Document:

EXHBIT 10BB

 

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

SECURED CONVERTIBLE MINIMUM
BORROWING NOTE

 

FOR VALUE
RECEIVED, MICRO COMPONENT TECHNOLOGY, INC., a Minnesota corporation (the
“Borrower”), promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore Corporate
Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand
Cayman, Cayman Islands, Fax: 345-949-9877 (the “Holder”) or its registered
assigns, on order, the sum of SEVEN HUNDRED FIFTY THOUSAND ($750,000), or, if
different, the aggregate principal amount of all “Loans” (as such term is
defined in the Security Agreement referred to below), together with any accrued
and unpaid interest hereon, on March 9, 2007 (the “Maturity Date”).

 

Capitalized terms
used herein without definition shall have the meanings ascribed to such terms
in the Security Agreement between Borrower and the Holder dated as of
March 9, 2004 (as amended, modified and supplemented from time to time,
the “Security Agreement”).

 

The following terms shall apply to this Secured Convertible Minimum
Borrowing Note (the “Note”):

 

INTEREST

 

1.1                                 Interest
Rate and Payments.  Subject to
Sections 5.3 and 6.7 hereof, interest payable on this Note shall accrue at a
rate per annum equal to the “prime rate” published in The Wall Street
Journal from time to time, plus one and three-quarters percent (1.75%) (the
“Contract Rate”).  The Prime Rate shall
be increased or decreased as the case may be for each increase or decrease in
the Prime Rate in an amount equal to such increase or decrease in the Prime
Rate; each change to be effective as of the day of the change in such rate in
accordance with the terms of the Security Agreement. Subject to the immediately
following sentence, the Contract Rate hall not be less than five and
three-quarters percent (5.75%).  Commencing
six months after the Closing Date, the Contract Rate shall be adjusted as
follows: if (i) the Company shall have registered the shares of the Company’s
common stock underlying the conversion of all currently issued and outstanding
Minimum Borrowing Notes and that certain warrant issued to Holder of even date
herewith on a registration statement declared effective by the Securities
Exchange Commission,

 

10BB-1

 

and (ii) the volume weighted average price of the Common Stock as
reported by Bloomberg, L.P. on the principal market for the Common Stock for
any of the seven (7) trading days immediately preceding an Interest Payment
Date (defined below) exceeds the then applicable Fixed Conversion Price (as
hereinafter defined) in such percentages as outlined in the table below, the
Contract Rate for the succeeding calendar month shall automatically be adjusted
as follows:

 

	
   

  	
  Contract
  Rate

  
	
  130% of the Fixed Conversion Price

  	
  Prime Rate

  
	
  150% of the Fixed Conversion Price

  	
  Prime Rate minus 0.75%

  
	
  175% of the Fixed Conversion Price

  	
  Prime Rate minus 2.00%

  

 

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

 

ADVANCES, BORROWER CONVERSION
RIGHTS, PAYMENTS UNDER NOTE

 

Mechanics of
Advances. 
All Loans evidenced by this Note shall be made in accordance with the
terms and provisions of the Security Agreement.

 

Fixed Conversion
Price. 
For purposes hereof, subject to Section 3.5 hereof, the “Fixed
Conversion Price” shall initially be $1.92. Upon conversion of an aggregate
principal amount of $1,500,000 of the Note into shares of Common Stock pursuant
to Section 2.4 hereof, the Fixed Conversion Price shall be adjusted to the
average closing price of the Common Stock for the three (3) trading days
immediately prior to the date of such conversion.

 

No Effective Registration.  Notwithstanding anything to the contrary
herein, the Borrower shall be prohibited from exercising its right to repay any
amount hereunder in shares of Common Stock if at any time from the Call Date
(defined below) for such payment through the date upon which such payment is
made by delivery of certificates for shares of Common Stock there fails to
exist an effective current Registration Statement (as defined in the
Registration Rights Agreement) covering the shares of Common Stock to be
issued, or if an Event of Default hereunder exists and is continuing, unless
such requirement is otherwise waived in writing by the Holder in whole or in
part at the Holder’s option.

 

Reserved.

 

2.5                                 Optional
Redemption in Cash.  The Borrower
will have the option of prepaying this Note in full (“Optional Redemption”) by
paying to the Holder a sum of money equal to one hundred five percent (105%) of
the principal amount of this Note together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder
arising under this Note, the Security Agreement, or any Ancillary Agreement (as
defined in the Security Agreement) (the “Redemption Amount”) outstanding on the
day written notice of redemption (the “Notice of Redemption”) is given to the
Holder, which Notice of Redemption shall specify the date for such Optional
Redemption (the “Redemption Payment Date”), which date shall be seven (7) days
after the date of the Notice of Redemption (the “Redemption Period”). A Notice
of Redemption shall not be effective with respect to any portion of this Note
for which the Holder has a pending election to convert pursuant to
Section 3.1, or for conversions elected to be made by the Holder pursuant
to Section 3.1 during the Redemption Period. The Redemption Amount shall
be determined as if such election to convert had been completed immediately
prior to the date of the Notice of Redemption. On the Redemption Payment Date,
the Redemption Amount must be paid in good funds to the Holder.  In the event the Borrower fails to pay the
Redemption Amount by the Redemption Payment Date, then such Redemption Notice
will be null and void.

 

10BB-2

 

HOLDER’S CONVERSION RIGHTS

 

Optional
Conversion. Subject to the terms of this
Article III, the Holder shall have the right, but not the obligation, at
any time until the Maturity Date, or thereafter during an Event of Default (as
defined in Article V), and, subject to the limitations set forth in
Section 3.2 hereof, to convert all or any portion of the outstanding
Principal Amount and/or accrued interest and fees due and payable into fully
paid and nonassessable shares of the Common Stock at the Fixed Conversion
Price. The shares of Common Stock to be issued upon such conversion are herein
referred to as the “Conversion Shares.”

 

Conversion
Limitation. Notwithstanding anything contained
herein to the contrary, (a) the Holder shall not be entitled to convert and (b)
the Borrower shall not be entitled to make payment in shares of Common Stock
pursuant to the terms of this Note if the number of shares of Common Stock that
would be issued upon such conversion or such payment would either (i) exceed
the difference between the number of shares of Common Stock beneficially owned
by such Holder or issuable upon exercise of warrants held by such Holder and
4.99% of the outstanding shares of Common Stock of the Borrower or (ii) exceed
twenty five percent (25%) of the aggregate dollar trading volume of the Common
Stock for the ten (10) day trading period immediately preceding delivery of a
Notice of Conversion to the Borrower. 
For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and Regulation 13d-3 thereunder. 
The limitation described in clause (a) of this Section 3.2 shall
automatically become null and void without any notice to Borrower upon the
occurrence and during the continuance beyond any applicable grace period of an
Event of Default, or upon 75 days prior notice to the Borrower.

 

Mechanics of Holder’s
Conversion. (a) In the event that the Holder elects
to convert this Note into Common Stock, the Holder shall give notice of such
election by delivering an executed and completed notice of conversion (“Notice
of Conversion”) to the Borrower and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees that are being converted.  On each
Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records and shall provide
written notice thereof to the Borrower within two (2) business days after the
Conversion Date.  Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the “Conversion
Date”).  A form of Notice of Conversion
to be employed by the Holder is annexed hereto as Exhibit A.

 

(b) Pursuant to the terms of the Notice of Conversion, the
Borrower will issue instructions to the transfer agent accompanied by an
opinion of counsel within one (1) business day of the date of the delivery to
Borrower of the Notice of Conversion and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder’s designated broker with the Depository
Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”)
system within three (3) business days after receipt by the Borrower of the
Notice of Conversion (the “Delivery Date”). In the case of the exercise of the
conversion rights set forth herein the conversion privilege shall be deemed to
have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such Common Stock, unless the Holder provides the Borrower
written instructions to the contrary.

 

(c) The Borrower understands that a delay in the delivery of the shares
of Common Stock issuable upon conversion of the Note (the “Note Shares”) in the
form required pursuant to this Section 3 beyond the Delivery Date could
result in economic loss to the Holder. 
In the event that the Borrower fails to direct its transfer agent to
deliver the Note Shares to the Holder via the

 

10BB-3

 

DWAC system within the time frame set forth in Section 3.3(b)
above and the Note Shares are not delivered to the Holder by the Delivery Date,
as compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of the Note Shares in the form
required pursuant to this Section 3 upon conversion of the Note in the
amount equal to the greater of:  (i)
$500 per business day after the Delivery Date; or (ii) the Holder’s actual
damages from such delayed delivery. Notwithstanding the foregoing, the Borrower
will not owe the Holder any late payments if the delay in the delivery of the
Note Shares beyond the Delivery Date is solely out of the control of the
Borrower and the Borrower is actively trying to cure the cause of the
delay.  The Borrower shall pay any
payments incurred under this Section 3.3 in immediately available funds
upon demand and, in the case of actual damages, accompanied by reasonable
documentation of the amount of such damages. 
Such documentation shall show the number of shares of Common Stock the
Holder is forced to purchase (in an open market transaction) which the Holder
anticipated receiving upon such conversion, and shall be calculated as the
amount by which (A) the Holder’s total purchase price (including customary
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (B) the aggregate principal and/or interest amount of the Note, for
which such Notice of Notice was not timely honored.

 

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

 

10BB-4

 

Late Payments.
The Borrower understands that a delay in the delivery of the shares of Common
Stock in the form required pursuant to this Article beyond the Delivery
Date could result in economic loss to the Holder.  As compensation to the Holder for such loss, the Borrower agrees
to pay late payments to the Holder for late issuance of such shares in the form
required pursuant to this Article III upon conversion of the Note, in the
amount equal to $500 per business day after the Delivery Date.  The Borrower shall pay any payments incurred
under this Section in immediately available funds upon demand.

 

Adjustment
Provisions. The Fixed Conversion Price and number
and kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.2 shall be subject to adjustment from time to time
upon the happening of certain events while this conversion right remains
outstanding, as follows:

 

Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification or
other change.

 

Stock Splits, Combinations and Dividends.  If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Fixed Conversion Price shall be proportionately reduced in case of subdivision
of shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total number of
shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event.

 

C. Share Issuances. 
Subject to the provisions of this Section 3.5, if the Borrower
shall at any time prior to the conversion or repayment in full of the Principal
Amount issue any shares of Common Stock to a person other than the Holder
(except (i) pursuant to Subsections A or B above; (ii) pursuant to options,
warrants, or other obligations to issue shares outstanding on the date hereof
as disclosed to Holder in writing; or (iii) pursuant to options that may be
issued under any employee incentive stock option and/or any qualified or
non-qualified stock option plans adopted by the Borrower) for a consideration
per share (the “Offer Price”) less than the Fixed Conversion Price in effect at
the time of such issuance, then the Fixed Conversion Price shall be immediately
reset pursuant to the formula below:

 

If the Borrower
issues any additional shares pursuant to Section 3.5 above then, and
thereafter successively upon each such issue, the Fixed Conversion Price shall
be adjusted by multiplying the then applicable Fixed Conversion Price by the
following fraction:

 

	
  A + B

  
	
  (A + B) + [((C – D) x B) / C]

  

 

A = Actual shares
outstanding prior to such offering

B =  Actual shares sold in the offering

C = Fixed Conversion Price

D = Offering price

 

10BB-5

 

D. Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to Subsection C
above, the following shall apply:

 

(a)                                                                                                                                  in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Borrower for any underwriting of the issue or otherwise in connection
therewith;

 

(b)                                                                                                                                 in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Borrower (irrespective of the accounting
treatment thereof); and

 

(c)                                                                                                                                  Upon any such exercise, the aggregate consideration received for such
securities shall be deemed to be the consideration received by the Borrower for
the issuance of such securities plus the additional minimum consideration, if
any, to be received by the Borrower upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (a) and (b) of this Subsection (D)).

 

Reservation of
Shares. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note.  The
Borrower represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. 
The Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the conversion of this
Note.

 

Registration
Rights. 
The Holder has been granted registration rights with respect to the
shares of Common Stock issuable upon conversion of this Note as more fully set
forth in a Registration Rights Agreement dated the date hereof.

 

EVENTS OF DEFAULT

 

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

 

Failure to Pay
Principal, Interest or other Fees.  The Borrower fails to pay when due any
installment of principal, interest or other fees hereon or on any other
promissory note issued pursuant to the Security Agreement, when due in
accordance with the terms of such note.

 

Breach of
Covenant. 
The Borrower breaches any covenant or other term or condition of this
Note in any material respect and such breach, if subject to cure, continues for
a period of thirty (30) days after the occurrence thereof.

 

Breach of
Representations and Warranties.  Any material representation or warranty of
the Borrower made herein, or the Security Agreement, or in any Ancillary Agreement
shall be materially false or misleading.

 

Stop Trade.  An SEC stop trade order or Principal Market
trading suspension of the Common Stock shall be in effect for 5 consecutive
days or 5 days during a period of 10 consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Borrower
shall not have been able to cure such trading suspension within 30 days of the
notice thereof or list the Common Stock on another Principal Market within 60
days of such notice.  The “Principal
Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market

 

10BB-6

 

System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at
the time the principal trading exchange or market for the Common Stock), or any
securities exchange or other securities market on which the Common Stock is
then being listed or traded.

 

Default Under
Related Agreement. 
The occurrence of an Event of Default under and as defined in the
Security Agreement and/or the Ancillary Agreements.

 

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

 

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

 

10BB-7

 

DEFAULT PAYMENTS

 

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

 

Default Payment
Date and Default Notice Period.  The Default Payment shall be due and payable
on the fifth business day after an Event of Default as defined in
Article IV (“Default Payment Date”) has occurred and is continuing beyond
any applicable grace period.  The period
between date upon which of an Event of Default has occurred and is continuing
beyond any applicable grace period and the Default Payment Date shall be the
“Default Period.”  If during the Default
Period, the Borrower cures the Event of Default, the Event of Default will no
longer exist and any additional rights the Holder had triggered by the
occurrence and continuance of an Event of Default will no longer exist.  If the Event of Default is not cured during
the Default Notice Period, all amounts payable hereunder shall be due and
payable on the Default Payment Date, all without further demand, presentment or
notice, or grace period, all of which hereby are expressly waived.

 

Default Interest
Rate. 
Following the occurrence and during the continuance of an Event of
Default, interest on this Note shall automatically be increased by five percent
(5%) per annum, and all outstanding Obligations, including unpaid interest,
shall continue to accrue interest from the date of such Event of Default at
such interest rate applicable to such Obligations until such Event of Default
is cured or waived.

 

Cumulative
Remedies. 
The remedies under this Note shall be cumulative.

 

MISCELLANEOUS

 

Failure or
Indulgence Not Waiver.  No failure or delay on the part of the
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. 
All rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

 

Notices.  Any notice herein required or permitted to
be given shall be in writing and provided in accordance with the terms of the
Security Agreement.

 

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

 

Assignability.  This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Security Agreement.

 

Cost of
Collection. 
If default is made in the payment of this Note, the Borrower shall pay
the Holder hereof reasonable costs of collection, including reasonable
attorneys’ fees.

 

Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.  Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York.  Both parties and the individual signing this
Note on behalf of the Borrower agree to submit to the jurisdiction of such
courts.  The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and
costs.  In the event that any provision
of this Note is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such
provision which may prove invalid or unenforceable under any law shall not affect
the validity or unenforceability of any

 

10BB-8

 

other provision
of this Note.  Nothing contained herein
shall be deemed or operate to preclude the Holder from bringing suit or taking
other legal action against the Borrower in any other jurisdiction to collect on
the Borrower’s obligations to Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court order in
favor of Holder.

 

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

 

Security Interest.  The Holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in the
Security Agreement.

 

Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.

 

[Balance of page intentionally left blank; signature page
follows.]

 

10BB-9

 

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

 

	
   

  	
  MICRO COMPONENT TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Thomas P. Maun

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:CFO

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
  /s/ Lori Faber

  	
   

  
					

 

10BB-10

 

NOTICE OF CONVERSION

 

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

 

The undersigned
hereby elects to convert
$               
of the principal and $               
of the interest due on the Secured Convertible Minimum Borrowing Note issued by
Micro Component Technology, Inc. (the “Company”) on March 9, 2004 into
Shares of Common Stock of the Company according to the conditions set forth in
such Note, as of the date written below.

 

	
  Date of
  Conversion:

  	
   

  
	
   

  	
   

  
	
  Conversion
  Price:

  	
   

  
	
   

  	
   

  
	
  Shares To Be
  Delivered:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Holder DWAC
  instructions

  	
   

  

 

10BB-11EXHIBIT 10CC

 

 

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

 

SECURED REVOLVING NOTE

 

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

 

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

 

The
following terms shall apply to this Note:

 

INTEREST & PREPAYMENTS

 

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

 

10CC-1

 

all currently
issued and outstanding Minimum Borrowing Notes and that certain warrant issued
to Holder of even date herewith on a registration statement declared effective
by the Securities Exchange Commission, and (ii) the volume weighted average
price of the Common Stock as reported by Bloomberg, L.P. on the principal
market for the Common Stock for the seven (7) trading days immediately
preceding an Interest Payment Date (defined below) exceeds the then applicable
Fixed Conversion Price (as hereinafter defined) in such percentages as outlined
in the table below, the Contract Rate for the succeeding calendar month shall automatically
be adjusted as follows:

 

	
   

  	
   

  	
  Contract Rate

  
	
  130% of the Fixed Conversion Price

  	
   

  	
  Prime Rate

  
	
  150% of the Fixed Conversion Price

  	
   

  	
  Prime Rate minus 0.75%

  
	
  175% of the Fixed Conversion Price

  	
   

  	
  Prime Rate minus 2.00%

  

 

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

 

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

 

HOLDER’S CONVERSION RIGHTS

 

Optional
Conversion. Subject to the terms of this
Article II, the Holder shall have the right, but not the obligation, at
any time until the Maturity Date, or thereafter during an Event of Default (as
defined in Article III), and, subject to the limitations set forth in
Section 2.2 hereof, to convert all or any portion of the outstanding
Principal Amount and/or accrued interest and fees due and payable into fully
paid and nonassessable shares of the Common Stock at the Fixed Conversion
Price. For purposes hereof, subject to Section 2.5 hereof, the “Fixed
Conversion Price” shall initially be $1.92. The shares of Common Stock to be
issued upon such conversion are herein referred to as the “Conversion
Shares.”  The Fixed Conversion Price
shall also be adjusted from time to time pursuant to Section 2.2 of the
Minimum Borrowing Note.

 

Conversion Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall not
be entitled to convert pursuant to the terms of this Note an amount that (a)
would be convertible into that number of Conversion Shares that would exceed
the difference between the number of shares of Common Stock beneficially owned
by such Holder or issuable upon exercise of warrants held by such Holder and
4.99% of the outstanding shares of Common Stock of the Borrower or (b) exceed
twenty five percent (25%) of the aggregate dollar trading volume of the Common
Stock for the ten (10) day trading period immediately preceding delivery of a
Notice of Conversion to the Borrower. 
For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and Regulation 13d-3 thereunder. 
The Conversion Shares limitation described in this Section 2.2
shall automatically become null and void without any notice to Borrower upon
the occurrence and during the continuance beyond any applicable grace period of
an Event of Default, or upon 75 days prior notice to the Borrower.

 

Mechanics of
Holder’s Conversion. (a) In the
event that the Holder elects to convert this Note into Common Stock, the Holder
shall give notice of such election by delivering an executed and completed
notice of conversion (“Notice of Conversion”) to the Borrower and such Notice
of Conversion shall provide a breakdown in reasonable detail of the Principal
Amount, accrued interest and fees that are being

 

10CC-2

 

converted.  On each Conversion Date (as hereinafter
defined) and in accordance with its Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date.  Each date on which a Notice of Conversion is
delivered or telecopied to the Borrower in accordance with the provisions
hereof shall be deemed a Conversion Date (the “Conversion Date”).  A form of Notice of Conversion to be
employed by the Holder is annexed hereto as Exhibit A.

 

(b)           Pursuant to the terms of the Notice
of Conversion, the Borrower will issue instructions to the transfer agent
accompanied by an opinion of counsel within one (1) business day of the date of
the delivery to Borrower of the Notice of Conversion and shall cause the
transfer agent to transmit the certificates representing the Conversion Shares
to the Holder by crediting the account of the Holder’s designated broker with
the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent
Commission (“DWAC”) system within three (3) business days after receipt by the Borrower
of the Notice of Conversion (the “Delivery Date”).  In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of
Conversion.  The Holder shall be treated
for all purposes as the record holder of such Common Stock, unless the Holder
provides the Borrower written instructions to the contrary.

 

(c) The Borrower understands that a delay in the delivery of
the shares of Common Stock issuable upon conversion of the Note (the “Note
Shares”) in the form required pursuant to this Section 3 beyond the
Delivery Date could result in economic loss to the Holder.  In the event that the Borrower fails to
direct its transfer agent to deliver the Note Shares to the Holder via the DWAC
system within the time frame set forth in Section 2.3(b) above and the Note
Shares are not delivered to the Holder by the Delivery Date, as compensation to
the Holder for such loss, the Borrower agrees to pay late payments to the
Holder for late issuance of the Note Shares in the form required pursuant to
this Section 3 upon conversion of the Note in the amount equal to the
greater of:  (i) $500 per business day
after the Delivery Date; or (ii) the Holder’s actual damages from such delayed
delivery. Notwithstanding the foregoing, the Borrower will not owe the Holder
any late payments if the delay in the delivery of the Note Shares beyond the
Delivery Date is solely out of the control of the Borrower and the Borrower is
actively trying to cure the cause of the delay.  The Borrower shall pay any payments incurred under this Section 2.3
in immediately available funds upon demand and, in the case of actual damages,
accompanied by reasonable documentation of the amount of such damages.  Such documentation shall show the number of
shares of Common Stock the Holder is forced to purchase (in an open market
transaction) which the Holder anticipated receiving upon such conversion, and
shall be calculated as the amount by which (A) the Holder’s total purchase
price (including customary brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Note, for which such Notice of Notice was not timely honored.

 

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

 

Late Payments.
The Borrower understands that a delay in the delivery of the shares of Common
Stock in the form required pursuant to this Article beyond the Delivery
Date could result in economic loss to the

 

10CC-3

 

Holder.  As compensation to the Holder for such loss,
the Borrower agrees to pay late payments to the Holder for late issuance of
such shares in the form required pursuant to this Article II upon
conversion of the Note, in the amount equal to $500 per business day after the
Delivery Date.  The Borrower shall pay
any payments incurred under this Section in immediately available funds
upon demand.

 

Adjustment
Provisions. The Fixed Conversion Price and number
and kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.1 shall be subject to adjustment from time to time
upon the happening of certain events while this conversion right remains
outstanding, as follows:

 

Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase an adjusted number of such securities
and kind of securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such reclassification or
other change.

 

Stock Splits, Combinations and Dividends.  If the shares of Common Stock
are subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of Common Stock,
the Fixed Conversion Price shall be proportionately reduced in case of subdivision
of shares or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the total number of
shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event.

 

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

 

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

 

	
  A + B

  
	
  (A + B) + [((C – D) x B) / C]

  

 

A = Actual shares outstanding prior to such offering

 

B =  Actual shares sold in the
offering

 

C = Fixed Conversion Price

 

D = Offering price

 

10CC-4

 

D.            Computation of Consideration. For purposes of
any computation respecting consideration received pursuant to Subsection C
above, the following shall apply:

 

(d)                                           in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Borrower for any underwriting of the issue or otherwise in connection
therewith;

 

(e)                                           in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Borrower (irrespective of the accounting
treatment thereof); and

 

(f)                                            Upon any such exercise, the aggregate consideration received for such
securities shall be deemed to be the consideration received by the Borrower for
the issuance of such securities plus the additional minimum consideration, if
any, to be received by the Borrower upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (a) and (b) of this Subsection (D)).

 

Reservation of
Shares. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note.  The
Borrower represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. 
The Borrower agrees that its issuance of this Note shall constitute full
authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the conversion of this
Note.

 

EVENTS OF DEFAULT

 

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

 

10CC-5

 

Failure to Pay
Principal, Interest or other Fees.  The Borrower fails to pay when due any
installment of principal, interest or other fees hereon or on any other Note
issued pursuant to the Security Agreement, when due in accordance with the
terms of such Note.

 

Breach of
Covenant. 
The Borrower breaches any covenant or other term or condition of this
Note in any material respect and such breach, if subject to cure, continues for
a period of thirty (30) days after the occurrence thereof.

 

Breach of
Representations and Warranties.  Any material representation or warranty of
the Borrower made herein, or the Security Agreement, or in any Ancillary
Agreement shall be materially false or misleading.

 

Stop Trade.  An SEC stop trade order or Principal Market
trading suspension of the Common Stock shall be in effect for 5 consecutive
days or 5 days during a period of 10 consecutive days, excluding in all cases a
suspension of all trading on a Principal Market, provided that the Borrower
shall not have been able to cure such trading suspension within 30 days of the
notice thereof or list the Common Stock on another Principal Market within 60
days of such notice.  The “Principal
Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New
York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock), or any securities exchange or
other securities market on which the Common Stock is then being listed or
traded.

 

Default Under
Related Agreement. 
The occurrence of an Event of Default under and as defined in the
Security Agreement.

 

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

 

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

 

DEFAULT PAYMENTS

 

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

 

Default Payment
Date and Default Notice Period.  The Default Payment shall be due and payable
on the fifth business day after an Event of Default as defined in
Article III (“Default Payment Date”) has occurred and is continuing beyond
any applicable grace period.  The period
between date upon which of an Event of Default has occurred and is continuing
beyond any applicable grace period and the Default Payment Date shall be the
“Default Period.” If during the Default Period, the Borrower cures the Event of
Default, the Event of Default will no longer exist and any additional rights
the Holder had triggered by the occurrence and continuance of an Event of
Default will no longer exist.  If the
Event of Default is not

 

10CC-6

 

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

 

Default Interest
Rate. 
Following the occurrence and during the continuance of an Event of
Default, interest on this Note shall automatically be increased by five percent
(5%) per annum, and all outstanding Obligations, including unpaid interest,
shall continue to accrue interest from the date of such Event of Default at
such interest rate applicable to such Obligations until such Event of Default
is cured or waived.

 

Cumulative
Remedies. 
The remedies under this Note shall be cumulative.

 

MISCELLANEOUS

 

Failure or
Indulgence Not Waiver.  No failure or delay on the part of the
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. 
All rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

 

Notices.  Any notice herein required or permitted to
be given shall be in writing and provided in accordance with the terms of the
Security Agreement.

 

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

 

Assignability.  This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder
and its successors and assigns, and may be assigned by the Holder in accordance
with the requirements of the Security Agreement.

 

Cost of
Collection. 
If default is made in the payment of this Note, the Borrower shall pay
the Holder hereof reasonable costs of collection, including reasonable
attorneys’ fees.

 

Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.  Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New
York or in the federal courts located in the state of New York.  Both parties and the individual signing this
Note on behalf of the Borrower agree to submit to the jurisdiction of such
courts.  The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and costs.  In the event that any provision of this Note
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove
invalid or unenforceable under any law shall not affect the validity or
unenforceability of any other provision of this Note.  Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower’s obligations to Holder,
to realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of Holder.

 

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

 

Security Interest.  The Holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in the
Security Agreement.

 

Construction.  Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Note to favor
any party against the other.

 

10CC-7

 

[Balance of page intentionally left blank; signature page
follows.]

 

10CC-8

 

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

 

 

	
   

  	
  MICRO COMPONENT TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Maun

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Lori Faber

  	
   

  	
   

  
					

 

10CC-9

 

NOTICE OF CONVERSION

 

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

 

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

 

	
  Date of
  Conversion:

  	
   

  	
   

  
	
   

  	
   

  
	
  Conversion
  Price:

  	
   

  	
   

  
	
   

  	
   

  
	
  Shares To Be
  Delivered:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Holder DWAC
  instructions

  	
   

  	
   

  

 

10CC-10

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