<PAGE>

                                                                   EXHIBIT 10.26

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

         This Intellectual Property Security Agreement (this "IP AGREEMENT") is
made as of the Effective Date, by and between Poly Circuits, Inc., an Illinois
corporation ("GRANTOR"), and Silicon Valley Bank, a California banking
corporation ("BANK").

                                    RECITALS

         A.       Bank will make advances to Grantor ("ADVANCES") as described
in the Accounts Receivable Finance Agreement (the "FINANCING AGREEMENT"), but
only if Grantor grants Bank a security interest in its Copyrights, Trademarks,
Patents, and Mask Works. Defined terms used but not defined herein shall have
the same meanings as in the Financing Agreement.

         B.       Pursuant to the terms of the Financing Agreement, Grantor has
granted to Bank a security interest in all of Grantor's right title and
interest, whether presently existing or hereafter acquired in, to and under all
of the Collateral.

         NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of Grantor's Indebtedness under the
Financing Agreement, Grantor hereby represents, warrants, covenants and agrees
as follows:

         1.       Grant of Security Interest. As collateral security for the
prompt and complete payment and performance of all of Grantor's present or
future Indebtedness, obligations and liabilities to Bank, Grantor hereby grants
a security interest in all of Grantor's right, title and interest in, to and
under its Intellectual Property Collateral (all of which shall collectively be
called the "INTELLECTUAL PROPERTY COLLATERAL"), including, without limitation,
the following:

                  (a)      Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on EXHIBIT A
attached hereto (collectively, the "COPYRIGHTS");

                  (b)      Any and all trade secrets, and any and all
intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;

                  (c)      Any and all design rights which may be available to
Grantor now or hereafter existing, created, acquired or held;

                  (d)      All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on EXHIBIT B attached
hereto (collectively, the "PATENTS");

                  (e)      Any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Grantor connected
with and symbolized by such trademarks, including without limitation those set
forth on EXHIBIT C attached hereto (collectively, the "TRADEMARKS")

                  (f)      All mask works or similar rights available for the
protection of semiconductor chips, now-owned or hereafter acquired, including,
without limitation those set forth on EXHIBIT D attached hereto (collectively,
the "MASK WORKS");

<PAGE>

                  (g)      Any and all claims for damages by way of past,
present and future infringements of any of the rights included above, with the
right, but not the obligation, to sue for and collect such damages for said use
or infringement of the intellectual property rights identified above;

                  (h)      All licenses or other rights to use any of the
Copyrights, Patents, Trademarks, or Mask Works and all license fees and
royalties arising from such use to the extent permitted by such license or
rights;

                  (i)      All amendments, extensions, renewals and extensions
of any of the Copyrights, Trademarks, Patents, or Mask Works; and

                  (j)      All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

         2.       Authorization and Request. Grantor authorizes and requests
that the Register of Copyrights and the Commissioner of Patents and Trademarks
record this IP Agreement.

         3.       Covenants and Warranties. Grantor represents, warrants,
covenants and agrees as follows:

                  (a)      Grantor is now the sole owner of the Intellectual
Property Collateral, except for nonexclusive licenses granted by Grantor to its
customers in the ordinary course of business.

                  (b)      Performance of this IP Agreement does not conflict
with or result in a breach of any IP Agreement to which Grantor is bound, except
to the extent that certain intellectual property agreements prohibit the
assignment of the rights thereunder to a third party without the licensor's or
other party's consent and this IP Agreement constitutes a security interest.

                  (c)      During the term of this IP Agreement, Grantor will
not transfer or otherwise encumber any interest in the Intellectual Property
Collateral, except for non-exclusive licenses granted by Grantor in the ordinary
course of business or as set forth in this IP Agreement;

                  (d)      To its knowledge, each of the Patents is valid and
enforceable, and no part of the Intellectual Property Collateral has been judged
invalid or unenforceable, in whole or in part, and no claim has been made that
any part of the Intellectual Property Collateral violates the rights of any
third party;

                  (e)      Grantor shall promptly advise Bank of any material
adverse change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Grantor in or to any Trademark, Patent,
Copyright, or Mask Work specified in this IP Agreement;

                  (f)      Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents, Copyrights, and Mask
Works deemed material by the Borrower in its reasonable business judgment, (ii)
use its reasonable efforts to detect infringements of the Trademarks, Patents,
Copyrights, and Mask Works and promptly advise Bank in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, Copyrights,
or Mask Works which Borrower deems material in its reasonable business judgment
to be abandoned, forfeited or dedicated to the public without the written
consent of Bank, which shall not be unreasonably withheld, unless Grantor
determines that reasonable business practices suggest that abandonment is
appropriate.

                  (g)      Grantor shall promptly register the most recent
version of any of Grantor's Copyrights, if not so already registered, and shall,
from time to time, execute and file such other instruments, and take such
further actions as Bank may reasonably request from time to time to perfect or
continue the perfection of Bank's interest in the Intellectual Property
Collateral;

                                       2
<PAGE>

                  (h)      This IP Agreement creates, and in the case of after
acquired Intellectual Property Collateral, this IP Agreement will create at the
time Grantor first has rights in such after acquired Intellectual Property
Collateral, in favor of Bank a valid and perfected first priority security
interest in the Intellectual Property Collateral in the United States securing
the payment and performance of the obligations evidenced by the Financing
Agreement upon making the filings referred to in clause (i) below;

                  (i)      To its knowledge, except for, and upon, the filing
with the United States Patent and Trademark office with respect to the Patents
and Trademarks and the Register of Copyrights with respect to the Copyrights and
Mask Works necessary to perfect the security interests created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority of
U.S. regulatory body is required either (i) for the grant by Grantor of the
security interest granted hereby or for the execution, delivery or performance
of this IP Agreement by Grantor in the U.S. or (ii) for the perfection in the
United States or the exercise by Bank of its rights and remedies thereunder;

                  (j)      All information heretofore, herein or hereafter
supplied to Bank by or on behalf of Grantor with respect to the Intellectual
Property Collateral is accurate and complete in all material respects.

                  (k)      Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Bank's prior written consent, which consent shall not be unreasonably withheld.
Grantor shall not permit the inclusion in any material contract to which it
becomes a party of any provisions that could or might in any way prevent the
creation of a security interest in Grantor's rights and interest in any property
included within the definition of the Intellectual Property Collateral acquired
under such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.

                  (l)      Upon any executive officer of Grantor obtaining
actual knowledge thereof, Grantor will promptly notify Bank in writing of any
event that materially adversely affects the value of any material Intellectual
Property Collateral, the ability of Grantor to dispose of any material
Intellectual Property Collateral of the rights and remedies of Bank in relation
thereto, including the levy of any legal process against any of the Intellectual
Property Collateral.

         4.       Bank's Rights. Bank shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this IP Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify Bank
for all reasonable costs and reasonable expenses incurred in the reasonable
exercise of its rights under this section 4.

         5.       Inspection Rights. Grantor hereby grants to Bank and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, and any of Grantor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Grantor and
as often as may be reasonably requested, but not more than one (1) in every six
(6) months; provided, however, nothing herein shall entitle Bank access to
Grantor's trade secrets and other proprietary information.

         6.       Further Assurances; Attorney in Fact.

                  (a)      On a continuing basis, Grantor will, subject to any
prior licenses, encumbrances and restrictions and prospective licenses, make,
execute, acknowledge and deliver, and file and record in the proper filing and
recording places in the United States, all such instruments, including
appropriate financing and continuation statements and collateral agreements and
filings with the United States Patent and Trademarks Office and the Register of
Copyrights, and take all such action as may reasonably be deemed necessary or
advisable, or as requested by Bank, to perfect Bank's security interest in all
Copyrights, Patents, Trademarks, and Mask Works and otherwise

                                       3
<PAGE>

to carry out the intent and purposes of this IP Agreement, or for assuring and
confirming to Bank the grant or perfection of a security interest in all
Intellectual Property Collateral.

                  (b)      Grantor hereby irrevocably appoints Bank as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor. Bank or otherwise, from time to time in Bank's discretion,
upon Grantor's failure or inability to do so, to take any action and to execute
any instrument which Bank may deem necessary or advisable to accomplish the
purposes of this IP Agreement, including:

                           (i)      To modify, in its sole discretion, this IP
Agreement without first obtaining Grantor's approval of or signature to such
modification by amending Exhibit A, Exhibit B, Exhibit C, and Exhibit D hereof,
as appropriate, to include reference to any right, title or interest in any
Copyrights, Patents, Trademarks or Mask Works acquired by Grantor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents, Trademarks, or Mask Works in which Grantor no longer
has or claims any right, title or interest; and

                           (ii)     To file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Intellectual Property Collateral without the signature of Grantor where
permitted by law.

         7.       Events of Default. The occurrence of any of the following
shall constitute an Event of Default under this IP Agreement:

                  (a)      An Event of Default occurs under the Financing
Agreement; or

                  (b)      Grantor breaches any warranty or agreement made by
Grantor in this IP Agreement.

         8.       Remedies. Upon the occurrence and continuance of an Event of
Default, Bank shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Grantor to assemble the Intellectual Property Collateral
and any tangible property in which Bank has a security interest and to make it
available to Bank at a place designated by Bank. Bank shall have a nonexclusive,
royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works
to the extent reasonably necessary to permit Bank to exercise its rights and
remedies upon the occurrence of an Event of Default. Grantor will pay any
expenses (including reasonable attorney's fees) incurred by Bank in connection
with the exercise of any of Bank's rights hereunder, including without
limitation any expense incurred in disposing of the Intellectual Property
Collateral. All of Bank's rights and remedies with respect to the Intellectual
Property Collateral shall be cumulative.

         9.       Indemnity. Grantor agrees to defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this IP Agreement, and
(b) all losses or expenses in any way suffered, incurred, or paid by Bank as a
result of or in any way arising out of, following or consequential to
transactions between Bank and Grantor, whether under this IP Agreement or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising from or out of Bank's gross
negligence or willful misconduct.

         10.      Reassignment. At such time as Grantor shall completely satisfy
all of the obligations secured hereunder, Bank shall execute and deliver to
Grantor all deeds, assignments, and other instruments as may be reasonably
necessary or proper to reinvest in Grantor title to the property to the extent
assigned hereunder, subject to any disposition thereof which may have been made
by Bank pursuant hereto.

         11.      Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

                                       4
<PAGE>

         12.      Attorneys' Fees. If any action relating to this IP Agreement
is brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.

         13.      Amendments. This IP Agreement may be amended only by a written
instrument signed by both parties hereto.

         14.      Counterparts. This IP Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

         15.      Law and Jurisdiction. This IP Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard for choice of law provisions. Grantor and Bank consent to the
nonexclusive jurisdiction of any state or federal court located in Santa Clara
County, California.

         16.      Confidentiality. In handling any confidential information,
Bank shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this IP Agreement except that the disclosure of this information may
be made (i) to the affiliates of the Bank, (ii) to prospective transferee or
purchasers of an interest in the obligations secured hereby, provided that they
have entered into comparable confidentiality agreement in favor of Grantor and
have delivered a copy to Grantor, (iii) as required by law, regulation, rule or
order, subpoena judicial order or similar order and (iv) as may be required in
connection with the examination, audit or similar investigation of Bank.

                            [SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Intellectual
Property Security Agreement as of the Effective Date of the Financing Agreement.

ADDRESS OF GRANTOR:                    GRANTOR:

475 Industrial Drive                   POLY CIRCUITS, INC.,
West Chicago, IL                       an Illinois corporation
60185

                                       By:     _________________________________
                                       Name:   _________________________________
                                       Title:  _________________________________

<PAGE>

Exhibit "A" attached to that certain Intellectual Property Security Agreement
dated as of the Effective Date of the Financing Agreement.

                                   EXHIBIT "A"

                                   COPYRIGHTS

SCHEDULE A - ISSUED COPYRIGHTS

<TABLE>
<CAPTION>
COPYRIGHT DESCRIPTION                   REGISTRATION NUMBER     DATE OF ISSUANCE
---------------------                   -------------------     ----------------
<S>                                     <C>                     <C>
</TABLE>

SCHEDULE B - PENDING COPYRIGHT APPLICATIONS

<TABLE>
<CAPTION>
                                                                  FIRST DATE OF
                           APPLICATION    DATE OF                    PUBLIC
COPYRIGHT DESCRIPTION         NUMBER       FILING    CREATION     DISTRIBUTION
---------------------      -----------    -------    --------     --------------
<S>                        <C>            <C>        <C>          <C>
</TABLE>

SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)

<TABLE>
<CAPTION>
                                                                                       DATE AND
                                                                                      RECORDATION
                                                                                     NUMBER OF IP
                                                                                     AGREEMENT TO
                                                                                       OWNER OF
                                                                                      GRANTOR (IF
                                                                ORIGINAL                ORIGINAL
                                                                AUTHOR OR               AUTHOR OR
                                                                 OWNER OF               OWNER OF
                                                              COPYRIGHT (IF           COPYRIGHT IS
 COPYRIGHT            DATE OF            FIRST DATE OF        DIFFERENT FROM         DIFFERENT FROM
DESCRIPTION          CREATION            DISTRIBUTION            GRANTOR)                GRANTOR)
---------------  -----------------  ----------------------  ------------------   ----------------------
<S>              <C>                <C>                     <C>                  <C>
</TABLE>

<PAGE>

Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated as of the Effective Date of the Financing Agreement.

                                   EXHIBIT "B"

                                     PATENTS

<TABLE>
<CAPTION>
                                DOCKET                                        FILING
PATENT DESCRIPTION                NO.         COUNTRY         SERIAL NO.       DATE        STATUS
------------------------    ------------   -------------  ----------------  ----------   -----------
<S>                         <C>            <C>            <C>               <C>          <C>
</TABLE>

<PAGE>

Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated as of the Effective Date of the Financing Agreement.

                                   EXHIBIT "C"

                                   TRADEMARKS

<TABLE>
<CAPTION>
 TRADEMARK DESCRIPTION        COUNTRY        SERIAL NO.       REG. NO.        STATUS
------------------------    ------------   -------------  ----------------  ----------
<S>                         <C>            <C>            <C>               <C>
</TABLE>

<PAGE>

Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated as of the Effective Date of the Financing Agreement.

                                   EXHIBIT "D"

                                   MASK WORKS

<TABLE>
<CAPTION>
 MASK WORK DESCRIPTION        COUNTRY        SERIAL NO.       REG. NO.        STATUS
------------------------    ------------   -------------  ----------------  ----------
<S>                         <C>            <C>            <C>               <C>
</TABLE>

<PAGE>

                            VALIDITY INDEMNIFICATION

To:      Silicon Valley Bank

RE:      That certain Accounts Receivable Financing Agreement dated as of the
         Effective Date (defined therein) (the "AGREEMENT"), between M-Wave,
         Inc., a Delaware corporation and Poly Circuits, Inc., an Illinois
         corporation (collectively referred to herein as "BORROWER") and Silicon
         Valley Bank ("BANK")

         I am the chairman and chief executive officer of Borrower and have read
and understand the Agreement. Capitalized words not defined here are defined in
the Agreement. To induce you to extend financial accommodations to Borrower
under the Agreement, I personally warrant and represent the following:

         1.       All Financed Receivables reported to you on behalf of
Borrower, such as agings, transmittals, compliance certificates, collateral
reports or financial statements, are genuine obligations of Account Debtors from
the sale and completed delivery of merchandise or services rendered by Borrower
(the "SOLD GOODS") in the ordinary course of its business in complete
performance of that Account Debtors order.

         2.       All proceeds of the Financed Receivables such as checks,
drafts, notes, letters of credit and acceptances Borrower receives will be held
in trust for you and immediately forwarded to you.

         3.       No Financed Receivables are subject to any material offsets,
defenses or counterclaims, nor will Borrower impede or interfere with the
collection or payment of the Financed Receivables.

         4.       Sold Goods will be Borrower's sole property until sale and
both Financed Receivables and Sold Goods will be free of all liens and security
interests except those of Silicon Valley Bank.

         5.       The due dates of the Financed Receivables reported to Silicon
Valley Bank will be accurate.

         6.       Borrower will promptly report all disputes, rejections,
returns and resales of Sold Goods and all credits it allows on Financed
Receivables.

         7.       All Borrower's reports such as those about the Financed
Receivables, other Accounts and Inventory will be accurate except for minor
inadvertent errors.

         8.       Seller will not sell its Inventory except in the ordinary
course of business.

         I hereby indemnify and hold Silicon Valley Bank harmless from any
direct or consequential damage or loss which it sustains from the breach of any
of my representations or warranties (which continue and are irrevocable while
the Borrower is indebted to Silicon Valley Bank), or its reliance (whether
reasonable or not) on any misstatement (intentional or not), fraud, deceit or
criminal act of Borrower's officers, employees, or agents, or any costs
(including reasonable attorneys' fees and expenses) Silicon Valley Bank incurs
enforcing its rights. I will pay any loss, cost or damage on upon demand.

         My obligations are in addition to and not in lieu of Borrower's
obligations under the Agreement. This Validity Indemnification does not impair
or modify or otherwise affect the Agreement. This Validity Indemnification binds
me and my personal representatives, successors and assigns.

Date: April____,2004

                                        Very truly yours,

                                        ________________________________________
                                        Name: Joseph A. Turek
                                        Social Security Number: ________________
                                        Address: ____________________
                                        City/ST/Zip: ___________________
                                        Telephone: ___________________