EXHIBIT 10.6


 


FUNDS ESCROW AGREEMENT


 


This Funds Escrow Agreement (this “Agreement”)
is dated as of July 31, 2008 among MICRO
COMPONENT TECHNOLOGY, INC., a Minnesota corporation (the “Company”),
Valens U.S. SPV I, LLC and Valens
Offshore SPV I, Ltd. (the “Purchasers”), and Loeb & Loeb
LLP (the “Escrow Agent”).


 


W  I  T
N  E  S  S  E  T  H:


 


WHEREAS, LV Administrative Services, Inc., as
administrative and collateral agent for the Purchasers (the “Agent”),
has advised the Escrow Agent that (a) the Company, the Agent and the
Purchasers have entered into a Securities Purchase Agreement (the “Purchase
Agreement”) for the sale by the Company to the Purchasers of secured term
notes (the “Term Notes”), and (b) the Company has issued to the
Purchasers common stock purchase warrants (the “Warrants”) in connection
with the issuance of the Term Notes;


 


WHEREAS, the Company and the Purchasers wish to
deliver to the Escrow Agent copies of the Documents (as hereafter defined) and,
following the satisfaction of all closing conditions relating to the Documents,
the Purchasers to deliver the Escrowed Payment (as hereafter defined), in each
case, to be held and released by Escrow Agent in accordance with the terms and
conditions of this Agreement; and


 


WHEREAS, the Escrow Agent is willing to serve as
escrow agent pursuant to the terms and conditions of this Agreement;


 


NOW THEREFORE, the parties agree as follows:


 


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INTERPRETATION


 


Definitions. 
Whenever used in this Agreement, the following terms shall have the
meanings set forth below.


 


“Agreement”
means this Agreement, as amended, modified and/or supplemented from time to
time by written agreement among the parties hereto.


 


“Closing
Payment” means (a) a non-refundable payment to Valens Capital
Management, LLC, the investment manager of the Purchasers (“VCM”) in an amount
equal to $70,000.00; (ii) a non-refundable payment to the Purchasers in an
amount equal to $35,000.00; (iii) an advance prepayment discount deposit
to the Purchasers in an amount equal to $35,000.00; and (iv) a
non-refundable structuring payment to VCM in an amount equal to $30,000.00.


 


“Creditor
Parties” means collectively, the Agent and the Purchasers.


 


“Disbursement
Letter” means that certain letter delivered to the Escrow Agent by the
Company, acceptable in form and substance to the Agent, setting forth wire
instructions and amounts to be funded at the Closing.


 


“Documents”
means copies of the Disbursement Letter, the Purchase Agreement, the Term Notes
and the Warrants.


 


“Escrowed
Payment” means $3,500,000.


 


Entire
Agreement.  This Agreement constitutes the entire
agreement among the parties hereto with respect to the arrangement with the
Escrow Agent and supersedes all prior agreements, understandings, negotiations
and discussions of the parties, whether oral or written with respect to the
arrangement with the Escrow Agent.  There
are no warranties, representations and other agreements made by the parties in
connection with the arrangement with the Escrow Agent except as specifically
set forth in this Agreement.


 


Extended
Meanings.  In this Agreement words importing the
singular number include the plural and vice versa; words importing the
masculine gender include the feminine and neuter genders.  The word “person” includes an individual,
body corporate, partnership, trustee or trust or unincorporated association,
executor, administrator or legal representative.


 


Waivers
and Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance.  Except as expressly stated herein, no delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
party of any right, power or privilege hereunder preclude any other or future
exercise of any other right, power or privilege hereunder.


 


Headings. 
The division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of this Agreement.


 


Law
Governing this Agreement; Consent to Jurisdiction. 
THIS AGREEMENT 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.  With respect to any suit, action
or proceeding relating to this Agreement or to the transactions contemplated
hereby (“Proceedings”), each party hereto irrevocably submits to the exclusive
jurisdiction of the courts of the County of New York, State of New York and the
United States District court located in the county of New York in the State of
New York.  Each party hereto 


 


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hereby
irrevocably and unconditionally (a) waives trial by jury in any Proceeding
relating to this Agreement and for any related counterclaim and (b) waives
any objection which it may have at any time to the laying of venue of any
Proceeding brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have
jurisdiction over such party.  As between
the Company and the Purchasers, the prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs.  In the event that any provision of this
Agreement is determined by a court of competent jurisdiction to be invalid or
unenforceable, then the remainder of this Agreement shall not be affected and
shall remain in full force and effect.


 


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


 


APPOINTMENT OF AND
DELIVERIES TO THE ESCROW AGENT


 


Appointment. 
The Company and the Purchasers hereby irrevocably designate and appoint
the Escrow Agent as their escrow agent for the purposes set forth herein, and
the Escrow Agent by its execution and delivery of this Agreement hereby accepts
such appointment under the terms and conditions set forth herein.


 


Copies
of Documents to Escrow Agent.  On or about
the date hereof, the Creditor Parties and the Company shall deliver to the
Escrow Agent copies of the Documents executed by such parties.


 


Delivery
of Escrowed Payment to Escrow Agent.  Following the
satisfaction of all closing conditions relating to the Documents (other than
the funding of the Escrowed Payment), the Purchasers shall deliver to the
Escrow Agent the Escrowed Payment.  At
such time, the Escrow Agent shall hold the Escrowed Payment as agent for the
Company, subject to the terms and conditions of this Agreement.


 


Intention
to Create Escrow Over the Escrowed Payment.  The
Purchasers and the Company intend that the Escrowed Payment shall be held in
escrow by the Escrow Agent and released from escrow by the Escrow Agent only in
accordance with the terms and conditions of this Agreement.


 


RELEASE OF ESCROW


 


Release
of Escrow.  Subject to the provisions of Section 4.2,
the Escrow Agent shall release the Escrowed Payment from escrow as follows:


 


Upon
receipt by the Escrow Agent of (i) oral instructions from David Grin
and/or Eugene Grin (each of whom is a principal of the Purchasers) consenting
to the release of the Escrowed Payment from escrow in accordance with the
Disbursement Letter following the Escrow Agent’s receipt of the Escrowed
Payment, (ii) the Disbursement Letter, and (iii) the Escrowed Payment,
the Escrowed Payment shall promptly be disbursed in accordance with the
Disbursement Letter.  The Disbursement
Letter shall include, without limitation, Escrow Agent’s authorization to
retain from the Escrowed Payment Escrow Agent’s fee for 


 


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acting
as Escrow Agent hereunder and the Closing Payment for delivery to Valens
Capital Management, LLC in accordance with the Disbursement Letter.


 


Upon
receipt by the Escrow Agent of a final and non-appealable judgment, order,
decree or award of a court of competent jurisdiction (a “Court Order”) relating
to the Escrowed Payment, the Escrow Agent shall remit the Escrowed Payment in
accordance with the Court Order.  Any
Court Order shall be accompanied by an opinion of counsel for the party
presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the
Court Order is a court of competent jurisdiction and that the Court Order is final
and non-appealable.


 


Acknowledgement
of Company and Purchasers; Disputes.  The Company
and the Purchasers acknowledge that the only terms and conditions upon which
the Escrowed Payment are to be released from escrow are as set forth in
Sections 3 and 4 of this Agreement.  The
Company and the Purchasers reaffirm their agreement to abide by the terms and
conditions of this Agreement with respect to the release of the Escrowed
Payment.  Any dispute with respect to the
release of the Escrowed Payment shall be resolved pursuant to Section 4.2
or by written agreement between the Company and the Purchasers.


 


CONCERNING THE ESCROW
AGENT


 


Duties
and Responsibilities of the Escrow Agent.  The Escrow
Agent’s duties and responsibilities shall be subject to the following terms and
conditions:


 


The
Purchasers and the Company acknowledge and agree that the Escrow Agent (i) shall
not be required to inquire into whether the Creditor Parties, the Company or
any other party is entitled to receipt of any Document or all or any portion of
the Escrowed Payment; (ii) shall not be called upon to construe or review
any Document or any other document, instrument or agreement entered into in
connection therewith; (iii) shall be obligated only for the performance of
such duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iv) may rely on and shall be protected in acting or refraining
from acting upon any written notice, instruction, instrument, statement,
request or document furnished to it hereunder and believed by the Escrow Agent
in good faith to be genuine and to have been signed or presented by the proper
person or party, without being required to determine the authenticity or
correctness of any fact stated therein or the propriety or validity or the
service thereof; (v) may assume that any person purporting to give notice
or make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so; (vi) shall not be responsible
for the identity, authority or rights of any person, firm or company executing
or delivering or purporting to execute or deliver this Agreement or any
Document or any funds deposited hereunder or any endorsement thereon or
assignment thereof; (vii) shall not be under any duty to give the property
held by Escrow Agent hereunder any greater degree of care than Escrow Agent
gives its own similar property; and (viii) may consult counsel
satisfactory to Escrow Agent (including, without limitation, Loeb &
Loeb LLP or such other counsel of Escrow Agent’s choosing), the opinion of such
counsel to be full and complete authorization and protection in respect of any
action taken, suffered or omitted by Escrow Agent hereunder in good faith and
in accordance with the opinion of such counsel.


 


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The
Purchasers and the Company acknowledge that the Escrow Agent is acting solely
as a stakeholder at their request and that the Escrow Agent shall not be liable
for any action taken by Escrow Agent in good faith and believed by Escrow Agent
to be authorized or within the rights or powers conferred upon Escrow Agent by
this Agreement.  The Purchasers and the
Company hereby, jointly and severally, indemnify and hold harmless the Escrow
Agent and any of Escrow Agent’s partners, employees, agents and representatives
from and against any and all actions taken or omitted to be taken by Escrow
Agent or any of them hereunder and any and all claims, losses, liabilities,
costs, damages and expenses suffered and/or incurred by the Escrow Agent
arising in any manner whatsoever out of the transactions contemplated by this
Agreement and/or any transaction related in any way hereto, including the fees
of outside counsel and other costs and expenses of defending itself against any
claims, losses, liabilities, costs, damages and expenses arising in any manner
whatsoever out the transactions contemplated by this Agreement and/or any
transaction related in any way hereto, except for such claims, losses,
liabilities, costs, damages and expenses incurred by reason of the Escrow Agent’s
gross negligence or willful misconduct. 
The Escrow Agent shall owe a duty only to the Purchasers and the Company
under this Agreement and to no other person.


 


The
Purchasers and the Company shall jointly and severally reimburse the Escrow
Agent for its reasonable out-of-pocket expenses (including counsel fees (which
counsel may be Loeb & Loeb LLP or such other counsel of the Escrow
Agent’s choosing) incurred in connection with the performance of its duties and
responsibilities hereunder, which shall not (subject to Section 4.1(b))
exceed $1,500.


 


The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5) business
days prior written notice of resignation to the Purchasers and the Company.  Prior to the effective date of resignation as
specified in such notice, the Purchasers and Company will issue to the Escrow
Agent a joint instruction authorizing delivery of the Documents and the
Escrowed Payment to a substitute Escrow Agent selected by the Purchasers and
the Company.  If no successor Escrow
Agent is named by the Purchasers and the Company, the Escrow Agent may apply to
a court of competent jurisdiction in the State of New York for appointment of a
successor Escrow Agent, and deposit the Documents and the Escrowed Payment with
the clerk of any such court, and/or otherwise commence an interpleader or
similar action for a determination of where to deposit the same.


 


The
Escrow Agent does not have and will not have any interest in the Documents and
the Escrowed Payment, but is serving only as escrow agent, having only
possession thereof.


 


The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and reasonably believed by it to be authorized hereby or within the
rights or powers conferred upon it hereunder, nor for action taken or omitted
by it in good faith, and in accordance with advice of counsel (which counsel
may be Loeb & Loeb LLP or such other counsel of the Escrow Agent’s
choosing), and shall not be liable for any mistake of fact or error of judgment
or for any acts or omissions of any kind except to the extent any such
liability arose from its own willful misconduct or gross negligence.


 


This
Agreement sets forth exclusively the duties of the Escrow Agent with respect to
any and all matters pertinent thereto and no implied duties or obligations
shall be read into this Agreement.


 


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The
Escrow Agent shall be permitted to act as counsel for the Creditor Parties or
the Company, as the case may be, in any dispute as to the disposition of the
Documents and the Escrowed Payment, in any other dispute between the Creditor
Parties and the Company, whether or not the Escrow Agent is then holding the
Documents and/or the Escrowed Payment and continues to act as the Escrow Agent
hereunder.


 


The
provisions of this Section 4.1 shall survive the resignation of the Escrow
Agent or the termination of this Agreement.


 


Dispute
Resolution; Judgments.  Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:


 


If
any dispute shall arise with respect to the delivery, ownership, right of
possession or disposition of the Documents and/or the Escrowed Payment, or if
the Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone,
to (i) refrain from taking any action other than to continue to hold the
Documents and the Escrowed Payment pending receipt of a joint instruction from
the Purchasers and the Company, (ii) commence an interpleader or similar
action, suit or proceeding for the resolution of any such dispute; and/or (iii) deposit
the Documents and the Escrowed Payment with any court of competent jurisdiction
in the State of New York, in which event the Escrow Agent shall give written
notice thereof to the Purchasers and the Company and shall thereupon be
relieved and discharged from all further obligations pursuant to this
Agreement.  The Escrow Agent may, but
shall be under no duty to, institute or defend any legal proceedings which
relate to the Documents and the Escrowed Payment.  The Escrow Agent shall have the right to
retain counsel if it becomes involved in any disagreement, dispute or
litigation on account of this Agreement or otherwise determines that it is
necessary to consult counsel which such counsel may be Loeb & Loeb LLP
or such other counsel of the Escrow Agent’s choosing.


 


The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order.  In case the Escrow Agent obeys or
complies with a Court Order, the Escrow Agent shall not be liable to the
Creditor Parties, the Company or any other person, firm, company or entity by
reason of such compliance.


 


GENERAL MATTERS


 


Termination. 
This escrow shall terminate upon disbursement of the Escrowed Payment in
accordance with the terms of this Agreement or earlier upon the agreement in
writing of the Purchasers and the Company or resignation of the Escrow Agent in
accordance with the terms hereof.


 


Notices. 
All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):


 


	
  If to the Company, to:

  	
   

  	
  Micro Component Technology, Inc.

  
	
   

  	
   

  	
  2340 West County Road C

  
	
   

  	
   

  	
  St. Paul, Minnesota 55113-2528

  
	
   

  	
   

  	
  Attention:Chief Financial Officer

  
	
   

  	
   

  	
  Fax: (651) 697-4200

  



 


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  With a copy to:

  	
   

  	
  Best & Flanagan,
  LLP

  
	
   

  	
   

  	
  225 South Sixth St.,
  Suite 4000,

  
	
   

  	
   

  	
  Minneapolis, Minnesota
  55402

  
	
   

  	
   

  	
  Attention: James C.
  Diracles, Esq.

  
	
   

  	
   

  	
  Fax: (612) 339-5897

  
	
   

  	
   

  	
   

  
	
  If to the Purchasers, to:

  	
   

  	
  c/o Valens Capital Management LLC

  
	
   

  	
   

  	
  335 Madison Avenue, 10th Floor

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Attention: Portfolio Services

  
	
   

  	
   

  	
  Fax: 212-581-5037

  
	
   

  	
   

  	
   

  
	
  If to the Escrow Agent, to:

  	
   

  	
  Loeb & Loeb LLP

  
	
   

  	
   

  	
  345 Park Avenue

  
	
   

  	
   

  	
  New York, New York 10154

  
	
   

  	
   

  	
  Attention: Scott J. Giordano, Esq.

  
	
   

  	
   

  	
  Fax: (212) 407-4990

  



 


or to
such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.


 


Interest. 
The Escrowed Payment shall not be held in an interest bearing account
nor will interest be payable in connection therewith.


 


Assignment;
Binding Agreement.  Neither this Agreement nor any right or
obligation hereunder shall be assignable by any party without the prior written
consent of the other parties hereto. 
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective legal representatives, successors and
assigns.


 


Invalidity. 
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.


 


Counterparts/Execution. 
This Agreement may be executed in any number of counterparts and by
different signatories hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same agreement. 
This Agreement may be executed by facsimile or electronic transmission.


 


[Signature Page to Follow]


 


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IN WITNESS WHEREOF, the parties hereto have executed
this Funds Escrow Agreement as of the date and year first above written.


 


 


	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MICRO COMPONENT TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Roger E. Gower

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PURCHASERS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VALENS U.S. SPV I, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Valens Capital Management,

  
	
   

  	
   

  	
  its investment manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VALENS OFFSHORE SPV I, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Valens Capital Management,

  
	
   

  	
   

  	
  its investment manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ESCROW AGENT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LOEB & LOEB LLP

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: