Exhibit 10.3


 


AMENDMENT
NUMBER 5 TO LOAN DOCUMENTS


 


THIS
AMENDMENT NUMBER 5 TO LOAN DOCUMENTS (this “Fifth Amendment”), is entered into as
of August 14, 2009, by and among GVEC 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 August 20, 2008, that certain Amendment Number
2 to Loan Documents, dated February 12, 2009, that certain Forbearance
Agreement and Amendment Number 3 to Loan Documents, dated March 20, 2009
(as amended by that certain Amendment to Forbearance Agreement and Amendment
Number 3 to Loan Documents, dated April 9, 2009) and that certain
Amendment Number 4 to Loan Documents, dated April 14, 2009 (as further
amended, restated, supplemented, or modified from time to time, the “Credit
Agreement”); and


 


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


 


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:


 


“Fifth
Amendment” means that certain Amendment Number 5 to Loan Documents, dated
as of August 14, 2009, by and among Borrowers, Agent and the Lenders party
thereto.


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


(c)           Section 2.2(e) of
the Credit Agreement is amended and restated as follows:


 


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


 


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


 


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


 


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


 


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


 


(d)           Section 2.4(c)(i) of
the Credit Agreement is hereby amended by adding the following clause at the
end of the first sentence of such Section 2.4(c)(i): “; provided,
however, that in connection with any such sales or dispositions that
occur subsequent to Fifth Amendment Effective Date and prior to January 1,
2010, Borrowers shall prepay the outstanding Obligations in an amount equal to
75% of the Net Cash Proceeds received in connection with such sales or dispositions.”


 


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


 


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


 


2

















 


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


 


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


 


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


 


(f)            Section 6.16(d) of
the Credit Agreement is amended and restated as follows:


 


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


 


 


	
  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

  	
  ”

  



 


3

















 


3.             CONDITIONS PRECEDENT TO THIS FIFTH AMENDMENT.  The satisfaction of each of the following
shall constitute conditions precedent to the effectiveness of this Fifth 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 Fifth
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 Fifth 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)           Borrowers
have 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


 


(e)           No
Material Adverse Change shall have occurred.


 


4.             CONSTRUCTION.  THIS FIFTH 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.


 


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


 


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


 


4

















 


7.             MISCELLANEOUS.


 


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


 


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


 


[signatures on next page]


 


5

















 


IN WITNESS WHEREOF, the
parties have caused this Fifth 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:

  	
  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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