**Exhibit 10.3**

 

AMENDMENT NUMBER 15 TO LOAN DOCUMENTS

 

ThisAMENDMENT NUMBER 15 TO LOAN DOCUMENTS (this “Fifteenth Amendment”) is enteredinto as of July 31, 2010, by and among GVEC RESOURCE IV INC. (the “Agent”),as Agent and as a Lender, PRIVATE EQUITY MANAGEMENT GROUP LLC, a Delawarelimited liability company (“PEMG”), EMRISE CORPORATION, a Delawarecorporation (“Parent”), and Parent’s Subsidiaries that are signatorieshereto (collectively, with Parent, the “Borrowers” and eachindividually, a “Borrower”), with reference to the following facts:

 

A.                                    Borrowers,Agent and the Lenders named therein are parties to that certain CreditAgreement, dated as of November 30, 2007, as amended by that certainAmendment Number 1 to Loan Documents, dated as of August 20, 2008, thatcertain Amendment Number 2 to Loan Documents, dated as of February 12,2009, that certain Forbearance Agreement and Amendment Number 3 to LoanDocuments, dated as of March 20, 2009 (as amended by that certainAmendment to Forbearance Agreement and Amendment Number 3 to Loan Documents,dated as of Apri1 9, 2009), that certain Amendment Number 4 to Loan Documents,dated as of Apri1 14, 2009, that certain Amendment Number 5 to LoanDocuments, dated as of August 14, 2009, that certain Amendment Number 6 toLoan Documents, dated as of November 3, 2009, that certain AmendmentNumber 7 to Loan Documents, dated as of November 13, 2009, that certainAmendment Number 8 to Loan Documents, dated as of December 31, 2009, thatcertain Amendment Number 9 to Loan Documents, dated as of Apri1 13, 2010, thatcertain Amendment Number 10 to Loan Documents, dated as of May 3, 2010,that certain Amendment Number 11 to Loan Documents, dated as of May 17,2010, that certain Amendment Number 12 to Loan Documents, dated as of June 1,2010, that certain Amendment Number 13 to Loan Documents, dated as of June 17,2010 and that certain Amendment Number 14 to Loan Documents, dated as of July 16,2010 (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.  Capitalizedterms not otherwise defined herein shall have the same meanings as set forth inthe Credit Agreement.

 

2.                                      Representations and Warranties.

 

(a)                                 Each Borrower hereby represents and warrantsthat, after giving effect to this Fifteenth Amendment, no Event of Default orfailure of condition has occurred or exists, or would exist with notice orlapse of time or both under the Credit Agreement.

 

(b)                                 All representations and warranties ofBorrowers in this Fifteenth Amendment and the Credit Agreement are true andcorrect as of the date hereof, and shall survive the execution of thisFifteenth Amendment.

 

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3.                                      Amendments.

 

(a)                                 “Key Milestone” numbered 10, as set forth inAnnex Y to the Credit Agreement, as Annex Y has been amended from time to time,is hereby replaced in its entirety with the Key Milestone set forth in AnnexY-6 attached hereto.

 

(b)                                 The defined term “Maturity Date” in the CreditAgreement shall mean and refer to August 31, 2010.

 

4.                                      Default.  In additionto all other Events of Default under the Credit Agreement, the following shallconstitute Events of Default under this Fifteenth Amendment and the CreditAgreement: (i) Borrowers’ failure to pay any amount when due under thisFifteenth Amendment or to perform any covenant or other agreement contained inthis Fifteenth Amendment, or any other document entered into pursuant hereto,and/or (ii) the termination of the Stock Purchase Agreement between EmriseElectronics Corporation and Aeroflex Incorporated dated as of June 7,2010, as amended from time to time.

 

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

 

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

 

(b)                                 payment by Borrowers to PEMG of an amendmentfee in the amount of Thirty Thousand Dollars ($30,000), which shall benonrefundable as of the date hereof and due and payable as follows: (i) TwentyThousand Dollars ($20,000) on the date of this Fifteenth Amendment; and (ii) anadditional Ten Thousand Dollars ($10,000) on August 20, 2010;

 

(c)                                  payment by Borrowers of all legal fees andexpenses incurred through (which shall be due and payable on, and nonrefundableas of) the date of this Fifteenth Amendment (which shall be remitted via wiretransfer according to the instructions set forth on Exhibit A hereto); and

 

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

 

6.                                      Release.

 

(a)                                 Each Borrower acknowledges that neither Agent,any Lender nor PEMG (the “Released Parties”) would enter into thisFifteenth Amendment without Borrowers’ assurance hereunder.  Except for the obligations arising hereafterunder this Fifteenth Amendment, each Borrower hereby absolutely discharges andreleases the Released Parties, any person or entity that has obtained anyinterest from any of them under the Credit Agreement or otherwise and each ofthe Released Parties’ and such entities’ former and present partners,stockholders, officers, directors, employees, successors, assignees, agents andattorneys from any known or unknown claims which any Borrower now has againstany of them of any nature, including any claims that any Borrower, itssuccessors, counsel, and advisors may in the future 

 

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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 ofCalifornia 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.

 

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

 

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

 

(e)                                  The provisions of this section shall survivepayment in full of the Obligations, full performance of all the terms of thisFifteenth Amendment and the Credit Agreement, and/or Agent’s, any Lender’s orPEMG’s actions to exercise any remedy available under the Credit Agreement orotherwise.

 

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 thisFifteenth Amendment.  Each Borrower hasexecuted this Fifteenth Amendment after reviewing and understanding eachprovision of this Fifteenth 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 Fifteenth Amendment prior to the executionhereof and the delivery and acceptance of the consideration described herein.

 

8.                                      Miscellaneous.

 

(a)                                 Successors and Assigns.  ThisFifteenth Amendment shall be binding upon and shall inure to the benefit ofBorrower and Agent and their respective successors and assigns; 

 

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provided,however, that the foregoing shall not authorize any assignment by Borrower ofits rights or duties hereunder.

 

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

 

(c)                                  Course of Dealing; Waivers.  Nocourse of dealing on the part of Agent or its officers, nor any failure ordelay 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 anylater exercise of any such right.  Agent’sfailure at any time to require strict performance by Borrower of any provisionshall not affect any right of Agent thereafter to demand strict compliance andperformance.  Any suspension or waiver ofa right must be in writing signed by an officer of Agent.

 

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

 

(e)                                  Legal Effect.  The CreditAgreement remains in full force and effect. If any provision of this Fifteenth Amendment conflicts with applicablelaw, such provision shall be deemed severed from this Fifteenth Amendment, andthe balance of this Fifteenth Amendment shall remain in full force and effect.

 

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

 

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

 

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

 

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

 

9.                                      Entire Amendment; Effect of Fifteenth Amendment.  This Fifteenth Amendment, and the terms andprovisions hereof, constitutes the entire Fifteenth Amendment among the partiespertaining to the subject matter hereof and supersedes any and all prior or 

 

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contemporaneousamendments relating to the subject matter hereof.  Except as expressly set forth in thisFifteenth Amendment, the Credit Agreement and other Loan Documents shall remainunchanged and in full force and effect. To the extent any terms or provisions of this Fifteenth Amendmentconflict with those of the Credit Agreement or other Loan Documents, the termsand provisions of this Fifteenth Amendment shall control.  This Fifteenth Amendment is a Loan Document.

 

10.                               Counterparts; Electronic Transmission.  This Fifteenth 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 thisFifteenth Amendment by signing any such counterpart.  Delivery of an executed counterpart of thisFifteenth Amendment by electronic mail shall be equally as effective asdelivery of an original executed counterpart of this Fifteenth Amendment.  Any party delivering an executed counterpartof this Fifteenth Amendment by electronic mail also shall deliver an originalexecuted counterpart of this Fifteenth Amendment, but the failure to deliver anoriginal executed counterpart shall not affect the validity, enforceability,and binding effect of this Fifteenth Amendment

 

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

 

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INWITNESS WHEREOF, the parties have caused this AMENDMENT NUMBER 15 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/  Robert P. Mosier |
|                             |                     |                        | Name: | Robert  P. Mosier |
|                             |                     |                        | Title: | Receiver |
|                             |                     |                        |   |   |
| ** **                       |                     |                        |   |   |
| **PRIVATE EQUITY MANAGEMENT**    |                     |                        |   |
| **GROUP LLC**                    |                     |                        |   |
|                             |                     |                        |   |   |
|                             |                     |                        |   |   |
| By:                              | /s/  Robert P. Mosier    |                        |   |   |
| Name:                            | Robert  P. Mosier        |                        |   |   |
| Title:                           | Receiver                 |                        |   |   |

 

***[Signature Page to Amendment Number 15 to LoanDocuments]***

 

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**ANNEX Y-6**

 

(Amended “Key Milestones” re Sale of ACC)

 
| **Key  Milestone  #** | ** ** | **Date** | ** ** | **PEM Deliverable** | ** ** | **Description**                                                          |   |
|-----------------------|------------|----------|------------|--------------------------|------------|--------------------------------------------------------------------------|--------|
| 10                    |       | 8/31     |       | Closing documentation    |       | ·     Complete vote and  close transaction |   |

 

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