EXHIBIT 10.7
MASTER SECURITY
AGREEMENT
To:
LV Administrative
Services, Inc., as Agent
c/o Valens Capital Management,
LLC
335 Madison Avenue, 10 th
Floor
New York, NY 10017
Date: July 31, 2008
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 the Agent (as defined below)) 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 the Agent,
for the ratable benefit of the Creditor Parties (as defined in the
Securities Purchase Agreement referred to below), 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 (including, without limitation, the Restricted Account
(the “ Restricted Account ”) maintained at
Capital One, N.A. (Account Name: Micro Component
Technology, Inc., Account Number: 7017213614) referred to in
the Restricted Account Agreement), inventory, equipment, goods,
fixtures, documents, instruments (including, without limitation,
promissory notes), contract rights, commercial tort claims set
forth on Schedule B attached hereto, 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. Except as
otherwise defined herein, all capitalized terms used herein shall
have the meanings provided such terms in that certain Securities
Purchase Agreement dated as of the date hereof (as amended,
restated, modified and/or supplemented from time to time, the
“ Purchase Agreement ”) by and among the
Company, the Purchasers party thereto and LV Administrative
Services, Inc., as administrative and collateral agent for the
Purchasers (the “ Agent ”). All items of
Collateral which are defined in the UCC shall have the meanings set
forth in the UCC. For purposes hereof, the term “
UCC ” means the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of New York;
provided, that in the event that, by reason of mandatory provisions
of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, the Agent’s security interest in
any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other
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than the State of New York,
the term “ UCC ” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions of this Agreement relating to such
attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions; provided further, that to
the extent that the UCC is used to define any term herein
and
such term is defined
differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9
shall govern.
The term “
Obligations ” as used herein shall mean and include
all debts, liabilities and obligations owing by each Assignor to
any Creditor Party arising under, out of, or in connection with:
(i) the Purchase Agreement and (ii) the Related
Agreements (the Purchase Agreement and the Related Agreements, 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 any Creditor
Party, 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 Agent, for the benefit of the
Creditor Parties, 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 the Agent 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 attached hereto, and it will provide the Agent
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 the Agent 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
the Agent’s satisfaction within ten (10) days of the
creation thereof;
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it will, at its and the
other Assignors’ joint and several cost and expense, keep the
Collateral in good state of repair (ordinary wear and tear
excepted) and will not waste or destroy the same or any part
thereof other than ordinary course discarding of items no longer
used or useful in its or such other Assignors’
business;
it will not, without the
Agent’s 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 the
Agent’s 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 the
Agent to be held as cash collateral for the
Obligations;
(i) it will insure or cause the Collateral
to be insured in the Agent’s name (as an additional insured
and lender loss payee) against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as the
Agent shall specify in amounts and under policies by insurers
acceptable to the Agent and all premiums thereon shall be paid by
such Assignor and the policies delivered to the Agent. If any
such Assignor fails to do so, the Agent may procure such insurance
and the cost thereof shall be promptly reimbursed by the Assignors,
jointly and severally, and shall constitute Obligations;
it will expressly agree that if additional loss
payees and/or lender loss payees, other than the Agent, are named
to the Collateral, the Agent will always be assigned to first lien
position until all Obligations have been satisfied;
it will at all reasonable times allow the
Creditor Parties or their respective representatives free access to
and the right of inspection of the Collateral;
such Assignor (jointly and
severally with each other Assignor) hereby indemnifies and saves
the Agent and each other Creditor Party harmless from all loss,
costs, damage, liability and/or expense, including reasonable
attorneys’ fees, that the Agent and each other Creditor Party
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 the Agent, any other Creditor Party 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 the
Agent’s or any Creditor Party’s own gross negligence or
willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision);
all commercial tort claims
(as defined in the Uniform Commercial Code as in effect in the
State of New York) held by any Assignor are set forth on
Schedule B to this Master Security Agreement; each Assignor
hereby agrees that it shall promptly, and in any event within five
(5) Business Days after the same is acquired by it, notify the
Agent of any commercial tort claim acquired by it and unless
otherwise consented to in writing by the Agent, it shall enter into
a supplement to this Master Security Agreement granting to the
Agent a security interest for the ratable benefit of the Creditor
Parties in such commercial tort claim, securing the
Obligations.
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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;
any representation or warranty, or statement
made or furnished to the Agent or any other Creditor Party 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 repla
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