-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RDA2r9mWrgcUcgY1iqBFOMkbt1t9mRBDJGxnV2m9XTuhrQwUoUdc+n9DfDaAyiiu dL4lOD3K5oT2aJNC/lsoBw== 0001193125-05-231109.txt : 20051122 0001193125-05-231109.hdr.sgml : 20051122 20051122172400 ACCESSION NUMBER: 0001193125-05-231109 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050805 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051122 DATE AS OF CHANGE: 20051122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DPAC TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000784770 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 330033759 STATE OF INCORPORATION: CA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14843 FILM NUMBER: 051222130 BUSINESS ADDRESS: STREET 1: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 BUSINESS PHONE: 7148980007 MAIL ADDRESS: STREET 1: 7321 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 FORMER COMPANY: FORMER CONFORMED NAME: DENSE PAC MICROSYSTEMS INC DATE OF NAME CHANGE: 19920703 8-K/A 1 d8ka.htm FORM 8-K AMENDMENT NO. 2 FORM 8-K AMENDMENT NO. 2

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

 

Amendment No. 2

CURRENT REPORT

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

 

Date of Report (Date of earliest event reported):

August 5, 2005

 

DPAC TECHNOLOGIES CORP.

(Exact name of registrant as specified in its charter)

 

California   0-14843   33-0033759

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

I.R.S. Employer

Identification Number

 

7321 Lincoln Way, Garden Grove, California 92841

(Address of principal executive office) (Zip Code)

 

(714) 898-0007

Registrant’s telephone number, including area code

 

Not Applicable

(Former name or former address, if changed since last report.)

 

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):

 

x 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))

 



INTRODUCTION

 

The sole purpose of this amendment is to include two exhibits that were inadvertently omitted from the Registrant’s Form 8-K/A, filed with the SEC on October 20, 2005.

 

Section 1 - Registrant’s Business and Operations

 

Item 1.01 Entry into a Material Definitive Agreement

 

On October 20, 2005 the Registrant entered into amendments of two material agreements:

 

1. The Second Amendment, dated October 20, 2005, to the Agreement and Plan of Reorganization (the “Second Amendment”) between the Registrant and QuaTech, originally entered into on April 26, 2005, as subsequently amended by the First Amendment dated August 5, 2005.

 

2. The First Amendment to the Licensing Agreement, dated October 20, 2005 (the “License Amendment”) among the Registrant, Quatech and Development Capital Ventures LP (“DCV”), that licenses DCV and QuaTech and their successors the rights to manufacture and distribute the Registrant’s Airborne™ wireless technology.

 

Descriptions of these amendments are as set forth in the Registrant’s Form 8-K/A filed with the SEC on October 20, 2005.

 

The amendments to the agreements were announced in a press release dated October 20, 2005, are attached hereto as Exhibits 2.4.3 and 2.5.1, and are incorporated herein by this reference. The descriptions herein are qualified in their entirety by reference to the exhibits.


Section 9 - Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits

 

EXHIBITS

 

Ex. No.

  

Description


  2.4       Agreement and Plan of Reorganization dated April 26, 2005 among the Registrant, DPAC Acquisition Sub, Inc. and QuaTech, Inc., including selected exhibits: Forms of Shareholder and Registration Rights Agreement, Employment Agreement for Steven Runkel and Employment Agreement for Creighton Early. Other exhibits listed in the exhibit list in the Table of Contents have been omitted from this filing but will be filed by the Registrant if requested by the Securities Exchange Commission*
  2.4.1    Typed signatures to Exhibit 2.4**
  2.4.2    First Amendment, dated August 5, 2005, to Agreement and Plan of Reorganization, originally entered into on April 26, 2005***
  2.4.3    Second Amendment, dated October 20, 2005, to Agreement and Plan of Reorganization, originally entered into on April 26, 2005, as subsequently amended by the First Amendment dated August 5, 2005
  2.5       License Agreement, dated August 5, 2005, originally entered into on April 26, 2005***
  2.5.1    First Amendment, dated October 20, 2005, to License Agreement dated August 5, 2005
10.24     Bridge Loan and Escrow Agreement, dated July 29, 2005***
10.25     Convertible Term Note, dated August 5, 2005***
10.26     Loan Agreement, dated August 5, 2005***
10.27     Security Agreement, dated August 5, 2005, with attached Riders***
99.1       Press Release of Registrant, dated August 5, 2005***
99.2       Press Release of Registrant, dated October 20, 2005****

* Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on April 27, 2005.

 

** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on May 20, 2005.

 

*** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K filed with the SEC on August 9, 2005.

 

**** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on October 20, 2005.


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.

 

       

DPAC Technologies Corp.

(Registrant)

Date: November 22, 2005       /s/ Creighton K. Early
       

(Signature)

 

Creighton K. Early, Chief Executive Officer

(Name and Title)


EXHIBIT INDEX

 

Ex. No.

  

Description


  2.4       Agreement and Plan of Reorganization dated April 26, 2005 among the Registrant, DPAC Acquisition Sub, Inc. and QuaTech, Inc., including selected exhibits: Forms of Shareholder and Registration Rights Agreement, Employment Agreement for Steven Runkel and Employment Agreement for Creighton Early. Other exhibits listed in the exhibit list in the Table of Contents have been omitted from this filing but will be filed by the Registrant if requested by the Securities Exchange Commission*
  2.4.1    Typed signatures to Exhibit 2.4**
  2.4.2    First Amendment, dated August 5, 2005, to Agreement and Plan of Reorganization, originally entered into on April 26, 2005***
  2.4.3    Second Amendment, dated October 20, 2005, to Agreement and Plan of Reorganization, originally entered into on April 26, 2005, as subsequently amended by the First Amendment dated August 5, 2005
  2.5      

License Agreement, dated August 5, 2005***

  2.5.1    First Amendment, dated October 20, 2005, to License Agreement dated August 5, 2005
10.24     Bridge Loan and Escrow Agreement, dated July 29, 2005***
10.25     Convertible Term Note, dated August 5, 2005***
10.26     Loan Agreement, dated August 5, 2005***
10.27     Security Agreement, dated August 5, 2005, with attached Riders***
99.1       Press Release of Registrant, dated August 5, 2005***
99.2       Press Release of Registrant, dated October 20, 2005****

* Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on April 27, 2005.

 

** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on May 20, 2005.

 

*** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K filed with the SEC on August 9, 2005.

 

**** Filed as a like-numbered Exhibit to the Registrant’s Form 8-K/A filed with the SEC on October 20, 2005.
EX-2.4.3 2 dex243.htm SECOND AMENDMENT TO THE AGREEMENT AND PLAN OF REORGANIZATION Second Amendment to the Agreement and Plan of Reorganization

EXHIBIT 2.4.3

 

SECOND AMENDMENT TO

AGREEMENT AND PLAN OF REORGANIZATION

 

This Second Amendment to the Agreement and Plan of Reorganization, dated as of October 20, 2005 (the “Amendment”) is entered into by and among DPAC Technologies Corp., a California corporation (“DPAC”), DPAC Acquisition Sub, Inc., an Ohio corporation (“DPAC Sub”), and QuaTech, Inc., an Ohio corporation (“QuaTech”).

 

RECITALS

 

WHEREAS, the parties entered into that certain Agreement and Plan of Reorganization, dated April 26, 2005 (the “Original Agreement”), whereby DPAC, DPAC Sub and QuaTech agreed to engage in a business combination transaction following which QuaTech will become a wholly-owned subsidiary of DPAC (the “Transaction”);

 

WHEREAS, the parties entered into that certain First Amendment to Agreement and Plan of Merger (the “First Amendment”) on August 5, 2005, thereby amending certain provisions of the Original Agreement (such Original Agreement, as amended by the First Amendment being referred to hereinafter as the “Merger Agreement”);

 

WHEREAS, since the signing of the Merger Agreement, the circumstances of each of DPAC and QuaTech have changed, such that certain closing conditions to the Transaction and certain economic terms are no longer feasible or applicable;

 

WHEREAS, QuaTech has commitments from financial institutions (“Commitment Letters”) to obtain approximately $3,100,000 for general corporate purposes, the funding of which shall occur prior to the Effective Date (the “QuaTech Refinancing”);

 

WHEREAS, in light of the changed circumstances, each party is not willing to proceed with the Transaction unless certain amendments are made.

 

WHEREAS, as a result of the foregoing changed circumstances and in consideration for this Amendment, Development Capital Ventures, LP (“DCV”), an affiliate of QuaTech, DPAC and QuaTech have agreed to amend (the “License Amendment”) the License Agreement dated August 5, 2005;

 

WHEREAS, the parties desire to amend the Merger Agreement to reflect the foregoing; and

 

WHEREAS, the Board of Directors of each of DPAC, DPAC Sub and QuaTech believe that as of the date hereof it is in the best interests of each of their respective companies to proceed with the Transaction, as set forth in the Merger Agreement as amended hereby.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1. Exchange Rates. Sections 1.6(a) and (b) of the Merger Agreement are amended and restated in their entirety to read as follows:

 

“(a) Conversion of QuaTech Common Stock. At the Effective Time, all shares of QuaTech common stock, par value $0.00001 per share (“QuaTech Common Stock”) issued and outstanding immediately prior to the Effective Time, other than any shares of QuaTech Common Stock to be canceled pursuant to

 

1


Section 1.6(c), shall be canceled and extinguished, and all of the shares of QuaTech Common Stock theretofore outstanding shall be converted automatically solely into the right to receive a number of registered whole shares of DPAC Common Stock (adjusted appropriately for any stock splits, stock dividends or similar recapitalization occurring prior to the Effective Time including without limitation the Reverse Split), rounded up to the nearest whole number of shares of DPAC Common Stock, at a rate, subject to adjustment, of one whole share of DPAC Common Stock in exchange for each 0.021780444 of one whole share of QuaTech Common Stock (the “Common Exchange Rate”), without payment for any lesser fractions, and all such lesser fractions of one whole shares of QuaTech Common Stock shall be cancelled without further payment therefor, except that a beneficial holder may aggregate such fractions from the person’s total holdings. At the Closing, QuaTech shall deliver to DPAC a certified list showing the name and address of each record holder of QuaTech Common Stock and the exact number of shares held by each such holder (the “QuaTech Common Shareholder List”). For avoidance of doubt, the Common Exchange Rate will require an adjustment to take into account the change in the number of outstanding shares of DPAC Common Stock as will result from the Reverse Split.

 

(b) Conversion of QuaTech Preferred Stock. At the Effective Time all shares of QuaTech 9% Series A Convertible Preferred Stock, par value $0.00001 per share (“QuaTech Preferred Stock”) issued and outstanding immediately prior to the Effective Time shall be cancelled and extinguished and each share of QuaTech Preferred Stock theretofore outstanding shall be converted automatically solely into the right to receive a number of registered whole shares of DPAC Common Stock at a rate, subject to adjustment, of one whole share of DPAC Common Stock (adjusted appropriately for any stock splits, stock dividends or similar recapitalization occurring prior to the Effective Time including without limitation the Reverse Split), rounded up to the nearest whole number of shares of DPAC Common Stock, in exchange for each 0.021780444 of one whole share (subject to adjustment as provided below) of QuaTech Preferred Stock (the “Preferred Exchange Rate”), without payment for any lesser fractions of one whole share of QuaTech Preferred Stock, and all such lesser fractions shall be cancelled without further payment therefor, except that a beneficial holder may aggregate such fractions from the person’s total holdings. For avoidance of doubt, the Preferred Exchange Rate will require an adjustment to take into account the change in the number of outstanding shares of DPAC Common Stock as will result from the Reverse Split.”

 

2. Minimum Credit Facility. Section 5 of the First Amendment is deleted in its entirety and replaced with the following:

 

“Section 6.1(f) of the Merger Agreement is deleted in its entirety; provided, however, that it remains a condition to QuaTech’s obligation to close that DPAC have no outstanding bank or other similar debt owed to any financial institution other than the DCV Bridge Loan and further is a condition to QuaTech’s and DPAC’s respective obligations to close the Merger that the QuaTech Refinancing (as defined in this Amendment) have occurred on terms consistent with the Commitment Letters and satisfactory to QuaTech. The repayment of the QuaTech Note held by HillStreet will not be a condition precedent to the Closing.”

 

3. Section 6.3(i) of the Merger Agreement (which was added by Section 9 of the First Amendment) is amended and restated in its entirety as follows:

 

“(i) QuaTech shall have elected to exercise its Prepayment Option and shall have deposited the Prepayment Amount (each as defined in the License Amendment) into escrow as provided for by the License Amendment.”

 

4. Termination Date. Each reference to “December 31, 2005” in Article VII of the Merger Agreement is hereby amended to read “March 31, 2006.”

 

5. Effect of Merger Agreement. Except as specifically amended hereby, the Merger Agreement shall remain in full force and effect.

 

2


6. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of laws principles.

 

7. Entire Agreement. This Amendment, together with the Merger Agreement and the License Agreement as amended by the License Amendment, constitutes the complete, final and exclusive understanding and agreement of the parties and supersedes any and all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether oral or written, between the parties with respect to the subject matter hereof.

 

8. Use of Defined Terms. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement.

 

[Remainder of page intentionally left blank]

 

3


IN WITNESS WHEREOF, the undersigned have executed and delivered this Second Amendment to the Agreement and Plan of Reorganization by their respective duly authorized officers as of the date first written above.

 

DPAC TECHNOLOGIES CORP.

By:

 

/s/    CREIGHTON K. EARLY        


Name:

Title:

 

Creighton K. Early

Chief Executive Officer

DPAC ACQUISITION SUB, INC.

By:

 

/s/    CREIGHTON K. EARLY        


Name:

Title:

 

Creighton K. Early

Chief Executive Officer

QUATECH, INC.

By:

 

/s/    STEVEN D. RUNKEL        


Name:

Title:

 

Steven D. Runkel

Chief Executive Officer

 

4

EX-2.5.1 3 dex251.htm FIRST AMENDMENT TO LICENSE AGREEMENT First Amendment to License Agreement

EXHIBIT 2.5.1

 

FIRST AMENDMENT TO

LICENSE AGREEMENT

 

THIS FIRST AMENDMENT TO LICENSE AGREEMENT (the “License Amendment”) is made and entered into as of October 20, 2005 by and among DPAC Technologies Corp., a California corporation (“DPAC”), Development Capital Ventures LP, a Delaware limited partnership (“DCV”) and QuaTech, Inc., an Ohio corporation (“QuaTech”). All capitalized terms used by not otherwise defied herein shall have the meaning set forth in the Original Agreement (defined below). The Original Agreement, as modified by this License Amendment, shall be hereinafter referred to as the “Agreement.”

 

RECITALS

 

WHEREAS, the parties entered into that certain License Agreement as of August 5, 2005 (the “Original Agreement”), whereby DPAC granted to DCV (as partial consideration and security for DCV’s extension of a $500,000 bridge loan to DPAC (the “Bridge Loan”)) an exclusive, worldwide, perpetual, sublicenseable right and license to manufacture, have manufactured, develop, market and sell the Products and the Technology;

 

WHEREAS, the Original Agreement also provided for a sublicense of all of DCV’s rights thereunder to QuaTech;

 

WHEREAS, DPAC and QuaTech are parties to that certain Agreement and Plan of Reorganization dated April 26, 2005, as amended by that certain First Amendment to Agreement and Plan of Reorganization dated August 5, 2005, whereby DPAC would acquire QuaTech by merger, with the shareholders of QuaTech, including DCV, obtaining a controlling interest in DPAC (the “Merger Agreement”);

 

WHEREAS, DPAC and QuaTech desire to further amend the Merger Agreement and simultaneously herewith and in partial consideration of the execution and delivery of this License Amendment, are entering into that certain Second Amendment to the Agreement and Plan of Reorganization of even date herewith (the “Merger Amendment”);

 

WHEREAS, in connection with and in furtherance of the Merger Amendment, DPAC and DCV desire to amend the Original Agreement to grant QuaTech an option to prepay any and all future license Fees under the Original Agreement as amended hereby in exchange for a direct, exclusive, worldwide, perpetual, sublicenseable right and license to manufacture, have manufactured, develop, market and sell the Products and the Technology.

 

NOW THEREFORE, pursuant to the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. OPTION TO PREPAY.

 

1.1. The Original Agreement is amended to provide that DPAC hereby grants QuaTech an option (the “Prepayment Option”) to elect to prepay any and all license Fees which may have become due and payable under the Original Agreement as set forth on Exhibit B thereto, following the exercise of such option by QuaTech for a one-time cash payment of Two Million Four Hundred Thousand Dollars ($2,400,000.00) (the “Prepayment Amount”).

 

1.2. The Prepayment Option shall be exercisable at anytime following the date hereof in the sole discretion of QuaTech upon written notice of its election to exercise the Prepayment Option being delivered to DPAC and DCV. The Prepayment Amount shall be due and payable within two (2) business days of the giving of notice of QuaTech’s election to exercise the Prepayment Option.

 

1


2. LICENSE.

 

2.1. Upon the exercise of the Prepayment Option, the license granted by DPAC to DCV and the sublicense by DCV to QuaTech pursuant to Section 4 of the Original Agreement shall terminate as set forth in Section 5.2 below.

 

2.2. Upon the exercise of the Prepayment Option, DPAC shall grant to QuaTech, effective upon the exercise of the Prepayment Option (the “Effective Date”), an exclusive, sublicensable, worldwide, perpetual right and license to the Technology, including the trade names DPAC Technologies, Airborne and AirborneDirect, to develop, make, have made, offer for sale, sell and create derivative works of the Products and the Technology. DPAC shall provide QuaTech with all upgrades, modifications, enhancements and improvements to the Technology upon creation of such upgrades, modifications, enhancements and improvements. If the Agreement (including the exclusive license granted herein) is not approved by the shareholders of DPAC, such exclusive license shall convert to a non-exclusive license, but shall continue to be subject to the terms of the Agreement.

 

2.3. All rights and licenses granted under or pursuant to this Amendment by DPAC to QuaTech are, and will otherwise be deemed to be, for purposes of section 365(n) of the Code (the “Code”), licenses to rights in “intellectual property” as defined under the Code. The parties further agree that, in the event of the commencement of bankruptcy proceedings by or against DPAC under the Code, QuaTech will be entitled, at its option, to retain all of its rights and licenses under this Agreement pursuant to Code Section 365(n).

 

2.4. If DPAC or its affiliates owns or controls any patents filed or issued after the Effective Date claiming new technology based on the Technology or Products, DPAC will notify QuaTech in order to permit QuaTech the opportunity to negotiate a license to such patents.

 

2.5. Upon the grant of the license set forth in Section 2.2 above, QuaTech agrees to purchase from DPAC, at DPAC’s original cost, the Products contained in DPAC’s inventory required to fulfill and ship all backlog and customer orders for Products until such point that all of DPAC’s useable and salable inventory is reduced to zero. QuaTech shall purchase the inventory from DPAC as and when needed and shall pay for such inventory purchases on terms of net 30 days from date of shipment. QuaTech shall not purchase Products or inventory from any other source until all of DPAC’s usable and saleable inventory as of the Effective Date is reduced to zero.

 

2.6. The parties hereto agree and acknowledge that the Prepayment Amount represents the full and fair value of the exclusive license of the Products.

 

3. ESCROW OF PREPAYMENT AMOUNT.

 

3.1. The entire Prepayment Amount shall be paid directly into an escrow account (the “Escrow Fund”) to be maintained by a mutually agreed upon third party (the “Escrow Agent”).

 

The Escrow Fund shall be maintained pursuant to the terms of a mutually agreed upon escrow agreement between the parties hereto and the Escrow Agent which shall provide for, among other things, the following:

 

(a) In the event that the merger is consummated pursuant to the terms of the Merger Agreement, the entire amount of the Escrow Fund shall be released from escrow and delivered to DPAC.

 

(b) In the event that (i) the Merger Agreement is terminated prior to consummation of the merger for any reason and (ii) the Agreement shall have been approved by the requisite vote of the DPAC’s shareholders,

 

1) an amount equal to the unpaid principal amount of the Bridge Loan, together with all accrued but unpaid interest and any fees or costs then due, shall be released from the Escrow Fund and delivered to DCV and shall be applied as repayment of the Bridge Loan and the remaining portion of the Escrow Fund shall be released from escrow and delivered to DPAC;

 

2


2) provided, however, that in the event QuaTech exercises its conversion right pursuant to Section 5.3 below, the entire amount of the Escrow Fund shall be released from escrow and returned and delivered to QuaTech.

 

(c) In the event that (i) the Merger Agreement is terminated prior to consummation of the merger for any reason and (ii) the Agreement shall not have been approved by the requisite vote of the DPAC’s shareholders, the entire amount of the Escrow Fund shall be released from escrow and returned and delivered to QuaTech.

 

4. AMENDMENT OF MERGER AGREEMENT.

 

Simultaneously herewith and in partial consideration of the execution and delivery of this License Amendment, DPAC and QuaTech have entered into the Merger Amendment on terms contained therein.

 

5. TERMINATION.

 

If and when QuaTech exercises the Prepayment Option, Section 8 of the Original Agreement shall be amended in its entirety to provide as follows:

 

5.1. If QuaTech or DPAC materially breaches the Agreement, the other parties will have the right to terminate the Agreement, provided that such party or parties notify the breaching party in writing of such material breach, give the breaching party sixty (60) days to cure such material breach and the material breach is not cured within such sixty (60) day period.

 

5.2. Upon the exercise of the Prepayment Option, the license granted by DPAC to DCV and the sublicense by DCV to QuaTech pursuant to Section 4 of the Original Agreement shall terminate.

 

5.3. In the event that (i) the Merger Agreement is terminated prior to consummation of the merger for any reason and (ii) the Agreement shall have been approved by the requisite vote of the DPAC’s shareholders, QuaTech shall have the exclusive right to unilaterally convert the exclusive license granted herein to a non-exclusive license subject to the terms of the Agreement and to receive a full refund of the Prepayment Amount. QuaTech’s right to convert the license pursuant to this Section 5.3 shall be exercisable only during the five (5) business day period following the later to occur of the termination of the Merger Agreement and the taking of the vote (by meeting, proxy, consent or otherwise) of DPAC’s shareholders. To exercise its right to terminate pursuant to this Section 5.3, QuaTech must deliver written notice to DPAC in accordance with the notice provisions of the Agreement. In the event of such conversion, QuaTech shall pay license fees to DPAC in accordance with Section 5 of the Original Agreement with such fees accruing as to Product or Product derivatives sold and shipped on or after the Effective Date set forth in Section 2.2 of this License Amendment.

 

5.4. In the event of (i) a termination of the Merger Agreement prior to the closing for any reason and (ii) the failure of the requisite number of DPAC shareholders to approve the Agreement (including the exclusive license granted herein), following the return of the Prepayment Amount pursuant to Section 3.1(c) above, the Agreement shall stay in full force and effect except that the license provided in Section 2 hereof shall be converted into non-exclusive license. In the event of such conversion, QuaTech shall pay license fees to DPAC in accordance with Section 5 of the Original Agreement with such fees accruing as to Product or Product derivatives sold and shipped on or after the Effective Date set forth in Section 2.2 of this License Amendment.

 

6. DPAC EQUIPMENT.

 

In the event the Merger Agreement is terminated prior to the closing for any reason, and QuaTech, at its option, continues to license the Technology, QuaTech shall pay DPAC the net book value of any DPAC equipment QuaTech has in its possession, in exchange for title to such equipment.

 

3


7. MISCELLANEOUS.

 

7.1. Effect of Agreements. Except as specifically amended hereby, the Original Agreement shall remain in full force and effect.

 

7.2. Governing Law. This License Amendment shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to its conflicts of laws principles.

 

7.3. Entire Agreement. This License Amendment, together with the Original Agreement, the Exhibits, the Merger Agreement, as amended, the Merger Amendment and the documents executed in connection with the Merger Agreement, as amended, and the transactions contemplated thereby, constitutes the complete, final and exclusive understanding and agreement of the parties and cancels and supersedes any and all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether oral or written, between the parties with respect to the subject matter thereof.

 

7.4. Counterparts; Facsimile. This License Amendment may be executed in one or more counterparts, all of which , when taken together, will constitute one and the same agreement. A facsimile signature will be deemed as valid as an original signature.

 

[signatures follow]

 

4


IN WITNESS WHEREOF, the undersigned have executed and delivered this First Amendment to License Agreement by their respective duly authorized officers as of the date first written above.

 

DPAC TECHNOLOGIES CORP.

     

DEVELOPMENT CAPITAL VENTURES, LP

By:

 

/s/    CREIGHTON K. EARLY        


     

By: DCC Operating, its General Partner

Name:

Title:

 

Creighton K. Early

Chief Executive Officer

         

By:

  /s/    DONALD L. MURFIN        
               

Name:

Title:

 

Donald L. Murfin

Executive Vice President

 

QUATECH, INC.
By:   /s/    STEVEN D. RUNKEL        
Name:   Steven D. Runkel
Title:   Chief Executive Officer

 

5

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