**EXHIBIT 10CC**

 

 

THISNOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATESECURITIES LAWS.  THIS NOTE AND THECOMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFEREDFOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATIONSTATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATES SECURITIESLAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO MICRO COMPONENT TECHNOLOGY,INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

**SECURED REVOLVING NOTE**

 

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

 

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

 

Thefollowing terms shall apply to this Note:

 

# **INTEREST & PREPAYMENTS**

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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 oneand three-quarters percent (1.75%) (the “Contract Rate”).  The Prime Rate shall be increased ordecreased as the case may be for each increase or decrease in the Prime Rate inan amount equal to such increase or decrease in the Prime Rate; each change tobe effective as of the day of the change in such rate in accordance with theterms 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 shallbe adjusted as follows: if (i) the Company shall have registered the shares ofthe Company’s common stock underlying the conversion of

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## ***all currentlyissued and outstanding Minimum Borrowing Notes and that certain warrant issuedto Holder of even date herewith on a registration statement declared effectiveby the Securities Exchange Commission, and (ii) the volume weighted averageprice of the Common Stock as reported by Bloomberg, L.P. on the principalmarket for the Common Stock for the seven (7) trading days immediatelypreceding an Interest Payment Date (defined below) exceeds the then applicableFixed Conversion Price (as hereinafter defined) in such percentages as outlinedin the table below, the Contract Rate for the succeeding calendar month shall automaticallybe 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%*** |

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## ***Interest shall be payable monthly in arrears commencing onApril 1, 2004 and on the first day of each consecutive calendar monththereafter, (each, an “Interest Payment Date”).***

 

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

 

# **HOLDER’S CONVERSION RIGHTS**

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## ***OptionalConversion***. Subject to the terms of thisArticle II, the Holder shall have the right, but not the obligation, atany time until the Maturity Date, or thereafter during an Event of Default (asdefined in Article III), and, subject to the limitations set forth inSection 2.2 hereof, to convert all or any portion of the outstandingPrincipal Amount and/or accrued interest and fees due and payable into fullypaid and nonassessable shares of the Common Stock at the Fixed ConversionPrice. For purposes hereof, subject to Section 2.5 hereof, the “FixedConversion Price” shall initially be $1.92. The shares of Common Stock to beissued upon such conversion are herein referred to as the “ConversionShares.”  The Fixed Conversion Priceshall also be adjusted from time to time pursuant to Section 2.2 of theMinimum Borrowing Note.

 

## ***Conversion Limitation***.Notwithstanding anything contained herein to the contrary, the Holder shall notbe 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 exceedthe difference between the number of shares of Common Stock beneficially ownedby such Holder or issuable upon exercise of warrants held by such Holder and4.99% of the outstanding shares of Common Stock of the Borrower or (b) exceedtwenty five percent (25%) of the aggregate dollar trading volume of the CommonStock for the ten (10) day trading period immediately preceding delivery of aNotice of Conversion to the Borrower. For the purposes of the immediately preceding sentence, beneficialownership shall be determined in accordance with Section 13(d) of theExchange Act and Regulation 13d-3 thereunder. The Conversion Shares limitation described in this Section 2.2shall automatically become null and void without any notice to Borrower uponthe occurrence and during the continuance beyond any applicable grace period ofan Event of Default, or upon 75 days prior notice to the Borrower.

 

## ***Mechanics ofHolder’s Conversion***. (a) In theevent that the Holder elects to convert this Note into Common Stock, the Holdershall give notice of such election by delivering an executed and completednotice of conversion (“Notice of Conversion”) to the Borrower and such Noticeof Conversion shall provide a breakdown in reasonable detail of the PrincipalAmount, accrued interest and fees that are being

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## ***converted.  On each Conversion Date (as hereinafterdefined) and in accordance with its Notice of Conversion, the Holder shall makethe appropriate reduction to the Principal Amount, accrued interest and fees asentered in its records and shall provide written notice thereof to the Borrowerwithin two (2) business days after the Conversion Date.  Each date on which a Notice of Conversion isdelivered or telecopied to the Borrower in accordance with the provisionshereof shall be deemed a Conversion Date (the “Conversion Date”).  A form of Notice of Conversion to beemployed by the Holder is annexed hereto as Exhibit A.***

 

### **(b)**           Pursuant to the terms of the Noticeof Conversion, the Borrower will issue instructions to the transfer agentaccompanied by an opinion of counsel within one (1) business day of the date ofthe delivery to Borrower of the Notice of Conversion and shall cause thetransfer agent to transmit the certificates representing the Conversion Sharesto the Holder by crediting the account of the Holder’s designated broker withthe Depository Trust Corporation (“DTC”) through its Deposit Withdrawal AgentCommission (“DWAC”) system within three (3) business days after receipt by the Borrowerof the Notice of Conversion (the “Delivery Date”).  In the case of the exercise of the conversion rights set forthherein the conversion privilege shall be deemed to have been exercised and theConversion Shares issuable upon such conversion shall be deemed to have beenissued upon the date of receipt by the Borrower of the Notice ofConversion.  The Holder shall be treatedfor all purposes as the record holder of such Common Stock, unless the Holderprovides the Borrower written instructions to the contrary.

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## ***(c) The Borrower understands that a delay in the delivery ofthe shares of Common Stock issuable upon conversion of the Note (the “NoteShares”) in the form required pursuant to this Section 3 beyond theDelivery Date could result in economic loss to the Holder.  In the event that the Borrower fails todirect its transfer agent to deliver the Note Shares to the Holder via the DWACsystem within the time frame set forth in Section 2.3(b) above and the NoteShares are not delivered to the Holder by the Delivery Date, as compensation tothe Holder for such loss, the Borrower agrees to pay late payments to theHolder for late issuance of the Note Shares in the form required pursuant tothis Section 3 upon conversion of the Note in the amount equal to thegreater of:  (i) $500 per business dayafter the Delivery Date; or (ii) the Holder’s actual damages from such delayeddelivery. Notwithstanding the foregoing, the Borrower will not owe the Holderany late payments if the delay in the delivery of the Note Shares beyond theDelivery Date is solely out of the control of the Borrower and the Borrower isactively trying to cure the cause of the delay.  The Borrower shall pay any payments incurred under this Section 2.3in 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 ofshares of Common Stock the Holder is forced to purchase (in an open markettransaction) which the Holder anticipated receiving upon such conversion, andshall be calculated as the amount by which (A) the Holder’s total purchaseprice (including customary brokerage commissions, if any) for the shares ofCommon Stock so purchased exceeds (B) the aggregate principal and/or interestamount of the Note, for which such Notice of Notice was not timely honored.***

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Nothingcontained herein or in any document referred to herein or delivered inconnection herewith shall be deemed to establish or require the payment of arate of interest or other charges in excess of the maximum permitted byapplicable law.  In the event that therate of interest or dividends required to be paid or other charges hereunderexceed the maximum amount permitted by such law, any payments in excess of suchmaximum shall be credited against amounts owed by the Borrower to the Holderand thus refunded to the Borrower.

 

## ***Late Payments***.The Borrower understands that a delay in the delivery of the shares of CommonStock in the form required pursuant to this Article beyond the DeliveryDate could result in economic loss to the

 

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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 ofsuch shares in the form required pursuant to this Article II uponconversion of the Note, in the amount equal to $500 per business day after theDelivery Date.  The Borrower shall payany payments incurred under this Section in immediately available fundsupon demand.***

 

## ***AdjustmentProvisions***. The Fixed Conversion Price and numberand kind of shares or other securities to be issued upon conversion determinedpursuant to Section 2.1 shall be subject to adjustment from time to timeupon the happening of certain events while this conversion right remainsoutstanding, as follows:

 

#### **Reclassification, etc**.  If the Borrower at any time shall, byreclassification or otherwise, change the Common Stock into the same or adifferent number of securities of any class or classes, this Note, as to theunpaid Principal Amount and accrued interest thereon, shall thereafter bedeemed to evidence the right to purchase an adjusted number of such securitiesand kind of securities as would have been issuable as the result of such changewith respect to the Common Stock immediately prior to such reclassification orother change.

 

#### **Stock Splits, Combinations and Dividends**.  If the shares of Common Stockare subdivided or combined into a greater or smaller number of shares of CommonStock, 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 subdivisionof shares or stock dividend or proportionately increased in the case ofcombination of shares, in each such case by the ratio which the total number ofshares of Common Stock outstanding immediately after such event bears to thetotal number of shares of Common Stock outstanding immediately prior to suchevent.

 

C.            ShareIssuances.  Subject to theprovisions of this Section 2.5, if the Borrower shall at any time prior tothe conversion or repayment in full of the Principal Amount issue any shares ofCommon Stock to a person other than the Holder (except (i) pursuant toSubsections A or B above; (ii) pursuant to options, warrants, or other obligationsto issue shares outstanding on the date hereof as disclosed to Holder inwriting; or (iii) pursuant to options that may be issued under any employeeincentive stock option and/or any qualified or non-qualified stock option plansadopted by the Borrower) for a consideration per share (the “Offer Price”) lessthan the Fixed Conversion Price in effect at the time of such issuance, thenthe Fixed Conversion Price shall be immediately reset pursuant to the formulabelow:

 

If the Borrowerissues any additional shares pursuant to Section 2.5 above then, andthereafter successively upon each such issue, the Fixed Conversion Price shallbe adjusted by multiplying the then applicable Fixed Conversion Price by thefollowing fraction:

 
| A + B                              |
|------------------------------------|
| (A + B) + [((C – D) x B) / C] |

 

A = Actual shares outstanding prior to such offering

 

B =  Actual shares sold in theoffering

 

C = Fixed Conversion Price

 

D = Offering price

 

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#### **D.**            Computation of Consideration. For purposes ofany computation respecting consideration received pursuant to Subsection Cabove, the following shall apply:

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#### **(d)**                                           in the case of the issuance of shares of Common Stock for cash, theconsideration shall be the amount of such cash, provided that in no case shallany deduction be made for any commissions, discounts or other expenses incurredby the Borrower for any underwriting of the issue or otherwise in connectiontherewith;

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#### **(e)**                                           in the case of the issuance of shares of Common Stock for aconsideration in whole or in part other than cash, the consideration other thancash shall be deemed to be the fair market value thereof as determined in goodfaith by the Board of Directors of the Borrower (irrespective of the accountingtreatment thereof); and

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#### **(f)**                                            Upon any such exercise, the aggregate consideration received for suchsecurities shall be deemed to be the consideration received by the Borrower forthe issuance of such securities plus the additional minimum consideration, ifany, 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 providedin clauses (a) and (b) of this Subsection (D)).

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## ***Reservation ofShares***. During the period the conversion rightexists, the Borrower will reserve from its authorized and unissued Common Stocka sufficient number of shares to provide for the issuance of Common Stock uponthe full conversion of this Note.  TheBorrower represents that upon issuance, such shares will be duly and validlyissued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note shall constitute fullauthority to its officers, agents, and transfer agents who are charged with theduty of executing and issuing stock certificates to execute and issue thenecessary certificates for shares of Common Stock upon the conversion of thisNote.

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# **EVENTS OF DEFAULT**

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

 

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## ***Failure to PayPrincipal, Interest or other Fees***.  The Borrower fails to pay when due anyinstallment of principal, interest or other fees hereon or on any other Noteissued pursuant to the Security Agreement, when due in accordance with theterms of such Note.

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## ***Breach ofCovenant***. The Borrower breaches any covenant or other term or condition of thisNote in any material respect and such breach, if subject to cure, continues fora period of thirty (30) days after the occurrence thereof.

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## ***Breach ofRepresentations and Warranties***.  Any material representation or warranty ofthe Borrower made herein, or the Security Agreement, or in any AncillaryAgreement shall be materially false or misleading.

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## ***Stop Trade***.  An SEC stop trade order or Principal Markettrading suspension of the Common Stock shall be in effect for 5 consecutivedays or 5 days during a period of 10 consecutive days, excluding in all cases asuspension of all trading on a Principal Market, provided that the Borrowershall not have been able to cure such trading suspension within 30 days of thenotice thereof or list the Common Stock on another Principal Market within 60days of such notice.  The “PrincipalMarket” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQSmallCap Market, NASDAQ National Market System, American Stock Exchange, or NewYork Stock Exchange (whichever of the foregoing is at the time the principaltrading exchange or market for the Common Stock), or any securities exchange orother securities market on which the Common Stock is then being listed ortraded.

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## ***Default UnderRelated Agreement***. The occurrence of an Event of Default under and as defined in theSecurity Agreement.

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

 

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

 

# **DEFAULT PAYMENTS**

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## ***Default Payment***.  If an Event of Default occurs, the Holder,at its option, may elect, in addition to all rights and remedies of Holderunder the Security Agreement and all obligations of Borrower under the SecurityAgreement, to require the Borrower to make a Default Payment (“DefaultPayment”).  The Default Payment shall bethe outstanding principal amount of the Note, plus accrued but unpaid interest,all other fees then remaining unpaid, and all other amounts payable hereunder.

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## ***Default PaymentDate and Default Notice Period***.  The Default Payment shall be due and payableon the fifth business day after an Event of Default as defined inArticle III (“Default Payment Date”) has occurred and is continuing beyondany applicable grace period.  The periodbetween date upon which of an Event of Default has occurred and is continuingbeyond any applicable grace period and the Default Payment Date shall be the“Default Period.” If during the Default Period, the Borrower cures the Event ofDefault, the Event of Default will no longer exist and any additional rightsthe Holder had triggered by the occurrence and continuance of an Event ofDefault will no longer exist.  If theEvent of Default is not

 

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## ***cured during theDefault Notice Period, all amounts payable hereunder shall be due and payableon the Default Payment Date, all without further demand, presentment or notice,or grace period, all of which hereby are expressly waived.***

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## ***Default InterestRate***. Following the occurrence and during the continuance of an Event ofDefault, 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 atsuch interest rate applicable to such Obligations until such Event of Defaultis cured or waived.

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## ***CumulativeRemedies***. The remedies under this Note shall be cumulative.

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# **MISCELLANEOUS**

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## ***Failure orIndulgence Not Waiver***.  No failure or delay on the part of theHolder hereof in the exercise of any power, right or privilege hereunder shalloperate as a waiver thereof, nor shall any single or partial exercise of anysuch power, right or privilege preclude other or further exercise thereof or ofany other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and notexclusive of, any rights or remedies otherwise available.

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## ***Notices***.  Any notice herein required or permitted tobe given shall be in writing and provided in accordance with the terms of theSecurity Agreement.

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## ***AmendmentProvision***. The term “Note” and all reference thereto, as used throughout this instrument,shall mean this instrument as originally executed, or if later amended orsupplemented, then as so amended or supplemented, and any successor instrumentas it may be amended or supplemented.

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## ***Assignability***.  This Note shall be binding upon the Borrowerand its successors and assigns, and shall inure to the benefit of the Holderand its successors and assigns, and may be assigned by the Holder in accordancewith the requirements of the Security Agreement.

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## ***Cost ofCollection***. If default is made in the payment of this Note, the Borrower shall paythe Holder hereof reasonable costs of collection, including reasonableattorneys’ fees.

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## ***Governing Law***.  This Note shall be governed by and construedin accordance with the laws of the State of New York, without regard toprinciples of conflicts of laws.  Anyaction brought by either party against the other concerning the transactionscontemplated by this Agreement shall be brought only in the state courts of NewYork or in the federal courts located in the state of New York.  Both parties and the individual signing thisNote on behalf of the Borrower agree to submit to the jurisdiction of suchcourts.  The prevailing party shall beentitled to recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this Noteis invalid or unenforceable under any applicable statute or rule of law, thensuch provision shall be deemed inoperative to the extent that it may conflicttherewith and shall be deemed modified to conform with such statute or rule oflaw.  Any such provision which may proveinvalid or unenforceable under any law shall not affect the validity orunenforceability of any other provision of this Note.  Nothing contained herein shall be deemed or operate to precludethe Holder from bringing suit or taking other legal action against the Borrowerin 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 toenforce a judgment or other court order in favor of Holder.

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## ***Maximum Payments***.  Nothing contained herein shall be deemed toestablish or require the payment of a rate of interest or other charges inexcess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid orother charges hereunder exceed the maximum permitted by such law, any paymentsin excess of such maximum shall be credited against amounts owed by theBorrower to the Holder and thus refunded to the Borrower.

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## ***Security Interest***.  The Holder of this Note has been granted asecurity interest in certain assets of the Borrower more fully described in theSecurity Agreement.

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## ***Construction***.  Each party acknowledges that its legalcounsel participated in the preparation of this Note and, therefore, stipulatesthat the rule of construction that ambiguities are to be resolved against thedrafting party shall not be applied in the interpretation of this Note to favorany party against the other.

 

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## ***[Balance of page intentionally left blank; signature pagefollows.]***

 

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IN WITNESSWHEREOF, the Borrower has caused this Secured Convertible Revolving Note to besigned 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 |                             |   |
|                |                                  |  |  |  |

 

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**NOTICE OF CONVERSION**

 

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

 

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

 
| Date of  Conversion:      |   |   |
|---------------------------|--------|--------|
|                      |   |
| Conversion  Price:        |   |   |
|                      |   |
| Shares To Be  Delivered:  |   |   |
|                      |   |
| Signature:                |   |   |
|                      |   |
| Print Name:               |   |   |
|                      |   |
| Address:                  |   |   |
|                      |   |   |
|                      |   |   |
|                      |   |
| Holder DWAC  instructions |   |   |

 

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