Document:

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

LAURUS MASTER FUND, LTD.

and

MICRO COMPONENT TECHNOLOGY, INC.

Dated: March 29, 2007

 

TABLE OF CONTENTS

	
  

  	
  

  	
   

  	
  Page

  
	
  1.

  	
  Agreement to Sell and Purchase.

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Fees and Warrant.

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Closing, Delivery and Payment.

  	
  2

  
	
   

  	
  3.1

  	
  Closing.

  	
  2

  
	
   

  	
  3.2

  	
  Delivery.

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties of the Company.

  	
  2

  
	
   

  	
  4.1

  	
  Organization, Good Standing and Qualification.

  	
  2

  
	
   

  	
  4.2

  	
  Subsidiaries.

  	
  3

  
	
   

  	
  4.3

  	
  Capitalization; Voting Rights.

  	
  3

  
	
   

  	
  4.4

  	
  Authorization; Binding Obligations.

  	
  4

  
	
   

  	
  4.5

  	
  Liabilities; Solvency.

  	
  5

  
	
   

  	
  4.6

  	
  Agreements; Action.

  	
  5

  
	
   

  	
  4.7

  	
  Obligations to Related Parties.

  	
  6

  
	
   

  	
  4.8

  	
  Changes.

  	
  7

  
	
   

  	
  4.9

  	
  Title to Properties and Assets; Liens, Etc.

  	
  8

  
	
   

  	
  4.10

  	
  Intellectual Property.

  	
  9

  
	
   

  	
  4.11

  	
  Compliance with Other Instruments.

  	
  9

  
	
   

  	
  4.12

  	
  Litigation.

  	
  10

  
	
   

  	
  4.13

  	
  Tax Returns and Payments.

  	
  10

  
	
   

  	
  4.14

  	
  Employees.

  	
  10

  
	
   

  	
  4.15

  	
  Registration Rights and Voting Rights.

  	
  11

  
	
   

  	
  4.16

  	
  Compliance with Laws; Permits.

  	
  11

  
	
   

  	
  4.17

  	
  Environmental and Safety Laws.

  	
  11

  
	
   

  	
  4.18

  	
  Valid Offering.

  	
  12

  
	
   

  	
  4.19

  	
  Full Disclosure.

  	
  12

  
	
   

  	
  4.20

  	
  Insurance.

  	
  12

  
	
   

  	
  4.21

  	
  SEC Reports.

  	
  12

  
	
   

  	
  4.22

  	
  Listing.

  	
  13

  
	
   

  	
  4.23

  	
  No Integrated Offering.

  	
  13

  
	
   

  	
  4.24

  	
  Stop Transfer.

  	
  13

  
	
   

  	
  4.25

  	
  Dilution.

  	
  13

  
	
   

  	
  4.26

  	
  Patriot Act.

  	
  13

  
	
   

  	
  4.27

  	
  ERISA.

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Representations and Warranties of the Purchaser.

  	
  14

  
	
   

  	
  5.1

  	
  No Shorting.

  	
  14

  
	
   

  	
  5.2

  	
  Requisite Power and Authority.

  	
  14

  
	
   

  	
  5.3

  	
  Investment Representations.

  	
  15

  
	
   

  	
  5.4

  	
  The Purchaser Bears Economic Risk.

  	
  15

  
	
   

  	
  5.5

  	
  Acquisition for Own Account.

  	
  15

  
	
   

  	
  5.6

  	
  The Purchaser Can Protect Its Interest.

  	
  15

  
	
   

  	
  5.7

  	
  Accredited Investor.

  	
  16

  
	
   

  	
  5.8

  	
  Legends.

  	
  16

  

 

 i
 

 

	
  

  	
  

  	
   

  	
  Page(s)

  
	
  6.

  	
  Covenants of the Company.

  	
  16

  
	
   

  	
  6.1

  	
  Stop-Orders.

  	
  16

  
	
   

  	
  6.2

  	
  Listing.

  	
  16

  
	
   

  	
  6.3

  	
  Market Regulations.

  	
  17

  
	
   

  	
  6.4

  	
  Reporting Requirements.

  	
  17

  
	
   

  	
  6.5

  	
  Use of Funds.

  	
  18

  
	
   

  	
  6.6

  	
  Access to Facilities.

  	
  18

  
	
   

  	
  6.7

  	
  Taxes.

  	
  19

  
	
   

  	
  6.8

  	
  Insurance.

  	
  19

  
	
   

  	
  6.9

  	
  Intellectual Property.

  	
  20

  
	
   

  	
  6.10

  	
  Properties.

  	
  20

  
	
   

  	
  6.11

  	
  Confidentiality.

  	
  20

  
	
   

  	
  6.12

  	
  Required Approvals.

  	
  20

  
	
   

  	
  6.13

  	
  Reissuance of Securities.

  	
  22

  
	
   

  	
  6.14

  	
  Opinion.

  	
  22

  
	
   

  	
  6.15

  	
  Margin Stock.

  	
  22

  
	
   

  	
  6.16

  	
  FIRPTA.

  	
  22

  
	
   

  	
  6.17

  	
  Financing Right of First Refusal.

  	
  22

  
	
   

  	
  6.18

  	
  Authorization and Reservation of Shares.

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Covenants of the Purchaser.

  	
  24

  
	
   

  	
  7.1

  	
  Confidentiality.

  	
  24

  
	
   

  	
  7.2

  	
  Non-Public Information.

  	
  24

  
	
   

  	
  7.3

  	
  Limitation on Acquisition of Common Stock of the
  Company.

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Covenants of the Company and the Purchaser Regarding
  Indemnification.

  	
  24

  
	
   

  	
  8.1

  	
  Company Indemnification.

  	
  24

  
	
   

  	
  8.2

  	
  Purchaser’s Indemnification.

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Exercise of the Warrant.

  	
  25

  
	
   

  	
  9.1

  	
  Mechanics of Exercise.

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Registration Rights.

  	
  26

  
	
   

  	
  10.1

  	
  Registration Rights Granted.

  	
  26

  
	
   

  	
  10.2

  	
  Offering Restrictions.

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Miscellaneous.

  	
  26

  
	
   

  	
  11.1

  	
  Governing Law, Jurisdiction and Waiver of Jury
  Trial.

  	
  26

  
	
   

  	
  11.2

  	
  Severability.

  	
  27

  
	
   

  	
  11.3

  	
  Survival.

  	
  28

  
	
   

  	
  11.4

  	
  Successors.

  	
  28

  
	
   

  	
  11.5

  	
  Entire Agreement; Maximum Interest.

  	
  28

  
	
   

  	
  11.6

  	
  Amendment and Waiver.

  	
  29

  
	
   

  	
  11.7

  	
  Delays or Omissions.

  	
  29

  
	
   

  	
  11.8

  	
  Notices.

  	
  29

  
	
   

  	
  11.9

  	
  Attorneys’ Fees.

  	
  30

  
	
   

  	
  11.10

  	
  Titles and Subtitles.

  	
  30

  
	
   

  	
  11.11

  	
  Facsimile Signatures; Counterparts.

  	
  30

  
	
   

  	
  11.12

  	
  Broker’s Fees.

  	
  30

  
	
   

  	
  11.13

  	
  Construction.

  	
  31

  

 

 ii
 

 

LIST OF EXHIBITS

	
  Form of Secured Term Note

  	
   

  	
  Exhibit A

  
	
  Form of Warrant

  	
   

  	
  Exhibit B

  
	
  Form of Opinion

  	
   

  	
  Exhibit C

  
	
  Form of Escrow Agreement

  	
   

  	
  Exhibit D

  

 

 iii

SECURITIES
PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”)
is made and entered into as of March 29, 2007, 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 a Secured Term Note in the aggregate principal amount of One
Million Dollars ($1,000,000) in the form of Exhibit A hereto (as amended,
modified and/or supplemented from time to time, the “Note”);

WHEREAS, the Company wishes to issue to the Purchaser
a warrant in the form of Exhibit B hereto (as amended, modified and/or
supplemented from time to time, the “Warrant”) to purchase up to 5,000,000 shares
of the Company’s Common Stock (subject to adjustment as set forth therein) in
connection with the Purchaser’s purchase of the Note;

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

WHEREAS, the Company desires to issue and sell the
Note and Warrant to the 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:

2.             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 shall sell to the Purchaser, and the
Purchaser shall purchase from the Company, the Note.  The sale of the Note on the Closing Date shall
be known as the “Offering.”  The Note
will mature on the Maturity Date (as defined in the Note).  Collectively, the Note and Warrant and Common
Stock issuable upon exercise of the Warrant are referred to as the “Securities.”

3.             Fees and Warrant.  On the Closing Date:

(a)           The Company will issue and deliver to
the Purchaser the Warrant to purchase up to 5,000,000 shares of Common Stock
(subject to adjustment as set forth therein) in connection with the Offering,
pursuant to Section 1 hereof.  All the
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 for the benefit of the holder of the
Warrant and shares of the 

Company’s Common Stock issuable upon exercise of the
Warrant (the “Warrant Shares”).

(b)           Subject to the terms of Section 2(d)
below, the Company shall pay to Laurus Capital Management, LLC, the investment
manager of the Purchaser (“LCM”), a non-refundable payment in an amount equal
to three and one half percent (3.50%) of the aggregate principal amount of the
Note.  The foregoing payment is referred
to herein as the “LCM Payment.”  Such
payment shall be deemed fully earned on the Closing Date and shall not be
subject to rebate or proration for any reason.

(c)           [Intentionally Deleted].

(d)           The LCM Payment and the expenses
referred to in the preceding clause (c) (net of deposits previously paid by the
Company) shall be paid at closing out of funds held pursuant to the Escrow
Agreement (as defined below) and a disbursement letter (the “Disbursement
Letter”).

4.             Closing, Delivery and Payment.

4.1           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 the
Purchaser may mutually agree (such date is hereinafter referred to as the “Closing
Date”).

4.2           Delivery.  Pursuant to the Escrow Agreement, at the
Closing on the Closing Date, the Company will deliver to the Purchaser, among
other things, the Note and the Warrant 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 (it being understood
that $964,500 of the proceeds of the Note shall be placed in the Restricted
Account (as defined in the Restricted Account Agreement referred to below)). The Company hereby acknowledges and agrees that Purchaser’s obligation to purchase the Note from the Company on the
Closing Date shall be contingent upon the satisfaction (or waiver by the
Purchaser in its sole discretion)  of the items and matters set forth  in the closing checklist provided by the Purchaser to the Company on
or prior to the Closing Date.

5.             Representations and Warranties
of the Company.  The Company
hereby represents and warrants to the Purchaser as follows

5.1           Organization,
Good Standing and Qualification.  Each of the
Company and each of its Subsidiaries is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.  Each of the Company and each of its
Subsidiaries has the corporate, limited liability company or partnership, as
the case may be, power and authority to own and operate its properties and
assets and, insofar as it is or shall be a party thereto, to (1) execute and
deliver (i) this Agreement, (ii) the Note and the Warrant to be issued in
connection with this Agreement, (iii) the Reaffirmation and Ratification
Agreement dated as of the date hereof among the Company, certain Subsidiaries
of the Company and the Purchaser (as amended, modified and/or supplemented from
time to time, the “Reaffirmation Agreement”), (iv) the Registration Rights

 2
 

Agreement
relating to the Securities dated as of the date hereof between the Company and
the Purchaser (as amended, modified and/or supplemented from time to time, the “Registration
Rights Agreement”), (v) the Funds Escrow Agreement dated as of the date hereof
among the Company, the Purchaser and the escrow agent referred to therein,
substantially in the form of Exhibit D hereto (as amended, modified and/or
supplemented from time to time, the “Escrow Agreement”),
(vi) the Restricted Account Agreement dated as of the date hereof among the
Company, the Purchaser and North Fork Bank (as amended, restated, modified
and/or supplemented from time to time, the “Restricted Account Agreement”),
(vii) the Restricted Account Side Letter related to the Restricted Account
Agreement dated as of the date hereof between the Company and the Purchaser (as
amended, restated, modified and/or supplemented from time to time, the “Restricted
Account Side Letter”) and (viii) all other documents, instruments and
agreements entered into in connection with the transactions contemplated hereby
and thereby (the preceding clauses (ii) through (viii),
together with (w) that certain Master Security Agreement dated as of February
17, 2006 by and among the Company, certain Subsidiaries of the Company and the
Purchaser (as amended, restated, modified and/or supplemented from time to
time, the “2006 Master Security Agreement”), (x) that certain Stock Pledge
Agreement dated as of February 17, 2006 among the Company, certain Subsidiaries
of the Company and the Purchaser (as amended, restated, modified and/or
supplemented from time to time, the “2006 Stock Pledge Agreement”), and (y)
that certain Guaranty dated as of February 17, 2006 made by certain
Subsidiaries of the Company (as amended, restated, modified and/or supplemented
from time to time, the “2006 Guaranty”), collectively, the “Related
Agreements” and each, a “Related Agreement”); (2) issue and sell the Note;
(3) issue and sell the Warrant and the Warrant Shares; and (4) carry out
the provisions of this Agreement and the Related Agreements and to carry on its
business as presently conducted.  Each of
the Company and each of its Subsidiaries is duly qualified and is authorized to
do business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in all jurisdictions in which
the nature or location 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 has not, or could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
assets, liabilities, condition (financial or otherwise), properties, operations
or prospects of the Company and its Subsidiaries, taken individually and as a
whole (a “Material Adverse Effect”).

5.2           Subsidiaries.  Each direct and indirect Subsidiary of the
Company, the direct owner of such Subsidiary and its percentage ownership
thereof, is set forth on Schedule 4.2. 
For the purpose of this Agreement, 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.

5.3           Capitalization;
Voting Rights.

(a)           The authorized capital stock of the
Company, as of the date hereof consists of 55,000,000 shares, of which
54,000,000 are shares of Common Stock, par 

 3
 

value $0.01 per share, 36,665,322 shares of which are
issued and outstanding , and 1,000,000 are shares of preferred stock, par value
$0.01 per share none of which shares of preferred stock are issued and
outstanding.]  The authorized, issued and
outstanding capital stock of each Subsidiary of the Company is set forth on
Schedule 4.3.

(b)           Except as disclosed on Schedule 4.3,
other than:  (i) the shares reserved for
issuance under the Company’s stock option plans; and (ii) shares which may be
granted pursuant to this Agreement and the Related Agreements, there are no
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 Warrant, or the issuance of any of the Warrant 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.

(c)           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.

(d)           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”). 
The Warrant 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.

5.4           Authorization;
Binding Obligations.  All
corporate, partnership or limited liability company, as the case may be, action
on the part of the Company and each of its Subsidiaries (including their
respective officers and directors) necessary for the authorization of this
Agreement and the Related Agreements, the performance of all obligations of the
Company and its Subsidiaries hereunder and under the other Related Agreements
at the Closing and, the authorization, sale, issuance and delivery of the Note
and Warrant has been taken or will be taken prior to the Closing.  This 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 each of the Company and each of its
Subsidiaries, enforceable against each such person or entity in accordance with
their terms, except:

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

 4
 

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

The sale of the Note is
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 Warrant and the
subsequent exercise of the Warrant for Warrant 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.

5.5           Liabilities.   

Neither the Company nor any of its Subsidiaries
has any liabilities, except current liabilities incurred in the ordinary course
of business and liabilities disclosed in any of the Company’s filings under the
Securities Exchange Act of 1934 (“Exchange Act”) made prior to the date of this
Agreement (collectively, the “Exchange Act Filings”), copies of which have been
provided to the Purchaser.

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

(a)           there are no agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which the Company or any of its Subsidiaries is a
party or by which it is bound which may involve: (i) obligations (contingent or
otherwise) of, or payments to, the Company or any of its Subsidiaries in excess
of $50,000 (other than obligations of, or payments to, the Company or any of
its Subsidiaries 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 or
any of its Subsidiaries (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 Company’s or any of its
Subsidiaries products or services; or (iv) indemnification by the Company or
any of its Subsidiaries with respect to infringements of proprietary rights.

(b)           Since December 31, 2005 (the “Balance
Sheet Date”), neither the Company nor any of its Subsidiaries has:  (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 or entity not in excess, individually
or in the aggregate, of $100,000, other than ordinary course 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.

(c)           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 or any

 5
 

Subsidiary of 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.

(d)           The Company maintains disclosure
controls and procedures (“Disclosure Controls”) designed to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the rules and forms of the
Securities and Exchange Commission (“SEC”).

(e)           The Company makes and keep books,
records, and accounts, that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the Company’s assets.  The Company maintains internal control over
financial reporting (“Financial Reporting Controls”) designed by, or under the
supervision of, the Company’s principal executive and principal financial
officers, and effected by the Company’s board of directors, management, and
other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles (“GAAP”),
including that:

(i)            transactions are executed in
accordance with management’s general or specific authorization;

(ii)           unauthorized acquisition, use, or
disposition of the Company’s assets that could have a material effect on the
financial statements are prevented or timely detected;

(iii)          transactions are recorded as necessary
to permit preparation of financial statements in accordance with GAAP, and that
the Company’s receipts and expenditures are being made only in accordance with
authorizations of the Company’s management and board of directors;

(iv)          transactions are recorded as necessary
to maintain accountability for assets; and

(v)           the recorded accountability for
assets is compared with the existing assets at reasonable intervals, and
appropriate action is taken with respect to any differences.

(f)            There is no weakness in any of the
Company’s Disclosure Controls or Financial Reporting Controls that is required
to be disclosed in any of the Exchange Act Filings, except as so disclosed.

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

(a)           for payment of salary for services
rendered and for bonus payments;

 6
 

(b)           reimbursement for reasonable expenses
incurred on behalf of the Company and its Subsidiaries;

(c)           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 each Subsidiary of the Company, as applicable); and

(d)           obligations listed in the Company’s
and each of its Subsidiary’s financial statements or disclosed in any of the
Company’s 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
of its Subsidiaries or any members of their immediate families, are indebted to
the Company or any of its Subsidiaries, 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 or any of its Subsidiaries is affiliated
or with which the Company or any of its Subsidiaries has a business
relationship, or any firm or corporation which competes with the Company or any
of its Subsidiaries, other than passive investments in publicly traded companies
(representing less than one percent (1%) of such company) which may compete
with the Company or any of its Subsidiaries. 
Except as described above, no officer, director or stockholder of the
Company or any of its Subsidiaries, or any member of their immediate families,
is, directly or indirectly, interested in any material contract with the
Company or any of its Subsidiaries and no agreements, understandings or
proposed transactions are contemplated between the Company or any of its
Subsidiaries and any such person.  Except
as set forth on Schedule 4.7, neither the Company nor any of its Subsidiaries
is a guarantor or indemnitor of any indebtedness of any other person or entity.

5.8           Changes.  Since the Balance Sheet Date, 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:

(a)           any change in the business, assets,
liabilities, condition (financial or otherwise), properties, operations or
prospects of the Company or any of its Subsidiaries, which individually or in
the aggregate has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect;

(b)           any resignation or termination of any
officer, key employee or group of employees of the Company or any of its
Subsidiaries;

(c)           any material change, except in the
ordinary course of business, in the contingent obligations of the Company or
any of its Subsidiaries by way of guaranty, endorsement, indemnity, warranty or
otherwise;

(d)           any damage, destruction or loss,
whether or not covered by insurance, which has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

 7
 

(e)           any waiver by the Company or any of
its Subsidiaries of a valuable right or of a material debt owed to it;

(f)            any direct or indirect loans made by
the Company or any of its Subsidiaries to any stockholder, employee, officer or
director of the Company or any of its Subsidiaries, other than advances made in
the ordinary course of business;

(g)           any material change in any
compensation arrangement or agreement with any employee, officer, director or
stockholder of the Company or any of its Subsidiaries;

(h)           any declaration or payment of any
dividend or other distribution of the assets of the Company or any of its
Subsidiaries;

(i)            any labor organization activity
related to the Company or any of its Subsidiaries;

(j)            any debt, obligation or liability
incurred, assumed or guaranteed by the Company or any of its Subsidiaries,
except those for immaterial amounts and for current liabilities incurred in the
ordinary course of business;

(k)           any sale, assignment or transfer of
any patents, trademarks, copyrights, trade secrets or other intangible assets
owned by the Company or any of its Subsidiaries;

(l)            any change in any material agreement
to which the Company or any of its Subsidiaries is a party or by which either
the Company or any of its Subsidiaries is bound which either individually or in
the aggregate has had, or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect;

(m)          any other event or condition of any
character that, either individually or in the aggregate, has had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; or

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

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

(a)           those resulting from taxes which have
not yet become delinquent;

(b)           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 or any of its Subsidiaries, so
long as in each such case, such liens and encumbrances have no effect on the
lien priority of the Purchaser in such property; and

 8
 

(c)           those that have otherwise arisen in
the ordinary course of business, so long as they have no effect on the lien
priority of the Purchaser therein.

All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased or
used by the Company and its Subsidiaries 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 and its Subsidiaries are in compliance with all
material terms of each lease to which it is a party or is otherwise bound.

5.10         Intellectual
Property.

(a)           Each of the Company and each of its
Subsidiaries 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 or any of its Subsidiaries
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.

(b)           Neither the Company nor any of its
Subsidiaries has received any communications alleging that the Company or any
of its Subsidiaries 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 or any of its Subsidiaries aware of
any basis therefor.

(c)           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 or any of its Subsidiaries, except for inventions, trade secrets or
proprietary information that have been rightfully assigned to the Company or
any of its Subsidiaries.

5.11         Compliance
with Other Instruments.  Neither the
Company nor any of its Subsidiaries is in violation or default of (x) any term
of its Charter or Bylaws, or (y) any provision of any indebtedness, mortgage,
indenture, contract, agreement or instrument to which it is party or by which
it is bound or of any judgment, decree, order or writ, which violation or
default, in the case of this clause (y), has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.  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 and thereto, will not,
with or without the passage of time or giving of notice, 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, 

 9
 

encumbrance
or charge upon any of the properties or assets of the Company or any of its
Subsidiaries 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.

5.12         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 or any of its
Subsidiaries that prevents the Company or any of its Subsidiaries from entering
into this Agreement or the other Related Agreements, or from consummating the
transactions contemplated hereby or thereby, or which has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect or any change in the current equity ownership of the
Company or any of its Subsidiaries, nor is the Company aware that there is any
basis to assert any of the foregoing. 
Neither the Company nor any of its Subsidiaries is a party to 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 or
any of its Subsidiaries currently pending or which the Company or any of its
Subsidiaries intends to initiate.

5.13         Tax
Returns and Payments.  Each of the
Company and each of its Subsidiaries 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 all other taxes due and payable by the Company or any of its
Subsidiaries 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, neither the Company nor any of its
Subsidiaries has been advised:

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

(b)           of any adjustment, deficiency,
assessment or court decision in respect of its federal, state or other taxes.

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

5.14         Employees.  Except as set forth on Schedule 4.14, neither
the Company nor any of its Subsidiaries has any 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 or any of its Subsidiaries.  Except as disclosed in the Exchange Act
Filings or on Schedule 4.14, neither the Company nor any of its Subsidiaries is
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 or any of its Subsidiaries, nor any consultant with whom the
Company or any of its Subsidiaries 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 or any of its Subsidiaries because of the nature of
the business to be conducted by the Company or any of its Subsidiaries; and to
the Company’s knowledge the 

 10
 

continued employment
by the Company and its Subsidiaries of their present employees, and the
performance of the Company’s and its Subsidiaries’ contracts with its
independent contractors, will not result in any such violation.  Neither the Company nor any of its
Subsidiaries is 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 judgment, decree or order of any court or
administrative agency that would interfere with their duties to the Company or
any of its Subsidiaries.  Neither the
Company nor any of its Subsidiaries has received any notice alleging that any
such violation has occurred.  Except for
employees who have a current effective employment agreement with the Company or
any of its Subsidiaries, no employee of the Company or any of its Subsidiaries
has been granted the right to continued employment by the Company or any of its
Subsidiaries or to any material compensation following termination of
employment with the Company or any of its Subsidiaries.  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 or any of
its Subsidiaries, nor does the Company or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee or
group of employees.

5.15         Registration
Rights and Voting Rights.  Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings,
neither the Company nor any of its Subsidiaries is presently under any
obligation, and neither the Company nor any of its Subsidiaries has granted any
rights, to register any of the Company’s or its Subsidiaries’ 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 or any of its Subsidiaries has entered
into any agreement with respect to the voting of equity securities of the
Company or any of its Subsidiaries.

5.16         Compliance
with Laws; Permits.  Neither the
Company nor any of its Subsidiaries is in violation of any provision of the
Sarbanes-Oxley Act of 2002 or any SEC related regulation or rule or any rule of
the Principal Market (as hereafter defined) promulgated thereunder or any other
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 has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.  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 or any other
Related Agreement and the issuance of any of the Securities, except such as
have 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.  Each of the Company and its Subsidiaries 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
could, either individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.

5.17         Environmental
and Safety Laws.  Neither the
Company nor any of its Subsidiaries is 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.

 11
 

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 any of its
Subsidiaries or, to the Company’s knowledge, by any other person or entity on
any property owned, leased or used by the Company or any of its
Subsidiaries.  For the purposes of the
preceding sentence, “Hazardous Materials” shall mean:

(a)           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

(b)           any petroleum products or nuclear
materials.

5.18         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.

5.19         Full
Disclosure.  Each of the Company and each of its
Subsidiaries has provided the Purchaser with all information requested by the
Purchaser in connection with its decision to purchase the Note and Warrant,
including all information the Company and its Subsidiaries believe is
reasonably necessary to make such investment decision.  Neither this Agreement, the Related
Agreements, the exhibits and schedules hereto and thereto nor any other
document delivered by the Company or any of its Subsidiaries 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 or any of its Subsidiaries were based on the Company’s and its Subsidiaries’
experience in the industry and on assumptions of fact and opinion as to future
events which the Company or any of its Subsidiaries, at the date of the
issuance of such projections or estimates, believed to be reasonable.

5.20         Insurance.  Each of the Company and each of its
Subsidiaries 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 and its Subsidiaries in the same or
similar business.

5.21         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 Securities Exchange Act 1934, as amended (the
“Exchange Act”).  The Company has
furnished the Purchaser copies of:  (i)
its Annual Reports on Form 10-KSB for its fiscal year ended December 31, 2005;
and (ii) its Quarterly Reports on Form 10-QSB for its fiscal quarters ended
March 31, 2006, June 30, 2006 and September 30, 2006, and the Form 8-K filings
which it has 

 12
 

made
during the fiscal years 2006 and 2007 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.

5.22         Listing.  The Company’s Common Stock is listed or
quoted, as applicable, on a Principal Market (as hereafter defined) and
satisfies and at all times hereafter will satisfy, all requirements for the
continuation of such listing or quotation, as applicable.  The Company has not received any notice that
its Common Stock will be delisted from, or no longer quoted on, as applicable,
the Principal Market or that its Common Stock does not meet all requirements
for such listing or quotation, as applicable. 
For purposes hereof, the term “Principal Market” means the NASD Over The
Counter Bulletin Board, NASDAQ Capital Market, NASDAQ National Markets 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).

5.23         No
Integrated Offering.  Neither the
Company, nor any of its Subsidiaries or affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to this Agreement or any of
the Related Agreements 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.

5.24         Stop
Transfer.  The Securities are restricted securities as
of the date of this Agreement.  Neither
the Company nor any of its Subsidiaries will 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.

5.25         Dilution.  The Company specifically acknowledges that
its obligation to issue the shares of Common Stock upon exercise of the Warrant
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.

5.26         Patriot
Act.            The Company certifies that, to the
best of Company’s knowledge, neither the Company nor any of its Subsidiaries
has been designated, nor is or shall be 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 covenants that: 
(i) none of the cash or property that the Company or any of its
Subsidiaries 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; 

 13
 

and
(ii) no contribution or payment by the Company or any of its Subsidiaries to
the Purchaser, to the extent that they are within the Company’s and/or its
Subsidiaries’ 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, warranties or covenants ceases to be
true and accurate regarding the Company or any of its Subsidiaries.  The Company shall provide the Purchaser all
additional information regarding the Company or any of its Subsidiaries 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, warranties
or covenants are incorrect, or if otherwise required by applicable law or
regulation related to money laundering or 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
Purchaser’s investment in the Company.  The
Company further understands that the Purchaser may release confidential
information about the Company and its Subsidiaries 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.

5.27         ERISA.  Based upon the Employee Retirement Income
Security Act of 1974 (“ERISA”), and the regulations and published
interpretations thereunder:  (i) neither
the Company nor any of its Subsidiaries has engaged in any Prohibited
Transactions (as defined in Section 406 of ERISA and Section 4975 of the
Internal
Revenue Code of 1986, as amended (the “Code”)); (ii) each of the Company
and each of its Subsidiaries has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans; (iii) neither
the Company nor any of its Subsidiaries has any knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) neither the Company nor any of its Subsidiaries has any fiduciary
responsibility for investments with respect to any plan existing for the
benefit of persons other than the Company’s or such Subsidiary’s employees; and
(v) neither the Company nor any of its Subsidiaries has withdrawn, completely
or partially, from any multi-employer pension plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980.

6.             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):

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

6.2           Requisite
Power and Authority.  The 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 the Purchaser’s part required for the lawful execution and delivery of this
Agreement and the 

 14
 

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
the Purchaser, enforceable in accordance with their terms, except:

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

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

6.3           Investment
Representations.  The 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
the Purchaser’s representations contained in this 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 Warrant to be purchased by it under this Agreement and the
Warrant Shares acquired by it upon the exercise of the Warrant,
respectively.  The Purchaser further
confirms that it has had an opportunity to ask questions and receive answers
from the Company regarding the Company’s and its Subsidiaries’ business,
management and financial affairs and the terms and conditions of the Offering,
the Note, the Warrant 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.

6.4           The
Purchaser Bears Economic Risk.  The 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. 
The 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.

6.5           Acquisition
for Own Account.  The Purchaser
is acquiring the Note and Warrant and the Warrant Shares for the 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.

6.6           The
Purchaser Can Protect Its Interest.  The Purchaser
represents that by reason of its, or of its management’s, business and
financial experience, the Purchaser has the capacity to evaluate the merits and
risks of its investment in the Note, the Warrant and the Securities and to
protect its own interests in connection with the transactions contemplated in
this Agreement and the Related Agreements. 
Further, the Purchaser is aware of no publication of any advertisement
in connection with the transactions contemplated in the Agreement or the
Related Agreements.

 15

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

6.8           Legends.

(a)           The Warrant 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.”

(b)           The Warrant shall bear substantially
the following legend:

“THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS.  THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT 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.”

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

7.1           Stop-Orders.  The Company will advise the Purchaser,
promptly after it receives notice of issuance by 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.

7.2           Listing.  The Company shall promptly secure the listing
or quotation, as applicable, of the shares of Common Stock issuable upon the
exercise of the Warrant on the Principal Market upon which shares of Common
Stock are listed or quoted for trading, as applicable (subject to official
notice of issuance) and shall maintain such listing or quotation, as

 16
 

applicable,
so long as any other shares of Common Stock shall be so listed or quoted, as
applicable.  The Company will maintain
the listing or quotation, as applicable, 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.

7.3           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 the Purchaser and promptly provide copies thereof
to the Purchaser.

7.4           Reporting
Requirements.  The Company
will deliver, or cause to be delivered, to the Purchaser each of the following,
which shall be in form and detail acceptable to the Purchaser:

(a)           As soon as available, and in any
event within ninety (90) days after the end of each fiscal year of the Company,
each of the Company’s and each of its Subsidiaries’ audited financial
statements with a report of independent certified public accountants of
recognized standing selected by the Company and acceptable to the Purchaser
(the “Accountants”), which annual financial statements shall be without
qualification and shall include each of the Company’s and each of its
Subsidiaries’ balance sheet as at the end of such fiscal year and the related
statements of each of the Company’s and each of its Subsidiaries’ income,
retained earnings and cash flows for the fiscal year then ended, prepared on a
consolidating and consolidated basis to include the Company, each Subsidiary of
the Company and each of their respective affiliates, all in reasonable detail
and prepared in accordance with GAAP, together with (i) if and when available,
copies of any management letters prepared by the Accountants; and (ii) a
certificate of the Company’s President, Chief Executive Officer or Chief Financial
Officer stating that such financial statements have been prepared in accordance
with GAAP and whether or not such officer has knowledge of the occurrence of
any Event of Default  (as defined in the
Note) and, if so, stating in reasonable detail the facts with respect thereto;

(b)           As soon as available and in any event
within forty five (45) days after the end of each fiscal quarter of the
Company, an unaudited/internal balance sheet and statements of income, retained
earnings and cash flows of the Company and each of its Subsidiaries as at the
end of and for such quarter and for the year to date period then ended,
prepared on a consolidating and consolidated basis to include all the Company,
each Subsidiary of the Company and each of their respective affiliates, in
reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in accordance
with GAAP, subject to year-end adjustments and accompanied by a certificate of
the Company’s President, Chief Executive Officer or Chief Financial Officer,
stating (i) that such financial statements have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and (ii) whether or not such
officer has knowledge of the occurrence of any Event of Default

 17
 

(as defined in the Note) not theretofore reported and
remedied and, if so, stating in reasonable detail the facts with respect
thereto;

(c)           As soon as available and in any event
within twenty (20) business days after the end of each calendar month, an
unaudited/internal balance sheet and statements of income, retained earnings
and cash flows of each of the Company and its Subsidiaries as at the end of and
for such month and for the year to date period then ended, prepared on a consolidating
and consolidated basis to include the Company, each Subsidiary of the Company
and each of their respective affiliates, in reasonable detail and stating in
comparative form the figures for the corresponding date and periods in the
previous year, all prepared in accordance with GAAP, subject to quarterly and
year-end adjustments and accompanied by a certificate of the Company’s
President, Chief Executive Officer or Chief Financial Officer, stating (i) that
such financial statements have been prepared in accordance with GAAP, subject
to quarterly and year-end audit adjustments, and (ii) whether or not such
officer has knowledge of the occurrence of any Event of Default (as defined in
the Note) not theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto;

(d)           The Company shall 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. 
Promptly after (i) the filing thereof, copies of
the Company’s most recent registration statements and annual, quarterly,
monthly or other regular reports which the Company files with the Securities
and Exchange Commission (the “SEC”), and (ii) the issuance thereof,
copies of such financial statements, reports and proxy statements as the
Company shall send to its stockholders; and

(e)           The Company shall
deliver, or cause the applicable Subsidiary of the Company to deliver, such
other information as the Purchaser shall reasonably request.

7.5           Use
of Funds.  The Company shall (i) use the proceeds of the
sale of the Note for the purchase of parts and labor necessary to develop  “demo equipment” to be utilized in connection
with the business of the Company and its Subsidiaries (the “Demo Equipment”) (it
being understood that $964,500 of the proceeds of the Note will be deposited in
the Restricted Account on the Closing Date and shall be subject to the terms
and conditions of the Restricted Account Agreement and the Restricted Account
Side Letter) and
(ii) use the proceeds of the sale of the Warrant for general working capital
purposes.

7.6           Access
to Facilities.  Each of the
Company and each of its Subsidiaries 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 or any Subsidiary (provided that no such prior
notice shall be required to be given and no such representative of the Company
or any Subsidiary shall be required to accompany the Purchaser in the event the
Purchaser believes such access is necessary to preserve or protect the
Collateral (as defined in the Master Security Agreement) or 

 18
 

following
the occurrence and during the continuance of an Event of Default (as defined in
the Note)), to:

(a)           visit and inspect any of the properties
of the Company or any of its Subsidiaries;

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

(c)           discuss the affairs, finances and
accounts of the Company or any of its Subsidiaries with the directors, officers
and independent accountants of the Company or any of its Subsidiaries.

Notwithstanding the
foregoing, neither the Company nor any of its Subsidiaries will 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.

7.7           Taxes.  Each of the Company and each of its
Subsidiaries will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or business of the
Company and its Subsidiaries; provided, however, that any such tax, assessment,
charge or levy need not be paid currently if (i) the validity thereof shall
currently and diligently be contested in good faith by appropriate proceedings,
(ii) such tax, assessment, charge or levy shall have no effect on the lien
priority of the Purchaser in any property of the Company or any of its
Subsidiaries and (iii) if the Company and/or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto in accordance with
GAAP; and provided, further, that the Company and its Subsidiaries 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 therefor.

7.8           Insurance.  (i) The Company shall bear the full risk of
loss from any loss of any nature whatsoever with respect to the Collateral (as
defined in each of the Master Security Agreement, the Stock Pledge Agreement
and each other security agreement entered into by the Company and/or any of its
Subsidiaries for the benefit of the Purchaser) and the Company and each of its
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 the Obligations (as defined in the Master Security
Agreement).   Furthermore, the Company
will insure or cause the Collateral to be insured in the Purchaser’s name as an
additional insured and lender loss payee, with an appropriate loss payable
endorsement in form and substance satisfactory to the Purchaser, against loss
or damage by fire, flood, sprinkler leakage, theft, burglary, pilferage, loss
in transit and other risks customarily insured against by companies in similar
business similarly situated as the Company and its Subsidiaries including but
not limited to workers compensation, public and product liability and business
interruption, and such other hazards as the Purchaser shall specify in amounts
and under insurance policies and bonds by insurers acceptable to the Purchaser
and all premiums thereon shall be paid by the Company and the policies
delivered to the Purchaser.  If the
Company or any of its Subsidiaries fails to obtain

 19
 

the insurance and in such amounts of coverage as
otherwise required pursuant to this Section 6.8, the Purchaser may procure such
insurance and the cost thereof shall be promptly reimbursed by the Company and
shall constitute Obligations.

(ii)           The Company’s 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 the Purchaser with no less
than thirty (30) days notice prior of cancellation;

(iii)          The Purchaser, in connection with its
status as a lender loss payee, will be assigned at all times to a first lien
position until such time as all the Purchaser’s Obligations have been
indefeasibly satisfied in full.

7.9           Intellectual
Property.  Each of the Company and each of its
Subsidiaries shall maintain in full force and effect its 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.

7.10         Properties.  Each of the Company and each of its
Subsidiaries 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 each of the Company and each of its Subsidiaries 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, either individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

7.11         Confidentiality.  The Company will not, and will not permit any
of its Subsidiaries to, 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.  Notwithstanding the foregoing, the Company
may disclose the Purchaser’s identity and the terms of this Agreement and the
Related Agreements to its current and prospective debt and equity financing
sources.  The Purchaser shall be
permitted to discuss, distribute or otherwise transfer any non-public
information of the Company and its Subsidiaries in the Purchaser’s possession
now or in the future to potential or actual (i) direct or indirect investors in
the Purchaser and (ii) third party assignees or transferees of all or a portion
of the obligations of the Company and/or any of its Subsidiaries hereunder and under
the Related Agreement, to the extent that such investor or assignee or
transferee enters into a confidentiality agreement for the benefit of the
Company in such form as may be necessary to addresses the Company’s Regulation
FD requirements.

7.12         Required
Approvals.  (I) 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:

(a)           (i) directly or indirectly declare or
pay any dividends, other than dividends paid to the Company or any of its
wholly-owned Subsidiaries, (ii) issue any preferred

 20
 

stock that is
manditorily redeemable prior to the one year anniversary of the Maturity Date
(as defined in the Note) or (iii) redeem any of its preferred stock or other
equity interests;

(b)           liquidate, dissolve or effect a
material reorganization (it being understood that in no event shall the Company
or any of its Subsidiaries dissolve, liquidate or merge with any other person
or entity (unless, in the case of such a merger, the Company or, in the case of
merger not involving the Company, such Subsidiary, as applicable, is the
surviving entity);

(c)           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, any Related Agreement or any of the agreements contemplated hereby
or thereby;

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

(e)           (i) 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%) of the fair
market value of the Company’s and its Subsidiaries’ assets)) whether secured or
unsecured other than (x) the Company’s obligations owed to the Purchaser, (y)
indebtedness set forth on Schedule 6.12(e) attached hereto and made a part
hereof and any refinancings or replacements thereof on terms no less favorable
to the Purchaser than the indebtedness being refinanced or replaced, and (z)
any indebtedness incurred in connection with the purchase of assets (other than
equipment) in the ordinary course of business, or any refinancings or
replacements thereof on terms no less favorable to the Purchaser than the
indebtedness being refinanced or replaced, so long as any lien relating thereto
shall only encumber the fixed assets so purchased and no other assets of the
Company or any of its Subsidiaries; (ii) cancel any indebtedness 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 or entity, except the
endorsement of negotiable instruments by the Company or any Subsidiary thereof
for deposit or collection or similar transactions in the ordinary course of
business or guarantees of indebtedness otherwise permitted to be outstanding
pursuant to this clause (e); and

(II) The Company,
without the prior written consent of the Purchaser, shall not, and shall not
permit any of its Subsidiaries to:

(a) make
investments in, make any loans or advances to, or transfer
assets to, any Subsidiary, other than MCT International, Inc., a Minnesota
corporation (“International”), other than immaterial investments, loans, advances
and/or asset transfers made in the ordinary course of business; and/or

 21

                (b) create or acquire, or permit any Subsidiary of the Company to
create or acquire, 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 2006 Master Security Agreement, the 2006 Stock Pledge Agreement and the
2006 Guaranty, in each case referred to in the Reaffirmation Agreement (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.

7.13         Reissuance of
Securities.  The Company agrees to reissue certificates
representing the Securities without the legends set forth in Section 5.8 above
at such time as:

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

(b)           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 Purchaser and broker, if any.

7.14         Opinion.  On the Closing Date, the Company will deliver
to the Purchaser an opinion acceptable to the Purchaser from the Company’s
external legal counsel.  The Company will
provide, at the Company’s expense, such other legal opinions in the future as
are deemed reasonably necessary by the Purchaser (and acceptable to the
Purchaser) in connection with the exercise of the Warrant.

7.15         Margin
Stock.       The Company will not permit any of the
proceeds of the Note or the Warrant 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.

7.16         FIRPTA.  Neither the Company, nor any of its
Subsidiaries, is a “United States real property holding corporation” as such
term is defined in Section 897(c)(2) of the Code and Treasury Regulation
Section 1.897-2 promulgated thereunder and neither the Company nor any of its
Subsidiaries shall at any time take any action or otherwise acquire any
interest in any asset or property to the extent the effect of which shall cause
the Company and/or such Subsidiary, as the case may be, to be a “United States
real property holding corporation” as such term is defined in Section 897(c)(2)
of the Code and Treasury Regulation Section 1.897-2 promulgated thereunder.

7.17         Financing
Right of First Refusal.

(a)           The Company hereby grants to the
Purchaser a right of first refusal to provide any Additional Financing (as
defined below) to be issued by the Company and/or

 22
 

any
of its Subsidiaries, subject to the following terms and conditions.  From and after the date hereof,  prior to the incurrence of any additional
indebtedness and/or the sale or issuance of any equity interests of the Company
or any of its Subsidiaries (an “Additional Financing”), the Company and/or any
Subsidiary of the Company, as the case may be, shall notify the Purchaser of
its intention to enter into such Additional Financing.  In connection therewith, the Company and/or
the applicable Subsidiary thereof shall submit a fully executed term sheet (a “Proposed
Term Sheet”) to the Purchaser setting forth the terms, conditions and pricing
of any such Additional Financing (such financing to be negotiated on “arm’s
length” terms and the terms thereof to be negotiated in good faith) proposed to
be entered into by the Company and/or such Subsidiary.  The Purchaser shall have the right, but not
the obligation, to deliver its own proposed term sheet (the “Purchaser Term
Sheet”) setting forth the terms and conditions upon which the Purchaser would
be willing to provide such Additional Financing to the Company and/or such
Subsidiary.  The Purchaser Term Sheet
shall contain terms no less favorable to the Company and/or such Subsidiary
than those outlined in Proposed Term Sheet. 
The Purchaser shall deliver such Purchaser Term Sheet within ten (10)
business days of receipt of each such Proposed Term Sheet.  If the provisions of the Purchaser Term Sheet
are at least as favorable to the Company and/or such Subsidiary, as the case
may be, as the provisions of the Proposed Term Sheet, the Company and/or such
Subsidiary shall enter into and consummate the Additional Financing transaction
outlined in the Purchaser Term Sheet.

(b)           The
Company will not, and will not permit its Subsidiaries to, agree, directly or
indirectly, to any restriction with any person or entity which limits the
ability of the Purchaser to consummate an Additional Financing with the Company
or any of its Subsidiaries.

7.18         Authorization and
Reservation of Shares.  The Company
shall at all times have authorized and reserved a sufficient number of shares
of Common Stock to provide for the exercise of the Warrants.

7.19         Investor
Relations/Public Relations.  The
Company hereby agrees to incorporate into its annual budget an amount of funds
necessary to maintain a comprehensive investor relations and public relations
program (an “IR/PR Program”), which IR/PR Program shall incorporate elements
customarily utilized by companies of similar size and in a similar industry as
the Company and its Subsidiaries.

6.20         Restricted Cash Disclosure.  The Company agrees that, in connection with
its filing of its 8-K Report with the SEC concerning the transactions
contemplated by this Agreement and the Related Agreements (such report, the “Laurus
Transaction 8-K”) in a timely manner after the date hereof, it will disclose in
such Laurus Transaction 8-K the amount of the proceeds of the Note issued to
the Purchaser that has been placed in a restricted cash account and is subject
to the terms and conditions of this Agreement and the Related Agreements.  Furthermore, the Company agrees to disclose
in all public filings required by the Commission (where appropriate) following
the filing of the Laurus Transaction 8-K, the existence of the restricted cash
referred to in the immediately preceding sentence, together with the amount
thereof.

 23
 

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

8.1           Confidentiality.  The Purchaser 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.

8.2           Non-Public
Information.  The Purchaser will not
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.

8.3           Limitation on
Acquisition of Common Stock of the Company. 
Notwithstanding anything to the contrary contained in this Agreement,
any Related Agreement 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
the Purchaser 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”).

9.             Covenants of the Company and the Purchaser Regarding
Indemnification.

9.1           Company
Indemnification.  The Company
agrees to indemnify, hold harmless, reimburse and defend the Purchaser, each of
the Purchaser’s officers, directors, agents, affiliates, control persons, and
principal shareholders, against all claims, costs, expenses, liabilities,
obligations, losses or damages (including reasonable legal fees) of any nature,
incurred by or imposed upon the Purchaser which result, arise out of or are
based upon: (i) any misrepresentation by the Company or any of its Subsidiaries
or breach of any warranty by the Company or any of its Subsidiaries in this
Agreement, any other Related Agreement or in any exhibits or schedules attached
hereto or thereto; or (ii) any breach or default in performance by Company or
any of its Subsidiaries of any covenant or undertaking to be performed by
Company or any of its Subsidiaries hereunder, under any other Related Agreement
or any other agreement entered into by the Company and/or any of its
Subsidiaries and the Purchaser relating hereto or thereto.

9.2           Purchaser’s
Indemnification.  The 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 claims, costs, expenses,
liabilities, obligations, losses or damages (including reasonable legal fees)
of any nature, incurred by or imposed upon the Company which result, arise out
of or are based upon:  (i) any
misrepresentation by the Purchaser or breach of any warranty by the Purchaser
in

 24
 

this
Agreement or in any exhibits or schedules attached hereto or any Related
Agreement; or (ii) any breach or default in performance by the Purchaser
of any covenant or undertaking to be performed by the Purchaser hereunder, or
any other agreement entered into by the Company and the Purchaser relating
hereto.

10.           Exercise of the Warrant.

10.1         Mechanics of
Exercise.

(a)           Provided the Purchaser has notified
the Company of the Purchaser’s intention to sell the Warrant Shares and the
Warrant Shares are included in an effective registration statement or are
otherwise exempt from registration when sold: 
(i) upon the exercise of the Warrant or part thereof, the Company shall,
at its own cost and expense, take all necessary action (including the issuance
of an opinion of counsel reasonably acceptable to the Purchaser following a
request by the Purchaser) 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 Warrant Shares issuable upon such exercise; 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 Warrant 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 Warrant Shares.

(b)           The Purchaser will give notice of its
decision to exercise its right to exercise the Warrant or part thereof by
telecopying or otherwise delivering an executed and completed notice of the
number of shares to be subscribed to the Company (the “Form of Subscription”).  The Purchaser will not be required to
surrender the Warrant until the Purchaser receives a credit to the account of
the Purchaser’s prime broker through the DWAC system (as defined below),
representing the Warrant Shares or until the Warrant has been fully
exercised.  Each date on which a Form of
Subscription is telecopied or delivered to the Company in accordance with the
provisions hereof shall be deemed a “Exercise Date.”  Pursuant to the terms of the Form of
Subscription, the Company 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 the Company of the  Form
of Subscription and shall cause the transfer agent to transmit the certificates
representing the Warrant Shares set forth in the applicable Form of
Subscription to the Holder by crediting the account of the Purchaser’s prime broker
with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent
Commission (“DWAC”) system within three (3) business days after receipt by the
Company of the Form of Subscription (the “Delivery Date”).

(c)           The Company understands that a delay
in the delivery of the Warrant Shares in the form required pursuant to Section
9 hereof beyond the Delivery Date could result in economic loss to the
Purchaser.  In the event that the Company
fails to direct its 

 25
 

transfer agent to deliver the Warrant Shares to the
Purchaser via the DWAC system within the time frame set forth in Section 9.1(b)
above and the Warrant Shares are not delivered to the Purchaser by the Delivery
Date, as compensation to the Purchaser for such loss, the Company agrees to pay
late payments to the Purchaser for late issuance of the Warrant Shares in the
form required pursuant to Section 9 hereof upon exercise of the Warrant in the
amount equal to the greater of:  (i) $500
per business day after the Delivery Date; or (ii) the Purchaser’s actual
damages from such delayed delivery.  The
Company shall pay any payments incurred under this Section 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 Purchaser is forced to purchase (in an open market
transaction) which the Purchaser anticipated receiving upon such exercise, and
shall be calculated as the amount by which (A) the Purchaser’s total purchase
price (including customary brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate amount of the Exercise
Price for the Warrants, for which such Form of Subscription was not timely
honored.

11.           Registration Rights.

11.1         Registration
Rights Granted.  The Company
hereby grants registration rights to the Purchaser pursuant to the Registration
Rights Agreement.

11.2         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 (these
exceptions hereinafter referred to as the “Excepted Issuances”), neither the
Company nor any of its Subsidiaries will, prior to the full repayment of the
Note (together with all accrued and unpaid interest and fees related thereto)
and the full exercise by Purchaser of the Warrants, (x) enter into any equity
line of credit agreement or similar agreement or (y) issue, or enter into any agreement
to issue, any securities with a variable/floating conversion and/or pricing
feature which are or could be (by conversion or registration) free-trading
securities (i.e.  common stock subject to
a registration statement).

12.           Miscellaneous.

12.1         Governing Law,
Jurisdiction and Waiver of Jury Trial.

(a)           THIS
AGREEMENT AND THE OTHER RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.

(b)           THE COMPANY HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE PURCHASER, ON
THE OTHER HAND, PERTAINING

 26
 

TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER
RELATED AGREEMENTS; PROVIDED, THAT
THE PURCHASER AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK,
STATE OF NEW YORK; AND FURTHER  PROVIDED, THAT, NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL (AS DEFINED IN THE 2006 MASTER
SECURITY AGREEMENT) OR ANY OTHER SECURITY FOR THE OBLIGATIONS (AS DEFINED IN
THE 2006 MASTER SECURITY AGREEMENT), OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE PURCHASER.  THE
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY
OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS.  THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH
IN SECTION 11.9 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

(c)           THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE PURCHASER AND/OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
THERETO.

12.2         Severability.  Wherever possible each provision of this
Agreement and the Related Agreements shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement or any Related Agreement shall be prohibited by or invalid or illegal
under applicable law such provision shall be ineffective to the extent of such
prohibition or invalidity or illegality, without invalidating the remainder of
such provision or the remaining provisions thereof which shall not in any way
be affected or impaired thereby.

 27
 

12.3         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.  All indemnities set forth herein shall
survive the execution, delivery and termination of this Agreement and the Note
and the making and repayment of the obligations arising hereunder, under the Note
and under the other Related Agreements.

12.4         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 or entity
which 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. 
The Purchaser shall not be permitted to assign its rights hereunder or
under any Related Agreement to a competitor of the Company unless an Event of
Default (as defined in the Note) has occurred and is continuing.  Upon such assignment, the Purchaser shall be
released from all responsibility for the Collateral (as defined in the 2006
Master Security Agreement, the 2006 Stock Pledge Agreement and each other
security agreement, mortgage, cash collateral deposit letter, pledge and other agreements
which are executed by the Company or any of its Subsidiaries in favor of the
Purchaser) to the extent same is assigned to any transferee.  The Purchaser may from time to time sell or
otherwise grant participations in any of the Obligations (as defined in the
2006 Master Security Agreement) and the holder of any such participation shall,
subject to the terms of any agreement between the Purchaser and such holder, be
entitled to the same benefits as the Purchaser with respect to any security for
the Obligations (as defined in the 2006 Master Security Agreement) in which
such holder is a participant.  The
Company agrees that each such holder may exercise any and all rights of banker’s
lien, set-off and counterclaim with respect to its participation in the
Obligations (as defined in the 2006 Master Security Agreement) as fully as
though the Company were directly indebted to such holder in the amount of such
participation.  The Company may not
assign any of its rights or obligations hereunder without the prior written
consent of the Purchaser.  All of the
terms, conditions, promises, covenants, provisions and warranties of this
Agreement shall inure to the benefit of each of the undersigned, and shall bind
the representatives, successors and permitted assigns of the Company.

12.5         Entire Agreement;
Maximum Interest.  This
Agreement, the Related Agreements, the exhibits and schedules hereto and
thereto 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. 
Nothing contained in this Agreement, any Related Agreement 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 rate 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
rate permitted by such law, any payments in 

 28
 

excess
of such maximum shall be credited against amounts owed by the Company to the
Purchaser and thus refunded to the Company.

12.6         Amendment and
Waiver.

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

(b)           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.

(c)           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.

12.7         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 or the Related Agreements, by law or otherwise
afforded to any party, shall be cumulative and not alternative.

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

(a)           upon personal delivery to the party
to be notified;

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

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

(d)           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

  
	
   

  	
  Facsimile:

  	
  651-697-4200

  
	
   

  	
   

  
	
   

  	
   

  

 

 29
 

 

	
  

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Best & Flanagan LLP

  225 South Sixth Street, Suite 4000

  Minneapolis, Minnesota 55402-4690

  
	
   

  	
  Attention:

  	
  James C. Diracles 

  
	
   

  	
  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 Islands

  
	
   

  	
  Facsimile:

  	
  345-949-8080

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Portfolio Services

  Laurus Capital Management, LLC

  335 Madison Avenue, 10th Floor

  New York, NY 10017

  
	
   

  	
  Facsimile:

  	
  212-541-4410

  
				

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.

12.9         Attorneys’ Fees.  In the event that any suit or action is
instituted to enforce any provision in this Agreement or any Related 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 and/or such Related
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.

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

12.11       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 agreement.

12.12       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

 30
 

claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 11.12 being untrue.

12.13       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 or any Related Agreement to favor any
party against the other.

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

 31
 

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 Gower

  	
   

  	
  By:

  	
  /s/ David Grin

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    Roger Gower

  	
   

  	
  Name:

  	
    David Grin

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Director

  

 

 32

EXHIBIT A

FORM OF SECURED
TERM NOTE

 

 A-1

EXHIBIT B

FORM
OF WARRANT

 

 B-1

EXHIBIT C

FORM OF OPINION

1.             The
Company and each of its Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted.

2.             Each
of the Company and each of its Subsidiaries has the requisite corporate power
and authority to execute, deliver and perform its obligations under the Agreement
and the Related Agreements.  All
corporate action on the part of the Company and each of its Subsidiaries and
its officers, directors and stockholders necessary has been taken for:  (i) the authorization of the Agreement and
the Related Agreements and the performance of all obligations of the Company
and each of its Subsidiaries thereunder; and (ii) the authorization, sale,
issuance and delivery of the Securities pursuant to the Agreement and the
Related Agreements.  The Warrant Shares,
when issued pursuant to and in accordance with the terms of the Agreement and
the Related Agreements and upon delivery shall be validly issued and
outstanding, fully paid and non assessable.

3.             The
execution, delivery and performance by each of the Company and each of its
Subsidiaries of the Agreement and the Related Agreements (to which it is a
party) and the consummation of the transactions on its part contemplated by any
thereof, will not, with or without the giving of notice or the passage of time
or both:

(a)           Violate the provisions of their
respective Charter or bylaws; or

(b)           Violate any judgment, decree, order
or award of any court binding upon the Company or any of its Subsidiaries; or

(c)           Violate any [insert jurisdictions in
which counsel is qualified] or federal law

4.             The
Agreement and the Related Agreements will constitute, valid and legally binding
obligations of each of the Company and each of its Subsidiaries (to the extent
such entity is a party thereto), and are enforceable against each of the
Company and each of its Subsidiaries party thereto in accordance with their
respective terms, except:

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

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

5.             To
such counsel’s knowledge, the sale of the Note is not subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.

 C-1
 

To
such counsel’s knowledge, the sale of the Warrant and the subsequent exercise
of the Warrant for Warrant Shares are not subject to any preemptive rights or,
to such counsel’s knowledge, rights of first refusal that have not been
properly waived or complied with.

6.             Assuming
the accuracy of the representations and warranties of the Purchaser contained
in the Agreement, the offer, sale and issuance of the Securities on the Closing
Date will be exempt from the registration requirements of the Securities
Act.  To such counsel’s knowledge,
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 solicited any offers to buy and security under circumstances that
would cause the offering of the Securities pursuant to the Agreement or any
Related 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.

7.             There
is no action, suit, proceeding or investigation pending or, to such counsel’s
knowledge, currently threatened against the Company or any of its Subsidiaries
that prevents the right of the Company or any of its Subsidiaries to enter into
this Agreement or any Related Agreement, or to consummate the transactions
contemplated thereby.  To such counsel’s
knowledge, 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; nor is there any action, suit, proceeding or investigation
by the Company currently pending or which the Company intends to initiate.

8.             The
terms and provisions of the Master Security Agreement and the Stock Pledge
Agreement create a valid security interest in favor of the Purchaser, in the
respective rights, title and interests of the Company and its Subsidiaries in and
to the Collateral (as defined in each of the Master Security Agreement and the
Stock Pledge Agreement).  Each UCC-1
Financing Statement naming the Company or any Subsidiary thereof as debtor and
the Purchaser as secured party are in proper form for filing and assuming that
such UCC-1 Financing Statements have been filed with the Secretary of State of
[Delaware], the security interest created under the Master Security Agreement
will constitute a perfected security interest under the Uniform Commercial Code
in favor of the Purchaser in respect of the Collateral that can be perfected by
filing a financing statement.  After
giving effect to the delivery to the Purchaser of the stock certificates
representing the ownership interests of each Subsidiary of the Company
(together with effective endorsements) and assuming the continued possession by
the Purchaser of such stock certificates in the State of New York, the security
interest created in favor of the Purchaser under the Stock Pledge Agreement
constitutes a valid and enforceable first perfected security interest in such
ownership interests (and the proceeds thereof) in favor of the Purchaser,
subject to no other security interest. 
No filings, registrations or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interest created under
the Stock Pledge Agreement in respect of such ownership interests.

9.             Assuming
that North Fork Bank is a “bank” (as such term is defined in Section
9-102(a)(8) of the UCC), and that the Restricted Account (as defined in the
Restricted Account Agreement) constitutes a “deposit account” (as such term is
defined in Section 9-102(a)(29) of the UCC), under the Uniform Commercial Code,
the due execution and delivery of the Restricted Account Agreement perfects the
Purchaser’s security interest in the Restricted Account.

 C-2

EXHIBIT D

FORM
OF ESCROW AGREEMENT

 

 D-1Exhibit 10.2

SECURED TERM NOTE

FOR VALUE RECEIVED, MICRO COMPONENT TECHNOLOGY, INC., a Minnesota
corporation (the “Company”), promises to pay to LAURUS MASTER
FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands, Fax:
345-949-8080 (the “Holder”) or its
registered assigns or successors in interest, the sum of One Million Dollars
($1,000,000), together with any accrued and unpaid interest hereon, on March
31, 2008 (the “Maturity Date”) if not
indefeasibly sooner paid in full.

Capitalized terms used herein without definition shall
have the meanings ascribed to such terms in that certain Securities Purchase
Agreement dated as of the date hereof between the Company and the Holder (as
amended, modified and/or supplemented from time to time, the “Purchase Agreement”).

The Principal Amount of this
Secured Term Note that is contained in the Restricted Account (as defined in
the Restricted Account Agreement referred to in the Purchase Agreement) on the
date of the issuance of this Secured Term Note is $964,500.

The following terms shall apply to this Secured Term
Note (this “Note”):

13.

CONTRACT RATE AND AMORTIZATION

13.1         Contract Rate.  Subject to Sections 3.2 and 4.10, interest payable
on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate
per annum equal to the “prime rate” published in The Wall Street Journal
from time to time (the “Prime Rate”),
plus two percent (2%) (the “Contract Rate”).  The Contract 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 the Prime Rate.  The Contract Rate shall not at any time be
less than nine percent (9%).  Interest
shall be (i) calculated on the basis of a 360 day year, and (ii) payable
monthly, in arrears, commencing on May 1, 2007, on the first business day of
each consecutive calendar month thereafter through and including the Maturity
Date, and on the Maturity Date, whether by acceleration or otherwise.

13.2         Contract Rate
Payments.  The Contract Rate shall be
calculated on the last business day of each calendar month hereafter (other
than for increases or decreases in the Prime Rate which shall be calculated and
become effective in accordance with the terms of Section 1.1) until the
Maturity Date and shall be subject to adjustment as set forth herein.

13.3         Payable on
Maturity Date.  Any outstanding
Principal Amount together with any accrued and unpaid interest and any and all
other unpaid amounts which are then owing by the Company to the Holder under
this Note, the Purchase Agreement and/or any other Related Agreement shall be
due and payable on the Maturity Date.

14.

OPTIONAL PREPAYMENT

14.1         Optional
Prepayment.  The Companies may prepay
this Note at any time, in whole or in part, without penalty or premium.

15.

EVENTS OF DEFAULT

15.1         Events of Default.  The occurrence of any of the following events
set forth in this Section 3.1 shall constitute an event of default (“Event of Default”) hereunder:

(a)           Failure to Pay.  The Company fails to pay when due any
installment of principal, interest or other fees hereon in accordance herewith,
or the Company fails to pay any of the other Obligations (under and as defined
in the Master Security Agreement) when due, and, in any such case, such failure
shall continue for a period of three (3) days following the date upon which any
such payment was due.

(b)           Breach of
Covenant.  The Company or any of its
Subsidiaries breaches any covenant or any other term or condition of this Note
in any material respect and such breach, if subject to cure, continues for a
period of fifteen (15) days after the occurrence thereof.

(c)           Breach of
Representations and Warranties.  Any
representation, warranty or statement made or furnished by the Company or any
of its Subsidiaries in this Note, the Purchase Agreement or any other Related
Agreement shall at any time be false or misleading in any material respect on
the date as of which made or deemed made.

(d)           Default Under
Other Agreements.  The occurrence of
any default (or similar term) in the observance or performance of any other
agreement or condition relating to any indebtedness or contingent obligation of
the Company or any of its Subsidiaries beyond the period of grace (if any), the
effect of which default is to cause, or permit the holder or holders of such
indebtedness or beneficiary or beneficiaries of such contingent obligation to
cause, such indebtedness to become due prior to its stated maturity or such
contingent obligation to become payable;

(e)           Material Adverse
Effect.  Any change or the occurrence
of any event which could reasonably be expected to have a Material Adverse
Effect;

(f)            Bankruptcy.  The Company or any of its Subsidiaries shall
(i) apply for, consent to or suffer to exist the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, without challenge within ten (10) days of the filing thereof, or failure to
have dismissed, within thirty (30) business days, any petition filed against it
in any 

 2
 

involuntary
case under such bankruptcy laws, or (vii) take any action for the purpose of
effecting any of the foregoing;

(g)           Judgments.  Attachments or levies in excess of $50,000 in
the aggregate are made upon the Company or any of its Subsidiary’s assets or a
judgment is rendered against the Company’s property involving a liability of
more than $50,000 which shall not have been vacated, discharged, stayed or
bonded within thirty (30) business days from the entry thereof;

(h)           Insolvency.  The Company or any of its Subsidiaries shall
admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business;

(i)            Change of
Control.  A Change of Control (as
defined below) shall occur with respect to the Company, unless Holder shall
have expressly consented to such Change of Control in writing.  A “Change of Control” shall mean any event or
circumstance as a result of which (i) any “Person” or “group” (as such terms
are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on
the date hereof), other than the Holder, is or becomes the “beneficial owner”
(as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of 35% or more on a fully diluted basis of the then outstanding
voting equity interest of the any Company, (ii) the Board of Directors of the
Company shall cease to consist of a majority of the Company’s board of
directors on the date hereof (or directors appointed by a majority of the board
of directors in effect immediately prior to such appointment) or (iii) the
Company or any of its Subsidiaries merges or consolidates with, or sells all or
substantially all of its assets to, any other person or entity;

(j)            Indictment;
Proceedings.  The indictment or
threatened indictment of the Company or any of its Subsidiaries or any
executive officer of the Company or any of its Subsidiaries under any criminal
statute, or commencement or threatened commencement of criminal or civil
proceeding against the Company or any of its Subsidiaries or any executive
officer of the Company or any of its Subsidiaries pursuant to which statute or
proceeding penalties or remedies sought or available include forfeiture of any
of the property of the Company or any of its Subsidiaries;

(k)           The Purchase
Agreement and Related Agreements. 
(i) An Event of Default shall occur under and as defined in the Purchase
Agreement or any other Related Agreement, (ii) the Company or any of its
Subsidiaries shall breach any term or provision of the Purchase Agreement or
any other Related Agreement in any material respect and such breach, if capable
of cure, continues unremedied for a period of fifteen (15) days after the
occurrence thereof, (iii) the Company or any of its Subsidiaries attempts to
terminate, challenges the validity of, or its liability under, the Purchase
Agreement or any Related Agreement, (iv) any proceeding shall be brought to
challenge the validity, binding effect of the Purchase Agreement or any Related
Agreement or (v) the Purchase Agreement or any Related Agreement ceases to be a
valid, binding and enforceable obligation of the Company or any of its
Subsidiaries (to the extent such persons or entities are a party thereto);

 3
 

(l)            Other
Indebtedness.  An Event of Default or
similar term shall occur under, and as defined in, (i) that certain Security
and Purchase Agreement, dated as of February 17, 2006, by and among the
Company, such other
subsidiaries of Company which become a party to such Security and Purchase
Agreement and Laurus (as amended, restated, modified and/or supplemented
from time to time, the “Security and Purchase Agreement”), (ii) the Ancillary
Agreements referred to in, and defined in, the Security and Purchase Agreement,
(iii) that certain 10% Senior Subordinated Convertible Note, dated February 17,
2004 issued by the Company to Amaranth Trading, L.L.C. in the original
principal amount of $1,229,919 and assigned to Laurus pursuant to that certain
Note Sale Agreement dated as of December 20, 2006 by and between Amaranth
Trading L.L.C. and Laurus (as amended, restated, modified and/or supplemented
from time to time, the ”10% Note”) and/or (iv) all documents, instruments and
agreements related to the documents, instruments and agreements referred to in
the immediately preceding clauses (i) through (iii), inclusive; and/or

(m)          Demo
Equipment.  The Company or any
Subsidiary of the Company transfers (on a consignment basis or otherwise) any
Demo Equipment to a customer or any other party, unless (a) such transfer is
made for testing purposes at a time when no Event of Default shall have
occurred and be continuing and (b) prior to such transfer the Holder shall have
received all such documents and agreements deemed necessary by and acceptable
in form and substance to the Holder to protect and perfect the Holder’s
security interest in such Demo Equipment and the right of the Holder to remove
such Demo Equipment from such customer’s and/or other party’s premises.

15.2           Default Interest.  Following the occurrence and during the
continuance of an Event of Default, the Company shall pay additional interest
on the outstanding principal balance of this Note in an amount equal to one
percent (1%) per month, and all outstanding obligations under this Note, the
Purchase Agreement and each other Related Agreement, including unpaid interest,
shall continue to accrue interest at such additional interest rate from the
date of such Event of Default until the date such Event of Default is cured or
waived.

15.3         Default Payment.  Following the occurrence and during the
continuance of an Event of Default, the Holder, at its option, may demand
repayment in full of all obligations and liabilities owing by Company to the
Holder under this Note, the Purchase Agreement and/or any other Related
Agreement and/or may elect, in addition to all rights and remedies of the
Holder under the Purchase Agreement and the other Related Agreements and all
obligations and liabilities of the Company under the Purchase Agreement and the
other Related Agreements, to require the Company to make a Default Payment (“Default Payment”).  The Default Payment shall be one hundred
thirty percent (130%) of the outstanding principal amount of the Note, plus
accrued but unpaid interest, all other fees then remaining unpaid, and all
other amounts payable hereunder.  The
Default Payment shall be applied first to any fees due and payable to the
Holder pursuant to this Note, the Purchase Agreement, and/or the other Related
Agreements, then to accrued and unpaid interest due on this Note and then to
the outstanding principal balance of this Note. 
The Default Payment shall be due and payable immediately on the date
that the Holder has demanded payment of the Default Payment pursuant to this
Section 3.3.

 4
 

16.

MISCELLANEOUS

16.1         Issuance of New
Note.  Upon any partial payment of
this Note, a new Note containing the same date and provisions of this Note
shall, at the request of the Holder, be issued by the Company to the Holder for
the principal balance of this Note and interest which shall not have been paid
as of such date.  Subject to the
provisions of Article III of this Note, the Company shall not pay any costs,
fees or any other consideration to the Holder for the production and issuance
of a new Note.

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

16.3         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.

16.4         Notices.  Any notice herein required or permitted to be
given shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party notified, (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then
on the next business day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. 
All communications shall be sent to the Company at the address provided
in the Purchase Agreement executed in connection herewith, and to the Holder at
the address provided in the Purchase Agreement for the Holder, with a copy to
Laurus Capital Management, LLC, Attn: Portfolio Services, 335 Madison Avenue,
10th Floor, New York, New York 10017, facsimile
number (212) 541-4410, or at such other address as the Company or the Holder
may designate by ten days advance written notice to the other parties hereto.

16.5         Amendment
Provision.  The term “Note” and all
references 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 such successor
instrument may be amended or supplemented.

16.6         Assignability.  This Note shall be binding upon the Company
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 Purchase Agreement.  The Company may not assign any of its
obligations under this Note without the prior written consent of the Holder,
any such purported assignment without such consent being null and void.

16.7         Cost of Collection.  In case of any Event of Default under this
Note, the Company shall pay the Holder the Holder’s reasonable costs of
collection, including reasonable attorneys’ fees.

 5
 

16.8         Governing Law,
Jurisdiction and Waiver of Jury Trial.

(a)           THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

(b)           THE
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND,
AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR
ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER  PROVIDED,
THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER.  THE COMPANY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.  THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.

(c)           THE
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS.  THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT,
OR OTHERWISE BETWEEN THE HOLDER AND/OR THE COMPANY ARISING OUT OF, CONNECTED
WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS
RELATED HERETO OR THERETO.

16.9         Severability.  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 

 6
 

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
this Note.

16.10       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 rate
permitted by such law, any payments in excess of such maximum rate shall be
credited against amounts owed by the Company to the Holder and thus refunded to
the Company.

16.11       Security Interest
and Guarantee.  The Holder has been
granted a security interest (i) in certain assets of the Company and its
Subsidiaries as more fully described in the Master Security Agreement dated as
of February 17, 2006, as amended, restated, reaffirmed, modified and/or
supplemented from time to time and (ii) in the equity interests of the Company’s
Subsidiaries pursuant to the Stock Pledge Agreement dated as of February 17,
2006, as amended, restated, reaffirmed, modified and/or supplemented from time
to time.  The obligations of the Company
under this Note are guaranteed by certain Subsidiaries of the Company pursuant
to the Guaranty dated as of February 17, 2006, as amended, restated,
reaffirmed, modified and/or supplemented from time to time.

16.12       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.

5.13         Registered
Obligation. This Note is intended to be a registered obligation within the
meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Company (or
its agent) shall register this Note (and thereafter shall maintain such
registration) as to both principal and any stated interest.  Notwithstanding any document, instrument or
agreement relating to this Note to the contrary, transfer of this Note (or the
right to any payments of principal or stated interest thereunder) may only be
effected by (i) surrender of this Note and either the reissuance by the Company
of this Note to the new holder or the issuance by the Company of a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).

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

 7
 

IN WITNESS WHEREOF, the Company
has caused this Secured Term Note to be signed in its name effective as of this
29th day of March, 2007.

	
  

  	
  MICRO COMPOMENT TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger Gower

  
	
   

  	
   

  	
  Name:

  	
  Roger Gower

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
   

  
	
  /s/ Lori Faber

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 8

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