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
|
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.
|
QUATECH and
SOCKET Supply Agreement
2
|
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.
|
QUATECH and
SOCKET Supply Agreement
3
|
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.
|
QUATECH and
SOCKET Supply Agreement
4
|
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 QUAT
|
|
