**EXHIBIT 10.71**

 

**THIS EXHIBIT HAS BEENREDACTED AND IS THE SUBJECT OF A CONFIDENTIALTREATMENT REQUEST.  REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEENFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

AMENDMENT NUMBER 9TO LOAN DOCUMENTS

 

ThisAMENDMENT NUMBER 9 TO LOAN DOCUMENTS (this “Ninth Amendment”) is enteredinto as of April 13, 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 April 9, 2009), that certain Amendment Number 4 to Loan Documents, dated as of April 14, 2009,that certain  Amendment Number 5 to LoanDocuments, dated as of August 14, 2009, that certain  Amendment Number 6 to Loan Documents, datedas of November 3, 2009, that certain Amendment Number 7 to Loan Documents,dated as of November 13, 2009, and that certain Amendment Number 8 to LoanDocuments, dated as of December 31, 2009 (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.                                      DefinedTerms.  Capitalized terms nototherwise defined herein shall have the same meanings as set forth in theCredit Agreement

 

2.                                      AmendmentFee.  In consideration of theexecution of this Ninth Amendment, Borrowers shall pay PEMG an advisory feeequal to Thirty-Seven Thousand Five Hundred Dollars ($37,500) (the “AmendmentFee”), which fee shall be due and payable on the earlier of (i) theMaturity Date or (ii) at such time as Borrowers repay all outstandingObligations under the Credit Agreement. The Amendment Fee shall be fully earned and nonrefundable as of the dateof this Ninth Amendment.

 

3.                                      Representationsand Warranties.

 

(a)                                 EachBorrower hereby represents and warrants that, after giving effect to this NinthAmendment, 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)                                Allrepresentations and warranties of Borrowers in this Ninth Amendment and theCredit Agreement are true and correct as of the date hereof, and shall survivethe execution of this Ninth Amendment.

 

4.                                      Amendments.The Credit Agreement is hereby amended as follows:

 

(a)                                 Section 2.4(c)(i)(z) ofthe Credit Agreement is hereby amended and restated in its entirety to read asfollows:

 

“(z) Borrowers shallprepay the outstanding Obligations in an amount equal to [* * *] of the NetCash Proceeds received in connection with the sale of [* * *].”

 

(b)                                Section 5.23(b) ofthe Credit Agreement is hereby amended and restated in its entirety to read asfollows:

 

“(b)                          IntentionallyOmitted.”

 

5.                                      AdditionalAgreements.  In addition to theamendments above, the Borrowers, Agent and the Lenders hereby acknowledge andagree that there will be no additional fees, other than legal fees, expensesand costs, with respect to any future 

 

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**THIS EXHIBIT HAS BEENREDACTED AND IS THE SUBJECT OF A CONFIDENTIALTREATMENT REQUEST.  REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEENFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

changes regarding the anticipated milestone dates of [** *], as of the date hereof, provided the following conditions and circumstancesare satisfied:

 

(a)                                 Borrowerspromptly notify Agent and the Lenders of any potential change to the milestonedate(s);

 

(b)                                Borrowers,in good faith, provide a documented explanation regarding the reason for anychange to the milestone date(s) to Agent, which documented reasoning shallbe acceptable to Agent in its reasonable discretion; and

 

(c)                                 Anypotential change of the milestone date(s) is moved within a reasonabletime frame, as determined by the Agent in its reasonable discretion, which changeof the milestone date(s) will in no way conflict with the payment in fullof the Loans by the Maturity Date.

 

6.                                      Default.  In addition to all other Events of Defaultunder the Credit Agreement, Borrowers’ failure to pay any amount when due underthis Ninth Amendment or to perform any covenant or other agreement contained inthis Ninth Amendment, including the agreements contained in Section 5 ofthis Ninth Amendment, or any other document entered into pursuant hereto, shallconstitute Events of Default under this Ninth Amendment and the CreditAgreement.

 

7.                                      ConditionsPrecedent.  The effectiveness of thisNinth Amendment is subject to Agent’s receipt of all of the following:

 

(a)                                 thisNinth Amendment and such other agreements and instruments reasonably requestedby Agent pursuant hereto (including such documents as are necessary to createand perfect Agent’s interest in the Collateral), each duly executed by eachBorrower;

 

(b)                                paymentby Borrowers of all legal fees and expenses incurred through the date of thisNinth Amendment (which shall be remitted via wire transfer according to theinstructions set forth on Exhibit A hereto); and

 

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

 

8.                                      Release.

 

(a)                                 EachBorrower acknowledges that neither Agent, any Lender nor PEMG (the “ReleasedParties”) would enter into this Ninth Amendment without Borrowers’assurance hereunder.  Except for theobligations arising hereafter under this Ninth 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 and presentpartners, stockholders, officers, directors, employees, successors, assignees,agents and attorneys from any known or unknown claims which any Borrower nowhas against any of them of any nature, including any claims that any Borrower,its successors, counsel, and advisors may in the future discover they wouldhave now had if they had known facts not now known to them, whether founded incontract, in tort or pursuant to any other theory of liability, including butnot limited to any claims arising out of or related to the Credit Agreement orthe transactions contemplated thereby.

 

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

 

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

 

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

 

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**THIS EXHIBIT HAS BEENREDACTED AND IS THE SUBJECT OF A CONFIDENTIALTREATMENT REQUEST.  REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEENFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

(d)                                EachBorrower warrants and represents that such Borrower is the sole and lawfulowner of all right, title and interest in and to all of the claims releasedhereby and no Borrower has heretofore assigned or transferred or purported toassign or transfer to any person any such claim or any portion thereof.  Each Borrower shall indemnify and holdharmless 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)                                 Theprovisions of this section shall survive payment in full of the Obligations,full performance of all the terms of this Ninth Amendment and the CreditAgreement, and/or Agent’s, any Lender’s or PEMG’s actions to exercise anyremedy available under the Credit Agreement or otherwise.

 

9.                                      Consultationof Counsel.  Each Borroweracknowledges that such Borrower has had the opportunity to be represented bylegal counsel of its own choice throughout all of the negotiations thatpreceded the execution of this Ninth Amendment. Each Borrower has executed this Ninth Amendment after reviewing andunderstanding each provision of this Ninth Amendment and without reliance uponany promise or representation of any person or persons acting for or on behalfof Agent.  Each Borrower furtheracknowledges that such Borrower and its counsel have had adequate opportunityto make whatever investigation or inquiry they may deem necessary or desirablein connection with the subject matter of this Ninth Amendment prior to theexecution hereof and the delivery and acceptance of the consideration describedherein.

 

10.                                Miscellaneous.

 

(a)                                 Successorsand Assigns.  This Ninth Amendmentshall be binding upon and shall inure to the benefit of Borrower and Agent andtheir respective successors and assigns; provided, however, that the foregoingshall not authorize any assignment by Borrower of its rights or dutieshereunder.

 

(b)                                Integration.  This Ninth Amendment and any documentsexecuted in connection herewith or pursuant hereto contain the entire NinthAmendment between the parties with respect to the subject matter hereof andsupersede all prior agreements, understandings, offers and negotiations, oralor written, with respect thereto and no extrinsic evidence whatsoever may beintroduced in any judicial or arbitration proceeding, if any, involving thisNinth Amendment; except that any financing statements or other agreements orinstruments filed by Agent with respect to Borrower shall remain in full forceand effect.

 

(c)                                 Courseof Dealing; Waivers.  No course ofdealing on the part of Agent or its officers, nor any failure or delay in theexercise of any right by Agent, shall operate as a waiver thereof, and anysingle or partial exercise of any such right shall not preclude any laterexercise 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)                                Timeis of the Essence.  Time is of theessence as to each and every term and provision of this Ninth Amendment and theother Credit Agreement.

 

(e)                                 LegalEffect.  The Credit Agreement remainsin full force and effect.  If anyprovision of this Ninth Amendment conflicts with applicable law, such provisionshall be deemed severed from this Ninth Amendment, and the balance of thisNinth Amendment shall remain in full force and effect.

 

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

 

(g)                                Uponthe effectiveness of this Ninth Amendment, each reference in the CreditAgreement to “this Ninth Amendment,” “hereunder,” “herein,”“hereof” or words of like import referring to the Credit Agreement shallmean and refer to the Credit Agreement as amended by this Ninth Amendment.

 

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**THIS EXHIBIT HAS BEENREDACTED AND IS THE SUBJECT OF A CONFIDENTIALTREATMENT REQUEST.  REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEENFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

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

 

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

 

11.                                EntireAmendment; Effect of Ninth Amendment. This Ninth Amendment, and the terms and provisions hereof, constitutesthe entire Ninth Amendment among the parties pertaining to the subject matterhereof and supersedes any and all prior or contemporaneous amendments relatingto the subject matter hereof. Except as expressly set forth in this NinthAmendment, the Credit Agreement and other Loan Documents shall remain unchangedand in full force and effect. To the extent any terms or provisions of thisNinth Amendment conflict with those of the Credit Agreement or other LoanDocuments, the terms and provisions of this Ninth Amendment shall control. ThisNinth Amendment is a Loan Document.

 

12.                                Counterparts; Electronic Transmission**.**This Ninth 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 this NinthAmendment by signing any such counterpart. Delivery of an executed counterpartof this Ninth Amendment by electronic mail shall be equally as effective asdelivery of an original executed counterpart of this Ninth Amendment. Any partydelivering an executed counterpart of this Ninth Amendment by electronic mailalso shall deliver an original executed counterpart of this Ninth Amendment,but the failure to deliver an original executed counterpart shall not affectthe validity, enforceability, and binding effect of this Ninth Amendment.

 

**[*Balance of Page IntentionallyLeft Blank*]**

 

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**THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF ACONFIDENTIALTREATMENT REQUEST.  REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEENFILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.**

 

INWITNESS WHEREOF, the parties have caused this Amendment Number 9 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 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 toAmendment Number 9 to Loan Documents*]**

 

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