EXHIBIT NO. 10.1 MICRO COMPONENT TECHNOLOGY, INC. SECURITIES PURCHASE AGREEMENT

 

TABLE OF CONTENTS

 

1.	Agreement to Sell and Purchase
2.	Fees
3.	Closing, Delivery and Payment.
	3.1	Closing
	3.2	Delivery
4.	Representations and Warranties of the Company
	4.1	Organization, Good Standing and Qualification
	4.2	Subsidiaries
	4.3	Capitalization; Voting Rights
	4.4	Authorization; Binding Obligations
	4.5	Liabilities
	4.6	Agreements; Action
	4.7	Obligations to Related Parties
	4.8	Changes
	4.9	Title to Properties and Assets; Liens, Etc.
	4.10	Intellectual Property
	4.11	Compliance with Other Instruments
	4.12	Litigation
	4.13	Tax Returns and Payments
	4.14	Employees
	4.15	Registration Rights and Voting Rights
	4.16	Compliance with Laws; Permits
	4.17	Environmental and Safety Laws
	4.18	Valid Offering
	4.19	Full Disclosure
	4.20	Insurance
	4.21	SEC Reports
	4.22	Listing
	4.23	No Integrated Offering
	4.24	Stop Transfer
	4.25	Dilution.
	4.26	Patriot Act.
5.	Representations and Warranties of the Purchaser
	5.1	No Shorting
	5.2	Requisite Power and Authority
	5.3	Investment Representations
	5.4	Purchaser Bears Economic Risk
	5.5	Acquisition for Own Account
	5.6	Purchaser Can Protect Its Interest
	5.7	Accredited Investor
	5.8	Legends

 

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6.	Covenants of the Company
	6.1	Stop-Orders
	6.2	Listing
	6.3	Market Regulations
	6.4	Reporting Requirements
	6.5	Use of Funds
	6.6	Access to Facilities
	6.7	Taxes
	6.8	Insurance
	6.9	Intellectual Property
	6.10	Properties
	6.11	Confidentiality
	6.12	Required Approvals
	6.13	Reissuance of Securities
	6.14	Opinion
	6.15	Margin Stock
	6.16	Reservation of Common Stock
7.	Covenants of the Purchaser
	7.1	Confidentiality
	7.2	Non-Public Information
	7.3	Limitation on Acquisition of Common Stock of the Company
8.	Covenants of the Company and Purchaser Regarding Indemnification
	8.1	Company Indemnification
	8.2	Purchaser’s Indemnification
	8.3	Procedures
9.	Conversion of Convertible Note.
10.	Registration Rights, Indemnification.
	10.1	Registration Rights Granted
	10.2	Indemnification
	10.3	Offering Restrictions
11.	Miscellaneous
	11.1	Governing Law
	11.2	Survival
	11.3	Successors
	11.4	Entire Agreement
	11.5	Severability
	11.6	Amendment and Waiver
	11.7	Delays or Omissions
	11.8	Notices
	11.9	Attorneys’ Fees
	11.10	Titles and Subtitles
	11.11	Facsimile Signatures; Counterparts
	11.12	Broker’s Fees
	11.13	Construction

 

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LIST OF EXHIBITS

 

Form of Convertible Term Note		Exhibit A
Form of Option		Exhibit B
Form of Opinion		Exhibit C
Form of Escrow Agreement		Exhibit D

 

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SECURITIES PURCHASE AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

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

 

Fees.  On the Closing Date:

 

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

 

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

 

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

 

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

 

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

 

Closing, Delivery and Payment.

 

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

 

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

 

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

 

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

 

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

 

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

 

Capitalization; Voting Rights.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

reimbursement for reasonable expenses incurred on behalf of the Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Any labor organization activity related to the Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

those resulting from taxes which have not yet become delinquent;

 

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

 

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

 

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

 

Intellectual Property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Compliance with Laws; Permits.   Except as set forth on Schedule 4.16, to its knowledge, the Company is not in violation in any material respect of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company.  No governmental orders, permissions, consents, approvals or authorizations are required to be obta