Document:

<PAGE>   1
EXHIBIT 4.2

                         VIRTUAL TECHNOLOGY CORPORATION

                     [FORM OF] COMMON STOCK PURCHASE WARRANT

          Virtual Technology Corporation, a Minnesota corporation (the
"Company"), hereby agrees that, for $          value received,

                    is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time on or after December
   , 1999, and before 5:00 p.m., Minneapolis, Minnesota time, on December     ,
2004,                (       ) shares (subject to reduction and other

adjustments below) of the Company's Common Stock, par value $.001 per share, at
an exercise price of $0.50 per share (the "Warrant Shares").

1. Exercise of Warrant. The purchase rights granted by this Warrant shall be
exercised (in minimum quantities of 100 Warrant Shares) by the holder
surrendering this Warrant with the form of exercise attached hereto duly
executed by such holder, to the Company at its principal office, accompanied by
payment, in cash or by wire transfer or cashier's check payable to the order of
the Company, of the purchase price payable in respect of the Warrant Shares
being purchased. If less than all of the Warrant Shares purchasable hereunder
are purchased, the Company will, upon such exercise, execute and deliver to the
holder hereof a new Warrant (dated the date hereof) evidencing the number of
Warrant Shares not so purchased. As soon as practicable after the exercise of
this Warrant and payment of the purchase price, the Company will cause to be
issued in the name of and delivered to the holder hereof, or as such holder may
direct, a certificate or certificates representing the Warrant Shares purchased
upon such exercise. The Company may require that such certificate or
certificates contain on the face thereof a legend substantially as follows:

          "The transfer of the shares represented by this certificate is
          restricted pursuant to the terms of a Common Stock Purchase Warrant
          dated December    , 1999, issued by Virtual Technology Corporation, a
          copy of which is available for inspection at the offices of the
          Company. Transfer may not be made except in accordance with the terms
          of the Common Stock Purchase Warrant. In addition, no sale, offer to
          sell or transfer of the shares represented by this certificate shall
          be made without (i) the opinion of counsel satisfactory to the Company
          that such sale, offer, or transfer may be made without registration or
          qualification under the Securities Act of 1933, as amended, and
          applicable state securities laws or (ii) such registration or
          qualification."

2. Negotiability and Transfer. This Warrant is issued upon the following terms,
to which each holder hereof consents and agrees:

          (a) Until this Warrant is duly transferred on the books of the
          Company, the Company may treat the registered holder of this Warrant
          as absolute owner hereof for all purposes without being affected by
          any notice to the contrary.

          (b) Each successive holder of this Warrant, or of any portion of the
          rights represented thereby, shall be bound by the terms and conditions
          set forth herein.

3. Redemption Rights and Adjustments of this Warrant Related Thereto. At any
time that this Warrant is outstanding and has not been exercised in any part,
the holder hereof may demand in writing

<PAGE>   2

the redemption of the right to acquire [1/2] of the Warrant Shares hereunder
(the "Secured Warrant Portion") for $[the original purchase price]. If the
holder receives good funds from the Company upon such redemption demand within
seven (7) calendar days of the date of such redemption demand, then the right to
acquire the Warrant Shares upon exercise of the Secured Warrant Portion shall
lapse. If the holder does not receive good funds from the Company upon such
redemption demand within such seven (7) calendar days, then no such reduction in
this Warrant shall take effect, but the right of the holder to be paid the
$[original purchase price] shall continue absolutely. In no event shall the
redemption of the Secured Warrant Portion affect the holder's right to exercise
this Warrant with respect to the other [1/2] of the Warrant Shares purchasable
hereunder.

4. Antidilution Adjustments. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of Common Stock, or declare a
dividend payable in Common Stock, the exercise price in effect immediately prior
to the subdivision, combination, or record date for such dividend payable in
Common Stock shall forthwith be proportionately increased, in the case of
combination, or proportionately decreased, in the case of subdivision or
declaration of a dividend payable in Common Stock, and the number of Warrant
Shares purchasable upon exercise of this Warrant immediately preceding such
event, shall be changed to the number determined by dividing the then current
exercise price by the exercise price as adjusted after such subdivision,
combination, or dividend payable in Common Stock and multiplying the result of
such division against the number of Warrant Shares purchasable upon the exercise
of this Warrant immediately preceding such event, so as to achieve an exercise
price and number of Warrant Shares purchasable after such event proportional to
such exercise price and number of Warrant Shares purchasable immediately
preceding such event. All calculations hereunder shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. No
fractional Warrant Shares are to be issued upon the exercise of this Warrant,
but the Company shall pay a cash adjustment in respect of any fraction of a
share which would otherwise be issuable in an amount equal to the same fraction
of the market price per share of Common Stock on the day of exercise as
determined in good faith by the Company. In case of any capital reorganization
or any reclassification of the shares of Common Stock of the Company, or in the
case of any consolidation with or merger of the Company into or with another
corporation, or the sale of all or substantially all of its assets to another
corporation, which is effected in such a manner that the holders of Common Stock
shall be entitled to receive stock, securities, or assets with respect to or in
exchange for Common Stock, then, as a part of such reorganization,
reclassification, consolidation, merger, or sale, as the case may be, lawful
provision shall be made so that the holder of the Warrant shall have the right
thereafter to receive, upon the exercise hereof, the kind and amount of shares
of stock or other securities or property which the holder would have been
entitled to receive if, immediately prior to such reorganization,
reclassification, consolidation, merger, or sale, the holder had held the number
of Warrant Shares which were then purchasable upon the exercise of the Warrant.
In any such case, appropriate adjustment (as determined in good faith by the
Board of Directors of the Company) shall be made in the application of the
provisions set forth herein with respect to the rights and interest thereafter
of the holder of the Warrant, to the end that the provisions set forth herein
(including provisions with respect to adjustments of the exercise price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
the Warrant. When any adjustment is required to be made in the exercise price,
initial or adjusted, the Company shall forthwith determine the new exercise
price and (a) prepare and retain on file a statement describing in reasonable
detail the method used in arriving at the new exercise price and (b) cause a
copy of such statement to be mailed to

                                      -2-

<PAGE>   3

the holder of the Warrant as of a date within ten (10) days after the date when
the circumstances giving rise to the adjustment occurred.

5. Demand Registration Rights. The Company agrees to use its best efforts by
April 1, 2000 to file a registration statement under the Securities Act of 1933,
as amended (the "Act"), on Form S-1 (or if available, on Form S-2 or S-3)
covering all or such part of the Warrant Shares, and all or such part of any
other shares of Common Stock of the Company underlying options, warrants or
other rights to acquire such securities then held by such original holder, as to
which the original holder may prior to April 1, 2000 request registration of in
writing.

        (a) Obligations of Holder. It shall be a condition precedent to the
obligation of the Company to register any Warrant Shares or other Common Stock
pursuant to this Section 5 that the original holder hereof shall furnish to the
Company such information regarding the Warrant Shares or other Common Stock held
by such seller and the intended method of disposition thereof and other
information concerning the seller as the Company shall reasonably request and as
shall be required in connection with the registration statement to be filed by
the Company.

        (b) Registration Procedures. If and whenever the Company is required by
the provisions of this Section 5 to effect the registration under the Act of
Warrant Shares or other Common Stock owned by the original holder hereof, until
the Common Stock covered by such registration statement has been sold or for
nine (9) months after effectiveness, whichever is the shorter period of time,
the Company shall:

            (i) Prepare and file with the Securities and Exchange Commission
("SEC") and/or any applicable state securities agency a registration statement
with respect to such Common Stock and use its best efforts to cause such
registration statement to become and remain effective within 60 days after the
demand for registration made hereunder by the original holder;

            (ii) Prepare and file such amendments to such registration statement
and supplements to the prospectus contained therein as may be necessary to keep
such registration statement effective;

            (iii) Furnish to the original holder hereunder such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such holder may reasonably request in
order to facilitate the public offering of its securities;

            (iv) Notify the original holder hereunder promptly after it shall
receive notice thereof of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;

            (v) Notify the original holder hereunder promptly of any request by
the SEC or applicable state securities agency for the amending or supplementing
of such registration statement or prospectus or for additional information;

            (vi) Prepare and file promptly upon the request of the original
holder hereunder any amendments or supplements to such registration statement or
prospectus which, in the opinion of

                                      -3-

<PAGE>   4
counsel to the original holder hereunder, are required under the Act or the
rules and regulations thereunder in connection with the distribution of Common
Stock by such holder;

          (vii) Prepare and promptly file with the SEC and promptly notify the
original holder hereunder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred, the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;

          (viii) In case the original holder hereunder is required to deliver a
prospectus at a time when the prospectus then in circulation is not in
compliance with the Act, the Company will prepare and file such supplements or
amendments to such registration statement and such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of the Act;

          (ix) Advise the original holder hereunder, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and

          (x) Not file any amendment or supplement to such registration
statement or prospectus to which the original holder hereunder shall reasonably
have objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Act or the rules and
regulations thereunder, after having been furnished with a copy thereof at least
two (2) business days prior to the filing thereof.

     (c) Expenses. With respect to the inclusion of shares of Common Stock in a
registration statement pursuant to this Section 5, all reasonable fees, costs,
and expenses of and incidental to such registration, inclusion and public
offering in connection therewith shall be borne by the Company; provided,
however, that the original holder hereof shall bear its pro rata share of any
underwriting discounts and commissions and shall bear any fees and disbursements
of accountants and counsel retained by it (other than accountants and counsel
also retained by the Company).

     (d) Adjustment in Number of Warrants if Registration Statement not Timely
Effected. If the Company fails to obtain effectiveness on or before May 31,
2000, of the registration statement demanded above by the original holder
hereof, then ipso facto and without any action on the part of the original
holder hereof or the Company, this Warrant will automatically be adjusted to
represent the right to purchase twice the number of Warrant Shares (i.e.,
Warrant Shares if the Secured Warrant Portion has been redeemed       or Warrant
Shares if the Secured Warrant Portion has not been redeemed).

6.   Notices. The Company shall mail to the registered holder of the Warrant, at
     its last known post office address appearing on the books of the Company,
     not less than fifteen (15) days prior to the date on which (a) a record
     will be taken for the purpose of determining the holders of shares of
     Common Stock

                                      -4-

<PAGE>   5

entitled to dividends (other than cash dividends) or subscription rights or (b)
a record will be taken (or in lieu thereof, the transfer books will be closed)
for the purpose of determining the holders of common stock entitled to notice of
and to vote at a meeting of shareholders at which any capital reorganization,
reclassification of common stock, consolidation, merger, dissolution,
liquidation, winding up, or sale of substantially all of the Company's assets
shall be considered and acted upon. Any other notice or communication required
or permitted hereunder shall in writing and shall be deemed to have been given,
when received, if delivered by hand, telegram, telex or telecopy, and, when
deposited, if placed in the mails for delivery by air mail, postage prepaid,
addressed to the appropriate party as specified on the first page of this
Agreement. Addresses may be changed by written notice given pursuant to this
Section; however, any such notice shall not be effective, if mailed, until three
(3) working days after depositing in the mails or when actually received,
whichever occurs first.

7.   Reservation of Common Stock. A number of shares of Common Stock sufficient
to provide for the exercise of the Warrant and the Warrant Shares included
therein upon the basis herein set forth shall at all times be reserved for the
exercise thereof.

8.    Miscellaneous. Whenever reference is made herein to the issue or sale of
shares of Common Stock, the term "Common Stock" shall include any stock of any
class of the Company other than preferred stock that has a fixed limit on
dividends or a payment preference in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company. The Company will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, or sale of assets, or by any other voluntary
act or deed, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations, or conditions to be observed or performed hereunder by
the Company, but will, at all times in good faith, assist, insofar as it is
able, in the carrying out of all provisions hereof and in the taking of all
other action which may be necessary in order to protect the rights of the holder
hereof against dilution. Upon written request of the holder of this Warrant, the
Company will promptly provide such holder with a then current written list of
the names and addresses of all holders of warrants originally issued under the
terms of, and concurrent with, this Warrant. The representations, warranties,
and agreements herein contained shall survive the exercise of this Warrant. This
Common Stock Purchase Warrant shall be interpreted under the laws of the State
of Minnesota, exclusive of its conflict of laws rules. All Warrant Shares or
other securities issued upon the exercise of the Warrant shall be validly
issued, fully paid, and nonassessable, and the Company will pay all taxes in
respect of the issuer thereof. Notwithstanding anything contained herein to the
contrary, the holder of this Warrant shall not be deemed a shareholder of the
Company for any purpose whatsoever until and unless this Warrant is duly
exercised.

          IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
signed by its duly authorized officer this      day of December, 1999.

                               VIRTUAL TECHNOLOGY CORPORATION

                               By:
                                  ----------------------------------------

                               Its:
                                   ---------------------------------------

                                      -5-

<PAGE>   6

                              WARRANT EXERCISE FORM

                   To be signed only upon exercise of Warrant.

     The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,            of the Warrant Shares of Virtual Technology
Corporation to which such Warrant relates and herewith makes payment of $
therefore in cash, wire transfer or by certified check, and requests that such
Warrant Shares be issued and be delivered to the address for which is set forth
below the signature of the undersigned.

           Dated:
                 ---------------------

                                   -------------------------------------
                                   (Taxpayer's I.D. Number)

                                   -------------------------------------
                                   (Signature)

                                   -------------------------------------

                                   -------------------------------------
                                   (Address)

                                      -6-

<PAGE>   7

                 SECURED WARRANT PORTION REDEMPTION DEMAND FORM

          To be signed for redemption demand as to the Secured Warrant Portion
of this Warrant.

          The undersigned, the original holder of the within Warrant, hereby
demands redemption of the Secured Warrant Portion of this Warrant for the
redemption price of $[original purchase price], such amount being due seven (7)
calendar days from the date below.

           Dated:
                 ---------------------

                                    --------------------------------------

                                    By
                                      ------------------------------------

                                    Its
                                       -----------------------------------

                                      -7-<PAGE>   1
EXHIBIT 10.7

Coast Business Credit(R)

                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

BORROWER:         VIRTUAL TECHNOLOGY CORPORATION
ADDRESS:          3100 WEST LAKE STREET, SUITE 410
                  MINNEAPOLIS, MN 55416

BORROWER:         GTI ACQUISITION CORPORATION
ADDRESS:          7615 GOLDEN TRIANGLE DRIVE, SUITE G
                  MINNEAPOLIS, MN 55344

BORROWER:         T2 ACQUISITION CORPORATION
ADDRESS:          6698 SHADY OAK ROAD
                  EDEN PRAIRIE, MN 55344

DATE:             DECEMBER 10, 1999

THIS FIRST AMENDMENT TO THE LOAN AND SECURITY AGREEMENT is entered into as of
the above date between COAST BUSINESS CREDIT, a division of Southern Pacific
Bank ("Coast"), a California corporation, with offices at 12121 Wilshire
Boulevard, Suite 1400, Los Angeles, California 90025, and Virtual Technology
Corporation, GTI Acquisition Corporation and T2 Acquisition Corporation (jointly
and severally, the "Borrower") whose chief executive offices are located
respectively at the above addresses ("Borrower's Addresses"). This Amendment
shall for all purposes be deemed to be a part of the Loan and Security Agreement
("Loan Agreement"), and the same is an integral part of the Loan Agreement.

                              CONSENT AND APPROVAL

1.   Coast hereby consents and approves Borrower's request to add T2 Acquisition
     Corporation, a Minnesota Corporation ("T2") as a co-borrower, jointly and
     severally liable for all Obligations under the Loan Agreement and all
     documents related thereto (collectively, "Loan Documents").

2.   T2 agrees to be bound by all of the terms and conditions in the Loan
     Documents, and to be liable, jointly and severally, for all Obligations
     thereunder whether now existing or hereinafter arising.

                                    AMENDMENT

                                       1

<PAGE>   2

1.   The Loan Documents are hereby amended in all respects to define Borrower to
     include, jointly and severally, T2. All other terms and conditions, as
     amended, shall remain the same, and are hereby ratified and affirmed.

2.   Section 2.1 (b) of the Schedule shall be amended as follows:

              "Inventory  Loans,  subject  to  an  appraisal  acceptable  to
              Coast, in an amount not to exceed the lesser of:

              (1)  Fifty percent (50%) of
                   the value of Virtual
                   Technology Corporation
                   and GTI Acquisition
                   Corporation's Eligible
                   Inventory (as defined
                   in Section 1 of the
                   Agreement), calculated
                   at the lower of cost
                   or market value and
                   determined on a
                   first-in, first-out
                   basis, plus

              (2)  Forty-five percent
                   (45%) of the value of
                   T2 Acquisition
                   Corporation's Eligible
                   Inventory (as defined
                   in Section 1 of the
                   Agreement), calculated
                   at the lower of cost
                   or market value and
                   determined on a
                   first-in, first-out
                   basis, or

              (3)  Five Million Dollars
                   ($5,000,000.00), plus"

3.   Section 2 of the Schedule is hereby amended to add the following
     sub-paragraph at the end of the existing section:

          "The availability of the Inventory Loans advanced against T2's
     Eligible Inventory, as set forth in Section 2.1 (b) (2), is subject to
     Coast's receipt of a final appraisal of the T2 Inventory being not less
     than fifty percent (50%) of Orderly Liquidation Value."

4.   Section 3.2 of the Schedule entitled "Facility Fee" is hereby amended to
     substitute "$6,000" in place of "$5,000".

5.   Section 8.1 of the Schedule is hereby amended to add the following
     sub-paragraphs:

          "17. Virtual Technology Corporation ("VTC") shall execute and issue an
     additional warrant to Coast with respect to shares of voting common stock
     of VTC representing 250,000 shares of common stock with a term of three (3)
     years and an aggregate exercise price equal to the average stock price of
     the past thirty (30) trading days immediately preceding the date of the
     First Amendment to the Loan and Security Agreement. The warrant shall
     include standard and customary issuer representations, warranties and such
     other provisions as Coast shall require, in form and substance acceptable
     to Coast.

                                       2

<PAGE>   3

     18. Borrower shall as of January 1, 2000, and at all times thereafter,
maintain a minimum consolidated Tangible Net Worth of not less than a negative
Three Million Five Hundred Thousand Dollars ($3,500,000.00), measured monthly."

6. Section 8.3 of the Schedule is hereby amended to add the following
   sub-paragraph:

     "Quarterly inventory appraisals (desktop only), as soon as available, and
in any event within forty-five (45) days after the end of each fiscal quarter of
Borrower."

7. Section 9.1 of the Schedule entitled "Maturity Date" is hereby amended to
   substitute "March 31, 2003" in place of "March 31, 2002".

8. Section 9.1 of the Schedule entitled "Early Termination Fee" is hereby
   amended to read as follows:

           "An amount equal to the greater of (i) an amount equal to all
   interest due and payable during the six (6) months immediately preceding the
   effective date of termination, or (ii) an amount equal to the average monthly
   interest due and payable based on the greater of the six (6) month monthly
   interest immediately preceding the effective date of termination or, if the
   effective date of termination is less than six (6) months from the Closing
   Date, an amount equal to the average monthly interest due hereunder
   multiplied by the number of full or partial months from the effective date of
   termination to the Maturity Date, or (iii) an amount equal to the average
   monthly interest accrued during the six (6) months immediately preceding the
   effective date of termination multiplied by the number of full or partial
   months from the effective date of termination to the Maturity Date."

                        VARIANCE FROM FINANCIAL COVENANTS

1. Coast hereby consents and agrees to waive Borrower's failure to comply with
   the minimum consolidated Tangible Net Worth provision set forth in Section
   8.1 (13) of the Schedule for the months September, 1999 and October, 1999,
   and only as to those two months.

   CONDITIONS PRECEDENT TO EFFECTIVENESS OF FIRST AMENDMENT

1. T2 shall comply with each and every condition precedent contained in the Loan
   Documents.

2. Borrowers' execution and return of this First Amendment.

3. Borrowers' execution and return of a Stock Pledge, in form and substance
   acceptable to Coast, pledging all of the stock of T2 as additional Collateral
   (as defined in Section 1 of the Loan and Security Agreement).

4. Borrower shall pay Coast a Restructuring Fee by way of an additional Warrant,
   in form and substance acceptable to Coast, for an additional 200,000 shares
   of VTC, as set forth above under Amendment Section 5.

                                       3
<PAGE>   4

5.   Borrower shall pay Coast a Waiver Fee by way of an additional Warrant, in
     form and substance acceptable to Coast, for an additional 50,000 shares of
     VTC, as set forth above under Amendment Section 5.

6.   Borrowers' execution and return of a Security Agreement in Patent and
     Trademarks, in form and substance acceptable to Coast, assigning rights in
     and to all trademarks acquired from Tech Squared, Inc.

7.   Borrowers' delivery of a fully executed assignment from Tech Squared, Inc.
     to T2 of Tech Squared, Inc.'s trademarks.

8.   Coast's receipt and approval of a fully executed copy of the Asset Purchase
     Agreement and all Schedules and Exhibits thereto between T2 and Tech
     Squared, Inc.

9.   Confirmation, in form and substance acceptable to Coast, that all
     conditions to the Tech Squared, Inc. Asset Purchase Agreement have been
     satisfied and title to all assets transferred to T2.

10.  Coast's receipt and approval of an Opinion of Counsel, in form and
     substance satisfactory to Coast, in connection with the transaction
     contemplated in this First Amendment.

11.  Confirmation, in form and substance acceptable to Coast, of Borrower's
     receipt in December 1999 of an equity infusion of not less than Two Million
     Dollars ($2,000,000.00).

     EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, ALL OF THE TERMS AND CONDITIONS OF
     THE LOAN AGREEMENT AND ALL OTHER DOCUMENTS AND AGREEMENTS BETWEEN COAST AND
     BORROWER, AS AMENDED, SHALL CONTINUE IN FULL FORCE AND EFFECT AND THE SAME
     ARE HEREBY RATIFIED AND AFFIRMED. THE WAIVERS CONTAINED HEREIN DO NOT
     CONSTITUTE A WAIVER OF ANY OTHER PROVISION OR TERM OF THE LOAN AGREEMENT
     NOR ANY RELATED DOCUMENT OR AGREEMENT, NOR AN AGREEMENT TO WAIVE ANY TERM
     OR CONDITION OF THE LOAN AGREEMENT NOR ANY RELATED DOCUMENT OR AGREEMENT IN
     THE FUTURE.

                      Signatures follow on separate page 5

Borrower:
VIRTUAL TECHNOLOGY CORPORATION

By:/s/ Gregory Appelhof
   ----------------------

                                       4

<PAGE>   5

      Gregory Appelhof, President

And by:   /s/ John Harvatine
       ---------------------
       John L. Harvatine, Chief Financial Officer

Borrower:
GTI ACQUISITION CORPORATION

By:  /s/ Gregory Appelhof
   ------------------------
   Gregory Appelhof, President

And by:   /s/ John Harvatine
       ---------------------
       John L. Harvatine, Chief Financial Officer

Coast:
COAST BUSINESS CREDIT

By:  /s/ Todd Davock
   ----------------------
   Todd Davock, Vice President

The undersigned hereby agrees to be bound by all of the terms and
conditions set forth in the Loan Documents, and further expressly agrees to
be liable, jointly and severally, for all outstanding Obligations existing
as of the date hereof and arising hereafter.

Borrower:
T2 ACQUISITION CORPORATION

By:    /s/ Gregory Appelhof
   -------------------------------
   Gregory Appelhof, President and Chief Executive Officer

And by:  /s/ John Harvatine
       --------------------------
       John L. Harvatine, Chief Financial Officer, Secretary and Treasurer

        Signature page to First Amendment to Loan and Security Agreement

                                       5

<PAGE>   6
EXHIBIT 10.7

COAST BUSINESS CREDIT(R)

                 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

BORROWER:         VIRTUAL TECHNOLOGY CORPORATION
ADDRESS:          3100 WEST LAKE STREET, SUITE 410
                  MINNEAPOLIS, MN 55416

BORROWER:         GTI ACQUISITION CORPORATION
ADDRESS:          7615 GOLDEN TRIANGLE DRIVE, SUITE G
                  MINNEAPOLIS, MN 55344

BORROWER:         T2 ACQUISITION CORPORATION
ADDRESS:          6698 SHADY OAK ROAD
                  EDEN PRAIRIE, MN 55344

DATE:             DECEMBER 15, 1999

THIS SECOND AMENDMENT TO THE LOAN AND SECURITY AGREEMENT is entered into as of
the above date between COAST BUSINESS CREDIT, a division of Southern Pacific
Bank ("Coast"), a California corporation, with offices at 12121 Wilshire
Boulevard, Suite 1400, Los Angeles, California 90025, and Virtual Technology
Corporation, GTI Acquisition Corporation and T2 Acquisition Corporation (jointly
and severally, the "Borrower") whose chief executive offices are located
respectively at the above addresses ("Borrower's Addresses"). This Amendment
shall for all purposes be deemed to be a part of the Loan and Security Agreement
("Loan Agreement"), and the same is an integral part of the Loan Agreement.

                                    RECITALS

1.   Coast and Borrower entered into a First Amendment to the Loan and Security
     Agreement as of December 10, 1999.

2.   Condition Precedent to Effectiveness of First Amendment No. 11 ("Condition
     No. 11") requires Borrower's receipt in December 1999 of an equity infusion
     of not less than Two Million Dollars ($2,000,000.00).

3.   Borrower has requested that Coast extend additional credit as if the First
     Amendment is effective even though Borrower, to date, is unable to satisfy
     Condition No. 11.

                                       1

<PAGE>   7

             LIMITED AND CONDITIONAL WAIVER FROM FINANCIAL COVENANTS

1.   Coast hereby consents and agrees to a limited, conditional waiver of
     Condition No. 11 as follows:

              (a) Coast will deem the First Amendment effective upon Coast's
                  receipt, in form and substance acceptable to Coast, of
                  Borrower's receipt of an equity infusion of not less than One
                  Million Dollars ($1,000,000.00) in December 1999.

                               CONDITION OF WAIVER

1.   On or before December 31, 1999, Borrower shall confirm its receipt, in form
     and substance acceptable to Coast, of a total equity infusion in December
     1999 of not less than Two Million Dollars ($2,000,000.00), inclusive of the
     One Million Dollars ($1,000,000.00) that is a condition precedent to the
     effectiveness of this Amendment.

                            AGREEMENT OF THE PARTIES

1.   Coast and Borrower agree that Borrower's failure to satisfy Condition of
     Waiver No. 1, above, shall be an Event of Default under the Loan Agreement.

     CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECOND AMENDMENT

1.   Borrowers' execution and return of this Second Amendment.

2.   Coast's receipt of confirmation, in form and substance acceptable to Coast,
     of Borrower's receipt of an equity infusion of not less than One Million
     Dollars ($1,000,000.00) in December 1999.

     EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN, ALL OF THE TERMS AND CONDITIONS OF
     THE LOAN AGREEMENT AND ALL OTHER DOCUMENTS AND AGREEMENTS BETWEEN COAST AND
     BORROWER, AS AMENDED, SHALL CONTINUE IN FULL FORCE AND EFFECT AND THE SAME
     ARE HEREBY RATIFIED AND AFFIRMED. THE WAIVERS CONTAINED HEREIN DO NOT
     CONSTITUTE A WAIVER OF ANY OTHER PROVISION OR TERM OF THE LOAN AGREEMENT
     NOR ANY RELATED DOCUMENT OR AGREEMENT, NOR AN AGREEMENT TO WAIVE ANY TERM
     OR CONDITION OF THE LOAN AGREEMENT NOR ANY RELATED DOCUMENT OR AGREEMENT IN
     THE FUTURE.

                  Signatures follow on separate page three (3)

Borrower:

                                       2

<PAGE>   8

VIRTUAL TECHNOLOGY CORPORATION

By:      /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President

And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer

Borrower:
GTI ACQUISITION CORPORATION

By:    /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President

And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer

Borrower:
T2 ACQUISITION CORPORATION

By:    /s/ Gregory Appelhof
   --------------------------------
   Gregory Appelhof, President and Chief Executive Officer

And by:  /s/ John Harvatine
       ----------------------------
       John L. Harvatine, Chief Financial Officer, Secretary and Treasurer

Coast:
COAST BUSINESS CREDIT

By:    /s/ Britt Terrell
   --------------------------------
   Britt Terrell, Vice President

        Signature page to Second Amendment to Loan and Security Agreement

                                       3

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