**Exhibit 10.3**

 

**AMENDMENTNUMBER 5 TO LOAN DOCUMENTS**

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**THISAMENDMENT NUMBER 5 TO LOAN DOCUMENTS** (this “Fifth Amendment”), is entered into asof August 14, 2009, by and among **GVEC RESOURCE IV INC.**(“Agent”), as Agent and as a Lender, **EMRISECORPORATION**, a Delaware corporation (“Parent”), and Parent’sSubsidiaries that are signatories hereto (collectively with Parent, “Borrowers”).

 

**WI T N E S S E T H**

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WHEREAS, Borrowers, Agentand the Lenders named therein are parties to that certain Credit Agreement,dated as of November 30, 2007, as amended by that certain Amendment Number1 to Loan Documents, dated August 20, 2008, that certain Amendment Number2 to Loan Documents, dated February 12, 2009, that certain ForbearanceAgreement and Amendment Number 3 to Loan Documents, dated March 20, 2009(as amended by that certain Amendment to Forbearance Agreement and AmendmentNumber 3 to Loan Documents, dated April 9, 2009) and that certainAmendment Number 4 to Loan Documents, dated April 14, 2009 (as furtheramended, restated, supplemented, or modified from time to time, the “CreditAgreement”); and

 

WHEREAS, the parties tothe Credit Agreement desire to amend certain provisions of the Credit Agreementas more fully set forth below.

 

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

 

# 1.             **DEFINITIONS**.  Capitalized terms used herein and nototherwise defined herein shall have the meanings ascribed to them in the CreditAgreement, as amended hereby.

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# 2.             **AMENDMENT TO CREDITAGREEMENT**.

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## (a)           Schedule1.1 of the Credit Agreement is amended by the addition of the followingdefinitions:

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“FifthAmendment” means that certain Amendment Number 5 to Loan Documents, datedas of August 14, 2009, by and among Borrowers, Agent and the Lenders partythereto.

 

“FifthAmendment Effective Date” means the date on which each of the conditionsprecedent set forth in Section 3 of the Fifth Amendment has beensatisfied.

 

## (b)           Section 2.2(d) ofthe Credit Agreement is amended and restated as follows:

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“(d)         Subject to subsection (c) above,the principal of Term Loan A shall be repaid in installments as follows:

 

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(i)            onSeptember 1, 2009, and on October 1, 2009, equal installments of $20,000;

 

(ii)           onNovember 1, 2009, an installment of $25,000;

 

(iii)          onDecember 1, 2009, an installment of $65,000; and

 

(iv)          commencingon January 1, 2010, and continuing on the first day of each of the 10consecutive months thereafter, equal installments of $120,000.”

 

## (c)           Section 2.2(e) ofthe Credit Agreement is amended and restated as follows:

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“(e)         Subject to subsection (c) above,the principal of Term Loan B shall be repaid in installments as follows:

 

(i)            onSeptember 1, 2009, and on October 1, 2009, equal installments of $55,000;

 

(ii)           onNovember 1, 2009, an installment of $75,000;

 

(iii)          onDecember 1, 2009, an installment of $85,000; and

 

(iv)          commencingon January 1, 2010, and continuing on the first day of each of the 10consecutive months thereafter, equal installments of $166.666.67.”

 

## (d)           Section 2.4(c)(i) ofthe Credit Agreement is hereby amended by adding the following clause at theend of the first sentence of such Section 2.4(c)(i): “; provided,however, that in connection with any such sales or dispositions thatoccur subsequent to Fifth Amendment Effective Date and prior to January 1,2010, Borrowers shall prepay the outstanding Obligations in an amount equal to75% of the Net Cash Proceeds received in connection with such sales or dispositions.”

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## (e)           Section 5.22of the Credit Agreement is hereby amended and restated as follows:

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**“**5.22       **Additional Capital**.  On or prior to December 31, 2009,Borrowers shall provide evidence to Agent that Borrowers shall have received aminimum of Three Million Dollars ($3,000,000) in Net Cash Proceeds (after thepayment of all underwriting commissions, investment banking fees and other feesand expenses associated therewith) from the 

 

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sale of Borrowers’ Stock.  Notwithstanding anything to the contrarycontained herein, including but not limited to the provisions of Section 2.4(c) ofthis Agreement, Borrower shall apply a portion of such Net Cash Proceeds to paydown a portion of the Obligations, which payments shall be applied according tothe terms of this Agreement, based on the following schedule:

 

(a)           with respect to the first $3,000,000of Net Cash Proceeds, fifty percent (50%) of such Net Cash Proceeds shall beapplied to the Obligations; and

 

(b)           with respect to the amount of NetCash Proceeds in excess of the first $3,000,000, thirty percent (30%) of suchNet Cash Proceeds shall be applied to the Obligations.”

 

## (f)            Section 6.16(d) ofthe Credit Agreement is amended and restated as follows:

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“(d)         **Minimum Liquidity**.  Fail to achieve a minimum Liquidity, measuredquarterly at the end of each calendar quarter, of not less than the amount setforth in the following table for the applicable period set forth oppositethereto:

 

 
| **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 |       | N/A                |       |
| 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  | ” |

 

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# 3.             **CONDITIONS PRECEDENT TO THIS FIFTH AMENDMENT**.  The satisfaction of each of the followingshall constitute conditions precedent to the effectiveness of this Fifth Amendmentand each and every provision hereof:

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## (a)           Therepresentations and warranties in the Credit Agreement and the other LoanDocuments shall be true and correct in all material respects on and as of the FifthAmendment Effective Date, as though made on such date (except to the extentthat such representations and warranties relate solely to an earlier date);

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## (b)           NoDefault or Event of Default shall have occurred and be continuing on the datehereof or as of the Fifth Amendment Effective Date;

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## (c)           Noinjunction, writ, restraining order, or other order of any nature prohibiting,directly or indirectly, the consummation of the transactions contemplatedherein shall have been issued and remain in force by any Governmental Authorityagainst any Borrower, Agent, any Lender or any of their Affiliates;

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## (d)           Borrowershave paid to Agent, in immediately available funds, an amount equal to$100,000, which amount represents a fee in consideration of the Lenders’actions taken in connection with this Fifth Amendment; and

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## (e)           NoMaterial Adverse Change shall have occurred.

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# 4.             **CONSTRUCTION**.  THIS FIFTH AMENDMENT SHALL BE GOVERNED BY,AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLETO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

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# 5.             **ENTIRE AMENDMENT; EFFECT OF FIFTH AMENDMENT**.  This Fifth Amendment, and the terms andprovisions hereof, constitutes the entire agreement 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 this FifthAmendment, the Credit Agreement and other Loan Documents shall remain unchangedand in full force and effect.  To theextent any terms or provisions of this Fifth Amendment conflict with those ofthe Credit Agreement or other Loan Documents, the terms and provisions of thisFifth Amendment shall control.  ThisFifth Amendment is a Loan Document.

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# 6.             **COUNTERPARTS; TELEFACSIMILE EXECUTION**.  This Fifth Amendment may be executed in anynumber of counterparts, all of which taken together shall constitute one andthe same instrument and any of the parties hereto may execute this FifthAmendment by signing any such counterpart. Delivery of an executed counterpart of this Fifth Amendment bytelefacsimile shall be equally as effective as delivery of an original executedcounterpart of this Fifth Amendment.  Anyparty delivering an executed counterpart of this Fifth Amendment by telefacsimilealso shall deliver an original executed counterpart of this Fifth Amendment,but the failure to deliver an original executed counterpart shall not affectthe validity, enforceability, and binding effect of this Fifth Amendment.

 

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# 7.             **MISCELLANEOUS**.

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## (a)           Uponthe effectiveness of this Fifth Amendment, each reference in the CreditAgreement to “this Agreement,” “hereunder,” “herein,” “hereof”or words of like import referring to the Credit Agreement shall mean and referto the Credit Agreement as amended by this Fifth Amendment.

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## (b)           Uponthe effectiveness of this Fifth Amendment, each reference in the Loan Documentsto the “Credit Agreement,” “thereunder,” “therein,” “thereof”or words of like import referring to the Credit Agreement shall mean and referto the Credit Agreement as amended by this Fifth Amendment.

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[signatures on next page]

 

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IN WITNESS WHEREOF, theparties have caused this Fifth Amendment to be executed and delivered on the datefirst written above.

 
| **EMRISE  CORPORATION**      |                     | EMRISE  ELECTRONICS CORPORATION                    |
|------------------------------|--------------------------|----------------------------------------------------|
| ** **                   | ** **               |                                               |
| ** **                   | ** **               |                                               |
| By:                          | /s/ Carmine T.  Oliva    | ** **                                         | By: | /s/ Carmine T.  Oliva |
| Title:                       | Chief Executive  Officer | ** **                                         | Title: | Chief Executive  Officer |
| ** **                   | ** **               | ** **                                         |   |   |
| ** **                   | ** **               | ** **                                         |   |   |
| **CXR  LARUS CORPORATION**   | ** **               | **RO  ASSOCIATES INCORPORATED**                    |
| ** **                   | ** **               | ** **                                         | ** ** | ** ** |
| ** **                   | ** **               | ** **                                         | ** ** | ** ** |
| By:                          | /s/ Carmine T.  Oliva    | ** **                                         | By: | /s/ Carmine T.  Oliva |
| Title:                       | Chief Executive  Officer | ** **                                         | Title: | Chief Executive  Officer |
| ** **                   | ** **               |                                               | ** ** | ** ** |
| ** **                   | ** **               |                                               | ** ** | ** ** |
| **CUSTOM  COMPONENTS, INC.** |                     | **ADVANCED  CONTROL COMPONENTS, INC.**             |
| ** **                   | ** **               |                                               | ** ** | ** ** |
| ** **                   | ** **               |                                               | ** ** | ** ** |
| By:                          | /s/ Carmine T.  Oliva    | ** **                                         | By: | /s/ Carmine T.  Oliva |
| Title:                       | Chief Executive  Officer |                                               | Title: | Chief Executive  Officer |
| ** **                   | ** **               | ** **                                         | ** ** |
| ** **                   | ** **               | ** **                                         | ** ** |
| ** **                   | ** **               | **GVEC  RESOURCE IV INC.,**  as Agent and a Lender |
| ** **                   | ** **               | ** **                                         | ** ** |
| ** **                   | ** **               | ** **                                         | ** ** |
| ** **                   | ** **               | By:                                                | /s/ signature  illegible |
| ** **                   | ** **               | Title:                                             | Authorized  Representative |

 

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