Exhibit 10.27


 


Security
Agreement


 


THIS SECURITY AGREEMENT (this “Agreement”),
dated as of this 5th day of August, 2005, is made by DPAC
TECHNOLOGIES CORP. (the “Grantor”),
with an address at 7321 Lincoln Way, Garden Grove,
California 92841,
in favor of DEVELOPMENT CAPITAL VENTURES, LP (the “Lender”),
with an address at 4443 Brookfield Corporate Drive, Suite 110,
Chantilly, Virginia 20151.


 


Under the terms hereof,
the Lender desires to obtain and the Grantor desires to grant the Lender
security for all of the Obligations (as hereinafter defined).


 


NOW, THEREFORE, the Grantor and the Lender, intending to
be legally bound, hereby agree as follows:


 


1.  Definitions.


 


(a)  “Collateral” shall include all personal property of the
Grantor, including the following, all whether now owned or hereafter acquired
or arising and wherever located:  (i) accounts
(including health-care-insurance receivables and credit card receivables); (ii) securities
entitlements, securities accounts, commodity accounts, commodity contracts and
investment property; (iii) deposit accounts; (iv) instruments
(including promissory notes); (v) documents (including warehouse
receipts); (vi) chattel paper (including electronic chattel paper and
tangible chattel paper); (vii) inventory, including raw materials, work in
process, or materials used or consumed in Grantor’s business, items held for
sale or lease or furnished or to be furnished under contracts of service, sale
or lease, goods that are returned, reclaimed or repossessed;
(viii) goods of every nature, including stock-in-trade, goods on
consignment, standing timber that is to be cut and removed under a conveyance
or contract for sale, the unborn young of animals, crops grown, growing, or to
be grown, manufactured homes, computer programs embedded in such goods and farm
products; (ix) equipment, including machinery, vehicles and furniture; (x)
fixtures; (xi) agricultural liens; (xii) as-extracted collateral; (xiii)
commercial tort claims, if any, described on Exhibit “A” hereto; (xiv)
letter of credit rights; (xv) general intangibles, of every kind and
description, including payment intangibles, software, computer information,
source codes, object codes, records and data, all existing and future customer
lists, choses in action, claims (including claims for indemnification or breach
of warranty), books, records, patents and patent applications, copyrights,
trademarks, tradenames, tradestyles, trademark applications, goodwill,
blueprints, drawings, designs and plans, trade secrets, contracts, licenses
(including the licenses and other intangibles granted to Lender pursuant to a
License Agreement dated the date hereof between Grantor and Lender in favor of
Lender), license agreements, formulae, tax and any other types of refunds,
returned and unearned insurance premiums, rights and claims under insurance
policies; (xvi) all supporting obligations of all of the foregoing property;
(xvii) all property of the Grantor now or hereafter in the Lender’s possession
or in transit to or from, or under the custody or control of, the Lender or any
affiliate thereof; (xviii) all cash and cash equivalents thereof; and (xix) all
cash and noncash proceeds (including insurance proceeds) of all of the
foregoing property, all products thereof and all additions and accessions
thereto, substitutions therefor and replacements thereof.  The Collateral shall also include any and all
other tangible or intangible property that is described as being part of the
Collateral pursuant to one or more Riders to Security Agreement that may be
attached hereto or delivered in connection herewith, including the Rider to
Security Agreement - Copyrights, the Rider to Security Agreement -
Patents, the Rider to Security Agreement - Trademarks and the Rider to
Security Agreement - Cash Collateral Account.


 


(b)  “Obligations” shall include all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Grantor to the
Lender or to any other direct or indirect subsidiary of Lender, of any kind or
nature, present or future (including any interest accruing thereon after
maturity, or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
the Grantor, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect (including those
acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, whether or
not (i) evidenced by any note, guaranty or other instrument, (ii) arising
under any agreement, instrument or document, (iii) for the payment of
money, (iv) arising by reason of an extension of credit, opening of a
letter of credit, loan, equipment lease or guarantee, (v) under any
interest or currency swap, future, option or other interest rate protection or
similar agreement, (vi) under or by


 





















 


reason of any foreign currency
transaction, forward, option or other similar transaction providing for the
purchase of one currency in exchange for the sale of another currency, or in
any other manner, (vii) arising out of overdrafts on deposit or other
accounts or out of electronic funds transfers (whether by wire transfer or
through automated clearing houses or otherwise) or out of the return unpaid of,
or other failure of the Lender to receive final payment for, any check, item,
instrument, payment order or other deposit or credit to a deposit or other
account, or out of the Lender’s non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository or other similar
arrangements; and any amendments, extensions, renewals and increases of or to
any of the foregoing, and all costs and expenses of the Lender incurred in the
documentation, negotiation, modification, enforcement, collection and otherwise
in connection with any of the foregoing, including reasonable attorneys’ fees
and expenses.


 


(c) “UCC” means the Uniform Commercial Code, as adopted and
enacted and as in effect from time to time in the State whose law governs
pursuant to the Section of this Agreement entitled “Governing Law and
Jurisdiction.”  Terms used herein which
are defined in the UCC and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the UCC. To the extent the
definition of any category or type of collateral is modified by any amendment,
modification or revision to the UCC, such modified definition will apply
automatically as of the date of such amendment, modification or revision.


 


2.  Grant of Security Interest. 
To secure the Obligations, the Grantor, as debtor, hereby assigns and
grants to the Lender, as secured party, a continuing lien on and security
interest in the Collateral. 


 


3.  Change in Name or Locations. 
The Grantor hereby agrees that if the location of the Collateral changes
from the locations listed on Exhibit “A” hereto and made part hereof, or
if the Grantor changes its name, its type of organization, its state of
organization (if Grantor is a registered organization), its principal residence
(if Grantor is an individual), its chief executive office (if Grantor is a
general partnership or non-registered organization) or establishes a name in
which it may do business that is not listed as a tradename on Exhibit “A” hereto,
the Grantor will immediately notify the Lender in writing of the additions or
changes.  


 


4.  Representations and Warranties. 
The Grantor represents, warrants and covenants to the Lender that: (a) all
information, including its type of organization, jurisdiction of organization,
chief executive office, and (for individuals only) principal residence are as
set forth on Exhibit “A” hereto and are true and correct on the date
hereof;  (b) the Grantor has good,
marketable and indefeasible title to the Collateral, has not made any prior
sale, pledge, encumbrance, assignment or other disposition of any of the
Collateral, and the Collateral is free from all encumbrances and rights of
setoff of any kind except the lien in favor of the Lender created by this
Agreement;  (c) except as herein
provided, the Grantor will not hereafter without the Lender’s prior written
consent sell, pledge, encumber, assign or otherwise dispose of any of the
Collateral or permit any right of setoff, lien or security interest to exist
thereon except to the Lender; (d) the Grantor will defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest therein;  (e) each
account and general intangible, if included in the definition of Collateral, is
genuine and enforceable in accordance with its terms and the Grantor will
defend the same against all claims, demands, setoffs and counterclaims at any
time asserted; and (f) at the time any account or general intangible
becomes subject to this Agreement, such account or general intangible will be a
good and valid account representing a bona fide sale of goods or services by
the Grantor and such goods will have been shipped to the respective account
debtors or the services will have been performed for the respective account
debtors, and no such account or general intangible will be subject to any claim
for credit, allowance or adjustment by any account debtor or any setoff,
defense or counterclaim.


 


5.  Grantor’s Covenants. 
The Grantor covenants that it shall:


 


(a)  from time to
time and at all reasonable times allow the Lender, by or through any of its
officers, agents, attorneys, or accountants, to examine or inspect the
Collateral, and obtain valuations and audits of the Collateral, at the Grantor’s
expense, wherever located.  The Grantor
shall do, obtain, make, execute and deliver all such additional and further
acts, things, deeds, assurances and instruments as the Lender may require to
vest in and assure to the Lender its rights hereunder and in or to the
Collateral, and the proceeds thereof, including waivers from landlords,
warehousemen and mortgagees.  The Grantor
agrees that the Lender has the right to notify (on invoices or otherwise)
account debtors and other obligors or payors on any Collateral of its
assignment to the Lender, and that all payments thereon should be made directly
to the Lender, and that the Lender has full power and authority to collect,
compromise, endorse, sell or otherwise deal with the Collateral in its own name
or that of the Grantor at any time upon an Event of Default;


 


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(b)  keep the
Collateral in good order and repair at all times and immediately notify the
Lender of any event causing a material loss or decline in value of the
Collateral, whether or not covered by insurance, and the amount of such loss or
depreciation; 


 


(c)  only use or
permit the Collateral to be used in accordance with all applicable federal,
state, county and municipal laws and regulations; and


 


(d)  have and
maintain insurance at all times with respect to all Collateral against risks of
fire (including so-called extended coverage), theft, sprinkler leakage, and
other risks (including risk of flood if any Collateral is maintained at a location
in a flood hazard zone) as the Lender may require, in such form, in such
amount, for such period and written by such companies as may be satisfactory to
the Lender in its sole discretion.  Each
such casualty insurance policy shall contain a standard Lender’s Loss Payable
Clause issued in favor of the Lender under which all losses thereunder shall be
paid to the Lender as the Lender’s interests may appear.  Such policies shall expressly provide that
the requisite insurance cannot be altered or canceled without at least thirty
(30) days prior written notice to the Lender and shall insure the Lender
notwithstanding the act or neglect of the Grantor.  Upon the Lender’s demand, the Grantor shall
furnish the Lender with duplicate original policies of insurance or such other
evidence of insurance as the Lender may require.  In the event of failure to provide insurance
as herein provided, the Lender may, at its option, obtain such insurance and
the Grantor shall pay to the Lender, on demand, the cost thereof.  Proceeds of insurance may be applied by the
Lender to reduce the Obligations or to repair or replace Collateral, all in the
Lender’s sole discretion.


 


6.  Negative Pledge; No Transfer. 
The Grantor will not sell or offer to sell or otherwise transfer or grant
or allow the imposition of a lien or security interest upon the Collateral
(except for sales of inventory and collections of accounts in the Grantor’s
ordinary course of business), will not allow any third party to gain control of
all or any part of the Collateral, and will not use any portion thereof in any
manner inconsistent with this Agreement or with the terms and conditions of any
policy of insurance thereon.


 


7.  Covenants for Accounts. 
If accounts are included in the definition of Collateral:


 


(a)  The Grantor
will, on the Lender’s demand, make notations on its books and records showing
the Lender’s security interest and make available to the Lender shipping and
delivery receipts evidencing the shipment of the goods that gave rise to an
account, completion certificates or other proof of the satisfactory performance
of services that gave rise to an account, a copy of the invoice for each
account and copies of any written contract or order from which an account
arose.  The Grantor shall promptly notify
the Lender if an account becomes evidenced or secured by an instrument or
chattel paper and upon the Lender’s request, will promptly deliver any such
instrument or chattel paper to the Lender, including any letter of credit
delivered to the Grantor to support a shipment of inventory by the Grantor.


 


(b)  The Grantor
will promptly advise the Lender whenever an account debtor refuses to retain or
returns any goods from the sale of which an account arose and will comply with
any instructions that the Lender may give regarding the sale or other
disposition of such returns.  From time
to time with such frequency as the Lender may request, the Grantor will report
to the Lender all credits given to account debtors on all accounts.


 


(c)  The Grantor
will immediately notify the Lender if any account arises out of contracts with
the United States or any department, agency or instrumentality thereof, and
will execute any instruments and take any steps required by the Lender so that
all monies due and to become due under such contract shall be assigned to the
Lender and notice of the assignment given to and acknowledged by the
appropriate government agency or authority under the Federal Assignment of
Claims Act.


 


(d)  At any time
after the occurrence of an Event of Default, and without notice to the Grantor,
the Lender may direct any persons who are indebted to the Grantor on any
Collateral consisting of accounts or general intangibles to make payment
directly to the Lender of the amounts due. 
The Lender is authorized to collect, compromise, endorse and sell any
such Collateral in its own name or in the Grantor’s name and to give receipts
to such account debtors for any such payments and the account debtors will be
protected in making such payments to the Lender.  Upon the Lender’s written request, the
Grantor will establish with the Lender and maintain a lockbox account (“Lockbox”) with the Lender and a depository account(s) (“Cash Collateral Account”) with the Lender subject to the
provisions of this subparagraph and such other related agreements as


 


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the Lender may require, and the Grantor
shall notify its account debtors to remit payments directly to the
Lockbox.  Thereafter, funds collected in
the Lockbox shall be transferred to the Cash Collateral Account, and funds in
the Cash Collateral Account shall be applied by the Lender, daily, to reduce
the outstanding Obligations.


 


8.  Further Assurances. 
By its signature hereon, the Grantor hereby irrevocably authorizes the
Lender to execute (on behalf of the Grantor) and file against the Grantor one
or more financing, continuation or amendment statements pursuant to the UCC in
form satisfactory to the Lender, and the Grantor will pay the cost of preparing
and filing the same in all jurisdictions in which such filing is deemed by the
Lender to be necessary or desirable in order to perfect, preserve and protect
its security interests.  If required by
the Lender, the Grantor will execute all documentation necessary for the Lender
to obtain and maintain perfection of its security interests in the
Collateral.    At the Lender’s request,
the Grantor will execute, in form satisfactory to the Lender, a Rider to
Security Agreement - Copyrights (if any Collateral consists of registered or
unregistered copyrights), a Rider to Security Agreement - Patents (if any
Collateral consists of patents or patent applications), a Rider to Security
Agreement - Trademarks (if any Collateral consists of trademarks,
tradenames, tradestyles or trademark applications).  If any Collateral consists of letter of
credit rights, electronic chattel paper, deposit accounts or supporting
obligations not maintained with the Lender or one of its affiliates, or any
securities entitlement, securities account, commodities account, commodities
contract or other investment property, then at the Lender’s request the Grantor
will execute, and will cause the depository institution or securities
intermediary upon whose books and records the ownership interest of the Grantor
in such Collateral appears, to execute such Pledge Agreements, Notification and
Control Agreements or other agreements as the Lender deems necessary in order
to perfect, prioritize and protect its security interest in such Collateral, in
each case in a form satisfactory to the Lender.


 


9.  Events of Default. 
The Grantor shall, at the Lender’s option, be in default under this
Agreement upon the happening of any of the following events or conditions
(each, an “Event of Default”):  (a) any Event of Default (as defined in
any of the Obligations); (b) any default under any of the Obligations that
does not have a defined set of “Events of Default” and the lapse of any notice
or cure period provided in such Obligations with respect to such default; (c) demand
by the Lender under any of the Obligations that have a demand feature; (d) the
failure by the Grantor to perform any of its obligations under this Agreement; (e) falsity,
inaccuracy or material breach by the Grantor of any written warranty,
representation or statement made or furnished to the Lender by or on behalf of
the Grantor; (f) an uninsured material loss, theft, damage, or destruction
to any of the Collateral, or the entry of any judgment against the Grantor or
any lien against or the making of any levy, seizure or attachment of or on the
Collateral; (g) the failure of the Lender to have a perfected first
priority security interest in the Collateral; (h) any indication or
evidence received by the Lender that the Grantor may have directly or
indirectly been engaged in any type of activity which, in the Lender’s
discretion, might result in the forfeiture of any property of the Grantor to
any governmental entity, federal, state or local; or (i) if the Lender
otherwise deems itself insecure.


 


10.  Remedies.  Upon
the occurrence of any such Event of Default and at any time thereafter, the
Lender may declare all Obligations secured hereby immediately due and payable
and shall have, in addition to any remedies provided herein or by any
applicable law or in equity, all the remedies of a secured party under the UCC.
The Lender’s remedies include, but are not limited to, the right to (a) peaceably
by its own means or with judicial assistance enter the Grantor’s premises and
take possession of the Collateral without prior notice to the Grantor or the
opportunity for a hearing, (b) render the Collateral unusable, (c) dispose
of the Collateral on the Grantor’s premises, (d) require the Grantor to
assemble the Collateral and make it available to the Lender at a place designated
by the Lender, and (e) notify the United States Postal Service to send the
Grantor’s mail to the Lender.  Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Lender will give the Grantor
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or any other intended disposition thereof is
to be made.  The requirements of commercially
reasonable notice shall be met if such notice is sent to the Grantor at least
ten (10) days before the time of the intended sale or disposition.  Expenses of retaking, holding, preparing for
disposition, disposing or the like shall include the Lender’s reasonable
attorneys’ fees and legal expenses, incurred or expended by the Lender to
enforce any payment due it under this Agreement either as against the Grantor,
or in the prosecution or defense of any action, or concerning any matter
growing out of or connection with the subject matter of this Agreement and the
Collateral pledged hereunder.  The
Grantor waives all relief from all appraisement or exemption laws now in force
or hereafter enacted.


 


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11.  Power of Attorney. 
The Grantor does hereby make, constitute and appoint any officer or
agent of the Lender as the Grantor’s true and lawful attorney-in-fact, with
power to (a) endorse the name of the Grantor or any of the Grantor’s
officers or agents upon any notes, checks, drafts, money orders, or other
instruments of payment or Collateral that may come into the Lender’s possession
in full or part payment of any Obligations; (b) sue for, compromise,
settle and release all claims and disputes with respect to, the Collateral; and
(c) sign, for the Grantor, such documentation required by the UCC, or
supplemental intellectual property security agreements; granting to the Grantor’s
said attorney full power to do any and all things necessary to be done in and
about the premises as fully and effectually as the Grantor might or could
do.  The Grantor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an
interest, and is irrevocable.


 


12.  Payment of Expenses. 
At its option, the Lender may discharge taxes, liens, security interests
or such other encumbrances as may attach to the Collateral, may pay for
required insurance on the Collateral and may pay for the maintenance, appraisal
or reappraisal, and preservation of the Collateral, as determined by the Lender
to be necessary.  The Grantor will
reimburse the Lender on demand for any payment so made or any expense incurred
by the Lender pursuant to the foregoing authorization, and the Collateral also
will secure any advances or payments so made or expenses so incurred by the
Lender.


 


13.  Notices. 
All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”)
must be in writing and will be effective upon receipt.  Notices may be given in any manner to which
the parties may separately agree, including electronic mail.  Without limiting the foregoing, first-class
mail, facsimile transmission and commercial courier service are hereby agreed
to as acceptable methods for giving Notices. 
Regardless of the manner in which provided, Notices may be sent to a
party’s address as set forth above or to such other address as any party may
give to the other for such purpose in accordance with this section.


 


14.  Preservation of
Rights.  No
delay or omission on the Lender’s part to exercise any right or power arising
hereunder will impair any such right or power or be considered a waiver of any
such right or power, nor will the Lender’s action or inaction impair any such
right or power.  The Lender’s rights and
remedies hereunder are cumulative and not exclusive of any other rights or
remedies which the Lender may have under other agreements, at law or in equity.


 


15.  Illegality.  
If any provision contained in this Agreement should be invalid, illegal
or unenforceable in any respect, it shall not affect or impair the validity,
legality and enforceability of the remaining provisions of this Agreement.


 


16.  Changes in Writing. 
No modification, amendment or waiver of, or consent to any departure by
the Grantor from, any provision of this Agreement will be effective unless made
in a writing signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.  No notice to or demand on the Grantor will
entitle the Grantor to any other or further notice or demand in the same,
similar or other circumstance.


 


17.  Entire Agreement. 
This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.


 


18.  Counterparts. 
This Agreement may be signed in any number of counterpart copies and by
the parties hereto on separate counterparts, but all such copies shall
constitute one and the same instrument. 
Delivery of an executed counterpart of signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart.  Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.


 


19.  Successors and Assigns. 
This Agreement will be binding upon and inure to the benefit of the
Grantor and the Lender and their respective heirs, executors, administrators,
successors and assigns; provided, however, that the Grantor may
not assign this Agreement in whole or in part without the Lender’s prior
written consent and the Lender at any time may assign this Agreement in whole
or in part.


 


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20.  Interpretation. 
In this Agreement, unless the Lender and the Grantor otherwise agree in
writing, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to statutes are to
be construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; the word “or” shall be deemed to include “and/or”,
the words “including”, “includes” and “include” shall be deemed to be followed
by the words “without limitation”; references to articles, sections (or
subdivisions of sections) or exhibits are to those of this Agreement; and
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. 
Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.  Unless otherwise specified in
this Agreement, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with GAAP.  If this Agreement is executed by more than
one Grantor, the obligations of such persons or entities will be joint and
several. 


 


21.  Indemnity. 
The Grantor agrees to indemnify each of the Lender, each legal entity,
if any, who controls the Lender and each of their respective directors,
officers and employees (the “Indemnified Parties”)
and to hold each Indemnified Party harmless from and against any and all
claims, damages, losses, liabilities and expenses (including all fees and
charges of internal or external counsel with whom any Indemnified Party may
consult and all expenses of litigation and preparation therefor) which any
Indemnified Party may incur or which may be asserted against any Indemnified
Party by any person, entity or governmental authority (including any person or
entity claiming derivatively on behalf of the Grantor), in connection with or
arising out of or relating to the matters referred to in this Agreement or the
Obligations, whether (a) arising from or incurred in connection with any
breach of a representation, warranty or covenant by the Grantor, or (b) arising
out of or resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or
order, or tort, or contract or otherwise, before any court or governmental
authority; provided, however, that the foregoing indemnity
agreement shall not apply to any claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party’s gross negligence or
willful misconduct.  The indemnity
agreement contained in this Section shall survive the termination of this
Agreement, payment of the Obligations and assignment of any rights
hereunder.  The Grantor may participate
at its expense in the defense of any such claim.


 


22.  Governing Law and Jurisdiction.  This Agreement has been delivered to and
accepted by the Lender and shall be construed in accordance with, and governed
in all respects by the laws of the State of Delaware as applied to agreements
entered into and to be performed entirely in such state, between residents of
such state. Nothing contained in this Agreement will prevent the Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against the Grantor individually, against any security or against any property
of the Grantor within any other county, state or other foreign or domestic
jurisdiction.  The Lender and the Grantor
agree that the venue provided above is the most convenient forum for both the
Lender and the Grantor.  The Grantor
waives any objection to venue and any objection based on a more convenient
forum in any action instituted under this Agreement.


 


23.  WAIVER OF JURY TRIAL.  THE GRANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS
AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  THE GRANTOR ACKNOWLEDGES THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.


 


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The
Grantor acknowledges that it has read and understood all the provisions of this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.


 


WITNESS the due execution hereof as a document
under seal, as of the date first written above.


 


 


	
  WITNESS / ATTEST:

  	
   

  	
  DPAC
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEVELOPMENT
  CAPITAL VENTURES, LP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: DCC
  OPERATING, INC.,

  
	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Donald L.
  Murfin

  
	
   

  	
   

  	
  Title: Executive
  Vice President

  
							



 


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EXHIBIT “A”


TO
SECURITY AGREEMENT


 


1.                                       Grantor’s form of organization (i.e.,
corporation, partnership, limited liability company):


 


 


2.                                       Grantor’s State of organization, if a
registered organization (i.e., corporation, limited partnership or limited
liability company):


 


 


3.                                       Grantor’s principal residence, if a
natural person or general partnership:


 


 


4.                                       Address of Grantor’s chief executive
office, including the County: 


 


 


5.                                       Grantor’s EIN, if not a natural person:


 


 


6.                                       Grantor’s SSN, if a natural person:


 


 


7.                                       Grantor’s organizational ID# (if any
exists):


 


 


8.                                       Address for books and records, if
different: 


 


 


9.                                       Addresses of other Collateral locations,
including Counties, for the past five (5) years:


 


 


10.                                 Name and address of landlord or owner if
location is not owned by the Grantor: 


 


 


11.                                 Other names or tradenames now or formerly
used by the Grantor:


 


 


12.                                 List of all existing Commercial Tort
Claims (by case title with court and brief description of claim):


 


8





















 


RIDER TO SECURITY AGREEMENT - PATENTS


 


THIS
RIDER TO SECURITY AGREEMENT (“Rider”)
is executed this 5th day of August, 2005, by and between DPAC
TECHNOLOGIES CORP. (the “Grantor”) with
an address at 7321 Lincoln Way, Garden
Grove, California 92841 and DEVELOPMENT CAPITAL
VENTURES, LP (the “Lender”), with
an address at 4443 Brookfield Corporate Drive, Suite 110, Chantilly,
Virginia 20151.  This Rider is
incorporated into and made part of that certain Security Agreement (“Security Agreement”) between the Grantor and the Lender
dated August 5, 2005, and also into certain other financing documents and
security agreements executed by and between the Grantor and the Lender
or by and between the Borrower (as defined in the Security Agreement) and the
Lender (all such documents including this Rider collectively referred to as “Loan Documents”). 
All capitalized terms not otherwise defined in this Rider shall have the
same meanings ascribed to such terms in the other Loan Documents.


 


As
collateral security for the Obligations (as defined in the Security Agreement)
under the Loan Documents, the Grantor has agreed to grant a security interest
in and to assign to the Lender the Patent Collateral (as hereinafter defined).  The Lender desires to have its lien and
security interest in such Patent Collateral confirmed by a document identifying
such security interest and in such form as may be recorded in the United States
Patent and Trademark Office.


 


NOW,
THEREFORE, with the foregoing background deemed incorporated
by reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:


 


1.                                      Grant
of Security Interest.  In
consideration of and pursuant to the terms of the Security Agreement and for
other good, valuable and sufficient consideration, the receipt of which is
hereby acknowledged, and to secure the Obligations, the Grantor does hereby
assign and grant to the Lender a lien and security interest in (a) all of
the Grantor’s right, title and interest in and to (i) the United States
Letters Patent and the inventions described and claimed therein set forth on Schedule A
hereto and any future patents (hereinafter referred to collectively as the “Patents”); (ii) the applications for Letters Patent
and the inventions described and claimed therein set forth on Schedule A
hereto and any United States Letters Patent which may be issued upon any of
said applications and any future patent applications (hereinafter referred to
collectively as the “Applications”);
(iii) any reissue, extension, division or continuation of the Patents or
the Applications (such reissues, extensions, divisions and continuations being
herein referred to collectively as the “Reissued Patents”);
(iv) all future royalties or other fees paid or payment or payments made
or to be made to the Grantor in respect of the Patents; and (v) proceeds
of any and all of the foregoing (the Patents, Applications, Reissued Patents
and Royalties and proceeds being herein referred to collectively as the “Patent Rights”), and (b) all rights, interests, claims
and demands that the Grantor has or may have in existing and future profits and
damages for past and future infringements of the Patent Rights (such rights,
interests, claims and demands being herein called the “Claims”)
(the Patent Rights and Claims collectively referred to as the “Patent Collateral”).


 





















 


2.                                      Representations
and Warranties.  The Grantor
warrants and represents to the Lender that: 
(a) the Grantor is the true and lawful exclusive owner of the
Patent Rights set forth on Schedule A, including all rights and interests
herein granted; (b) the Patent Collateral is valid and enforceable; (c) the
Grantor has full power and authority to execute and deliver this Rider; (d) the
Grantor has no notice of any suits or actions commenced or threatened against
it, or notice of claims asserted or threatened against it, with reference to
the Patent Rights and the interests granted herein; and (e) the Patent
Rights and all interests granted herein are so granted free from all liens,
charges, claims, options, licenses, pledges and encumbrances of every kind and
character.


 


3.                                      Covenants.  The Grantor further covenants that:  (a) Until all of the Grantor’s
liabilities to the Lender have been satisfied in full, it will not enter into
any agreement, including without limitation, license agreements, which are
inconsistent with the Grantor’s obligations under this Rider; and (b) If
the Grantor acquires rights to any new Patent Collateral, the provisions of
this Rider shall automatically apply thereto and the Grantor shall give the
Lender prompt written notice thereof along with an amended Schedule “A.”


 


4.                                      Maintenance
of Patent Collateral.  The
Grantor further covenants that:  until
all of the Obligations have been satisfied in full, it will (i) not enter
into any agreement, including without limitation, license agreements, which are
inconsistent with the Grantor’s undertakings and covenants under this Rider or
which restrict or impair the Lender’s rights hereunder and (ii) maintain
the Patent Collateral in full force and effect.


 


5.                                      Negative
Pledge.  The Grantor agrees not
to sell, assign or further encumber its rights and interest in the Patent
Collateral without prior written consent of the Lender.


 


6.                                      Remedies
Upon Default.  (a)  Anything
herein contained to the contrary notwithstanding, if and while the Grantor
shall be in default hereunder or an Event of Default exists under the Loan
Documents, the Grantor hereby covenants and agrees that the Lender, as the
holder of a security interest under the Uniform Commercial Code, as now or
hereafter in effect in Pennsylvania, may take such action permitted under the
Loan Documents or permitted by law, in its exclusive discretion, to foreclose
upon the Patent Collateral covered hereby.


 


(b)                                 For
such purposes, and in the event of the Grantor’s default hereunder or an Event
of Default under the Loan Documents and while such default or Event of Default
exists, the Grantor hereby authorizes and empowers the Lender to make,
constitute and appoint any officer or agent of the Lender as the Lender may
select, in its exclusive discretion, as the Grantor’s true and lawful
attorney-in-fact, with the power to endorse the Grantor’s name on all applications,
documents, papers and instruments necessary for the Lender to use the Patent
Collateral or to grant or issue any exclusive or non-exclusive license under
the Patent Collateral to anyone else, or necessary for the Lender to assign,
pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral to anyone else.  The Grantor
hereby ratifies all that such


 


2





















 


attorney shall lawfully
do or cause to be done by virtue hereof, except for the gross negligence or
wilful misconduct of such attorney.  This
power of attorney shall be irrevocable for the life of this Rider and the Loan
Documents, and until all the Obligations are satisfied in full.


 


(c)                                  The
Grantor expressly acknowledges that this Rider shall be recorded with the
Patent and Trademark Office in Washington, DC. 
Contemporaneously herewith, the Grantor shall also execute and deliver
to the Lender such documents as the Lender shall reasonably require to
permanently assign all rights in the Patent Collateral to the Lender, which
documents shall be held by the Lender, in escrow, until the occurrence of an
Event of Default hereunder or under the Loan Documents.  After such occurrence, the Lender may, at its
sole option, record such escrowed documents with the Patent and Trademark
Office.


 


7.                                      Prosecution
of Patent Applications.  (a) The
Grantor shall, at its own expense, diligently file and prosecute all patent
applications relating to the inventions described and claimed in the Patent
Collateral in the United States Patent and Trademark Office, and shall pay or
cause to be paid in their customary fashion all fees and disbursements in
connection therewith, and shall not abandon any such application prior to the
exhaustion of all administrative and judicial remedies or disclaim or dedicate
any Patent without the prior written consent of the Lender.  The Grantor shall not abandon any Patent
Collateral without the prior written consent of the Lender.


 


(b)                                 Any
and all fees, costs and expenses, including reasonable attorneys’ fees and
expenses incurred by the Lender in connection with the preparation,
modification, enforcement or termination of this Rider and all other documents
relating hereto and the consummation of this transaction, the filing and recording
of any documents (including all taxes in connection therewith) in public
offices, the payment or discharge of any taxes, counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in defending or prosecuting any
actions or proceedings arising out of or related to the Patent Collateral shall
be paid by the Grantor on demand by the Lender.


 


(c)                                  The
Grantor shall have the right to bring suit in the name of the Grantor to
enforce the Patent Collateral, in which case the Lender may, at the Lender’s
option, be joined as a nominal party to such suit if the Lender shall be
satisfied that such joinder is necessary and that the Lender is not thereby
incurring any risk of liability by such joinder.  The Grantor shall promptly, upon demand,
reimburse and indemnify, defend and hold harmless the Lender for all damages,
costs and expenses, including reasonable attorneys’ fees, incurred by the
Lender pursuant to this paragraph and all other actions and conduct of the
Grantor with respect to the Patent Rights during the term of this Rider.


 


8.                                      Subject
to Security Agreement.  This
Rider shall be subject to the terms, provisions, and conditions set forth in
the Security Agreement and may not be modified without the written consent of
the party against whom enforcement is being sought.


 


3





















 


9.                                      Inconsistent
with Security Agreement.  All
rights and remedies herein granted to the Lender shall be in addition to any
rights and remedies granted to the Lender under the Loan Documents.  In the event of an inconsistency between this
Rider and the Security Agreement, the language of the Security Agreement shall
control.  The terms and conditions of the
Security Agreement are hereby incorporated herein by reference.


 


10.                               Termination
of Agreement.  Upon payment and
performance of all Obligations under the Loan Documents and full satisfaction
of all of the Grantor’s liabilities and obligations to the Lender, the Lender
shall execute and deliver to the Grantor all documents necessary to terminate
the Lender’s security interest in the Patent Collateral.


 


11.                               Fees
and Expenses.  Any and all
reasonable fees, costs and expenses, of whatever kind or nature, including the
reasonable attorneys’ fees and legal expenses incurred by the Lender in
connection with the preparation of this Rider and all other documents relating
hereto and the consummation of this transaction, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in protecting, maintaining, preserving
the Patent Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Patent Collateral, in each case in
accordance with the terms of this Rider, shall be borne and paid by the Grantor
on demand by the Lender and until so paid shall be added to the principal
amount of the Obligations to the Lender and shall bear interest at the contract
rate therefor.


 


12.                               Additional
Remedies.  Upon the occurrence of
an Event of Default under the Loan Documents, the Lender may, without any
obligation to do so, complete any obligation of the Grantor hereunder, in the
Grantor’s name or in the Lender’s name, but at the Grantor’s expense, and the
Grantor hereby agrees to reimburse the Lender in full for all reasonable
expenses, including reasonable attorney’s fees, incurred by the Lender in
protecting, defending and maintaining the Patent Collateral.


 


13.                               Governing
Law.  This Agreement has been
delivered to and accepted by the Lender and shall be construed in accordance
with, and governed in all respects by the laws of the State of Delaware as
applied to agreements entered into and to be performed entirely in such state,
between residents of such state. Nothing contained in this Agreement will
prevent the Lender from bringing any action, enforcing any award or judgment or
exercising any rights against the Grantor individually, against any security or
against any property of the Grantor within any other county, state or other
foreign or domestic jurisdiction.  The
Lender and the Grantor agree that the venue provided above is the most
convenient forum for both the Lender and the Grantor.  The Grantor waives any objection to venue and
any objection based on a more convenient forum in any action instituted under
this Agreement.


 


4





















 


14.                               Counterparts.  This Rider may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.


 


5





















 


The
Grantor acknowledges that it has read and understood all the provisions of this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.


 


WITNESS the due execution hereof as a document
under seal, as of the date first written above.


 


 


	
  WITNESS / ATTEST:

  	
   

  	
  DPAC
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEVELOPMENT
  CAPITAL

  
	
   

  	
   

  	
  VENTURES,
  LP 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  DCC OPERATING,
  INC.,

  
	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Donald L.
  Murfin

  
	
   

  	
   

  	
   

  	
  Title: Executive
  Vice President

  
						



 


6





















 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the         
day of August in the year 2005 before me, the undersigned, a Notary Public
in and for said State, personally appeared                                   ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the         
day of August in the year 2005 before me, the undersigned, a Notary Public
in and for said State, personally appeared                                   ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


7





















 


SCHEDULE A TO RIDER TO
SECURITY AGREEMENT - PATENTS


 


	
  PATENT REGISTRATION NO.

  	
   

  	
  PATENT

  
	
  10/653,381

  	
   

  	
  Wireless
  Connectivity Module

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


8





















 


PATENT ASSIGNMENT


 


WHEREAS,
DPAC TECHNOLOGIES CORP. (the “Grantor”) is the owner of the entire right, title and
interest in and to the United States patents, patent applications and rations
listed on Schedule “A” attached hereto and made a part hereof, the
inventions described therein and all rights associated therewith (collectively,
the “Patent Collateral”), which are
registered in the United States Patent and Trademark Office or which are the
subject of pending applications in the United States Patent and Trademark
Office; and


 


WHEREAS,
DEVELOPMENT CAPITAL VENTURES, LP, having a place of business
at 4443 Brookfield Corporate Drive, Suite 110,
Chantilly, Virginia 20151, identified as the “Lender”
under that certain Rider to Security Agreement - Patents of even date herewith
(the “Grantee”) is desirous of acquiring
said Patent Collateral;


 


NOW,
THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and intending to be legally bound hereby, the
Grantor, its successors and assigns does hereby transfer, assign and set over
unto Grantee, its successors, transferees and assigns, all of its present and
future right, title and interest in and to the Patent Collateral and all
proceeds thereof and all rights and proceeds associated therewith.


 


IN
WITNESS WHEREOF, the undersigned has caused this Patent
Assignment to be executed by its duly authorized officer on this                 
day of                               ,
          .


 


 


	
  WITNESS / ATTEST:

  	
  DPAC TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
				



 





















 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the
         day of           
in the year 2005 before me, the undersigned, a Notary Public in and for said
State, personally appeared                         ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


2





















 


RIDER TO SECURITY AGREEMENT -
TRADEMARKS


 


THIS
RIDER TO SECURITY AGREEMENT (“Rider”)
is executed this 5th day of August, 2005, by and between DPAC
TECHNOLOGIES CORP. (the “Grantor”) with
an address at 7321 Lincoln Way, Garden Grove, California 92841 and DEVELOPMENT CAPITAL VENTURES, LP (the “Lender”),
with an address at 4443 Brookfield
Corporate Drive, Suite 110, Chantilly, Virginia 20151.  This Rider is incorporated into and made part
of that certain Security Agreement (“Security Agreement”)
between the Grantor and the Lender dated August 5, 2005, and also into
certain other financing documents and security agreements executed by and
between the Grantor and the Lender or by and between the Borrower (as defined
in the Security Agreement) and the Lender (all such documents including this
Rider collectively referred to as “Loan Documents”).  All capitalized terms not otherwise defined
in this Rider shall have the same meanings ascribed to such terms in the other
Loan Documents.


 


The
Grantor has adopted, used and is using (or has filed applications for the
registration of) the trademarks, service marks and tradenames listed on Schedule “A”
attached hereto and made part hereof (all such marks or names hereinafter
referred to as the “Trademarks”).


 


The
Lender desires to acquire a lien and security interest on the Trademarks and
the registration thereof, together with all the goodwill of the Grantor
associated therewith and represented thereby, as security for all of the
Obligations (as defined in the Security Agreement) to the Lender, and the
Lender desires to have its security interest in such Trademarks confirmed by a
document identifying same and in such form that it may be recorded in the United
States Patent and Trademark Office.


 


NOW,
THEREFORE, with the foregoing background deemed incorporated
by reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:


 


1.                                      Grant
of Security Interest.  In
consideration of and pursuant to the terms of the Loan Documents, and for other
good, valuable and sufficient consideration, the receipt of which is hereby
acknowledged, and to secure the Grantor’s present and future liabilities to the
Lender, the Grantor grants a lien and security interest to the Lender in all
its present and future right, title and interest in and to the Trademarks,
together with all the goodwill of the Grantor associated with and represented
by the Trademarks, and the registration thereof and the right (but not the
obligation) to sue for past, present and future infringements, and the proceeds
thereof, including, without limitation, license royalties and proceeds of
infringement suits.


 


2.                                      Maintenance
of Trademarks.  The Grantor hereby
covenants and agrees to maintain the Trademarks in full force and effect until
all of the Obligations to the Lender are satisfied in full.


 





















 


3.                                      Representations
and Warranties.  The Grantor
represents, warrants and covenants that: (a) the Trademarks are subsisting
and have not been adjudged invalid or unenforceable; (b) each of the
Trademarks is valid and enforceable; (c) the Grantor is the sole and
exclusive owner of the entire and unencumbered right, title and interest in and
to each of the Trademarks, and each of the Trademarks is free and clear of any
liens, charges and encumbrances, including, without limitation, pledges,
assignments, licenses and covenants by the Grantor not to sue third persons; (d) the
Grantor has the unqualified right to enter into this Rider and perform its
terms; (e) the Grantor has used, and will continue to use for the duration
of this Rider, proper notice, as required by 15 U.S.C. §§ 1051-1127 in
connection with its use of the Trademarks; and (f) the Grantor has used,
and will continue to use for the duration of this Rider, consistent standards
of quality in products leased or sold under the Trademarks and hereby grants to
the Lender and its employees and agents the right to visit the Grantor’s
locations which lease, sell or store products under any of the Trademarks and
to inspect the products and quality control records relating thereto at
reasonable times during regular business hours to ensure the Grantor’s
compliance with this paragraph 3(f).


 


4.                                      Covenants.  The Grantor further covenants that:  (a)  until all of the Obligations have
been satisfied in full, the Grantor will not enter into any agreement,
including, without limitation, license agreements, which are inconsistent with
the Grantor’s obligations under this Rider; and (b) if the Grantor
acquires rights to any new Trademarks, the provisions of this Rider shall
automatically apply thereto and the Grantor shall give the Lender prompt
written notice thereof along with an amended Schedule “A.”


 


5.                                      Exclusive
Use of Trademarks.  So long as
this Rider is in effect and so long as the Grantor has not received notice from
the Lender that an Event of Default has occurred under the Loan Documents and
that the Lender has elected to exercise its rights hereunder, the Grantor shall
continue to have the exclusive right to use the Trademarks and the Lender shall
have no right to use the Trademarks or issue any exclusive or non-exclusive
license with respect thereto, or assign, pledge or otherwise transfer title in
the Trademarks to anyone else.


 


6.                                      Negative
Pledge.  The Grantor agrees not
to sell, assign or further encumber its rights and interest in the Trademarks
without prior written consent of the Lender.


 


7.                                      Remedies
Upon Default.  (a)  Anything
herein contained to the contrary notwithstanding, if and while the Grantor
shall be in default hereunder or an Event of Default exists under the Loan
Documents, the Grantor hereby covenants and agrees that the Lender, as the
holder of a security interest under the Uniform Commercial Code, as now or
hereafter in effect in Pennsylvania, may take such action permitted under the
Loan Documents or permitted by law, in its exclusive discretion, to foreclose
upon the Trademarks covered hereby.


 


(b)                                 For
such purposes, and in the event of the Grantor’s default hereunder or an Event
of Default under the Loan Documents and while such default or Event of Default
exists, the Grantor hereby authorizes and empowers the Lender to make,
constitute and appoint any officer or agent of the Lender as the Lender may
select, in its exclusive discretion, as the


 


2





















 


Grantor’s true and lawful
attorney-in-fact, with the power to endorse the Grantor’s name on all
applications, documents, papers and instruments necessary for the Lender to use
the Trademarks or to grant or issue any exclusive or non-exclusive license
under the Trademarks to anyone else, or necessary for the Lender to assign,
pledge, convey or otherwise transfer title in or dispose of the Trademarks to anyone
else.  The Grantor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue hereof,
except for the gross negligence or wilful misconduct of such attorney.  This power of attorney shall be irrevocable
for the life of this Rider and the Loan Documents, and until all the
Obligations are satisfied in full.


 


(c)                                  The
Grantor expressly acknowledges that this Rider shall be recorded with the
Patent and Trademark Office in Washington, DC. 
Contemporaneously herewith, the Grantor shall also execute and deliver
to the Lender such documents as the Lender shall reasonably require to
permanently assign all rights in the Trademarks to the Lender, which documents
shall be held by the Lender, in escrow, until the occurrence of an Event of Default
hereunder or under the Loan Documents. 
After such occurrence, the Lender may, at its sole option, record such
escrowed documents with the Patent and Trademark Office.


 


8.                                      Subject
to Security Agreement.  This
Rider shall be subject to the terms, provisions, and conditions set forth in
the Security Agreement and may not be modified without the written consent of
the party against whom enforcement is being sought.


 


9.                                      Inconsistent
with Security Agreement.  All
rights and remedies herein granted to the Lender shall be in addition to any
rights and remedies granted to the Lender under the Loan Documents.  In the event of an inconsistency between this
Rider and the Security Agreement, the language of the Security Agreement shall
control.  The terms and conditions of the
Security Agreement are hereby incorporated herein by reference.


 


10.                               Termination
of Agreement.  Upon payment and
performance of all Obligations under the Loan Documents and full satisfaction
of all of the Grantor’s liabilities and obligations to the Lender, the Lender
shall execute and deliver to the Grantor all documents necessary to terminate
the Lender’s security interest in the Trademarks.


 


11.                               Fees
and Expenses.  Any and all
reasonable fees, costs and expenses, of whatever kind or nature, including the
reasonable attorneys’ fees and legal expenses incurred by the Lender in
connection with the preparation of this Rider and all other documents relating
hereto and the consummation of this transaction, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in protecting, maintaining, preserving
the Trademarks, or in defending or prosecuting any actions or proceedings
arising out of or related to the Trademarks, in each case in accordance with
the terms of this Rider, shall be borne and paid by the Grantor on demand by
the Lender and until so paid shall be added to the principal amount of the
Obligations to the Lender and shall bear interest at the contract rate
therefor.


 


3





















 


12.                               Prosecution
of Trademark Applications.  (a) 
Subject to the terms of the Security Agreement, the Grantor shall have the duty
to prosecute diligently any trademark application with respect to the
Trademarks pending as of the date of this Rider or thereafter, until the
Obligations shall have been satisfied in full, to preserve and maintain all
rights in the Trademarks, and upon reasonable request of the Lender, the
Grantor shall make federal application on registrable but unregistered
trademarks belonging to the Grantor.  Any
reasonable expenses incurred in connection with such applications shall be
borne by the Grantor.  The Grantor shall
not abandon any Trademark without the written consent of the Lender.


 


(b)                                 The
Grantor shall have the right to bring suit in its own name to enforce the
Trademarks, in which event the Lender may, if the Grantor deems it necessary or
after an Event of Default under the Loan Documents, be joined as a nominal
party to such suit if the Lender shall have been satisfied that it is not
thereby incurring any risk of liability because of such joinder.  The Grantor shall promptly, upon demand,
reimburse and indemnify the Lender for all damages, reasonable costs and
reasonable expenses, including attorneys’ fees, incurred by the Lender in the
fulfillment of the provisions of this paragraph.


 


13.                               Additional
Remedies.  Upon the occurrence of
an Event of Default under the Loan Documents, the Lender may, without any
obligation to do so, complete any obligation of the Grantor hereunder, in the
Grantor’s name or in the Lender’s name, but at the Grantor’s expense, and the
Grantor hereby agrees to reimburse the Lender in full for all reasonable
expenses, including reasonable attorneys’ fees, incurred by the Lender in
protecting, defending and maintaining the Trademarks.


 


14.                               Governing
Law.  This Agreement has been
delivered to and accepted by the Lender and shall be construed in accordance
with, and governed in all respects by the laws of the State of Delaware as
applied to agreements entered into and to be performed entirely in such state,
between residents of such state. Nothing contained in this Agreement will
prevent the Lender from bringing any action, enforcing any award or judgment or
exercising any rights against the Grantor individually, against any security or
against any property of the Grantor within any other county, state or other foreign
or domestic jurisdiction.  The Lender and
the Grantor agree that the venue provided above is the most convenient forum
for both the Lender and the Grantor.  The
Grantor waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.


 


15.                               Counterparts.  This Rider may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.


 


4





















 


The Grantor acknowledges that it has read and
understood all the provisions of this Agreement, including the waiver of jury
trial, and has been advised by counsel as necessary or appropriate.


 


WITNESS the due execution hereof as a document under seal, as
of the date first written above.


 


 


	
  WITNESS / ATTEST:

  	
   

  	
  DPAC
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEVELOPMENT
  CAPITAL

  
	
   

  	
   

  	
  VENTURES,
  LP 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  DCC OPERATING,
  INC.,

  
	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Donald L.
  Murfin

  
	
   

  	
   

  	
   

  	
  Title: Executive
  Vice President

  
						



 


5





















 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the         
day of August in the year 2005 before me, the undersigned, a Notary Public
in and for said State, personally appeared                                   ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the         
day of August in the year 2005 before me, the undersigned, a Notary Public
in and for said State, personally appeared                                   ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


6





















 


SCHEDULE A TO RIDER TO
SECURITY AGREEMENT - TRADEMARKS


 


	
   

  	
   

  	
  APPLICATION OR

  	
   

  	
   

  	
   

  	
  REGISTRATION OR

  	
   

  
	
  TRADEMARK

  	
   

  	
  REGISTRATION NO.

  	
   

  	
  COUNTRY

  	
   

  	
  FILING DATE

  	
   

  
	
  Airborne

  	
   

  	
  78/259,260

  	
   

  	
  U.S.

  	
   

  	
  August 17, 2005

  	
   

  
	
  Airborne Direct

  	
   

  	
  78/304,711

  	
   

  	
  U.S.

  	
   

  	
  February 28, 2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 





















 


TRADEMARK ASSIGNMENT


 


WHEREAS,
DPAC TECHNOLOGIES CORP. (the “Grantor”) is the owner of the entire right, title and
interest in and to the United States trademarks, tradenames and registrations
listed on Schedule “A” attached hereto and made a part hereof (the “Trademarks”), which are registered in the United States
Patent and Trademark Office; and


 


WHEREAS,
DEVELOPMENT CAPITAL VENTURES, LP, having a place of business
at 4443 Brookfield Corporate Drive, Suite 110,
Chantilly, Virginia 20151, identified as the “Lender”
under that certain Rider to Security Agreement - Trademarks of even date
herewith (the “Grantee”) is desirous of
acquiring said Trademarks;


 


NOW,
THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and intending to be legally bound hereby, the
Grantor, its successors and assigns does hereby transfer, assign and set over
unto Grantee, its successors, transferees and assigns all of its present and
future right, title and interest in and to the Trademarks and all proceeds
thereof and all goodwill associated therewith.


 


IN
WITNESS WHEREOF, the undersigned has caused this Trademark
Assignment to be executed by its duly authorized officer on this                 
day of                                     ,
          .


 


	
  WITNESS / ATTEST:

  	
  DPAC TECHNOLOGIES CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
				



 





















 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the
         day of           
in the year 2005 before me, the undersigned, a Notary Public in and for said
State, personally appeared                         ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


2





















 


RIDER TO SECURITY AGREEMENT - COPYRIGHTS


 


THIS
RIDER TO SECURITY AGREEMENT (“Rider”)
is executed this 5th day of August, 2005, by and between DPAC
TECHNOLOGIES CORP. (the “Grantor”) with
an address at 7321 Lincoln Way, Garden Grove, California 92841 and DEVELOPMENT CAPITAL VENTURES, LP (the “Lender”),
with an address at 4443 Brookfield
Corporate Drive, Suite 110, Chantilly, Virginia 20151.  This Rider is incorporated into and made part
of that certain Security Agreement (“Security Agreement”)
between the Grantor and the Lender dated August 5, 2005, and also into
certain other financing documents and security agreements executed by and
between the Grantor and the Lender or by and between the Borrower (as defined
in the Security Agreement) and the Lender (all such documents including this
Rider collectively referred to as “Loan Documents”).  All capitalized terms not otherwise defined
in this Rider shall have the same meanings ascribed to such terms in the other
Loan Documents.


 


The
Grantor has filed applications for the registration of the copyrights listed on
Schedule A attached hereto and made part hereof (all such
copyrights hereinafter referred to as the “Copyrights”).


 


The
Grantor desires to grant a security interest in and to the Copyrights and the
registration thereof, as security for the Grantor’s Obligations referred to and
described in the Loan Documents, and the Lender desires to have its security
interest in such Copyrights confirmed by a document identifying same and in
such form that it may be recorded in the Library of Congress, Copyright Office.


 


NOW,
THEREFORE, with the foregoing background deemed incorporated
by reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:


 


1.                                      Grant
of Security Interest.  In
consideration of and pursuant to the terms of the Loan Documents, and for other
good, valuable and sufficient consideration, the receipt of which is hereby
acknowledged, and to secure the Grantor’s present and future Obligations, the
Grantor grants to the Lender a lien and security interest in all of Grantor’s
present and future right, title and interest in and to the Copyrights, and the
registration thereof and the right (but not the obligation) to sue for past,
present and future infringements, and the proceeds thereof, including, without
limitation, license royalties and proceeds of infringement suits.


 


2.                                      [Blank].


 


3.                                      Representations
and Warranties.  The Grantor
represents, warrants and covenants that: 
(a) the Copyrights are subsisting and have not been adjudged
invalid or unenforceable; (b) to the best of Grantor’s knowledge each of
the registered Copyrights is valid and enforceable; (c) except as
otherwise provided in or resulting from the Loan Documents, the Grantor is the
sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each of the Copyrights, and each of the Copyrights is free
and clear of any liens, charges, and encumbrances, including, without
limitation, pledges, assignments, licenses and covenants by


 





















 


the Grantor not to sue
third persons; and (d) the Grantor has the unqualified right to enter into
this Rider and perform its terms.


 


4.                                      Covenants.  The Grantor covenants that:  (a) until all of the Obligations have
been satisfied in full, it will not enter into any agreement which is
inconsistent with the Grantor’s obligations under this Rider; (b) if the
Grantor registers any new Copyrights, the provisions of this Rider shall automatically
apply thereto and the Grantor shall give the Lender prompt written notice
thereof along with an amended Schedule A and (c) the Grantor
has no notice of any actions or suits commenced or threatened against it, or
notice of claims asserted or threatened against it, with respect to the
Copyrights.


 


5.                                      Exclusive
Ownership of Copyrights.  So long
as this Rider is in effect and so long as the Grantor has not received notice
from the Lender that an Event of Default has occurred under the Loan Documents
and that the Lender has elected to exercise its rights to assignment hereunder,
the Grantor shall continue to have the exclusive ownership of the Copyrights,
including the licensing thereof, and the Lender shall have no ownership or
other right to use the Copyrights or issue any exclusive or non-exclusive
license with respect thereto, or assign, pledge or otherwise transfer title in
the Copyrights to anyone else.


 


6.                                      Negative
Pledge.  Notwithstanding anything
to the contrary in this Agreement, the Grantor agrees not to sell or assign its
rights and interest in the Copyrights without the prior written consent of the
Lender, which consent shall not be unreasonably withheld or delayed.


 


7.                                      Remedies
Upon Default.  (a)  Anything
herein contained to the contrary notwithstanding, if and while the Grantor
shall be in default hereunder or an Event of Default exists under the Loan
Documents, the Grantor hereby covenants and agrees that the Lender as the
holder of a security interest under the Uniform Commercial Code, as now or
hereafter in effect in Pennsylvania, may take such action permitted under the
Loan Documents or permitted by law, in its exclusive discretion, to foreclose
upon the Copyrights covered hereby.


 


(b)  For such purposes, and in the event of an Event of Default
under the Loan Documents and while such Event of Default exists, the Grantor
hereby authorizes and empowers the Lender to make, constitute and appoint any
officer or agent of the Lender as the Lender may select, in its exclusive
discretion, as the Grantor’s true and lawful attorney-in-fact, with the power
to endorse the Grantor’s name on all applications, documents, papers and
instruments necessary for the Lender to use the Copyrights or to grant or issue
any exclusive or non-exclusive license under the Copyrights to anyone else, or
necessary for the Lender to assign, pledge, convey or otherwise transfer title
in or dispose of the Copyrights to anyone else. 
The Grantor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof, except for the gross negligence or willful
misconduct of such attorney.  This power
of attorney shall be irrevocable for the life of this Rider and the Loan
Documents, and until all the Obligations (as defined in the Security Agreement)
are satisfied in full.


 


(c)  The Grantor expressly acknowledges that a Notice of Security
Interest (i.e. this Rider) or equivalent document shall be recorded with the
Library of Congress, Copyright Office


 


2





















 


in Washington,
D.C. Upon the occurrence of an Event of Default, the Grantor shall also execute
and deliver to the Lender such documents as the Lender shall reasonably request
to permanently assign all rights in the Copyrights to the Lender.  After such occurrence, the Lender may, at its
sole option, record any such documents with the Copyright Office.


 


8.                                      Subject
to Loan Agreement.  This Rider
shall be subject to the terms, provisions, and conditions set forth in the Loan
Agreement and may not be modified without the written consent of the party
against whom enforcement is being sought.


 


9.                                      Inconsistent
with Loan Agreement.  All rights
and remedies herein granted to the Lender shall be in addition to any rights
and remedies granted to the Lender under the Loan Documents.  In the event of an inconsistency between this
Rider and the Loan Agreement, the language of the Loan Agreement shall
control.  The terms and conditions of the
Loan Agreement are hereby incorporated herein by reference.


 


10.                               Re-Vesting
of and/or Termination of any Interest in Copyrights.  Upon payment and performance of all
Obligations under the Loan Documents and full satisfaction of all of the
Grantor’s liabilities and obligations to the Lender, the Lender shall
immediately execute and deliver to the Grantor all documents and take all
actions necessary to re-vest all rights in and to the Copyrights in the Grantor
and/or terminate any interest of the Lender therein.


 


11.                               [Blank]


 


12.                               Prosecution
of Copyright Applications.  The
Grantor shall have the exclusive right, in its sole discretion, to bring suit
in its own name to enforce the Copyrights.


 


13.                               Additional
Remedies.  Upon the occurrence of
an Event of Default under the Loan Documents, the Lender may, without any
obligation to do so, complete any obligation of the Grantor hereunder, in the
Grantor’s name or in the Lender’s name, but at the Grantor’s expense, and the
Grantor hereby agrees to reimburse the Lender in full for all reasonable
expenses, including reasonable attorney’s fees, incurred by the Lender in
protecting, defending and maintaining the Copyrights.


 


14.          Governing Law.  This Agreement has been delivered to and
accepted by the Lender and shall be construed in accordance with, and governed
in all respects by the laws of the State of Delaware as applied to agreements
entered into and to be performed entirely in such state, between residents of
such state. Nothing contained in this Agreement will prevent the Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against the Grantor individually, against any security or against any property
of the Grantor within any other county, state or other foreign or domestic
jurisdiction.  The Lender and the Grantor
agree that the venue provided above is the most convenient forum for both the
Lender and the Grantor.  The Grantor
waives any objection to venue and any objection based on a more convenient
forum in any action instituted under this Agreement.


 


3





















 


The
Grantor acknowledges that it has read and understood all the provisions of this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.


 


WITNESS the due
execution hereof as a document under seal, as of the date first written above.


 


 


	
  WITNESS / ATTEST:

  	
   

  	
  DPAC
  TECHNOLOGIES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DEVELOPMENT
  CAPITAL

  
	
   

  	
   

  	
  VENTURES,
  LP 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  DCC OPERATING,
  INC.,

  
	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Donald L.
  Murfin

  
	
   

  	
   

  	
   

  	
  Title: Executive
  Vice President

  
						



 


4





















 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the
         day of August in the year
2005 before me, the undersigned, a Notary Public in and for said State, personally
appeared
                                  ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


 


	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  



 


On the         
day of August in the year 2005 before me, the undersigned, a Notary Public
in and for said State, personally appeared                                   ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is(are) subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the person(s) upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary Public

  



 


5





















 


SCHEDULE A TO RIDER TO SECURITY AGREEMENT -
COPYRIGHTS


 


Registered Copyrights


 


	
  Registration No.

  	
   

  	
  Title of Work

  	
   

  	
  Registration Date

  	
   

  	
  Country

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Unregistered Copyrights


 


	
  Title of Work

  	
   

  	
  Description

  	
   

  
	
  Airborne WLn Module Firmware

  	
   

  	
   

  	
   

  
	
  AirborneDirect/Serial Firmware

  	
   

  	
   

  	
   

  
	
  AirborneDirect/Ethernet Firmware

  	
   

  	
   

  	
   

  
	
  Airborne Evaluation Utility Software

  	
   

  	
   

  	
   

  
	
  Airborne OEM Configuration Tool Software

  	
   

  	
   

  	
   

  
	
  Airborne Transportation Bridge Firmware

  	
   

  	
   

  	
   

  
	
  VCOMM Utility Software