Exhibit 10.1


 


EXECUTION COPY


 


AMENDMENT NUMBER 2 TO LOAN DOCUMENTS


 


THIS
AMENDMENT NUMBER 2 TO LOAN DOCUMENTS (this “Second
Amendment”), is entered into as of February 12, 2009, by and among GVECR 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 as of August 20, 2008
(as further amended, restated, supplemented, or modified from time to time, the
“Credit Agreement”);


 


WHEREAS,
Borrowers wish to obtain additional time to comply with certain financial
covenants in the Credit Agreement;


 


WHEREAS,
subject to the satisfaction of the conditions set forth herein, the Lender
Group is willing to provide Borrowers with additional time to comply with
certain financial covenants and to revise certain other financial covenants in
the Credit Agreement consistent with other modifications made to the Credit
Agreement pursuant to the terms and conditions of that certain Amendment Number
1 to Loan Documents dated as of August 20, 2008;


 


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.             AMENDMENT
TO CREDIT AGREEMENT.


 


(a)           Schedule 1.1
of the Credit Agreement is amended by the addition of the following
definitions:


 


“Second Amendment” means that certain
Amendment Number 2 to Loan Documents, dated as of February 12, 2009, by
and among Borrowers, Agent and the Lenders party thereto.


 


“Second Amendment Effective Date”
means the date on which each of the conditions precedent set forth in Section 3
of the Second Amendment has been satisfied.


 


(b)           Section 2.2(g) of
the Credit Agreement is amended and restated as follows:


 


“(g)         Subject to subsection
(c) above, the principal of Term Loan C shall be repaid in full on March 20,
2009.”


 


(c)           Section 2.4(d)(i) of
the Credit Agreement is amended and restated as follows:


 

















 


“(i)          Each prepayment
pursuant to subclauses (c)(i) and (c)(ii) above (in
each case except with respect to insurance proceeds and condemnation awards
related to a casualty or loss of Collateral) shall be applied first against the
outstanding balance of principal and interest on the Term Loan C and second
against the remaining installments of principal of the Term Loans (other than
Term Loan C) (if any) in the inverse order of maturity.”


 


(d)           Section 5.21
of the Credit Agreement is hereby amended and restated as follows:


 


                “5.21       Additional Capital.  On or prior to March 20, 2009, Borrowers
shall provide evidence to Agent that Borrowers shall have received no less than
$5,000,000 in net proceeds (after the payment of all underwriting commissions,
investment banking fees and other fees and expenses associated therewith) from
either (i) the sale of the Stock or assets of a significant subsidiary or
division of Borrowers or (ii) the sale of Borrowers’ Stock on terms
acceptable to Agent in its reasonable discretion.”


 


3.             AMENDMENT
TO TERM LOAN C NOTE.  The
Term Loan C Note dated August 20, 2008 is amended by replacing “February 15,
2009” in the first paragraph with “March 20, 2009.”  All other terms of the Term Loan C Note
remain the same.


 


4.             CONDITIONS
PRECEDENT TO THIS SECOND AMENDMENT.  The satisfaction of each of the following
shall constitute conditions precedent to the effectiveness of this Second
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 Second 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)           No Default or Event
of Default shall have occurred and be continuing on the date hereof or as of
the Second 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;


 


(d)           No Material Adverse
Change shall have occurred;


 


(e)           On or prior to the
Second Amendment Effective Date, Borrowers shall have paid Private Equity
Management Group, Inc. (“PEMG”) an advisory fee equal of $100,000
in cash to compensate PEMG for its ongoing advice relating to Borrowers’
overall financing and capitalization structure. 
The advisory fee shall be due and payable in full on the Second
Amendment Effective Date and non-refundable when paid;


 


(f)            Borrowers shall
have executed and delivered this Second Amendment to Agent by no later than February 12,
2009; and


 


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(g)           Borrowers shall have
executed and delivered to Agent two second amended and restated Warrant
Agreements, each in form and substance satisfactory to Agent.  The second amended and restated Warrant
Agreements will, collectively, amend and restate the amended and restated
Warrant Agreement dated August 20, 2008 and will, collectively, provide
for the same aggregate number of shares of Parent’s common stock issuable upon
exercise of the second amended and restated Warrant Agreements as were
originally issuable under the terms of the amended and restated Warrant
Agreement, with one-half of the aggregate number of shares issuable under the
amended and restated Warrant Agreement issuable under each second amended and
restated Warrant Agreement.  The second
amended and restated Warrant Agreements will also provide for a reduction in the
exercise price of one-half of the aggregate number of shares of common stock
issuable under the amended and restated Warrant Agreement.  One of the second amended and restated
Warrant Agreements will provide for the purchase of up to 387,879 shares of Parent’s
common stock (such number of shares reflecting Parent’s 1-for-3.75 reverse
split of its common stock effective November 19, 2008) at an exercise
price of $1.99 per share.  The other
second amended and restated Warrant Agreement will provide for the purchase of
up to 387,879 shares of Parent’s common stock (such number of shares reflecting
Parent’s 1-for-3.75 reverse split of its common stock effective November 19,
2008) at an exercise price of $1.80 per share.


 


5.             CONSTRUCTION.  THIS SECOND 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.


 


6.             ENTIRE AMENDMENT; EFFECT
OF SECOND AMENDMENT.  This
Second 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 Second 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
Second Amendment conflict with those of the Credit Agreement or other Loan
Documents, the terms and provisions of this Second Amendment shall
control.  This Second Amendment is a Loan
Document.


 


7.             COUNTERPARTS;
TELEFACSIMILE EXECUTION. 
This Second 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 Second Amendment by signing any such
counterpart.  Delivery of an executed
counterpart of this Second Amendment by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Second
Amendment.  Any party delivering an
executed counterpart of this Second Amendment by telefacsimile also shall
deliver an original executed counterpart of this Second Amendment, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Second Amendment.


 


8.             MISCELLANEOUS.


 


(a)           Upon the
effectiveness of this Second Amendment, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “herein,” “hereof”
or words of like import referring 


 


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to the Credit
Agreement shall mean and refer to the Credit Agreement as amended by this
Second Amendment.


 


(b)           Upon the
effectiveness of this Second 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 Second Amendment.


 


[signatures on next page]


 


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


 


	
  EMRISE CORPORATION

  	
   

  	
  EMRISE ELECTRONICS CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carmine T. Oliva

  	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CXS LARUS CORPORATION

  	
   

  	
  RO ASSOCIATES INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carmine T. Oliva

  	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CUSTOM COMPONENTS, INC.

  	
   

  	
  ADVANCED CONTROL COMPONENTS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carmine T. Oliva

  	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GVEC RESOURCE IV INC., as Agent and a

  Lender

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Authorized Signatory

  
	
   

  	
   

  	
   

  	
  Title:

  	
  /s/ Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Authorized Signatory

  
	
   

  	
   

  	
   

  	
  Title:

  	
  /s/ Authorized Signatory

  
										



 


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