Exhibit 10.3

 

AMENDMENT NUMBER 12 TO LOAN DOCUMENTS

 

This AMENDMENT NUMBER 12 TO LOAN DOCUMENTS (this “Twelfth Amendment”) is entered
into as of June 1, 2010, by and among GVEC RESOURCE IV INC. (the “Agent”), as
Agent and as a Lender, PRIVATE EQUITY MANAGEMENT GROUP LLC, a Delaware limited
liability company (“PEMG”), EMRISE CORPORATION, a Delaware corporation
(“Parent”), and Parent’s Subsidiaries that are signatories hereto (collectively,
with Parent, the “Borrowers” and each individually, a “Borrower”), with
reference to the following facts:

 

A.                                   Borrowers, Agent and the Lenders named
therein are parties to that certain Credit Agreement, dated as of November 30,
2007, as amended by that certain Amendment Number 1 to Loan Documents, dated as
of August 20, 2008, that certain Amendment Number 2 to Loan Documents, dated as
of February 12, 2009, that certain Forbearance Agreement and Amendment Number 3
to Loan Documents, dated as of March 20, 2009 (as amended by that certain
Amendment to Forbearance Agreement and Amendment Number 3 to Loan Documents,
dated as of April 9, 2009), that certain  Amendment Number 4 to Loan Documents,
dated as of April 14, 2009, that certain  Amendment Number 5 to Loan Documents,
dated as of August 14, 2009, that certain  Amendment Number 6 to Loan Documents,
dated as of November 3, 2009, that certain Amendment Number 7 to Loan Documents,
dated as of November 13, 2009, that certain Amendment Number 8 to Loan
Documents, dated as of December 31, 2009, that certain Amendment Number 9 to
Loan Documents, dated as of April 13, 2010, that certain Amendment Number 10 to
Loan Documents, dated as of May 3, 2010 and that certain Amendment Number 11 to
Loan Documents, dated as of May 17, 2010 (as further amended, restated,
supplemented or modified from time to time, the “Credit Agreement”).

 

NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:

 

1.                                       Defined Terms.  Capitalized terms not
otherwise defined herein shall have the same meanings as set forth in the Credit
Agreement.

 

2.                                       Representations and Warranties.

 

(a)                                  Each Borrower hereby represents and
warrants that, after giving effect to this Twelfth Amendment, no Event of
Default or failure of condition has occurred or exists, or would exist with
notice or lapse of time or both under the Credit Agreement.

 

(b)                                 All representations and warranties of
Borrowers in this Twelfth Amendment and the Credit Agreement are true and
correct as of the date hereof, and shall survive the execution of this Twelfth
Amendment.

 

3.                                       Amendments.  “Key Milestones” numbered
8 and 9, as set forth in Annex Y to the Credit Agreement, as amended by Annex
Y-2 to the Credit Agreement, are hereby replaced in their entireties with the
Key Milestones set forth in Annex Y-3 attached hereto.  For sake of clarity, Key
Milestone number 10, as set forth in Annex Y-1 to the Credit Agreement, shall
remain as set forth in Annex Y-1.

 

4.                                       Consent.  Notwithstanding any provision
of the Credit Agreement or other Loan Agreements, PEMG, as Court-appointed
Receiver for the Agent, hereby consents to the execution, delivery, and
performance by Borrower Emrise Electronics Corporation (“ECC”) of that certain
Stock Purchase Agreement (the “Purchase Agreement”) by and between Aeroflex
Incorporated (or its designated affiliate) and ECC, and such other documents and
instruments reasonably necessary to effectuate the Purchase Agreement, and to
the consummation of the transactions contemplated thereby.

 

5.                                       Default.  In addition to all other
Events of Default under the Credit Agreement, Borrowers’ failure to pay any
amount when due under this Twelfth Amendment or to perform any covenant or other
agreement contained in this Twelfth Amendment, or any other document entered
into pursuant hereto, shall constitute Events of Default under this Twelfth
Amendment and the Credit Agreement.

 

6.                                       Conditions Precedent.  The
effectiveness of this Twelfth Amendment is subject to Agent’s receipt of all of
the following:

 

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(a)                                  this Twelfth Amendment and such other
agreements and instruments reasonably requested by Agent pursuant hereto
(including such documents as are necessary to create and perfect Agent’s
interest in the Collateral), each duly executed by each Borrower;

 

(b)                                 payment by Borrowers of all legal fees and
expenses incurred through the date of this Twelfth Amendment (which shall be
remitted via wire transfer according to the instructions set forth on Exhibit A
hereto); and

 

(c)                                  such other documents and completion of such
other matters as Agent may reasonably deem necessary or appropriate.

 

7.                                       Release.

 

(a)                                  Each Borrower acknowledges that neither
Agent, any Lender nor PEMG (the “Released Parties”) would enter into this
Twelfth Amendment without Borrowers’ assurance hereunder.  Except for the
obligations arising hereafter under this Twelfth Amendment, each Borrower hereby
absolutely discharges and releases the Released Parties, any person or entity
that has obtained any interest from any of them under the Credit Agreement or
otherwise and each of the Released Parties’ and such entities’ former and
present partners, stockholders, officers, directors, employees, successors,
assignees, agents and attorneys from any known or unknown claims which any
Borrower now has against any of them of any nature, including any claims that
any Borrower, its successors, counsel, and advisors may in the future discover
they would have now had if they had known facts not now known to them, whether
founded in contract, in tort or pursuant to any other theory of liability,
including but not limited to any claims arising out of or related to the Credit
Agreement or the transactions contemplated thereby.

 

(b)                                 Each Borrower waives the provisions of
California Civil Code Section 1542, which states:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

(c)                                  The provisions, waivers and releases set
forth in this section are binding upon each Borrower and each Borrower’s
shareholders, agents, employees, assigns and successors in interest.  The
provisions, waivers and releases of this section shall inure to the benefit of
the Released Parties and their respective agents, employees, officers,
directors, assigns and successors in interest.

 

(d)                                 Each Borrower warrants and represents that
such Borrower is the sole and lawful owner of all right, title and interest in
and to all of the claims released hereby and no Borrower has heretofore assigned
or transferred or purported to assign or transfer to any person any such claim
or any portion thereof.  Each Borrower shall indemnify and hold harmless Agent,
each Lender and PEMG from and against any claim, demand, damage, debt, liability
(including payment of attorneys’ fees and costs actually incurred whether or not
litigation is commenced) based on or arising out of any such assignment or
transfer.

 

(e)                                  The provisions of this section shall
survive payment in full of the Obligations, full performance of all the terms of
this Twelfth Amendment and the Credit Agreement, and/or Agent’s, any Lender’s or
PEMG’s actions to exercise any remedy available under the Credit Agreement or
otherwise.

 

8.                                       Consultation of Counsel.  Each Borrower
acknowledges that such Borrower has had the opportunity to be represented by
legal counsel of its own choice throughout all of the negotiations that preceded
the execution of this Twelfth Amendment.  Each Borrower has executed this
Twelfth Amendment after reviewing and understanding each provision of this
Twelfth Amendment and without reliance upon any promise or representation of any
person or persons acting for or on behalf of Agent.  Each Borrower further
acknowledges that such Borrower and its counsel have had adequate opportunity to
make whatever investigation or inquiry they may deem necessary or desirable in
connection with the subject matter of this Twelfth Amendment prior to the
execution hereof and the delivery and acceptance of the consideration described
herein.

 

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9.                                       Miscellaneous.

 

(a)                                  Successors and Assigns.  This Twelfth
Amendment shall be binding upon and shall inure to the benefit of Borrower and
Agent and their respective successors and assigns; provided, however, that the
foregoing shall not authorize any assignment by Borrower of its rights or duties
hereunder.

 

(b)                                 Integration.  This Twelfth Amendment and any
documents executed in connection herewith or pursuant hereto contain the entire
Twelfth Amendment between the parties with respect to the subject matter hereof
and supersede all prior agreements, understandings, offers and negotiations,
oral or written, with respect thereto and no extrinsic evidence whatsoever may
be introduced in any judicial or arbitration proceeding, if any, involving this
Twelfth Amendment; except that any financing statements or other agreements or
instruments filed by Agent with respect to Borrower shall remain in full force
and effect.

 

(c)                                  Course of Dealing; Waivers.  No course of
dealing on the part of Agent or its officers, nor any failure or delay in the
exercise of any right by Agent, shall operate as a waiver thereof, and any
single or partial exercise of any such right shall not preclude any later
exercise of any such right.  Agent’s failure at any time to require strict
performance by Borrower of any provision shall not affect any right of Agent
thereafter to demand strict compliance and performance.  Any suspension or
waiver of a right must be in writing signed by an officer of Agent.

 

(d)                                 Time is of the Essence.  Time is of the
essence as to each and every term and provision of this Twelfth Amendment and
the other Credit Agreement.

 

(e)                                  Legal Effect.  The Credit Agreement remains
in full force and effect.  If any provision of this Twelfth Amendment conflicts
with applicable law, such provision shall be deemed severed from this Twelfth
Amendment, and the balance of this Twelfth Amendment shall remain in full force
and effect.

 

(f)                                    Choice of Law and Venue; Jury Trial
Waiver; Judicial Reference; Service of Process.  Section 12 of the Credit
Agreement hereby is incorporated herein by this reference as though fully set
forth.

 

(g)                                 Upon the effectiveness of this Twelfth
Amendment, each reference in the Credit Agreement to “this Twelfth Amendment,”
“hereunder,” “herein,” “hereof” or words of like import referring to the Credit
Agreement shall mean and refer to the Credit Agreement as amended by this
Twelfth Amendment.

 

(h)                                 Upon the effectiveness of this Twelfth
Amendment, each reference in the Loan Documents to the “Credit Agreement”
“thereunder,” “therein,” “thereof or words of like import referring to the
Credit Agreement shall mean and refer to the Credit Agreement as amended by this
Twelfth Amendment.

 

(i)                                     Assignment and Indemnity.  Borrower
consents to Agent’s assignment, in accordance with Section 13 of the Credit
Agreement, of all or any part of Agent’s rights under this Twelfth Amendment and
the Credit Agreement.

 

10.                                 Entire Amendment; Effect of Twelfth
Amendment.  This Twelfth Amendment, and the terms and provisions hereof,
constitutes the entire Twelfth Amendment among the parties pertaining to the
subject matter hereof and supersedes any and all prior or contemporaneous
amendments relating to the subject matter hereof. Except as expressly set forth
in this Twelfth Amendment, the Credit Agreement and other Loan Documents shall
remain unchanged and in full force and effect. To the extent any terms or
provisions of this Twelfth Amendment conflict with those of the Credit Agreement
or other Loan Documents, the terms and provisions of this Twelfth Amendment
shall control. This Twelfth Amendment is a Loan Document.

 

11.                                 Counterparts; Electronic Transmission. This
Twelfth Amendment may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Twelfth Amendment by signing any such
counterpart. Delivery of an executed counterpart of this Twelfth Amendment by
electronic mail shall be equally as effective as delivery of an original
executed counterpart of this Twelfth Amendment. Any party delivering an executed
counterpart of this Twelfth Amendment by electronic mail also shall deliver an
original executed counterpart of this Twelfth Amendment, but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Twelfth Amendment.

 

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this AMENDMENT NUMBER 12 TO LOAN
DOCUMENTS to be executed and delivered on the date first written above.

 

EMRISE CORPORATION

 

EMRISE ELECTRONICS CORPORATION

 

 

 

 

 

 

By:

/s/ Carmine Oliva

 

By:

/s/ Carmine Oliva

Name:

Carmine Oliva

 

Name:

Carmine Oliva

Title:

Chief Executive Officer

 

Title:

President

 

 

 

 

 

 

CXR LARUS CORPORATION

 

ADVANCED CONTROL COMPONENTS, INC.

 

 

 

 

 

 

By:

/s/ Carmine Oliva

 

By:

/s/ Carmine Oliva

Name:

Carmine Oliva

 

Name:

Carmine Oliva

Title:

President

 

Title:

President

 

 

 

 

 

 

CUSTOM COMPONENTS, INC.

 

GVEC RESOURCE IV INC.,

 

 

as Agent and a Lender

 

 

 

By:

/s/ Carmine Oliva

 

By: PRIVATE EQUITY MANAGEMENT GROUP LLC, its Court-Appointed Receiver

 

 

 

Name:

Carmine Oliva

 

 

Title:

President

 

By:

/s/ Jim LeSieur

 

 

Name:

Jim LeSieur

 

 

Title:

Chief Operating Officer

PRIVATE EQUITY MANAGEMENT GROUP LLC

 

 

 

 

 

 

 

 

By:

/s/ Jim LeSieur

 

 

Name:

Jim LeSieur

 

 

Title:

Chief Operating Officer

 

 

 

[Signature Page to Amendment Number 12 to Loan Documents]

 

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ANNEX Y-3
(Amended “Key Milestones” re Sale of ACC)

 

Key
Milestone
#

 

Date

 

PEM Deliverable

 

Description

8

 

6/8

 

Binding SPA

 

·                  Sign binding SPA

9

 

6/11

 

Preliminary proxy

 

·                  File preliminary proxy with SEC for shareholder approval

 

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