Document:

TERMLOANANOTE

Exhibit 10.1

SECOND AMENDED AND RESTATED 
TERM LOAN A NOTE
$1,000,000.00    Irvine, California    February 8, 2012
FOR VALUE RECEIVED, EMRISE CORPORATION, a Delaware corporation (“Parent”), EMRISE ELECTRONICS CORPORATION, a New Jersey corporation (“EEC”), and CXR LARUS CORPORATION, a Delaware corporation (“CXR”) (each of Parent, EEC, and CXR 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 28, 2013 (or such earlier date of termination of this Note, whether by prepayment, or by acceleration, the “Maturity Date”), the lesser of (a) ONE MILLION DOLLARS AND ZERO CENTS ($1,000,000.00), and (b) the unpaid principal amount of Second Amended and Restated Term Loan A made by Payee to the Borrowers under the Credit Agreement referred to below, all as more particularly set forth herein. The principal hereof and all interest thereon shall be due and payable as provided 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, as follows, notwithstanding anything to the contrary set forth in 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:
From the date hereof and continuing on the same day each month thereafter through the Maturity Date, Borrowers shall pay interest only on the outstanding principal amount hereof at a fixed per annum rate equal to fifteen and one half percent (15.5%).  On the Maturity Date, all outstanding principal and interest, if any, and any unpaid fees or costs, and all other amounts due under the Credit Agreement shall be paid in full.  Notwithstanding the foregoing, (A) Borrowers shall make a one time principal payment to Payee on February 29, 2012 in the amount of FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($500,000.00), and (B) provided that Borrowers make an additional principal payment to Payee in the amount of (i) TWO HUNDRED THOUSAND DOLLARS AND ZERO CENTS ($200,000.00) by April 30, 2012, or (ii) TWO HUNDRED TWENTY FIVE THOUSAND DOLLARS AND ZERO CENTS ($225,000.00) at any time from May 1, 2012 through June 30, 2012, or (iii) TWO HUNDRED FIFTY THOUSAND DOLLARS AND ZERO CENTS ($250,000.00) at any time from July 1, 2012 through August 31, 2012, plus (iv) any unpaid fees or costs then due in accordance with the provisions of the Credit Agreement, then the remaining principal balance due under this Note, and all other amounts due under the Credit Agreement, shall be deemed to be paid in full and Payee shall, at Borrowers’ expense, terminate all liens and security interests in favor of Payee.
This Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A 

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Exhibit 10.1

evidenced hereby was made and is to be repaid, including but not limited to any default rates and other fees and costs.
All payments of principal and interest in respect of this Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A Note shall not limit or otherwise affect the obligations of the Borrowers hereunder with respect to payments of principal of or interest on this Second Amended and Restated Term Loan A Note.
This Second Amended and Restated Term Loan A Note is subject to mandatory prepayment and to prepayment at the option of Borrowers, each as provided in the Credit Agreement.
THIS SECOND AMENDED AND RESTATED TERM LOAN A 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 Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A 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 Second Amended and Restated Term Loan A Note. Borrowers and any endorsers of this Second Amended and Restated Term Loan A 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.

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Exhibit 10.1

Subject to the terms and conditions of that certain Amendment Number 17 to Loan Documents dated as of even date herewith, by and among Borrowers, Payee and , Private Equity Management Group LLC, as Payee’s court-appointed receiver, this Second Amended and Restated Term Loan A Note completely amends and restates that certain Amended and Restated Term Loan A Note issued by Borrowers to Payee on or about August 31, 2010 (the “Original Note”), which Original Note shall, upon execution and delivery of this Second Amended and Restated Term Loan A Note be of no further force or effect.
[Signature Page Follows]

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IN WITNESS WHEREOF, the Borrowers have caused this Second Amended and Restated Term Loan A 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
	 
	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
	 
	 

	 
	 
	 

	 
	 
	 

	By:  /s/ Carmine Oliva    
	 
	 

	Name:  Carmine Oliva
	 
	 

	Title:  President
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

4AMENDMENT17

Exhibit 10.2

AMENDMENT NUMBER 17 TO LOAN DOCUMENTS

This AMENDMENT NUMBER 17 TO LOAN DOCUMENTS (this “Seventeenth Amendment”) is entered into as of February 8, 2012, by and among GVEC RESOURCE IV INC. (the “Agent”), as Agent and as a Lender, PRIVATE EQUITY MANAGEMENT GROUP LLC, a Delaware limited liability company (“PEMG”), EMRISE CORPORATION, a Delaware corporation (“Parent”), and Parent’s Subsidiaries that are signatories hereto (collectively, with Parent, the “Borrowers” and each individually, a “Borrower”), with reference to the following facts:
A.    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, that certain Amendment Number 2 to Loan Documents, dated as of February 12, 2009, that certain Forbearance Agreement and Amendment Number 3 to Loan Documents, dated as of March 20, 2009 (as amended by that certain Amendment 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 Loan Documents, dated as of August 14, 2009, that certain Amendment Number 6 to Loan Documents, dated as of November 3, 2009, that certain Amendment Number 7 to Loan Documents, dated as of November 13, 2009, that certain Amendment Number 8 to Loan Documents, dated as of December 31, 2009, that certain Amendment Number 9 to Loan Documents, dated as of April 13, 2010, that certain Amendment Number 10 to Loan Documents, dated as of May 3, 2010, that certain Amendment Number 11 to Loan Documents, dated as of May 17, 2010, that certain Amendment Number 12 to Loan Documents, dated as of June 1, 2010, that certain Amendment Number 13 to Loan Documents, dated as of June 17, 2010, that certain Amendment Number 14 to Loan Documents, dated as of July 16, 2010, that certain Amendment Number 15 to Loan Documents, dated as of July 31, 2010 and that certain Amendment Number 16 to Loan Documents, dated as of August 31, 2010  (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.Defined Terms.  Capitalized terms not otherwise defined herein shall have the same meanings as set forth in the Credit Agreement.
2.    Representations and Warranties.
(a)    Each Borrower hereby represents and warrants that, after giving effect to this Seventeenth Amendment, 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)    All representations and warranties of Borrowers in this Seventeenth Amendment and the Credit Agreement are true and correct as of the date hereof, and shall survive the execution of this Seventeenth Amendment.  
3.    Amendments.  The following provisions of the Credit Agreement hereby are amended and restated to read as follows:
(a)    Section 2.2(a) shall be deemed to be amended and restated in its entirety to read as follows:
“(a)    Subject to the terms and conditions of this Agreement, on August 31, 2010, Lenders shall be deemed to have made a term loan (the “Second Amended and Restated Term Loan A”) to Borrowers in an amount not to exceed One Million Dollars ($1,000,000).”
(b)    The third sentence of Section 2.2(c) hereby is amended and restated in its entirety to read as follows:
“The Second Amended and Restated Term Loan A shall be repaid in accordance with the terms and conditions of that certain Second Amended and Restated Term Loan A Note.”
(c)    The Amended and Restated Term Loan A Note shall be replaced in its entirety with the Second Amended and Restated Term Loan A Note.

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Exhibit 10.2

(d)    The defined term “Amended and Restated Term Loan A” in the Credit Agreement shall mean and refer to the “Second Amended and Restated Term Loan A.”
4.    Default.  In addition to all other Events of Default under the Credit Agreement, Borrowers’ failure to pay any amount when due under this Seventeenth Amendment or  to perform any covenant or other agreement contained in this Seventeenth Amendment, or any other document entered into pursuant hereto, including but not limited to the Second Amended and Restated Term Loan A Note, shall constitute Events of Default under this Seventeenth Amendment and the Credit Agreement
5.    Consent.  Notwithstanding any provision in the Credit Agreement to the contrary, Lenders hereby consent and approve of the sale of assets by CXR Larus Corporation of the test equipment line of products marketed under the CXR Halcyon name to LDDF Incorporated.
6.    Conditions Precedent.  The effectiveness of this Seventeenth Amendment is subject to Agent’s receipt of all of the following:
(a)    this Seventeenth Amendment and such other agreements and instruments reasonably requested by Agent pursuant hereto (including such documents as are necessary to create and perfect Agent’s interest in the Collateral, and including but not limited to the Second Amended and Restated Term Loan A Note, substantially in the form attached hereto as Annex Q), each duly executed by each Borrower;
(b)    payment by Borrowers to PEMG of an amendment fee in the amount of Ten Thousand Dollars ($10,000), which shall be nonrefundable as of the date hereof;
(c)    payment by Borrowers of all legal fees and expenses incurred through (which shall be due and payable on, and nonrefundable as of the date of this Seventeenth Amendment (which shall be remitted via wire transfer according to the instructions set forth on Exhibit A hereto); and
(d)    such other documents and completion of such other matters as Agent may reasonably deem necessary or appropriate.
7.    Release.
(a)    Each Borrower acknowledges that neither Agent, any Lender nor PEMG (the “Released Parties”) would enter into this Seventeenth Amendment without Borrowers’ assurance hereunder.  Except for the obligations arising hereafter under this Seventeenth Amendment, each Borrower hereby absolutely discharges and releases the Released Parties, any person or entity that has obtained any interest from any of them under the Credit Agreement or otherwise and each of the Released Parties’ and such entities’ former and present partners, stockholders, officers, directors, employees, successors, assignees, agents and attorneys from any known or unknown claims which any Borrower now has against any of them of any nature, including any claims that any Borrower, its successors, counsel, and advisors may in the future discover they would have now had if they had known facts not now known to them, whether founded in contract, in tort or pursuant to any other theory of liability, including but not limited to any claims arising out of or related to the Credit Agreement or the transactions contemplated thereby.  
(b)    Each Borrower waives the provisions of California Civil Code Section 1542, which states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
(c)    The provisions, waivers and releases set forth in this section are binding upon each Borrower and each Borrower’s shareholders, agents, employees, assigns and successors in interest.  The provisions, waivers and releases of this section shall inure to the benefit of the Released Parties and their respective agents, employees, officers, directors, assigns and successors in interest.
(d)    Each Borrower warrants and represents that such Borrower is the sole and lawful owner of all right, title and interest in and to all of the claims released hereby and no Borrower has heretofore assigned or transferred or purported to assign or 

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Exhibit 10.2

transfer to any person any such claim or any portion thereof.  Each Borrower shall indemnify and hold harmless Agent, each Lender and PEMG from and against any claim, demand, damage, debt, liability (including payment of attorneys’ fees and costs actually incurred whether or not litigation is commenced) based on or arising out of any such assignment or transfer.
(e)    The provisions of this section shall survive payment in full of the Obligations, full performance of all the terms of this Seventeenth Amendment and the Credit Agreement, and/or Agent’s, any Lender’s or PEMG’s actions to exercise any remedy available under the Credit Agreement or otherwise.
8.    Consultation of Counsel.  Each Borrower acknowledges that such Borrower has had the opportunity to be represented by legal counsel of its own choice throughout all of the negotiations that preceded the execution of this Seventeenth Amendment.  Each Borrower has executed this Seventeenth Amendment after reviewing and understanding each provision of this Seventeenth Amendment and without reliance upon any promise or representation of any person or persons acting for or on behalf of Agent.  Each Borrower further acknowledges that such Borrower and its counsel have had adequate opportunity to make whatever investigation or inquiry they may deem necessary or desirable in connection with the subject matter of this Seventeenth Amendment prior to the execution hereof and the delivery and acceptance of the consideration described herein.
9.    Miscellaneous.
(a)    Successors and Assigns.  This Seventeenth Amendment shall be binding upon and shall inure to the benefit of Borrower and Agent and their respective successors and assigns; provided, however, that the foregoing shall not authorize any assignment by Borrower of its rights or duties hereunder.
(b)    Integration.  This Seventeenth Amendment and any documents executed in connection herewith or pursuant hereto contain the entire Seventeenth Amendment between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Seventeenth Amendment; except that any financing statements or other agreements or instruments filed by Agent with respect to Borrower shall remain in full force and effect.
(c)    Course of Dealing; Waivers.  No course of dealing on the part of Agent or its officers, nor any failure or delay in the exercise of any right by Agent, shall operate as a waiver thereof, and any single or partial exercise of any such right shall not preclude any later exercise of any such right.  Agent’s failure at any time to require strict performance by Borrower of any provision shall not affect any right of Agent thereafter to demand strict compliance and performance.  Any suspension or waiver of a right must be in writing signed by an officer of Agent.
(d)    Time is of the Essence.  Time is of the essence as to each and every term and provision of this Seventeenth Amendment and the other Credit Agreement.
(e)    Legal Effect.  The Credit Agreement remains in full force and effect.  If any provision of this Seventeenth Amendment conflicts with applicable law, such provision shall be deemed severed from this Seventeenth Amendment, and the balance of this Seventeenth Amendment shall remain in full force and effect.
(f)    Choice of Law and Venue; Jury Trial Waiver; Judicial Reference; Service of Process.  Section 12 of the Credit Agreement hereby is incorporated herein by this reference as though fully set forth.
(g)    Upon the effectiveness of this Seventeenth Amendment, each reference in the Credit Agreement to “this Seventeenth Amendment,” “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 Seventeenth Amendment.
(h)    Upon the effectiveness of this Seventeenth 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 Seventeenth Amendment.
(i)    Assignment and Indemnity.  Borrower consents to Agent’s assignment, in accordance with Section 13 of the Credit Agreement, of all or any part of Agent’s rights under this Seventeenth Amendment and the Credit Agreement.  

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Exhibit 10.2

10.    Entire Amendment; Effect of Seventeenth Amendment.  This Seventeenth Amendment, and the terms and provisions hereof, constitutes the entire Seventeenth Amendment 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 Seventeenth 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 Seventeenth Amendment conflict with those of the Credit Agreement or other Loan Documents, the terms and provisions of this Seventeenth Amendment shall control. This Seventeenth Amendment is a Loan Document.
11.    Counterparts; Electronic Transmission. This Seventeenth 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 Seventeenth Amendment by signing any such counterpart. Delivery of an executed counterpart of this Seventeenth Amendment by electronic mail shall be equally as effective as delivery of an original executed counterpart of this Seventeenth Amendment. Any party delivering an executed counterpart of this Seventeenth Amendment by electronic mail also shall deliver an original executed counterpart of this Seventeenth Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Seventeenth Amendment.

[Balance of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties have caused this AMENDMENT NUMBER 17 TO LOAN DOCUMENTS 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
	 
	 

	 
	 
	 

	 
	 
	 

	By:  /s/ Carmine Oliva    
	 
	 

	Name:  Carmine Oliva
	 
	 

	Title:  President
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	GVEC RESOURCE IV INC.,

	 
	 
	as Agent and a Lender

	 
	 
	 

	 
	 
	By: PRIVATE EQUITY MANAGEMENT GROUP LLC, its Court-Appointed Receiver

	 
	 
	 

	 
	 
	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 to Amendment Number 17 to Loan Documents]

ANNEX Q 
(Second Amended and Restated Term Loan A Note)
[hard copy to be attached]

EXHIBIT A 
(Wire Transfer Instructions)

M&T Bank 
25 South Charles Street, 18th Floor 
Baltimore, MD 21201 
Account Name: DLA Piper US LLP Operating Account 
Account #: 074-8148-5 
ABA Transit #: 022000046 
Swift Code: MANTUS33INT 
Reference: 018212-000004 (tz18133) 
Law Firm Tax Identification Number: 52-0616490

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