EXHIBIT NO. 10.1


 


MICRO COMPONENT TECHNOLOGY, INC.


 


SECURITIES PURCHASE AGREEMENT


 


April 29, 2005


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  Agreement to Sell and Purchase

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Closing, Delivery and Payment.

  	
   

  
	
   

  	
  3.1

  	
  Closing

  	
   

  
	
   

  	
  3.2

  	
  Delivery

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties of the
  Company

  	
   

  
	
   

  	
  4.1

  	
  Organization, Good Standing and
  Qualification

  	
   

  
	
   

  	
  4.2

  	
  Subsidiaries

  	
   

  
	
   

  	
  4.3

  	
  Capitalization; Voting Rights

  	
   

  
	
   

  	
  4.4

  	
  Authorization; Binding Obligations

  	
   

  
	
   

  	
  4.5

  	
  Liabilities

  	
   

  
	
   

  	
  4.6

  	
  Agreements; Action

  	
   

  
	
   

  	
  4.7

  	
  Obligations to Related Parties

  	
   

  
	
   

  	
  4.8

  	
  Changes

  	
   

  
	
   

  	
  4.9

  	
  Title to Properties and Assets; Liens, Etc.

  	
   

  
	
   

  	
  4.10

  	
  Intellectual Property

  	
   

  
	
   

  	
  4.11

  	
  Compliance with Other Instruments

  	
   

  
	
   

  	
  4.12

  	
  Litigation

  	
   

  
	
   

  	
  4.13

  	
  Tax Returns and Payments

  	
   

  
	
   

  	
  4.14

  	
  Employees

  	
   

  
	
   

  	
  4.15

  	
  Registration Rights and Voting Rights

  	
   

  
	
   

  	
  4.16

  	
  Compliance with Laws; Permits

  	
   

  
	
   

  	
  4.17

  	
  Environmental and Safety Laws

  	
   

  
	
   

  	
  4.18

  	
  Valid
  Offering

  	
   

  
	
   

  	
  4.19

  	
  Full
  Disclosure

  	
   

  
	
   

  	
  4.20

  	
  Insurance

  	
   

  
	
   

  	
  4.21

  	
  SEC
  Reports

  	
   

  
	
   

  	
  4.22

  	
  Listing

  	
   

  
	
   

  	
  4.23

  	
  No Integrated Offering

  	
   

  
	
   

  	
  4.24

  	
  Stop
  Transfer

  	
   

  
	
   

  	
  4.25

  	
  Dilution.

  	
   

  
	
   

  	
  4.26

  	
  Patriot
  Act.

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties of the
  Purchaser

  	
   

  
	
   

  	
  5.1

  	
  No
  Shorting

  	
   

  
	
   

  	
  5.2

  	
  Requisite Power and Authority

  	
   

  
	
   

  	
  5.3

  	
  Investment Representations

  	
   

  
	
   

  	
  5.4

  	
  Purchaser Bears Economic Risk

  	
   

  
	
   

  	
  5.5

  	
  Acquisition for Own Account

  	
   

  
	
   

  	
  5.6

  	
  Purchaser Can Protect Its Interest

  	
   

  
	
   

  	
  5.7

  	
  Accredited Investor

  	
   

  
	
   

  	
  5.8

  	
  Legends

  	
   

  



 


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  6.

  	
  Covenants of the Company

  	
   

  
	
   

  	
  6.1

  	
  Stop-Orders

  	
   

  
	
   

  	
  6.2

  	
  Listing

  	
   

  
	
   

  	
  6.3

  	
  Market Regulations

  	
   

  
	
   

  	
  6.4

  	
  Reporting Requirements

  	
   

  
	
   

  	
  6.5

  	
  Use
  of Funds

  	
   

  
	
   

  	
  6.6

  	
  Access to Facilities

  	
   

  
	
   

  	
  6.7

  	
  Taxes

  	
   

  
	
   

  	
  6.8

  	
  Insurance

  	
   

  
	
   

  	
  6.9

  	
  Intellectual Property

  	
   

  
	
   

  	
  6.10

  	
  Properties

  	
   

  
	
   

  	
  6.11

  	
  Confidentiality

  	
   

  
	
   

  	
  6.12

  	
  Required Approvals

  	
   

  
	
   

  	
  6.13

  	
  Reissuance of Securities

  	
   

  
	
   

  	
  6.14

  	
  Opinion

  	
   

  
	
   

  	
  6.15

  	
  Margin Stock

  	
   

  
	
   

  	
  6.16

  	
  Reservation of Common Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Covenants of the Purchaser

  	
   

  
	
   

  	
  7.1

  	
  Confidentiality

  	
   

  
	
   

  	
  7.2

  	
  Non-Public Information

  	
   

  
	
   

  	
  7.3

  	
  Limitation on Acquisition of Common Stock
  of the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Covenants of the Company and Purchaser
  Regarding Indemnification

  	
   

  
	
   

  	
  8.1

  	
  Company Indemnification

  	
   

  
	
   

  	
  8.2

  	
  Purchaser’s Indemnification

  	
   

  
	
   

  	
  8.3

  	
  Procedures

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Conversion of Convertible Note.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Registration Rights, Indemnification.

  	
   

  
	
   

  	
  10.1

  	
  Registration Rights Granted

  	
   

  
	
   

  	
  10.2

  	
  Indemnification

  	
   

  
	
   

  	
  10.3

  	
  Offering Restrictions

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Miscellaneous

  	
   

  
	
   

  	
  11.1

  	
  Governing
  Law

  	
   

  
	
   

  	
  11.2

  	
  Survival

  	
   

  
	
   

  	
  11.3

  	
  Successors

  	
   

  
	
   

  	
  11.4

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  11.5

  	
  Severability

  	
   

  
	
   

  	
  11.6

  	
  Amendment and Waiver

  	
   

  
	
   

  	
  11.7

  	
  Delays or Omissions

  	
   

  
	
   

  	
  11.8

  	
  Notices

  	
   

  
	
   

  	
  11.9

  	
  Attorneys’
  Fees

  	
   

  
	
   

  	
  11.10

  	
  Titles and Subtitles

  	
   

  
	
   

  	
  11.11

  	
  Facsimile Signatures; Counterparts

  	
   

  
	
   

  	
  11.12

  	
  Broker’s
  Fees

  	
   

  
	
   

  	
  11.13

  	
  Construction

  	
   

  



 


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LIST OF EXHIBITS


 


	
  Form of Convertible Term Note

  	
   

  	
  Exhibit A

  
	
  Form of Option

  	
   

  	
  Exhibit B

  
	
  Form of Opinion

  	
   

  	
  Exhibit C

  
	
  Form of Escrow Agreement

  	
   

  	
  Exhibit D

  



 


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SECURITIES PURCHASE AGREEMENT


 


THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
April 29, 2005, by and between MICRO COMPONENT TECHNOLOGY, INC., a Minnesota
corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands
company (the “Purchaser”).


 


RECITALS


 


WHEREAS,
the Company has authorized the sale to the Purchaser of Convertible Term Note
in the aggregate principal amount of Two Million Five Hundred Thousand Dollars
$2,500,000.00 (the “Note”), which Note is convertible into shares of the
Company’s common stock, $0.01 par value per share (the “Common Stock”) at a
fixed conversion price of $.23 per share of Common Stock (“Fixed Conversion
Price”);


 


WHEREAS,
the Company wishes to issue an option to the Purchaser to purchase up to
2,560,000 shares of Common Stock (subject to adjustment as set forth therein)
in connection with Purchaser’s purchase of the Note (as amended, modified or
supplemented from time to time, the “Option”);


 


WHEREAS,
Purchaser desires to purchase the Note and the Option on the terms and
conditions set forth herein; and


 


WHEREAS,
the Company desires to issue and sell the Note and the Option to Purchaser on
the terms and conditions set forth herein.


 


AGREEMENT


 


NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises,
representations, warranties and covenants hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


Agreement to
Sell and Purchase.  Pursuant to the terms and conditions set forth
in this Agreement, on the Closing Date (as defined in Section 3), the Company
agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase
from the Company, a Note in the aggregate amount of $2,500,000 convertible in
accordance with the terms thereof into shares of the Company’s Common Stock in
accordance with the terms of the Note and this Agreement. The Note purchased on
the Closing Date shall be known as the “Offering.” A form of the Note is
annexed hereto as Exhibit A. The Note will have a Maturity Date thirty six (36)
months from the date hereof. Collectively, the Note and the Option and Common
Stock issuable upon conversion of the Note and exercise of the Option are
referred to as the “Securities”.


 


Fees.  On the Closing Date:


 


The Company will issue and
deliver to the Purchaser an Option to purchase up to 2,556,651 shares of Common
Stock pursuant to Section 1 hereof. The Option must be delivered on the Closing
Date. A form of the Option is annexed hereto as Exhibit B. All the


 


4





















 


representations, covenants,
warranties, undertakings, and indemnification, and other rights made or granted
to or for the benefit of the Purchaser by the Company are hereby also made and
granted in respect of the Option and shares of the Company’s Common Stock
issuable upon exercise of the Option (the “Option Shares”)


 


Subject to the terms of Section
2(d) below, the Company shall pay to Laurus Capital Management, LLC, manager of
Purchaser a closing payment in an amount equal to three and one-half percent
(3.50%) of $2,500,000 or $87,500. The foregoing fee is referred to herein as
the “Closing Payment.”


 


The Company shall reimburse the
Purchaser for its services rendered to the Purchaser in preparation of this
Agreement and the Related Agreements (as hereinafter defined), and expenses in
connection with the Purchaser’s due diligence review of the Company and
relevant matters. Such expenses shall be $10,000.  Amounts required to be paid hereunder will be
paid at the Closing.


 


The Closing Payment, and
expenses referred to in Section 2(c) above (net of deposits previously paid by
the Company) shall be paid at closing out of funds held pursuant to a Funds
Escrow Agreement of even date herewith among the Company, Purchaser, and an
Escrow Agent (the “Funds Escrow Agreement”) and a disbursement letter (the “Disbursement
Letter”).


 


Closing, Delivery and Payment.


 


Closing.  Subject to the terms and conditions herein,
the closing of the transactions contemplated hereby (the “Closing”), shall take
place on the date hereof, at such time or place as the Company and Purchaser
may mutually agree (such date is hereinafter referred to as the “Closing Date”).


 


Delivery. 
Pursuant to the Funds Escrow Agreement in the form attached hereto as
Exhibit C, at the Closing on the Closing Date, the Company will deliver to the
Purchaser, among other things, a Note in the form attached as Exhibit A
representing the principal amount of $2,500,000 and Option in the form attached
as Exhibit B in the Purchaser’s name representing an aggregate amount of
2,556,651 Option Shares and the Purchaser will deliver to the Company, among
other things, the amounts set forth in the Disbursement Letter by certified
funds or wire transfer.


 


Representations and Warranties of the Company.  The Company hereby represents and warrants to
the Purchaser as of the date of this Agreement as set forth below which
disclosures are supplemented by, and subject to the Company’s filings under the
Securities Exchange Act of 1934 (collectively, the “Exchange Act Filings”),
copies of which have been provided to the Purchaser.


 


Organization, Good Standing and Qualification.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
Each of the Company and its Subsidiaries (as defined below) has the corporate
power and authority to own and operate its properties and assets, to execute
and deliver (to the extent that it is a party) this Agreement, and the Note and
the Option to be issued in connection with this Agreement, the Registration
Rights Agreement relating to the Securities dated as of the date hereof between
the


 


5





















 


Company and the Purchaser and
all other agreements entered into in connection with such agreements referred
to herein (including, without limitation, the Master Security Agreement, the
Stock Pledge Agreement and the Subsidiary Guaranty, each dated as of the date
hereof (as amended, modified or supplemented from time to time, collectively,
the “Security and Guaranty Documentation”) (each of the foregoing,
collectively, the “Related Agreements”), to issue and sell the Note and the
shares of Common Stock issuable upon conversion of the Note (the “Note Shares”),
to issue and sell the Option and the Option Shares and to carry out the
provisions of this Agreement and the Related Agreements and to carry on its
business as presently conducted.  The
Company is duly qualified and is authorized to do business and is in good standing
as a foreign corporation in all jurisdictions in which the nature of its
activities and of its properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or its business.


 


Subsidiaries.  The Company owns a majority of the issued and
outstanding capital stock of all its Subsidiaries as listed in Schedule 4.2
hereof.  The Company does not own or
control any equity security or other interest of any other corporation, limited
partnership or other business entity.  .
For the purpose of this Agreement, (x) a “Subsidiary” of any person or entity
means (i) a corporation or other entity whose shares of stock or other
ownership interests having ordinary voting power (other than stock or other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
persons or entities performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a corporation
or other entity in which such person or entity owns, directly or indirectly,
more than 50% of the equity interests at such time.


 


Capitalization;
Voting Rights.


 


The authorized capital stock of
the Company, as of the date hereof consists of 41,000,000 shares, of which
4,000,000 are shares of Common Stock, par value $0.01 per share, 25,556,514
shares of which are issued and outstanding as of April 28, 2005, and 1,000,000
are shares of preferred stock, par value $0.01 per of share, none of which are
issued and outstanding.


 


Except as
disclosed on Schedule 4.3 and other than: 
(i) 1,998,235and 75,000 shares of Common Stock reserved for issuance upon
exercise of option granted or to be granted, respectively, under the Company’s
stock option plans; (ii) 234,512 shares of Common Stock issuable upon exercise
of warrants issued by the Company (iii) 5,167,897 shares issuable upon conversion
of 10% Senior Convertible Notes, and (iv) the shares which
may be granted pursuant to this Agreement and the Related Agreements, there are
no other outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder
agreements, or arrangements or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. Except as disclosed on
Schedule 4.3, neither the offer, issuance or sale of any of the Note or the
Option, or the issuance of any of the Note Shares or the Option Shares, nor the
consummation of any transaction contemplated hereby will result in a change in
the price or number of any securities of the Company outstanding, under
anti-dilution or other similar provisions contained in or affecting any such
securities.


 


6





















 


All issued and outstanding
shares of the Company’s Common Stock: 
(i) have been duly authorized and validly issued and are fully paid and
nonassessable; and (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.


 


The rights,
preferences, privileges and restrictions of the shares of the Common Stock are
as stated in the Company’s Certificate of Incorporation (the “Charter”).  Subject to shareholder approval of an
increase in the Company’s authorized shares, the Note
Shares and the Option Shares have been duly and validly reserved for issuance.
When issued in compliance with the provisions of this Agreement and the Company’s
Charter, the Securities will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances; provided, however, that the
Securities may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.


 


Authorization; Binding Obligations.  Except for shareholder approval of an
increase in the Company’s authorized shares, all corporate
action on the part of the Company, its officers and directors necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder at the Closing and, the authorization,
sale, issuance and delivery of each of the Note and the Option have been taken
or will be taken prior to the Closing. The Agreement and the Related
Agreements, when executed and delivered and to the extent it is a party
thereto, will be valid and binding obligations of the Company enforceable in
accordance with their terms, except:


 


as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights; and


 


general principles of equity
that restrict the availability of equitable or legal remedies.


 


The sale of the Note and the
subsequent conversion of the Note into Note Shares are not and will not be
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with.  The
issuance of the Option and the subsequent exercise of the Option for Option
Shares are not and will not be subject to any preemptive rights or rights of
first refusal that have not been properly waived or complied with.


 


Liabilities.  The Company, to the best of its knowledge, has
no material contingent liabilities, except current liabilities incurred in the
ordinary course of business and liabilities disclosed in any Exchange Act
Filings.


 


Agreements; Action.  Except as set forth on Schedule 4.6 or as
disclosed in any Exchange Act Filings:


 


There are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which the Company is a party or to its knowledge by
which it is bound which may involve: (i) obligations (contingent or otherwise)
of, or payments to, the Company in excess of $50,000 (other than obligations
of, or payments to, the Company arising from purchase or sale agreements
entered into in the ordinary course of business); or (ii) the transfer or
license of any patent, copyright, trade secret or other proprietary right to or
from the Company (other than licenses arising from the purchase of “off the
shelf” or other standard products); or (iii) provisions restricting the
development, manufacture or distribution of the


 


7





















 


Company’s products or services;
or (iv) indemnification by the Company with respect to infringements of
proprietary rights.


 


Since December 31, 2004, the
Company has not:  (i) declared or paid
any dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock; (ii) incurred any indebtedness for
money borrowed or any other liabilities (other than ordinary course obligations)
individually in excess of $50,000 or, in the case of indebtedness and/or
liabilities individually less than $50,000, in excess of $100,000 in the
aggregate; (iii) made any loans or advances to any person not in excess,
individually or in the aggregate, of $100,000, other than ordinary advances for
travel expenses; or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course
of business.


 


For the purposes of subsections
(a) and (b) above, all indebtedness, liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same person or
entity (including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.


 


Obligations to
Related Parties. 
Except as set forth on Schedule 4.7, there are no obligations of the
Company to officers, directors, stockholders or employees of the Company other
than:


 


for payment of salary for
services rendered and for bonus payments;


 


reimbursement for reasonable
expenses incurred on behalf of the Company;


 


for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company); and


 


obligations listed in the
Company’s financial statements or disclosed in any of its Exchange Act Filings.


 


Except as described above or
set forth on Schedule 4.7, none of the officers, directors or, to the best of
the Company’s knowledge, key employees or stockholders of the Company or any
members of their immediate families, are indebted to the Company, individually
or in the aggregate, in excess of $50,000 or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm
or corporation which competes with the Company, other than passive investments
in publicly traded companies (representing less than one percent (1%) of such
company) which may compete with the Company. Except as described above, no
officer, director or stockholder, or any member of their immediate families,
is, directly or indirectly, interested in any material contract with the
Company and no agreements, understandings or proposed transactions are
contemplated between the Company and any such person.  Except as set forth on Schedule 4.7, the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.


 


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Changes.  Since
December 31, 2004, except as disclosed in any Exchange Act Filing or in any
Schedule to this Agreement or to any of the Related Agreements, there has not
been:


 


Any change in the assets,
liabilities, financial condition, prospects or operations of the Company, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is reasonably expected to have a material adverse
effect on such assets, liabilities, financial condition, prospects or
operations of the Company;


 


Any resignation or termination
of any officer, key employee or group of employees of the Company;


 


Any material change, except in
the ordinary course of business, in the contingent obligations of the Company
by way of guaranty, endorsement, indemnity, warranty or otherwise;


 


Any damage, destruction or
loss, whether or not covered by insurance, materially and adversely affecting
the properties, business or prospects or financial condition of the Company;


 


Any waiver by the Company of a
valuable right or of a material debt owed to it;


 


Any direct or indirect material
loans made by the Company to any stockholder, employee, officer or director of
the Company, other than advances made in the ordinary course of business;


 


Any material change in any
compensation arrangement or agreement with any employee, officer, director or
stockholder;


 


Any declaration or payment of
any dividend or other distribution of the assets of the Company;


 


Any labor organization activity
related to the Company;


 


Any debt, obligation or
liability incurred, assumed or guaranteed by the Company, except those for
immaterial amounts and for current liabilities incurred in the ordinary course
of business;


 


Any sale, assignment or
transfer of any patents, trademarks, copyrights, trade secrets or other
intangible assets;


 


Any change in any material
agreement to which the Company is a party or by which it is bound which may
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company;


 


Any other event or condition of
any character that, either individually or cumulatively, has or may materially
and adversely affect the business, assets, liabilities, financial condition,
prospects or operations of the Company; or


 


Any arrangement or commitment
by the Company to do any of the acts described in subsection (a) through (m)
above.


 


9





















 


Title to Properties and Assets; Liens, Etc.  Except as set forth on Schedule 4.9, the
Company has good and marketable title to its properties and assets, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than:


 


those resulting from taxes
which have not yet become delinquent;


 


minor liens and encumbrances
which do not materially detract from the value of the property subject thereto
or materially impair the operations of the Company; and


 


those that have otherwise
arisen in the ordinary course of business.


 


All facilities, machinery,
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company are in good operating condition and repair and are reasonably fit and
usable for the purposes for which they are being used.  Except as set forth on Schedule 4.9, the
Company is in compliance with all material terms of each lease to which it is a
party or is otherwise bound.


 


Intellectual Property.


 


The Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes necessary for its business as now conducted and to the Company’s
knowledge as presently proposed to be conducted (the “Intellectual Property”),
without any known infringement of the rights of others.  There are no outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of “off the shelf” or standard products.


 


The Company has not received
any communications alleging that the Company has violated any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity, nor is the Company aware of
any basis therefore.


 


The Company does not believe it
is or will be necessary to utilize any inventions, trade secrets or proprietary
information of any of its employees made prior to their employment by the
Company, except for inventions, trade secrets or proprietary information that
have been rightfully assigned to the Company.


 


Compliance with Other Instruments. 
Except as set forth on Schedule 4.11, the
Company is not in violation or default of any term of its Charter or Bylaws, or
of any material provision of any mortgage, indenture, contract, agreement,
instrument or contract to which it is party or by which it is bound or of any
judgment, decree, order or writ.  The
execution, delivery and performance of and compliance with this Agreement and
the Related Agreements to which it is a party, and the issuance and sale of the
Note by the Company and the other Securities by the Company each pursuant
hereto, will not, with or without the passage of time or giving of notice,


 


10





















 


result in any such material
violation, or be in conflict with or constitute a default under any such term
or provision, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.


 


Litigation. 
Except as set forth on Schedule 4.12 hereto, there is no action, suit,
proceeding or investigation pending or, to the Company’s knowledge, currently
threatened against the Company that prevents the Company to enter into this
Agreement or the Related Agreements, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that
there is any basis for any of the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.  There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.


 


Tax Returns and Payments.  The Company has timely filed all tax returns
(federal, state and local) required to be filed by it.  All taxes shown to be due and payable on such
returns, any assessments imposed, and to the Company’s knowledge all other
taxes due and payable by the Company on or before the Closing, have been paid
or will be paid prior to the time they become delinquent.  Except as set forth on Schedule 4.13, the Company
has not been advised:


 


that any of its returns,
federal, state or other, have been or are being audited as of the date hereof;
or


 


of any deficiency in assessment
or proposed judgment to its federal, state or other taxes.


 


The Company has no knowledge of
any liability of any tax to be imposed upon its properties or assets as of the
date of this Agreement that is not adequately provided for.


 


Employees.  Except
as set forth on Schedule 4.14, the Company has no collective bargaining
agreements with any of its employees. 
There is no labor union organizing activity pending or, to the Company’s
knowledge, threatened with respect to the Company.  Except as disclosed in the Exchange Act
Filings or on Schedule 4.14, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. 
To the Company’s knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be
conducted by the Company; and to the Company’s knowledge the continued
employment by the Company of its present employees, and the performance of the
Company’s contracts with its independent contractors, will not result in any
such violation.  The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any


 


11





















 


judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company.  The Company has not
received any notice alleging that any such violation has occurred.  Except for employees who have a current
effective employment agreement with the Company, no employee of the Company has
been granted the right to continued employment by the Company or to any
material compensation following termination of employment with the Company.  Except as set forth on Schedule 4.14, the
Company is not aware that any officer, key employee or group of employees
intends to terminate his, her or their employment with the Company, nor does
the Company have a present intention to terminate the employment of any officer,
key employee or group of employees.


 


Registration Rights and Voting Rights.  Except as set forth on Schedule Rates
4.15 and except as disclosed in Exchange Act Filings, the Company is presently
not under any obligation, and has not granted any rights, to register any of
the Company’s presently outstanding securities or any of its securities that
may hereafter be issued.  Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, to the
Company’s knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.


 


Compliance with Laws; Permits.  Except as set forth on Schedule 4.16, to its
knowledge, the Company is not in violation in any material respect of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation
would materially and adversely affect the business, assets, liabilities,
financial condition, operations or prospects of the Company.  No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the
execution and delivery of this Agreement and the issuance of any of the
Securities, except such as has been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed in
a timely manner.  The Company has all
material franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which would
materially and adversely affect the business, properties, prospects or
financial condition of the Company.


 


Environmental
and Safety Laws. 
The Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and
to its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation. Except as set forth
on Schedule 4.17, no Hazardous Materials (as defined below) are used or have
been used, stored, or disposed of by the Company or, to the Company’s
knowledge, by any other person or entity on any property owned, leased or used
by the Company. For the purposes of the preceding sentence, “Hazardous
Materials” shall mean:


 


materials which are listed or
otherwise defined as “hazardous” or “toxic” under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or
remedy of contamination on property, the protection of the environment from
contamination, the control of hazardous wastes, or other activities involving
hazardous substances, including building materials; or


 


12





















 


any petroleum products or
nuclear materials.


 


Valid Offering.  Assuming the accuracy of the representations
and warranties of the Purchaser contained in this Agreement, the offer, sale
and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.


 


Full Disclosure.  The Company has provided the Purchaser with
all information requested by the Purchaser in connection with its decision to
purchase the Note and the Option, including all information the Company
believes is reasonably necessary to make such investment decision.  Neither this Agreement, the exhibits and
schedules hereto, the Related Agreements nor any other document delivered by
the Company to Purchaser or its attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.  Any financial projections and other estimates
provided to the Purchaser by the Company were based on the Company’s experience
in the industry and on assumptions of fact and opinion as to future events
which the Company, at the date of the issuance of such projections or
estimates, believed to be reasonable.


 


Insurance.  The
Company has general commercial, product liability, fire and casualty insurance
policies with coverages which the Company believes are customary for companies
similarly situated to the Company in the same or similar business.


 


SEC Reports. 
Except as set forth on Schedule 4.21, the Company has filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act.  The Company has furnished
the Purchaser with copies of:  (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 2004; and
(ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2004, June 30, 2004 and September 30, 2004, and the Form 8-K filings which it
has made during 2005 to date (collectively, the “SEC Reports”). Except as set
forth on Schedule 4.21, each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.


 


Listing.  The Company’s Common Stock is listed for
trading on the National Association of Securities Dealers,  Inc. Over the Counter Bulletin Board (“NASD
OTCBB”) and satisfies all requirements for the continuation of such
listings.  The Company has not received
any notice that its Common Stock will be delisted from NASD OTCBB or that it
does not meet all requirements for listing.


 


No Integrated Offering.  Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or


 


13





















 


solicited any offers to buy any
security under circumstances that would cause the offering of the Securities
pursuant to this Agreement to be integrated with prior offerings by the Company
for purposes of the Securities Act which would prevent the Company from selling
the Securities pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of its affiliates or subsidiaries take any action or steps that would cause the
offering of the Securities to be integrated with other offerings.


 


Stop Transfer.  The Securities are restricted securities as
of the date of this Agreement.  The
Company will not issue any stop transfer order or other order impeding the sale
and delivery of any of the Securities at such time as the Securities are
registered for public sale or an exemption from registration is available, except
as required by state and federal securities laws.


 


Dilution. 
The Company specifically acknowledges that its obligation to issue the
shares of Common Stock upon conversion of the Note and exercise of the Option
is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company.


 


Patriot Act. 
If the Company is a corporation, trust, partnership, limited liability
Purchaser or other organization, the Company certifies that, to the best of
Company’s knowledge, the Company has not been designated, and is not owned or
controlled, by a “suspected terrorist” as defined in Executive Order
13224.  The Company hereby acknowledges
that the Purchaser seeks to comply with all applicable laws concerning money
laundering and related activities.  In
furtherance of those efforts, the Company hereby represents, warrants and
agrees that:  (i) none of the cash or
property that the Company will pay or will contribute to the Purchaser has been
or shall be derived from, or related to, any activity that is deemed criminal
under United States law; and (ii) no contribution or payment by the Company to
the Purchaser, to the extent that they are within the Company’s control shall
cause the Purchaser to be in violation of the United States Bank Secrecy Act,
the United States International Money Laundering Control Act of 1986 or the
United States International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001.  The Company shall
promptly notify the Purchaser if any of these representations ceases to be true
and accurate regarding the Company.  The
Company agrees to provide the Purchaser any additional information regarding
the Company that the Purchaser deems necessary or convenient to ensure
compliance with all applicable laws concerning money laundering and similar
activities.  The Company understands and
agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law or
regulation related to money laundering similar activities, the Purchaser may
undertake appropriate actions to ensure compliance with applicable law or
regulation, including but not limited to segregation and/or redemption of the
Company’s investment in the Purchaser. 
The Company further understands that the Purchaser may release
confidential information about the Company and, if applicable, any underlying
beneficial owners, to proper authorities if the Purchaser, in its sole discretion,
determines that it is in the best interests of the Purchaser in light of
relevant rules and regulations under the laws set forth in subsection (ii)
above.


 


Representations and Warranties of the Purchaser.  The Purchaser hereby represents and warrants to
the Company as follows (such representations and warranties do not lessen or
obviate the representations and warranties of the Company set forth in this
Agreement)


 


14





















 


No Shorting. 
The Purchaser or any of its affiliates and investment partners has not,
will not and will not cause any person or entity, directly to engage in “short
sales” of the Company’s Traded Securities as long as the Note shall be
outstanding.


 


Requisite
Power and Authority. 
Purchaser has all necessary power and authority under all applicable
provisions of law to execute and deliver this Agreement and the Related
Agreements and to carry out their provisions. All corporate action on Purchaser’s
part required for the lawful execution and delivery of this Agreement and the
Related Agreements have been or will be effectively taken prior to the Closing.
Upon their execution and delivery, this Agreement and the Related Agreements
will be valid and binding obligations of Purchaser, enforceable in accordance
with their terms, except:


 


as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights; and


 


as limited by general
principles of equity that restrict the availability of equitable and legal
remedies.


 


Investment Representations.  Purchaser understands that the Securities are
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon Purchaser’s representations contained in
the Agreement, including, without limitation, that the Purchaser is an “accredited
investor” within the meaning of Regulation D under the Securities Act of 1933,
as amended (the “Securities Act”). The Purchaser confirms that it has received
or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the Note
and the Option to be purchased by it under this Agreement and the Note Shares
and the Option Shares acquired by it upon the conversion of the Note and
exercise of the Option, respectively. The Purchaser further confirms that it
has had an opportunity to ask questions and receive answers from the Company regarding
the Company’s business, management and financial affairs and the terms and
conditions of the Offering, the Note, the Option and the Securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the
Purchaser had access.


 


Purchaser
Bears Economic Risk.  Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in companies
similar to the Company so that it is capable of evaluating the merits and risks
of its investment in the Company and has the capacity to protect its own
interests. Purchaser must bear the economic risk of this investment until the
Securities are sold pursuant to: (i) an effective registration statement under
the Securities Act; or (ii) an exemption from registration is available with
respect to such sale.


 


Acquisition for Own Account.  Purchaser is acquiring the Note, the Option,
the Note Shares and the Option Shares for Purchaser’s own account for
investment only, and not as a nominee or agent and not with a view towards or
for resale in connection with their distribution.


 


Purchaser Can
Protect Its Interest. 
Purchaser represents that by reason of its, or of its management’s,
business and financial experience, Purchaser has the capacity to evaluate the


 


15





















 


merits and risks of its
investment in the Note, the Option and the Securities and to protect its own
interests in connection with the transactions contemplated in this Agreement,
and the Related Agreements.  Further,
Purchaser is aware of no publication of any advertisement in connection with
the transactions contemplated in the Agreement or the Related Agreements.


 


Accredited Investor.  Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.


 


Legends.


 


The Note shall bear
substantially the following legend:


 


“THIS NOTE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE
COMMON STOCK 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 OR SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO MICRO
COMPONENT TECHNOLOGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”


 


The Note Shares and the Option
Shares, if not issued by DWAC system (as hereinafter defined), shall bear a
legend which shall be in substantially the following form until such shares are
covered by an effective registration statement filed with the SEC:


 


“THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO MICRO COMPONENT TECHNOLOGY, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.”


 


The Option shall bear
substantially the following legend:


 


“THIS OPTION AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE 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


 


16





















 


REGISTRATION STATEMENT AS TO THIS OPTION OR
THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO MICRO
COMPONENT TECHNOLOGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”


 


Covenants of the Company.  The Company covenants and agrees with the Purchaser
as follows:


 


Stop-Orders. 
The Company will advise the Purchaser, promptly after it receives notice
of issuance by the Securities and Exchange Commission (the “SEC”), any state
securities commission or any other regulatory authority of any stop order or of
any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Common Stock of the
Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.


 


Listing. 
The Company shall promptly secure the listing of the shares of Common
Stock issuable upon conversion of the Note and the exercise of the Option on
the NASD OTCBB, Nasdaq National Market or the NASDAQ SmallCap Market (any one,
a “Principal Market”) upon which shares of Common Stock are listed (subject to
official notice of issuance) and shall maintain such listing so long as any
other shares of Common Stock shall be so listed. The Company will maintain the
listing of its Common Stock on the Principal Market, and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers (“NASD”)
and such exchanges, as applicable.


 


Market Regulations.  The Company shall notify the SEC, NASD and
applicable state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to Purchaser
and promptly provide copies thereof to Purchaser.


 


Reporting Requirements.  The Company will timely file with the SEC all
reports required to be filed pursuant to the Exchange Act and refrain from
terminating its status as an issuer required by the Exchange Act to file
reports thereunder even if the Exchange Act or the rules or regulations
thereunder would permit such termination.


 


Use of Funds.  The
Company agrees that it will use the proceeds of the sale of the Note and the
Option for working capital purposes only.


 


Access to Facilities. The
Company will permit any representatives designated by the Purchaser (or any
successor of the Purchaser), upon reasonable notice and during normal business
hours, at such person’s expense and accompanied by a representative of the
Company, to:


 


visit and inspect any of the
properties of the Company;


 


17





















 


examine the corporate and
financial records of the Company (unless such examination is not permitted by
federal, state or local law or by contract) and make copies thereof or extracts
therefrom; and


 


discuss the affairs, finances
and accounts of the Company with the directors, officers and independent
accountants of the Company.


 


Notwithstanding the foregoing,
the Company will not provide any material, non-public information to the
Purchaser unless the Purchaser signs a confidentiality agreement and otherwise
complies with Regulation FD, under the federal securities laws.


 


Taxes. 
The Company will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.


 


Insurance.  The Company will keep its assets which are of
an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured
against by companies in similar business similarly situated as the Company; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner which the Company reasonably believes is
customary for companies in similar business similarly situated as the Company
and to the extent available on commercially reasonable terms. The Company and each of its subsidiaries set forth in
Section 4.2 hereof (the “Subsidiaries”) will jointly and severally bear the
full risk of loss from any loss of any nature whatsoever with respect to the
assets pledged to the Purchaser as security for its obligations hereunder and
under the Related Agreements. At the Company’s own cost and expense in amounts
and with carriers reasonably acceptable to Purchaser, the Company and each of
the Subsidiaries shall (i) keep all its insurable properties and properties in
which it has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to the Company’s or the respective Subsidiary’s including
business interruption insurance; (ii) maintain a bond in such amounts as is
customary in the case of companies engaged in businesses similar to the Company’s
or the Subsidiaries’ insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of the
Company either directly or through governmental authority to draw upon such
funds or to direct generally the disposition of such assets; (iii) maintain
public and product liability insurance against claims for personal injury,
death or property damage suffered by others; (iv) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any
state or jurisdiction in which the Company or the Subsidiaries are engaged in
business; and (v) furnish Purchaser with (x) copies of all policies and
evidence of the


 


18





















 


maintenance of such policies at least thirty
(30) days before any expiration date, (y) excepting the Company’s workers’
compensation policy, endorsements to such policies naming Purchaser as “co-insured”
or “additional insured” and appropriate loss payable endorsements in form and
substance satisfactory to Purchaser, naming Purchaser as loss payee, and (z)
evidence that as to Purchaser the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Company or any of its Subsidiaries and
the insurer will provide Purchaser with at least thirty (30) days notice prior
to cancellation.  The Company and each of
its Subsidiaries shall instruct the insurance carriers that in the event of any
loss thereunder, the carriers shall make payment for such loss to the Company
and/or any of the Subsidiaries and Purchaser jointly.  In the event that as of the date of receipt
of each loss recovery upon any such insurance, the Purchaser has not declared
an event of default with respect to this Agreement or any of the Related
Agreements, then the Company shall be permitted to direct the application of
such loss recovery proceeds toward investment in property, plant and equipment
that would comprise “Collateral” secured by Purchaser’s security interest
pursuant to its security agreement, with any surplus funds to be applied toward
payment of the obligations of the Company to Purchaser. In the event that
Purchaser has properly declared an event of default with respect to this
Agreement or any of the Related Agreements, then all loss recoveries received
by Purchaser upon any such insurance thereafter may be applied to the
obligations of the Company hereunder and under the Related Agreements, in such
order as the Purchaser may determine. Any surplus (following satisfaction of
all Company obligations to Purchaser) shall be paid by Purchaser to the Company
or applied as may be otherwise required by law. 
Any deficiency thereon shall be paid by the Company or any of the
Subsidiaries, as applicable, to Purchaser, on demand.


 


Intellectual Property.  The Company shall maintain in full force and
effect its corporate existence, rights and franchises and all licenses and
other rights to use Intellectual Property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.


 


Properties. 
The Company will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company will at all times comply with each provision of all
leases to which it is a party or under which it occupies property if the breach
of such provision could reasonably be expected to have a material adverse
effect.


 


Confidentiality.  The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser,
unless expressly agreed to by the Purchaser or unless and until such disclosure
is required by law or applicable regulation, and then only to the extent of
such requirement.  The Company may
disclose Purchaser’s identity and the terms of this Agreement to its current
and prospective debt and equity financing sources.


 


Required Approvals.  For so long as twenty-five percent (25%) of
the aggregate principal amount of the Note is outstanding, the Company, without
the prior written consent of the Purchaser, shall not, and shall not permit any
of its Subsidiaries to:


 


directly or indirectly declare
or pay any dividends, other than dividends with respect to its preferred stock;


 


19





















 


liquidate, dissolve or effect a
material reorganization;


 


become subject to (including,
without limitation, by way of amendment to or modification of) any agreement or
instrument which by its terms would (under any circumstances) restrict the
Company’s or any of its Subsidiaries’ right to perform the provisions of this
Agreement or any of the agreements contemplated thereby;


 


materially alter or change the
scope of the business of the Company and its Subsidiaries taken as a whole;


 


create,
incur, assume or suffer to exist any indebtedness (exclusive of trade debt and
debt incurred to finance the purchase of equipment (not in excess of five
percent (5%) per annum of the Company’s assets) whether secured or unsecured
other than the Company’s indebtedness to the Purchaser and as set forth on
Exhibit 6.12(e) attached hereto and made a part hereof or any refinancings or
replacements thereof or any debt incurred in connection with the purchase of
assets or in connection with operating lines of credit as necessary to operate
such assets, or any refinancings or replacements thereof; (ii) cancel any debt
owing to it in excess of $50,000 in the aggregate during any 12 month period;
(iii) assume, guarantee, endorse or otherwise become directly or contingently
liable in connection with any obligations of any other Person, except the
endorsement of negotiable instruments by the Company for deposit or collection
or similar transactions in the ordinary course of business or guarantees
provided to any of the lenders set forth in subparagraph (i) immediately above; and


 


create or acquire any
Subsidiary after the date hereof unless (i) such Subsidiary is a wholly-owned
Subsidiary of the Company and (ii) such Subsidiary becomes a party to the
Security and Guaranty Documentation (either by executing a counterpart thereof
or an assumption or joinder agreement in respect thereof) and, to the extent
required by the Purchaser, satisfies each condition of this Agreement and the
Related Agreements as if such Subsidiary were a Subsidiary on the Closing Date.


 


Reissuance of Securities.  The Company agrees to reissue certificates
representing the Securities without the legends set forth in Section 5.7 above
at such time as:


 


the holder thereof is permitted
to dispose of such Securities pursuant to Rule 144(k) under the Securities Act;
or


 


upon resale subject to an
effective registration statement after such Securities are registered under the
Securities Act.


 


The Company agrees to cooperate
with the Purchaser in connection with all resales pursuant to Rule 144(d) and
Rule 144(k) and provide legal opinions necessary to allow such resales provided
the Company and its counsel receive reasonably requested representations from
the selling Purchaser and broker, if any.


 


Opinion.  On the Closing Date, the Company will deliver
to the Purchaser an opinion in the form attached hereto as Exhibit B. The
Company will provide, at the Company’s expense, such other legal opinions in
the future as are reasonably necessary for the conversion of the Note and the
exercise of the Option.


 


20





















 


Margin Stock.  The Company will not permit any of the
proceeds of the Note or the Option to be used directly or indirectly to “purchase”
or “carry” “margin stock” or to repay indebtedness incurred to “purchase” or “carry”
“margin stock” within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect.


 


Reservation of
Common Stock. 
Subject to shareholder approval of
an increase in its number of authorizes shares, at all times on
and after June 23, 2005, the Company shall 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 the Note (including all principal,
interest and fees related thereto) and the full exercise of the Option.


 


Shareholder Approval.  The Company shall seek shareholder approval
of an increase in its authorized shares to 55,000,000 at its annual meeting to
be held June 23, 2005.  Notwithstanding
anything herein to the contrary, Company shall not be obligated to issue any
shares under the Note or the Option which would exceed its number of authorized
shares.  Failure to obtain such
shareholder approval referred to in this Section 6.17 on or prior to July 31,
2005 shall constitute an Event of Default under, and as defined in, the Note.


 


Deliveries. 
The Company shall deliver to Purchaser after the Closing Date:


 


(a)                                  Within 15 days following the Closing Date,
stock certificates of the subsidiaries the stock of which are being pledged
under that certain stock pledge agreement entered into for the benefit of the
Purchase as of the date hereof; and


 


(b)                                 Upon request of Purchaser, such documentation
as may be necessary to perfect Purchaser’s security interest under local law in
non United States subsidiaries and/or grant a guarantee under local law by such
non United States subsidiaries, within 45 days of such request.


 


Covenants of the Purchaser.  The Purchaser covenants and agrees with the
Company as follows:


 


Confidentiality.  The Purchaser agrees that it will not
disclose, and will not include in any public announcement, the name of the
Company, unless expressly agreed to by the Company or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.


 


Non-Public Information.  The Purchaser agrees not to effect any sales
in the shares of the Company’s Common Stock while in possession of material,
non-public information regarding the Company if such sales would violate
applicable securities law.


 


7.3                                 Limitation
on Acquisition of Common Stock of the Company.  Notwithstanding anything to the
contrary contained in this Agreement, any Ancillary Agreement


 


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or any
document, instrument or agreement entered into in connection with any other
transactions between the Purchaser and the Company, the Purchaser may not
acquire stock in the Company (including, without limitation, pursuant to a
contract to purchase, by exercising an option or warrant, by converting any
other security or instrument, by acquiring or exercising any other right to
acquire, shares of stock or other security convertible into shares of stock in
the Company, or otherwise, and such contracts, options, warrants, conversion or
other rights shall not be enforceable or exercisable) to the extent such stock
acquisition would cause any interest (including any original issue discount)
payable by the Company to Laurus not to qualify as “portfolio interest” within
the meaning of Section 881(c)(2) of the Code, by reason of Section 881(c)(3) of
the Code, taking into account the constructive ownership rules under Section
871(h)(3)(C) of the Code (the “Stock Acquisition Limitation”).  The Stock Acquisition Limitation shall
automatically become null and void without any notice to the Company upon the
earlier to occur of either (a) the Company’s delivery to the Purchaser of a
Notice of Redemption (as defined in the Note) or (b) the existence of an Event
of Default (as defined in the Note) at a time when the average closing price of
the Company’s common stock as reported by Bloomberg, L.P. on the Principal
Market for the immediately preceding five trading days is greater than or equal
to 150% of the Fixed Conversion Price (as defined in the Note).


 


Covenants of the Company and Purchaser Regarding Indemnification.


 


Company Indemnification.  The Company agrees to indemnify, hold
harmless, reimburse and defend Purchaser, each of Purchaser’s officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon
the Purchaser which results, arises out of or is based upon: (i) any
misrepresentation by Company or breach of any warranty by Company in this Agreement
or in any exhibits or schedules attached hereto or any Related Agreement; or
(ii) any breach or default in performance by Company of any covenant or
undertaking to be performed by Company hereunder, or any other agreement
entered into by the Company and Purchaser relating hereto.


 


Purchaser’s Indemnification.  Purchaser agrees to indemnify, hold harmless,
reimburse and defend the Company and each of the Company’s officers, directors,
agents, affiliates, control persons and principal shareholders, at all times
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon
the Company which results, arises out of or is based upon:  (i) any misrepresentation by Purchaser or
breach of any warranty by Purchaser in this Agreement or in any exhibits or
schedules attached hereto or any Related Agreement; or (ii) any breach or
default in performance by Purchaser of any covenant or undertaking to be
performed by Purchaser hereunder, or any other agreement entered into by the
Company and Purchaser relating hereto.


 


Procedures. 
The procedures and limitations set forth in Section 10.2(c) and (d)
shall apply to the indemnifications set forth in Sections 8.1 and 8.2 above.


 


Conversion of
Convertible Note.


 


Provided the Purchaser has
notified the Company of the Purchaser’s intention to sell the Note Shares and
the Note Shares are included in an effective registration statement or are


 


22





















 


otherwise exempt from
registration when sold:  (i) Upon the
conversion of the Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action (including the issuance of an opinion of counsel)
to assure that the Company’s transfer agent shall issue shares of the Company’s
Common Stock in the name of the Purchaser (or its nominee) or such other
persons as designated by the Purchaser in accordance with Section 9.1(b) hereof
and in such denominations to be specified representing the number of Note
Shares issuable upon such conversion; and (ii) 
the Company warrants that no instructions other than these instructions
have been or will be given to the transfer agent of the Company’s Common Stock
and that after the Effectiveness Date (as defined in the Registration Rights
Agreement) the Note Shares issued will be freely transferable subject to the
prospectus delivery requirements of the Securities Act and the provisions of
this Agreement, and will not contain a legend restricting the resale or
transferability of the Note Shares.


 


Subject to shareholder approval
of an increase in the Company’s number of authorized shares, the
Purchaser shall convert the Notes into shares of Common Stock pursuant to the
provision of Article III of the Note.


 


Registration Rights, Indemnification.


 


Registration Rights Granted.  The Company hereby grants registration rights
to the Purchaser pursuant to a Registration Rights Agreement dated as of even
date herewith between the Company and the Purchaser.


 


Indemnification.  The Company shall be subject to the
indemnification provisions provided for in Section 5 of the Registration Rights
Agreement.


 


Offering Restrictions.  Except as previously disclosed in the SEC
Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors of the Company; or shares of preferred stock issued to
pay dividends in respect of the Company’s preferred stock; or equity or debt
issued in connection with an acquisition of a business or assets by the Company;
or the issuance by the Company of stock in connection with the establishment of
a joint venture partnership or licensing arrangement (these exceptions
hereinafter referred to as the “Excepted Issuances”), the Company will not
issue any securities with a continuously variable/floating conversion feature
which are or could be (by conversion or registration) free-trading securities
(i.e. common stock subject to a registration statement) prior to the full
repayment or conversion of the Note (the “Exclusion Period”).


 


Miscellaneous.


 


Governing Law.  THIS AGREEMENT 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 INDIVIDUALS EXECUTING
THIS AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO
THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY.  IN THE EVENT THAT ANY PROVISION OF THIS
AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR


 


23





















 


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 ANY AGREEMENT.


 


Survival. 
The representations, warranties, covenants and agreements made herein
shall survive any investigation made by the Purchaser and the closing of the
transactions contemplated hereby to the extent provided therein. All statements
as to factual matters contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant hereto in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate
or instrument.


 


Successors.  Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who shall be a holder
of the Securities from time to time, other than the holders of Common Stock
which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. Purchaser may not assign its rights hereunder to a
competitor of the Company.


 


Entire Agreement.  This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or
bound to any other in any manner by any representations, warranties, covenants
and agreements except as specifically set forth herein and therein.


 


Severability.  In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.


 


Amendment and Waiver.


 


This Agreement may be amended
or modified only upon the written consent of the Company and the Purchaser.


 


The obligations of the Company
and the rights of the Purchaser under this Agreement may be waived only with
the written consent of the Purchaser.


 


The obligations of the
Purchaser and the rights of the Company under this Agreement may be waived only
with the written consent of the Company.


 


Delays or Omissions.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related Agreements,
shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter
occurring.  All remedies, either under
this Agreement, the Note or the Related Agreements, by law or otherwise
afforded to any party, shall be cumulative and not alternative.


 


24





















 


Notices. 
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given:


 


upon personal delivery to the
party to be notified;


 


when sent by confirmed
facsimile if sent during normal business hours of the recipient, if not, then
on the next business day;


 


three (3) business days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or


 


one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.


 


All communications shall be
sent as follows:


 


	
  If to the Company, to:

  	
   

  	
  MICRO
  COMPONENT TECHNOLOGY, INC.

  2340 West County Road C,

  St. Paul, Minnesota 55113-2528

  Attention: Chief Financial Officer

  Telephone: (651) 697-4000

  Facsimile: (651) 697-4200

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Best
  & Flanagan, LLP

  225 South Sixth St., Suite 4000,

  Minneapolis, Minnesota 55402

  Attention: James C. Diracles, Esq.

  Telephone: (612) 339-7121

  Facsimile: (612) 339-5897

  
	
   

  	
   

  	
   

  
	
  If to the Purchaser, to:

  	
   

  	
  Laurus
  Master Fund, Ltd.

  c/o M&C Corporate Services Limited

  P.O. Box 309 GT

  Ugland House

  George Town

  South Church Street

  Grand Cayman, Cayman Islands345-949-8080

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  John
  E. Tucker, Esq.

  825 Third Avenue 14th Floor

  New York, NY 10022

  Facsimile:(212)541-4434

  



 


25





















 


or at such other address as the
Company or the Purchaser may designate by written notice to the other parties
hereto given in accordance herewith.


 


Attorneys’ Fees.  In the
event that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including,
without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.


 


Titles and Subtitles.  The
titles of the sections and subsections of the Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.


 


Facsimile Signatures; Counterparts.  This
Agreement may be executed by facsimile signatures and in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.


 


Broker’s Fees.  Except
as set forth on Schedule 11.12 hereof, Each party hereto represents and
warrants that no agent, broker, investment banker, person or firm acting on behalf
of or under the authority of such party hereto is or will be entitled to any
broker’s or finder’s fee or any other commission directly or indirectly in
connection with the transactions contemplated herein.  Each party hereto further agrees to indemnify
each other party for any claims, losses or expenses incurred by such other
party as a result of the representation in this Section 11.12 being untrue.


 


Construction.  Each
party acknowledges that its legal counsel participated in the preparation of
this Agreement and the Related Agreements 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 Agreement to favor any
party against the other.


 


[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK


 


IN
WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.


 


	
  COMPANY:

  	
   

  	
  PURCHASER:

  
	
   

  	
   

  	
   

  
	
  MICRO
  COMPONENT TECHNOLOGY, INC.

  	
   

  	
  LAURUS
  MASTER FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Roger E. Gower

  	
   

  	
  By:

  	
  Eugene
  Grim

  
	
  Name:

  	
  Roger
  E. Gower

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
  Director

  



 


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