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.
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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.
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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.
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 multip