Exhibit 10.2
Supply and Licensing Agreement Between
Quatech, Inc. and
Socket Mobile, Inc.
This Agreement, effective as of September 30, 2009 (“Effective Date”), is made
and entered into by and between QuaTech, Inc., (“QUATECH”), an Ohio Corporation
with its principal place of business at 5675 Hudson Industrial Parkway, Hudson,
Ohio 44236 and Socket Mobile, Inc. (“SOCKET”), a Delaware Corporation, having
its principal place of business at 39700 Eureka Drive, Newark, California 94560,
collectively hereafter referred to as the “Parties”. QUATECH is a wholly owned
subsidiary of DPAC Technologies Corp., a California Corporation, located at 5675
Hudson Industrial Parkway, Hudson, Ohio 44236.
WHEREAS SOCKET is selling to QUATECH the designs, engineering specifications and
related documentation, software drivers and exclusive marketing rights for its
serial products under an Asset Purchase Agreement dated September 30, 2009
(“Purchase Agreement”);
WHEREAS the sale of the serial products to QUATECH includes the right for
QUATECH to manufacture or have manufactured the serial products. In connection
with this right, QUATECH and SOCKET have agreed for QUATECH to purchase SOCKET’s
HIS3 chip from SOCKET under this Agreement;
WHEREAS the serial products being sold to QUATECH include SOCKET’S Cordless
Serial Adapter (“CSA”), QUATECH and SOCKET have agreed the purchase of the CSA
only includes the design implementation currently being marketed and sold along
with SOCKET’s serial products and SOCKET shall license to QUATECH hereunder
SOCKET’S firmware implemented within the CSA that provides Bluetooth
functionality along with the CSA’s Configuration Utilities.
NOW THEREFORE in consideration for the mutual covenants and obligations set
forth herein, the parties hereby agree as follows:

1.   TERM       The term of this Agreement shall commence on the Effective Date
and shall terminate ten (10) years after such date, unless otherwise terminated
or canceled by either party as provided herein. This Agreement shall
automatically renew for additional one (1) year terms unless one of the Parties
notifies the other in writing that it does not desire to renew the Agreement at
least sixty (60) days prior to the expiration date.

QUATECH and SOCKET Supply Agreement

 

 

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2.   PRODUCTS       HIS3 Chip The HIS3 chip is an interface chip owned and
manufactured by SOCKET and used in SOCKET products including its serial products
as more fully described in Appendix A. This Agreement enables QUATECH to
purchase the HIS3 Chip from Socket for use in all QUATECH products (including
but not limited to the CSA)(“QUATECH Products”).       Socket Bluetooth BlueLab
Application Code and Configurator Utilities (“Software”). The Bluetooth BlueLab
Application Code is the Bluetooth firmware that runs embedded within the CSA.
The Configurator Utilities are used on a desktop or notebook computer to
configure the BlueLab Application Code firmware when the CSA is plugged into a
desktop or notebook. The Software is described in more detail in Appendix B.
This Agreement licenses QUATECH to distribute this Software with the CSA
purchased under the Purchase Agreement.       CSA Product. A limited quantity of
the Cordless Serial Adapter product is available due to the end of life status
of the BC02 Bluetooth chip designed into this product. SOCKET has manufactured
and holds in its inventory approximately 1,700 CSA units. SOCKET agrees to hold
these units for purchase by QUATECH, and QUATECH agrees to purchase these units
no later than March 31, 2010 at SOCKET’s cost of $35.24 per unit. In addition,
SOCKET has in its inventory approximately 2,100 BC02 modules at a cost of $15.65
per unit which have been removed from SOCKET’s price lists as an end of life
product. These modules represent the likely last available supply that could be
used to build additional CSA products. QUATECH agrees to advise SOCKET no later
than November 30, 2009 whether QUATECH will commit to a) purchase some or all of
these modules or b) instruct SOCKET to build additional CSA products with these
modules that QUATECH will commit to purchase and which SOCKET agrees to build if
so ordered by QUATECH. After November 30, 2009 or upon being advised by QUATECH
that some or all of the BCO2 modules are not needed, SOCKET has the right to
dispose of any BC02 modules not needed by QUATECH.   3.   SOFTWARE AND TEMPORARY
LICENSE OF SOCKET MOBILE I/P       License and Distribution Rights. QUATECH is
granted a worldwide perpetual royalty free license to use, display and
distribute the Software and related technical and user documentation in object
code format with the CSA product acquired under the Purchase Agreement. SOCKET
shall supply QUATECH with master copies of the Software (including source code
of the Configurator Utilities ) along with all technical and user documentation
that describes the use of the Software. QUATECH is also granted a source code
license for the Configurator Utilities and the right to create derivative works
of this product and its documentation and to use, modify, display and distribute
all such derivative works. QUATECH shall provide SOCKET with a source code copy
and related documentation of all derivative works to enable SOCKET to provide
second level support for the CSA.       Software Support and Warranty. The
Software is supplied “as is”. Bug fixes that correct conditions that keep the
Software from operating in accordance with its specifications shall be made by
Socket upon request at no charge to QUATECH. All other modifications if any
requested by QUATECH shall be made by SOCKET at SOCKET’S discretion at a
non-recurring engineering fee to be mutually agreed at the time of such request
based on fees common to the industry for software development. SOCKET shall also
provide QUATECH with second level technical support in answering technical
questions regarding the Software.       Socket Mobile Intellectual Property
(I/P). Socket Mobile I/P used by SOCKET on its serial products consists of the
name ‘Socket Mobile’ and the logo ‘Socket’. These marks have been used on
labels, data sheets, manuals, product packaging and on driver software. Certain
products being purchased by QUATECH may initially contain Socket Mobile I/P. It
is the intent of the parties that QUATECH will update and remove Socket Mobile
I/P and replace it with Quatech I/P on data sheets, manuals, packaging and
driver software and will begin to affix a sticker to product labels or create
new labels no later than December 31, 2009. QUATECH is granted a royalty-free
license through December 31, 2009 to manufacture and distribute purchased
products containing Socket Mobile I/P.

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4.   HIS3 CHIP       Right to incorporate the chip into QUATECH Products.
QUATECH is granted the right to use the HIS3 chip in all QUATECH Products. The
HIS3 chip may not be sold as a stand-alone chip without the express written
permission of SOCKET.       Technical Support. QUATECH shall provide first level
support to its customers for its serial products containing the HIS3 chip.
SOCKET shall provide second level support and training services to QUATECH for
the HIS3 chip Monday through Friday during SOCKET’s normal business hours.      
Escrow of HIS3 Engineering specification documentation. SOCKET shall arrange to
place and keep current the most recent engineering drawings and specifications
for its HIS3 chip as defined in the Escrow Service Agreement to be mutually
agreed between the parties. The escrow shall be established under a Master
Beneficiary Three-Party Escrow Service Agreement between QUATECH, SOCKET and
Iron Mountain Intellectual Property Management, Inc. , a copy of which is
attached hereto as Appendix C (hereafter referred to as the “Escrow Agreement”).
The Escrow Agreement shall provide for the release of the engineering drawings
and specifications with a license to manufacture and sell the HIS3 chip for use
in QUATECH Products in the event that SOCKET becomes insolvent or otherwise
declares bankruptcy, in the event SOCKET breaches this Agreement or in the event
SOCKET fails to function as a going concern or to operate in the ordinary
course, each as more fully described in the Escrow Agreement.       Warranty of
the HIS3 Chip. SOCKET shall warrant the HIS3 chip to perform in accordance with
its specifications for a period of fifteen months from date of receipt by
QUATECH in accordance with its normal warranty policy as specified in
Appendix D.       Sale to Government. If QUATECH sells its QUATECH Products
containing the HIS3 chip to the United States Federal Government either directly
or indirectly, or through the General Services Administration (“GSA”),
California Multiple Award Schedule (“CMAS”), or other government multiple award
schedule contracts, SOCKET agrees to provide any representations or
certifications to QUATECH or any of QUATECH’S U.S. Federal Government end-users
as may be required, including but not limited to a Letter of Supply required to
add the QUATECH Products to QUATECH’s GSA Schedule. SOCKET agrees to furnish the
HIS3 chips needed by QUATECH to fulfill any GSA, CMAS, or other government
multiple award schedule contracts or similar contract obligations under any
schedule contract, and to accept any government flow-down provisions, including
but not limited to, the United States Government Federal Acquisition Regulations
(“FARs”) and its supplements, Defense FARs, or NASA FARs, whether for resale or
internal use.

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5.   HIS3 CHIP ORDERS/RESCHEDULE RIGHTS       QUATECH shall order HIS3 chips by
issuing and delivering to SOCKET written purchase orders (“Purchase Orders”).
QUATECH shall order a minimum of 1,000 HIS3 chips per quarter for delivery
during the six (6) quarters commencing with the quarter ending December 31,
2009. Delivery dates specified in the Purchase Orders shall be consistent with
minimum lead time guidelines supplied by SOCKET from time to time, unless
otherwise agreed between the parties. SOCKET shall have three (3) business days
within which to either accept or reject a submitted Purchase Order and shall
submit an order confirmation to QUATECH . Purchase Orders that are not rejected
shall be deemed accepted by SOCKET. Subject to the Purchase Order Reschedule
Table referred to below, Purchase Orders are firm and may not be cancelled after
acceptance by SOCKET.       Purchase Order Reschedule Table:   •   Purchase
Orders for delivery dates due within 30 days shall be firm   •   Purchase Orders
for delivery dates due within 31 days to 60 days may be up to 50% rescheduled  
•   Purchase Orders for delivery dates due in greater than 60 days may be up to
100% rescheduled       No Purchase Orders may be rescheduled more than three
times and for no more than six months in total from the original due date.   6.
  NON-BINDING FORECASTS FOR SUPPLY OF THE HIS3 CHIP       QUATECH shall provide
SOCKET at least quarterly a rolling six month non-binding forecast of its
requirements for the HIS3 chip to aid SOCKET in planning its manufacturing
schedules and inventory levels.   7.   PRICING       The purchase price for the
HIS3 chip will be $19.75 per chip until a cumulative total of 75,000 chips have
been purchased by QUATECH under this Agreement. QUATECH may, at its option,
place an order with SOCKET for delivery of all 75,000 chips less quantities
previously ordered at a price of $15.75 per chip. Delivery dates for this order
must be specified within a six month period from the date of order. All HIS3
chips will be shipped FOB Socket’s plant. The price of the HIS3 chip includes
the cost of freight. Subsequent to the purchase by QUATECH of the initial 75,000
chips, the purchase price will be reduced to $3.75 per chip.   8.  
SPECIFICATIONS/CHANGES/END OF LIFE       SOCKET shall not make any
modifications, improvements, alterations or changes (hereinafter collectively
referred to as “Changes”) to the HIS3 chips as listed in the attached Appendix A
during the term of this Agreement that affect or may tend to affect form, fit,
function, appearance, reliability, or interchangeability without prior
notification to QUATECH in writing and only due to changes outside of the
control of SOCKET such as technical obsolescence of components of the HIS3 chip.
In the event Changes are required, SOCKET shall give QUATECH a minimum of three
months written notification of Changes prior to proceeding and shall enable
QUATECH to place a last buy order for the current HIS3 chip.       QUATECH may,
at its option, request that a test be performed on any Changes to ensure the
HIS3 chips as changed comply with Specifications.

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9.   PACKAGING       SOCKET shall be responsible to provide packaging for the
HIS3 chips of the necessary quality, construction and strength to prevent damage
in transit. SOCKET shall bear all costs related to packaging, and to the
cartoning and packing, including drayage and palleting, if applicable.   10.  
TRADEMARKS, LOGOS, LABELING       During the term of this Agreement, QUATECH is
hereby granted a non-exclusive license to use at its option the trademarks,
service marks, trade names, product names, logos, designs, and other
designations or brands (the “Marks”) owned by SOCKET relating to the HIS3 chip
in connection with identifying that the QUATECH Products contain an HIS3 chip
from SOCKET. QUATECH shall not remove or deface any Marks appearing on the HIS3
chips or on any documentation provided by SOCKET hereunder. QUATECH may indicate
its relationship to SOCKET and refer to the HIS3 chip and any marks relating
thereto provided that such references are truthful and not misleading and SOCKET
is designated the owner of the Marks.       QUATECH is not granted any right,
title or interest in the SOCKET Marks except as provided for herein and in the
Purchase Agreement, and acknowledges SOCKET’s right in and to the Marks and
agrees that any and all use of the Marks by QUATECH shall inure to the sole
benefit of SOCKET. QUATECH agrees that it shall not take any action inconsistent
with the ownership of the Marks and agrees not to challenge SOCKET’s rights in
or attempt to register any of the Marks or any mark confusingly similar thereto.
      Nothing in this Agreement grants SOCKET any right to use, or right, title
or interest in any Marks owned by QUATECH or its affiliates and subsidiaries.  
11.   PAYMENTS       All prices are in U.S. currency. SOCKET shall bill QUATECH
at the time that HIS3 chips are shipped. Payments are due forty-five (45) days
after QUATECH’s receipt of invoice. In the case of deliveries made in
installments, each shipment shall be paid for when delivered and invoiced
without regard to the other scheduled deliveries. SOCKET shall not be required
to ship additional HIS3 chip to QUATECH while undisputed payments are delinquent
(all disputes by QUATECH must be in good faith).

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12.   REPRESENTATIONS AND WARRANTIES       SOCKET makes the following
representations and warranties to QUATECH, each of which is true and correct on
the date hereof and shall continue to be true and correct at all times during
the term of this Agreement, and hereby covenants as follows:

  (i)   SOCKET has all requisite corporate power and authority to execute,
deliver and perform this Agreement and any other agreements contemplated hereby
and to consummate the transactions contemplated hereby.     (ii)   The HIS3
chips are new and shall be free and clear of all liens and encumbrances.    
(iii)   The HIS3 chips will be covered by the fifteen month warranty set out in
Appendix D.     (iv)   The HIS3 chip are suitable for manufacture and
incorporation into the QUATECH Products as contemplated by this Agreement, and
fully comply with all applicable codes, standards, specifications, laws and
regulations and have all required approvals, certifications and licensing
(collectively “Certifications”) in each region/country where the HIS3 chips have
been obtained and will be sold. As appropriate, SOCKET shall provide evidence to
such effect including all Certifications as required by QUATECH.     (v)   All
HIS3 chips meet the latest requirements of the European environmental directives
2002/95/EC on the restriction of the use of certain hazardous substances in
electric and electronic equipment (RoHS) and 2002/96/EC on waste electrical and
electronic equipment (WEEE). Upon request SOCKET shall certify its compliance by
signing a ‘Supplier Declaration of Conformity’.     (vi)   The HIS3 chips and
their use do not infringe upon any copyright, patent, trademark, trade secret or
other proprietary or intellectual property right of any third party and as of
the Effective Date of this Agreement, SOCKET has no knowledge of any suits or
proceedings, pending or threatened, alleging any such infringement.     (vii)  
All documents and statements provided by SOCKET under this Agreement, including,
but not limited to, the Country of Origin of the HIS3 chips, Export Control
Classification Numbers (“ECCN”), Supplier Declaration of Conformity and
Certificate of Insurance are true and correct and may be relied upon by QUATECH.

    SOCKET warrants the HIS3 chips against defects in material and workmanship,
and warrants that they will function substantially in conformance with their
published specification, under normal use and service for the time periods and
in accordance with the terms and conditions specified in Appendix B.      
EXCEPT FOR (I) ANY BREACH OF SECTION 18 OR (II) SOCKET’S INDEMNIFICATION
OBLIGATIONS IN SECTION 14, SOCKET IS NOT RESPONSIBLE FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES RESULTING FROM BREACH OF ANY EXPRESS OR IMPLIED WARRANTY,
INCLUDING DAMAGE TO PROPERTY AND, TO THE EXTENT PERMITTED BY LAW, DAMAGES FOR
PERSONAL INJURY. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES INCLUDING
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.    
  Some states do not allow limitation of implied warranties, or the exclusion or
limitation of incidental or consequential damages, so that the above limitations
or exclusions may not apply to QUATECH . This warranty gives QUATECH specific
legal rights and QUATECH may also have other rights which vary from state to
state.

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13.   QUALITY CONTROL       SOCKET’s Responsibilities for specification
conformance:       SOCKET maintains a quality control system which is designed
to assure that all materials and services conform to the specifications as
described in the data sheets. SOCKET performs all inspections and tests required
to substantiate material conformance to specifications.       SOCKET Corrective
Action:       SOCKET shall take prompt action to isolate and correct conditions
which result in material non-conformance to specifications.   14.   INTELLECTUAL
PROPERTY/PATENT INDEMNIFICATION       Indemnification by SOCKET: SOCKET will
defend, indemnify and hold QUATECH, its parent, affiliates and subsidiaries and
their officers, directors and employees harmless from and against any and all
claims, damages, costs, expenses (including but not limited to, reasonable
attorneys’ fees and costs) or liabilities which may result, in whole or in part,
from any warranty or product liability claim or any property damage or personal
injury (including death) brought against QUATECH to the extent the claims result
solely from the HIS3 chips or Software supplied by SOCKET to QUATECH hereunder,
or any claim that the sale or use or distribution of the HIS3 chips or Software
infringes any patent, copyright, trademark, trade secret, or other proprietary
or intellectual property right of any third party (hereinafter, “ Claim”)
brought against QUATECH and SOCKET will pay all claims, damages, costs, expenses
(including but not limited to reasonable attorneys’ fees and costs) or
liabilities which result from any of the above, provided that SOCKET is promptly
informed in writing and furnished a copy of each communication, notice, or other
action relating to the above and is given the authority, information, and
assistance necessary to defend or settle such Claim, provided that SOCKET may
not settle any Claim without QUATECH’s prior written consent, such consent not
to be unreasonably withheld. QUATECH shall have the right, at its expense, but
not the obligation to participate in any such Claim.       The above
indemnification shall not apply to the extent awards, judgments, decrees and
settlements result from modification, misuse, abuse, or misrepair of HIS3 chips
or Software by or on behalf of or authorized by QUATECH or QUATECH’s customer or
the user of the HIS3 chips or Software or by defects in the design, manufacture,
or operation of HIS3 chips or Software when such defects are attributable solely
to use in conjunction with QUATECH products.       Should the HIS3 chips or
Software delivered by SOCKET hereunder be adjudged infringing, or in SOCKET’s
opinion be likely to be adjudged infringing any Patent (defined below), then
SOCKET shall, at its expense and option either (i) procure for QUATECH the right
to use such HIS3 chips or Software free of any liability or infringement, or
(ii) replace such HIS3 chips or Software with non-infringing substitutes or
modify such HIS3 chips or Software to be non-infringing. If neither alternative
(i) or (ii) can be accomplished, then SOCKET shall refund QUATECH’s full
purchase price and accept return of such HIS3 chips or Software.      
Indemnification by QUATECH : QUATECH will defend, indemnify and hold SOCKET
harmless from any patent, copyright, trademark, or other intellectual property
right (hereinafter, “Patent”) action brought against SOCKET to the extent that
it is based solely on a claim that QUATECH Products manufactured or developed
and supplied by QUATECH to its customers (excluding SOCKET products, HIS3 chips
or Software) hereunder constitute an infringement of any Patent right and
QUATECH will pay all damages and costs awarded against SOCKET in such action
which are attributable to such claim, provided that QUATECH is promptly informed
in writing and furnished a copy of each communication, notice, or other action
relating to the alleged infringement and is given the authority, information,
and assistance necessary to defend or settle such claim. SOCKET shall have the
right, at its expense, to participate in any such claim or action.

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15.   LIMITATION OF LIABILITY       EXCEPT FOR (I) ANY BREACH OF SECTION 12,
(II) EITHER PARTY’S INDEMNIFICATION OBLIGATIONS IN SECTION 14 OR (III) ANY
BREACH OF SECTION 18, EITHER PARTY’S ENTIRE LIABILITY ARISING OUT OF THIS
AGREEMENT AND/OR SALE, DISTRIBUTION, USE OR PERFORMANCE OF ANY PRODUCT OR ANY
BREACH THEREOF SHALL BE LIMITED TO THE GREATER OF (1) THE TOTAL AMOUNT PAID BY
QUATECH FOR PURCHASES OF HIS3 CHIPS DURING THE TWENTY FOUR (24) MONTH PERIOD
PRECEDING THE DATE THE INITIAL CLAIM IS MADE AGAINST A PARTY UNDER OR WITH
RESPECT TO THIS AGREEMENT, OR (2) THE TOTAL VALUE OF THE HIS3 CHIPS THAT ARE THE
SUBJECT OF THE CLAIM.       EXCEPT FOR (I) ANY BREACH OF SECTION 18 OR
(II) EITHER PARTY’S INDEMNIFICATION OBLIGATIONS IN SECTION 14, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR LOSS OF USE, DATA OR PROFITS, OR ANY SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE USE, SALE, LICENSE, DISTRIBUTION OR PERFORMANCE OF
PRODUCTS OR ANY BREACH THEREOF, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY,
WHETHER IN AN ACTION FOR CONTRACT OR TORT (INCLUDING NEGLIGENCE) OR OTHERWISE,
AND WHETHER OR NOT EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.   16.   COMPLIANCE WITH LAWS       Both Parties shall in the
performance of this Agreement comply with all applicable laws, executive orders,
regulations, ordinances, proclamations, demands and requisitions of national
governments, or of any state or local governmental authority which may now or
hereafter govern performance hereunder including laws dealing with the
certification and qualification of products and with the export of products.  
17.   GOVERNING LAW       This Agreement and any questions concerning its
validity, construction, or performance shall be governed by the laws of the
State of Ohio, United States of America.   18.   NON-DISCLOSURE AGREEMENT      
Except as required by law, neither party will disclose the terms and conditions
of this Agreement to any third party without the prior written consent of the
other party. The Mutual Non-Disclosure Agreement between SOCKET and DPAC
Technologies on behalf of Quatech dated July 10, 2008 applies to and is
incorporated into this Agreement.

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19.   FORCE MAJEURE       Neither party shall be responsible for any failures or
delays under this Agreement due to causes beyond its reasonable control and
without its fault or negligence, including, without limitation, civil
insurrection, riot, labor or transportation strikes, fire, storm, flood,
earthquake, volcanic eruption, explosion, war, embargoes, acts of God, acts of
government or any agency thereof, or judicial action. Upon the giving of prompt
notice of any such cause to the other party, the time of performance by the
party so affected shall be extended to the extent and for the period that its
performance of said obligations is prevented by such causes provided, however,
that if such causes delay performance by more than ninety (90) days, either
party shall have the right to terminate this Agreement without further
obligation hereunder.   20.   TAXES AND DUTIES       Neither party shall be
responsible for taxes and duties of the other party. QUATECH shall provide to
SOCKET a valid exemption certificate or other document acceptable to taxing or
custom authorities.   21.   ASSIGNMENT       Neither party shall assign this
Agreement nor any obligations or rights hereunder without the prior written
consent of the other party. Written consent will not unreasonably be withheld,
delayed or conditioned.   22.   RELATIONSHIP       It is expressly agreed that
SOCKET and QUATECH are acting hereunder as independent contractors and under no
circumstances shall any of employees of one party be deemed the employees of the
other for any purpose. This Agreement shall not be construed as authority for
either party to act for the other party in any agency or other capacity, or to
make commitments of any kind for the account of or on behalf of the other.   23.
  NOTICES       Any notice required or permitted to be given hereunder shall be
in writing and shall be sent by registered or certified mail, return receipt
requested, or else hand-delivered, addressed as follows:

     
To QUATECH:
  QUATECH Inc.
 
  Attention: Steve Runkel, President and CEO
 
  5875 Hudson Industrial Parkway
 
  Hudson, Ohio 44236
 
   
To SOCKET:
  SOCKET Mobile, Inc.
 
  Attention: Micheal Gifford, Executive VP
 
  39700 Eureka Drive
 
  Newark, CA 94560

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24.   SEVERABILITY OF PROVISIONS       In the event that any provision of this
Agreement shall be held to be invalid or unenforceable, the same shall not
affect in any respect whatsoever the validity or enforceability of the remainder
of this Agreement.   25.   WAIVER       The failure of either party to enforce,
in any one or more instances, any of the terms or conditions of this Agreement
shall not be construed as a waiver of the future performance of any such term or
condition.   26.   TERMINATION       Either party may terminate this Agreement
at any time for the other party’s uncured default provided that the terminating
party has given to the other party thirty (30) days prior written notice of such
default and its intention to terminate. After giving such notice, a party may
suspend its own performance under this Agreement until such default is cured.
Termination shall not constitute a party’s sole remedy for default. Default
shall include, but is not limited to:

  a)   Failure of QUATECH to pay undisputed invoices (all disputes must be in
good faith) when due and this is not rectified within thirty (30) days of notice
from SOCKET;     b)   Insolvency — Either party may terminate this Agreement
effective immediately and without liability upon written notice to the other
party if the other party (i) becomes insolvent, (ii) declares bankruptcy,
(iii) becomes the subject of any proceedings seeking relief, reorganization, or
rearrangement under any laws relating to insolvency, (iv) makes an assignment
for the benefit of creditors, or (v) commences the liquidation, dissolution, or
winding up of its business.

27.   ENTIRE AGREEMENT       This contract contains the entire agreement between
the Parties, and no modifications or waiver of any of the provisions, or any
future representation, promise, or addition shall be binding upon the parties
unless agreed to in writing. All purchase orders/order acknowledgements shall be
subject only to the terms and conditions of this Agreement. If any of the
provisions of SOCKET’s acknowledgments or other writings are in addition to or
in conflict with the terms and conditions of this Agreement or are ambiguous,
those additional, conflicting or ambiguous terms and conditions are expressly
rejected and the terms and conditions of this Agreement shall govern.

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                SOCKET MOBILE, INC.   QUATECH, INC.    
 
               
By:
  /s/ Kevin J. Mills   By:   /s/ Steven D. Runkel    
 
               
 
  Name: Kevin J. Mills       Name: Steven D. Runkel    
 
  Title:   President and CEO       Title:   President    
 
  Date:   September 30, 2009       Date:   September 30, 2009    

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APPENDIX A
SOFTWARE SPECIFICATIONS
The following software programs constitute the Software for the CSA:
Socket Bluetooth BlueLab Application Code (Binary code only)
Virtual Machine Code implemented as firmware within the CSA
Configurator Utilities (Binary Code and Source Code)
Windows XP — Socket Cordless Serial Adapter Configuration Utility
ScktSdApp.exe — configuration program
Inpout32.dll — utility DLL
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APPENDIX B
HIS3 CHIP DATA SHEET
FEATURES

•   Supports PC Card and CompactFlash® (CF) bus interfaces   •   512-byte FIFOs
in enhanced mode   •   Fully software compatible with industry standard 16C550
UARTs, supports Additional advanced features found in the 16C950   •   Maximum
baud rate 6.0 Mbps   •   Readable FIFO levels   •   Flexible clock prescaler can
divide by any number between 1 and 31. Allows the use of 7.3728 MHz, 14.7456 MHz
or 18.432 MHz crystals to achieve standard baud rates   •   Detection of bad
data in the receiver FIFO   •   Readable out-of-band flow control status   •  
Automated out-of-band flow control using CTS#/RTS# and DSR#/DTR#   •  
Transmitter idle interrupt (shift register and FIFO empty)   •   Software reset
  •   Arbitrary trigger levels for receiver and transmitter FIFO interrupts   •
  Sleep mode (low operating current)   •   System clock 3 to 24 MHz   •   3.3 V
or 5 V operation   •   80-pin TQFP package (10x10x1 mm) recommended for new
designs   •   Operating temperature range of -20 to +100° Celsius   •   Broad
host/client compatibility   •   Device drivers available for Windows
CE/9x/Me/2000/XP/Vista   •   Production test sofware available   •   Module Mode
feature allows the mDP to function as 2 independent UARTs   •   8 General
Purpose I/O pins   •   Virtual parallel UART

(Appendix B continued on next page)
QUATECH and SOCKET Supply Agreement

 

 

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APPENDIX B (Continued)
HIS3 CHIP DATA SHEET
Dual Serial Ports Interfaced to CF/PC Card Bus
The mobilityIC Dual Port or HIS3 is a single chip implementation of two serial
ports interfaced to the PC Card or CF buses. A complete PC Card or CF dual
serial port peripheral can be built with a mobilityIC dual port, a crystal, an
EEPROM and two serial transceiver chips. Such a design offers PC Card/CF
compliance, high performance, low power consumption and minimum component count.
The HIS3 is designed to provide all the functions necessary for a universal
receiver transmitter subsystem interface, such as for WAN cards (GPRS, CDMA,
EDGE, UMTS) and GPS. The HIS3 uses a 16C550 compliant core with an expanded
512-byte deep receiver first-in-first-out (FIFO) memory and 512-byte deep
transmitter FIFO memory. The deep FIFOs reduce the CPU overhead and allow higher
data rates. The HIS3 contains two high performance UARTs offering data rates up
to 6.0 Mbps each. The HIS3 connects directly to a serial EEPROM to store
nonvolatile information which consists of the PC Card/CF tuples and initial
configuration information. Attribute memory consists of a 248-byte Card
Information Structure (CIS), a 16- byte initialization area, and 15
Configuration Registers.
The HIS3 keeps power consumption to a minimum by providing features such as
fully programmable clock division and sleep modes when a function is not being
used. The HIS3 can operate at either 3.3 or 5 volts and does not require
external regulation to operate in low or high voltage environments. Technology
examples include standard or high speed serial ports, bar code scanners,
high-speed radios (GPRS, CDMA, EDGE, UMTS), RFID readers, blood analyzers, etc.
The HIS3 design is extremely flexible and can be incorporated into:

•   Standard serial ports   •   Bar code scanners   •   High-speed radios   •  
RFID readers   •   Blood analyzers   •   Other industrial applications

QUATECH and SOCKET Supply Agreement

 

 

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APPENDIX C
FORM OF ESCROW AGREEMENT
(To be attached)
QUATECH and SOCKET Supply Agreement

 

 

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APPENDIX D
Limited Hardware Warranty
Socket Mobile, Inc. warrants the HIS3 chip against defects in material and
workmanship, under normal use and service, for 15 months from the date of
purchase. The warranty does not extend to damage caused by a manufacturing
process of soldering chips to an electronic board.
Incompatibility is not a defect covered by Socket’s warranty. During the
warranty period, Socket will, at its option, repair or replace defective chips
at no charge.
Socket will replace or repair the product with new parts and the returned
product becomes Socket’s property. Socket warrants the repaired or replaced
products to be free from defects in material or workmanship for ninety (90) days
after the return shipping date, or for the duration of the original warranty
period, whichever is greater.
This warranty does not cover the replacement of products damaged by abuse,
accident, misuse or misapplication, nor as a result of service or modification
other than by Socket.
SOCKET IS NOT RESPONSIBLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM
BREACH OF ANY EXPRESS OR IMPLIED WARRANTY, INCLUDING DAMAGE TO PROPERTY AND, TO
THE EXTENT PERMITTED BY LAW, DAMAGES FOR PERSONAL INJURY. THIS WARRANTY IS IN
LIEU OF ALL OTHER WARRANTIES INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
Some states do not allow limitation of implied warranties, or the exclusion or
limitation of incidental or consequential damages, so the above limitations or
exclusions may not apply to you. This warranty gives you specific legal rights,
and you may also have other rights that vary from state to state. This product
may contain fully tested, recycled parts, warranted as if new. For warranty
information, call +1 (510) 744-2700.

     
PRODUCT DISPOSAL: The HIS3 chips should not be placed in municipal waste. Please
check local regulations for disposal of electronic products.
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