Document:

Filed by Bowne Pure Compliance

EXHIBIT 10.1

EXECUTION COPY

AMENDMENT NO. 1

TO SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT

AND

AMENDMENT NO. 1 TO SECURITY AGREEMENT

THIS AMENDMENT NO. 1 TO SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AND AMENDMENT NO. 1 TO
SECURITY AGREEMENT (this “Amendment”), is made as of October 10, 2008, by and among QuaTech, Inc.,
an Ohio corporation (the “QuaTech”), DPAC Technologies Corp., a California corporation (“DPAC” and
together with QuaTech, the “Companies”) and Canal Mezzanine Partners, L.P., a Delaware limited
partnership (the “Purchaser”).

WITNESSETH:

WHEREAS, the Companies and the Purchaser have entered into that certain Senior Subordinated
Note and Warrant Agreement, dated as of January 31, 2008 (as may be amended, supplemented or
otherwise modified from time to time, the “Purchase Agreement”), pursuant to which the Purchaser
have made certain financial accommodations available to the Companies;

WHEREAS, the Companies have requested, and the Purchaser has agreed, subject to the terms of
this Amendment, to purchase a $250,000 senior subordinated note issued by the Companies;

WHEREAS, the Companies and the Purchaser desire to amend the Purchase Agreement as set forth
herein;

NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein and
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Companies and the Purchaser do hereby agree as follows:

SECTION 1. DEFINED TERMS.

Each defined term used herein and not otherwise defined herein shall have the meaning ascribed
to such term in the Purchase Agreement.

 

 

 

SECTION 2. AMENDMENT TO THE PURCHASE AGREEMENT.

The Companies and the Purchaser hereby agree that the Purchase Agreement shall be amended,
effective upon the satisfaction of the conditions precedent set forth in this Amendment, as
follows:

2.1 Amendment to Recitals. Subpart (A) of the Recitals to the Purchase Agreement
shall be amended in its entirety to read as follows:

A. Purchase and Sale.

Upon the terms and subject to the conditions set forth in this Purchase Agreement, the
Companies shall issue and sell to the Purchaser (i) a Senior Subordinated Note in the
aggregate principal amount of $1,200,000 due January 31, 2013 (the “Initial Note”), (ii) a
Senior Subordinated Note in the aggregate principal amount of $250,000 due January 31, 2009
(the “New Note” and together with the Initial Note, the “Note”) and (iii) in the case of
DPAC, a warrant to purchase the common stock of DPAC representing 3% of the Fully Diluted
Common Stock of DPAC on the date of exercise (the “Common Stock Warrant” and together with
the Note, and where applicable, the Warrant Shares, the “Securities”).

2.2 Amendment to Exhibit A. Exhibit A to the Purchase Agreement shall be amended by
amending the definition of “Note,” “Warrant Certificate” and “Warrant” contained therein in their
entireties to read as follows:

 “Note” means together (i) the Senior Subordinated Note due January 31, 2013 in the
principal amount of $1,200,000 issued and sold to the Purchaser by the Companies pursuant to
the terms of the Purchase Agreement, and (ii) the Senior Subordinated Note due January 31,
2009 in the principal amount of $250,000 issued and sold to the Purchaser by the Companies
pursuant to the terms of the Purchase Agreement, in each case as amended, modified or
restated from time to time, and all notes issued in exchange or substitution therefor.

 “Warrant Certificate” shall mean any certificate representing a Warrant.

 “Warrant” means together the Warrant issued on the Closing Date and the Warrant issued
on October 10, 2008, each purchased from DPAC by Purchaser pursuant to the Purchase
Agreement.

SECTION 3. AMENDMENT TO SECURITY AGREEMENT

Upon the Satisfaction of the conditions to this Amendment, the Security Agreement shall
be amended by amending the definition of “Secured Obligations” in its entirety to read as
follows:

“Secured Obligations” means (a) all principal, interest and other amounts due and
payable under the Note Purchase Agreement, the Related Documents and the Note (as defined in
the Note Purchase Agreement (as amended), (b) all costs and expenses incurred by Secured
Party in the realization upon the Collateral, including without limitation reasonable
attorneys’ fees and legal expenses, and (c) each and every liability owed by any Debtor to
Secured Party however created, direct or contingent, due or to
become due, whether now existing or hereafter arising, including without limitation the
Success Fee.

 

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SECTION 4. REPRESENTATIONS AND WARRANTIES.

Each of the Companies hereby represents and warrants to the Purchaser as follows:

4.1 The Amendment. This Amendment has been duly and validly executed by an authorized
executive officer of each of the Companies and constitutes the legal, valid and binding obligation
of each of the Companies enforceable against each of the Companies in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors’ rights generally, and to general principles of equity.

4.2 Purchase Agreement. Each of the Purchase Agreement, as amended by this Amendment,
the Note, the Security Agreement, the Warrant and the other Related Documents remains in full force
and effect and remains the valid and binding obligation of each of the Companies party thereto
enforceable against each of the Companies party thereto in accordance with its terms. Each of the
Companies hereby ratifies and confirms the Purchase Agreement as amended by this Amendment and each
of the other Related Documents. The representations and warranties contained in the Purchase
Agreement are in all material respects correct on and as of the date hereof as if made on such date
(except as a result of transactions permitted under the Purchase Agreement or as otherwise set
forth in the revised Schedule of Exceptions delivered by the Companies contemporaneously herewith)
and no Default or Event of Default exists, in each case after giving effect to this Amendment.

4.3 Nonwaiver. The execution, delivery, performance and effectiveness of this
Amendment shall not operate nor be deemed to be nor construed as a waiver (i) of any right, power
or remedy of the Purchaser under the Purchase Agreement or any of the other Related Documents, nor
(ii) of any term, provision, representation, warranty or covenant contained in the Purchase
Agreement or any of the other Related Documents. Further, none of the provisions of this Amendment
shall constitute, be deemed to be or construed as, a waiver of any Default or Event of Default
under the Purchase Agreement, as amended by this Amendment, or any of the other Related Documents.

4.4 Reference to and Effect on the Purchase Agreement. Upon the effectiveness of this
Amendment, each reference in the Purchase Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein”, or words of like import shall mean and be a reference to the Purchase Agreement, as
amended hereby, and each reference to the Purchase Agreement in any of the other Related Documents
shall mean and be a reference to the Purchase Agreement, as amended hereby.

4.5 Claims and Defenses. To the knowledge of each Company, as of the date of this
Amendment, no Company has any defenses, claims, counterclaims or setoffs with respect to the
Purchase Agreement or any other of the Related Documents or its Obligations under any Related
Documents or with respect to any actions of the Purchaser or any of its officers,
directors, shareholders, employees, agents or attorneys, and each of the Companies irrevocably and
absolutely waives any such known defenses, claims, counterclaims and setoffs and releases the
Purchaser and each of its officers, directors, shareholders, employees, agents and attorneys from
the same.

 

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SECTION 5. CONDITION PRECEDENT TO EFFECTIVENESS OF THIS 
AMENDMENT.

In addition to all of the other conditions and agreements set forth herein, the effectiveness
of this Amendment is subject to the following condition precedent:

5.1 Amendment to Purchase Agreement. The Purchaser shall have received a counterpart
of this Amendment No. 1 to Senior Subordinated Note and Warrant Purchase Agreement and Amendment
No. 1 to Security Agreement, executed and delivered by a duly authorized officer of each of the
Companies and the Purchaser.

5.2 Executed Note and Warrant. The Purchaser shall have received an original $250,000
Senior Subordinated Note and Warrant Agreement and an original Warrant, in each case executed and
delivered by a duly authorized officer of each of the Companies.

5.3 Consent Under Senior Loan Agreement. The Purchaser shall have received executed
copies of a consent under the Senior Loan Agreement pursuant to which the Senior Lender consents to
this Amendment, which consent shall be in form and substance satisfactory to the Purchaser.

5.4 Amendment to Subordination Agreement. The Purchaser shall have received a fully
executed copy of an amendment to the subordination agreement with respect to the Senior Loan
Agreement, which amendment shall be in form and substance satisfactory to the Purchaser.

5.5 Authorizing Resolutions. The Purchaser shall have received a copy of resolutions
of the board of directors of each of the Companies authorizing the execution and delivery of this
Amendment and the Note and with respect to DPAC, the Warrant, each in form and substance
satisfactory to the Purchaser.

5.6 Amendment Fee. The Purchaser shall have received a $3,000 amendment fee in
immediately available funds.

 

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SECTION 6. MISCELLANEOUS

6.1 Governing Law. This Amendment shall be governed by and construed in accordance
with the law of the State of Ohio, without regard to principles of conflict of law.

6.2 Costs and Expenses. The Companies hereby acknowledge and agree to reimburse (on a
joint and several basis) the Purchaser for all costs and expenses incurred by or
on behalf of the Purchaser in connection with the documentation and negotiation of Amendment
including, without limitation, reasonable legal fees and expenses of counsel to the Purchaser.

6.3 Severability. In the event any provision of this Amendment should be invalid, the
validity of the other provisions hereof and of the Purchase Agreement shall not be affected
thereby.

6.4 Counterparts. This Amendment may be executed in one or more counterparts, each of
which, when taken together, shall constitute but one and the same agreement.

 

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IN WITNESS WHEREOF, each of the Companies has caused this Amendment No. 1 to Senior
Subordinated Note and Warrant Purchase Agreement to be duly executed and delivered by its duly
authorized officer as of the date first above written.

COMPANIES:

	 	 	 	 	 
	DPAC TECHNOLOGIES CORP.	 	 
	a California corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Steve Runkel	 	 
	 

	 	 

Steve Runkel, Chief Executive Officer
	 	 
	 
	 	 	 	 
	QUATECH, INC.	 	 
	an Ohio corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Steve Runkel	 	 
	 

	 	 

Steve Runkel, Chief Executive Officer
	 	 

 

S-1

 

	 	 	 
	Accepted as of October 10, 2008.
	 
	 	 
	CANAL MEZZANINE PARTNERS, L.P.
	a Delaware limited partnership
	 
	 	 
	By:

	 	Canal Mezzanine Management, LLC,
	 

	 	an Ohio limited liability company
	Title:

	 	General Partner
	 
	 	 
	By:

	 	Canal Holdings, LLC
	 

	 	an Ohio limited liability company
	Title:

	 	Managing Member

	 	 	 	 	 
	By:

	 	/s/ Shawn M. Wynne	 	 
	Name:

	 	Shawn M. Wynne	 	 
	Title:

	 	Authorized Signer	 	 

 

S-2Filed by Bowne Pure Compliance

EXHIBIT 10.2

EXECUTION COPY

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

Senior Subordinated Note

due January 31, 2009 (except as provided herein)

	 	 	 
	Makers Corp.

	 	 QuaTech, Inc. and DPAC Technologies
	 
	 	 
	Payee

	 	 Canal Mezzanine Partners, L.P.
	 
	 	 
	Principal Amount

	 	 $250,000
	 
	 	 
	Stated Interest Rate

	 	13% per annum
	 
	 	 
	Default Interest Rate

	 	 16% per annum
	 
	 	 
	Date of Note

	 	 October 10, 2008
	 
	 	 
	Made At

	 	 Hudson, Ohio
	 
	 	 
	Maturity Date

	 	 January 31, 2009 (except as provided herein)
	 
	 	 
	Payment Dates

	 	 Interest : Last day of each month beginning October 31, 2008
	 

	 	 Principal: January 31, 2009 (except as provided herein)

 

 

 

This is the Senior Subordinated Note due January 31, 2009 (the “Note”) provided for in
the Senior Subordinated Note and Warrant Purchase Agreement dated as of January 31, 2008 (as
amended, restated, supplemented or otherwise modified from time to time, the “Purchase
Agreement”) by and between the Payee, as purchaser, and the Makers, as sellers.

This Note is one of the Related Documents referred to in the Purchase Agreement.

FOR VALUE RECEIVED, the Makers hereby promises to pay to the order of the Payee the Principal
Amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), together with Interest, Prepayment
Premium, if any, and Assessments (each as defined herein or in the Purchase Agreement), upon the
terms and subject to the conditions set forth in this Note.

Section 1. Definitions and Miscellaneous Provisions

Any capitalized term used but not otherwise defined in this Note shall have the definition
given such term as set forth in the Purchase Agreement, which definition is, to the extent
applicable, incorporated herein by reference. The provisions of Section 12 of the Purchase
Agreement are applicable to this Note and are incorporated herein by reference.

Section 2. Maturity and Pay Off

The unpaid Principal Amount of this Note, together with all accrued but unpaid Interest and
Assessments, shall be due and payable in full on the Maturity Date, provided that if such unpaid
Principal and Interest shall not have been refinanced pursuant to a transaction with Payee or any
affiliate thereof, or otherwise repaid, on or before the Maturity Date (a “Refinancing”),
then such Principal Amount shall become due and payable in full on the Maturity Date set forth in
the Initial Note (January 31, 2013) and the Makers shall pay to the Payee a $250,000 extension fee
on the January 31, 2008 (such fee shall be the joint and several liability of each of the Makers).
Payment of the Principal Amount and all accrued but unpaid Interest and Assessments may be
Accelerated upon the occurrence of an Event of Default as provided for in this Note. Upon request
of the Makers, the Payee will furnish to the Makers a letter setting forth the amount of Principal
Amount, Interest, Prepayment Premium and Assessments required to pay this Note in full as of a
specified Pay Off Date.

Section 3. Interest

Interest shall accrue on the unpaid Principal Amount from the date of this Note through and
including the Pay Off Date at the applicable interest rate (“Interest”). All accrued but
unpaid Interest shall be paid monthly in arrears on each Payment Date specified above, commencing
October 31, 2008.

At all times that the Default Interest Rate is not in effect, the interest rate on this Note
shall be a fixed rate per annum equal to the Stated Interest Rate. Upon the occurrence of an Event
of Default, this Note shall accrue interest at a rate per annum equal to the Default Interest Rate
unless the Payee elects, in the sole exercise of its discretion, to waive imposition of the Default
Interest Rate by giving written notice of such election to the Makers (a “Default Rate
Waiver”). Absent a Default Rate Waiver, the interest rate on this Note shall be a fixed rate
per
annum equal to the Default Interest Rate, and the Default Interest Rate shall continue to be the
interest rate on this Note until the Event of Default has been remedied or waived and no other
Default or Event of Default is continuing, unremedied or unwaived, provided that the Note has not
been Accelerated.

 

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Notwithstanding any provision of this Note to the contrary: (i) in no event shall the interest
rate on this Note be a rate per annum in excess of the maximum interest rate permissible under
Applicable Law (including any applicable interest rate ceiling imposed by United States Small
Business Administration regulations as applicable), and (ii) to the extent that Interest (or other
amounts paid with respect to this Note that are deemed to be Interest under Applicable Law) results
in Interest payments in excess of those permitted under Applicable Law, such excess payments shall
be applied first to the payment of the unpaid Principal Amount, second to the payment of any other
amounts due from the Makers to the Payee, and third, if no other obligations are owing to the
Payee, then refunded to the Makers. The Makers agree that if such excess payments are applied in
the manner provided for in this paragraph, then to the fullest extent permitted by Applicable Law,
Payee shall not be subject to any penalty provided for by any Applicable Law relating to charging
or collecting Interest in excess of that permitted by Applicable Law.

Interest shall accrue based upon: (i) the actual number of days elapsed over each month,
including any additional days elapsed because the scheduled Payment Date fell on a day other than a
Business Day; (ii) months consisting of thirty (30) days each; (iii) quarters consisting of three
(3) 30-day months, and (iv) monthly compounding of any Interest or Assessment accrued but unpaid as
of each Payment Date.

Section 4. Principal Amount

The Principal Amount shall be paid in full on the Maturity Date Date (except as set forth in
Section 2 above).

Section 5. Prepayments

The Makers may prepay the Principal Amount in whole at any time; provided that (i) the Makers
deliver irrevocable written notice to the Payee at least thirty (30) days prior to such prepayment,
which notice shall include written confirmation from the Makers that such prepayment is permissible
under the Senior Loan Agreement and (ii) each partial prepayment of Principal Amount shall be equal
to $100,000 or an integral multiple thereof.

If the Principal Amount is paid on or prior to the Maturity Date of Note, the Makers shall pay
all accrued but unpaid Interest.

If notice of prepayment is given, the Principal Amount to be prepaid as stated in the notice,
together with Interest accrued thereon through the date of prepayment with respect to the Principal
Amount prepaid and all unpaid Assessments shall become due and payable on the date specified in the
notice.

 

3

 

Section 6. Late Payments

A payment of Principal Amount, Interest or Assessment shall be deemed to be a Payment Default
if such payment is not received prior to 2:00 p.m., Hudson, Ohio time on the fifth day after such
payment is due. The Payee may, in the sole exercise of its discretion, by written notice to the
Makers, assess a fee of $500 for each Payment Date with respect to which there is a late payment to
reimburse the Payee for the cost of processing such late payment. Such late fee shall be deemed to
be an Assessment for purposes of this Note. The Payee may not assess a late fee with respect to any
Payment Date after payment of this Note is Accelerated.

Section 7. Payments

Unless otherwise agreed by the Payee, all payments in connection with this Note shall be made
by wire transfer of immediately available funds to the account of the Payee at or before 2:00 p.m.
Hudson, Ohio time on each Payment Date. Any wire transfer received by the Payee after 2:00 p.m.
Hudson, Ohio time shall be deemed to have been received by the Payee prior to such time on the next
Business Day.

Unless otherwise specified in writing by the Payee to the Makers, all such payments shall be
wired as follows:

Morgan Bank, N.A.

10 West Streetsboro Street

Hudson, Ohio 44236

ABA # 041202702

Account # 128075483

In the event that any scheduled Payment Date falls on a day other than a Business Day, the
Payment Date shall be deemed to be the following Business Day, and such additional days shall be
deemed to have elapsed for purposes of computing Interest payable on such Payment Date.

Section 8. Events of Default

(a) Enumeration of Defaults. The occurrence of each of the following events shall be an
“Event of Default” for the purposes of this Note. An Event of Default shall be deemed to
continue until waived by written notice by the Payee to the Makers or remedied by action of the
Makers.

(b) Payment Default. The Makers default in the payment when due of any Principal Amount,
Interest or Assessment, and such default is not remedied (including the payment of any Assessment)
within the grace period provided for in Section 6 of this Note (a “Payment
Default”). A Payment Default shall be deemed to have occurred notwithstanding the fact that the
Payment Default results from compliance with or enforcement of the Subordination Agreement.

 

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(c) Covenant Default. The Makers fail to observe or perform any affirmative covenant, negative
covenant (other than those described in clause 8(e) below), reporting requirement or any other
agreement set forth in the Purchase Agreement or the Related Documents and such default is either
(i) not remedied within thirty (30) days after written notice of such default by the Payee or the
Makers, or (ii) is the third instance of a default under applicable subsection of the Purchase
Agreement or the Related Documents.

(d) Warranty Default. Any representation or warranty made by the Makers in the Purchase
Agreement or the Related Documents proves to have been untrue, incomplete or misleading in any
material respect when made or when deemed to have been made and such breach is not remedied (if it
is capable of being remedied) within thirty (30) days after written notice of such default by the
Payee or the Makers.

(e) Financial Test Default; Certain Negative Covenants. (i) As of any applicable date of
determination, the Makers fail to satisfy any of the Financial Tests, or (ii) the Makers fails to
observe or perform any of the negative covenants set forth in Sections 8.1 through
8.11 of the Purchase Agreement.

(f) Cross Default. The holder of any Indebtedness accelerates the payment of such Indebtedness
for any reason or the Makers default in the payment of any Indebtedness with an unpaid principal
amount in excess of $50,000, and such default remains unremedied beyond the applicable grace period
therefor, regardless of whether (i) such default is waived by the obligee, (ii) payment of any
Indebtedness of the Makers is accelerated, (iii) the right of the Makers to borrow money is
suspended as a result of any such default, or (iv) any action to enforce payment of any
Indebtedness is commenced against the Makers or with respect to any collateral securing such
Indebtedness.

(g) Subordination Default. Any document with respect to the Senior Indebtedness is amended or
modified in violation of the Subordination Agreement, a blocking period provided for in the
Subordination Agreement is commenced, payment of any amount due under this Note is prevented due to
compliance with or enforcement of the Subordination Agreement, any amounts previously paid to the
Payee must be repaid or held in trust by the Payee due to compliance with or enforcement of the
Subordination Agreement, or the Makers obtain forbearance with respect to the payment of any
principal or interest due under the Senior Indebtedness.

(h) Insolvency Default. The Makers: (i) discontinue the conduct of their business; (ii) apply
for or consents to the imposition of any Insolvency Relief; (iii) voluntarily commence or consent
to the commencement of an Insolvency Proceeding; (iv) file an answer admitting the material
allegations of any involuntary commencement of an Insolvency Proceeding; (v) make a general
assignment for the benefit of its creditors; (vi) are unable or admits in writing their inability
to pay their debts as they become due; or (vii) have an Insolvency Order entered against such
Makers and such Insolvency Order is not dismissed within thirty (30) days of its entry (each, an
“Insolvency Default”).

 

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(i) Fraudulent Conveyance Default. The Makers: (i) conceal, remove or permit to be concealed
or removed all or any part of their property with the intent to hinder, delay or defraud
any of their creditors; (ii) make or permit any conveyance of their material properties that
would be deemed fraudulent to creditors under any Insolvency Law or other Applicable Law; or (iii)
have, while such Makers are insolvent, cause or permit any of their creditors to obtain a Lien on
any of their property by legal proceedings or otherwise which is not vacated within thirty (30)
days.

(j) Judgments. A final, nonappealable judgment or judgments is or are entered against the
Makers in the aggregate amount of $50,000 or more on a claim or claims not covered by insurance.

(k) Material Adverse Change. In the reasonable judgment of the Payee, any material adverse
change occurs in the financial condition or results of operations of the Makers or the Makers’
ability to perform its obligations under this Note, the Purchase Agreement or the Related
Documents.

(l) Change in Control. A Change in Control of the Makers occurs.

(m) Failure of Enforceability. (i) The Makers shall contest or challenge the validity or
enforceability of this Note, the Purchase Agreement or the Related Documents or (ii) this Note, the
Purchase Agreement or the Related Documents shall be declared in whole or in part invalid, void or
unenforceable which declaration would, individually or in the aggregate, materially reduce the
principal benefits of any breach of, or security provided by, this Note, the Purchase Agreement or
any Related Document to the Payee, or make the remedies generally afforded thereby inadequate for
the practical realization thereof.

Section 9. Remedies and Acceleration

(a) Remedies. Upon the occurrence of an Event of Default, the Payee shall have (i) all rights
and remedies granted to it under this Note, the Purchase Agreement and the Related Documents, and
(ii) all rights of a creditor under Applicable Law (including the UCC). All such rights and
remedies and the exercise thereof shall be cumulative. No exercise of any such rights and remedies
shall be deemed to be exclusive or constitute an election of remedies.

(b) Purchase of Senior Indebtedness. If an event of default shall have occurred and be
continuing in respect of any Senior Indebtedness of the Makers, the Payee shall have the option
(but not the obligation), at any time, to purchase all, but not less than all, of such Senior
Indebtedness for an amount equal to the then outstanding principal amount, plus accrued but unpaid
interest with respect thereto as of the date of such purchase, plus any unpaid fees and expenses
then owing with respect thereto. The purchase price so paid by the Payee shall constitute an
additional advance hereunder and shall be subject to the terms and conditions of this Note, the
Purchase Agreement and the Related Documents.

(c) Acceleration of Payment. Upon the occurrence of an Insolvency Default, payment of this
Note shall be Accelerated automatically and without notice. Upon the occurrence and during the
continuation of any other Event of Default, the Payee may, in the sole exercise of its discretion,
elect to cause payment of this Note to be Accelerated by giving written notice of such
election to the Makers. Once payment of this Note has been Accelerated, such Acceleration may
be revoked only by the Payee, in the sole exercise of its discretion, by giving written notice of
revocation to the Makers.

 

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(d) Waiver of Default. No Default or Event of Default may be waived or shall be deemed to have
been waived except by written notice by the Payee to the Makers, and any such waiver shall be
applicable only to the specific Defaults or Events of Default expressly identified in such notice
and shall not be deemed to apply to any other or subsequent Default or Event of Default. The Payee
may grant or withhold any such waiver in the sole exercise of its discretion, and may condition
such waiver upon the payment by the Makers of a premium, the grant of additional security interests
or the acceptance of other terms and conditions under this Note or the Purchase Agreement. No
course of dealing by the Payee, or the failure, forbearance or delay by the Payee in exercising any
of its rights or remedies under this Note, the Purchase Agreement or any Related Document shall
operate as a waiver of any Default or Event of Default or of any right of the Payee under this
Note.

Section 10. Waivers

To the fullest extent permitted by Applicable Law, each Maker waives with respect to this
Note: presentment; demand and protest; and notice of presentment, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or
renewal; and diligence in collection. Each Maker agrees that the Payee may release all or any part
of the Collateral securing the payment of this Note; any guarantor or surety with respect to this
Note, or any other Maker from its obligation with respect to this Note, all without notice to such
Maker and without affecting in any way the obligation of such Maker under this Note.

Section 11. Security for Payment

Payment of this Note is secured under the terms and subject to the conditions of certain of
the Related Documents. Nothing in this Note shall be deemed to preclude the Payee from obtaining
other or additional security for the payment of this Note, to require the Payee to elect remedies
or proceed against any Collateral or guaranty before Accelerating payment of this Note or to take
any legal or other action to collect payment of this Note.

Section 12. Subordination Agreement

It is anticipated that the Payee and the Senior Lender will enter into a Subordination
Agreement in connection with the Senior Loan Agreement, pursuant to which certain of the Payee’s
rights under this Note and the Related Documents will be subordinated to the Senior Lender. Nothing
in this Note, the Purchase Agreement or the Subordination Agreement shall grant to the Makers any
rights as a beneficiary under the Subordination Agreement nor any right to enforce any provision of
such agreement.

 

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Section 13. Collection and Assessment for Costs

The Makers shall reimburse the Payee for all reasonable costs and expenses (including
reasonable legal fees and disbursements) incurred by the Payee in connection with the collection or
attempted collection of the payment of this Note through legal proceedings or otherwise following
an Event of Default. All such amounts shall be deemed to be Assessments for purposes of this Note.

Section 14. Amendment

This Note may not be amended, restated, supplemented or otherwise modified except by an
express written agreement executed and delivered by each Maker and the Payee. Compliance with the
covenants and other provisions of this Note may not be waived or modified except by an express
written consent signed and delivered by the Payee.

Section 15. Governing Law

This Note was negotiated in the State of Ohio and accepted by the Payee in the State of Ohio,
and the purchase price for the Note shall be disbursed from the State of Ohio. Each Maker agrees
that the State of Ohio has a substantial relationship to the transactions evidenced hereby and
further agrees that this Note shall be governed by and construed in accordance with the laws of the
State of Ohio, without regard to conflicts of laws principles.

Section 16. Waiver of Jury Trial

The Payee and each Maker, after consulting or having had the opportunity to consult with legal
counsel, knowingly, voluntarily and intentionally waive any right any of them may have to a trial
by jury in any Litigation. Neither the Payee nor any Maker shall seek to consolidate, by
counterclaim or otherwise, any Litigation in which a jury trial has been waived with any other
Litigation in which a jury trial cannot be or has not been waived.

Section 17. Consent to Jurisdiction, Venue and Service of Process

The Payee and the Makers, each after having consulted or having had the opportunity to consult
with legal counsel, hereby knowingly, voluntarily, intentionally, and irrevocably: (i) consents to
the jurisdiction of the Common Pleas Court of Summit County, Ohio and the United States District
Court for the Northern District of Ohio, Eastern Division with respect to any Litigation; (ii)
waives any objections to the venue of any Litigation in either such court; (iii) agrees not to
commence any Litigation except in either of such courts and agrees not to contest the removal of
any Litigation commenced in any other court to either of such courts; (iv) agrees not to seek to
remove, by consolidation or otherwise, any Litigation commenced in either of such courts to any
other court; and (v) waives personal service of process in connection with any Litigation and
consents to service of process by registered or certified mail, postage prepaid, addressed as
provided in the Purchase Agreement.

Section 18. Confession of Judgment

Each Maker hereby authorizes any attorney at law to appear in any court of record of the State
of Ohio or any other state in the United States of America at any time after this Note becomes due,
whether by acceleration or otherwise, and to waive the issuing and service of process and confess a
judgment in favor of the legal holder hereof against such Maker, or either or any one or more of
them, for the amount then appearing due upon this Note, together with costs of suit and to release
all errors and waive all right of appeal.

 

8

 

IN WITNESS WHEREOF, this Note has been executed and delivered by and on behalf each Maker,
effective as of the Date of Note set forth above.

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT
PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON THE CREDITOR’S PART TO COMPLY WITH
THE AGREEMENT, OR ANY OTHER CAUSE.

	 	 	 	 	 
	 	Maker:

QUATECH, INC.

 	 
	 	By:  	/s/ Steve Runkel
 	 
	 	 	Steve Runkel, 	 
	 	 	Chief Executive Officer 	 
	 
	 	Maker:

DPAC TECHNOLOGIES CORP.

 	 
	 	By:  	/s/ Steve Runkel
 	 
	 	 	Steve Runkel, 	 
	 	 	Chief Executive Officer 	 
	 

 

9

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