|
<PAGE>
EXHIBIT 10.1
FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND WAIVER OF DEFAULTS
THIS FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND
WAIVER OF DEFAULTS (the "Amendment"), dated August _13_, 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
(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 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. The Borrowers have requested that (i) certain amendments be
made to the
Credit Agreement, and (ii) certain Events of Default be waived,
both of which
the Lender is willing to agree to pursuant to the terms and
conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants and agreements herein contained, it is agreed as
follows:
1. Section 6.2(a) of the Credit Agreement is hereby deleted
in
its entirety and restated as follows:
"(a) MINIMUM BOOK NET WORTH. The Borrowers, on a
consolidated basis, will maintain, during each month
described
below, their Book Net Worth, determined as of the end of
each
calendar month, in an amount not less than the amount set
forth for each such period:
1
<PAGE>
Period Minimum Book Net Worth
------ ----------------------
Calendar month ending June 30, 2007, The sum of (i) $23,000,000
and
and each calendar month thereafter: (ii) 90% of Borrowers'
consolidated Net Income for each
calendar quarter ending on or
after September 30, 2007, but
only to the extent such Net
Income for each such quarter is
positive.
Borrowers' Book Net Worth calculation shall be adjusted by
Lender to eliminate any foreign translation adjustments
occurring on or after June 30, 2007. The foregoing minimum
Book Net Worth for Borrowers shall be adjusted by Lender on
an
annual basis for the calendar year ending December 31, 2008,
and continuing each year thereafter, such that the minimum
required Book Net Worth shall be the greater of (i) the
required Book Net Worth determined in accordance with the
above requirements as if no adjustment had been made, and
(ii)
an amount equal to the actual Book Net Worth of the
Borrowers
as determined by Borrowers' audited consolidated year-end
financial statements less $500,000."
2. Section 6.2(b) of the Credit Agreement is hereby deleted
in
its entirety and restated as follows:
"(b) MINIMUM NET INCOME. The Borrowers will achieve,
for each year to date period described below, determined as
of
the end of such period, Net Income of not less than the
amount
set forth for each such period (numbers appearing between
"( )" are negative):
Period Minimum Net Income
------ ------------------
January 1, 2007 through June 30, 2007 ($1,515,000)
January 1, 2007 through July 31, 2007 ($1,430,000)
January 1, 2007 through August 31, 2007 ($1,290,000)
January 1, 2007 through September 30, 2007 ($1,150,000)
January 1, 2007 through October 31, 2007 ($715,000)
January 1, 2007 through November 30, 2007 ($280,000)
January 1, 2007 through December 31, 2007 $100,000
2
<PAGE>
Borrowers' Net Income calculation shall be adjusted by
Lender
to eliminate any foreign translation adjustments occurring
on
or after June 30, 2007."
3. Section 6.2(c) of the Credit Agreement is hereby deleted
in
its entirety and restated as follows:
"(c) MINIMUM DEBT SERVICE COVERAGE RATIO. The
Borrowers, on a consolidated basis, will maintain a Debt
Service Coverage Ratio, determined as at the end of each
calendar quarter for the period indicated below, of not less
than the ratio set forth for each such period:
Minimum Debt Service
Test Dates/Periods Coverage Ratio
------------------ --------------
December 31, 2007, and the last day of each calendar 1.20 to
1.00
quarter thereafter, for the four quarter period ending on
the last day of such calendar quarter.
4. 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.
5. WAIVER OF DEFAULTS. The Borrowers are in default of the
following provisions of the Credit Agreement with respect to the
calendar months
ending April 30, 2007 and May 31, 2007 (collectively, the
"Existing Defaults"):
<TABLE>
-------------------------
----------------------------------------------- ------------------
-------------------------
Required
Section/Covenant Test Date/Period Performance Actual
Performance
-------------------------
----------------------------------------------- ------------------
-------------------------
<S> <C> <C> <C>
Section 6.2(a) Calendar month ending April 30, 2007 $26,900,000
$23,433,000
-------------------------
----------------------------------------------- ------------------
-------------------------
Section 6.2(a) Calendar month ending May 31, 2007 $26,900,000
$23,251,000
-------------------------
----------------------------------------------- ------------------
-------------------------
</TABLE>
Upon the terms and subject to the conditions set forth in this
Amendment, the
Lender hereby waives the Existing Defaults. This waiver shall be
effective only
in this specific instance and for the specific purpose for which
it is given,
and this waiver shall not entitle the Borrowers to any other or
further waiver
in any similar or other circumstances.
3
<PAGE>
6. AMENDMENT FEE. The Borrowers shall pay the Lender as of
the
date hereof a fully-earned and non-refundable fee in the amount
of $10,000 in
consideration of the Lender's execution and delivery of this
Amendment.
7. CONDITIONS PRECEDENT. This Amendment, and the waiver set
forth in Section 5 of this Amendment, shall be effective when
the Lender shall
have
| 
