Document:

Proposed 2005 Amendment to 1996 Stock Option Plan

 EXHIBIT 10.3.1 
  
 Proposed 2005 Amendments to the 1996 Stock Option Plan (the “Plan”) 
  

	1.	Amendment to Increase the Number of Shares of Common Stock Which May Be Issued Under the Plan. 

  
 Section 4, entitled “NUMBER OF SHARES SUBJECT TO PLAN,” is amended and restated in its entirety as follows:

  
 “The stock to be offered under the Plan shall consist of
up to 6,000,000 shares of the Company’s Common Stock plus four percent (4%) of the total number of outstanding shares of Common Stock each year from 2001 until the termination of the Plan. If any Option granted hereunder shall expire or
terminate for any reason without having been exercised in full, the unpurchased shares subject thereto shall again be available for purposes of this Plan.” 
  

	2.	Amendment to Extend the Termination Date of the Plan. 

  
 Section 19, entitled “TERM OF PLAN,” is amended and restated in its entirety as follows: 
  
 “No Option shall be granted pursuant to the Plan after January 17,
2011 unless earlier terminated by the Board of Directors or extended by an amendment approved by the stockholders of the Company. The Plan was adopted by the Board on January 17, 1996. The Plan was approved by the shareholders on
September 12, 1996.”Form of Employment Agreement for Steven D. Runkel

 EXHIBIT 10.20 
  
 FORM OF EMPLOYMENT AGREEMENT FOR 
 STEVEN D. RUNKEL 
  
 This Employment Agreement
(“Agreement”) is made and entered into by and between DPAC Technologies Corp., a California corporation (the “Company”) and Steven D. Runkel, an individual (“Executive”), effective as of the Effective Date as defined in
the Agreement and Plan of Reorganization dated April     , 2005 (“Merger Agreement”) among the Company, Quatech, Inc. and Acquisition Sub, as defined in the Merger Agreement. In consideration of the mutual
covenants and agreements set forth herein, receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 ARTICLE I 
 EMPLOYMENT 
  
 The Company hereby employs Executive and Executive accepts employment with the Company upon
the terms and conditions herein set forth. 
  
 1.
Employment. The Company hereby employs Executive, and Executive agrees to serve, as the Chief Executive Officer of the Company, reporting to the Board of Directors of the Company, commencing on the Effective Date and thereafter during the
term of this Agreement. In the event the Effective Date does not occur and the Merger Agreement is terminated, this Agreement shall be null and void and of no force or effect whatsoever. Executive agrees to perform such usual and customary duties of
such office as may be delegated to Executive from time to time by the Board of Directors of the Company. Executive agrees to devote substantially Executive’s full business time and attention and best efforts to the affairs of the Company during
the term of this Agreement. 
  
 1.2 Term. The term of
employment of Executive hereunder will be for the period commencing on the date of this Agreement and ending on the earliest of: 
  
 (a) December 31, 2006; 
  
 (b) The date of termination of Executive’s employment in accordance with Article IV of this Agreement; or 
  
 (c) The date of Executive’s death. 
  
 ARTICLE II 
 COMPENSATION 
  
 1.2 Base Salary. Effective on and after the Effective Date and thereafter during the employment of Executive, the Company shall pay Executive a base salary at the rate of $210,000 per year. 
  
 2.2 Auto Allowance. Executive shall receive an automobile allowance of
$750 per month. 
  
 2.3 Annual Incentive Compensation
Program. Executive shall be eligible to participate in any and every annual incentive compensation program of the Company, at a level commensurate with other Company senior executives, as established by the Board of Directors of the Company from
time to time. 
  
 2.4 Reimbursement of Expenses. Executive
shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Executive in performing services hereunder, including all expenses of travel, mobile phones, business entertainment and living expenses while away from home on
business at the request of, or in the 

 
service of, the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the
Company. 
  
 2.5 Benefits. Executive shall be entitled to
participate in or be covered by, as the case may be, all health, insurance, pension, disability insurance, physical exam and other employee plans and benefits established by the Company (collectively referred to herein as the “Benefit
Plans”) on the same terms as are generally applicable to other senior executives of the Company, subject to meeting applicable eligibility requirements. 
  
 2.6 Vacations and Holidays. During Executive’s employment with the Company, Executive shall be entitled to an annual vacation leave at full
pay, such vacation to be four weeks in each year of the term hereof or such greater vacation benefits as may be provided for by the Company’s vacation policies applicable to senior executives, as established by the Board of Directors of the
Company from time to time. Executive shall be entitled to such holidays as are established by the Company for all employees. 
  
 ARTICLE III 
 NON-COMPETITION, CONFIDENTIALITY
AND NONDISCLOSURE 
  
 3.1 Confidentiality Agreement.
Concurrently with the execution of this Agreement, Executive will execute and deliver Company’s standard Employee Assignment of Inventions and Non-Disclosure Agreement, and be bound by the terms thereof. As a condition of Executive’s
employment hereof, Executive agrees that all references to “Company” in the Employee Invention and Non-Disclosure Agreement shall be deemed to include the Company as well as Quatech, Inc. and any other subsidiary, direct or indirect, of
the Company. 
  
 3.2 No Violation of Other Agreements.
Executive represents that Executive’s performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to (i) not compete or interfere with the business of a former employer (which term
for purposes of this Section 3.3 shall also include persons, firms, corporations and other entities for which Executive has acted as an independent contractor or consultant), (ii) not solicit employees, customers or vendors of any former employer,
or (iii) keep in confidence proprietary information acquired by Executive in confidence or in trust prior to Executive’s employment with the Company. Executive represents and warrants to and covenants with the Company that Executive will not
bring to the Company any materials or documents of a former employer containing confidential or proprietary information that is not generally available to the public, unless Executive shall have obtained express written authorization from any such
former employer for their possession and use. 
  
 ARTICLE IV

 TERMINATION 
  
 4.1 Definitions. For purposes of this Article IV, the following definitions shall apply to the terms set forth below: 
  
 (a) Cause. “Cause” shall be defined as
follows: 
  
 (i) Executive’s conviction of,
or guilty plea to, any felony (whether or not involving the Company) which constitutes a crime of moral turpitude or which is punishable by imprisonment in a state or federal correctional facility; 
  
 (ii) Actions by Executive during the term of this Agreement
involving willful malfeasance or gross negligence in the performance of Executive’s duties hereunder; 
  
 (iii) Executive’s commission of an act of fraud, whether prior or subsequent to the date hereof, upon the Company; 

 (iv) Executive’s willful failure or refusal to perform Executive’s duties as
required by this Agreement; and 
  
 (v)
Executive’s willful violation of any reasonable rule or regulation of the Board of Directors applicable to all senior executives if such violation is not cured promptly following notice to Executive. 
  
 For purposes of items (i) through (v) above, a conviction or the commission
or omission of any act of Executive described therein shall not be deemed to constitute “Cause” unless a majority of the Board of Directors affirmatively votes to deem it to be material and to constitute “Cause” for purposes
hereof, following five (5) business days’ notice to Executive of a meeting of the Board of Directors and an open discussion and presentation by Executive explaining such conviction, act or omission. 
  
 (b) Good Reason. “Good Reason” shall mean
the relocation of Executive without Executive’s written consent. 
  
 4.2 Termination by Company. The Company may terminate Executive’s employment hereunder immediately for Cause. Subject to the other provisions contained in this Agreement, the Company may terminate this Agreement for any reason
other than Cause upon thirty (30) days’ written notice to Executive. 
  
 4.3 Termination by Executive. Executive may terminate this Agreement and Executive’s employment hereunder upon thirty (30) days’ written notice to the Company. 
  
 4.4 Benefits Received Upon Termination. 
  
 (a) If Executive’s employment is terminated by the
Company for Cause, or if this Agreement is terminated by Executive for any reason under circumstances not constituting Good Reason, then the Company shall pay Executive Executive’s Base Salary through the effective date of such termination plus
credit for any vacation earned but not taken. Thereafter, the Company shall have no further obligations to Executive under this Agreement; provided, however, that the Company will continue to honor any obligations that may have vested or been
accrued and not forfeited on termination pursuant to and under the existing Company Benefit Plans or any other agreements or arrangements applicable to Executive. 
  
 (b) If Executive’s employment is terminated by the Company without Cause or by Executive for Good
Reason the Company shall: 
  
 (i) pay Executive,
within two (2) business days following the date of termination, any unpaid portion of Executive’s Base Salary and Auto Allowance through the date of termination, plus an additional 30 days from the date of termination, in lieu of the required
notification period, plus credit for any vacation earned but not taken; and 
  
 (ii) as severance pay Executive’s Base Salary plus Auto Allowance in effect as of the date of termination, such payments to be made in accordance with the Company’s usual payroll periods for the twelve (12)
months immediately following the termination of employment under this Agreement, subject to withholding in accordance with the Company’s usual payroll practices; and 
  
 (iii) if Executive holds unvested restricted stock or unvested stock options, accelerate the vesting of all
of Executive’s stock or stock options at and from the date of Executive’s termination , so that all restrictions on restricted stock shall lapse immediately and all unvested stock options will vest immediately; and 

 (iv) if Executive holds unexercised stock options on the date of termination, amend the
options to permit all vested options, including those vested as a result of the preceding clause, to be exercised for two years from and after the date of Executive’s termination. 
  
 (c) Termination Because of Employee Death or Disability. Should Executive die or become disabled, as
defined under the written insurance policies and procedures that may from time to time be obtained by the Company and its employment policies, the Company, or its insurer, shall pay Executive or the personal representative thereof the amount of
twelve (12) months of Executive’s Base Salary, such payments to be made in accordance with the Company’s usual payroll periods for twelve (12) months following the termination of employment under this Agreement, subject to withholding in
accordance with the Company’s usual payroll practices, in addition to any other compensation under this Agreement. 
  
 4.5 Effect of Termination. Upon any termination of this Agreement, for any reason, Executive shall be deemed to have immediately resigned in all
capacities as an officer of the Company and as an officer or director of all subsidiaries of the Company, if applicable, without the giving of any notice or the taking of any other action; provided, however, that termination under this Agreement
shall not alter any rights of Executive expressly granted under any other written agreement approved and adopted by the Board of Directors of the Company. 
  
 ARTICLE V 
 ASSUMPTION OF OBLIGATIONS BY
SUCCESSOR TO COMPANY 
  
 5.1 Assumption of Obligations. The
Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, to assume expressly, absolutely and unconditionally
and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Any failure of the Company to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of this Agreement. As used in this Agreement, “Company” shall mean the Company as herein before defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this Article V or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. 
  
 5.2 Beneficial Interests. This Agreement shall inure to the benefit of
and be enforceable by Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts are still payable to him or her hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive’s personal representative, devisee, legatee, or other designee or, if there be no such designee, to Executive’s
estate. 
  
 ARTICLE VI 
 GENERAL PROVISIONS 
  
 6.1 Notice. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: 
  
 If to the Company: 
  
 DPAC Technologies Corp. 
 7321 Lincoln Way 
 Garden Grove, California 92841 
 Attention:                             
 Facsimile No. (714) 897-1772 

 With a Copy to: 
  
 The Yocca Law Firm, LLP 
 19900 MacArthur Blvd., Suite 650 
 Irvine, California 92612 
 Attention: Nicholas J. Yocca 
 Facsimile No. (949) 253-0870 
  
 If to Executive: 
  
 Steven D. Runkel 

______________________ 
 ______________________ 
 ______________________ 
 Facsimile No.
             
  
 or such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 
  
 6.2 No Waivers. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to specifically in a writing signed by Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 
  
 6.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio. 
  
 6.4
Severability or Partial Invalidity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

  
 6.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 
  
 6.6 Legal Fees and Expenses. Should any party institute any action or proceeding to enforce this Agreement or any provision hereof, or for damages
by reason of any alleged breach of this Agreement or of any provision hereof, or for a declaration of rights hereunder, the prevailing party in any such action or proceeding shall be entitled to receive from the other party all costs and expenses,
including reasonable attorneys’ fees, incurred by the prevailing party in connection with such action or proceeding. 
  
 6.7 Entire Agreement. This Agreement constitutes the entire agreement of the parties and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations between the parties with respect to the subject matter hereof. This Agreement is intended by the parties as the final expression of their agreement with respect to such terms as are
included in this Agreement and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and that no extrinsic evidence
may be introduced in any judicial proceeding involving this Agreement. 
  
 6.8 Assignment. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by Executive without the prior written consent of 

 
the Company and any such attempted assignment and delegation shall be void and be of no effect. The Company may assign or delegate its rights, duties and
obligations hereunder to any person or entity; provided that such person or entity assumes the Company’s obligations under this Agreement in accordance with Section 5.1. 
  
 6.9 Indemnification. To the extent permitted by law, applicable statutes and the Articles of Incorporation, Bylaws or
resolutions of the Company in effect from time to time, the Company shall indemnify Executive against liability or loss arising out of Executive’s actual or asserted misfeasance or nonfeasance in the performance of Executive’s duties under
this Agreement or out of any actual or asserted wrongful act against or by the Company including but not limited to judgments, fines, settlements and expenses incurred in the defense of actions, proceedings and appeals therefrom. The Company shall
endeavor to obtain Directors and Officers’ Liability Insurance to indemnify and insure the Company and Executive from and against the aforesaid liabilities, subject to exclusions in the insurance contract. The provisions of this paragraph shall
apply to the estate, executor, administrator, heirs, legatees or devisees of Executive. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 
  

	
	 “Executive”

	
	 
	Steven D. Runkel

  

			
	 “Company”

	
	 DPAC Technologies Corp.

		
	By:

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