8-K

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (earliest event reported):          November 30, 2007

EMRISE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-10346	77-0226211
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	file number)	Identification No.)

9485 Haven Avenue, Suite 100

Rancho Cucamonga, California 91730

(Address of principal executive offices) (Zip code)

(909) 987-9220

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Item 1.01.              Entry Into a Material Definitive Agreement.

On November 30, 2007, EMRISE Corporation (the “Company”) and its subsidiaries, EMRISE Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated (collectively, the “Borrowers”) entered into a Credit Agreement (the “Credit Agreement”) with GVEC Resource IV Inc. (the “Lender”), an affiliate of Private Equity Management Group (“PEM Group”), providing for a three year credit facility in the aggregate amount $23,000,000 (the “Credit Facility”).

Credit Agreement

The Credit Facility consists of (i) a one year revolving credit facility for up to $7,000,000 that may be extended for up to three years (the “Revolver”), (ii) a three year term loan in an outstanding principal amount of $6,000,000 which was fully funded on November 30, 2007 (the “Term Loan A”); and (iii) a three year term loan in the amount of $10,000,000 to be used solely for possible acquisitions to be made within 18 months of November 30, 2007 (the “Term Loan B,” and together with the Term Loan A, the “Term Loans”).  Proceeds from the Revolver and the Term Loan A will be used to repay existing institutional debt and to fund working capital.

The Revolver is formula-based which generally provides that the outstanding borrowings under the line of credit may not exceed an aggregate of 85% of eligible accounts receivable, plus 10% of the value of eligible raw materials not to exceed $600,000, plus 50% of the value of eligible finished goods inventory not to exceed $1,500,000, minus the aggregate amount of reserves that may be established by the Lender.

Interest on the revolver is payable monthly.  The interest rate is variable and is adjusted monthly based on prime rate as published in the “Money Rates” column of the Wall Street Journal (the “Base Rate”) plus 1.25%, subject to a minimum rate of 9.5%.  The Revolver is subject to various financial covenants on a consolidated basis including the following: EBITDA, measured on a fiscal quarter-end basis, must not be less than the scheduled amount for each specified period; the debt service coverage ratio, measured quarterly, must be greater than the lesser of the scheduled amount for each specific period or 1.10:1.00; the leverage ratio, measured quarterly, must not be greater than 1.25:1.00; and the Company must not incur capital expenditures in any fiscal year in excess of $500,000.

The Term Loans bear interest at the Base Rate plus 4.25%, subject to a minimum rate of 12.5%, and require interest only payments in the first year, scheduled principal plus interest payments in years two and three, and a final balloon payment at the end of year three.  Interest on the Term Loans is payable monthly.  The Borrowers may make full or partial prepayment of the Term Loans provided that any such prepayment is accompanied by the applicable prepayment premium discussed below.

Upon the sale or disposition by Borrowers or any of their subsidiaries of property or assets, the Borrowers may be obligated to prepay the Revolver and the Term Loans with the net cash proceeds received in connection with such sales or dispositions to the extent that the aggregate amount of net cash proceeds received, and not paid to the Lender as a prepayment, for all such sales or dispositions exceed $150,000 in any fiscal year.

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In the event of a default and continuation of a default, the Lender may accelerate the payment of the principal balance requiring the Company to pay the entire indebtedness outstanding on that date.  Upon the occurrence and during the continuation of an event of default, the Lender may also elect to increase the interest rate applicable to the outstanding balance by four percentage points above the per annum interest rate that would otherwise be applicable.

A copy of the Credit Agreement is filed as Exhibit 10.1 to this Report and is incorporated herein by this reference. The description of the Credit Agreement in this Report is qualified in its entirety by the terms of the Credit Agreement.

Fee Letter

In connection with entering into the Credit Agreement, the Borrowers executed a Fee Letter dated November 30, 2007 (“Fee Letter”) pursuant to which the Borrowers paid PEM Group an advisory fee of $862,500.  The Borrowers have also paid all reasonable legal fees, costs and expenses of counsel to the Lender and all out-of-pocket expenses associated with the transaction.  Upon the Borrowers election to renew the term of the Revolver as permitted in the Credit Agreement, the Borrowers must pay PEM Group a fee of $70,000.

Pursuant to the terms of the Fee Letter, if the Lender terminates the credit facility during a default period or if the Company prepays the Revolver or the Term Loans as described above, the Company will be subject to penalties as follows: if the termination or prepayment occurs during the one year period after November 30, 2007, the penalty is equal to 3% of the outstanding principal balance of the Revolver and the Term Loans; if the termination or prepayment occurs during second year after November 30, 2007, the penalty is equal to 2% of the outstanding principal balance of the Revolver and the Term Loans.  The Revolver and the Term Loan B are subject to an unused line fee of 0.5% per annum, payable monthly, on any unused portion of the revolving credit facility and the loan, respectively.  All fees due pursuant to the Fee Letter are payable monthly, in the manner set forth in the Credit Agreement.

Security Agreement, Patent Security Agreement and Trademark Security Agreement

In connection with entering into the Credit Agreement, the Borrowers and the Lender entered in to a Security Agreement dated November 30, 2007.  Also in connection with the Credit Agreement, the Company, RO Associates Incorporated and the Lender entered into a Patent Security Agreement dated November 30, 2007, and the Company, RO Associates Incorporated, Emrise Electronics Corporation and the Lender entered into a Trademark Security Agreement dated November 30, 2007 (the Security Agreement, the Patent Security Agreement and the Trademark Security Agreement shall be referred to collectively as the “Security Agreements”).

Pursuant to the terms of the Security Agreements, the Credit Facility is secured by a perfected first priority lien on all the assets of the Borrowers (subject to customary exceptions).  Pursuant to the terms of the Security Agreements, and to secure payment of the indebtedness of

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Borrowers under the Credit Facility, the Borrowers irrevocably pledged and assigned to, and granted the Lender a continuing security interest in all the personal property of the Borrowers including the Borrowers’ interest in any deposit accounts, the stock of each of the Borrowers’ subsidiaries, the intellectual property owned by each of the Borrowers, and the proceeds of the intellectual property owned by each of the Borrowers.  If  an event of default, as defined in the Credit and Agreement, occurs, the Lender may, at its option, exercise any or all remedies available under the Security Agreements with respect to the collateral.

A copy of the Security Agreement, the Patent Security Agreement and the Trademark Security Agreement are filed as Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, to this Report and are incorporated herein by this reference. The description of the Security Agreements in this Report is qualified in its entirety by the terms of the Security Agreements.

Revolving Notes

In connection with entering into the Credit Agreement, the Borrowers issued a Revolver Loan Note dated November 30, 2007 (the “Revolver Note”) to the Lender in the principal amount of $7,000,000.  The Revolver Note is governed by the terms of the Credit Agreement.

A copy of the Revolver Note is filed as Exhibit 10.5 to this Report and is incorporated herein by this reference. The description of the Revolver Note in this Report is qualified in its entirety by the terms of the Revolver Note.

Term Notes

In connection with entering into the Credit Agreement, the Borrowers issued to the Lender a Term Loan A Note dated November 30, 2007 in the principal amount of $6,000,000 and a Term Loan B Note dated November 30, 2007 in the principal amount of $10,000,000 (collectively, the “Term Notes”).  The Term Notes are governed by the terms of the Credit Agreement.

A copy of the Term Notes are filed as Exhibit 10.6 and Exhibit 10.7 to this Report and are incorporated herein by this reference. The description of the Term Notes in this Report is qualified in its entirety by the terms of the Term Notes.

Warrant

As described in Item 3.02 of this Report, the Company issued a Warrant to purchase 2,909,090 shares of its Common Stock on November 30, 2007.  The disclosures regarding the Warrant are incorporated by reference into this Item 1.01.

Foreign Subsidiary Guaranty Agreements, Share Pledge Agreements and Security Agreements

On November 30, 2007, in connection with the Borrowers entering in to the Credit Agreement, certain of the Borrowers’ foreign subsidiaries entered into a Guaranty with the Lender (the “Guaranty Agreements”) pursuant to which each guarantor unconditionally, absolutely and irrevocably guaranteed to the Lender, and each guarantor is jointly and severally liable for, (i) the due and punctual payment of all obligations of the Borrowers pursuant to the

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terms of the Credit Agreement and (ii) the due and punctual performance of all covenants and obligations owing to the Lenders.  Pursuant to the terms of the Guaranty Agreements, if the guaranteed obligations are not punctually paid when due, the guarantors are obligated to pay the amount due on the guaranteed obligations.

In connection with the Credit Agreement, and to secure the performance of the Borrowers’ obligations under the Credit Agreement, Emrise Electronics Ltd., XCEL Power Systems, Ltd. Pascall Electronic (Holdings) Limited, Pascall Electronics Limited, Belix Would Components Ltd. and The Belix Company Ltd. (collectively, the “UK Subsidiaries”) entered into a Composite Debenture (“Composite Debenture”) with the Lender, dated November 30, 2007, pursuant to which the UK Subsidiaries irrevocably pledged and assigned to, and granted the Lender a continuing first priority security interest in all the personal property of the UK Subsidiaries including the ownership interest of Emrise Electronics Ltd. in the shares of the other UK Subsidiaries and the intellectual property owned by each of the UK Subsidiaries.

Also in connection with the Credit Agreement, Emrise Electronics Corporation and the Lender entered into a Share Charge dated November 30, 2007 (“Share Charge”), pursuant to which it pledged its interest in the shares of its wholly owned subsidiary, Emrise Electronics Ltd., to the Lender as a continuing security to secure the performance of the Borrowers’ obligations under the Credit Agreement.

In connection with the Credit Agreement, and to secure the performance of the Borrowers’ obligations under the Credit Agreement, the Lender and CXR Anderson Jacobson, SAS (the “French Subsidiary”) entered into a Convention de Nantissement de fonds de commerce dated November 30, 2007 (the “Going Concern Pledge”) pursuant to which the French Subsidiary irrevocably pledged and assigned to, and granted the Lender a continuing first priority security interest in all the personal property of the French Subsidiary including its intellectual property.

Also in connection with the Credit Agreement, the Company and Lender entered in to a Agreement For The Pledge Of Account Of Financial Instruments Relating To Shares Of CXR Anderson Jacobson SAS dated November 30, 2007 (the “French Share Pledge”) pursuant to which the Company pledged its interest in the shares of its wholly-owned subsidiary, CXR Anderson Jacobson SAS, to the Lender as a continuing security to secure the performance of the Borrowers’ obligations under the Credit Agreement.

A copy of the three Guaranty Agreements, Composite Debenture, the Share Charge, the Going Concern Pledge and the French Share Pledge (collectively, the “Foreign Subsidiary Agreements”) are filed as Exhibit 10.10 through Exhibit 10.16 to this Report and are incorporated herein by this reference.  An English translation of the Going Concern Pledge is filed as Exhibit 10.17 to this Report.  The description of the Foreign Subsidiary Agreements in this Report is qualified in its entirety by the terms of each of the Foreign Subsidiary Agreements.

Item 1.02.Termination of a Material Definitive Agreement.

Our financing arrangements with Wells Fargo Bank, National Association (“Wells Fargo”), acting through its Wells Fargo Business Credit operating division, pursuant to the Credit and Security Agreement between Wells Fargo and the Borrowers dated December 1,

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2006, were terminated on November 30, 2007 and all the Borrowers’ debt to Wells Fargo was paid in full in connection with the funding of the new credit facility described in Item 1.01 of this Report.  In connection with terminating our financing arrangement prior to maturity, we paid a termination fee of $128,119.88 to Wells Fargo.  The material terms of the Wells Fargo credit facility are described in the Company’s Current Report on Form 8-K filed on December 7, 2006 and are incorporated herein by reference.

Our financing arrangements with IFN Finance were terminated on November 30, 2007 and all debt owed to IFN Finance was paid in full in connection with the funding of the new credit facility described in Item 1.01 of this Report.  In connection with terminating our financing arrangements, we paid a termination fee of approximately €8,000.00 to IFN Finance.  The material terms of the IFN Finance credit facility are described in the Company’s Annual Report on Form 10-K filed on April 2, 2007 and are incorporated herein by reference.

Our financing arrangements with Lloyds TSB Commercial Finance Limited (“Lloyds Commercial”) were terminated on November 30, 2007 and all debt owed to Lloyds Commercial was paid in full in connection with the funding of the new credit facility described in Item 1.01 of this Report.  In connection with terminating our financing arrangements, we paid a termination fee of ₤5,179.50 to Lloyds Commercial.  The material terms of the Lloyds Commercial credit facility are described in the Company’s Annual Report on Form 10-K filed on April 2, 2007 and are incorporated herein by reference.

Our financing arrangements with Lloyds TSB Bank PLC (“Lloyds PLC”) were terminated on November 30, 2007 and all debt owed to Lloyds PLC was paid in full in connection with the funding of the new credit facility described in Item 1.01 of this Report.  The material terms of the Lloyds PLC credit facility are described in the Company’s Annual Report on Form 10-K filed on April 2, 2007 and are incorporated herein by reference.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As described in Item 1.01 of this Report, the Company entered in to a new credit facility when it executed the Credit Agreement on November 30, 2007. The disclosures regarding the new facility are incorporated by reference into this Item 2.03.

Item 3.02.Unregistered Sales of Equity Securities.

In connection with entering in to the Credit Agreement and in consideration of the services performed by the PEM Group, the Company issued to Private Equity Management Group LLC, an affiliate of PEM Group, a seven year warrant to purchase 2,909,090 shares of the Company’s common stock at an exercise price of $1.10 per share.  The warrant holder received piggy-back registration rights with respect to the shares of common stock underlying the warrant.  The warrant is exercisable for cash, except that if there is no effective registration statement registering for resale the shares underlying the warrants available after November 30, 2008, then the warrant may be exercised on a cashless basis.  The warrant includes standard minority investor rights, including but not limited to anti-dilution rights.

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A copy of the Warrant is filed as Exhibit 10.8 to this Report and is incorporated herein by this reference. The description of the Warrant in this Report is qualified in its entirety by the terms of the Warrant.

Item 9.01Financial Statements and Exhibits

(d)Exhibits:

Exhibit No	Description
10.1	Credit Agreement by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation and RO Associates and GVEC Resource IV Inc dated November 30, 2007.
10.2	Security Agreement between EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.3	Patent Security Agreement between EMRISE Corporation, RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.4	Trademark Security Agreement between EMRISE Corporation, EMRISE Electronics Corporation and RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.5	Revolver Loan Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.6	Term Loan A Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.7	Term Loan B Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.8	Warrant issued to Private Equity Management Group LLC dated November 30, 2007.
10.10	Guaranty dated November 30, 2007 by and between XCEL Japan Ltd. and GVEC Resource IV Inc.

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10.11	Guaranty dated November 30, 2007 by and among Emrise Electronics Ltd., XCEL Power Systems, Ltd. Pascall Electronic (Holdings) Limited, Pascall Electronics Limited, Belix Would Components Ltd. and The Belix Company Ltd. and GVEC Resource IV Inc.
10.12	Composite Debenture dated November 30, 2007 by and among Emrise Electronics Ltd., XCEL Power Systems, Ltd. Pascall Electronic (Holdings) Limited, Pascall Electronics Limited, Belix Would Components Ltd. and The Belix Company Ltd. and GVEC Resource IV Inc.
10.13	Share Charge dated November 30, 2007 by and between Emrise Electronics Corporation and GVEC Resource IV Inc.
10.14	Guaranty dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc.
10.15	Agreement For The Pledge Of Account Of Financial Instruments Relating To Shares Of CXR Anderson Jacobson SAS dated November 30, 2007 by and between Emrise Corporation and GVEC Resource IV Inc.
10.16	Convention de Nantissement de fonds de commerce dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc.
10.17	Going Concern Pledge (English Translation of Convention de Nantissement de fonds de commerce dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc. filed as Exhibit 10.16 to this Report.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EMRISE CORPORATION
Dated: December 6, 2007	By:	/s/ D. JOHN DONOVAN
		D. John Donovan, Vice President of Finance and Administration (principal financial officer)

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INDEX TO EXHIBITS ATTACHED TO THIS REPORT

Exhibit No.	Description
10.1	Credit Agreement by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation and RO Associates and GVEC Resource IV Inc dated November 30, 2007.
10.2	Security Agreement between EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.3	Patent Security Agreement between EMRISE Corporation, RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.4	Trademark Security Agreement between EMRISE Corporation, EMRISE Electronics Corporation and RO Associates Incorporated and GVEC Resource IV Inc dated November 30, 2007.
10.5	Revolver Loan Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.6	Term Loan A Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.7	Term Loan B Note dated November 30, 2007 executed by EMRISE Corporation, Emrise Electronics Corporation, CXR Larus Corporation and RO Associates Incorporated in favor of GVEC Resource IV Inc.
10.8	Warrant issued to Private Equity Management Group LLC dated November 30, 2007.
10.10	Guaranty dated November 30, 2007 by and between XCEL Japan Ltd. and GVEC Resource IV Inc.
10.11	Guaranty dated November 30, 2007 by and among Emrise Electronics Ltd., XCEL Power Systems, Ltd. Pascall Electronic (Holdings) Limited, Pascall Electronics Limited, Belix Would Components Ltd. and The Belix Company Ltd. and GVEC Resource IV Inc.
10.12	Composite Debenture dated November 30, 2007 by and among Emrise Electronics Ltd., XCEL Power Systems, Ltd. Pascall Electronic (Holdings) Limited, Pascall Electronics Limited, Belix Would Components Ltd. and The Belix Company Ltd. and GVEC Resource IV Inc.

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10.13	Share Charge dated November 30, 2007 by and between Emrise Electronics Corporation and GVEC Resource IV Inc.
10.14	Guaranty dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc.
10.15	Agreement For The Pledge Of Account Of Financial Instruments Relating To Shares Of CXR Anderson Jacobson SAS dated November 30, 2007 by and between Emrise Corporation and GVEC Resource IV Inc.
10.16	Convention de Nantissement de fonds de commerce dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc.
10.17	Going Concern Pledge (English Translation of Convention de Nantissement de fonds de commerce dated November 30, 2007 by and between CXR Anderson Jacobson, SAS and GVEC Resource IV Inc. filed as Exhibit 10.16 to this Report.)

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EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

by and among

EMRISE CORPORATION

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

GVEC RESOURCE IV INC.

as the Arranger and Agent

Dated as of November 30, 2007

1.	DEFINITIONS AND CONSTRUCTION		1
	1.1	Definitions	1
	1.2	Accounting Terms	1
	1.3	Code	1
	1.4	Construction	1
	1.5	Schedules and Exhibits	2
	1.6	Currency Conversion	2
2.	LOAN AND TERMS OF PAYMENT		2
	2.1	Making of Loans	2
	2.2	Term Loans	3
	2.3	Borrowing Procedures	4
	2.4	Payments	7
	2.5	Overadvances	10
	2.6	Interest: Rates, Payments, and Calculations	10
	2.7	Cash Management	11
	2.8	Crediting Payments	12
	2.9	Designated Account	12
	2.10	[Intentionally Omitted]	12
	2.11	Fees	12
	2.12	[Intentionally Omitted]	13
	2.13	Joint and Several Liability of Borrowers	13
	2.14	Registered Notes	15
3.	CONDITIONS; TERM OF AGREEMENT		16
	3.1	Conditions Precedent to the Initial Extension of Credit	16
	3.2	Conditions Precedent to all Extensions of Credit; Special Conditions Precedent to Term Loan B	16
	3.3	Term	18
	3.4	Effect of Termination	19
	3.5	Early Termination by Borrowers	19
	3.6	Conditions Subsequent to Extensions of Credit	19
4.	REPRESENTATIONS AND WARRANTIES		21
	4.1	No Encumbrances	21
	4.2	Accounts	21
	4.3	Inventory	21
	4.4	Equipment	21
	4.5	Location of Inventory and Equipment	21
	4.6	Inventory Records	21
	4.7	State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims	22
	4.8	Due Organization and Qualification; Subsidiaries	22
	4.9	Due Authorization; No Conflict	23
	4.10	Litigation	23

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	4.11	No Material Adverse Change	23
	4.12	Fraudulent Transfer	24
	4.13	Employee Benefits	24
	4.14	Environmental Condition	24
	4.15	Intellectual Property	25
	4.16	Leases	26
	4.17	Deposit Accounts and Securities Accounts	26
	4.18	Complete Disclosure	27
	4.19	Indebtedness	27
	4.20	Regulation U	27
	4.21	Taxes	27
	4.22	Compliance with Law, Etc	27
	4.23	Adverse Agreements, Etc	28
	4.24	Permits, Etc	28
	4.25	Insurance	28
	4.26	Employee and Labor Matters	28
	4.27	Material Contracts	29
	4.28	Capacity	29
	4.29	Investment Company Acts	29
	4.30	The IFN Credit Facility	29
	4.31	The Lloyds Credit Facility	29
	4.32	The Wells Fargo Credit Facility	29
5.	AFFIRMATIVE COVENANTS		29
	5.1	Accounting System	30
	5.2	Collateral Reporting	30
	5.3	Financial Statements, Reports, Certificates	30
	5.4	Appraisal	30
	5.5	Inspection	30
	5.6	Maintenance of Properties	30
	5.7	Taxes	30
	5.8	Insurance	31
	5.9	Location of Inventory and Equipment	31
	5.10	Compliance with Laws	31
	5.11	Leases	32
	5.12	Existence	32
	5.13	Environmental	32
	5.14	Disclosure Updates	32
	5.15	Control Agreements	32
	5.16	Assignment of Proceeds	32
	5.17	Employee Benefits	33
	5.18	Formation of Subsidiaries	33
	5.19	Adequate Reserves	34
	5.20	Designated Payments	34
6.	NEGATIVE COVENANTS		34

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	6.1	Indebtedness	34
	6.2	Liens	35
	6.3	Restrictions on Fundamental Changes	35
	6.4	Disposal of Assets	35
	6.5	Change Name	35
	6.6	Nature of Business	35
	6.7	Prepayments and Amendments	36
	6.8	Change of Control	36
	6.9	Consignments	36
	6.10	Distributions	36
	6.11	Accounting Methods	36
	6.12	Investments	36
	6.13	Transactions with Affiliates	37
	6.14	Use of Proceeds	37
	6.15	Inventory and Equipment with Bailees	37
	6.16	Financial Covenants	37
	6.17	No Transactions Prohibited Under ERISA; Unfunded Liability	40
	6.18	Salaries	41
	6.19	Obtaining of Permits, Etc	41
	6.20	UK Subsidiaries	41
	6.21	Changes to Accounts	41
7.	EVENTS OF DEFAULT		41
8.	THE LENDER GROUP’S RIGHTS AND REMEDIES		43
	8.1	Rights and Remedies	43
	8.2	Remedies Cumulative	44
9.	TAXES AND EXPENSES		44
10.	WAIVERS; INDEMNIFICATION; RELEASE		45
	10.1	Demand; Protest; etc	45
	10.2	The Lender Group’s Liability for Collateral	45
	10.3	Costs and Expenses	45
	10.4	Indemnification	45
11.	NOTICES		46
12.	CHOICE OF LAW AND VENUE; JUDICIAL REFERENCE; WAIVER OF JURY TRIAL; SERVICE OF PROCESS		47
13.	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS		49
	13.1	Assignments and Participations	49
	13.2	Successors	53
14.	AMENDMENTS; WAIVERS		53

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	14.1	Amendments and Waivers	53
	14.2	No Waivers; Cumulative Remedies	54
15.	AGENT; THE LENDER GROUP		54
	15.1	Appointment and Authorization of Agent	54
	15.2	Delegation of Duties	55
	15.3	Liability of Agent	55
	15.4	Reliance by Agent	55
	15.5	Notice of Default or Event of Default	56
	15.6	Credit Decision	56
	15.7	Costs and Expenses; Indemnification	57
	15.8	Agent in Individual Capacity	57
	15.9	Successor Agent	58
	15.10	Lender in Individual Capacity	58
	15.11	Withholding Taxes	58
	15.12	Collateral Matters	62
	15.13	Restrictions on Actions by Lenders; Sharing of Payments	62
	15.14	Agency for Perfection	63
	15.15	Payments by Agent to the Lenders	63
	15.16	Concerning the Collateral and Related Loan Documents	63
	15.17	Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	63
	15.18	Several Obligations; No Liability	64
	15.19	No Consequential Damages	65
16.	GENERAL PROVISIONS		65
	16.1	Effectiveness	65
	16.2	Section Headings	65
	16.3	Interpretation	65
	16.4	Severability of Provisions	65
	16.5	Counterparts; Electronic Execution	65
	16.6	Revival and Reinstatement of Obligations	66
	16.7	Confidentiality	66
	16.8	Integration	66
	16.9	Parent as Agent for Borrowers	67
	16.10	Compliance With USA Patriot Act	67

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of November 30, 2007, by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), GVEC RESOURCE IV INC., a company organized under the laws of the British Virgin Islands, as the arranger and administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”), EMRISE CORPORATION, a Delaware corporation (“Parent”), and each of Parent’s Subsidiaries identified on the signature pages hereof (such Subsidiaries, together with Parent, are referred to hereinafter each individually as a “Borrower,” and collectively, jointly and severally, as the “Borrowers”).

INTRODUCTION

All defined terms not otherwise defined above or in this Introduction Statement are as defined in Schedule 1.1 or as defined elsewhere herein.

The Borrowers have requested that the Lenders agree to make available a secured credit facility of up to $23,000,000, the proceeds of which will be used to pay certain specified obligations of the Borrowers, to fund general working capital requirements and to make certain specified acquisitions.

Subject to the terms and conditions set forth herein, Agent is willing to act as agent for the Lenders and each Lender is willing to make loans to the Borrowers in an aggregate amount not in excess of its Commitment hereunder.

Accordingly, the parties hereto hereby agree as follows:

1.DEFINITIONS AND CONSTRUCTION.

1.1Definitions. Except as otherwise provided herein, capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

1.2Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Borrowers” or the term “Parent” is used in respect of a financial covenant or a related definition, it shall be understood to mean Parent and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise.

1.3Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein, provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Divisions of the Code, the definition of such term contained in Article 9 shall govern.

1.4Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to

the singular include the plural, the terms “includes” and “including” are not limiting, the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or,” and any provision that is set forth herein as part of a list or series is to be construed in a manner that does not result in duplication of any other provision in such list or series. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than contingent indemnification Obligations. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

1.5Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

1.6Currency Conversion. All references to monetary amounts herein shall be to U.S. Dollars. With respect to any amounts not denominated in U.S. Dollars and required for or related to any term or definition hereunder, Borrower shall convert such non-U.S. Dollar denominated amounts to the amount of U.S. Dollars that would be required to purchase such non-U.S. Dollar denominated amounts on the applicable date of determination based on the rate at which any applicable currency may be exchanged into Dollars, as set forth on such date on the relevant Bloomberg Key Cross Currency Rates screen at or about 11:00 A.M., London time, on such date.

2.LOAN AND TERMS OF PAYMENT.

2.1Making of Loans.

(a)Making of Advances. Subject to the terms and conditions of this Agreement, on and after the Closing Date and prior to the Revolver Maturity Date, each Lender agrees to make such portion of the Advances to Borrowers in an amount equal to such Lender’s Pro Rata Share of the then extant Revolver Commitment; provided that Advances shall be made in an aggregate amount not to exceed the lesser of: (y) the Maximum Revolver Amount; and (z) the Borrowing Base.

(b)Nothing to the contrary in this Section 2.1 notwithstanding, Agent shall have the right to establish reserves in such amounts as Agent in its Permitted Discretion shall

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deem necessary or appropriate, against the Borrowing Base, including reserves with respect to (i) sums that Borrowers are required to pay by any section of this Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, environmental liabilities, or, in the case of leased assets, rents or other amounts payable under such leases) and have failed to pay, and (ii) amounts owing by Borrowers to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent, likely would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral, to the extent that the sums and amounts described in clauses (i) and (ii) above exceed $250,000 in the aggregate.

(c)The outstanding unpaid principal amount of Advances and all accrued and unpaid interest on Advances shall be due and payable on the earlier of:  (i) the Revolver Maturity Date; and (ii) the termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All Advances and all accrued and unpaid interest on Advances shall constitute Obligations. Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time prior to the Revolver Maturity Date. Borrowers may only request Advances of at least $100,000 and integral multiples of $100,000 in excess thereof, except in the case of an Advance which, if made, would result in the aggregate amount of Advances equaling the lesser of (y) the Maximum Revolver Amount and (z) the Borrowing Base.

2.2Term Loans.

(a)Subject to the terms and conditions of this Agreement, on the Closing Date, each Lender agrees to make term loans (collectively, the “Term Loan A”) to Borrowers in an amount equal to such Lender’s Pro Rata Share of the Term Loan A Commitment.

(b)Subject to the terms and conditions of this Agreement, from time to time during the Term Loan B Commitment Period, each Lender agrees to make term loans (collectively, the “Term Loan B”) to Borrowers in an aggregate amount equal to such Lender’s Pro Rata Share of the Term Loan B Commitment.

(c)All amounts outstanding under the Term Loans shall constitute Obligations. No portion of the Term Loans which is repaid or prepaid may be reborrowed. The Term Loans shall be repaid in installments as set forth in the tables set forth in subsections (d) and (e) below; provided, however, that the outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loans shall be due and payable on November 30, 2010 or such earlier date of termination of this Agreement, whether by prepayment, or by acceleration.

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

(i)commencing December 1, 2008, and continuing on the first day of each of the 11 consecutive months thereafter, equal installments of $50,000; and

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(ii)commencing on December 1, 2009, and continuing on the first day of each of the 11 consecutive months thereafter, equal installments of $120,000.

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

(i)commencing on June 1, 2009 and continuing on the first day of each of the 5 consecutive months thereafter, installments equal to the quotient of (x) 10% of the aggregate Term Loan B Amount (as of the Term Loan B Commitment Expiry Date) and (y) six; and

(ii)commencing on December 1, 2009, and continuing on the first day of each of the 11 consecutive months thereafter, installments equal to the quotient of (x) 20% of the aggregate Term Loan B Amount (as of the Term Loan B Commitment Expiry Date) and (y) twelve.

2.3Borrowing Procedures.

(a)Generally.

(i)Each Borrowing of a Loan shall be made by an irrevocable written request by an Authorized Person delivered to Agent. Such notice must be received by Agent no later than 10:00 a.m. (California time) on the Closing Date, or if applicable, thereafter on the Business Day that is one (1) Business Day prior to the requested Funding Date specifying (i) the pertinent Loan, and (ii) the requested Funding Date, which shall be a Business Day. At Agent’s election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time. In such circumstances, Borrowers agree that any such telephonic notice will be confirmed in writing within 24 hours of the giving of such telephonic notice, but the failure to provide such written confirmation shall not affect the validity of the request. Each request for the Borrowing of an Advance shall be accompanied by the concurrent delivery to Agent of a complete and executed Borrowing Base Certificate.

(ii)Unless Agent receives notice from a Lender prior to 9:00 a.m. (California time) on the date of a Borrowing that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each applicable Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers on such date a corresponding amount. If and to the extent any applicable Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrowers such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender’s portion of the Loan on the date of Borrowing for all purposes of this

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Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loan comprising such Borrowing.

(iii)Borrowers shall borrow pursuant to Section 2.2(a) an amount equal to the Term Loan A Commitment in a single drawing.

(iv)Subject to the other conditions set forth in this Section 2.3(a), each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent’s receipt of such funds, Agent shall make such funds available to Administrative Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Administrative Borrower’s Designated Account; provided, however, that Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any portion of the applicable Loan if Agent shall have actual knowledge that one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived.

(v)Agent shall not be obligated to transfer to a Defaulting Lender any payments respecting the Loan made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender’s portion of the Loan was funded by the other members of the Lender Group). Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable portion of the Loan and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrowers of their duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Administrative Borrower at its option, upon written notice to Agent, to arrange for a substitute Lender to assume the Total Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations without any

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premium or penalty of any kind whatsoever; provided however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Group’s or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.

(b)Notation. Agent shall record on its books the principal amount of each of the Advances and Term Loans owing to each Lender, and the interests therein of each Lender, from time to time and such records shall, absent manifest error, gross negligence or willful misconduct on the part of Agent, conclusively be presumed to be correct and accurate.

(c)Lenders’ Failure to Perform. All Loans shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares and subject to Sections 2.1 and 2.2. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any portion of any Loan (or other extensions of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

(d)Settlement. It is agreed that each Lender’s funded portion of the Advances is intended by the Lenders to equal, at all times, to such Lender’s Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Advances shall take place on a periodic basis in accordance with the following provisions:

(i)Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent, by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 11:00 a.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein:  (y) if a Lender’s balance of the Advances exceeds such Lender’s Pro Rata Share of the Advances as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances, and (z) if a Lender’s balance of the Advances is less than such Lender’s Pro Rata Share of the Advances as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances. Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to

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recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii)In determining whether a Lender’s balance of the Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest and fees payable by Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement.

(iii)During the period between Settlement Dates, each Lender (subject to the effect of agreements between Agent and individual Lenders) with respect to the Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Agent or the Lenders, as applicable.

2.4Payments.

(a)Payments by Borrowers.

(i)Except as otherwise expressly provided herein, all payments by Borrowers shall be made in Dollars to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 5:00 p.m. (California time) on the date specified herein. Any payment so received shall be deemed to have been received the following Business Day. Any payment received by Agent later than 5:00 p.m. (California time) but before 5:00 p.m. (California time) the following Business Day shall be deemed to have been received on the second following Business Day, and any applicable interest or fee shall continue to accrue until such following (or, if applicable, second following) Business Day.

(ii)Unless Agent receives notice from Administrative Borrower prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(b)Apportionment and Application.

(i)Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in clause (b)(iv) below and in the other Loan Documents (including agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Revolver Lenders, the Term Loan A Lenders and the Term Loan B Lenders, as applicable (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender), and payments of fees and

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expenses (other than fees or expenses that are for Agent’s separate account, after giving effect to any agreements between Agent and individual Lenders) shall be apportioned ratably among the Revolver Lenders, the Term Loan A Lenders and the Term Loan B Lenders, as applicable.

(ii)At any time following the occurrence of an Event of Default and at the election of Agent, all proceeds of Collateral and other payments received by Agent shall be applied against such portions of the Obligations and in such order as Agent may elect.

(iii)Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(d).

(iv)Except as provided in clause (b)(ii) above, this Section 2.4(b) shall not apply to any payment made by Borrowers to Agent for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement.

(v)For purposes of the foregoing, “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, except to the extent that default or overdue interest (but not any other interest) and loan fees, each arising from or related to a default, are disallowed in any Insolvency Proceeding.

(vi)In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern.

(vii)The provisions of this Section 2.4 constitute an agreement among Borrowers and the Lender Group as to the application of payments, Collections and proceeds of Collateral and do not constitute any subordination of (x) any Obligations or (y) the right to payment of any Obligations.

(c)Mandatory Prepayments.

(i)Except as otherwise may be agreed to by Agent and the Borrowers, immediately upon any voluntary or involuntary sale or disposition by Borrowers or any of their Subsidiaries of property or assets (other than sales or dispositions of Inventory or Equipment in the ordinary course of business), Borrowers shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such sales or dispositions to the extent that the aggregate amount of Net Cash Proceeds received by Borrowers and their Subsidiaries (and not paid to Agent as a prepayment of the Obligations) for all such sales or dispositions shall exceed $150,000 in any fiscal year. Nothing contained in this subclause (ii) shall permit Borrowers or

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any of their Subsidiaries to sell or otherwise dispose of any property or assets other than in accordance with Section 6.4.

(ii)Immediately upon the receipt by Borrowers or any of their Subsidiaries of any Extraordinary Receipts in excess of $200,000 in the aggregate in any fiscal year of Parent ending after the Closing Date, Borrowers shall prepay the outstanding Obligations in accordance with clause (d) below in an amount equal to 100% of such Extraordinary Receipts in excess of $200,000 in the aggregate in any fiscal year of Parent ending after the Closing Date, net of any reasonable expenses incurred in collecting such Extraordinary Receipts.

(d)Application of Payments.

(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 against the remaining installments of principal of the Term Loans (if any) in the inverse order of maturity.

(ii)Each prepayment pursuant to subclauses (c)(i) above and (c)(ii) with respect to insurance proceeds and condemnation awards related to a casualty or loss of Collateral shall be applied as follows:

(1)if the proceeds are from any sale or disposition of any Accounts or Inventory or any insurance policy or condemnation award with respect to Inventory, such proceeds shall be applied against the remaining installments of principal of the Term Loans (if any) in the inverse order of maturity; and

(2)if the proceeds are from the sale or disposition of any other assets or any insurance policy or condemnation award not described in clause (1) above, such proceeds shall be applied against the remaining installments of principal of the Term Loans (if any) in the inverse order of maturity; provided, however, that, except during the continuation of a Default or an Event of Default, such proceeds shall not be required to be so applied to the extent that such proceeds are used to replace, repair, or restore the properties or assets in respect of which such proceeds were paid if (i) the amount of proceeds received in respect of such sales, dispositions, insurance policies, or condemnation awards are less than $5,000,000 in the aggregate during the term of this Agreement, (ii) Borrowers deliver a certificate to Agent within 10 days after such sale or 30 days after the date of such loss, destruction, or taking, as the case may be, stating that such proceeds shall be used to replace, repair, or restore such properties or assets within a period specified in such certificate not to exceed the earlier of (x) 180 days after the receipt of such proceeds and (y) the Maturity Date (which certificate shall set forth estimates of the proceeds to be so expended), and (iii) such proceeds are immediately deposited in a Deposit Account subject to a Control Agreement. If all or any portion of such proceeds not so applied to the prepayment of the Obligations in

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accordance with this clause (2) are not used in accordance with the preceding sentence within the period specified in the relevant certificate furnished pursuant hereto, such remaining portion shall be applied to the Obligations in accordance with this clause (2) on the last day of such specified period.

(e)Optional Prepayment of Term Loans. The Borrowers shall have the privilege of making full or partial prepayments of the Term Loans, upon five (5) Business Days prior written notice to the Agent; provided that any such prepayment shall be accompanied by the applicable Prepayment Premium as provided in the Fee Letter. Any optional prepayment of the Term Loans shall be in a minimum amount of $1,000,000. Each such prepayment of the Term Loans shall be applied against the remaining installments of principal of the applicable Term Loan in the inverse order of maturity. Notwithstanding anything to contrary contained herein, the Term Loan B Commitment shall be reduced by an amount equal to the amount that the principal balance of the Term Loan B is prepaid pursuant to this Section 2.4(e).

2.5Overadvances. If, at any time or for any reason, the aggregate amount of outstanding principal of the Advances accrued and payable by Borrowers to the Lender Group pursuant to Section 2.1 is greater than any of the limitations set forth in Section 2.1 (an “Overadvance”), Borrowers immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the aggregate amount of the then outstanding Advances. In addition, Borrowers hereby promise to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full as and when due and payable under the terms of this Agreement and the other Loan Documents.

2.6Interest:  Rates, Payments, and Calculations.

(a)Interest Rates. Except as provided in clause (b) below, (i) Term Loans shall bear interest at a per annum rate equal to the Base Rate plus 4.25 percentage points, and (ii) all other Obligations shall bear interest at a per annum rate equal to the Base Rate plus 1.25 percentage points.

The foregoing notwithstanding, at no time shall: (x) any portion of the Term Loans bear interest on the Daily Balance thereof at a per annum rate less than 12.50%, and (y) any portion of any other Obligations bear interest on the Daily Balance thereof at a per annum rate less than 9.50%. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be deemed increased to the minimum rate.

(b)Default Rate. Upon the occurrence and during the continuation of an Event of Default (and at the election of Agent or the Required Lenders), all Obligations shall bear interest on the Daily Balance thereof at a per annum rate equal to 4 percentage points above the per annum rate otherwise applicable hereunder.

(c)Payment. Except as provided to the contrary in Section 2.11, interest and all fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Any interest or fees not paid when

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due shall be compounded and shall accrue interest at the rate then applicable to the applicable Loan.

(d)Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. Any change in the Base Rate shall take effect on the first day of the month following such change and shall continue in effect for the balance of such month.

(e)Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7Cash Management.

(a)Borrowers shall (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each a “Cash Management Bank”), and shall request in writing and otherwise take such reasonable steps to ensure that all Account Debtors of the Borrowers and the Guarantors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to Borrowers or such Guarantors) into a bank account in Agent’s name (a “Cash Management Account”) at one of the Cash Management Banks.

(b)Each Cash Management Bank shall establish and maintain Cash Management Agreements with Agent and Borrowers, in form and substance reasonably acceptable to Agent. Each such Cash Management Agreement shall provide, among other things, that (i) the Cash Management Bank will comply with any instructions originated by Agent directing the disposition of the funds in such Cash Management Account without further consent by Borrowers or any Guarantor, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and (iii) it will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent’s Account; provided, that, to the extent there are no Advances then outstanding and no other amounts then due and payable, so long as no Event of Default has occurred and is continuing, the Agent shall direct that such amounts be deposited in the Designated Account.

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(c)So long as no Event of Default has occurred and is continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to Agent, and (ii) prior to the time of the opening of such Cash Management Account, a Borrower, as applicable, and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. Borrowers shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 45 days of written notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent’s reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent’s liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in Agent’s reasonable judgment.

(d)The Cash Management Accounts shall be cash collateral accounts subject to Control Agreements.

2.8Crediting Payments. The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item received by Agent into the Agent’s Account on a Business Day on or before 5:00 p.m. (California time) shall be deemed to have been received the following Business Day. If any payment item is received into the Agent’s Account on a non-Business Day or after 5:00 p.m. (California time) on a Business Day but before 5:00 p.m. (California time) the following Business Day, it shall be deemed to have been received by Agent as of the opening of business on the second following Business Day.

2.9Designated Account. Agent is authorized to make the Loans under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d). Administrative Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Loans requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.10[Intentionally Omitted]

2.11Fees. Borrowers shall pay to Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

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2.12[Intentionally Omitted]

2.13Joint and Several Liability of Borrowers.

(a)Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b)Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including, without limitation, any Obligations arising under this Section 2.13), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.

(c)If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation.

(d)The Obligations of each Borrower under the provisions of this Section 2.13 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstances whatsoever.

(e)Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Loans made under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement). Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly

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or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.13 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.13, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.13 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.13 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or any Agent or Lender.

(f)Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g)Each Borrower waives all rights and defenses arising out of an election of remedies by Agent or any Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement against such Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise.

(h)In the event that any Obligations are at any time secured by Real Property, each Borrower hereby waives all rights and defenses that such Borrower may have as a result thereof. This means, among other things:

(i)Agent and Lenders may collect from such Borrower without first foreclosing on any Real Property or other Collateral pledged by Borrowers.

(ii)If Agent or any Lender forecloses on any Real Property pledged by Borrowers:

(A)The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B)Agent and Lenders may collect from such Borrower even if Agent or Lenders, by foreclosing on the Real Property, has destroyed any right such Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by Real Property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

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(i)The provisions of this Section 2.13 are made for the benefit of Agent, Lenders and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of any such Agent, Lender, successor or assign first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.13 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by any Agent or Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.13 will forthwith be reinstated in effect, as though such payment had not been made.

(j)Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or Lender hereunder or under any other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

(k)Each Borrower hereby agrees that, after the occurrence and during the continuance of any Default or Event of Default, the payment of any amounts due with respect to the indebtedness owing by any Borrower to any other Borrower is hereby subordinated to the prior payment in full in cash of the Obligations. Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b).

2.14Registered Notes. Agent, acting solely for this purpose as a non-fiduciary agent on behalf of Borrowers (or in the case of an assignment not recorded in the Register in accordance with Section 13.1(i), the assigning Lender) agrees to record the Commitments and Loans on the Register (or in the case of an assignment not recorded in the Register in accordance with Section 13.1(i), a Related Party Register). Each Commitment and Loan recorded on the Register (or Related Party Register) may not be evidenced by promissory notes other than

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Registered Notes (as defined below). Upon the registration of each Commitment and Loan, each Borrower agrees, at the request of any Lender, to execute and deliver to such Lender a promissory note, in conformity with the terms of this Agreement, in registered form to evidence such Registered Loan, in form and substance reasonably satisfactory to such Lender, and registered as provided in Section 13.1(i) (a “Registered Note”), payable to the order of such Lender or its registered assigns and otherwise duly completed. Once recorded on the Register (or Related Party Register), no Commitment or Loan may be removed from the Register (or Related Party Register) so long as it or they remain outstanding, and a Registered Note may not be exchanged for a promissory note that is not a Registered Note.

3.CONDITIONS; TERM OF AGREEMENT.

3.1Conditions Precedent to the Initial Extension of Credit. The obligation of each Lender to make its initial extension of credit provided for hereunder, is subject to the fulfillment, to the satisfaction of Agent and each Lender of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

3.2Conditions Precedent to all Extensions of Credit; Special Conditions Precedent to Term Loan B.

(a)Subject to Section 3.1, the obligation of the Lender Group (or any member thereof) to make any Advances or any portion of either Term Loan hereunder at any time (or to extend any other credit hereunder) shall be subject to the following conditions precedent:

(i)the representations and warranties contained in this Agreement and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(ii)no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof;

(iii)no injunction, writ, restraining order, or other order of any nature restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender, or any of their Affiliates;

(iv)no Material Adverse Change shall have occurred; and

(v)with respect to any Advance, a Borrowing Base Certificate.

(b)Subject to Sections 3.1 and 3.2(a), the obligation of the Term Loan B Lenders (or any member thereof) to make any portion of the Term Loan B hereunder during the Term Loan B Commitment Period shall be subject to the following additional conditions precedent:

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(i)the proceeds shall be used for the acquisition (whether by merger or otherwise) by any Borrower or any Subsidiary of the Borrower of eighty percent (80%) of the outstanding capital stock, membership interest,  partnership interest or other similar ownership interest of a Person which is engaged in a line of business similar to the business of such Borrower or such Subsidiary of the Borrower, or the purchase of all or substantially all of the assets owned by such Person;

(ii)Agent shall have received fifteen (15) days prior written notice of such proposed acquisition from the Acquiring Person;

(iii)such acquisition has been (A) approved by the board of directors or other appropriate governing body of the Person that is the subject of the acquisition or (B) agreed to by the requisite shareholders, members, partners or owners of the Person that is the subject of the acquisition, as required under applicable law or by the Governing Documents of such Person;

(iv)no Default or Event of Default shall have occurred and be continuing or would result after giving effect to such acquisition;

(v)such acquisition is undertaken in accordance with all applicable requirements of law;

(vi)if the consideration to be paid in connection with such acquisition includes an “earn out”, the applicable purchase agreement related to such acquisition includes a maximum dollar amount that may be payable pursuant to the “earn out” provisions;

(vii)Agent shall have received a pro forma balance sheet and income statements of the Acquiring Person and its Subsidiaries (after giving effect to the proposed acquisition) as of the then most recent fiscal quarter ended for which a financial statement has been delivered in accordance with Section 5.3, together with a certificate of the Acquiring Person, in form and substance satisfactory to Agent, demonstrating that upon the consummation of such acquisition, the Borrowers will be in compliance with the financial covenants contained in Section 6.16, such evidence of compliance to be in form and substance reasonably satisfactory to Agent;

(viii)Agent shall have received financial statements which include balance sheets, income statements and statements of cash flows of the Person being acquired, (A) in the same form and substance as those required to be delivered by the Borrowers under Section 5.3, to the extent such are available, or (B) if unavailable, in the form relied upon by the Acquiring Person in connection with such transaction, in each case for the previous three (3) fiscal years, or if less than three (3) years are existing, for such shorter period of time as does exist;

(ix)Agent shall have received lien searches or other evidence satisfactory to Agent that the shares or other interest in the Person, or the assets of the Person, which is the subject of the proposed acquisition are (or will be at the closing of the proposed acquisition) free and clear of all Liens, except Permitted Liens, including, without limitation, with respect to the acquisition of shares or other equity interests, free of any restrictions on

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transfer other than restrictions applicable to the sale of securities under federal and state securities laws and regulations generally;

(x)the aggregate consideration to be paid in connection with such acquisition shall not exceed the greater of (A) the greater of (i) three (3) times EBITDA (adjusted for actual expenses incurred in connection with such acquisition) calculated in accordance with the terms hereof, for the most recent fiscal year ended, as reflected in the financial statements referred to in clause (vii) above and (ii) an amount equal to the pro forma Borrowing Base for the Person that is the subject of the acquisition, calculated in accordance with the terms hereof as of the date of such proposed acquisition and (B) an amount mutually agreed upon by the Borrowers, Agent and the Lender Group taking into consideration the totality of all information relating to the Person that is the subject of the acquisition, which agreement by Agent and the Lender Group shall not be unreasonably withheld;

(xi)Agent shall have received the favorable legal opinion of the applicable Borrower’s counsel in form and substance satisfactory to Agent;

(xii)Agent shall have received a true and correct copy of the Acquisition Documents, as well as evidence of all requisite approvals and permits, all of which shall be in form and substance satisfactory to Agent; and

(xiii)Agent shall have received such other documents and instruments as Agent in its reasonable discretion may require.

3.3Term.

(a)This Agreement shall continue in full force and effect for a term ending on November 30, 2010 (the “Maturity Date”), unless terminated earlier in accordance with the terms of this Agreement. The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement pursuant to Section 8.1.

(b)Notwithstanding the provisions of subsection (a), all Obligations (other than the principal amount of the Term Loans), including accrued interest to the date of principal payment, shall be due and payable no later than November 30, 2008 (the “Revolver Maturity Date”); provided, however, that by written notice to Agent (the “Revolver Renewal Notice”), Borrowers may elect to require the Lenders to renew the Revolver Commitment two times, each for a period of one year, so long as each of the following conditions precedent have fulfilled, to the satisfaction of Agent, in which case such renewal date shall become the new Revolver Maturity Date:

(i)Administrative Borrower delivers the Revolver Renewal Notice to Agent no later than forty-five (45) days prior to the then extant Revolver Maturity Date;

(ii)No Default or Event of Default has occurred since the Closing Date (whether or not then continuing); and

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(iii)Concurrently with Administrative Borrower’s delivery of the Revolver Renewal Notice, Borrower pays Agent a renewal fee (the “Revolver Renewal Fee”) equal to one percent (1%) of the Maximum Revolver Amount.

Each Borrower hereby acknowledges and agrees that each Revolver Renewal Fee is fully earned and non-refundable on the date such fee is due and payable as provided in this Section 3.3(b).

3.4Effect of Termination. On the date of termination of this Agreement, all Obligations immediately shall become due and payable without notice or demand. No termination of this Agreement, however, shall relieve or discharge Borrowers of their duties, Obligations, or covenants hereunder or under any other Loan Document and the Agent’s Liens in the Collateral shall remain in effect until all Obligations have been paid in full and the Lender Group’s obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent’s Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations.

3.5Early Termination by Borrowers. Borrowers have the option, at any time upon 30 days prior written notice by Administrative Borrower to Agent, to terminate this Agreement by paying to Agent, in cash, the Obligations in full including, without limitation, any amounts due under the Fee Letter. If Administrative Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Commitments shall terminate and Borrowers shall be obligated to repay in cash the Obligations in full on the date set forth as the date of termination of this Agreement in such notice.

3.6Conditions Subsequent to Extensions of Credit.

(a)The obligation of the Lender Group (or any member thereof) to continue to make Advances or lend any portion of the Term Loans (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto (unless such date is extended in writing by Agent), of each of the conditions subsequent set forth below (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):

(i)Within thirty (30) days after the Closing Date, the Borrowers and their Subsidiaries, as applicable, shall have entered into Control Agreements with Lloyds TSB Bank plc, in form and substance satisfactory to Agent, with respect to all accounts of the Borrowers and their UK Subsidiaries located in the United Kingdom.

(ii)Within ninety (90) days after the Closing Date, all Accounts of the Borrowers located in the United States shall be payable to accounts at East West Bank and the Borrowers shall have entered into Control Agreements with East West Bank, in form and substance satisfactory to Agent, with respect to such accounts.

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(iii)To the extent not paid directly by the Agent, within five (5) Business Days after the Closing Date, the IFN Credit Facility shall have been paid in full and Agent shall have received evidence satisfactory to it that (A) the IFN Credit Facility has been paid off in full, (B) all Liens associated with the IFN Credit Facility have been released or discharged and (C) all accounts of the French Subsidiary with IFN Finance S.A. have been closed.

(iv)To the extent not paid directly by the Agent, within five (5) Business Days after the Closing Date, the Lloyds Credit Facility shall have been paid in full and Agent shall have received evidence satisfactory to it that (A) the Lloyds Credit Facility has been paid off in full and (B) all Liens associated with the Lloyds Credit Facility have been released or discharged.

(v)To the extent not paid directly by the Agent, within two (2) Business Days after the Closing Date, the Wells Fargo Credit Facility shall have been paid in full and Agent shall have received evidence satisfactory to it that (A) the Wells Fargo Credit Facility has been paid off in full and (B) all Liens associated with the Wells Fargo Credit Facility have been released or discharged.

(vi)Within seven (7) Business Days after the Closing Date, Agent or its counsel shall have received certificates representing the Pledged Interests (as such term is defined in the Security Agreement), the Securities (as such term is defined in the UK Share Pledge) and the Charged Shares (as such term is defined in the UK Debenture) in each case with an executed stock power or powers with respect thereto endorsed in blank.

(b)The obligation of the Lender Group (or any member thereof) to continue to provide the Borrowers with any Borrowing Base credit with respect to Eligible Finished Goods Inventory or Eligible Raw Materials Inventory stored at the locations noted in Schedule 4.5 is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below:

(i)Within thirty (30) days after the Closing Date, Agent shall have received Collateral Access Agreements, all in form and substance satisfactory to Agent, with respect to the locations noted in Schedule 4.5 Part I.

(ii)Within seventy-five (75) days after the Closing Date, Agent shall have received Collateral Access Agreements, all in form and substance satisfactory to Agent, with respect to the locations noted in Schedule 4.5 Part II.

If the Agent does not receive Collateral Access Agreements within the time periods noted in this Section 3.6(b), any inventory stored at such locations shall cease to be deemed “Eligible Finished Goods Inventory” or “Eligible Raw Materials Inventory,” as applicable, for purposes of determination of the Borrowing Base; provided, however, that Inventory stored at locations for which Collateral Access Agreements have not been provided may still be deemed “Eligible Finished Goods Inventory” or “Eligible Raw Materials Inventory,” as applicable, if the aggregate amount of all Inventory (including, without limitation, Eligible Finished Goods Inventory and Eligible Raw Materials Inventory) stored at any one location does not exceed $100,000 and such

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inventory otherwise qualifies as “Eligible Finished Goods Inventory” or “Eligible Raw Materials Inventory.”

4.REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

4.1No Encumbrances. Each Borrower has good and indefeasible title to, or a valid leasehold interest in, their personal property assets and good and marketable title to, or a valid leasehold interest in, their Real Property, in each case, free and clear of Liens except for Permitted Liens.

4.2Accounts. As to each Account that is identified by Borrowers as an Eligible Account in a borrowing base report submitted to Agent, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or, if applicable, the rendition of services to such Account Debtor in the ordinary course of Borrowers’ business, (b) owed to a Borrower without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and (c) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Accounts.

4.3Inventory. As to each item of Inventory that is identified by Borrowers as Eligible Inventory in a borrowing base report submitted to Agent, such Inventory is (a) of good and merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more of the excluding criteria set forth in the definition of Eligible Inventory.

4.4Equipment. Each item of Equipment of Borrowers and their Subsidiaries is used or held for use in their business and is in good working order, ordinary wear and tear and damage by casualty excepted.

4.5Location of Inventory and Equipment. The Inventory and Equipment (other than vehicles or Equipment out for repair) of Borrowers and the UK Subsidiaries are not stored with a bailee, warehouseman, or similar party except as set forth in Schedule 4.5 and are located only at, or in-transit between, the locations identified on Schedule 4.5 (as such Schedule may be updated pursuant to Section 5.9).

4.6Inventory Records. Each Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its Inventory and the book value thereof in all material respects.

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4.7State of Incorporation; Location of Chief Executive Office; Organizational Identification Number; Commercial Tort Claims.

(a)The name and jurisdiction of organization of each Borrower and each of its Subsidiaries is set forth on Schedule 4.7(a).

(b)The chief executive office of each Borrower and, as of the Closing Date,  each of its Subsidiaries, is located at the address indicated on Schedule 4.7(b).

(c)Each Borrower’s and each of its Subsidiaries’ organizational identification number, if any, is identified on Schedule 4.7(c).

(d)As of the Closing Date, Borrowers and their Subsidiaries do not hold any commercial tort claims.

4.8Due Organization and Qualification; Subsidiaries.

(a)Each Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state or jurisdiction where the failure to be so qualified reasonably could be expected to result in a Material Adverse Change.

(b)Set forth on Schedule 4.8(b) is a complete and accurate description of the authorized capital Stock of each Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 4.8(b), there are no subscriptions, options, warrants, or calls relating to any shares of each Borrower’s capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Borrower is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock.

(c)Set forth on Schedule 4.8(c) is a complete and accurate list of each Borrower’s direct and indirect Subsidiaries, showing: (i) the jurisdiction of its organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by the applicable Borrower. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable.

(d)There are no subscriptions, options, warrants, or calls relating to any shares of any Borrower’s Subsidiaries’ capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Borrower or any of its respective Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of any Borrower’s Subsidiaries’ capital Stock or any security convertible into or exchangeable for any such capital Stock.

(e)Other than the UK Guarantor Subsidiaries, no other UK Subsidiary has assets in excess of $5,000.

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4.9Due Authorization; No Conflict.

(a)As to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Borrower.

(b)As to each Borrower, the execution, delivery, and performance by such Borrower of this Agreement and the other Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation applicable to any Borrower, the Governing Documents of any Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on any Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of any Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of any Borrower, other than Permitted Liens, or (iv) require any approval of any Borrower’s interest holders or any approval or consent of any Person under any material contractual obligation of any Borrower, other than consents or approvals that have been obtained and that are still in force and effect.

(c)Other than the filing of financing statements and the recording in the US Copyright Office or the US Patent and Trademark Office of a notice of Agent’s security interest in pertinent Intellectual Property, the execution, delivery, and performance by each Borrower of this Agreement and the other Loan Documents to which such Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than consents or approvals that have been obtained and that are still in force and effect.

(d)As to each Borrower, this Agreement and the other Loan Documents to which such Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(e)The Agent’s Liens are validly created, perfected and first priority Liens, subject only to Permitted Liens.

4.10Litigation. There are no material actions, suits, or proceedings pending or, to the best knowledge of Borrowers, threatened against Borrowers, or any of their Subsidiaries, as applicable, except for (a) matters that are fully covered by insurance (subject to customary deductibles) and (b) matters arising after the Closing Date that, if decided adversely to Borrowers, or any of their Subsidiaries, as applicable, reasonably could not be expected to result in a Material Adverse Change.

4.11No Material Adverse Change. All financial statements of Borrowers and their Subsidiaries that have been delivered by Borrowers to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrowers’ and their Subsidiaries’ financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with

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respect to Borrowers and their Subsidiaries since the date of the latest consolidated financial statements submitted to Agent on or before the Closing Date.

4.12Fraudulent Transfer.

(a)Each Borrower is Solvent.

(b)No transfer of property is being made by any Borrower or any Subsidiary and no obligation is being incurred by any Borrower or any Subsidiary in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrowers or their Subsidiaries.

(c)None of the Borrowers at this time contemplates filing a petition in bankruptcy or for an arrangement or reorganization or similar proceeding under any law of any jurisdiction, nor, to the knowledge of the Borrowers, is the subject of any actual, pending or threatened bankruptcy, insolvency or similar proceedings under any law of any jurisdiction.

4.13Employee Benefits. Except as set forth on Schedule 4.13, none of Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates maintains, contributes to, or has any liability (contingent or otherwise) with respect to, any Benefit Plan or Multiemployer Plan. Each of Borrowers, their Subsidiaries and their ERISA Affiliates have satisfied the minimum funding standards of ERISA and the IRC with respect to each Benefit Plan to which it is obligated to contribute and has made all contributions required under the terms of each Multiemployer Plan to which it is obligated to contribute. No ERISA Event has occurred nor has any other event occurred that may result in an ERISA Event that reasonably could be expected to result in a Material Adverse Change. None of Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates is required to provide security to any Benefit Plan under Section 401(a)(29) of the IRC. Each Plan has been maintained in all material respects with ERISA and the IRC, to the extent applicable, and other applicable law.

4.14Environmental Condition.

(a)The operations of the Borrowers and their respective Subsidiaries are in compliance with all applicable limitations, restrictions, conditions, standards, prohibitions, requirements and obligations of Environmental Laws and related orders of any court or other Governmental Authority;

(b)There are not any existing, pending or, to the knowledge of any Borrower, threatened actions, suits, claims, investigations, inquiries or proceedings by or before any court or any other Governmental Authority directed against Borrowers or their respective Subsidiaries that pertain or relate to (i) any remedial obligations under any applicable Environmental Law, (ii) violations by any Borrower or any of its Subsidiaries of any Environmental Law, (iii) personal injury or property damage claims relating to a Release of chemicals or Hazardous Materials, or (iv) response, removal, or remedial costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) or any similar state law;

(c)With respect to permits and licenses, (i) all licenses, permits, consents, or other approvals required under Environmental Laws that are necessary to the operations of any

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Borrower or any of its Subsidiaries have been obtained and are in full force, and effect and no Borrower has knowledge of any basis for revocation or suspension of any such licenses, permits, consents or other approvals; (ii) all operations of each Borrower and its Subsidiaries were constructed and have been operated in accordance with the representations and conditions made or set forth in the permit applications and the permits for each Borrower and its Subsidiaries; and (iii) each Borrower and its Subsidiaries have been operated in compliance with such permits, licenses, consents, or approvals, and at the production levels or emission levels specified in such permits, licenses, consents, or approvals;

(d)No portion of any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries is part of a site listed on the National Priorities List under CERCLA or any similar ranking or listing under any state law;

(e)All Hazardous Materials generated by each Borrower and its Subsidiaries have been transported, stored, treated and disposed of by carriers or treatment, storage and disposal facilities authorized or maintaining valid permits under all applicable Environmental Laws;

(f)To the knowledge of the Borrowers and their Subsidiaries, no Person has disposed or Released any Hazardous Materials on, at, or under any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries;

(g)No Borrower or any of its Subsidiaries is currently operating or required to operate under any compliance order, schedule, decree or agreement, any consent decree, order or agreement, or corrective action decree, order or agreement issued or entered into under any Environmental Law; and

(h)There are no underground storage tanks located on, at or under any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries.

4.15Intellectual Property.

(a)Each Borrower and each Subsidiary of a Borrower owns or has a right to use all Patents, Copyrights, Trademarks and Licenses that are necessary to the conduct of its business as currently conducted. Attached hereto as Schedule 4.15 (as updated semi-annually) is a true, correct, and complete listing of Patents, Copyrights and Trademarks as to which each Borrower and each Subsidiary of a Borrower is the owner or is an exclusive licensee (collectively, the “Scheduled Intellectual Property Collateral”).

(b)Except as set forth in Schedule 4.15:

(i)Each Borrower and each Subsidiary of a Borrower is the sole owner or is an exclusive licensee of its Scheduled Intellectual Property Collateral, free and clear of any Lien (other than any Permitted Lien) without the payment of any monies or royalty except with respect to off-the-shelf software;

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(ii)Each Borrower and each Subsidiary of a Borrower has taken, and will continue to take, all actions which are necessary or advisable to acquire and protect its Scheduled Intellectual Property Collateral, including, as applicable: (x) registering all Copyrights included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment, in the U.S. Copyright Office, and (y) registering all Patents and Trademarks included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment, in the United States Patent and Trademark Office;

(iii)Each Borrower’s and each Subsidiary of a Borrower’s rights in the Scheduled Intellectual Property Collateral are valid and enforceable;

(iv)No Borrower or Subsidiary of a Borrower has received any material demand, claim, notice or inquiry from any Person in respect of the Scheduled Intellectual Property Collateral which challenges, threatens to challenge or inquiries as to whether there is any basis to challenge, the validity of, the rights of Borrowers and their Subsidiaries in or the right of Borrowers and their Subsidiaries to use, any such Scheduled Intellectual Property Collateral, and Borrowers and their Subsidiaries know of no basis for any such challenge;

(v)Borrowers and their Subsidiaries have not received any written notice of any violation or infringement of any proprietary rights of any other Person that could reasonably be expected to result in a Material Adverse Change;

(vi)Borrowers and their Subsidiaries have not granted any license with respect to any Scheduled Intellectual Property Collateral to any Person; and

(vii)Borrowers and their Subsidiaries are not pursuing any claims or causes of actions against any Person for infringement of the Scheduled Intellectual Property Collateral that could reasonably be expected to result in a Material Adverse Change.

4.16Leases. Set forth on Schedule 4.16 is a complete and accurate list of all leases for Equipment and Real Property entered into by each Borrower or any of its Subsidiaries, showing: (i) the date on which such lease was entered into, (ii) the amount of rent due under such lease, (iii) the date on which such rent is due, and (iv) the term of such lease and any renewal or other extension options. Borrowers enjoy peaceful and undisturbed possession under all leases of Equipment and Real Property material to their business and to which they are parties or under which they are operating, and all of such material leases are valid and subsisting and no material default by Borrowers exists under any of them. Borrowers’ Subsidiaries enjoy peaceful and undisturbed possession under all leases of Equipment and Real Property material to the business of the Borrowers and their Subsidiaries, taken as a whole, and to which they are parties or under which they are operating, and all of such material leases are valid and subsisting and no default material to the business of the Borrowers and their Subsidiaries, taken as a whole, by any of Borrowers’ Subsidiaries exists under any of them.

4.17Deposit Accounts and Securities Accounts. Set forth on Schedule 4.17 is a listing of all of Borrowers’ and their Subsidiaries’ Deposit Accounts and Securities Accounts,

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including, with respect to each bank or securities intermediary (a) the name and address of such Person, and (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person. Subject to Section 6.12, each of the Deposit Accounts and Securities Accounts set forth on Schedule 4.17 is the subject of a Control Agreement.

4.18Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information hereafter furnished by or on behalf of Borrowers or their Subsidiaries in writing to Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information not misleading at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Parent’s good faith estimate of its consolidated future performance for the periods covered thereby.

4.19Indebtedness. Set forth on Schedule 4.19 is a true and complete list of all Indebtedness of each Borrower and each Subsidiary of each Borrower outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date, and such Schedule accurately reflects the aggregate principal amount of such Indebtedness as of the Closing Date.

4.20Regulation U. No action has been taken or is currently planned by Borrowers or any of their Subsidiaries which would cause this Agreement or any of the other Loan Documents to violate Regulation U or any other regulation of the Board of Governors of the Federal Reserve System, or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect. Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock as one of its important activities and, except as may be expressly agreed to and documented between Borrower and Agent, none of the proceeds of the Advances or the Term Loans will be used directly or indirectly for such purpose.

4.21Taxes. Each Borrower and its Subsidiaries have timely filed all federal, state, foreign (if applicable) and local tax returns and other reports which are required by law to be filed by them, and each Borrower and its Subsidiaries have paid or caused to be paid to the proper authorities when due all taxes (including, without limitation, payroll and other employment related taxes) that are due and payable, except only for taxes subject to a Permitted Protest.

4.22Compliance with Law, Etc. None of the Borrowers is in violation of its Governing Documents. No Borrower is in violation of any law (including, without limitation, any Environmental Laws), rule, regulation, judgment or order of any Governmental Authority applicable to it or any of its property or assets, or any term of any agreement or instrument binding on or otherwise affecting it or any of its properties, which violation could reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Change. No Default or Event of Default has occurred and is continuing.

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4.23Adverse Agreements, Etc. No Borrower is a party to any agreement or instrument, or subject to any Governing Document restriction or any judgment, order, regulation, ruling or other requirement of a court or other Governmental Authority, which has resulted in, or could reasonably be expected to result in, a Material Adverse Change.

4.24Permits, Etc. Each Borrower has been, and is, in compliance with, all permits, licenses, authorizations, approvals, entitlements and accreditations required for such Person lawfully to own, lease, manage or operate, or to acquire, each business currently owned, leased, managed or operated, or to be acquired, by such Person, other than those permits, licenses, authorizations, entitlements and accelerations, the lack of which, or the failure to be in compliance with which, could not reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Change. As of the Closing Date, no condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license, authorization, approval, entitlement or accreditation, and, to the knowledge of any Borrower, there is no claim that any thereof is not in full force and effect in all material respects.

4.25Insurance. As of the Closing Date, each Borrower and each of their respective Subsidiaries keeps its property adequately insured and maintains (i) insurance to such extent and against such risks, including fire, as is customary with similarly situated companies in the same or similar businesses, (ii) worker’s compensation insurance in the amount required by applicable law, (iii) public liability insurance, which shall include product liability insurance, in the amount customary with similarly situated companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it, and (iv) such other insurance as may be required by law or as may be required by Agent, in the exercise of its reasonable judgment (including, without limitation, against larceny, embezzlement or other criminal misappropriation and medical malpractice and professional liability insurance). Such policies are in full force and effect on the Closing Date, and no Borrower nor any of their respective Subsidiaries has received notice of cancellation with respect to any such policy.

4.26Employee and Labor Matters. There is (i) no unfair labor practice complaint pending or, to the knowledge of any Borrower, threatened against any Borrower or any Subsidiary of any Borrower before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Borrower or any Subsidiary of any Borrower which arises out of or under any collective bargaining agreement which has had or could reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Change, (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened against any Borrower or any Subsidiary of any Borrower, other than employee grievances arising in the ordinary course of business which could not reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Change or (iii) as of the Closing Date, to the knowledge of any Borrower, no union representation question existing with respect to the employees of any Borrower or any Subsidiary of any Borrower and no union organizing activity taking place with respect to any of the employees of any Borrower or any Subsidiary of any Borrower. As of the Closing Date, no any Borrower or any Subsidiary of any Borrower has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of any Borrower or any Subsidiary of any Borrower have not

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been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. All material payments due from any Borrower or any Subsidiary of any Borrower on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of any Borrower or any Subsidiary of any Borrower, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. As of the Closing Date, no Borrower nor any of their respective Subsidiaries is a party to any collective bargaining agreement.

4.27Material Contracts. Each of the Borrowers has heretofore made available to Agent true and complete copies of all of the Material Contracts to which any Borrower is a party, each of which is set forth on Schedule 4.28. As of the Closing Date, to the knowledge of any Borrower, all of the Material Contracts are valid and in full force and effect (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws or by general equitable principles relating to enforceability, and except to the extent any such Material Contract shall have expired in accordance with its terms), and no breach or default, or event which, with notice or lapse of time or both, would constitute a breach or default by any Borrower exists, with respect thereto. No Borrower has received any notice of cancellation or non-renewal of any of the Material Contracts. As of the Closing Date, to the knowledge of any Borrower, none of the Material Contracts nor any rights thereunder will be impaired by the consummation of the transactions contemplated by this Agreement.

4.28Capacity. Each Borrower and each of its Subsidiaries, by reason of its own business and financial experience has the “capacity to protect its own interests” in connection with the transactions contemplated by this Agreement within the meaning of Section 25118(f)(2) and Section 25118(g) of the California Corporations Code.

4.29Investment Company Acts. None of the Borrowers or any of its Subsidiaries is an “investment company” or an “affiliated person” or “promoter” of, or “principal underwriter” of or for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended.

4.30The IFN Credit Facility. The total outstanding amount of the IFN Credit Facility as of the Closing Date is €845,688.

4.31The Lloyds Credit Facility. The total outstanding amount of the Lloyds Credit Facility as of the Closing Date is the sum of $968,209.49 and £808,512.14.

4.32The Wells Fargo Credit Facility. The total outstanding amount of the Wells Fargo Credit Facility as of the Closing Date is $1,926,773.53.

5.AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers shall and shall cause each of their respective Subsidiaries to do all of the following (provided, however, that only Administrative Borrower is

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required to comply with Section 5.2 and Section 5.3, in each case on behalf of itself and the other Borrowers):

5.1Accounting System. Maintain a system of accounting that enables Borrowers to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrowers also shall keep a reporting system that shows all additions, sales, claims, returns and allowances with respect to their sales.

5.2Collateral Reporting. Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the reports set forth on Schedule 5.2 at the times specified therein. In addition, each Borrower agrees to reasonably cooperate fully with Agent to maintain a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth above.

5.3Financial Statements, Reports, Certificates. Deliver to Agent, with copies to each Lender, each of the financial statements, reports, or other items set forth on Schedule 5.3 at the time specified herein. In addition, Parent agrees that no Subsidiary of Parent will have a fiscal year end different from that of Parent, other than as required by applicable law.

5.4Appraisal. Permit Agent to have the Inventory reappraised by an appraisal company selected by Agent from time to time after the Closing Date for the purpose of redetermining the Borrowing Base.

5.5Inspection. Permit Agent, each Lender, and each of their duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, its officers and employees at such reasonable times and intervals as Agent or any such Lender may designate and, so long as no Default or Event of Default exists and is continuing, with reasonable prior notice to Administrative Borrower.

5.6Maintenance of Properties. Maintain and preserve all of its properties which are necessary or useful in the proper conduct to its business in good working order and condition, ordinary wear, tear, and casualty excepted (and except where the failure to do so could not be reasonably expected to result in a Material Adverse Change), and comply in all material respects at all times with the provisions of all material leases to which it is a party as lessee, so as to prevent any material loss or forfeiture thereof or thereunder.

5.7Taxes. Pay or discharge, and cause each of its Subsidiaries to pay or discharge, when due, (a) all taxes, assessments and charges of any Governmental Authority (including, without limitation, F.I.C.A., F.U.T.A., state disability, and federal, state and local income taxes) levied or imposed upon it or upon its income or profits or upon any properties belonging to it (including, without limitation, the Collateral), prior to the date on which penalties attach thereto and (b) all taxes required to be withheld by it; provided, that no Borrower or Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim that is the subject of a Permitted Protest. Borrowers will and will cause their Subsidiaries to, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that the applicable Borrower or

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Subsidiary has made such payments or deposits. Each Borrower will timely file, and will cause its Subsidiaries to timely file, all tax returns required to be filed in connection with the payment of taxes required by this Section 5.7. No Borrower will change its federal tax employer identification number without providing not less than thirty (30) days advance written notice to Agent, or revoke, alter or amend any Tax Information Authorization (on IRS Form 8821 or otherwise) given to Agent.

5.8Insurance.

(a)At Borrowers’ expense, maintain insurance respecting their and their Subsidiaries’ assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrowers also shall maintain business interruption, public liability, and product liability insurance, as well as insurance against larceny and embezzlement. All such policies of insurance shall be in such amounts as are ordinarily maintained by Persons engaged in the same or similar businesses and with such insurance companies as are reasonably satisfactory to Agent. Other than business interruption insurance policies, Borrowers shall deliver or has delivered certificates of insurance evidencing all required coverages to Agent with an endorsement naming Agent as loss payee (under a satisfactory lender’s loss payable endorsement) or additional insured, as appropriate. Each certificate of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days’ prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever.

(b)Administrative Borrower shall give Agent prompt notice of any loss of the Collateral exceeding $100,000 covered by such insurance. Borrowers shall have the exclusive right to adjust any such losses payable under any such insurance policies which are less than $100,000. In the case of any losses of the Collateral payable under such insurance exceeding $100,000, to the extent permitted under such insurance policies, Agent shall have the exclusive right to adjust any losses payable under any such insurance policies (other than business interruption insurance policies), without any liability to Borrowers whatsoever in respect of such adjustments. Any monies received as payment for any loss under any insurance policy mentioned above (other than liability or business interruption insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain of Collateral, shall be paid over to Agent and applied as provided in Section 2.4(d)(ii).

5.9Location of Inventory and Equipment. Keep the Inventory and Equipment only at the locations identified on Schedule 4.5 or in transit from one such location to another; provided, however, that Administrative Borrower may amend Schedule 4.5 so long as such amendment occurs by written notice to Agent not less than 30 days prior to the date on which such Inventory or Equipment is moved to such new location, so long as such new location is within the original country of origin (i.e. continental United States, France, United Kingdom or Japan), and so long as, at the time of such written notification, if such location is not owned by a Borrower, the applicable Borrower provides Agent a Collateral Access Agreement with respect thereto.

5.10Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations,

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and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.

5.11Leases. Pay, or cause to be paid, when due all rents and other amounts payable under any material leases to which any Borrower or any Subsidiary of a Borrower is a party or by which any Borrower’s or any of its Subsidiaries’ properties and assets are bound.

5.12Existence. At all times preserve and keep in full force and effect each Borrower’s and each of its Subsidiaries’ valid existence and good standing and any rights and franchises, in each case, material to the Borrowers’ businesses taken as a whole.

5.13Environmental.

(a)Keep any property owned, leased or operated by any Borrower or any Subsidiary of a Borrower free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned, leased or operated by any Borrower or any Subsidiary of a Borrower and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly, but in any event within 5 days of its receipt thereof, provide Agent with written notice of any of the following:  (i) notice that an Environmental Lien has been filed against any of the real or personal property of any Borrower that is not a Permitted Lien, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against any Borrower or any Subsidiary of a Borrower which could reasonably be expected to cause a Material Adverse Change, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change.

5.14Disclosure Updates. Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to the Lender Group contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the facts and circumstances in which such statement was made or known by any Borrower or any Subsidiary of a Borrower to exist at the time such statement was made.

5.15Control Agreements. Take all reasonable steps in order for Agent to obtain control in accordance with Sections 8106, 9104, 9105, 9106, and 9107 of the Code with respect to (subject to the proviso contained in Section 6.12) all of its Securities Accounts, Deposit Accounts, electronic chattel paper, investment property, and letter of credit rights.

5.16Assignment of Proceeds. Execute and deliver to Agent any and all additional documents that Agent may request in its Permitted Discretion, in form and substance reasonably satisfactory to Agent, providing for the assignment of all proceeds to Agent arising from any license or royalty agreement entered into by any Borrower with respect to such Borrower’s General Intangibles.

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5.17Employee Benefits.

(a)Deliver to Agent:  (i) promptly, and in any event within 10 Business Days after Borrowers or their Subsidiaries know or have reason to know that an ERISA Event has occurred that reasonably could be expected to result in a Material Adverse Change, a written statement of the chief financial officer of such Borrower or such Subsidiary describing such ERISA Event and any action that is being taking with respect thereto by Borrowers or their Subsidiaries or their ERISA Affiliates, and any action taken or threatened by the IRS, Department of Labor, or PBGC; Borrowers and Subsidiaries shall be deemed to know all facts known by the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any event within three Business Days after the filing thereof with the IRS, a copy of each funding waiver request filed with respect to any Benefit Plan and all communications received by Borrowers or their Subsidiaries or, to the knowledge of Borrowers or their Subsidiaries, any ERISA Affiliate with respect to such request, and (iii) promptly, and in any event within three Business Days after receipt by Borrowers or their Subsidiaries or, to the knowledge of Borrowers or their Subsidiaries or any of their ERISA Affiliates, of the PBGC’s intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice.

(b)Cause to be delivered to Agent, upon Agent’s request, each of the following:  (i) a copy of each Plan (or, where any such plan is not in writing, complete description thereof) (and if applicable, related trust agreements or other funding instruments) and all amendments thereto, all material written interpretations thereof and material written descriptions thereof that have been distributed to employees or former employees of Borrowers or their Subsidiaries; (ii) the most recent determination letter issued by the IRS with respect to each Benefit Plan; (iii) for the three most recent Plan years, annual reports on Form 5500 Series required to be filed with any governmental agency for each Benefit Plan; (iv) all actuarial reports prepared for the last three Plan years for each Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the most recent annual contributions required to be made by Borrowers or their Subsidiaries or any of their ERISA Affiliates to each such plan and copies of the collective bargaining agreements requiring such contributions; (vi) any information that has been provided to Borrowers or their Subsidiaries or any of their ERISA Affiliates regarding withdrawal liability under any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual payments made to former employees of Borrowers or its Subsidiaries under any Retiree Health Plan.

5.18Formation of Subsidiaries. At the time that any Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Borrower shall (a), if such new Subsidiary is a Domestic Subsidiary, cause such new Subsidiary to provide to Agent a joinder to this Agreement, together with such other security documents (including, if requested by Agent, Mortgages with respect to any Real Property of such new Subsidiary), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance satisfactory to Agent (including being sufficient to grant Lender a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Agent a pledge agreement and appropriate certificates and powers or financing statements, hypothecating all of the direct or beneficial ownership interest in any such new Subsidiary, in form and substance satisfactory to Agent, and (c) provide to Agent all other documentation, including one or more opinions of counsel satisfactory to Agent, which in its opinion is appropriate with respect to the execution

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and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all property subject to a Mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 5.18 shall be a Loan Document.

5.19Adequate Reserves. Set up and maintain on its books such reserves as may be required by GAAP with respect to doubtful accounts and all taxes, assessments, charges, levies and claims with respect to its business, and include such reserves in its quarterly as well as year-end financial statements.

5.20Designated Payments. Within seven (7) Business Days of the Closing Date, provide evidence satisfactory to Agent that all the Designated Payments referenced in Schedule 3.1(r) have been paid in accordance with the Designated Payments List.

6.NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations, Borrowers will not and will not permit any of their respective Subsidiaries to do any of the following without the prior written consent of Agent:

6.1Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a)Indebtedness evidenced by this Agreement and the other Loan Documents,

(b)Indebtedness set forth on Schedule 4.19,

(c)Permitted Purchase Money Indebtedness,

(d)Indebtedness relating to letters of credit, guaranties and performance bonds of Borrower in an aggregate principal amount at any time not to exceed the lesser of (x) $1,000,000 and (y) the amount of Advances which the Borrower would be able to borrow at such time under Section 2.1(c),

(e)other unsecured Indebtedness in an aggregate principal amount at any time outstanding not to exceed $250,000,

(f)refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) through (e) of this Section 6.1 or this Section 6.1(f) (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended or add one or more Borrowers as liable with respect thereto if such additional Borrowers were not liable with respect to the original Indebtedness, (ii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions, that, taken as a whole, are materially more burdensome or restrictive to the applicable Borrower, (iii) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the

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refinancing, renewal, or extension Indebtedness must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness, and (iv) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended,

(g)endorsement of instruments or other payment items for deposit, and

(h)Indebtedness comprising Permitted Investments.

6.2Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 6.1(e) and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness).

6.3Restrictions on Fundamental Changes.

(a)Enter into any merger or consolidation, reorganization or recapitalization (other than any merger (x) between any Domestic Subsidiary and Parent in which Parent is the surviving corporation or (y) between two Foreign Subsidiaries) not otherwise permitted under the Loan Documents, or reclassify its Stock other than pursuant to the terms of such Stock;

(b)Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution),

(c)Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its assets, or

(d)Other than Permitted Dispositions, suspend or go out of a substantial portion of its or their business.

6.4Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of the assets of any Borrower or any Subsidiary of a Borrower.

6.5Change Name. Change any Borrower’s or any of its Subsidiaries’ name, organizational identification number, state of organization, or organizational identity; provided, however, that a Borrower or a Subsidiary of a Borrower may change its name upon at least 30 days’ prior written notice by Administrative Borrower to Agent of such change and so long as, at the time of such written notification, such Borrower or such Subsidiary provides any financing statements necessary to perfect and continue perfected the Agent’s Liens.

6.6Nature of Business. Make any change in the principal nature of their business.

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6.7Prepayments and Amendments. Except in connection with a refinancing permitted by Section 6.1(e):

(a)optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Borrower or a Subsidiary of a Borrower, other than the Obligations in accordance with this Agreement,

(b)make any payment on account of Indebtedness that has been contractually subordinated in right of payment if such payment is not permitted at such time under the subordination terms and conditions, or

(c)directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Section 6.1(b).

6.8Change of Control. Cause or permit, directly or indirectly, any Change of Control.

6.9Consignments. Consign any of their Inventory or sell any of their Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale.

6.10Distributions. Other than distributions or declaration and payment of dividends by a Borrower to another Borrower, by any Subsidiary to a Borrower, or by any Foreign Subsidiary to any other Subsidiary, make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of any Stock of any Borrower, of any class, whether now or hereafter outstanding.

6.11Accounting Methods. Modify or change their fiscal year or materially modify or change their method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Borrowers’ accounting records in a manner that would result in said accounting firm or service bureau declining to provide Agent information regarding Borrowers’ and their Subsidiaries’ financial condition.

6.12Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or incur any liabilities (including contingent obligations) other than Indebtedness permitted under Section 6.1 for or in connection with any Investment; provided, however, that Borrowers shall not have Permitted Investments (other than in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in an aggregate amount in excess of $50,000 in each of the United States, the United Kingdom, France and Japan at any one time unless Administrative Borrower and the applicable securities intermediary or bank have entered into Control Agreements (or have otherwise provided sufficient security to Agent’s satisfaction) governing such Permitted Investments in order to perfect (and further establish) the Agent’s Liens in such Permitted Investments. Subject to the foregoing proviso, Borrowers shall not establish or maintain any Deposit Account or Securities Account unless Agent shall have received a Control Agreement in respect of such Deposit Account or Securities Account.

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6.13Transactions with Affiliates. Directly or indirectly enter into or permit to exist any transaction with any Affiliate of any Borrower except for transactions that (a) are upon fair and reasonable terms, and (b) are no less favorable to Borrowers or their respective Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate.

6.14Use of Proceeds. Use the proceeds of:  (a) the Advances for any purpose other than (i) on the Closing Date, to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, (ii) as of the Closing Date and thereafter, for working capital, and (iii) after the Closing Date, consistent with the terms and conditions hereof, for Borrowers’ lawful and permitted purposes, (b) the Term Loan A for any purpose other than, as of the Closing Date, to pay certain specified obligations of Borrower, including the Existing Credit Facilities, and (c) the Term Loan B for any purpose other than, as of the Closing Date and thereafter, to fund the purchase price of Permitted Acquisitions.

6.15Inventory and Equipment with Bailees. Except as set forth on Schedule 4.5, store any Inventory or Equipment of Borrowers at any time now or hereafter with a bailee, warehouseman, or similar party without Agent’s prior written consent.

6.16Financial Covenants.

(a)Minimum EBITDA. Fail to achieve EBITDA, measured on a fiscal quarter-end basis, of not less than the required amount set forth in the following table for the applicable period set forth opposite thereto; provided, however, that any EBITDA in excess of the amounts required in any given quarter may be used to satisfy future minimum EBITDA quarterly requirements and provided, further, that such excess shall not be applied to any quarter more than twelve (12) months following the end of the quarter as to which such excess existed:

Applicable Period	Applicable Amount
For Borrowers’ fiscal quarter ending in December 2007	$	866,000
For Borrowers’ fiscal quarter ending in March 2008	$	(50,000	)
For Borrowers’ fiscal quarter ending in June 2008	$	400,000
For Borrowers’ fiscal quarter ending in September 2008	$	625,000
For Borrowers’ fiscal quarter ending in December 2008	$	1,116,000
For Borrowers’ fiscal quarter ending in March 2009	$	792,000
For Borrowers’ fiscal quarter ending in June 2009	$	1,056,000

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For Borrowers’ fiscal quarter ending in September 2009	$	1,069,000
For Borrowers’ fiscal quarter ending in December 2009	$	1,419,000
For Borrowers’ fiscal quarter ending in March 2010	$	1,130,000
For Borrowers’ fiscal quarter ending in June 2010	$	1,403,000
For Borrowers’ fiscal quarter ending in September 2010	$	1,528,000
For Borrowers’ fiscal quarter ending in December 2010	$	2,033,000

(b)Debt Service Coverage Ratio. Fail to achieve a Debt Service Coverage Ratio, 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 or 1.10:1.00, whichever is less; provided, however, that any EBITDA in excess of the amounts required in any given quarter may be used to satisfy future Debt Service Coverage Ratio requirements and provided, further, that such excess shall not be applied to any quarter more than twelve (12) months following the end of the quarter as to which such excess existed:

Applicable Period	Fixed Charge Coverage Ratio
For Borrowers’ fiscal quarter ending in December 2007	0.40:1.00
For Borrowers’ fiscal quarter ending in March 2008	(0.26):1.00
For Borrowers’ fiscal quarter ending in June 2008	0.44:1.00
For Borrowers’ fiscal quarter ending in September 2008	0.85:1.00
For Borrowers’ fiscal quarter ending in December 2008	1.20:1.00
For Borrowers’ fiscal quarter ending in March 2009	0.68:1.00
For Borrowers’ fiscal quarter ending in June 2009	1.09:1.00
For Borrowers’ fiscal quarter ending in September 2009	1.09:1.00

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For Borrowers’ fiscal quarter ending in December 2009	1.15:1.00
For Borrowers’ fiscal quarter ending in March 2010	1.04:1.00
For Borrowers’ fiscal quarter ending in June 2010	1.45:1.00
For Borrowers’ fiscal quarter ending in September 2010	1.62:1.00
For Borrowers’ fiscal quarter ending in December 2010	0.36:1.00

(c)Maximum Leverage Ratio. Fail to achieve a Leverage Ratio, measured quarterly at the end of each calendar quarter, of not greater than the amount set forth in the following table for the applicable period set forth opposite thereto:

Applicable Period	Maximum Leverage Ratio
For Borrowers’ fiscal quarter ending in December 2007	1.25:1.00

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For Borrowers’ fiscal quarter ending in March 2008	1.25:1.00
For Borrowers’ fiscal quarter ending in June 2008	1.25:1.00
For Borrowers’ fiscal quarter ending in September 2008	1.25:1.00
For Borrowers’ fiscal quarters ending in December 2008 and each fiscal quarter thereafter	1.25:1.00

(d)Capital Expenditures. Make Capital Expenditures (in the aggregate for the Borrowers and their Subsidiaries) in any fiscal year in excess of $500,000.

6.17No Transactions Prohibited Under ERISA; Unfunded Liability.

(a)Directly or indirectly

(i)engage in any prohibited transaction which is reasonably likely to result in a civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;

(ii)permit to exist with respect to any Benefit Plan any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived;

(iii)fail to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan;

(iv)terminate any Benefit Plan where such event would result in any liability of Borrowers, any Subsidiary of a Borrower or any of their ERISA Affiliates under Title IV of ERISA which was not paid in connection with such termination;

(v)fail to make any required contribution or payment to any Multiemployer Plan;

(vi)fail to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment;

(vii)amend a Plan resulting in an increase in current liability for the Plan year such that any of Borrowers, any Subsidiary of a Borrower or any of their ERISA Affiliates is required to provide security to such Plan under Section 401(a)(29) of the IRC; or

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(viii)withdraw from any Multiemployer Plan where such withdrawal is reasonably likely to result in any liability of such entity under Title IV of ERISA;

which, individually or in the aggregate, results in or reasonably would be expected to result in a claim against or liability of any Borrower, any of their Subsidiaries or any of their ERISA Affiliates in excess of $100,000.

6.18Salaries. Pay excessive or unreasonable salaries, bonuses, commissions, consultant fees or other compensation..

6.19Obtaining of Permits, Etc. Each Borrower will obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, and take all necessary action to timely renew, all permits, licenses, authorizations, approvals, entitlements and accreditations, and file all reports required to be filed with any Governmental Authority, which are necessary in the proper conduct of its business, except for such permits, license, authorizations, approvals, entitlements and accreditations, the lack of which could not reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Change.

6.20UK Subsidiaries. Permit any UK Subsidiary, that is not a UK Guarantor Subsidiary, to have assets in excess of $5,000.

6.21Changes to Accounts. Make any changes or modifications (including, without limitation, to the signing authority of the Agent or its designees) with respect to any Deposit Accounts or other accounts (maintained with banks or lending institutions) of the Borrowers or their Subsidiaries located in the United States, the United Kingdom or Japan; provided, however, that during an Event of Default, Agent may make any changes or modifications it deems necessary to such Deposit Accounts or accounts without the prior consent of the Borrowers or their Subsidiaries.

7.EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

7.1If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, or (b) all or any portion of the principal of the Obligations);

7.2If Borrowers or any Subsidiary of any Borrower

(a)fail to perform or observe any covenant or other agreement contained in any of Sections 2.7, 5.5, 5.8, 5.10, 5.12, 5.14, 5.16, 5.20, 6.1 through 6.17, 6.20 or 6.21 of this Agreement;

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(b)fail to perform or observe any covenant or other agreement contained in any of Sections 5.6, 5.7, 5.9, 5.11, or 5.15 of this Agreement and such failure continues for a period of 20 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) written notice thereof is given to Administrative Borrower by Agent;

(c)fail to perform any covenant or other agreement contained in Sections 5.2 or 5.3 and such failure or neglect is not cured within 15 days after the date on which such failure or neglect first occurs;

(d)fail to perform any covenant or other agreement contained in Section 5.1 and such failure or neglect is not cured within 15 days after the date on which such failure or neglect first occurs; or

(e)fail to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents; in each case, other than any such covenant or agreement that is the subject of another provision of this Section 7 (in which event such other provision of this Section 7 shall govern), and such failure continues for a period of 20 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) written notice thereof is given to Administrative Borrower by Agent;

7.3If any material portion of the assets of any Borrower or any material portion of the assets of the Borrowers and their Subsidiaries, taken as a whole, is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person and the same is not discharged before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such property or asset is subject to forfeiture by such Borrower or the applicable Subsidiary;

7.4If an Insolvency Proceeding is commenced by any Borrower;

7.5If an Insolvency Proceeding is commenced against any Borrower or any Subsidiary of a Borrower and any of the following events occur:  (a) the applicable Borrower or Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof; provided, however, that, during the pendency of such period, Agent (including any successor agent) and each other member of the Lender Group shall be relieved of their obligations to extend credit hereunder, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, any Borrower or any Subsidiary of a Borrower, or (e) an order for relief shall have been issued or entered therein;

7.6If any Borrower or any Subsidiary of a Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

7.7If one or more judgments, orders, or awards involving an aggregate amount of $500,000 or more (except to the extent covered by insurance pursuant to which the insurer has

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accepted liability therefor in writing) shall be entered or filed against any Borrower or any Subsidiary of a Borrower or with respect to any of their respective assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by the applicable Borrower or the applicable Subsidiary;

7.8If there is a default in any agreement to which any Borrower or any Subsidiary of a Borrower is a party with one or more third Persons relative to Indebtedness of any Borrower involving in an amount of $500,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of the applicable Borrower’s or Subsidiary’s obligations thereunder;

7.9If any warranty, representation, statement, or Record made herein or in any other Loan Document or delivered to Lender in connection with this Agreement or any other Loan Document by any Borrower or Subsidiary thereof or any officer, employee or director of any Borrower or such Subsidiary, proves to have been untrue in any material respect when made;

7.10If any Acquiring Party shall breach its obligations under any of the Acquisition Documents;

7.11If the Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected (to the extent that perfection can be effected by the measures required to be taken under the Loan Documents for such purpose) and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement;

7.12A Material Adverse Change shall have occurred; or

7.13Any material provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Borrower or any Subsidiary of a Borrower, or a proceeding shall be commenced by any Borrower or any Subsidiary of a Borrower, or by any Governmental Authority having jurisdiction over any Borrower or any Subsidiary of a Borrower, seeking to establish the invalidity or unenforceability thereof.

8.THE LENDER GROUP’S RIGHTS AND REMEDIES.

8.1Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrowers:

(a)Declare all or any portion of the Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

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(b)Cease advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and the Lender Group;

(c)Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent’s Liens in the Collateral and without affecting the Obligations; and

(d)The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 7.4 or Section 7.5, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations then outstanding, together with all accrued and unpaid interest thereon and all fees and all other amounts due under this Agreement and the other Loan Documents, shall automatically and immediately become due and payable, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrowers.

8.2Remedies Cumulative. The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

9.TAXES AND EXPENSES.

If any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as and to the extent required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to any Borrower, may do any or all of the following:  (a) make payment of the same or any part thereof, (b) set up such reserves against the Borrowing Base as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply with Section 5.8 hereof, obtain and maintain insurance policies of the type described in Section 5.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing.

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10.WAIVERS; INDEMNIFICATION; RELEASE.

10.1Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of default or dishonor (other than any notice required under this Agreement), notice of payment and nonpayment (other than any notice required under this Agreement), nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any such Borrower may in any way be liable.

10.2The Lender Group’s Liability for Collateral. Each Borrower hereby agrees that:  (a) so long as the Lender Group complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for:  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.

10.3Costs and Expenses. The Borrowers shall pay on demand all costs and expenses, including reasonable attorneys’ fees, incurred by Agent and the Lenders in connection with the Obligations, this Agreement, the Loan Documents and any other document or agreement related hereto or thereto, and the transactions contemplated hereby, including all such costs, expenses and fees incurred in connection with the negotiation, preparation, execution, amendment, administration, performance, collection and enforcement of the Obligations and all such documents and agreements (including, without limitation, UCC and judgment and tax Lien searches). Without limiting the foregoing, the Borrowers shall pay all taxes (other than taxes based upon or measured by each Lender’s net income or any personal property tax), imposts, charges, duties and fees, if any, in connection with the issuance of any note described in Section 2.14, if any, and the filing and/or recording of any documents and/or financing statements.

10.4Indemnification. In addition to the payment of expenses pursuant to Section 10.3, each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or in connection with the monitoring of Borrowers’ or their Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, Borrowers shall have no obligation to any Indemnified Person under this Section 10.3 with

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respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11.NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Borrowers or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Administrative Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrowers in care of Administrative Borrower or to Agent, as the case may be, at its address set forth below:

If to Administrative Borrower:	Emrise Corporation
	9485 Haven Avenue, Suite 100
	Rancho Cucamonga, CA 91730
	Attn: D. John Donovan
	Fax No.: (909) 354-3568
With a copy to:	Rutan & Tucker, LLP
	611 Anton Blvd., Suite 1400
	Costa Mesa, CA 92626
	Attn: Larry A. Cerutti, Esq.
	Fax No.: (714) 546-9035
If to Agent:	GVEC Resource IV Inc.
	1 Park Plaza, Suite 550
	Irvine, California 92614
	Attention: Peter Paul Mendel, Esq., General Counsel
	Fax No.: (949) 757-0978
With a copy to:	Fulbright & Jaworski L.L.P.
	666 Fifth Avenue
	New York, New York 10103
	Attn: Charles D. Schmerler, Esq.
	Fax No.: (212) 318-3021

Agent and Borrowers may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11, other than notices by Agent in connection with

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enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail. Each Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

12.CHOICE OF LAW AND VENUE; JUDICIAL REFERENCE; WAIVER OF JURY TRIAL; SERVICE OF PROCESS.

(a)THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

(b)EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH BORROWER HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT AGAINST ANY BORROWER OR ITS ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE SUCH BORROWER OR ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT TO JURISDICTION.

(c)EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (i) ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS

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SECTION; (ii) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; AND (iii) ANY RIGHT IT MAY HAVE, HOWEVER ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT IN A STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD NOT HAVE OR ACCEPT JURISDICTION THEREOF.

(d)ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS AGREEMENT AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A PROCEEDING IN CALIFORNIA STATE COURT INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT OR ANY LENDER, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

(e)OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF CALIFORNIA, EACH BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

(f)EACH BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES

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AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. EACH BORROWER WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 11. EACH BORROWER SHALL TAKE SUCH ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE AND EFFECT. EACH BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH BORROWER IRREVOCABLY AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE (45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN THIS SECTION.

13.ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1Assignments and Participations.

(a)Any Lender may assign and delegate to one or more assignees (each an “Assignee”) that are Eligible Transferees all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $2,000,000 (except such minimum amount shall not apply to an assignment and delegation by a Lender to (x) any other Lender or an Affiliate of such Lender or a Related Fund of such Lender, (y) a group of new Lenders, each of which is an Affiliate or Related Fund of each other so long as the aggregate amount to be assigned to such group is at least $2,000,000 or (z) if as a result of such assignment such Lender shall cease to be a party hereto); provided, however, that, except as otherwise provided in Section 13.1(c) hereof, Borrowers and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Agent an Assignment and Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for Agent’s separate account a processing fee in the amount of $3,500. Anything contained herein to the contrary notwithstanding, the payment of any fees shall not be required and the Assignee need not be an Eligible Transferee if (x) such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of the assigning Lender or (y) the assignee is a Lender or an Affiliate of a Lender or a Related Fund of a Lender.

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(b)Except as otherwise provided in Section 13.1(c) hereof, from and after the date that Agent notifies the assigning Lender (with a copy to Administrative Borrower) that it has received an executed Assignment and Acceptance and payment of the above referenced processing fee (if required), (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.4 and Section 15.11 hereof) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall effect a novation between Borrowers and the Assignee; provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 15 and Section 16.7 of this Agreement.

(c)Notwithstanding anything contained in this Section 13.1 to the contrary, a Lender may assign any or all of its rights hereunder to a Qualified Affiliate of such Lender or a Qualified Related Fund of such Lender without (i) providing any notice to Agent or any other Person or (ii) delivering an executed Assignment and Acceptance to Agent; provided, however, that (x) Borrowers and Agent may continue to deal solely and directly with the assigning Lender until an Assignment and Acceptance has been delivered to Agent, (y) the failure of such assigning Lender to deliver an Assignment and Acceptance to Agent or any other Person shall not affect the legality, validity or binding effect of such assignment, and (z) an Assignment and Acceptance between an assigning Lender and its Qualified Affiliate or Qualified Related Fund shall be effective as of the date specified in such Assignment and Acceptance.

(d)By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably

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incidental thereto, and (6) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(e)Immediately upon Agent’s receipt of any processing fee payment (if required) and the fully executed Assignment and Acceptance (or, in the case of an assignment from a Lender to one or more of its Qualified Affiliates or Qualified Related Funds pursuant to Section 13.1(c), upon the effective date specified in such Assignment and Acceptance), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

(f)Any Lender may at any time, without the consent of the Borrowers, sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitments, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and such Originating Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Originating Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. Subject to Section 15.11(g), the Borrowers agree that each Participant shall be entitled to be

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benefits of Section 15.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to this Section 13.1. The provisions of this Section 13.1(f) are solely for the benefit of the Lender Group, and Borrowers shall not have any rights as third party beneficiaries of any such provisions.

(g)In connection with any such assignment or participation or proposed assignment or participation, a Lender may, subject to the provisions of Section 16.7, disclose all documents and information which it now or hereafter may have relating to Borrowers and their Subsidiaries and their respective businesses.

(h)Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24 or any other Person, including, without limitation, as provided in Section 2.15, and such Person may enforce such pledge or security interest in any manner permitted under applicable law; provided, that no such pledge or grant of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or secured party (or any transferee thereof) for such Lender as a party hereto unless such pledgee or secured party (or transferee) becomes a Lender hereunder.

(i)Agent shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain, or cause to be maintained, a register (the “Register”) on which it shall enter the names and addresses of the Lenders and the Commitments of, and the principal amount of the Advances and the Term Loans (and stated interest thereon) owing to, each Lender from time to time. Subject to the last sentence of this Section 13.1(i), the entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrowers, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Administrative Borrower and any Lender at any reasonable time and from time to time upon reasonable notice. In the case of an assignment to a Qualified Affiliate or Qualified Related Fund pursuant to Section 13.1(c) as to which an Assignment and Acceptance is not delivered to Agent, the assigning Lender shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain a register (the “Related Party Register”) comparable to the Register on behalf of Borrowers.

(j)A Registered Loan (and the Registered Note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register or the Related Party Register (and each Registered Note shall expressly so provide). Any assignment or sale of all or part of such Registered Loan (and the Registered Note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register or the Related Party Register, together with the surrender of the Registered Note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such Registered Note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new Registered Notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the Registered Note, if any

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evidencing the same), Agent and Borrowers shall treat the Person in whose name such Registered Loan (and the Registered Note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon, notwithstanding notice to the contrary.

13.2Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrowers may not assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release any Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 hereof and, except as expressly required pursuant to Section 13.1 hereof, no consent or approval by any Borrower is required in connection with any such assignment.

14.AMENDMENTS; WAIVERS.

14.1Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by Borrowers therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders and Administrative Borrower (on behalf of all Borrowers), do any of the following:

(a)increase or extend any Commitment of any Lender,

(b)postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(c)reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document,

(d)change the Pro Rata Share that is required to take any action hereunder,

(e)amend or modify this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(f)other than as permitted by Section 15.12, release Agent’s Lien in and to any of the Collateral,

(g)change the definition of “Required Lenders” or “Pro Rata Share”,

(h)contractually subordinate any of the Agent’s Liens,

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(i)release any Borrower from any obligation for the payment of money,

(j)change the definition of Borrowing Base, any of the definitions used therein, the definition of “Maximum Revolver Amount,” the definition of “Term Loan Amount,” or Sections 2.1, 2.2 or 2.4(b), or

(k)amend any of the provisions of Section 15

and, provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent, affect the rights or duties of Agent under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrowers, shall not require consent by or the agreement of Borrowers.

14.2No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Borrowers of any provision of this Agreement. Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

15.AGENT; THE LENDER GROUP.

15.1Appointment and Authorization of Agent. Each Lender hereby designates and appoints GVECR as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 15. The provisions of this Section 15 (other than Section 15.11) are solely for the benefit of Agent, and the Lenders, and Borrowers and their Subsidiaries shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word “Agent” is for convenience only, that GVECR is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or

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refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make portions of the Loans, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections of Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management accounts as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections of Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrowers, the Obligations, the Collateral, the Collections of Borrowers and their Subsidiaries, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

15.2Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

15.3Liability of Agent. None of the Agent Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or Affiliate of any Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of Borrowers or the books or records or properties of any of Borrowers’ Subsidiaries or Affiliates.

15.4Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement

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or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the requisite Lenders as it deems appropriate and until such instructions are received, Agent shall refrain from acting as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

15.5Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Administrative Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.”  Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 8; provided, however, that unless and until Agent has received any such request, Agent may refrain from taking such action with respect to such Default or Event of Default as it shall deem advisable.

15.6Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrowers and any other Person party to a Loan Document. Except for notices, reports, and other documents

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expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.

15.7Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, reasonable attorneys fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from the Collections of Borrowers and their Subsidiaries received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from the Collections of Borrowers and their Subsidiaries received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make any portion of a Loan or any other extension of credit hereunder. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses (including reasonable fees and expenses of attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8Agent in Individual Capacity. GVECR and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan Documents as though GVECR were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, GVECR or its Affiliates may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other

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Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms “Lender” and “Lenders” include GVECR in its individual capacity.

15.9Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders (or such shorter period agreed to by the Agent and the Required Lenders). If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the effective date of a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

15.10Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrowers and their Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrowers or their Affiliates and any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of Borrowers or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

15.11Withholding Taxes.

(a)Subject to clause (h) below, any and all payments to a Lender or Agent made by or on account of any Obligation shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions or conditions of any nature, and all liabilities with respect thereto (including penalties, interest and additions to tax), excluding, in the case of each Lender and Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by the net income of such Lender or Agent, respectively, by the jurisdiction in which such Lender or

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Agent, as the case may be, is organized or maintains a lending office or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, fees, withholdings, restrictions, conditions and liabilities being hereinafter collectively referred to as “Taxes”).

(b)In addition, each Borrower agrees to pay any present or future stamp, documentary, sales, transfer, excise, mortgage recording, or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, recordation, registration or filing of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).

(c)If any Borrower shall be required to deduct or withhold any Taxes or Other Taxes from or in respect of any amount payable hereunder or under any other Loan Document to any Lender or Agent, then, subject to clause (h) below:

(i)the amount so payable shall be increased so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional amounts payable pursuant to this Section 15.11), such Lender or Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made,

(ii)such Borrower shall make such deductions or withholdings,

(iii)such Borrower shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and

(iv)within ten (10) days thereafter, such Borrower shall send Agent (and the applicable Lender) the original or a certified copy of a receipt (or, if the original or a certified copy is not available, such other documentation as shall be satisfactory to Agent and the applicable Lender) evidencing payment of the amount or amounts so deducted or withheld.

(d)Subject to clause (h) below, the Borrowers hereby jointly and severally indemnify and agree to hold each Lender and Agent harmless on an after-tax basis from and against the full amount of any and all Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 15.11) paid by such Lender or Agent and any liability (including penalties, interest and expenses for nonpayment, late payment or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payments under this indemnification shall be made within ten (10) days from the date on which any Lender or Agent makes written demand therefor.

(e)Subject to clause (h) below, in the event that by reason of any law, regulation or requirement or in the interpretation or administration thereof by any Governmental Authority, whether or not having the force of law, any Lender (or its applicable lending office) shall, with respect to any Loan or Loan Document, be subjected to any tax, levy, impost, charge, fee, duty, deduction or withholding of any kind whatsoever (except for changes in the tax on the net income of such Lender or its applicable lending office imposed by the jurisdiction in which such Lender is organized or maintains a lending office), and if any such measures or any other similar measure shall result in an increase in the cost to such Lender of making or maintaining

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any Loan or in a reduction in the amount of any sum receivable by such Lender in respect thereof, then such Lender shall promptly notify the Borrowers stating the reasons therefor. The Borrowers shall thereafter pay to such Lender, upon demand and as additional consideration hereunder, such additional amount or amounts as shall fully compensate such Lender on an after-tax basis for such increased cost or reduced amount. A certificate as to any such increased cost or reduced amount, setting forth the calculations therefor, shall be submitted by such Lender to the Borrowers and shall, in the absence of manifest error, be conclusive and binding as to the amount thereof.

(f)Each Lender that is not a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States (or any jurisdiction thereof), or any estate or trust that is subject to federal income taxation regardless of the source of its income or is otherwise a “foreign person” within the meaning of Treasury Regulation Section 1.1441-1(c) (a “Non-U.S. Lender”) shall deliver to the Borrowers and Agent (or, in the case of an assignment that is not disclosed to Agent or the Borrowers in accordance with Section 13.1(c), solely to the assigning Lender and not to Agent or the Borrowers) two (2) copies of each applicable IRS Form W-8BEN, Form W-8IMY or Form W-8ECI, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, United States federal withholding tax on all payments by the Borrowers under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement. In addition, each Non-U.S. Lender shall deliver such forms upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. In addition to properly completing and duly executing Forms W-8BEN or W-8IMY (or any subsequent versions thereof or successor thereto), if such Non-U.S. Lender is claiming an exemption from withholding of United States federal income tax under Section 871(h) or Section 881(c) of the IRC, such Non-U.S. Lender hereby represents and warrants that such Non-U.S. Lender is (A) not a “bank” within the meaning of Section 881(c)(3)(A) of the IRC, (B) not a “10 percent shareholder” within the meaning of Section 871(h)(3)(B) of the IRC and (C) not a controlled foreign corporation receiving interest from a related person within the meaning of Section 864(d)(4) of the IRC, and such Non-U.S. Lender agrees that it shall provide Agent, and Agent shall provide to the Borrowers (or, in the case of an assignment that is not disclosed to Agent in accordance with Section 13.1(c), solely to the assigning Lender and not to Agent or the Borrowers), with notice at any time after becoming a Lender hereunder that it can no longer make the foregoing representations and warranties. Each Non-U.S. Lender shall notify the Borrowers (or, in the case of an assignment that is not disclosed to Agent or the Borrowers in accordance with Section 13.1(c), solely to the assigning Lender and not to Agent or the Borrowers) at any time it determines that it is no longer in a position to provide any previously delivered form (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this Section 15.11, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 15.11(f) that such Non-U.S. Lender is not legally able to deliver.

(g)Each Person that shall become a Participant pursuant to Section 13.1(f) above shall, on or before the date of the effectiveness of the related transfer, be required to provide all of the applicable forms required pursuant to clause (f) above, and shall be deemed to make the representations and warranties set forth in subclauses (A) - (C) of clause (f) above,

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provided that the obligations of such Participant, pursuant to this clause (g), shall be determined as if such Participant were a Lender except that such Participant shall furnish all such required forms and make such representations and warranties to the Lender from which the related participation shall have been purchased.

(h)Notwithstanding anything in this Section 15.11 to the contrary, the Borrowers shall not be required to pay additional amounts pursuant to clause (c)(i) above to any Lender or Agent on account of any Taxes collected by means of withholding at the source (“Withholding Taxes”) or to indemnify any Lender or Agent pursuant to clause (d) above on account of any Withholding Taxes, unless such Withholding Taxes would not have arisen but for (i) any failure by a Borrower or its representative to qualify as a “United States person” as defined in Section 7701(a)(30) of the IRC, (ii) any payment to a Lender or Agent made by or on account of any Obligation having been made through an account or branch outside the United States, (iii) any other act or omission to act of a Borrower or its representative or (iv) a breach of any representation, warranty or covenant made by a Borrower in this Agreement.

(i)If a Borrower is required to pay additional amounts to or for the account of any Lender or Agent pursuant to this Section 15.11, then such Lender or Agent shall use its reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to designate a lending office from a different jurisdiction (if such a lending office exists) so as to eliminate or reduce any such additional payments by such Borrower which may accrue in the future if such designation in the reasonable judgment of such Lender or Agent, would not require such Lender to disclose information such Lender deems confidential and is not, in the sole determination of such Lender or Agent, as the case may be, otherwise disadvantageous to such Lender or Agent.

(j)If Agent or a Lender receives a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which a Borrower has paid additional amounts pursuant to this Section 15.11, it shall pay to the Borrowers, to the extent permitted by applicable law, the net amount of any such refund (including any interest paid thereon by such Governmental Authority) after deducting taxes and other expenses attributable thereto and any taxes which Agent or such Lender is required to withhold from the payment to the Borrowers; provided, that no Default which if not cured would become an Event of Default or Event of Default is continuing, and provided further, that the Borrowers, upon the request of Agent or such Lender, shall promptly repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent or such Lender in the event Agent or such Lender is required to repay the applicable refund to such Governmental Authority.

(k)If any Borrower fails to perform any of its obligations under this Section 15.11, the Borrowers shall indemnify Agent, Lenders and/or each Participant for any taxes, interest or penalties that may become payable as a result of any such failure. The agreements and obligations of the Borrowers under this Section 15.11 shall survive the termination of this Agreement and the payment of the Loans and all other Obligations and all other amounts payable hereunder.

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15.12Collateral Matters.

(a)The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Administrative Borrower certifies to Agent that the sale or disposition is permitted under Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Borrower or its Subsidiaries owned any interest at the time the Agent’s Lien was granted nor at any time thereafter, or (iv) constituting property leased to a Borrower or its Subsidiaries under a lease that has expired or is terminated in a transaction permitted under this Agreement. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Administrative Borrower at any time, the Lenders will confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.12; provided, however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent’s opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrowers in respect of) all interests retained by Borrowers, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(b)Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrowers or is cared for, protected, or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein.

15.13Restrictions on Actions by Lenders; Sharing of Payments.

(a)Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrowers or any Deposit Accounts of Borrowers now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

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(b)If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s ratable portion of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

15.14Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent’s Liens in assets which, in accordance with Division 8 or Division 9, as applicable, of the Code can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.15Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

15.16Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

15.17Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender:

(a)is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

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(b)expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(c)expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrowers and will rely significantly upon the books and records of Borrowers and their Subsidiaries, as well as on representations of Borrowers’ personnel,

(d)agrees to keep all Reports and other material, non-public information regarding Borrowers and their Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 16.7, and

(e)without limiting the generality of any other indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing:  (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrowers to Agent that has not been contemporaneously provided by Borrowers to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrowers, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Administrative Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Administrative Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

15.18Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall

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confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group. No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

15.19No Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney of Agent or any Lender, shall be liable to a Borrower or any other Person on any theory of liability for any special, indirect, consequential or punitive damages.

16.GENERAL PROVISIONS.

16.1Effectiveness. This Agreement shall be binding and deemed effective when executed by Borrowers, Agent, and each Lender whose signature is provided for on the signature pages hereof.

16.2Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

16.3Interpretation. Neither this Agreement or any of the other Loan Documents nor any uncertainty or ambiguity herein or therein shall be construed or resolved against the Lender Group or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement and the other Loan Documents have been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto and thereto. Time is of the essence in Borrowers’ payment and performance of the Obligations.

16.4Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

16.5Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and

65

binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

16.6Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by any Borrower or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrowers automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

16.7Confidentiality. Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Borrowers and their Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except:  (a) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries and Affiliates of any member of the Lender Group, provided that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 16.7, (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by Administrative Borrower or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Lender’s interest under this Agreement, provided that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section 16.7, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, however, that, unless prohibited by applicable law, statute, regulation, or court order, such Lender or Agent shall:  (y) notify Administrative Borrower of any request by any court, governmental or administrative agency, or pursuant to any subpoena or other legal process for disclosure of any such non-public material information concurrent with, or where practicable, prior to the disclosure thereof, and (z) notify all other Persons described in clause (a) above that they are bound by, the provisions of this Section 16.7. The provisions of this Section 16.7 shall survive the payment in full of the Obligations.

16.8Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and

66

shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

16.9Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (i) to provide Agent with all notices with respect to portions of the Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain portions of the Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement. It is understood that the handling of the Loan Account and Collateral of Borrowers in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof. Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group. To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (a) the handling of the Loan Account and Collateral of Borrowers as herein provided, (b) the Lender Group’s relying on any instructions of the Administrative Borrower, or (c) any other action taken by the Lender Group hereunder or under the other Loan Documents, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 16.9 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

16.10Compliance With USA Patriot Act. Agent is subject to the USA Patriot Act and hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act Agent is required to obtain, verify and record information that identifies Borrower and certain of its Affiliates, which information includes the name and address of Borrower and these Affiliates and other information that will allow Agent to identify Borrower and these Affiliates in accordance with the USA Patriot Act.

67

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

EMRISE CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:		V.P. of Finance & Administration
EMRISE ELECTRONICS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:		Secretary & Treasurer
CXR LARUS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:		Secretary & Treasurer
RO ASSOCIATES INCORPORATED
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:		Secretary & Treasurer

68

GVEC RESOURCE IV INC., as Agent
By:	/S/ ROBERT J. ANDERSON
Name:			Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:			Peter Paul Mendel
Title:		Authorized Signatory
GVEC RESOURCE IV INC., as a Lender
By:	/S/ ROBERT J. ANDERSON
Name:			Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:			Peter Paul Mendel
Title:		Authorized Signatory

69

EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of                between                                 “Assignor”) and                         (“Assignee”). Reference is made to the agreement described in Item 2 of Annex I annexed hereto (the “Credit Agreement”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.

1.In accordance with the terms and conditions of Section 13 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor’s portion of the Revolver Commitment, the Term Loan A Commitment, and the Term Loan B Commitment, all as specified on Annex I.

2.The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrowers to Assignor with respect to Assignor’s share of the Advances and Term Loans assigned hereunder, as reflected by the Register.

3.The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Agent, Assignor, or any other Lender, based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (c) confirms that it is an Eligible Transferee; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; [and (f) attaches the forms required under Section 15.11 of the Credit Agreement as prescribed by the IRS certifying as to

EXHIBIT A-1 - 1

the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement.]

4.Following the execution of this Assignment Agreement by the Assignor and Assignee, it will be delivered by the Assignor (if required by the Credit Agreement) to the Agent for recording by the Agent. The effective date of this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the date of the execution hereof by the Assignor and the Assignee, the payment by Assignor or Assignee to Agent for Agent’s sole and separate account of a processing fee in the amount of $5,000 (if required by the Credit Agreement), and the receipt of any required consent of the Agent, (b) the Settlement Date specified on Annex I, and (c) the receipt by Assignor of the Purchase Price specified in Annex I.

5.Upon recording by the Agent, as of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Article 15 and Section 16.7 of the Credit Agreement.

6.Upon recording by the Agent, from and after the Settlement Date, the Agent shall make all payments under the Credit Agreement and the other Loan Documents in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees (if applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor the Purchase Price (as set forth on Annex I) of the principal amount of any outstanding loans under the Credit Agreement and the other Loan Documents. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the other Loan Documents for periods prior to the Settlement Date directly between themselves on the Settlement Date.

7.This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Assignment Agreement may be executed and delivered by telecopier or other facsimile transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

8.THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAW RULES.

EXHIBIT A-1 - 2

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.

		[NAME OF ASSIGNOR]
		as Assignor
		By:
			Name:
			Title:
		[NAME OF ASSIGNEE]
		as Assignee
		By:
			Name:
			Title:
ACCEPTED THIS     DAY OF
GVEC RESOURCE IV INC.
as Agent
By:
	Name:
	Title:

EXHIBIT A-1 - 3

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

1.	Borrowers: EMRISE CORPORATION and each of its Subsidiaries party to the Credit Agreement described below.
2.	Name and Date of Credit Agreement:
		Credit Agreement, dated as of November 30, 2007, by and among Borrowers, the lenders from time to time a party thereto (the “Lenders”), and GVEC Resource IV Inc., a company organized under the laws of the British Virgin Islands, as the arranger and administrative agent for the Lenders
3.	Date of Assignment Agreement:
4.	Amounts:
	a.	Assigned Amount of Revolver Commitment	$
	b.	Assigned Amount of Term Loan A	$
	c.	Assigned Amount of Term Loan B	$
	d.	Assigned Amount of Term Loan B Commitment	$
5.	Settlement Date:
6.	Purchase Price		$
7.	Notice and Payment Instructions, etc.

Assignee: Assignor:

EXHIBIT A-1

EXHIBIT B-1

FORM OF BORROWING BASE CERTIFICATE

GVEC Resource IV Inc., as Agent
under the below referenced Credit Agreement
1 Park Plaza, Suite 550
Irvine, California 92614
Attention:  Peter Paul Mendel, Esq., General Counsel

Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”) dated as of November 30, 2007, by and among the lenders identified on the signature pages thereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), GVEC Resource IV Inc., a company organized under the laws of the British Virgin Islands, as the arranger and administrative agent for the Lenders (“Agent”), EMRISE CORPORATION, a Delaware corporation (“Parent”), and each of its Subsidiaries party thereto.

The undersigned, Emrise Corporation (“Administrative Borrower”), pursuant to Schedule 5.2 of the Credit Agreement, hereby certifies to Agent that the items set forth on Annex I hereto, calculated in accordance with the terms and definitions set forth in the Credit Agreement for such items are true and correct, and that Borrower is in compliance with and, after giving effect to any currently requested Advances, will be in compliance with, the terms, conditions, and provisions of the Credit Agreement.

All initially capitalized terms used in this Borrowing Base Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.

[Includes form attached]

EXHIBIT B-1

1

IN WITNESS WHEREOF, this Borrowing Base Certificate is executed by the undersigned this           day of                                      ,                     .

EMRISE CORPORATION,

a Delaware corporation

By:

Name:

Title:

EXHIBIT B-1

2

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Parent’s letterhead]

To:GVEC Resource IV Inc., as Agent
under the below referenced Credit Agreement
1 Park Plaza, Suite 550
Irvine, California 92614
Attention:  Peter Paul Mendel, Esq., General Counsel

Re:Compliance Certificate dated

Ladies and Gentlemen:

Reference is made to that certain CREDIT AGREEMENT (the “Credit Agreement”) dated as of November 30, 2007, by and among the lenders identified on the signature pages thereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), GVEC Resource IV Inc., a company organized under the laws of the British Virgin Islands, as the arranger and administrative agent for the Lenders (“Agent”), EMRISE CORPORATION, a Delaware corporation (“Parent”), and each of its Subsidiaries party thereto. Capitalized terms used in this Compliance Certificate have the meanings set forth in the Credit Agreement unless specifically defined herein.

Pursuant to Schedule 5.3 of the Credit Agreement, the undersigned officer of Parent hereby certifies that:

1.The consolidated financial information of Parent and its Subsidiaries furnished in Schedule 1 attached hereto has been prepared in accordance with GAAP (except for year-end adjustments and the lack of footnotes or as set forth on Schedule 1), and fairly presents in all material respects the financial condition of Parent and its Subsidiaries.

2.Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of Parent and its Subsidiaries during the accounting period covered by the financial statements delivered pursuant to Schedule 5.3 of the Credit Agreement.

3.Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event or condition that constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2 attached hereto, specifying the nature and period of existence thereof and what action Borrowers have taken, are taking, or propose to take with respect thereto.

4.The representations and warranties of Borrowers set forth in the Credit Agreement and the other Loan Documents are true and correct on and as of the date hereof

EXHIBIT C-1 - 1

(except to the extent they relate to a specified date), except as set forth on Schedule 3 attached hereto.

5.Parent and its Subsidiaries are in compliance with the applicable covenants contained in Section 6.16 of the Credit Agreement as demonstrated on Schedule 4 hereof and as calculated on Schedule 5 hereof.

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this             day of                            ,                  .

EMRISE CORPORATION,

a Delaware corporation

By:

Name:

Title:

EXHIBIT C-1 - 2

SCHEDULE 4

Financial Covenants

1.Minimum EBITDA.

Parent’s and its Subsidiaries’ EBITDA, measured on a quarter-end basis, for the period of                    consecutive fiscal quarters ending                 ,                    is $                  , which amount [is/is not] greater than or equal to the amount set forth in Section 6.16(a) of the Credit Agreement on the date of measurement.

2.Debt Service Coverage Ratio.

Borrower’s and its Subsidiaries’ Debt Service Coverage Ratio, measured for the fiscal quarter ending                  , is          1:00, which ratio [is/is not] greater than or equal to the ratio set forth in Section 6.16(b) of the Credit Agreement on the date of measurement.

3.Maximum Leverage Ratio.

Borrower’s and its Subsidiaries’ Leverage Ratio, measured for the fiscal quarter ending                  , is            :1.00, which ratio [is/is not] less than or equal to the ratio set forth in Section 6.16(c) of the Credit Agreement on the date of measurement.

4.Capital Expenditures.

Parent’s consolidated Capital Expenditures during Parent’s fiscal year most recently ended is                   , which [is/is not] less than or equal to the amount set forth in Section 6.16(d) of the Credit Agreement for the corresponding period.

SCHEDULE 4

Schedule B-1

Commitments

Lender	Loan Commitment		Total Commitment
Revolver Lenders:
GVEC Resource IV Inc.	$	7,000,000	$	7,000,000
Term Loan A Lenders:
GVEC Resource IV Inc.	$	6,000,000	$	6,000,000
Term Loan B Lenders:
GVEC Resource IV Inc.	$	10,000,000	$	10,000,000
All Lenders:	$	23,000,000	$	23,000,000

SCHEDULE B-1 - 1

Schedule 1.1

As used in the Agreement, the following terms shall have the following definitions:

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.

“Acquiring Party” means the Borrower that consummates the acquisition constituting a Permitted Acquisition.

“Acquisition Documents” means, collectively, all documents evidencing, securing or otherwise pertaining to a Permitted Acquisition.

“Administrative Borrower” has the meaning specified therefor in Section 16.9.

“Advances” has the meaning specified therefor in Section 2.1(a).

“Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, for purposes of the definition of Eligible Accounts and Section 6.13 hereof: (a) any Person which owns directly or indirectly 10% or more of the Stock having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to be an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed an Affiliate of such Person.

“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.

“Agent’s Liens” means the Liens granted by Borrowers or their Subsidiaries to Agent under the Loan Documents.

“Aggregate Term Loan Exposure” means, as of any date of determination, the sum of (a) the aggregate outstanding principal amount of the Term Loans and (b) any remaining Term Loan B Commitments for which Borrowings under Section 2.2(b) have not been made.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

SCHEDULE 1.1 - 1

“Assignee” has the meaning specified therefor in Section 13.1(a).

“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1.

“Authorized Person” means any officer or employee of Administrative Borrower.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.

“Base Rate” means at any time the rate of interest most recently published in the “Money Rates” column of the Wall Street Journal as the “prime rate,” or if at any time such rate is for any reason unavailable, the rate of interest most recently announced by Bank of America, N.A., or such other major U.S. bank as selected by the Agent, as its “prime rate.”

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA) for which any Borrower or ERISA Affiliate of any Borrower has been an “employer” (as defined in Section 3(5) of ERISA) within the past six years.

“Board of Directors” means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

“Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble to the Agreement.

“Borrowing” means a borrowing hereunder consisting of: (a) Advances made on the same day by one or more Lenders with a Revolver Commitment (or Agent on behalf thereof), or (b) a Term Loan made on the same day by the one or more Lenders with a Term Loan Commitment (or Agent on behalf thereof).

“Borrowing Base” means, as of any date of determination, the result of:

(a)85% of the amount of Eligible Accounts, plus

(b)50% of the value of Eligible Finished Goods Inventory not to exceed
$1,500,000, plus

(c)10% of the value of Eligible Raw Materials Inventory not to exceed
$600,000, minus

(d)the aggregate amount of reserves, if any, established by Agent under Section 2.1(b).

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of California.

SCHEDULE 1.1 - 2

“Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP.

“Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody’s, (c) commercial paper or other money market instruments maturing no more than 1 year from the date of acquisition thereof and, at the time of acquisition, having a short term debt rating of A-1 or P-1, or better, or a long term debt rating of BBB or better, from S&P or Moody’s, and (d) certificates of deposit or bankers’ acceptances maturing within 1 year from the date of acquisition thereof either (i) issued by any bank which has a rating of A or A2, or better, from S&P or Moody’s, or (ii) constituting certificates of deposit less than or equal to $100,000 in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation.

“Cash Management Account” has the meaning specified therefor in Section 2.7(a).

“Cash Management Agreements” means those certain cash management agreements, in form and substance satisfactory to Agent, each of which is among the Administrative Borrower or one of its Subsidiaries, Agent and one of the Cash Management Banks.

“Cash Management Bank” has the meaning specified therefor in Section 2.7(a).

“Change of Control” means that (a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40%, or more, of the Stock of Parent having the right to vote for the election of members of the Board of Directors, or (b) a majority of the members of the Board of Directors do not constitute Continuing Directors.

“Closing Date” means the date on which Agent sends Administrative Borrower a written notice that each of the conditions precedent set forth in Section 3.1 with respect to the initial Loan either has been satisfied or has been waived.

“Closing Date Projections” means the set of Projections of Parent and the Borrowers in form and substance (including as to scope and underlying assumptions) reasonably satisfactory to Agent.

“Code” means the California Uniform Commercial Code, as in effect from time to time.

SCHEDULE 1.1 - 3

“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Borrower or any of its Subsidiaries in or upon which a Lien is granted under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any of Borrower’s or any of its Subsidiaries books and records, Equipment or Inventory, in each case, in form and substance satisfactory to Agent.

“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of or to Borrowers or any of their Subsidiaries.

“Combined” shall mean, as the context requires, financial information of Borrowers combined in accordance with GAAP.

“Combined Capital Base” shall mean (x) the sum of (i) Stockholders’ Equity and (ii) Subordinated Debt, less any receivables from Affiliates that are not Borrowers appearing on the Borrowers’ balance sheet as of the date such calculation is made (other than receivables from Affiliates arising in the ordinary course of business).

“Commitment” means, with respect to each Lender, its Revolver Commitment, its Term Loan A Commitment, its Term Loan B Commitment, or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan A Commitments, their Term Loan B Commitments, or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule B-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts shall be reduced by any portion of the applicable Loan made by such Lender or Lenders, as applicable, and as such amounts may be: (x) reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 and (y) reduced from time to time as required by Section 2.4(e).

“Compliance Certificate” means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

“Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof.

“Control Agreement” means a control agreement or other arrangement, in form and substance reasonably satisfactory to Agent, executed and delivered by the Administrative

SCHEDULE 1.1 - 4

Borrower or one of its Subsidiaries, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).

“Copyright” has the meaning specified therefor in the Security Agreement.

“Copyright Security Agreement” has the meaning specified therefor in the Security Agreement.

“Daily Balance” means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.

“Debt Service Coverage Ratio” means, for any period, the ratio of (i) EBITDA less cash taxes to (ii) cash Interest Expense, plus payments of principal actually made or scheduled to be made with respect to Indebtedness (including principal payments on the Term Loans under the Agreement), plus dividends and distributions.

“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Advances (or the Term Loan, if applicable) that are Base Rate Loans (inclusive of the margin applicable thereto described in Section 2.6(a)).

“Department of Labor” means the United States Department of Labor.

“Deposit Account” means any deposit account (as that term is defined in the Code).

“Designated Account” means the Deposit Account of Administrative Borrower identified on Schedule C-1.

“Designated Account Bank” has the meaning specified therefor in Schedule C-1.

“Designated Payments” has the meaning specified therefor in Schedule 3.1(r).

“Designated Payments List” has the meaning specified therefor in Schedule 3.1(r).

“Disposition” means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person.

“Dollars” or “$” means United States dollars.

SCHEDULE 1.1 - 5

“Domestic Subsidiary” means any Subsidiary of a Borrower which is not a Foreign Subsidiary.

“EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or loss), minus interest income and extraordinary gains (including gains on sale of assets) plus interest expense, Income Tax Expense, depreciation and amortization, in each case, as determined in accordance with GAAP.

“Eligible Accounts” means those Accounts created by an Eligible Credit Party in the ordinary course of its business, that arise out of its sale of goods, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, however, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash. Eligible Accounts shall not include the following:

(a)Accounts that an Account Debtor located in the United States has failed to pay within 90 days of the original invoice date or accounts than an Account Debtor located in the United Kingdom has failed to pay within 90 days after the end of the month during which the Account was created,

(b)Accounts owed by an Account Debtor (or any Affiliate of such Account Debtor) where 37.5% or more of all Accounts owed by that Account Debtor (or any such Affiliate) are deemed ineligible under clause (a) above,

(c)Accounts with respect to which the Account Debtor is an employee, Affiliate or agent of Borrower,

(d)Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional,

(e)Accounts that are not payable in Dollars, Euros or Pounds Sterling, unless (y) the Account is supported by an irrevocable letter of credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent,

(f)Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States or the United Kingdom, or (ii) is not organized under the laws of the United States or any state thereof or under the laws of the United Kingdom, unless (y) the Account is supported by an irrevocable letter of credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (z) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent,

SCHEDULE 1.1 - 6

(g)Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which Borrower has complied, to the reasonable satisfaction of Lender, with the Assignment of Claims Act, 31 USC § 3727), or (ii) any state of the United States,

(h)Accounts that arise out of the rendering of services by any Person, other than services provided by an Eligible Credit Party to customers of the Eligible Credit Party (i) with of value of less than $10,000, or (ii) with a value in excess of $10,000 if the customer has acknowledged in writing that such services have been completed prior to invoicing by the Eligible Credit Party and provided that the Eligible Credit Party confirms to Agent on a monthly basis that evidence of such acknowledgements exist and makes available such acknowledgements to Agent upon request of Agent,

(i)Accounts with respect to which the Account Debtor is a creditor of any Borrower or any Subsidiary thereof, has or has asserted a right of setoff, or has disputed its obligation to pay all or any portion of the Account, to the extent of such right of setoff or disputed obligation,

(j)Accounts with respect to an Account Debtor whose total obligations owing to Borrower exceeds 25% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts in the aggregate, to the extent of the obligations owing by such Account Debtor in excess of such percentage,

(k)Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which Borrower or any Subsidiary thereof has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,

(l)Accounts not paid by the applicable Account Debtor and for which a credit memo has been issued no earlier than 60 days following the original due date of the applicable invoice,

(m)Accounts, the collection of which, Agent, in its Permitted Discretion, has notified Borrower that Agent believes to be doubtful by reason of the Account Debtor’s financial condition,

(n)Accounts that are not subject to a valid and perfected first priority Agent’s Lien,

(o)Accounts with respect to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor,

(p)Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Eligible Credit Party of the subject contract for goods, or

(q)Accounts for which the applicable Eligible Credit Party has executory performance obligations or which have acceptance criteria, until such time as such performance obligations or acceptance criteria have been completed, accepted or waived, as applicable.

SCHEDULE 1.1 - 7

“Eligible Credit Party” means the Borrowers and each UK Guarantor Subsidiary.

“Eligible Inventory” means Eligible Finished Goods Inventory and Eligible Raw Materials Inventory.

“Eligible Finished Goods Inventory” means Inventory of an Eligible Credit Party consisting of first quality finished goods held for sale in the ordinary course of Borrower’s business, that complies with each of the representations and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, however, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any audit or appraisal performed by Agent from time to time after the Closing Date. In determining the amount to be so included, Inventory shall be valued at the lower of cost or market on a basis consistent with Borrower’s historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if:

(a)Borrower does not have good, valid, and marketable title thereto,

(b)it is not located at one of the locations in the continental United States or the United Kingdom set forth on Schedule E-1 (or in-transit to any such location),

(c)it is located on real property leased by Borrower or in a contract warehouse, in each case, unless (subject to Section 3.6(b)) it is subject to a Collateral Access Agreement executed by the lessor, or warehouseman, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises,

(d)it is not subject to a valid and perfected first priority Agent’s Lien,

(e)it consists of goods returned or rejected by Borrower’s customers until such time as product is deemed to be saleable through a reasonable quality inspection process,

(f)it consists of goods that are encumbered by a purchase money Lien,

(g)it consists of goods that have been characterized as obsolete or slow moving consistent with each Borrower’s policy of recording obsolete or slow moving inventory, which policy is in accordance with GAAP,

(h)it is not covered by insurance acceptable to the Agent for full replacement value,

(i)Borrower fails to cause Agent to receive timely an appraisal of Borrower’s Inventory in accordance with the provisions of this Agreement, the results of which shall be satisfactory to Agent in its sole discretion, or

(j)Borrower fails to provide to Agent, in form and substance acceptable to the Agent in its sole discretion, detailed reporting on Eligible Inventory such that it can be distinguished from other Inventory that does not meet the criteria set forth above; provided, however, if Borrower fails to provide to Agent, in form and substance acceptable to the Agent in its sole discretion, detailed reporting on Eligible Inventory such that Eligible Inventory can be

SCHEDULE 1.1 - 8

distinguished from other Inventory as required by Section 5.2, then on the date that such report is due and thereafter, the amount of the Eligible Inventory shall be zero.

“Eligible Raw Materials Inventory” means Inventory as to which the following is applicable:  (i) such Inventory does not qualify as Eligible Finished Goods Inventory solely because the Inventory does not consist of finished goods held for sale in the ordinary course of Borrower’s business, and (ii) such Inventory consists of first quality raw materials held for use in producing goods in the ordinary course of Borrower’s business.

“Eligible Transferee” means any Affiliate (other than individuals) of a Lender and any Lender’s Related Funds, and during the continuation of an Event of Default, any other Person approved by Agent.

“Environmental Actions” means any existing, pending or threatened action, suit, complaint, summons, citation, notice, directive, order, claim, litigation, investigation, inquiry, judicial or administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of any Borrower or any of their predecessors in interest, (b) from any assets, properties, or businesses of any Subsidiary of a Borrower (or any predecessor in interest of such Subsidiary)  material to the business of Borrowers and their Subsidiaries, taken as a whole, (c) from adjoining properties or businesses, or (d) from or onto any facilities which received Hazardous Materials generated by any Borrower, any Subsidiary of a Borrower or any of their predecessors in interest, including any claim for personal injury, property damage, damage to natural resources, remediations, or similar costs or expenses incurred or asserted by any Person pursuant to Environmental Law.

“Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Borrower or any Subsidiary of a Borrower, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time. The term “Environmental Laws” shall include, but not be limited to the following statutes and the regulations promulgated thereunder: the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C. § 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., and any state, county, or local regulations similar thereto.

“Environmental Liabilities” means all liabilities, responsibilities, claims, suits, monetary obligations, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or

SCHEDULE 1.1 - 9

consultants, and costs of remediation, removal, response, abatement, clean-up, monitoring, investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which a Borrower or a Subsidiary of a Borrower is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person that is a party to an arrangement with a Borrower or a Subsidiary of a Borrower and whose employees are aggregated with the employees of a Borrower or a Subsidiary of a Borrower under IRC Section 414(o).

“ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower or ERISA Affiliates from a Benefit Plan during a Plan year in which it was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), (c) the providing of notice of intent to terminate a Benefit Plan in a distress termination (as described in Section 4041(c) of ERISA), (d) the institution by the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or its Subsidiaries or any of their ERISA Affiliates from a Multiemployer Plan, (g) providing any security to any plan under Section 401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA Affiliates, or (h) the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA.

“Euro and €” means the single, unified, lawful currency of those member states of the European Union participating in the Economic and Monetary Union.

“Event of Default” has the meaning specified therefor in Section 7.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

SCHEDULE 1.1 - 10

“Extraordinary Receipts” means any Collections received by any Borrower or any of their Subsidiaries not in the ordinary course of business (and not consisting of proceeds described in Section 2.4(c)(ii) hereof), including (a) pension plan reversions, (b) proceeds of insurance (including proceeds of the key man life insurance policies), (c) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (d) condemnation awards (and payments in lieu thereof), (e) indemnity payments and (f) any purchase price adjustment received in connection with any purchase agreement.

“Existing Credit Facilities” means those certain credit facilities entered into by the Borrowers and each of Wells Fargo Bank, National Association (acting through its Wells Fargo Business Credit operating division) and Lloyds TSB Bank plc.

“Fee Letter” means that certain fee letter among Borrowers and Agent, in form and substance satisfactory to Agent.

“Foreign Subsidiary” means any Subsidiary of a Borrower which is organized under the laws of a jurisdiction other than the United States of America or any state or Governmental Authority thereof.

“French Bank Account Pledge Agreement” means a bank account pledge agreement, in form and substance satisfactory to Agent, executed by the French Subsidiary, the applicable French account bank and Agent and delivered to Agent.

“French Guaranty” means a guaranty agreement, in form and substance satisfactory to Agent, executed by each French Subsidiary and delivered to Agent.

“French Pledge Over Going Concerns” means a pledge agreement, in form and substance satisfactory to Agent, executed by the French Subsidiary and delivered to Agent.

“French Security Documents” means the French Share Pledge, the French Pledge Over Going Concerns, the French Bank Account Pledge Agreement and the French Guaranty.

“French Share Pledge” means a share pledge agreement, in form and substance satisfactory to Agent, executed by each owner of a French Subsidiary and delivered to Agent.

“French Subsidiary” means any Subsidiary of Borrower incorporated in France.

“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

“Governmental Authority” means any federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal,

SCHEDULE 1.1 - 11

administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

“Guarantors” means French Subsidiary, UK Subsidiary and XCEL Japan, Ltd.

“GVECR” means GVEC Resource IV Inc., a company organized under the laws of the British Virgin Islands.

“Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or polychlorinated biphenyls.

“IFN Credit Facility” means that certain credit facility entered into by the French Subsidiary and IFN Finance S.A.

“Income Tax Expense” means, with respect to any Person for any period of determination, all provisions for federal, state, local and foreign taxes based on the net income or profits of such Person (including, without limitation, franchise taxes, any additions to such taxes, and any penalties and interest with respect thereto), all as determined for such Person in accordance with GAAP.

“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (e) all obligations to pay the deferred purchase price of assets (other than trade debt incurred in the ordinary course of business and repayable in accordance with customary trade practices), and (f) any obligation guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (e) above.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.4.

“Indemnified Person” has the meaning specified therefor in Section 10.4.

“Individual Lender Term Loan Exposure” means, for a particular Term Loan Lender, as of any date of determination, the sum of (a) the aggregate outstanding principal amount of such Term Loan Lender’s portions of the Term Loans and (b) if a Term Loan B lender, such Lender’s remaining Term Loan B Commitment for which Borrowings under Section 2.2(b) have not been made.

SCHEDULE 1.1 - 12

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intellectual Property Collateral” has the meaning specified therefor in the Security Agreement.

“Interest Expense” means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, relocation and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising in the ordinary course of business consistent with past practice), purchases or other acquisitions of Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time (or any successor statute thereof).

“IRS” means the United States Internal Revenue Service.

“Japanese Guaranty” means a guaranty agreement, in form and substance satisfactory to Agent, executed by XCEL Japan Ltd. and delivered to Agent.

“Lender” and “Lenders” have the respective meanings set forth in the preamble to the Agreement, and shall include any other Person made a party to the Agreement in accordance with the provisions of Section 13.1.

“Lender Group” means, individually and collectively, each of the Lenders (including the Issuing Lender) and Agent.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Borrower under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) fees or charges reasonably paid or incurred by Agent in connection with the Lender Group’s transactions with Borrowers, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax Lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication and appraisal (including periodic collateral appraisals or business valuations), including the cost of real estate surveys, real estate title policies and endorsements,

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and environmental audits, in each case to the extent of the fees and charges (and up to the amount of any limitation) authorized in the Agreement,  (c) costs and expenses incurred by Agent in the disbursement of funds to or for the account of Borrowers or other members of the Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Agent related to any inspections or audits to the extent of the fees and charges (and up to the amount of any limitation) authorized in the Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with any Borrower arising under the Loan Documents, (h) Agent’s and each Lender’s reasonable costs and expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and expenses (including reasonable attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including reasonable fees and expenses of attorneys, accountants, consultants, and other advisors incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Borrower or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.

“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“Leverage Ratio” means, with respect to Borrowers for any date of calculation, (i) all of the Obligations of Borrowers under the Agreement to (ii) the Combined Capital Base.

“Lien” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, irrespective of whether (a) such interest is based on the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such interest is contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien” includes the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also includes reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property.

“Lloyds Credit Facility” means that certain credit facility entered into by certain of the UK Subsidiaries and Lloyds TSB Bank plc (or its affiliates).

“Loan” means an Advance or either of the Term Loans, as the context reasonably requires.

SCHEDULE 1.1 - 14

“Loan Account” has the meaning specified therefor in Section 2.10.

“Loan Documents” means the Agreement, the Cash Management Agreements, the Control Agreements, the Copyright Security Agreement, the Fee Letter, any Mortgages, the Patent Security Agreement, the Security Agreement, the Trademark Security Agreement, the Intellectual Property Security Agreement, the Warrant Agreement, the UK Security Agreements, the French Security Agreements, the Japanese Guaranty, the McDermott Subordination Agreement, the Yost Subordination Agreement, any note or notes executed by a Borrower in connection with the Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by any Borrower and the Lender Group in connection with the Agreement.

“Loans” mean one or more of the following, as the context reasonably requires: the Advances, the Term Loan A and the Term Loan B.

“Material Adverse Change” means (a) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrowers or any of its Subsidiaries, (b) a material impairment of a Borrower’s or a Subsidiary’s ability to perform its obligations under the Loan Documents to which it is a party or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent’s Liens with respect to the Collateral as a result of an action or failure to act on the part of a Borrower or a Subsidiary of a Borrower.

“Material Contracts” means collectively (x) each of the contracts listed on Schedule 4.28 and (y) any other contract entered into by a Borrower, the termination or non-renewal of which could reasonably be expected to result in a Material Adverse Change.

“Maturity Date” has the meaning specified therefor in Section 3.3(a).

“Maximum Revolver Amount” means $7,000,000.

“McDermott Subordination Agreement” means a subordination agreement, in form and substance satisfactory to Agent, executed by the Borrowers and Noel McDermott and delivered to Agent.

“Mortgages” means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a Borrower or a Subsidiary of a Borrower in favor of Agent, in form and substance satisfactory to Agent, that encumber the Real Property.

“Multiemployer Plan” means a “multiemployer plan” (as defined in Section 3(37) of ERISA) to which Borrower or any ERISA Affiliate is making, is obligated to make, has made or has been obligated to make, contributions on behalf of participants who are or were employed by any of them, other than a plan described in Section 4(b)(4) of ERISA, or with respect to which Borrower or any ERISA Affiliate has any liability, contingent or otherwise.

“Net Cash Proceeds” means, with respect to any sale or disposition by any Person or any Subsidiary thereof of property or assets, the amount of Collections received (directly or

SCHEDULE 1.1 - 15

indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of such Person or such Subsidiary, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any Permitted Lien on any asset (other than (A) Indebtedness owing to Agent or any Lender under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such disposition, (ii) reasonable expenses related thereto incurred by such Person or such Subsidiary in connection therewith, and (iii) taxes paid or payable to any taxing authorities by such Person or such Subsidiary in connection therewith, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate and are properly attributable to such transaction.

“Non-U.S. Lender” has the meaning specified therefor in Section 15.11(f).

“Obligations” means all loans (including the Term Loans), Advances, debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), premiums, liabilities (including all amounts charged to Borrowers’ Loan Account pursuant hereto), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that Borrowers are required to pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in the Agreement or in the other Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“Originating Lender” has the meaning specified therefor in Section 13.1(e).

“Other Taxes” has the meaning specified therefor in Section 15.11(b).

“Parent” has the meaning specified therefor in the preamble to the Agreement.

“Participant” has the meaning specified therefor in Section 13.1(f).

“Patent” has the meaning specified therefor in the Security Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Security Agreement.

“PBGC” means Pension Benefit Guaranty Corporation as defined in Title IV of ERISA, or any successor entity.

SCHEDULE 1.1 - 16

“Permitted Acquisition” means an acquisition by a Borrower which satisfies the conditions of Section 3.2(b), unless one or more of such conditions have been waived by Agent in Agent’s sole discretion, and in such case, only to the extent of such waiver.

“Permitted Discretion” means a determination made honestly in fact and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

“Permitted Dispositions” means (a) sales or other dispositions of Equipment, Inventory and other fixed assets (other than Real Property) that are substantially worn, damaged, or obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents, and (d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business.

“Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b) Investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) Investments received in settlement of amounts due to a Borrower or its Subsidiaries effected in the ordinary course of business or owing to a Borrower or its Subsidiaries as a result of Insolvency Proceedings involving an Account Debtor or upon the foreclosure or enforcement of any Lien in favor of a Borrower or its Subsidiaries, (e) Investments by any Foreign Subsidiary in a Parent or Domestic Subsidiary, (f) Investments by any Foreign Subsidiary in another Foreign Subsidiary, (g) Investments by any Borrower in another Borrower, and (h) Permitted Acquisitions.

“Permitted Liens” means (a) Liens held by Agent to secure the Obligations, (b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) judgment Liens that do not constitute an Event of Default under Section 7.7 of the Agreement, (d) Liens set forth on Schedule D-1, (e) the interests of lessors under operating leases, (f) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (g) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrowers’ business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (h) Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment insurance, (i) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (j) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, and (k) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof.

“Permitted Protest” means the right of Administrative Borrower or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll

SCHEDULE 1.1 - 17

taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on a Borrower’s or any of its Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by Administrative Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $1,000,000.

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“Plan” means any employee benefit plan, program, or arrangement maintained or contributed to by Borrower or with respect to which it may incur liability.

“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss statements and (c) cash flow statements, all prepared on a basis consistent with Parent’s historical financial statements, in reasonable detail and accompanied by a statement of underlying assumptions.

“Pro Rata Share” means:

(a)with respect to a Lender’s obligation to make Advances and right to receive payments of principal, interest, fees, costs and expenses with respect thereto, (x) prior to the Revolver Commitment being reduced to zero, the percentage obtained by dividing (i) such Lender’s Revolver Commitment by (ii) the aggregate Revolver Commitments of all Lenders, and (y) from and after the time that the Revolver Commitment has been terminated or reduced to zero, the percentage obtained by dividing (i) the aggregate principal amount of such Lender’s Advances by (ii) the aggregate principal amount of all Advances,

(b)with respect to a Term Loan Lender’s obligation to make a Term Loan and right to receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (x) such Lender’s Individual Lender Term Loan Exposure by (y) the Aggregate Term Loan Exposure, and

(c)with respect to all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7), the percentage obtained by dividing (i) such Lender’s Revolver Commitment, plus such Lender’s Individual Lender Term Loan Exposure by (ii) the aggregate amount of Revolver Commitments of all Lenders plus the Aggregate Term Loan Exposure; provided, however, that in the event the Revolver Commitments have been terminated or reduced to zero, Pro Rata Share shall be the percentage obtained by dividing (A) the outstanding principal amount of such Lender’s Advances plus such Lender’s Individual Lender Term Loan Exposure by (B) the principal amount of all outstanding Advances plus the Aggregate Term Loan Exposure.

SCHEDULE 1.1 - 18

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

“Qualified Affiliate” is an Affiliate that is exempt from United States withholding taxes in respect of interest paid or accrued on the Obligations.

“Qualified Related Fund” is a Related Fund that is exempt from United States withholding taxes in respect of interest paid or accrued on the Obligations.

“Rating Agencies” has the meaning specified therefor in Section 2.15.

“Real Property” means any real property hereafter acquired by any Borrower and the improvements thereto.

“Record” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

“Register” has the meaning specified therefor in Section 13.1(i).

“Registered Loan” means a loan recorded on the Register (or Related Party Register) pursuant to Section 13.1(i).

“Registered Note” has the meaning specified therefor in Section 2.14.

“Related Fund” means a fund or account managed by a Lender or an Affiliate of a Lender or its investment manager.

“Related Party Register” has the meaning specified therefor in Section 13.1(i).

“Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping, or disposing.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (d) conduct any other actions with respect to Hazardous Materials authorized by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 14.2(a).

“Report” has the meaning specified therefor in Section 15.17.

SCHEDULE 1.1 - 19

“Reportable Event” means any of the events described in Section 4043(c) of ERISA or the regulations thereunder other than a Reportable Event as to which the provision of 30 days notice to the PBGC is waived under applicable regulations.

“Required Lenders” means, at any time, Lenders whose Pro Rata Share aggregate 50.1% or more, as determined pursuant to clause (c) of the definition of “Pro Rata Share.”

“Retiree Health Plan” means an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA that provides benefits to individuals after termination of their employment, other than as required by Section 601 of ERISA.

“Revolver Commitment” means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule B-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1.

“Revolver Lenders” means those Lenders designated as having a Revolver Commitment on Schedule B-1.

“Revolver Maturity Date” has the meaning specified therefor in Section 3.3(b).

“Revolver Renewal Fee” has the meaning specified therefor in Section 3.3(b).

“Revolver Renewal Notice” has the meaning specified therefor in Section 3.3(b).

“Revolver Usage” means, as of any date of determination, the amount of outstanding Advances.

“Scheduled Intellectual Property Collateral” has the meaning set forth in Section 4.15.

“SEC” means the United States Securities and Exchange Commission and any successor thereto.

“Securities Account” means a “securities account” (as that term is defined in the Code).

“Security Agreement” means a security agreement, in form and substance satisfactory to Agent, executed and delivered by Borrowers and its Subsidiaries to Agent.

“Solvent” means, with respect to any Person on a particular date, that, at fair valuations, the sum of such Person’s assets is greater than all of such Person’s debts.

“Stock” means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

SCHEDULE 1.1 - 20

“Stock Pledge Agreement” means a pledge agreement by and among Agent, on the one hand, and the owners of 100% of the outstanding Stock of Borrower, on the other, in form and substance satisfactory to Agent.

“Stockholders’ Equity” shall mean the Combined capital surplus and retained earnings of Borrowers, subject to intercompany eliminations and reduced by the outstanding amount of any note received by Borrowers in payment for Stock, all as determined in accordance with GAAP.

“Subordinated Debt” shall mean any Indebtedness of Borrowers as to which the subordinated creditor has agreed in writing on terms acceptable to the Required Lenders in their sole discretion to be subordinate and junior in right of payment to the rights of the Lender Group with respect to the Obligations under this Agreement.

“Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

“Taxes” has the meaning specified therefor in Section 15.11(a).

“Term Loans” means, collectively, the Term Loan A and the Term Loan B.

“Term Loan A” has the meaning specified therefor in Section 2.2(a).

“Term Loan A Amount” means, as of any date of determination, the outstanding principal amount of Term Loan A.

“Term Loan A Commitment” means, with respect to each Lender, its Term Loan A Commitment, and, with respect to all Lenders, their Term Loan A Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule B-1.

“Term Loan A Lenders” means those Lenders designated as having a Term Loan A Commitment on Schedule B-1.

“Term Loan B” has the meaning specified therefor in Section 2.2(b).

“Term Loan B Amount” means, as of any date of determination, the outstanding principal amount of Term Loan B.

“Term Loan B Commitment” means, with respect to each Lender, its Term Loan B Commitment, and, with respect to all Lenders, their Term Loan B Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule B-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts shall be reduced by any portion of the Term Loan B made by such Lender or Lenders, as applicable, and as such amounts: (x) may be reduced or increased

SCHEDULE 1.1 - 21

from time to time pursuant to assignments made in accordance with the provisions of Section 13.1; and (y) reduced from time to time as required by Section 2.4(e).

“Term Loan B Commitment Expiry Date” means May 30, 2009.

“Term Loan B Commitment Period” means the period of time commencing on the Closing Date and ending on the Term Loan B Commitment Expiry Date.

“Term Loan B Lenders” means those Lenders designated as having a Term Loan B Commitment on Schedule B-1.

“Term Loan Commitment” means a Term Loan A Commitment or a Term Loan B Commitment.

“Term Loan Lender” means a Term Loan A Lender or a Term Loan B Lender.

“Total Commitment” means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule B-1 attached hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, as such amounts may be: (x) reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1; and (y) reduced from time to time as required by Section 2.4(e).

“Trademark” has the meaning specified therefor in the Security Agreement.

“Trademark Security Agreement” has the meaning specified therefor in the Security Agreement.

“Treasury Regulations” means the final, temporary and proposed United States Treasury regulations promulgated under the IRC, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“UK Debenture” means a debenture agreement, in form and substance satisfactory to Agent, executed by each UK Subsidiary and delivered to Agent.

“UK Guaranty” means a guaranty agreement, in form and substance satisfactory to Agent, executed by each UK Guarantor Subsidiary and delivered to Agent.

“UK Security Documents” means the UK Debenture, the UK Share Pledge and the UK Guaranty.

“UK Share Pledge” means a share pledge agreement, in form and substance satisfactory to Agent, executed by each owner of a UK Subsidiary and delivered to Agent.

“UK Guarantor Subsidiary” means the UK Subsidiaries that are parties to the UK Guaranty.

SCHEDULE 1.1 - 22

“UK Subsidiary” means any Subsidiary of Borrower incorporated in the United Kingdom.

“USA Patriot Act” means the USA Patriot Act, Title III of Pub.L. 107-56, signed into law October 26, 2001.

“United States” means the United States of America.

“Voidable Transfer” has the meaning specified therefor in Section 16.6.

“Warrant Agreement” means a warrant agreement, in form and substance satisfactory to Agent, executed and delivered by Borrowers to Agent.

“Wells Fargo Credit Facility” means that certain credit facility entered into by the Borrowers and Wells Fargo Bank, National Association (acting through its Wells Fargo Business Credit operating division).

“Withholding Taxes” has the meaning specified therefor in Section 15.11(h).

“Yost Subordination Agreement” means a subordination agreement, in form and substance satisfactory to Agent, executed by the Borrowers and Warren and Gail Yost and delivered to Agent.

SCHEDULE 1.1 - 23

Schedule 3.1

I.CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT.

The obligation of each Lender to make its initial portion of a Loan (whether as an Advance, Term Loan A or Term Loan B) provided for in the Agreement is subject to the fulfillment, to the satisfaction of Agent and each Lender (the making of such portion of a Loan by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:

(a)the Closing Date shall occur on or before December 7, 2007;

(b)Agent shall have received a letter duly executed by each Borrower authorizing Agent to file appropriate financing statements in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the security interests to be created by the Loan Documents;

(c)Agent shall have received evidence that appropriate financing statements have been duly filed in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent’s Liens in and to the Collateral;

(d)Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect:,

(i)the Cash Management Agreements,

(ii)the Control Agreements,

(iii)[intentionally omitted],

(iv)a disbursement letter executed and delivered by Borrowers to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent,

(v)the Fee Letter,

(vi)the Patent Security Agreement,

(vii)the Security Agreement,

(viii)[intentionally omitted],

(ix)the Trademark Security Agreement,

(x)the Warrant Agreement,

(xi)the Japanese Guaranty,

SCHEDULE 3.1 - 1

(xii)the UK Security Documents,

(xiii)the French Security Documents,

(xiv)the McDermott Subordination Agreement, and

(xv)the Yost Subordination Agreement.

(e)Agent shall have received a certificate from the Secretary of each Borrower (i) attesting to the resolutions of such Borrower’s Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which such Borrower is a party, (ii) authorizing specific officers of such Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Borrower;

(f)Agent shall have received copies of each Borrower’s Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of such Borrower;

(g)Agent shall have received a certificate of status with respect to each Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Borrower, which certificate shall indicate that such Borrower is in good standing in such jurisdiction;

(h)Agent shall have received certificates of status with respect to each Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that such Borrower is in good standing in such jurisdictions;

(i)Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 5.8, the form and substance of which shall be reasonably satisfactory to Agent;

(j)[intentionally omitted];

(k)Agent shall have received opinions of Borrowers’ counsel (including Borrowers’ French and United Kingdom counsel) in form and substance satisfactory to Agent;

(l)Agent shall have received the valuation report on each Borrower and Guarantor, in form and substance satisfactory to Agent;

(m)Agent shall have received the due diligence report on each Borrower and Guarantor, in form and substance satisfactory to Agent;

(n)Agent shall have received the Closing Date Projections;

(o)Borrowers shall have paid all Lender Group Expenses incurred in

SCHEDULE 3.1 - 2

connection with the transactions evidenced by this Agreement;

(p)Borrowers shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Borrowers of the Loan Documents or with the consummation of the transactions contemplated thereby;

(q)The Agent shall have received “key man life insurance” insurance policies for each of Carmine Oliva and Graham Jefferies, each of which shall be in an amount, for a term and issued by insurers acceptable to Agent;

(r)With respect to $1,800,000 of the Loan proceeds to be disbursed on the Closing Date which shall be used to pay off certain accounts payable and unsecured creditors of the Borrowers (the “Designated Payments”), Borrowers shall provide Agent with a detailed list (duly executed by the Borrowers) of all recipients of a Designated Payment and the amounts to be paid to such recipients (the “Designated Payments List”);

(s)Agent shall have received evidence satisfactory to it that the prepayment penalty applicable to Borrowers’ Existing Credit Facility with Wells Fargo Bank, National Association (acting through its Wells Fargo Business Credit operating division) has been reduced from 3% to 2%; and

(t)all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Agent.

SCHEDULE 3.1 - 3

EX-10.2

EXHIBIT 10.2

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”) is made as of the 30^th day of November, 2007, among the Grantors listed on the signature pages hereof (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and GVEC RESOURCE IV INC., a company organized and existing under the laws of the British Virgin Islands, in its capacity as administrative agent for the Lender Group (together with its successors, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Credit Agreement”) among EMRISE Corporation, a Delaware corporation (“Parent”), each of Parent’s Subsidiaries identified on the signature pages thereto (such Subsidiaries, together with Parent, are referred to hereinafter individually as a “Borrower” and collectively, jointly and severally, as the “Borrowers”), the lenders party thereto as “Lenders” (“Lenders”), and Agent, the Lender Group is willing to make available to Borrowers a secured credit facility of up to $23,000,000 from time to time pursuant to the terms and conditions thereof;

WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group in connection with the transactions contemplated by this Agreement; and

WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other Loan Documents and to induce the Lender Group to make financial accommodations to Borrowers as provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, (a) the obligations of Grantors arising from this Agreement, the Credit Agreement, and the other Loan Documents and (b) all Obligations of any Borrower (including, without limitation, any interest, fees or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency Proceeding), plus reasonable attorneys fees and expenses if the obligations represented thereunder are collected by law, through an attorney-at-law, or under advice therefrom (clauses (a) and (b) being hereinafter referred to as the “Secured Obligations”), by the granting of the security interests contemplated by this Agreement.

NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.             Defined Terms. All capitalized terms used herein (including, without limitation, in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement; provided, however, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in

1

this Agreement, as used in this Agreement, the following terms shall have the following meanings:

(a)           “Accounts” means accounts (as that term is defined in the Code).

(b)           “Code” means the California Uniform Commercial Code, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

(c)           “Copyrights” means all right, title and interest in and to copyrights in works of authorship of any kind, and all registration applications, registrations and recordings thereof in the Office of the United States Register of Copyrights, Library of Congress, or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter acquired, including, but not limited to, those described in Schedule A to the Copyright Security Agreement annexed  hereto and made a part hereof, together with all extensions, renewals, reversionary rights, and corrections thereof and all licenses thereof or pertaining thereto.

(d)           “Copyright Security Agreement” means each Copyright Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit A attached hereto, pursuant to which Grantors have granted to Agent, for the benefit of the Lender Group, a security interest in all their respective Copyrights.

(e)           “Deposit Account” means a deposit account (as that term is defined in the Code).

(f)            “Equipment” means equipment (as that term is defined in the Code).

(g)           “General Intangibles” means general intangibles (as that term is defined in the Code and, in any event, including, without limitation, payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights, URLs and domain names, industrial designs, other industrial or intellectual property or rights therein or applications therefor, whether under license or otherwise, programs, programming materials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including intellectual property licenses, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction).

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(h)           “Intellectual Property Collateral” means the Copyrights, the Patents and the Trademarks.

(i)            “Inventory” means inventory (as that term is defined in the Code).

(j)            “Investment Related Property” means (i) investment property (as that term is defined in the Code), and (ii) all of the following regardless of whether classified as investment property under the Code:  all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

(k)           “Patents” means all right, title and interest in and to all inventions and letters patent and registration applications therefor, and all registrations and recordings thereof, including, without limitation, registration applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States or any state thereof, or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter acquired, including, but not limited to, those described in Schedule A to the Patent Security Agreement annexed hereto and made a part hereof, together with all re-examinations, reissues, continuations, continuations-in-part, divisions, improvements and extensions thereof and all licenses thereof or pertaining thereto and all licenses of patent rights now in effect or hereafter entered into and the rights to make, use and sell, and all other rights with respect to, the inventions disclosed or claimed therein, all inventions, designs, proprietary or technical information, know-how, other data or information, software, databases, all embodiments or fixations thereof and related documentation, all information having value in connection with the business relating thereto and all other trade secret rights not described above.

(l)            “Patent Security Agreement” means each Patent Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit B attached hereto, pursuant to which Grantors have granted to Agent, for the benefit of the Lender Group, a security interest in all their respective Patents.

(m)          “Pledged Companies” means, each Person listed on Schedule 1 hereto as a “Pledged Company”, together with each other Person, all or a portion of whose Stock, is acquired or otherwise owned by a Grantor after the Closing Date.

(n)           “Pledged Interests” means all of each Grantor’s right, title and interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation, including, without limitation, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including, without limitation, any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or

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in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

(o)           “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in the form of Exhibit C to this Agreement.

(p)           “Pledged Operating Agreements” means all of each Grantor’s rights, powers, and remedies under the limited liability company operating agreements of the Pledged Companies that are limited liability companies.

(q)           “Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships.

(r)            “Records” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(s)           “Securities Accounts” means securities accounts (as that term is defined in the Code).

(t)            “Stock” means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

(u)           “Trademarks” means all right, title and interest in and to trademarks, trade names, trade styles, service marks, logos, emblems, prints and labels, all elements of package or trade dress of goods, and all general intangibles of like nature, now existing or hereafter adopted or acquired, together with the goodwill of the business connected with the use thereof and symbolized thereby, and all registration applications, registrations and recordings thereof, including, without limitation, registration applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States or in any office of the Secretary of State (or equivalent) of any state thereof, or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter acquired, including, but not limited to, those described in Schedule A to the Trademark Security Agreement and made a part hereof, together with all extensions, renewals and corrections thereof and all licenses thereof or pertaining thereto.

(v)           “Trademark Security Agreement” means each Trademark Security Agreement among Grantors, or any of them, and Agent, for the benefit of the Lender Group, in substantially the form of Exhibit D attached hereto, pursuant to which Grantors have granted to Agent, for the benefit of the Lender Group, a security interest in all their respective Trademarks.

(w)          “URL” means “uniform recourse locator,” an internet web address.

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2.             Grant of Security. Each Grantor hereby unconditionally grants, assigns and pledges to Agent, for the benefit of the Lender Group, a continuing security interest in all personal property of such Grantor whether now owned or hereafter acquired or arising and wherever located (hereinafter referred to as the “Security Interest”), including, without limitation, such Grantor’s right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):

(a)           all of such Grantor’s Accounts;

(b)           all of such Grantor’s books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information) (“Books”);

(c)           all of such Grantor’s chattel paper (as that term is defined in the Code) and, in any event, including, without limitation, tangible chattel paper and electronic chattel paper (“Chattel Paper”);

(d)           all of such Grantor’s interest with respect to any Deposit Account;

(e)           all of such Grantor’s Equipment and fixtures;

(f)            all of such Grantor’s General Intangibles;

(g)           all of such Grantor’s Intellectual Property Collateral;

(h)           all of such Grantor’s Inventory;

(i)            all of such Grantor’s Investment Related Property;

(j)            all of such Grantor’s letters of credit, letter of credit rights, instruments, promissory notes, drafts, and documents (as such terms may be defined in the Code) (“Negotiable Collateral”);

(k)           all of such Grantor’s rights in respect of supporting obligations (as such term is defined in the Code), including letters of credit and guaranties issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property (“Supporting Obligations”);

(l)            all of such Grantor’s interest with respect to any commercial tort claims (as that term is defined in the Code), including, without limitation those commercial tort claims listed on Schedule 2 attached hereto (“Commercial Tort Claims”);

(m)          all of such Grantor’s money, Cash Equivalents, or other assets of each such Grantor that now or hereafter come into the possession, custody, or control of Agent or any other member of the Lender Group or the Bank Product Provider;

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(n)           all of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or commercial tort claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation with respect to any of the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing Collateral (the “Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to any Grantor or Agent from time to time with respect to any of the Investment Related Property.

3.             Security for Secured Obligations. This Agreement and the Security Interest created hereby secures the payment and performance of all the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Obligations owed by Borrowers, or any of them, to Agent, the Lender Group or any of them.

4.             Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including, without limitation, the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) none of the members of the Lender Group shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform any of the obligations or duties of any Grantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or other Loan Documents, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including, without limitation, all voting, consensual, and dividend rights, shall remain in the applicable Grantor until the occurrence of an Event of Default and until Agent shall notify the applicable Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.

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5.             Representations and Warranties. Each Grantor hereby represents and warrants as follows, which representations and warranties shall be continuing until the Secured Obligations are paid in full and the Commitments terminated:

(a)           The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit Agreement.

(b)           Schedule 3 attached hereto sets forth all Real Property owned by Grantors as of the Closing Date.

(c)           As of the date hereof, no Borrower has any Trademarks, Patents or Copyrights registered, or which are the subject of any pending application, in the United States Patent and Trademark Office, or any similar office of the United States or in any office of the Secretary of State (or equivalent) of any state thereof, or the United States Register of Copyrights, or in any similar office or agency of any country or political subdivision thereof throughout the world, other than those identified in Schedule A to each of the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement. The registrations of the Trademarks are valid and subsisting and in full force and effect. No Grantor has granted a license or otherwise agreed to allow any third party to use any Trademark (except as disclosed to Agent in writing prior to the date of this Agreement). The Patents are valid and subsisting and in full force and effect and have not been adjudged or, to such Grantor’s knowledge, claimed invalid or unenforceable in whole or in part (except for Permitted Liens). No Grantor has granted a license or otherwise agreed to allow any third party to use any Patent (except as disclosed to Agent in writing prior to the date of this Agreement). None of the Patents has been abandoned or dedicated.

(d)           This Agreement creates a valid security interest in the Collateral of each of Grantors, to the extent a security interest therein can be created under the Code, securing the payment of the Secured Obligations. All filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken or will have been taken upon the filing of financing statements listing each applicable Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 4 attached hereto or will have been taken upon: (i)  the filing of financing statements listing each applicable Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 4 attached hereto; and (ii) the recording in the US Copyright Office and the US Patent and Trademark Office of a notice of Agent’s security interest in pertinent Intellectual Property. Upon the making of such filings, Agent shall have a first priority perfected security interest in the Collateral (subject only to Permitted Liens) of each Grantor to the extent such security interest can be perfected by the filing of a financing statement or recordation in the US Copyright Office or the US Patent and Trademark Office.

(e)           Except for the Security Interest created hereby, each Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 1 as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the Closing Date; (i)  all of the Pledged Interests are duly authorized, validly issued, fully paid

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and nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding equity interests of the Pledged Companies of such Grantor identified on Schedule 1 hereto as supplemented or modified by any Pledged Interests Addendum or any Supplement to this Agreement; (ii) such Grantor has the right and requisite authority to pledge, the Investment Related Property pledged by such Grantor to Agent as provided herein; (iii) all actions necessary or desirable to perfect, establish the first priority (subject to Permitted Liens) of, or otherwise protect, Agent’s Liens in the Investment Related Collateral, and the proceeds thereof, have been duly taken, (a) upon the execution and delivery of this Agreement; (b) upon the taking of possession by Agent of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by the applicable Grantor; (c) upon the filing of financing statements in the applicable jurisdiction set forth on Schedule 4 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates, and (d) with respect to any Securities Accounts, upon the delivery of Control Agreements with respect thereto; and (iv) each Grantor has delivered to and deposited with Agent (or, with respect to any Pledged Interests created after the Closing Date, will deliver and deposit in accordance with Sections 6 and 8 hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged Interests are represented by certificates, and undated powers endorsed in blank with respect to such certificates.

(f)            Other than the filing of financing statements, Mortgages and the security agreements attached hereto as Exhibits A, B and D and any requirement under applicable law to register Stock, no consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except (x) as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally; and (y) for consents and approvals that have been obtained and that are still in force and effect.

6.             Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent and the Lender Group that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 22 hereof:

(a)           Possession of Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel Paper, and if and to the extent that perfection or priority of Agent’s Security Interest is dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of Agent and in accordance with Section 8 hereof, shall execute such other documents as shall be reasonably requested by Agent or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper to Agent, together with such undated powers endorsed in blank as shall be requested by Agent.

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(b)           Chattel Paper.

(i)            Upon the request of Agent, each Grantor shall take all steps reasonably necessary to grant Agent control of all electronic Chattel Paper in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction.

(ii)           If any Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly upon the request of Agent, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interest of GVEC Resource IV Inc., as Agent for the benefit of the Lender Group”.

(c)           Control Agreements.

(i)            Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall obtain an authenticated Control Agreement, from each bank holding a Deposit Account for such Grantor.

(ii)           Except to the extent otherwise permitted by the Credit Agreement, each Grantor shall obtain authenticated Control Agreements, from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for any Grantor.

(d)           Letter of Credit Rights. Each Grantor that is or becomes the beneficiary of a letter of credit in excess of $50,000 shall promptly (and in any event within 5 Business Days after becoming a beneficiary), notify Agent thereof and, upon the request by Agent, enter into a tri-party agreement with Agent and the issuer and/or confirmation bank with respect to letter-of-credit rights (as that term is defined in the Code) assigning such letter-of-credit rights to Agent and directing all payments thereunder to Agent’s Account, all in form and substance satisfactory to Agent.

(e)           Commercial Tort Claims. Each Grantor shall promptly (and in any event within 5 Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof against any third party in an amount exceeding $100,000 and, upon request of Agent, promptly amend Schedule 2 to this Agreement, authorize the filing of additional or amendments to existing financing statements and do such other acts or things deemed necessary or desirable by Agent to give Agent a first priority, perfected security interest in any such Commercial Tort Claim.

(f)            Investment Related Property.

(i)            If any Grantor shall receive or become entitled to receive any Pledged Interests after the Closing Date, it shall promptly (and in any event within 5 Business Days of receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests.

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(ii)           Each Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof.

(iii)          As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (a) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (b) do not and will not constitute investment company securities, and (c) are not and will not be held by such Pledgor in a securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.

(g)           Real Property; Fixtures. Each Grantor covenants and agrees that upon the acquisition of any fee interest in Real Property it will promptly (and in any event within 10 Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant to Agent, for the benefit of the Lender Group, a first priority (subject to existing Liens) Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor and upon request of Agent shall deliver such other documentation and opinions, in form and substance reasonably satisfactory to Agent, in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion, including, without limitation, title insurance policies, financing statements, fixture filings and environmental audits and such Grantor shall pay all recording costs, taxes and other fees and costs (including reasonable attorneys fees and expenses) incurred in connection therewith. Each Grantor acknowledges and agrees that, to the extent permitted by applicable law, all of the Collateral shall remain personal property regardless of the manner of its attachment or affixation to real property.

(h)           Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except expressly permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral of any of Grantors, except for Permitted Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents.

(i)            Other Actions as to Any and All Collateral. Each Grantor shall promptly (and in any event within 5 Business Days of acquiring or obtaining such Collateral) notify Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as defined in the Code), or instruments (as defined in the Code) and, upon the request of Agent and in accordance with Section 8 hereof, promptly execute such other documents, or if applicable, deliver such Chattel Paper, other documents or certificates evidencing any Investment Related Property in accordance with Section 6 hereof and do such other acts or things deemed necessary or desirable by Agent to protect Agent’s Security Interest therein.

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(j)            Intellectual Property Collateral.

(i)            Each Grantor (either itself or through its licensees) will place appropriate notice of Copyright on all copies embodying copyrighted works covered by the Copyright which are publicly distributed and no Grantor will (and will not permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Copyright may become invalidated or dedicated to the public domain. Each Grantor will continue to use standards of quality in the manufacture of products sold under the Trademarks that are at least equal to those standards in effect as of the date of this Agreement. Each Grantor (either itself or through its licensees) will continue to use the Trademarks on its current lines of goods as reflected in its current catalogs, brochures and price lists in order to maintain the Trademarks in full force and effect, in the ordinary course of business, and no Grantor will (or will permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Trademark may become invalidated. No Grantor will do any act, or omit to do any act, or permit any licensee thereof to do any act whereby any Patent may become abandoned or dedicated.

(ii)           Each Grantor will promptly perform all acts and execute all documents, including, without limitation, grants of security in forms acceptable to Agent and suitable for recording with (a) the United States Patent and Trademark Office and the United States Register of Copyrights, and (b) the appropriate offices and agencies of foreign jurisdictions reasonably requested by Agent at any time to evidence, perfect, maintain, record or enforce the Agent’s security interest in the Intellectual Property Collateral or otherwise in furtherance of the provisions of this Agreement. Each Grantor hereby authorizes Agent to execute and file one or more financing statements (and any similar documents) or copies thereof or of this Agreement with respect to the Intellectual Property Collateral (with a copy sent to Administrative Borrower).

(iii)          In the event that any Grantor, either itself or through any subsidiary, affiliate, agent, employee, licensee or designee, shall file an application for the issuance of any Patent or registration of any Trademark with the United States Patent and Trademark Office, or any similar office of the United States or in any office of the Secretary of State (or equivalent) of any state thereof, or for the registration of any Copyright with the United States Register of Copyrights, or for the registration of any Patent, Trademark or Copyright in any similar office or agency of any country or political subdivision thereof throughout the world, or shall obtain issuance of any Patent or registration of any Trademark or Copyright previously applied for, or shall adopt, acquire or obtain rights to any new trademark, patent application or work for which a copyright application has been or is expected to be filed, or become entitled to the benefit of any patent application or any patent or any part thereof for reissue, re-examination, continuation, continuation-in-part, division, improvement or extension, the applicable Grantor shall (a) inform Agent of any such event or action in semi-annual reports which Borrowers shall deliver to Agent concurrently with the delivery to Agent of the quarterly financial information of Borrower pursuant to the Credit Agreement, and (b) execute and deliver any and all assignments, agreements, instruments, documents and papers as are necessary or appropriate or as Agent may reasonably request to evidence the Agent’s security interest in such Trademark, Patent or Copyright and the goodwill and general intangibles of Grantors relating thereto or represented thereby. Each Grantor hereby constitutes Agent, or Agent’s agent, its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby

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ratified and confirmed; such power being coupled with an interest is irrevocable until the Secured Obligations are indefeasibly paid in full and the Commitments terminated. Each Grantor authorizes the amendment of the schedules hereto to include any future Intellectual Property Collateral registrations or applications which may be acquired or made by such Grantor.

(iv)          Each Grantor has the authority, right and power to enter into this Agreement and to perform its terms and to grant the security interest herein granted, and has not entered and will not enter into any oral or written agreements which would prevent such Grantor from complying with the terms hereof, provided, however, each Grantor may enter into or maintain in effect such non-exclusive license agreements with respect to the Intellectual Property Collateral as such Grantor believes in its reasonable business judgment are in the best interest of such Grantor’s business, so long as any such license agreement does not prohibit the assignment thereof to Agent, for the benefit of the Lender Group. The Intellectual Property Collateral is not now, and at all times will not be, subject to any Liens (other than Permitted Liens); provided, however, each Grantor may enter into such non-exclusive license agreements with respect to the Intellectual Property Collateral as such Grantor believes in its reasonable business judgment are in the best interest of such Grantor’s business, so long as any such license agreement does not prohibit the assignment thereof to Agent, for the benefit of the Lender Group. To the best knowledge of each Grantor, none of the Intellectual Property Collateral is subject to any claims of any other party.

(v)           Except for Permitted Liens, or to the extent that Agent upon prior written notice from Grantor, shall consent in writing, no Grantor will assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security interest in or lien upon, grant an exclusive license, or otherwise dispose of any of the Intellectual Property Collateral, and nothing in this Agreement shall be deemed a consent by Agent to any such action except as expressly permitted herein.

(vi)          Each Grantor will take commercially reasonable steps in any proceeding before the United States Patent and Trademark Office, United States Register of Copyrights or similar office or agency of the United States or any office of the Secretary of State (or equivalent) of any state thereof, or in any similar office or agency of any country or political subdivision thereof throughout the world, to maintain each registration application and registration of the Intellectual Property Collateral, including, without limitation, filing of renewals, extensions, affidavits of use and incontestability, and opposition, interference and cancellation proceedings. Each Grantor shall notify Agent promptly in writing if any registration application or registration relating to any Intellectual Property Collateral may become abandoned or dedicated or subject to an adverse final determination in any proceeding in the United States Patent and Trademark Office or United States Register of Copyrights or in any similar office or agency of any country or political subdivision thereof throughout the world or in any court regarding such Grantor’s ownership of such Intellectual Property Collateral, its right to register same, or to keep or maintain the validity of same.

(vii)         In the event that any Grantor acquires actual knowledge that any Trademark, Patent or Copyright is infringed, misappropriated or diluted by a third party, such Grantor shall promptly sue for infringement, misappropriation and/or dilution and to obtain injunctive relief and recover damages therefor, unless such Grantor shall determine in its

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reasonable business judgment that such suit is not in the best interest of such Grantor’s business, and the applicable Grantor shall take such other actions reasonably required to protect such Trademark, Patent or Copyright as such Grantor shall deem appropriate in its reasonable business judgment under the circumstances. Upon and during the continuation of an Event of Default, Agent shall have the right, but in no way shall be obligated, to bring suit in its own name to enforce the Trademarks, Patents and Copyrights and any licenses thereunder, in which event the applicable Grantor shall, at the request of Agent, do any and all lawful acts requested by Agent and execute any and all documents required by Agent to aid such enforcement, and the applicable Grantor shall, upon demand, promptly reimburse and indemnify Agent for all costs and expenses incurred in such enforcement.

7.             Relation to Other Loan Documents. The provisions of this Agreement shall be read and construed with the other Loan Documents referred to below in the manner so indicated. In the event of any conflict between any provision in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall control.

8.             Further Assurances.

(a)           Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that Agent may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.

(b)           Each Grantor authorizes the filing of such financing or continuation statements, or amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.

(c)           Each Grantor authorizes Agent to file, transmit, or communicate, as applicable, financing statements and amendments describing the Collateral as “all personal property of debtor” or “all assets of debtor” or words of similar effect, in order to perfect Agent’s security interest in the Collateral without such Grantor’s signature. Each Grantor also hereby ratifies its authorization for Agent to have filed in any jurisdiction any financing statements filed prior to the date hereof.

(d)           Each Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under Section 9509(d)(2) of the Code.

9.             Agent’s Right to Perform Contracts. Upon the occurrence and continuation of an Event of Default, Agent (or its designee) may proceed to perform any and all of the obligations of any Grantor contained in any contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself could.

10.           Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the

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name of such Grantor or otherwise, to take any action and to execute any instrument which Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, without notice to any Grantor or Borrower, including, without limitation:

(a)           at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor;

(b)           at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of Agent;

(c)           to receive, indorse, and collect any drafts or other instruments, documents, Negotiable Collateral or Chattel Paper;

(d)           at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to file any claims or take any action or institute any proceedings which Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of Agent with respect to any of the Collateral;

(e)           at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

(f)            at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other industrial or intellectual property rights, in advertising for sale and selling Inventory and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

(g)           at such time as an Event of Default has occurred and is continuing under the Credit Agreement, Agent on behalf of the Lender Group shall have the right, but shall not be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and any intellectual property licenses included within the Collateral and, if Agent shall commence any such suit, the appropriate Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents reasonably required by Agent in aid of such enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

11.           Agent May Perform. If any of Grantors fails to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable, jointly and severally, by Grantors.

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12.           Agent’s Duties. The powers conferred on Agent hereunder are solely to protect Agent’s interest in the Collateral, for the benefit of the Lender Group, and shall not impose any duty upon Agent to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for moneys actually received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which Agent accords its own property.

13.           Collection of Accounts, General Intangibles and Negotiable Collateral; Control Agreements. At any time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s designee may (a) notify Account Debtors of any Grantor that the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender Group, or that Agent has a security interest therein, and (b) collect the Accounts, General Intangibles and Negotiable Collateral directly, and any collection costs and expenses shall constitute part of such Grantor’s Secured Obligations under the Loan Documents. With respect to each Control Agreement delivered pursuant to Section 6(c), at any time upon the occurrence and during the continuation of an Event of Default, Agent shall be entitled to give any bank or securities intermediary holding the relevant deposit or securities account instructions as to the withdrawal or disposition of funds or assets held therein, all without further consent of any Grantor; provided that Agent agrees it shall not give any bank or securities intermediary such instructions unless an Event of Default has occurred and is continuing.

14.           Disposition of Pledged Interests by Agent. None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Each Grantor understands that in connection with such disposition, Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees that:  (a) if Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, Agent shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that Agent has handled the disposition in a commercially reasonable manner.

15.           Voting Rights.

(a)           Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at its option, and with 5 Business Days prior notice to any Grantor, and in

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addition to all rights and remedies available to Agent under any other agreement, at law, in equity, or otherwise, exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged Interests owned by such Grantor, but under no circumstances is Agent obligated by the terms of this Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

(b)           For so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it will not, without the prior written consent of Agent, vote or take any consensual action with respect to such Pledged Interests which would materially adversely affect the rights of Agent and the other members of the Lender Group or the value of the Pledged Interests.

16.           Remedies. Upon the occurrence and during the continuation of an Event of Default:

(a)           Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the Code or any other applicable law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, Agent without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any of Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to Agent at one or more locations which are reasonably convenient to Grantors, and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days notice to any of Grantors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b)           Agent is hereby granted a non-exclusive license or other right to use, without liability for royalties or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual property or any

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property of a similar nature, whether owned by any of Grantors or with respect to which any of Grantors have rights under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and all franchise agreements shall inure to the benefit of Agent.

(c)           Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in the Credit Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each Grantor shall remain jointly and severally liable for any such deficiency.

(d)           Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have the right to an immediate writ of possession without notice of a hearing. Agent shall have the right to the appointment of a receiver for the properties and assets of each of Grantors, and each Grantor hereby consents to such rights and such appointment and hereby waives, to the fullest extent permitted by law, any objection such Grantors may have thereto or the right to have a bond or other security posted by Agent.

17.           Remedies Cumulative. Each right, power, and remedy of Agent as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.

18.           Marshaling. Agent  shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

19.           Indemnity and Expenses.

(a)           Each Grantor agrees to indemnify Agent and the other members of the Lender Group from and against all claims, lawsuits and liabilities (including reasonable

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attorney’s fees) growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement) or any other Loan Document to which such Grantor is a party, except claims, losses or liabilities resulting from the gross negligence or willful misconduct of the party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision shall survive the termination of this Agreement and the Credit Agreement and the repayment of the Secured Obligations.

(b)           Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent hereunder or (iv) the failure by any of Grantors to perform or observe any of the provisions hereof.

(c)           Grantors, jointly and severally, agree to pay, and to save Agent and the other members of the Lender Group harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, property, sales, value added, recording, document or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

20.           Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any of Grantors herefrom, shall in any event be effective unless the same shall be in writing and signed by Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by Agent and each of Grantors to which such amendment applies.

21.           Addresses for Notices. All notices and other communications provided for hereunder shall be given in the form and manner and delivered to Agent at its address specified in the Credit Agreement, and to any of the Grantors at their respective addresses specified in the Credit Agreement or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

22.           Continuing Security Interest: Assignments under Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each of Grantors, and their respective successors and assigns, and (c) inure to the benefit of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender may, in accordance with

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the provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any eligible assignee of Lender, and such assignee of Lender shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and the expiration or termination of the Commitments, the Security Interest granted hereby shall terminate and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto. At such time, Agent will authorize the filing of appropriate termination statements to terminate such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document executed and delivered by any Grantor to Agent nor any additional Loans made by any of the Lender Group to Borrowers, nor the taking of further security, nor the retaking or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Lender Group, or any of them, shall release any of Grantors from any obligation, except a release or discharge executed in writing by Agent in accordance with the provisions of the Credit Agreement. Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which Agent would otherwise have had on any other occasion.

23.           CHOICE OF LAW AND VENUE; JUDICIAL REFERENCE; WAIVER OF JURY TRIAL; SERVICE OF PROCESS.

(a)           THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

(b)           EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH GRANTOR HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY

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OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT AGAINST ANY GRANTOR OR ITS ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE SUCH GRANTOR OR ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT TO JURISDICTION.

(c)           EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (i) ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION; (ii) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; AND (iii) ANY RIGHT IT MAY HAVE, HOWEVER ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY LOAN DOCUMENT IN A STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD NOT HAVE OR ACCEPT JURISDICTION THEREOF.

(d)           ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS AGREEMENT AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A PROCEEDING IN CALIFORNIA STATE COURT INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

(e)           OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF CALIFORNIA, EACH GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GRANTOR CERTIFIES THAT NO REPRESENTATIVE,

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AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

(f)            EACH GRANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH GRANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. EACH GRANTOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT. EACH GRANTOR SHALL TAKE SUCH ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE AND EFFECT. EACH GRANTOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH GRANTOR IRREVOCABLY AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE (45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN THIS SECTION.

24.           New Subsidiaries. Pursuant to Section 5.18 of the Credit Agreement, any new direct or indirect Subsidiary (whether by acquisition or creation) of Parent is required to enter into this Agreement by executing and delivering in favor of Agent an instrument in the form of Annex 1 attached hereto. Upon the execution and delivery of Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

25.           Agent. Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group.

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26.           Miscellaneous.

(a)           This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

(b)           Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

(c)           Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

(d)           The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

(e)           The representation, warranties and covenants of each Grantor hereunder are joint and several.

(f)            All exhibits and schedules hereto are incorporated into this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written.

GRANTORS:	EMRISE CORPORATION,
	a Delaware corporation
	By:	/S/ D. JOHN DONOVAN
	Name:			D. JOHN DONOVAN
	Title:		V.P. of Finance & Administration
	EMRISE ELECTRONICS CORPORATION,
	a New Jersey corporation
	By:	/S/ D. JOHN DONOVAN
	Name:			D. JOHN DONOVAN
	Title:		Secretary & Treasurer
	CXR LARUS CORPORATION,
	a Delaware corporation
	By:	/S/ D. JOHN DONOVAN
	Name:			D. JOHN DONOVAN
	Title:		Secretary & Treasurer
	RO ASSOCIATES INCORPORATED,
	a California corporation
	By:	/S/ D. JOHN DONOVAN
	Name:			D. JOHN DONOVAN
	Title:		Secretary & Treasurer

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AGENT:	GVEC RESOURCE IV INC., as Agent
	By:	/S/ ROBERT J. ANDERSON
	Name:			Robert J. Anderson
	Title:		Authorized Signatory
	By:	/S/ PETER PAUL MENDEL
	Name:			Peter Paul Mendel
	Title:		Authorized Signatory

D-24

EX-10.3

Exhibit 10.3

PATENT SECURITY AGREEMENT

EMRISE Corporation, a Delaware corporation, and RO Associates Incorporated, a California corporation (collectively, “Grantor”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, grant to GVEC Resource IV Inc., a company organized and existing under the laws of the British Virgin Islands, as agent for and representative of (in such capacity herein called “Secured Party”) the financial institutions (“Lenders”) party to that certain Credit Agreement, entered into by and among the Grantor, Agent, and Lenders, dated as of November 30, 2007 ( the “Credit Agreement”), a continuing security interest in the following property:

(i)Each patent presently owned and listed on Schedule A hereto; and

(ii)All proceeds of the foregoing, including without limitation any claim by Grantor against third parties for damages (to the extent not effectively prohibited by an applicable and legally enforceable license agreement) by reason of past, present or future infringement of any patent now owned or hereafter owned by Grantor, in each case together with the right to sue for and collect said damages:

to secure performance of all Obligations of Grantor under the Creditor Agreement and as set out in that certain Security Agreement dated as of November 30, 2007, by and among Grantor and Secured Party and others (the “Agreement”).

Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured Party with respect to the security interest in the works of authorship, patents, patent registrations and recordings made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall have their respective meanings set forth therein, unless the context requires otherwise.

1

IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be duly executed as of November 30, 2007.

GRANTOR:
EMRISE CORPORATION, a Delaware corporation
By:	/S/ D. JOHN DONOVAN
Name:		D. JOHN DONOVAN
Title:		V.P. of Finance & Administration
RO ASSOCIATES INCORPORATED,
a California corporation
By:	/S/ D. JOHN DONOVAN
Name:		D. JOHN DONOVAN
Title:		Secretary & Treasurer

2

ACCEPTED BY SECURED PARTY:
GVEC RESOURCE IV INC., as Agent
By:	/S/ ROBERT J. ANDERSON
Name:		Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:		Peter Paul Mendel
Title:		Authorized Signatory

3

Schedule A to

PATENT SECURITY AGREEMENT

Patents

EMRISE Corporation

Title	Jurisdiction	Serial Number	Filing Date	Status	Patent Number	Issue Date
(Inventors: Donald L. Horton; William J. Miller)
Low Profile Rotary Switch	Brazil	PI0215831-0	8/29/02	Pending	N/A	N/A
Low Profile Rotary Switch	Canada	2494641	11/5/02	Pending	N/A	N/A
Low Profile Rotary Switch	Europe	02778749.8	11/5/02	Pending	N/A	N/A
Low Profile Rotary Switch	Japan	2004-532550	11/5/02	Pending	N/A	N/A
Low Profile Rotary Switch	PCT	PCT/US02/35610	11/5/02	Superceded	N/A	N/A
Low Profile Rotary Switch	US	10/523342	1/27/05	Pending	N/A	N/A
(Inventors: Donald L. Horton; William J. Miller)
Low Profile Rotary Switch With Detent in the Bushing	Brazil	PI0314134-9	7/17/03	Pending	N/A	N/A
Low Profile Rotary Switch With Detent in the Bushing	Canada	2496034	7/17/03	Pending	N/A	N/A
Low Profile Rotary Switch With Detent in the Bushing	Europe	03811194.4	7/17/03	Pending	N/A	N/A
Low Profile Rotary Switch With Detent in the Bushing	Japan	2004-551425	7/17/03	Pending	N/A	N/A
Low Profile Rotary Switch With Detent in the Bushing	PCT	PCT/US03/22523	7/17/03	Superceded	N/A	N/A
Low Profile Rotary Switch With Detent in the Bushing	US	10/522700	1/27/05	Issued	7109430	9/19/06
Low Profile Rotary Switch With Detent in the Bushing	US	11/485249	7/11/06	Pending	N/A	N/A
(Inventor: Donald L. Horton)
Rotary Switch with Crown Detent	Canada	2548604	10/5/04	Pending	N/A	N/A
Rotary Switch with Crown Detent	Europe	04821443.1	10/5/04	Pending	N/A	N/A
Rotary Switch with Crown Detent	Japan	2006-551044	10/5/04	Pending	N/A	N/A

4

Title	Jurisdiction	Serial Number	Filing Date	Status	Patent Number	Issue Date
Rotary Switch with Crown Detent	PCT	PCT/US04/32797	10/5/04	Pending	N/A	N/A
(Inventor: Donald L. Horton)
Rotary Circuit Selectionwith Crown Detent	US	10/581240	6/2/06	Pending	N/A	N/A

5

RO Associates Incorporated:

Title	Jurisdiction	Patent / Publication Number	Status	Publication / Issue Date
Current Sharing Signal Coupling/Decoupling Circuit for Power Converter Systems	US	6134129	Issued	10/17/2000
Improved Current Sharing Signal Coupling/Decoupling Circuit for Power Converter Systems	Australia	6397499A1	Published/pending	4/10/2000
Current Sharing Signal Coupling/Decoupling Circuit for Power Converter Systems	US	5428523	Issued	6/27/1995
Improved Current Sharing Signal Coupling/Decoupling Circuit for Power Converter Systems	Australia	6362794A1	Published/pending	10/24/1994
DC to DC Converter Apparatus	US	5075821	Issued	12/24/1991
DC to DC Converter Apparatus	US	D334171	Issued	3/23/1993
Method and Means for Protecting Converter Circuits	US	4858052	Expired	8/15/1989
High Efficiency Power Supply Apparatus	US	3564384	Issued	2/16/1971

6

EX-10.4

Exhibit 10.4

TRADEMARK SECURITY AGREEMENT

EMRISE Corporation, a Delaware corporation, RO Associates Incorporated, a California corporation and EMRISE Electronics Corporation, a New Jersey corporation (collectively, “Grantor”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, grant to GVEC Resource IV Inc., a company organized and existing under the laws of the British Virgin Islands, as agent for and representative of (in such capacity herein called “Secured Party”) the financial institutions (“Lenders”) party to that certain Credit Agreement, entered into by and among the Grantor, Agent, and Lenders, dated as of November 30, 2007 ( the “Credit Agreement”), a continuing security interest in the following property:

(i)Each trademark, trademark registration and trademark application listed on Schedule A hereto, and all of the goodwill of the business connected with the use of, and symbolized by, each such trademark, trademark registration and trademark application; and

(ii)All proceeds of the foregoing, including without limitation any claim by Grantor against third parties for damages (to the extent not effectively prohibited by an applicable and legally enforceable license agreement) by reason of past, present or future infringement of any trademark or trademark registration listed in Schedule A hereto or by reason of injury to the goodwill associated with any such trademark or trademark registration or trademark license, in each case together with the right to sue for and collect said damages;

to secure performance of all Obligations of Grantor under the Credit Agreement and as set out in that certain Security Agreement dated as of November 30, 2007, by and among Grantor and Secured Party and others (the “Agreement”).

Grantor does hereby further acknowledge and affirm that the rights and remedies of Secured Party with respect to the security interest in the works of authorship, trademarks, trademark registrations and recordings, and trademark applications made and granted hereby are more fully set forth in the Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

All terms defined in the Agreement, whether by reference or otherwise, when used herein, shall have their respective meanings set forth therein, unless the context requires otherwise.

1

IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to be duly executed as of November 30, 2007.

GRANTOR:
EMRISE CORPORATION, a Delaware corporation
By:	/S/ D. JOHN DONOVAN
Name:		D. JOHN DONOVAN
Title:		V.P. of Finance & Administration
RO ASSOCIATES INCORPORATED,
a California corporation
By:	/S/ D. JOHN DONOVAN
Name:		D. JOHN DONOVAN
Title:		Secretary & Treasurer
EMRISE ELECTRONICS CORPORATION, a New Jersey corporation
By:	/S/ D. JOHN DONOVAN
Name:		D. JOHN DONOVAN
Title:		Secretary & Treasurer

2

ACCEPTED BY SECURED PARTY:
GVEC RESOURCE IV INC., as Agent
By:	/S/ ROBERT J. ANDERSON
Name:		Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:		Peter Paul Mendel
Title:		Authorized Signatory

3

Schedule A to

TRADEMARK SECURITY AGREEMENT

Trademarks

EMRISE Corporation

Title	Jurisdiction	Serial Number	Filing Date	Status	Registration Number	Issue Date
VLP	Australia	1024618	6/22/04	Issued	832836	6/22/2004
VLP	Hungary	832836	6/22/04	Issued	832836	6/2/2005
VLP	Ireland	832836	6/22/04	Issued	832836	4/22/2005
VLP	Israel	173032	6/27/04	Issued	173032	10/9/2005
VLP	India	1292840	6/22/04	Pending	N/A	6/28/2004
VLP	Iran	Z1231066	6/22/04	Issued	832836	6/22/2004
VLP	Japan	832836	6/22/04	Issued	832836	6/22/2004
VLP	Singapore	T04/17097E	6/22/04	Issued	832836	8/11/05
VLP	Turkey	832836	6/22/04	Issued	832836	2/25/2005
VLP	Taiwan	01163599	6/30/04	Issued	01163599	7/16/2005
VLP	United Kingdom		6/22/04	Issued	832836	3/23/2005
VLP	US	78/346552	12/30/03	Issued	2913348	12/21/2004
EMRISE	Europe	004496253	6/17/05	Registered	004496253	7/25/2006
EMRISE	Japan	2005-109295	11/21/05	Pending	N/A	N/A
EMRISE	US	78/636436	5/24/05	Pending	N/A	N/A

RO Associates Incorporated:

Mark	Jurisdiction	Serial Number	Registration Number	Issue Date
QUATTROVERTER	US	78106259	2708076	4/15/2003
SUPERVERTER	US	7673243	2482111	8/28/2001
MEGAVERTER	US	75582640	2281762	9/28/1999
UNIVERTER	US	75544651	2281572	9/28/1999
u VERTER	US	74137284	1694114	6/16/1992
NANOVERTER	US	74230586	1951638	1/23/1996
PICOVERTER	US	74230585	1914092	8/22/1995
MICROVERTER	US	74137282	1711279	9/1/1992

EMRISE Electronics Corporation:

Title	Jurisdiction	Serial Number	Filing Date	Status	Registration Number	Issue Date
DIGITRAN	European Community	165498	4/1/1996	Registered	165498	1/20/1999

4

EX-10.5

EXHIBIT 10.5

REVOLVER LOAN NOTE

$7,000,000 November 30, 2007

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 November 30, 2010, the lesser of (a) SEVEN MILLION DOLLARS AND ZERO CENTS ($7,000,000.00), and (b) the unpaid principal amount of the Advances 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 Revolver Loan 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 the Advances evidenced hereby were made and are to be repaid.

All payments of principal and interest in respect of this Revolver Loan 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 Revolver Loan 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 Revolver Loan Note shall not limit or otherwise affect the obligations of the Borrowers hereunder with respect to payments of principal of or interest on this Revolver Loan Note.

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

THIS REVOLVER LOAN 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

1

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 Revolver Loan 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 Revolver Loan 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 Revolver Loan 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 Revolver Loan 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 Revolver Loan Note. Borrowers and any endorsers of this Revolver Loan 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]

2

IN WITNESS WHEREOF, the Borrowers have caused this Revolver Loan 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/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			V.P. of Finance & Administration
EMRISE ELECTRONICS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			Secretary & Treasurer
CXR LARUS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:			Secretary & Treasurer
RO ASSOCIATES INCORPORATED
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:		Secretary & Treasurer

3

EX-10.6

EXHIBIT 10.6

TERM LOAN A NOTE

$6,000,000 November 30, 2007

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 November 30, 2010, the lesser of (a) SIX MILLION DOLLARS AND ZERO CENTS ($6,000,000.00), and (b) the unpaid principal amount of 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 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 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 Term Loan A evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this 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 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 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 Term Loan A Note.

This 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 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

1

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 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 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 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 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 Term Loan A Note. Borrowers and any endorsers of this 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.

[Signature Page Follows]

2

IN WITNESS WHEREOF, the Borrowers have caused this 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
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			V.P. of Finance & Administration
EMRISE ELECTRONICS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			Secretary & Treasurer
CXR LARUS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:			Secretary & Treasurer
RO ASSOCIATES INCORPORATED
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:		Secretary & Treasurer

3

EX-10.7

Exhibit 10.7

TERM LOAN B NOTE

$10,000,000 November 30, 2007

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 November 30, 2010, the lesser of (a) TEN MILLION DOLLARS AND ZERO CENTS ($10,000,000.00), and (b) the unpaid principal amount of Term Loan B 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 B 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 B evidenced hereby was made and is to be repaid.

All payments of principal and interest in respect of this Term Loan B 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 B 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 B 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 B Note.

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

THIS TERM LOAN B 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

1

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 B 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 B 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 B 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 B 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 B Note. Borrowers and any endorsers of this Term Loan B 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]

2

IN WITNESS WHEREOF, the Borrowers have caused this Term Loan B 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/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			V.P. of Finance & Administration
EMRISE ELECTRONICS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:			Secretary & Treasurer
CXR LARUS CORPORATION
By:	/S/ D. JOHN DONOVAN
Name:			D. JOHN DONOVAN
Title:			Secretary & Treasurer
RO ASSOCIATES INCORPORATED
By:	/S/ D. JOHN DONOVAN
Name:				D. JOHN DONOVAN
Title:		Secretary & Treasurer

3

EX-10.8

EXHIBIT 10.8

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

EMRISE CORPORATION

WARRANT

Warrant No. PEM-1 Original Issue Date: November 30, 2007

EMRISE Corporation, a Delaware corporation (the “Company”), hereby certifies that, for value received and pursuant to the terms of the Commitment Letter dated November 7, 2007 by and between the Company and Private Equity Management Group, Inc., Holder is entitled to purchase from the Company up to a total of 2,909,090 shares of Common Stock (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at any time and from time to time from and after the Original Issue Date and through and including November 30, 2014 (the “Expiration Date”), and subject to the following terms and conditions:

1.Definitions. As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.

“Alternate Consideration” shall have the meaning set forth in Section 9(b).

“Anti-Dilution Excluded Securities” shall mean any of the following securities: (i)  securities issued to employees, consultants, officers or directors of the Company pursuant to the Company’s 2007 Stock Incentive Plan or Options granted by the Company to employees, consultants, officers or directors of the Company pursuant to the Company’s 2007 Stock Incentive Plan and the grant of which is approved by the compensation committee of the Board of Directors; (ii) for the avoidance of doubt, securities issued on the conversion of any Convertible Securities or the exercise of any Options, in each case, outstanding on the Original Issue Date (as disclosed on Schedule 4.8(b) to the Credit Agreement dated November 30, 2007 by and among the Company, GVEC Resource IV Inc. and certain other parties listed on the signature pages to the Credit Agreement); and (iii) for the avoidance of doubt, securities issued in connection with a stock split, stock dividend, combination, reorganization, recapitalization or

other similar event for which adjustment is made in accordance with the provisions of this Warrant.

“Business Day” shall mean any day other than Saturday, Sunday or other day on which commercial banks in the State of California are authorized or required by law to remain closed.

“Common Stock” shall mean the Company’s common stock, $0.0033 par value per share.

“Common Stock Equivalents” shall mean Options and Convertible Securities.

“Convertible Securities” shall mean any stock or securities (other than Options) convertible into or exchangeable for Common Stock.

“Date of Exercise” shall have the meaning set forth in Section 5(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Exercise Price” shall mean $1.10, subject to adjustment in accordance with Section 9.

“Fundamental Transaction” shall mean any of the following: (i) the Company effects any merger or consolidation of the Company with or into another Person pursuant to which the Company is not the surviving entity (other than a migratory merger conducted for the purpose of changing the Company’s state of incorporation), (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.

“Holder” or “Holders” shall mean the holder or holders, as the case may be, from time to time, whether direct or beneficially, of Registrable Securities pursuant to this Warrant, including, without limitation, Private Equity Management Group LLC and any of its permitted transferees.

“Indemnified Party” shall have the meaning set forth in Section 12(c)(iii).

“Indemnifying Party” shall have the meaning set forth in Section 12(c)(iii).

“Losses” shall have the meaning set forth in Section 12(c)(i).

“Person” shall mean an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

“New Warrant” shall have the meaning set forth in Section 3.

2

“Options” shall mean any outstanding rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” shall mean the Original Issue Date first set forth on the first page of this Warrant.

“Proceeding” shall mean an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” shall mean the final prospectus filed with respect to the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including one or more other final prospectuses filed with respect to post-effective amendments, and all material incorporated by reference in such Prospectus.

“Registrable Securities” shall mean: (i) the Warrant Shares; and (ii) any securities issued or issuable with respect to such Warrant Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization with respect to any of the securities referenced above.

“Registration Statement” shall mean the registration statements contemplated by Section 12, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement.

“Rule 144” shall mean Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Subsidiary” shall mean any direct or indirect subsidiary of the Company.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over the counter market as reported by the Pink Sheets, LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall mean a Business Day.

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“Trading Market” means whichever of NYSE Arca, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“Warrant Register” shall have the meaning set forth in Section 2.

2.Registration of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

3.Registration of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

4.Exercise and Duration of Warrants.

(a)This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Original Issue Date through and including the Expiration Date. At 5:00 p.m., California time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value. The Company may not call or redeem any portion of this Warrant without the prior written consent of the affected Holder.

(b)If at any time after November 30, 2008 there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y [(A-B)/A]

where:

X = the number of Warrant Shares to be issued to the Holder.

Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

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A = the average of the closing sale prices for the five Business Days immediately prior to (but not including) the Exercise Date.

B = the Exercise Price.

5.Delivery of Warrant Shares.

(a)To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant Shares represented by this Warrant is being exercised. Upon delivery of the Exercise Notice (in the form attached hereto) to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than three (3) Business Days after the Date of Exercise) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise, which, shall contain the following restrictive securities legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

The Company shall, upon request of the Holder and subsequent to the date on which the Registration Statement covering the resale of the Warrant Shares has been declared effective by the SEC, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available, provided, that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A “Date of Exercise” means the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if the Holder is not utilizing the cashless exercise provisions set forth in Section 10(b), payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased.

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(b)If by the third (3^rd) Business Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.

(c)The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.

6.Charges, Taxes and Expenses. Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

7.Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

8.Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant

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Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

9.Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

(a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the payment of the dividend or the making of the distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

(b)Fundamental Transactions. If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then as a condition to the Company consummating any such Fundamental Transaction, the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant

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(or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

(c)Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

(d)Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(e)Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.

(f)Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits shareholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction at least ten (10) calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

(g)Subsequent Equity Sales. If the Company at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an

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effective price per share less than the then Exercise Price (each such issuance, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then the Exercise Price shall be reduced to such price and, in each case, the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment of the Exercise Price in the case of the issuance or sale from and after the Original Issue Date of Anti-Dilution Excluded Securities. The Company shall notify the Holder in writing, no later than the Business Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or if applicable, reset price, exchange price, conversion price and other pricing terms.

10.Payment of Exercise Price. Except in connection with a cashless exercise as set forth in Section 4(b), the Holder shall pay the Exercise Price by delivering to the Company immediately available funds.

11.No Fractional Shares. No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing sale price of one Warrant Share as reported by the applicable Trading Market on the date of exercise.

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12.Registration Rights.

(a)Incidental Registration. If at any time prior to the Expiration Date the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans (the “Registration Statement”), then the Company shall send to Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such Registration Statement all or any part of such Registrable Securities such holder requests to be registered. The Company will take all steps reasonably necessary in order to ensure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to have its Warrant Shares included in the Registration Statement.

(b)Registration Expenses. All fees and expenses incident to the performance of or compliance with Section 12 this Agreement by the Company, except as and to the extent specified in this Section 12(b), shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation:  (A) all registration and filing fees; (B) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is requested by the holders of a majority of the Registrable Securities included in the Registration Statement); (C) messenger, telephone and delivery expenses; (D) fees and disbursements of counsel for the Company; (E) Securities Act liability insurance, if the Company so desires such insurance; and (F) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Section 12, including, without limitation, the Company’s independent public accountants (including the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters). Except as otherwise expressly provided in this Agreement, any fees or expenses incurred by Holder or its legal counsel or Holder’s other advisors or consultants in connection with any review of the Registration Statement or with respect to any other matters related to this Agreement shall be borne solely by Holder.

(c)Indemnification.

(i)Indemnification by the Company. The Company shall, notwithstanding any termination of this Warrant, indemnify and hold harmless the Holder, the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls the Holder (within the

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meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and attorneys’ fees) and expenses (collectively, “Losses”) (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any related Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising solely out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any related Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding the Holder furnished in writing to the Company by the Holder expressly for use therein. The Company shall notify the Holder promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(ii)Indemnification by Holder. The Holder shall indemnify and hold harmless the Company, the directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred, arising solely out of or based solely upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any related Prospectus, or any form of prospectus or form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any related Prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission or alleged untrue statement or omission is contained in information so furnished by the Holder in writing to the Company expressly for inclusion in the Registration Statement or such related Prospectus. In no event shall the liability of the Holder hereunder be greater in amount than the dollar amount of the net proceeds received by the Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(iii)Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the

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Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, however, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except to the extent that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (x) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (y) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (z) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 12(c)) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, however, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(iv)Contribution. If a claim for indemnification under Section 12(c)(i) or Section 12(c)(ii) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate

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to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying, Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 12(c)(iii), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 12(c)(iv) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 12(c)(iv), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount of the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the proceeding. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

13.Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:00 p.m. (California time) on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Business Day or later than 5:00 p.m. (California time) on any Business Day, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be:  (i) if to the Company, to EMRISE Corporation, 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California 91730, Attn: President, or to Facsimile No.: (909) 987-5186 (or such other address as the Company shall indicate in writing in accordance with this Section), or (ii) if to the Holder, to

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the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section.

14.Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon ten (10) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

15.Holder Status. The Holder is an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

16.Miscellaneous.

(a)This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

(b)THE CORPORATE LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS SHAREHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. THE COMPANY AND HOLDER HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR HOLDER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THIS WARRANT, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY HOLDER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH

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EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND HOLDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

(c)The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(d)In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

(e)Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by being a Holder, be entitled to any rights of a shareholder with respect to the Warrant Shares.

(f)This Warrant may be transferred by the original Holder to any other Person provided such Person is an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

EMRISE CORPORATION
By:	/s/ Carmine T. Oliva
	Carmine T. Oliva, President and
	Chief Executive Officer

[Signature Page to Warrant]

IN WITNESS WHEREOF, the Holder has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

PRIVATE EQUITY MANAGEMENT GROUP LLC
By:	/s/ Robert J. Anderson
	Robert J. Anderson, Authorized Signatory
By:	/s/ Peter Paul Mendel
	Peter Paul Mendel, Authorized Signatory

[Signature Page to Warrant]

EXERCISE NOTICE
EMRISE CORPORATION
WARRANT DATED NOVEMBER 30, 2007

The undersigned Holder hereby irrevocably elects to purchase                 shares of Common Stock pursuant to the above referenced Warrant. Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

(1)The undersigned Holder hereby exercises its right to purchase                   Warrant Shares pursuant to the Warrant.

(2)The Holder intends that payment of the Exercise Price shall be made as (check one):

“Cash Exercise” under Section 4(a).

“Cashless Exercise” under Section 4(b).

(3)If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $             to the Company in accordance with the terms of the Warrant.

(4)Pursuant to this Exercise Notice, the Company shall deliver to the Holder                 Warrant Shares in accordance with the terms of the Warrant.

(5)The undersigned represents that it has and will comply with the prospectus delivery requirements, if any, of the Securities Act.

Dated:               ,	Name of Holder:
	(Print)
	By:
	Name:
	Title:
	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

[Exercise Notice]

Warrant Shares Exercise Log

Date Number of Warrant
Shares Available to be
Exercised Number of Warrant Shares
Exercised Number of
Warrant Shares
Remaining to be
Exercised

[Warrant Exercise Log]

EMRISE CORPORATION
WARRANT ORIGINALLY ISSUED NOVEMBER 30, 2007
WARRANT NO. PEM-1

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                    the right represented by the above-captioned Warrant to purchase               shares of Common Stock to which such Warrant relates and appoints                  attorney to transfer said right on the books of the Company with full power of substitution in the premises.

Dated:                 ,
	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
	Address of Transferee
In the presence of:

[Form of Assignment]

EX-10.10

EXHIBIT 10.10

GUARANTY

THIS GUARANTY (this “Guaranty”) is executed as of November 30, 2007, by XCEL Japan Ltd. (the “Guarantor”), for the benefit of GVEC Resource IV Inc., as Arranger and Agent (the “Agent”) and the Lenders (as defined below). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement (as herein defined).

RECITALS:

A.            Pursuant to that certain Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Credit Agreement”) between and among EMRISE Corporation, a Delaware corporation (the “Parent”), each of Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries, together with the Parent, the “Borrowers”), the Agent, and the Lenders from time to time party thereto (the “Lenders”), the Lenders are willing to make certain financial accommodations available to the Borrowers from time to time pursuant to the terms and conditions thereof.

B.            The Guarantor is an indirect wholly owned subsidiary of the Parent and, as such, will benefit by virtue of the financial accommodations extended to the Parent by the Lenders.

C.            In order to induce the Lenders to enter into the Credit Agreement and to extend the financial accommodations to the Borrowers pursuant to the Credit Agreement, and in consideration thereof, the Guarantor has agreed to guarantee the Guaranteed Obligations.

NOW, THEREFORE, as an inducement to the Lenders to enter into the Credit Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I
NATURE AND SCOPE OF GUARANTY

Section 1.1.            Guaranty. The Guarantor hereby unconditionally, absolutely and irrevocably guarantees to the Agent, for the benefit of the Lenders, and the Guarantor shall be liable for (a) the due and punctual payment of all Obligations including, without limitation, the principal of, and interest (including any interest that, but for the commencement of any applicable bankruptcy or insolvency proceeding, would have accrued) on, any and all premium on, and any and all expenses incurred in connection with, the Obligations pursuant to the terms of the Credit Agreement, and (b) the due and punctual performance of all of the covenants and obligations owing to the Agent and the Lenders (the “Guaranteed Obligations”).

Section 1.2.            Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and not a guaranty of collection. This Guaranty may not be revoked by the Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor. The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or

discharge the obligation of the Guarantor to the Agent or any Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by the Agent and any permitted assignee of the Agent and shall not be discharged by the assignment or negotiation of all or part of the Agent’s or any Lender’s rights under the Credit Agreement.

Section 1.3.            Payment By the Guarantor. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon demand by the Agent, and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to the Agent at the Agent’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.4.            No Duty To Pursue Others. The liability of the Guarantor shall be direct and immediate as a primary and not a secondary obligation or liability. It shall not be necessary for the Agent (and the Guarantor hereby waives any rights which the Guarantor may have to require the Agent), in order to enforce the obligations of the Guarantor hereunder, first to (a) institute suit or exhaust its remedies against any Borrower or others liable on the Loans or the Guaranteed Obligations or any other Person, (b) enforce the Agent’s rights against any collateral which shall ever have been given to secure the Loans, (c) enforce the Agent’s rights against any other guarantors of the Guaranteed Obligations, (d) join the Borrowers or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (e) exhaust any remedies available to the Agent or any Lender against any collateral which shall ever have been given to secure the Loans, or (f) resort to any other means of obtaining payment of the Guaranteed Obligations. Neither the Agent nor the Lenders shall be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.5.            Waivers.

(a)           Without limitation to any other waivers contained in this Guaranty, the Guarantor acknowledges and agrees to the provisions of the Loan Documents, and hereby waives notice of: (i) any loans or advances made by the Lenders to any of the Borrowers; (ii) acceptance of this Guaranty; (iii) any amendment or extension of the Credit Agreement or of any other Loan Documents; (iv) the execution and delivery by the Borrowers and the Agent or any Lender of any other loan or credit agreement or of any Borrower’s execution and delivery of any promissory notes or other documents arising under the Loan Documents or in connection with the Collateral; (v) the occurrence of any breach by any Borrower under any of the Loan Documents or an Event of Default; (vi) the Agent’s or any Lender’s transfer or disposition of the Guaranteed Obligations, or any part thereof; (vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations; (viii) protest, proof of non-payment or default by any Borrower; and (ix) any other action at any time taken or omitted by the Agent or any Lender, and, generally, all demands and notices of every kind in connection

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with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

(b)           Without limitation to any other waivers contained in this Guaranty, the Guarantor hereby waives, to the fullest extent permitted by law: (i) presentment, demand, protest, diligence, notice of demand, notice of protest, notice of dishonor, notice of nonperformance, notice of non-payment, notice of acceptance and all other notices and other formalities which may be required by statute, rule of law or otherwise to preserve intact Agent’s rights against the Guarantor under this Guaranty; (ii) all benefits and defenses under California Civil Code (“CC”) Section 2849, including the right, if any, to the benefit of, or to direct application of, any security hypothecated to, the Agent, until all the Obligations, howsoever arising, shall have been paid and/or performed; (iii) all benefits and defenses under CC Section 2845, including the right to require the Agent to proceed against any Borrower or to pursue any other remedy in the Agent’s power; (iv) all benefits and defenses under CC Section 2850, including the right to require the Agent to proceed against or exhaust any security or Collateral the Agent may hold; (v) any defense arising by reason of any disability or other defense of any Borrower or by reason of the cessation from any cause whatsoever of the liability of any Borrower other than full payment of and full performance of the Obligations; (vi) all statutes of limitations as a defense in any action or proceeding brought against the Guarantor by the Agent, to the fullest extent permitted by law (and the Guarantor agrees that any partial payment by any Borrower or other circumstances which operate to toll any statute of limitations as to any Borrower shall also operate to toll the statute of limitations as to the Guarantor); (vii) any defense based upon Agent’s failure to perfect or continue the perfection of any lien or security interest in Collateral that secures the Obligations; (viii) any defense arising due to any failure by the Agent to inform the Guarantor of any facts the Agent may now or hereafter know about any Borrower or any Borrower’s financial condition; (ix) all benefits and defenses under CC Section 2809 purporting to reduce a guarantor’s obligations in proportion to the principal obligation, and the Guarantor agrees that by doing so the Guarantor’s liability may be larger in amount or more burdensome than that of the Borrowers; (x) all benefits and defenses under CC Section 2810, and the Guarantor agrees that by doing so the Guarantor is liable even if the Borrowers had no liability at the time of execution of the Loan Documents or thereafter ceased to be liable; (xi) all rights and benefits of CC Section 2819, and the Guarantor agrees that by doing so the Guarantor’s liability shall continue even if the Agent alters any Obligation in any respect or the Agent’s remedies or rights against any Borrower are in any way impaired or suspended without the Guarantor’s consent, whether or not due to the act or omission of the Agent; (xii) any defense based on any action taken or omitted by the Agent in any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships; and (xiii) all other rights and remedies now or hereafter accorded by applicable law to sureties or guarantors.

(c)           Without limiting the generality of the foregoing and without limitation to any other waivers contained in this Guaranty, the Guarantor waives, to the fullest extent permissible by law, all benefits and defenses under CC Sections 2847 and 2848 and agrees that the Guarantor shall have no right of subrogation or reimbursement against any Borrower and no right of contribution against any other guarantor or pledgor unless and until all Obligations have been satisfied and the Agent has released, transferred or disposed of all of its right, title and interest in any Collateral.

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(d)           Without limiting the generality of the foregoing and without limitation to any other waivers contained in this Guaranty, the Guarantor hereby waives, to the fullest extent permitted by law, any and all rights and defenses a guarantor or surety would otherwise have under applicable California law to the enforcement of this Guaranty, including, but not limited to, all rights and defenses arising under or by virtue of or pursuant to the provisions of CC Sections 2787 to 2855, inclusive, and CC Sections 2899 and 3433, and any additional rights or defenses relating any of the foregoing statutory provisions pursuant to any applicable judicial decisions of the State of California.

(e)           The Guarantor acknowledges that the waivers made by the Guarantor in this Guaranty are made knowing that their intent is to deprive the Guarantor of the benefits and defenses that would or could otherwise be available to the Guarantor under the statutory provisions referenced herein.

Section 1.6.            Payment of Expenses. In the event that the Guarantor should breach or fail to timely perform any provision of this Guaranty, the Guarantor shall pay on demand to the Agent all costs and expenses (including court costs and reasonable attorneys’ fees) incurred by the Agent in the enforcement hereof or the preservation of the Agent’s rights hereunder. The covenant contained in this Section 1.6 shall survive the payment of the Guaranteed Obligations.

Section 1.7.            Effect of Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, the Agent or any Lender must rescind or restore any payment, or any part thereof, received by the Agent or any Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to the Guarantor by the Agent shall be without effect, and this Guaranty shall remain in full force and effect. It is the intention of the Guarantor that the Guarantor’s obligations hereunder shall not be discharged except by the Guarantor’s performance of such obligations and then only to the extent of such performance.

Section 1.8.            Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty and without limitation to any other waivers contained in this Guaranty, the Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of the Agent or the Lenders), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from the Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by the Guarantor under or in connection with this Guaranty or otherwise until ninety one (91) days after the Agent has received payment in full of the Obligations.

ARTICLE II
EVENTS AND CIRCUMSTANCES NOT REDUCING OR
DISCHARGING GUARANTOR’S OBLIGATIONS

The Guarantor hereby consents and agrees to each of the following, and agrees that the Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced

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or adversely affected by any of the following, and without limitation to any other waivers contained in this Guaranty waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which the Guarantor might otherwise have as a result of or in connection with any of the following:

Section 2.1.            Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Credit Agreement, the other Loan Documents, or any other document, instrument, contract or understanding between the Borrowers and the Agent or any Lender, or any other parties, pertaining to the Guaranteed Obligations or any failure of the Agent to notify the Guarantor of any such action.

Section 2.2.            Adjustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Agent or any Lender to any Borrower or any other guarantor.

Section 2.3.            Condition of Borrowers or Guarantor. (a) The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of any Borrower, the Guarantor, any other guarantor or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of any Borrower or the Guarantor, (b) Agent’s or any Lender’s election, in any proceeding instituted under the United States Bankruptcy Code, of the application of Section 1111(b)(2) of the United States Bankruptcy Code or any successor statute, (c) any borrowing or any grant of a security interest under Section 364 of the United States Bankruptcy Code or (d) any action taken or omitted by the Agent or any Lender in any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding (each, an “Insolvency Proceeding”) involving any Borrower, the Guarantor or any other guarantor, including any election to have the Agent’s or any Lender’s claim allowed as being secured, partially secured or unsecured, any extension of credit by the Agent or any Lender to any Borrower, the Guarantor or any other guarantor in any Insolvency Proceeding and the taking and holding by the Agent or any Lender of any security for any such extension of credit, (d) any sale, lease or transfer of any or all of the assets of any Borrower, the Guarantor or any other guarantor, or (e) any changes in the shareholders, partners or members of any Borrower, the Guarantor or any other guarantor; or any reorganization of any Borrower or the Guarantor.

Section 2.4.            Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (a) the Guaranteed Obligations, or any part thereof, exceed the amount permitted by law, (b) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (c) the officers or representatives executing the Credit Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (d) the Guaranteed Obligations violate applicable usury laws, (e) any Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced), which render the Guaranteed Obligations wholly or partially uncollectible from such Borrower, (f) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of

5

the Guaranteed Obligations) is illegal, uncollectible or unenforceable, (g) the Credit Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, (h) the failure of consideration for the granting of this Guaranty, (i) the expiration of any statute of limitations affecting the liability of the Guarantor hereunder, the liability of any Borrower or any guarantor under the Loan Documents; it being agreed that the Guarantor shall remain liable hereon regardless of whether any Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

Section 2.5.            Release of Obligors. Any full or partial release of the liability of any Borrower on the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and the Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons will be liable to pay the Guaranteed Obligations, or that the Agent or the Lenders will look to other Persons to pay the Guaranteed Obligations.

Section 2.6.            Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

Section 2.7.            Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations, or the application by any Borrower of the proceeds of the Loans for purposes other than the purposes represented by such Borrower to the Agent and Lenders or intended or understood by the Agent and Lenders or Guarantor.

Section 2.8.            Care and Diligence. The failure of the Agent or any Lender to diligently exercise its rights and remedies under any of the Loan Documents, or to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security, including but not limited to any neglect, delay, omission, failure or refusal of the Agent or any Lender (a) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (b) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (c) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations, (d) to take any other acts or omissions of which vary, increase or decrease the risk on the Guarantor, other than any loss, damage liability or cost arising from the Agent’s or such Lender’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral.

Section 2.9.            Lender Disclosure. The failure of the Agent or the Lenders to disclose to the Guarantor (a) any facts it may now or hereafter know regarding any Borrower, regardless of whether the Agent or the Lenders have reason to believe that any such facts materially increase the risk beyond that which the Guarantor intends to assume or has reason to believe that such

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facts are unknown to the Guarantor, the Guarantor acknowledging that it is fully responsible for being and keeping informed of the financial condition and affairs of the Borrowers, or (b) any default, demand of performance or notice of acceleration to the Borrowers or any other Person with respect to the Loans or the Guaranteed Obligations.

Section 2.10.          Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by the Guarantor that the Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

Section 2.11.          Offset. The Guaranteed Obligations and the liabilities and obligations of the Guarantor to the Agent hereunder shall not be reduced, discharged or released by reason of any existing or future right of offset, claim or defense (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced) of any Borrower against the Agent, any Lender or any other Person, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.12.          Merger. The reorganization, merger or consolidation of any Borrower into or with any Person.

Section 2.13.          Preference. Any payment by any Borrower to the Agent or any Lender is held to constitute a preference under bankruptcy laws, or for any reason the Agent or such Lender is required to refund such payment or pay such amount to such Borrower or someone else.

Section 2.14.          Attempted Revocation. Any revocation or repudiation hereof by the Guarantor or the revocation or repudiation of any of the Loan Documents by any Borrower or any other Person, including any right the Guarantor might have to revoke this Guaranty pursuant to the terms of any of the Loan Documents.

Section 2.15.          Surety Defenses. Any other suretyship defense that might, but for the terms hereof, be available to the Guarantor, including without limitation, any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of any Borrower.

Section 2.16.          Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, other than any loss, damage liability or cost arising from the Agent’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence,

7

circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into the Loan Documents and extend credit to the Borrowers, the Guarantor represents and warrants to the Agent and the Lenders as follows, as of the date hereof, and as of each date that the Lenders make a Term Loan or Advance to any Borrower under the Credit Agreement:

Section 3.1.            Benefit. The Guarantor is an Affiliate of the Parent and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.2.            Familiarity and Reliance. The Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrowers and is familiar with the value of any and all collateral intended to be created as security for the payment of the Loans or Guaranteed Obligations; however, the Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.3.            No Representations by the Agent and Lenders. None of the Agent, the Lenders, nor any other party has made any representation, warranty or statement to the Guarantor in order to induce the Guarantor to execute this Guaranty.

Section 3.4.            Guarantor’s Financial Condition. As of the date hereof , and after giving effect to this Guaranty and the contingent obligation evidenced hereby, the Guarantor is, and will be, solvent, and has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities.

Section 3.5.            Legality. This Guaranty has been duly authorized by all necessary corporate action and the execution, delivery and performance by the Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which the Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which the Guarantor is a party or which may be applicable to the Guarantor. This Guaranty is a legal and binding obligation of the Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

Section 3.6.            Financial Statements. Any and all balance sheets, net worth statements and other financial data that have been given or may be given to the Agent with respect to the Guarantor did or will, at the time of such delivery, fairly and accurately present the financial condition of the Guarantor in all material respects.

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Section 3.7.            Representations and Warranties of Borrowers. All representations and warranties made by the Borrowers with respect to the Guarantor in the Credit Agreement are true and correct in all material respects.

ARTICLE IV

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1.            Subordination of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of the Borrowers to the Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of the Borrowers thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. The Guarantor Claims shall include without limitation all rights and claims of the Guarantor against the Borrowers (arising as a result of subrogation or otherwise) as a result of the Guarantor’s payment of all or a portion of the Guaranteed Obligations. Upon the occurrence of a Default or an Event of Default, the Guarantor shall not receive or collect, directly or indirectly, from any Borrower or any other party any amount upon the Guarantor Claims.

Section 4.2.            Claims in Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision involving the Guarantor as debtor, the Agent shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. The Guarantor hereby assigns such dividends and payments to the Agent for the benefit of the Lenders. Should the Agent receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to the Guarantor, and which, as between such Borrower and the Guarantor, shall constitute a credit against the Guarantor Claims, then upon payment to the Agent in full of the Guaranteed Obligations, the Guarantor shall become subrogated to the rights of the Agent to the extent that such payments to the Agent on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if the Agent had not received dividends or payments upon the Guarantor Claims.

Section 4.3.            Payments Held in Trust. Notwithstanding anything to the contrary in this Guaranty, in the event that the Guarantor shall receive any funds, payments, claims or distributions which are prohibited by this Guaranty, the Guarantor agrees to hold in trust for the Agent, an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay such funds, payments, claims and/or distributions promptly to the Agent, and the Guarantor covenants promptly to pay the same to the Agent.

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Section 4.4.            Liens Subordinate. The Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon any Borrowers’ assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon such Borrowers’ assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of the Guarantor or the Agent presently exist or are hereafter created or attach. Until ninety one (91) days after the Obligations shall have been paid in full and the Guaranteed Obligations fully satisfied, without the prior written consent of the Agent, the Guarantor shall not (a) exercise or enforce any creditor’s right it may have against any Borrower, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of any Borrower held by the Guarantor.

ARTICLE V

MISCELLANEOUS

Section 5.1.            No Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay by the Agent or any Lender in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law. The Agent may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

Section 5.2.            Enforcement. The Agent shall have the right to enforce this Guaranty in separate actions against the Guarantor, or by an action against any other Person liable for the Guaranteed Obligations.

Section 5.3.            Severability of Provisions. Any provision of this Guaranty which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

Section 5.4.            Amendments. This Guaranty may be amended only by an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.

Section 5.5.            Parties Bound; Assignment. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided, however, that the Guarantor may not, without the prior written consent of the Agent, assign any of its rights, powers, duties or obligations hereunder.

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Section 5.6.            Headings. Article, Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.

Section 5.7.            Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 5.8.            Telefacsimile Execution. Delivery of an executed signature page to this Guaranty by telefacsimile shall be equally as effective as delivery of an original executed signature page of this Guaranty. Any party delivering an executed signature page of this Guaranty by telefacsimile also shall deliver an original executed signature page of this Guaranty but the failure to deliver an original executed signature page shall not affect the validity, enforceability, and binding effect of this Guaranty.

Section 5.9.            Rights and Remedies. If the Guarantor becomes liable for any indebtedness owing by any Borrower to the Agent or Lenders, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of the Agent hereunder shall be cumulative of any and all other rights that the Agent and the Lenders may ever have against the Guarantor. The exercise by the Agent of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 5.10.          Complete Agreement. This Guaranty, together with the Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof.

Section 5.11.          Cooperation. The Guarantor acknowledges that the Agent and its successors and assigns may, subject to any applicable limitations set forth in the Credit Agreement assign, or sell participations in, its rights under the Credit Agreement pursuant to the terms thereof. The Guarantor shall reasonably cooperate with the Agent and Lenders in effecting any such assignment or participation.

Section 5.12.          Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest on the Term Loans, any amount payable on the Advances or any other amount payable by any Borrower under the Loan Documents relating to the Term Loans or the Advances is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, the Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

Section 5.13.          Survival. Notwithstanding anything to the contrary contained in this Guaranty or in any other Loan Document, this Guaranty shall continue in full force and effect until full indefeasible payment of the Guaranteed Obligations.

Section 5.14.          Choice of Law and Venue; Judicial Reference; Waiver of Jury Trial; Service of Process.

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(a)           THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

(b)           THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE GUARANTOR HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT AGAINST THE GUARANTOR OR ITS ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE THE GUARANTOR OR ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT TO JURISDICTION.

(c)           THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (i) ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE LOAN DOCUMENTS IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION; (ii) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; AND (iii) ANY RIGHT IT MAY HAVE, HOWEVER ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT IN A STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD NOT HAVE OR ACCEPT JURISDICTION THEREOF.

(d)           ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS GUARANTY AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A PROCEEDING IN CALIFORNIA STATE COURT INCLUDING

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ANY AND ALL QUESTIONS OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

(e)           OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF CALIFORNIA, THE GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

(f)            THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT. THE GUARANTOR SHALL TAKE SUCH ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE AND EFFECT. THE GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY TO THIS

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GUARANTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE GUARANTOR IRREVOCABLY AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE (45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN THIS SECTION.

Section 5.15.          Notices. All notices and other communications hereunder to Agent shall be in writing and shall be mailed, sent or delivered in accordance with the Credit Agreement. All notices and other communications hereunder to the Guarantor shall be in writing and shall be (a) personally delivered, (b) sent by overnight courier of international reputation, (c) transmitted by telecopy, or (d) sent as electronic mail, to the following (or at such other business address, telecopier number, or e-mail address as the Guarantor may hereafter designate in writing to the other parties hereto):

	XCEL Japan Ltd.
	KEC Bldg, 9F
	25-18, Higashi, Gitanda 5-Chome
	Shinagawa-ku, Tokyo 141-0022
	Japan
With a copy to:	Emrise Corporation
	9485 Haven Avenue, Suite 100
	Rancho Cucamonga, CA 91730
	Attn: D. John Donovan
	Rutan & Tucker, LLP
	611 Anton Blvd., Suite 1400
	Costa Mesa, CA 92626
	Attn: Larry A. Cerutti, Esq.
	Fax No.: (714) 546-9035

Section 5.16.          Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first set forth above.

GUARANTOR:
XCEL JAPAN LTD.
By:	/S/ SHIGEO FUJII
Name:			Shigeo Fujii
Title:		Managing Director and Director

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Acknowledged and agreed:
AGENT AND ARRANGER:
GVEC RESOURCE IV INC.
By:	/S/ ROBERT J. ANDERSON
Name:			Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:			Peter Paul Mendel
Title:		Authorized Signatory

EX-10.11

EXHIBIT 10.11

GUARANTY

THIS GUARANTY (this “Guaranty”) is executed and delivered as a deed as of November 30, 2007, by each of the parties that are signatories hereto (such parties are referred to hereinafter each individually as a “Guarantor,” and collectively, jointly and severally, as the “Guarantors”), for the benefit of GVEC Resource IV Inc., as Arranger and Agent (the “Agent”) and the Lenders (as defined below). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement (as herein defined).

RECITALS:

A.Pursuant to that certain Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Credit Agreement”) between and among EMRISE Corporation, a Delaware corporation (the “Parent”), each of Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries, together with the Parent, the “Borrowers”), the Agent, and the Lenders from time to time party thereto (the “Lenders”), the Lenders are willing to make certain financial accommodations available to the Borrowers from time to time pursuant to the terms and conditions thereof.

B.The Guarantors are direct or indirect wholly owned subsidiaries of the Parent and, as such, will benefit by virtue of the financial accommodations extended to the Parent by the Lenders.

C.In order to induce the Lenders to enter into the Credit Agreement and to extend the financial accommodations to the Borrowers pursuant to the Credit Agreement, and in consideration thereof, the Guarantors have agreed to guarantee the Guaranteed Obligations.

NOW, THEREFORE, as an inducement to the Lenders to enter into the Credit Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I
NATURE AND SCOPE OF GUARANTY

Section 1.1.Guaranty. Each Guarantor hereby unconditionally, absolutely and irrevocably guarantees to the Agent, for the benefit of the Lenders, and each Guarantor shall be jointly and severally liable for (a) the due and punctual payment of all Obligations including, without limitation, the principal of, and interest (including any interest that, but for the commencement of any applicable bankruptcy or insolvency proceeding, would have accrued) on, any and all premium on, and any and all expenses incurred in connection with, the Obligations pursuant to the terms of the Credit Agreement, and (b) the due and punctual performance of all of the covenants and obligations owing to the Agent and the Lenders (the “Guaranteed Obligations”).

Section 1.2.Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and not a guaranty of collection. This Guaranty may not be revoked by any

Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by any Guarantor. The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of any Guarantor to the Agent or any Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by the Agent and any permitted assignee of the Agent and shall not be discharged by the assignment or negotiation of all or part of the Agent’s or any Lender’s rights under the Credit Agreement.

Section 1.3.Payment By the Guarantors. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantors shall, immediately upon demand by the Agent, and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to the Agent at the Agent’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.4.No Duty To Pursue Others. The liability of each Guarantor shall be direct and immediate as a primary and not a secondary obligation or liability. It shall not be necessary for the Agent (and each Guarantor hereby waives any rights which such Guarantor may have to require the Agent), in order to enforce the obligations of each Guarantor hereunder, first to (a) institute suit or exhaust its remedies against any Borrower or others liable on the Loans or the Guaranteed Obligations or any other Person, (b) enforce the Agent’s rights against any collateral which shall ever have been given to secure the Loans, (c) enforce the Agent’s rights against any other guarantors of the Guaranteed Obligations, (d) join the Borrowers or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (e) exhaust any remedies available to the Agent or any Lender against any collateral which shall ever have been given to secure the Loans, or (f) resort to any other means of obtaining payment of the Guaranteed Obligations. Neither the Agent nor the Lenders shall be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.5.Waivers.

(a)Without limitation to any other waivers contained in this Guaranty, each Guarantor acknowledges and agrees to the provisions of the Loan Documents, and hereby waives notice of: (i) any loans or advances made by the Lenders to any of the Borrowers; (ii) acceptance of this Guaranty; (iii) any amendment or extension of the Credit Agreement or of any other Loan Documents; (iv) the execution and delivery by the Borrowers and the Agent or any Lender of any other loan or credit agreement or of any Borrower’s execution and delivery of any promissory notes or other documents arising under the Loan Documents or in connection with the Collateral; (v) the occurrence of any breach by any Borrower under any of the Loan Documents or an Event of Default; (vi) the Agent’s or any Lender’s transfer or disposition of the Guaranteed Obligations, or any part thereof; (vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations; (viii) protest, proof of

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non-payment or default by any Borrower; and (ix) any other action at any time taken or omitted by the Agent or any Lender, and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

(b)Without limitation to any other waivers contained in this Guaranty, each Guarantor hereby waives, to the fullest extent permitted by law:  (i) presentment, demand, protest, diligence, notice of demand, notice of protest, notice of dishonor, notice of nonperformance, notice of non-payment, notice of acceptance and all other notices and other formalities which may be required by statute, rule of law or otherwise to preserve intact Agent’s rights against each Guarantor under this Guaranty; (ii) all benefits and defenses under California Civil Code (“CC”) Section 2849, including the right, if any, to the benefit of, or to direct application of, any security hypothecated to, the Agent, until all the Obligations, howsoever arising, shall have been paid and/or performed; (iii) all benefits and defenses under CC Section 2845, including the right to require the Agent to proceed against any Borrower or to pursue any other remedy in the Agent’s power; (iv) all benefits and defenses under CC Section 2850, including the right to require the Agent to proceed against or exhaust any security or Collateral the Agent may hold; (v) any defense arising by reason of any disability or other defense of any Borrower or by reason of the cessation from any cause whatsoever of the liability of any Borrower other than full payment of and full performance of the Obligations; (vi) all statutes of limitations as a defense in any action or proceeding brought against any Guarantor by the Agent, to the fullest extent permitted by law (and each Guarantor agrees that any partial payment by any Borrower or other circumstances which operate to toll any statute of limitations as to any Borrower shall also operate to toll the statute of limitations as to any Guarantor); (vii) any defense based upon Agent’s failure to perfect or continue the perfection of any lien or security interest in Collateral that secures the Obligations; (viii) any defense arising due to any failure by the Agent to inform any Guarantor of any facts the Agent may now or hereafter know about any Borrower or any Borrower’s financial condition; (ix) all benefits and defenses under CC Section 2809 purporting to reduce a guarantor’s obligations in proportion to the principal obligation, and each Guarantor agrees that by doing so such Guarantors’ liability may be larger in amount or more burdensome than that of the Borrowers; (x) all benefits and defenses under CC Section 2810, and each Guarantor agrees that by doing so such Guarantor is liable even if the Borrowers had no liability at the time of execution of the Loan Documents or thereafter ceased to be liable; (xi) all rights and benefits of CC Section 2819, and each Guarantor agrees that by doing so such Guarantors’ liability shall continue even if the Agent alters any Obligation in any respect or the Agent’s remedies or rights against any Borrower are in any way impaired or suspended without such Guarantors’ consent, whether or not due to the act or omission of the Agent; (xii) any defense based on any action taken or omitted by the Agent in any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships; and (xiii) all other rights and remedies now or hereafter accorded by applicable law to sureties or guarantors.

(c)Without limiting the generality of the foregoing and without limitation to any other waivers in this Guaranty, each Guarantor waives, to the fullest extent permissible by law, all benefits and defenses under CC Sections 2847 and 2848 and agrees that each Guarantor shall have no right of subrogation or reimbursement against any Borrower and no right of contribution against any other guarantor or pledgor unless and until all Obligations have been satisfied and

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the Agent has released, transferred or disposed of all of its right, title and interest in any Collateral.

(d)Without limiting the generality of the foregoing or any other waivers in this Guaranty, each Guarantor hereby waives, to the fullest extent permitted by law, any and all rights and defenses a guarantor or surety would otherwise have under applicable California law to the enforcement of this Guaranty, including, but not limited to, all rights and defenses arising under or by virtue of or pursuant to the provisions of CC Sections 2787 to 2855, inclusive, and CC Sections 2899 and 3433, and any additional rights or defenses relating any of the foregoing statutory provisions pursuant to any applicable judicial decisions of the State of California.

(e)Each Guarantor acknowledges that the waivers made by such Guarantor in this Guaranty are made knowing that their intent is to deprive the Guarantors of the benefits and defenses that would or could otherwise be available to the Guarantors under the statutory provisions referenced herein.

Section 1.6.Payment of Expenses. In the event that any Guarantor should breach or fail to timely perform any provision of this Guaranty, the Guarantors shall pay on demand to the Agent all costs and expenses (including court costs and reasonable attorneys’ fees) incurred by the Agent in the enforcement hereof or the preservation of the Agent’s rights hereunder. The covenant contained in this Section 1.6 shall survive the payment of the Guaranteed Obligations.

Section 1.7.Effect of Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership, administration or other debtor relief law, or any judgment, order or decision thereunder, the Agent or any Lender must rescind or restore any payment, or any part thereof, received by the Agent or any Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to any Guarantor by the Agent shall be without effect, and this Guaranty shall remain in full force and effect. It is the intention of each Guarantor that such Guarantor’s obligations hereunder shall not be discharged except by such Guarantor’s performance of such obligations and then only to the extent of such performance.

Section 1.8.Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty and without limitation to any other waivers contained in this Guaranty, each Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating such Guarantor to the rights of the Agent or the Lenders), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from the Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by such Guarantor under or in connection with this Guaranty or otherwise until ninety one (91) days after the Agent has received payment in full of the Obligations.

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ARTICLE II
EVENTS AND CIRCUMSTANCES NOT REDUCING OR
DISCHARGING GUARANTOR’S OBLIGATIONS

Each Guarantor hereby consents and agrees to each of the following, and agrees that such Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and without limitation to any other waivers contained in this Guaranty waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which the Guarantor might otherwise have as a result of or in connection with any of the following:

Section 2.1.Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Credit Agreement, the other Loan Documents, or any other document, instrument, contract or understanding between the Borrowers and the Agent or any Lender, or any other parties, pertaining to the Guaranteed Obligations or any failure of the Agent to notify the Guarantor of any such action.

Section 2.2.Adjustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Agent or any Lender to any Borrower or any other guarantor.

Section 2.3.Condition of Borrowers or Guarantors. (a) The insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, liquidation, disability, dissolution, administration, receivership or lack of power of any Borrower, any Guarantor, any other guarantor or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of any Borrower or any Guarantor, (b) Agent’s or any Lender’s election, in any proceeding instituted under (i) the United States Bankruptcy Code, of the application of Section 1111(b)(2) of the United States Bankruptcy Code or any successor statute or (ii) any equivalent or analogous provision or procedure under the laws of any other applicable jurisdiction (an “Analogous Provision”), (c) any borrowing or any grant of a security interest under Section 364 of the United States Bankruptcy Code or an Analogous Provision or (d) any action taken or omitted by the Agent or any Lender in any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation, administration, receivership or other like proceeding (each, an “Insolvency Proceeding”) involving any Borrower, any Guarantor or any other guarantor, including any election to have the Agent’s or any Lender’s claim allowed as being secured, partially secured or unsecured, any extension of credit by the Agent or any Lender to any Borrower, any Guarantor or any other guarantor in any Insolvency Proceeding and the taking and holding by the Agent or any Lender of any security for any such extension of credit, (d) any sale, lease or transfer of any or all of the assets of any Borrower, any Guarantor or any other guarantor, or (e) any changes in the shareholders, partners or members of any Borrower, any Guarantor or any other guarantor; or any reorganization of any Borrower or any Guarantor.

Section 2.4.Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (a) the Guaranteed Obligations, or any part thereof, exceed the amount permitted by law, (b) the act of creating the Guaranteed Obligations or any part thereof is

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ultra vires, (c) the officers or representatives executing the Credit Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (d) the Guaranteed Obligations violate applicable usury laws, (e) any Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced), which render the Guaranteed Obligations wholly or partially uncollectible from such Borrower, (f) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, (g) the Credit Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, (h) the failure of consideration for the granting of this Guaranty, (i) the expiration of any statute of limitations affecting the liability of any Guarantor hereunder, the liability of any Borrower or any guarantor under the Loan Documents; it being agreed that each Guarantor shall remain liable hereon regardless of whether any Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

Section 2.5.Release of Obligors. Any full or partial release of the liability of any Borrower on the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by each Guarantor that any Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and each Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons will be liable to pay the Guaranteed Obligations, or that the Agent or the Lenders will look to other Persons to pay the Guaranteed Obligations.

Section 2.6.Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

Section 2.7.Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations, or the application by any Borrower of the proceeds of the Loans for purposes other than the purposes represented by such Borrower to the Agent and Lenders or intended or understood by the Agent and Lenders or Guarantors.

Section 2.8.Care and Diligence. The failure of the Agent or any Lender to diligently exercise its rights and remedies under any of the Loan Documents, or to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security, including but not limited to any neglect, delay, omission, failure or refusal of the Agent or any Lender (a) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (b) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (c) to take or prosecute any action in connection with any instrument or

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agreement evidencing or securing all or any part of the Guaranteed Obligations, (d) to take any other acts or omissions of which vary, increase or decrease the risk on any Guarantor, other than any loss, damage liability or cost arising from the Agent’s or such Lender’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral.

Section 2.9.Lender Disclosure. The failure of the Agent or the Lenders to disclose to the Guarantors (a) any facts it may now or hereafter know regarding any Borrower, regardless of whether the Agent or the Lenders have reason to believe that any such facts materially increase the risk beyond that which any Guarantor intends to assume or has reason to believe that such facts are unknown to such Guarantor, each Guarantor acknowledging that it is fully responsible for being and keeping informed of the financial condition and affairs of the Borrowers, or (b) any default, demand of performance or notice of acceleration to the Borrowers or any other Person with respect to the Loans or the Guaranteed Obligations.

Section 2.10.Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by each Guarantor that such Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

Section 2.11.Offset. The Guaranteed Obligations and the liabilities and obligations of each Guarantor to the Agent hereunder shall not be reduced, discharged or released by reason of any existing or future right of offset, claim or defense (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced) of any Borrower against the Agent, any Lender or any other Person, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.12.Merger. The reorganization, merger or consolidation of any Borrower into or with any Person.

Section 2.13.Preference. Any payment by any Borrower to the Agent or any Lender is held to constitute a preference under bankruptcy laws, or for any reason the Agent or such Lender is required to refund such payment or pay such amount to such Borrower or someone else.

Section 2.14.Attempted Revocation. Any revocation or repudiation hereof by any Guarantor or the revocation or repudiation of any of the Loan Documents by any Borrower or any other Person, including any right any Guarantor might have to revoke this Guaranty pursuant to the terms of any of the Loan Documents.

Section 2.15.Surety Defenses. Any other suretyship defense that might, but for the terms hereof, be available to any Guarantor, including without limitation, any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of any Borrower.

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Section 2.16.Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, other than any loss, damage liability or cost arising from the Agent’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral, whether or not such action or omission prejudices any Guarantor or increases the likelihood that such Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of each Guarantor that such Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into the Loan Documents and extend credit to the Borrowers, each Guarantor jointly and severally represents and warrants to the Agent and the Lenders as follows, as of the date hereof, and as of each date that the Lenders make a Term Loan or Advance to any Borrower under the Credit Agreement:

Section 3.1.Existence. Each Guarantor is duly incorporated and validly existing under the laws of its jurisdiction of incorporation.

Section 3.2.Benefit. Each Guarantor is an Affiliate of the Parent and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.3.Familiarity and Reliance. Each Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrowers and is familiar with the value of any and all collateral intended to be created as security for the payment of the Loans or Guaranteed Obligations; however, each Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.4.No Representations by the Agent and Lenders. None of the Agent, the Lenders, nor any other party has made any representation, warranty or statement to any Guarantor in order to induce such Guarantor to execute this Guaranty.

Section 3.5.Guarantors’ Financial Condition. As of the date hereof , and after giving effect to this Guaranty and the contingent obligation evidenced hereby, each Guarantor is, and will be, solvent, and has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities.

Section 3.6.Legality. This Guaranty has been duly authorized by all necessary corporate action and the execution, delivery and performance by each Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with its constitutional documents or any law, statute or regulation whatsoever to which such Guarantor is subject or constitute a default (or an event which with

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notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which such Guarantor is a party or which may be applicable to such Guarantor. This Guaranty is a legal and binding obligation of each Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

Section 3.7.Financial Statements. Any and all balance sheets, net worth statements and other financial data that have been given or may be given to the Agent with respect to each Guarantor did or will, at the time of such delivery, fairly and accurately present the financial condition of such Guarantor in all material respects.

Section 3.8.Representations and Warranties of Borrowers. All representations and warranties made by the Borrowers with respect to the Guarantors in the Credit Agreement are true and correct in all material respects.

All representations and warranties made by each Guarantor herein shall survive the execution hereof.

ARTICLE IV

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1.Subordination of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of the Borrowers to any Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of the Borrowers thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by any Guarantor. The Guarantor Claims shall include without limitation all rights and claims of any Guarantor against the Borrowers (arising as a result of subrogation or otherwise) as a result of such Guarantors’ payment of all or a portion of the Guaranteed Obligations. Upon the occurrence of a Default or an Event of Default, no Guarantor shall receive or collect, directly or indirectly, from any Borrower or any other party any amount upon the Guarantor Claims.

Section 4.2.Claims in Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership, administration or other debtor relief law, or any judgment, order or decision involving any Guarantor as debtor, the Agent shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to the Agent for the benefit of the Lenders. Should the Agent receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to any Guarantor, and which, as between such Borrower and such Guarantor,

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shall constitute a credit against the Guarantor Claims, then upon payment to the Agent in full of the Guaranteed Obligations, such Guarantor shall become subrogated to the rights of the Agent to the extent that such payments to the Agent on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if the Agent had not received dividends or payments upon the Guarantor Claims.

Section 4.3.Payments Held in Trust. Notwithstanding anything to the contrary in this Guaranty, in the event that any Guarantor shall receive any funds, payments, claims or distributions which are prohibited by this Guaranty, such Guarantor agrees to hold in trust for the Agent, an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay such funds, payments, claims and/or distributions promptly to the Agent, and each Guarantor covenants promptly to pay the same to the Agent.

Section 4.4.Liens Subordinate. Each Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon any Borrowers’ assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon such Borrowers’ assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of any Guarantor or the Agent presently exist or are hereafter created or attach. Until ninety one (91) days after the Obligations shall have been paid in full and the Guaranteed Obligations fully satisfied, without the prior written consent of the Agent, no Guarantor shall (a) exercise or enforce any creditor’s right it may have against any Borrower, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of any Borrower held by such Guarantor.

ARTICLE V

MISCELLANEOUS

Section 5.1.No Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay by the Agent or any Lender in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law. The Agent may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

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Section 5.2.Enforcement. The Agent shall have the right to enforce this Guaranty in separate actions against any Guarantor, or by an action against any other Person liable for the Guaranteed Obligations.

Section 5.3.Severability of Provisions. Any provision of this Guaranty which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

Section 5.4.Amendments. This Guaranty may be amended only by an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.

Section 5.5.Parties Bound; Assignment. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided, however, that no Guarantor may, without the prior written consent of the Agent, assign any of its rights, powers, duties or obligations hereunder.

Section 5.6.Headings. Article, Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.

Section 5.7.Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 5.8.Telefacsimile Execution. Delivery of an executed signature page to this Guaranty by telefacsimile shall be equally as effective as delivery of an original executed signature page of this Guaranty. Any party delivering an executed signature page of this Guaranty by telefacsimile also shall deliver an original executed signature page of this Guaranty but the failure to deliver an original executed signature page shall not affect the validity, enforceability, and binding effect of this Guaranty.

Section 5.9.Rights and Remedies. If any Guarantor becomes liable for any indebtedness owing by any Borrower to the Agent or Lenders, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of the Agent hereunder shall be cumulative of any and all other rights that the Agent and the Lenders may ever have against such Guarantor. The exercise by the Agent of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 5.10.Complete Agreement. This Guaranty, together with the Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof.

Section 5.11.Cooperation. Each Guarantor acknowledges that the Agent and its successors and assigns may, subject to any applicable limitations set forth in the Credit Agreement assign, or sell participations in, its rights under the Credit Agreement pursuant to the

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terms thereof. Each Guarantor shall reasonably cooperate with the Agent and Lenders in effecting any such assignment or participation.

Section 5.12.Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest on the Term Loans, any amount payable on the Advances or any other amount payable by any Borrower under the Loan Documents relating to the Term Loans or the Advances is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, each Guarantors’ obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

Section 5.13.Survival. Notwithstanding anything to the contrary contained in this Guaranty or in any other Loan Document, this Guaranty shall continue in full force and effect until full indefeasible payment of the Guaranteed Obligations.

Section 5.14.Choice of Law and Venue; Judicial Reference; Waiver of Jury Trial; Service of Process.

(a)THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

(b)EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT AGAINST ANY GUARANTOR OR ITS ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE SUCH GUARANTOR OR ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT TO JURISDICTION.

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(c)EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (i) ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE LOAN DOCUMENTS IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION; (ii) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; AND (iii) ANY RIGHT IT MAY HAVE, HOWEVER ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT IN A STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD NOT HAVE OR ACCEPT JURISDICTION THEREOF.

(d)ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS GUARANTY AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A PROCEEDING IN CALIFORNIA STATE COURT INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

(e)OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF CALIFORNIA, EACH GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

(f)EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE,

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APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. EACH GUARANTOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT. EACH GUARANTOR SHALL TAKE SUCH ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE AND EFFECT. EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH GUARANTOR IRREVOCABLY AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE (45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN THIS SECTION.

Section 5.15.Notices. All notices and other communications hereunder to Agent shall be in writing and shall be mailed, sent or delivered in accordance with the Credit Agreement. All notices and other communications hereunder to any Guarantor shall be in writing and shall be (a) personally delivered, (b) sent by overnight courier of international reputation, (c) transmitted by telecopy, or (d) sent as electronic mail, to the following (or at such other business address, telecopier number, or e-mail address as the Guarantor may hereafter designate in writing to the other parties hereto):

	EMRISE Electronics Ltd.
	Brunswick Road, Cobbs Wood
	Ashford, Kent TN23 1EH
	United Kingdom
	Attn: D. John Donovan
With a copy to:	Emrise Corporation
	9485 Haven Avenue, Suite 100
	Rancho Cucamonga, CA 91730
	Attn: D. John Donovan
	Rutan & Tucker, LLP
	611 Anton Blvd., Suite 1400
	Costa Mesa, CA 92626
	Attn: Larry A. Cerutti, Esq.
	Fax No.: (714) 546-9035

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Section 5.16.Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, each Guarantor has executed and delivered this Guaranty as a deed as of the date first set forth above.

GUARANTORS:
EMRISE ELECTRONICS LTD.
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director
XCEL POWER SYSTEMS, LTD.
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director
PASCALL ELECTRONIC (HOLDINGS) LIMITED
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director

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PASCALL ELECTRONICS LIMITED
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director
BELIX WOUND COMPONENTS LTD.
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director
THE BELIX COMPANY LTD.
By:	/S/ G.M.J. JEFFRIES
Name:			G.M.J Jeffries
Title:		Director
By:	/S/ CARMINE T. OLIVA
Name:			Carmine T. Oliva
Title		Director

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Acknowledged and agreed:
AGENT AND ARRANGER:
GVEC RESOURCE IV INC.
By:	/S/ ROBERT J. ANDERSON
Name:			Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:			Peter Paul Mendel
Title:		Authorized Signatory

EX-10.12

EXHIBIT 10.12

Dated 30 November 2007

(1)  THE COMPANIES NAMED IN THIS DEED AS CHARGING COMPANIES

- and –

(2) GVEC RESOURCE IV INC.
(as Collateral Agent)

COMPOSITE DEBENTURE

CONTENTS

Clause		Page
1.	DEFINITIONS AND INTERPRETATION	1
2.	COVENANT TO PAY	5
3.	GRANT OF SECURITY INTEREST	5
4.	CONVERSION OF FLOATING CHARGE	8
5.	CONTINUING SECURITY	8
6.	NEGATIVE PLEDGE	8
7.	FURTHER ASSURANCE	9
8.	REPRESENTATIONS AND WARRANTIES	10
9.	COVENANTS OF THE CHARGING COMPANIES	11
10.	DEBTS AND ACCOUNTS	15
11.	ENFORCEMENT OF SECURITY	16
12.	APPOINTMENT AND POWERS OF RECEIVER OR ADMINISTRATOR	16
13.	APPLICATION OF PROCEEDS	19
14.	POWER OF ATTORNEY	19
15.	PROTECTION OF THIRD PARTIES	20
16.	NOTICE OF SUBSEQUENT SECURITY INTEREST	20
17.	CONSOLIDATION OF ACCOUNTS AND SET-OFF	20
18.	CURRENCY AND THE EURO	21
19.	APPROPRIATION AND SUSPENSE ACCOUNT	21
20.	PAYMENTS	22
21.	DELAY, OMISSION, AMENDMENTS AND CONSENTS	22
22.	COSTS AND EXPENSES	22
23.	MISCELLANEOUS	23
24.	ASSIGNMENT	23
25.	NOTICES	23
26.	THIRD PARTY RIGHTS	24
27.	TERMINATION; RELEASE	25
28.	GOVERNING LAW AND JURISDICTION	25

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SCHEDULE 1	The Original Charging Companies
SCHEDULE 2	Group Shares
SCHEDULE 3	Special Provisions Relating To The Security Shares
SCHEDULE 4	Form Of Notice To Bank Operating Collections Accounts
SCHEDULE 5	Intellectual Property Rights
SCHEDULE 6	Deed Of Accession

ii

THIS COMPOSITE DEBENTURE (such agreement, as the same may from time to time be amended, supplemented, restated, replaced or otherwise modified herein referred to as this “Composite Debenture”) is made as a deed on      November 2007.

BETWEEN

(1)EACH OF THE PARTIES THAT ARE SIGNATORIES HERETO, each a company organized and existing under the laws of England and Wales (the “Original Charging Companies”); and

(2)GVEC RESOURCE IV INC., a company organized and existing under the laws of the British Virgin Islands, acting as collateral agent (such entity, acting in such capacity, together with it successors and assigns, herein referred to as the “Collateral Agent”) for the benefit of the Lenders that are from time to time parties to the Credit Agreement (as defined below), the “Lenders”).

RECITALS

(A)On or about the date hereof, a Credit Agreement has been entered into between EMRISE Corporation, a company organized and existing under the laws of the State of Delaware (the “Parent”), each of the Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries, together with the Parent, herein collectively referred to as the “Borrowers”), the Collateral Agent and the Lenders (such agreement, as the same may from time to time be amended, supplemented, restated, replaced or otherwise modified herein referred to as the “Credit Agreement”).

(B)Each Charging Company shares an identity of interest as a member of a combined group of companies ultimately owned (directly or indirectly) by the Parent and certain of its affiliates and, as a member of such group, each Charging Company will derive substantial direct and indirect economic and other benefits from the extensions of credit under the Credit Agreement. It is also a condition precedent to the effectiveness of the Credit Agreement and the making of the Loans thereunder that each Charging Company shall have entered into this Composite Debenture.

IT IS AGREED as follows:

In consideration of the execution, delivery and performance by the Lenders of the agreements referred to above, each Charging Company hereby agrees with the Collateral Agent (acting for the benefit of itself and the Lenders as follows:

1.             DEFINITIONS AND INTERPRETATION

1.1Terms Defined Above

Terms defined above shall have their specified meanings.

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1.2References to Collateral Agent

When references are made herein to the Collateral Agent, unless otherwise indicated, it is understood that such references refer to the Collateral Agent, acting as agent for the benefit of itself and the Lenders in accordance with the provisions of the Credit Agreement.

1.3Other Defined Terms

Words and expressions defined in the Credit Agreement shall, save as otherwise defined herein, bear the same meanings in this Composite Debenture but so that, so far as the context admits, the following expressions shall have the respective meanings ascribed to them:

“Accounts” means all accounts or sub-accounts opened or maintained by any Charging Company with any bank, financial institution or other person (including any Collection Account (if any) opened or maintained by such Charging Company under Clause 10.1.2;

“Act” means the Law of Property Act 1925;

“Administrator” means an administrator appointed pursuant to Schedule B1 to the Insolvency Act 1986 by the Collateral Agent as holder of this Composite Debenture;

“Beneficiaries” means the Collateral Agent and the Lenders, and “Beneficiary” means each or any of them;

“Charged Shares” means the Group Shares;

“Charging Companies” means the Original Charging Companies and any other company which accedes to the terms of this Composite Debenture pursuant to the terms of a duly executed Deed of Accession (each a “Charging Company”);

“Claims” means all present and future book and other debts and monetary claims and any rights and claims to which the relevant Charging Company is now or may hereafter become entitled in relation to (i) securities to the extent held by way of temporary investment; (ii) royalties, fees and income of the like nature in respect of any Intellectual Property owned by it, or (iii) the Insurances;

“Collateral” means all assets or property (whether real, personal, mixed, tangible or intangible), including, without limitation, cash, securities, accounts and contract rights, and all of any Charging Company’s right, title and interest therein and thereto, charged, mortgaged or assigned pursuant to the provisions of this Composite Debenture;

“Collections Account” has the meaning ascribed to that term in Clause 10.1.2;

“Deed of Accession” means a deed of accession to this Composite Debenture in the form set out in Schedule 6;

“Default Rate” bears the same meaning ascribed to it in Section 2.6(b) of the Credit Agreement;

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“Event of Default” has the meaning given to that expression in the Credit Agreement;

“Group Shares” means all shares specified in Schedule 2, together with all other stocks, shares, debentures, bonds, warrants, coupons or other securities and Investments owned by any Charging Company;

“Insurances” means the policies of insurance in which a Charging Company has an interest from time to time;

“Intellectual Property Rights” means know-how, patents, trademarks, service marks, designs, business names, topographical or similar rights, copyrights or other intellectual property monopoly rights, and any license or other interest in any such rights including, without prejudice to the generality of the foregoing, those (if any) listed in Schedule 5 and “Intellectual Property” shall be construed accordingly;

“Investments” means shares, certificates of deposit, debentures, bonds, warrants, coupons, securities and other investments as defined in part II of schedule II of the Financial Services and Markets Act 2000;

“Lien” has the meaning given to that expression in the Credit Agreement;

“Loan Documents” has the meaning given to that expression in the Credit Agreement;

“Obligors” means, collectively, (a) the Borrowers; (b) each of the Charging Companies; (c) each other entity that is now or may hereafter be a party to the UK Guaranty (as such term is defined in the Credit Agreement); (d) each other entity that is now or may hereafter be a party to the French Guaranty (as such term is defined in the Credit Agreement) and (e) each other entity that is now or may hereafter be a party to the Japanese Guaranty (as such term is defined in the Credit Agreement);

“Permitted Liens” has the meaning given to that expression in the Credit Agreement;

“Planning Acts” means the Town and Country Planning Acts 1990 and the Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the Planning (Consequential Provisions) Act 1990, the Planning and Compensation Act 1991 and any regulations made pursuant thereto;

“Plant and Machinery” means all plant and machinery owned by the Charging Companies or any of them now or in the future;

“Receiver” means so far as the law allows any administrative receiver, receiver and manager, or (if the Collateral Agent so specifies in their relevant appointment) a receiver, in each case appointed by the Collateral Agent under this Composite Debenture but, for the avoidance of doubt, does not include an administrator (as defined in the Insolvency Act 1986);

“Related Rights” means, in relation to any Investments or Charged Shares, all dividends, distributions, and other income paid or payable on the relevant Investment or Charged

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Shares (as the case may be), together with (a) all shares or other property derived from the relevant Investment or Charged Shares (as the case may be) and (b) all other allotments, accretions, rights, benefits and advantages of all kinds accruing, offered or otherwise derived from or incidental to the relevant Investment or Charged Shares (whether by way of conversion, redemption, bonus, preference, option or otherwise);

“Security Interest” means, with respect to any asset, any mortgage, charge, pledge, lien, hypothecation, encumbrance, assignment, trust arrangement, title retention or other security interest or arrangement of any kind whatsoever in respect of such assets, whether or not filed, recorded or otherwise perfected under applicable law (including, for the avoidance of doubt, any Lien);

“Secured Obligations” means (a) all principal, interest, premium, fees, reimbursements, indemnifications, and other amounts now or thereafter owed by the Obligors under the Credit Agreement and the Loan Documents and all present and future obligations and liabilities of any kind hereunder (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever); (b) all amounts, obligations, or liabilities of any kind now or hereafter owed by a Charging Company under this Composite Debenture and the Loan Documents; and (c) any increases, extensions, renewals, replacements, and rearrangements of the foregoing obligations under any amendments, supplements, restatements, replacements and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent; provided that no obligation or liability shall be included in the definition of “Secured Obligations” to the extent that, if it were so included, this Composite Debenture (or any part of it) would constitute unlawful financial assistance within the meaning of sections 151 and 152 of the Companies Act 1985;

“Security Shares” means the Charged Shares and the Related Rights accruing to all or any of the Charged Shares; and

“Taxes” has the meaning given to that expression in the Credit Agreement.

1.4Interpretation

1.4.1References to Clauses, sub-clauses, paragraphs and Schedules are to be construed, unless otherwise stated, as references to clauses, sub-clauses, paragraphs and schedules of this Composite Debenture.

1.4.2References in this Composite Debenture to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended for the time being.

1.4.3Clause headings are for convenience only and shall in no way affect the construction of this Composite Debenture.

1.4.4Section 61 of the Act shall govern the construction of this Composite Debenture.

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1.4.5References to the “Charging Companies” and the “Collateral Agent” shall be construed so as to include their respective successors or permitted assignees (whether immediate or derivative).

1.4.6References in this Composite Debenture to the singular include references to the plural and vice versa.

1.4.7Any reference to this Composite Debenture, this security or any document shall, save as otherwise expressly provided herein, be construed as a reference to this Composite Debenture, this security or such other document as amended, varied, supplemented, novated and/or replaced in any manner from time to time and, for the avoidance of doubt, shall be deemed to incorporate the provisions of any Deed of Accession entered into by any company, from time to time.

1.4.8The terms of the other Loan Documents, and of any side letters between the parties thereto in relation to any of such documents are incorporated in this Composite Debenture to the extent required to ensure that any disposition of the Collateral contained in this Composite Debenture is a valid disposition in accordance with Section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 or Section 2 of the Statute of Frauds (Ireland) 1695.

1.4.9The obligations of any person being “enforceable” and “binding” shall be construed subject to the principle that equitable remedies are available at the discretion of the courts, the limitation on enforcement by laws relating to the insolvency, liquidation, administration and other laws affecting the rights of creditors, the time barring of claims, defences of set-off and counterclaim (save as expressly excluded in this Composite Debenture) and that which the courts hold to be matters of public policy.

1.4.10References to the “euro” shall be construed as a reference to the single currency of participating member states of the European Union.

2.             COVENANT TO PAY

Each of the Charging Companies covenants with the Collateral Agent on behalf of the Beneficiaries that it will pay or discharge on demand the Secured Obligations as and when they fall due in the manner provided in the relevant Loan Documents and this Composite Debenture. Any such amount not paid when due shall bear interest (as well after as before judgment and payable on demand) at the Default Rate from the due date until the date such amount is unconditionally and irrevocably paid and discharged in full.

3.             GRANT OF SECURITY INTEREST

3.1Fixed charges

As a continuing security for the payment and performance of the Secured Obligations, each Charging Company hereby, with full title guarantee, charges, and agrees to charge, in favour of the Collateral Agent (acting for the benefit of itself and the Lenders pursuant

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to the provisions of the Credit Agreement) the following assets and property which are at any time owned by such Charging Company, or in which such Charging Company is from time to time interested:

3.1.1by way of fixed charge all interests in any freehold or leasehold property vested in or charged to such Charging Company, the buildings and fixtures (including trade fixtures) at any time thereon, all proceeds of sale derived therefrom and the benefit of all covenants given in respect thereof and any monies paid or payable in respect of such covenant and all licences to enter upon or use land and the benefit of all other agreements relating to land;

3.1.2by way of fixed charge all Plant and Machinery and its interest in any plant and machinery in its possession;

3.1.3by way of fixed charge all Investments, together with all Related Rights from time to time accruing thereto;

3.1.4by way of fixed charge all rights and interests of such Charging Company in, and claims under, the Insurances and all proceeds thereof held by, or written in favour of, such Charging Company or in which such Charging Company is otherwise interested and all claims and returns of premium in respect of them;

3.1.5by way of fixed charge all the right, title, interest and benefit of such Charging Company in and to the Accounts, all monies standing to the credit thereof, all interest accrued on any such monies, all debts owed to such Charging Company represented by any such Account and all rights of such Charging Company to repayment of any of the foregoing;

3.1.6all of such Charging Company’s present and future book and other debts, the proceeds of the same and all other moneys due and owing to it or which may become due and owing to it or which may become due and owing to it at any time in the future, and the benefit of all rights, securities and guarantees of any nature now or at any time enjoyed or held by it in relation to any of the foregoing;

3.1.7by way of fixed charge all Intellectual Property Rights;

3.1.8by way of fixed charge the benefit of all present or future licences, consents, agreements and authorisations held or utilised by such Charging Company in connection with its business or the use of any of its assets;

3.1.9by way of fixed charge all the present and future goodwill and uncalled capital of such Charging Company; and

3.1.10by way of fixed charge all the Charged Shares together with all the Related Rights from time to time accruing thereto.

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3.2Assignment

(a)As a continuing security for the payment of the Secured Obligations, each Charging Company hereby, with full title guarantee, assigns and/or agrees to assign absolutely in favour of the Collateral Agent (acting for the benefit of itself and the Lenders pursuant to the provisions of the Credit Agreement) all the rights, title, interest and benefit of such Charging Company in and to:

(i)all contracts and agreements to which such Charging Company is a party and/or that confer any rights upon such Charging Company, including all moneys which at any time may be or become payable to such Charging Company pursuant thereto and the proceeds of any claims, awards and judgments which may at any time be receivable or received by such Charging Company pursuant thereto;

(ii)the Insurances and all proceeds in respect of such Insurances and all benefits thereof (including all Claims and returns of premium relating thereto); and

(iii)each Account charged by such Company pursuant to Clause 3.1.5, including all moneys standing to the credit of each such Account, all interest accrued on any such Account and all the debts represented by any of the foregoing.

(b)To the extent that any right, title and interest described in paragraph (a) above is not assignable or capable of assignment without the consent of a third party, each Charging Company shall, if required to do so by the Collateral Agent use its reasonable endeavours to obtain any relevant consent to assignment and, pending such consent being granted, the assignment thereof purported to be effected by paragraph (a) shall only operate as an assignment of all proceeds, damages, compensation, remuneration, profit, rent or income which such Charging Company may derive therefrom or be awarded or entitled to in respect thereof in each case as continuing security for the payment, discharge and performance of the Secured Obligations.

3.3Floating charge

3.3.1As further continuing security for the payment and performance of the Secured Obligations, each Charging Company hereby charges as beneficial owner and with full title guarantee in favour of the Collateral Agent (acting for the benefit of itself and the Lenders pursuant to the provisions of the Credit Agreement) by way of floating charge all its assets and undertaking whatsoever and wheresoever situated both present and future not effectively charged by way of first fixed mortgage or charge pursuant to the provisions of Clause 3.1, including, without prejudice to the generality of the foregoing, heritable property and all other property and assets in Scotland.

3.3.2The floating charge created by this Clause 3.3 is a qualifying floating charge for the purposes of paragraph 14 of Schedule Bl to the Insolvency Act 1986.

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3.4If any lease, agreement or other asset (each a “Non Assignable Asset”) of any Charging Company cannot be validly mortgaged, charged or assigned in accordance with the terms of this Composite Debenture for any reason (including any prohibition on mortgaging, charging or assigning the Non Assignable Asset without the consent of a third party), then:

(a)to the extent that the Non Assignable Asset cannot be validly mortgaged, charged or assigned by way of fixed or floating security it shall not be subject to any fixed or floating mortgage, charge or assignment under this Composite Debenture; and

(b)the relevant Charging Company shall, at the request of the Collateral Agent, use all reasonable endeavours to obtain any consent required for mortgaging, charging or assigning the Non Assignable Asset in accordance with the terms of this Composite Debenture.

3.5Until such time as a Non Assignable Asset is validly mortgaged, charged or assigned to the Collateral Agent in accordance with the terms of this Composite Debenture:

(a)the relevant Charging Company shall hold the benefit of the Non Assignable Asset on trust for the Collateral Agent unless the Non Assignable Asset cannot validly be held on trust for the Collateral Agent;

(b)if the Non Assignable Asset cannot be validly held on trust for the Collateral Agent, the relevant Charging Company shall, during the continuance of any Event of Default, and to the extent that it can lawfully do so, deal with the Non Assignable Asset in such manner as the Collateral Agent or any Receiver shall direct.

4.             CONVERSION OF FLOATING CHARGE

4.1Conversion of floating charge

Without prejudice to the security constituted or intended to be constituted by this Composite Debenture (and subject to the provisions of paragraph 43 of Schedule Al to the Insolvency Act 1986), the Collateral Agent may by written notice to a Charging Company convert the floating charge created by this Composite Debenture into a fixed charge as regards all or any of that Charging Company’s assets specified in the notice if an Event of Default has occurred and is continuing.

4.2Automatic conversion of floating charge

The floating charge created by a Charging Company under this Composite Debenture shall (in addition to the circumstances in which the same will occur under general law but subject to the provisions of paragraph 43 of Schedule Al to the Insolvency Act 1986) automatically be converted into a fixed charge in relation to any of the Collateral subject to the floating charge created by Clause 3.3 (a “Floating Charge Asset”) if such Charging Company creates (or purports to create) a Security Interest (other than a Permitted Lien) on or over the relevant Floating Charge Asset without the prior consent

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in writing of the Collateral Agent or if any third party levies any distress, execution, attachment or other legal process against any such Floating Charge Asset or attempts to do so and such attempt, in the opinion of leading counsel, has a reasonable prospect of success.

4.3No waiver

The giving by the Collateral Agent of a notice pursuant to Clause 4.1 in relation to any class of assets of any Charging Company shall not be construed as a waiver or abandonment of the rights of the Collateral Agent to serve similar notices in respect of any other class of assets or of any of the other rights of the Collateral Agent.

5.             CONTINUING SECURITY

5.1This Composite Debenture shall be in addition to, and without prejudice to and shall not merge with, any other right, remedy, guarantee, mortgage or other security which the Collateral Agent may at any time hold for any of the Secured Obligations and this Composite Debenture may be enforced against each or any Charging Company without the Collateral Agent first having recourse to any other right, remedy, guarantee, mortgage or other security held or available to it.

5.2This Composite Debenture shall remain in full force and effect as a continuing security until the Collateral Agent shall have certified in writing that the Secured Obligations have been discharged in full.

6.             NEGATIVE PLEDGE

Save as permitted by the terms of the Credit Agreement, each Charging Company severally covenants with the Collateral Agent that, during the continuance of the security created by this Composite Debenture, it shall not without the prior written consent of the Collateral Agent:

6.1Create or permit to subsist any Security Interest (other than a Permitted Lien) upon any of the Collateral;

6.2Sell, transfer, assign, lease, lend or otherwise dispose of, whether by a single transaction or a number of transactions and whether related or not, the whole or any part of the Collateral except in the ordinary course of business in the case of Collateral that is a Floating Charge Asset.

7.             FURTHER ASSURANCE

7.1Subject and without prejudice to the terms of the Credit Agreement, each Charging Company will, whenever requested by the Collateral Agent and at its own expense, promptly execute such deeds or documents and take any action reasonably required by the Collateral Agent to perfect and protect the security created (or intended to be created) by this Composite Debenture or to facilitate the realisation thereof or otherwise to

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enforce the same or exercise any of the rights of the Collateral Agent hereunder. In particular, but without limitation, each Charging Company will:

7.1.1execute a valid legal mortgage or, in the case or property situated in Scotland, a standard security, in such form as the Collateral Agent shall reasonably require, of any freehold, leasehold or heritable property now or in the future belonging to such Charging Company which is not hereby effectively charged by way of legal mortgage or, in the case of property situated in Scotland, by way of standard security;

7.1.2execute a legal assignment in such form as the Collateral Agent may reasonably require over all or any of the Accounts or debts, proceeds or moneys referred to in Clause 3.1.6 and/or the contracts relating thereto and give notice of such assignment to the relevant debtors and/or counterparties thereto;

7.1.3execute a valid fixed charge in such form as the Collateral Agent may reasonably require over any asset the subject of the floating charge hereunder at any time after conversion under Clause 4.1 or 4.2; and

7.1.4otherwise execute all transfers, assignments, conveyances and assurances whatsoever and give all notices, orders, instructions and directions whatsoever which the Collateral Agent may reasonably think expedient.

7.2Any security document required to be executed by a Charging Company pursuant to Clause 7.1 will be prepared at the cost of such Charging Company and will contain terms and conditions which are no more onerous than those contained herein.

7.3Each Charging Company as registered proprietor hereby appoints the Collateral Agent as its agent to apply for the particulars of this Composite Debenture and of the interest of the Collateral Agent in the Intellectual Property and any other or future trade marks or trade mark applications registered or to be registered in the United Kingdom in the name of each Charging Company to be made on the Register of Trade Marks under section 25(1) of the Trade Marks Act 1994 and each Charging Company hereby agrees to execute all documents and forms required to enable such particulars to be entered on the Register of Trade Marks.

8.             REPRESENTATIONS AND WARRANTIES

8.1Each Charging Company represents and warrants to the Collateral Agent that:

8.1.1Incorporation

It is a limited company duly organised, validly existing and registered under relevant laws of the jurisdiction in which it is incorporated and has the power and all necessary governmental and other consents, approvals, licences and authorities to own its property and assets and carry on its business;

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8.1.2Authority

It is empowered to enter into and perform its obligations contained in this Composite Debenture and has taken all necessary action to authorise the execution, delivery and performance of this Composite Debenture, to observe and perform its obligations hereunder and (in the case only of each Charging Company) to create the security to be constituted hereby;

8.1.3Obligations binding

This Composite Debenture as executed and delivered constitutes and will constitute its legal, valid and binding obligations (subject to laws affecting the rights of creditors generally);

8.1.4No contravention

Neither the execution and delivery nor the performance of its obligations under and compliance with the provisions of this Composite Debenture, nor (in the case only of each Charging Company) the creation of the security constituted by it, does or will contravene, conflict with or breach any provisions of any law, regulation or statute to which it is subject, or any agreement, undertaking or other instrument in respect of, or binding on such Charging Company or on any of its assets, or any provision of its memorandum and articles of association, or, as the case may be, other constitutional documentation;

8.1.5Charged Shares

In the case only of each relevant Charging Company, it is the legal and beneficial owner of the Group Shares identified against its name in Schedule 2 (save in relation to those Group Shares held by a nominee for any such Charging Company in which case such Charging Company is the beneficial owner of such Group Shares).

8.1.6Centre of main interests

Its centre of main interests (for the purpose of the EC Regulation on Insolvency Proceedings 2000) is in England and Wales.

8.2Matters represented

Each of the representations and warranties in Clauses 8.1.1 to 8.1.6 (inclusive) will be correct and complied with in all material respects at all times during the continuance of this security.

9.             COVENANTS OF THE CHARGING COMPANIES

Each of the Charging Companies hereby covenants with the Collateral Agent and covenants to procure that each other Charging Company will:

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9.1Insurance

Effect and maintain insurance at its own expense in respect of all its assets and business in accordance with all the requirements of the Credit Agreement. Such insurance shall, in accordance with the requirements of the Credit Agreement, have the interest of the Collateral Agent as mortgagee and/or additional insured (for the benefit of the Lenders) noted on the policies with effect from the date of this Composite Debenture, and each Charging Company shall promptly supply to the Collateral Agent on request copies of each policy of insurance required to be maintained in accordance with this Clause 9.1, together with the current premium receipts relating thereto;

9.2Maintenance

Keep all buildings and erections forming part of the Collateral in a good state of repair, and keep all plant, machinery, fixtures, fittings and other effects for the time being owned by it in working order and condition;

9.3Outgoings

Duly and punctually pay all rates, rents, taxes, and other outgoings due by it in respect of the Collateral (or any of them);

9.4Inspection

Permit the Collateral Agent or its designated representatives to have, on reasonable notice, access during normal office hours to its accounts and accounting records and to any books and records relating to the Collateral, to inspect and take extracts from the same and make photocopies thereof and the relevant Charging Company shall provide, at its cost and expense, such clerical and other assistance as the Collateral Agent may reasonably request with regard thereto;

9.5Comply with statutes

In relation to the Collateral, comply with all obligations under any present or future statute, regulation, order and instrument or under any bye-laws, regulations or requirements of any competent authority or other approvals, licenses or consents and, if requested by the Collateral Agent, produce to the Collateral Agent, within 14 days of receipt of the same, every material notice, order or proposal given or made in relation to the Collateral by any competent authority and either comply with the same or make such objections and representations against the same as the Collateral Agent may require or approve;

9.6Comply with covenants

Observe and perform all covenants and stipulations from time to time affecting any part of the Collateral, or the manner of use or the enjoyment of the same and shall not, except with the prior written consent of the Collateral Agent, such consent not to be unreasonably withheld or delayed, enter into any onerous or restrictive obligations affecting any part thereof;

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9.7Licenses

Not, except with the prior written consent of the Collateral Agent, confer on any person any right or license to occupy any land or building forming part of the Collateral or any license to assign or sub-let part of the Collateral;

9.8Planning Acts

Not carry out any development within the meaning of the Planning Acts in or upon the Collateral or any part thereof without first obtaining such permissions as may be required under or by virtue of the Planning Acts and, in the case of development involving a substantial change in the structure or a change of use of the Collateral or any part thereof, without first obtaining the written consent of the Collateral Agent;

9.9Deposit of documents

Deposit with the Collateral Agent any deeds and documents of title relating to the Collateral which are required by the Collateral Agent by way of perfection of the Security Interests created by this Debenture;

9.10Intellectual Property

Ensure that each Charging Company will (subject and without prejudice to the terms of the Credit Agreement):

(i)observe and comply with all material obligations and laws to which it is subject in its capacity as registered proprietor, beneficial owner, user, licensor or licensee of its material Intellectual Property or any part thereof;

(ii)do all acts as are reasonably practicable to maintain, protect and safeguard its material Intellectual Property and not discontinue the use of any of its material Intellectual Property, nor allow it to be used in such a way that it is put at risk by becoming generic or by being identified as disreputable in any material

(iii)duly register in such register(s), or with such authorities as may be available for the purpose, and in such name(s) as may be required by the law and practice of the place of registration, such of its material Intellectual Property and all assignments, licenses and mortgages thereof as may be capable of registration in such place(s);

(iv)pay all fees necessary to maintain, protect and safeguard its material Intellectual Property and the registrations required to be made under Clause 9.10(iii) prior to the latest time provided for payment thereof;

(v)take all such reasonable steps, including the commencement of legal proceedings, as may be necessary to safeguard and maintain the validity, reputation, integrity, registration or subsistence of its material Intellectual Property;

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(vi)not change the specification referred to in any of its registration of any material Intellectual Property or permit any disclaimer, condition, restriction, memorandum or other thing to be entered on the registration of any of the trade marks comprised within such material Intellectual Property, the effect of which will be to materially and adversely affect the value of such trade marks;

(vii)not assign, sever, dispose of, or otherwise part with control of its material Intellectual Property, or create or permit to subsist any Security Interest thereon (other than a Permitted Lien), or grant any license to any person to use the same in any manner which will materially and adversely affect the value of such material Intellectual Property, provided that nothing contained in this Clause 9.10 (vii) shall have the effect of preventing the exploitation of Intellectual Property by the Charging Companies in the ordinary course of business;

(viii)maintain a comprehensive, detailed and up-to-date centralized record of all its material Intellectual Property (including details of agents engaged in relation to registration thereof); and

(ix)as and when reasonably requested by the Collateral Agent, promptly provide the Collateral Agent with a copy of the record described in Clause 10.01(viii) and/or a written summary of all its Intellectual Property created or acquired since the date of this Composite Debenture or the date of the last notification, in accordance with the provisions of this Clause 9.10(ix).

9.11Property Acquisitions

9.11.1Notifications

Notify the Collateral Agent forthwith upon the acquisition by that Charging Company of any freehold or leasehold property; and

9.11.2Security

On demand made to such Charging Company by the Collateral Agent, execute and deliver to the Collateral Agent any legal mortgage or, in the case of property situated in Scotland, a standard security, in favour of the Collateral Agent of any freehold, leasehold or heritable property which becomes vested in it after the date of this Composite Debenture and all fixtures and fittings thereon to secure the payment or discharge of the Secured Obligations, such legal mortgage or standard security to be in such form as the Collateral Agent may reasonably require. Any security document required to be executed by a Charging Company pursuant to this Clause 9.11.2 will be prepared at the cost of such Charging Company and will contain terms and conditions that are no more onerous than those contained herein. In the case of any leasehold property in relation to which the consent of the landlord in whom the reversion of that lease is vested in required in order for the Charging Company to perform any of its obligations under this Clause 9.11.2, the Charging Company shall not be required to perform that particular obligation unless and until it has

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obtained the landlord’s consent (which it shall use all reasonable endeavours to do).

9.12HM Land Registry

In respect of any freehold or leasehold land which it may hereafter acquire and which is registered land (or unregistered land subject to compulsory first registration), give the. Land Registry written notice of this Debenture and apply to the Chief Land Registrar for the registration of a Restriction against the registered titles in the following terms:

“No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent by the proprietor for the time being of the charge dated November 30, 2007 in favour of GVEC RESOURCE IV INC. referred to in the charges register.”

9.13Collateral Agent May Insure

If default shall at any time be made by any Charging Company in effecting or keeping up the insurance referred to in Clause 9.1, or in producing any such policy or receipt to the Collateral Agent may take out or renew such policies of insurance in any sum which the Collateral Agent may reasonably think expedient and all monies expended by the Collateral Agent in respect thereof shall be deemed to be property paid by the Collateral Agent, and shall be reimbursed by the relevant Charging Company on demand and shall bear interest at the Default Rate from the date of payment until the date of reimbursement. This Composite Debenture shall be a security for the reimbursement to the Collateral Agent of such monies together with such interest as aforesaid.

9.14Application of Monies

All claims and monies received or receivable under any insurances referred to in Clause 9.1 shall (subject to the rights or claims of any lessor or landlord of any part of the Collateral) be applied, in repairing, replacing, restoring or rebuilding any property damaged or destroyed in respect of which such insurances are payable or, after the occurrence of an Event of Default which is continuing, in permanent reduction of the Secured Obligations in such order as the Collateral Agent sees fit.

10.          DEBTS AND ACCOUNTS

10.1Books debts and receipts

Each Charging Company will:

10.1.1Get in and realise all claims and book and other debts charged to the Collateral Agent under this Deed in the ordinary and usual course of business on behalf of the Collateral Agent;

10.1.2Open and maintain a current or other separately designated account in the name of such charging company (“Collections Account”), either with the Collateral Agent

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or with any other bank designated by the Collateral Agent for this purpose, and thereafter pay the proceeds of any such getting in and realisation into the Collections Account forthwith on receipt; and

10.1.3Where any Collections Account is not maintained with the Collateral Agent, promptly following the opening of the same, deliver to the bank with which the relevant Collections Account is maintained, a notice, and procure that such bank signs and delivers to the Collateral Agent a letter or other acknowledgement, in each case substantially in the form set out in Schedule 4 [Form of Notice to Bank Operating Collections Account].

10.2Dealings with Accounts

10.2.1Without prejudice to Clause 3.1.5 and any legal assignment required hereunder, until the Collateral Agent gives notice to the contrary during the continuance of an Event of Default, each Charging Company shall be entitled to withdraw the proceeds of any book and other debts standing to the credit of the Accounts (other than any Collections Account) held by the Chargor for use in the ordinary course of its business.

10.2.2Without prejudice to Clause 3.1.5 and any legal assignment required hereunder, each Charging Company shall deal with the proceeds of any book and other debts standing to the credit of any Collection Account (if any) opened pursuant to Clause 10.1.2, in accordance with any directions from time to time given in writing by the Collateral Agent (but subject always to the terms of Clause 10.1.2).

10.2.3If, as a result of any right to withdraw from any Account any proceeds referred to in this Clause 10.2, any such proceeds are in any way released or deemed to be released from the fixed charge created pursuant to Clause 3.1.5 and stand subject to the floating charge created pursuant to Clause 3.3, the release will in no way derogate from the subsistence and continuance of the fixed charge on all other outstanding book and other debts of the relevant charging company and the proceeds of those debts.

10.3Particulars of Book Debts and Accounts

Each Charging Company will deliver to the Collateral Agent such information as to the amount and nature of its book and other debts, claims and/or financial statements relating to any of its Accounts as the Collateral Agent may from time to time require, taking into account the requirements of the Loan Documents.

11.          ENFORCEMENT OF SECURITY

11.1The security constituted by this Composite Debenture shall become immediately enforceable upon (i) notice to that effect given in accordance with the Credit Agreement; or (ii) the occurrence of an Event of Default which is continuing and the power of sale and other powers conferred by section 101 of the Act, as varied or amended by this Composite Debenture, shall be immediately exercisable upon and at any time after the

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occurrence of any Event of Default which is continuing. After the security constituted by this Composite Debenture has become enforceable, the Collateral Agent may in its absolute discretion enforce all or any part of this security in such manner as it sees fit.

11.2For the purposes of all powers implied by statute, the Secured Obligations shall be deemed to have become due and payable on the date of this Composite Debenture and sections 93 and 103 of the Act shall not apply to this security. The statutory powers of leasing conferred on the Collateral Agent shall be extended so as to authorize the Collateral Agent to lease, make agreements for leases, accept surrenders of leases and grant options as the Collateral Agent shall think fit and without the need to comply with any of the provisions of sections 99 and 100 of the Act.

12.          APPOINTMENT AND POWERS OF RECEIVER OR ADMINISTRATOR

12.1Except as provided below, at any time after this security becomes enforceable, or if so requested by any Charging Company by written notice at any time, the Collateral Agent may without further notice appoint any person (or persons) to be a Receiver of all or any part of the Collateral and/or of the income thereof and of the rights of the Collateral Agent contained in this Composite Debenture or may, at its sole and absolute discretion, appoint (or may apply to Court to appoint) any person or persons to be an administrator of the Charging Company pursuant to Schedule Bl of the Insolvency Act 1986. This Clause 13.1 shall operate subject to the provisions of paragraph 43 of Schedule Al of the Insolvency Act 1986.

12.2The Collateral Agent may remove from time to time any Receiver appointed by it (subject to the provisions of section 45 of the Insolvency Act 1986 in the case of an administrative receivership) and, whenever it may deem appropriate, appoint a new Receiver in the place of any Receiver whose appointment has terminated for whatever reason.

12.3If at any time and by virtue of any such appointment there is more than one Receiver of all or any part of the Collateral and/or the income thereof, such persons shall have power to act individually (unless the contrary shall be stated in the deed(s) or other instrument(s) appointing them).

12.4Any Receiver shall (in addition to the powers conferred by the Act and the Insolvency Act 1986 or any other statute from time to time in force) have the following powers:

12.4.1To take possession of, collect and get in all or any part of the Collateral and/or income in respect of which he was appointed;

12.4.2To manage the Collateral and the business of any of the Charging Companies;

12.4.3To redeem any security and to borrow or raise any money and secure the payment of any money in priority to the Secured Obligations for the purpose of the exercise of his powers and/or defraying any costs or liabilities incurred by him in such exercise;

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12.4.4To alter, improve, develop, complete, construct, modify, refurbish or repair any building or land and to complete or undertake or concur in the completion or undertaking (with or without modification) of any project in which any of the Charging Companies were concerned or interested prior to his appointment, being a project for the alteration, improvement, development, completion, construction, modification, refurbishment or repair of any building or land;

12.4.5To sell or concur in selling, leasing or otherwise disposing of all or any part of the Collateral in respect of which he was appointed without the need to observe the restriction imposed by Section 103 of the Act;

12.4.6To carry out any sale, lease or other disposal of all or any part of the Collateral by conveying, transferring, assigning or leasing the same in the name of any of the Charging Companies and, for that purpose, to enter into covenants and other contractual obligations in the name of, and so as to bind, any of the Charging Companies;

12.4.7To take any such proceedings, in the name of any of the Charging Companies or otherwise, as he shall think fit in respect of the Collateral and/or income in respect of which he was appointed, including proceedings for recovery of rent or other monies in arrears at the date of his appointment;

12.4.8To enter into or make any such agreement, arrangement or compromise as he shall think fit;

12.4.9To insure, and renew any insurances in respect of, the Collateral as he shall think fit, or as the Collateral Agent shall direct;

12.4.10To appoint and employ such managers, officers and workmen and engage such professional advisers as he shall think fit, including, without prejudice to the generality of the foregoing power, to employ his partners and firm;

12.4.11To operate any rent review clause in respect of any property in respect of which he was appointed or any part thereof and to apply for any new or extended lease; and

12.4.12To do all such other things as may seem to him to be incidental or conducive to any other power vested in him in the realization of this security.

12.5In making any sale or other disposal in the exercise of their respective powers, the Receiver, Administrator or the Collateral Agent may accept, as and by way of consolidation for such sale or other disposal, cash, shares, loan capital or other obligations, including, without limitation, consideration fluctuating according to or dependent upon profit or turnover and consideration the amount whereof is to be determined by a third party. Any such consideration may be receivable in a lump sum or by installments and upon receipt by the Receiver, shall ipso facto be and become charged with the payment of the Secured Obligations. Any contract for any such sale or other

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disposal by the Receiver or the Collateral Agent may contain conditions excluding or restricting the personal liability of the Receiver and the Collateral Agent.

12.6Any Receiver or Administrator appointed hereunder shall so far as the law allows, be the agent of the Charging Companies and (subject to the provisions of the Companies Act 1985 and the Insolvency Act 1986) the Charging Companies shall be solely responsible for his acts and defaults and for his remuneration and the Collateral Agent shall not be under any liability whatsoever in such regard.

12.7Any Receiver or Administrator shall be entitled to remuneration for his services at a rate to be fixed by agreement between him and the Collateral Agent (or, failing such agreement, to be fixed by the Collateral Agent).

12.8Only monies actually paid by a Receiver or Administrator to the Collateral Agent in satisfaction or discharge of the Secured Obligations shall be capable of being applied by the Collateral Agent in satisfaction thereof.

12.9Neither the Collateral Agent nor any Receiver or Administrator shall be liable in respect of all or any part of the Collateral or for any loss or damage which arises out of the exercise or the attempted or purported exercise of, or the failure to exercise any of, their respective powers, unless such loss or damage is caused by its or his gross negligence or willful default.

12.10Without prejudice to the generality of Clause 12.9, entry into possession of the Collateral shall not render the Collateral Agent or the Receiver or Administrator liable to account as mortgagee in possession and if and whenever the Collateral Agent enters into possession of the Collateral, it shall be entitled to any time at its discretion to go out of such possession.

12.11All or any of the powers which are conferred by this Composite Debenture on a Receiver or Administrator may be exercised by the Collateral Agent without first appointing a Receiver or Administrator or notwithstanding the appointment of any Receiver or Administrator.

12.12The Collateral Agent may not appoint an administrative receiver (as defined in section 29(2) of the Insolvency Act 1986) over the Collateral if the Collateral Agent is prohibited from so doing by section 72A of the Insolvency Act 1986 and no exception to the prohibition on appointing an administrative receiver applies.

13.          APPLICATION OF PROCEEDS

13.1All monies received by the Collateral Agent, any Receiver or any Administrator appointed under this Composite Debenture shall be applied in the following order:

13.1.1In payment of the costs, charges and expenses of and incidental to the appointment of the Receiver or Administrator and the payment of his remuneration;

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13.1.2In payment and discharge of any liabilities incurred by the Receiver or Administrator on behalf of me Charging Companies in the exercise of any of the powers of the Receiver or Administrator;

13.1.3In providing for the matters (other than the remuneration of the Receiver or Administrator) specified in the first three paragraphs of Section 109(g) of the Act;

13.1.4In or towards the satisfaction of the Secured Obligations; and

13.1.5Any surplus shall be paid to the Charging Companies or other person entitled to it.

13.2The provisions of Clause 14 shall take effect as and by way of variation and extension to the provisions of Section 109 of the Act, which provisions as so varied and extended shall be deemed incorporated in this Composite Debenture.

14.          POWER OF ATTORNEY

Each Charging Company, by way of security, irrevocably appoints the Collateral Agent and every Receiver or Administrator of the Collateral (or any part thereof) appointed hereunder and any person nominated for the purpose by the Collateral Agent or any Receiver or Administrator (in writing under hand signed by an officer of the Collateral Agent or any Receiver or Administrator) severally as its attorney (with full power of substitution and delegation) in its name and on its behalf and as its act and deed to sign or execute (using the company seal where appropriate) any deed, document, agreement and instrument required under the terms of this Composite Debenture and, following the occurrence of an Event of Default and for as long as the same is continuing, to do all such acts or things as may be required by the Collateral Agent or any Receiver or Administrator hereunder or in the exercise of any of their power, and each Charging Company hereby covenants with the Collateral Agent to ratify and confirm all acts or things made, done or executed by such attorney as aforesaid.

15.          PROTECTION OF THIRD PARTIES

No purchaser from or other person dealing with the Collateral Agent, with any Receiver or with any Administrator shall be obliged or concerned to enquire whether the right of the Collateral Agent to appoint a Receiver or Administrator or the right of the Collateral Agent or any Receiver to exercise any of the powers conferred by this Composite Debenture in relation to the Collateral or any part thereof have arisen or become exercisable by the Collateral Agent or by any such Receiver or Administrator, nor be concerned with notice to the contrary, nor with the propriety of the exercise or purported exercise of any such powers and the title of such a purchase and the position of such a person shall not be impeachable by reference to any of those matters.

16.          NOTICE OF SUBSEQUENT SECURITY INTEREST

If the Collateral Agent receives notice (whether actual or otherwise) of any subsequent Security Interest, other than a Permitted Lien, affecting any part of the Collateral and/or

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the proceeds of sale thereof, it may open a new account or accounts for any of the Charging Companies in its books and if it does not do so then, as from the time of receipt of such notice by the Collateral Agent, all payments made by such Charging Company to the Collateral Agent shall be treated as having been credited to the new account of such Charging Company and not as having been applied in reduction of the Secured Obligations.

17.          CONSOLIDATION OF ACCOUNTS AND SET-OFF

17.1The Collateral Agent shall be entitled, at any time or times after the occurrence of an Event of Default which is continuing and without prior notice to the Charging Companies (both before and after demand);

17.1.1To combine or consolidate all or any sums of money now or hereafter standing to the credit of the then existing Accounts (including any of the Collections Accounts (if any)) of any of the Charging Companies with the Collateral Agent with the liabilities to the Collateral Agent of any of the Charging Companies; and

17.1.2To set-off or transfer any sum or sums standing to the credit of any one or more of such Accounts (including any of the Collections Accounts (if any)) in or towards satisfaction of any of the liabilities of all or any of the Charging Companies to the Collateral Agent on any other account or in any other respect.

The liabilities referred to in this Clause 17 may be actual, primary, collateral, several or joint liabilities, and the accounts, sums and liabilities referred to in this Clause 17 may be denominated in any currency.

17.2If the amounts concerned are expressed in a different currency then the Collateral Agent may exercise all such rights and is authorized to effect any necessary conversions at a market rate of exchange selected by it.

17.3If the relevant obligation or liability is unliquidated or unascertained the Collateral Agent may set-off the amount it estimates (in good faith) will be the final amount of such obligation or liability once it becomes liquidated or ascertained.

18.          CURRENCY AND THE EURO

18.1All monies received or held by the Collateral Agent, any Receiver or any Administrator under this Composite Debenture may be converted from their existing currency into such other currency as the Collateral Agent considers necessary or desirable to cover the obligations and liabilities comprised in the Secured Obligations in that other currency at the spot rate of exchange.

18.2No payment to the Collateral Agent (whether under any judgment or court order or in the liquidation or dissolution of any of the Charging Companies or otherwise) shall discharge the obligation or liability of any Charging Company in respect of which it was made, unless and until the Collateral Agent shall have received payment in full in the currency in which the obligation or liability was incurred and, to the extent that the amount of any

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such payment shall on actual conversion into such currency fall short of such obligation or liability expressed in that currency, the Collateral Agent shall have a further separate cause of action against such Charging Company and shall be entitled to enforce the security constituted by this Composite Debenture to recover the amount of the shortfall.

18.3If sterling is, or is to be replaced by the euro, the Collateral Agent may notify the Charging Companies of any amendments to this Composite Debenture which the Collateral Agent reasonably considers necessary to reflect that replacement and to put the Collateral Agent in the same position, so far as possible, that it would have been in if no such replacement had occurred. Upon such notification this Composite Debenture shall be deemed to be amended in accordance with such notification.

19.          APPROPRIATION AND SUSPENSE ACCOUNT

19.1Subject to Clause 18.2, the Collateral Agent may apply all payments received for the Secured Obligations to reduce any part of those liabilities as it thinks fit.

19.2All monies received, recovered or realized by the Collateral Agent under this Composite Debenture may, at the direction of the Collateral Agent, be credited to any suspense account for so long as the Collateral Agent determines (with interest accruing thereon at such rate, if any, as the Collateral Agent may determine for the account of the relevant Charging Company) pending application by the Collateral Agent (as it may determine) in or towards the discharge of any of the Secured Obligations.

20.          PAYMENTS

20.1Subject to Clause 20.2, all payments to be made by any Charging Company in respect of this Composite Debenture, shall be made in immediately available funds to the credit of such account as the Collateral Agent may designate. All such payments shall be made free and clear of, and without any deduction for, or on account of, any set-off or counterclaim or, except to the extent compelled by law, any deduction on account of any Taxes.

20.2If any Charging Company is compelled by law to withhold or deduct any Taxes from any sum payable hereunder to the Collateral Agent, the sum so payable by such Charging Company shall be increased so as to result in the receipt by the Collateral Agent of a net amount equal to the full amount expressed to be payable hereunder and such Charging Company will supply the Collateral Agent promptly with evidence satisfactory to the Collateral Agent that such Charging Company has accounted to the relevant authority for the sum withheld or deducted.

21.          DELAY, OMISSION, AMENDMENTS AND CONSENTS

21.1No failure to exercise, nor any delay in exercising on the part of the Collateral Agent any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other power or right. The rights and remedies

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herein provided are cumulative and not exclusive of any rights or remedies provided by law.

21.2Any provisions of this Composite Debenture may be amended only if the Collateral Agent, the Charging Companies so agree in writing and any breach hereof may be waived before or after it occurs only if the Collateral Agent so agrees in writing. A waiver given or consent granted by the Collateral Agent under this Composite Debenture will be effective only if given in writing and then only in the instance and for the purpose for which it is given.

22.          COSTS AND EXPENSES

22.1Each Charging Company shall reimburse the Collateral Agent and any Receiver or Administrator in respect of all reasonable expenses, including, without limitation, reasonable legal, valuation, accountancy and consultancy fees (and any value added or similar tax thereon) incurred by the Collateral Agent in connection with:

22.1.1The negotiation, preparation, execution and completion of this Composite Debenture, or any of the documents referred to herein; and

22.1.2Any actual or proposed amendment or extension of, or any waiver or consent under, this Composite Debenture.

22.2Each Charging Company shall reimburse the Collateral Agent and any Receiver or Administrator for all costs and expenses, including, without limitation, legal fees (and any value added or similar tax thereon) incurred in connection with the enforcement or preservation of any of their respective rights under this Composite Debenture, or any of the documents referred to herein.

22.3The amounts payable under Clauses 22.1 and 22.2 shall carry interest at the Default Rate (as well after as before any judgment) from the dates on which they were demanded by the Collateral Agent or the Receiver or Administrator (as the case may be) and shall form part of the Secured Obligations and accordingly be secured on the Collateral under the charges contained in this Composite Debenture.

22.4Each Charging Company shall pay all present and future stamp, registration and similar taxes or charges which may be payable, or determined to be payable, in connection with the execution, delivery, performance or enforcement of this Composite Debenture or any judgment given in connection therewith and shall indemnify the Collateral Agent and the Receiver or Administrator against any and all liabilities, including, without limitation, penalties with respect to, or resulting from its delay or omission to pay any such stamp, registration and similar taxes or charges.

23.          MISCELLANEOUS

23.1All of the provisions of this Composite Debenture are severable and distinct from one another and the illegality, invalidity or unenforceability of any provision of this Composite Debenture under the law of any jurisdiction shall not affect the validity or

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enforceability of such provision under the law of any other jurisdiction, nor the legality, validity or enforceability of any other provision of this Composite Debenture.

23.2This Composite Debenture may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered to any party shall be an original, but all the counterparts shall constitute one and the same instrument.

24.          ASSIGNMENT

The Collateral Agent and each other Beneficiary may assign or transfer all or any part of its rights under this Composite Debenture in accordance with and subject to the provisions of the Credit Agreement.

25.          NOTICES

25.1All communications to be made hereunder shall be made in writing and (unless otherwise stated) by letter or facsimile.

Subject and without prejudice to any other requirements of the Credit Agreement, any notices, proceedings or other documents to be served on any of the Charging Companies pursuant to this Composite Debenture shall be made or delivered to it at the address and/or facsimile number set out below or at such other address and/or facsimile number as a Charging Company may hereafter advise to the Collateral Agent in writing.

To the Collateral Agent:

GVEC Resource IV Inc.

1 Park Plaza, Suite 550

Irvine, California 92614

Attention: Peter Paul Mendel, Esq., General Counsel

Fax No.: +1 (949) 757-0978

To any Charging Company:

EMRISE Electronics, Ltd.

Brunswick Road, Cobbs Wood

Ashford, Kent TN23 1EH

United Kingdom

Attn: D. John Donovan

With a copy to:

Emrise Corporation

9485 Haven Avenue, Suite 100

Rancho Cucamonga, CA 91730

Attn: D. John Donovan

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Rutan & Tucker, LLP

611 Anton Blvd., Suite 1400

Costa Mesa, CA 92626

Attn: Larry A. Cerutti, Esq.

Fax No.: (714) 546-9035

25.2Any notice to any Charging Company shall be deemed to have been given:

25.2.1If delivered personally, at the time of such delivery;

25.2.2If posted, on the second Business Day following the day on which it was dispatched by first class, registered or recorded delivery post (airmail, if appropriate) postage prepaid; and

25.2.3If sent by facsimile transmission, when transmitted (provided a correct transmission report is generated),

provided that any communication that, by virtue of any provision of this Clause 25.2, would be deemed to be given on a day that is not a Business Day, or after 5:30 pm (local time) on a Business Day, shall be deemed to have been given at 9:00 am (local time) on the next succeeding Business Day.

25.3Any notice to the Collateral Agent shall be deemed to have been given only on actual receipt by the Collateral Agent.

26.          THIRD PARTY RIGHTS

A person who is not a party to this Composite Debenture shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Composite Debenture. This Clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act.

27.          TERMINATION; RELEASE

27.1Termination

This Composite Debenture and the security interest created hereby shall terminate when all the Secured Obligations have been indefeasibly paid in full in cash, at which time the Lenders shall direct the Collateral Agent to execute and deliver to each Charging Company or the Charging Company’s designee, at the relevant Charging Company’s expense, all documents which such Charging Company shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination documents pursuant to this Clause 27.1 shall be without recourse to or warranty by the Collateral Agent or the Lenders.

27.2Release

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If any of the Collateral shall be sold, transferred or otherwise disposed of by a Charging Company in a transaction permitted by the Loan Documents, the security interest created hereby in any Collateral that is so sold, transferred or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer or other disposition, and such Collateral shall be sold free and clear of the lien and security interest created hereby; provided, however, that such security interest will continue to attach to all proceeds of such sales or other dispositions. In connection with any of the foregoing, the Lenders shall direct the Collateral Agent to execute and deliver to each Charging Company or the Charging Company’s designee, at the relevant Charging Company’s expense, all documents that such Charging Company shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination documents pursuant to this Clause 27.2 shall be without recourse to or warranty by the Collateral Agent or the Lenders.

28.          GOVERNING LAW AND JURISDICTION

28.1Law

This Composite Debenture shall be governed by, and construed in accordance with, the laws of England.

28.2Jurisdiction

28.2.1Submission

Each of the parties of this Composite Debenture irrevocably agrees that the courts of England shall have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes which may arise out of, or in connection with, this agreement and, for the purposes, irrevocably submits to the jurisdiction of such courts.

28.2.2Forum

Each of the parties irrevocably waives any objection which it might now or hereafter have to the courts referred to in Clause 28.2.1 being nominated as the forum to hear and determine any suit, action or proceeding, and to settle any disputes which may arise out of, or in connection with, this Composite Debenture and agreed not to claim that any such court is not a convenient or appropriate forum.

28.2.3Other competent jurisdictions

The submission to the jurisdiction of the courts referred to in Clause 28.2.1 shall not (and shall not be construed so as to) limit the right of the Collateral Agent to take proceedings against any Charging Company in any other court of competent jurisdiction (including without limitation and for the avoidance of doubt, in accordance with the terms of the Credit Agreement) nor shall the taking of

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proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

28.2.4Consent to enforcement

Each of the Charging Companies hereby consents in respect of any legal action or proceeding arising out of, or in connection with, this Composite Debenture, to the giving of any relief, or the issue of any process in connection with such action or proceeding including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such action or proceeding.

28.2.5Waiver of Indemnity

To the extent that any of the Charging Companies may in any jurisdiction claim for itself or its assets, immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and, to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Charging Companies hereby irrevocably agree that they shall not claim and hereby irrevocably waive such immunity to the full extent permitted by the law of such jurisdiction.

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IN WITNESS WHEREOF the parties have each duly executed this Composite Debenture as a deed the day and year first before written.

EMRISE ELECTRONICS LTD.
Executed and delivered as		)
a deed on behalf of		)	/s/ G.M.J. Jeffries
EMRISE ELECTRONICS LTD.	)		Director
acting by two directors/		)
a director and the secretary		)
			/s/ Carmine T. Oliva
			Director
XCEL POWER SYSTEMS, LTD.
Executed and delivered as		)
a deed on behalf of		)	/s/ G.M.J. Jeffries
XCEL POWER SYSTEMS, LTD.		)	Director
acting by two directors/		)
a director and the secretary		)
			/s/ Carmine T. Oliva
			Director
BELIX WOUND COMPONENTS LTD.
Executed and delivered as		)	/s/ G.M.J. Jeffries
a deed on behalf of		)	Director
BELIX WOUND COMPONENTS LTD.		)
acting by two directors/		)
a director and the secretary		)	/s/ Carmine T. Oliva
			Director
THE BELIX COMPANY LTD.
Executed and delivered as		)	/s/ G.M.J. Jeffries
a deed on behalf of		)	Director
THE BELIX COMPANY LTD.	)
acting by two directors/		)
a director and the secretary		)	/s/ Carmine T. Oliva
			Director

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PASCALL ELECTRONIC (HOLDINGS )
LIMITED
		/s/ G.M.J. Jeffries
Executed and delivered as	)	Director
a deed on behalf of	)
PASCALL ELECTRONIC (HOLDINGS)	)
LIMITED	)	/s/ Carmine T. Oliva
acting by two directors/	)	Director
a director and the secretary	)
PASCALL ELECTRONICS LIMITED
Executed and delivered as	)	/s/ G.M.J. Jeffries
a deed on behalf of	)	Director
PASCALL ELECTRONICS LIMITED	)
acting by two directors/	)
a director and the secretary	)	/s/ Carmine T. Oliva
		Director

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GVEC RESOURCE IV INC.
Executed and delivered as a deed on behalf	)
of GVEC RESOURCE IV INC. in its	)
capacity as Collateral Agent, a	)
company incorporated in the British Virgin	)	/s/ Robert J. Anderson
Islands by Robert J. Anderson	)
being a person who in accordance with	)	Robert J. Anderson
the laws of that territory is acting under	)
the authority of  the director	)	Authorized Signatory
Executed and delivered as a deed on behalf	)
of GVEC RESOURCE IV INC. in its	)
capacity as Collateral Agent, a	)
company incorporated in the British Virgin	)	/s/ Peter Paul Mendel
Islands by Peter Paul Mendel	)
being a person who in accordance with	)	Peter Paul Mendel
the laws of that territory is acting under	)
the authority of  the director	)	Authorized Signatory

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SCHEDULE 1

The Original Charging Companies

Name	Company Number	Registered Office
EMRISE Electronics Ltd.	1969006	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
XCEL Power Systems, Ltd.	575679	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Belix Wound Components Ltd.	1537636	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
The Belix Company Ltd.	1567245	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Pascall Electronic (Holdings) Limited	1756274	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Pascall Electronics Limited	1316674	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK

31

SCHEDULE 2
Group Shares

Name	Subsidiary	Charged Shares
EMRISE Electronics Ltd.	XCEL Power Systems Ltd.	10,000
EMRISE Electronics Ltd.	Pascall Electronic (Holdings Limited)	140,320 10% non-cumulative preferred shares and 224,931 ordinary shares
EMRISE Electronics Ltd.	CXR Anderson Jacobson Ltd.	2
EMRISE Electronics Ltd.	Abbot Electronics Ltd.	2
EMRISE Electronics Ltd.	Digitran Ltd.	2
Pascall Electronic (Holdings) Limited	Pascall Electronics Limited	53,822
XCEL Power Systems, Ltd.	The Belix Company Ltd.	100,000
XCEL Power Systems, Ltd.	Belix Wound Components Ltd.	100
The Belix Company Ltd.	Belix Power Conversions Ltd.	30,000

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SCHEDULE 3
Special Provisions Relating To The Security Shares

1.             Certificated Charged Shares

Each Charging Company shall, by way of security for the Secured Obligations, in respect of all Charged Shares which are in certificated form:

1.1immediately deliver to the Collateral Agent (or as it shall direct) all certificates and other documents of title to such Charged Shares together with instruments of transfer executed in blank in respect of such Charged Shares and left undated; and

1.2immediately on receipt of any certificate and other documents of title to any further or other Charged Shares deliver them to the Collateral Agent together with instruments of transfer executed in blank and left undated.

2.The Collateral Agent may, at any time following the occurrence of an Event of Default which is continuing, complete the instruments of transfer on behalf of the relevant Charging Company in favour of itself or such other person as it shall select.

3.Until an Event of Default occurs:

3.1each Charging Company will be entitled to receive and retain all dividends, distributions and other monies paid on or derived from the Charged Shares; and

3.2each Charging Company will be entitled to exercise all voting and other rights and powers attaching to the Charged Shares, provided that it will not exercise any such voting rights or powers in a manner prejudicial to the interests of the Collateral Agent under this Composite Debenture including, without limitation, to have the effect of changing the terms of the Charged Shares (or any class of them or any Related Rights), save with the prior written consent of the Collateral Agent, such consent not to be unreasonably withheld.

4.At any time when any Charged Shares are registered in the name of the Collateral Agent or its nominee, the Collateral Agent will not be under any duty to ensure that any dividends, distributions or other monies payable in respect of those Charged Shares are duly and promptly paid or received by it or its nominee or to verify that the correct amounts are paid or received or to take any action in connection with the taking up of any (or any offer of any) stocks, shares, rights, monies or other property paid, distributed, accruing or offered at any time by way of interest, dividend, redemption, bonus, rights, preference, option, warrant or otherwise on or in respect of or in substitution for, any of those Charged Shares.

5.It is expressly agreed that, notwithstanding anything to the contrary contained in this Deed, each Charging Company shall remain liable to observe and perform all of the conditions and obligations assumed by it in respect of the Security Shares.

33

SCHEDULE 4
Form Of Notice To Bank Operating Collections Accounts

To:          [•insert name and address of Account Bank]

Dated: • 20    

Dear Sirs,

Re:Account Holder: [•insert name of Charging Companies]
Collections Account Nos: [•insert number] (the “Collections Account[s]”)
Account Branch: [•insert branch address]

We give you notice that [•insert names of Charging Companies] (the “Companies”) have charged to[•] (“[•]”), as Collateral Agent (“Collateral Agent”) for itself and certain other parties all their right, title, interest and benefit in and to the monies from time to time standing to the credit of the Collections Accounts and any other accounts from time to time maintained with you by the Companies (the “Charged Accounts”) and to all interest accrued or in the future accruing on the Charged Accounts.

We advise you that under (and subject to) the terms of our agreement(s) with the Collateral Agent, we can only withdraw any monies from the Collections Accounts in accordance with any directions of the Collateral Agent.

We irrevocably authorise and instruct you from time to time:

(a)if at anytime the Collateral Agent so instructs you, not to permit withdrawals from the Collections Accounts and/or to comply with any other directions of the Collateral Agent in relation to any such withdrawals;

(b)to hold all monies from time to time standing to the credit of the Charged Accounts to the order of the Collateral Agent and accordingly to pay all or any part of those monies to the Collateral Agent (or as it may direct) promptly following receipt of written instructions from the Collateral Agent to that effect; and

(c)to disclose to the Collateral Agent such information relating to the Companies and the Charged Accounts as the Collateral Agent may from time to time request you to provide.

We also advise you that the provisions of this notice may only be revoked or varied with the prior written consent of the Collateral Agent.

Please confirm by completing the enclosed copy of this notice and returning it to the Collateral Agent (with a copy to each Company) that:

1.             you agree to act in accordance with the provisions of this notice;

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2.you have not, at the date this notice is returned to the Collateral Agent, received notice of any assignment or charge of or claim to the monies standing to the credit of the Charged Accounts or the grant of any security or other interest over those monies in favour of any third party and that you will notify us promptly if you should do so in the future; and

3.you do not now and will not in the future exercise any right to combine accounts or any rights of set-off or lien or any similar rights in relation to the monies standing to the credit of the Charged Accounts.

This notice shall be governed by and construed in accordance with the laws of England.

Yours faithfully,

for and on behalf of

[•Insert name of Charging Company]

for and on behalf of

[•Insert name of Charging Company]

for and on behalf of

[•Insert name of Charging Company]

Counter-signed by

for and on behalf of

[•NAME OF BANK]

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[On Copy]

To:  [COLLATERAL AGENT]

Copy to:       [•Insert name of each Charging Company]

We hereby acknowledge receipt of the above notice. We confirm:

(1)that the matters referred to in it do not conflict with the terms which apply to the Charged Accounts; and

(2)           the matters set out in paragraphs 1 to 3 in the above notice.

for and on behalf of

[•Insert name of Account Bank]

Dated: •      200•

36

SCHEDULE 5
Intellectual Property Rights

TRADEMARK REGISTRATIONS AND APPLICATIONS

Trademark	Country or Jurisdiction	Reg. No.- (App. No.)	Record Owner/Liens	Status
Pascall	United Kingdom	2391280	Pascall Electronics Limited	Issued

37

SCHEDULE 6

Deed Of Accession

THIS SUPPLEMENTAL DEED is made on                                                                 200[ ]

BETWEEN:

(1)THE COMPANIES LISTED IN SCHEDULE 1 (each in “Acceding Company”, together the “Acceding Companies”);

(2)THE COMPANIES LISTED IN SCHEDULE 2 (together the “Existing Charging Companies”); and

(3)[•] (“[•]”) in its capacity as trustee (“Collateral Agent”) for the Beneficiaries.

WHEREAS,

This Supplemental Deed is supplemental to a composite debenture dated [                               ] 2007 and made between, inter alia, the Existing Charging Companies (1) and the Collateral Agent (2) (the “Composite Debenture”).

IT IS AGREED and declared as follows:

1.             DEFINITIONS

1.1Words or expressions defined (including by reference) in the Composite Debenture shall, unless otherwise defined herein, bear the same meaning in this Supplemental Deed (including the recital hereto).

1.2The principles of construction set out in Clause 1.2 of the Composite Debenture shall apply mutatis mutandis to this Supplemental Deed as if the same were set out in lull herein.

2.ACCESSION OF THE ACCEDING COMPANY

2.1By its execution of this Supplemental Deed, each of the Acceding Companies unconditionally and irrevocably undertakes to and agrees with the Collateral Agent to observe and be bound by the terms and provisions of the Composite Debenture as if it were an original party thereto as one of the Charging Companies.

2.2Without prejudice to the generality of sub-clause 2.1, each Acceding Company hereby:

2.2.1(jointly and severally with the other Charging Companies) covenants in the terms set out in Clause 3 of the Composite Debenture; and

2.2.2with full title guarantee, charges and assigns to the Collateral Agent for the payment and discharge of all monies and liabilities hereby, or by the Composite

38

Debenture, covenanted to be paid or discharged by it, all its property, assets and undertaking on the terms set out in Clause 4 of the Composite Debenture.

2.3The Existing Charging Companies hereby consent to the succession of the Acceding Companies to the Composite Debenture on the terms of clauses 2.1 and 2.2 of this Supplemental Deed and agree that the Composite Debenture shall hereafter be read and construed as if the Acceding Companies had been named therein as Charging Companies.

3.INTERPRETATION

This Supplemental Deed shall hereafter be read as one with the Composite Debenture, so that all references in the Composite Debenture to “this Deed”, “herein” and similar expressions shall include references to this Supplemental Deed.

4.             DELIVERY

This Supplemental Deed shall be treated as having been executed and delivered as a deed only upon being dated.

5.             COUNTERPARTS

This Supplemental Deed may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered to any party shall be an original, but all the counterparts shall constitute one and the same instrument.

6.             THIRD PARTY RIGHTS

A person who is not a party to this Supplemental Deed shall have no right under the Contracts (Rights of Third Parties) Act of 1999 to enforce any term of this Supplemental Deed. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act.

7.             GOVERNING LAW AND JURISDICTION

7.1This Supplemental Deed shall be governed by, and construed in accordance with, the laws of England.

7.2Each of the parties to this Supplemental Deed irrevocably agree that the provision of Clause 28.2 of the Composite Debenture shall apply mutatis mutandis to this Supplemental Deed.

IN WITNESS whereof each of the parties to this Supplemental Deed have duly executed this deed the day and year first above written.

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SCHEDULE 1

The Acceding Companies

[•]	[•]	[•]
[•]	[•]	[•]
[•]	[•]	[•]

40

SCHEDULE 2

The Existing Charging Companies

Name	Company Number	Registered Office
EMRISE Electronics Ltd.	1969006	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
XCEL Power Systems, Ltd.	575679	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Belix Wound Components Ltd.	1537636	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
The Belix Company Ltd.	1567245	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Pascall Electronic (Holdings) Limited	1756274	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK
Pascall Electronics Limited	1316674	Brunswick Road, Cobbs Wood Ashford, Kent TN23 1EH, UK

EX-10.13

EXHIBIT 10.13

Dated 30 November 2007

(1) EMRISE ELECTRONICS CORPORATION
as Chargor

-and-

(2) GVEC RESOURCE IV INC.
as Collateral Agent

SHARE CHARGE

TABLE OF CONTENTS

Clause		Page
1.	DEFINITIONS AND INTERPRETATION		1
2.	COVENANT TO PAY		4
3.	CHARGE		4
4.	COVENANTS BY THE CHARGOR		4
5.	DIVIDENDS AND VOTING RIGHTS		6
6.	REPRESENTATIONS AND WARRANTIES BY THE CHARGOR		6
7.	FURTHER ASSURANCE		7
8.	POWERS OF THE COLLATERAL AGENT		7
9.	RECEIVER		8
10.	CONTINUING SECURITY AND PROTECTIVE PROVISIONS		9
11.	NEW ACCOUNTS, SUSPENSE ACCOUNTS, NON-MERGER		10
12.	POWER OF ATTORNEY		11
13.	DISCHARGE CONDITIONAL		11
14.	DISCHARGE OF SECURITY		12
15.	CURRENCY		12
16.	COSTS		13
17.	ASSIGNMENT		13
18.	NOTICES		14
19.	MISCELLANEOUS		15
20.	LAW AND JURISDICTION		15

i

THIS SHARE CHARGE (such agreement, as the same may from time to time be amended, supplemented, restated, replaced or otherwise modified herein referred to as this “Share Charge”) is made as a deed on 30 November 2007.

BY:

1.EMRISE ELECTRONICS CORPORATION a company organized and existing under the laws of the State of New Jersey (the “Chargor”)

IN FAVOUR OF

2.GVEC RESOURCE IV INC., a company organized and existing under the laws of the British Virgin Islands, acting as collateral agent (such entity, acting in such capacity, together with it successors and assigns, herein referred to as the “Collateral Agent”) for the benefit of the Lenders that are from time to time parties to the Credit Agreement (as defined below), the “Lenders”).

RECITALS

(A)On or about the date hereof, a Credit Agreement has been entered into between EMRISE Corporation, a company organized and existing under the laws of the State of Delaware (the “Parent”), each of the Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries, together with the Parent, herein collectively referred to as the “Borrowers”), the Collateral Agent and the Lenders (such agreement, as the same may from time to time be amended, supplemented, restated, replaced or otherwise modified herein referred to as the “Credit Agreement”).

(B)The Chargor will derive substantial direct and indirect economic and other benefits from the extensions of credit under the Credit Agreement. It is also a condition precedent to the effectiveness of the Credit Agreement that the Chargor shall have entered into this Share Charge.

NOW THIS DEED WITNESSES as follows:

In consideration of the execution, delivery and performance by the Lenders of the agreements referred to above, the Chargor hereby agrees with the Collateral Agent (acting for the benefit of itself and the Lenders in accordance with the provisions of the Credit Agreement) as follows:

1.DEFINITIONS AND INTERPRETATION

1.1Terms Defined Above

Terms defined above shall have their specified meanings.

1.2References to Collateral Agent

When references are made herein to the Collateral Agent, unless otherwise indicated, it is understood that such references refer to the Collateral Agent, acting as agent for the

1

benefit of itself and the Lenders in accordance with the provisions of the Credit Agreement.

1.3Other Defined Terms

Words and expressions defined in the Credit Agreement shall, save as otherwise defined herein, bear the same meanings in this Share Charge but so that, so far as the context admits, the following expressions shall have the respective meanings ascribed to them:

“Beneficiaries” means the Collateral Agent and the Lenders and “Beneficiary” means each or any of them;

“Business Day” means a day on which banks are open in London for the transaction of business;

“Company” means EMRISE Electronics Ltd. (Company No. 1969006) having its registered office at Brunswick Road, Coobs Wood, Ashford, Kent TN23 1EH, UK;

“Loan Documents” has the meaning given to that expression in the Credit Agreement;

“Obligors” means, collectively, (a) the Borrowers; (b) each other entity that is now or may hereafter be a party to the UK Guaranty (as such term is defined in the Credit Agreement) (c) each other entity that is now or may hereafter be a party to the French Guaranty (as such term is defined in the Credit Agreement) and (d) each other entity that is now or may hereafter be a party to the Japanese Guaranty (as such term is defined in the Credit Agreement);

“Receiver” means a receiver or receiver and manager of the Chargor appointed by the Collateral Agent under this Share Charge.

“Secured Obligations” means (a) all principal, interest, premium, fees, reimbursements, indemnifications, and other amounts how or hereafter owed by the Obligors under the Credit Agreement and the other Loan Documents and all present and future obligations and liabilities of any kind (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever); (b) all amounts, obligations, or liabilities of any kind now or hereafter owed by the Chargor under this Share Charge and the other Loan Documents; and (c) any increases, extensions, renewals, replacements, and rearrangements of the foregoing obligations under any amendments, supplements, restatements, replacements and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent.

“Securities” means all stocks, shares, bonds and securities of any kind in the Company (marketable or otherwise) negotiable instruments and warrants, whether registered in the name of, or beneficially owned by, the Chargor:

(a)which are listed or described in the Schedule; or

2

(b)which are registered in the name of or shall be transferred into the name of the Collateral Agent (or any nominee or agent for the Collateral Agent) or held or to be held to the order of the Collateral Agent (whether for safe custody, collection, security or otherwise); or

(c)which may after the date hereof be registered in the name of, or beneficially owned by, the Chargor

and in each such case includes all dividends, interest or other distributions payable thereon and all allotments, accretions, offers, rights, bonuses, benefits and advantages whatsoever (whether by way of conversion, redemption, preference, option or otherwise) which accrue, are offered or arise in respect thereof.

1.4In this Share Charge (unless otherwise provided):

(a)references to Clauses and the Schedule are to be construed as references to the Clauses of, and the Schedule to, this Share Charge as amended or varied from time to time and references to sub Clauses shall unless otherwise specifically stated be construed as references to the sub Clauses of the Clause in which the reference appears;

(b)references to the Credit Agreement, or to any other document or agreement are to be construed as references to the Credit Agreement, or such other document or agreement as is in force for the time being and as amended, varied, novated or supplemented, as the case may be, from time to time;

(c)words importing the singular shall include the plural and vice versa;

(d)references to a person shall be construed so as to include that person’s assigns or transferees or successors in title and shall be construed as including references to an individual, firm, partnership, joint venture, company, corporation, unincorporated body of persons or any state or any agency thereof;

(e)references to any statute or statutory provision include any statute or statutory provision which amends; extends, consolidates or replaces the same; or which has been amended, extended, consolidated or replaced by the same, and shall include any orders, regulations, instruments or other subordinate legislation made under the relevant statute;

(f)references to liability or liabilities are to be construed to include all liabilities and obligations whether actual, contingent, present or future and whether incurred solely or jointly or as principal or surety;

(g)the words “other” and “otherwise” shall not be construed ejusdem generis with any foregoing words where a wider construction is possible; and

3

(h)the words “including” and “in particular” shall be construed as being by way of illustration or emphasis only and shall not be construed as, nor shall they take effect as, limiting the generality of any foregoing words.

2.COVENANT TO PAY

The Chargor covenants with the Collateral Agent (acting for the benefit of itself and the Beneficiaries pursuant to the provisions of the Credit Agreement) that it will on demand pay and discharge each of the Secured Obligations when due to the Collateral Agent PROVIDED THAT the liability of the Chargor hereunder shall be limited to the amount realised by the disposal of the Securities and other amounts payable by the Chargor under this Share Charge.

3.CHARGE

The Chargor hereby charges with full title guarantee the Securities by way of first fixed charge to the Collateral Agent (acting as agent for the benefit of itself and the Beneficiaries pursuant to the provisions of the Credit Agreement) as a continuing security to secure the payment and performance of the Secured Obligations.

The Collateral Agent is hereby authorised to arrange at any time during the occurrence and continuance of an Event of Default under the Credit Agreement or any Loan Document for any of the Securities to be registered in the name of the Collateral Agent (or its nominee) and the Collateral Agent will use its best endeavours to notify the Chargor of any such registration.

4.COVENANTS BY THE CHARGOR

4.1The Chargor hereby covenants with the Collateral Agent, for the benefit of itself and the other Beneficiaries, that during the continuance of this security the Chargor will:

(a)deposit with the Collateral Agent (unless the Collateral Agent shall otherwise agree) only Securities which are fully paid and which it has a good right to deposit and transfer free from any option, lien, charge or encumbrance of any kind and in respect of which it shall lodge:

(i)all stock and share certificates and documents of title;

(ii)executed undated transfers of the Securities completed in blank or duly executed and dated transfers in favour of the Collateral Agent (as agent and trustee for the Beneficiaries) or its nominee or agent as the Collateral Agent may direct; and

(iii)such other documents as the Collateral Agent may from time to time require for perfecting the title of the Beneficiaries to the Securities including any bonus or rights issue (duly executed by or signed on behalf of the registered holder) or for vesting or enabling the Chargor to vest the same in the Collateral Agent or its nominees or in any purchaser to the

4

intent that the Collateral Agent may at any tune without notice present them for registration;

(b)duly and promptly pay all calls, installments or other payments which may be made or become due in respect of any of the Securities as and when the same from time to time become due (and if the Chargor does not do so, the Collateral Agent may make such payments on behalf of the Chargor, in which event any sums so paid shall be reimbursed on demand by the Chargor to the Collateral Agent);

(c)comply promptly with any notice served on it under the Companies Act 1985 or 2006;

(d)not (without the prior consent in writing of the Collateral Agent or except as provided herein):

(i)permit any person other than the Chargor or the Collateral Agent (or its nominee or agent) to be registered as holder of the Securities or any part thereof; or

(ii)create or purport to create or permit to subsist any mortgage, charge, lien or encumbrance (other than in favour of the Collateral Agent or as permitted under the Credit Agreement) on or over the Securities or any part thereof or interest therein; or

(iii)sell, transfer, grant any option over or otherwise dispose of the Securities or any part thereof or interest therein or attempt or-agree so to do;

(e)not do or cause or permit to be done anything which may in any way depreciate, jeopardise or otherwise prejudice the value to the Beneficiaries of the Securities.

4.2The Chargor hereby farther covenants and agrees with the Beneficiaries that:

(a)the Collateral Agent and its nominees at the discretion of the Collateral Agent may exercise in the name of the Chargor or otherwise at any time whether before or after demand for payment and without any further consent or authority on the part of the Chargor in respect of the Securities any voting rights and any powers or rights which may be exercisable by the person in whose name the Securities are registered or by the bearer thereof; but such power shall be exercised subject to the provisions of Clause 5;

(b)the Chargor will, if so requested by the Collateral Agent, transfer all or any of the Securities to the Collateral Agent or to such nominees wheresoever situate or agents as the Collateral Agent may select and that the Collateral Agent may hold all or any of such Securities in any branch of the Collateral Agent or with any correspondents or other agents whether in the United Kingdom or overseas;

5

(c)subject to Clause 8.7 the Chargor shall provide to the Collateral Agent a copy of any report, accounts, circular or notice received in respect of or in connection with any of the Securities promptly following the receipt thereof by the Chargor.

5.DIVIDENDS AND VOTING RIGHTS

Without prejudice to any other provision in this Share Charge (other than Clause 4.2), the Collateral Agent hereby agrees with the Chargor that until it shall have made demand for payment on the Borrowers under the Credit Agreement for any of the Secured Obligations or until the occurrence of an Event of Default has occurred and which is continuing under the Credit Agreement or any of the Loan Documents:

(a)the Chargor will hold all dividends paid on and received by it in respect of the Securities; and

(b)the Chargor will exercise all voting and other rights and powers attached to the Securities.

6.REPRESENTATIONS AND WARRANTIES BY THE CHARGOR

The Chargor represents and warrants to the Collateral Agent, for the benefit of itself and the Beneficiaries, and undertakes that:

(a)the Company is duly incorporated and validly existing under the law of England and Wales;

(b)subject to and as permitted by the Credit Agreement, the Chargor is the sole, absolute and^; beneficial owner of the Securities, that no person save the Chargor has any right or interest of any sort whatsoever in or to the Securities and that there are no agreements or arrangements (including any restrictions on transfer) affecting the Securities in any way or which would or might in any way fetter or otherwise prejudice the rights of the Chargor or any mortgagee of the Securities;

(c)the Securities are duly authorised, validly issued and fully paid and are and will at all times be free from any restriction on transfer and there are no moneys or liabilities outstanding in respect of any of the Securities;

(d)this Share Charge constitutes its legal, valid, binding and enforceable obligations and is a security over all and every part of the Securities effective in accordance with its terms (subject to laws affecting the rights of creditors generally);

(e)this Share Charge does not and will not conflict with or result in any breach or constitute a default under any agreement, instrument or obligation to which the Company or Chargor is a party or by which it is bound; and

(f)all necessary authorisations and consents to enable or entitle it to enter into this Share Charge have been obtained and will remain in full force and effect at all times during the subsistence of the security constituted by this Share Charge.

6

7.FURTHER ASSURANCE

The Chargor shall at any time, if and when required by the Collateral Agent, execute such further legal or other charges or assignments in favour of the Collateral Agent as the Collateral Agent shall from time to time reasonably require over all or any of the Securities and all rights relating thereto both present and future (including any bonus or substituted securities) and such other transfers or documents as the Collateral Agent may from time to time reasonably require for perfecting its title to the same or for vesting or enabling it to vest the same in itself or its nominees or in any purchaser as the Collateral Agent deems necessary or desirable to secure the Secured Obligations or to facilitate the realisation of the Securities or the exercise of the powers conferred on the Collateral Agent; such further charges or assignments to be prepared by or on behalf of the Collateral Agent at die cost of the Chargor and to contain an immediate power of sale without notice, a clause excluding section 93 and the restrictions contained in section 103 of the Law of Property Act 1925 and such other clauses for the benefit of the Beneficiaries as the Collateral Agent may reasonably require.

8.POWERS OF THE COLLATERAL AGENT

8.1At any time after the Collateral Agent shall have demanded payment of any of the Secured Obligations in accordance with the terms of the Loan Documents:

(a)the Collateral Agent and any nominee of the Collateral Agent wheresoever situate may without further notice and without the restrictions contained in section 103 of the Law of Property Act 1925 in respect of all or any of the Securities exercise all the powers or rights (including voting rights) which may be exercisable by the registered holder of the Securities and all other powers conferred on mortgagees by the Law of Property Act 1925 as hereby varied or extended; and

(b)any dividends, interest or other payments which may be received or receivable by the Collateral Agent or by any nominee in respect of any of the Securities may be applied by the Collateral Agent as though they were proceeds of sale.

8.2Section 93 of the Law of Property Act 1925 shall not apply to this security or to any security given to the Collateral Agent or the Beneficiaries pursuant hereto.

8.3In exercising the powers referred to in Clause 8.1, the Securities or any part thereof may be sold or disposed of at such times in such manner and generally on such terms and conditions and for such consideration as the Collateral Agent may think fit. Any such sale or disposition may be for cash, debentures or other obligations, shares, stock, securities or other valuable consideration and be payable immediately or by installments spread over such period as the Collateral Agent shall think fit. No purchaser or other person shall be bound or concerned to see or enquire whether the right of the Collateral Agent to exercise any of the powers hereby conferred has arisen or not or be concerned with notice to the contrary or with the propriety of the exercise or purported exercise of such powers.

7

8.4All money received by the Collateral Agent in the exercise of any powers conferred by this Share Charge shall be applied, after payment of all costs and expenses incurred in the exercise of such power and after the discharge of all liabilities having priority thereto, in or towards satisfaction of the Secured Obligations in such order as the Collateral Agent in its absolute discretion may from time to time determine.

8.5The Collateral Agent shall not be liable to account as mortgagee in possession in respect of all or any of the Securities and shall not be liable for any loss upon realisation or for any neglect or default to present any interest coupon or any bond or stock drawn for repayment or for any failure to pay any call or installment or to accept any offer or to notify the Chargor of any such matter or for any negligence or default by its nominees, correspondents or agents or for any other loss of any nature whatsoever in connection with me Securities other than any caused by the Collateral Agent’s gross negligence or willful default.

8.6The Chargor hereby agrees fully to indemnify and hold harmless the Collateral Agent and the other Beneficiaries from and against all losses, actions, claims, expenses, demands and liabilities whether in contract, tort or otherwise:

(a)in respect of calls or other payments relating to the Securities now of hereafter incurred by the Collateral Agent or any other Beneficiary (or any nominee or agent of any of them) or by any officer or employee for whose liability, act or omission it may be answerable; and

(b)occasioned by any breach by the Chargor of any of its covenants or other obligations to the Collateral Agent or any other of the Beneficiaries under this Share Charge.

The Chargor shall indemnify the Collateral Agent and the other Beneficiaries on demand and shall pay interest on the sums demanded from the date of demand to the date of actual payment at the Default Rate, as such term is defined in Section 2.6(b) of the Credit Agreement (both before and after judgment).

8.7Neither the Collateral Agent nor any other Beneficiary shall have any liability or responsibility to the Chargor for any action taken or omitted to be taken by the Collateral Agent in relation to the Securities (including any Securities which are at any time registered in the name of the Collateral Agent (or any nominee or agent for the Collateral Agent)). In particular, the Collateral Agent shall have no liability as a result of any failure to forward to the Chargor any report, circular or other communication received by the Collateral Agent in relation to any Securities or to accept or decline any offer made in respect of any Securities or to make any payment in relation to any Securities.

9.RECEIVER

9.1At any time after this security becomes enforceable the Collateral Agent may without further notice appoint any one or more qualified persons to be a receiver or receiver and manager (each a “Receiver”) of all or any part of the Securities in like manner in every respect as if the Collateral Agent had become entitled under the Law of Property Act

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1925 to exercise the power of sale thereby conferred. In this Clause “qualified person” means a person who, under the Insolvency Act 1986, is qualified to act as a receiver of the property of any company with respect to which he is appointed.

9.2Every Receiver appointed in accordance with Clause 9.1 shall have and be entitled to exercise all powers conferred by the Law of Property Act 1925 as if such Receiver has been duly appointed thereunder together with all powers conferred on receivers under the Insolvency Act 1986. Additionally, each Receiver shall have power to do all such other acts and things as he may consider desirable or necessary for realising the Securities or any part thereof or incidental or conducive to any of the matters, powers or authorities conferred on a Receiver under or by virtue of this Share Charge and to exercise in relation to the Securities or any part thereof all such powers, authorities and things as he would be capable of exercising if he were, the absolute beneficial owner of the same and to use the name of the Chargor for all or any of the purposes aforesaid.

9.3Any Receiver appointed pursuant to this Share Charge shall be the agent of the Chargor (and notwithstanding the liquidation of such Chargor, any Receiver shall not he the agent of the; Collateral Agent) and shall as such agent be deemed to be in the same position as a receiver appointed by a mortgagee under the Law of Property Act 1925. The Chargor shall be solely liable for such Receiver’s costs, defaults and remuneration and shall be liable on any contracts and engagements made or entered into by such Receiver, except the Collateral Agent may from time to time remove any Receiver appointed by it and may whenever it may deem it expedient appoint another qualified person as a new receiver in the place of any Receiver whose appointment may for any reason have terminated and may from time to time fix the remuneration of any Receiver appointed by it.

9.4All or any of the powers, authorities and discretions which are conferred by this Share Charge (either expressly or impliedly) upon a Receiver of the Securities may be exercised after the security hereby created becomes enforceable by the Collateral Agent in relation to the whole of the Securities or any part thereof without first appointing a Receiver thereof or notwithstanding the appointment of a Receiver thereof.

10.CONTINUING SECURITY AND PROTECTIVE PROVISIONS

10.1The security constituted by this Share Charge shall be continuing and shall not be considered as satisfied or discharged by any intermediate payment or settlement of the whole or any part of the Secured Obligations or any other matter or thing whatsoever and shall be binding until all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full. In particular this Share Charge shall not be reduced, discharged or otherwise adversely affected by:

(a)any variation, extension, compromise, discharge, dealing with, exchange or renewal of any right or remedy which the Collateral Agent or any other Beneficiary may now or hereafter have against the Obligors or any other person in respect of the Secured Obligations;

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(b)any act or omission by the Collateral Agent or any other Beneficiary or any other person in taking up, perfecting or enforcing or the non-enforcement of any security or guarantee from or against the Obligors or any other person;

(c)any termination, amendment, variation, novation or supplement of or to any of the Secured Obligations;

(d)any grant of time, indulgence, waiver or concession to the Obligors or any other person;

(e)any change in the constitution, name and style of the Obligors or any other person;

(f)any invalidity, illegality, unenforceability, irregularity, frustration or discharge by operation of law of any actual or purported liability of, or any security held from, the Obligors or any other person in connection with the Secured Obligations;

(g)any act or omission which would not have discharged or affected any of the liabilities of the Chargor had it been a principal debtor or by anything done or omitted by any person which, but for this provision, might operate to exonerate or discharge the Chargor or otherwise reduce or extinguish any of its liabilities under this Share Charge.

10.2The Chargor shall not at any time (while any of the Secured Obligations are outstanding) take any security or other right or benefit from or exercise any right against the Obligors, a guarantor or any other person in connection with the liability of, or any payment made by, the Chargor under or pursuant to this Share Charge.

10.3If the Chargor shall be in breach of Clause 10.2 any security or other right or benefit obtained from any Borrower or any other person shall be held upon trust to transfer or pay the same to the Collateral Agent to the extent necessary to satisfy any liability of the Chargor hereunder.

11.NEW ACCOUNTS, SUSPENSE ACCOUNTS, NON-MERGER

11.1If the Collateral Agent or any other Beneficiary receives notice (whether actual or otherwise) of any subsequent mortgage or charge affecting all or any part of the Securities the Collateral Agent may open a new account or accounts with the Obligors and, if it does not open a new account, it shall nevertheless be treated as if it had done so at the time when the Collateral Agent or the other Beneficiary received or was deemed to have received notice and as from that time all payments made by the Obligors to the Collateral Agent or other Beneficiary shall be credited or be treated as having been credited to the new account and shall not operate to reduce the amount secured by this Share Charge at the time when the Collateral Agent or the other Beneficiary received or was deemed to have received such notice.

11.2All moneys received, recovered or realised by the Collateral Agent under this Share Charge (including the proceeds of any conversion of currency) may in the discretion of

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the Collateral Agent be credited to any suspense or impersonal account held with the Collateral Agent and may be held in such account for so long as the Collateral Agent may think fit. The Charger shall not be concerned with, and shall have no right in respect of, the application by the Collateral Agent of any sums received, recovered or realised by the Collateral Agent under this Share Charge.

11.3This Share Charge is in addition to and shall not merge with or otherwise prejudice or affect any banker’s lien, right to combine and consolidate accounts, right of set off or any other contractual or other right or remedy or any guarantee, lien, pledge, bill, note, mortgage or other security now or hereafter held by or available to the Beneficiaries.

12.POWER OF ATTORNEY

12.1The Chargor hereby irrevocably appoints the following, namely:

(a)the Collateral Agent; and

(b)each and every person to whom the Collateral Agent shall from time to time have delegated the exercise of the power of attorney conferred by this Clause 12;

jointly and also severally to be its attorney or attorneys and in its name and otherwise on its behalf to sign, seal, execute, deliver, perfect and do all deeds, instruments, documents, acts and things which may be required (or which the Collateral Agent shall consider requisite) for carrying out any obligation imposed on the Chargor by or pursuant to this Share Charge, for carrying any sale or other dealing by the Collateral Agent or any other Beneficiary into effect, for getting in the Securities, and generally for enabling the Collateral Agent to exercise the powers conferred on it by or pursuant to this Share Charge or by law. The Collateral Agent shall have full power to delegate the power conferred on it by this Clause 12.1, but no such delegation shall preclude the subsequent exercise of such power by the Collateral Agent itself or preclude the Collateral Agent from making a subsequent delegation thereof to some other person and any such delegation may be revoked by the Collateral Agent at any time.

12.2The power of attorney hereby granted is as regards the Collateral Agent and its delegates (and as the Chargor hereby acknowledges) granted irrevocably and for value as part of the security constituted by this Share Charge to secure proprietary interests in and the performance of obligations owed to the respective donees within the meaning of the Powers of Attorney Act 1971.

12.3The Chargor agrees to ratify and confirm anything such attorney shall lawfully and properly do or purport to do by virtue of Clause 12.1 and all money expended by any such attorney shall be deemed to be expenses incurred by the Collateral Agent under this Share Charge.

13.DISCHARGE CONDITIONAL

13.1Any release, discharge or settlement between the Chargor and the Collateral Agent in relation to this Share Charge shall be conditional upon no disposition or payment to the

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Collateral Agent or any other Beneficiary by any Borrower or any other person being avoided, set aside or ordered to be refunded pursuant to any law relating to insolvency or for any other reason.

13.2If any such disposition or payment is avoided, set aside or ordered to be refunded, the Collateral Agent shall be entitled to enforce this Share Charge against the Chargor as if such release, discharge or settlement had not occurred and any such disposition or payment had not been made.

14.DISCHARGE OF SECURITY

14.1Termination

This Share Charge and the security interest created hereby shall terminate when all the Secured Obligations have been indefeasibly paid in full in cash, at which time the Beneficiaries shall direct the Collateral Agent to execute and deliver to the Chargor or the Chargor’s designee, at the relevant Chargor’s expense, all documents which such Chargor shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination documents pursuant to this Clause 14 shall be without recourse to or warranty by the Collateral Agent or the Beneficiaries.

14.2Release

If any of the Securities shall be sold, transferred or otherwise disposed of by a Chargor in a transaction permitted by the Loan Documents, the security interest created hereby in any Securities that is so sold, transferred or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer or other disposition, and such Securities shall be sold free and clear of the lien and security interest created hereby; provided, however, that such security interest will continue to attach to all proceeds of such sales or other dispositions. In connection with any of the foregoing, the Beneficiaries shall direct the Collateral Agent to execute and deliver to the Chargor or the Chargor’s designee, at the Chargor’s expense, all documents that the Chargor shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination documents pursuant to this Clause 14 shall be without recourse to or warranty by the Collateral Agent or the Beneficiaries.

14.3Upon any release of the Securities neither the Collateral Agent nor any of the other Beneficiaries nor their nominees or agents (as the case may be) shall be bound to release or transfer to the Chargor the identical stocks, shares or securities which were deposited with or transferred to it or them and the Chargor shall accept shares and securities of the same class and denomination or such other securities as then represent the Securities.

15.CURRENCY

15.1All moneys received or held by the Collateral Agent or any other Beneficiary under this Share Charge may from time to time after demand has been made by the Collateral Agent or ah Event of Default has occurred be converted into such other currency as the Collateral Agent considers necessary or desirable to cover the Secured Obligations in the

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currency thereof at the then prevailing spot rate of exchange of the Collateral Agent (as reasonably determined by the Collateral Agent) for purchasing that other currency with the existing currency.

15.2No payment to the Collateral Agent or any other Beneficiary (whether under any judgment or court order or otherwise) shall discharge the obligation or liability of the Chargor in respect of which it was made unless and until the Collateral Agent or such other Beneficiary shall have received payment in full in the currency in which such obligation or liability was incurred and, to the extent that the amount of any such payment shall on actual conversion into such currency fall short of such obligation or liability actual or contingent expressed in that currency, the Collateral Agent or such other Beneficiary shall have a further separate cause of action against the Chargor and shall be entitled to enforce this Share Charge to recover the amount of the shortfall.

16.COSTS

The Chargor shall on demand pay to the Collateral Agent the amount of all reasonable costs and expenses and other liabilities (including reasonable legal and out of pocket expenses and any Value Added Tax on such costs and expenses) which the Collateral Agent or any other Beneficiary incurs in connection with:

(a)the preparation, negotiation, execution and delivery of this Share Charge;

(b)any stamping or payment of stamp duty reserve tax or registration of this Share Charge or any transfer of the Securities pursuant hereto;

(c)any actual or proposed amendment or waiver or consent under or in connection with this Share Charge;

(d)any discharge or release of this Share Charge;

(e)the preservation or exercise (or attempted preservation or exercise) of any rights under or in connection with and the enforcement (or attempted enforcement) of this Share Charge; or

(f)dealing with or obtaining advice about any other matter or question arising out of or in connection with this Share Charge;

together with interest thereon at the Default Rate from the date of demand (or if earlier the date of payment by the Collateral Agent or such other Beneficiary) until the date of payment by the Chargor whether before or after judgment.

17.ASSIGNMENT

The Beneficiaries may assign or otherwise transfer the whole or any part of the benefit of this Share Charge to any person to whom all or any part of its rights, benefits and obligations under the Credit Agreement are assigned or transferred in accordance with the provisions of the Credit Agreement and the expression ^“the Beneficiaries” wherever used

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herein shall be deemed to include the assignees and other successors, whether immediate or derivative, of any Beneficiary, who shall be entitled to enforce and proceed upon this Share Charge in the same manner as if named herein. The Beneficiaries shall be entitled to disclose (on a confidential basis) any information concerning the Chargor to any such assignee or other successor or any participant or proposed assignee, successor or participant. The Chargor may not assign or transfer all or any part of its rights and/or obligations under this Share Charge.

18.NOTICES

18.1Without prejudice to any other method of service of notices and communications provided by law, a demand or notice under this Share Charge shall be in writing signed by an officer or agent of the Collateral Agent and may be served on the Chargor by hand, by post or by facsimile transmission. Any such notice or communication shall be sent to the address or number of the Chargor as set out below:

EMRISE Electronics Corporation
9654 Hermosa Avenue
Rancho Cucamonga, CA 91730
USA
Attn: D. John Donovan

With a copy to:

Rutan & Tucker, LLP
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Attn: Larry A. Cerutti, Esq.
Fax No.: (714) 546-9035

18.2Any such notice or communication given by the Collateral Agent or any other Beneficiary shall be deemed to have been received:

(a)if sent by facsimile transmission, with a confirmed receipt of transmission from the receiving machine, on the Business Day on which transmitted or the following Business Day if transmitted after the normal business hours of the Chargor;

(b)in the case of a written notice lodged by hand, on the Business Day of actual delivery or the following Business Day if delivered after the normal business hours of the Chargor; and

(c)if posted, on the second Business Day following the day on which it was properly dispatched by first class mail postage prepaid.

18.3Any notice given to the Collateral Agent or any other Beneficiary shall be deemed to have been given only on actual receipt.

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19.MISCELLANEOUS

19.1All sums payable by the Chargor under this Share Charge shall be paid without any set off, counterclaim, withholding or deduction whatsoever unless required by law in which event the Chargor will, simultaneously with making the relevant payment under this Share Charge, pay to the Collateral Agent such additional amount as will result in the receipt by the Collateral Agent of the full amount which would otherwise have been receivable and will supply the Collateral Agent promptly with evidence satisfactory to the Collateral Agent that the Chargor has accounted to the relevant authority for the sum withheld or deducted.

19.2No delay or omission on the part of the Collateral Agent in exercising any right or remedy under this Share Charge shall impair that right or remedy or operate as or be taken to be a waiver of it nor shall any single, partial or defective exercise of any such right or remedy preclude any other or further exercise under this Share Charge of that or any other right or remedy.

19.3The rights of the Beneficiaries under this Share Charge are cumulative and not exclusive of any rights provided by law and may be exercised from time to time and as often as the Collateral Agent deems expedient.

19.4Any waiver by the Collateral Agent or any other Beneficiary of any terms of this Share Charge or any consent or approval given by any of them under it shall be effective only if given in writing and then only for the purpose and upon the terms and conditions (if any) on which it is given.

19.5If at any time any one or more of the provisions of this Share Charge is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction neither the legality, validity or enforceability of the remaining provisions of this Share Charge nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall be in any way affected or impaired as a result.

19.6Any statement, certificate or determination of the Collateral Agent as to the amount of the Secured Obligations or (without limitation) any other matter provided for in this Share Charge shall in the absence of manifest error be conclusive and binding on the Chargor.

20.LAW AND JURISDICTION

20.1This Share Charge is governed by and shall be construed in accordance with English law.

20.2The Chargor irrevocably agrees for the exclusive benefit of the Beneficiaries that the courts of England shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which may arise out of or in connection with this Share Charge and for such, purposes irrevocably submits to the jurisdiction of such courts.

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20.3Nothing contained in this Clause shall limit the right of the Collateral Agent or other Beneficiary to take proceedings against the Chargor in any other court of competent jurisdiction (including without limitation and for the avoidance of doubt, in accordance with the terms of the Credit Agreement) nor shall the taking of any such proceedings in one or more jurisdictions preclude the taking of proceedings in any other jurisdiction whether concurrently or not (unless precluded by applicable law).

20.4The Chargor irrevocably waives any objection which it may have now or in the future to the courts of England being nominated for the purpose of this Clause on the ground of venue or otherwise and agrees not to claim that any such court is not a convenient or appropriate forum.

20.5The Chargor irrevocably and unconditionally authorises and appoints EMRISE Electronics Ltd. of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH, United Kingdom (or such other company with a registered office in England as it may from time to time substitute by not less than fifteen days written notice to the Collateral Agent) to accept service of all legal process arising out of or connected with this Share Charge and service on such person (or substitute) shall be deemed to be service on the Chargor. Except upon such a substitution the Chargor shall not revoke any such authority or appointment and shall at all times maintain an agent for service of process in England and if any such, agent ceases for any reason to be an agent for this purpose shall forthwith appoint another agent and advise the Collateral Agent accordingly.

IN WITNESS whereof the Chargor has executed this Share Charge as a deed with the intention that it be delivered on the day and year first before written.

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SCHEDULE

Number of shares or amount of stock	Description of stocks, shares, or other securities
58,668	Ordinary shares of £1 each in EMRISE Electronics Ltd. a company registered in England and Wales (Registered No. 1969006)

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IN WITNESS WHEREOF the Chargor has executed this Share Charge as a deed with the intention that it be delivered on the day and year first before written

EXECUTED as a Deed on behalf of	)
EMRISE Electronics Corporation, a company	)
incorporated in the State of New Jersey by	)
Carmine Oliva being a person	)	/s/ Carmine Oliva
who in accordance with the laws of that	)
territory, is acting under the authority	)
of President & Chief Executive Officer	)

	)	/s/ Robert J. Anderson
		Robert J. Anderson
		Authorized Signatory
SIGNED for and on behalf of	)	/s/ Peter Paul Mendel
GVEC RESOURCE IV INC. in its capacity	)	Peter Paul Mendel
as Collateral Agent	)	Authorized Signatory

EX-10.14

EXHIBIT 10.14

GUARANTY

THIS GUARANTY (this “Guaranty”) is executed as of November 30, 2007, by CXR Anderson Jacobson SAS (the “Guarantor”), for the benefit of GVEC Resource IV Inc., as Arranger and Agent (the “Agent”) and the Lenders (as defined below). All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement (as herein defined).

RECITALS:

A.            Pursuant to that certain Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Credit Agreement”) between and among EMRISE Corporation, a Delaware corporation (the “Parent”), each of Parent’s Subsidiaries identified on the signature pages thereof (such Subsidiaries, together with the Parent, the “Borrowers”), the Agent, and the Lenders from time to time party thereto (the “Lenders”), the Lenders are willing to make certain financial accommodations available to the Borrowers from time to time pursuant to the terms and conditions thereof.

B.            The Guarantor is a wholly owned subsidiary of the Parent and, as such, will benefit by virtue of the financial accommodations extended to the Parent by the Lenders.

C.            In order to induce the Lenders to enter into the Credit Agreement and to extend the financial accommodations to the Borrowers pursuant to the Credit Agreement, and in consideration thereof, the Guarantor has agreed to guarantee the Guaranteed Obligations.

NOW, THEREFORE, as an inducement to the Lenders to enter into the Credit Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

ARTICLE I
NATURE AND SCOPE OF GUARANTY

Section 1.1.            Guaranty. The Guarantor hereby unconditionally, absolutely and irrevocably guarantees to the Agent, for the benefit of the Lenders, and the Guarantor shall be liable for (a) the due and punctual payment of all Obligations including, without limitation, the principal of, and interest (including any interest that, but for the commencement of any applicable bankruptcy or insolvency proceeding, would have accrued) on, any and all premium on, and any and all expenses incurred in connection with, the Obligations pursuant to the terms of the Credit Agreement, and (b) the due and punctual performance of all of the covenants and obligations owing to the Agent and the Lenders (the “Guaranteed Obligations”).

Section 1.2.            Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and not a guaranty of collection. This Guaranty may not be revoked by the Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by the Guarantor. The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or

discharge the obligation of the Guarantor to the Agent or any Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by the Agent and any permitted assignee of the Agent and shall not be discharged by the assignment or negotiation of all or part of the Agent’s or any Lender’s rights under the Credit Agreement.

Section 1.3.            Payment By the Guarantor. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, the Guarantor shall, immediately upon demand by the Agent, and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to the Agent at the Agent’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.4.            No Duty To Pursue Others. The liability of the Guarantor shall be direct and immediate as a primary and not a secondary obligation or liability. It shall not be necessary for the Agent (and the Guarantor hereby waives any rights which the Guarantor may have to require the Agent), in order to enforce the obligations of the Guarantor hereunder, first to (a) institute suit or exhaust its remedies against any Borrower or others liable on the Loans or the Guaranteed Obligations or any other Person, (b) enforce the Agent’s rights against any collateral which shall ever have been given to secure the Loans, (c) enforce the Agent’s rights against any other guarantors of the Guaranteed Obligations, (d) join the Borrowers or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (e) exhaust any remedies available to the Agent or any Lender against any collateral which shall ever have been given to secure the Loans, or (f) resort to any other means of obtaining payment of the Guaranteed Obligations. Neither the Agent nor the Lenders shall be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.5.            Waivers.

(a)           Without limitation to any other waivers contained in this Guaranty, the Guarantor acknowledges and agrees to the provisions of the Loan Documents, and hereby waives notice of: (i) any loans or advances made by the Lenders to any of the Borrowers; (ii) acceptance of this Guaranty; (iii) any amendment or extension of the Credit Agreement or of any other Loan Documents; (iv) the execution and delivery by the Borrowers and the Agent or any Lender of any other loan or credit agreement or of any Borrower’s execution and delivery of any promissory notes or other documents arising under the Loan Documents or in connection with the Collateral; (v) the occurrence of any breach by any Borrower under any of the Loan Documents or an Event of Default; (vi) the Agent’s or any Lender’s transfer or disposition of the Guaranteed Obligations, or any part thereof; (vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations; (viii) protest, proof of non-payment or default by any Borrower; and (ix) any other action at any time taken or omitted by the Agent or any Lender, and, generally, all demands and notices of every kind in connection

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 with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

(b)           Without limitation to any other waivers contained in this Guaranty, the Guarantor hereby waives, to the fullest extent permitted by law: (i) presentment, demand, protest, diligence, notice of demand, notice of protest, notice of dishonor, notice of nonperformance, notice of non-payment, notice of acceptance and all other notices and other formalities which may be required by statute, rule of law or otherwise to preserve intact Agent’s rights against the Guarantor under this Guaranty; (ii) all benefits and defenses under California Civil Code (“CC”) Section 2849, including the right, if any, to the benefit of, or to direct application of, any security hypothecated to, the Agent, until all the Obligations, howsoever arising, shall have been paid and/or performed; (iii) all benefits and defenses under CC Section 2845, including the right to require the Agent to proceed against any Borrower or to pursue any other remedy in the Agent’s power; (iv) all benefits and defenses under CC Section 2850, including the right to require the Agent to proceed against or exhaust any security or Collateral the Agent may hold; (v) any defense arising by reason of any disability or other defense of any Borrower or by reason of the cessation from any cause whatsoever of the liability of any Borrower other than full payment of and full performance of the Obligations; (vi) all statutes of limitations as a defense in any action or proceeding brought against the Guarantor by the Agent, to the fullest extent permitted by law (and the Guarantor agrees that any partial payment by any Borrower or other circumstances which operate to toll any statute of limitations as to any Borrower shall also operate to toll the statute of limitations as to the Guarantor); (vii) any defense based upon Agent’s failure to perfect or continue the perfection of any lien or security interest in Collateral that secures the Obligations; (viii) any defense arising due to any failure by the Agent to inform the Guarantor of any facts the Agent may now or hereafter know about any Borrower or any Borrower’s financial condition; (ix) all benefits and defenses under CC Section 2809 purporting to reduce a guarantor’s obligations in proportion to the principal obligation, and the Guarantor agrees that by doing so the Guarantor’s liability may be larger in amount or more burdensome than that of the Borrowers; (x) all benefits and defenses under CC Section 2810, and the Guarantor agrees that by doing so the Guarantor is liable even if the Borrowers had no liability at the time of execution of the Loan Documents or thereafter ceased to be liable; (xi) all rights and benefits of CC Section 2819, and the Guarantor agrees that by doing so the Guarantor’s liability shall continue even if the Agent alters any Obligation in any respect or the Agent’s remedies or rights against any Borrower are in any way impaired or suspended without the Guarantor’s consent, whether or not due to the act or omission of the Agent; (xii) any defense based on any action taken or omitted by the Agent in any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships; and (xiii) all other rights and remedies now or hereafter accorded by applicable law to sureties or guarantors.

(c)           Without limiting the generality of the foregoing and without limitation to any other waivers contained in this Guaranty, the Guarantor waives, to the fullest extent permissible by law, all benefits and defenses under CC Sections 2847 and 2848 and agrees that the Guarantor shall have no right of subrogation or reimbursement against any Borrower and no right of contribution against any other guarantor or pledgor unless and until all Obligations have been satisfied and the Agent has released, transferred or disposed of all of its right, title and interest in any Collateral.

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(d)           Without limiting the generality of the foregoing and without limitation to any other waivers contained in this Guaranty, the Guarantor hereby waives, to the fullest extent permitted by law, any and all rights and defenses a guarantor or surety would otherwise have under applicable California law to the enforcement of this Guaranty, including, but not limited to, all rights and defenses arising under or by virtue of or pursuant to the provisions of CC Sections 2787 to 2855, inclusive, and CC Sections 2899 and 3433, and any additional rights or defenses relating any of the foregoing statutory provisions pursuant to any applicable judicial decisions of the State of California.

(e)           The Guarantor acknowledges that the waivers made by the Guarantor in this Guaranty are made knowing that their intent is to deprive the Guarantor of the benefits and defenses that would or could otherwise be available to the Guarantor under the statutory provisions referenced herein.

Section 1.6.            Payment of Expenses. In the event that the Guarantor should breach or fail to timely perform any provision of this Guaranty, the Guarantor shall pay on demand to the Agent all costs and expenses (including court costs and reasonable attorneys’ fees) incurred by the Agent in the enforcement hereof or the preservation of the Agent’s rights hereunder. The covenant contained in this Section 1.6 shall survive the payment of the Guaranteed Obligations.

Section 1.7.            Effect of Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, the Agent or any Lender must rescind or restore any payment, or any part thereof, received by the Agent or any Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to the Guarantor by the Agent shall be without effect, and this Guaranty shall remain in full force and effect. It is the intention of the Guarantor that the Guarantor’s obligations hereunder shall not be discharged except by the Guarantor’s performance of such obligations and then only to the extent of such performance.

Section 1.8.            Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty and without limitation to any other waivers contained in this Guaranty, the Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of the Agent or the Lenders), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from the Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by the Guarantor under or in connection with this Guaranty or otherwise until ninety one (91) days after the Agent has received payment in full of the Obligations.

Section 1.9.            Limitations on the Guaranty by the Guarantor.

(a)           Notwithstanding any other term of this Guaranty, the liability of the Guarantor under this Guaranty will be limited (without double counting) to an amount not exceeding the greater of:

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(i)            the aggregate of amounts made available under the Loan Documents from time to time to the Guarantor to the extent that such amounts have been borrowed by, transferred to or otherwise directly or indirectly on-lent or made available to the Guarantor (the “Relevant French Amounts”) and all interest, commissions, costs, fees, expenses and other sums accruing or payable under the Loan Documents in connection with the Relevant French Amounts; and

(ii)           Ninety percent (90%) of the Adjusted Net Assets of the Guarantor calculated on the basis of its last audited accounts available at the date of any payment under this Guaranty.

(b)           For the purpose of this clause, “Adjusted Net Assets” of the Guarantor means the lesser of:

(i)            the amount by which the book value of the total assets of the Guarantor exceeds the total amount of its liabilities, including, without limitation, contingent liabilities to the extent that such liabilities are or have to be included in the accounts of the Guarantor according to generally accepted accounting principles in France but in all cases excluding any liabilities (contingent or otherwise) of the Guarantor under or in respect of this Guaranty (including, without limitation, such liabilities in respect of accrued interest, commissions and any other sums payable under any Loan Document at the date the calculation is made); and

(ii)           the amount by which the fair market value of the total assets of the Guarantor exceeds the total amount of its liabilities, including, without limitation, contingent liabilities to the extent that such liabilities are or have to be included in the accounts of the Guarantor according to generally accepted accounting principles in France, but in all cases excluding any liabilities (contingent or otherwise) of the Guarantor under or in respect of this Guaranty (including, without limitation, such liabilities in respect of accrued interest, commissions and any other sums payable under any Loan Document at the date the calculation is made).

ARTICLE II
EVENTS AND CIRCUMSTANCES NOT REDUCING OR
DISCHARGING GUARANTOR’S OBLIGATIONS

The Guarantor hereby consents and agrees to each of the following, and agrees that the Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and without limitation to any other waivers contained in this Guaranty waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which the Guarantor might otherwise have as a result of or in connection with any of the following:

Section 2.1.            Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Credit Agreement, the

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other Loan Documents, or any other document, instrument, contract or understanding between the Borrowers and the Agent or any Lender, or any other parties, pertaining to the Guaranteed Obligations or any failure of the Agent to notify the Guarantor of any such action.

Section 2.2.            Adjustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by the Agent or any Lender to any Borrower or any other guarantor.

Section 2.3.            Condition of Borrowers or Guarantor. (a) The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of any Borrower, the Guarantor, any other guarantor or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of any Borrower or the Guarantor, (b) Agent’s or any Lender’s election, in any proceeding instituted under the United States Bankruptcy Code, of the application of Section 1111(b)(2) of the United States Bankruptcy Code or any successor statute, (c) any borrowing or any grant of a security interest under Section 364 of the United States Bankruptcy Code or (d) any action taken or omitted by the Agent or any Lender in any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding (each, an “Insolvency Proceeding”) involving any Borrower, the Guarantor or any other guarantor, including any election to have the Agent’s or any Lender’s claim allowed as being secured, partially secured or unsecured, any extension of credit by the Agent or any Lender to any Borrower, the Guarantor or any other guarantor in any Insolvency Proceeding and the taking and holding by the Agent or any Lender of any security for any such extension of credit, (d) any sale, lease or transfer of any or all of the assets of any Borrower, the Guarantor or any other guarantor, or (e) any changes in the shareholders, partners or members of any Borrower, the Guarantor or any other guarantor; or any reorganization of any Borrower or the Guarantor.

Section 2.4.            Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (a) the Guaranteed Obligations, or any part thereof, exceed the amount permitted by law, (b) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (c) the officers or representatives executing the Credit Agreement or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (d) the Guaranteed Obligations violate applicable usury laws, (e) any Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced), which render the Guaranteed Obligations wholly or partially uncollectible from such Borrower, (f) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, (g) the Credit Agreement or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, (h) the failure of consideration for the granting of this Guaranty, (i) the expiration of any statute of limitations affecting the liability of the Guarantor hereunder, the liability of any Borrower or any guarantor under the Loan Documents; it being agreed that the Guarantor shall remain liable hereon regardless of whether any Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

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Section 2.5.            Release of Obligors. Any full or partial release of the liability of any Borrower on the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by the Guarantor that the Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and the Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons will be liable to pay the Guaranteed Obligations, or that the Agent or the Lenders will look to other Persons to pay the Guaranteed Obligations.

Section 2.6.            Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

Section 2.7.            Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations, or the application by any Borrower of the proceeds of the Loans for purposes other than the purposes represented by such Borrower to the Agent and Lenders or intended or understood by the Agent and Lenders or Guarantor.

Section 2.8.            Care and Diligence. The failure of the Agent or any Lender to diligently exercise its rights and remedies under any of the Loan Documents, or to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security, including but not limited to any neglect, delay, omission, failure or refusal of the Agent or any Lender (a) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (b) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (c) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations, (d) to take any other acts or omissions of which vary, increase or decrease the risk on the Guarantor, other than any loss, damage liability or cost arising from the Agent’s or such Lender’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral.

Section 2.9.            Lender Disclosure. The failure of the Agent or the Lenders to disclose to the Guarantor (a) any facts it may now or hereafter know regarding any Borrower, regardless of whether the Agent or the Lenders have reason to believe that any such facts materially increase the risk beyond that which the Guarantor intends to assume or has reason to believe that such facts are unknown to the Guarantor, the Guarantor acknowledging that it is fully responsible for being and keeping informed of the financial condition and affairs of the Borrowers, or (b) any default, demand of performance or notice of acceleration to the Borrowers or any other Person with respect to the Loans or the Guaranteed Obligations.

Section 2.10.          Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall

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prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by the Guarantor that the Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

Section 2.11.          Offset. The Guaranteed Obligations and the liabilities and obligations of the Guarantor to the Agent hereunder shall not be reduced, discharged or released by reason of any existing or future right of offset, claim or defense (other than a defense based upon the actual payment of the Guaranteed Obligations sought to be enforced) of any Borrower against the Agent, any Lender or any other Person, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.12.          Merger. The reorganization, merger or consolidation of any Borrower into or with any Person.

Section 2.13.          Preference. Any payment by any Borrower to the Agent or any Lender is held to constitute a preference under bankruptcy laws, or for any reason the Agent or such Lender is required to refund such payment or pay such amount to such Borrower or someone else.

Section 2.14.          Attempted Revocation. Any revocation or repudiation hereof by the Guarantor or the revocation or repudiation of any of the Loan Documents by any Borrower or any other Person, including any right the Guarantor might have to revoke this Guaranty pursuant to the terms of any of the Loan Documents.

Section 2.15.          Surety Defenses. Any other suretyship defense that might, but for the terms hereof, be available to the Guarantor, including without limitation, any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of any Borrower.

Section 2.16.          Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, other than any loss, damage liability or cost arising from the Agent’s gross negligence or willful misconduct following the Agent’s taking title to the Collateral, whether or not such action or omission prejudices the Guarantor or increases the likelihood that the Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of the Guarantor that the Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

To induce the Agent and the Lenders to enter into the Loan Documents and extend credit to the Borrowers, the Guarantor represents and warrants to the Agent and the Lenders as follows,

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as of the date hereof, and as of each date that the Lenders make a Term Loan or Advance to any Borrower under the Credit Agreement:

Section 3.1.            Benefit. The Guarantor is an Affiliate of the Parent and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.2.            Familiarity and Reliance. The Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrowers and is familiar with the value of any and all collateral intended to be created as security for the payment of the Loans or Guaranteed Obligations; however, the Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.3.            No Representations by the Agent and Lenders. None of the Agent, the Lenders, nor any other party has made any representation, warranty or statement to the Guarantor in order to induce the Guarantor to execute this Guaranty.

Section 3.4.            Guarantor’s Financial Condition. As of the date hereof , and after giving effect to this Guaranty and the contingent obligation evidenced hereby, the Guarantor is, and will be, solvent, and has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities.

Section 3.5.            Legality. This Guaranty has been duly authorized by all necessary corporate action and the execution, delivery and performance by the Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which the Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which the Guarantor is a party or which may be applicable to the Guarantor. This Guaranty is a legal and binding obligation of the Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

Section 3.6.            Financial Statements. Any and all balance sheets, net worth statements and other financial data that have been given or may be given to the Agent with respect to the Guarantor did or will, at the time of such delivery, fairly and accurately present the financial condition of the Guarantor in all material respects.

Section 3.7.            Representations and Warranties of Borrowers. All representations and warranties made by the Borrowers with respect to the Guarantor in the Credit Agreement are true and correct in all material respects.

Section 3.8.            Special Representations and Warranties of the Guarantor. Without limiting the generality of the foregoing representations and warranties, the Guarantor represents and warrants as follows:

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(a)           it is a member of the group of companies of which the Parent is the parent (the “Group”), which Group has a common business and financial strategy;

(b)           the transactions contemplated by this Guaranty and the Loan Documents are aimed at the fulfillment of the objectives designed for the Group as a whole, are not without economic consideration for the Guarantor, and do not create an imbalance between the respective undertakings of the various parties within the Group;

(c)           the execution and performance by the Guarantor of its obligations hereunder:

(i)            do not exceed the financial capacity (as at the date hereof) of the Guarantor, and do not constitute an abuse of the Guarantor’s credit or assets (“abus de biens sociaux”, as such term is used under the laws of France); and

(ii)           have been authorized by all corporate action required under the laws of France (including the adoption of all such resolutions or decisions required pursuant to Articles L. 225-35, L. 225-38 and L. 227-10 of the French Commercial Code (“Code de Commerce”)) and under the constitutive documents of the Guarantor.

All representations and warranties made by the Guarantor herein shall survive the execution hereof.

ARTICLE IV

SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1.            Subordination of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of the Borrowers to the Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of the Borrowers thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by the Guarantor. The Guarantor Claims shall include without limitation all rights and claims of the Guarantor against the Borrowers (arising as a result of subrogation or otherwise) as a result of the Guarantor’s payment of all or a portion of the Guaranteed Obligations. Upon the occurrence of a Default or an Event of Default, the Guarantor shall not receive or collect, directly or indirectly, from any Borrower or any other party any amount upon the Guarantor Claims.

Section 4.2.            Claims in Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision involving the Guarantor as debtor, the Agent shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon

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Guarantor Claims. The Guarantor hereby assigns such dividends and payments to the Agent for the benefit of the Lenders. Should the Agent receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to the Guarantor, and which, as between such Borrower and the Guarantor, shall constitute a credit against the Guarantor Claims, then upon payment to the Agent in full of the Guaranteed Obligations, the Guarantor shall become subrogated to the rights of the Agent to the extent that such payments to the Agent on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if the Agent had not received dividends or payments upon the Guarantor Claims.

Section 4.3.            Payments Held in Trust. Notwithstanding anything to the contrary in this Guaranty, in the event that the Guarantor shall receive any funds, payments, claims or distributions which are prohibited by this Guaranty, the Guarantor agrees to hold in trust for the Agent, an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay such funds, payments, claims and/or distributions promptly to the Agent, and the Guarantor covenants promptly to pay the same to the Agent.

Section 4.4.            Liens Subordinate. The Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon any Borrowers’ assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon such Borrowers’ assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of the Guarantor or the Agent presently exist or are hereafter created or attach. Until ninety one (91) days after the Obligations shall have been paid in full and the Guaranteed Obligations fully satisfied, without the prior written consent of the Agent, the Guarantor shall not (a) exercise or enforce any creditor’s right it may have against any Borrower, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of any Borrower held by the Guarantor.

ARTICLE V

MISCELLANEOUS

Section 5.1.            No Waiver; Cumulative Remedies; Compliance with Laws. No failure or delay by the Agent or any Lender in exercising any right, power or remedy under the Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under the Loan Documents. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law. The Agent may comply with any applicable state or federal law requirements in connection with a disposition of

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the Collateral and such compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

Section 5.2.            Enforcement. The Agent shall have the right to enforce this Guaranty in separate actions against the Guarantor, or by an action against any other Person liable for the Guaranteed Obligations.

Section 5.3.            Severability of Provisions. Any provision of this Guaranty which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

Section 5.4.            Amendments. This Guaranty may be amended only by an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.

Section 5.5.            Parties Bound; Assignment. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided, however, that the Guarantor may not, without the prior written consent of the Agent, assign any of its rights, powers, duties or obligations hereunder.

Section 5.6.            Headings. Article, Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.

Section 5.7.            Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 5.8.            Telefacsimile Execution. Delivery of an executed signature page to this Guaranty by telefacsimile shall be equally as effective as delivery of an original executed signature page of this Guaranty. Any party delivering an executed signature page of this Guaranty by telefacsimile also shall deliver an original executed signature page of this Guaranty but the failure to deliver an original executed signature page shall not affect the validity, enforceability, and binding effect of this Guaranty.

Section 5.9.            Rights and Remedies. If the Guarantor becomes liable for any indebtedness owing by any Borrower to the Agent or Lenders, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of the Agent hereunder shall be cumulative of any and all other rights that the Agent and the Lenders may ever have against the Guarantor. The exercise by the Agent of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 5.10.          Complete Agreement. This Guaranty, together with the Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof.

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Section 5.11.          Cooperation. The Guarantor acknowledges that the Agent and its successors and assigns may, subject to any applicable limitations set forth in the Credit Agreement assign, or sell participations in, its rights under the Credit Agreement pursuant to the terms thereof. The Guarantor shall reasonably cooperate with the Agent and Lenders in effecting any such assignment or participation.

Section 5.12.          Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest on the Term Loans, any amount payable on the Advances or any other amount payable by any Borrower under the Loan Documents relating to the Term Loans or the Advances is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, the Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

Section 5.13.          Survival. Notwithstanding anything to the contrary contained in this Guaranty or in any other Loan Document, this Guaranty shall continue in full force and effect until full indefeasible payment of the Guaranteed Obligations.

Section 5.14.          Choice of Law and Venue; Judicial Reference; Waiver of Jury Trial; Service of Process.

(a)           THE VALIDITY OF THIS GUARANTY, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

(b)           THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN LOS ANGELES COUNTY AND OF THE FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE GUARANTOR HEREBY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT AGAINST THE GUARANTOR OR ITS ASSETS OR PROPERTIES IN THE COURTS OF ANY JURISDICTION WHERE THE

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GUARANTOR OR ITS ASSETS OR PROPERTIES MAY BE LOCATED OR IN WHICH IT OTHERWISE MAY BE SUBJECT TO JURISDICTION.

(c)           THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO (i) ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE LOAN DOCUMENTS IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION; (ii) THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; AND (iii) ANY RIGHT IT MAY HAVE, HOWEVER ARISING, TO REMOVE OR TRANSFER ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST IT IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT IN A STATE COURT OF THE UNITED STATES OF AMERICA TO ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA IF SUCH FEDERAL COURT OF THE UNITED STATES OF AMERICA WOULD NOT HAVE OR ACCEPT JURISDICTION THEREOF.

(d)           ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS GUARANTY AND THE MATTERS CONTEMPLATED HEREBY (EACH A “CLAIM”), ARISING IN A PROCEEDING IN CALIFORNIA STATE COURT INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF THE AGENT, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE (“REFERENCE”). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY.

(e)           OTHER THAN WITH RESPECT TO ANY PROCEEDING IN THE STATE COURTS OF CALIFORNIA, THE GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

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(f)            THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE ADMINISTRATIVE BORROWER, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE LOAN DOCUMENTS. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO THE ADMINISTRATIVE BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT. THE GUARANTOR SHALL TAKE SUCH ACTIONS AS ARE REASONABLE, INCLUDING THE EXECUTION AND FILING OF ANY AND ALL FURTHER AGREEMENTS, INSTRUMENTS AND OTHER DOCUMENTS AS MAY BE NECESSARY, TO FULLY IMPLEMENT AND EFFECT SUCH APPOINTMENTS AND TO CONTINUE THEM IN FULL FORCE AND EFFECT. THE GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE GUARANTOR IRREVOCABLY AGREES AND UNDERTAKES TO ENTER ITS UNCONDITIONAL APPEARANCE WITHIN FORTY-FIVE (45) DAYS AFTER THE COMPLETION OF SERVICE ON THE AUTHORIZED AGENT AS PROVIDED IN THIS SECTION.

Section 5.15.          Notices. All notices and other communications hereunder to Agent shall be in writing and shall be mailed, sent or delivered in accordance with the Credit Agreement. All notices and other communications hereunder to the Guarantor shall be in writing and shall be (a) personally delivered, (b) sent by overnight courier of international reputation, (c) transmitted by telecopy, or (d) sent as electronic mail, to the following (or at such other business address, telecopier number, or e-mail address as the Guarantor may hereafter designate in writing to the other parties hereto):

	CXR Anderson Jacobson SAS
	Rue de l’Ornette
	28410-Abondant
	France
With a copy to:	Emrise Corporation
	9485 Haven Avenue, Suite 100
	Rancho Cucamonga, CA 91730
	Attn: D. John Donovan
	Rutan & Tucker, LLP
	611 Anton Blvd., Suite 1400
	Costa Mesa, CA 92626

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Attn: Larry A. Cerutti, Esq.

Fax No.: (714) 546-9035

Section 5.16.          Severability. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first set forth above.

GUARANTOR:
CXR ANDERSON JACOBSON SAS
By:	/S/ Carmine Thomas Oliva
Name:		Carmine Thomas Oliva
Title		President

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Acknowledged and agreed:
AGENT AND ARRANGER:
GVEC RESOURCE IV INC.
By:	/S/ ROBERT J. ANDERSON
Name:			Robert J. Anderson
Title:		Authorized Signatory
By:	/S/ PETER PAUL MENDEL
Name:			Peter Paul Mendel
Title:		Authorized Signatory

EX-10.15

EXHIBIT 10.15

Private and Confidential

Dated  November 30, 2007

EMRISE CORPORATION	(1)
(the Pledgor)
GVEC RESOURCE IV INC.	(2)
(the Administrative Agent)
THE LENDERS	(3)

AGREEMENT FOR THE PLEDGE OF
ACCOUNT OF FINANCIAL INSTRUMENTS
RELATING TO SHARES OF
CXR ANDERSON JACOBSON SAS

Contents

Clause		Page
1	Definitions - Interpretation	1
2	Creation and Basis of the Pledge	3
3	Representations and warranties	4
4	Covenants	5
5	Enforcement	6
6	Term - Release	7
7	Notices	7
8	Miscellaneous	7
9	Successors and assigns	8
10	Costs and Taxes	8
11	Governing Law - Jurisdiction	8
Schedule 1		9
Part A - Déclaration de gage de compte d’instruments financiers (actions de société)		9
Part B - Statement of pledge of financial instruments account (company shares)		11
Schedule 2		13
Part A - Attestation de constitution de nantissement de compte d’instruments financiers		13
Part B - Acknowledgement of pledge of financial instruments account		14
Schedule 3		15
Part A - Notification au Teneur du Compte de Dividendes Nanti		15
Part B - Form of Notification of Pledge to Dividends Account Holder		16
Schedule 4		18
Part A - Attestation de Nantissement du Compte de Dividendes Nanti		18
Part B - Form of Certification of Pledge of Dividends Account		20
SIGNATURE PAGE		22

AGREEMENT FOR THE PLEDGE OF ACCOUNT OF FINANCIAL INSTRUMENTS
(COMPANY SHARES)

BETWEEN THE UNDERSIGNED:

(1)EMRISE CORPORATION, a company incorporated under the laws of Delaware, United States of America, having its principal executive offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91370, United States of America, represented by the person identified on the signature page hereof (hereinafter referred to as the “Pledgor”);

(2)GVEC RESOURCE IV INC. a company incorporated under the laws of the British Virgin Islands, whose registered office is Walkers (BVI) Limited, Walkers Chambers, PO Box 92, Road Town, Tortola, British Virgin Islands, registered under number 1027282, acting in its own name and in its capacity as Administrative Agent under the Credit Agreement (as such term is defined below), represented by the person identified on the signature page hereof (hereinafter referred to as the “Administrative Agent”); and

(3)Each lender under the Credit Agreement, listed in such Credit Agreement, together with its successors and assigns, represented by the Administrative Agent (hereinafter referred to collectively as the “Lenders”) (the Administrative Agent, the Lenders and the Arranger under the Credit Agreement being hereinafter referred to collectively as the “Beneficiaries”).

WHEREAS:

(A)The Pledgor is the owner of 90,000 shares (actions) representing 100% of the share capital and of the voting rights of CXR Anderson Jacobson SAS, a French société par actions simplifiée, whose registered office is rue de l’Ornette, 28410 Abondant, France, registered under single identification number 785 754 706 RCS Dreux (hereinafter referred to as the “Company” or, in its capacity as registrar of its own shares, the “Registrar”).

(B)Pursuant to a credit agreement governed by the laws of the State of California, United States of America, entitled “Credit Agreement” and dated on or about the date hereof (such agreement, as it may be from time to time amended, modified or supplemented, being referred to hereinafter as the “Credit Agreement”) between, inter alia, GVEC RESOURCE IV Inc. as the Arranger and the Administrative Agent, the Lenders as lenders, and the Pledgor and certain of its subsidiaries as Borrowers (as such term is defined below), the Lenders have granted to the Borrowers a credit facility for a maximum principal amount of USD 23,000,000, pursuant to the terms and conditions set out in the Credit Agreement.

(C)Pursuant to schedule 3.1 of the Credit Agreement, it has been agreed that the Pledgor shall grant a first ranking pledge over the financial instruments account in which the Shares (as such term is defined below) are registered, for the benefit of the Beneficiaries upon the terms and conditions of the present agreement for pledge of financial instrument account in order to secure the performance and payment of the Obligations (as such term is defined below). The Beneficiaries have, pursuant to article 2328-1 of the French Code civil (hereafter the “Civil Code”), appointed the Administrative Agent in order that the Administrative Agent be entitled to register, perform and enforce any security interest (sûreté réelle) granted by the Pledgor in order to secure the performance and payment of the Obligations.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

1Definitions - Interpretation

1.1Definitions

Unless otherwise stipulated, capitalised terms and expressions used in this Agreement, including in the recitals hereto, shall have the meanings ascribed to such terms below or, if not so defined, shall have the meanings ascribed to such terms in the Credit Agreement.

“Agreement” means this agreement, together with the Schedules hereto, as it may be amended, restated or supplemented from time to time;

“Beneficiaries” has the meaning ascribed to such term in the recitals hereof;

“Borrower” has the meaning set forth in the preamble of the Credit Agreement;.

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks are open for business in the State of California (United States of America) and Paris, France;

“Clauses” means any of the clauses of this Agreement;

“Company” has the meaning ascribed to such term in the recitals hereof;

“Dividends Account” has the meaning set forth in Clause 2.1.3 below;

“Dividends Account Holder” means the account holder of the Dividends Account, as such account is defined in Clause 2.1.3 below;

“Event of Default” has the meaning ascribed to such term in Schedule 1.1 of the Credit Agreement;

“Financial Instruments Account” has the meaning set forth in Clause 2.1.1 below;

“Loan Documents” has the meaning ascribed to such term in the Credit Agreement;

“Notification to the Dividends Account Holder” means notification in the form attached in Schedule 3 to this Agreement;

“Obligations” has the meaning ascribed to such term in the Credit Agreement;

“Parties” means collectively the Pledgor, the Administrative Agent and the Beneficiaries;

“Registrar” has the meaning ascribed to such term in the recitals hereof;

“Schedule” means any of the schedules to this Agreement;

“Shares” means all the ninety thousand (90,000) shares of the Company, with a par value of EUR 15 each, held by the Pledgor on the date of signature hereof, and which are registered on the Financial Instruments Account, as well as any securities (valeurs mobilières) and other financial instruments (instruments financiers) which may be added to or substituted for the aforementioned shares of the Company in any manner whatsoever in accordance with the provisions of Clause 2.2 below (including the results of any reduction in capital of the Company by reduction of the par value of its shares) and any other rights in connection therewith; and

“ Statement of Pledge” means a statement of pledge in the form attached in Schedule 1. - Part A to this Agreement (a translation of which into English agreed between the parties is attached for information purposes as Schedule 1 - Part B to this Agreement).

1.2Interpretation

In this Agreement, unless the context otherwise requires:

1.2.1The titles of Clauses and Schedules are for ease of reference only and shall not affect the interpretation or construction thereof.

1.2.2Terms defined in Clause 1.1 may be used in the singular or the plural sense as required by the context thereof.

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1.2.3References to a person shall be construed as including such person’s successors and assigns and to any other person succeeding to the rights and obligations of such person in any manner whatsoever.

1.2.4References to an agreement or any other document shall include any schedules thereto and any modifications or amendments thereof.

1.2.5References to time of day are to Paris time.

2Creation and Basis of the Pledge

2.1Transfer of the Shares to the Financial Instruments Account and pledge of the Financial Instruments Account and Dividend Account

2.1.1Pursuant to this Agreement and the Statement of Pledge (which the Pledgor has signed in one original and one copy simultaneously herewith), the Shares are registered on a special financial instruments account on the books of the Registrar (hereafter the “Financial Instruments Account”) and the Pledgor hereby agrees to grant a first priority pledge over such Financial Instruments Account in favor of the Beneficiaries, which accept such pledge, in accordance with article L.431-4 of the French Code Monétaire et Financier (hereafter the “Monetary and Finance Code”) as security for the performance and payment of the Obligations.

2.1.2Upon the signing of this Agreement, the Pledgor has delivered one original executed copy of the Statement of Pledge to the Administrative Agent and one copy thereof to the Registrar. The Company shall cause the Registrar, upon receipt of said copy, to deliver to the Administrative Agent a certification of the pledge created hereunder in the form set forth in Schedule 2. - Part A hereto (a translation of which into English agreed between the parties is attached for information purposes as Schedule 2 - Part B to this Agreement) immediately following reception by the Registrar of the signed copy of the Statement of Pledge.

2.1.3Pursuant to article L. 431-4 of the Monetary and Finance Code, all dividends, interest, fruits and products in any currency relating to the Shares shall be credited on a special account to be held by the Pledgor in the books of the Dividends Account Holder (the “Dividends Account”). The Pledgor undertakes to open the Dividends Account and to provide the Beneficiary with information relating to the Dividends Account and the identity of the Dividends Account Holder prior to the payment of any dividends by the Company to the Pledgor. The Dividends Account is deemed to be incorporated into the basis of the pledge of the Financial Instruments Account created hereunder, as from the date of the Statement of Pledge. The Pledgor shall cause the Dividends Account Holder to deliver to the Administrative Agent as reasonably requested from time to time by the Administrative Agent a confirmation of the amounts held in the Dividends Account.

2.1.4The Pledgor undertakes:

(a)to deliver to the Dividends Account Holder a Notification to the Dividends Account Holder as soon as the Dividends Account is opened;

(b)to cause the Dividends Account Holder to register the pledge over the Dividends Accounts in favor of the Beneficiaries pursuant to this Agreement and the Statement of Pledge; and

(c)to cause the Dividends Account Holder to deliver, as soon as the Dividends Account is opened, to the Administrative Agent a certification of pledge of dividends account substantially in the form of Schedule 4.

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2.2Scope of pledge

2.2.1In addition to the Shares registered on the Financial Instruments Account, the scope of the pledge is extended to any securities which are substituted therefor, or are added thereto pursuant to the provisions of article L. 431-4 of the Monetary and Finance Code, such rights being subject to and automatically and irrevocably deemed to be incorporated into the pledge created hereunder, without any such operation constituting in any manner a novation of the rights and security granted to the Beneficiaries hereunder. The Pledgor and the Registrar irrevocably undertake to credit such securities to the Financial Instruments Account.

2.2.2If the Pledgor acquires in any manner additional shares or other new securities issued by the Company that are not included in the pledge granted pursuant to Clause 2.1.1 and Clause 2.2.1 above, the Pledgor shall, as security for the payment of the Obligations, transfer such shares or other securities to the Financial Instruments Account in order to include them in the scope of the pledge granted by the Pledgor to the Beneficiaries pursuant to the terms of  this Agreement. The Pledgor shall, at its own cost, execute such documents and take such other actions as may be necessary or appropriate to effect such first priority pledge.

2.2.3In the event that the Company should effect a reduction of its capital otherwise than due to losses, the Pledgor undertakes to refrain from presenting the Shares in order for such Shares to be purchased by the Company without the prior written consent of the Administrative Agent, acting in the name and on behalf of the Beneficiaries.

2.2.4In the event that the Company should effect a reduction of its capital due to losses, the Pledgor undertakes to inform the Administrative Agent promptly of the proposed reduction and, in any event, prior to the date on which the shareholders vote on such proposed reduction, and any shares of the Company resulting from the Shares as a consequence of such reduction in capital shall be automatically incorporated into the Financial Instruments Account.

2.2.5More generally, any shares, or other shareholder interests attributed to the Pledgor and constituting ownership interests in any legal entity resulting from the contribution of the Shares in connection with the transformation or merger of the Company or any similar operation concerning the legal nature or organization of the Company, shall be considered as being subject to the pledge created hereunder and, consequently, shall be incorporated into the Financial Instruments Account or the Dividends Account, as the case may be. The Pledgor shall promptly, at its own cost, sign all documents and take all action necessary to confirm such rights of the Beneficiaries in such shares or other shareholder interests.

3Representations and warranties

3.1Representations and warranties of the Pledgor

The Pledgor hereby represents and warrants to the Administrative Agent, acting in the name and on behalf of the Beneficiaries, that:

3.1.1it is a duly incorporated, registered and validly existing company in accordance with the laws and regulations governing it and has the power to own its property and other assets and to conduct its business as it is now being conducted and hereafter proposed to be conducted;

3.1.2it has power to execute and perform its obligations under this Agreement and all necessary corporate, shareholder and other action has been taken to authorize the execution and performance of the same;

3.1.3any governmental or administrative authorizations required to be obtained or receive by it in order to execute and perform its obligations under this Agreement and to ensure the validity and enforceability thereof have been obtained and are in force;

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3.1.4the execution of this Agreement as well as the performance of its obligations contained herein are its valid and legally binding obligations, and do not contravene or conflict with, or result in any breach of any of the terms of, or constitute a default under its Articles of Association, or any provision of any contract or any undertaking to which it is a party or by which it is bound;

3.1.5the Shares were duly issued and are fully paid-up, are wholly owned by the Pledgor and are not subject to a pledge, attachment or sequestration of any kind other than the pledge created hereunder, and there is no purchase or sale option with respect to any of them;

3.1.6the Shares are held in registered form and represent at the date hereof (i) all of the shares of the Company held by the Pledgor; and (ii) 100% of the share capital of and the voting rights in the Company;

3.1.7the Company is the Registrar (teneur de compte) of its own shares, including the Shares;

3.1.8the Dividends Account is not subject to a pledge, attachment or sequestration of any kind other than the pledge created hereunder;

3.1.9the execution of this Agreement as well as the performance of the obligations contained herein do not constitute an abuse of company assets (abus de biens sociaux) or analogous principle under the laws of any other jurisdiction other than France;

3.1.10it has, in its capacity as the sole shareholder of the Company, by a decision dated 27 November 2007, approved the terms and conditions of the Agreement and the Beneficiaries as new shareholders of the Company in the event of enforcement of the present pledge; and

3.1.11there are no provisions in the by-laws (statuts) of the Company prohibiting the transfer, assignment or pledge of Shares during a fixed or indeterminate time period, which in the case of any of the foregoing would operate so as to prevent the enforcement of the pledge created hereunder.

3.2Repetition of representations and warranties

The representations and warranties made in Clause 3.1 shall be deemed to be repeated so that they remain accurate permanently and at all times during the term of this Agreement and are without prejudice to the representations and warranties made and granted under the Loan Documents.

4Covenants

4.1The Pledgor undertakes that it shall not (without the prior written consent of the Administrative Agent, acting in the name and on behalf of the Beneficiaries):

4.1.1create or attempt to create or permit to subsist in favor of any person other than the Beneficiaries any lien, charge or other security interest on the Financial Instruments Account or the Dividends Account, or any right pertaining thereto other than the pledge created hereunder;

4.1.2sell, transfer, assign or otherwise dispose of the Shares or any part thereof or interest therein or attempt or agree so to do; or

4.1.3do or cause or permit to be done anything which might reasonably be expected to depreciate, jeopardize or otherwise prejudice the value of the Shares registered in the Financial Instruments Account;

4.2The Pledgor undertakes to give to the Administrative Agent a statement of the shares registered on the Financial Instruments Account in case of change of the number of such shares.

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4.3The Pledgor shall at any time and from time to time and at its own expense, promptly take all such further action, as may be necessary in the Administrative Agent’s opinion and as the Administrative Agent may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent, acting in the name and on behalf of the Beneficiaries, to exercise and enforce their rights and remedies hereunder with respect to the Financial Instruments Account and the Dividends Account.

4.4The Pledgor undertakes not to exercise the voting rights attached to its Shares in a way that could reasonably be expected to adversely affect the rights of the Beneficiaries under this Agreement. Without limiting the generality of the foregoing, the Pledgor undertakes to refrain from introducing into the Articles of Association (statuts) of the Company any provision not existing on the date hereof which would limit the right of shareholders to transfer Shares to third parties.

5Enforcement

5.1The pledge created hereunder in favor of the Beneficiaries constitutes the sole pledge on or over the Financial Instruments Account and the Dividends Account.

5.2Upon the occurrence of an Event of Default, the Administrative Agent may by a demand (mise en demeure) delivered by hand or sent by registered mail to the Pledgor and the Registrar pursuant to articles D. 431-1 et seq. of the Monetary and Finance Code, require that unless payment of any amount due is made by the Pledgor within eight (8) Business Days of such delivery or, as the case may be, expedition, any cash dividends, interest or other monies which may be paid or payable in respect of the Shares following the expiration of such period shall be paid to the Administrative Agent, acting in the name and on behalf of the Beneficiaries. All sums so paid to the Administrative Agent shall be applied to payment of the Obligations. However, so long as no Event of Default has occurred and no demand has been made by the Administrative Agent, acting in the name and on behalf of the Beneficiaries, following an Event of Default, any such cash dividends, interest and other monies shall (subject to the provisions of the Credit Agreement) be paid to the Pledgor and shall not fall within the scope of the pledge created hereunder.

5.3Upon the occurrence of an Event of Default resulting in the Obligations becoming due and payable, the Administrative Agent may notify the Dividends Account Holder and the Pledgor that the Pledgor is no longer entitled to dispose of or withdraw from the Dividends Account any amount credited thereon.

5.4As regards the balance of the Dividends Account, it is specified that upon the occurrence of an Event of Default, the Administrative Agent acting in the name and on behalf of the Beneficiaries shall, by a demand (mise en demeure) delivered by hand or sent by registered mail pursuant to the provisions of articles D. 431-1 et seq. of the Monetary and Finance Code, require that unless payment of any amount due is made by the Pledgor within eight (8) Banking Days of such delivery or expedition, any cash dividends, interests or other monies which are credited on the Dividends Account and any cash dividends, interest or other monies which may be paid or payable in respect of the Shares following the expiration of such period shall be paid to the Administrative Agent for the account of the Beneficiaries.

5.5Upon the occurrence of an Event of Default resulting in the Obligations becoming due and payable, the Beneficiary shall be entitled to exercise with respect to the Financial Instruments Account and the Dividends Account all rights, actions and privileges granted by law to a secured creditor in order to recover the Obligations, including, at its discretion, by requesting the sale of the Shares pursuant to article 2346 of the Civil Code and article L.521-3 of the French Code de commerce, judicial attribution of the Shares in accordance with article 2347 of the Civil Code, or attribution of the Shares and any other securities or financial instruments incorporated into the basis of the pledge pursuant to this Agreement, and any amount credited on the Dividends Account in accordance with article 2348 of the Civil Code, as well as any relief permitted under articles L. 431-4 and D. 431-1 et seq. of the Monetary and Finance Code.

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5.6The Parties acknowledge and agree that the present Agreement shall be entered into without prejudice to any other rights and actions of the Beneficiaries and that it shall not affect the nature and the scope of any obligations and/or any security which have been or will be granted or made by the Pledgor.

5.7The Pledgor undertakes not to prevent the performance and enforcement of the pledge over the Financial Instruments Account and the exercise by the Administrative Agent acting in the name and on behalf of the Beneficiaries of their rights under the Agreement in accordance with the law.

6Term - Release

6.1This Agreement shall remain in force until the complete and final payment or the reimbursement of any amount due in respect of the Obligations. The representations, warranties and covenants contained herein shall bind the Pledgor during the same period.

6.2The Agent acting in the name and on behalf of the Beneficiaries agrees consequently to release the pledge created hereunder, at the expense of the Pledgor, at such time that it is satisfied that (i) no amount remains due in respect of the Obligations and (ii) none of the facilities granted under the Loan Documents remain available.

7Notices

Any notices, requests or communication made under this Agreement or relating to this Agreement shall be made in accordance with section 11 of the Credit Agreement.

8Miscellaneous

8.1This Agreement does not affect and shall not affect in any manner whatsoever, the nature and the scope of any undertaking or any security or guarantee relating to the Obligations that may have been given or granted by the Pledgor or by any third party, and is in addition to them.

8.2The rights and remedies of the Beneficiaries pursuant to this Agreement and to any other document relating to the Agreement and its performance may be exercised as often as necessary and are cumulative and not exclusive of any other rights or remedies provided by law or any other document to which the Pledgor is a party. The Agent acting in the name and on behalf of the Beneficiaries may exercise their rights under this Agreement regardless of whether their other rights or remedies provided by law or any other document with respect to the Obligations have been exercised.

8.3Subject to applicable limitation periods, the failure by the Administrative Agent acting in the name and on behalf of the Beneficiaries to exercise any right or action hereunder or any delay in exercising such rights or actions shall not constitute a waiver thereof, no delay in exercising any right, power or privilege under this Agreement by the Administrative Agent shall operate as a waiver of the same, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise of the same, or the exercise of any other right, power or privilege, and no waiver by any of the Beneficiaries shall be binding unless effected by written instrument signed by all of the parties bound thereby and referring expressly to the present Agreement. No delay or grace period granted to the Pledgor by any of the Beneficiaries shall constitute a restriction or waiver by it of the exercise of any of the rights and options of the Beneficiaries under the present Agreement. The Beneficiaries shall have no liability towards the Pledgor or its successors or assigns with respect to the late exercise or the non-exercise of their rights under the Pledge.

8.4In the event that any provision of the present Agreement shall be deemed to be null and void or not binding due to the effect of any law or due to the interpretation of such provision by any authority, the invalidity of such provision shall not affect the validity of any other provision of this Agreement which shall be legal, valid and binding. In such a case, the parties shall negotiate in good faith to replace the relevant provision by a new provision which shall be valid, binding, enforceable and compliant with the original intention of the parties.

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9Successors and assigns

9.1All the rights, privileges, actions and options granted to the Beneficiaries hereunder will benefit their successors and assigns, as well as to any of their own successors and assigns and all the terms, conditions, promises, representations and warranties hereunder will be binding on the Pledgor and on its successors and assigns.

9.2The Pledgor acknowledges that the Beneficiaries are entitled, pursuant to section 13 of the Credit Agreement, to assign all or part of their rights under the Credit Agreement, and agrees that the provisions of this Agreement will run to the benefit of any assignee of the Beneficiaries.

9.3The Pledgor shall not be entitled to assign or transfer in whole or in part its rights and obligations under this Agreement.

9.4The security created hereunder shall not be affected in the event of modification, amendment, supplement or transfer of the Credit Agreement. The Pledgor undertakes to sign any document required to enable any successor or assign of the Beneficiaries to benefit from their rights hereunder.

10Costs and Taxes

In accordance with and subject to the terms and conditions set forth in the Credit Agreement, all taxes, imposts, duties or penalties, present or future, of any manner whatsoever, and any reasonable costs incurred by the Administrative Agent and/or the Beneficiaries in connection with this Agreement, including any reasonable fees and expenses of legal counsel, relating to the negotiation, preparation, execution or registration of the present Agreement and to the performance, amendment, enforcement or release thereof or consequent thereupon, shall be borne by the Pledgor, who undertakes to pay such amounts on first demand to the Administrative Agent acting in the name and on behalf of the Beneficiaries.

11Governing Law - Jurisdiction

11.1This Agreement is governed by French law as to its validity, construction and enforcement.

11.2Any dispute or other procedure concerning the present Agreement or any documents or instruments in connection therewith shall be subject to the jurisdiction of the Commercial court of Paris or the state and federal courts in the county of Los Angeles, State of California, as the case may be, without prejudice to the right of the Beneficiaries to commence proceedings before any other jurisdiction.

The signature of the parties is at the end of the document.

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Schedule 1

Part A - Déclaration de gage de compte d’instruments financiers (actions de société)

CONSTITUANT

- Nom :EMRISE CORPORATION, société régie par le droit de l’Etat du Delaware (Etats-Unis d’Amérique) dont les bureaux principaux sont situés au 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91370, Etats-Unis d’Amérique.

INSTRUMENTS FINANCIERS INSCRITS EN COMPTE NANTI

- Compte d’Instruments Financiers Nanti :	numéro 12 bis
- Nature :	actions nominatives d’une valeur nominale de EUR 15 chacune
- Nombre:	initialement 90.000
- Société Emettrice et Teneur de Compte :	CXR ANDERSON JACOBSON SAS, société par actions simplifiée au capital social de 1.350.000 euros, dont le siège social est situé rue de l’Ornette, 28410 Abondant, France, immatriculée au Registre du Commerce et des Sociétés de Dreux sous le numéro unique d’identification 785 754 706

Les termes commençant par une majuscule auront la signification qui leur est attribuée dans la Convention de nantissement de compte d’instruments financiers conclue en date de ce jour entre le Constituant, les Bénéficiaires et l’Agent Administratif.

OBLIGATIONS GARANTIES

- Nature :

toutes les dettes et obligations de paiement du Constituant, présentes et futures, tant en principal, qu’en intérêts, intérêts de retard, prime, frais, commissions ou accessoires dues et exigibles (que ce soit à leur échéance normale ou dès la survenance d’un Cas de Défaut dont la période de grâce a expiré) au titre de la Convention de Crédit, telles qu’elles pourront, le cas échéant, être modifiées ou augmentées à la suite de toute modification ou avenant aux Documents de Crédit sans qu’un avenant aux présentes ou une nouvelle Déclaration de Gage ne soit nécessaire

- Montant total :

toutes sommes en principal, intérêts, intérêts de retard, primes, frais, commissions et accessoires dues par le Constituant au titre de la Convention de Crédit, étant précisé que ce montant pourra, le cas échéant, être modifié ou augmenté par toute modification de, ou avenant, des Documents de Crédit sans que la signature d’une nouvelle déclaration de gage soit nécessaire, dans la limite de la valeur des instruments financiers, sommes et autres droits figurant sur le Compte d’Instruments Financiers

9

BENEFICIAIRES DU NANTISSEMENT

GVEC RESOURCE IV INC., société régie par le droit des Iles Vierges britanniques, dont le siège social est situé au Walkers (BVI) Limited, Walkers Chambers, PO Box 92, Road Town, Tortola, Iles Vierges Britanniques,, et tout successeur, cessionnaire et ayants droit de ce dernier ;

Ainsi que les entités dénommées les Prêteurs dans la Convention de Crédit et dont la liste figure dans ladite Convention de Crédit.

État de Californie (Etats-Unis d’Amérique), le ____________ 2007

_________________________________

EMRISE CORPORATION

Par :

10

For information purposes only

Part B - Statement of pledge of financial instruments account (company shares)

PLEDGOR

- Name: EMRISE CORPORATION a company incorporated under the laws of Delaware, United States of America, having its principal executive offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91370, United States of America

SECURITIES CONTAINED IN THE PLEDGED FINANCIAL INSTRUMENTS ACCOUNT

- Pledged Financial Instruments Account:	n°12 bis
- Nature:	Registered shares with par value of EUR 15 each
- Number:	Initially 90,000
- Issuer and Registrar:	CXR ANDERSON JACOBSON SAS, a société par actions simplifiée incorporated under the laws of France with a share capital of EUR 1,350,000, whose registered office is rue de l’Ornette, 28410 Abondant, France, registered at the Registre du Commerce et des Sociétés of Dreux under single identification number 785 754 706

The terms the first letter of which is capitalized have the meanings ascribed to them in the Agreement for Pledge of Financial Instruments entered into on the date hereof between the Pledgor, the Beneficiaries and the Administrative Agent.

OBLIGATIONS

- Nature:

all present and future obligations and liabilities of the Pledgor, in principal, interest, default interest, indemnities, fees, commissions and accessories due and payable (at their term or on the occurrence of an Event of Default which grace period has expired) pursuant to the Credit Agreement, and as they may be modified or increased pursuant to any modification of or amendments to the Loan Documents without any amendment to this Agreement or any new statement of pledge being necessary

- Total amount:

all amounts in principal, interest, default interest, indemnities, fees and accessories due by the Pledgor pursuant to the Credit Agreement, it being stated that this amount may be modified or increased as a result of any modification of or amendment to the Loan Documents without the signature of any new statement of pledge being required, up to the value of the securities, moneys and other rights registered on the Financial Instruments Account

BENEFICIARIES OF THE PLEDGE

GVEC RESOURCE IV INC., a company organized under the laws of the British Virgin Islands, whose registered office is Walkers (BVI) Limited, Walkers Chambers, PO Box 92, Road Town, Tortola, British Virgin Islands; and

11

Other entities, referred to as the Lenders in the Credit Agreement and the list of which is indicated in the said Credit Agreement.

Signed in the State of California (United States of America) on ____________ 2007

_________________________________

EMRISE CORPORATION

By: ________________________

12

Schedule 2

Part A - Attestation de constitution de nantissement de compte d’instruments financiers

A :GVEC RESOURCE IV INC.

Walkers (BVI) Limited, Walkers Chambers

PO Box 92, Road Town

Tortola, British Virgin Islands

en qualité d’Agent Administratif, agissant au nom et pour le compte des Bénéficiaires

Nous avons pris connaissance de la déclaration de gage de compte d’instruments financiers (actions de société) ci-jointe en date du [•] 2007 et nous certifions, en qualité de Teneur de Compte de nos propres actions, que les instruments financiers dont il est fait mention dans ladite déclaration de gage sont inscrits sur un compte spécial ouvert au nom du Constituant, EMRISE CORPORATION lequel compte est nanti au profit de GVEC RESOURCE IV INC.,et d’autres entités, dénommées les Prêteurs dans la Convention de Crédit et dont la liste figure dans ladite Convention de Crédit (les “Bénéficiaires”) aux termes de la Convention de Nantissement de Compte d’Instruments Financiers en langue anglaise en date du [•] 2007, entre le Constituant, les Bénéficiaires et l’Agent Administratif (la “Convention de Nantissement”) et ce conformément à l’article L.431-4 du Code Monétaire et Financier et à la Convention de Nantissement.

Dans ce cadre, nous vous déclarons que les comptes d’actionnaires et le registre de mouvements de titres de la Société sont à jour à la date des présentes.

Le [•] 2007

_________________________________

CXR ANDERSON JACOBSON SAS

En sa qualité de Teneur de Compte

Par : ___________

Qualité : ___________________

13

For information purposes only

Part B - Acknowledgement of pledge of financial instruments account

To: GVEC RESOURCE IV INC.,

Walkers (BVI) Limited, Walkers Chambers

PO Box 92, Road Town

Tortola, British Virgin Islands

in its capacity as Administrative Agent, acting in the name and on behalf of the Beneficiaries

We have read the Statement of pledge of account of financial instruments (company shares) dated [•] 2007 and we hereby certify, as Registrar of our own shares, that the financial instruments referred to in such Statement of pledge were transferred to a special account opened in the name of the Pledgor, EMRISE CORPORATION, which account is pledged in favor of GVEC RESOURCE IV INC., and other entities, referred to as the Lenders in the Credit Agreement and the list of which is indicated in the said Credit Agreement (the “Beneficiaries”) pursuant to the Agreement for the Pledge of Account of Financial Instruments dated as of [•] 2007 between the Pledgor and the Beneficiary (the “Pledge Agreement”) in accordance with article L.431-4 of the Monetary and Finance Code and with the Pledge Agreement.

In such context, we hereby declare that the shareholders’ accounts and the share register of the Company are up to date on the date hereof.

Signed in the State of California (United Stated of America) on [•].

_________________________________

CXR ANDERSON JACOBSON SAS

In its capacity as Registrar

By: _________________

Title: ______________________

14

Schedule 3

Part A - Notification au Teneur du Compte de Dividendes Nanti

EMRISE CORPORATION

[Adresse]

A :[•], en sa qualité de Teneur du Compte de Dividendes Nanti

Date :[•] 2007

Compte N° : RIB : [•] / IBAN : [•] (le “Compte de Dividendes Nanti”) / Titulaire du Compte : EMRISE CORPORATION (le “Constituant”)

Madame/Monsieur,

(a)Aux termes d’une convention de nantissement de compte d’instruments financiers conclue en date de ce jour (la “Convention de Nantissement”) entre le Constituant, GVEC RESOURCE IV INC. et d’autres entités dénommées les Prêteurs dans le Convention de Crédit et dont la liste figure dans ladite Convention de Crédit (ci-après les “Bénéficiaires”), et GVEC RESOURCE IV INC. en qualité d’agent administratif (l’ ”Agent Administratif”) et de la déclaration de gage y afférente, nous vous notifions par la présente que le Constituant a consenti un nantissement en faveur des Bénéficiaires sur le solde créditeur du Compte de Dividendes Nanti à tout moment (y compris tout intérêt (le cas échéant) couru sur un tel solde créditeur) ouvert en relation avec le Compte d’Instruments Financiers conformément à l’Article L.431-4 III du Code Monétaire et Financier.

(b)Les termes et expressions utilisés dans la présente notification auront, sauf stipulation contraire, la signification qui est attribuée au terme correspondant dans la Convention de Nantissement.

(c)Nous vous autorisons par la présente et vous donnons instruction de bloquer le Compte de Dividendes Nanti, ainsi que de geler le solde créditeur figurant sur le Compte de Dividendes Nanti à la date à laquelle vous recevrez une instruction écrite par l’Agent Administratif à cet effet et jusqu’à la réception d’une instruction écrite contraire notifiée par l’Agent Administratif.

(d)Nous vous informons également que les stipulations de cette notification ne peuvent être révoquées ou modifiées qu’avec le consentement écrit préalable de l’Agent Administratif.

(e)Nous vous prions de bien vouloir retourner à l’Agent Administratif (avec copie à notre Société) l’Attestation de Nantissement du Compte de Dividendes Nanti ci-jointe dûment signée.

Nous vous prions d’agréer, Madame, Monsieur, l’expression de nos salutations distinguées.

___________________________

EMRISE CORPORATION

Le Constituant

Par: ____________________

Qualité: __________________

Annexe : copie de la Convention de Nantissement et de la Déclaration de Gage du Compte d’Instruments Financiers y afférent

15

For information purposes only

Part B - Form of Notification of Pledge to Dividends Account Holder

EMRISE CORPORATION

[address]

To:[•], as Dividends Account Holder

Date:[•] 2007

Account No: RIB: [•] / IBAN: [•] (the “Dividends Account”) / Account Owner: EMRISE CORPORATION (the “Pledgor”)

Madam/Sir,

(a)According to the terms and conditions set out in the pledge of the financial instruments account (the “Agreement”) entered into on the date hereof between the Pledgor, GVEC RESOURCE IV INC. and other entities, referred to as the Lenders in the Credit Agreement and the list of which is indicated in the said Credit Agreement (hereafter the “Beneficiaries”) and GVEC RESOURCE IV INC. as the administrative agent (the “Administrative Agent”) and the related statement of pledge, we hereby notify that the Pledgor has pledged in favor of the Beneficiaries the balance of the pledged Dividends Account existing from time to time (including any accrued interest (as the case may be) on such a positive balance) open in relation to the Financial Instruments Account in accordance with article L.431-4 III of the French Code Monétaire et Financier.

(b)Unless otherwise stipulated, the terms and expressions used in this notification shall have the meaning ascribed to such term in the Agreement.

(c)We hereby allow you and instruct you to block the Dividends Account, as well as to freeze the balance of the Dividends Account on the date on which you will receive a written instruction from the Administrative Agent for this purpose and until receipt of a written instruction to the contrary notified by the Administrative Agent.

(d)Furthermore, we inform you that the provisions of this notification may only be revoked or modified with the prior written consent of the Administrative Agent.

(e)Please return to the Administrative Agent (as well as a copy to our company) the duly signed Statement of Pledge of the Dividend Account attached hereto.

Yours faithfully,

___________________________

EMRISE CORPORATION

The Pledgor

By: _________________

Position: __________________

16

Annex: copy of the Agreement and the related Statement of Pledge of Financial Instruments

17

Schedule 4

Part A - Attestation de Nantissement du Compte de Dividendes Nanti

A : GVEC RESOURCE IV INC.

En sa qualité d’Agent Administratif, agissant au nom et pour le compte des Bénéficiaires

Date : [•] 2007

Nantissement du compte de dividendes détenu par EMRISE CORPORATION

Madame/Monsieur,

(a)Nous soussignés, [Teneur du Compte de Dividendes Nanti] société [type de société] au capital social de [•] EUR, dont le siège social est situé au [adresse], [code postal] [ville], France, immatriculée au Registre du Commerce et des Sociétés de [•] sous le numéro unique d’identification [•], faisons référence à la déclaration de gage de compte d’instruments financiers signée par EMRISE CORPORATION en date du [•] 2007 et relative au compte d’actionnaire détenu par cette société auprès de CXR Anderson Jacobson SAS (ci-après la « Déclaration de Gage ») et agissons, dans le cadre des présentes, en qualité de teneur du compte bancaire spécial mentionné ci-dessous.

(b)Nous certifions par les présentes :

(i)qu’un compte bancaire spécial n° [•] sur lequel seront crédités les fruits et produits payés par CXR Anderson Jacobson SAS en relation avec les actions de CXR Anderson Jacobson SAS détenues par EMRISE CORPORATION, telles qu’identifiées dans la Déclaration de Gage, a été ouvert au nom de EMRISE CORPORATION en date du [•] 2007 ; et

(ii)que ce compte bancaire (ci-après le « Compte de Dividendes Nanti ») est nanti en faveur des Bénéficiaires (tel qu’identifiés dans la Déclaration de Gage) conformément aux dispositions de l’article L.431-4 du Code monétaire et financier.

(c)Les termes et expressions commençant par une majuscule auront, sauf stipulation contraire, la signification qui leur est attribuée dans la notification qui nous a été adressée par EMRISE CORPORATION en date de ce jour (le cas échéant par renvoi à la Convention de Nantissement).

(d)Nous soussignés :

(i)reconnaissons que sur notification de l’Agent Administratif, le Constituant ne sera pas autorisé à disposer et utiliser les produits en numéraire crédités sur le Compte de Dividendes Nanti (sans que nous ayons à vérifier le bien fondé de cette notification) ;

(ii)acceptons, sur notification de l’Agent Administratif, d’affecter le solde du Compte de Dividendes Nanti au paiement des Obligations conformément aux dispositions légales (sans que nous ayons à vérifier le bien fondé de cette notification) ; et

(iii)plus généralement, confirmons que nous n’avons pas reçu de notification écrite indiquant que le Constituant a octroyé une sûreté ou tout autre droit d’une quelconque nature sur le Compte de Dividendes Nanti en faveur de tiers y compris nous-mêmes, à l’exception du nantissement constitué par la Convention de Nantissement.

18

(e)Toutefois, il est entendu que nous n’aurons, en aucune manière, à vérifier que les sommes versées sur le Compte de Dividendes Nanti correspondent aux fruits et produits effectivement dus au Constituant et plus généralement, nous n’assumons aucune responsabilité en ce qui concerne :

(i)la bonne exécution par le Constituant et/ou la Société de leurs obligations respectives ;

(ii)la validité ou l’efficacité de la documentation juridique relative au gage ou aux obligations sous-jacentes garanties par le gage ; et

(iii)la disponibilité des fonds crédités (ou à créditer) sur le Compte de Dividendes Nanti.

(f)La présente attestation est régie par (et doit être interprétée selon) le droit français.

(g)Tout litige relatif à sa validité, son interprétation ou son exécution relève de la compétence du Tribunal de commerce de Paris ou d’une juridiction compétente relevant de l’Etat de Californie, sans préjudice de la faculté pour les Bénéficiaires de saisir toute autre juridiction compétente de leur choix.

(h)Une copie de la Déclaration de Gage est jointe en annexe à cette attestation de nantissement du Compte de Dividendes Nanti.

___________________________________

[•]

Le Teneur du Compte de Dividendes Nanti

Par : [•]

Fonction : [•]

Annexe : copie de la Déclaration de Gage du Compte d’Instruments Financiers

19

Part B - Form of Certification of Pledge of Dividends Account

To: GVEC RESOURCE IV INC.

As Administrative Agent

Date: [•] 2007

Financial Instruments Account Pledge by EMRISE CORPORATION

Madam/Sir,

(a)We, [Dividends Account Holder] a [type of company] with a share capital of EUR [•], whose registered office is [address], [postal code] [city], France, registered with the Registry of Commerce and Companies of [•] under single identification number [•], hereby refer to a statement of pledge of financial instruments account which has been constituted by EMRISE CORPORATION on [•] 2007 in connection with its shareholder account in CXR Anderson Jacobson SAS (hereafter the “Statement of Pledge”) and we hereby act as the account holder of the special bank account mentioned below:

(b)We hereby certify that:

(i)a special bank account no. [•] has been opened in the name of EMRISE CORPORATION, on which the fruits and products paid by CXR Anderson Jacobson SAS in connection with the shares of CXR Anderson Jacobson SAS, as identified in the Statement of Pledge of Financial Instruments dated [•] 2007 and signed by EMRISE CORPORATION, shall be credited;

(ii)this bank account is pledged in favor of the Beneficiaries (as identified in the Statement of Pledge) in accordance with article L. 431-4 of the Finance and Monetary Code (the “Dividends Account”).

(c)Unless otherwise stipulated, capitalised terms and expressions shall have the meaning ascribed to such terms in the notification issued by EMRISE CORPORATION and dated the date hereof (as the case may be by reference to the Agreement).

(d)We the undersigned:

(i)acknowledge that upon notification from the Administrative Agent to us of the occurrence of an Event of Default, the Pledgor shall not be allowed to use the cash proceeds credited on the Dividends Account (without having to verify if such notification is justified);

(ii)accept upon notification from the Administrative Agent, to allocate the balance of the Dividends Account to the payment of the Obligations in accordance with the law (without having to verify if such notification is justified); and

(iii)more generally, confirm that we have not received any written notification stating that the Pledgor has granted any security interest or any right on the Dividends Account in favor of any third party including ourselves, except as regards the present pledge.

(e)However, it has been agreed that we shall not have, in any manner whatsoever, to verify that the sums transferred to the Dividends Account correspond to the fruits and products owed to the Pledgor and, more generally, we shall not have any liability regarding:

(i)the performance by the Pledgor and/or the Company of their respective obligations;

20

(ii)the validity or efficiency of the legal documentation relating to the pledge or the obligations secured by the pledge; and

(iii)the availability of the sums credited (or to be credited) to the Dividends Account.

(f)This certification shall be governed (and interpreted) according to French law.

(g)Any dispute relating to its validity, interpretation or performance shall be subject to the jurisdiction of the Commercial court of Paris or the competent courts of the State of California, as the case may be, without prejudice to the right of the Beneficiaries to commence proceedings before any other jurisdiction.

(h)A copy of the Statement of Pledge of financial instruments is set out as an annex to this confirmation of pledge of Dividends Account.

___________________________

[•]

The Dividends Account Holder

By: [•]

Position: [•]

Annex: copy of the Statement of Pledge of Financial Instruments

21

SIGNATURE PAGE

Signed in the State of California (United Stated of America), on November 30, 2007, in three (3) originals.

EMRISE CORPORATION
Pledgor		)
By:	Carmine Thomas Oliva	) /s/ Carmine Thomas Oliva
Title:	President and Chief Executive Officer	)

GVEC RESOURCE IV INC.
Administrative Agent		)
By:	Robert J. Anderson	) /s/ Robert J. Anderson
Title	Authorized Signatory	)

By:	Peter Paul Mendel	) /s/ Peter Paul Mendel
Title	Authorized Signatory	)

The BENEFICIARIES
Represented by the Administrative Agent	)

By:	Robert J. Anderson	) /s/ Robert J. Anderson
Title	Authorized Signatory	)

By:	Peter Paul Mendel	) /s/ Peter Paul Mendel
Title	Authorized Signatory	)

22

EX-10.16

EXHIBIT 10.16

Privé et Confidentiel

Le 30 Novembre 2007

CXR ANDERSON JACOBSON S.A.S.	(1)
(le Constituant)
GVEC RESOURCE IV INC.	(2)
(l’Agent Administratif)
et
LES PRETEURS	(3)

CONVENTION DE NANTISSEMENT DE
FONDS DE COMMERCE

Sommaire

Article		Page
1	Définitions - Interprétation	1
2	Nantissement du Fonds de Commerce	3
3	Désignation du Fonds de Commerce nanti	3
4	Enregistrement et frais	4
5	Déclarations et garanties	4
6	Engagements du Constituant	6
7	Assurances	7
8	Durée	8
9	Réalisation du nantissement	8
10	Notifications	9
11	Dispositions générales	9
12	Successeurs et Ayants-Droit	9
13	Loi applicable et attribution de juridiction	10
Annexe 1 Les Prêteurs		11
PAGE DE SIGNATURE		12

ENTRE LES SOUSSIGNES :

(1)CXR ANDERSON JACOBSON, société par actions simplifiée au capital social de 1.350.000 euros, dont le siège social est situé rue de l’Ornette 28140 Abondant, France, immatriculée au Registre du Commerce et des Sociétés de Dreux sous le numéro unique d’identification 785 754 706, représentée par la personne identifiée en page de signature des présentes (ci-après dénommée le « Constituant ») ;

(2)GVEC RESOURCE IV INC., international business company de droit des Iles Vierges Britanniques, dont le siège social est situé au Walkers (BVI) Limited, Walkers Chambers, PO Box 92, Road Town, Tortola, Iles Vierges Britanniques, immatriculée sous le numéro 1027282, représentée par la personne identifiée en page de signature des présentes, agissant tant en son nom propre qu’au nom et pour le compte des Prêteurs (l’« Agent Administratif ») ; et

(3)Chacun des prêteurs au titre de la Convention de Crédit (tel que ce terme est défini ci-dessous) identifié en Annexe 1 des présentes, ainsi que ses successeurs, cessionnaires et ayants-droit, représenté par l’Agent Administratif (collectivement, les « Prêteurs »).

IL A ETE PREALABLEMENT EXPOSE CE QUI SUIT :

(A)Aux termes d’une convention de crédit de droit Californien (Etats-Unis d’Amérique), intitulée “Credit Agreement” en date du même jour (ou aux alentours de cette date) que la présente Convention (telle qu’elle pourrait être, le cas échéant, amendée, modifiée ou complétée ultérieurement étant ci-après dénommée la « Convention de Crédit »), conclue entre, notamment, GVEC Resource IV Inc. en qualité d’Arrangeur et d’Agent Administratif, les Prêteurs en qualité de prêteurs et Emrise Corporation (désignée ci-dessous) ainsi que certaines de ses filiales en qualité d’emprunteurs (les « Emprunteurs »), les Prêteurs ont consenti aux Emprunteurs une ouverture de crédit pour un montant maximum en principal de vingt-trois millions de dollars américains (23.000.000 USD).

(B)La société Emrise Corporation détient 100% du capital social du Constituant.

(C)Aux termes de la Garantie (tel que ce terme est défini ci-dessous), certaines filiales de la société Emrise Corporation dont le Constituant ont accepté chacun de garantir l’exécution des obligations de paiement des Emprunteurs au Bénéficiaire au titre de la Convention de Crédit (défini ci-dessous sous le terme « Obligations Garanties »).

(D)Le Constituant s’est ainsi engagé à consentir au Bénéficiaire pour sûreté et garantie du paiement de toutes sommes dues par lui au titre des Obligations Garanties, dans les conditions prévues par les présentes, un nantissement de premier rang sur son fonds de commerce (ci après la “Convention”). Le Bénéficiaire a désigné, au titre de l’article 2328-1 du Code civil, l’Agent Administratif pour l’inscription, la gestion et la réalisation de toute sûreté réelle consentie par le Constituant afin de garantir le paiement par le Constituant des Obligations Garanties.

CECI AYANT ETE EXPOSE, IL A ETE CONVENU CE QUI SUIT :

1Définitions - Interprétation

1.1Définitions

Pour l’application de la présente Convention, sauf stipulation contraire, les termes et expressions commençant par une majuscule auront la signification qui leur est attribuée ci-dessous et, à défaut d’y être définis, ils auront la signification qui est attribuée à leur traduction anglaise dans la Convention de Crédit :

« Agent Administratif » a la signification donnée dans l’énoncée des parties à la présente Convention ;

« Arrangeur » désigne la société GVEC Resource IV Inc. ainsi que ses successeurs, cessionnaires et ayants-droit au titre de la Convention de Crédit ;

« Annexe » désigne l’une quelconque des annexes à la Convention ;

« Article » désigne l’un quelconque des articles de la Convention ;

« Bénéficiaire » désigne collectivement l’Agent Administratif, l’Arrangeur et les Prêteurs ainsi que leurs successeurs, cessionnaires et ayants-droit respectifs ;

« Cas de Réalisation » désigne le défaut d’exécution par le Constituant de l’une quelconque de ses obligations au titre de la Garantie ;

« Convention » désigne le présent acte de nantissement de Fonds de Commerce, y compris ses annexes, tel qu’il pourrait être amendé, modifié ou complété ultérieurement ;

« Droits de Propriété Intellectuelle » désigne les brevets d’invention, les licences, les marques, les dessins et modèles industriels, et généralement tous les droits de propriété intellectuelle (à l’exception toutefois du nom commercial) y compris les droits d’exploitation de logiciel, qui sont attachés au Fonds de Commerce;

« Emrise Corporation » désigne Emrise Corporation, société régie par le droit de l’Etat du Delaware (Etats-Unis d’Amérique) dont les bureaux principaux sont situés au 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91370, Etats-Unis d’Amérique ;

« Fonds de Commerce » signifie le fonds de commerce du Constituant ou un ou plusieurs éléments et droits le composant (y compris, le cas échéant, les éléments et droits ultérieurement incorporés dans l’assiette du nantissement), nantis en faveur du Bénéficiaire, au titre de la Convention et tels que désignés à l’Article 3 ci-dessous, intitulé « Désignation du Fonds de Commerce nanti » ;

« Garantie » désigne la convention en date du même jour (ou aux alentours de cette date) que la présente Convention conclue entre, notamment le Constituant et certaines filiales de la société Emrise Corporation, au titre de laquelle ils ont octroyé en faveur de l’Arrangeur, l’Agent Administratif et les Prêteurs une garantie aux obligations de paiement des Emprunteurs au titre de la Convention de Crédit ;

« Nantissement » désigne le nantissement du Fonds de Commerce créé au profit du Bénéficiaire aux termes de la Convention ;

« Obligations Garanties » désigne toutes les obligations de payer toutes sommes présentes ou futures (qu’elles soient certaines ou conditionnelles), tant en principal, qu’en intérêts, intérêts de retard, commissions, pénalités, frais, charges, taxes et tous autres accessoires dues par les Emprunteurs envers le Bénéficiaire au titre de la Convention de Crédit et faisant l’objet des engagements du Constituant aux termes de la Garantie (étant entendu que l’intention des parties à la présente Convention est que ce terme corresponde au terme « Guaranteed Obligations » tel que défini à la Garantie) ; et

« Parties » désigne collectivement le Constituant et le Bénéficiaire.

1.2Sauf stipulation contraire, dans la Convention :

1.2.1les titres attribués aux Articles et Annexes ont pour seul but d’en faciliter la lecture et ne sauraient avoir d’influence sur son interprétation ;

1.2.2les termes définis à l’Article 1.1 pourront être employés indifféremment au singulier ou au pluriel lorsque le sens ou le contexte l’exigeront ;

1.2.3toutes les références faites à une personne comprennent ses successeurs, ayants-droit et ayants-cause ou toute autre personne venant aux droits et obligations de cette personne, de quelque manière que ce soit ;

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1.2.4les renvois à une convention ou autre document comprennent ses annexes ainsi que les modifications ou avenants dont la convention ou le document a fait l’objet ;

1.2.5toute référence à une créance est réputée inclure les droits accessoires qui y sont attachés ; et

1.2.6les références horaires font référence aux heures de Paris.

2Nantissement du Fonds de Commerce

Pour sûreté du paiement et de l’exécution complet et à bonne date des Obligations Garanties, le Constituant affecte, par la Convention, le Fonds de Commerce en nantissement au profit du Bénéficiaire, conformément aux dispositions des articles L.142-1 et suivants du Code de commerce et des dispositions réglementaires du Code de commerce afférentes à ces articles, et consent, en tant que de besoin, à ce que ce Nantissement soit dès à présent inscrit auprès du greffe du Tribunal de commerce de Dreux. A compter de l’accomplissement des formalités prévues à l’Article 4.1, le Nantissement constituera une sûreté de premier rang grevant le Fonds de Commerce en faveur du Bénéficiaire.

3Désignation du Fonds de Commerce nanti

3.1Le Constituant affecte en nantissement son Fonds de Commerce, lequel consiste tant en France qu’à l’étranger, directement ou indirectement, pour son compte ou le compte de tiers :

(a)l’importation, l’exportation, l’achat, la vente, la location, l’installation, l’entretien et la réparation de toutes marchandises, appareils et équipements dans le domaine de l’informatique et de ses annexes ainsi que la commercialisation des fournitures afférentes ;

(b)et, plus généralement, toutes opérations commerciales, industrielles ou financières, mobilières ou immobilières, pouvant se rattacher directement ou indirectement à son objet social ou à tous objets similaires ou connexes ou susceptibles d’en faciliter l’exploitation ou le développement ainsi que la participation de la société par tous moyens, à toutes entreprises ou sociétés, créées ou à créer, pouvant se rattacher à son objet social, notamment par voie de création de sociétés nouvelles, d’apport, fusion, commandite, souscription, achat de titres ou droits sociaux, alliance, société en participation ou groupement d’intérêt économique.

3.2Ledit Fonds de Commerce ainsi nanti comprend tout ce qui peut légalement y être compris aux termes de l’article L.142-2 du Code de commerce, à savoir, notamment :

(a)l’enseigne, la clientèle et l’achalandage y étant attachés ;

(b)le mobilier commercial et industriel, le matériel et l’outillage et l’équipement servant à son exploitation ;

(c)les noms commerciaux, les brevets d’invention et licences, les marques de fabrique et de commerce y compris les Droits de Propriété Intellectuelle, les dessins et modèles, et plus généralement, tous les éléments incorporels et droits de propriété industrielle, intellectuelle, littéraire ou artistique qui sont attachés au Fonds de Commerce, y compris les logiciels et tous droits du Constituant au titre des licences de logiciels, contrats de maintenance et contrats d’accès aux codes sources, qui sont liés à son activité ;

(d)le droit au bail, dans la mesure où il en existe un, des locaux dans lesquels le Fonds de Commerce est exploité ;

(e)les logiciels et contrats de maintenance qui sont liés à l’activité du Constituant ; et

(f)tous les autres actifs qui pourraient, à l’avenir, être incorporés dans l’assiette du Nantissement du Fonds de Commerce conformément à l’Article 6.4 de la Convention.

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3.2.2Il est entendu que l’assiette du présent Nantissement sera automatiquement et dans les limites prévues par la loi, étendue en outre aux éléments suivants :

(a)le mobilier ainsi que le matériel et l’outillage venant à être créé ou acquis par le Constituant, comprenant notamment le mobilier ou matériel supplémentaire acquis en remplacement ou à titre de perfectionnement ou d’amélioration du mobilier ou matériel actuel du Fonds de Commerce ;

(b)le cas échéant, toutes indemnités d’assurance, d’éviction ou d’expropriation ou toutes autres indemnités au titre de l’un ou l’autre des éléments du Fonds de Commerce qui seraient versées au Constituant ;

(c)le cas échéant, les droits aux baux, ainsi que toute prorogation ou extension de ces baux, relatifs aux locaux où serait exercée l’activité du Constituant relativement au Fonds de Commerce ou à toute succursale ou établissement secondaire du Constituant existant ou venant à être créé ;

(d)le cas échéant, les noms commerciaux, marques de fabrique et de commerce, droits d’auteur, logos, dessins et modèles industriels et plus généralement tous les droits de propriété industrielle et intellectuelle ou autre actif incorporel venant à être créés ou acquis par le Constituant ainsi que toutes licences ou sous licences relatives à l’un de ces éléments incorporels ;

(e)le cas échéant, les brevets français ou étrangers ainsi que tout procédé ou savoir-faire venant à être créés ou acquis par le Constituant ainsi que toutes licences ou sous licences relatives à l’un de ces éléments incorporels ; et

(f)le cas échéant, tous les éléments susmentionnés tels que venant à être détenus (à quelque titre que ce soit) par les établissements secondaires du Constituant qu’il aurait ultérieurement créés.

4Enregistrement et frais

4.1Enregistrement et inscriptions

4.1.1La présente Convention sera enregistrée par l’Agent Administratif auprès des autorités fiscales compétentes. L’Agent Administratif fera en outre inscrire le présent Nantissement de Fonds de Commerce dans les quinze (15) jours suivant la date de la Convention, auprès du greffe du tribunal de commerce de Dreux.

4.1.2A cet effet, tous pouvoirs sont donnés au porteur d’un exemplaire original de la Convention.

4.2Frais et taxes

Le Constituant s’engage à rembourser à l’Agent Administratif, à première demande de celui-ci et sur présentation des justificatifs appropriés, tous les droits, impôts, taxes ou pénalités, présents ou futurs de quelque nature que ce soit, ainsi que tous les frais raisonnables (y compris les honoraires et débours d’avocats) supportés dans le cadre de la négociation de la Convention, sa préparation, sa signature, son enregistrement, son inscription, sa mise en œuvre et les modifications dont elle pourra faire l’objet ou qui en seront la suite ou la conséquence.

5Déclarations et garanties

5.1Outre les déclarations et garanties du Constituant exposées dans la Garantie, le Constituant déclare et garantit au Bénéficiaire :

5.1.1qu’il est une société régulièrement constituée, immatriculée et existant valablement conformément à la législation et à la réglementation qui lui sont applicables et il a la capacité

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d’être propriétaire de ses biens et autres actifs et d’exercer ses activités de la manière dont il les exerce actuellement et dont il envisage de les exercer par la suite ; que la conclusion et l’exécution de la Convention ont été dûment autorisées par ses organes sociaux compétents ;

5.1.2qu’il a la capacité de conclure la Convention et d’exécuter les obligations qui en résultent, et toutes les décisions requises de ses organes sociaux et de ses actionnaires et toutes les autres mesures nécessaires afin d’autoriser la conclusion et l’exécution de la Convention, ont été prises ;

5.1.3que la conclusion et l’exécution de la Convention ne contreviennent à aucune stipulation de ses statuts ou résolution de ses organes sociaux ;

5.1.4que la conclusion et l’exécution de la Convention ne contreviennent à aucune stipulation d’aucun contrat ou engagement auquel il est partie ou auquel il est tenu, ni ne violent en aucune façon les lois ou règlements qui lui sont applicables ;

5.1.5que la conclusion et l’exécution de la Convention ne nécessitent aucune autorisation, avis, licence, enregistrement ou approbation d’une ou auprès d’une autorité publique quelconque, à l’exception de ce qui est expressément prévu aux présentes, et que toutes les autorisations gouvernementales ou administratives qu’il devait obtenir afin de pouvoir conclure la Convention et exécuter ses obligations au titre de celle-ci, et afin d’assurer la validité et l’opposabilité des présentes ont été obtenues et sont en vigueur ;

5.1.6que la Convention constitue dès sa signature et demeurera, un engagement licite, valable et qui lui est opposable, conformément aux termes des présentes ;

5.1.7qu’aucune instance n’est en cours ou, à la connaissance du Constituant, n’est sur le point d’être intentée pour empêcher ou interdire la conclusion ou l’exécution de la Convention ou qui pourrait avoir un effet défavorable important sur son activité, son patrimoine ou sa situation économique et financière ;

5.1.8qu’il a parfaite connaissance des documents donnant lieu aux Obligations Garanties, dont il reconnaît avoir reçu une copie dans le cas où il ne serait pas partie, notamment la Convention de Crédit et la Documentation du Crédit (telle que définie dans la Convention de Crédit et correspondant au terme anglais « Loan Documents ») ;

5.1.9qu’aucune autorisation d’un tiers ne sera nécessaire en cas de vente du Fonds de Commerce à la suite de la réalisation du présent Nantissement ;

5.1.10qu’il est propriétaire du Fonds de Commerce, ainsi qu’en attestent les extraits de son immatriculation au Registre du Commerce et des Sociétés de Dreux ;

5.1.11qu’il a donné au Bénéficiaire toutes les informations requises par ce dernier sur l’ensemble des éléments nantis ou devant être nantis aux termes de la Convention;

5.1.12qu’il n’est propriétaire à ce jour d’aucun fonds de commerce hormis le Fonds de Commerce sur lequel porte le présent Nantissement et qu’il est, en vertu ou non de contrats de licence, effectivement et valablement autorisé à utiliser tous les actifs et droits inclus dans l’assiette du Nantissement ;

5.1.13qu’il n’est propriétaire à ce jour d’aucun Droit de Propriété Intellectuelle ;

5.1.14qu’il n’est titulaire à ce jour, à un quelconque titre (et notamment en vertu d’une licence), d’aucun Droit de Propriété Intellectuelle autres que ceux compris dans l’assiette du présent Nantissement ;

5.1.15qu’il est titulaire de titres valables et licites d’occupation des locaux où est exploité le Fonds de Commerce ;

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5.1.16qu’aucune licence ou sous licence portant sur un quelconque Droit de Propriété Intellectuelle ou nom commercial n’a, à ce jour, été concédée par le Constituant à des tiers ; et

5.1.17qu’aucun des éléments du Fonds de Commerce dont le Constituant est propriétaire n’a été ou ne doit être préalablement nanti en faveur de banques tierces au titre des articles L525-1 et suivants du Code de commerce.

5.2Les déclarations et garanties du Constituant mentionnées à l’Article 5.1 des présentes survivront à la signature de la Convention et seront réputées être réitérées par le Constituant comme étant sincères et exactes à chaque date à laquelle les déclarations et garanties mentionnées dans la Convention de Crédits seront réitérées.

6Engagements du Constituant

Le Constituant s’engage par les présentes dans les termes suivants :

6.1Protection du Fonds de Commerce

Le Constituant veillera à la préservation et à la conservation du Fonds de Commerce, maintiendra (sous réserve de l’usure normale) les éléments composant le Fonds de Commerce en état normal de fonctionnement et en activité, s’abstiendra de tout acte pouvant diminuer de manière significative la valeur du Fonds de Commerce autre que tout acte de disposition d’un élément du Fonds de Commerce dans le cours normal des affaires et s’engage à notifier promptement à l’Agent Administratif toute circonstance ou tout événement susceptible d’affecter de manière significative et défavorable (i) la valeur du Fonds de Commerce, (ii) la capacité du Constituant d’utiliser le Fonds de Commerce, ou (iii) l’exercice par le Constituant de ses droits et ses recours concernant le Fonds de Commerce aussi bien immédiats que futurs.

6.2Notification de nantissement envisagé

Le Constituant s’engage à notifier à l’Agent Administratif toute information dont il aurait connaissance et selon laquelle un tiers quelconque envisagerait ou serait sur le point de prendre ou de se voir consentir un privilège ou une sûreté sur l’un quelconque des éléments inclus dans l’assiette du Nantissement du Fonds de Commerce, ou devant s’y ajouter en vertu du présent Article 6.

6.3Nécessité de l’accord écrit de l’Agent Administratif

Le Constituant devra obtenir l’accord exprès et écrit de l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, préalablement à l’accomplissement de toute action, à la signature de tout accord ou contrat, ou à l’acceptation de tout engagement qui aurait pour effet de diminuer de manière significative la valeur du Fonds de Commerce. En particulier, le Constituant ne pourra, sans l’accord préalable et écrit de l’Agent Administratif :

6.3.1modifier ou laisser modifier la structure juridique ou économique de l’entreprise exploitant le Fonds de Commerce ;

6.3.2aliéner de quelque façon que ce soit le Fonds de Commerce ou l’un quelconque de ses éléments, exception faite des opérations de gestion courantes et des opérations de remplacement ;

6.3.3s’engager dans toute opération n’entrant pas dans son objet social ou n’entrant pas dans le cadre habituel de son exploitation ; ou

6.3.4donner le Fonds de Commerce en location-gérance ou grever ou laisser grever le Fonds de Commerce par toute charge ou sûreté, même d’un rang secondaire par rapport au présent Nantissement.

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6.4Nouveau fonds de commerce

Si dans l’avenir, le Constituant devenait propriétaire de nouveaux fonds de commerce (que ce soit par acquisition, création, apport ou tout autre moyen) avant le paiement complet des Obligations Garanties, il devra immédiatement en informer l’Agent Administratif. En outre, le Constituant s’engage, à la demande de l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, à affecter promptement en nantissement tout nouveau fonds de commerce dont il deviendrait propriétaire au profit du Bénéficiaire dans des conditions identiques à celles stipulées dans la Convention.

6.5Renouvellement des enregistrements et inscriptions - Nouvelles inscriptions

6.5.1Le Constituant autorise dès à présent l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, à renouveler aux frais du Constituant l’inscription du présent Nantissement (y compris au titre de tous avenants), pour une nouvelle période légale de protection, dont la durée sera égale à la durée maximale permise par la loi, et ce à l’expiration de chaque période correspondant à la période légale de validité du Nantissement constitué en vertu de la Convention et ce aussi longtemps qu’un montant quelconque restera dû et exigible au titre des Obligations Garanties.

6.5.2En ce qui concerne les nouveaux droits de propriété intellectuelle ou industrielle créés ou acquis par le Constituant après la date des présentes qui sont compris de plein droit dans l’assiette du Nantissement, constitué en vertu de l’Article 3 des présentes, y compris, la totalité des marques, logos, droits de propriété intellectuelle, dessins et modèles industriels, brevets de droit français ou de droits étrangers ainsi que des procédés ou savoir-faire et plus généralement, tous les droits de propriété industrielle, littéraire ou artistique ainsi que tous les noms commerciaux, ainsi que toutes les licences ou sous licences relatives à l’un de ces éléments incorporels qui seraient accordées par le Constituant à des tiers, y compris les logiciels, tous nouveaux droits du Constituant au titre de licences de logiciels, les contrats de maintenance et contrats d’accès aux codes sources, qui sont ou seront liés à son activité, le Constituant autorise d’ores et déjà l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, à enregistrer immédiatement, aux frais du Constituant, auprès de l’Institut National de la Propriété Industrielle le nantissement portant sur les nouveaux droits acquis par le Constituant.

6.6Autres engagements

6.6.1Le Constituant s’engage par la Convention à informer sans délai l’Agent Administratif de tout sinistre affectant de manière significative le Fonds de Commerce ou l’un de ses éléments et à prendre à ses frais, toute mesure et à signer tout document ou acte qui pourra être raisonnablement requis par l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, à tout moment en vue d’établir la preuve, d’assurer l’efficacité, de préserver ou de procéder à la réalisation du Nantissement constitué au profit du Bénéficiaire.

6.6.2En outre, le Constituant s’engage expressément à informer l’Agent Administratif de la création ou de l’acquisition de toute succursale ou établissement secondaire dans lesquels le Constituant exploiterait tout ou partie de son Fonds de Commerce ou tout nouveau fonds de commerce, et ce dans les cinq (5) Jours Ouvrables suivant l’inscription d’un tel établissement secondaire ou d’une telle succursale auprès du Registre du Commerce et des Sociétés compétent, afin de permettre à l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, d’effectuer toute inscription nouvelle ou complémentaire qui serait nécessaire à la constitution, à l’extension ou à la préservation du Nantissement.

7Assurances

Le Constituant s’engage à assurer ou à faire assurer dès ce jour et à maintenir constamment et adéquatement assurés tant que la Convention sera en vigueur, le matériel, le mobilier, l’outillage et les agencements et autres biens assurables du Fonds de Commerce contre tous les risques normalement assurés par les sociétés commerciales ayant le même type d’activités que le Constituant, et notamment, sans que cette liste soit limitative, les risques d’incendie, explosion, foudre, bris et dégâts des eaux, perte, destruction, émeute, troubles sociaux, actes de terrorisme et vol. Ces assurances devront être souscrites par le Constituant auprès d’une ou

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des compagnies d’assurance notoirement solvable(s) ou agréée(s) par l’Agent Administratif. Le Constituant s’engage à renouveler ces assurances à chaque échéance jusqu’au paiement complet des Obligations Garanties et à justifier de ces assurances à l’Agent Administratif à tout moment sur simple demande de celui-ci. Le Constituant reconnaît expressément qu’en cas de réalisation du présent nantissement, les indemnités d’assurance qui seraient allouées au Constituant en cas de sinistre seront payées à l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, à concurrence du montant des indemnités versées (et pour un maximum égal aux Obligations Garanties), au titre de l’article L. 121-13 du Code des Assurances. A cette fin, l’Agent Administratif adressera une notification aux compagnies d’assurance pertinentes. Il est convenu que toute somme reçue par l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, au titre du présent paragraphe viendra de plein droit en paiement des sommes dues au titre des Obligations Garanties.

8Durée

8.1Les déclarations, garanties et engagements ci-dessus exposés engageront le Constituant, la Convention restera en vigueur et le Bénéficiaire pourra exercer tout droit ou privilège suite au Nantissement consenti aux termes des présentes aussi longtemps qu’un montant quelconque restera dû au titre des Obligations Garanties.

8.2L’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, accepte par conséquent de donner mainlevée du présent Nantissement, aux frais du Constituant, dès lors qu’il constate (i) que les Obligations Garanties ont été intégralement remboursées et (ii) qu’aucun prêt ou ouverture de crédit ne sera disponible pour les Emprunteurs au titre de la Convention de Crédit.

9Réalisation du nantissement

En cas de défaillance du Constituant au titre des Obligations Garanties (ci-après un « Cas de Réalisation »), l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, pourra :

9.1en ce qui concerne le Nantissement constitué en vertu de la Convention, exercer immédiatement l’ensemble des droits et privilèges et engager toute action réservés par la loi au créancier gagiste, et notamment, poursuivre la réalisation du Nantissement, conformément aux termes des articles L141-5 et suivants et de l’article L521-3 du Code de commerce (ou de toute autre disposition légale alors en vigueur) ; et

9.2en ce qui concerne les contrats et licences compris dans l’assiette du Nantissement de Fonds de Commerce et dont la cession requiert le consentement du cocontractant ou du concédant, demander, sans l’accord préalable du Constituant, le consentement dudit cocontractant ou concédant en vue de permettre le transfert des contrats et licences concernés à toute personne qui deviendrait ou serait susceptible de devenir propriétaire du Fonds de Commerce consécutivement à la réalisation du Nantissement.

ETANT ENTENDU, DANS TOUS LES CAS, QUE le Constituant s’engage d’ores et déjà par les présentes, à effectuer toutes les diligences raisonnables, promptement après la réalisation du Nantissement, afin d’obtenir le consentement d’un tel cocontractant ou concédant en vue d’une cession visée ci-dessus, sans que le Constituant puisse être tenu responsable en cas de refus d’un cocontractant ou concédant de consentir la cession visée ci-dessus ; et

ETANT EGALEMENT ENTENDU QUE le Constituant s’engage à effectuer toutes les diligences raisonnables pour inclure, dans les contrats et licences portant sur des droits futurs ou supplémentaires, des stipulations autorisant le transfert desdits contrats et licences en cas de réalisation du Nantissement, sans que le Constituant puisse être tenu responsable en cas de refus d’un cocontractant ou concédant de consentir la cession visée ci-dessus.

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10Notifications

Toutes les notifications ou communications effectuées en application de la Convention seront réalisées conformément aux stipulations de l’article 5.15 de la Garantie.

11Dispositions générales

11.1La présente Convention n’affecte et ne pourra affecter en aucune manière la nature et l’étendue de tous engagements et de toutes sûretés et garanties relatifs aux Obligations Garanties qui ont pu ou pourront être contractés ou fournis, soit par le Constituant, soit par tout tiers, auxquels elle s’ajoute.

11.2La Convention est irrévocable et s’appliquera de plein droit nonobstant :

11.2.1tout renouvellement, extension ou prorogation de la Convention de Crédit et/ou de la Garantie donnant lieu aux Obligations Garanties ;

11.2.2toute novation ou autre modification de la Convention de Crédit et/ou de la Garantie donnant lieu aux Obligations Garanties ; et

11.2.3toute nullité, irrégularité, inopposabilité ou absence de caractère exécutoire de tout ou partie de la Convention de Crédit et/ou de la Garantie donnant lieu aux Obligations Garanties et/ou de toute autre sûreté ou document mentionné dans ou afférent à la Convention de Crédit et à ses annexes, notamment en garantie de toute obligation de restitution à la charge du Constituant.

11.3Le présent Nantissement ne pourra être éteint ou donner lieu à mainlevée, partiellement ou totalement à raison d’un quelconque paiement partiel entre les mains du Bénéficiaire au titre des Obligations Garanties.

11.4Tous les droits conférés au Bénéficiaire par la Convention ou par tout autre document délivré en exécution ou à l’occasion de la Convention, ainsi que les droits, engagements ou autres sûretés du Bénéficiaire consentis par le Constituant ou découlant de la loi, sont cumulatifs et pourront être exercés à tout moment. Le Bénéficiaire pourra exercer ses droits au titre de la Convention quand bien même ses autres droits, engagements ou sûretés en garantie des Obligations Garanties n’auraient pas été exercés.

11.5Sous réserve des règles relatives à la prescription, le fait pour le Bénéficiaire et/ou l’Agent Administratif, agissant au nom et pour le compte du Bénéficiaire, de ne pas exercer un droit ou de l’exercer tardivement ne saurait constituer une renonciation à ce droit, et l’exercice d’un seul droit ou son exercice partiel n’empêchera pas le Bénéficiaire de l’exercer à nouveau dans l’avenir ou d’exercer tout autre droit. Aucun octroi d’un délai supplémentaire au Constituant par l’un quelconque des Bénéficiaires ne constituera une renonciation par le Bénéficiaire de l’exercice de tout droit ou faculté auquel le Bénéficiaire à droit au titre de la Convention. Le Bénéficiaire n’assume aucune responsabilité envers le Constituant à raison de l’exercice tardif ou du non-exercice des droits et prérogatives conférés par la Convention.

11.6Dans l’hypothèse où une stipulation de la Convention serait ou deviendrait illégale, nulle ou inopposable, une telle illicéité, nullité ou inopposabilité ne portera pas atteinte à la licéité, à la validité ou à l’opposabilité des autres stipulations des présentes. Les Parties conviennent néanmoins que dans une telle hypothèse, elles négocieront de bonne foi afin de remplacer la stipulation concernée par une nouvelle stipulation valable, opposable et conforme à l’intention initiale des Parties.

12Successeurs et Ayants-Droit

12.1Tous les droits et obligations du Bénéficiaire résultant de la Convention profiteront à ses successeurs, cessionnaires et ayants-droit ainsi qu’aux éventuels successeurs, cessionnaires et ayants-droit de ces derniers, et toutes les modalités, promesses, engagements, déclarations et

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garanties au titre des présentes lieront le Constituant et ses successeurs, cessionnaires et ayants-droit ainsi que les éventuels successeurs, cessionnaires et ayants-droit de ces derniers.

12.2Le Constituant reconnaît que le Bénéficiaire a, en application des stipulations de la Convention de Crédit, la faculté de céder tout ou partie de ses droits au titre de la Convention de Crédit et convient que les stipulations de la Convention ainsi que le Nantissement envisagé dans la Convention bénéficieront à tout cessionnaire du Bénéficiaire.

12.3Le Constituant ne pourra céder ou transférer tout ou partie de ses droits ou obligations au titre de la Convention.

12.4La sûreté constituée en vertu des présentes ne sera pas affectée par une modification, un avenant, un ajout ou une cession afférent à la Convention de Crédit et/ou la Garantie. Le Constituant s’engage à signer tout document permettant à tout ayant-droit du Bénéficiaire de bénéficier des droits du Bénéficiaire au titre des présentes.

12.5En cas de changement d’Agent Administratif aux termes de l’article 15.9 de la Convention de Crédit, le nouvel Agent Administratif bénéficiera de la présente Convention et du Nantissement constitué aux termes de ladite Convention, sans que ceci emporte novation. Le Constituant, sur simple demande de l’Agent Administratif, s’engage à prendre toute mesure et signer tout document aux fins d’établir les droits du nouvel Agent Administratif.

13Loi applicable et attribution de juridiction

13.1La Convention sera régie, pour sa validité, son interprétation et son exécution, par le droit français.

13.2Les Parties conviennent irrévocablement par les présentes que tout litige ou toute autre procédure concernant la Convention ou tous documents ou actes y afférents, sera de la compétence du Tribunal de Commerce de Paris ou d’une juridiction compétente relevant de l’Etat de Californie, sans préjudice de la faculté pour le Bénéficiaire de saisir toute autre juridiction compétente de son choix.

Les signatures des Parties figurent en dernière page des présentes.

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Annexe 1
Les Prêteurs

GVEC Resource IV Inc.

Walkers (BVI) Limited

Walkers Chambers

PO Box 92

Road Town

Tortola, Iles Vierges Britanniques

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PAGE DE SIGNATURE

État de Californie (États-Unis d’Amérique), le 30 Novembre, en cinq (5) exemplaires originaux

CXR ANDERSON JACOBSON SAS
Constituant
Par :	Carmine Thomas Oliva		)
Qualité :		President	)  /s/ Carmine Thomas Oliva

GVEC RESOURCE IV INC.
Agent Administratif
Par :	Robert J. Anderson		)
Qualité :		Authorized Signatory	)  /s/ Robert J. Anderson

Par :	Peter Paul Mendel		)
Qualité :		Authorized Signatory	)  /s/ Peter Paul Mendel

LES BENEFICIAIRES

Représentés par l’Agent Administratif

Par :	Robert J. Anderson		)
Qualité :		Authorized Signatory	)  /s/ Robert J. Anderso

Par :	Peter Paul Mendel		)
Qualité :		Authorized Signatory	)  /s/ Peter Paul Mendel

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EX-10.17

Exhibit 10.17

Private and Confidential                                                                                                        

Dated 30 November, 2007
CXR ANDERSON JACOBSON S.A.S. (Pledgor) GVEC RESOURCE IV INC. (Administrative Agent) and THE LENDERS	(1) (2) (3)
GOING CONCERN PLEDGE AGREEMENT

Contents
Clause
1	Definitions
2	Pledge over the business as a Going Concern (Nantissement)
3	Designation of the pledged Going Concern
4	Registration, fees and expenses
5	Representations and Warranties
6	Undertakings of the Pledgor
7	Insurance
8	Duration
9	Enforcement of the Pledge
10	Notices
11	Miscellaneous
12	Successors and Assigns
13	Governing Law - Jurisdiction

BETWEEN:

(1)	CXR ANDERSON JACOBSON, a French société par actions simplifiée with a share capital of EUR 1,350,000, having its registered office at rue de l’Ornette 28140 Abondant, France, registered with the Registry of Commerce and Companies of Dreux under single identification number 785 754 706, represented by the person identified on the signature page hereof (hereinafter referred to as the “Pledgor”); and
(2)	GVEC RESOURCE IV INC., an international business company incorporated under the laws of the British Virgin Islands, whose registered office is Walkers (BVI) Limited, Walkers Chambers, PO Box 92, Road Town, Tortola, British Virgin Islands, registered under number 1027282, acting in its own name and in its capacity as Administrative Agent under the Credit Agreement (as such term is defined below), represented by the person identified on the signature page hereof (hereinafter referred to as the “Administrative Agent”); and
(3)	Each lender under the Credit Agreement (as such term is defined below), each identified in Schedule 1, together with its successors, transferees and assigns, represented by the Administrative Agent (hereinafter referred to collectively as the “Lenders”).

WHEREAS:

(A)	Pursuant to a credit agreement governed by the laws of the State of California (United States of America), entitled “Credit Agreement” and dated [•] 2007 (such agreement, as it may from time to time be amended, modified or supplemented, being referred to hereinafter as the “Credit Agreement”) between, inter alia, GVEC Resource IV Inc. as the Arranger and the Administrative Agent, the Lenders as lenders, and Emrise Corporation and certain of its subsidiaries as Borrowers (the “Borrowers”), the Lenders have granted to the Borrowers a credit facility for a maximum principal amount of USD 23,000,000.
(B)	Emrise Corporation is the holder of 100% of the share capital of the Pledgor.
(C)	Pursuant to the Guarantee (as such term is defined below), certain of Emrise Corporation’s subsidiaries including the Pledgor have agreed to guarantee the performance of the payment obligations of the Borrowers to the Beneficiary under the Credit Agreement (as defined below under the term “Guaranteed Obligations”).
(D)	The Pledgor has agreed to grant to the Beneficiary as security for the payment of all amounts due and payable by it pursuant to the Guaranteed Obligations, in accordance with the terms and conditions set out in this agreement, a first ranking pledge over its going concern (hereinafter referred to as the “Agreement)”. The Beneficiary has, pursuant to article 2328-1 of the French Code civil (hereafter the “Civil Code”), appointed the Administrative Agent in order that the Administrative Agent be entitled to register, perform and enforce any security interest (sûreté réelle) granted by the Pledgor in order to secure the performance and payment of the Guaranteed Obligations.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

1Definitions

1.1Definitions

In this Agreement, unless otherwise stipulated, the terms and expressions the first letter of which is capitalised shall have the meanings ascribed to such terms below or, if not so defined, shall have the meanings ascribed to such terms in the Credit Agreement:

[PLEASE NOTE: ORDER CORRESPONDS TO ALPHABETICAL ORDER IN ORIGINAL FRENCH VERSION OF TEXT]

“Administrative Agent” has the meaning ascribed to such term in the list of parties hereof;

“Arranger” refers to GVEC Resource IV Inc., together with its successors, transferees and assigns pursuant to the Credit Agreement;

“Schedule” means any of the schedules to the Agreement;

“Clause” means any of the clauses of the Agreement;

“Beneficiary” means collectively the Administrative Agent, the Arranger and the Lenders, together with their respective successors, transferees and assigns;

“Enforcement Event” means any failure by the Pledgor to perform any of its obligations under the Guarantee;

“Agreement” means this agreement together with the schedules hereto, as it or they may be expressly amended, restated or supplemented hereinafter;

“Intellectual Property Rights” means patents, licenses, trademarks, drawings and industrial design rights, and more generally all intellectual property rights (with the exception of the legal name), including software licenses, attached to the Going Concern;

“Emrise Corporation” means Emrise Corporation, a company incorporated under the laws of Delaware, United States of America, having its principal executive offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, 91370, United States of America;

“Going Concern” means the going concern (fonds de commerce) of the Pledgor or one or several components thereof (including, as the case may be, the components and rights subsequently included therein), pledged in favor of the Beneficiary, pursuant to this Agreement, as described in Clause 3 hereof entitled “Designation of the Pledged Going Concern”;

“Guarantee” means the agreement dated [•], entered into between, inter alia, the Pledgor and certain of Emrise Corporation’s subsidiaries, pursuant to which they have granted in favor of the Arranger, the Administrative Agent and the Lenders a guarantee securing the payment obligations of the Lenders pursuant to the Credit Agreement;

“Pledge” means the Going Concern pledge, created in favor of the Beneficiary pursuant to the present Agreement;

“Guaranteed Obligations” means all present and future payment obligations, whether in principal, interest, default interest, indemnities, costs, fees, commissions or accessories due and payable by the Borrowers to the Beneficiary pursuant to the Credit Agreement and which constitute the obligations of the Pledgor pursuant to the terms of the Guarantee (it being specified that the intention of the parties in this agreement is that such term corresponds to the term “Guaranteed Obligations” in the Guarantee); and

“Parties” means collectively the Pledgor and the Beneficiary.

1.2Unless otherwise stipulated, in this Agreement:

1.2.1	the titles of Clauses and Schedules are for ease of reference only and shall not affect the interpretation or construction thereof;
1.2.2	terms defined in Clause 1.1may be used in the singular or the plural sense as required by the context thereof;
1.2.3	references to a person shall be construed as including such person’s successors, transferees and assigns and to any other person succeeding to the rights and obligations of such person in any manner whatsoever;
1.2.4	references to an agreement or any other document shall include any schedules thereto and any modifications or amendments thereof;

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1.2.5	references to an obligation shall include any accessories attached thereto; and
1.2.6	References to time of day are to Paris time.

2Pledge over the business as a Going Concern (Nantissement)

In order to secure the performance and the payment of the Guaranteed Obligations, the Pledgor hereby pledges the Going Concern in favor of the Beneficiary, pursuant to the provisions of articles L.142-1 et seq. of the Code de commerce (the “Commercial Code”) and with regulatory provisions of the Commercial Code relating to such articles and the Pledgor hereby agrees, to the extent necessary, that such pledge be registered with the Commercial court of Dreux.  Upon completion of the formalities as contemplated in Clause 4.1, the Pledge will constitute a first ranking security interest over the Going Concern in favor of the Beneficiary.

3Designation of the pledged Going Concern

3.1The Pledgor hereby pledges its Going Concern which consists, in France as well as abroad, directly or indirectly, for its own account of for the account of third parties, in:

(a)

the importation, the exportation, the purchase, the sale, the lease, the installation, the maintenance and the repair of any goods, devices or equipments in the engineering and computer domain and related domains, as well as the marketing of related supplies;

(b)

and, more generally, any and all commercial, industrial or finance transactions, relating to movable or real-estate property, which can be linked, directly or indirectly, with its corporate purpose, or with any similar or ancillary purposes, or which are likely to facilitate the operation or the development of the Pledgor’s business as well as its participation, by every possible means, in any firm or company, created or to be created, which can be linked with its corporate purpose, in particular by the creation of new companies, contribution (apport), merger, general partnership (commandite), subscription, purchase of shares or shareholder interests, alliance, undisclosed partnership (société en participation) or economic interest group (groupement d’intérêt économique).

3.2The said Going Concern so pledged includes all elements which may be legally included therein pursuant to article L. 142-2 of the Commercial Code, and in particular:

(a)	the logo, the clients and goodwill in respect therewith;
(b)	commercial and industrial furniture, material and equipment used in the operation thereof;
(c)	the commercial names, the patents and licenses, the trade marks and trade names, including the Intellectual Property Rights, the models and designs and more generally any intangible element and industrial, intellectual, literary and artistic rights attached to the Going Concern, including the software and any rights granted to the Pledgor pursuant to software licenses and agreements and maintenance agreements and which relate to its activity;
(d)	lessee rights to leased real estate (droit au bail), as the case may be, relating to the premises in which the Going Concern is operated;
(e)	software and maintenance agreements relating to the activity of the Pledgor; and
(f)	all the elements which may subsequently be created and which are to be included in the scope of the Pledge pursuant to Clause 6.4 of the present Agreement.

3.3In addition, the scope of the Pledge over the Going Concern shall automatically extend, to the extent permitted by law, to the following elements:

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(a)	furniture, material and equipment which may be created or acquired by the Pledgor, including additional furniture, material and equipment that shall replace, improve or perfect the existing furniture, material and equipment of the Going Concern pledged;
(b)	as the case may be, any insurance or eviction indemnities and expropriation or any other compensation which would be paid to the Pledgor in connection with any of the elements of the Going Concern;
(c)	as the case may be, any leasing rights including any renewal or extension of such leasing rights with respect to the premises in which the Going Concern is operated or with respect to any branch or secondary establishment of the Pledgor whether existing, created or to be acquired subsequently by the Pledgor;
(d)	as the case may be, commercial names, trade marks and trade names, copyrights, logos, industrial designs and models and, more generally, any intangible assets and rights relating to industrial and intellectual rights which may be created, acquired by the Pledgor, as well as all licenses or sub-licences, relating to any of these intangible assets;
(e)	as the case may be, French or foreign patents or any manufacturing process or know-how which may be created or acquired by the Pledgor, including all licenses or sub-licenses relating thereto; and
(f)	as the case may be, all the elements mentioned above which may be held (in its capacity whatsoever) by any secondary establishment of the Pledgor which has been subsequently created.

4Registration, fees and expenses

4.1Tax registration and registration at commercial court

4.1.1	This Agreement will be registered by the Administrative Agent with the relevant tax authorities. In addition, the Pledge of Going Concern will be registered by the Administrative Agent with the clerk’s office of the Commercial court of Dreux within fifteen (15) days from the date hereof.
4.1.2	In this respect, all powers are vested in the bearer of an original copy of this Agreement.

4.2Fees and expenses of registration, recording and release

All taxes, imposts, duties or penalties, present or future, of any manner whatsoever, and any reasonable costs incurred by the Administrative Agent in connection with this Agreement, including any reasonable fees and expenses of counsel, relating to the negotiation, preparation execution and registration of the present Agreement and to the performance thereof or consequent thereupon, in particular the costs relating to the formalities described in this Clause, shall be borne by the Pledgor, who undertakes to pay such amounts on first demand to the Administrative Agent upon presentation of supporting evidence of such costs.

5Representations and Warranties

5.1In addition to the representations and warranties of the Pledgor set forth in the Guarantee, the Pledgor hereby represents and warrants to the Beneficiary that:

5.1.1 it is a duly incorporated, registered and validly existing company in accordance with the laws and regulations governing it, that it has the power to own its property and other assets and to conduct its business as it is now being conducted and hereafter proposed to be conducted; that the execution and performance hereof have been duly authorized by the relevant corporate bodies;

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5.1.2	it has full power and authority to execute this Agreement and perform its obligations hereunder and all necessary corporate, shareholder and other action has been taken to authorize the execution and performance of the same and such authorizations remain in force;
5.1.3	that the execution and performance hereof does not contravene with any provisions of its articles of association (statuts) nor with any resolution of its corporate bodies;
5.1.4	that the execution and performance hereof does not contravene with any provision of any agreement or undertaking which it is a party to or which is binding on it, does not breach any applicable law or regulation;
5.1.5	that, apart from those referred to in this Agreement, the execution and performance hereof does not require any authorization, opinion, license, registration or approbation from any third authorities, will be required, and that any governmental or administrative authorizations required to be obtained or receive by it in order to execute and perform its obligations under this Agreement and to ensure the validity and enforceability thereof have been obtained and are in force;
5.1.6	that this Agreement will constitute from its execution and will remain thereafter, a legal, valid and binding undertaking under the terms hereof;
5.1.7	that there is no pending action nor that it is not aware of any claim to be brought, to the effect of preventing or forbid the execution or performance hereof or which could have a significant impact on its activity, its assets or its financial and economic situation;
5.1.8	it is fully aware of the terms of the documentation, from which the Guaranteed Obligations arise, and acknowledges to have received a copy of each document of which it has neither signed or received, in particular the Credit Agreement and the Loan Documents (as such term is defined in the Credit Agreement);
5.1.9	that no authorization from any third party will be required in the event of the sale of the Going Concern, following the enforcement of the Pledge;
5.1.10	that it is the owner of the Going Concern, as evidenced by extracts from its registration certificate at the Registry of Commerce and Companies of Dreux;
5.1.11	that it has given to the Beneficiary all information requested by the Beneficiary concerning all of the elements pledged or due to be pledged hereunder;
5.1.12	that it does not at the date hereof, own any business, except for the Going Concern which is the subject of this Pledge, and that it is, whether or not pursuant to licensing agreements, effectively and validly authorized to use the assets and rights included within the scope of the Pledge;
5.1.13	that at the date hereof, it is not the owner of any Intellectual Property Right;
5.1.14	that at the date hereof, it is not the holder in any capacity whatsoever (and in particular, as a licensee) of any Intellectual Property Right, other than the rights included in the scope of the present Pledge;
5.1.15	that it has legal and valid title to occupation of the premises in which the Going Concern is operated;
5.1.16	that no license or sub-license concerning any Intellectual Property Right or trade name, has been granted at the date hereof by the Pledgor to any third parties; and
5.1.17	that none of the components of the Going Concern owned by the Pledgor are pledged nor are they required to be pledged in favor of third party banks pursuant to articles L525-1 and following of the Commercial Code.

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5.2The representations and warranties set out in Clause 5.1 shall remain in force following the signature of the Agreement and shall be deemed to be repeated by the Pledgor so that they remain accurate on each date on which the representations and warranties set out in the Credit Agreement are repeated.

6Undertakings of the Pledgor

The Pledgor hereby undertakes as follows:

6.1Preservation of the Going Concern

The Pledgor shall ensure the conservation and preservation of the Going Concern, it shall maintain (subject to the fair wear and tear) the components of the Going Concern in a normal state of operation and in activity, it shall refrain from taking any action which may significantly decrease the value of the Going Concern (with the exception of actions taken in the normal course of business), and shall promptly notify the Administrative Agent of any events or circumstances which are likely to materially and adversely affect (i) the  capacity of the Pledgor to use the Going Concern, or (ii) the exercise by the Pledgor of its rights and remedies with respect to the Going Concern whether immediately or in the future.

6.2Notification of contemplated pledge

The Pledgor undertakes to notify the Administrative Agent of any information of which it is aware and according to which any third party is considering or is about to take or to be granted a security or privilege over any of the elements included in the scope of the Pledge over the Going Concern or to be so included pursuant to this Clause.

6.3Requirement of Written Agreement of the Administrative Agent

The Pledgor shall be required to obtain the express written consent of the Administrative Agent, acting in the name and on behalf of the Beneficiary, prior to the completion of any action, the signature of any contract or agreement, or the making of any undertaking which would result in a significant decrease in the value of the Going Concern.  In particular, the Pledgor shall not, without the express prior written agreement of the Administrative Agent:

6.3.1	modify or permit the modification of the legal structure of the company operating the Going Concern;
6.3.2	transfer in any manner whatsoever the Going Concern or any of the components thereof except for normal business transactions or replacement;
6.3.3	undertake any transaction which does not clearly fall within its corporate purpose or within the normal sphere of its operations; or
6.3.4	subject or permit the Going Concern to be subjected to any charge over the Going Concern, even if ranking behind the Pledge.

6.4New going concern

In the event that, in the future, the Pledgor becomes the owner of new going concerns (whether by acquisition, creation, contribution or any other means) prior to the full payment of the Guaranteed Obligations, it shall immediately so inform the Administrative Agent.  The Pledgor further undertakes to grant a pledge in favor of the Administrative Agent, acting in the name and on behalf of the Beneficiary, as security for the Guaranteed Obligations, on any such new going concern.

6.5Renewal of registration and recording - New recordings

6.5.1 The Pledgor hereby authorizes the Administrative Agent, acting in the name and on behalf of the Beneficiary, to renew the present Pledge (including any amendments thereto), at the

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Pledgor’s expenses, for a further period of legal protection, which shall be the maximum period under the law, upon expiration of each period corresponding to the legal period of validity of the Pledge as long as any amounts remain due and payable in respect of the Guaranteed Obligations.

6.5.2

With respect to new intellectual and/or industrial property rights created or acquired by the Pledgor after the date hereof which are automatically included in the scope of the Pledge pursuant to Clause 3 (including all of the trademarks, logos, intellectual rights, industrial designs and models, French or foreign patents as well as procedures or know-how and more generally, all industrial, literary or artistic rights as well as commercial names and any licenses or sub-licenses relating to any of such intangible elements granted by the Pledgor to a third party, including software, any new rights of the Pledgor under software licenses, maintenance agreements and contracts for access to source codes, which are or which will be associated with its activity, with the exception of such elements as are the property of the Lessee) the Pledgor hereby authorizes the Administrative Agent, acting in the name and on behalf of the Beneficiary, to immediately register, at the Pledgor’s expenses, with the Institut National de la Propriété Industrielle the pledge over such new rights acquired by the Pledgor.

6.6Further covenants

6.6.1

The Pledgor hereby covenants that it will, at its own expenses, perform all acts and execute all documents and instruments which may be reasonably requested by the Administrative Agent at any time, in order to evidence, perfect, maintain or enforce the Pledge created in favor of the Beneficiary or, more generally, as a result of the provisions of this Agreement.

6.6.2

In addition, the Pledgor expressly undertakes to inform the Administrative Agent of the creation or acquisition of any secondary establishment or branch in which the Pledgor operates part or all of its Going Concern or any new going concern, within five (5) Business Days of the registration of such secondary establishment or branch with the relevant Registry of Commerce and Companies, in order to enable the Administrative Agent to make any new or additional registration which may be necessary to the creation, extension or conservation of the Pledge, in the conditions set out in this Agreement.

7Insurance

The Pledgor undertakes as from the date hereof to adequately insure or cause to be insured and maintain insured for so long as this Agreement remains in force, the materials, furniture, tools and fixtures and fittings and other insurable property of the Going Concern, against all types of risks usually insured by commercial companies carrying on the same type of business as the Pledgor, and in particular, without such list being exhaustive, risks of fire, explosion, lightning, water damage, loss, destruction, riots, social unrest, acts of terrorism and theft.  Such insurance must be taken out by the Pledgor with one or more reputable company(ies) or must be approved by the Administrative Agent.  The Pledgor undertakes to renew or cause to be renewed such insurance upon each renewal date until payment in full of the Guaranteed Obligations and termination of all commitments under the Credit Agreement and to provide evidence of such insurance policies to the Administrative Agent at any time upon the latter’s request.  The Pledgor acknowledges that, in the event of enforcement of the Pledge, the proceeds of any insurance policy which would be allocated to the Pledgor in case of damage shall be paid to the Administrative Agent for the account of the Beneficiary up to the amount of such proceeds (and for a maximum amount equal to the Guaranteed Obligations), pursuant to article L.121-13 of the Insurance Code.  In this respect, the Administrative Agent, acting in the name and on behalf of the Beneficiary will notify the relevant insurance companies.  It is agreed however, that any amounts received by the Administrative Agent on behalf of the Beneficiary pursuant to this paragraph shall automatically be applied to reduce the amount owed under the Guaranteed Obligations.

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8Duration

8.1	The representations, warranties and covenants set out above shall bind the Pledgor and this Agreement shall remain in force for so long as any amount remains due and payable in respect of the Guaranteed Obligations.
8.2	Consequently, the Administrative Agent, acting in the name and on behalf of the Beneficiary, undertakes to release the present Pledge over the Going Concern, at the Pledgor’s expense when, (i) all Guaranteed Obligations are fully and irrevocably satisfied and (ii) no loan or credit facility is available for the Borrowers under the Credit Agreement.

9Enforcement of the Pledge

If the Pledgor does not comply with its obligations under the Guaranteed Obligations (hereinafter an “Enforcement Event”), the Administrative Agent, acting in the name and on behalf of the Beneficiary, may:

9.1

with respect to the Pledge created hereunder, immediately exercise all rights and privileges and take any action granted by law to a secured creditor, and in particular, enforce the pledge pursuant to articles L141-5 et seq. and article L521-3 of the Commercial Code (or any other legal provision then applicable); and

9.2

with respect to any contracts and licenses included in the scope of the Pledge over the Going Concern hereunder and for which the consent of the co-contractor or grantor of a license is required in order to effect a transfer thereof, request (without it being necessary to obtain the Pledgor’s consent for this purpose) the consent of any such co-contractor or grantor of a license in order to allow the transfer of the relevant licenses and agreements to any transferee or proposed transferee of the Going Concern upon enforcement of the Pledge.

IT BEING SPECIFIED THAT, IN ANY EVENT, the Pledgor hereby undertakes to take all reasonable actions promptly after the enforcement of the Pledge, in order to obtain the consent of such co-contractor or grantor of license in respect of the transfer referred to above; provided that the Pledgor shall not be held liable in the event where any co-contractor or grantor would refuse to consent to the above-mentioned transfer; and

IT BEING ALSO SPECIFIED THAT the Pledgor undertakes to take all reasonable actions to include, in any agreements and licenses relating to future or additional rights, provisions that allow the transfer of such agreements or licenses in case of enforcement of the Pledge, provided that the Pledgor shall not be held liable in the event that any co-contractor or grantor refuses to consent to the above-mentioned transfer.

10Notices

Any notices and communications made under this Agreement shall be made in accordance with clause 5.15 of the Guaranty.

11Miscellaneous

11.1	This Agreement does not affect and shall not affect in any way the nature and the scope of any undertaking or any guarantee that may have been given or granted by the Pledgor or by any third party, and comes in addition to them.
11.2	This Agreement is irrevocable and shall remain in force notwithstanding:

11.2.1	any renewal, extension or prorogation of the Credit Agreement and/or the Guarantee giving rise to the Guaranteed Obligations;
11.2.2	any novation or amendment of the Credit Agreement an/or the Guarantee giving rise to the Guaranteed Obligations; and

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11.2.3 in the event that any provision of the Credit Agreement and/or of the Guarantee giving rise to the Guaranteed Obligations and/or of any other security or of any other document referred to in the Credit Agreement or referring to the Credit Agreement or its schedules, in particular in guarantee of any restitution obligation of the Pledgor.

11.3	This Pledge shall not be extinguished or released, either in full or in part, as a result of any partial payment to the Beneficiary of the Guaranteed Obligations.
11.4	The rights of the Beneficiary pursuant to this Agreement or to any document issued pursuant to this Agreement, and any right, remedy or other security granted by the Pledgor in favor of the Beneficiary or provided by law, may be exercised as often as necessary and are cumulative. The Beneficiary may exercise its rights under this Agreement regardless of whether or not its other rights, remedies or securities with respect to the Guaranteed Obligations have been exercised.
11.5	Subject to applicable limitation periods, the failure by the Beneficiary and/or the Administrative Agent, acting in the name and on behalf of the Beneficiary, to exercise any right or action hereunder or any delay in exercising such rights or actions shall not constitute a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise of the same, or the exercise of any other right. No waiver shall be binding unless effected by written instrument signed by all of the Parties and referring expressly to this Agreement. The Beneficiary shall have no liability towards the Pledgor with respect to the late exercise or the non-exercise of their rights under this Agreement.
11.6	In the event that any provision of this Agreement shall be deemed to be null and void or not binding due to the effect of any law or due to the interpretation of such provision, the invalidity of such provision shall not affect the validity of any other provision of this Agreement. In such a case, the Parties shall negotiate in good faith to replace the relevant provision by a new provision which shall be valid, binding, enforceable and compliant with the original intention of the Parties.

12Successors and Assigns

12.1	All the rights and liabilities of the Beneficiary under this Agreement will benefit to its successors, transferees and assigns, as well as to any of their own successors, transferees and assigns, and to their own successors and assigns and all the terms, conditions, promises, representations and warranties hereunder will be binding on the Pledgor and on its successors and assigns
12.2	The Pledgor acknowledges that the Beneficiary is entitled, pursuant to the provisions of the Credit Agreement, to assign all or part of its rights under the Credit Agreement, and agrees that the provisions of this Agreement will run to the benefit of any assignee of the Beneficiary.
12.3	The Pledgor shall not be entitled to assign or transfer in whole or in part its rights or obligations under this Agreement.
12.4	The security under this Agreement shall not be affected by any amendment, addition or assignment of the Credit Agreement and/or the Guarantee. The Pledgor undertakes to execute any necessary documents allowing any assignee, transferee or successor of the Beneficiary to benefit from the rights under this Agreement.
12.5	In the event that the Administrative Agent is replaced in accordance with the terms of clause 15.9 of the Credit Agreement, this Agreement and the related Pledge shall inure to the benefit of the new Administrative Agent without this constituting a novation. The Pledgor undertakes, at the request of the Administrative Agent, to take any measure and sign any document in order to ascertain the rights of the new Administrative Agent.

13Governing Law - Jurisdiction

13.1 This Agreement is governed by French law as to its validity, construction and enforcement.

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13.2 Any dispute arising out of this Agreement shall be submitted to the Commercial court of Paris or the competent courts of the State of California, as the case may be, without prejudice to the right of the Beneficiary to commence proceedings before any other jurisdiction

The signature of the Parties is on the last page hereof.

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Schedule 1
The Lenders

GVEC Resource IV Inc.

Walkers (BVI) Limited

Walkers Chambers

PO Box 92

Road Town

Tortola, British Virgin Islands

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SIGNATURE PAGE

Signed in [the State of California (United States of America)], on November 30, in [four] ([4]) original copies

CXR ANDERSON JACOBSON SAS
Pledgor
Represented by:	Carmine Thomas Oliva	)  /s/ Carmine Thomas Oliva
As:	President	)
GVEC RESOURCE IV INC.
Administrative Agent
Represented by:	Robert J. Anderson	)  /s/ Robert J. Anderson
As:	Authorized Signatory	)
and
Represented by:	Peter Paul Mendel	)  /s/ Peter Paul Mendel
As:	Authorized Signatory	)
THE LENDERS
Represented by the Administrative Agent
Represented by:	Robert J. Anderson	)  /s/ Robert J. Anderson
As:	Authorized Signatory	)
and
Represented by:	Peter Paul Mendel	)  /s/ Peter Paul Mendel
As:	Authorized Signatory	)

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