Document:

Second Modification Agreement

 Exhibit 10.1 
 SECOND MODIFICATION AGREEMENT 
 THIS SECOND
MODIFICATION AGREEMENT (“Agreement”) is dated to be effective as of the 11th day of January, 2011 (“Effective Date”), by and between each of the undersigned Lenders (“Lenders”); MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation in its
capacity as Agent (“Agent”) for the Lenders; LECROY CORPORATION, a Delaware corporation (“Borrower”); CATALYST ENTERPRISES, INC., a California corporation, COMPUTER ACCESS TECHNOLOGY CORPORATION, a Delaware corporation, and
LECROY LIGHTSPEED CORPORATION, a Delaware corporation (collectively, “Guarantors,” and together with the Borrower, collectively, “Obligors”). 
 RECITALS 
 The Lenders have extended credit accommodations to the
Borrower in accordance with the terms of an Amended and Restated Credit Agreement dated to be effective as of July 29, 2010, as amended pursuant to the First Modification Agreement dated as of September 28, 2010 (as so amended, and as the
same may be amended, modified, extended, renewed, restated, supplemented, or replaced from time to time, “Credit Agreement”), and the terms of the other “Loan Documents,” as such term is defined in the Credit Agreement. The
Guarantors have guaranteed to the Credit Parties (as such term is defined in the Credit Agreement) the repayment and performance of all existing and future obligations of the Borrower to the Credit Parties pursuant to Guaranty Agreements dated as of
July 29, 2010 (as the same may be amended, modified, extended, renewed, restated, supplemented or replaced from time to time, collectively, “Guaranties”). Any capitalized terms used herein without definition which are defined in, or
defined by reference to the Credit Agreement shall have the meanings thereby assigned. 
 The parties hereto have entered into
this Agreement in order to amend certain provisions of the Credit Agreement as set forth below, on the terms and conditions set forth herein. 
 NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows: 

AGREEMENT 
 Section 1. Acknowledgment And Reaffirmation Of Obligations. The Obligors acknowledge and affirm that: (a) each of the Loan Documents is the valid and binding obligation of each of the Obligors
that is a signatory thereto; (b) the Loan Documents are enforceable in accordance with all stated terms; (c) the Obligors have no defenses, claims of offset, or counterclaims against the enforcement of the Loan Documents in accordance with
all stated terms; (d) no Default of Event of Default is presently existing. 
 Section 2. Amendment and Modification of
Credit Agreement. The Credit Agreement is hereby amended and modified as follows: 
 Section 2.1. Amendment to Definition
of “Applicable Rate”. The definition of “Applicable Rate” is hereby amended by replacing the pricing grid set forth in such definition with the following: 

 

																					
	
            Tier        
    
Level
	 	Total Leverage
Ratio	 	 	Applicable
Rate for
Adjusted
Base Rate
Borrowings	 	 	Applicable
Rate for
Eurodollar
Borrowings	 	 	Applicable
Rate
for
Commitment
Fees	 	 	Applicable
Rate for LC
Issuance
Fees	 
	1	 	 	3 2.50	  	 	 	2.00	% 	 	 	3.00	% 	 	 	0.35	% 	 	 	3.00	% 
	2	 	3	 2.00 < 2.50	  	 	 	1.75	% 	 	 	2.75	% 	 	 	0.30	% 	 	 	2.75	% 
	3	 	3	 1.50 < 2.00	  	 	 	1.50	% 	 	 	2.50	% 	 	 	0.25	% 	 	 	2.50	% 
	4	 	3	 1.00 < 1.50	  	 	 	1.25	% 	 	 	2.25	% 	 	 	0.20	% 	 	 	2.25	% 
	5	 	 	< 1.00	  	 	 	1.00	% 	 	 	2.00	% 	 	 	0.15	% 	 	 	2.00	% 

 Section 2.2. Amendment to Definition of “LIBOR Rate”. The definition of
“LIBOR Rate” is hereby amended by replacing the proviso set forth at the end of such definition with the following: 

provided that, in no event shall the LIBOR Rate be a rate less than 0.375% per annum. 

Section 2.3. Amendment to Definition of “Maturity Date”. The definition of “Maturity Date” is hereby amended
by replacing the first sentence of such definition with the following: 
 “Maturity Date” means January 1,
2014. 
 Section 2.4. Amendment to Definition of “Permitted Acquisition”. The definition of “Permitted
Acquisition” is hereby amended by replacing the final proviso clause thereof with the following: 
 (f) the aggregate amount
of all consideration payable for such acquisition, which when combined with the aggregate amount of all consideration paid or payable by the Borrower and its Subsidiaries pursuant to other Permitted Acquisitions occurring in the same Fiscal Year,
shall not be more than Ten Million Dollars ($10,000,000.00). 
 Section 2.5. Amendment to Section 2.01(d).
Section 2.01(d) (captioned “Increase in Revolving Credit Commitments”) is hereby amended by deleting clause “(x)” thereof and marking same as “intentionally omitted.” 

Section 2.6. Amendment to Section 7.04. Section 7.04 (captioned “Investments, Loans, Advances, Guarantees, and
Acquisitions”) is hereby amended by replacing clause “(d)” with the following: 
 (d) Permitted Acquisitions;
provided that the aggregate amount of consideration for all Permitted Acquisitions entered into by the Borrower and/or its Subsidiaries in any Fiscal Year shall not exceed Ten Million Dollars ($10,000,000.00). 

Section 2.7. Amendment to Section 7.08. Section 7.08 (captioned “Restricted Payments”) is hereby amended by
replacing clause “(c)” thereof with the following: 
 (c) so long as no Default or Event of Default exists and is
continuing, prior to and after giving effect to such repurchase, including but not limited to full compliance with all of its financial covenants set forth in this Agreement, the Borrower may repurchase outstanding shares of its Capital Stock in an
aggregate amount of up to $5,000,000.00 in any Fiscal Year. 
 Section 2.8. Amendment to Section 7.12.
Section 7.12 (captioned “Senior Leverage Ratio”) is hereby deleted and marked as “intentionally omitted.” 
 Section 2.9. Amendment to Section 7.13. Section 7.13 (captioned “Total Leverage Ratio”) is hereby amended and restated in its entirety as follows: 

Section 7.13 Total Leverage Ratio. Tested quarterly, as of the last day of each fiscal quarter, the
Borrower’s Total Leverage Ratio for the previous four quarters shall not at any time exceed 2.75:1.00. 
 Section 2.10.
Amendment to Section 7.14. Section 7.14 (captioned “Minimum Consolidated EBITDA”) is hereby amended and restated in its entirety as follows: 

Section 7.14 Minimum Consolidated EBITDA. Tested quarterly, at the end of each fiscal quarter and determined
on a trailing twelve-month basis, the Borrower shall not, at any time, cause, permit or allow its Consolidated EBITDA to be less than $15,000,000.00. 

  
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 Section 2.11. Amendment to Section 7.16. Section 7.16 (captioned
“Maximum Capital Expenditures”) is hereby amended and restated in its entirety as follows: 

Section 7.16 Maximum Capital Expenditures. Tested annually, at the end of each Fiscal Year, the Borrower shall
not, at any time, permit Capital Expenditures made or obligated to be made by the Borrower and its Subsidiaries to exceed $7,000,000.00 in any Fiscal Year. 
 Section 2.12. Amendment to Section 7.17. Section 7.17 (captioned “Maximum Debt Outstanding”) is hereby deleted and marked as “intentionally omitted.” 

Section 2.13. Amendment to Section 7.18. Section 7.18 (captioned “Minimum Liquidity”) is hereby deleted and
marked as “intentionally omitted.” 
 Section 2.14. Amendment to Section 7.19. Section 7.19
(captioned “Amendments to Convertible Senior Notes and Indenture; Prepayment of Convertible Senior Notes”) is hereby amended and restated in its entirety as set forth below: 

7.19. Amendments to Convertible Senior Notes and Indenture; Prepayment of Convertible Senior Notes. The Borrower
will not agree to any amendments to the Indenture or the Convertible Senior Notes, except for any amendments to the Indenture and the Convertible Senior Notes (a) under which the holders thereof waive their rights to require the Borrower to
redeem or repurchase the Convertible Senior Notes on the First Repurchase Date or any other Repurchase Date, (b) which have the effect of extending the First Repurchase Date, or any other Repurchase Date, from the date presently set forth in
the Convertible Senior Notes and the Indenture to a date not less than one hundred eighty (180) days after January 1, 2014, and (c) which, in connection with the foregoing, modify the conversion price. The Borrower will not redeem or
repurchase any Convertible Senior Notes prior to the First Repurchase Date or any other respective stated Repurchase Date, or prepay any principal, premium or interest upon the Convertible Senior Notes prior to any stated payment or maturity date;
except that, in the absence of any continuing Defaults or Events of Default, the Borrower may redeem, repurchase, or prepay any principal, premium or interest amounts under the Convertible Senior Notes on the respective stated Repurchase Date
therefor, provided that, prior to, and after giving effect to, each such redemption, repurchase, or prepayment transaction: 
  

	 	(a)	the Borrower is in full compliance with all of the terms and conditions set forth in this Agreement and the other Loan Documents; and 

 

	 	(b)	no Defaults or Events of Default would then exist. 

 Section 2.15. Amendment to Section 10.02. Section 10.02 (captioned “Waivers and Amendments”) is hereby amended to delete clause “(D)” of subsection 10.02(b)(ii) and
mark such clause “(D)” as intentionally omitted. 
 Section 3. No Other Modifications Of Loan Documents. The
parties acknowledge that except as specifically stated in this Agreement, the Credit Agreement and the other Loan Documents shall not be deemed to have been amended, modified or changed in any respect, and shall continue to be enforceable against
the parties thereto in accordance with all stated terms. Nothing contained herein is intended to limit, vary, or terminate any liens, pledges, or security interests presently existing for the benefit of the Credit Parties or to alter the lien
priority thereof. Each Obligor reaffirms and ratifies all of such liens, pledges, security interests or mortgage liens previously granted for the benefit of the Credit Parties. 

Section 4. Amendment Fee. The Borrower shall pay to the Agent for the benefit of each of the Lenders signing this Agreement on or
before the Effective Date, an amendment fee in an amount equal to the sum of the following calculated with respect to each such Lender (a) the Revolving Credit Committed Amount of each Lender, times (b) 15 Basis Points.

  
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 Section 5. Reimbursement of Expenses of Agent. The Obligors agree to reimburse the
Agent, promptly upon receipt of an invoice therefor, for all reasonable expenses incurred by the Agent in connection with this Agreement. 
 Section 6. Further Assurances. The Obligors each agree to execute and deliver to the Agent such documents as may, from time to time, be reasonably requested by the Agent in order to amend, modify
and restate any of the Loan Documents as contemplated by this Agreement and the Credit Agreement. 
 Section 7. No Novation;
No Refinance. It is the intent of each of the parties that nothing contained in this Agreement shall be deemed to effect or accomplish or otherwise constitute a novation of any of the Loans or the other Obligations or to be a refinance of any of
the Loans or the other Obligations. 
 Section 8. Enforceability. This Agreement shall inure to the benefit of and be
enforceable against each of the parties and their respective successors and assigns. 
 Section 9. Choice Of Law; Consent To
Jurisdiction; Agreement As To Venue. This Agreement shall be construed, performed and enforced and its validity and enforceability determined in accordance with the laws of the State of New York (“Governing State”) (excluding, however,
conflict of laws principles). Each of the parties irrevocably consents to the non-exclusive jurisdiction of the courts of the Governing State and any United States District Court located in the Governing State, if a basis for federal jurisdiction
exists. Each of the parties agrees that venue shall be proper in any State court located in the Governing State selected by the Agent on behalf of the Credit Parties or in any United States District Court located in the Governing State if a basis
for federal jurisdiction exists and waives any right to object to the maintenance of a suit in any of the state or federal courts of the Governing State on the basis of improper venue or of inconvenience of forum. 

Section 10. RELEASE. IN ORDER TO INDUCE THE CREDIT PARTIES TO ENTER INTO THIS AGREEMENT, EACH OF THE OBLIGORS FOREVER RELEASES
AND DISCHARGES EACH OF THE CREDIT PARTIES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS (COLLECTIVELY, THE “RELEASED PARTIES”) FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, SUITS AND DAMAGES (INCLUDING CLAIMS FOR
ATTORNEYS’ FEES AND COSTS) WHICH ANY OF THE OBLIGORS, JOINTLY OR SEVERALLY, EVER HAD OR MAY NOW HAVE AGAINST ANY OF THE RELEASED PARTIES FOR ANY CLAIMS ARISING OUT OF OR RELATED IN ANY WAY TO THE OBLIGATIONS, THE LOAN DOCUMENTS, THIS AGREEMENT
OR THE ADMINISTRATION THEREOF, WHETHER KNOWN OR UNKNOWN, INCLUDING BUT NOT LIMITED TO ANY AND ALL CLAIMS BASED UPON OR RELYING ON ANY ALLEGATIONS OR ASSERTIONS OF DURESS, ILLEGALITY, UNCONSCIONABILITY, BAD FAITH, BREACH OF CONTRACT, REGULATORY
VIOLATIONS, NEGLIGENCE, MISCONDUCT, OR ANY OTHER TORT, CONTRACT OR REGULATORY CLAIM OF ANY KIND OR NATURE. THIS RELEASE IS INTENDED TO BE FINAL AND IRREVOCABLE AND IS NOT SUBJECT TO THE SATISFACTION OF ANY CONDITIONS OF ANY KIND. 

Section 11. Counterparts And Delivery. This Agreement may be executed and delivered in counterparts, and shall be fully
enforceable against each signatory, even if all designated signatories do not actually execute this Agreement. This Agreement, and the signatures to this Agreement, may be delivered via facsimile. 

Section 12. Waiver of Jury Trial. All parties to this agreement waive the right to a trial by jury in any action brought to
enforce or construe this Agreement or which otherwise arises out of or relates to this Agreement or the transactions contemplated herein. 
 [Signatures Begin On The Following Page] 

  
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 Signature Page To Second Modification Agreement: 

IN WITNESS WHEREOF, the parties have executed this Agreement with the specific intention of creating a document under seal to be effective
as of the date first above written. 
  

							
	 WITNESS/ATTEST
	 		 	 BORROWER:
  

LECROY CORPORATION,
 A Delaware
Corporation

				
	  
	 		 	By:	 	/S/ SEAN B. O’CONNOR
		 		 		 	Sean B. O’Connor, Vice President-Finance
			
	 WITNESS/ATTEST

 
	 		 	 GUARANTORS:
  

CATALYST ENTERPRISES, INC.,
 A California
Corporation

				
	 	 		 	 By:
	 	/S/ SEAN B. O’CONNOR
		 		 		 	Sean B. O’Connor, Vice President-Finance
			
		 		 	 COMPUTER ACCESS TECHNOLOGY CORPORATION,
 A Delaware Corporation

				
	 	 		 	By:	 	/S/ SEAN B. O’CONNOR
		 		 		 	Sean B. O’Connor, Vice President-Finance
			
		 		 	 LECROY LIGHTSPEED CORPORATION,
 A Delaware Corporation

				
	 	 		 	 By:
	 	 /S/ SEAN B.
O’CONNOR

		 		 		 	Sean B. O’Connor, Vice President-Finance

 [Signatures Continued On The Following Page] 

 Signature Page To Second Modification Agreement – Continued: 

 

							
	 WITNESS/ATTEST
	 		 	 AGENT:
  

MANUFACTURERS AND TRADERS TRUST COMPANY,

A New York Banking Corporation, In Its Capacity As Agent
 For The Lenders

				
	 	 		 	By:	 	/S/ CHRIS TESLA
		 		 		 	Chris Tesla, Vice President
			
	 WITNESS/ATTEST
	 		 	 LENDER:
  

MANUFACTURERS AND TRADERS TRUST COMPANY,

A New York Banking Corporation, In Its Capacity As

A Lender

				
	 	 		 	By:	 	/S/ CHRIS TESLA
		 		 		 	Chris Tesla, Vice President

 [Signatures Continued On The Following Page] 

 Signature Page To Second Modification Agreement – Continued: 

 

									
	 WITNESS/ATTEST
	 		 	 LENDER:
  

CAPITAL ONE, N. A.,
 A National Banking
Association,
 Successor to North Fork Bank, In Its Capacity As A Lender

				
	 	 		 	By:	  	/S/ GEORGE STIRLING
		 		 		  	 Name:

Title:
	  	 George
Stirling                
 Senior Vice
President                

 Signature Page To Second Modification Agreement – Continued: 

 

									
	 WITNESS/ATTEST
	 		 	 LENDER:
  

RBS CITIZENS, N.A.,
 In Its Capacity As A
Lender

				
	 	 		 	By:	  	/S/ ANTHONY SELVAGGIO
		 		 		  	 Name:

Title:
	  	 Anthony
Selvaggio                
 Vice
PresidentEmployment Agreement

 Exhibit 10.1 
 EMPLOYMENT AGREEMENT 
 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 January 1, 2011. 

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. 
 1.1 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. 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) January 30, 2012;

 (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 

2.1 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 $225,000 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; 

  
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 (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 be defined as follows: 
 (i) The relocation of Executive without Executive’s written consent;

 (ii) The Executive’s title is substantially lessened; 

(iii) The Executive is assigned material duties that are materially inconsistent with the executive’s then-current status; and

 (iv) The Company fails to obtain the assumption of the agreement by any successor or assignee of the Company. 

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. 

  
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 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) in exchange for a full general release of
claims against the Company in a form reasonably acceptable to the Company, the Company will pay the Executive 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.
The Executive will continue to be covered by the Company under it existing Company Benefit Plans during the twelve (12) month period. In the event that the Executive enters into employment with another employer prior to the end of the twelve
(12) month period, the severance will be reduced to difference between Executive’s Base Salary plus Auto Allowance and the Executive’s new Base Salary plus Auto Allowance from the new employer; 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; and 
 (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-

 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.
		  	5675 Hudson Industrial Parkway
		  	Hudson, OH. 44236
		  	Attention: Steve Vukadinovich
		  	Facsimile No. (330) 655-9020
		
	With a Copy to:	  	
		  	Buchanan Ingersoll & Rooney PC
		  	301 Grant Street, 20th Floor
		  	Pittsburgh, PA 15219
		  	Attention: Perry Patterson
		  	Fax: (412) 562-1041

  
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	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-

 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”

	
	/s/ Steven D. Runkel
	 Steven D. Runkel
	 	
		
	 “Company”
	 	
	
	 DPAC Technologies Corp.

	
	 By: /s/ Stephen Vukadinovich

	Chief Financial Officer

  
 -7-

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