EXHIBIT NO. 10.5


 


MICRO
COMPONENT TECHNOLOGY, INC.AND CERTAIN OF ITS

SUBSIDIARIES MASTER SECURITY AGREEMENT


 


To:                              Laurus
Master Fund, Ltd.

c/o M&C Corporate Services Limited

P.O. Box 309 GT

Ugland House

South Church Street

George Town

Grand Cayman, Cayman Islands


 


Date: April 29,
2005


 


To Whom It May Concern:


 


To secure the payment of all Obligations (as hereafter defined), MICRO
COMPONENT TECHNOLOGY, INC., a Minnesota corporation (the “Company”), each of
the other undersigned parties (other than Laurus Master Fund, Ltd., (“Laurus”))
and each other entity that is required to enter into this Master Security
Agreement (each an “Assignor” and, collectively, the “Assignors”) hereby
assigns and grants to Laurus a continuing security interest in all of the
following property now owned or at any time hereafter acquired by such
Assignor, or in which such Assignor now has or at any time in the future may
acquire any right, title or interest (the “Collateral”): all cash, cash
equivalents, accounts, accounts receivable, deposit accounts, inventory,
equipment, goods, documents, instruments (including, without limitation,
promissory notes), contract rights, general intangibles (including, without
limitation, payment intangibles and an absolute right to license on terms no less
favorable than those current in effect among such Assignor’s affiliates),
chattel paper, supporting obligations, investment property (including, without
limitation, all partnership interests, limited liability company membership
interests and all other equity interests owned by any Assignor),
letter-of-credit rights, trademarks, trademark applications, tradestyles,
patents, patent applications, copyrights, copyright applications and other
intellectual property in which such Assignor now has or hereafter may acquire
any right, title or interest, all proceeds and products thereof (including,
without limitation, proceeds of insurance) and all additions, accessions and
substitutions thereto or therefor.  In
the event any Assignor wishes to finance the acquisition in the ordinary course
of business of any hereafter acquired equipment and has obtained a written
commitment from an unrelated third party financing source to finance such
equipment, Laurus shall release its security interest on such hereafter acquired
equipment so financed by such third party financing source.  Except as otherwise defined herein, all
capitalized terms used herein shall have the meanings provided such terms in
the Securities Purchase Agreement referred to below.


 





















 


The term “Obligations” as used herein shall mean and include all debts,
liabilities and obligations owing by each Assignor to Laurus arising under, out
of, or in connection with: (i) that certain Securities Purchase Agreement
dated as of the date hereof by and between the Company and Laurus (the “Securities
Purchase Agreement”) and (ii) the Related Agreements referred to in the
Securities Purchase Agreement (the Securities Purchase Agreement and each
Related Agreement, as each may be amended, modified, restated or supplemented
from time to time, collectively, the “Documents”), and in connection with any
documents, instruments or agreements relating to or executed in connection with
the Documents or any documents, instruments or agreements referred to therein
or otherwise, and in connection with any other indebtedness, obligations or
liabilities of each such Assignor to Laurus, whether now existing or hereafter
arising, direct or indirect, liquidated or unliquidated, absolute or
contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise, including, without
limitation, obligations and liabilities of each Assignor for post-petition
interest, fees, costs and charges that accrue after the commencement of any
case by or against such Assignor under any bankruptcy, insolvency,
reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in
each case, irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against any Assignor
under any Debtor Relief Law.


 


Each Assignor hereby jointly and severally represents, warrants and
covenants to Laurus that:


 


it is a corporation, partnership or limited liability company, as the
case may be, validly existing, in good standing and formed under the respective
laws of its jurisdiction of formation set forth on Schedule A, and each
Assignor will provide Laurus thirty (30) days’ prior written notice of any
change in any of its respective jurisdiction of formation;


 


its legal name is as set forth in its Certificate of Incorporation or
other organizational document (as applicable) as amended through the date
hereof and as set forth on Schedule A, and it will provide Laurus thirty
(30) days’ prior written notice of any change in its legal name;


 


its organizational identification number (if applicable) is as set
forth on Schedule A hereto, and it will provide Laurus thirty (30) days’
prior written notice of any change in its organizational identification number;


 


it is the lawful owner of its Collateral and it has the sole right to
grant a security interest therein and will defend the Collateral against all
claims and demands of all persons and entities;


 


it will keep its Collateral free and clear of all attachments, levies,
taxes, liens, security interests and encumbrances of every kind and nature (“Encumbrances”),
except (i) Encumbrances securing the Obligations and (ii) Encumbrances
securing indebtedness of each such Assignor not to exceed $50,000 in the
aggregate for all such Assignors so long as all such Encumbrances are removed
or otherwise released to Laurus’ satisfaction within ten (10) days of the
creation thereof;


 


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it will, at its and the other Assignors’ joint and several cost and
expense keep the Collateral in good state of repair (ordinary wear and tear
excepted) and will not waste or destroy the same or any part thereof other than
ordinary course discarding of items no longer used or useful in its or such
other Assignors’ business;


 


it will not, without Laurus’ prior written consent, sell, exchange,
lease or otherwise dispose of any Collateral, whether by sale, lease or
otherwise, except for the sale of inventory in the ordinary course of business
and for the disposition or transfer in the ordinary course of business during
any fiscal year of obsolete and worn-out equipment or equipment no longer
necessary for its ongoing needs, having an aggregate fair market value of not
more than $25,000 and only to the extent that:


 


the proceeds of each such disposition are used to acquire replacement
Collateral which is subject to Laurus’ first priority perfected security
interest, or are used to repay the Obligations or to pay general corporate
expenses; or


 


following the occurrence of an Event of Default which continues to
exist the proceeds of which are remitted to Laurus to be held as cash
collateral for the Obligations;


 


it will insure or cause the Collateral to be insured in Laurus’ name
(as an additional insured and loss payee) against loss or damage by fire,
theft, burglary, pilferage, loss in transit and such other hazards as Laurus
shall specify in amounts and under policies by insurers acceptable to Laurus
and all premiums thereon shall be paid by such Assignor and the policies delivered
to Laurus.  If any such Assignor fails to
do so, Laurus may procure such insurance and the cost thereof shall be promptly
reimbursed by the Assignors, jointly and severally, and shall constitute
Obligations;


 


it will at all reasonable times allow Laurus or Laurus’ representatives
free access to and the right of inspection of the Collateral; [and]


 


such Assignor (jointly and severally with each other Assignor) hereby
indemnifies and saves Laurus harmless from all loss, costs, damage, liability
and/or expense, including reasonable attorneys’ fees, that Laurus may sustain
or incur to enforce payment, performance or fulfillment of any of the
Obligations and/or in the enforcement of this Master Security Agreement or in
the prosecution or defense of any action or proceeding either against Laurus or
any Assignor concerning any matter growing out of or in connection with this
Master Security Agreement, and/or any of the Obligations and/or any of the
Collateral except to the extent caused by Laurus’ own gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and nonappealable decision).


 


The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Master Security Agreement:


 


any covenant or any other term or condition of this Master Security
Agreement is breached in any material respect and such breach, to the extent
subject to cure, shall continue without remedy for a period of fifteen (15)
days after the occurrence thereof;


 


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any representation or warranty, or statement made or furnished to
Laurus under this Master Security Agreement by any Assignor or on any Assignor’s
behalf should prove to any time be false or misleading in any material respect
on the date as of which made or deemed made;


 


the loss, theft, substantial damage, destruction, sale or encumbrance
to or of any of the Collateral or the making of any levy, seizure or attachment
thereof or thereon except to the extent:


 


such loss is covered by insurance proceeds which are used to replace
the item or repay Laurus; or


 


said levy, seizure or attachment does not secure indebtedness in excess
of $100,000 in the aggregate for all Assignors and such levy, seizure or attachment
has been removed or otherwise released within ten (10) days of the
creation or the assertion thereof;


 


an Event of Default shall have occurred under and as defined in any
Document.


 


Upon the occurrence of any Event of Default and at any time thereafter,
Laurus may declare all Obligations immediately due and payable and Laurus shall
have the remedies of a secured party provided in the Uniform Commercial Code as
in effect in the State of New York, this Agreement and other applicable law.  Upon the occurrence of any Event of Default
and at any time thereafter, Laurus will have the right to take possession of
the Collateral and to maintain such possession on any Assignor’s premises or to
remove the Collateral or any part thereof to such other premises as Laurus may
desire.  Upon Laurus’ request, each
Assignor shall assemble or cause the Collateral to be assembled and make it
available to Laurus at a place designated by Laurus.  If any notification of intended disposition
of any Collateral is required by law, such notification, if mailed, shall be
deemed properly and reasonably given if mailed at least ten (10) days
before such disposition, postage prepaid, addressed to the applicable Assignor
either at such Assignor’s address shown herein or at any address appearing on
Laurus’ records for such Assignor.  Any
proceeds of any disposition of any of the Collateral shall be applied by Laurus
to the payment of all expenses in connection with the sale of the Collateral,
including reasonable attorneys’ fees and other legal expenses and disbursements
and the reasonable expenses of retaking, holding, preparing for sale, selling,
and the like, and any balance of such proceeds may be applied by Laurus toward
the payment of the Obligations in such order of application as Laurus may
elect, and each Assignor shall be liable for any deficiency.  For the avoidance of doubt, following the
occurrence and during the continuance of an Event of Default, Laurus shall have
the immediate right to withdraw any and all monies contained in any deposit
account in the name of any Assignor and controlled by Laurus and apply same to
the repayment of the Obligations (in such order of application as Laurus may
elect).


 


If any Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on such
Assignor’s part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Laurus may, at its option without waiving its right to
enforce this Master Security Agreement according to its terms, immediately or
at any time thereafter and without notice to any Assignor, perform or fulfill
the same or cause the performance or fulfillment of the same for each Assignor’s
joint and several account and at


 


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each Assignor’s joint and several cost and expense, and the cost and
expense thereof (including reasonable attorneys’ fees) shall be added to the
Obligations and shall be payable on demand with interest thereon at the highest
rate permitted by law, or, at Laurus’ option, debited by Laurus from any other
deposit accounts in the name of any Assignor and controlled by Laurus.


 


Each Assignor appoints Laurus, any of Laurus’ officers, employees or
any other person or entity whom Laurus may designate as such Assignor’s
attorney, with power to execute such documents in each such Assignor’s behalf
and to supply any omitted information and correct patent errors in any
documents executed by any Assignor or on any Assignor’s behalf; to file
financing statements against such Assignor covering the Collateral (and, in
connection with the filing of any such financing statements, describe the
Collateral as “all assets and all personal property, whether now owned and/or
hereafter acquired” (or any substantially similar variation thereof)); to sign
such Assignor’s name on public records; and to do all other things Laurus deem
necessary to carry out this Master Security Agreement.  Each Assignor hereby ratifies and approves
all acts of the attorney and neither Laurus nor the attorney will be liable for
any acts of commission or omission, nor for any error of judgment or mistake of
fact or law other than gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision).  This power being coupled with an interest, is
irrevocable so long as any Obligations remains unpaid.


 


No delay or failure on Laurus’ part in exercising any right, privilege
or option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default shall operate as a waiver of any other default
or of the same default on a future occasion. 
Laurus’ books and records containing entries with respect to the
Obligations shall be admissible in evidence in any action or proceeding, shall
be binding upon each Assignor for the purpose of establishing the items therein
set forth and shall constitute prima facie proof thereof.  Laurus shall have the right to enforce any
one or more of the remedies available to Laurus, successively, alternately or
concurrently.  Each Assignor agrees to
join with Laurus in executing such documents or other instruments to the extent
required by the Uniform Commercial Code in form satisfactory to Laurus and in
executing such other documents or instruments as may be required or deemed
necessary by Laurus for purposes of affecting or continuing Laurus’ security
interest in the Collateral.


 


THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.  All of the rights,
remedies, options, privileges and elections given to Laurus hereunder shall
inure to the benefit of Laurus’ successors and assigns.  The term “Laurus” as herein used shall
include Laurus, any parent of Laurus’, any of Laurus’ subsidiaries and any
co-subsidiaries of Laurus’ parent, whether now existing or hereafter created or
acquired, and all of the terms, conditions, promises, covenants, provisions and
warranties of this Agreement shall inure to the benefit of each of the
foregoing, and shall bind the representatives, successors and assigns of each
Assignor.


 


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Each Assignor hereby consents and agrees that the state or federal
courts located in the County of New York, State of New York shall have
exclusive jurisdiction to hear and determine any claims or disputes between
Assignor, on the one hand, and Laurus, on the other hand, pertaining to this
Master Security Agreement or to any matter arising out of or related to this
Master Security Agreement, provided, that Laurus and each Assignor acknowledges
that any appeals from those courts may have to be heard by a court located
outside of the County of New York, State of New York, and further provided,
that nothing in this Master Security Agreement shall be deemed or operate to
preclude Laurus from bringing suit or taking other legal action in any other
jurisdiction to collect, the Obligations, to realize on the Collateral or any
other security for the Obligations, or to enforce a judgment or other court
order in favor of Laurus.  Each Assignor
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and each Assignor hereby waives any objection
which it may have based upon lack of personal jurisdiction, improper venue or forum
non  conveniens.  Each
Assignor hereby waives personal service of the summons, complaint and other
process issues in any such action or suit and agrees that service of such
summons, complaint and other process may be made by registered or certified
mail addressed to such assignor at the address set forth on the signature lines
hereto and that service so made shall be deemed completed upon the earlier of
such Assignor’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.


 


The parties desire that their disputes be resolved by a judge applying
such applicable laws.  Therefore, to
achieve the best combination of the benefits of the judicial system and of
arbitration, the parties hereto waive all rights to trial by jury in any
action, suite, or proceeding brought to resolve any dispute, whether arising in
contract, tort, or otherwise between Laurus, and/or any Assignor arising out
of, connected with, related or incidental to the relationship established
between them in connection with this Master Security Agreement or the
transactions related hereto.


 


It is understood and agreed that any person or entity that desires to
become an Assignor hereunder, or is required to execute a counterpart of this
Master Security Agreement after the date hereof pursuant to the requirements of
any Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to Laurus and with all documents and
actions required above to be taken to the reasonable satisfaction of Laurus.


 


All notices from Laurus to any Assignor shall be sufficiently given if
mailed or delivered to such Assignor’s address set forth below.


 


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  Very truly
  yours,

  
	
   

  	
  MICRO
  COMPONENT TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger E.
  Gower

  	
   

  
	
   

  	
  Name: Roger
  E. Gower

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
  Address:

  	
  2340 West
  County Road C

  
	
   

  	
   

  	
  St. Paul, MN
  55113-2528

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MCT
  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o Micro
  Coponent Technology, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C

  
	
   

  	
   

  	
  St. Paul, MN
  55113-2528

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MCT ASIA
  PTE. LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul, Minnesota
  55113-2528

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
  (651) 697-4200

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MCT ASIA
  (PENANG) SDN. BHD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name:  Thomas P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul,
  Minnesota 55113-2528

  
	
   

  	
  Attention:
  Facsimile: (651) 697-420

  
													



 


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  MCT
  PHILIPPINES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul,
  Minnesota 55113-2528

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
  (651) 697-4200

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEIJING MCT
  CO. LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul,
  Minnesota 55113-2528

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
  (651) 697-4200

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MCT (HONG
  KONG) LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul,
  Minnesota 55113-2528

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
  (651) 697-4200

  
					



 


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  ASECO
  (MALAYSIA) SDN. BHD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name: Thomas
  P. Maun - Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address: c/o
  Micro Component

  Technologies, Inc.

  
	
   

  	
   

  	
  2340 West
  County Road C,

  
	
   

  	
   

  	
  St. Paul,
  Minnesota 55113-2528

  
	
   

  	
  Attention:

  
	
   

  	
  Facsimile:
  (651) 697-4200

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED:

  
	
   

  	
   

  
	
   

  	
  LAURUS
  MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:/s/
  Eugene Grim

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Director

  
						



 


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