EXHIBIT 10

 

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SILICON VALLEY BANK

SPECIALTY FINANCE DIVISION

 

ACCOUNTS RECEIVABLE FINANCING AGREEMENT

 

This ACCOUNTS RECEIVABLE FINANCING AGREEMENT (the “Agreement”), dated as of the
Effective Date is between Silicon Valley Bank, Specialty Finance Division of
(“Bank”), and Micro Component Technology, Inc., a Minnesota corporation,
(“Borrower”), whose address is at 2340 West County Road #C, St. Paul, MN 55113
and with a FAX number of (651) 697-4200.

 

1.                                      Definitions.  In this Agreement:

 

“Accounts” are all existing and later arising accounts, contract rights, and
other obligations owed Borrower in connection with its sale or lease of goods
(including licensing software and other technology) or provision of services,
all credit insurance, guaranties, other security and all merchandise returned or
reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Account Debtor” is defined in the California Uniform Commercial Code and shall
include any person liable on any Financed Receivable, such as, a guarantor of
the Financed Receivable and any issuer of a letter of credit or banker’s
acceptance.

 

“Adjusted Quick Ratio”.  A ratio of Quick Assets to Current Liabilities minus
Deferred Maintenance Revenue of at least

 

“Adjustments” are all discounts, allowances, returns, disputes, counterclaims,
offsets, defenses, rights of recoupment, rights of return, warranty claims, or
short payments, asserted by or on behalf of any Account Debtor for any Financed
Receivable.

 

“Advance” is defined in Section 2.2.

 

“Advance Rate” is 80% net of deferred revenue and offsets related to each
specific Account Debtor, or another percentage as Bank establishes under
Section 2.2.

 

“Applicable Rate” is a rate per annum equal to greater of (i) the “Prime Rate”
plus two percentage points (2%) and (ii) six percentage points (6%).

 

“Borrower’s Books” are all Borrower’s books and records including ledgers,
records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

 

“Code” is the California Uniform Commercial Code.

 

“Collateral” has the meaning set forth on Exhibit A.

 

“Collateral Handling Fee” is defined in Section 3.5.

 

“Collections” are all funds received by Bank from or on behalf of an Account
Debtor for Financed Receivables.

 

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“Compliance Certificate” is attached as Exhibit B.

 

“Deferred Maintenance Revenue” is all amounts received in advance of performance
under maintenance contract and not yet recognized as revenue.

 

“Early Termination Fee” is defined in Section 3.6.

 

“Effective Date” is the date in which Bank executes this Agreement.

 

“Event of Default” is defined in Section 9.

 

“Facility” is an extension of credit by Bank to Borrower in order to finance
receivables with an aggregate Account Balance not exceeding the Facility Amount.

 

“Facility Amount” is $2,500,000.00.

 

“Facility Fee” is defined in Section 3.4.

 

“Facility Period” is the period beginning on this date and continuing until
June      , 2004, unless the period is terminated sooner by Bank with notice to
Borrower or by Borrower under Section 3.6.

 

“Finance Charges” is defined in Section 3.2.

 

“Financed Receivables” are all those accounts, receivables, chattel paper,
instruments, contract rights, documents, general intangibles, letters of credit,
drafts, bankers acceptances, and rights to payment, and all proceeds, including
their proceeds (collectively “receivables”), which Bank finances and make an
Advance.  A Financed Receivable stops being a Financed Receivable (but remains
Collateral) when the Advance made for the Financed Receivable has been finally
paid.

 

“Financed Receivable Balance” is the total outstanding amount, at any time, of
all Financed Receivables.

 

“Good Faith Deposit” is described in Section 3.9.

 

“Guarantor” means any guarantor of the Obligations.

 

“Ineligible Receivable” is any accounts receivable:

 

(a)                                  that is unpaid (90) calendar days after the
invoice date; or

 

(b)                                 that is owed by an Account Debtor that has
filed, or has had filed against it, any bankruptcy case, assignment for the
benefit of creditors, receivership, or Insolvency Proceeding or who has become
insolvent (as defined in the United States Bankruptcy Code) or who is generally
not paying its debts as they become due; or

 

(c)                                  for which there has been any breach of
warranty or representation in Section 6 or any breach of any covenant in this
Agreement; or

 

(d)                                 for which the Account Debtor asserts any
discount, allowance, return, dispute, counterclaim, offset, defense, right of
recoupment, right of return, warranty claim, or short payment.

 

“Insolvency Proceeding” are proceedings by or against any person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

 

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“Invoice Transmittal” shows accounts receivable which Bank may finance and, for
each receivable, includes the Account Debtor’s, name, address, invoice amount,
invoice date and invoice number and is signed by Borrower’s authorized
representative.

 

“Lockbox” is described in Section 6.2.

 

“Obligations” are all advances, liabilities, obligations, covenants and duties
owing, arising, due or payable by Borrower to Bank now or later under this
Agreement or any other document, instrument or agreement, account (including
those acquired by assignment) primary or secondary, such as all Advances,
Finance Charges, Collateral Handling Fees, interest, fees, expenses,
professional fees and attorneys’ fees or other.

 

“Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not
Bank’s lowest rate.

 

“Reconciliation Day” is the last calendar day of each month.

 

“Reconciliation Period” is each calendar month.

 

 

2.                                      Financing of Accounts Receivable.

 

2.1                               Request for Advances.  During the Facility
Period, Borrower may offer accounts receivable to Bank, if there is not an Event
of Default.  Borrower will deliver an Invoice Transmittal for each accounts
receivable it offers.  Bank may rely on information on or with the Invoice
Transmittal.

 

2.2                               Acceptance of Accounts Receivable.  Bank is
not obligated to finance any accounts receivable.  Bank may approve any Account
Debtor’s credit before financing any receivable.  When Bank accepts a
receivable, it will pay Borrower the Advance Rate times the face amount of the
receivable (the “Advance”).  Bank may, in its discretion, change the percentage
of the Advance Rate.  When Bank makes an Advance, the receivable becomes a
“Financed Receivable.”  All representations and warranties in Section 6 must be
true as of the date of the Invoice Transmittal and of the Advance and no Event
of Default exists would occur as a result of the Advance.  The aggregate amount
of all Financed Receivables outstanding at any time may not exceed the Facility
Amount.

 

3.                                      Collections, Finance Charges,
Remittances and Fees.  The Obligations shall be subject to the following fees
and Finance Charges.  Fees and Finance Charges may, in Bank’s discretion, be
charged as an Advance, and shall thereafter accrue fees and Finance Charges as
described below.  Bank may, in its discretion, charge fee and Finance Charges to
Borrower’s deposit account maintained with Bank.

 

3.1                               Collections.  Collections will be credited to
the Financed Receivables Balance, but if there is an Event of Default, Bank may
apply Collections to the Obligation in any order it chooses.   If Bank receives
a payment for both Financed Receivable and a non Financed Receivable, the funds
will first be applied to the Financed Receivable and, if there is not an Event
of Default, the excess will be remitted to the Borrower, subject to
Section 3.10.

 

3.2                               Finance Charges.  In computing Finance Charges
on the Obligations, all Collections received by Bank shall be deemed applied by
Bank on account of the Obligations three (3) Business Days after receipt of the
Collections.  Borrower will pay a finance charge (the “Finance Charge”), equal
to the Applicable Rate times the number of days in the Reconciliation Period
times the outstanding average daily Financed Receivable Balance for that
Reconciliation Period. After an Event of Default, Obligations accrue interest at
five percent (5%) above the Applicable Rate effective immediately before the
Event of Default.

 

3.3          RESERVED.

 

3.4          Facility Fee.  A fully earned, non-refundable facility fee of
$20,000.00 is due upon execution of this Agreement.

 

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3.5                               Collateral Handling Fee.  On each
Reconciliation Day, Borrower will pay to Bank a collateral handling fee, equal
to one half of one percent (.50%) per month of the average daily Financed
Receivable Balance outstanding during the applicable Reconciliation Period. 
After an Event of Default, the Collateral Handling Fee will increase an
additional one half of one percent (.50%) effective immediately before the Event
of Default.

 

3.6                               Early Termination Fee.  A fully earned,
non-refundable early termination fee of $20,000.00 is due upon voluntary or
involuntary full payment of the Obligations and termination of this Facility
prior to June      , 2003 unless the Obligations are paid in full from an
initial advance from a loan agreement with Silicon Valley Bank.

 

3.7                               Accounting.  After each Reconciliation Period,
Bank will provide an accounting of the transactions for that Reconciliation
Period, including the amount of all Financed Receivables, all Collections,
Adjustments, Finance Charges, the Collateral Handling Fee.  If Borrower does not
object to the accounting in writing within 30 days it is considered correct. 
All Finance Charges and other interest and fees calculated on the basis of a 360
day year and actual days elapsed.

 

3.8                               Deductions.  Bank may deduct fees, finance
charges and other amounts due from any Advances made or Collections received by
Bank.

 

3.9                               Good Faith Deposit.  Borrower has paid to Bank
a Good Faith Deposit of $3,000.00 to initiate Banks due diligence review
process.  Any portion of the deposit not utilized to pay expenses will be
applied to the Facility Fee.

 

3.10        Account Collection Services.  All Borrowers’ receivables are to be
paid to the same address/or party and Borrower and Bank must agree on such
address.  If Bank collects all receivables and there is not an Event of Default
or an event that with notice or lapse of time will be an Event of Default,
within five (5) days of receipt of those collections, Bank will give Borrower,
the receivables collections it receives for receivables other than Financed
Receivables and/or amount in excess of the amount for which Bank has made an
Advance to Borrower, less any amount due to Bank, such as the Finance Charge,
Collateral Handling Fee and expenses or otherwise.  This Section does not impose
any affirmative duty on Bank to do any act other than to turn over amounts.  All
receivables and collections are Collateral and if an Event of Default occurs,
Bank need not remit collections of Collateral and may apply them to the
Obligations.

 

4.                                      Repayment of Obligations.

 

4.1                               Repayment on Maturity.  Borrower will repay
each Advance on the earliest of: (a) payment of the Financed Receivable in
respect which the Advance was made, (b) the Financed Receivable becomes an
Ineligible Receivable, (c) when any Adjustment is made to the Financed
Receivable (but only to the extent of the Adjustment if the Financed Receivable
is not otherwise an Ineligible Receivable, or (d) the last day of the Facility
Period (including any early termination).  Each payment will also include all
accrued Finance Charges on the Advance and all other amounts due hereunder.

 

4.2                               Repayment on Event of Default.  When there is
an Event of Default, Borrower will, if Bank demands (or, in an Event of Default
under Section 9(B), immediately without notice or demand from Bank) repay all of
the Advances.  The demand may, at Bank’s option, include the Advance for each
Financed Receivable then outstanding and all accrued Finance Charges, Collateral
Handling Fees, attorneys and professional fees, court costs and expenses, and
any other Obligations.

 

5.                                      Power of Attorney.  Borrower irrevocably
appoints Bank and its successors and assigns it attorney-in-fact and authorizes
Bank, regardless of whether there has been an Event of Default, to:

 

(a)          sell, assign, transfer, pledge, compromise, or discharge all or any
part of the Financed Receivables;

 

(b)         demand, collect, sue, and give releases to any Account Debtor for
monies due and compromise, prosecute, or defend any action, claim, case or
proceeding about the Financed

 

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Receivables, including filing a claim or voting a claim in any bankruptcy case
in Bank’s or Borrower’s name, as Bank chooses;

 

(c)          prepare, file and sign Borrower’s name on any notice, claim,
assignment, demand, draft, or notice of or satisfaction of lien or mechanics’
lien or similar document;

 

(d)         notify all Account Debtors to pay Bank directly;

 

(e)          receive, open, and dispose of mail addressed to Borrower;

 

(f)            endorse Borrower’s name on check or other instruments;

 

(g)         execute on Borrower’s behalf any instruments, documents or financing
statements to perfect Bank’s interests in the Financed Receivables and
Collateral; and

 

(h)         do all acts and things necessary or expedient.

 

6.                                      Representations, Warranties and
Covenants.

 

6.1                               Representations and Warranties.  Borrower
represents and warrants for each Financed Receivable:

 

(a)                                  It is the owner with legal right to sell,
transfer and assign it;

 

(b)                                 The correct amount is on the Invoice
Transmittal and is not disputed;

 

(c)                                  Payment is not contingent on any obligation
or contract and it has fulfilled all its obligations as of the Invoice
Transmittal date;

 

(d)                                 It is based on an actual sale and delivery
of goods and/or services rendered, due to Borrower, it is not past due or in
default, has not been previously sold, assigned, transferred, or pledged and is
free of any liens, security interests and encumbrances;

 

(e)                                  There are no defenses, offsets,
counterclaims or agreements for which the Account Debtor may claim any deduction
or discount;

 

(f)                                    It reasonably believes no Account Debtor
is insolvent or subject to any Insolvency Proceedings;

 

(g)                                 It has not filed or had filed against it
Insolvency Proceedings and does not anticipate any filing;

 

(h)                                 Bank has the right to endorse and/ or
require Borrower to endorse all payments received on Financed Receivables and
all proceeds of Collateral; and

 

(i)                                     No representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statement contained in the certificates or statement
not misleading.

 

6.2                               Additional Representations and Warranties. 
Borrower represents and warrants as follows:

 

(a)          Borrower is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in,
any state in which the conduct of its business or its ownership of property
requires that it be qualified.  The execution, delivery and performance of this
Agreement has been duly authorized, and does not conflict with

 

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Borrower’s organizational documents, nor constitute an Event of Default under
any material agreement by which Borrower is bound.  Borrower is not in default
under any agreement to which or by which it is bound.

 

(b)         Borrower has good title to the Collateral.  All inventory is in all
material respects of good and marketable quality, free from material defects.

 

(c)          Borrower is not an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act.  Borrower is not
engaged as one of its important activities in extending credit for margin stock
(under Regulations G, T and U of the Federal Reserve Board of Governors). 
Borrower has complied with the Federal Fair Labor Standards Act.  Borrower has
not violated any laws, ordinances or rules. None of Borrower’s properties or
assets has been used by Borrower, to the best of Borrower’s knowledge, by
previous persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally.  Borrower has timely filed all
required tax returns and paid, or made adequate provision to pay, all taxes. 
Borrower has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted.

 

6.3                               Affirmative Covenants.  Borrower will do all
of the following:

 

(a)          Maintain its corporate existence and good standing in its
jurisdictions of incorporation and maintain its qualification in each
jurisdiction necessary to Borrower’s business or operations.

 

(b)         Give Bank at least 10 days prior written notice of changes to its
name, organization, chief executive office or location of records.

 

(c)          Pay all its taxes including gross payroll, withholding and sales
taxes when due and will deliver satisfactory evidence of payment if requested.

 

(d)         Provide a written report within 10 days, if payment of any Financed
Receivable does not occur by its due date and include the reasons for the delay.

 

(e)          Give Bank copies of all Forms 10-K, 10-Q and 8-K (or equivalents)
within 5 days of filing with the Securities and Exchange Commission, while any
Financed Receivable is outstanding.

 

(f)            Execute any further instruments and take further action as Bank
requests to perfect or continue Bank’s security interest in the Collateral or to
affect the purposes of this Agreement.

 

(g)         Provide Bank with: (i) a Compliance Certificate on a monthly  basis
to be received by Bank no later than 30 days following each Reconciliation Date,
or on a more frequent or other basis if and as requested by Bank;

 

(h)         Provide Bank with, as soon as available, but no later than 30 days
following each Reconciliation Date: (i) a balance sheet and income statement,
prepared by Borrower in accordance with GAAP, consistently applied, covering
Borrower’s operations during such Reconciliation Period, (ii) an aged listing of
accounts receivable and accounts payable and (iii) a current schedule of
Borrower’s Deferred Maintenance Revenue;

 

(i)             Immediately notify, transfer and deliver to Bank all collections
Borrower receives for Financed Receivables.

 

(j)             Remit all payments for Accounts to the Bank by the close of
business on each Friday along with a detailed cash receipts journal and shall
immediately notify and direct all of the Borrower’s Account Debtors to make all
payments for Borrower’s Accounts to a lockbox account established with the Bank
(“Lockbox”) or to wire transfer payments to a cash

 

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collateral account that Bank controls. It will be considered an immediate Event
of Default if the Lockbox is not set-up and operational within 45 days from the
date of this Agreement.

 

(k)          Within one hundred and twenty (120) days after the close of each of
Borrower’s fiscal years, Borrower shall provide Bank with a copy of the annual
audited financial statements of Borrower, including balance sheet, statement of
income and retained earnings, statement of cash flows for the fiscal year then
ended and such other information (including nonfinancial information) as Bank
may reasonably request, in reasonable detail, prepared and certified by an
independent public accountant acceptable to Bank;

 

(l)             Allow Bank to audit Borrower’s Collateral, including but not
limited to Borrower’s Accounts, at Borrowers expense, no later than 90 days
following the execution of this Agreement and annually thereafter.  Provided
however, if an Event of Default has occurred, Bank may audit Borrower’s
Collateral, including but not limited to Borrower’s Accounts at Bank’s sole
discretion and without notification and authorization from Borrower.

 

(m)       Within ninety (90) days following the Effective Date of this
Agreement, Borrower will maintain its primary operating deposit accounts with
Bank.

 

6.4                               Negative Covenants.  Borrower will not do any
of the following without Bank’s prior written consent:

 

(a)          Assign, transfer, sell or grant, or permit any lien or security
interest in the Collateral.

 

(b)         Convey, sell, lease, transfer or otherwise dispose of the
Collateral.

 

(c)          Create, incur, assume, or be liable for any indebtedness.

 

(d)         Become an “investment company” or a company controlled by an
“investment company,” under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Advance for that purpose; fail to meet the
minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, or permit any of its
subsidiaries to do so.

 

7.                                      Adjustments.  If any Account Debtor
asserts a discount, allowance, return, offset, defense, warranty claim, or the
like (an “Adjustment”) or if Borrower breaches any of the representations,
warranties or covenants set forth in Section 6, Borrower will promptly advise
Bank.  Borrower will resell any rejected, returned, or recovered personal
property for Bank, at Borrower’s expense, and pay proceeds to Bank.  While
Borrower has returned goods that are Borrower property, Borrower will segregate
and mark them “property of Silicon Valley Bank.”  Bank owns the Financed
Receivables and until receipt of payment, has the right to take possession of
any rejected, returned, or recovered personal property.

 

8.                                      Security Interest.  Borrower grants to
Bank a continuing security interest in all presently and later acquired
Collateral to secure all Obligations and the performance of each of Borrower’s
duties hereunder.  Any security interest will be a first priority security
interest in the Collateral.

 

9.                                      Events of Default.  Any one or more of
the following is an Event of Default.

 

(a)          Borrower fails to pay any amount owed to Bank when due;

 

(b)         Borrower files or has filed against it any Insolvency Proceedings or
any assignment for the benefit of creditors, or appointment of a receiver or
custodian for any of its assets;

 

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(c)          Borrower becomes insolvent or is generally not paying its debts as
they become due or is left with unreasonably small capital;

 

(d)         Any involuntary lien, garnishment, attachment attaches to the
Financed Receivables or any Collateral;

 

(e)          Borrower breaches any covenant, agreement, warranty, or
representation is an immediate Event of Default;

 

(f)            Borrower is in default under any document, instrument or
agreement evidencing any debt, obligation or liability in favor of Bank its
affiliates or vendors regardless of whether the debt, obligation or liability is
direct or indirect, primary or secondary, or fixed or contingent;

 

(g)         An event of default occurs under any Guaranty of the Obligations or
any material provision of any Guaranty is not valid or enforceable or a Guaranty
is repudiated or terminated;

 

(h)         A material default or Event of Default occurs under any agreement
between Borrower and any creditor of Borrower that signed a subordination
agreement with Bank;

 

(i)             Failure to establish a Lockbox according to Section 6.3(j);

 

(j)             Any creditor that has signed a subordination agreement with Bank
breaches any terms of the subordination agreement; or

 

(i)             A material impairment in the perfection or priority of the
Bank’s security interest in the Collateral; (ii) a material adverse change in
the business, operations, or conditions (financial or otherwise) of the Borrower
occurs; or (iii) a material impairment of the prospect of repayment of any
portion of the Advances occurs.

 

10.                               Remedies.

 

10.1                        Remedies Upon Default.  When an Event of Default
occurs, (1) Bank may stop financing receivables or extending credit to Borrower;
(2) at Banks option and on demand, all or a portion of the Obligations or, for
to an Event of Default described in Section 9(B), automatically and without
demand, are due and payable in full; (3) apply to the Obligations any (i)
balances and deposits of Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower; and (4) Bank may exercise
all rights and remedies under this Agreement and the law, including those of a
secured party under the Code, power of attorney rights in Section 5 for the
Collateral, and the right to collect, dispose of, sell, lease, use, and realize
upon all Financed Receivables and Collateral in any commercial manner.  Borrower
agrees that any notice of sale required to be given to Borrower is deemed given
if at least five days before the sale may be held.

 

10.2                        Demand Waiver.  Borrower waives demand, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guaranties held by Bank
on which Borrower is liable.

 

10.3                        Default Rate.  If any amount is not paid when due,
the amount bears interest at the Applicable Rate plus five percent until the
earlier of (a) payment in good funds or (b) entry of a final judgment when the
principal amount of any money judgment will accrue interest at the highest rate
allowed by law.

 

11.                               Fees, Costs and Expenses.  The Borrower will
pay on demand all fees, costs and expenses  (including attorneys’ and
professionals fees with costs and expenses) that Bank incurs from:  (a)
preparing, negotiating, administering, and enforcing this Agreement or related
agreement, including any amendments, waivers or consents, (b) any litigation or
dispute relating to the Financed Receivables, the Collateral, this Agreement or
any other agreement, (c) enforcing any rights against Borrower or any guarantor,
or any Account Debtor, (d) protecting or enforcing its interest in the Financed
Receivables or other Collateral, (e) collecting the Financed Receivables and the

 

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Obligations, and (f) any bankruptcy case or insolvency proceeding involving
Borrower, any Financed Receivable, the Collateral, any Account Debtor, or any
Guarantor.

 

12.                               Choice of Law, Venue and Jury Trial Waiver. 
California law governs this Agreement.  Borrower and Bank each submit to the
exclusive jurisdiction of the State and Federal courts in Santa Clara County,
California.

 

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. 
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

13.                               Notices.  Notices or demands by either party
about this Agreement must be in writing and personally delivered or sent by an
overnight delivery service, by certified mail postage prepaid return receipt
requested, or by FAX to the addresses listed at the beginning of this
Agreement.  A party may change notice address by written notice to the other
party.

 

14.                               General Provisions.

 

14.1                        Successors and Assigns.  This Agreement binds and is
for the benefit of successors and permitted assigns of each party.  Borrower may
not assign this Agreement or any rights under it without Bank’s prior written
consent which may be granted or withheld in Bank’s discretion.  Bank may,
without the consent of or notice to Borrower, sell, transfer, or grant
participation in any part of Bank’s obligations, rights or benefits under this
Agreement.

 

14.2                        Indemnification.  Borrower will indemnify, defend
and hold harmless Bank and its officers, employees, and agents against:  (a)
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by this Agreement; and (b) losses
or expenses incurred, or paid by Bank from or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank’s gross negligence or willful misconduct.

 

14.3                        Time of Essence.  Time is of the essence for
performance of all obligations in this Agreement.

 

14.4                        Severability of Provision.  Each provision of this
Agreement is severable from every other provision in determining the
enforceability of any provision.

 

14.5                        Amendments in Writing, Integration.  All amendments
to this Agreement must be in writing.  This Agreement is the entire agreement
about this subject matter and supersedes prior negotiations or agreements.

 

14.6                        Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts and
when executed and delivered are one Agreement.

 

14.7                        Survival.  All covenants, representations and
warranties made in this Agreement continue in force while any Financed
Receivable amount remains outstanding.  Borrower’s indemnification obligations
survive until all statutes of limitations for actions that may be brought
against Bank have run.

 

14.8                        Confidentiality.  Bank will use the same degree of
care handling Borrower’s confidential information that it uses for its own
confidential information, but may disclose information:  (i) to its subsidiaries
or affiliates in connection with their business with Borrower, (ii) to
prospective transferees or purchasers of any interest in the Agreement, (iii) as
required by law, regulation, subpoena, or other order, (iv) as required in
connection with an examination or audit and (v) as it considers appropriate
exercising the remedies under this Agreement.  Confidential information does not
include information that is either:  (a) in the public domain or in Bank’s
possession when disclosed, or becomes part of the public domain after disclosure
to Bank; or (b) disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.

 

9

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14.9                        Other Agreements.  This Agreement may not adversely
affect Banks rights under any other document or agreement.  If there is a
conflict between this Agreement and any agreement between Borrower and Bank,
Bank may determine in its sole discretion which provision applies.  Borrower
acknowledges that any security agreements, liens and/or security interests
securing payment of Borrower’s Obligations also secure Borrower’s Obligations
under this Agreement and are not adversely affected by this Agreement. 
Additionally, (a) any Collateral under other agreements or documents between
Borrower and Bank secures Borrowers Obligations under this Agreement and (b) a
default by Borrower under this Agreement is a default under agreements between
Borrower and Bank.

 

 

BORROWER:

MICRO COMPONENT TECHNOLOGY, INC.,

 

a Minnesota corporation

 

By

 

 

Title

 

 

 

BANK:

SILICON VALLEY BANK

 

By

 

 

Title

 

 

Effective Date:

 

 

 

10

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EXHIBIT A

 

The Collateral consists of all of Borrower’s right, title and interest in and to
the following:

 

All goods and equipment now owned or hereafter acquired, including, without
limitation, all machinery, fixtures, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

 

All inventory, now owned or hereafter acquired, including, without limitation,
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products including such inventory as is temporarily
out of Borrower’s custody or possession or in transit and including any returns
upon any accounts or other proceeds, including insurance proceeds, resulting
from the sale or disposition of any of the foregoing and any documents of title
representing any of the above;

 

All contract rights and general intangibles now owned or hereafter acquired,
including, without limitation, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, leases, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer discs, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind;

 

All now existing and hereafter arising accounts, contract rights, royalties,
license rights and all other forms of obligations owing to Borrower arising out
of the sale or lease of goods, the licensing of technology or the rendering of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower;

 

All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower’s Books relating to the foregoing;

 

All copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing;

 

All Borrower’s Books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions and
accessions to and proceeds thereof.

 

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EXHIBIT B

 

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SILICON VALLEY BANK

SPECIALTY FINANCE DIVISION

 

COMPLIANCE CERTIFICATE

 

I, as authorized officer of Micro Component Technology, Inc., a Minnesota
corporation (“Borrower”) certify under the Accounts Receivable Financing
Agreement (the “Agreement”) between Borrower and Silicon Valley Bank (“Bank”) as
follows.

 

Borrower represents and warrants for each Financed Receivable:

 

(a)          It is the owner with legal right to sell, transfer and assign it;

 

(b)         The correct amount is on the Invoice Transmittal and is not
disputed;

 

(c)          Payment is not contingent on any obligation or contract and it has
fulfilled all its obligations as of the Invoice Transmittal date;

 

(d)         It is based on an actual sale and delivery of goods and/or services
rendered, due to Borrower, it is not past due or in default, has not been
previously sold, assigned, transferred, or pledged and is free of any liens,
security interests and encumbrances;

 

(e)          There are no defenses, offsets, counterclaims or agreements for
which the Account Debtor may claim any deduction or discount;

 

(f)            It reasonably believes no Account Debtor is insolvent or subject
to any Insolvency Proceedings;

 

(g)         It has not filed or had filed against it proceedings and does not
anticipate any filing; and

 

(h)         Bank has the right to endorse and/ or require Borrower to endorse
all payments received on Financed Receivables and all proceeds of Collateral.

 

No representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statement contained in
the certificates or statement not misleading.

 

Additionally, Borrower represents and warrants as follows:

 

(a)              Borrower is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good standing in,
any state in which the conduct of its business or its ownership of property
requires that it be qualified.  The execution, delivery and performance of this
Agreement has been duly authorized, and do not conflict with Borrower’s
formations documents, nor constitute an Event of Default under any material
agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which or by which it is bound.

 

(b)             Borrower has good title to the Collateral. All inventory is in
all material respects of good and marketable quality, free from material
defects.

 

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(c)              Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act. 
Borrower is not engaged as one of its important activities in extending credit
for margin stock (under Regulations G, T and U of the Federal Reserve Board of
Governors).  Borrower has complied with the Federal Fair Labor Standards Act. 
Borrower has not violated any laws, ordinances or rules.  None of Borrower’s
properties or assets has been used by Borrower, to the best of Borrower’s
knowledge, by previous persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally.  Borrower has timely
filed all required tax returns and paid, or made adequate provision to pay, all
taxes.  Borrower has obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted.

 

(d)             All representations and warranties in the Agreement are true and
correct in all material respects on this date.

 

 

Sincerely,

 

 

 

SIGNATURE

 

 

 

TITLE

 

 

 

DATE

 

 

2

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SILICON VALLEY BANK

SPECIALTY FINANCE DIVISION

 

SECRETARY’S CERTIFICATE OF RESOLUTION

 

I, as Secretary of Micro Component Technology, Inc., a Minnesota corporation
(the “Corporation”), certify that at a meeting duly convened at which a quorum
was present the following resolutions were adopted by the Board of Directors of
the Corporation and that these resolutions have not been modified, amended, or
rescinded and remain effective as of today’s date.

 

It is resolved that any one of the following officers of the Corporation, whose
name, title and signature is below:

 

NAME

 

TITLE

 

SIGNATURE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

may act for Borrower and:

 

(a)          Sell the corporation’s accounts receivable to Bank;

 

(b)         Grant to Bank a security interest in any of the corporation’s
assets;

 

(c)          Execute and deliver certain agreements in connection with the sale
of receivables, and granting of security interests; and

 

(d)         Designate other individuals to request advances, pay fees and costs
and execute other documents or agreements (including documents or agreement that
waive the Corporation’s right to a jury trial) they think necessary to
effectuate these Resolutions.

 

Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.

 

I certify that the persons listed above are the Corporation’s officers with the
titles and signatures shown following their names and that these resolutions
have not been modified are currently effective.

 

X

 

 

*Secretary or Assistant Secretary

Date

 

X

 

 

* If the certifying officer is designated as a signer in these resolutions then
another corporate officer must also sign.

 

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