effect on the date hereof or any successor form under the Act.

                  1.1.6  The term "SEC" means the Securities and Exchange
Commission.

                  1.1.7 The term "EXCHANGE ACT" shall mean the Securities
Exchange Act of 1934, as amended.

SECTION 1.3 OF THE AGREEMENT

           1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 4

than the Holders) any of its stock under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock plan or a
transaction covered by Rule 145 under the Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.

SECTION 1.4 OF THE AGREEMENT

           1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section
1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:

                  1.4.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.

                  1.4.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement for up to ninety (90) days.

                  1.4.3 Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.

                  1.4.4 Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

                  1.4.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering, including,
without limitation, participating in investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Registrable
Securities. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.

                  1.4.6 Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 5

existing, such obligation to continue for ninety (90) days.

                  1.4.7 Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed or to be listed on the Nasdaq
National Market, if not listed on a securities exchange, if eligible.

                  1.4.8 Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.

                  1.4.9 Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.

SECTION 1.5 OF THE AGREEMENT:

           1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2.1 or subsection 1.12.2(2), whichever is applicable.

SECTION 1.7 OF THE AGREEMENT:

           1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the selling
Holders selected by them with the approval of the Company, which approval shall
not be unreasonably withheld, but excluding underwriting discounts and
commissions relating to Registrable Securities.

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 6

SECTION 1.8 OF THE AGREEMENT

           1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders) but in no event shall (i) the amount of securities
of the selling Holders included in the offering be reduced below thirty percent
(30%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities in which
case the selling shareholders may be excluded if the underwriters make the
determination described above and no other shareholder's securities are included
or (ii) notwithstanding (i) above, any shares being sold by a shareholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder which is a Holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "SELLING
SHAREHOLDER," and any pro-rata reduction with respect to such "selling
shareholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling shareholder," as defined in this sentence.

SECTION 1.9 OF THE AGREEMENT

           1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

SECTION 1.10 OF THE AGREEMENT

           1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:

                  1.10.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof)

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 7

arise out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.

                  1.10.2 To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.10.2, in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10.2 shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.10.2 exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.

                  1.10.3 Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 8

any liability to the indemnified party under this Section 1.10, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.10.

                  1.10.4 If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided, that, in no event shall any contribution by a Holder
under this subsection 1.10.4 exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.

                  1.10.5 Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

                  1.10.6 The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

SECTION 1.11 OF THE AGREEMENT:

           1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:

                  1.11.1 make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;

                  1.11.2 take such action, including the voluntary registration
of its Common Stock under Section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;

                  1.11.3 file with the SEC in a timely manner all reports and
other documents required

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 9

of the Company under the Act and the Exchange Act; and

                  1.11.4 furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

SECTION 1.13 OF THE AGREEMENT:

           1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of at least one hundred thousand (100,000) shares of such securities as
presently constituted, provided the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership or limited liability company who are
partners, members or retired partners or members of such partnership or limited
liability company (including spouses and ancestors, lineal descendants and
siblings of such partners, members or spouses who acquire Registrable Securities
by gift, will or intestate succession) shall be aggregated together and with the
partnership or limited liability company; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under Section 1.

SECTION 1.15 OF THE AGREEMENT:

           1.15   "MARKET STAND-OFF" AGREEMENT.

                  1.15.3 Each Holder hereby agrees that, during the period of
duration (up to, but not exceeding, one hundred eighty (180) days) specified by
the Company and an underwriter of Common Stock or other securities of the
Company, following the date of the final prospectus distributed in connection
with a registration statement of the Company filed under the Act, it shall not,
to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that: (i) such agreement shall be
applicable only to the first such registration statement of the Company which
covers Common Stock (or other securities) to be sold on its behalf to the public
in an underwritten offering; and (ii) all officers and directors of the Company,
all five percent (5%) security holders, except for pension funds, mutual funds
and other similar investment vehicles, and all other persons with registration
rights (whether or not pursuant to this Agreement)

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 10

enter into similar agreements.

                  1.15.4 In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Registrable Securities
of each Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.15.

                  1.15.5 Notwithstanding the foregoing, the obligations
described in this Section 1.15 shall not apply to a registration relating solely
to employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.

SECTION 1.16 OF THE AGREEMENT:

           1.16 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled
to exercise any right provided for in this Section 1 after such time as Rule 144
or another similar exemption under the Act is available for the sale of all of
such Holder's shares during a three (3)-month period without registration.

SECTION 3 OF THE AGREEMENT:

     3.    MISCELLANEOUS.

           3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of the Common Stock). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

           3.2 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflicts of laws.

           3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

           3.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

           3.5 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address as set forth below or on
Exhibit A hereto or as subsequently modified by written notice.

<PAGE>
SmartDisk Corporation
Investor's Rights Agreement
Page 11

           3.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company, Toshiba and the Holders of a majority
of the Registrable Securities then outstanding. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each Holder of any
Registrable Securities then outstanding, each future Holder of all such
Registrable Securities, and the Company.

           3.7 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (x) such
provision shall be excluded from this Agreement, (y) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (z) the
balance of the Agreement shall be enforceable in accordance with its terms.

         3.8 AGGREGATION OF STOCK. All shares of the Preferred Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.EXHIBIT 10.16

                        DEVELOPMENT AND LICENSE AGREEMENT

         This Development and License Agreement (this "AGREEMENT") is entered
into as of December 1, 1999 (the "EFFECTIVE DATE") by and between SMARTDISK
CORPORATION, a Delaware corporation, with its principal offices at 3506
Mercantile Avenue, Naples, FL 34104 and SmartDisk International, Inc., a
Delaware corporation, having a Japan branch with its principal place of business
located at Kyoei Yaesu Bldg., 2-3-12 Yaesu, Chuo-Ku, Tokyo, 104-0028, Japan,
(collectively "SMARTDISK"), and SONY CORPORATION, a corporation formed under the
laws of Japan, with its principal offices at 6-7-35 Kitashinagawa
Shinagawa-ku,Tokyo, 141-0001 Japan ("SONY").

                                 R E C I T A L S

         A. "FLOPPY DISK" means higher density 3.5 inch micro floppydisks which
conform to the technical specifications of the document entitled "Information
processing - Data interchange on 90mm (3.5in) flexible disk cartridges using
modified frequency modulation recording at 15916 ftprad on 80 tracks on each
side" issued by ISO as "ISO-9529-1."

         B. SmartDisk designs, develops and manufactures, among other products,
products for the ability to read data to and write data from flash memory
storage products, in the form of Floppy Disks ("FLASHPATH").

         C. Sony has developed and distributes a certain form of flash memory
card system known as the Memory Stick ("MEMORY STICK"); further, Sony is
developing a new version of its Mavica brand camera (the "New Mavica") that will
internally accept the MSFP II (as defined hereafter) as an adapter for the
Memory Stick.

         D. The parties desire to have SmartDisk design, develop, manufacture
and sell to Sony a type of FlashPath product for use with the Memory Stick and
the New Mavica ("MSFP II") which is suitable for mass production and
distribution (such MSFP II is in addition to the FlashPath product currently
being developed by SmartDisk for Sony) and have Sony distribute the MSFP II.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

         1.       DEFINITIONS

                  1.1 "CONFIDENTIAL INFORMATION" means (i) all information
disclosed by either party to the other during the term of this Agreement
relating to either party's financial or business plans and affairs, financial
statements, internal management tools and systems, marketing plans, clients,
contracts, products and programs, product and program development plans,
hardware, firmware, software programs and other technology which information is
deemed by the disclosing party as confidential; (ii) which is disclosed in oral,
written, graphic, machine recognizable, and/or

<PAGE>

sample form; and, (iii) is clearly designated, labeled or marked as
confidential. Confidential Information which is disclosed other than in material
form will be confirmed as Confidential Information in writing by the disclosing
party within thirty (30) days after such disclosure, identifying the place and
date of such disclosure and names of the receiving party's employees to whom
such disclosure was made and describing the resume of the information disclosed.

                  1.2 "DESIGN SPECIFICATIONS" means the written preliminary
specifications for MSFP II attached hereto as EXHIBIT A which shall be deemed to
be part of this Agreement.

                  1.3 "DEVELOPMENT SCHEDULE" means a description of the
development obligations of each party with respect to MSFP II to be set forth in
EXHIBIT B attached hereto. The Development Schedule shall include, without
limitation, a detailed description of each party's deliverables, delivery dates
and milestones for: (i) developing various beta-version components of MSFP II;
(ii) developing and testing a production prototype which shall be used as a
manufacturing sample; (iii) developing and testing manufacturing and engineering
improvements for commercial manufacturing cost reductions; and (iv) developing
commercialized, final products.

                  1.4 "FINAL SPECIFICATIONS" means the written final
specifications for MSFP II to be agreed to by the parties as set forth in
Section 2.1 below and when so agreed to shall become EXHIBIT C attached hereto
and shall be deemed to be part of this Agreement.

                  1.5 "INTELLECTUAL PROPERTY RIGHTS" means patents, copyrights
including rights in audiovisual works and moral rights, trademarks, service
marks, and trade names and registrations and applications therefor, trade
secrets, know-how, rights in trade dress and packaging and other intellectual
property rights recognized by the law of the United States and each applicable
jurisdiction.

                  1.6 "MEMORY STICK ASIC COMPONENTS" means the Intellectual
Property Rights in those portions of the digital chip used solely to provide a
serial to parallel interface allowing the Memory Stick to communicate with the
FlashPath, and which the parties hereto may develop to create MSFP II.

                  1.7 "MEMORY STICK UPDATES" means updates, additions,
enhancements, or modifications to the Memory Stick.

                  1.8 "PATENTABLE DEVELOPMENTS" means all ideas conceived
during, and which are directly related to, the development of MSFP II which are
patentable ideas or inventions, excluding the Memory Stick ASIC Components and
the Specified Driver Source Code.

                  1.9 "SPECIFIED DRIVER SOURCE CODE" means all Intellectual
Property Rights in those portions of the driver software source code which are
developed pursuant to this Agreement and which specifically support only MSFP
II.

         2.        DEVELOPMENT PHASE I - PROJECT PLANNING

<PAGE>

                  SmartDisk has developed the Design Specifications for MSFP II
which previously have been delivered to Sony. The parties shall review and
revise, as is acceptable to both parties, the Design Specifications to create
the Final Specifications by December 1, 1999. By no later than December 1, 1999,
the parties shall negotiate in good faith to develop and agree upon the
Development Schedule, which shall be deemed to be part of this Agreement as
EXHIBIT B.

         3.       DEVELOPMENT PHASE II - PROJECT DEVELOPMENT

                  3.1 DESIGNATED CONTACTS. EXHIBIT D attached hereto sets forth
each party's designated "Principal Contact", which shall be each party's
respective point of contact for the resolution of problems. In addition, Exhibit
D sets forth each party's respective "Program Manager", who shall have overall
responsibility for the direction and coordination of the development of MSFP II.
The Sony and SmartDisk Program Managers shall establish and implement reasonable
project management procedures. In addition to the responsibilities set forth
herein, the Principal Contact and Program Manager shall be responsible for
matters designated in the Development Schedule, if any.

                  3.2 DEVELOPMENT OPERATIONS. The parties hereby agree to carry
out their respective obligations pursuant to and in accordance with the Final
Specifications and Development Schedule. In addition to the requirements set
forth in the Final Specifications and Development Schedule, Sony agrees to
provide technology resources which Sony deems necessary to assist in SmartDisk's
understanding of the Memory Stick so as to enable SmartDisk to develop MSFP II.

                  3.3 ACCEPTANCE OF MILESTONES. SmartDisk shall deliver to Sony
each milestone associated with a deliverable as set forth in the Development
Schedule for review and approval by Sony. Sony will test the delivered milestone
to determine whether such delivered milestone is in conformity with the Final
Specifications. Sony will inform SmartDisk whether such delivered milestones are
in conformity with the Final Specifications within the time periods set forth in
the Development Schedule. In the event that a delivered milestone does not
conform to the relevant portion of the Final Specification (such nonconformance
will be referred to as "DEFICIENCIES"), Sony shall reject the delivered
milestone and provide written notice to SmartDisk describing the Deficiencies in
sufficient detail to allow SmartDisk to correct the Deficiencies. Within a
period of time to be agreed between the parties after receiving each report
regarding Deficiencies, SmartDisk will use its best commercial efforts to
correct the Deficiencies so that the milestone conforms to the applicable part
of the Final Specifications. The procedure in this Section 3.3 will be repeated
with respect to a milestone to determine whether it is acceptable to Sony. In
the event a delivered milestone fails to conform to the Final Specifications
more than two times, the Program Managers shall meet to determine the
appropriate course of action.

                  3.4 CHANGES TO FINAL SPECIFICATIONS. Either party may request
changes to the Final Specifications during the development of MSFP II. All
requested changes by a party shall be submitted to the other party's Program
Manager in writing. Upon such other party's receipt of such changes, the parties
shall determine the amount of rework necessary, the additional development time
necessary, any additional costs associated with such changes and which party
shall be responsible for such costs. All such determinations shall be made by
the mutual consent of the parties. Upon written approval by both parties to
effect the requested change, SmartDisk will commence implementation of

<PAGE>

such change. SmartDisk will revise the Final Specifications and Development
Schedule to reflect such change.

                  3.5 MEMORY STICK MODIFICATIONS. In the event that during the
term of this Agreement, Sony develops, or has developed on its behalf, any
modification, enhancement or update to the Memory Stick which causes MSFP II to
no longer interoperate with the Memory Stick or causes MSFP II to become
commercially obsolete, Sony shall send SmartDisk written notice thereof no later
than six (6) months prior to Sony's anticipated first commercial release of such
modification and the Principal Contacts shall meet to determine the appropriate
course of action for the parties. Notwithstanding the foregoing, in the event of
minor modifications, enhancements or updates to the Memory Stick, Sony shall
exercise its best efforts to advise SmartDisk of such minor modifications,
enhancements, or updates, as soon as possible. SmartDisk shall exercise best
efforts to incorporate such minor modifications, enhancements, or updates, as
soon as commercially reasonable, taking into consideration the cost of such
modifications and the impact on manufacturing lead times.

                  3.6 COMPLETION. The development of MSFP II shall be deemed
completed upon Sony's acceptance of the final milestone as set forth in the
Development Schedule, but shall in no event be later than March 31, 2000.

         4.       OWNERSHIP AND LICENSE

                  4.1 FLASHPATH. SmartDisk has and will retain all rights of
ownership in and to FlashPath, including without limitation the object code,
source code and documentation, all proprietary rights embodied therein and
related thereto, and Sony agrees and understands that it will not obtain, assert
or claim any right or license therein except as specifically set forth in this
Agreement. SmartDisk hereby grants and agrees to grant to Sony a non-exclusive,
worldwide, fully-paid right and license to market, sell and distribute those
portions of FlashPath (and Intellectual Property Rights incorporated therein)
which are incorporated in MSFP II for a period of five (5) years from the
Effective Date and to grant sublicenses of the foregoing to distributors of Sony
products.

                  4.2 MEMORY STICK. Sony has and will retain all rights of
ownership in and to the Memory Stick, including without limitation the object
code, source code and documentation, all proprietary rights embodied therein and
related thereto, and SmartDisk agrees and understands that it will not obtain,
assert or claim any right or license therein except as specifically set forth in
this Agreement. Sony hereby grants and agrees to grant to SmartDisk a
non-exclusive, worldwide, fully-paid right and license to use and reproduce, as
reasonably required by SmartDisk, the Memory Stick, including its design
documentation and object and source code, for the sole internal purpose of
designing, developing, manufacturing, testing, performing quality assurance,
performing quality control, improving and providing support and maintenance for
MSFP II. Notwithstanding the grant of non-exclusive rights by Sony as set forth
above, the parties understand and agree that SmartDisk shall be the exclusive
developer of MSFP II as developed in accordance with the Final Specifications
and Sony's technical assistance. In the event MSFP II contains any portion of
the Memory Stick which is proprietary to Sony, Sony hereby grants SmartDisk an
exclusive, fully-paid, worldwide right and license to reproduce, modify and
include such portions of the Memory Stick in

<PAGE>

MSFP II as developed in accordance with the Final Specifications and Sony's
technical assistance and to make, have made, market, sell and distribute to Sony
MSFP II as developed in accordance with the Final Specifications and Sony's
technical assistance which includes such portions of the Memory Stick and to
sublicense any of the foregoing solely for the purposes of manufacturing MSFP II
for distribution to Sony.

                  4.3 MEMORY STICK ASIC COMPONENTS AND SPECIFIED DRIVER SOURCE
CODE. SmartDisk hereby assigns and agrees to assign to Sony all worldwide right,
title and interest SmartDisk may have or acquire in and to the Memory Stick ASIC
Components and the Specified Driver Source Code without royalty or any other
consideration except as may be expressly set forth herein. In addition, Sony
hereby grants and agrees to grant to SmartDisk a perpetual, exclusive,
worldwide, fully-paid right and license to make, have made, use and reproduce
the Memory Stick ASIC Components and the Specified Driver Source Code for the
sole purposes of designing, developing, manufacturing, testing, performing
quality assurance, performing quality control, improving and providing support
and maintenance for MSFP II and any other product which SmartDisk may develop
and supply to Sony in the future. In the event Sony requests that SmartDisk
perform additional development work with respect to the Memory Stick ASIC
Components and the Specified Driver Source Code for the New Mavica, the parties
will determine an appropriate additional development fee to paid by Sony to
SmartDisk for such work.

                  4.4 PATENTABLE DEVELOPMENTS. All Patentable Developments shall
be owned jointly by Sony and SmartDisk. Each party hereto hereby assigns and
agrees to assign to the other a one-half undivided interest in and to all
worldwide right, title and interest which each such party may have or acquire in
and to the Patentable Developments without royalty or any other consideration
except as may be expressly set forth herein. The parties further agree to use
their commercially reasonable efforts to cause any third party involved in the
development of the Patentable Developments to likewise contribute any rights
such third party may have in the Patentable Developments to an equal joint
ownership among all such parties. Notwithstanding the joint ownership described
herein, no party shall have the obligation to account to the others for any
further development, distribution, commercialization or other use of the
Patentable Developments and each party hereto waives its rights to claim the
other party committed waste of any Patentable Development. Any party to this
Agreement (the "CLAIMING PARTY") shall have the right to bring a claim of
infringement against any third party which infringes any of the Patentable
Developments and the other party hereto agrees to cooperate in any claim brought
by the Claiming Party at the expense of the Claiming Party.

                  4.5 ADDITIONAL LICENSES. To the extent that Sony owns or has
licenses to any additional Intellectual Property Rights which affect the design,
development, manufacture, license or sale of MSFP II, Sony hereby grants and
agrees to grant to SmartDisk a non-exclusive, worldwide, fully-paid right and
license to use such Intellectual Property Rights to design, make, have made, use
and sell MSFP II to Sony for distribution by Sony.

                  4.6 PROPRIETARY MARKINGS. The parties agree that each MSFP II
shall be labeled as set forth in Exhibit E attached hereto and shall carry on
all containers and storage media therefor and in all marketing material the
trademarks, copyright notices, patent notices, trade secret notices and other
notices regarding proprietary rights as set forth in Exhibit E.

<PAGE>

         5.       DEVELOPMENT FEES

                  5.1 GENERAL. In consideration of the development of MSFP II,
Sony shall pay to SmartDisk the development fees set forth in EXHIBIT F attached
hereto and incorporated herein by reference (the "FEES").

                  5.2 MONTHLY INVOICES. For those Fees designated on Exhibit F
as "Invoice Fees", SmartDisk shall send to Sony on a monthly basis an invoice
and an accounting for Product development work performed by SmartDisk during the
month. Sony shall pay each such invoice within thirty (30) calendar days of
receipt.

                  5.3 PAYMENT FOR DELIVERABLES. SmartDisk shall submit
deliverables to Sony in accordance with Section 3.3 above. Upon acceptance any
delivered milestone, Sony shall remit to SmartDisk the applicable Fee associated
therewith in accordance with the Development Schedule.

                  5.4 TOOLING AND DIES. SmartDisk shall purchase on behalf of
Sony, and as Sony's purchasing agent, tooling and dies for the manufacture of
MSFP II. As of the Effective Date the parties estimate the cost of such tooling
and dies to be approximately (Y) 35,000,000 and Sony shall reimburse SmartDisk
for the costs thereof. The actual amount of reimbursement by Sony shall be
determined by both parties at the time SmartDisk orders such tooling and dies.
The timing and manner of payment of such costs shall be more fully set forth in
a separate Manufacturing Agreement to be entered into by the parties hereto.

                  5.5 TAXES. All taxes, duties, fees and other governmental
charges of any kind (including customs duties, import sales, services and use
taxes, but excluding taxes based on the gross revenues or net income of
SmartDisk) which are imposed by or under the authority of any government or any
political subdivision thereof on the Fees shall be borne by Sony and shall not
be considered a part of, a deduction from or an offset against such fees.
SmartDisk shall be responsible for all taxes assessed on the gross revenues or
net income of SmartDisk by any governmental authority with jurisdiction over
SmartDisk. In the event that Sony is required to withhold taxes based on such
gross revenues or net income of SmartDisk by any such governmental authority,
Sony is hereby authorized to make such payment of withholding taxes and Sony
will provide SmartDisk with official tax receipts or other evidence of payment
of such withheld taxes sufficient to substantiate a claim by SmartDisk for
credit against SmartDisk's United States federal income tax.

         6.       INDEMNIFICATION AND LIMITATIONS ON LIABILITY

                  6.1 SMARTDISK'S OBLIGATIONS. (a) SmartDisk will indemnify and
hold harmless Sony from and against all claims, actions, damages, costs and
expenses (including attorneys' fees) arising out of any actual or threatened
claim of infringement of any patent, or any copyright, trademark, or trade
secret arising out of FlashPath or any of SmartDisk's other contributions to
MSFP II only as used in MSFP II, to the extent that such contributions were not
a direct result of instructions or technical assistance received from Sony. This
obligation will be subject to the following terms and conditions:

<PAGE>

                  (i) The obligation will arise only if Sony gives SmartDisk
prompt notice of the infringement claim and grants SmartDisk, in writing,
exclusive control over its defense and settlements;

                  (ii) This obligation will cover MSFP II only in the form as
delivered to Sony by SmartDisk or its agents, and will not cover any correction,
modification, improvement, enhancement or addition to any Product made by anyone
other than SmartDisk without SmartDisk's prior written authorization;

                  (iii) This obligation will not cover any claim that any
Product infringes any third party's rights as used in combination with any
hardware or software not supplied by SmartDisk if that claim could have been
avoided by the use of that Product in combination with other hardware or
software, notwithstanding the foregoing, the obligation will cover any claim
that any Product infringes any third party's rights as used in combination with
any Floppy Disk drives in common and/or in combination with any Memory Stick in
common;

                  (iv) This obligation will not cover any use of the Memory
Stick ASIC Components, the Specified Driver Source Code or the Patentable
Developments used with or in any product other than MSFP II;

                  (v) Without limiting SmartDisk's general obligation of
indemnification, and in addition thereto, if an infringement claim is asserted,
or if SmartDisk believes one likely, SmartDisk will have the right and the
obligation to do any of the following, if approved by Sony: (a) procure a
license from the person(s) claiming or likely to claim infringements; or (b)
modify MSFP II to avoid the claim of infringement; or (c) suspend the Agreement
with respect to such Product until the infringement claim has otherwise been
resolved. If SmartDisk choose the option (c) and as a result, the development of
MSFP II hereunder is delayed by more than ninety (90) days, Sony shall have the
right to terminate this Agreement, and SmartDisk shall reimburse Sony, in such
amounts as the parties shall agree but in no event more than the payments made
by Sony hereunder.

                  (b) SmartDisk warrants that the Memory Stick ASIC Components
and Specified Driver Source Code supplied to Sony will perform in accordance
with the Final Specifications. SmartDisk warrants that for twelve (12) months
from the date on which Sony accepted the final milestone as set forth in the
Development Schedule, the Memory Stick ASIC Components and Specified Driver
Source Code shall be free from any significant programming errors and from
defects in workmanship and materials. In the event that any defect is found
during the warranty period, SmartDisk shall remedy such defect at no additional
expense to Sony.

                  6.2 SONY'S OBLIGATIONS. Sony will indemnify and hold harmless
SmartDisk from and against all claims, actions, damages, costs and expenses
(including attorneys' fees) arising out of any actual or threatened claim of
infringement of any patent , or any copyright, trademark, or trade secret
arising out of the Memory Stick or any of Sony's other contributions to MSFP II,
only as used in MSFP II, including arising from Sony's instructions and
technical assistance. This obligation will be subject to the following terms and
conditions:

<PAGE>

                  (i) The obligation will arise only if SmartDisk gives Sony
prompt notice of the infringement claim and grants Sony, in writing, exclusive
control over its defense and settlements;

                  (ii) This obligation will cover MSFP II only in the form
developed pursuant to the Final Specifications or as corrected, modified,
improved, or enhanced by SmartDisk to the extent that such action by SmartDisk
did not give rise to the claim;

                  (iii) This obligation will not cover any claim that any
Product infringes any third party's rights as used in combination with any
hardware or software not supplied by Sony if that claim could have been avoided
by the use of that Product in combination with other hardware or software;

                  (iv) This obligation will not cover any use of the Memory
Stick ASIC Components, Specified Driver Source Code or the Patentable
Developments used with or in any product other than MSFP II;

                  (v) Without limiting Sony's general obligation of
indemnification, and in addition thereto, if an infringement claim is asserted,
or if Sony believes one likely, Sony will have the right and the obligation to
do any of the following if approved by SmartDisk: (a) procure a license from the
person(s) claiming or likely to claim infringements; or (b) reimburse SmartDisk
to have SmartDisk modify MSFP II to avoid the claim of infringement; or (c)
suspend the Agreement with respect to such Product until the infringement claim
has otherwise been resolved; and

                  6.3 ENTIRE OBLIGATION. SECTIONS 6.1 AND 6.2 STATE THE PARTIES'
EXCLUSIVE AND ENTIRE OBLIGATIONS WITH RESPECT TO ANY CLAIMS OF INFRINGEMENT OF
PROPRIETARY RIGHTS OF ANY KIND.

                  6.4 GENERAL INDEMNIFICATION. Subject to the provisions of
Sections 6.1, 6.2 and 6.3 hereof, each party shall indemnify, defend and hold
the other and its successors harmless from any and all claims, demands, actions,
losses, liabilities, costs, expenses or damages of any kind or nature
(including, but not limited to reasonable attorneys fees) arising out of any
misrepresentation or breach or default in connection with any of the
representations, warranties, covenants or obligations made by such party.

                  6.5 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS
WARRANTIES STATED IN THIS AGREEMENT, SMARTDISK MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PRODUCT AND SMARTDISK SPECIFICALLY DISCLAIMS ANY
WARRANTIES, WHETHER EXPRESS OR IMPLIED, FOR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE.

                  6.6 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND OR
THE LOSS OF ANTICIPATED PROFITS ARISING FROM ANY BREACH OF THIS AGREEMENT EVEN
IF SUCH PARTY IS NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF
WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE. UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY'S

<PAGE>

LIABILITY TO THE OTHER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
PRODUCT, EXCEED THE AMOUNTS PAID BY SONY TO SMARTDISK UNDER THIS AGREEMENT
REGARDLESS OF WHETHER ANY ACTION OR CLAIM IS BASED ON SUCH CONTRACT, WARRANTY,
INDEMNITY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT OR OTHERWISE.

<PAGE>

         7.       ASSIGNMENT

         This Agreement shall not be assigned by either party, in whole or in
part without the written consent of the other, which consent will not be
unreasonably withheld. However, either party may assign this Agreement to a
subsidiary or entity controlled by or under common control with such party, or
to any successor in-interest resulting from a reorganization, merger,
acquisition or sale of substantially all of the assets of such party, upon
written notice to the other party, (as long as the original party hereto, to the
extent such party continues to exist, remains primarily liable to the other
contracting party).

         8.       DURATION AND TERMINATION OF AGREEMENT

                  8.1 TERM. This Agreement is effective for a period commencing
on the Effective Date, and ending on the earlier of the completion of the
development of MSFP II or March 31, 2000.

                  8.2 TERMINATION FOR CAUSE. Subject to Section 8.3, in the
event that either materially breaches this Agreement and such breach remains
uncured twenty (20) calendar days following receipt of written notice by the
nonbreaching party, the nonbreaching party may terminate this Agreement by
written notice to the breaching party in which case the effective date of such
termination shall be the day following the twenty (20) day cure period described
herein.

                  8.3 SURVIVAL. Sections 4, 5.4, 6, 9, and 10 shall survive the
termination or expiration of this Agreement.

         9.       CONFIDENTIAL INFORMATION

                  9.1 CONFIDENTIAL INFORMATION. Each party agrees to use
reasonable efforts, and at least the same care that it uses to protect its own
confidential information of like importance, to prevent unauthorized
dissemination and disclosure of the other party's Confidential Information
during and for a period of three (3) years after the term of this Agreement;
provided, however, that with respect to Confidential Information regarding
specifications of Memory Stick, SmartDisk shall, in perpetuity, use reasonable
efforts, and at least the same care that it uses to protect its own confidential
information of like importance, to prevent unauthorized dissemination and
disclosure. All these obligations under this Section 9.1 will be subject to the
following terms and conditions:

                           (i)      The foregoing obligations will not apply to
any Confidential Information that: (a) becomes known to the general public
without fault or breach on the part of the receiving party; (b) the disclosing
party customarily provides to others without restriction on disclosures; (c) the
receiving party receives from a third party without breach of a nondisclosure
obligation and without restriction on disclosure; (d) was in the possession of
the receiving party prior to disclosure by the other; or (e) is independently
developed by the receiving party's personnel having no access to any
Confidential Information obtained from the other.

                           (ii)     Nothing in this Agreement will affect any
obligation of either party to maintain the confidentiality of a third party's
confidential information.

<PAGE>

                  9.2 NO IMPAIRMENT. Nothing in this Agreement will impair the
right of either party to use, develop or market technologies, ideas or products
similar to those of the party so long as such use, development or marketing does
not infringe on any Intellectual Property Right of such other party or use such
other party's the Confidential Information.

                  9.3 PUBLIC ANNOUNCEMENT. Sony and SmartDisk agree that no
press release or other public announcement about this Agreement or the business
relationship between the parties shall be made without the prior written consent
of both parties, which shall not be unreasonably withheld.

         10.      GENERAL

                  10.1 RELATIONSHIP OF THE PARTIES. The parties' relationship
during the term of this Agreement shall be that of an independent contractors.
Neither party shall have, nor shall represent that it has, any power, right or
authority to bind the other, or to assume or create any obligation or
responsibility, express or implied, on behalf of the other or in such other
party's name, except as herein expressly provided.

                  10.2 INFORMAL DISPUTE RESOLUTION. Should any dispute or
disagreement between SmartDisk and Sony arise relating to any provision of this
Agreement (except with respect to Section 9.1), the Program Manager of one party
may give written notification of such dispute or disagreement to the Program
Manager of the other party. The Program Managers shall communicate with each
other promptly with a view to resolving such dispute or disagreement within
fourteen (14) calendar days of commencing their negotiations (or such extended
period as the Program Managers agree is appropriate in any case). In the event
that a dispute or disagreement is not resolved by the Program Managers within
such time period, the Program Managers shall refer the dispute for discussion
and resolution to the Principle Contact of SmartDisk and the Principle Contact
of Sony, who shall have an additional fourteen (14) calendar days to meet and
confer concerning a possible resolution. In the event that a dispute or
disagreement is not resolved by the Principle Contacts within such time period,
the Principle Contacts shall refer the dispute for discussion and resolution to
the President of SmartDisk and the President of Personal Video Company of Sony,
who shall have an additional fourteen (14) calendar days to meet and confer
concerning a possible resolution.

                  10.3 GOVERNING LAWS. The internal laws of the State of
Delaware, U.S.A., regardless of any choice of law principles, shall govern the
validity of this Agreement, the construction of its terms and the interpretation
and enforcement of the rights and duties of the parties.

                  10.4 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties.

                  10.5 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement

<PAGE>

and application of such provision to other persons or circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision which will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.

                  10.6 ENTIRE AGREEMENT. This Agreement and the exhibits hereto,
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, express or implied, written or
oral, between the parties with respect hereto, except for the Memorandum of
Understanding between the parties dated executed in March, 1999 (the "MOU"),
which shall survive this Agreement. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. In the event of any conflict between the terms of this
Agreement and the MOU, the terms of this Agreement shall control.

                  10.7 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived, only by a writing signed by the parties. The waiver by a party of any
breach hereof for default in payment of any amount due hereunder or default in
the performance hereof shall not be deemed to constitute a waiver of any other
default or succeeding breach or default.

                  10.8 ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be entitled to
recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without limitation, costs,
expenses and fees on any appeal). The prevailing party shall be the party
entitled to recover its costs of suit, regardless of whether such suit proceeds
to final judgment. A party not entitled to recover its costs shall not be
entitled to recover attorneys' fees. No sum for attorneys' fees shall be counted
in calculating the amount of a judgment for purposes of determining if a party
is entitled to recover costs or attorneys' fees.

                  10.9 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand or request with respect to this Agreement, each such
communication shall be in writing and shall be given or made by facsimile, mail
or other delivery and faxed, mailed or delivered to the intended recipient at
the addresses specified below:

            If to the Company:    SmartDisk Corporation
                                  3506 Mercantile Avenue
                                  Naples, FL 34104 USA
                                  Facsimile: (941) 436-2509
                                  Attn:  Daniel E. Reed

            If to Sony:           Sony Corporation Shinagawa Technology Center
                                  Shinagawa INTERCITY C Tower
                                  2-15-3 Konan Minato-ku,Tokyo,108-6201 Japan
                                  Facsimile:(03)5769-5945
                                  Attn: Kazuo Yoshino
<PAGE>

            with a copy to:
                                  Sony Corporation
                                  6-7-35 Kitashinagawa Shinagawa-ku, Tokyo,
                                  141-0001 Japan
                                  Facsimile:(03)5448-7835
                                  Attn: Intellectual Property Department
                                  General Manager

Except as may be otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by facsimile with
verified receipt by the receiving fax machine, when personally delivered, four
(4) days after being delivered to an overnight air courier (E.G. DHL, or Federal
Express) upon proof of delivery, or, in the case of a mailed notice, five (5)
days after being deposited in the United States mail certified or registered
mail, postage prepaid. Either party may change its address for such
communications by giving notice thereof to the other party in conformance with
this section.

                  10.10 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the intents
and purposes of this Agreement.

                  10.11 FORCE MAJEURE. No failure or omission to carry out or
observe any of the terms, provisions or conditions of this Agreement shall give
rise to any claim by one party against the other or be deemed to be a breach of
this Agreement if the same is caused by or arises out of one or more of the
following conditions: acts of God; acts, regulations or laws of any government;
war; civil commotion; destruction of production facilities or materials by fire,
earthquake or storm; labor disturbances; epidemic; failure of public utilities
or of suppliers; or any other event, matter or thing wherever occurring and
whether or not of the same class or kind as those set forth above, which is not
reasonably within the control of the party affected thereby. Any party
temporarily excused from performance hereunder by such conditions shall resume
performance promptly when such conditions are removed or cured. Any party
claiming any such conditions as an excuse for delay in performance hereunder
shall give prompt notice in writing thereof to the other party.

<PAGE>

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

SMARTDISK CORPORATION                       SONY CORPORATION

By: /s/ Michael S. Battaglia                By: /s/ K. Yoshino

Name: Michael S. Battaglia                  Name: Kazuo Yoshino

Title: CEO and President                    Title: General Manager

SMARTDISK INTERNATIONAL, INC.

By: /s/ Y. Uchida

Name: Yoshiaki Uchida

Title: President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]