Document:

EXHIBIT
NO. 10.2

 

REGISTRATION
RIGHTS AGREEMENT

 

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

 

This Agreement is made pursuant
to the Securities Purchase Agreement, dated as of the date hereof, by and
between the Purchaser and the Company (as amended, modified or supplemented
from time to time, the “Securities Purchase Agreement”), and pursuant to the
Note referred to therein.

 

The Company and the Purchaser
hereby agree as follows:

 

Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Securities Purchase Agreement shall have
the meanings given such terms in the Securities Purchase Agreement.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means shares of the Company’s common stock,
par value $0.01 per share.

 

“Effectiveness Date” means (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later than
ninety days following the date hereof and (ii) with respect to each additional
Registration Statement required to be filed hereunder, a date no later than
thirty (30) days following the applicable Filing Date.

 

“Effectiveness Period” shall have the meaning set forth in
Section 2(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended, and any successor statute.

 

“Filing Date” means, with respect to (i) the Registration
Statement required to be filed hereunder in respect of the first 1,500,000
shares of Common Stock issuable upon exercise of the Option[Note should be
registered first], a date no later than 30 days following the date hereof, (ii)
the shares of Common Stock issuable upon exercise of the balance of the Option
and upon conversion of the Note, the date which is 30 days after the date on
which the Company receives shareholder approval of a sufficient increase in the
Company’s authorized shares, but no later than August 30, 2005 and (iii) the
shares of Common Stock issuable to the Holder as a result of adjustments to the
Fixed Conversion Price or Exercise Price, as the case may be, made pursuant to
the Note or the Option or otherwise, thirty (30) days after the occurrence such
event or the date of the adjustment of the Fixed Conversion Price or Exercise
Price, as the case may be.

 

 

“Holder” or “Holders”
means the Purchaser or any of its affiliates or transferees to the extent any
of them hold Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in
Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in
Section 5(c).

 

“Note” has the meaning set forth in the Securities Purchase
Agreement.

 

“Option” has the meaning set forth in the Securities Purchase
Agreement.

 

“Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

 

“Registrable Securities” means the shares of Common Stock
issued upon the conversion of the Note and the exercise of the Option.

 

“Registration Statement” means each registration statement
required to be filed hereunder, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

 

“Rule 144” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as
amended, and any successor statute.

 

“Securities Purchase Agreement” shall have the meaning set
forth in the recitals hereto.

 

2

 

“Trading Market” means any of the NASD OTC Bulletin Board,
NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock Exchange
or the New York Stock Exchange.

 

Registration.

 

On or prior to the Filing Date
the Company shall prepare and file with the Commission a Registration Statement
covering the Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415.  The
Registration Statement shall be on Form S-3 (except if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3, in
which case such registration shall be on another appropriate form in accordance
herewith).  The Company shall cause the
Registration Statement to become effective and remain effective as provided
herein.  The Company shall use its
reasonable commercial efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the Effectiveness Date.  The Company shall use its reasonable
commercial efforts to keep the Registration Statement continuously effective
under the Securities Act until the date which is the earlier date of when (i)
all Registrable Securities have been sold or (ii) all Registrable Securities
may be sold immediately without registration under the Securities Act and
without volume restrictions pursuant to Rule 144(k), as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected
Holders (the “Effectiveness Period”).

 

If: (i) the Registration
Statement is not filed on or prior to the Filing Date; (ii) the Registration
Statement is not declared effective by the Commission by the Effectiveness
Date; (iii) after the Registration Statement is filed with and declared
effective by the Commission, the Registration Statement ceases to be effective
(by suspension or otherwise) as to all Registrable Securities to which it is
required to relate at any time prior to the expiration of the Effectiveness
Period (without being succeeded immediately by an additional registration
statement filed and declared effective) for a period of time which shall exceed
30 days in the aggregate per year or more than 20 consecutive calendar days
(defined as a period of 365 days commencing on the date the Registration
Statement is declared effective); or (iv) the Common Stock is not listed or
quoted, or is suspended from trading on any Trading Market for a period of
three (3) consecutive Trading Days (provided the Company shall not have been
able to cure such trading suspension within 30 days of the notice thereof or
list the Common Stock on another Trading Market); (any such failure or breach
being referred to as an “Event,” and for purposes of clause (i) or (ii) the
date on which such Event occurs, or for purposes of clause (iii) the date which
such 30 day or 20 consecutive day period (as the case may be) is exceeded, or
for purposes of clause (iv) the date on which such three (3) Trading Day period
is exceeded, being referred to as “Event Date”), then until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty, equal to 1.0% for each thirty (30) day
period (prorated for partial periods) on a daily basis of the original
principal amount of the Note.  While such
Event continues, such liquidated damages shall be paid not less often than each
thirty (30) days.  Any unpaid liquidated
damages as of the date when an Event has been cured by the Company

 

3

 

shall be paid within three (3)
days following the date on which such Event has been cured by the Company.

 

Registration Procedures.  If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable Securities
under the Securities Act, the Company will, as expeditiously as possible:

 

prepare and file with the
Commission the Registration Statement with respect to such Registrable
Securities, respond as promptly as possible to any comments received from the
Commission, and use its best efforts to cause the Registration Statement to become
and remain effective for the Effectiveness Period with respect thereto, and
promptly provide to the Purchaser copies of all filings and Commission letters
of comment relating thereto;

 

prepare and file with the
Commission such amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement and to keep such
Registration Statement effective until the expiration of the Effectiveness
Period;

 

furnish to the Purchaser such
number of copies of the Registration Statement and the Prospectus included
therein (including each preliminary Prospectus) as the Purchaser reasonably may
request to facilitate the public sale or disposition of the Registrable
Securities covered by the Registration Statement;

 

use its commercially reasonable
efforts to register or qualify the Purchaser’s Registrable Securities covered
by the Registration Statement under the securities or “blue sky” laws of such
jurisdictions within the United States as the Purchaser may reasonably request,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;

 

list the Registrable Securities
covered by the Registration Statement with any securities exchange on which the
Common Stock of the Company is then listed;

 

immediately notify the
Purchaser at any time when a Prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event of which the
Company has knowledge as a result of which the Prospectus contained in such Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; and

 

make available for inspection
by the Purchaser and any attorney, accountant or other agent retained by the
Purchaser, all publicly available, non-confidential financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the attorney,
accountant or agent of the Purchaser.

 

4

 

Registration Expenses.  All expenses relating to the Company’s
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders (to the extent such counsel is required due to Company’s
failure to meet any of its obligations hereunder), are called “Registration
Expenses”. All selling commissions applicable to the sale of Registrable
Securities, including any fees and disbursements of any special counsel to the
Holders beyond those included in Registration Expenses, are called “Selling
Expenses.”   The Company shall only be
responsible for all Registration Expenses.

 

Indemnification.

 

In the event of a registration
of any Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will indemnify and hold harmless the Purchaser, and its
officers, directors and each other person, if any, who controls the Purchaser
within the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Purchaser, or such persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Purchaser, and each such person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by or on behalf of the Purchaser or
any such person in writing specifically for use in any such document.

 

In the event of a registration
of the Registrable Securities under the Securities Act pursuant to this
Agreement, the Purchaser will indemnify and hold harmless the Company, and its
officers, directors and each other person, if any, who controls the Company
within the meaning of the Securities Act, against all losses, claims, damages
or liabilities, joint or several, to which the Company or such persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact which was furnished in writing by the Purchaser to the Company expressly
for use in (and such information is contained in) the Registration Statement
under which such Registrable Securities were registered under the Securities
Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will

 

5

 

reimburse the Company and each
such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Purchaser will be liable in
any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished in writing to the Company by or on behalf of the
Purchaser specifically for use in any such document.  Notwithstanding the provisions of this
paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.

 

Promptly after receipt by a
party entitled to claim indemnification hereunder (an “Indemnified Party”) of
notice of the commencement of any action, such Indemnified Party shall, if a
claim for indemnification in respect thereof is to be made against a party
hereto obligated to indemnify such Indemnified Party (an “Indemnifying Party”),
notify the Indemnifying Party in writing thereof, but the omission so to notify
the Indemnifying Party shall not relieve it from any liability which it may
have to such Indemnified Party other than under this Section 5(c) and shall
only relieve it from any liability which it may have to such Indemnified Party
under this Section 5(c) if and to the extent the Indemnifying Party is prejudiced
by such omission. In case any such action shall be brought against any
Indemnified Party and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such Indemnified Party, and, after notice
from the Indemnifying Party to such Indemnified Party of its election so to
assume and undertake the defense thereof, the Indemnifying Party shall not be
liable to such Indemnified Party under this Section 5(c) for any legal expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof; if the Indemnified Party retains its own counsel, then the Indemnified
Party shall pay all fees, costs and expenses of such counsel, provided,
however, that, if the defendants in any such action include both the
indemnified party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be deemed to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the Indemnifying Party as incurred.

 

In order to provide for just
and equitable contribution in the event of joint liability under the Securities
Act in any case in which either (i) the Purchaser, or any officer, director or
controlling person of the Purchaser, makes a claim for indemnification pursuant
to this Section 5 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the Purchaser or such
officer, director or controlling person of the Purchaser in circumstances for
which indemnification is provided under this Section 5; then, and in each such
case, the Company and the Purchaser will contribute to the aggregate losses,
claims,

 

6

 

damages or liabilities to which
they may be subject (after contribution from others) in such proportion so that
the Purchaser is responsible only for the portion represented by the percentage
that the public offering price of its securities offered by the Registration
Statement bears to the public offering price of all securities offered by such
Registration Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.

 

Representations and Warranties.

 

The Common Stock of the Company
is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and,
except with respect to certain matters which the Company has disclosed to the
Purchaser on Schedule 4.21 to the Securities Purchase Agreement, the Company
has timely filed all proxy statements, reports, schedules, forms, statements
and other documents required to be filed by it under the Exchange Act.  The Company has filed (i) its Annual Report
on Form 10-K for the fiscal year ended December 31, 2004 and (ii) its Quarterly
Report on Form 10-Q for the fiscal quarters ended March 31, 2004, June 30,
2004, and September 30, 2004 and all Current Reports on Form 8-K that the
Company were required to file (collectively, the “SEC Reports”).  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.  The financial statements of
the Company included in the SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed) and fairly present
in all material respects the financial condition, the results of operations and
the cash flows of the Company and its subsidiaries, on a consolidated basis, as
of, and for, the periods presented in each such SEC Report.

 

The Common Stock is listed for
trading on the National Association of Securities Dealers,  Inc. Over the Counter Bulletin Board (“NASD
OTCBB”) and satisfies all requirements for the continuation of such
listing.  The Company has not received any
notice that its Common Stock will be delisted from the NASD OTCBB (except for
prior notices which have been fully remedied) or that the Common Stock does not
meet all requirements for the continuation of such listing.

 

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 any security under circumstances that would cause the offering of the
Securities pursuant to the Securities Purchase Agreement to be integrated with
prior offerings by the Company for

 

7

 

purposes of the Securities Act
which would prevent the Company from selling the Common Stock 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.

 

The Note, the Option and the
shares of Common Stock which the Purchaser may acquire pursuant to the Note and
the Option are all restricted securities under the Securities Act as of the
date of this Agreement.  The Company will
not issue any stop transfer order or other order impeding the sale and delivery
of any of the Registrable Securities at such time as such Registrable
Securities are registered for public sale or an exemption from registration is
available, except as required by federal or state securities laws.

 

The Company understands the
nature of the Registrable Securities issuable upon the conversion of the Note
and the Option and recognizes that the issuance of such Registrable Securities
may have a potential dilutive effect. 
The Company specifically acknowledges that its obligation to issue the
Registrable Securities 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.

 

Except for agreements made in
the ordinary course of business, there is no agreement that has not been filed
with the Commission as an exhibit to a registration statement or to a form
required to be filed by the Company under the Exchange Act, the breach of which
could reasonably be expected to have a material and adverse effect on the
Company and its subsidiaries, or would prohibit or otherwise interfere with the
ability of the Company to enter into and perform any of its obligations under
this Agreement in any material respect.

 

The Company will at all times
on and after July 31, 2005 have authorized and reserved a sufficient number of
shares of Common Stock for the full conversion of the Note and the full
exercise of the Option.

 

Miscellaneous.

 

Remedies.  In the event of a breach by the Company or by
a Holder, of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement.

 

No Piggyback on Registrations.  Except as and to the extent specified in
Schedule 7(b) hereto, neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 7(b) hereto, the Company has not previously
entered into any agreement granting any registration rights with respect to any
of its securities to any Person that have not been fully satisfied.

 

8

 

Compliance.  Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

 

Discontinued Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of a Discontinuation Event (as defined below), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
applicable Registration Statement until such Holder’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement or until it
is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.  For purposes of this Section
7(d), a “Discontinuation Event” shall mean (i) when the Commission notifies the
Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement (the
Company shall provide true and complete copies thereof and all written
responses thereto to each of the Holders); (ii) any request by the Commission
or any other Federal or state governmental authority for amendments or
supplements to such Registration Statement or Prospectus or for additional
information; (iii) the issuance by the Commission of any stop order suspending
the effectiveness of such Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iv) the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and/or (v) the occurrence of
any event or passage of time that makes the financial statements included in
such Registration Statement ineligible for inclusion therein or any statement
made in such Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any 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.

 

Piggy-Back Registrations.  If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such determination and, if within fifteen days after receipt of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered to the extent the Company may do so without
violating registration rights of others which exist as of the date of this
Agreement,

 

9

 

subject to customary
underwriter cutbacks applicable to all holders of registration rights and
subject to obtaining any required the consent of any selling stockholder(s) to
such inclusion under such registration statement.

 

Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of the then outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the immediately preceding sentence.

 

Notices.  Any notice or request hereunder may be given
to the Company or the Purchaser at the respective addresses set forth below or
as may hereafter be specified in a notice designated as a change of address
under this Section 7(g).  Any notice or
request hereunder shall be given by registered or certified mail, return
receipt requested, hand delivery, overnight mail, Federal Express or other
national overnight next day carrier (collectively, “Courier”) or telecopy
(confirmed by mail).  Notices and
requests shall be, in the case of those by hand delivery, deemed to have been
given when delivered to any party to whom it is addressed, in the case of those
by mail or overnight mail, deemed to have been given three (3) business days
after the date when deposited in the mail or with the overnight mail carrier,
in the case of a Courier, the next business day following timely delivery of
the package with the Courier, and, in the case of a telecopy, when confirmed.  The address for such notices and
communications shall be as follows:

 

	
  If to the Company:

  	
  Micro Component Technology,
  Inc.

  2340 West County Road C,

  St. Paul, Minnesota 55113-2528

  Attention: Chief Financial
  Officer

  Telephone:  (651) 697-4000

  Facsimile:

  
	
   

  	
   

  
	
   

  	
  with a copy to:

  
	
   

  	
   

  
	
   

  	
  Best & Flanagan, LLP

  225 South Sixth St., Suite
  4000,

  Minneapolis, Minnesota 55402

  Attention: James C. Diracles,
  Esq.

  Telephone: (612) 339-7121

  Facsimile: (612) 339-5897

  
	
   

  	
   

  
	
  If to a Purchaser:

  	
  To the address set forth
  under such Purchaser name on the signature pages hereto.

  

 

10

 

	
  If to any other Person who is

  then the registered Holder:

  	
   

  To the address of such Holder
  as it appears in the stock transfer books of the Company

  

 

or such other
address as may be designated in writing hereafter in accordance with this
Section 7(g) by such Person.

 

Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted under
the Notes and the Security Agreement with the prior written consent of the
Company, which consent shall not be unreasonably withheld.

 

Execution and Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

 

Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

 

Cumulative Remedies.  The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

 

11

 

Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

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

 

IN WITNESS WHEREOF, the parties
have executed this Registration Rights Agreement as of the date first written
above. 

 

	
  MICRO COMPONENT TECHNOLOGY,
  INC.

  	
   

  	
  LAURUS MASTER FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/
  Roger E. Gower

  	
   

  	
  By:

  	
   /s/ Eugene Grim

  
	
  Name:

  	
   Roger E. Gower

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   Chief Executive Officer

  	
   

  	
  Title:

  	
   Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  825 Third Avenue – 14th
  Floor

  
	
   

  	
   

  	
  New York, NY  10022

  
	
   

  	
   

  	
  Attention:

  	
  John E. Tucker, Esq.

  
	
   

  	
   

  	
  Facsimile:

  	
  212-541-4434

  
						

 

12EXHIBIT NO. 10.3

 

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

 

SECURED
CONVERTIBLE TERM NOTE

 

FOR VALUE RECEIVED, MICRO COMPONENT
TECHNOLOGY, INC., a Minnesota corporation (the “Borrower”), hereby 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 (the “Holder”) or its registered assigns or
successors in interest, on order, the sum of TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($2,500,000.00), together with any accrued and unpaid interest hereon,
on April 29, 2008 (the “Maturity Date”)
if not sooner paid.

 

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 Borrower
and the Holder (the “Purchase Agreement”).

 

The following terms shall apply to this Note:

 

ARTICLE I

INTEREST &
AMORTIZATION

 

1.1                                 Interest Rate and
Payment.  (a) Subject to
Sections 4.10 and 5.6 hereof, interest payable on this Note shall accrue at a
rate per annum (the “Interest Rate”) equal to the “prime rate” published in The
Wall Street Journal from time to time, plus one and three-quarters percent
(1.75%). The prime rate shall be increased or decreased as the case may be for
each increase or decrease in the prime rate in an amount equal to such increase
or decrease in the prime rate; each change to be effective as of the day of the
change in such rate.  If the Company has
satisfied the requirements of Section 2.2 hereof, the Interest Rate will
be subject to adjustment as set forth in Section 1.1(b).  In no event, however, shall the Interest Rate
be less than zero percent (0.0%). 
Interest shall be payable monthly in arrears commencing on June 1,
2005, on the first day of each consecutive calendar month thereafter (each, a “Repayment Date”), and on the Maturity Date,
whether by acceleration or otherwise.

 

(b) If, on the last business day of each
month hereafter until the Maturity Date (each a “Determination Date”), (i) the
Company shall have registered the shares of the Company’s common stock
underlying the conversion of the Note and that certain option issued to Holder
in

 

 

connection with the Note on a registration statement declared effective
by the SEC, and (ii) the volume weighted average price of the Common Stock as reported by
Bloomberg, L.P. on the principal market for the five (5)  trading days
immediately preceding a Determination Date (the “Market Price”) exceeds the
then applicable Fixed Conversion Price, the Interest Rate for the
succeeding calendar month shall automatically be reduced by 25 basis points
(0.25%) for each incremental twenty five percent (25%) increase in the market
price of the Common Stock above the then applicable Fixed Conversion Price.

 

1.2                                 Minimum Monthly Principal
Payments. Amortizing payments of the aggregate principal amount outstanding
under this Note at any time (the “Principal
Amount”) shall begin on November 1, 2005 and shall recur on the
first calendar day of each succeeding month thereafter until the Maturity Date
(each, an “Amortization Date”).  Subject to Section 3 below, beginning on
the first Amortization Date, the Borrower shall make monthly payments to the
Holder on each Repayment Date, each in the amount of $83,333.33, together with
any accrued and unpaid interest to date on such portion of the Principal Amount
plus any and all other amounts which are then owing under this Note but have
not been paid (collectively, the “Monthly
Amount”).

 

ARTICLE II

CONVERSION
REPAYMENT OPTION

 

2.1                                 (a) Payment of
Monthly Amount in Cash or Common Stock. 
Each month by the fifth (5th) business day prior to each
Amortization Date (the “Notice Date”),
the Holder shall deliver to Borrower a written notice in the form of Exhibit B
attached hereto electing to convert the Monthly Amount payable on the next
Repayment Date in either cash or Common Stock, or a combination of both (each,
a “Repayment Election Notice”). If
a Repayment Election Notice is not delivered by the Holder on or before the
applicable Notice Date for such Repayment Date, then the Borrower shall pay the
Monthly Amount due on such Repayment Date in cash. Any portion of the Monthly
Amount paid in cash on a Repayment Date, shall be paid to the Holder in an amount
equal to 101% of the principal portion of the Monthly Amount due and owing to
Holder on the Repayment Date. If the Holder converts all or a portion of the
Monthly Amount in shares of Common Stock, the number of such shares to be
issued by the Borrower to the Holder on such Repayment Date shall be the number
determined by dividing (x) the portion of the Monthly Amount to be paid in
shares of Common Stock, by (y) the then applicable Fixed Conversion Price.  For purposes hereof, the initial “Fixed Conversion Price” means $0.23 [100%
of the average closing price for the 3 trading days immediately preceding the
Closing Date].

 

(b)                                 Monthly Amount
Conversion Guidelines.  Subject to
Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall elect to convert all or
a portion of the Monthly Amount due on each Repayment Date in shares of Common
Stock if the average closing price of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market (as defined in Section 4.7 hereof)
for the three (3) trading days immediately preceding such Repayment Date
was greater than 115% of the Fixed Conversion Price; provided that the amount
of any such conversion shall not exceed twenty five percent (25%) of the
aggregate dollar trading volume of the Common Stock for the ten (10) day
trading period immediately preceding delivery of a Repayment Election Notice to
the Borrower.  Any part of the Monthly
Amount due on a Repayment Date that the Holder has

 

2

 

not elected to convert into shares of Common Stock shall be paid by the
Borrower in cash on such Repayment Date. Any part of the Monthly Amount due on
such Repayment Date which the Holder has elected to convert into shares of
Common Stock but which must be paid in cash (because the closing price of the
Common Stock on one or more of the three (3) trading days immediately
preceding the applicable Repayment Date was less than 115% of the Fixed
Conversion Price) shall be paid in cash at the rate of 101% of the Monthly
Amount otherwise due on the Repayment Date within three (3) business days
of the applicable Repayment Date.

 

2.2                                 No Effective
Registration.  Notwithstanding
anything to the contrary herein,  none of
the Borrower’s obligations to the Holder may be converted into Common Stock
unless (a) either (i) an effective current Registration Statement (as
defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists,
or (ii) an exemption from registration of the Common Stock is available to
pursuant to Rule 144 of the Securities Act and (b) no Event of
Default hereunder exists and is continuing, unless such Event of Default is
cured within any applicable cure period or is otherwise waived in writing by
the Holder in whole or in part at the Holder’s option.

 

Any
amounts converted by the Holder pursuant to this Section 2.2 shall be deemed
to constitute payments of outstanding principal applying to Monthly Amounts for
the remaining Repayment Dates in chronological order.

 

2.3                                 Optional Redemption
in Cash.  The Borrower will have the
option of prepaying this Note (“Optional
Redemption”) by paying to the Holder a sum of money equal to (i) one
hundred five percent (105%) of the principal amount of this Note if the closing
price of the Common Stock on one or more of the three (3) trading days
immediately preceding the Optional Redemption date is less than or equal to 75%
of the then Fixed Conversion Price; (ii) one hundred ten percent (110%) of
the principal amount of this Note if the closing price of the Common Stock on
one or more of the three (3) trading days immediately preceding the
Optional Redemption date is between 76% and 100% of the then Fixed Conversion
Price, inclusive; or (iii) one hundred fifteen percent (115%) of the
principal amount of this Note if the closing price of the Common Stock on one
or more of the three (3) trading days immediately preceding the Optional
Redemption date is between 101% and 107.5% of the then Fixed Conversion Price,
inclusive; or (iv) one hundred twenty percent (120%) of the principal
amount of this Note if the closing price of the Common Stock on one or more of
the three (3) trading days immediately preceding the Optional Redemption
Date is greater than 107.5% of the then Fixed Conversion Price, together with
accrued but unpaid interest thereon and any and all other sums due, accrued or
payable to the Holder arising under this Note, the Security Agreement, or any
Ancillary Agreement (as defined in the Security Agreement) (the “Redemption Amount”) outstanding on the day
written notice of redemption (the “Notice of
Redemption”) is given to the Holder. The Notice of Redemption shall
specify the date for such Optional Redemption (the “Redemption Payment Date”) which date shall be ten (10) days
after the date of the Notice of Redemption (the “Redemption Period”). A Notice of Redemption shall not be
effective with respect to any portion of this Note for which the Holder has a
pending election to convert pursuant to Section 3.1, or for conversions
elected to be made by the Holder pursuant to Section 3.1 during the
Redemption Period.  The Redemption Amount
shall be determined as if such Holder’s conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good

 

3

 

funds to the Holder.  In the
event the Borrower fails to pay the Redemption Amount on the Redemption Payment
Date, then such Redemption Notice will be null and void.

 

ARTICLE III

CONVERSION
RIGHTS

 

3.1.                              Holder’s Conversion
Rights.  The Holder shall have the
right, but not the obligation, to convert all or any portion of the then
aggregate outstanding principal amount of this Note, together with interest and
fees due hereon, into shares of Common Stock subject to the terms and
conditions set forth in this Article III. 
The Holder may exercise such right by delivery to the Borrower of a
written notice of conversion not less than one (1) day prior to the date
upon which such conversion shall occur. 
The date upon which such conversion shall occur is (the “Conversion Date”).

 

3.2                                 Conversion
Limitation.  Notwithstanding anything
contained herein to the contrary, the Holder shall not be entitled to convert
pursuant to the terms of this Note an amount that (a) would be convertible
into that number of Conversion Shares that would exceed the difference between
the number of shares of Common Stock beneficially owned by such Holder or
issuable upon exercise of warrants held by such Holder and 4.99% of the
outstanding shares of Common Stock of the Borrower or (b) exceed twenty
five percent (25%) of the aggregate dollar trading volume of the Common Stock
for the ten (10) day trading period immediately preceding delivery of a
Notice of Conversion to the Borrower. 
For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and Regulation 13d-3 thereunder.   The Holder may void the Conversion Share
limitation described in this Section 3.2 upon 75 days prior notice to the
Borrower or without any notice requirement upon an Event of Default.

 

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

 

(b)  Pursuant to the terms of the Notice of Conversion, the
Borrower will issue instructions to the transfer agent accompanied by an
opinion of counsel within one (1) business day of the date of the delivery
to Borrower of the Notice of Conversion and shall cause the transfer agent to
transmit the certificates representing the Conversion Shares to the Holder by
crediting the account of the Holder’s designated broker with the Depository
Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”)
system within three (3) business days after receipt by the Borrower of the
Notice of Conversion (the “Delivery Date”).

 

4

 

In the case of the exercise of the conversion rights set forth herein
the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of
Conversion.  The Holder shall be treated
for all purposes as the record holder of such Common Stock, unless the Holder
provides the Borrower written instructions to the contrary.

 

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

 

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

 

3.4                                 Conversion
Mechanics.

 

(a)                                  The number of shares
of Common Stock to be issued upon each conversion of this Note shall be
determined by dividing that portion of the principal and interest and fees to
be converted, if any, by the then applicable Fixed Conversion Price.  In the event of any conversions of outstanding
principal amount under this Note in part pursuant to this Article III,
such conversions shall be deemed to constitute conversions of outstanding
principal amount applying to Monthly Amounts for the remaining Repayment Dates
in chronological order.

 

(b)                                 The Fixed Conversion
Price and number and kind of shares or other securities to be issued upon
conversion is subject to adjustment from time to time upon the occurrence of
certain events, as follows:

 

5

 

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

 

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

 

C.                                     Share Issuances.  Subject to the provisions of this Section 3.4,
if the Borrower shall at any time prior to the conversion or repayment in full
of the Principal Amount issue any shares of Common Stock to a person other than
the Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant
to options, warrants, or other obligations to issue shares outstanding on the
date hereof as disclosed to Holder in writing; or (iii) pursuant to options
that may be issued under any employee incentive stock option and/or any
qualified stock option plan adopted by the Borrower) for a consideration per
share (the “Offer Price”) less than the Fixed Conversion Price in effect at the
time of such issuance, then the Fixed Conversion Price shall be immediately
reset to such lower Offer Price. For purposes hereof, the issuance of any
security of the Borrower convertible into or exercisable or exchangeable for
Common Stock shall result in an adjustment to the Fixed Conversion Price at the
time of issuance of such securities.

 

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

 

3.5                                 Issuance of New
Note.  Upon any partial conversion 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 Borrower to the Holder
for the principal balance of this Note and interest which shall not have been
converted or paid. The Borrower will pay no costs, fees or any other
consideration to the Holder for the production and issuance of a new Note.

 

6

 

ARTICLE IV

EVENTS
OF DEFAULT

 

Upon the occurrence and continuance of an
Event of Default beyond any applicable grace period, the Holder may make all
sums of principal, interest and other fees then remaining unpaid hereon and all
other amounts payable hereunder due and payable within five (5) days after
written notice from Holder to Borrower (each occurrence being a “Default Notice Period”).  In the event of such an acceleration, the
amount due and owing to the Holder shall be 130% of the outstanding principal
amount of the Note (plus accrued and unpaid interest and fees, if any).  If, with respect to any Event of Default
other than a payment default described in Section 4.1 below, within the
Default Notice Period the Borrower cures the Event of Default, the Event of
Default will be deemed to no longer exist and any rights and remedies of Holder
pertaining to such Event of Default will be of no further force or effect.

 

The occurrence of any of the following events
set forth in any of Sections 4.1 through 4.10, inclusive, below is an “Event of Default”:

 

4.1                                 Failure to Pay
Principal, Interest or other Fees. 
The Borrower fails to pay when due any installment of principal,
interest or other fees hereon in accordance herewith, or the Borrower or any of
its Subsidiaries fails to pay when due any amount due under any other
promissory note issued by Borrower.

 

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

 

4.3                                 Breach of
Representations and Warranties.  Any
material representation or warranty of the Borrower made herein, in the
Purchase Agreement, or in any Related Agreement shall be materially false or
misleading and shall not be cured for a period of ten (10) days after the
occurrence thereof.

 

4.4                                 Receiver or Trustee.  The Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed.

 

4.5                                 Judgments.  Any money judgment, writ or similar final
process shall be entered or filed against the Borrower or any of its
Subsidiaries or any of its property or other assets for more than $250,000, and
shall remain unvacated, unbonded or unstayed for a period of ninety (90) days,
other than any judgment disclosed to Holder in writing as of the date hereof.

 

4.6                                 Bankruptcy.  Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower or any of its Subsidiaries.

 

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

 

7

 

of such notice.  The “Principal
Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New
York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock).

 

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

 

4.9                     Default Under
Related Agreements.  The
occurrence and continuance of any Event of Default as defined in (v) the
Related Agreements, (w) that certain Security Agreement, dated as of March 9,
2004, by and between the Borrower and the Holder (as amended, modified or
supplemented from time to time, the “2004 Security Agreement”), (x) any
Ancillary Agreement referred to in the 2004 Security Agreement, (y) that
certain Securities Purchase Agreement, dated as of March 9, 2004, by and
between the Borrower and the Holder (as amended, modified or supplemented from
time to time, the “2004 Purchase Agreement”) or (z) any Related Agreement
referred to in the 2004 Purchase Agreement.

 

4.10               Authorized
Shares.                                          The failure by
the Borrower to obtain shareholder approval to increase the authorized shares
of Common Stock of the Borrower to 55,000,000 on or prior to July 31,
2005.

 

DEFAULT
RELATED PROVISIONS

 

4.11                           Payment Grace Period.  The Borrower shall have a three (3) business
day grace period to pay any monetary amounts due under this Note or the
Purchase Agreement or any Related Document, after which grace period a default
interest rate of two percent (2%) per month shall apply to the monetary amounts
due hereunder.

 

4.12                           Conversion Privileges.  The conversion privileges set forth in Article III
shall remain in full force and effect immediately from the date hereof and
until this Note is paid in full.

 

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

 

ARTICLE V

MISCELLANEOUS

 

5.1                                 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.

 

5.2                                 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,

 

8

 

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 Borrower 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 such Holder, with a copy to
John E. Tucker, Esq., 825 Third Avenue, 14th Floor, New York,
New York 10022, facsimile number (212) 541-4434, or at such other address
as the Borrower or the Holder may designate by ten days advance written notice
to the other parties hereto.  A Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.

 

5.3                                 Amendment Provision.  The term “Note” and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.

 

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

 

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

 

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

 

5.7                                 Security
Interest and Guarantee.  The Holder
has been granted a security interest (i) in certain assets of the Borrower
and its Subsidiaries as more fully described in the Master Security Agreement
dated as of the date hereof and (ii) in the equity interests of the
Borrowers’ Subsidiaries pursuant to the Stock Pledge Agreement dated as of the
date hereof.  The

 

9

 

obligations of the Borrower under this Note are guaranteed by certain Subsidiaries
of the Company pursuant to the Subsidiary Guaranty dated as of the date hereof.

 

5.8                                 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.

 

5.9                                 Cost of Collection.  If default is made in the payment of this
Note, the borrower shall pay to Holder reasonable costs of collection,
including reasonable attorney’s fees.

 

5.10                           Authorized Shares.  Notwithstanding any provision herein to the
contrary, nothing in this Agreement shall require Borrower to issue any shares
pursuant hereto in excess of the number of shares Borrower currently has
authorized and unreserved for issuance. 
Borrower agrees to seek shareholder approval of an increase in its
authorized shares from 40,000,000 to 55,000,000 at its annual meeting to be
held on June 23, 2005.  Failure to
obtain such approval by July 31, 2005 shall constitute an Event of Default
under, and as defined in, this Note.

 

IN WITNESS WHEREOF,  Borrower has caused this Convertible Term
Note to be signed in its name effective as of this 29th  day of April, 2005.

 

 

	
   

  	
  MICRO COMPONENT TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger E. Gower

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Thomas P. Maun

  	
   

  	
   

  
							

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]