LOCKBOX AGREEMENT
THIS
LOCKBOX AGREEMENT,
dated
as of May __, 2008 (this “Agreement”), by and between SJ
Electronics, Inc. (f/k/a Acheron, Inc.),
a
Nevada corporation (the “Company”),
Tri-State Title & Escrow, LLC, in its capacity as collateral agent (the
“Collateral
Agent”),
and
Xxxx
Xxx
(the
“Lockbox
Agent”).
WITNESSETH:
WHEREAS,
the
Company and the several Investors (such capitalized term and all other
capitalized terms used in this Agreement having the meanings provided in Section
1) are parties to the Note Purchase Agreement, pursuant to which, among other
things, the Investors have agreed to purchase the Notes from the Company;
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the Company
and the Collateral Agent are executing and delivering the Security Agreement
and
the Collateral Agency Agreement with the Collateral Agent pursuant to which,
among other things, the Company is granting a security interest in the
Collateral, including, without limitation, all of the Company's right, title
and
interest in and to all Accounts Receivable to the Collateral Agent for the
ratable benefit of the Holders;
WHEREAS,
in order
to give effect to and perfect the security interest in certain of the collateral
subject to the Security Agreement, this Agreement provides that all payments
to
the Company pursuant to the Security Agreement shall be paid into a Collateral
Account and disbursed from the Collateral Account in accordance with the terms
of this Agreement; and
WHEREAS,
it
is a
condition precedent to the several obligations of the Investors to purchase
their respective Notes pursuant to the Note Purchase Agreement that the Company
and the Collateral Agent shall have executed and delivered this Agreement for
the ratable benefit of the Holders;
NOW
THEREFORE,
in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties agree as follows:
1.
Definitions.
(a) Reference
is hereby made to the Notes for a statement of the terms thereof. All terms
used
in this Agreement which are defined in the Notes, Note Purchase Agreement or
other Transaction Documents and which are not otherwise defined herein shall
have the same meanings herein as set forth therein.
(b) All
the
agreements or instruments herein defined shall mean such agreements or
instruments as the same may from time to time be supplemented or amended or
the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms thereof and of this Agreement.
(c) The
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
”Accounts
Receivable”
means all
rights to payment for goods sold or leased or for services rendered, whether
or
not such rights have been earned by performance. Lite-On, Inc. is expressly
excluded from account debtors on the Accounts Receivable.
“Collateral
Account”
means
the account maintained at the Collateral Agent for the ratable benefit of the
Holders which is identified in clause (b) of Section 2 and entitled “SJ
Electronics Noteholder Collateral Account”, and any successor or replacement
account.
“Event
of Default”
means:
(1) the
failure by the Company to perform in any material respect any obligation of
the
Company under this Agreement as and when required by this
Agreement;
(2) any
representation or warranty made by the Company pursuant to this Agreement shall
have been untrue in any material respect when made or deemed to have been made;
or
(3) any
Event
of Default, as that term is defined in the Security Agreement; or
(4) any
Event
of Default, as that term is defined in any of the Notes.
“Holder”
means
any Investor or any holder from time to time of any Note.
“Majority
Holders”
means
at any time such of the holders of Notes, which based on the outstanding
principal amount of the Notes, represents a majority of
the
aggregate outstanding principal amount of the Notes.
“Note
Purchase Agreement”
means
the Note Purchase Agreement, dated as of May ___, 2008, by and between the
Company and the respective Investor parties thereto pursuant to which the
Company issued the Notes.
“Notes”
means
the Company’s 15% Senior Secured Convertible Notes due 2009 issued pursuant to
the Note Purchase Agreement, including, without limitation.
“Person”
means
any natural person, corporation, partnership, limited liability company, trust,
incorporated organization, unincorporated association or similar entity or
any
government, governmental agency or political subdivision.
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“Security
Agreement”
means
the Pledge and Security Agreement, dated as of May __, 2008, between the Company
and the Collateral Agent.
“Transaction
Documents”
means
the Notes, the Note Purchase Agreement, this Agreement, the Security Agreement,
the Collateral Agency Agreement, the Guaranty and the other agreements,
instruments and documents contemplated hereby and thereby.
2. Payments.
(a) The
Company agrees, that, within thirty (30) Business days of the date of this
Agreement the Company shall irrevocably instruct in writing (the “Instruction”)
all the account debtors on the Accounts Receivable that payments in respect
thereof shall be made by wire transfer of funds to the Collateral
Account.
If
the
Company fails to give the Instruction in accordance with Section 6(j) of the
Security Agreement, the Collateral Agent may, in its own name or in the name
of
the Company, give the Instruction directly to the account debtors on the
Accounts that constitute part of the Collateral and to all of the parties to
Contracts that constitute part of the Collateral.
(b) If
any
Person who has not already received the Instruction is to become an account
debtor on the Accounts Receivable, the Company shall instruct such Person that
payments in respect thereof shall be made in the manner set forth in Section
2(a). If the Company fails to give the instructions in accordance with this
Section 2(b), the Collateral Agent may, in its own name or in the name of the
Company, give such instructions directly to such Person.
3.
No
Contrary Instructions. Without
the prior written consent of the Collateral Agent and the Majority Holders,
the
Company shall not revoke, rescind or modify the Instruction or take any other
action which is contrary to or inconsistent with this Agreement or the Security
Agreement. If for any reason the Company receives any payment from an account
debtor or party to a Contract on or after the Notice Date, the Company shall
immediately deposit such payment, and any interest or proceeds thereon, in
the
Collateral Account. Prior to such deposit, the Company shall hold all such
funds
in trust for the exclusive benefit of the Collateral Agent and the Holders
pursuant to this Agreement.
4. Collateral
Account.
The
Collateral Account shall be under the shared control of the Lockbox Agent and
the Collateral Agent (the “Authorized
Parties”).
All
cash deposited in the Collateral Account pursuant to this Agreement, and all
interest earned thereon, shall be held in the Collateral Account and shall
at
all times be segregated from the funds and property of any other Person. The
assets in the Collateral Account shall be held in cash only and shall not be
invested in any securities. Funds may be withdrawn from the Collateral Account
by the Company at its sole discretion, provided that
no Event
of Default has occurred and is continuing. After an Event of Default has
occurred and is continuing, funds may be withdrawn from the Collateral Account
only by the Authorized Parties acting jointly.
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5. Representations
and Warranties.
The
Company hereby represents and warrants to and for the benefit of the Lockbox
Agent, the Collateral Agent and the Holders that:
(a) Power
and Authority.
The
Company has full power, authority and legal right to enter into this
Agreement.
(b) Binding
Obligation.
This
Agreement has been duly authorized by the Company and has been duly executed
and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its
terms.
(c) Non-Contravention.
The
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic
or
foreign, or of any securities issued by the Company or any Subsidiary, or of
any
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking to which the Company or any Subsidiary is a party or which purports
to be binding upon the Company or any Subsidiary or upon any of their respective
assets and will not result in the creation or imposition of any Lien on any
of
the assets of the Company or any Subsidiary except as expressly permitted by
this Agreement and the other Transaction Documents.
(d) Consents.
No
consent (other than consents which have been obtained) of any party, and no
filing, approval, registration, recording or other action is required in
connection with the execution, delivery or performance of this Agreement by
the
Company.
6. Indemnification.
The
Company agrees to pay, indemnify, and to save the Lockbox Agent, the Collateral
Agent and each Holder harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to,
or
resulting from, any delay in paying any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to the Collateral
Account, (ii) with respect to, or resulting from, any failure or delay by the
Company in complying with any law or regulation applicable to the Collateral
Account or (iii) in connection with this Agreement, any breach or alleged breach
hereof, or any action taken by the Lockbox Agent, the Collateral Agent or any
Holder in exercising its rights hereunder.
7. Security
Agreement. The
Collateral Account, and all funds due to the Company and deposited in the
Collateral Account, are subject to the security interest of the Collateral
Agent
pursuant to the Security Agreement in accordance with the terms
thereof.
8. Paragraph
Headings, Captions, Etc.
The
paragraph headings, the captions and the footers used in this Agreement are
for
convenience of reference only and are not to affect the construction hereof
or
be taken into consideration in the interpretation hereof.
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9. Effective
Date; Termination.
This
Agreement shall become effective at the time of first issuance of any Note
on
the earliest Issuance Date when executed and delivered by the Company and the
Collateral Agent. Upon the payment and performance in full by the Company of
its
obligations under the Transaction Documents, the Company's obligations under
this Agreement shall terminate, any funds remaining in the Collateral Account
shall be paid to the Company, and promptly thereafter the parties shall instruct
the account debtors on all Accounts that theretofore constituted Collateral
and
all parties to Contracts that theretofore constituted Collateral to make all
further payments due to the Company directly to the Company.
10. Integration. This
Agreement represents the entire agreement of the Company the Collateral Agent
and the Lockbox Agent with respect to the subject matter hereof, and there
are
no promises, undertakings, representations or warranties by the parties relative
to the subject matter hereof not expressly set forth or referred to
herein.
11. Governing
Law. This
Agreement and the rights and obligations of the Company under this Agreement
shall be governed by, and construed and interpreted in accordance with, the
law
of the State of New York.
12. Counterparts;
Execution. This
Agreement may be executed in any number of counterparts and all the counterparts
taken together shall be deemed to constitute one and the same instrument. This
Agreement, once executed by a party, may be delivered to the other party hereto
by telephone line facsimile transmission of a copy of this Agreement bearing
the
signature of the party so delivering this Agreement.
[Signature
page follows]
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IN
WITNESS WHEREOF,
the
Company has caused this Agreement to be duly executed and delivered as of the
date first above written.
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By:
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Name:
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Title:
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ACKNOWLEDGED
AND AGREED:
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TRISTATE
TITLE & ESCROW, LLC
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By:
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Name:
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Title:
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LOCKBOX
AGENT
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Xxxx
Xxx
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