8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

__________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

September 30, 2009
Date of Report
(Date of earliest event reported)

SOCKET MOBILE, INC.
(Exact name of registrant as specified in its charter)

 

Delaware
(State or other jurisdiction of incorporation) 001-13810
(Commission File Number) 94-3155066
(IRS Employer Identification No.)

39700 Eureka Drive
Newark, CA 94560
(Address of principal executive offices, including zip code)

(510) 933-3000
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Sale of Serial Product Line Assets to Quatech, Inc.

On September 30, 2009, Socket Mobile, Inc. (the "Company") entered into an Asset Purchase Agreement, pursuant to which the Company simultaneously sold its SocketSerial product line to Quatech Inc. ("Quatech"), a wholly owned subsidiary of DPAC Technologies Corp. and manufacturer of wireless machine-to-machine networking and device connectivity systems. Quatech's purchase of the assets from the Company was made with interim financing provided by Development Capital Ventures, LP. Under the terms of the Asset Purchase Agreement, Quatech acquired for the sum of $500,000 all rights, title and interest in the Company's serial products business including related product designs, the SocketSerial brand name and SocketSerial website under which the serial products were marketed by the Company. $450,000 of the purchase price was paid at the time of the closing of the transaction. The remaining $50,000 of the purchase price is contingent and payable upon the attainment by Quatech of quarterly revenue from the sale of SocketSerial products of at least $250,000 in any quarter through the quarter ending December 31, 2010. The Company will recognize $450,000 ($0.12 per share) as a gain on sale of assets in its reported results for the quarter ended September 30, 2009. The Company will use the proceeds from the transaction for working capital purposes.

SocketSerial product line sales for the quarter ended June 30, 2009 were $229,000 or approximately 5.5 percent of the Company's revenues for that quarter. The products in the SocketSerial product line consist of a CompactFlash serial card, a PC serial card, a PC dual serial card, and a PC serial card, all with fixed and removable cable models. Also included are the Company's USB to Serial Adapter, USB to Ethernet Adapter and Cordless Serial Adapter. Quatech intends to continue to manufacture and distribute the SocketSerial product line and will assume existing customer support responsibilities.

Each of the Company and Quatech made customary, representations, warranties and covenants in the Asset Purchase Agreement. Each of the Company and Quatech also agreed to indemnify the other party for losses arising out of breaches of such party's representations, warranties and covenants and certain other liabilities.

The Company also agreed for a period of three years that it will not (a) invest in, own, manage, operate, finance, control, advise, render services to or guarantee the obligations of any other party engaged in the serial card business, (b) directly or indirectly contact any customer of the serial card business or any customer of Quatech for the purpose of soliciting such customer to purchase, lease or license a product or service that would be in competition with those products or services made, rendered, offered or under development by Quatech, or (c) directly or indirectly interfere with or attempt to disrupt the relationship, contractual or otherwise, between Quatech and any of its employees or solicit an employee of Quatech to terminate employment with Quatech and become self-employed or employed with others in the same or similar business.

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In connection with the sale and purchase of the serial products business, the Company and Quatech also entered into a Supply and Licensing Agreement pursuant to which the Company will (i) supply Quatech with its proprietary HIS3 interface chip used in the serial products, (ii) license its Bluetooth software to Quatech for use in the Cordless Serial Adapter, and (iii) supply a limited quantity of the Cordless Serial Adapter product currently held in the Company's inventory.

The foregoing descriptions of the Asset Purchase Agreement and Supply and Licensing Agreement are qualified in their entirety by reference to the full text of such agreements, which are attached hereto as Exhibits 10.1 and 10.2, respectively and incorporated herein by reference.

The Company and Quatech announced the transactions described above in a press announcement dated October 1, 2009, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated as of September 30, 2009, among Socket Mobile, Inc., Development Capital Ventures, LP and Quatech Inc.
10.2	Supply and Licensing Agreement Between Quatech, Inc. and Socket Mobile, Inc.
99.1	Press release dated October 1, 2009

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                               

	SOCKET MOBILE, INC.
Date: October 6, 2009	By: /s/	David W. Dunlap
		David W. Dunlap Vice President, Finance and Administration and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated as of September 30, 2009, among Socket Mobile, Inc., Development Capital Ventures, LP and Quatech Inc.
10.2	Supply and Licensing Agreement Between Quatech, Inc. and Socket Mobile, Inc.
99.1	Press release dated October 1, 2009

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EX-10

Exhibit 10.1

ASSET PURCHASE AGREEMENT

BY AND

AMONG

SOCKET MOBILE, INC.,

DEVELOPMENT CAPITAL VENTURES, LP

AND

QUATECH INC.

TABLE OF CONTENTS
1. AGREEMENT TO SELL AND PURCHASE CERTAIN ASSETS		1
	1.1 Agreement to Sell and Purchase	1
	1.2 Treatment of Liabilities	2
	1.3 Delivery of Assets	2
	1.4 Supply and Licensing Agreement	3
	1.5 Transition Services
2. PURCHASE PRICE		3
	2.1 Purchase Price	3
	2.2 Allocation of Purchase Price	4
	2.3 Transfer Taxes	4
3. CLOSING		4
	3.1 Date and Time	4
	3.2 Seller's Deliveries	4
	3.3 Purchaser Deliveries	5
	3.4 Inventory	5
4. REPRESENTATIONS AND WARRANTIES OF SELLER		5
	4.1 Organization of Seller; Authorizations	5
	4.2 Requisite Power and Authority	6
	4.3 Seller's Requisite Consents; Nonviolation	6
	4.4 No Undisclosed Liabilities	6
	4.5 Title to Assets	6
	4.6 Assigned Contracts	6
	4.7 Litigation	7
	4.8 Intellectual Property	7
	4.9 Compliance with Laws	11
	4.10 Tangible Assets	11
	4.11 Inventory	11
5. OTHER COVENANTS		11
	5.1 Expenses	11
	5.2 Books and Records	11
	5.3 Bulk Transfer Laws	12
	5.4 Confidentiality	12
	5.5 Publicity	12
	5.6 Discontinuation of Operations	12
	5.7 Non-competition	12
	5.8 Remedies	13
	5.9 Insurance and Access	13
	5.10 Litigation Support	14
	5.11 Post Closing Accounts Receivable	14
	5.12 Product Returns	14
6. INDEMNIFICATION		14
	6.1 Indemnification by the Seller	14
	6.2 Indemnification by the Purchaser	15
7. MISCELLANEOUS		16
	7.1 No Waiver	16
	7.2 Successors and Assigns	16
	7.3 Notices	16
	7.4 Survival of Obligations	16
	7.5 Complete Agreement	17
	7.6 Applicable Law; Jurisdiction	17
	7.7 Counterparts	17
	7.8 Further Assurances	17

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the close of business on September 30, 2009, by and among Socket Mobile, Inc., a Delaware corporation, ("Seller"), Development Capital Ventures, LP ("Funder") located at 5820 Fitzhugh Street, Burke, VA 22015, and Quatech Inc., an Ohio corporation ("Purchaser").

1. AGREEMENT TO SELL AND PURCHASE CERTAIN ASSETS

1.1 Agreement to Sell and Purchase.

At the Closing, Seller will sell, convey, transfer, assign and deliver to Funder, for the purpose of enabling the purchase by Purchaser, and Purchaser will, upon completion of arrangements with Funder, complete the purchase and assume from Funder, all assets of Seller which pertain to Seller's serial card business (the "Business"), free and clear of all liens, charges, claims, mortgages, pledges, easements, encumbrances, security interests, adverse claims or any other title defects or restrictions of any kind (collectively, "Encumbrances"). For the purpose of this transaction, Funder is deemed an intermediary who will fund the purchase by Purchaser and enable its immediate transfer to Purchaser. Accordingly, all references to Purchaser are made with the expectation that all rights, title and interest in the Asset Purchase Agreement and related documents have been transferred by Funder to Purchaser. Until notification by Funder to Seller of the completion of the transfer to Purchaser, Seller shall follow the instructions from Funder as to the matters that Purchaser has agreed to undertake. The assets of Seller which pertain to Seller's serial card business include, without limitation:

(a) The tangible personal property and assets of Seller, including without limitation the property listed on Schedule 1.1(a) to this Agreement, related to or used in the Business (the "Assets") as currently conducted and as currently proposed to be conducted;

(b) All of Seller's right, title and interest in, to and under any contract, purchase order, license or other agreement to the ownership, manufacture and distribution of the Assets as listed on Schedule 1.1(b) to this Agreement (the "Seller Contracts") ;

(c) All of Seller's right, title and interest in and to (i) all intangible assets of Seller, including all Intellectual Property (as defined in Section 4.8(n) below) of the Seller related to or used in connection with the Business as currently conducted or as currently proposed to be conducted (collectively, the "Seller Owned Proprietary Rights"), including all engineering drawings and specifications, data sheets and the Intellectual Property described on Schedule 1.1(c) to this Agreement and including without limitation all rights in and to use the name "Socket Serial" and the date of first use of each such mark in each respective country where such mark is used (the "Marks, (ii) the licenses, leases, assignments, rights to use and other agreements for the license, lease and assignment of, or provision of the right to use Intellectual Property of another person that is related to or used or useful in connection with the Business as currently conducted or as currently proposed to be conducted, together with all rights, privileges, prepaid fees, deposits, credits and claims of the Seller thereunder (collectively, the "Seller Licensed Proprietary Rights Agreements"), including without limitation those listed on Schedule 1.1(c)(ii) hereto, and (iii) all Intellectual Property that the Seller has a right to use that is related to or used in connection with the Business as currently conducted or as currently proposed to be conducted under the Seller Licensed Proprietary Rights Agreements (collectively, the "Seller Licensed Proprietary Rights" and together with the Seller Owned Proprietary Rights, the "Seller Proprietary Rights"), including the Intellectual Property listed on Schedule 1.1(c)(iii) hereto.

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(d) all of the Seller's customer lists and other records, files, data, reports, lists, ledgers, market studies, books and records used in or relating to the Business as currently conducted or as currently proposed to be conducted (including such records as are contained in any computer media).

1.2 Treatment of Liabilities.

(a) In connection with the sale of the Assets to Purchaser, Purchaser will assume only the following liabilities of Seller (collectively, the "Assumed Liabilities"): those obligations of Seller relating to the Assigned Contracts or breaches of any product warranties offered in connection with the Assets arising out of sales of the Assets made by Purchaser from and after the Closing in accordance with the terms thereof, but excluding any obligations arising as a result of any breach, default or failure to perform by Seller under any Assigned Contract or product warranties offered in connection with the Assets prior to the Closing except as described in Schedule 1.2 relating to the assumption of warranty customer support by Purchaser .

(b) Except for the Assumed Liabilities, Purchaser will not assume, and will not be liable for, any of Seller's debts, liabilities, taxes, obligations, contracts or commitments of any nature or kind whatsoever, whether existing as of the Closing or arising thereafter, known or unknown, contingent or otherwise, including any payroll liabilities and obligations of Seller (the "Excluded Liabilities"). All Excluded Liabilities will be solely those of Seller and will be satisfied by Seller, and Purchaser shall have no liability under any circumstances

1.3 Delivery of Assets.

(a) Within five (5) days from the Closing Date, Seller shall arrange for delivery, at the sole expense of Seller, of the Assets listed in Article 1.1(c) to Purchaser at Purchaser's address specified in Section 7.3 of this Agreement. Electronic transfer may be used as mutually agreed between the parties. Seller shall retain all risk of loss and damage regarding the Assets until such time as the Assets are delivered to Purchaser pursuant to this Section 1.3, at which time the risk of loss and damage to the Assets shall pass to Purchaser.

(b) Seller shall retain and use the assets listed in Article 1.1 (a), consisting primarily of on hand and consigned inventory components and tooling, during the month of September to supply inventory to the Purchaser and to Distributors as described under Article 1.5, Transition Services. Purchaser shall compile by October 15, 2009 a list of inventory components as of the end of September for purchase by Purchaser at Seller's cost. These dates may be modified by mutual agreement of the parties. Inventory components to be purchased shall consist only of inventory deemed useable by Purchaser in Purchaser's sole discretion. Seller's cost shall consist of material, labor and overhead.

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1.4 Supply and Licensing Agreement

Seller is also in the business or designing, manufacturing and selling HIS3 computer chips (the "Chips") which are a component used in the manufacturing of certain of the Assets. The Chips are not included in the definition of "Assets" and are not included in this sale. Seller and Purchaser will enter into a supply, support and limited licensing agreement (the "Supply and Licensing Agreement"), in substantially the form attached hereto as Schedule 1.4, pursuant to which Seller will, among other things, continue to manufacture the Chips and sell them to Purchaser. Seller and Purchaser are also entering into a Cordless Serial Adapter License to enable Purchaser to use Seller's Bluetooth software with the Cordless Serial Adapter Product. Such license is included in the "Supply and Licensing Agreement, in substantially the form attached hereto as Exhibit 1.4.

1.5 Transition Services.

Seller and Purchaser agree that they shall enter into a transitional services arrangement pursuant to the mutually agreed upon schedule and timeframe provided for on Schedule 1.5 hereto. Seller will provide Purchaser with those certain services listed on Schedule 1.5, which shall include, among other things, providing Purchaser with warranty support training and information, secondary customer support services and facilitating communications between Purchaser and Seller's distributors and manufacturers. Schedule 1.5 also provides for continued supply of product by Seller to distributors and to Purchaser during September, for the accounting for post-closing shipments by Seller on behalf of Purchaser to facilitate revenue recognition and earnings by Purchaser for all post-closing shipments, and for the transfer of customer warranty support in its entirety to Purchaser as of September 30, 2009.

2. PURCHASE PRICE

2.1 Purchase Price.

The purchase price (the "Purchase Price") for the Rights and Intangible and Tangible Assets, excluding Finished Product and Component Inventory items, described in Articles 1.1 (a), 1.1 (b) and 1.1 (c) will be $500,000. $450,000 is payable in full, via wire transfer of immediately available United States funds, at the Closing. The balance of $50,000 shall be payable upon the attainment by Purchaser of $250,000 in quarterly sales revenue from the sale of SocketSerial products in any quarter through and including the quarter ending December 31, 2010. The purchase price for the Finished Product and Component inventory items described in Article 1.1 (a) will be an amount equal to Seller's cost of these assets, such cost to consist of material, labor and overhead.

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2.2 Allocation of Purchase Price.

On the Closing Date, the Purchase Price for the Assets will be allocated in accordance with a schedule to be prepared by Purchaser which will be reasonably acceptable to Seller (the "Allocation"), which such Allocation shall be conclusive and binding on both the Purchaser and Seller. The parties agree to file tax returns reflecting the sale and purchase consistent with such schedule.

2.3 Transfer Taxes.

Seller will be responsible for the payment of all transfer and sales taxes, if any, incurred in connection with the sale of the Assets to Purchaser.

3. CLOSING

3.1 Date and Time.

The closing of the transactions contemplated hereby (the "Closing") shall take place simultaneously with the execution and delivery of this Agreement. The date of the Closing is hereinafter referred to as the "Closing Date." The Closing shall be effective as of 4:00 p.m. Pacific time (which shall be considered the Close of Business time) on the Closing Date.

3.2 Seller's Deliveries.

At the Closing, Seller will execute and deliver, or cause to be executed and delivered, to Purchaser the following documents (collectively, the "Related Agreements") or take, or cause to be taken, the following actions:

(a) A Bill of Sale for the Assets (conveying title thereto free and clear of all Encumbrances);

(b) An assignment of trademarks and proprietary rights agreement in the form attached hereto as Exhibit 3.2(d);

(c) The Supply and Licensing Agreement;

(d) Copies of resolutions of the board of directors of Seller authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated by this Agreement and consummation of the transactions contemplated by thereby, which resolutions have been certified by the Secretary of Seller as being valid and in full force and effect;

(e) Those consents set forth on Schedule 4.3 hereto;

(f) All Encumbrances on the Assets shall be satisfied in full on or prior to Closing (or simultaneously therewith) and Seller shall have provided Purchaser with evidence of such satisfaction which is satisfactory to Purchaser; and

(g) Such other documents and certificates as are required by the terms of this Agreement or as may be reasonably requested by Purchaser.

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3.3 Purchaser Deliveries.

At the Closing, Funder and Purchaser will:

(a) pay to Seller the Purchase Price;

(b) execute and deliver to Seller the Asset Purchase Agreement;

(c) deliver the Allocation pursuant to Section 2.2; and

(d) execute and deliver to Seller the Supply and Licensing Agreement.

3.4 Inventory.

(a) On or before the Closing, Purchaser may elect, at its sole discretion, to issue one or more purchase orders (the "Purchase Orders," and each a "Purchase Order") for delivery to Purchaser in September selected finished goods inventory ("Inventory") of Seller, at a purchase price equal to Seller's cost of producing such finished goods inventory. Upon receipt of a Purchase Order, Seller shall be obligated to sell and deliver such Inventory to Purchaser on the terms set forth in this Article and in Article 1.5.

(b) Any Inventory purchased under a Purchase Order shall be subject to all of the terms and conditions of this Agreement including, but not limited to, the representations and warranties set forth in Article 4 hereof and the Seller's indemnification obligations set forth in Article 6 hereof.

4. REPRESENTATIONS AND WARRANTIES OF SELLER

The Seller hereby represents and warrants to, and covenants and agrees with, Purchaser that as of the date hereof:

4.1 Organization of Seller; Authorizations.

Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as currently conducted and as proposed to be conducted and is qualified or licensed to do business and is in good standing in every jurisdiction where the nature of its business or the properties owned, leased or operated by it requires qualification or licensure, except where the failure to be so qualified or licensed would not have a material adverse effect on Seller or the operations of Seller.

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4.2 Requisite Power and Authority.

Seller has all requisite corporate authority and power to execute and deliver this Agreement and to perform all transactions contemplated by this Agreement (the "Transactions"). The execution, delivery and performance by Seller of this Agreement have been duly authorized and approved by all necessary corporate action. Assuming the due authorization, execution and delivery by Purchaser, this Agreement constitutes a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except as the enforceability of its terms may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally or by the principles governing the availability of equitable remedies.

4.3 Seller's Requisite Consents; Nonviolation.

The execution and delivery of this Agreement and the consummation of the Transactions by Seller do not and will not, except as set forth on Schedule 4.3 to this Agreement, (a) require the consent, license, permit, waiver, approval, authorization or other action of, by or with respect to, any person or entity (whether governmental or non-governmental), (b) violate or conflict with the provisions of the Articles of Incorporation or Bylaws, or other charter documents, of Seller, (c) constitute a default under, violate, conflict with, or result in the termination of, any Assigned Contract, agreement, judgment, order, injunction or decree to which Seller is a party, or by which Seller is bound or to which Seller, or any of its properties is subject, (d) conflict with or violate any law, rule or regulation of any Governmental Entity (as defined below in Section 4.16(a)) having jurisdiction over Seller or any of its assets or properties, or (e) result in the creation or imposition of any Encumbrance on the Assets or in any person (other than Purchaser) obtaining the right to acquire any of the properties, rights or assets of Seller.

4.4 No Undisclosed Liabilities.

Seller does not have any liability, commitment, obligation, loan or indebtedness of any nature whatsoever, whether as primary obligor, guarantor, surety or otherwise, whether known or unknown, whether accrued, absolute, contingent or otherwise, and whether due or to become due relating to the Business as currently conducted or as currently proposed to be conducted, the Assets or the Assumed Liabilities except as set forth on Schedule 4.4.

4.5 Title to Assets.

Seller has good, valid, exclusive and marketable title to the Assets, free and clear of all Encumbrances, and will transfer to Purchaser at the Closing good, valid, exclusive and marketable title to the Assets, free and clear of any Encumbrances.

4.6 Assigned Contract Rights.

The Assigned Contract Rights constitute all of the material contract or agreement rights to which Seller is a party that relate to, or are used in, the Business. Each of the Assigned Contract rights is valid, in full force and effect and enforceable in accordance with its terms. There has not occurred any default or any event which, with notice or lapse of time or both, would become a default under any of the Assigned Contracts resulting from any act or omission by Seller or any act or omission of any other party thereto prior to the Closing Date, nor (ii) has there been a claim of any breach or default under any of the Assigned Contracts by Seller or by any other party thereto. Within the last twelve months, the Seller has not received any written notice that any person is canceling, modifying or terminating, and to the knowledge of the Seller, no person intends to cancel, modify, or terminate, any of the Assigned Contracts, or to exercise or not to exercise any option thereunder. True and complete copies of all Assigned Contract rights, including all related amendments, supplements and modifications, have been provided to Purchaser.

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4.7 Litigation.

There is no pending or, to the knowledge of the Seller, threatened, litigation or judicial, administrative or arbitration claim, action or proceeding nor are there any judgments, orders, writs, injunctions or decrees currently in effect and involving or affecting any Asset or the Business.

4.8 Intellectual Property.

(a) Schedule 4.8(a) sets forth a complete and accurate list of (i) all Seller Proprietary Rights, including all such Intellectual Property owned, licensed or used by the Seller, all applications therefor, and all licenses, assignments and other agreements relating thereto to which the Seller is a party, and with respect to any mark, the date of first use of such mark in each respective country where such mark is used, and (ii) all Seller Licensed Proprietary Rights, including agreements relating to technology, know-how and processes with respect to such Intellectual Property that the Seller has licensed for its use or authorized for use by others.

(b) The Seller Proprietary Rights constitute all of the Intellectual Property related to, used in connection with, or useful or necessary for (x) the manufacture, use, sale, marketing, distribution, import and export of the Assets and Products of the Business, and (y) the conduct of the Business as currently conducted or as currently contemplated by the Seller to be conducted.

(c) The conduct of the Business as currently conducted or as currently contemplated by the Seller to be conducted does not and will not interfere with, conflict with, infringe upon, misappropriate or otherwise violate the Intellectual Property rights of any other person, and no action or claim has been asserted or is pending or is threatened alleging that the operation of such Business interferes with, conflicts with, infringes upon, misappropriates or otherwise violates the Intellectual Property rights of any other person and there is no basis therefor. After the Closing, Purchaser shall be able to manufacture, use, market, distribute, sell, import and export the Assets and conduct the Business as currently conducted or as currently contemplated by the Seller to be conducted without interfering with, conflicting with, infringing upon, misappropriating or otherwise violating the Intellectual Property rights of any other person.

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(d) The Seller is the sole owner of the entire right, title and interest in and to, or has a valid exclusive license or other sufficient exclusive legal right under, the Seller Proprietary Rights.

(e) There are no outstanding options, licenses, Encumbrances or agreements of any kind relating to the Seller Proprietary Rights, nor is the Seller bound by or a party to any options, licenses, Encumbrances or agreements of any kind with respect to the Intellectual Property of any other person relating to or used in connection with the Business.

(f) The Seller Proprietary Rights are valid and enforceable, and the same have not been adjudged invalid or unenforceable in whole or in part. The Seller has complied with all of its obligations of confidentiality in respect of the claimed trade secrets or proprietary information of others with respect to the Business and there are no violations of such obligations of confidentiality as are owed to them with respect to the Business.

(g) No claims or actions have been asserted, are pending or threatened against the Seller (i) based upon or challenging or seeking to deny or restrict the exclusive ownership by, inventorship of, or exclusive use or license rights of the Seller of any of the Seller Proprietary Rights, (ii) alleging that (x) the Seller Proprietary Rights, (y) the development, manufacture, distribution, marketing, use or sale of the products of the Business, or (z) any services provided, processed or used by the Seller relating to or used in connection with the Business, infringe or misappropriate any Intellectual Property right of any third party, or (iii) alleging that the Seller Licensed Proprietary Rights are being licensed or sublicensed in conflict with the terms of any license or other agreement, and there is no basis for such a claim with respect to any of the foregoing.

(h) No person is engaging in any activity that infringes or misappropriates the Seller Proprietary Rights. The Seller has not granted any license or other right to any third party with respect to the Seller Proprietary Rights. The execution and delivery by the Seller of this Agreement and the Related Agreements, the performance by the Seller of its obligations hereunder or thereunder, and the consummation of the transactions contemplated hereby and thereby will not breach, violate or conflict with any instrument or agreement concerning the Seller Proprietary Rights, will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any of the Seller Proprietary Rights or impair the right of Purchaser or any of its affiliates to license or dispose of, or to bring any action for the infringement of, any Seller Proprietary Rights.

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(i) The Seller has delivered to Purchaser correct and complete copies of all licenses of the Seller Licensed Proprietary Rights, other than licenses of commercial off-the-shelf computer software. With respect to each such license:

(i) such license is valid and binding and in full force and effect and represents the entire agreement between the respective licensor and licensee with respect to the subject matter of such license;

(ii) such license will not cease to be valid and binding and in full force and effect on terms identical in all material respects to those currently in effect as a result of the consummation of the transactions contemplated by this Agreement, nor will the consummation of the transactions contemplated by this Agreement constitute a breach or default under such license or otherwise so as to give the licensor or any other person a right to terminate such license;

(iii) the Seller has not (A) received any notice of termination or cancellation under such license, (B) received any notice of breach or default under such license, which breach has not been cured, or (C) granted to any other person any rights, adverse or otherwise, under such license that would constitute a breach of such license;

(iv) neither the Seller nor any other party to such license is in breach or default thereof, and no event has occurred that, with notice or lapse of time, would constitute such a breach or default or permit termination, modification or acceleration under such license; and

(v) no consent, approval, permit, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Entity or other person is necessary in order for such license to remain in full force and effect following the consummation of the transactions contemplated by this Agreement and the Related Agreements.

(j) None of the Seller's employees, officers, directors, agents or consultants is (i) subject to confidentiality restrictions in favor of any third person the breach of which with respect to the Business could subject the Seller to any liability, or (ii) obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Seller or that would conflict with the Business as currently conducted or currently proposed to be conducted. Each employee and officer of and consultant to the Seller that has performed services with respect to the Business has executed a proprietary information and inventions agreement of the Seller substantially similar to the form delivered by Seller to Purchaser as of the date hereof. No current or former employee or officer of or consultant to the Seller has excluded works or inventions made prior to his or her employment or relationship with the Seller from his or her assignment of inventions pursuant to such employee's, officer's or consultant's proprietary information and inventions agreement in any way relating to the Business or that could reasonably be expected to affect the Seller Proprietary Rights.

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(k) The Seller has taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of its trade secrets and other confidential Intellectual Property. There has been no misappropriation of any trade secrets or other confidential Seller Proprietary Rights by any person. No employee, independent contractor or agent of the Seller has misappropriated any trade secrets of any other person in the course of such performance as an employee, independent contractor or agent with respect to the Business. No employee, independent contractor or agent of the Seller is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of Seller Proprietary Rights.

(l) Neither the execution nor delivery of this Agreement or the Related Agreements, nor the manufacturing, use, sale, marketing, distribution, import or export of the Assets or products of the Business, nor the carrying on of the Business by the employees of and consultants to the Seller, nor the conduct of the Business as presently conducted or as proposed to be conducted by the Seller, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. Except to the extent already assigned to the Seller, the Seller does not believe that it is or will be necessary to utilize any inventions or proprietary information of any of its employees or consultants (or people it currently intends to hire) made prior to their employment by the Seller in order to manufacture, use or sell the Assets or Seller Proprietary Rights.

(m) The Seller has not (i) abandoned, sold, or granted any security interest in or to any Seller Proprietary Rights, including failing to perform or cause to be performed all applicable filings, recordings and other acts, and pay or cause to be paid all required fees, royalties and taxes, to maintain and protect its interest in such Seller Proprietary Rights, (ii) developed, created or invented any Seller Proprietary Rights jointly with any third party with respect to which the Seller would not retain full ownership in such Seller Proprietary Rights, or (iii) disclosed, or allowed to be disclosed, any confidential Seller Proprietary Rights, unless such Seller Proprietary Rights are subject to a confidentiality and non-disclosure covenant protecting against disclosure thereof.

(n) For the purposes of this Agreement "Intellectual Property" means intellectual property or proprietary rights of any description related to or used or useful in connection with the Assets or the Business, including (a) rights in any patent, patent registration, patent application (including any provisionals, continuations, divisions, continuations-in-part, extensions, renewals, reissues, revivals and reexaminations, any national phase PCT applications, any PCT international applications, and all foreign counterparts, including utility models and utility model applications), copyright, work for hire, industrial design, URL, domain name, trademark, service mark, logo, trade dress or trade name, (b) related registrations and applications for registration, (c) trade secrets, moral rights, shop rights or publicity rights, (d) inventions, discoveries, or improvements, modification, know-how, technique, methodology, writing, work of authorship, design or data, whether or not patented, patentable, copyrightable or reduced to practice, including any inventions, discoveries, improvements, modification, know-how, technique, methodology, writing, work of authorship, design or data embodied or disclosed in any: (i) computer source codes (human readable format) and object codes (machine readable format); (ii) specifications; (iii) manufacturing, assembly, test, installation, service and inspection instructions and procedures; (iv) engineering, programming, service and maintenance notes and logs; (v) technical, operating and service and maintenance manuals and data; (vi) hardware reference manuals; and (vii) user documentation, help files or training materials, and (e) good will related to any of the foregoing.

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4.9 Compliance with Laws.

Seller is in compliance with all material federal, state, local, municipal and foreign laws, rules, regulations, statutes and ordinances applicable to Seller relating to the Business or any of the Assets.

4.10 Tangible Assets.

All tangible Assets of Seller are in good repair and good operating condition, ordinary wear and tear excepted, and are adequate and sufficient to carry on the Business as presently conducted.

4.11 Inventory.

Any Inventory which will be sold to Purchaser pursuant to the Purchase Orders is merchantable, actively being purchased by Seller's customers as of the Closing Date and fit for the purpose for which it was procured or manufactured. As of the Closing Date, none of the Seller's finished goods Inventory is slow moving, and none of Seller's Inventory is obsolete, in packaging that is not being used by Seller and its customers, in packaging that is scheduled to be replaced or discontinued, a product that has been, or is scheduled to be or is contemplated to be discontinued, phased out or replaced. None of the Inventory is damaged or defective. Exceptions to this Article are listed in Schedule 4.11.

5. OTHER COVENANTS

5.1 Expenses.

Each party will bear its own fees and expenses related to this transaction (including legal, accounting or other professional fees and expenses), whether or not the transaction is consummated.

5.2 Books and Records.

Following the Closing Date and for a period of five (5) years thereafter, Seller will maintain all books and records and tax statements and returns relating solely to the Business and will provide copies thereof to Purchaser promptly upon request.

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5.3 Bulk Transfer Laws.

The parties do not believe that any laws relating to bulk sales or bulk transfers (including any such laws under the Uniform Commercial Code) are applicable to any of the Transactions. Notwithstanding the foregoing, and in order to induce Purchaser to execute this Agreement and consummate the Transactions, Seller will indemnify and defend Purchaser and its affiliates and hold them harmless (in accordance with Section 6.1 below) from and against any claim or other expense arising out of, resulting from or relating to, any determination of the applicability to any of the Transactions of, or failure to comply with in connection with any of the Transactions, any of such laws.

5.4 Confidentiality.

From and after the Closing Date, the Seller will keep confidential and will not directly or indirectly disseminate, disclose, use, communicate, divulge or otherwise appropriate any of the Confidential Information (as defined below). From and after the Closing Date, the Seller will take all steps necessary or requested by Purchaser to ensure that all of the Confidential Information is kept secret and confidential for the sole use and benefit of Purchaser. All Confidential Information will be the exclusive property of Purchaser, and Seller will promptly deliver to Purchaser all Confidential Information, including all copies thereof, which is in Seller's possession or under Seller's control, without making or retaining any copies or extracts thereof. As used in this Agreement, "Confidential Information" means and includes all information, whether now possessed or subsequently obtained or developed, relating to the business of Purchaser or the business of the Seller as conducted prior to Closing, except for information that otherwise is publicly known.

5.5 Publicity.

None of the parties hereto will issue any press release or other information to the press or any third party with respect to the terms of this Agreement or the consummation of the Transaction without the express written consent of the other parties, provided, however, that the parties may release information contained in, or relating to, this Agreement or the consummation of the Transaction pursuant to a requirement of law, court proceeding or governmental decree.

5.6 Discontinuation of Operations.

Other than Seller's fulfillment of its obligations pursuant to the Transitional Services Agreement, Seller agrees that it will discontinue all operations of any kind whatsoever related to the Business, including the design, manufacture, distribution and sales of the Assets, pursuant to the mutually agreed upon schedule with Purchaser specified in the Transitional Services Agreement.

5.7 Non-competition.

The Seller agrees that for a period of three (3) years after the date hereof, it will not:

(a) invest in, own, manage, operate, finance, control, advise, render services to or guarantee the obligations of any person or entity engaged in the Business or the design, manufacture, distribution or sales of products similar to the Assets or the Products, anywhere in the United States.;

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(b) Directly or indirectly contact any customer of the Business or any customer of Purchaser for the purpose of soliciting such customer to purchase, lease or license a product or service that would be in competition with those products or services made, rendered, offered or under development by the Purchaser; or

(c) Directly or indirectly interfere with or attempt to disrupt the relationship, contractual or otherwise, between the Purchaser and any of its employees or solicit an employee of the Purchaser to terminate employment with the Purchaser and become self-employed or employed with others in the same or similar business.

The existence of any claim, dispute, or cause of action of the Seller against the Purchaser, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by the Purchaser of this covenant.

5.8 Remedies

Seller acknowledges and agrees that its respective obligations under Sections 5.4, 5.5, 5.6 and 5.7 above are of a special, unique and extraordinary character, that they are reasonably related to the legitimate business interests of Purchaser, and that a failure to perform any such obligation or a violation of such obligations will cause irreparable injury to Purchaser, the amount of which would be impossible to estimate or determine and for which adequate compensation could not be fashioned. Therefore, Seller agrees that Purchaser will be entitled, as a matter of right, and without the need to prove irreparable injury or to post bond, to an injunction, restraining order, writ of mandamus or other equitable relief (including specific performance) from any court of competent jurisdiction, restraining any violation or threatened violation of any term of such Sections 5.4, 5.5, 5.6 or 5.7 or requiring compliance with or performance of any obligation thereunder, by Seller and such other persons as the court will order. The rights and remedies provided Purchaser hereunder are cumulative and will be in addition to the rights and remedies otherwise available to Purchaser under any other agreement or applicable law.

5.9 Insurance and Access.

(a) Seller agrees to cooperate with Purchaser, as may be reasonably necessary, in order to make available to Purchaser any existing insurance coverage held by Seller on which Seller is a named insured relating to occurrences prior to Closing (the "Seller Policies"). In the event of an occurrence which Purchaser believes may be covered by one or more Seller Policies, Purchaser shall, after consultation with Seller, submit a claim for such occurrence to the appropriate insurer under the applicable Seller Policy. Seller agrees to provide such reasonable assistance as Purchaser may require in order to pursue such claim with the insurer, including, if necessary, acting as the direct contact for all purposes with such insurer and pursuing such claim on behalf of Purchaser.

(b) Seller shall for a period of five years after the Closing Date, during normal business hours and upon not less than three business days written notice, provide Purchaser and its representatives with such access to the books and records of Seller as may be reasonably requested by Purchaser, who shall be entitled, at its expense, to copy such books and records. Seller shall not, during such five-year period, destroy or cause or permit to be destroyed any books or records without first obtaining the consent of Purchaser (or providing to Purchaser notice of such intent and a reasonable opportunity to copy such books or records at least 30 days prior to such destruction).

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5.10 Litigation Support.

If and for so long as Purchaser or Seller are actively contesting or defending against any action in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction which occurred prior to the Closing Date involving the Seller, Seller shall cooperate with Purchaser or Purchaser's counsel in the defense or contest, make available their personnel on a mutually convenient basis and provide such testimony and reasonable access to Seller's books and records as shall be reasonably necessary in connection with the defense or contest.

5.11 Post Closing Accounts Receivable.

Purchaser and Seller acknowledge and agree that in the event that one party receives (the "Receiving Party") payment with respect to an outstanding account receivable (the "AR Amount") that was intended as payment for the other party (the "Proper Party"), the Receiving Party shall promptly, but in no event later than five (5) business days after receipt of the AR Amount, issue payment for the full AR Amount to the Proper Party.

5.12 Product Returns.

Seller acknowledges and agrees that it will be solely responsible for any and all returns, offsets, discounts, credits, contractual allowances, setoffs or any other reduction in price (collectively, the "Returns") from a third party related to the sale of any of the Assets prior to the Closing Date. Upon receipt of any Returns, Purchaser shall provide Seller with a reasonably detailed list outlining all Returns by customer and setting forth an aggregate dollar amount of the Returns (the "Returns Notice"). Seller acknowledges that in the event that Purchaser is subject to any Returns and once Purchaser has delivered a Returns Notice, Purchaser shall be entitled to make a claim for Losses pursuant to Article 6 below.

6. INDEMNIFICATION

6.1 Indemnification by the Seller.

Without limiting any other rights or remedies available to Purchaser, the Seller will indemnify, defend and hold harmless Purchaser and its affiliates and their respective officers, directors, members, managers, employees and shareholders from (collectively, "Affiliates"), against and with respect to any claim, liability, obligation, loss, damage, assessment, judgment, settlement, cost and expense (including costs attributable to the loss of the use of funds to the date on which the indemnification payment is made hereunder, reasonable attorneys' and accountants' fees, and costs and expenses reasonably incurred in investigating, preparing, defending against or prosecuting any litigation or claim, action, suit, proceeding or demand), of any kind or character (collectively, the "Losses") arising out of or in any manner incident, relating or attributable to:

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(a) any inaccuracy or breach in any representation or breach of any warranty of Seller contained in this Agreement, in any of the Related Agreements or in any certificate, instrument of transfer or other document or agreement executed by Seller in connection with this Agreement;

(b) any failure by Seller to perform or observe any covenant or agreement to be performed or observed by it or on its behalf under this Agreement, in any of the Related Agreements or under any certificates or other documents or agreements executed by Seller in connection with this Agreement;

(c) all Excluded Liabilities;

(d) any claim, allegation or assertion that the development, manufacture, marketing, distribution or sale of any Asset or product in the Business product line by Seller on or prior to the Closing Date that allegedly or actually infringes, violates or misappropriates any Intellectual Property or other proprietary rights of such third party; and

(e) all Returns.

6.2 Indemnification by the Purchaser.

Without limiting any other rights or remedies available to Seller, the Purchaser will indemnify, defend and hold harmless Seller and its Affiliates from, against and with respect to any Losses arising out of or in any manner incident, relating or attributable to:

(a) any inaccuracy or breach in any representation or breach of any warranty of Purchaser contained in this Agreement, in any of the Related Agreements or in any certificate, instrument of transfer or other document or agreement executed by Purchaser in connection with this Agreement;

(b) any failure by Purchaser to perform or observe any covenant or agreement to be performed or observed by it or on its behalf under this Agreement, in any of the Related Agreements or under any certificates or other documents or agreements executed by Seller in connection with this Agreement;

(c) all Assumed Liabilities; and

(d) any claim, allegation or assertion that the development, manufacture, marketing, distribution or sale of any Asset or product in the Business product line by Seller prior to the Closing Date that allegedly or actually infringes, violates or misappropriates any Intellectual Property or other proprietary rights of such third party.

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7. MISCELLANEOUS

7.1 No Waiver.

No waiver of any breach of any agreement or provision herein contained will be deemed a waiver of any preceding or succeeding breach thereof or of any other agreement or provision herein contained. No extension of time for performance of any obligations or acts will be deemed an extension of the time for performance of any other obligations or acts.

7.2 Successors and Assigns.

This Agreement will bind and inure to the benefit of the parties hereto and their successors and assigns. Purchaser may, without the consent of Seller, assign its rights and obligations under this Agreement to a third party.

7.3 Notices.

Any notice required or permitted to be given hereunder pursuant to this Agreement will be sent by certified or registered mail, postage prepaid, as follows:

To Purchaser:	Quatech Inc. 5675 Hudson Industrial Park Hudson, Ohio 44236 Attn: Steven D. Runkel Telephone: (330) 655-9000
With a copy (not constituting notice) to:	Buchanan Ingersoll & Rooney PC One Oxford Centre 301 Grant St., 20th Floor Pittsburgh, PA 15219 Attn: Perry S. Patterson, Esq. Telephone: 412-562-8445 Facsimile: 412-562-1041
To Seller:	Socket Mobile, Inc. 39700 Eureka Drive Newark, CA 94560 Attn: Kevin Mills Telephone: (510) 933-3111 Facsimile: (510) 933-3104

7.4 Survival of Obligations.

Except as otherwise provided herein or therein, the provisions of this Agreement and of any other document delivered hereunder will continue and will survive for eighteen (18) months following the execution and delivery of this Agreement and consummation of the Transactions. Notwithstanding the foregoing, (i) the covenants, representations, warranties set forth in Article 4 above which are breached as a result of fraud and/or willful or intentional breaches shall survive indefinitely and shall not expire and (ii) Purchaser's rights and Seller's obligations under Sections 5.10, 5.11, 5.12 and 5.13 shall survive indefinitely and shall not expire.

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7.5 Complete Agreement.

This Agreement, the Related Agreements, and the exhibits and schedules hereto and thereto contain the complete agreement of the parties with respect to the purchase and sale of the Assets and the Inventory, and no representations made by any party may be relied on unless set forth herein, therein or in such exhibits or schedules hereto or thereto. This Agreement may be altered or amended only by an instrument in writing, duly executed by all of the parties hereto.

7.6 Applicable Law; Jurisdiction.

All questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the domestic laws of the State of Ohio, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Ohio or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Ohio. Any lawsuit arising out of or in any way related to this Agreement to the parties' relationship hereunder shall be brought only in those state or federal courts having jurisdiction over actions arising in the State of Ohio.

7.7 Counterparts.

This Agreement may be signed in any number of counterparts, with the same effect as if all signatures were upon the same instrument.

7.8 Further Assurances.

Each party covenants that at any time, and from time to time, before or after the Closing Date, it will execute such additional instruments and take such actions as may be reasonably requested by the other party to carry out the intent and purposes of this Agreement.

[The remainder of this page has been intentionally left blank]

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

Quatech Inc.

By: /s/ Steven D. Runkel
Steven D. Runkel, President

Socket Mobile, Inc.

By: /s/ Kevin J. Mills
Kevin J. Mills, President and CEO

Development Capital Ventures, LP

By: /s/ Donald L. Murfin
Donald L. Murfin, Executive Vice President,
DCC Operating, Inc. General Partner

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Schedule 1.1(a)

Assets

The Assets included in this sale are Seller's entire stock and inventory of (including new Products returned from Seller's distributors whose distributor rights have been cancelled), and all of its rights, title and interest in and to, the following:

"Products"
CF Serial Card Removable cable and ruggedized (fixed cable)
PC Serial Card Removable cable and ruggedized (fixed cable)
PC Dual Serial Card Removable cable and ruggedized (fixed cable)
PC Quad Serial Card Removable cable and ruggedized (fixed cable)
USB to Serial Adapter
USB to Ethernet Adapter

"Other assets"
Tooling owned by Seller used in the manufacture of the Products;
Product accessories and components (with the exception of the Chips and Chip Specifications);
All serial driver software and the source code and related documentation therefor; and
All engineering drawings, specifications and data sheets for the Products.
"Socket Serial" website
All planning materials for a BC04 Bluetooth Cordless Serial Adapter "as is".
Excel files containing:

• Registered serial product user information from Purchaser's registration data base
  
  
• Customer service history information from Purchaser's customer service data base
  
  
• Information identifying members of Purchaser's Customer Advisory Board

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Schedule 1.1(b)

Changes relating to Seller's Contracts

Distributor Agreements: Seller agrees that commencing with the date of closing of this Agreement, Seller will advise each of its distributors of the sale of the serial business and the continuation of the serial business by Purchaser. In addition, Seller shall provide each distributor with a notice of discontinuation of the serial product assets by Seller and the availability of the serial product assets from Purchaser, all in accordance with the transition steps described in Schedule 1.5.

Supplier Agreements: Seller agrees that commencing with the date of closing of this Agreement, Seller will advise each supplier of its serial product components of the sale of the serial business and the continuation of the serial business by Purchaser. Seller shall also advise each supplier of the transfer of ownership of any serial product tooling and intellectual property used or held by supplier.

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Schedule 1.1(c)

Intangible Assets

Exclusive use of the name "Socket Serial" and related TM trademarks

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Schedule 1.2

Assumed Liabilities

Seller warrants its serial products to perform in accordance with product specifications for a period of one year. Such warranty includes a number of exclusions including abuse or intentional damage, use in an unintended manner or environment and incompatibility. Seller's remedies are to repair or replace the product.

Seller and Purchaser intend to transfer customer support responsibilities from Seller to Purchaser and Purchaser will honor Seller's warranty commitments. Purchaser shall charge Seller and Seller shall reimburse purchaser for the cost of warranty support for serial products sold by Seller prior to the closing date of the Purchase.

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Exhibit 1.4

Supply and Licensing Agreement

[To be inserted]

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Schedule 1.5

Transition Services

Seller and Purchaser wish to insure a smooth transition from seller to buyer without disruption of product flow or support to customers. Following is a general outline of the intent of the parties in achieving such transition.

Timely notification of suppliers and customers. Seller and Purchaser shall notify suppliers and customers of the sale/purchase of the serial product line and cooperate in enabling suppliers and distributors to establish relationships with Purchaser.

Transfer of finished goods. Purchaser may order finished goods from Seller for delivery during September while supplier arrangements are being activated. Such goods shall be transferred at Socket cost.

Post-closing support of distributors. Seller's distributors generally have 30 days from the date of notification (first item above) to continue to obtain product from Seller and to return product to Seller. Seller will continue to supply distributors post closing as an agent for Purchaser and shall supply Purchaser with detailed information of products shipped by customer. All shipments post closing shall be to the benefit of Purchaser including recognition of the revenue. The margin (revenue less product cost) shall be paid by Seller to Purchaser as agreed between the parties.

Inventories on hand consist of finished goods, useable components. Inventories are also consigned to various suppliers. Seller shall continue to use these inventories to build product for or on behalf of Purchaser. On completion of this transition (expected around the end of September), a detail listing of inventories on hand and consigned inventories shall be prepared by seller for transfer to Purchaser at seller's cost. The determination of useable inventories shall be at the sole discretion of Purchaser.

Customer warranty support shall be continued by Seller until transitioned to Purchaser as described in Schedule 1.2. Such transition is expected to occur approximately one month after closing.

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Schedule 4.3

Consents

Approval to close the transaction from Seller's Board of Directors

Approval to sell the assets from Seller's bank, Silicon Valley Bank. Seller's bank line of credit is secured by all assets of Seller and sale of assets other than in the ordinary course of business requires the approval of the Bank.

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Schedule 4.11

Inventory

Cordless Serial Adapter (CSA)
The Cordless Serial Adapter (CSA) includes a BC02 Bluetooth module that has been given end of life status due to the discontinuation of the manufacture of the BC02 chip by its manufacturer. Seller has approximately 1,700 CSA products manufactured and has approximately 2,100 BC02 modules that can be used to manufacture an additional 2,100 CSA products. Purchaser is acquiring the 1,700 CSA products by March 31, 2009 and will advise Seller by October 31, 2009 as to what number of BC02 modules will be acquired to enable additional CSA units to be manufactured.

CompactFlash Rugged IO (CF+RIO)
The 15 pin internal connector used on the CF+RIO is EOL. Socket is currently working with a final 2K quantity from our supplier and do not have an alternative connector available. Socket's going forward plan would be to re-layout the PCB to physically fit into another one of Socket's CF cases and adjust the over-mold design on the end of the cable to work with the adjusted configuration. This is not considered a major effort, but should get started this quarter to prevent any interruption in the overall channel supply based on current inventory. The overall effort will take a few weeks. Adjusted design with case would still be ordered from our current supplier. The change will warrant updates to the physical properties listed on data sheets and documentation images, as well as web site images.

Removable Serial Cables
The 15 pin connector used on the Removable Serial Cables (PN 8100-00016) has just gone EoL. This has just been confirmed by our supplier. Socket has been anticipating this and already as some new sample prototypes being built using a standard Honda 15 pin connector which can be procured from market sources. Socket is having these samples delivered for review and approval. Socket will provide an update after review and approval of the connector samples being received from our Taiwan supplier.

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Schedule 4.4

Undisclosed liabilities

All of Seller's assets are pledged as collateral against the bank line of credit with Silicon Valley Bank. Bank approval of the sale of the serial business is required to consummate the sale.

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EX-10

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 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.

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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.

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.

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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.

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.

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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.

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.

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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

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.

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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.

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

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)

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

APPENDIX C
FORM OF ESCROW AGREEMENT
(To be attached)

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.

EX-99.1 CHARTER

Exhibit 99.1

SOCKET MOBILE, INC. QUATECH
A DPAC TECHNOLOGIES COMPANY

NEWS RELEASE

For Immediate Release

QUATECH ENHANCES PRODUCT LINE WITH SOCKETSERIAL™ PURCHASE Quatech purchases a leading product line of mobile serial connectivity devices

HUDSON, OHIO, - October 1, 2009 - Quatech, Inc., a division of DPAC Technologies (OTCBB: DPAC.OB), and a leader in wireless machine-to-machine (M2M) networking and device connectivity solutions, and Socket Mobile Inc.,(Nasdaq, SCKT) an innovative provider of mobile productivity products, today announced the Quatech purchase of SocketSerial, a business unit of Socket Mobile Inc. selling SocketSerial branded connectivity devices for laptops and handheld computers. Quatech intends to continue to offer the SocketSerial product line worldwide through general two-tier distribution channels under the SocketSerial brand.

Founded in 1983, Quatech is the leading supplier in high performance connectivity solutions for mobile computing, industrial laptops and handheld computers with a broad range of interface adapters. Quatech released the PCMCIA product line in 1994 and today offers more choices in serial I/O PC cards than any other manufacturer. As laptop and handheld technology evolves, Quatech continues to offer the next generation interfaces in mobile connectivity by connecting high-bandwidth peripherals through PCMCIA and ExpressCards slots and USB to Serial Adapters. Offering options including multiport RS-232/422/485 serial and parallel configurations, Quatech laptop and handheld products are widely used in medical, transportation, industrial and telecommunication applications.

SocketSerial, an innovator in serial device technology for mobile platforms, has manufactured serial communications peripherals for notebooks, PDAs and tablets since 1993. Since then, Socket Mobile, through its SocketSerial business unit, has continued to be one of the top two leading suppliers, alongside Quatech, in serial peripheral technology. This acquisition by Quatech combines the technical and support strengths of two of the leading and longtime providers of connectivity solutions into a single organization.

"We are very excited about merging the top two leading lines of serial peripheral technology for mobile users." Quatech President and CEO Steve Runkel said. "With the addition of the SocketSerial branded product line, Quatech continues to seamlessly integrate a wide range of devices and peripherals, providing reliable solutions for today's mobile computer systems."

Quatech, a company dedicated for 26 years to the highest level of performance through quality design and manufacturing, and world-class service and support, is committed to delivering SocketSerial customers with the same excellent service. "Our goal is to make the integration of SocketSerial to Quatech ownership a positive transition for the customers." Runkel said. Under Quatech ownership, customers will have several avenues of customer support including a live chat and advanced support and download pages for customer support documentation needs.

For more information on any of Quatech's products, please visit www.Quatech.com, and for information on SocketSerial please visit www.SocketSerial.com.

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About Quatech, Inc.

Quatech delivers high performance device networking and connectivity solutions to help companies improve their bottom line results. Its products enable reliable machine-to-machine (M2M) communications via secure 802.11 wireless or traditional wired networks, with industrial-grade embedded radios, modules, boards and external device servers, and bridges. For local and mobile connections, Quatech's serial adapters provide secure connectivity and port expansion via any interface option.

Satisfied customers worldwide rely on Quatech's unique combination of performance and support to improve operations through real-time remote monitoring and control, streamlined systems, and lowest total cost of ownership (TCO). Quatech markets its products through a global network of distributors, resellers, systems integrators and original equipment manufacturers in the transportation, instrumentation and industrial control, homeland security, medical equipment, and logistics markets. Founded in 1983, Quatech is headquartered in Hudson, Ohio. Quatech merged with DPAC Technologies (OTCBB: DPAC) in February 2006. Information concerning DPAC is filed by DPAC with the SEC and is available on the SEC website, www.sec.gov. To learn more about Quatech's complete line of device networking and connectivity solutions, visit www.quatech.com.

About Socket Mobile

With more than 15 years of experience in the Automatic Identification and Data Capture market, Socket makes mobile computing and productivity work. The company offers a family of handheld computers and an extensive portfolio of AIDC peripherals designed specifically for business mobility deployments and to enable productivity increases and drive operational efficiencies in healthcare, hospitality and other vertical markets. The company also offers OEM solutions. Socket is headquartered in Newark, Calif. and can be reached at 510-933-3000 or www.socketmobile.com.

#####

Media Contacts:
Jennifer McKeever	David Dunlap, CFO
Quatech, Inc.	Socket Mobile, Inc.
PH: (330) 655-9000	PH: (510) 933-3035
Email: jennifer.mckeever@quatech.com	Email: dave@socketmobile.com

Forward-Looking Statements

This press release includes forward-looking statements. You can identify these statements by their forward-looking words such as "may," "will," "expect," "anticipate," "believe," "guidance," "estimate," "intend," predict," and "continue" or similar words or any connection with any discussion of future events or circumstances or of management's current estimates or beliefs. Forward-looking statements are subject to risks and uncertainties, and therefore results may differ materially from those set forth in those statements. More information about the risks and challenges faced by DPAC Technologies Corp. is contained in the Securities and Exchange Commission filings made by the Company on Form S-4, 10-K, 10-Q or 10-QSB and 8-K. DPAC Technologies Corp. specifically disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise.