Exhibit 10.4


 


AMENDMENT NO. 1 TO

SUBORDINATED CONTINGENT SECURED PROMISSORY NOTE


 


THIS AMENDMENT NO. 1 TO
SUBORDINATED CONTINGENT SECURED PROMISSORY NOTE (the “Amendment”) is entered into as of November 20, 2009, by
and between Emrise Electronics Corporation, a New Jersey corporation (the “Company”), and Joanne Couse (“Holder”) and amends that certain
Subordinated Continent Secured Promissory Note (the “Note”) dated August 20, 2008 by and between the Company
and Holder in the original principal amount of up to One Hundred Ninety-Eight
Thousand Dollars ($198,000).  All
capitalized terms not otherwise defined in this Amendment shall have the
meanings set forth in the Note.


 


NOW, THEREFORE, the
Company and Holder do hereby agree as follows:


 


1.                                       Amendments.


 


(a)           Definition of Applicable Interest Rate. 
The definition of “Applicable Interest Rate” in Section 1 is hereby
replaced in its entirety with the following:


 


“Applicable Interest Rate” shall mean the rate per annum equal to the
prime rate as reported in The Wall Street
Journal  plus 1%; provided, however, that such
rate shall be doubled until the Company has reduced the principal amount of the
Note by an amount equal to (i) the amount of any increase in the principal
balance of this Note attributable to the Closing Net Cash adjustment pursuant
to Section 2.5(c) of the Stock Purchase Agreement plus (ii) the
First Deferred Purchase Price Payment.


 


2.                                       Initial Principal Balance.  All references in the Note to
$198,000 shall be changed to $425,365.48.


 


3.                                       Adjustment of Principal Balance.  Section 2.2 is hereby
replaced in its entirety with the following:


 


As of the Issuance Date, the principal balance of the Note is $425,365.48
and notwithstanding any provision to the contrary in the Note or the Stock
Purchase Agreement, such principal balance shall not decrease, except in the
event of payment or pursuant to Section 10.8 of the Stock Purchase
Agreement.


 


4.                                       First
Measurement Period Principal Balance.  Section 2.3 is hereby deleted in its
entirety.


 


5.                                       Payments of Principal and Interest.


 


(a)           Section 3.1 is hereby replaced in its entirety with
the following:


 

















 


The Company shall make no principal or interest payments during the
period commencing on the Issuance Date and ending on July 1, 2010, at
which time the Company shall make a principal payment on the Note in the amount
of $132,421.11 plus a payment of interest accrued on such amount from the
Issuance Date through the date of payment of such principal amount.  The amount of $132,421.11 is comprised of the
amount attributable to the Closing Net Cash Adjustment plus the First Deferred
Purchase Price Payment.  During such
period, interest will accrue on a quarterly basis pursuant to the terms of this
Section 3.


 


(b)           Section 3.2
is hereby deleted in its entirety.


 


(c)           Section 3.3
is hereby replaced in its entirety with the following:


 


The outstanding principal amount, together with all accrued and unpaid
interest on this Note, shall be due and payable on the Maturity Date or such
earlier time as provided herein.


 


6.             Further Assurances. 
Each of the parties hereby agrees that it shall execute and deliver all
additional documents and take such further actions reasonably required to
implement the terms and intent of this Amendment.


 


7.             Remaining Provisions of the Note.  All sections and/or paragraphs of the Note
not otherwise amended, modified or restated in this Amendment shall remain in
full force and effect and as set forth in the Note; provided, however,
that in the event of any discrepancy or inconsistency between the Note and this
Amendment, this Amendment shall control.


 


IN WITNESS WHEREOF, the
undersigned have executed and acknowledge this Amendment as of the date first
written above.


 


	
  THE COMPANY:

  	
  Emrise
  Electronics Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carmine T.
  Oliva

  
	
   

  	
  Name:

  	
  Carmine T. Oliva

  
	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  HOLDER:

  	
   

  	
  /s/ Joanne Couse

  
	
   

  	
  Joanne Couse

  
				



 


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