Document:

Senior Subordinated Note

 Exhibit 10.7 
 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 
 Senior Subordinated Note 
 due January 31, 2013 
  

			
	Makers	  	Quatech, Inc. and DPAC Technologies Corp.
		
	Payee	  	Canal Mezzanine Partners, L.P.
		
	Principal Amount	  	$1,200,000
		
	Stated Interest Rate	  	13% per annum
		
	Default Interest Rate	  	16% per annum
		
	Date of Note	  	January 31, 2008
		
	Made At	  	Hudson, Ohio
		
	Maturity Date	  	January 31, 2013
		
	Payment Dates	  	Interest : Last day of each month beginning February 29, 2008
		
		  	Principal: January     , 2013

 This is the Senior Subordinated Note due January 31, 2013 (the
“Note”) provided for in the Senior Subordinated Note and Warrant Purchase Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”)
by and between the Payee, as purchaser, and the Makers, as sellers. 
 This Note is one of the Related Documents referred to in the
Purchase Agreement. 

 FOR VALUE RECEIVED, the Makers hereby promises to pay to the order of the Payee
the Principal Amount of ONE MILLION TWO HUNDRED THOUSAND DOLLARS ($1,200,000), together with Interest, Prepayment Premium and Assessments (each as defined herein or in the Purchase Agreement), upon the terms and subject to the conditions set forth
in this Note. 
 Section 1. Definitions and Miscellaneous Provisions 
 Any capitalized term used but not otherwise defined in this Note shall have the definition given such term as set forth in the Purchase Agreement, which
definition is, to the extent applicable, incorporated herein by reference. The provisions of Section 12 of the Purchase Agreement are applicable to this Note and are incorporated herein by reference. 
 Section 2. Maturity and Pay Off 
 The unpaid Principal Amount of this Note, together with all accrued but unpaid Interest and Assessments, shall be due and payable in full on the Maturity Date. Payment of the Principal Amount and all accrued but unpaid Interest and
Assessments may be Accelerated upon the occurrence of an Event of Default as provided for in this Note. Upon request of the Makers, the Payee will furnish to the Makers a letter setting forth the amount of Principal Amount, Interest, Prepayment
Premium and Assessments required to pay this Note in full as of a specified Pay Off Date. 
 Section 3. Interest 
 Interest shall accrue on the unpaid Principal Amount from the date of this Note through and including the Pay Off Date at the applicable interest rate
(“Interest”). All accrued but unpaid Interest shall be paid monthly in arrears on each Payment Date specified above, commencing February 29, 2008. 
 At all times that the Default Interest Rate is not in effect, the interest rate on this Note shall be a fixed rate per annum equal to the Stated Interest Rate. Upon the occurrence of an Event of Default, this Note
shall accrue interest at a rate per annum equal to the Default Interest Rate unless the Payee elects, in the sole exercise of its discretion, to waive imposition of the Default Interest Rate by giving written notice of such election to the Makers (a
“Default Rate Waiver”). Absent a Default Rate Waiver, the interest rate on this Note shall be a fixed rate per annum equal to the Default Interest Rate, and the Default Interest Rate shall continue to be the interest rate on this
Note until the Event of Default has been remedied or waived and no other Default or Event of Default is continuing, unremedied or unwaived, provided that the Note has not been Accelerated. 
 Notwithstanding any provision of this Note to the contrary: (i) in no event shall the interest rate on this Note be a rate per annum in excess of
the maximum interest rate permissible under Applicable Law (including any applicable interest rate ceiling imposed by United States Small Business Administration regulations as applicable), and (ii) to the extent that Interest (or other amounts
paid with respect to this Note that are deemed to be Interest under Applicable 

  

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Law) results in Interest payments in excess of those permitted under Applicable Law, such excess payments shall be applied first to the payment of the unpaid
Principal Amount, second to the payment of any other amounts due from the Makers to the Payee, and third, if no other obligations are owing to the Payee, then refunded to the Makers. The Makers agree that if such excess payments are applied in the
manner provided for in this paragraph, then to the fullest extent permitted by Applicable Law, Payee shall not be subject to any penalty provided for by any Applicable Law relating to charging or collecting Interest in excess of that permitted by
Applicable Law. 
 Interest shall accrue based upon: (i) the actual number of days elapsed over each month, including any additional
days elapsed because the scheduled Payment Date fell on a day other than a Business Day; (ii) months consisting of thirty (30) days each; (iii) quarters consisting of three (3) 30-day months, and (iv) monthly compounding of
any Interest or Assessment accrued but unpaid as of each Payment Date. 
 Section 4. Principal Amount 
 The Principal Amount shall be paid in full on the Maturity Date. 
 Section 5. Prepayments 
 The Makers may prepay the Principal Amount in whole at any time or in
part from time to time; provided that (i) the Makers deliver irrevocable written notice to the Payee at least thirty (30) days prior to such prepayment, which notice shall include written confirmation from the Makers that such prepayment
is permissible under the Senior Loan Agreement, (ii) each partial prepayment of Principal Amount shall be equal to $250,000 or an integral multiple thereof, and (iii) any such prepayment shall be made together with payment of a Prepayment
Premium as provided below if such prepayment is made on or prior to the second anniversary of the Date of Note. 
 If the Principal
Amount is paid on or prior to the second anniversary of the Date of Note, the Makers shall pay all accrued but unpaid Interest plus an amount equal to the sum of the Interest that would have accrued and been due and payable under this Note from the
date of such prepayment through the second anniversary of the Date of Note (a “Prepayment Premium”).  
 If notice of
prepayment is given, the Principal Amount to be prepaid as stated in the notice, together with Interest accrued thereon through the date of prepayment with respect to the Principal Amount prepaid, all unpaid Assessments and a Prepayment Premium, if
any, shall become due and payable on the date specified in the notice. In the case of the redemption of less than all of the outstanding Principal Amount hereof, the amounts so paid shall be applied in the following order: (a) first, to payment
of the Prepayment Premium, if any; (b) second, to payment of accrued Interest; (c) third, to payment of unpaid Assessments; and (d) finally, to payment of the Principal Amount, in inverse order of the principal installments hereof.

  

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 Section 6. Late Payments 
 A payment of Principal Amount, Interest, Prepayment Premium, or Assessment shall be deemed to be a Payment Default if such payment is not received prior
to 2:00 p.m., Hudson, Ohio time on the fifth day after such payment is due. The Payee may, in the sole exercise of its discretion, by written notice to the Makers, assess a fee of $500 for each Payment Date with respect to which there is a late
payment to reimburse the Payee for the cost of processing such late payment. Such late fee shall be deemed to be an Assessment for purposes of this Note. The Payee may not assess a late fee with respect to any Payment Date after payment of this Note
is Accelerated. 
 Section 7. Payments 
 Unless otherwise agreed by the Payee, all payments in connection with this Note shall be made by wire transfer of immediately available funds to the account of the Payee at or before 2:00 p.m. Hudson, Ohio time on
each Payment Date. Any wire transfer received by the Payee after 2:00 p.m. Hudson, Ohio time shall be deemed to have been received by the Payee prior to such time on the next Business Day. 
 Unless otherwise specified in writing by the Payee to the Makers, all such payments shall be wired as follows: 
 Morgan Bank, N.A. 
 10 West Streetsboro Street

 Hudson, Ohio 44236 
 ABA #
041202702 
 Account # 128075483 
 In the event that any scheduled Payment Date falls on a day other than a Business Day, the Payment Date shall be deemed to be the following Business Day, and such additional days shall be deemed to have elapsed for purposes of computing
Interest payable on such Payment Date. 
 Section 8. Events of Default 
 (a) Enumeration of Defaults. The occurrence of each of the following events shall be an “Event of Default” for the purposes of
this Note. An Event of Default shall be deemed to continue until waived by written notice by the Payee to the Makers or remedied by action of the Makers. 
 (b) Payment Default. The Makers default in the payment when due of any Principal Amount, Interest, Prepayment Premium or Assessment, and such default is not remedied (including the payment of any Assessment)
within the grace period provided for in Section 6 of this Note (a “Payment Default”). A Payment Default shall be deemed to have occurred notwithstanding the fact that the Payment Default results from compliance with or
enforcement of the Subordination Agreement. 
  

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 (c) Covenant Default. The Makers fail to observe or perform any affirmative covenant, negative
covenant (other than those described in clause 8(e) below), reporting requirement or any other agreement set forth in the Purchase Agreement or the Related Documents and such default is either (i) not remedied within thirty (30) days after
written notice of such default by the Payee or the Makers, or (ii) is the third instance of a default under applicable subsection of the Purchase Agreement or the Related Documents. 
 (d) Warranty Default. Any representation or warranty made by the Makers in the Purchase Agreement or the Related Documents proves to have been
untrue, incomplete or misleading in any material respect when made or when deemed to have been made and such breach is not remedied (if it is capable of being remedied) within thirty (30) days after written notice of such default by the Payee
or the Makers. 
 (e) Financial Test Default; Certain Negative Covenants. (i) As of any applicable date of determination, the
Makers fail to satisfy any of the Financial Tests, or (ii) the Makers fails to observe or perform any of the negative covenants set forth in Sections 8.1 through 8.11 of the Purchase Agreement. 
 (f) Cross Default. The holder of any Indebtedness accelerates the payment of such Indebtedness for any reason or the Makers default in the payment
of any Indebtedness with an unpaid principal amount in excess of $50,000, and such default remains unremedied beyond the applicable grace period therefor, regardless of whether (i) such default is waived by the obligee, (ii) payment of any
Indebtedness of the Makers is accelerated, (iii) the right of the Makers to borrow money is suspended as a result of any such default, or (iv) any action to enforce payment of any Indebtedness is commenced against the Makers or with
respect to any collateral securing such Indebtedness. 
 (g) Subordination Default. Any document with respect to the Senior
Indebtedness is amended or modified in violation of the Subordination Agreement, a blocking period provided for in the Subordination Agreement is commenced, payment of any amount due under this Note is prevented due to compliance with or enforcement
of the Subordination Agreement, any amounts previously paid to the Payee must be repaid or held in trust by the Payee due to compliance with or enforcement of the Subordination Agreement, or the Makers obtain forbearance with respect to the payment
of any principal or interest due under the Senior Indebtedness. 
 (h) Insolvency Default. The Makers: (i) discontinue the
conduct of their business; (ii) apply for or consents to the imposition of any Insolvency Relief; (iii) voluntarily commence or consent to the commencement of an Insolvency Proceeding; (iv) file an answer admitting the material
allegations of any involuntary commencement of an Insolvency Proceeding; (v) make a general assignment for the benefit of its creditors; (vi) are unable or admits in writing their inability to pay their debts as they become due; or
(vii) have an Insolvency Order entered against such Makers and such Insolvency Order is not dismissed within thirty (30) days of its entry (each, an “Insolvency Default”). 
 (i) Fraudulent Conveyance Default. The Makers: (i) conceal, remove or permit to be concealed or removed all or any part of their property
with the intent to hinder, delay or defraud 

  

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any of their creditors; (ii) make or permit any conveyance of their material properties that would be deemed fraudulent to creditors under any
Insolvency Law or other Applicable Law; or (iii) have, while such Makers are insolvent, cause or permit any of their creditors to obtain a Lien on any of their property by legal proceedings or otherwise which is not vacated within thirty
(30) days. 
 (j) Judgments. A final, nonappealable judgment or judgments is or are entered against the Makers in the aggregate
amount of $50,000 or more on a claim or claims not covered by insurance. 
 (k) Material Adverse Change. In the reasonable judgment of
the Payee, any material adverse change occurs in the financial condition or results of operations of the Makers or the Makers’ ability to perform its obligations under this Note, the Purchase Agreement or the Related Documents. 
 (l) Change in Control. A Change in Control of the Makers occurs. 
 (m) Failure of Enforceability. (i) The Makers shall contest or challenge the validity or enforceability of this Note, the Purchase Agreement or the Related Documents or (ii) this Note, the Purchase
Agreement or the Related Documents shall be declared in whole or in part invalid, void or unenforceable which declaration would, individually or in the aggregate, materially reduce the principal benefits of any breach of, or security provided by,
this Note, the Purchase Agreement or any Related Document to the Payee, or make the remedies generally afforded thereby inadequate for the practical realization thereof. 
 Section 9. Remedies and Acceleration 
 (a) Remedies. Upon the occurrence of an Event of
Default, the Payee shall have (i) all rights and remedies granted to it under this Note, the Purchase Agreement and the Related Documents, and (ii) all rights of a creditor under Applicable Law (including the UCC). All such rights and
remedies and the exercise thereof shall be cumulative. No exercise of any such rights and remedies shall be deemed to be exclusive or constitute an election of remedies. 
 (b) Purchase of Senior Indebtedness. If an event of default shall have occurred and be continuing in respect of any Senior Indebtedness of the Makers, the Payee shall have the option (but not the obligation),
at any time, to purchase all, but not less than all, of such Senior Indebtedness for an amount equal to the then outstanding principal amount, plus accrued but unpaid interest with respect thereto as of the date of such purchase, plus any unpaid
fees and expenses then owing with respect thereto. The purchase price so paid by the Payee shall constitute an additional advance hereunder and shall be subject to the terms and conditions of this Note, the Purchase Agreement and the Related
Documents. 
 (c) Acceleration of Payment. Upon the occurrence of an Insolvency Default, payment of this Note shall be Accelerated
automatically and without notice. Upon the occurrence and during the continuation of any other Event of Default, the Payee may, in the sole exercise of its discretion, elect to cause payment of this Note to be Accelerated by giving written notice of
such 

  

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election to the Makers. Once payment of this Note has been Accelerated, such Acceleration may be revoked only by the Payee, in the sole exercise of its
discretion, by giving written notice of revocation to the Makers. 
 (d) Waiver of Default. No Default or Event of Default may be
waived or shall be deemed to have been waived except by written notice by the Payee to the Makers, and any such waiver shall be applicable only to the specific Defaults or Events of Default expressly identified in such notice and shall not be deemed
to apply to any other or subsequent Default or Event of Default. The Payee may grant or withhold any such waiver in the sole exercise of its discretion, and may condition such waiver upon the payment by the Makers of a premium, the grant of
additional security interests or the acceptance of other terms and conditions under this Note or the Purchase Agreement. No course of dealing by the Payee, or the failure, forbearance or delay by the Payee in exercising any of its rights or remedies
under this Note, the Purchase Agreement or any Related Document shall operate as a waiver of any Default or Event of Default or of any right of the Payee under this Note. 
 Section 10. Waivers 
 To the fullest extent permitted by Applicable Law, each Maker waives with
respect to this Note: presentment; demand and protest; and notice of presentment, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal; and diligence in collection. Each
Maker agrees that the Payee may release all or any part of the Collateral securing the payment of this Note; any guarantor or surety with respect to this Note, or any other Maker from its obligation with respect to this Note, all without notice to
such Maker and without affecting in any way the obligation of such Maker under this Note. 
 Section 11. Security for Payment 

 Payment of this Note is secured under the terms and subject to the conditions of certain of the Related Documents. Nothing in this Note
shall be deemed to preclude the Payee from obtaining other or additional security for the payment of this Note, to require the Payee to elect remedies or proceed against any Collateral or guaranty before Accelerating payment of this Note or to take
any legal or other action to collect payment of this Note. 
 Section 12. Subordination Agreement 
 It is anticipated that the Payee and the Senior Lender will enter into a Subordination Agreement in connection with the Senior Loan Agreement, pursuant to
which certain of the Payee’s rights under this Note and the Related Documents will be subordinated to the Senior Lender. Nothing in this Note, the Purchase Agreement or the Subordination Agreement shall grant to the Makers any rights as a
beneficiary under the Subordination Agreement nor any right to enforce any provision of such agreement. 
  

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 Section 13. Collection and Assessment for Costs 
 The Makers shall reimburse the Payee for all reasonable costs and expenses (including reasonable legal fees and disbursements) incurred by the Payee in
connection with the collection or attempted collection of the payment of this Note through legal proceedings or otherwise following an Event of Default. All such amounts shall be deemed to be Assessments for purposes of this Note. 
 Section 14. Amendment 
 This Note
may not be amended, restated, supplemented or otherwise modified except by an express written agreement executed and delivered by each Maker and the Payee. Compliance with the covenants and other provisions of this Note may not be waived or modified
except by an express written consent signed and delivered by the Payee. 
 Section 15. Governing Law 
 This Note was negotiated in the State of Ohio and accepted by the Payee in the State of Ohio, and the purchase price for the Note shall be disbursed
from the State of Ohio. Each Maker agrees that the State of Ohio has a substantial relationship to the transactions evidenced hereby and further agrees that this Note shall be governed by and construed in accordance with the laws of the State of
Ohio, without regard to conflicts of laws principles. 
 Section 16. Waiver of Jury Trial 
 The Payee and each Maker, after consulting or having had the opportunity to consult with legal counsel, knowingly, voluntarily and intentionally waive
any right any of them may have to a trial by jury in any Litigation. Neither the Payee nor any Maker shall seek to consolidate, by counterclaim or otherwise, any Litigation in which a jury trial has been waived with any other Litigation in which a
jury trial cannot be or has not been waived. 
 Section 17. Consent to Jurisdiction, Venue and Service of Process 

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

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 Section 18. Confession of Judgment 
 Each Maker hereby authorizes any attorney at law to appear in any court of record of the State of Ohio or any other state in the United States of
America at any time after this Note becomes due, whether by acceleration or otherwise, and to waive the issuing and service of process and confess a judgment in favor of the legal holder hereof against such Maker, or either or any one or more of
them, for the amount then appearing due upon this Note, together with costs of suit and to release all errors and waive all right of appeal. 
  

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 IN WITNESS WHEREOF, this Note has been executed and delivered by and on behalf each Maker, effective as of the
Date of Note set forth above. 
 WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT
JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON THE
CREDITOR’S PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. 
  

			
	Maker:
	
	QUATECH, INC.
		
	By:	 	 /s/ Steve Runkel

		 	Steve Runkel,
		 	Chief Executive Officer

  

			
	Maker:
	
	DPAC TECHNOLOGIES CORP.
		
	By:	 	 /s/ Steve Runkel

		 	Steve Runkel,
		 	Chief Executive Officer

  

 10Security Agreement

 Exhibit 10.8 
 Execution Version 
 SECURITY AGREEMENT 
 THIS SECURITY AGREEMENT (the “Agreement”) is made on January 31, 2008, by and between DPAC TECHNOLOGIES CORP., a California corporation
(the “Company”), and QUATECH, Inc., an Ohio corporation (“Quatech”, together with the Company herein collectively or individually, as the context so requires, the “Debtor” or the “Debtors”), and CANAL
MEZZANINE PARTNERS, L.P., a Delaware limited partnership (the “Secured Party”). 
 RECITALS: 
 WHEREAS, Debtors and Secured Party are parties to a Senior Subordinated Note and Warrant Purchase Agreement of even date herewith (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”), providing for the issuance and sale by the Debtors and the purchase by the Secured Party of that certain Senior Subordinated Note due
January 31, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Note”) in an aggregate principal amount of One Million Two Hundred Thousand and 00/100 Dollars ($1,200,000).

 WHEREAS, each Debtor agrees to grant to and create in favor of Secured Party, in the manner set forth in this Agreement, security
interests in certain property of such Debtor as security for the performance and payment of the Secured Obligations (as defined in Section 1 hereof). 
 NOW THEREFORE, for and in consideration of the purchase of the Note by Secured Party and the benefits each Debtor shall receive therefrom, and the representations, warranties and mutual covenants set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as follows: 
 Section 1. Defined Terms. 
 1.1. Definitions. Certain capitalized words and terms as used in this Agreement shall have the meanings given to them in the Uniform Commercial
Code, and the Note Purchase Agreement unless otherwise indicated herein or the context or use indicates another or different meaning or intent. All defined terms shall be equally applicable to both the singular and plural forms of any of the words
and terms herein defined. In addition, the following capitalized words shall have the following meanings when used herein: 
 “Accounts” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Chattel Paper” has the
meaning assigned to that term in the Uniform Commercial Code. 
 “Commercial Tort Claims” has the meaning assigned to that term in
the Uniform Commercial Code. 
 “Deposit Account” has the meaning assigned to that term in the Uniform Commercial Code. 

 “Documents” has the meaning assigned to that term in the Uniform Commercial Code. 

“Electronic Chattel Paper” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Equipment” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Excluded Property” means any of the following: 
 (a) any interest of any Debtor in any contract right, license, general intangible, intellectual property agreement, any lease pertaining to real or personal property or any other document, instrument or agreement,
if the granting of a security interest, lien or encumbrance therein by such Debtor to Secured Party (i) is prohibited by the terms and provisions of the written agreement, document or instrument creating or evidencing such item of
Excluded Property or rights related thereto or by applicable law, or (ii) or in the case of any such Excluded Property, such item of Excluded Property would be subject to loss or forfeiture upon the grant or creation of a security interest,
lien or encumbrance therein (any of the foregoing, a “Valid Restriction”); provided, however, that Secured Party will be deemed to have, and at all times from and after the date hereof to have had, a security interest in the
proceeds of such Excluded Property to the extent that any proceeds of such Excluded Property have come into the possession of Secured Party or otherwise constitute a portion of the Collateral; 
 (b) any Equipment that is subject to a purchase money security interest or Capitalized Lease that contains a Valid Restriction;

 (c) any motor vehicles owned or leased by any Debtor; or 
 (d) any depository account maintained by any Debtor used solely for medical, pension, benefits, and taxes. 
 “Fixtures” has the meaning assigned to that term in the Uniform Commercial Code. 
 “General Intangibles” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Instruments” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Inventory” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Investment Property” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Letter of Credit Right” has the meaning assigned to that term in the Uniform Commercial Code. 
  

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 “Note Purchase Agreement” has the meaning assigned to that term in the Recitals. 
 “Note” has the meaning assigned to that term in the Recitals. 
 “Payment Intangible” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Pledged Deposits” means all time deposits of money (other than Deposit Accounts and Instruments), whether or not evidenced by certificates, and all rights to receive interest on said deposits. 
 “Secured Obligations” means (a) all principal, interest and other amounts due and payable under the Note Purchase Agreement, the Related
Documents and the Note, (b) all costs and expenses incurred by Secured Party in the realization upon the Collateral, including without limitation reasonable attorneys’ fees and legal expenses, and (c) each and every liability owed by
any Debtor to Secured Party however created, direct or contingent, due or to become due, whether now existing or hereafter arising, including without limitation the Success Fee. 
 “Security” has the meaning assigned to that term in Article 8 of the Uniform Commercial Code. 
 “Software” has the meaning assigned to that term in the Uniform Commercial Code. 
 “Stock Rights” means any Security, dividends or other distributions and any other right or property which the such Debtor shall receive or
shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Security or other ownership interests in a corporation, partnership, joint venture, limited liability company or other entity
constituting Collateral and any Security, any right to receive any Security and any right to receive earnings, in which such Debtor now has or hereafter acquires any right, issued by an issuer of such Securities. 
 “Uniform Commercial Code” means such Code as in effect in any jurisdiction on the date hereof or as the same may be from time to time
supplemented or amended hereafter in any jurisdiction. 
 Section 2. Creation of Security Interests. 
 2.1. The Collateral. As security for the full and timely discharge of the Secured Obligations in accordance with their respective terms, each
Debtor agrees that Secured Party will have, and there is hereby granted to and created in favor of Secured Party, a security interest under the Uniform Commercial Code, and otherwise in accordance with applicable law, in and to the following
exclusive of the of the Excluded Property (hereinafter collectively referred to as the “Collateral”): 
 2.1.1. All Equipment now
or hereafter owned by any Debtor, including without limitation (a) all machinery, equipment, furniture and fixtures, (b) all replacements and substitutions thereof and (c) accessions to any of the items aforesaid and all attachments,
components, parts (including spare parts) and accessories whether installed thereon or affixed thereto. 
  

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 2.1.2. All Accounts and General Intangibles now or hereafter owned by any Debtor, including, without
limitation, (a) all moneys due and to become due under any contractual obligation, (b) any damages arising out of or for breach or default in respect of any Account, (c) all other amounts from time to time paid or payable under or in
connection with any such Account including, without limitation, all tax refund claims, and (d) all rights of any Debtor in intellectual property, goodwill, trademarks, trade names, service marks, copyrights, patents, and licenses and in
applications therefor including, without limitation, license fees, patents, patent applications, trademarks, trademark applications, trade names, copyrights, copyright applications, rights to sue and recover for past infringement of patents,
trademarks and copyrights, computer programs, computer software, engineering drawings, service marks, customer lists, goodwill, and all licenses, permits, agreements of any kind or nature pursuant to which such (i) Debtor operates or has
authority to operate, (ii) Debtor possesses, uses or has authority to possess or use property (whether tangible or intangible) of others, or (iii) others possess, use, or have authority to possess or use property (whether tangible or
intangible) of such Debtor, and all recorded data of any kind or nature, regardless of the medium of recording, including, without limitation, all software, writings, plants, specifications, and schematics. 
 2.1.3. All Goods, Inventory, Instruments, Electronic Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Fixtures, Investment Property,
Letter of Credit Rights, Payment Intangibles, Pledge Deposits, Software and Stock Rights now or hereafter owned by any Debtor. 
 2.1.4. To
the extent not otherwise included, all other personal property, tangible or intangible, of any Debtor including, without limitation, all furniture, fixtures, other goods, contract rights, rights to the payment of money, insurance refund claims and
all other insurance claims and proceeds, tort claims, electronic chattel paper, documents, securities and other investment property, deposit accounts, rights to proceeds of letters of credit, letter-of-credit rights and supporting obligations of
every nature. 
 2.1.5. To the extent not otherwise included, all books and records pertaining to the foregoing, and all Proceeds or
products of any or all of the foregoing. 
 2.1.6. To the extent not otherwise included, all “Collateral” as that term is defined
in the Note Purchase Agreement. 
 2.2. Maintenance. Debtors shall from time to time replace and repair all parts of the Equipment
which are or become worn, broken, damaged, or deteriorated and otherwise maintain the Equipment, and every part thereof, in good working order and repair and pay the costs of such repairs, replacements, and maintenance as well as any costs of
storing the same when reasonable to do so. 
  

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 Section 3. Rights and Remedies of a Secured Party. In addition to all of the rights and
remedies given to Secured Party by this Agreement, Secured Party shall have all of the rights and remedies of a secured party under the Uniform Commercial Code. 
 Section 4. Provisions Applicable to the Collateral. The parties agree that the following provisions shall be applicable to the Collateral and each Debtor agrees that during the term of this Agreement:

 4.1. Books and Records; Chief Executive Offices; Jurisdiction. 
 4.1.1. Each Debtor shall keep accurate and complete books and records concerning the Collateral in accordance with GAAP. For the purpose of establishing
the location and value of the Collateral, each Debtor shall furnish to Secured Party, at such times and in such form and substance as may be reasonably requested by Secured Party, information adequate to identify the Collateral, including, without
limitation, the location, cost and fair market value of the Collateral. 
 4.1.2. (a) Each Debtor represents and warrants that its chief
executive office is located at the address set forth below: 
 5765 Hudson Industrial Parkway 
 Hudson, Ohio 44236 
 (b) Debtors shall not
move their chief executive office except to such new location as it may establish in accordance with Section 4.1.5 below. 
 4.1.3.
(a) The only original books of account and records of each Debtor relating to the Collateral are, and will continue to be, kept at the offices of such Debtor set forth in Section 4.1.2 above. 
 (b) The location where such books of account and records are kept shall not be changed by Debtors except in accordance with Section 4.1.5 below.

 4.1.4. Each Debtor represents and warrants that the location of all the Collateral is accurately and completely set forth in Exhibit
A hereto. The Secured Party acknowledges and agrees that the Debtors will maintain Inventory and/or Equipment at locations owned by third party landlords, and that Debtors are required to provide appropriate bailee waivers acceptable to Secured
Party on any location where any Debtor maintains at any time more than One Hundred Thousand Dollars ($100,000.00) worth of Inventory and/or Equipment. 
 4.1.5. Each Debtor shall not establish any different location for its chief executive office or for the place where the original books of account and records of such Debtor relating to the Collateral are kept, except
in accordance with 4.1.8 below. 
  

 5 

 4.1.6. Each Debtor shall not hold its right, title or interest or maintain its records relating to any
Collateral or invoice any Account debtor with respect to any Collateral in any name other than its own proper name. 
 4.1.7. Debtors shall
not change their jurisdiction of organization from the State of California with respect to the Company and Ohio with respect to Quatech, except to such new jurisdiction as such Debtor may establish in accordance with Section 4.1.8 below.

 4.1.8. Debtors shall not establish any locations different from those provided for in this Section 4.1 and attached Exhibit A
hereto, change the jurisdiction of their organization or change their name, until such (a) Debtor shall have given to the Secured Party written notice, thirty (30) days before doing so, of its intention to establish such new location or
jurisdiction of organization or change its name, clearly describing each such new location or jurisdiction or its new name and providing such other information in connection therewith as the Secured Party may reasonably request, and (b) with
respect to each such new location or jurisdiction or the new name, it shall have taken such action, satisfactory to the Secured Party, as may be necessary to maintain the lien of the Secured Party on the Collateral granted hereunder at all times
fully perfected, first in priority to all other liens (except for the liens of the Senior Lender and except as otherwise provided in the Related Documents) and in full force and effect. 
 4.2. Inspection. Each Debtor shall permit any persons designated by Secured Party, in order to permit Secured Party to assure itself of
performance by such Debtor of the Secured Obligations or otherwise facilitate compliance with this Agreement, to enter, examine, audit and inspect the Collateral and all properties, corporate books and financial records pertaining to the Collateral
or to the operation, business, affairs and financial condition of such Debtor, at any reasonable time and from time to time and upon reasonable notice to such Debtor, and shall permit such persons to copy (by photocopy or otherwise) and make
excerpts of such books and records. 
 4.3. Notice of Adverse Change. Each Debtor shall immediately notify Secured Party of any
material adverse change of which such Debtor has knowledge which adversely affects or may adversely affect its right, title, or interest in, or the value of, the Collateral in any material way. 
 4.4. Sale of Inventory. Notwithstanding the security interest in the Collateral granted hereunder, each Debtor shall have the right to sell, lease
or otherwise dispose of its Inventory in the ordinary course of its business free and clear of such security interest; but in such event, such security interest shall continue in the proceeds of such sale, lease or other disposition. 
 4.5. Account Verification. Secured Party may at any time cause Debtors to verify with any account debtor of such Debtor as to the status of any
Accounts payable by such account debtor. Such Debtor shall direct the account debtor to furnish a written response to the request for verification to a post office box at a post office located in Hudson, Ohio, which post office box shall be
controlled by Secured Party. Secured Party may make requests for verification directly with account debtors at any time after and during the continuance of an Event of Default. Debtors from time to time will execute and deliver such instruments and
take all such action as Secured Party may reasonably request in order to effectuate the purposes of this Section 4.5. 
  

 6 

 4.6. Debtor’s Rights to Collect Accounts. Notwithstanding any security interest in Accounts
of Debtors granted hereunder, Debtors shall have the right to and shall endeavor to collect such Accounts at their own cost and expense, until such time as Secured Party shall have notified such Debtor pursuant to Section 4.7 below that Secured
Party has revoked such Debtor’s right to collect such Accounts. 
 4.7. Collection of Accounts by the Secured Party. If an Event
of Default shall have occurred and be continuing, Secured Party shall have the right at any time and without affecting the liability of Debtors to Secured Party (a) to revoke any right of Debtors to collect their Accounts pursuant to
Section 4.6 above by written notice to Debtors to such effect, (b) to take over and direct collection of such Accounts of Debtors, (c) to give notice of the security interest of Secured Party in such Accounts to any or all of the
Account debtors obligated to Debtors, (d) to direct such Account debtors to make payment of such Accounts directly to Secured Party and (e) to take control of such Accounts of Debtors and the proceeds thereof, and to take possession of all
of a Debtors’ books and records relating thereto, with full power and authority in the name of Secured Party or of Debtors to enforce, collect, sue for, receive, and give receipts for any and all such Accounts. If any Account becomes evidenced
by or if such Debtor receives any promissory note, trade acceptance, chattel paper or other writing or instrument for the payment of money, such Debtor will deliver each such writing or instrument to Secured Party duly endorsed to the order of
Secured Party as additional Collateral under this Agreement. 
 Section 5. Preservation and Protection of Security Interests.
Each Debtor shall faithfully preserve and protect Secured Party’s security interest in the Collateral and shall, at its own cost and expense, cause such security interest to be perfected and continue perfected so long as the Secured Obligations
or any portion thereof are outstanding and unpaid, and for such purpose. Debtors shall from time to time at the request of Secured Party file or record, or cause to be filed or recorded, such instruments, documents and notices, including without
limitation financing and continuation statements, as Secured Party may deem necessary or advisable from time to time in order to preserve, perfect and continue perfected said security interest prior to the rights of any other secured party or lien
creditor (other than the Senior Lender). Debtors shall do all such other acts and things and shall execute and deliver all such other instruments and documents, including without limitation further security agreements, pledges, endorsements,
assignments and notices, as Secured Party may deem necessary or advisable from time to time in order to perfect and preserve the priority of said security interest as a perfected lien in the Collateral prior to the rights of any other secured party
or lien creditor (other than the Senior Lender). Secured Party, and its officers, employees and authorized agents, or any of them, are hereby irrevocably appointed the attorneys-in-fact of Debtors to do all acts and things which Secured Party may
deem necessary or advisable to preserve, perfect and continue perfected Secured Party’s security interest in the Collateral, including without limitation the signing of financing, continuation or other similar statements and notices on behalf
of such Debtor if Debtors fails to do so within ten (10) days of request by Secured Party. 
 Section 6. Application of
Moneys. Except as otherwise provided in this Agreement, if an Event of Default shall have occurred, all net proceeds which Secured Party shall receive upon realization of the lien and security interest granted under this Agreement may be applied
by or at 

  

 7 

 
the direction of Secured Party, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care, safekeeping or
otherwise of any and all of the Collateral or in any way relating to the rights of Secured Party hereunder, including reasonable attorneys’ fees and legal expenses, to the payment in whole or in part of the Secured Obligations, in such order as
Secured Party may elect. Any surplus remaining after the payment and satisfaction of all of the Secured Obligations shall be applied to or on the order of Debtors, their successors or assigns, or to the person or persons who may be lawfully entitled
to receive the same, or as any court of competent jurisdiction may direct. 
 Section 7. Representations and Warranties. Each
Debtor hereby represents and warrants to Secured Party that such Debtor has legal title to all the Collateral, subject to no Lien, other than Permitted Liens. No financing or continuation statement which names such Debtor as debtor has been filed
under the Uniform Commercial Code other than pursuant to the Permitted Liens, and such Debtor has not agreed or consented to cause or to permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to any Lien, except the Permitted Liens. 
 Section 8. Affirmative Covenants. On and after
the date of this Agreement, and for so long as any Secured Obligation is outstanding: 
 8.1. Maintenance of Properties. Each Debtor
shall maintain and preserve in good working order and condition, ordinary wear and tear excepted, all of its properties which are necessary or useful in the proper conduct of its business, and will from time to time make all necessary and proper
repairs, renewals, replacements, additions and improvements to said properties, subject to Section 2.2 of this Agreement. 
 8.2.
Notice of Default. If any Debtor has knowledge that any Event of Default occurs, such Debtor shall give prompt notice in writing of such happening to Secured Party. 
 8.3. Additional Information. Each Debtor shall furnish to Secured Party promptly after Secured Party’s request therefor, such other
information respecting the business, properties or condition of operations, financial or otherwise, of such Debtor as may be requested by Secured Party. 
 8.4. Maintenance of Collateral. 
 8.4.1. Each Debtor shall (a) pay and discharge all taxes,
assessments, fees, and other governmental charges or levies imposed upon it or any of the Equipment as well as all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other similar persons for labor, materials, supplies
and rentals which, if unpaid, might by law become a lien on the Collateral or any part thereof and (b) perform according to and maintain in force all leases which are Collateral; provided, however, that Debtors shall not be
required to make any payment pursuant to this Section 8.4 if (x) the amount, applicability, or validity thereof is being contested currently in good faith by appropriate proceedings, (y) Debtors shall have set aside on their books, in
accordance with GAAP applied on a consistent basis, adequate reserves or provisions with respect thereto, and (z) the title of Debtors to, and its right to use, any of its properties is not materially and adversely affected thereby. 

 

 8 

 8.4.2. If Debtors fail to make any payments it is required to make under this Section 8.4, Secured
Party may do so for the account of Debtors and may add the amount of such payments to the Secured Obligations. 
 8.5. Use of
Collateral. The Collateral will be used exclusively in the business operations of Debtors. 
 8.6. Performance of Contracts, etc.
Each Debtor shall perform according to and shall comply with those contractual obligations of such Debtor, non-performance of which would materially adversely affect the business of such Debtor or would impair the ability of such Debtor to perform
this Agreement. 
 8.7. Insurance. Each Debtor shall at all times: 
 8.7.1. Maintain or cause to be maintained insurance upon its respective property with responsible and reputable insurers of such character and in such
amounts as are usually maintained by persons engaged in a like business. 
 8.7.2. Furnish to Secured Party, upon request, a statement of
insurance coverage of such Debtor in form and detail satisfactory to Secured Party. 
 8.7.3. Require each policy of insurance to contain,
in favor of and satisfactory to Secured Party, a provision requiring at least thirty (30) days’ prior written notice to Secured Party in the event of any cancellation or contemplated cancellation of such insurance. To the extent reasonably
obtainable without additional cost to such Debtor, all such policies will further contain agreements by the insurers that any loss will be payable to Secured Party notwithstanding any acts or negligence by such Debtor which might otherwise result in
forfeiture of said insurance. If such Debtor fails to maintain in full force and effect insurance covering the Collateral as may be required by this Section 8.7, or fails to pay the premiums thereon when due, Secured Party may do so for the
account of such Debtor and add the cost thereof to the Secured Obligations. 
 8.7.4. Secured Party shall not be under any duty to ascertain
the existence or adequacy of insurance coverage. Debtors shall cause each policy of insurance covering tangible property subject to a Lien in favor of the Secured Party granted pursuant to this Agreement, or under any agreement, instrument or
document given as security pursuant hereto, to provide that, in the case of each separate loss in excess of One Hundred Thousand Dollars ($100,000.00) (or, if there shall be existing an Event of Default of any amount), the full amount of insurance
proceeds with respect thereto shall be payable to the Secured Party as secured party or otherwise as its interests may appear, to be applied in accordance with the Note Purchase Agreement, and each such policy shall (i) further provide for at
least thirty (30) days’ prior written notice to the Secured Party of the cancellation or substantial modification thereof, (ii) provide that, in respect of the interests of the Debtors and the Secured Party in such insurance, such
insurance shall not be 

  

 9 

 
invalidated by any such action or inaction of such Debtor or any other Person, (iii) insure the Secured Party’s interest regardless of any
violation by such Debtor or any other Person of any warranties, declarations or conditions contained in such insurance and (iv) provide that the Secured Party shall have the right (but not the obligation) to cure any default by the Debtors
under such insurance. After the occurrence of and during the continuation of an Event of Default, each Debtor hereby assigns and sets over unto Secured Party all moneys which may become payable on account of such insurance covering the Collateral
including without limitation any return of unearned premiums which may be due upon cancellation of any such insurance, and directs the insurers to pay Secured Party any amount so due. Secured Party, its officers, employees and authorized agents, are
hereby irrevocably appointed the attorneys-in-fact of Debtors to endorse any draft or check which may be payable to Debtors in order to collect the proceeds of such insurance or any return of unearned premiums. Any balance of insurance proceeds
remaining in the possession of Secured Party after payment in full of the Secured Obligations shall be paid to Debtors or Debtors’ order as such Debtor shall instruct Secured Party. 
 8.8. Risk of Loss. As of the execution of this Agreement, each Debtor shall assume all risk of loss of, damage to, or destruction of the
Collateral to the extent that such Debtor now or hereafter has or acquires any right, title and interest in the Collateral. 
 Section 9. Negative Covenants. On and after the date of this Agreement and so long as Secured Obligations are outstanding, each Debtor shall not: 
 9.1. Negative Pledge. Except as permitted by the Note Purchase Agreement, without the prior written consent of Secured Party (a) sell, assign, or transfer any of its right, title and interest in the
Collateral except the sale of such Debtor’s Inventory in the ordinary course of business, (b) grant or create or permit to exist any lien on or in any of the Collateral except for Permitted Liens, (c) permit any levy or attachment to
be made against any of the Collateral, or (d) file any financing statement with respect to any of the Collateral. 
 9.2. Change of
Name. Change its name without complying with Section 4.1.8 hereof. 
 Section 10. Care and Maintenance of Collateral by the
Secured Party. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of such of the Collateral as may be in Secured Party’s possession if Secured Party takes such action for that purpose as Debtors
shall request in writing, provided, however that Secured Party shall not be required to take any such requested action if in the judgment of Secured Party, such action would impair Secured Party’s security interest in such
Collateral or its rights in, or the value of, such Collateral, and provided, further, however that such written request is received by Secured Party in sufficient time to permit Secured Party to take the requested action. Each
Debtor acknowledges that failure of Secured Party to comply with any such request shall not of itself be deemed a failure to exercise reasonable care, and no failure of Secured Party to preserve or protect any rights with respect to such Collateral
against prior parties, or to do any act with respect to the preservation of such Collateral not so requested by such Debtor, shall be deemed a failure to exercise reasonable care in the custody or preservation of such Collateral. If all or any part
of the Collateral consists of any stock, bond or other security, Secured Party shall be under no obligation to sell or otherwise 

  

 10 

 
dispose of such security, or to cause such security to be sold or otherwise disposed of, by reason of any diminution in the fair market value thereof, and
Secured Party’s failure to do so shall under no circumstances be deemed a failure to exercise reasonable care in the custody and preservation of the Collateral, anything in this Section 10 or in any other section of this Agreement
notwithstanding. 
 Section 11. Remedies for Event of Default. 
 11.1. Remedies. If an Event of Default occurs and is continuing, in addition to the remedies set forth in the Note Purchase Agreement and the
other Related Documents: 
 11.1.1. Secured Party may exercise such rights and remedies as are provided by the Uniform Commercial Code,
including without limitation the right to enter any premises where any of the Collateral is located and take possession of the same without demand or notice and without prior judicial hearing or legal proceedings, which each Debtor hereby expressly
waives, and to sell all or any portion of the Collateral at public or private sale, after ten (10) days’ prior written notice to such Debtor, at such place or places and at such time or times and in such manner and upon such terms, whether
for cash or on credit, as Secured Party in its sole discretion may determine. Upon any such sale of any of the Collateral, to the extent permitted by law, Secured Party may purchase all or any of the Collateral being sold, free from any equity or
right of redemption. Secured Party shall apply the proceeds of any such sale to the Secured Obligations as provided in Section 6 hereof. If such proceeds are insufficient to pay the amounts owed by Debtors, Debtors shall be liable for any
deficiency in the amount so realized from the Collateral. 
 11.1.2. Each Debtor shall, upon the demand of Secured Party, promptly assemble
the Collateral, or any part thereof and make it available to Secured Party at a place to be designated by Secured Party which shall be reasonably convenient to Secured Party and such Debtor. The right of Secured Party under this Section 11.1.2
to have the Collateral assembled and made available to it is of the essence of this Agreement and Secured Party may, at its election, enforce such right by an action for specific performance. 
 11.2. No Requirement to Marshal Collateral. Each Debtor, to the extent that it has any right, title or interest in any of the Collateral, waives
and releases any right to require Secured Party to collect any of the Secured Obligations from any portion of the Collateral under any theory of marshaling of assets, or otherwise, and specifically authorizes Secured Party to apply any of its
Collateral against any of the Secured Obligations in any manner that Secured Party may determine. 
 Section 12. Captions.
Captions and section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement. 
 Section 13. Amendments, Waivers. No amendment, modification or waiver to this Agreement shall be binding unless in writing and signed by the party to be charged. 
 Section 14. Permitted Liens. The “Permitted Liens” as defined in the Note Purchase Agreement shall be deemed “Permitted
Liens” hereunder. 
  

 11 

 Section 15. Defeasance. Upon payment and performance in full of the Notes and all reasonable
costs and expenses incurred by Secured Party in the realization upon the Collateral, if any, including, without limitation, reasonable attorneys’ fees and legal expenses, this Agreement shall terminate and be of no further force and effect, and
in such event, Secured Party shall, at the expense of Debtors, take all action necessary to terminate the security interests of Secured Party in the Collateral. Until such time, however, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. 
 Section 16. Governing Law. This Agreement is being executed
and delivered in the State of Ohio and, except to the extent that the laws of any other jurisdiction are mandatorily applicable, shall in all respects be interpreted in accordance with the laws of the State of Ohio applicable to contracts to be
performed in the State of Ohio. 
 Section 17. Counterparts. This Agreement may be signed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. 
 Section 18. Entire Agreement. This Agreement sets forth the
entire understanding of the parties hereto and supersedes any and all prior agreements, arrangements, and understandings relating to the subject matter hereof. No representation, promise, inducement, or statement of intent has been made by any party
which is not embodied in this Agreement, and no party shall be bound by or be liable for any alleged representation, promise, inducement or statement of intention not embodied herein. 
 Section 19. Enforceability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction. 
 Section 20. Waiver of Jury Trial. THE SECURED PARTY AND EACH DEBTOR HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE SECURED PARTY AND SUCH DEBTOR ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN SUCH
DEBTOR AND THE SECURED PARTY IN CONNECTION WITH THE SECURITY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR THE TRANSACTIONS RELATED HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE SECURED PARTY TO ENTER INTO THE FINANCING TRANSACTIONS WITH DEBTORS. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE SECURED PARTY’S ABILITY TO PURSUE ITS REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY
CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN OR IN ANY OTHER DOCUMENT RELATED HERETO. 
  

 12 

 The parties hereto have caused this Security Agreement to be duly executed by its duly authorized
officers as of the day and year first above written. 
 [Signatures appear on following page] 
  

 13 

 IN WITNESS WHEREOF, the parties have caused this Security Agreement to be executed and delivered as of
the date first written above. 
  

									
	Debtors:	 	 	 	Secured Party:
			
	DPAC TECHNOLOGIES CORP.,	 		 	CANAL MEZZANINE PARTNERS, L.P.
	a California corporation	 		 	a Delaware limited partnership
					
	By:	 	 /s/ Steven D. Runkel
	 		 	By:	 	Canal Mezzanine Management, LLC,
		 	Steve Runkel, Chief Executive Officer	 		 		 	an Ohio limited liability company
		 		 		 	Title:	 	General Partner
				
	 QUATECH, INC.,
	 	 	 	By:	 	Canal Holdings, LLC
	an Ohio corporation	 		 		 	an Ohio limited liability company
		 		 		 	Title:	 	Managing Member
					
	By:	 	 /s/ Steven D. Runkel
	 	 	 	By:	 	 Shawn M. Wynne

		 	Steve Runkel, Chief Executive Officer	 		 	Name:	 	Shawn M. Wynne
		 		 		 	Title:	 	Authorized Signer

 Signature Page to Security Agreement 

 EXHIBIT A 
 DPAC TECHNOLOGIES CORP. 
  

							
	A.	  	LOCATION OF CHIEF EXECUTIVE OFFICE:	  		  	
				
		  	5765 Hudson Industrial Parkway	  		  	
		  	Hudson, Ohio 44236	  		  	
				
	B.	  	LOCATION OF BOOKS AND RECORDS:	  		  	
				
		  	5765 Hudson Industrial Parkway	  		  	
		  	Hudson, Ohio 44236	  		  	
			
	C.	  	LOCATION OF OTHER COLLATERAL (RETAIL STORES OR WAREHOUSES):	  	
				
		  	  
	  		  	
		  	  
	  		  	
				
	D.	  	LOCATION OF ANY OTHER PLACE(s) OF BUSINESS:	  		  	
				
		  	  
	  		  	
		  	  
	  		  	
				
	E.	  	JURISDICTION OF ORGANIZATION:	  		  	
				
		  	State of California	  		  	

 QUATECH, INC. 
  

			
	A.	  	LOCATION OF CHIEF EXECUTIVE OFFICE:
		
		  	5765 Hudson Industrial Parkway
		  	Hudson, Ohio 44236
		
	B.	  	LOCATION OF BOOKS AND RECORDS:
		
		  	5765 Hudson Industrial Parkway
		  	Hudson, Ohio 44236

  

 2 

							
			
	C.	  	LOCATION OF OTHER COLLATERAL (RETAIL STORES OR WAREHOUSES):	  	
				
		  	  
	  		  	
		  	  
	  		  	
				
	D.	  	LOCATION OF ANY OTHER PLACE(s) OF BUSINESS:	  		  	
				
		  	  
	  		  	
		  	  
	  		  	
				
	E.	  	JURISDICTION OF ORGANIZATION:	  		  	
				
		  	State of Ohio	  		  	

  

 3

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