RESTRICTIVE COVENANTRestrictive Covenant • August 14th, 2006 • SCM Microsystems Inc • Computer peripheral equipment, nec
SCM Microsystems, Inc. (“SCM”) and Kudelski S.A. have entered into an Asset Purchase Agreement dated April 5, 2006 concerning the Digital TV business (the “Business”) of SCM and its affiliates (“APA”). The APA provides in its Sec. 4.14 for a restrictive covenant that protects Kudelski S.A. and its subsidiaries against certain competitive actions of SCM and its affiliates (as defined in the APA, hereinafter “SCM Affiliate”); the content of sec. 4.14 is shown in Exhibit 1 to this Agreement. In view of the fact that Mr. Schneider is founder, major stock owner and CEO of SCM and Managing Director of SCM Microsystems GmbH, Kudelski S.A. has made it a condition to closing of the APA that Mr. Schneider will accept certain restrictions to his ability to compete with Kudelski S.A. and its subsidiaries after SCM’s sale of the Digital TV business to Kudelski S.A. and its subsidiaries.
