Document:

EXHIBIT NO. 10.4

 

THIS OPTION AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THIS OPTION AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS OPTION MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS OPTION UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO MICRO COMPONENT TECHNOLOGY, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

Right to Purchase up to 2,556,651 Shares of
Common Stock of Micro Component Technology, Inc.

(subject to adjustment as provided herein)

 

OPTION

 

	
  No.

  	
   

  	
  Issue Date: April 29, 2005

  

 

MICRO COMPONENT TECHNOLOGY, INC., a corporation organized under the
laws of the State of Minnesota (“Company”), hereby certifies that, for value
received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company (as defined
herein) from and after the Issue Date of this Option and at any time or from
time to time, up to 2,556,651 fully paid and nonassessable shares of Common
Stock (as hereinafter defined), $0.01 par value per share, at the applicable
Exercise Price per share (as defined below). 
The number and character of such shares of Common Stock and the
applicable Exercise Price per share are subject to adjustment as provided
herein.

 

As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

 

The term “Company” shall include Micro Component Technology, Inc.
and any corporation that shall succeed, or assume the obligations of, Micro
Component Technology, Inc. hereunder.

 

The term “Common Stock” includes (i) the Company’s Common Stock,
$.01 par value per share; and (ii) any other securities into which or for
which any of the securities described in (a) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

The “Exercise Price” applicable under this Option shall be a price of
$0.01 per share.

 

 

The term “Other Securities” refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the Holder at any time shall be entitled to receive, or shall
have received, on the exercise of the Option, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4
or otherwise.

 

1.                                       Exercise
of Option.

 

Number of Shares Issuable upon Exercise.  From and after the date hereof, the Holder
shall be entitled to receive, upon exercise of this Option in whole or in part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the “Exercise Notice”), shares of Common
Stock of the Company, subject to adjustment pursuant to Section 4.  Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to exercise this Option in
connection with that number of shares of Common Stock which would exceed the
difference between (i) 4.99% of the issued and outstanding shares of
Common Stock and (ii) the number of shares of Common Stock beneficially
owned by the Holder.  For the purposes of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder.  The limitation described in
the second sentence of this Section 1.1 shall automatically become null
and void without any notice to the Company upon the occurrence and during the
continuance beyond any applicable grace period of an Event of Default under and
as defined in that certain Secured Convertible Term Note dated as of the date
hereof among the Holder and the Company, as amended, modified or supplemented
from time to time, or upon 75 days prior notice by the Holder to the Company.

 

Fair Market Value.  For purposes hereof, the “Fair Market Value”
of a share of Common Stock as of a particular date (the “Determination Date”)
shall mean:

 

If the Company’s Common Stock is traded on the American Stock Exchange
or another national exchange or is quoted on the National or SmallCap Market of
The Nasdaq Stock Market, Inc. (“Nasdaq”), then the closing or last sale
price, respectively, reported for the last business day immediately preceding
the Determination Date.

 

If the Company’s Common Stock is not traded on the American Stock
Exchange or another national exchange or on the Nasdaq but is quoted on the
NASD Over The Counter Bulletin Board, then the mean of the average of the
closing bid and asked prices reported for the last business day immediately
preceding the Determination Date.

 

Except as provided in clause (d) below, if the Company’s Common
Stock is not publicly traded, then as the Holder and the Company agree or in
the absence of agreement by arbitration in accordance with the rules then
in effect of the American Arbitration Association, before a single arbitrator
to be chosen from a panel of persons qualified by education and training to
pass on the matter to be decided.

 

If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s charter,

 

2

 

then all amounts to be payable per share to holders of the Common Stock
pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon
exercise of the Option are outstanding at the Determination Date.

 

Company Acknowledgment.  The Company will, at the time of the exercise
of the Option, upon the request of the Holder hereof acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holder
shall continue to be entitled after such exercise in accordance with the
provisions of the Option.  If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.

 

Trustee for Option Holders.  In the event that a bank or trust company
shall have been appointed as trustee for the Holder of the Option pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and
duties of an option agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Option pursuant to this Section 1.

 

1.5                                 Shareholder
Approval.  Notwithstanding anything
herein to the contrary, Holder shall not be entitled to exercise this Option
for in excess of 1,500,000 shares in the aggregate unless and until the Company
has received shareholder approval of a sufficient increase in its number of
authorized shares.

 

2.                                       Procedure
for Exercise.

 

2.1                                 Delivery
of Stock Certificates, Etc., on Exercise. 
The Company agrees that the shares of Common Stock purchased upon
exercise of this Option shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date on which
this Option shall have been surrendered and payment made for such shares in
accordance herewith.  As soon as
practicable after the exercise of this Option in full or in part, and in any
event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for the
number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

 

2.2                                 Exercise.

 

Subject to subsection (b) below, payment shall be made in
cash or by certified or official bank check payable to the order of the Company
equal to the applicable aggregate Exercise Price

 

3

 

for the number of Common Shares specified in such Exercise Notice (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the terms of this
Option) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.

 

Notwithstanding any provisions herein to the contrary, in the event
there is no effective registration statement with respect to the shares
issuable upon exercise of this Option or an Event of Default (as such term is
defined in the Secured Convertible Term Note dated as of the date hereof among
the Holder and the Company, as amended, modified, restated and/or supplemented
from time to time) has occurred and is continuing, if the Fair Market Value of
one share of Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Option for cash,
the Holder may elect to receive shares equal to the value (as determined below)
of this Option (or the portion thereof being exercised) by surrender of this
Option at the principal office of the Company together with the properly
endorsed Exercise Notice in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

 

X=Y                        (A-B)

A

 

Where X =                                      the
number of shares of Common Stock to be issued to the Holder

 

Y =                              the
number of shares of Common Stock purchasable under the Option or, if only a
portion of the Option is being exercised, the portion of the Option being
exercised (at the date of such calculation)

 

A =                            the
Fair Market Value of one share of the Company’s Common Stock (at the date of
such calculation)

 

B =                              Exercise
Price (as adjusted to the date of such calculation)

 

3.                                       Effect
of Reorganization, Etc.; Adjustment of Exercise Price.

 

3.1                                 Reorganization,
Consolidation, Merger, Etc.  In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Option, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

 

4

 

3.2                                 Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where applicable)
receivable by the Holder pursuant to Section 3.1, or, if the Holder shall
so instruct the Company, to a bank or trust company specified by the Holder and
having its principal office in New York, NY as trustee for the Holder (the “Trustee”).

 

3.3                                 Continuation
of Terms.  Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Option shall continue in full force
and effect and the terms hereof shall be applicable to the shares of stock and
other securities and property receivable on the exercise of this Option after
the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be, and
shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Option as provided
in Section 4.  In the event this
Option does not continue in full force and effect after the consummation of the
transactions described in this Section 3, then the Company’s securities
and property (including cash, where applicable) receivable by the Holders will
be delivered to Holder or the Trustee as contemplated by Section 3.2.

 

4.                                       Extraordinary
Events Regarding Common Stock.  In
the event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock or any
preferred stock issued by the Company, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the
Common Stock into a smaller number of shares of the Common Stock (each of the
preceding clauses (a) through (c), inclusive, an “Event”), then, in each
such event, the number of shares of Common Stock that the Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled
to receive shall be increased or decreased to a number determined by
multiplying the number of shares of Common Stock that would, immediately prior
to such Event, be issuable upon the exercise of this Option by a fraction of
which (a) the numerator is the number of issued and outstanding shares of
Common Stock immediately after such Event, and (b) the denominator is the
number of issued and outstanding shares of Common Stock immediately prior to
such Event.

 

5.                                       Certificate
as to Adjustments.  In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Option, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee
to compute such adjustment or readjustment in accordance with the terms of the
Option and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or
receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of
Common Stock to be received upon exercise of this Option, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Option.  The Company will
forthwith mail a copy of each such

 

5

 

certificate to the Holder and any Option agent of the Company
(appointed pursuant to Section 10 hereof).

 

6.                                       Reservation
of Stock, Etc., Issuable on Exercise of Option.  Subject to shareholder approval of an
increase in the number of the Company’s authorized shares, which the Company
shall cause to occur on or prior to July 31, 2005, the Company will at all
times reserve and keep available, solely for issuance and delivery on the
exercise of the Option, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of the Option.

 

7.                                       Assignment;
Exchange of Option.  Subject to
compliance with applicable securities laws, this Option, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”)
in whole or in part.  On the surrender
for exchange of this Option, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, the provision of a
legal opinion from the Transferor’s counsel (at the Company’s expense) that
such transfer is exempt from the registration requirements of applicable
securities laws, and with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a
new Option of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Option so surrendered by
the Transferor.

 

8.                                       Replacement
of Option.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Option and, in the case of any such loss, theft or destruction
of this Option, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Option, the Company at its
expense will execute and deliver, in lieu thereof, a new Option of like tenor.

 

9.                                       Registration
Rights.  The Holder has been granted
certain registration rights by the Company. 
These registration rights are set forth in a Registration Rights
Agreement entered into by the Company and Holder dated as of even date of this
Option.

 

10.                                 Option
Agent.  The Company may, by written
notice to each Holder of the Option, appoint an agent for the purpose of
issuing Common Stock (or Other Securities) on the exercise of this Option
pursuant to Section 1, exchanging this Option pursuant to Section 7,
and replacing this Option pursuant to Section 8, or any of the foregoing,
and thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.

 

11.                                 Transfer
on the Company’s Books.  Until this
Option is transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

6

 

12.                                 Notices,
Etc.  All notices and other
communications from the Company to the Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such Holder
furnishes to the Company an address, then to, and at the address of, the last
Holder who has so furnished an address to the Company.

 

13.                                 Miscellaneous.  THIS OPTION AND ANY TERM HEREOF MAY BE CHANGED,
WAIVED, DISCHARGED OR TERMINATED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE
PARTY AGAINST WHICH ENFORCEMENT OF SUCH CHANGE, WAIVER, DISCHARGE OR
TERMINATION IS SOUGHT. THIS OPTION SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.  Any action brought
concerning the transactions contemplated by this Option shall be brought only
in the state courts of New York or in the federal courts located in the state
of New York; provided, however, that the Holder may choose to waive this
provision and bring an action outside the state of New York.  The individuals executing this Option on
behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury.  The prevailing
party shall be entitled to recover from the other party its reasonable attorney’s
fees and costs.  In the event that any
provision of this Option is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. 
Any such provision which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision of
this Option.  The headings in this Option
are for purposes of reference only, and shall not limit or otherwise affect any
of the terms hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof. 
The Company acknowledges that legal counsel participated in the
preparation of this Option and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Option to favor any party
against the other party.

 

 

	
   

  	
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IN WITNESS WHEREOF, the
Company has executed this Option as of the date first written above.

 

	
   

  	
  MICRO COMPONENT

  
	
   

  	
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
  WITNESS:

  	
  /s/ Thomas P. Maun

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger E.
  Gower

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  	
   

  
							

 

7EXHIBIT 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;

 

2

 

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;

 

3

 

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

 

4

 

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.

 

5

 

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.

 

6

 

	
   

  	
  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

  
													

 

7

 

	
   

  	
  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

  
					

 

8

 

	
   

  	
  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

  
						

 

9

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