EXHIBIT 10CC

 

 

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

 

SECURED REVOLVING NOTE

 

FOR VALUE RECEIVED, MICRO COMPONENT TECHNOLOGY, INC., a Minnesota corporation
(the “Borrower”), promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the “Holder”) or its
registered assigns, on order, the sum of TWO MILLION TWO HUNDRED FIFTY THOUSAND
($2,250,000) without duplication of any amounts owing by Borrower to Holder
under the Minimum Borrowing Notes (as defined in the Security Agreement referred
to below), or, if different, the aggregate principal amount of all “Loans” (as
such term is defined in the Security Agreement referred to below), together with
any accrued and unpaid interest hereon, on March 9, 2007 (the “Maturity Date”).

 

Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Security Agreement between Borrower and the Holder
dated as of March 8, 2004 (as amended, modified and supplemented from time to
time, the “Security Agreement”).

 

The following terms shall apply to this Note:

 

INTEREST & PREPAYMENTS

 

Interest Rate and Payments.   Subject to Sections 4.3 and 5.7 hereof, interest
payable on this Note shall accrue at a rate per annum equal to the “Prime Rate”
published in The Wall Street Journal from time to time, plus one and
three-quarters percent (1.75%) (the “Contract Rate”).  The Prime Rate shall be
increased or decreased as the case may be for each increase or decrease in the
Prime Rate in an amount equal to such increase or decrease in the Prime Rate;
each change to be effective as of the day of the change in such rate in
accordance with the terms of the Security Agreement. Subject to the immediately
following sentence, the Contract Rate shall not be less than five and
three-quarters percent (5.75%). Commencing six months after the Closing Date,
the Contract Rate shall be adjusted as follows: if (i) the Company shall have
registered the shares of the Company’s common stock underlying the conversion of

 

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ALL CURRENTLY ISSUED AND OUTSTANDING MINIMUM BORROWING NOTES AND THAT CERTAIN
WARRANT ISSUED TO HOLDER OF EVEN DATE HEREWITH ON A REGISTRATION STATEMENT
DECLARED EFFECTIVE BY THE SECURITIES EXCHANGE COMMISSION, AND (II) THE VOLUME
WEIGHTED AVERAGE PRICE OF THE COMMON STOCK AS REPORTED BY BLOOMBERG, L.P. ON THE
PRINCIPAL MARKET FOR THE COMMON STOCK FOR THE SEVEN (7) TRADING DAYS IMMEDIATELY
PRECEDING AN INTEREST PAYMENT DATE (DEFINED BELOW) EXCEEDS THE THEN APPLICABLE
FIXED CONVERSION PRICE (AS HEREINAFTER DEFINED) IN SUCH PERCENTAGES AS OUTLINED
IN THE TABLE BELOW, THE CONTRACT RATE FOR THE SUCCEEDING CALENDAR MONTH SHALL
AUTOMATICALLY BE ADJUSTED AS FOLLOWS:

 

 

 

CONTRACT RATE

130% OF THE FIXED CONVERSION PRICE

 

PRIME RATE

150% OF THE FIXED CONVERSION PRICE

 

PRIME RATE MINUS 0.75%

175% OF THE FIXED CONVERSION PRICE

 

PRIME RATE MINUS 2.00%

 

INTEREST SHALL BE PAYABLE MONTHLY IN ARREARS COMMENCING ON APRIL 1, 2004 AND ON
THE FIRST DAY OF EACH CONSECUTIVE CALENDAR MONTH THEREAFTER, (EACH, AN “INTEREST
PAYMENT DATE”).

 

1.3           Allocation of Principal to Minimum Borrowing Note.  To the extent
that the outstanding balance on Minimum Borrowing Note shall be less than
$750,000 (the difference of $750,000 less the actual balance of the Minimum
Borrowing Note, the “Available Minimum Borrowing”), such portion of the balance
hereof as shall equal the Available Minimum Borrowing shall be deemed to be
simultaneously extinguished on the Revolving Note and transferred to, and
evidenced by, a subsequent Minimum Borrowing Note.

 

HOLDER’S CONVERSION RIGHTS

 

OPTIONAL CONVERSION. SUBJECT TO THE TERMS OF THIS ARTICLE II, THE HOLDER SHALL
HAVE THE RIGHT, BUT NOT THE OBLIGATION, AT ANY TIME UNTIL THE MATURITY DATE, OR
THEREAFTER DURING AN EVENT OF DEFAULT (AS DEFINED IN ARTICLE III), AND, SUBJECT
TO THE LIMITATIONS SET FORTH IN SECTION 2.2 HEREOF, TO CONVERT ALL OR ANY
PORTION OF THE OUTSTANDING PRINCIPAL AMOUNT AND/OR ACCRUED INTEREST AND FEES DUE
AND PAYABLE INTO FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK AT THE
FIXED CONVERSION PRICE. FOR PURPOSES HEREOF, SUBJECT TO SECTION 2.5 HEREOF, THE
“FIXED CONVERSION PRICE” SHALL INITIALLY BE $1.92. THE SHARES OF COMMON STOCK TO
BE ISSUED UPON SUCH CONVERSION ARE HEREIN REFERRED TO AS THE “CONVERSION
SHARES.”  THE FIXED CONVERSION PRICE SHALL ALSO BE ADJUSTED FROM TIME TO TIME
PURSUANT TO SECTION 2.2 OF THE MINIMUM BORROWING NOTE.

 

CONVERSION LIMITATION. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, THE HOLDER SHALL NOT BE ENTITLED TO CONVERT PURSUANT TO THE TERMS OF
THIS NOTE AN AMOUNT THAT (A) WOULD BE CONVERTIBLE INTO THAT NUMBER OF CONVERSION
SHARES THAT WOULD EXCEED THE DIFFERENCE BETWEEN THE NUMBER OF SHARES OF COMMON
STOCK BENEFICIALLY OWNED BY SUCH HOLDER OR ISSUABLE UPON EXERCISE OF WARRANTS
HELD BY SUCH HOLDER AND 4.99% OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE
BORROWER OR (B) EXCEED TWENTY FIVE PERCENT (25%) OF THE AGGREGATE DOLLAR TRADING
VOLUME OF THE COMMON STOCK FOR THE TEN (10) DAY TRADING PERIOD IMMEDIATELY
PRECEDING DELIVERY OF A NOTICE OF CONVERSION TO THE BORROWER.  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 CONVERSION SHARES LIMITATION DESCRIBED IN THIS SECTION 2.2
SHALL AUTOMATICALLY BECOME NULL AND VOID WITHOUT ANY NOTICE TO BORROWER UPON THE
OCCURRENCE AND DURING THE CONTINUANCE BEYOND ANY APPLICABLE GRACE PERIOD OF AN
EVENT OF DEFAULT, OR UPON 75 DAYS PRIOR NOTICE TO THE BORROWER.

 

MECHANICS OF HOLDER’S CONVERSION. (A) IN THE EVENT THAT THE HOLDER ELECTS TO
CONVERT THIS NOTE INTO COMMON STOCK, THE HOLDER SHALL GIVE NOTICE OF SUCH
ELECTION BY DELIVERING AN EXECUTED AND COMPLETED NOTICE OF CONVERSION (“NOTICE
OF CONVERSION”) TO THE BORROWER AND SUCH NOTICE OF CONVERSION SHALL PROVIDE A
BREAKDOWN IN REASONABLE DETAIL OF THE PRINCIPAL AMOUNT, ACCRUED INTEREST AND
FEES THAT ARE BEING

 

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CONVERTED.  ON EACH CONVERSION DATE (AS HEREINAFTER DEFINED) AND IN ACCORDANCE
WITH ITS NOTICE OF CONVERSION, THE HOLDER SHALL MAKE THE APPROPRIATE REDUCTION
TO THE PRINCIPAL AMOUNT, ACCRUED INTEREST AND FEES AS ENTERED IN ITS RECORDS AND
SHALL PROVIDE WRITTEN NOTICE THEREOF TO THE BORROWER WITHIN TWO (2) BUSINESS
DAYS AFTER THE CONVERSION DATE.  EACH DATE ON WHICH A NOTICE OF CONVERSION IS
DELIVERED OR TELECOPIED TO THE BORROWER IN ACCORDANCE WITH THE PROVISIONS HEREOF
SHALL BE DEEMED A CONVERSION DATE (THE “CONVERSION DATE”).  A FORM OF NOTICE OF
CONVERSION TO BE EMPLOYED BY THE HOLDER IS ANNEXED HERETO AS EXHIBIT A.

 

(B)           PURSUANT TO THE TERMS OF THE NOTICE OF CONVERSION, THE BORROWER
WILL ISSUE INSTRUCTIONS TO THE TRANSFER AGENT ACCOMPANIED BY AN OPINION OF
COUNSEL WITHIN ONE (1) BUSINESS DAY OF THE DATE OF THE DELIVERY TO BORROWER OF
THE NOTICE OF CONVERSION AND SHALL CAUSE THE TRANSFER AGENT TO TRANSMIT THE
CERTIFICATES REPRESENTING THE CONVERSION SHARES TO THE HOLDER BY CREDITING THE
ACCOUNT OF THE HOLDER’S DESIGNATED BROKER WITH THE DEPOSITORY TRUST CORPORATION
(“DTC”) THROUGH ITS DEPOSIT WITHDRAWAL AGENT COMMISSION (“DWAC”) SYSTEM WITHIN
THREE (3) BUSINESS DAYS AFTER RECEIPT BY THE BORROWER OF THE NOTICE OF
CONVERSION (THE “DELIVERY DATE”).  IN THE CASE OF THE EXERCISE OF THE CONVERSION
RIGHTS SET FORTH HEREIN THE CONVERSION PRIVILEGE SHALL BE DEEMED TO HAVE BEEN
EXERCISED AND THE CONVERSION SHARES ISSUABLE UPON SUCH CONVERSION SHALL BE
DEEMED TO HAVE BEEN ISSUED UPON THE DATE OF RECEIPT BY THE BORROWER OF THE
NOTICE OF CONVERSION.  THE HOLDER SHALL BE TREATED FOR ALL PURPOSES AS THE
RECORD HOLDER OF SUCH COMMON STOCK, UNLESS THE HOLDER PROVIDES THE BORROWER
WRITTEN INSTRUCTIONS TO THE CONTRARY.

 

(C) THE BORROWER UNDERSTANDS THAT A DELAY IN THE DELIVERY OF THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTE (THE “NOTE SHARES”) IN THE
FORM REQUIRED PURSUANT TO THIS SECTION 3 BEYOND THE DELIVERY DATE COULD RESULT
IN ECONOMIC LOSS TO THE HOLDER.  IN THE EVENT THAT THE BORROWER FAILS TO DIRECT
ITS TRANSFER AGENT TO DELIVER THE NOTE SHARES TO THE HOLDER VIA THE DWAC SYSTEM
WITHIN THE TIME FRAME SET FORTH IN SECTION 2.3(B) ABOVE AND THE NOTE SHARES ARE
NOT DELIVERED TO THE HOLDER BY THE DELIVERY DATE, AS COMPENSATION TO THE HOLDER
FOR SUCH LOSS, THE BORROWER AGREES TO PAY LATE PAYMENTS TO THE HOLDER FOR LATE
ISSUANCE OF THE NOTE SHARES IN THE FORM REQUIRED PURSUANT TO THIS SECTION 3 UPON
CONVERSION OF THE NOTE IN THE AMOUNT EQUAL TO THE GREATER OF:  (I) $500 PER
BUSINESS DAY AFTER THE DELIVERY DATE; OR (II) THE HOLDER’S ACTUAL DAMAGES FROM
SUCH DELAYED DELIVERY. NOTWITHSTANDING THE FOREGOING, THE BORROWER WILL NOT OWE
THE HOLDER ANY LATE PAYMENTS IF THE DELAY IN THE DELIVERY OF THE NOTE SHARES
BEYOND THE DELIVERY DATE IS SOLELY OUT OF THE CONTROL OF THE BORROWER AND THE
BORROWER IS ACTIVELY TRYING TO CURE THE CAUSE OF THE DELAY.  THE BORROWER SHALL
PAY ANY PAYMENTS INCURRED UNDER THIS SECTION 2.3 IN IMMEDIATELY AVAILABLE FUNDS
UPON DEMAND AND, IN THE CASE OF ACTUAL DAMAGES, ACCOMPANIED BY REASONABLE
DOCUMENTATION OF THE AMOUNT OF SUCH DAMAGES.  SUCH DOCUMENTATION SHALL SHOW THE
NUMBER OF SHARES OF COMMON STOCK THE HOLDER IS FORCED TO PURCHASE (IN AN OPEN
MARKET TRANSACTION) WHICH THE HOLDER ANTICIPATED RECEIVING UPON SUCH CONVERSION,
AND SHALL BE CALCULATED AS THE AMOUNT BY WHICH (A) THE HOLDER’S TOTAL PURCHASE
PRICE (INCLUDING CUSTOMARY BROKERAGE COMMISSIONS, IF ANY) FOR THE SHARES OF
COMMON STOCK SO PURCHASED EXCEEDS (B) THE AGGREGATE PRINCIPAL AND/OR INTEREST
AMOUNT OF THE NOTE, FOR WHICH SUCH NOTICE OF NOTICE WAS NOT TIMELY HONORED.

 

Nothing contained herein or in any document referred to herein or delivered in
connection herewith shall be deemed to establish or require the payment of a
rate of interest or other charges in excess of the maximum permitted by
applicable law.  In the event that the rate of interest or dividends required to
be paid or other charges hereunder exceed the maximum amount permitted by such
law, any payments in excess of such maximum shall be credited against amounts
owed by the Borrower to the Holder and thus refunded to the Borrower.

 

LATE PAYMENTS. THE BORROWER UNDERSTANDS THAT A DELAY IN THE DELIVERY OF THE
SHARES OF COMMON STOCK IN THE FORM REQUIRED PURSUANT TO THIS ARTICLE BEYOND THE
DELIVERY DATE COULD RESULT IN ECONOMIC LOSS TO THE

 

10CC-3

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HOLDER.  AS COMPENSATION TO THE HOLDER FOR SUCH LOSS, THE BORROWER AGREES TO PAY
LATE PAYMENTS TO THE HOLDER FOR LATE ISSUANCE OF SUCH SHARES IN THE FORM
REQUIRED PURSUANT TO THIS ARTICLE II UPON CONVERSION OF THE NOTE, IN THE AMOUNT
EQUAL TO $500 PER BUSINESS DAY AFTER THE DELIVERY DATE.  THE BORROWER SHALL PAY
ANY PAYMENTS INCURRED UNDER THIS SECTION IN IMMEDIATELY AVAILABLE FUNDS UPON
DEMAND.

 

ADJUSTMENT PROVISIONS. THE FIXED CONVERSION PRICE AND NUMBER AND KIND OF SHARES
OR OTHER SECURITIES TO BE ISSUED UPON CONVERSION DETERMINED PURSUANT TO
SECTION 2.1 SHALL BE SUBJECT TO ADJUSTMENT FROM TIME TO TIME UPON THE HAPPENING
OF CERTAIN EVENTS WHILE THIS CONVERSION RIGHT REMAINS OUTSTANDING, AS FOLLOWS:

 

RECLASSIFICATION, ETC.  IF THE BORROWER AT ANY TIME SHALL, BY RECLASSIFICATION
OR OTHERWISE, CHANGE THE COMMON STOCK INTO THE SAME OR A DIFFERENT NUMBER OF
SECURITIES OF ANY CLASS OR CLASSES, THIS NOTE, AS TO THE UNPAID PRINCIPAL AMOUNT
AND ACCRUED INTEREST THEREON, SHALL THEREAFTER BE DEEMED TO EVIDENCE THE RIGHT
TO PURCHASE AN ADJUSTED NUMBER OF SUCH SECURITIES AND KIND OF SECURITIES AS
WOULD HAVE BEEN ISSUABLE AS THE RESULT OF SUCH CHANGE WITH RESPECT TO THE COMMON
STOCK IMMEDIATELY PRIOR TO SUCH RECLASSIFICATION OR OTHER CHANGE.

 

STOCK SPLITS, COMBINATIONS AND DIVIDENDS.  IF THE SHARES OF COMMON STOCK ARE
SUBDIVIDED OR COMBINED INTO A GREATER OR SMALLER NUMBER OF SHARES OF COMMON
STOCK, OR IF A DIVIDEND IS PAID ON THE COMMON STOCK IN SHARES OF COMMON STOCK,
THE FIXED CONVERSION PRICE SHALL BE PROPORTIONATELY REDUCED IN CASE OF
SUBDIVISION OF SHARES OR STOCK DIVIDEND OR PROPORTIONATELY INCREASED IN THE CASE
OF COMBINATION OF SHARES, IN EACH SUCH CASE BY THE RATIO WHICH THE TOTAL NUMBER
OF SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY AFTER SUCH EVENT BEARS TO THE
TOTAL NUMBER OF SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY PRIOR TO SUCH
EVENT.

 

C.            Share Issuances.  Subject to the provisions of this Section 2.5,
if the Borrower shall at any time prior to the conversion or repayment in full
of the Principal Amount issue any shares of Common Stock to a person other than
the Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant to
options, warrants, or other obligations to issue shares outstanding on the date
hereof as disclosed to Holder in writing; or (iii) pursuant to options that may
be issued under any employee incentive stock option and/or any qualified or
non-qualified stock option plans adopted by the Borrower) for a consideration
per share (the “Offer Price”) less than the Fixed Conversion Price in effect at
the time of such issuance, then the Fixed Conversion Price shall be immediately
reset pursuant to the formula below:

 

If the Borrower issues any additional shares pursuant to Section 2.5 above then,
and thereafter successively upon each such issue, the Fixed Conversion Price
shall be adjusted by multiplying the then applicable Fixed Conversion Price by
the following fraction:

 

A + B

(A + B) + [((C – D) x B) / C]

 

A = Actual shares outstanding prior to such offering

 

B =  Actual shares sold in the offering

 

C = Fixed Conversion Price

 

D = Offering price

 

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D.            COMPUTATION OF CONSIDERATION. FOR PURPOSES OF ANY COMPUTATION
RESPECTING CONSIDERATION RECEIVED PURSUANT TO SUBSECTION C ABOVE, THE FOLLOWING
SHALL APPLY:

 

(D)                                           IN THE CASE OF THE ISSUANCE OF
SHARES OF COMMON STOCK FOR CASH, THE CONSIDERATION SHALL BE THE AMOUNT OF SUCH
CASH, PROVIDED THAT IN NO CASE SHALL ANY DEDUCTION BE MADE FOR ANY COMMISSIONS,
DISCOUNTS OR OTHER EXPENSES INCURRED BY THE BORROWER FOR ANY UNDERWRITING OF THE
ISSUE OR OTHERWISE IN CONNECTION THEREWITH;

 

(E)                                           IN THE CASE OF THE ISSUANCE OF
SHARES OF COMMON STOCK FOR A CONSIDERATION IN WHOLE OR IN PART OTHER THAN CASH,
THE CONSIDERATION OTHER THAN CASH SHALL BE DEEMED TO BE THE FAIR MARKET VALUE
THEREOF AS DETERMINED IN GOOD FAITH BY THE BOARD OF DIRECTORS OF THE BORROWER
(IRRESPECTIVE OF THE ACCOUNTING TREATMENT THEREOF); AND

 

(F)                                            UPON ANY SUCH EXERCISE, THE
AGGREGATE CONSIDERATION RECEIVED FOR SUCH SECURITIES SHALL BE DEEMED TO BE THE
CONSIDERATION RECEIVED BY THE BORROWER FOR THE ISSUANCE OF SUCH SECURITIES PLUS
THE ADDITIONAL MINIMUM CONSIDERATION, IF ANY, TO BE RECEIVED BY THE BORROWER
UPON THE CONVERSION OR EXCHANGE THEREOF (THE CONSIDERATION IN EACH CASE TO BE
DETERMINED IN THE SAME MANNER AS PROVIDED IN CLAUSES (A) AND (B) OF THIS
SUBSECTION (D)).

 

RESERVATION OF SHARES. DURING THE PERIOD THE CONVERSION RIGHT EXISTS, THE
BORROWER WILL RESERVE FROM ITS AUTHORIZED AND UNISSUED COMMON STOCK A SUFFICIENT
NUMBER OF SHARES TO PROVIDE FOR THE ISSUANCE OF COMMON STOCK UPON THE FULL
CONVERSION OF THIS NOTE.  THE BORROWER REPRESENTS THAT UPON ISSUANCE, SUCH
SHARES WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE.  THE
BORROWER AGREES THAT ITS ISSUANCE OF THIS NOTE SHALL CONSTITUTE FULL AUTHORITY
TO ITS OFFICERS, AGENTS, AND TRANSFER AGENTS WHO ARE CHARGED WITH THE DUTY OF
EXECUTING AND ISSUING STOCK CERTIFICATES TO EXECUTE AND ISSUE THE NECESSARY
CERTIFICATES FOR SHARES OF COMMON STOCK UPON THE CONVERSION OF THIS NOTE.

 

EVENTS OF DEFAULT

 

The occurrence of any of the following events is an Event of Default (“Event of
Default”):

 

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FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES.  THE BORROWER FAILS TO PAY
WHEN DUE ANY INSTALLMENT OF PRINCIPAL, INTEREST OR OTHER FEES HEREON OR ON ANY
OTHER NOTE ISSUED PURSUANT TO THE SECURITY AGREEMENT, WHEN DUE IN ACCORDANCE
WITH THE TERMS OF SUCH NOTE.

 

BREACH OF COVENANT.  THE BORROWER BREACHES ANY COVENANT OR OTHER TERM OR
CONDITION OF THIS NOTE IN ANY MATERIAL RESPECT AND SUCH BREACH, IF SUBJECT TO
CURE, CONTINUES FOR A PERIOD OF THIRTY (30) DAYS AFTER THE OCCURRENCE THEREOF.

 

BREACH OF REPRESENTATIONS AND WARRANTIES.  ANY MATERIAL REPRESENTATION OR
WARRANTY OF THE BORROWER MADE HEREIN, OR THE SECURITY AGREEMENT, OR IN ANY
ANCILLARY AGREEMENT SHALL BE MATERIALLY FALSE OR MISLEADING.

 

STOP TRADE.  AN SEC STOP TRADE ORDER OR PRINCIPAL MARKET TRADING SUSPENSION OF
THE COMMON STOCK SHALL BE IN EFFECT FOR 5 CONSECUTIVE DAYS OR 5 DAYS DURING A
PERIOD OF 10 CONSECUTIVE DAYS, EXCLUDING IN ALL CASES A SUSPENSION OF ALL
TRADING ON A PRINCIPAL MARKET, PROVIDED THAT THE BORROWER SHALL NOT HAVE BEEN
ABLE TO CURE SUCH TRADING SUSPENSION WITHIN 30 DAYS OF THE NOTICE THEREOF OR
LIST THE COMMON STOCK ON ANOTHER PRINCIPAL MARKET WITHIN 60 DAYS OF SUCH
NOTICE.  THE “PRINCIPAL MARKET” FOR THE COMMON STOCK SHALL INCLUDE THE NASD OTC
BULLETIN BOARD, NASDAQ SMALLCAP MARKET, NASDAQ NATIONAL MARKET SYSTEM, AMERICAN
STOCK EXCHANGE, OR NEW YORK STOCK EXCHANGE (WHICHEVER OF THE FOREGOING IS AT THE
TIME THE PRINCIPAL TRADING EXCHANGE OR MARKET FOR THE COMMON STOCK), OR ANY
SECURITIES EXCHANGE OR OTHER SECURITIES MARKET ON WHICH THE COMMON STOCK IS THEN
BEING LISTED OR TRADED.

 

DEFAULT UNDER RELATED AGREEMENT.  THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER
AND AS DEFINED IN THE SECURITY AGREEMENT.

 

3.6           Failure to Deliver Common Stock or Replacement Note.  The
Borrower’s failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note and Section 9 of the Security Agreement if
such failure to timely deliver Common Stock shall not be cured within two (2)
business days, or if required, the Borrower is required to issue to Holder a
replacement Note, and the Borrower’s failure to deliver a replacement Note is
not cured within seven (7) business days.

 

3.7           Payment Grace Period.  The Borrower shall have a three (3)
business day grace period to pay any monetary amounts due under this Note or the
Security Agreement or any Related Document, after which grace period a default
interest rate of five percent (5%) per annum above the then applicable interest
rate hereunder shall apply to the monetary amounts due.

 

DEFAULT PAYMENTS

 

DEFAULT PAYMENT.  IF AN EVENT OF DEFAULT OCCURS, THE HOLDER, AT ITS OPTION, MAY
ELECT, IN ADDITION TO ALL RIGHTS AND REMEDIES OF HOLDER UNDER THE SECURITY
AGREEMENT AND ALL OBLIGATIONS OF BORROWER UNDER THE SECURITY AGREEMENT, TO
REQUIRE THE BORROWER TO MAKE A DEFAULT PAYMENT (“DEFAULT PAYMENT”).  THE DEFAULT
PAYMENT SHALL BE THE OUTSTANDING PRINCIPAL AMOUNT OF THE NOTE, PLUS ACCRUED BUT
UNPAID INTEREST, ALL OTHER FEES THEN REMAINING UNPAID, AND ALL OTHER AMOUNTS
PAYABLE HEREUNDER.

 

DEFAULT PAYMENT DATE AND DEFAULT NOTICE PERIOD.  THE DEFAULT PAYMENT SHALL BE
DUE AND PAYABLE ON THE FIFTH BUSINESS DAY AFTER AN EVENT OF DEFAULT AS DEFINED
IN ARTICLE III (“DEFAULT PAYMENT DATE”) HAS OCCURRED AND IS CONTINUING BEYOND
ANY APPLICABLE GRACE PERIOD.  THE PERIOD BETWEEN DATE UPON WHICH OF AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING BEYOND ANY APPLICABLE GRACE PERIOD AND
THE DEFAULT PAYMENT DATE SHALL BE THE “DEFAULT PERIOD.” IF DURING THE DEFAULT
PERIOD, THE BORROWER CURES THE EVENT OF DEFAULT, THE EVENT OF DEFAULT WILL NO
LONGER EXIST AND ANY ADDITIONAL RIGHTS THE HOLDER HAD TRIGGERED BY THE
OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT WILL NO LONGER EXIST.  IF THE
EVENT OF DEFAULT IS NOT

 

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CURED DURING THE DEFAULT NOTICE PERIOD, ALL AMOUNTS PAYABLE HEREUNDER SHALL BE
DUE AND PAYABLE ON THE DEFAULT PAYMENT DATE, ALL WITHOUT FURTHER DEMAND,
PRESENTMENT OR NOTICE, OR GRACE PERIOD, ALL OF WHICH HEREBY ARE EXPRESSLY
WAIVED.

 

DEFAULT INTEREST RATE.  FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF
AN EVENT OF DEFAULT, INTEREST ON THIS NOTE SHALL AUTOMATICALLY BE INCREASED BY
FIVE PERCENT (5%) PER ANNUM, AND ALL OUTSTANDING OBLIGATIONS, INCLUDING UNPAID
INTEREST, SHALL CONTINUE TO ACCRUE INTEREST FROM THE DATE OF SUCH EVENT OF
DEFAULT AT SUCH INTEREST RATE APPLICABLE TO SUCH OBLIGATIONS UNTIL SUCH EVENT OF
DEFAULT IS CURED OR WAIVED.

 

CUMULATIVE REMEDIES.  THE REMEDIES UNDER THIS NOTE SHALL BE CUMULATIVE.

 

MISCELLANEOUS

 

FAILURE OR INDULGENCE NOT WAIVER.  NO FAILURE OR DELAY ON THE PART OF THE HOLDER
HEREOF IN THE EXERCISE OF ANY POWER, RIGHT OR PRIVILEGE HEREUNDER SHALL OPERATE
AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER,
RIGHT OR PRIVILEGE PRECLUDE OTHER OR FURTHER EXERCISE THEREOF OR OF ANY OTHER
RIGHT, POWER OR PRIVILEGE.  ALL RIGHTS AND REMEDIES EXISTING HEREUNDER ARE
CUMULATIVE TO, AND NOT EXCLUSIVE OF, ANY RIGHTS OR REMEDIES OTHERWISE AVAILABLE.

 

NOTICES.  ANY NOTICE HEREIN REQUIRED OR PERMITTED TO BE GIVEN SHALL BE IN
WRITING AND PROVIDED IN ACCORDANCE WITH THE TERMS OF THE SECURITY AGREEMENT.

 

AMENDMENT PROVISION.  THE TERM “NOTE” AND ALL REFERENCE THERETO, AS USED
THROUGHOUT THIS INSTRUMENT, SHALL MEAN THIS INSTRUMENT AS ORIGINALLY EXECUTED,
OR IF LATER AMENDED OR SUPPLEMENTED, THEN AS SO AMENDED OR SUPPLEMENTED, AND ANY
SUCCESSOR INSTRUMENT AS IT MAY BE AMENDED OR SUPPLEMENTED.

 

ASSIGNABILITY.  THIS NOTE SHALL BE BINDING UPON THE BORROWER AND ITS SUCCESSORS
AND ASSIGNS, AND SHALL INURE TO THE BENEFIT OF THE HOLDER AND ITS SUCCESSORS AND
ASSIGNS, AND MAY BE ASSIGNED BY THE HOLDER IN ACCORDANCE WITH THE REQUIREMENTS
OF THE SECURITY AGREEMENT.

 

COST OF COLLECTION.  IF DEFAULT IS MADE IN THE PAYMENT OF THIS NOTE, THE
BORROWER SHALL PAY THE HOLDER HEREOF REASONABLE COSTS OF COLLECTION, INCLUDING
REASONABLE ATTORNEYS’ FEES.

 

GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.  ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE
COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK. 
BOTH PARTIES AND THE INDIVIDUAL SIGNING THIS NOTE ON BEHALF OF THE BORROWER
AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.  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 NOTE 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 UNENFORCEABILITY OF ANY OTHER PROVISION OF THIS NOTE.  NOTHING CONTAINED
HEREIN SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION AGAINST THE BORROWER IN ANY OTHER JURISDICTION TO
COLLECT ON THE BORROWER’S OBLIGATIONS TO HOLDER, TO REALIZE ON ANY COLLATERAL OR
ANY OTHER SECURITY FOR SUCH OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF HOLDER.

 

MAXIMUM PAYMENTS.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO ESTABLISH OR
REQUIRE THE PAYMENT OF A RATE OF INTEREST OR OTHER CHARGES IN EXCESS OF THE
MAXIMUM PERMITTED BY APPLICABLE LAW.  IN THE EVENT THAT THE RATE OF INTEREST
REQUIRED TO BE PAID OR OTHER CHARGES HEREUNDER EXCEED THE MAXIMUM PERMITTED BY
SUCH LAW, ANY PAYMENTS IN EXCESS OF SUCH MAXIMUM SHALL BE CREDITED AGAINST
AMOUNTS OWED BY THE BORROWER TO THE HOLDER AND THUS REFUNDED TO THE BORROWER.

 

SECURITY INTEREST.  THE HOLDER OF THIS NOTE HAS BEEN GRANTED A SECURITY INTEREST
IN CERTAIN ASSETS OF THE BORROWER MORE FULLY DESCRIBED IN THE SECURITY
AGREEMENT.

 

CONSTRUCTION.  EACH PARTY ACKNOWLEDGES THAT ITS LEGAL COUNSEL PARTICIPATED IN
THE PREPARATION OF THIS NOTE 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 NOTE TO FAVOR ANY PARTY
AGAINST THE OTHER.

 

10CC-7

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[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]

 

10CC-8

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IN WITNESS WHEREOF, the Borrower has caused this Secured Convertible Revolving
Note to be signed in its name effective as of this 9th day of March,  2004.

 

 

 

MICRO COMPONENT TECHNOLOGY, INC.

 

 

 

 

 

By:

/s/ Thomas P. Maun

 

 

Name:

 

Title: CFO

 

 

 

 

WITNESS:

 

 

 

 

 

/s/ Lori Faber

 

 

 

10CC-9

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NOTICE OF CONVERSION

 

(To be executed by the Holder in order to convert the Note)

 

The undersigned hereby elects to convert $                     of the principal
and $                     of the interest due on the Secured Convertible
Revolving Note issued by Micro Component Technology, Inc. (the “Company”) on
March 8, 2004 into Shares of Common Stock of the Company according to the
conditions set forth in such Note, as of the date written below.

 

Date of Conversion:

 

 

 

 

Conversion Price:

 

 

 

 

Shares To Be Delivered:

 

 

 

 

Signature:

 

 

 

 

Print Name:

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

Holder DWAC instructions

 

 

 

10CC-10

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