**Exhibit 10.4**

 

AMENDMENT NUMBER 13 TO LOAN DOCUMENTS

 

ThisAMENDMENT NUMBER 13 TO LOAN DOCUMENTS (this “Thirteenth Amendment”)isentered into as of June 17, 2010, effective as of June 11, 2010, byand 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’sSubsidiaries that are signatories hereto (collectively, with Parent, the “Borrowers”and each individually, a “Borrower”), with reference to the followingfacts:

 

A.                                   Borrowers, Agent and the Lenders named therein are parties to thatcertain Credit Agreement dated as of November 30, 2007, as amended by thatcertain 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 3to LoanDocuments, dated as of March 20, 2009 (as amended by that certain Amendmentto 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 ofApril 14, 2009, that certain Amendment Number 5 to Loan Documents, datedas of August 14, 2009, that certain Amendment Number 6 to Loan Documents,dated as of November 3, 2009, that certain Amendment Number 7 to LoanDocuments, dated as of November 13, 2009, that certain Amendment Number 8to Loan Documents, dated as of December 31, 2009, that certain AmendmentNumber 9 to Loan Documents, dated as of April 13, 2010, that certainAmendment Number 10 to Loan Documents, dated as of May 3, 2010, thatcertain Amendment Number 11 to Loan Documents, dated as of May 17, 2010and that certain Amendment Number 12 to Loan Documents, dated as of June 1,2010 (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 definedherein 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 tothis Thirteenth Amendment, no Event of Default or failure of condition hasoccurred or exists, or would exist with notice or lapse of time or both underthe Credit Agreement.

 

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

 

3.                                       Amendments.

 

(a)                                  “Key Milestones” numbered 9 and 10, as set forth in Annex Y to the CreditAgreement, as Annex Y has been amended from time to time, are hereby replacedin their entireties with the Key Milestones set forth in Annex Y-4 attachedhereto.

 

----

 

(b)                                 The defined term “Maturity Date” in the Credit Agreement shall mean andrefer to July 16, 2010.

 

4.                                       Default.  In addition to all other Events of Defaultunder the Credit Agreement, Borrowers’ failure to pay any amount when due underthis Thirteenth Amendment or to perform any covenant or other agreementcontained in this Thirteenth Amendment, or any other document entered intopursuant thereto, shall constitute Events of Default under this ThirteenthAmendment and the Credit Agreement.

 

5.                                       Conditions Precedent.  The effectiveness of this ThirteenthAmendment is subject to Agent’s receipt of all of the following:

 

(a)                                  this Thirteenth Amendment and such other agreements and instrumentsreasonably requested by Agent pursuant hereto (including such documents as arenecessary to create and perfect Agent’s interest in the Collateral), each dulyexecuted by each Borrower;

 

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

 

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

 

6.                                       Release.

 

(a)                                  Each Borrower acknowledges that neither Agent, any Lender nor PEMG (the “ReleasedParties”) would enter into this Thirteenth Amendment without Borrowers’assurance hereunder.  Except for the obligationsarising hereafter under this Thirteenth Amendment, each Borrower herebyabsolutely discharges and releases the Released Parties, any person or entitythat has obtained any interest from any of them under the Credit Agreement orotherwise and each of the Released Parties’ and such entities’ former andpresent partners, stockholders, officers, directors, employees, successors,assignees, agents and attorneys from any known or unknown claims which anyBorrower now has against any of them of any nature, including any claims thatany Borrower, its successors, counsel and advisors may in the future discoverthey would have now had if they had known facts not now known to them, whetherfounded 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 CreditAgreement or the transactions contemplated thereby.

 

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

 

AGENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW ORSUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IFKNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

2

----

 

(c)                                  The provisions, waivers and releases set forth in this section arebinding upon each Borrower and each Borrower’s shareholders, agents, employees,assigns and successors in interest.  Theprovisions, waivers and releases of this section shall inure to the benefit ofthe 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 andlawful owner of all right, title and interest in and to all of the claimsreleased hereby and no Borrower has heretofore assigned or transferred orpurported to assign or transfer to any person any such claim or any portionthereof.  Each Borrower shall indemnifyand hold harmless Agent, each Lender and PEMG from and against any claim,demand, damage, debt, liability (including payment of attorneys’ fees and costsactually incurred whether or not litigation is commenced) based on or arisingout of any such assignment or transfer.

 

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

 

7.                                       Consultation of Counsel.  Each Borrower acknowledges that such Borrowerhas had the opportunity to be represented by legal counsel of its own choicethroughout all of the negotiations that preceded the execution of this ThirteenthAmendment.  Each Borrower has executedthis Thirteenth Amendment after reviewing and understanding each provision ofthis Thirteenth Amendment and without reliance upon any promise orrepresentation of any person or persons acting for or on behalf of Agent.  Each Borrower further acknowledges that suchBorrower and its counsel have had adequate opportunity to make whateverinvestigation or inquiry they may deem necessary or desirable in connectionwith the subject matter of this Thirteenth Amendment prior to the executionhereof and the delivery and acceptance of the consideration described herein.

 

8.                                       Miscellaneous.

 

(a)                                  Successors and Assigns.  This Thirteenth Amendment shall be bindingupon and shall inure to the benefit of Borrower and Agent and their respectivesuccessors and assigns; provided, however, that the foregoing shall notauthorize any assignment by Borrower of its rights or duties hereunder.

 

(b)                                 Integration.  This Thirteenth Amendment and any documentsexecuted in connection herewith or pursuant hereto contain the entireThirteenth Amendment between the parties with respect to the subject matterhereof and supersede all prior agreements, understandings, offers andnegotiations, oral or written, with respect thereto and no extrinsic evidencewhatsoever may be introduced in any judicial or arbitration proceeding, if any,involving this Thirteenth Amendment; except that any financing statements orother agreements or instruments filed by Agent with respect to Borrower shallremain in full force and effect.

 

(c)                                  Course of Dealing; Waivers.  No course of dealing on the part of Agent orits officers, nor any failure or delay in the exercise of any right by Agent,shall operate 

 

3

----

 

as a waiver thereof, and any single orpartial exercise of any such right shall not preclude any later exercise of anysuch right.  Agent’s failure at any timeto require strict performance by Borrower of any provision shall not affect anyright of Agent thereafter to demand strict compliance and performance.  Any suspension or waiver of a right must bein writing signed by an officer of Agent

 

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

 

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

 

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

 

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

 

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

 

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

 

9.                                       Entire Amendment:  Effect of Thirteenth Amendment.  This Thirteenth Amendment, and the terms andprovisions hereof, constitutes the entire Thirteenth Amendment among the partiespertaining to the subject matter hereof and supersedes any and all prior orcontemporaneous amendments relating to the subject matter hereof.  Except as expressly set forth in thisThirteenth Amendment, the Credit Agreement and other Loan Documents shallremain unchanged and in full force and effect. To the extent any terms or provisions of this Thirteenth Amendmentconflict with those of the Credit Agreement or other Loan Documents, the termsand provisions of this Thirteenth Amendment shall control.  This Thirteenth Amendment is a Loan Document.

 

10.                                 Counterparts: Electronic Transmission.  This Thirteenth Amendment may be executed inany number of counterparts, all of which taken together shall constitute oneand the same instrument and any of the parties hereto may execute thisThirteenth Amendment by signing any such counterpart.  Delivery of an executed counterpart of thisThirteenth Amendment by electronic mail shall be equally as effective asdelivery of an original executed counterpart of this Thirteenth Amendment.  Any party delivering an executed counterpartof this 

 

4

----

 

Thirteenth Amendment by electronic mail alsoshall deliver an original executed counterpart of this Thirteenth Amendment,but the failure to deliver an original executed counterpart shall not affectthe validity, enforceability, and binding effect of this Thirteenth Amendment

 

***[Balance of Page Intentionally Left Blank]***

 

5

----

 

INWITNESS WHEREOF, the parties have caused this AMENDMENT NUMBER 13 TO LOANDOCUMENTS 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 |
| Name:                             | Carmine  Oliva           |                        |   | GROUP  LLC, its Court-Appointed Receiver |
| 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 13 to LoanDocuments]***

 

6

----

 

**ANNEX Y-4**

(Amended “Key Milestones” re Sale of ACC)

 
| **Key  Milestone  #** | ** ** | **Date** | ** ** | **PEM Deliverable**    | ** ** | **Description**                                                                                                                                                        |
|-----------------------|------------|----------|------------|------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9                     |       | 6/18     |       | Preliminary  proxy     |       | ·                  File preliminary proxy  with SEC for shareholder approval |
| 10                    |       | 7/16     |       | Closing  documentation |       | ·                  Complete vote and close  transaction                      |

 

7

----