8-K

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 (Date of earliest event reported) November 3, 2009

EMRISE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	001-10346	77-0226211
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

611 Industrial Way, Eatontown, NJ 07224

(Address of principal executive offices)                  (Zip Code)

Registrant’s telephone number, including area code  (732) 389-0355

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 (see General Instruction A.2. below):

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)

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

o    Pre-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.

Amendments to Loan Documents

Background Information

On November 30, 2007, EMRISE Corporation (the “Company”) and certain of its subsidiaries (collectively with the Company’s subsidiaries that later became party to the agreement pursuant to that certain Amendment Number 1 to Loan Documents dated August 20, 2008, the “Borrowers”) entered into a Credit Agreement with GVEC Resource IV Inc. (the “Lender”), an affiliate of Private Equity Management Group, which Credit Agreement has been amended by that certain Amendment Number 1 to Loan Documents, dated August 20, 2008, that certain Amendment Number 2 to Loan Documents, dated February 12, 2009, that certain Forbearance Agreement and Amendment Number 3 to Loan Documents, dated March 20, 2009 (as amended by that certain Amendment to Forbearance Agreement and Amendment Number 3 to Loan Documents, dated April 9, 2009), that certain Amendment Number 4 to Loan Documents, dated April 14, 2009, and that certain Amendment Number 5 to Loan Documents, dated August 14, 2009 (as further amended, restated, supplemented, or modified from time to time, the “Credit Agreement”).

Amendment No.6 to Loan Documents

On November 3, 2009, the Borrowers and the Lender entered into Amendment No. 6 to Loan Documents (the “Sixth Amendment”).  The Sixth Amendment amends the Credit Agreement to change the expiration date of the Credit Agreement from November 30, 2010 to June 30, 2010.  As such, all amounts outstanding under the terms of the Credit Agreement (including unpaid principal balance and all accrued and unpaid interest under the term loans and the Revolver (as defined below)) will become due and payable on June 30, 2010 and the Company will be unable to borrow under the revolving credit facility after that date.

In addition, the Borrowers and the Lender agreed to revise the schedule of principal payments due pursuant to the terms of the Sixth Amendment such that the Borrowers are now obligated to make monthly principal payments to the Lender of (i) $100,000 on November 1, 2009, (ii) $150,000 on December 1, 2009 and (iii) approximately $287,000 commencing on January 1, 2010 and continuing on the first day of each of the 5 consecutive months thereafter.  A balloon payment of $6.9 million will be due and payable on June 30, 2010.

Further, the Borrowers and Lender agreed to revise certain of the financial covenants related to the revolving credit facility that is available to the Borrowers under the terms of the Credit Agreement (the “Revolver”).  Under the terms of the Credit Agreement, as amended by the Sixth Amendment, the Revolver is subject to various financial covenants on a consolidated basis, including the following: EBITDA, as defined in the Credit Agreement, measured on a fiscal quarter-end basis, must not be less than $250,000 for the period ended September 30, 2009, $550,000 for the period ended December 31, 2009 and $1,450,000 for the period ended March 31, 2010; the leverage ratio, as defined by the Credit Agreement, measured quarterly, must not be greater than 1.70:1.00 for the period ended September 30, 2009, 1.50:1.00 for the period ended December 31, 2009 and 1.40:1.00 for the period ended March 31, 2010; and

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liquidity, as defined by the Credit Agreement, measured quarterly, must not be less than $2,800,000 for the period ended December 31, 2009 and $2,700,000 for the period ended March 31, 2010.  Additionally, the Revolver is subject to the Borrowers not incurring capital expenditures (a) in excess of $600,000 for the fiscal year ending December 31, 2009, and (b) in excess of $1,800,000 for the fiscal year ending December 31, 2010.  Additionally, the Revolver is subject to the Borrowers not incurring unfinanced capital expenditures in excess of $62,500 in any fiscal quarter and the Borrowers not incurring purchase money commitments in excess of $2 million over the life of the facility.  However, if the Borrowers incur unfinanced capital expenditures of less than $62,500 in any fiscal quarter, the difference between the amount incurred in a certain fiscal quarter and $62,500 maybe incurred in the two fiscal quarters immediately following such fiscal quarter.

Pursuant to the terms of the Sixth Amendment, the Borrowers (i) paid to Private Equity Management Group, Inc. (“PEMG”) an amount equal to $100,000 upon the closing of the Sixth Amendment and (ii) agreed to pay an additional $100,000 to PEMG on the earlier of (x) March 31, 2010; or (y) the repayment in full of the amounts due and payable under the terms of the Credit Agreement.  The foregoing payments represent an advisory fee to PEMG in consideration of PEMG’s advice in connection with the Sixth Amendment.

The Sixth Amendment is filed as Exhibit 10.1 to this report.

Amendment No.7 to Loan Documents

On November 13, 2009, the Borrowers and the Lender entered into an Amendment No. 7 to Loan Documents (the “Seventh Amendment,” and together with the Sixth Amendment, the “Amendments”).  Pursuant to the terms of the Seventh Amendment, the definition of the term “EBITDA” in the Credit Agreement was amended such that  (i) any non-cash impairment associated with the write down of the long-lived assets of RO Associates Incorporated, a Borrower and (ii) any loss or non-cash impairment associated with the discontinuation of operations, pursuant to a sale or otherwise, of RO Associates Incorporated recorded in the Parent’s and Subsidiaries’ consolidated financial statements in any period ending on or prior to December 31, 2009 were excluded from the definition of EBITDA.  Pursuant to the terms of the Seventh Amendment, the Borrowers paid to PEMG an advisory fee in an amount equal to $15,000 upon the closing of the Seventh Amendment in consideration of PEMG’s advice in connection with the Seventh Amendment.  The Seventh Amendment is filed as Exhibit 10.2 to this report.

The foregoing summary of the terms of the credit facility and the Amendments does not purport to be complete and is qualified in its entirety by reference to the full text of the agreements filed as exhibits to this report or to other reports filed by the Company with the Securities and Exchange Commission.  The Credit Agreement and the Amendments contain representations and warranties made by the parties thereto. The assertions embodied in such representations and warranties are not necessarily assertions of fact, but a mechanism for the parties to allocate risk.  Accordingly, investors should not rely on the representation and warranties as characterizations of the actual state of facts or for any other purpose at the time they were made or otherwise.  The agreements filed as exhibits to this report are not intended as documents for investors to obtain factual information about the current state of affairs of the parties to the agreements.  Rather, investors should look to other disclosures contained in the Company’s reports under the Securities Exchange Act of 1934, as amended.

Item 9.01              Financial Statements and Exhibits.

(d)   Exhibits:

Exhibit No.	Description
10.1	Amendment Number 6 to Loan Documents, dated November 3, 2009, by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation, RO Associates Incorporated, Advanced Control Components, Inc., Custom Control Components, Inc. and GVEC Resource IV Inc.
10.2	Amendment Number 7 to Loan Documents, dated November 13, 2009, by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation, RO Associates Incorporated, Advanced Control Components, Inc., Custom Control Components, Inc. and GVEC Resource IV Inc.

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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 hereunto duly authorized.

Date: November 16, 2009	EMRISE CORPORATION
	By:	/s/ D. JOHN DONOVAN
		D. John Donovan,
		Chief Financial Officer

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INDEX TO EXHIBITS ATTACHED TO THIS REPORT

Exhibit No.	Description
10.1	Amendment Number 6 to Loan Documents, dated November 3, 2009, by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation, RO Associates Incorporated, Advanced Control Components, Inc., Custom Control Components, Inc. and GVEC Resource IV Inc.
10.2	Amendment Number 7 to Loan Documents, dated November 13, 2009, by and among EMRISE Corporation, EMRISE Electronics Corporation, CXR Larus Corporation, RO Associates Incorporated, Advanced Control Components, Inc., Custom Control Components, Inc. and GVEC Resource IV Inc.

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EX-10.1

Exhibit 10.1

AMENDMENT NUMBER 6 TO LOAN DOCUMENTS

THIS AMENDMENT NUMBER 6 TO LOAN DOCUMENTS (this “Sixth Amendment”), is entered into as of November 3, 2009, by and among GVEC RESOURCE IV INC. (“Agent”), as Agent and as a Lender, EMRISE CORPORATION, a Delaware corporation (“Parent”), and Parent’s Subsidiaries that are signatories hereto (collectively with Parent, “Borrowers”).

W I T N E S S E T H

WHEREAS, Borrowers, Agent and the Lenders named therein are parties to that certain Credit Agreement, dated as of November 30, 2007, as amended by that certain Amendment Number 1 to Loan Documents, dated August 20, 2008, that certain Amendment Number 2 to Loan Documents, dated February 12, 2009, that certain Forbearance Agreement and Amendment Number 3 to Loan Documents, dated March 20, 2009 (as amended by that certain Amendment to Forbearance Agreement and Amendment Number 3 to Loan Documents, dated April 9, 2009), that certain Amendment Number 4 to Loan Documents, dated April 14, 2009, and that certain Amendment Number 5 to Loan Documents, dated August 14, 2009 (as further amended, restated, supplemented, or modified from time to time, the “Credit Agreement”); and

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

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend the Loan Documents as follows:

1.DEFINITIONS.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement, as amended hereby.

2.AMENDMENT TO CREDIT AGREEMENT.

(a)Schedule 1.1 of the Credit Agreement is amended by the addition or amendment and restatement, as applicable, of the following definitions:

“Combined Capital Base” shall mean the sum of (i) Stockholders’ Equity and (ii) Subordinated Debt.

“EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or loss), excluding any non-cash gain or loss associated with the change in fair value of warrants, 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.

“Sixth Amendment” means that certain Amendment Number 6 to Loan Documents, dated as of November 3, 2009, by and among Borrowers, Agent and the Lenders party thereto.

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

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

“(c)All amounts outstanding under the Terms 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 the Maturity Date (as defined in Section 3.3(a)) or such earlier date of termination of this Agreement, whether by prepayment, or by acceleration.”

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

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

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

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

(iii)commencing on January 1, 2010, and continuing on the first day of each of the 5 consecutive months thereafter, equal installments of $120,000.”

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

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

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

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

(iii)commencing on January 1, 2010, and continuing on the first day of each of the 5 consecutive months thereafter, equal installments of $166.666.67.”

(e)Section 3.3 of the Credit Agreement is amended and restated as follows:

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“(a)This Agreement shall continue in full force and effect for a term ending on June 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 June 30, 2010 (the “Revolver Maturity Date”).”

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

“(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:

Applicable Period	Minimum Amount
For Borrowers’ fiscal quarter ending in September 2009	$	250,000
For Borrowers’ fiscal quarter ending in December 2009	$	550,000
For Borrowers’ fiscal quarter ending in March 2010	$	1,450,000	”

(g)Section 6.16(b) of the Credit Agreement is amended and restated as follows:

“(b)[RESERVED]”

(h)Section 6.16(c) of the Credit Agreement is amended and restated as follows:

“(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 Ratio
For Borrowers’ fiscal quarter ending in September 2009	1.70:1.00
For Borrowers’ fiscal quarter ending in December 2009	1.50:1.00
For Borrowers’ fiscal quarter ending in March 2010	1.40:1.00”

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

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

Applicable Period	Minimum Amount
For Borrowers’ fiscal quarter ending in December 2009	$	2,800,000
For Borrowers’ fiscal quarter ending in March 2010	$	2,700,000	”

3.CONDITIONS PRECEDENT TO THIS SIXTH AMENDMENT.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Sixth Amendment and each and every provision hereof:

(a)The representations and warranties in the Credit Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the Sixth Amendment Effective Date, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b)No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the Sixth Amendment Effective Date;

(c)No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender or any of their Affiliates;

(d)Borrowers have paid to Private Equity Management Group, Inc. (“PEMG”), in immediately available funds, an amount equal to $100,000 as required by Section 4 of this Sixth Amendment; and

(e)No Material Adverse Change shall have occurred.

4.ADVISORY FEE.  For PEMG’s advice in connection with this Sixth Amendment the Borrowers shall pay to PEMG, in immediately available funds, (i) an amount equal to $100,000 on the Sixth Amendment Effective Date and (ii) an amount equal to $100,000 on the earlier of (x) March 31, 2010; or (y) the repayment in full of the Obligations.  The foregoing payments represent an advisory fee which is fully earned as of the Sixth Amendment

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Effective Date and no portion of such advisory fee shall be refundable for any reason, or applied to the outstanding balance of the Term Loans or any other amounts owing under the Credit Agreement.

5.CONSTRUCTION.  THIS SIXTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

6.ENTIRE AMENDMENT; EFFECT OF SIXTH AMENDMENT.  This Sixth Amendment, and the terms and provisions hereof, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior or contemporaneous amendments relating to the subject matter hereof.  Except as expressly set forth in this Sixth Amendment, the Credit Agreement and other Loan Documents shall remain unchanged and in full force and effect.  To the extent any terms or provisions of this Sixth Amendment conflict with those of the Credit Agreement or other Loan Documents, the terms and provisions of this Sixth Amendment shall control.  This Sixth Amendment is a Loan Document.

7.COUNTERPARTS; TELEFACSIMILE EXECUTION.  This Sixth Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Sixth Amendment by signing any such counterpart.  Delivery of an executed counterpart of this Sixth Amendment by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Sixth Amendment.  Any party delivering an executed counterpart of this Sixth Amendment by telefacsimile also shall deliver an original executed counterpart of this Sixth Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Sixth Amendment.

8.MISCELLANEOUS.

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

(b)Upon the effectiveness of this Sixth Amendment, each reference in the Loan Documents to the “Credit Agreement,” “thereunder,” “therein,” “thereof” or words of like import referring to the Credit Agreement shall mean and refer to the Credit Agreement as amended by this Sixth Amendment.

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

EMRISE CORPORATION		EMRISE ELECTRONICS CORPORATION
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: Chief Executive Officer		Title: President
CXR LARUS CORPORATION		RO ASSOCIATES INCORPORATED
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: President		Title: President
CUSTOM COMPONENTS, INC.		ADVANCED CONTROL COMPONENTS, INC.
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: President		Title: President
		GVEC RESOURCE IV INC.,
		as Agent and a Lender
		By:	/s/ signature illegible
		Name:
		Title: Authorized Signatory
		By:	/s/ signature illegible
		Name:
		Title: Authorized Signatory

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EX-10.2

Exhibit 10.2

AMENDMENT NUMBER 7 TO LOAN DOCUMENTS

THIS AMENDMENT NUMBER 7 TO LOAN DOCUMENTS (this “Seventh Amendment”), is entered into as of November 13, 2009, by and among GVEC RESOURCE IV INC. (“Agent”), as Agent and as a Lender, EMRISE CORPORATION, a Delaware corporation (“Parent”), and Parent’s Subsidiaries that are signatories hereto (collectively with Parent, “Borrowers”).

W I T N E S S E T H

WHEREAS, Borrowers, Agent and the Lenders named therein are parties to that certain Credit Agreement, dated as of November 30, 2007, as amended by that certain Amendment Number 1 to Loan Documents, dated August 20, 2008, that certain Amendment Number 2 to Loan Documents, dated February 12, 2009, that certain Forbearance Agreement and Amendment Number 3 to Loan Documents, dated March 20, 2009 (as amended by that certain Amendment to Forbearance Agreement and Amendment Number 3 to Loan Documents, dated April 9, 2009), that certain Amendment Number 4 to Loan Documents, dated April 14, 2009, that certain Amendment Number 5 to Loan Documents, dated August 14, 2009, and that certain Amendment Number 6 to Loan Documents, dated November 3, 2009 (as further amended, restated, supplemented, or modified from time to time, the “Credit Agreement”); and

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

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend the Loan Documents as follows:

1.DEFINITIONS.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement, as amended hereby.

2.AMENDMENT TO CREDIT AGREEMENT.

(a)Schedule 1.1 of the Credit Agreement is amended by the addition or amendment and restatement, as applicable, of the following definitions:

“EBITDA” means, with respect to any fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or loss), excluding (i) any non-cash gain or loss associated with the change in fair value of warrants, (ii) any non-cash impairment associated with the write down of the long-lived assets of RO Associates Incorporated, a Borrower, and (iii) any loss or non-cash impairment associated with the discontinuation of operations, pursuant to a sale or otherwise, of RO Associates Incorporated recorded in the Parent’s and Subsidiaries’ consolidated financial statements in any period ending on or prior to December 31, 2009, 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.

“Seventh Amendment” means that certain Amendment Number 7 to Loan Documents, dated as of November 13, 2009, by and among Borrowers, Agent and the Lenders party thereto.

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

3.CONDITIONS PRECEDENT TO THIS SEVENTH AMENDMENT.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Seventh Amendment and each and every provision hereof:

(a)The representations and warranties in the Credit Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the Seventh Amendment Effective Date, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b)No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the Seventh Amendment Effective Date;

(c)No injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against any Borrower, Agent, any Lender or any of their Affiliates;

(d)Borrowers have paid to Private Equity Management Group, Inc. (“PEMG”), in immediately available funds, an amount equal to the Advisory Fee; and

(e)No Material Adverse Change shall have occurred.

4.ADVISORY FEE.  For PEMG’s advice in connection with this Seventh Amendment the Borrowers shall pay to PEMG, in immediately available funds, an amount equal to $15,000 on the Seventh Amendment Effective Date (“Advisory Fee”).  The Advisory Fee represents an advisory fee which is fully earned as of the Seventh Amendment Effective Date and no portion of such advisory fee shall be refundable for any reason, or applied to the outstanding balance of the Term Loans or any other amounts owing under the Credit Agreement.  Agent and Lenders agree that except for the Advisory Fee, no fees, including non-cash or any other form of consideration, will be payable to Agent or Lenders in connection with this Seventh Amendment.

5.CONSTRUCTION.  THIS SEVENTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

6.ENTIRE AMENDMENT; EFFECT OF SEVENTH AMENDMENT.  This Seventh Amendment, and the terms and provisions hereof, constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior or

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contemporaneous amendments relating to the subject matter hereof.  Except as expressly set forth in this Seventh Amendment, the Credit Agreement and other Loan Documents shall remain unchanged and in full force and effect.  To the extent any terms or provisions of this Seventh Amendment conflict with those of the Credit Agreement or other Loan Documents, the terms and provisions of this Seventh Amendment shall control.  This Seventh Amendment is a Loan Document.

7.COUNTERPARTS; TELEFACSIMILE EXECUTION.  This Seventh Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Seventh Amendment by signing any such counterpart.  Delivery of an executed counterpart of this Seventh Amendment by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Seventh Amendment.  Any party delivering an executed counterpart of this Seventh Amendment by telefacsimile also shall deliver an original executed counterpart of this Seventh Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Seventh Amendment.

8.MISCELLANEOUS.

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

(b)Upon the effectiveness of this Seventh Amendment, each reference in the Loan Documents to the “Credit Agreement,” “thereunder,” “therein,” “thereof” or words of like import referring to the Credit Agreement shall mean and refer to the Credit Agreement as amended by this Seventh Amendment.

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

EMRISE CORPORATION		EMRISE ELECTRONICS CORPORATION
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: Chief Executive Officer		Title: President
CXR LARUS CORPORATION		RO ASSOCIATES INCORPORATED
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: President		Title: President
CUSTOM COMPONENTS, INC.		ADVANCED CONTROL COMPONENTS, INC.
By:	/s/ Carmine T. Oliva	By:	/s/ Carmine T. Oliva
Name: Carmine Oliva		Name: Carmine Oliva
Title: President		Title: President
		GVEC RESOURCE IV INC.,
		as Agent and a Lender
		By:	/s/ signature illegible
		Name:
		Title: Authorized Signatory
		By:	/s/ signature illegible
		Name:
		Title: Authorized Signatory

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