Exhibit 10.58

 

AMENDMENT NUMBER 4 TO LOAN DOCUMENTS

 

THIS AMENDMENT NUMBER 4 TO LOAN DOCUMENTS (this “Fourth Amendment”), is entered
into as of April 14, 2009, by and among GVEC RESOURCE IV INC. (“Agent”), as
Agent and as a Lender, EMRISE CORPORATION, a Delaware corporation (“Parent”),
and Parent’s Subsidiaries that are signatories hereto (collectively with Parent,
“Borrowers”).

 

W I T N E S S E T H

 

WHEREAS, 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 August 20, 2008 (the “First
Amendment”), that certain Amendment Number 2 to Loan Documents, dated
February 12, 2009 (the “Second Amendment”), and that certain Forbearance
Agreement and Amendment Number 3 to Loan Documents, dated March 20, 2009 (as
amended that certain Amendment to Forbearance Agreement and Amendment Number 3
to Loan Documents, dated April 9, 2009, the “Third Amendment”) (as further
amended, restated, supplemented, or modified from time to time, the “Credit
Agreement”);

 

WHEREAS, pursuant to Section 7 of the Third Amendment, on or prior to April 15,
2009, the parties to the Credit Agreement agreed to enter into an amendment to
the Credit Agreement to amend the financial covenants set forth in Sections
6.16(a), (b), and (c) of the Credit Agreement;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree to amend the Loan Documents
as follows:

 

1.                                       DEFINITIONS.  CAPITALIZED TERMS USED
HEREIN AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM
IN THE CREDIT AGREEMENT, AS AMENDED HEREBY.

 

2.                                       WAIVER OF DEFAULTS.  PURSUANT TO
SECTION 14.2 OF THE CREDIT AGREEMENT, AGENT AND REQUIRED LENDERS HEREBY WAIVE
ANY CLAIMS OF BREACH OR DEFAULT ARISING OUT OF OR RELATING TO THE INITIAL
OCCURRENCE OF THE SPECIFIED DEFAULTS (AS DEFINED IN THE THIRD AMENDMENT) AND THE
CONTINUATION OF SUCH SPECIFIED DEFAULTS (AS DEFINED IN THE THIRD AMENDMENT)
THROUGH THE FOURTH AMENDMENT EFFECTIVE DATE. AGENT AND THE REQUIRED LENDERS
FURTHER ACKNOWLEDGE THAT NO ACCELERATION OF ANY OBLIGATIONS OR TERMINATION OF
ANY COMMITMENTS UNDER THE CREDIT AGREEMENT SHALL BE TRIGGERED BY THE INITIAL
OCCURRENCE OF THE SPECIFIED DEFAULTS (AS DEFINED IN THE THIRD AMENDMENT) AND THE
CONTINUATION OF SUCH SPECIFIED DEFAULTS (AS DEFINED IN THE THIRD AMENDMENT)
THROUGH THE FOURTH AMENDMENT EFFECTIVE DATE.

 

3.                                       AMENDMENT TO CREDIT AGREEMENT.

 

(A)                                  SCHEDULE 1.1 OF THE CREDIT AGREEMENT IS
AMENDED BY THE ADDITION OR AMENDMENT AND RESTATEMENT, AS APPLICABLE, OF THE
FOLLOWING DEFINITIONS:

 

“Additional Unfinanced Capital Expenditures Amount” has the meaning specified
therefor in Section 6.16(f).

 

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“Debt Service Coverage Ratio” means, for any period, the ratio of (i) EBITDA
less cash taxes less Unfinanced Capital Expenditures to (ii) cash Interest
Expense, plus payments of principal actually made or scheduled to be made with
respect to Indebtedness (including principal payments on the Term Loans under
the Agreement), plus dividends and distributions.

 

“Fourth Amendment” means that certain Amendment Number 4 to Loan Documents,
dated as of April 14, 2009, by and among Borrowers, Agent and the Lenders party
thereto.

 

“Fourth Amendment Effective Date” means the date on which each of the conditions
precedent set forth in Section 4 of the Fourth Amendment has been satisfied.

 

“Leverage Ratio” means, with respect to Borrowers for any date of calculation,
the ratio of (i) all of the Obligations of Borrowers under the Agreement to
(ii) the Combined Capital Base less net intangible assets (including goodwill)
as reported on Borrowers’ consolidated balance sheet as of the date such
calculation is made.

 

“Liquidity” means, with respect to Borrowers for any date of calculation, the
sum of (i) all Cash and Cash Equivalents, and (ii) unused but available Advances
calculated by the Revolver Borrowing Base, minus (iii) any accounts payables
aged more than 30 days past due date.

 

“Unfinanced Capital Expenditures” means Capital Expenditures paid in cash (other
than cash that constitutes the proceeds of Purchase Money Indebtedness).

 

(B)                                 A NEW SECTION 5.22 TO THE CREDIT AGREEMENT
IS HEREBY ADDED AS FOLLOWS:

 

“5.22      Additional Capital.  On or prior to September 30, 2009, Borrowers
shall provide evidence to Agent that Borrowers shall have received a minimum of
$2,000,000 (Two Million Dollars) in Net Cash Proceeds (after the payment of all
underwriting commissions, investment banking fees and other fees and expenses
associated therewith) from the sale of Borrowers’ Stock.  Notwithstanding
anything to the contrary contained herein, including but not limited to the
provisions of Section 2.4(c) of this Agreement, Borrower shall apply a portion
of such Net Cash Proceeds to pay down a portion of the Obligations, which
payments shall be applied according to the terms of this Agreement, based on the
following schedule:

 

(a)           With respect to the first $2,000,000 of Net Cash Proceeds,
$500,000 shall be applied to the Obligations;

 

(b)           With respect to the next $1,000,000 of Net Cash Proceeds (i.e.,
between $2,000,001 and $3,000,000), fifty percent (50%) of such Net Cash
Proceeds shall be applied to the Obligations; and

 

(c)           With respect to the amount of Net Cash Proceeds in excess of the
first $3,000,000, thirty percent (30%) of such Net Cash Proceeds shall be
applied to the Obligations.”

 

(C)                                  SECTION 6.16 OF THE CREDIT AGREEMENT IS
AMENDED AND RESTATED AS FOLLOWS:

 

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“6.16       FINANCIAL COVENANTS.

 

(A)                                  MINIMUM EBITDA.  FAIL TO ACHIEVE EBITDA,
MEASURED ON A FISCAL QUARTER-END BASIS, OF NOT LESS THAN THE REQUIRED AMOUNT SET
FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE PERIOD SET FORTH OPPOSITE
THERETO; PROVIDED, HOWEVER THAT ANY EBITDA IN EXCESS OF THE AMOUNTS REQUIRED IN
ANY GIVEN QUARTER MAY BE USED TO SATISFY FUTURE MINIMUM EBITDA QUARTERLY
REQUIREMENTS AND PROVIDED, FURTHER, THAT SUCH EXCESS SHALL NOT BE APPLIED TO ANY
QUARTER MORE THAN TWELVE (12) MONTHS FOLLOWING THE END OF THE QUARTER AS TO
WHICH SUCH EXCESS EXISTED:

 

Applicable Period

 

Minimum Amount

 

For Borrowers’ fiscal quarter ending in March 2009

 

$

1,188,000

 

For Borrowers’ fiscal quarter ending in June 2009

 

$

589,000

 

For Borrowers’ fiscal quarter ending in September 2009

 

$

1,562,000

 

For Borrowers’ fiscal quarter ending in December 2009

 

$

1,060,000

 

For Borrowers’ fiscal quarter ending in March 2010

 

$

1,490,000

 

For Borrowers’ fiscal quarter ending in June 2010

 

$

1,686,000

 

For Borrowers’ fiscal quarter ending in September 2010

 

$

1,632,000

 

For Borrowers’ fiscal quarter ending in December 2010

 

$

1,909,000

 

 

(B)                                 DEBT SERVICE COVERAGE RATIO.  FAIL TO
ACHIEVE A DEBT SERVICE COVERAGE RATIO, MEASURED QUARTERLY AT THE END OF EACH
CALENDAR QUARTER, OF NOT LESS THAN THE AMOUNT SET FORTH IN THE FOLLOWING TABLE
FOR THE APPLICABLE PERIOD SET FORTH OPPOSITE THERETO OR 1.10:1.00, WHICHEVER IS
LESS; PROVIDED, HOWEVER, THAT (I) ANY EBITDA IN EXCESS OF THE AMOUNTS REQUIRED
IN ANY GIVEN QUARTER MAY BE USED TO SATISFY FUTURE DEBT SERVICE COVERAGE RATIO
REQUIREMENTS AND PROVIDED, FURTHER, THAT SUCH EXCESS SHALL NOT BE APPLIED TO ANY
QUARTER MORE THAN TWELVE (12) MONTHS FOLLOWING THE END OF THE QUARTER AS TO
WHICH SUCH EXCESS EXISTED AND (II) ANY ADDITIONAL UNFINANCED CAPITAL EXPENDITURE
AMOUNT MAY BE USED TO SATISFY FUTURE DEBT SERVICE COVERAGE RATIO REQUIREMENTS
AND PROVIDED, FURTHER, THAT SUCH AMOUNT SHALL NOT BE APPLIED TO ANY QUARTER MORE
THAN SIX (6) MONTHS FOLLOWING THE END OF THE QUARTER AS TO WHICH SUCH ADDITIONAL
UNFINANCED CAPITAL EXPENDITURES AMOUNT WAS CREATED:

 

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Applicable Period

 

Minimum Ratio

 

For Borrowers’ fiscal quarter ending in March 2009

 

0.72:1.00

 

For Borrowers’ fiscal quarter ending in June 2009

 

0.03:1.00

 

For Borrowers’ fiscal quarter ending in September 2009

 

1.00:1.00

 

For Borrowers’ fiscal quarter ending in December 2009

 

0.52:1.00

 

For Borrowers’ fiscal quarter ending in March 2010

 

0.55:1.00

 

For Borrowers’ fiscal quarter ending in June 2010

 

0.66:1.00

 

For Borrowers’ fiscal quarter ending in September 2010

 

0.83:1.00

 

For Borrowers’ fiscal quarter ending in December 2010

 

0.23:1.00

 

 

(C)                                  MAXIMUM LEVERAGE RATIO.  FAIL TO ACHIEVE A
LEVERAGE RATIO, MEASURED QUARTERLY AT THE END OF EACH CALENDAR QUARTER, OF NOT
GREATER THAN THE AMOUNT SET FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE
PERIOD SET FORTH OPPOSITE THERETO:

 

Applicable Period

 

Maximum Ratio

 

For Borrowers’ fiscal quarter ending in March 2009

 

11.13:1.00

 

For Borrowers’ fiscal quarter ending in June 2009

 

13.59:1.00

 

For Borrowers’ fiscal quarter ending in September 2009

 

7.29:1.00

 

For Borrowers’ fiscal quarter ending in December 2009

 

7.20:1.00

 

For Borrowers’ fiscal quarter ending in March 2010

 

6.26:1.00

 

For Borrowers’ fiscal quarter ending in June 2010

 

5.17:1.00

 

For Borrowers’ fiscal quarter ending in September 2010

 

4.46:1.00

 

For Borrowers’ fiscal quarter ending in December 2010

 

3.60:1.00

 

 

(D)                                 MINIMUM LIQUIDITY.  FAIL TO ACHIEVE A
MINIMUM LIQUIDITY, MEASURED QUARTERLY AT THE END OF EACH CALENDAR QUARTER, OF
NOT LESS THAN THE AMOUNT SET FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE
PERIOD SET FORTH OPPOSITE THERETO:

 

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Applicable Period

 

Minimum Amount

 

For Borrowers’ fiscal quarter ending in March 2009

 

$

3,400,000

 

For Borrowers’ fiscal quarter ending in June 2009

 

$

4,200,000

 

For Borrowers’ fiscal quarter ending in September 2009

 

$

5,200,000

 

For Borrowers’ fiscal quarter ending in December 2009

 

$

4,000,000

 

For Borrowers’ fiscal quarter ending in March 2010

 

$

4,600,000

 

For Borrowers’ fiscal quarter ending in June 2010

 

$

4,200,000

 

For Borrowers’ fiscal quarter ending in September 2010

 

$

5,500,000

 

For Borrowers’ fiscal quarter ending in December 2010

 

$

3,800,000

 

 

(E)                                  CAPITAL EXPENDITURES. THE AGGREGATE OF ALL
CAPITAL EXPENDITURES (FOR BORROWERS AND THEIR SUBSIDIARIES) SHALL NOT BE MORE
THAN THE AMOUNT SET FORTH IN THE FOLLOWING TABLE FOR THE APPLICABLE PERIOD SET
FORTH OPPOSITE THERETO:

 

Applicable Period

 

Maximum Amount

 

For Borrowers’ fiscal year ending in December 31, 2009

 

$

600,000

 

For Borrowers’ fiscal year ending in December 31, 2010

 

$

1,800,000

 

 

(f)                                    Unfinanced Capital Expenditures. The
amount of Unfinanced Capital Expenditures (for Borrowers and their subsidiaries)
in any fiscal quarter shall not be in excess of $62,500; provided, however, that
if in any fiscal quarter the amount of Unfinanced Capital Expenditures (for
Borrowers and their subsidiaries) is less than $62,500, then the difference
between such amount and $62,500 (the “Additional Unfinanced Capital Expenditures
Amount”), may be used by Borrowers to increase the maximum Unfinanced Capital
Expenditures (for Borrowers and their subsidiaries) to an amount equal to
$62,500 plus the Additional Unfinanced Capital Expenditures Amount in any future
quarter and provided, further, that such Additional Unfinanced Capital
Expenditures Amount may not be applied to any quarter more than six (6) months
following the end of the quarter as to which such Additional Unfinanced Capital
Expenditures Amount was created.

 

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4.                                       CONDITIONS PRECEDENT TO THIS FOURTH
AMENDMENT.  THE SATISFACTION OF EACH OF THE FOLLOWING SHALL CONSTITUTE
CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS FOURTH AMENDMENT AND EACH AND
EVERY PROVISION HEREOF:

 

(A)                                      THE REPRESENTATIONS AND WARRANTIES IN
THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRUE AND CORRECT IN
ALL MATERIAL RESPECTS ON AND AS OF THE FOURTH AMENDMENT EFFECTIVE DATE, AS
THOUGH MADE ON SUCH DATE (EXCEPT TO THE EXTENT THAT SUCH REPRESENTATIONS AND
WARRANTIES RELATE SOLELY TO AN EARLIER DATE);

 

(B)                                     EXCEPT FOR THE SPECIFIED DEFAULTS, NO
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING ON THE DATE
HEREOF OR AS OF THE FOURTH AMENDMENT EFFECTIVE DATE;

 

(C)                                      NO INJUNCTION, WRIT, RESTRAINING ORDER,
OR OTHER ORDER OF ANY NATURE PROHIBITING, DIRECTLY OR INDIRECTLY, THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN SHALL HAVE BEEN ISSUED AND
REMAIN IN FORCE BY ANY GOVERNMENTAL AUTHORITY AGAINST ANY BORROWER, AGENT, ANY
LENDER OR ANY OF THEIR AFFILIATES; AND

 

(D)                                     NO MATERIAL ADVERSE CHANGE SHALL HAVE
OCCURRED.

 

5.                                       COMPLIANCE WITH SECTION 7 OF THE THIRD
AMENDMENT.  BORROWERS AND AGENT ACKNOWLEDGE THAT, EFFECTIVE UPON THE OCCURRENCE
OF THE FOURTH AMENDMENT EFFECTIVE DATE, THE PROVISIONS OF SECTION 7 OF THE
CREDIT AGREEMENT HAVE BEEN COMPLIED WITH.

 

6.                                       CONSTRUCTION.  THIS FOURTH AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF
CALIFORNIA.

 

7.                                       ENTIRE AMENDMENT; EFFECT OF FOURTH
AMENDMENT.  THIS FOURTH AMENDMENT, AND THE TERMS AND PROVISIONS HEREOF,
CONSTITUTES THE ENTIRE AGREEMENT 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
FOURTH 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 FOURTH AMENDMENT CONFLICT WITH THOSE OF THE CREDIT AGREEMENT OR OTHER
LOAN DOCUMENTS, THE TERMS AND PROVISIONS OF THIS FOURTH AMENDMENT SHALL
CONTROL.  THIS FOURTH AMENDMENT IS A LOAN DOCUMENT.

 

8.                                       COUNTERPARTS; TELEFACSIMILE EXECUTION. 
THIS FOURTH 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 FOURTH AMENDMENT BY SIGNING ANY SUCH
COUNTERPART.  DELIVERY OF AN EXECUTED COUNTERPART OF THIS FOURTH AMENDMENT BY
TELEFACSIMILE SHALL BE EQUALLY AS EFFECTIVE AS DELIVERY OF AN ORIGINAL EXECUTED
COUNTERPART OF THIS FOURTH AMENDMENT.  ANY PARTY DELIVERING AN EXECUTED
COUNTERPART OF THIS FOURTH AMENDMENT BY TELEFACSIMILE ALSO SHALL DELIVER AN
ORIGINAL EXECUTED COUNTERPART OF THIS FOURTH AMENDMENT, BUT THE FAILURE TO
DELIVER AN ORIGINAL EXECUTED COUNTERPART SHALL NOT AFFECT THE VALIDITY,
ENFORCEABILITY, AND BINDING EFFECT OF THIS FOURTH AMENDMENT.

 

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9.                                       MISCELLANEOUS.

 

(A)                                  UPON THE EFFECTIVENESS OF THIS FOURTH
AMENDMENT, EACH REFERENCE IN THE CREDIT AGREEMENT TO “THIS AGREEMENT,”
“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 FOURTH
AMENDMENT.

 

(B)                                 UPON THE EFFECTIVENESS OF THIS FOURTH
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
FOURTH AMENDMENT.

 

[signatures on next page]

 

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IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to be executed
and delivered on the date first written above.

 

EMRISE CORPORATION

EMRISE ELECTRONICS CORPORATION

 

 

 

 

By:

/s/ D. John Donovan

 

By:

/s/ D. John Donovan

Title:

Treasurer

Title:

Treasurer

 

 

 

 

 

 

 

 

CXS LARUS CORPORATION

RO ASSOCIATES INCORPORATED

 

 

 

 

 

 

 

 

By:

/s/ D. John Donovan

 

By:

/s/ D. John Donovan

Title:

Treasurer

Title:

Treasurer

 

 

 

 

 

 

 

 

CUSTOM COMPONENTS, INC.

ADVANCED CONTROL COMPONENTS, INC.

 

 

 

 

 

 

By:

/s/ D. John Donovan

 

By:

/s/ D. John Donovan

Title:

Treasurer

Title:

Treasurer

 

 

 

 

 

 

GVEC RESOURCE IV INC., as Agent and a Lender

 

 

 

 

 

 

By:

/s/ signature illegible

 

Title:

Authorized Signatory

 

 

 

 

 

 

 

By:

/s/ signature illegible

 

Title:

Authorized Signatory

 

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