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Exhibit 10.1

                   FORBEARANCE AGREEMENT AND SECOND AMENDMENT
                        TO CREDIT AND SECURITY AGREEMENT



         THIS FORBEARANCE AGREEMENT AND SECOND AMENDMENT TO CREDIT AND SECURITY
AGREEMENT (the "AMENDMENT"), dated October 5, 2007, is entered into by and among
Emrise Corporation, a Delaware corporation, Emrise Electronics Corporation, a
New Jersey corporation, RO Associates Incorporated, a California corporation,
CXR Larus Corporation, a Delaware corporation (each individually, a "BORROWER,"
and collectively, the "BORROWERS"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(the "LENDER"), acting through its Wells Fargo Business Credit operating
division.

                                    RECITALS

         A. The Borrowers and the Lender are parties to a Credit and Security
Agreement dated as of December 1, 2006 (as amended by that certain First
Amendment to Credit and Security Agreement and Waiver of Defaults, dated August
13, 2007, and as further amended from time to time, the "CREDIT AGREEMENT").
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.

         B. As of the date hereof, the following Events of Default have occurred
and are continuing under the Credit Agreement (the "DESIGNATED EVENTS OF
DEFAULT"): (i) the Borrowers failed to satisfy the minimum Book Net Worth
requirement set forth in Section 6.2(a) of the Credit Agreement as of July 31,
2007, as the Borrowers' actual Book Net Worth was $22,811,000 versus the minimum
requirement of $23,000,000; and (ii) the Borrowers failed to satisfy the minimum
Net Income requirement set forth in Section 6.2(b) of the Credit Agreement for
the January 1, 2007 through July 31, 2007 period, as the Borrowers' actual Net
Income for such period was [$1,778,000]; versus the minimum requirement of
[$1,430,000];. As a result of the Designated Events of Default, the Lender
is entitled to exercise the Lender's rights and remedies under the Loan
Documents and otherwise.

         C. The Borrowers have requested that the Lender (i) forbear from
exercising any rights or remedies based on the Designated Events of Default for
the period of time set forth in this Amendment, and (ii) amend certain
provisions of the Loan Documents as set forth in this Amendment. The Lender has
agreed to forbear for the period hereinafter specified in this Amendment and
amend the Loan Documents, subject in each case to the terms and conditions of
this Amendment.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:


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1. TEMPORARY FORBEARANCE. Subject to the satisfaction of the terms and
conditions set forth herein, until that date (the "FORBEARANCE TERMINATION
DATE") which is the earliest to occur of (a) 5:00 p.m. on December 31, 2007, (b)
the date of the occurrence of any Event of Default (other than (i) the
Designated Events of Default, or (ii) any breaches of Sections 6.2(a), 6.2(b),
or 6.2(c) of the Credit Agreement that occur on or after August 31, 2007, and
before December 31, 2007 (the "FORBEARANCE PERIOD FINANCIAL COVENANT
DEFAULTS")), or (c) the date of the occurrence of any breach of any term or
provisions of this Amendment, the Lender will not exercise or enforce its rights
or remedies against the Borrowers which the Lender would be entitled to exercise
or enforce under the terms of the Loan Documents by reason of the occurrence of
the Designated Events of Default; PROVIDED that such forbearance shall not act
as a waiver of the Lender's right to enforce (x) any other claims, rights or
remedies at any time, and (y) all claims, rights, and remedies from time to time
on or after the Forbearance Termination Date. Furthermore, nothing contained
herein shall be construed as requiring the Lender to extend the Forbearance
Termination Date. The Borrowers acknowledge and agree that the Lender has not
waived, and by entering into this Amendment the Lender is not waiving, the
Designated Events of Default or any Forbearance Period Financial Covenant
Defaults that may occur on or prior to December 31, 2007.

2. REVOLVING FACILITY PRIOR TO FORBEARANCE TERMINATION DATE. Prior to the
Forbearance Termination Date (and provided that there exists no Default or Event
of Default under the Loan Documents other than the Designated Events of Default
or the Forbearance Period Financial Covenant Defaults), the Lender shall
continue to administer the revolving credit facility described in Section 2.1 of
the Credit Agreement (the "REVOLVING FACILITY") and permit Revolving Advances
and repayments thereunder in the same manner and in accordance with the same
terms as those governing the Loan Documents applicable thereto (including, but
not limited to, satisfaction of all conditions precedent in Article IV of the
Credit Agreement). It is expressly acknowledged and agreed by the Borrowers that
any election by the Lender to continue administering the Revolving Facility as
provided for hereby from the date of this Amendment and ending on the
Forbearance Termination Date shall not in any manner be deemed to prejudice the
Lender or act as a waiver of its otherwise applicable rights and remedies,
including, without limitation, to collect and enforce the full amount of the
Indebtedness from and after the Forbearance Termination Date.

3. FINANCIAL COVENANTS DURING THE FORBEARANCE PERIOD. Commencing August 31,
2007, and continuing through (and including) December 31, 2007, the Borrowers
shall comply with the following financial covenants (collectively, the
"FINANCIAL TESTS"):

         3.1 MINIMUM BOOK NET WORTH. The Borrowers, on a consolidated basis,
shall maintain, during each month, their Book Net Worth, determined as of the
end of each calendar month, commencing August 31, 2007 and continuing each
calendar month thereafter, in an amount not less than $22,500,000. The
Borrowers' Book Net Worth calculation shall be adjusted by the Lender to
eliminate any foreign currency translation adjustments; and

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         3.2 MINIMUM NET INCOME. The Borrowers shall achieve, for the quarter
ending December 31, 2007, Net Income of not less than $125,000. The Borrowers'
Net Income calculation shall be adjusted by the Lender to eliminate any foreign
currency translation adjustments.

         With respect to each of the foregoing Financial Tests, the Borrowers
shall provide the Lender, no later than thirty (30) days after the end of each
calendar month (or no later than October 15, 2007 with respect to the month
ending August 31, 2007), with a compliance certificate, prepared and signed by
the Borrowers' chief financial officer (or such other Person satisfactory to the
Lender) and in form and substance acceptable to the Lender, setting forth the
calculations for each of the foregoing Financial Tests. Failure to timely
deliver a duly completed and signed compliance certificate in accordance with
the foregoing shall constitute an Event of Default under the Loan Documents.

4. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby amended as
follows, and such amendments shall continue in effect beyond the Forbearance
Termination Date:

         4.1 DEFINITION OF "BORROWING BASE". The definition of "Borrowing Base"
that appears in Section 1.1 of the Credit Agreement is amended to read in its
entirety as follows:

         "Borrowing Base" means at any time the lesser of:

         (a) The Maximum Line Amount; or

         (b) Subject to change from time to time in the Lender's sole
         discretion, the sum of (without duplication):

                  (i) The product of the Accounts Advance Rate times Eligible
         Accounts, plus

                  (ii) Without duplication of the immediately preceding clause
         (i), during the Foreign Accounts Eligibility Period, the least of (A)
         the product of the Accounts Advance Rate times Eligible Foreign
         Accounts, (B) the FREP Subline Amount, or (C) an amount equal to ten
         percent (10%) of the aggregate of all Eligible Accounts plus all
         Eligible Foreign Accounts, plus

                  (iii) The lesser of: (A) the product of the Inventory Advance
         Rate times Eligible Inventory, or (B) $1,000,000, plus

                  (iv) The lesser of: (A) the product of the Insured Inventory
         Advance Rate times Eligible Insured Inventory, or (B) $300,000, less


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                  (v) The Borrowing Base Reserve, less

                  (vi) Indebtedness that the Borrowers owe to the Lender that
         has not yet been advanced on the Revolving Note and the dollar amount
         that the Lender in its reasonable discretion then determines to be a
         reasonable determination of the Borrowers' credit exposure with respect
         to any swap, derivative, foreign exchange, hedge, deposit, treasury
         management or other similar transaction or arrangement offered to
         Borrowers by Lender that is not described in Article II of this
         Agreement, less

                  (vii) The outstanding principal balance of the Term Note.

         Inventory that is eligible for inclusion under clause (iv) above shall
         not be also included in clause (iii) above for purposes of calculating
         the Borrowing Base."

         4.2 DEFINITION OF "ELIGIBLE INSURED INVENTORY". The following new
definition of "Eligible Insured Inventory" shall be added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:

                  "Eligible Insured Inventory" means Inventory of the Borrowers
         consisting of either work-in-process or finished goods, valued at the
         lower of cost or market in accordance with GAAP, that satisfies the
         definition of "Eligible Inventory" (other than clause (iii) of the
         definition of "Eligible Inventory") and the following additional
         criteria:

                  (i) The Inventory must be covered by one or more firm bona
         fide purchase orders (copies of which shall be supplied to the Lender
         if requested by the Lender);

                  (ii) The Inventory must be covered by a current insurance
         policy that is in form and substance, and issued by an insurance
         company, satisfactory to the Lender (in the Lender's sole discretion),
         which insurance policy shall include (without limitation) the following
         terms: (x) a one-time deductible not greater than $75,000; (y) cover
         all losses arising from insolvency of the Borrowers' customer who has
         ordered and/or received the Inventory; and (z) the Lender shall be as a
         named loss-payee (and a loss-payable endorsement, acceptable to the
         Lender in the Lender's sole discretion, shall have been issued in favor
         the Lender). At the Lender's request, Borrowers shall provide the
         Lender with complete copies of all such insurance policies and all
         endorsements and modifications thereto. Furthermore, the Borrowers
         shall not terminate, or materially and adversely modify, any such
         insurance policies without the Lender's consent (which may be withheld
         in the Lender's reasonable discretion);


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                           (iii) The Inventory that exceeds coverage limits of
         the insurance policy(ies) shall be excluded from Eligible Insured
         Inventory and the Borrowing Base; and

                           (iv) The Insured Inventory Deductible Amount shall be
         deducted from the value of the Eligible Insured Inventory for purposes
         of the amount of Eligible Insured Inventory that is included in the
         calculation of the Borrowing Base."

         4.3 DEFINITION OF "INSURED INVENTORY ADVANCE RATE". The following new
definition of "Insured Inventory Advance Rate" shall be added to Section 1.1 of
the Credit Agreement in the appropriate alphabetical order:

                  "Insured Inventory Advance Rate" means up to forty percent
         (40%) of Eligible Insured Inventory, or such lesser rate as the Lender
         in its sole discretion may deem appropriate from time to time."

         4.4 DEFINITION OF "INSURED INVENTORY DEDUCTIBLE AMOUNT". The following
new definition of "Insured Inventory Deductible Amount" shall be added to
Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

                  "Insured Inventory Deductible Amount" means the aggregate
         amount of the deductible(s) under the insurance policy(ies) referred to
         in the definition of "Eligible Insured Inventory."

         4.5 SECTION 6.1 OF THE CREDIT AGREEMENT. The following new paragraph
(s) is hereby added to the end of Section 6.1 of the Credit Agreement:

                  "(s) SUPPLEMENTAL INVENTORY REPORTS. Within 20 days after the
         end of each month or more frequently if the Lender so requires, (i) a
         summary report of the Borrowers' work-in-process and finished goods
         inventory that are covered by purchased orders (including a detailed
         report on the amount of Eligible Insured Inventory); (ii) a report that
         summarizes the insurance coverage for Eligible Insured Inventory on a
         customer-by-customer basis, together with the insurance coverage limit
         for each such customer, the accounts receivable balance for each such
         customer, and the amount of Eligible Insured Inventory supported by
         purchase orders for each such customer; and (iii) an order backlog
         report."

5. NO OTHER CHANGES. Except as explicitly amended or waived by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.

6. FEES.


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         6.1 ACCOMMODATION FEE. The Borrowers shall pay the Lender as of the
date hereof a fully-earned and non-refundable fee in the amount of $2,500 in
consideration of the Lender's execution and delivery of this Amendment (the
"ACCOMMODATION FEE").

         6.2 FORBEARANCE FEE. The Borrowers shall pay the Lender a forbearance
fee in the amount of $18,750 ("FORBEARANCE Fee"), which fee shall be (i) in
addition to the Accommodation Fee referred to in Section 5.1 of this Amendment,
(ii) deemed fully-earned and non-refundable as of the date of this Amendment,
and (iii) due and payable in accordance with the following schedule: (x) $15,000
on October 31, 2007, (y) $1,875 on November 30, 2007, and (z) $1,875 on December
31, 2007; provided that, notwithstanding the foregoing, any remaining unpaid
portion of the Forbearance Fee shall be immediately due and payable in full upon
the occurrence of the Forbearance Termination Date.

7. CONDITIONS PRECEDENT. This Amendment shall be effective when the Lender shall
have received and accepted an executed original of this Amendment, together with
each of the following, each in substance and form acceptable to the Lender in
its sole discretion:

         7.1 Payment of the Accommodation Fee described in Section 5.1 of this
Amendment; and

         7.2 Such other matters as the Lender may require.

8. COVENANTS; CONDITIONS SUBSEQUENT. The Borrowers shall deliver the following
items to the Lender no later than October 31, 2007, each of which shall be in
form and substance acceptable to the Lender:

         8.1 The Acknowledgment and Agreement of Subordinated Creditors set
forth at the end of this Amendment, duly executed by the Subordinated Creditors;
and

         8.2 A Certificate of the Secretary of each Borrower certifying as to
(i) the resolutions of the board of directors of such Borrower approving the
execution and delivery of this Amendment, (ii) the fact that the articles of
incorporation and bylaws of such Borrower, which were certified and delivered to
the Lender pursuant to the Certificate of Authority of such Borrower's secretary
or assistant secretary dated December 1, 2006, continue in full force and effect
and have not been amended or otherwise modified except as set forth in the
Certificate to be delivered, and (iii) certifying that the officers and agents
of such Borrower who have been certified to the Lender, pursuant to the
Certificate of Authority of such Borrower's secretary or assistant secretary
dated December 1, 2006, as being authorized to sign and to act on behalf of such
Borrower continue to be so authorized or setting forth the sample signatures of
each of the officers and agents of such Borrower authorized to execute and
deliver this Amendment and all other documents, agreements and certificates on
behalf of such Borrower.


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         The Borrowers failure to timely deliver the items described in the
foregoing Sections 7.1 and 7.2 shall constitute an immediate Event of Default
with no applicable cure period.

9. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents and warrants
to the Lender as follows:

         9.1 Such Borrower has all requisite power and authority to execute this
Amendment and any other agreements or instruments required hereunder and to
perform all of its obligations hereunder, and this Amendment and all such other
agreements and instruments has been duly executed and delivered by such Borrower
and constitute the legal, valid and binding obligation of such Borrower,
enforceable in accordance with its terms.

         9.2 The execution, delivery and performance by such Borrower of this
Amendment and any other agreements or instruments required hereunder have been
duly authorized by all necessary corporate action and do not (i) require any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any
provision of any law, rule or regulation or of any order, writ, injunction or
decree presently in effect, having applicability to such Borrower, or the
articles of incorporation or by-laws of such Borrower, or (iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which such Borrower is
a party or by which it or its properties may be bound or affected.

         9.3 All of the representations and warranties contained in Article V of
the Credit Agreement are correct on and as of the date hereof as though made on
and as of such date, except (i) to the extent that such representations and
warranties relate solely to an earlier date, and (ii) that the Designated Events
of Default have occurred.

10. REFERENCES. All references in the Credit Agreement to "this Agreement" shall
be deemed to refer to the Credit Agreement as amended hereby; and any and all
references in the Security Documents to the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby.

11. NO OTHER WAIVER. The execution of this Amendment and the acceptance of all
other agreements and instruments related hereto shall not be deemed to be a
waiver of any Default or Event of Default under the Credit Agreement (including,
but not limited to, the Designated Events of Default) or a waiver of any breach,
default or event of default under any Security Document or other document held
by the Lender, whether or not known to the Lender and whether or not existing on
the date of this Amendment.

12. RELEASE. The Borrowers, and each Subordinated Creditor signing the
Acknowledgment and Agreement of Subordinated Creditors set forth below, hereby
absolutely and unconditionally release and forever discharge the Lender, and any
and all participants, parent corporations, subsidiary corporations, affiliated


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corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrowers or each Subordinated Creditor has had, now has or has made claim to
have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

13. COSTS AND EXPENSES. The Borrowers hereby reaffirm their agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrowers specifically
agree to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrowers
hereby agree that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrowers, make a loan to
the Borrowers under the Credit Agreement, or apply the proceeds of any loan, for
the purpose of paying any such fees, disbursements, costs and expenses and the
Accommodation Fee and Forbearance Fee required under Sections 5.1 and 5.2 of
this Amendment.

14. MISCELLANEOUS. This Amendment and the Acknowledgment and Agreement of
Subordinated Creditors may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which counterparts, taken together, shall constitute one and the same
instrument.

                          [Signatures on the next page]















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




                                    WELLS FARGO BANK, NATIONAL ASSOCIATION

                                    By /s/ Vincent L. Maddela
                                             Vincent L. Maddela
                                             Its Vice President



                                    EMRISE CORPORATION

                                    By /s/ Carmine T. Oliva
                                       ----------------------------------------
                                             Its President and Chief
                                             Executive Officer



                                    EMRISE ELECTRONICS CORPORATION

                                    By /s/ Carmine T. Oliva
                                       ----------------------------------------
                                             Its Chief Executive Officer



                                    RO ASSOCIATES INCORPORATED

                                    By /s/ Carmine T. Oliva
                                       ----------------------------------------
                                             Its Chief Executive Officer



                                    CXR LARUS CORPORATION

                                    By /s/ Carmine T. Oliva
                                       ----------------------------------------
                                             Its Chief Executive Officer



                                       S-1



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ACKNOWLEDGMENT AND AGREEMENT OF SUBORDINATED CREDITORS

                  The undersigned, each a subordinated creditor of Emrise
Corporation, Emrise Electronics Corporation, RO Associates Incorporated, and CXR
Larus Corporation (collectively, the "BORROWERS") to Wells Fargo Bank, National
Association (the "LENDER"), acting through its Wells Fargo Business Credit
operating division, pursuant to a Subordination Agreement to which it is a party
dated December 1, 2006 (each, a "SUBORDINATION AGREEMENT"), hereby (i)
acknowledges receipt of the foregoing Amendment; (ii) consents to the terms
(including without limitation the release set forth in Section 12 of the
Amendment) and execution thereof; (iii) reaffirms all obligations to the Lender
pursuant to the terms of such Subordination Agreement; and (iv) acknowledges
that the Lender may amend, restate, extend, renew or otherwise modify the Loan
Documents and any indebtedness or agreement of the Borrowers, or enter into any
agreement or extend additional or other credit accommodations, without notifying
or obtaining the consent of the undersigned and without impairing the
obligations of the undersigned under such Subordination Agreement.




                                    ____________________________________________
                                    NOEL MCDERMOTT, trustee of the Noel C.
                                    McDermott Revocable Living Trust dated
                                    December 18, 1995




                                    ____________________________________________
                                    WARREN P. YOST, co-trustee Under Declaration
                                    of Trust dated March 9, 1988




                                    ____________________________________________
                                    GAIL A. YOST, co-trustee Under Declaration
                                    of Trust dated March 9, 1988