**EXHIBIT 10**

 

 

**SILICON VALLEY BANK**

**SPECIALTY FINANCE DIVISION**

 

**ACCOUNTS RECEIVABLE FINANCINGAGREEMENT**

 

This ACCOUNTS RECEIVABLE FINANCING AGREEMENT (the **“Agreement”**), dated as of the EffectiveDate is between Silicon Valley Bank, Specialty Finance Division of (**“Bank”**), and Micro Component Technology,Inc., a Minnesota corporation, (**“Borrower”**),whose address is at****2340 WestCounty 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 arisingaccounts, contract rights, and other obligations owed Borrower in connectionwith its sale or lease of goods (including licensing software and othertechnology) or provision of services,**allcredit insurance, guaranties, other security and all merchandise returned orreclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

**“Account Debtor”** is defined in the California UniformCommercial 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 ofcredit or banker’s acceptance.

 

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

 

**“Adjustments”** are all discounts, allowances, returns,disputes, counterclaims, offsets, defenses, rights of recoupment, rights ofreturn, warranty claims, or short payments, asserted by or on behalf of anyAccount 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, oranother 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 percentagepoints (6%).

 

**“Borrower’s Books”** are all Borrower’s books and recordsincluding ledgers, records regarding Borrower’s assets or liabilities, theCollateral, business operations or financial condition and all computerprograms 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 onbehalf 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 ofperformance 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 thisAgreement.

 

**“Event of Default”** is defined in ***Section 9*.**

 

**“Facility”** is an extension of credit by Bank toBorrower in order to finance receivables with an aggregate Account Balance notexceeding 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 andcontinuing until****June      ,2004, unless the period is terminated sooner by Bank with notice to Borrower orby 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 allproceeds, including their proceeds (collectively **“receivables”**), which Bank finances and make an Advance.  A Financed Receivable stops being a FinancedReceivable (but remains Collateral) when the Advance made for the FinancedReceivable has been finally paid.

 

**“Financed Receivable Balance”**is the total outstanding amount, at anytime, 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 afterthe invoice date; or

 

(b)                                 that is owed by an Account Debtor thathas filed, or has had filed against it, any bankruptcy case, assignment for thebenefit of creditors, receivership, or Insolvency Proceeding or who has becomeinsolvent (as defined in the United States Bankruptcy Code) or who is generallynot paying its debts as they become due; or

 

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

 

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

 

**“Insolvency Proceeding”**are proceedings by or against any personunder the United States Bankruptcy Code, or any other bankruptcy or insolvencylaw, 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 mayfinance and, for each receivable, includes the Account Debtor’s, name, address,invoice amount, invoice date and invoice number and is signed by Borrower’sauthorized representative.

 

**“Lockbox”**is described in ***Section 6.2*.**

 

**“Obligations”** are all advances, liabilities,obligations, covenants and duties owing, arising, due or payable by Borrower toBank now or later under this Agreement or any other document, instrument oragreement, account (including those acquired by assignment) primary orsecondary, 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 “primerate,” 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.**                                      Financingof Accounts Receivable.

** **

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

 

**2.2****                              ****Acceptance of AccountsReceivable**.  Bank is not obligated to finance anyaccounts receivable.  Bank may approveany Account Debtor’s credit before financing any receivable.  When Bank accepts a receivable, it will payBorrower the Advance Rate times the face amount of the receivable (the **“Advance”**).  Bank may, in its discretion, change the percentage of the AdvanceRate.  When Bank makes an Advance, thereceivable becomes a **“Financed Receivable.”**  All representations and warranties in ***Section 6***mustbe true as of the date of the Invoice Transmittal and of the Advance and noEvent of Default exists would occur as a result of the Advance.  The aggregate amount of all FinancedReceivables outstanding at any time may not exceed the Facility Amount.

 

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

 

**3.1****                              ****Collections**. Collections will be credited to the Financed Receivables Balance, but ifthere is an Event of Default, Bank may apply Collections to the Obligation inany order it chooses.   If Bank receivesa payment for both Financed Receivable and a non Financed Receivable, the fundswill first be applied to the Financed Receivable and, if there is not an Eventof 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 Collectionsreceived by Bank shall be deemed applied by Bank on account of the Obligations **three (3)** Business Days after receipt ofthe Collections.  Borrower will pay afinance charge (the **“Finance Charge”**),equal to the Applicable Rate times the number of days in the ReconciliationPeriod times the outstanding average daily Financed Receivable Balance for thatReconciliation Period. After an Event of Default, Obligations accrue interestat five percent (5%) above the Applicable Rate effective immediatelybefore 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 executionof this Agreement.

 

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**3.5****                              ****Collateral Handling Fee**. On each Reconciliation Day, Borrower will pay to Bank a collateralhandling fee, equal to one half of one percent (.50%) per month of the average dailyFinanced Receivable Balance outstanding during the applicable ReconciliationPeriod.  After an Event of Default, theCollateral 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 orinvoluntary full payment of the Obligations and termination of this Facilityprior to June      , 2003 unless the Obligationsare paid in full from an initial advance from a loan agreement with SiliconValley Bank.

 

**3.7****                              ****Accounting**. After each Reconciliation Period, Bank will provide an accounting of thetransactions for that Reconciliation Period, including the amount of allFinanced Receivables, all Collections, Adjustments, Finance Charges, theCollateral Handling Fee.  If Borrowerdoes not object to the accounting in writing within 30 days it is consideredcorrect.  All Finance Charges and otherinterest and fees calculated on the basis of a 360 day year and actual dayselapsed.

 

**3.8****                              ****Deductions**. Bank may deduct fees, finance charges and other amounts due from anyAdvances 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 diligencereview process.  Any portion of thedeposit 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 partyand Borrower and Bank must agree on such address.  If Bank collects all receivables and there is not an Event ofDefault or an event that with notice or lapse of time will be an Event ofDefault, within five (5) days of receipt of those collections, Bank will giveBorrower, the receivables collections it receives for receivables other thanFinanced Receivables and/or amount in excess of the amount for which Bank hasmade an Advance to Borrower, less any amount due to Bank, such as the FinanceCharge, Collateral Handling Fee and expenses or otherwise.  This Section does not impose anyaffirmative duty on Bank to do any act other than to turn over amounts.  All receivables and collections areCollateral and if an Event of Default occurs, Bank need not remit collectionsof Collateral and may apply them to the Obligations.

 

**4.**                                      Repaymentof Obligations.

 

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

 

**4.2****                              ****Repayment on Event ofDefault**.  When there is an Event of Default, Borrowerwill, 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, includethe Advance for each Financed Receivable then outstanding and all accrued FinanceCharges, Collateral Handling Fees, attorneys and professional fees, court costsand expenses, and any other Obligations.

 

**5.****                                     ****Power of Attorney**. Borrower irrevocably appoints Bank and its successors and assigns itattorney-in-fact and authorizes Bank, regardless of whether there has been anEvent of Default, to:

 

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

 

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

 

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Receivables, includingfiling a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’sname, 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 ormechanics’ lien or similar document;

 

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

 

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

 

(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 FinancedReceivables and Collateral; and

 

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

 

**6.**                                      Representations,Warranties and Covenants.

** **

**6.1****                              ****Representations andWarranties**.  Borrower represents and warrants for eachFinanced Receivable:

 

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

 

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

 

(c)                                  Payment is not contingent on anyobligation or contract and it has fulfilled all its obligations as of theInvoice Transmittal date;

 

(d)                                 It is based on an actual sale anddelivery of goods and/or services rendered, due to Borrower, it is not past dueor in default, has not been previously sold, assigned, transferred, or pledgedand 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 anydeduction or discount;

 

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

 

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

 

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

 

(i)                                     No representation, warranty or otherstatement of Borrower in any certificate or written statement given to Bankcontains any untrue statement of a material fact or omits to state a materialfact necessary to make the statement contained in the certificates or statementnot misleading.

 

**6.2****                              ****AdditionalRepresentations and Warranties**.  Borrowerrepresents and warrants as follows:

 

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

 

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Borrower’s organizationaldocuments, nor constitute an Event of Default under any material agreement bywhich Borrower is bound.  Borrower isnot 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 ofgood and marketable quality, free from material defects.

 

(c)          Borrower is not an **“investmentcompany”** or a company **“controlled”**by an **“investment company”** underthe Investment Company Act.  Borrower isnot engaged as one of its important activities in extending credit for marginstock (under Regulations G, T and U of the Federal Reserve Board ofGovernors).  Borrower has complied withthe Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules. None ofBorrower’s properties or assets has been used by Borrower, to the best ofBorrower’s knowledge, by previous persons, in disposing, producing, storing,treating, or transporting any hazardous substance other than legally.  Borrower has timely filed all required taxreturns 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, andgiven all notices to, all government authorities that are necessary to continueits business as currently conducted.

 

**6.3****                              ****AffirmativeCovenants**.  Borrowerwill do all of the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)         Provide Bank with: (i) a Compliance Certificate on amonthly  basis to be received by Bank nolater than 30 days following each Reconciliation Date, or on a more frequent orother basis if and as requested by Bank;

 

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

 

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

 

(j)             Remit all payments for Accounts to the Bank by theclose of business on each Friday along with a detailed cash receipts journal andshall immediately notify and direct all of the Borrower’s Account Debtors tomake all payments for Borrower’s Accounts to a lockbox account established withthe Bank (**“Lockbox”**) or to wiretransfer payments to a cash

 

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collateral account thatBank controls. It will be considered an immediate Event of Default if theLockbox is not set-up and operational within 45 days from the date of thisAgreement.

 

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

 

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

 

(m)       Within ninety (90) days following the Effective Dateof this Agreement, Borrower will maintain its primary operating depositaccounts with Bank.

 

**6.4****                              ****NegativeCovenants**.  Borrowerwill not do any of the following without Bank’s prior written consent:

 

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

 

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

 

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

 

(d)         Become an **“investmentcompany”** or a company controlled by an **“investment company,”** under the Investment Company Act of 1940or undertake as one of its important activities extending credit to purchase orcarry margin stock, or use the proceeds of any Advance for that purpose; failto meet the minimum funding requirements of ERISA, permit a Reportable Event orProhibited Transaction, as defined in ERISA, to occur; fail to comply with theFederal Fair Labor Standards Act or violate any other law or regulation, orpermit 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 setforth in ***Section 6*,**Borrower will promptly advise Bank. Borrower will resell any rejected, returned, or recovered personalproperty for Bank, at Borrower’s expense, and pay proceeds to Bank.  While Borrower has returned goods that areBorrower property, Borrower will segregate and mark them “property of SiliconValley Bank.”  Bank owns the FinancedReceivables and until receipt of payment, has the right to take possession ofany rejected, returned, or recovered personal property.

 

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

 

**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 whendue;

 

(b)         Borrower files or has filed against it any InsolvencyProceedings or any assignment for the benefit of creditors, or appointment of areceiver or custodian for any of its assets;

 

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

 

(d)         Any involuntary lien, garnishment, attachment attachesto 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, instrumentor agreement evidencing any debt, obligation or liability in favor of Bank itsaffiliates or vendors regardless of whether the debt, obligation or liabilityis direct or indirect, primary or secondary, or fixed or contingent;

 

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

 

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

 

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

 

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

 

(i)              A material impairment in the perfection or priorityof the Bank’s security interest in the Collateral; (ii) a material adversechange in the business, operations, or conditions (financial or otherwise) ofthe Borrower occurs; or (iii) a material impairment of the prospect ofrepayment 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 receivablesor extending credit to Borrower; (2) at Banks option and on demand, all or aportion 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 theObligations any (i) balances and deposits of Borrower it holds, or (ii) anyamount 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*** forthe Collateral, and the right to collect, dispose of, sell, lease, use, andrealize upon all Financed Receivables and Collateral in any commercialmanner.  Borrower agrees that any noticeof sale required to be given to Borrower is deemed given if at least five daysbefore the sale may be held.

 

**10.2****                       ****Demand Waiver**. Borrower waives demand, notice of default or dishonor, notice of paymentand 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 isliable.

 

**10.3****                       ****Default Rate**. If any amount is not paid when due, the amount bears interest at theApplicable Rate plus five percent until the earlier of (a) payment in goodfunds or (b) entry of a final judgment when the principal amount of any moneyjudgment 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 feeswith costs and expenses) that Bank incurs from:  (a) preparing, negotiating, administering, and enforcing thisAgreement or related agreement, including any amendments, waivers or consents,(b) any litigation or dispute relating to the Financed Receivables, theCollateral, this Agreement or any other agreement, (c) enforcing any rightsagainst Borrower or any guarantor, or any Account Debtor, (d) protecting orenforcing 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 proceedinginvolving Borrower, any Financed Receivable, the Collateral, any AccountDebtor, or any Guarantor.

 

**12.****                              ****Choice of Law, Venue andJury Trial Waiver**.  California law governs thisAgreement.  Borrower and Bank eachsubmit to the exclusive jurisdiction of the State and Federal courts in SantaClara County, California.

 

**BORROWER AND BANK EACH WAIVE THEIRRIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASEDUPON THIS AGREEMENT OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT,BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FORBOTH 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 inwriting and personally delivered or sent by an overnight delivery service, bycertified mail postage prepaid return receipt requested, or by FAX to theaddresses listed at the beginning of this Agreement.  A party may change notice address by written notice to the otherparty.

 

**14.**                               GeneralProvisions.

** **

**14.1****                       ****Successors and Assigns**. This Agreement binds and is for the benefit of successors and permittedassigns of each party.  Borrower may notassign this Agreement or any rights under it without Bank’s prior writtenconsent which may be granted or withheld in Bank’s discretion.  Bank may, without the consent of or noticeto Borrower, sell, transfer, or grant participation in any part of Bank’sobligations, 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 inconnection with the transactions contemplated by this Agreement; and (b) lossesor expenses incurred, or paid by Bank from or consequential to transactionsbetween 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 thisAgreement.

 

**14.4****                       ****Severability ofProvision**.  Each provision of this Agreement isseverable from every other provision in determining the enforceability of anyprovision.

 

**14.5****                       ****Amendments in Writing,Integration**.  All amendments to this Agreement must be inwriting.  This Agreement is the entireagreement about this subject matter and supersedes prior negotiations oragreements.

 

**14.6****                       ****Counterparts**. This Agreement may be executed in any number of counterparts and bydifferent parties on separate counterparts and when executed and delivered areone Agreement.

 

**14.7****                       ****Survival**. All covenants, representations and warranties made in this Agreementcontinue in force while any Financed Receivable amount remainsoutstanding.  Borrower’s indemnificationobligations survive until all statutes of limitations for actions that may bebrought against Bank have run.

 

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

 

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

 

 
| BORROWER:       | **MICRO COMPONENT TECHNOLOGY, INC**., |
|-----------------|---------------------------------------|
|            | a  Minnesota corporation              |
|            |
| By              |                                  |   |
| Title           |                                  |   |
|            |
| BANK:           | **SILICON VALLEY BANK**               |
|            |
| By              |                                  |   |
| Title           |                                  |   |
| Effective Date: |                                  |   |
|                 |                                       |  |  |  |  |  |  |  |

 

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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 hereafteracquired, including, without limitation, all machinery, fixtures, vehicles(including motor vehicles and trailers), and any interest in any of theforegoing, 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 includingsuch inventory as is temporarily out of Borrower’s custody or possession or intransit and including any returns upon any accounts or other proceeds,including insurance proceeds, resulting from the sale or disposition of any ofthe foregoing and any documents of title representing any of the above;

 

All contract rights and general intangibles now ownedor hereafter acquired, including, without limitation, goodwill, trademarks,service marks, trade styles, trade names, patents, patent applications, leases,license agreements, franchise agreements, blueprints, drawings, purchaseorders, 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 obligationsowing to Borrower arising out of the sale or lease of goods, the licensing oftechnology or the rendering of services by Borrower, whether or not earned byperformance, and any and all credit insurance, guaranties, and other securitytherefor, as well as all merchandise returned to or reclaimed by Borrower;

 

All documents, cash, deposit accounts, securities,securities entitlements, securities accounts, investment property, financialassets, letters of credit, certificates of deposit, instruments and chattelpaper now owned or hereafter acquired and Borrower’s Books relating to theforegoing;

 

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

 

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

 

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**EXHIBIT B**

 

******

**SILICON VALLEY BANK**

**SPECIALTY FINANCE DIVISION**

 

# Compliance Certificate

#  

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

 

**Borrower represents and warrants foreach Financed Receivable:**

 

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

 

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

 

(c)          Payment is not contingent on anyobligation or contract and it has fulfilled all its obligations as of theInvoice Transmittal date;

 

(d)         It is based on an actual sale anddelivery of goods and/or services rendered, due to Borrower, it is not past dueor in default, has not been previously sold, assigned, transferred, or pledgedand 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 anydeduction or discount;

 

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

 

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

 

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

 

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

 

**Additionally, Borrower represents andwarrants as follows:**

 

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

 

(b)             Borrower has good title to theCollateral. All inventory is in all material respects of good and marketablequality, 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 InvestmentCompany Act.  Borrower is not engaged asone 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 StandardsAct.  Borrower has not violated anylaws, ordinances or rules.  None ofBorrower’s properties or assets has been used by Borrower, to the best ofBorrower’s knowledge, by previous persons, in disposing, producing, storing,treating, or transporting any hazardous substance other than legally.  Borrower has timely filed all required taxreturns 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, andgiven all notices to, all government authorities that are necessary to continueits business as currently conducted.

 

(d)             All representations and warranties in theAgreement 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 OFRESOLUTION**

 

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

 

It is resolved that **anyone**of the following officers of the Corporation, whose name, titleand signature is below:

 
| **NAME** |   | **TITLE** |   | **SIGNATURE** |
|----------|--------|-----------|--------|---------------|
|     |   |      |   |          |
|     |   |      |   |          |
|     |   |      |   |          |
|     |   |      |   |          |
|     |   |      |   |          |

 

may act for Borrower and:

 

(a)          Sell the corporation’s accountsreceivable to Bank;

 

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

 

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

 

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

 

**F**urther resolved that all acts authorized by theseResolutions and performed before they were adopted are ratified. TheseResolutions remain in effect and Bank may rely on them until Bank receiveswritten notice of their revocation.

 

**I**certify that the persons listed above are theCorporation’s officers with the titles and signatures shown following theirnames and that these resolutions have not been modified are currentlyeffective.

 
| **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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