**Exhibit 10.3**

 

**FINANCING AGREEMENT**

 

**THIS FINANCINGAGREEMENT**(the “Financing Agreement”) is effective asof May 6, 2002, by and between **EXCELERATE TECHNOLOGIES, LLC,** aMassachusetts limited liability company with a principal place of business at70 Walnut Street, Wellesley, Massachusetts (“Excelerate”), and **AUGUSTTECHNOLOGY CORPORATION,** a Minnesota corporation with a principalplace of business at 4900 West 78th Street, Bloomington, Minnesota55435 (“August Technology”).

 

**RECITALS**

 

A.           AugustTechnology loaned to Excelerate Five Hundred Thousand U.S. Dollars ($500,000and hereafter the “Amount”) on or around May 6, 2002 per the terms of theConvertible Promissory Note of May 6, 2002 (the “Note”).

 

B.             Inconjunction with the Note, Excelerate has agreed to provide collateral for theloan using certain software defined herein (the “Collateral”) for the benefitof August Technology should Excelerate default.

 

**NOW THEREFORE,**basedupon the foregoing premises, and in consideration of the covenants andagreements herein contained, Excelerate and August Technology hereby agree asfollows:

 

**1.****                   Creationand Perfection of License**

(a.)       TheCollateral is defined as all of the software deposited in escrow per the EscrowAgreement between the parties, including but not limited to: Metrology DataViewer (also known as MDV), SmartSampler and WaferBrowser.

 

(b.)      Assecurity for due performance and payment in full by Excelerate of the Note (the“Obligations”), Excelerate hereby grants to August Technology an irrevocable,worldwide, non-exclusive license and interest (the “License”) in the Collateralif and only if Excelerate defaults as described below in Section 6.

 

(c)          Underthe License, August Technology will continue to pay to Excelerate all paymentsrequired by the OEM Software Development Agreement and the Work Orders issuedpursuant thereto (collectively, the “OEM Agreement”), provided, however, thatfrom and after the date that Excelerate defaults or a Bankruptcy occurs (asdescribed in Section 6 below), all such payments by August Technology *first*shall be set-off against amounts owed by Excelerate under the Note, and *second*,after the Note has been paid in full, shall be payable in cash to Excelerate asprovided in the OEM Agreement.  However,in the event of an Insolvency Event (as defined in Section 6), the Licenseshall thereupon convert into a royalty free, fully paid up License, and noother payments will be required from August Technology for its continued use ofthe Collateral pursuant to the License.

 

(d.)      TheLicense created herein shall attach to the Collateral immediately upon adefault.

 

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(e)          Althoughthe License created herein is non-exclusive, to the extent, and for so long as,any separate agreement between August Technology and Excelerate grants AugustTechnology an exclusive license, August Technology’s license under suchseparate agreement shall continue to be exclusive.  This Financing Agreement is not intended to modify theexclusivity of any such other license agreement.

 

**2.****                   NoTransfer, Further Encumbering, Etc.**

August Technology agrees that the rights granted to August Technologyhereunder are personal to August Technology, and until a Default occurs (asdefined in Section 6 below), August Technology may not directly or indirectlysell, assign, transfer, convey or encumber the Collateral, or any part thereofor interest therein, or any of its rights hereunder, or permit any such actionto be taken, by operation of law or otherwise without the prior written consentof Excelerate except where at least fifty percent (50%) of August Technology’soutstanding shares are acquired by a third party whereby Excelerate shall notunreasonably withhold its written consent of an assignment.

 

**3.****                   ContinuousInterest**

Excelerate agrees that until Excelerate has paid in full allobligations of Excelerate under the Note, or until termination of thisFinancing Agreement by August Technology, all rights, powers and remediesgranted to August Technology hereunder shall continue to exist, may not revokedby Excelerate at any time, as long as the Financing Agreement is still ineffect.

 

**4.****                   Taxes,Charges and Liens**

Excelerate agrees to pay any and all taxes, charges, liens andassessment, if any, against the Collateral, arising from and after the datehereof and upon the failure of Excelerate to do so, August Technology in itsdiscretion may pay any of such taxes, charges, liens and assessments.  Amounts so paid, together with interest at10% per annum, shall be a lien upon the Collateral, and shall be secured by asecurity agreement until reimbursed.

 

**5.****                   Rightto Create License**

Excelerate hereby represents and warrants to August Technology that onand as of the effective date of this Financing Agreement, Excelerate has theabsolute right and authority to enter into this Financing Agreement and herebycreates in favor of August Technology a valid and binding License in theCollateral upon Default, subject to no prior liens, charges, encumbrances orright of any other person or entity that would diminish or otherwise reduceAugust Technology’s License.

 

**6.****                   RemediesUpon Default**

In the event Excelerate enters bankruptcy (either voluntarily orinvoluntarily for the purpose of reorganization) (a “Bankruptcy”), or in theevent of any material default by Excelerate regarding Excelerate’s obligationsto August Technology under the Note, or in the event that Excelerate ceases toconduct business without the occurrence of a Bankruptcy or is declaredinsolvent by a court of law, arbitrator, or any governmental agency (other thanthrough a Bankruptcy for reorganization) (any such event, an “InsolvencyEvent”), then the following shall occur.

 

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August Technology immediately and irrevocably receives the License andthen has the right to use, make, sell, import, offer to sell, improve, and makederivative works from.  AugustTechnology may require Excelerate or the Escrow Agent under the EscrowAgreement between the parties to assemble all or any part of the Collateralincluding source and object code and make it available to August Technology ata place to be designated by August Technology, which is reasonably convenientto Excelerate and August Technology. August Technology and any assign thereof after a Default shall hold theCollateral absolutely free from any claim or right of whatsoever kind,including any equity or right of redemption of Excelerate, any infringementclaims by Excelerate, or any other claims by Excelerate.

 

**7.****                   Termination**

This Financing Agreement shall terminate upon the cancellation of theNote or the payment in full of all of Excelerate’s obligations under the Note,at which time the Collateral shall be fully released such that any Defaultthereafter does not result in the License created hereby under for a Default,and any and all instruments delivered to August Technology hereunder shallautomatically expire and terminate.  Insuch event, August Technology shall promptly execute and deliver to Exceleratea written release and cancellation hereof, and take any and all additionalaction reasonably requested by Excelerate to restore full rights of theCollateral in Excelerate.

 

**8.****                   Successorsand Assigns**

This Financing Agreement shall inure to the benefit of and be bindingupon the successors and assigns of Excelerate and August Technology.  Any License created hereunder is fullyassignable and/or transferable.

 

**9.****                   NoWaiver**

Any forbearance or failure to exercise any right, power or remedyhereunder shall not be deemed to be a waiver of such right, power or remedy,and any single or partial exercise of any right, power or remedy shall notpreclude the further exercise thereof.

 

**10.****            EntireAgreement; Termination of Security Agreement**

This Financing Agreement constitutes the entire and final agreement ofthe parties respecting the subject matter herein, and this Financing Agreementshall not be modified except by a written instrument signed by theparties.  This Financing Agreementsupersedes the Security Agreement between Excelerate and August Technology,which Security Agreement is hereby terminated without further action by theparties.

 

**11.****            GoverningLaw**

This Financing Agreement shall be construed in accordance with andgoverned by the laws of the State of Minnesota.

 

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**IN WITNESS WHEREOF,**theparties hereto have executed this Financing Agreement the date and year firstabove written.

 

 
|   | **EXCELERATE  TECHNOLOGIES, LLC.** |
|--------|------------------------------------|
|   |                               |
|   | By:                                | /s/ Baljit Singh |   |
|   |                               | Baljit Singh |
|   |                               | Its:  President & CEO |
|   |                               |   |
|   |                               |   |
|   | **AUGUST  TECHNOLOGY CORPORATION** |
|   |                               |
|   | By:                                | /s/ John M. Vasuta |   |
|   |                               | John M. Vasuta |
|   |                               | Its:  VP & General Counsel |
|        |                                    |  |  |  |

 

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