Document:

EXHIBIT
10.1

 

“RCT” means the
material omitted has been filed separately with the Securities and Exchange
Commission with an application requesting confidential treatment.

 

TWENTY-SECOND AMENDMENT
TO

LEASE
AND SUBLEASE AGREEMENT

 

THIS
TWENTY-SECOND AMENDMENT TO LEASE AND SUBLEASE AGREEMENT (“Twenty-Second Amendment”) is made and
entered effective the 30th day of June, 2009, by and between SMITH’S FOOD & DRUG CENTERS, INC.,
an Ohio corporation qualified to do business in Nevada (hereinafter called “Smith’s”) and HERBST GAMING, INC. a Nevada corporation, and MARKET GAMING, INC., a Nevada corporation
(hereinafter collectively called “Herbst”),
successor to ANCHOR COIN, a
licensed slot route operator in the State of Nevada (hereinafter called “Anchor”).

 

WITNESSETH:

 

WHEREAS, Smith’s and Anchor entered into that
certain Lease and Sublease Agreement dated July 28, 1993, whereby Smith’s
leases or subleases space to Anchor within those certain properties listed on Exhibit “A”
to the Agreement and identified as either “Leased Properties” or “Owned
Properties,” for the operation of certain gaming devises, which Agreement was
amended by that certain First Amendment to Lease and Sublease Agreement dated June 30,
1994; that certain Second Amendment to Lease and Sublease Agreement dated January 25,
1995; that certain Third Amendment to Lease and Sublease Agreement dated March 28,
1995; that certain Fourth Amendment to Lease and Sublease Agreement dated February 27,
1996; that certain Fifth Amendment to Lease and Sublease Agreement dated April 26,
1996; that certain Sixth Amendment to Lease and Sublease Agreement dated November 13,
1996; that certain Seventh Amendment to Lease and Sublease Agreement dated February 21,
1997; that certain Eighth Amendment to Lease and Sublease Agreement dated December 19,
1997; that certain Ninth Amendment to Lease and Sublease Agreement dated August 4,
1998; that certain Tenth Amendment to Lease and Sublease Agreement dated September 28,
1998; that certain Eleventh Amendment to Lease and Sublease Agreement dated May 3,
1999; that certain Twelfth Amendment to Lease and Sublease Agreement dated March 29,
2000: that certain Thirteenth Amendment to Lease and Sublease Agreement dated January 12,
2001; that certain First Affiliate Amendment to Lease and Sublease Agreement
dated August 23, 2002; that certain Fourteenth Amendment to Lease and
Sublease Agreement dated October 9, 2002; that certain Fifteenth Amendment
to Lease and Sublease Agreement dated August 29, 2003; that certain
Sixteenth Amendment to Lease and Sublease Agreement dated December 2,
2003; that certain Seventeenth Amendment to Lease and Sublease Agreement dated March 12,
2004; that certain Eighteenth Amendment to Lease and Sublease Agreement dated October 5,
2004; that certain Nineteenth Amendment to Lease and Sublease Agreement dated April 6,
2005; that certain Twentieth Amendment to Lease and Sublease Agreement dated October 17,
2005; and that certain Twenty-First Amendment to Lease and Sublease Agreement
dated July 25, 2006 (collectively, the “Agreement”); and

 

WHEREAS, Anchor assigned all of its rights,
title, and interest in the Agreement to Herbst by the certain Asset Purchase
Agreement dated November 11, 2002; and

 

WHEREAS, Smith’s and Herbst now desire to
further amend the Agreement as more fully set forth hereinafter and for Herbst
to assume the Agreement as provided for in 11 U.S.C 365 (the “Bankruptcy Code”);

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements contained herein, Smith’s
and Herbst hereby agree as follows:

 

1.             Term.  Notwithstanding anything contained in the
Agreement, the Term of the Agreement is hereby extended to and including RCT.

 

2.             Rent.  Herbst agrees to pay Smith’s as monthly
rental for the use and occupancy of each of the Supermarkets and the exclusive
right to operate Gaming Devices in each of the Supermarkets listed, for each of
the Lease Months (“Lease Months”) the rental specified opposite such
Supermarket on Exhibit “A” attached hereto and incorporated herein by
reference (the “Rent”).

 

Commencing January 1,
2011, and each calendar year thereafter, the Rent paid by Herbst to Smith’s
shall be RCT for all stores listed on Exhibit A RCT.  In no event shall Rent be decreased for any
store.  Thus, for example, if RCT for all
stores in 2010 is RCT, then, beginning January 1, 2011, the Rent for each
store shall be RCT.  Conversely, if RCT
in 2010 is RCT, then Rent will not be adjusted. 
The term “RCT” shall mean RCT.

 

In order to determine
RCT, Herbst will provide to RCT approved by Smith’s a detailed listing of RCT.
Any new Supermarkets opened during a year will not be included in this listing
for purposes of determining RCT for that year, but they shall be included for
each full calendar year they are in operation. 
Herbst shall also provide to RCT a detailed listing of RCT, which shows
RCT for all Supermarkets for RCT and RCT for all Supermarkets RCT.

 

 

The RCT shall prove the RCT
of RCT for all Supermarkets for each calendar year and RCT for all
Supermarkets, and shall confirm in writing to Herbst and Smith’s RCT for each
calendar year.  Smith’s shall be entitled
to and shall be provided RCT, but not RCT by RCT.

 

Any increase in Rent
pursuant to this paragraph 2 shall be calculated within ninety (90) days
following the end of each calendar year and shall be paid retroactively as of January 1
of each year.   The Rent for any New
Supermarket shall be subject to increase after it has been in operation for a
full calendar year, even though RCT will not be included in the RCT of that
year for purposes of comparing against the prior year.

 

3.             RCT.  In addition to the Rent under the Agreement,
Herbst shall pay to Smith’s the sum of RCT upon execution of this Twenty-Second
Amendment (“RCT”).

 

4.             Additional
Consideration.  As
additional consideration, Herbst shall, upon execution of this Twenty-Second
Amendment, release all of the remaining funds currently held as a Security
Deposit by Smith’s, pursuant to Section 5 of the Agreement, which amount
totals RCT.

 

5.             Change Persons and
Jackpot Payouts.  Notwithstanding
anything contained in Section 11 of the Agreement, should the Nevada
Gaming Control Board allow Herbst to reduce hours of change persons or allow
for their use to be discontinued altogether, then Herbst shall be allowed to do
so.

 

6.             New Supermarkets.  In addition to the Rent called for in the
Agreement, as it may be adjusted pursuant to paragraph 2 of this Twenty-Second
Amendment, Herbst shall pay to Smith’s, for each new supermarket, a pro rata
amount of RCT, up to a maximum of RCT per new Supermarket (the “New Supermarket
RCT”).  The actual amount of the New
Supermarket RCT payable for any new Supermarket shall be based on the total
number of months remaining on the Term at the time of commencement of gaming
operations at that specific new Supermarket divided by RCT, multiplied by
RCT.  Thus, for example, for a new
Supermarket commencing gaming operations in January 2011, Herbst would pay
to Smith’s the amount of RCT.  This New
Supermarket RCT shall be payable upon commencement of gaming operations at each
specific new Supermarket.

 

7.             Demised Premises
Upgrade.  On or before January 1,
2011, Herbst shall, at its own expense, upgrade all of the Demised Premises so
that they are current, clean and attractive.

 

8.             Bankruptcy Court
Approval.  Smith’s
understands that Herbst is a debtor-in-possession under Chapter 11 proceedings
before the United States Bankruptcy Court for the District of Nevada (“Bankruptcy
Court”), being Case No.               . 
As such, Smith’s acknowledges and understands that Herbst intends to seek the
approval of this Twenty-Second Amendment on the part of Herbst by the
Bankruptcy Court and the assumption of the Agreement pursuant to Section 365
of the Bankruptcy Code.  Herbst agrees to file a motion to approve this
Twenty-Second Amendment with the Bankruptcy Court pursuant to Section 363
of the Bankruptcy Court and to assume the Agreement pursuant to Section 365
of the Bankruptcy Court RCT.  The Effective Date of this Twenty-Second
Amendment shall be the first business day following the date the Bankruptcy
Court order becomes final.  Smith’s
agrees to reasonably cooperate with and assist Herbst in this regard.  Should RCT, then Smith’s shall return RCT
previously paid by Herbst to Smith’s under paragraph 3 herein and shall release
the additional consideration previously released by Herbst to Smith’s under
paragraph 4, which shall then be retained by Smith’s as a Security
Deposit.  Additionally, this
Twenty-Second Amendment shall be null and void and the parties shall continue
to be bound by the July 28, 1993 Agreement, as amended.

 

9.             Notice.   All notices or demands required or permitted
to be given or served pursuant to the Agreement shall be deemed to have been
given or served only if in writing forwarded by registered or certified mail~
postage prepaid, and addressed as follows:

 

	
  To Smith’s

  	
   

  	
  Smith’s Food &
  Drug Center, Inc

  1550 South Redwood Road

  Salt Lake City, Utah
  89104

   

  
	
  To Herbst

  	
   

  	
  Market
  Gaming, Inc.

  3440 W. Russell Road

  Las Vegas, NV 89118

  Attn: General Counsel

   

  

 

Either party hereto may
change such address by giving written notice to the other party

 

 

10.           Miscellaneous.  This Twenty-Second Amendment shall be binding
on the parties hereto and their respective successors and assigns.  The individuals executing this Twenty-Second
Amendment represent and warrant that they are duly empowered so to do and have
authority to bind their respective party. 
The Agreement remains in full force and effect and remains unmodified
except to the extent specifically amended herein.  Unless otherwise specified herein, the
capitalized terms of this Twenty-Second Amendment shall have the same meaning
as set forth in the Agreement.

 

 

IN
WITNESS WHEREOF,
the parties have executed this Twenty-Second Amendment on the date and year
first above written.

 

	
   

  	
  SMITH’S
  FOOD & DRUG CENTERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kyle McKay

  
	
   

  	
  Its:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HERBST
  GAMING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Troy D. Herbst

  
	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MARKET
  GAMING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Troy D. Herbst

  
	
   

  	
  Its:

  	
  Secretary / Treasurer

  

 

 

EXHIBIT A

 

	
  Location
  - Address

  	
   

  	
  CITY

  	
   

  	
  ZIP

  	
   

  	
  Monthly

  Rental $

  
	
  0 - Smiths Advertising
  allowance, Advertising Allowance,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  311 – Smith’s
  Food & Drug #311, 8050 S Rainbow, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89139

  	
   

  	
  RCT

  
	
  344 – Smith’s
  Food & Drug #344, 175 Lemmon Drive, Reno

  	
   

  	
  Reno

  	
   

  	
  89506

  	
   

  	
  RCT

  
	
  356 – Smith’s
  Food & Drug #356, 599 East William Street, Carson City

  	
   

  	
  Carson City

  	
   

  	
  89702

  	
   

  	
  RCT

  
	
  357 – Smith’s
  Food & Drug #357, 1255 Baring Boulevard, Sparks

  	
   

  	
  Sparks

  	
   

  	
  89431

  	
   

  	
  RCT

  
	
  378 – Smith’s
  Food & Drug #378, 750 South Meadows Parkway, Reno

  	
   

  	
  Reno

  	
   

  	
  89521

  	
   

  	
  RCT

  
	
  388 – Smith’s
  Food & Drug #388, 1740 Mountain City Highway, Elko

  	
   

  	
  Elko

  	
   

  	
  89801

  	
   

  	
  RCT

  
	
  389 – Smith’s
  Food & Drug #389, 1341 Highway 395, Gardnerville

  	
   

  	
  Gardnerville

  	
   

  	
  89410

  	
   

  	
  RCT

  
	
  390 – Smith’s
  Food & Drug #390, 1855 West Wendover Boulevard, Wendover

  	
   

  	
  Wendover

  	
   

  	
  89883

  	
   

  	
  RCT

  
	
  392 – Smith’s
  Food & Drug #392, 2200 Highway 50 East, Dayton

  	
   

  	
  Dayton

  	
   

  	
  89403

  	
   

  	
  RCT

  
	
  332 – Smith’s
  Food & Drug #332, 7130 North Durango Drive, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89149

  	
   

  	
  RCT

  
	
  334 – Smith’s
  Food & Drug #334, 2255 E. Centennial Parkway, North Las Vegas

  	
   

  	
  North Las Vegas

  	
   

  	
  89081

  	
   

  	
  RCT

  
	
  338 – Smith’s
  Food & Drug #338, 6855 Aliante Parkway, North Las Vegas

  	
   

  	
  North Las Vegas

  	
   

  	
  89084

  	
   

  	
  RCT

  
	
  341 – Smith’s
  Food & Drug #341, 601 South Highway 160, Pahrump

  	
   

  	
  Pahrump

  	
   

  	
  89041

  	
   

  	
  RCT

  
	
  342 – Smith’s
  Food & Drug #342, 350 North Sandhill Boulevard, Mesquite

  	
   

  	
  Mesquite

  	
   

  	
  89024

  	
   

  	
  RCT

  
	
  345 – Smith’s Food & Drug #345, 5564 Camino El Norte, North
  Las Vegas

  	
   

  	
  North Las Vegas

  	
   

  	
  89031

  	
   

  	
  RCT

  
	
  346 – Smith’s
  Food & Drug #346, 10616 South Eastern Avenue, Henderson

  	
   

  	
  Henderson

  	
   

  	
  89012

  	
   

  	
  RCT

  
	
  347 – Smith’s
  Food & Drug #347, 9851 West Charleston, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89117

  	
   

  	
  RCT

  
	
  348 – Smith’s
  Food & Drug #348, 1000 North Green Valley Parkway, Henderson

  	
   

  	
  Henderson

  	
   

  	
  89014

  	
   

  	
  RCT

  
	
  349 – Smith’s
  Food & Drug #349 , 10100 West Tropicana Ave., Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89147

  	
   

  	
  RCT

  
	
  350 – Smith’s
  Food & Drug #350, 4600 East Sunset Road, Henderson

  	
   

  	
  Henderson

  	
   

  	
  89014

  	
   

  	
  RCT

  
	
  351 – Smith’s
  Food & Drug #351, 6130 West Tropicana Avenue, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89103

  	
   

  	
  RCT

  
	
  354 – Smith’s
  Food & Drug #354, 3850 East Flamingo Road, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89121

  	
   

  	
  RCT

  
	
  355 – Smith’s
  Food & Drug #355, 450 North Nellis, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89110

  	
   

  	
  RCT

  
	
  358 – Smith’s
  Food & Drug #358, 2540 South Maryland Parkway, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89109

  	
   

  	
  RCT

  
	
  361 – Smith’s Store
  #361, 4700 West Ann Road, North Las Vegas

  	
   

  	
  North Las Vegas

  	
   

  	
  89031

  	
   

  	
  RCT

  
	
  363 – Smith’s Store
  #363 , 4015 South Buffalo Drive, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89147

  	
   

  	
  RCT

  
	
  364 - Smith’s
  Food & Drug #364, 10600 Southern Highlands Parkway, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89141

  	
   

  	
  RCT

  
	
  365 – Smith’s Store
  #365, 6150 West Flamingo Road, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89103

  	
   

  	
  RCT

  
	
  366 – Smith’s Store
  #366, 55 South Valley Verde Drive, Henderson

  	
   

  	
  Henderson

  	
   

  	
  89012

  	
   

  	
  RCT

  
	
  370 – Smith’s Store
  #370, 3160 North Rainbow Blvd., Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89107

  	
   

  	
  RCT

  
	
  371 – Smith’s
  Food & Drug #371, 8555 West Sahara Avenue, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89117

  	
   

  	
  RCT

  
	
  372 – Smith’s Store
  #372, 1421 North Jones Boulevard, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89108

  	
   

  	
  RCT

  
	
  376 – Smith’s
  Food & Drug #376, 2385 East Windmill Lane, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89123

  	
   

  	
  RCT

  
	
  377 – Smith’s
  Food & Drug #377, 850 South Rancho Drive, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89106

  	
   

  	
  RCT

  
	
  381 – Smith’s
  Food & Drug #381, 830 South Boulder Highway, Henderson

  	
   

  	
  Henderson

  	
   

  	
  89015

  	
   

  	
  RCT

  
	
  383 – Smith’s
  Food & Drug #383, 4440 North Rancho Drive, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89130

  	
   

  	
  RCT

  
	
  385 – Smith’s
  Food & Drug #385 , 2211 North Rampart Blvd., Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89128

  	
   

  	
  RCT

  
	
  394 – Smith’s
  Food & Drug #394, 9750 South Maryland Parkway, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89123

  	
   

  	
  RCT

  
	
  396 – Smith’s Food &
  Drug #396, 9350 West Flamingo Road, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89147

  	
   

  	
  RCT

  
	
  399 – Smith’s
  Food & Drug #399, 4840 West Desert Inn Road, Las Vegas

  	
   

  	
  Las Vegas

  	
   

  	
  89102

  	
   

  	
  RCTExhibit 10.3

 

AMENDMENT
NUMBER 5 TO LOAN DOCUMENTS

 

THIS
AMENDMENT NUMBER 5 TO LOAN DOCUMENTS (this “Fifth Amendment”), is entered into as
of August 14, 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) and that certain
Amendment Number 4 to Loan Documents, dated April 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 of the following
definitions:

 

“Fifth
Amendment” means that certain Amendment Number 5 to Loan Documents, dated
as of August 14, 2009, by and among Borrowers, Agent and the Lenders party
thereto.

 

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

 

(b)           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
September 1, 2009, and on October 1, 2009, equal installments of $20,000;

 

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

 

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

 

(iv)          commencing
on January 1, 2010, and continuing on the first day of each of the 10
consecutive months thereafter, equal installments of $120,000.”

 

(c)           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
September 1, 2009, and on October 1, 2009, equal installments of $55,000;

 

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

 

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

 

(iv)          commencing
on January 1, 2010, and continuing on the first day of each of the 10
consecutive months thereafter, equal installments of $166.666.67.”

 

(d)           Section 2.4(c)(i) of
the Credit Agreement is hereby amended by adding the following clause at the
end of the first sentence of such Section 2.4(c)(i): “; provided,
however, that in connection with any such sales or dispositions that
occur subsequent to Fifth Amendment Effective Date and prior to January 1,
2010, Borrowers shall prepay the outstanding Obligations in an amount equal to
75% of the Net Cash Proceeds received in connection with such sales or dispositions.”

 

(e)           Section 5.22
of the Credit Agreement is hereby amended and restated as follows:

 

“5.22       Additional Capital.  On or prior to December 31, 2009,
Borrowers shall provide evidence to Agent that Borrowers shall have received a
minimum of Three Million Dollars ($3,000,000) in Net Cash Proceeds (after the
payment of all underwriting commissions, investment banking fees and other fees
and expenses associated therewith) from the 

 

2

 

sale of Borrowers’ Stock.  Notwithstanding anything to the contrary
contained herein, including but not limited to the provisions of Section 2.4(c) of
this Agreement, Borrower shall apply a portion of such Net Cash Proceeds to pay
down a portion of the Obligations, which payments shall be applied according to
the terms of this Agreement, based on the following schedule:

 

(a)           with respect to the first $3,000,000
of Net Cash Proceeds, fifty percent (50%) of such Net Cash Proceeds shall be
applied to the Obligations; and

 

(b)           with respect to the amount of Net
Cash Proceeds in excess of the first $3,000,000, thirty percent (30%) of such
Net Cash Proceeds shall be applied to the Obligations.”

 

(f)            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 March 2009

  	
   

  	
  $

  	
  3,400,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in June 2009

  	
   

  	
  $

  	
  4,200,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in September 2009

  	
   

  	
  N/A

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in December 2009

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in March 2010

  	
   

  	
  $

  	
  4,600,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in June 2010

  	
   

  	
  $

  	
  4,200,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in September 2010

  	
   

  	
  $

  	
  5,500,000

  	
   

  
	
  For Borrowers’
  fiscal quarter

  ending in December 2010

  	
   

  	
  $

  	
  3,800,000

  	
  ”

  

 

3

 

3.             CONDITIONS PRECEDENT TO THIS FIFTH AMENDMENT.  The satisfaction of each of the following
shall constitute conditions precedent to the effectiveness of this Fifth 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 Fifth
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 Fifth 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 Agent, in immediately available funds, an amount equal to
$100,000, which amount represents a fee in consideration of the Lenders’
actions taken in connection with this Fifth Amendment; and

 

(e)           No
Material Adverse Change shall have occurred.

 

4.             CONSTRUCTION.  THIS FIFTH 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.

 

5.             ENTIRE AMENDMENT; EFFECT OF FIFTH AMENDMENT.  This Fifth 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 Fifth
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 Fifth Amendment conflict with those of
the Credit Agreement or other Loan Documents, the terms and provisions of this
Fifth Amendment shall control.  This
Fifth Amendment is a Loan Document.

 

6.             COUNTERPARTS; TELEFACSIMILE EXECUTION.  This Fifth 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 Fifth
Amendment by signing any such counterpart. 
Delivery of an executed counterpart of this Fifth Amendment by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Fifth Amendment.  Any
party delivering an executed counterpart of this Fifth Amendment by telefacsimile
also shall deliver an original executed counterpart of this Fifth Amendment,
but the failure to deliver an original executed counterpart shall not affect
the validity, enforceability, and binding effect of this Fifth Amendment.

 

4

 

7.             MISCELLANEOUS.

 

(a)           Upon
the effectiveness of this Fifth 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 Fifth Amendment.

 

(b)           Upon
the effectiveness of this Fifth 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 Fifth Amendment.

 

[signatures on next page]

 

5

 

IN WITNESS WHEREOF, the
parties have caused this Fifth 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

  
	
  Title:

  	
  Chief Executive
  Officer

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CXR
  LARUS CORPORATION

  	
   

  	
  RO
  ASSOCIATES INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carmine T.
  Oliva

  	
   

  	
  By:

  	
  /s/ Carmine T.
  Oliva

  
	
  Title:

  	
  Chief Executive
  Officer

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CUSTOM
  COMPONENTS, INC.

  	
   

  	
  ADVANCED
  CONTROL COMPONENTS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Carmine T.
  Oliva

  	
   

  	
  By:

  	
  /s/ Carmine T.
  Oliva

  
	
  Title:

  	
  Chief Executive
  Officer

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GVEC
  RESOURCE IV INC.,

  as Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ signature
  illegible

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Representative

  

 

6

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