THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE DISTRIBUTED, SOLD, TRANSFERRED,
ASSIGNED, HYPOTHECATED OR OFFERED UNLESS THERE IS IN EFFECT A
REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS COVERING SUCH
SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL THAT SUCH
DISTRIBUTION, SALE, TRANSFER, ASSIGNMENT, HYPOTHECATION OR OFFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF SUCH ACT AND LAWS.
DPAC Technologies Corp.
Warrant Certificate
Common Stock Purchase Warrant
of
Canal Mezzanine Partners, L.P.
Dated as of October 22,
2008
Dated as of October 22,
2008
This Warrant Certificate certifies that, for
value received, Canal Mezzanine Partners, L.P. (together
with its successors and assigns, the “ Holder
”), is entitled to purchase from DPAC Technologies
Corp. , a California corporation (together with its successors
and assigns, the “ Company ”), that number of
shares of common stock of the Company that will equal seventy five
one hundredths percent (0.75%) of the Fully Diluted Shares of the
Company on the date of exercise, at an aggregate exercise price of
One Dollar ($1) (the “ Warrant Purchase Price ”)
(such number of shares of common stock purchasable hereunder being
subject to adjustment as provided herein), and to exercise the
other rights, powers and privileges hereinafter provided, all on
the terms and subject to the conditions hereinafter set forth. This
Warrant Certificate is being issued by the Company pursuant to the
Senior Subordinated Note and Warrant Purchase Agreement dated as of
January 31, 2008 by and between the Company, as seller,
Quatech, Inc., an Ohio corporation and wholly owned subsidiary of
the Company, and the Holder, as purchaser (as amended from time to
time, the “ Purchase Agreement ”). Reference is
hereby made to the Purchase Agreement and that certain Registration
Rights Agreement, dated of January 31, 2008, by and among the
Company and the Holder (as amended, modified and supplemented from
time to time, the “ Registration Rights Agreement
”), for a description of, among other things, certain terms
relating to the Warrant and the Warrant Shares and certain rights
of the Holder hereof and thereof, including, without limitation,
the rights of the Holder to require the registration of the Warrant
Shares. The Holder is entitled to the applicable benefits of the
Purchase Agreement, the Registration Rights Agreement and the other
Related Documents and may enforce the applicable agreements
contained therein, all in accordance with the terms thereof,
notwithstanding any payment or prepayment or redemption or
acquisition of any of the other Securities issued pursuant to the
Purchase Agreement.
Section 1. Definitions . All
capitalized terms not otherwise defined herein shall have the
definitions set forth in the Glossary of Defined Terms attached to
the Purchase Agreement, which definitions are, to the extent
applicable, incorporated in this Warrant Certificate by
reference.
Section 2.
Exercise of Warrant .
2.1 Warrant Exercise . The Warrant shall
be exercisable either as to some or as to all of the Warrant Shares
at any time after January 31, 2008 if that certain Senior
Subordinated due February 15, 2009 in the principal amount of
$250,000 (the “Note”) is not repaid in full on or
before the Maturity Date (as defined in the Note), or from time to
time, after the date hereof; provided, that if any exercise of this
Warrant by the Holder is a partial exercise, any calculation of
Fully Diluted Shares upon a subsequent exercise by the Holder shall
not be deemed to include the Warrant Shares issued to the Holder as
a result of the previous partial exercise(s). Upon a partial
exercise of the Warrant by the Holder, the Warrant Purchase Price
shall be pro-rated to reflect the proportionate amount of Warrant
Shares being exercised upon such partial exercise in relation to
the full amount of Warrant Shares exerciseable for
hereunder.
2.2 Manner of Exercise . To exercise this
Warrant, the Holder shall deliver to the Company: (a) this
Warrant Certificate, (b) a notice of exercise (substantially
in the form attached hereto) (the “ Notice of Exercise
”) specifying the Warrant Shares to be purchased, executed by
a duly authorized officer of the Holder (or its attorney), and
(c) an amount equal to the Warrant Purchase Price for all
Warrant Shares as to which this Warrant is then being
exercised.
2.3 Effectiveness of Exercise . The
exercise of the Warrant shall be deemed to have been effected
immediately prior to the close of business on the Business Day on
which this Warrant Certificate, the Notice of Exercise and the
Warrant Purchase Price shall have been delivered and immediately
prior to the close of business on such Business Day the Holder
shall be deemed to have become the holder of record of the Warrant
Shares.
2.4 Delivery of Certificates . As soon as
practicable after the exercise of the Warrant, and in any event
within five (5) Business Days thereafter, the Company, at its
expense (including any applicable issue Taxes), will cause to be
issued in the name of and delivered to the Holder a certificate or
certificates representing the number of Warrant Shares to which the
Holder shall be entitled upon such exercise. If the exercise of the
Warrant is for less than all of the Warrant Shares, the Company
shall issue a new Warrant Certificate of like tenor for the balance
of the Warrant Shares issuable upon exercise of the
Warrant.
2.5 Certain
Adjustments .
(a) Reorganization Event . Upon the
occurrence of each Reorganization Event, there shall thereafter be
issuable upon the exercise of the Warrant (in lieu of the Warrant
Shares), as appropriate, the number of shares of common stock,
other securities or property to which the Holder would have been
entitled had the Holder exercised the Warrant immediately prior to
such Reorganization Event. Prior to and as a condition of the
consummation of each Reorganization Event, the Company shall cause
effective provisions to be made to effect the purposes of this
paragraph, including, if appropriate, an agreement among the
Company, any successor to the Company and the Holder. Adjustments
for events subsequent to the effective date of such Reorganization
Event shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. In any such event,
effective provisions shall be made in the Charter Documents of the
resulting or surviving Person, in any contract of sale, conveyance,
lease or transfer, or otherwise so that the provisions set forth
herein for the protection of the rights of the Holder shall
thereafter continue to be applicable; and any such resulting or
surviving Person shall expressly assume the obligation to deliver,
upon exercise, such shares of stock, other securities, or other
property. The provisions of this Section 2.5(a) shall
similarly apply to successive Reorganization Events.
(b) Other Event . In case any event
shall occur as to which the other provisions of this
Section 2.5 are not strictly applicable but the failure
to make any adjustment would not fairly protect the purchase rights
represented by the Warrant in accordance with the essential intent
and principles hereof, then the Holder may require in writing
within ninety (90) days after the occurrence of such event
that the Company examine the propriety of an adjustment to the
number of Warrant Shares issuable upon exercise of the Warrant.
Unless the Company and the Holder shall have mutually agreed upon
an adjustment, or that no adjustment is required, within thirty
(30) days after the receipt of such request, the Company shall
appoint a firm of independent certified public accountants of
recognized national standing (which may be the Company’s then
current accountants), to give an opinion regarding an adjustment,
if
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