Document:

Exhibit 10.8

 

TERM LOAN C NOTE

 

	
  $3,000,000

  	
   

  	
                                                                   August 20,
  2008

  

 

FOR VALUE RECEIVED, EMRISE CORPORATION, a Delaware corporation (“Parent”), EMRISE
ELECTRONICS CORPORATION,  a
New Jersey corporation (“EEC”), CXR LARUS CORPORATION, a Delaware corporation (“CXR”) and RO
ASSOCIATES INCORPORATED, a California corporation (“RO”),
(each of Parent, EEC, CXR and RO is referred to herein individually as a
“Borrower” and, collectively, as
the “Borrowers”), hereby jointly
and severally promise to pay GVEC RESOURCE IV
INC., a company organized under the laws of the British Virgin
Islands or its registered assigns (“Payee”),
on or before February 15, 2009, the lesser of (a) THREE MILLION
DOLLARS AND ZERO CENTS ($3,000,000.00), and (b) the unpaid principal
amount of Term Loan C made by Payee to the Borrowers under the Credit Agreement
referred to below, all as more particularly set forth herein.  The principal hereof shall be due and payable
as provided in the Credit Agreement referred to below.

 

Borrowers also hereby jointly and severally promise to pay interest on
the unpaid principal amount hereof, from the date hereof until paid in full, at
the rates and at the times which shall be determined in accordance with the
provisions of that certain Credit Agreement, dated as of November 30, 2007
(as amended, restated, replaced, supplemented or otherwise modified from time
to time, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Borrowers,
the Lenders that are signatories thereto, and Payee, as Arranger and Agent.

 

This
Term Loan C Note is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which Term Loan C evidenced hereby
was made and is to be repaid.

 

All
payments of principal and interest in respect of this Term Loan C Note shall be
made in lawful money of the United States of America in same day funds to Agent’s
Account for the account of the Lender Group or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement.  Payee hereby agrees,
by its acceptance hereof, that before disposing of this Term Loan C Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid; provided,
the failure to make a notation of any payment made on this Term Loan C Note
shall not limit or otherwise affect the obligations of the Borrowers hereunder
with respect to payments of principal of or interest on this Term Loan C Note.

 

This
Term Loan C Note is subject to mandatory prepayment and to prepayment at the
option of Borrowers, each as provided in the Credit Agreement.

 

THIS
TERM LOAN C NOTE AND THE RIGHTS AND OBLIGATIONS OF THE BORROWERS AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF 

 

 

THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF.

 

Upon
the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Term Loan C Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.

 

The
terms of this Term Loan C Note are subject to amendment only in the manner provided
in the Credit Agreement.

 

No
reference herein to the Credit Agreement and no provision of this Term Loan C
Note or the Credit Agreement shall alter or impair the obligations of
Borrowers, which are absolute and unconditional, to pay the principal of and
interest on this Term Loan C Note at the place, at the respective times, and in
the currency herein prescribed.

 

Borrowers
promise,  jointly and severally, to
pay all costs and expenses, including reasonable attorneys’ fees, all as
provided in the Credit Agreement, incurred in the collection and enforcement of
this Term Loan C Note.  Borrowers and any
endorsers of this Term Loan C Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF,
the Borrowers have caused this Term Loan C Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.

 

 

	
   

  	
  EMRISE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
  Name:

  	
  Carmine T. Oliva

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMRISE ELECTRONICS

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
  Name:

  	
  Carmine T. Oliva

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CXR LARUS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
  Name:

  	
  Carmine T. Oliva

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RO ASSOCIATES INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
  Name:

  	
  Carmine T. Oliva

  
	
   

  	
  Title:

  	
  Chief Executive OfficerExhibit 10.9

 

EXECUTION COPY

 

COLLATERAL
ASSIGNMENT OF RIGHTS

UNDER PURCHASE AGREEMENT

 

THIS COLLATERAL ASSIGNMENT
OF RIGHTS UNDER PURCHASE AGREEMENT (this “Collateral Assignment”) has
been executed and delivered as of August 20, 2008, by EMRISE CORPORATION,
a Delaware corporation (the “Borrower”), and EMRISE ELECTRONICS
CORPORATION, a New Jersey corporation (“Buyer”, and together with
Borrower, the “Credit Parties”), in favor of GVEC RESOURCE IV INC., a
company organized under the laws of the British Virgin Islands, as Agent under the Credit Agreement
described below (“Agent”), in light of the following facts:

 

Fact One:  Charles S. Brand (“Brand”), Thomas P.M.
Couse (“Couse”), Joanne Couse (“J. Couse”) and Michael Gaffney (“Gaffney”
and collectively with Couse and J. Couse, “Company Sellers” and
collectively with Couse, J. Couse and Brand, “Sellers”), Advanced
Control Components, Inc., a New Jersey corporation (the “Company”),
and Custom Components, Inc., a New Jersey corporation (“Parent”),
on the one hand, and Buyer, on the other, have entered into that certain Stock
Purchase Agreement, dated as of May 23, 2008 (the “Purchase Agreement”),
pursuant to which Buyer purchased and Company Sellers sold the Company Shares
(as defined in the Purchase Agreement), and Buyer purchased and Brand sold the
Parent Shares (as defined in the Purchase Agreement), all as set forth in the
Purchase Agreement (collectively, the “Purchased Stock”).

 

Fact Two:  Reference is made to that certain Credit Agreement (as
amended, restated, supplemented or otherwise modified from time to time,
including all schedules thereto, the “Credit Agreement”), dated as November 30,
2007, by and among the Borrower, Buyer, other Subsidiaries of Borrower, the
lenders party thereto as “Lenders” (“Lenders”) and Agent.

 

Fact Three:  Agent has
agreed to act as agent for the benefit of the Lender Group in connection with
the transactions contemplated by this Agreement and the Credit Agreement.

 

Fact Four: Agent has
required, as a condition precedent to permitting Borrower to consider the
transaction contemplated by the Purchase Agreement to be a Permitted
Acquisition (as defined in the Credit Agreement), that the Credit Parties
assign to Agent, for the benefit of the Lender Group, the Credit Parties’
rights and remedies with respect to the Purchase Agreement, in accordance with
the terms and conditions set forth herein.

 

NOW, THEREFORE, in
consideration of the facts set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Credit Parties and Agent hereby agree as follows:

 

1.             Any capitalized term in this
Collateral Assignment which is defined in the Credit Agreement shall have the
definition contained in the Credit Agreement, unless separately defined herein.

 

2.             As additional security for
the Obligations, the Credit Parties hereby collaterally assign and grant a
security interest to Agent, for the benefit of the Lender Group, in all of the
Credit Parties’ rights, remedies, privileges and claims with respect to the
Purchase Agreement, the agreements to be entered between any of the Credit
Parties and any of the Sellers and the instruments to be executed by any of the
Sellers for the benefit of any of the Credit Parties in connection therewith
(collectively, the “SPA Documents”), including but not limited to: (i) guaranties,
(ii) any right that any of the Credit Parties may have to indemnification
from any of the Sellers, including, without limitation, pursuant to Sections
10.2 and 10.3 of the Purchase Agreement; (iii) rights and remedies with
respect to any breach by any of the Sellers of any of their representations, 

 

1

 

warranties, and covenants
thereunder, including any non-competition covenants; and (iv) any rights
to payment from any of the Sellers (all of the foregoing collectively referred
to as the “Rights and Remedies”).

 

3.             Prior to the occurrence of
an Event of Default under the Loan Documents, the Credit Parties will enforce
all Rights and Remedies diligently and in good faith.

 

4.             Effective from and after the
occurrence of an Event of Default under the Loan Documents, and until such
Event of Default is cured or waived, each of the Credit Parties hereby
irrevocably authorizes and empowers Agent in Agent’s sole discretion, to
assert, as Agent may deem proper, either directly or on behalf of the Credit
Parties, any of the Rights and Remedies which the Credit Parties may from time
to time have against any of the Sellers.

 

5.             Regardless of the existence
of an Event of Default, Agent is irrevocably assigned the immediate right to
receive directly from the Sellers any and all payments, proceeds, monies,
damages and awards arising from the Rights and Remedies.  The Credit Parties hereby consent to Agent’s
issuance of irrevocable instructions to the Sellers to remit any and all
payments, proceeds, monies, damages and awards directly to Agent for
application of same on account of the Obligations pursuant to the terms of the
Loan Documents.

 

6.             Each of the Credit Parties
hereby irrevocably makes, constitutes, and appoints Agent (and all officers,
employees, or agents designated by Agent) as its true and lawful attorney (and
agent-in-fact) for the purposes of enabling Agent or its agent, upon the occurrence and during the
continuance of an Event of Default, to assert and collect such
claims and to apply such monies in the manner set forth hereinabove.

 

7.             The Credit Parties shall
keep Agent informed of all material circumstances bearing upon the Rights and Remedies,
and, effective from and after the occurrence of an Event of Default and until
such Event of Default is cured or waived, the Credit Parties shall not waive,
amend, alter or modify any of the material Rights and Remedies without prior
written consent of Agent.

 

8.             This Collateral Assignment
shall continue in effect until the Obligations have been indefeasibly paid and
discharged in full and all Commitments terminated.

 

9.             Notwithstanding the
foregoing, each of the Credit Parties expressly acknowledges and agrees that it
shall remain liable under the SPA Documents to observe and perform all of the
conditions and obligations in the SPA Documents which each of the Credit
Parties is bound to observe and perform, and that neither this Collateral
Assignment, nor any action taken pursuant hereto, shall cause Agent to be under
any obligation or liability in any respect whatsoever to any observance or
performance of any of the representations, warranties, conditions, covenants,
agreements or terms of any of the SPA Documents.

 

10.           This Collateral Assignment
may be executed in any number of counterparts, each of which, when executed and
delivered, shall be deemed to be an original. 
All of such counterparts, taken together, shall constitute but one and
the same agreement.  This Collateral
Assignment shall become effective upon the execution of a counterpart of this
Collateral Assignment by each of the parties hereto.

 

11.           THE VALIDITY OF THIS AGREEMENT, AND THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT THEREOF, AND THE RIGHTS OF THE PARTIES THERETO, SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

12.           THE PARTIES TO THIS AGREEMENT AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS COLLATERAL ASSIGNMENT SHALL 

 

2

 

BE TRIED AND LITIGATED ONLY IN
THE STATE OF CALIFORNIA AND FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT,
STATE OF CALIFORNIA.

 

13.           TO THE MAXIMUM EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF AGENT AND CREDIT PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY
CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES
HERETO WITH RESPECT TO THIS AGREEMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.  AGENT AND CREDIT PARTIES, TO THE EXTENT THEY MAY LEGALLY
DO SO, HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES
HERETO TO THE WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

 

[Signature page(s) to follow]

 

3

 

IN WITNESS WHEREOF, this Collateral Assignment has
been executed and delivered as of the date first set forth above.

 

 

	
  CREDIT PARTIES:

  	
  EMRISE CORPORATION, 
 a Delaware
  corporation   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
   

  
	
   

  	
  Name:   Carmine T. Oliva

  
	
   

  	
   

  
	
   

  	
  Title:     Chief Executive Officer 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMRISE ELECTRONICS CORPORATION, 
 a New Jersey
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T. Oliva

  
	
   

  	
   

  
	
   

  	
  Name:   Carmine T. Oliva 

  
	
   

  	
   

  
	
   

  	
  Title:     Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT:

  	
  GVEC RESOURCE IV, INC.
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Anderson

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Anderson

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President, Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wilbur Quon

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Wilbur Quon

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
						

 

[Signature Page to

Collateral Assignment Of Rights]

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