Exhibit 10.4

 

THIS SECURITY AGREEMENT IS OR WILL BE SUBJECT TO SUBORDINATION AGREEMENTS
BETWEEN COLLATERAL AGENT AND THE HOLDERS OF THE SENIOR INDEBTEDNESS

 

AMENDED AND RESTATED SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED SECURITY AGREEMENT (the “Security Agreement”), is made
as of August 31, 2010, by and among EMRISE Electronics Corporation, a New Jersey
corporation (“Borrower”), EMRISE Corporation, a Delaware corporation (“Parent”),
the Subsidiaries (as listed on Exhibit A), Charles S. Brand, an individual
(“Collateral Agent”), and the persons and entities listed on the Schedule of
Lenders attached hereto as Exhibit A (each, a “Lender” and collectively, the
“Lenders”).

 

R E C I T A L S

 

A.            Borrower and the Lenders are parties to that certain Stock
Purchase Agreement dated as of May 23, 2008 (the “Stock Purchase Agreement”)
relating to the purchase by Borrower of all of the issued and outstanding shares
of capital stock (collectively, the “Shares”) of (i) Advanced Control
Components, Inc., a New Jersey corporation (“ACC”) owned by Thomas P. M. Couse,
Joanne Couse and Michael Gaffney and (ii) Custom Components, Inc. owned by
Charles S. Brand.  As a result of the consummation of the Stock Purchase
Agreement, Borrower beneficially owned all of the capital stock of ACC.

 

B.            Pursuant to the terms of the Stock Purchase Agreement, Borrower
issued certain subordinated secured contingent promissory notes (as amended, are
referred to herein as the “Subordinated Contingent Notes”) to the Lenders to
satisfy a portion of the aggregate consideration to be paid by Borrower for the
purchase of the Shares.  The Subordinated Contingent Notes were amended in
November 2009 to add additional payment amounts, and to modify the payment date
and terms.  The Subordinated Contingent Notes have been amended by Amendment No.
2 of even date herewith.

 

C.            Parent, the ultimate parent of Borrower, delivered a Continuing
Guaranty dated August 20, 2008 (the “Guaranty”) in favor of the Lenders pursuant
to which the obligations of Borrower to the Lenders under the Subordinated
Contingent Notes were guaranteed by Parent.

 

D.            The Lenders subordinated the indebtedness owed to them under the
Subordinated Contingent Notes to the holder of the Senior Indebtedness pursuant
to that certain Subordination Agreement between the Collateral Agent and GVEC
Resource IV Inc. dated as of August 20, 2008 (the “GVEC Subordination
Agreement”).

 

E.             On June 7, 2010, Borrower entered into an agreement to sell its
direct and indirect interests in the Shares (the “Sale Transaction”).  In
connection with the Sale Transaction, the Borrower, Parent and the Lenders
entered into a Master Agreement, pursuant to which the Lenders agreed to release
their lien on all of the assets or property of ACC (the “Original Collateral”).

 

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E.             The parties desire to enter into this Amended and Restated
Security Agreement to grant the Collateral Agent, for the benefit of himself and
the Lenders, a security interest in the collateral described below as substitute
collateral for the Original Collateral.

 

F.             To perfect their grant of a security interest hereunder, each of
XCEL Power Systems, Ltd. and Pascall Electronics Limited will enter into an All
Assets Debenture dated as of the date hereof in favor of the Collateral Agent
(each, a “UK Debenture”).

 

G.            The Collateral Agent will enter into that certain Deed of
Priorities dated as of the date hereof between Lloyds TSB Commercial Finance
Limited, GVEC Resource IV, Inc., Collateral Agent and XCEL Power Systems, Ltd.
(the “XCEL Deed”) and that certain Deed of Priorities dated as of the date
hereof between Lloyds TSB Commercial Finance Limited, GVEC Resource IV, Inc.,
Collateral Agent and Pascall Electronics Limited (the “Pascall Deed” and
collectively with the GVEC Subordination Agreement and the XCEL Deed, the
“Subordination Agreements”).

 

H.            The Subordinated Contingent Note held by Michael Gaffney has been
paid in full and he is no longer a “Lender” hereunder.

 

NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.             Definitions and Interpretation.  Unless otherwise defined herein,
all other capitalized terms used herein and defined in the Subordinated
Contingent Notes shall have the respective meanings given to those terms in the
Subordinated Contingent Notes, and all terms defined in the New Jersey Uniform
Commercial Code (the “UCC”) shall have the respective meanings given to those
terms in the UCC.

 

2.             Grant of Security Interest.

 

2.1           To secure the Obligations as defined in Section 3 hereof, each of
the Subsidiaries hereby grants to Collateral Agent a continuing security
interest and lien in and to all of the assets and properties of the
Subsidiaries, whether now owned or existing or hereafter acquired or arising and
regardless of where located and all additions and accessions thereto,
substitutions and replacements therefor, and all proceeds thereof (the
“Collateral”), including, without limitation, the following property: all
tangible and intangible assets of the Subsidiaries, including, but not limited
to, all existing and future inventory, accounts, deposit accounts, accounts
receivable, furniture, fixtures, equipment, general intangibles, books and
records, patents, patent applications, trademarks, copyrights, trade secrets,
and any other property interest or proprietary right, as well as any document,
instrument or drawings embodying the same.

 

2.2           Borrower, Parent and each of the Subsidiaries hereby jointly and
severally warrant and represent to and covenant and agree with the Collateral
Agent and the Lenders that the continuing security interest and lien granted
pursuant to this Security Agreement is and shall at all times be a priority
security interest in the assets of each Subsidiary, subordinate only to Senior
Indebtedness.

 

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3.             Security for Obligations.  The obligations secured by this
Security Agreement (the “Obligations”) shall mean and include all obligations of
Borrower as provided in (i) the Subordinated Contingent Notes, (ii)  the Stock
Purchase Agreement, and (iii) all of the other Related Agreements (as such term
is defined in the Stock Purchase Agreement).

 

4.             Possession and Location of Collateral.  Unless and until any
default occurs hereunder as set forth in Section 11 hereof, each of the
Subsidiaries shall have possession of its Collateral for its use and enjoyment
in any lawful manner not inconsistent with this Security Agreement or the
Subordinated Contingent Notes.  The Collateral will be kept at any of Parent’s
place of business or the place of business of any of the Subsidiaries (or such
other places as any of Parent or the Subsidiaries customarily keeps the
Collateral) with respect to such Collateral and will not be moved therefrom
without the prior written consent of Collateral Agent, except that Parent and
the Subsidiaries may make sales of inventory items in the ordinary course of
business.  No Subsidiary shall replace or make material alterations in the
Collateral without the prior written consent of Collateral Agent.  The consent
of Collateral Agent required hereby shall not be unreasonably withheld.

 

5.             Financing Statements.  Concurrently with the execution of this
Security Agreement, each of the Subsidiaries shall execute and deliver to
Collateral Agent (a) the UCC-1 financing statement, or its foreign equivalent,
provided by Collateral Agent evidencing the Collateral Agent’s interest in the
Collateral and (b) a UCC-3 financing statement provided by Collateral Agent
evidencing Collateral Agent’s release of its lien on the Original Collateral. 
Collateral Agent hereby authorizes and directs each of Borrower and Parent to
file or cause to be filed the UCC-3 financing statement.

 

6.             Transfer, Taxes, Liens and Encumbrances.  Each of the
Subsidiaries represents and warrants that it has title to its respective
Collateral free and clear of any lien, security interest or encumbrance, except
for the security interests of the holders of the Senior Indebtedness and the
security interest created by this Security Agreement, and if such Subsidiary is
party to a UK Debenture, the applicable UK Debenture.  Title to the Collateral
will remain in and continue to be vested in each respective Subsidiary.  Each of
the Subsidiaries will defend its Collateral and will not sell, offer to sell or
otherwise transfer the Collateral, any portion thereof, or any interest therein,
without the prior written consent of Collateral Agent, except that Parent and
Subsidiaries may make sales of inventory items in the ordinary course of
business.  The consent of Collateral Agent required hereby shall not be
unreasonably withheld.  As applicable, Parent, Borrower or the Subsidiaries
shall pay all taxes, assessments and other charges made against the Collateral.

 

7.             Risk of Loss and Inspection of Collateral.  As applicable, Parent
or the Subsidiaries shall have all risk of loss of the Collateral, and each
Subsidiary will keep its Collateral in good order and repair.  Collateral Agent
shall have the right, at any reasonable time, to enter upon the premises where
the Collateral is located to examine and inspect the Collateral in person or by
agent.  Any refusal to permit such entry shall be a breach of this Security
Agreement.

 

8.             Insurance.  As applicable, Parent or the Subsidiaries shall keep
the Collateral insured, at its own expense, in an amount not less than its full
insurable value, against loss by fire, theft, vandalism and malicious mischief,
storm, earthquake and extended coverage, and

 

3

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shall cause the Lenders to be named as additional insured parties and loss
payees in such insurance, and furnish to Collateral Agent written evidence
thereof.

 

9.             Representations and Warranties.  Borrower, Parent and each of the
Subsidiaries hereby jointly and severally represent and warrant to Collateral
Agent and the Lenders that: (i) each of Borrower, Parent and the Subsidiaries
has full power and authority to enter into this Security Agreement (and, if
party to a UK Debenture, such UK Debenture) and to grant the security interest
and lien in and to the Collateral and has taken all proper and necessary actions
to authorize the execution, delivery and performance of this Security Agreement
(and, if party to a UK Debenture, such UK Debenture); (ii) that the Parent owns
one hundred percent (100%) of the issued and outstanding capital stock, directly
or indirectly, of the Borrower and each of the Subsidiaries; (iii) this
Agreement is valid and binding upon and enforceable against Borrower, Parent and
Subsidiaries, except as such enforceability may be limited by applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and general principles of equity; and (iv)
the making and performance of this Security Agreement (and if a party to a UK
Debenture, such UK Debenture) by Borrower, Parent and the Subsidiaries will not
conflict with their respective certificates of incorporation, bylaws, or other
organizational documents, breach or violate any law, statute, rule or regulation
of, or any judgment, order, decree, writ, injunction or award issued by any
governmental authority or violate or result in a default (immediately or with
the passage of time or notice or both) under any contract, indenture, agreement
or instrument to which Borrower, Parent or the Subsidiaries, as applicable, is a
party, or by which any of Borrower, Parent or the Subsidiaries is bound.

 

10.           Covenants.  Borrower, Parent and each of the Subsidiaries hereby
agree as follows:

 

10.1         (Liens on Collateral)  not to create, incur, assume or suffer to
exist any lien or security interest of any kind upon the Collateral other than
in favor of the holders of any Senior Indebtedness; provided that no additional
liens or security interest will be granted in favor of McDermott and Yost as
defined in the Note;

 

10.2         (Further Assurances)  that at any time and from time to time, at
Parent’s expense, Parent, Borrower and the Subsidiaries will promptly execute
and deliver all further instruments and documents and take all further action,
that may be necessary or desirable, or that Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Collateral Agent to exercise and
enforce Collateral Agent’s rights and remedies hereunder with respect to any
Collateral;

 

10.3         (Parent Financial Statements)  from and after the date hereof until
the Notes are paid in full, on a quarterly basis within five (5) business days
after the scheduled filing date (including any extensions pursuant to Rule
12b-25 of the Securities Exchange Act of 1934) for Parent’s Form 10-Q or Form
10-K, as applicable, with the Securities and Exchange Commission, Parent will
provide Collateral Agent with copies of Parent’s quarterly and annual financial
statements and any related notes;

 

10.4         (Parent, Borrower and Subsidiary Financial Statements)  from and
after the date hereof until the Notes are paid in full, on a quarterly basis
within forty-five (45)

 

4

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days after the end of each fiscal quarter, and within sixty (60) days after the
end of each fiscal year, Parent, Borrower and each Subsidiary will provide
Collateral Agent with copies of separate company quarterly and annual financial
statements and any related notes for each of Parent (only to the extent such
separate company financial statements may no be longer required to be filed with
the Securities and Exchange Commission), Borrower and each Subsidiary;

 

10.5         (Sale of Parent, Borrower or Subsidiaries).  in the event that
Parent, Borrower or any of the Subsidiaries or any assets of the Subsidiaries
(other than assets of the Subsidiaries sold in the ordinary course of business)
is proposed to be sold, including by way of stock sale, merger or otherwise, the
Parent shall provide notice to the Collateral Agent of such proposed sale
promptly and to the extent possible at least thirty (30) days prior to the
consummation thereof and in no event less than fourteen (14) days prior to the
consummation thereof; and

 

10.6         (Senior Indebtedness). on an aggregate basis, not to incur Senior
Indebtedness in an amount outstanding exceeding Fifteen Million Dollars
($15,000,000) without the prior written approval of the Lenders (which shall not
be unreasonably withheld) and, in no event, in an amount outstanding exceeding
Twenty Million Dollars ($20,000,000).

 

11.           Events of Default; Remedies.

 

11.1         Event of Default.  An Event of Default shall be deemed to have
occurred under this Security Agreement upon the occurrence and during the
continuance of an Event of Default (as defined in the Subordinated Contingent
Notes).

 

11.2         Rights Under the UCC.  In addition to all other rights granted
hereby and by the UK Debentures, and otherwise by law, subject to the
Subordination Agreements, Collateral Agent shall have, with respect to the
Collateral, the rights and obligations of a secured party under the UCC.

 

11.3         Notice, Etc.  In any case where notice of sale is required, ten
(10) days notice shall be deemed reasonable notice.  Subject to the
Subordination Agreements, Collateral Agent may have resort to the Collateral or
any portion thereof with no requirement on the part of Collateral Agent to
proceed first against any other Person (as defined in the Subordinated
Contingent Notes) or property.

 

11.4         Other Remedies.  Upon the occurrence and during the continuance of
an Event of Default, subject to the Subordination Agreements, at the request of
Collateral Agent, Parent, Borrower and each Subsidiary, as applicable, shall
assemble and make available to Collateral Agent all of the Collateral at a place
or places reasonably convenient to each of Borrower, Parent and the
Subsididaries, as applicable, and Collateral Agent; provided, however, that none
of Parent, Borrower or any Subsidiary shall be obligated under this Agreement to
ship any Collateral internationally.

 

11.5         Application of Collateral Proceeds.  Subject to the Subordination
Agreements, the proceeds and/or avails of the Collateral, or any part thereof,
and the proceeds and the avails of any remedy hereunder (as well as any other
amounts of any kind held by

 

5

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Collateral Agent at the time of, or received by Collateral Agent after, the
occurrence of an Event of Default) shall be paid to and applied as follows:

 

(a)           first, to the payment of reasonable costs and expenses, including
all amounts expended to preserve the value of the Collateral, of foreclosure or
suit, if any, and of such sale and the exercise of any other rights or remedies,
and of all proper fees, expenses, liability and advances, including reasonable
legal expenses and attorneys’ fees, incurred or made hereunder by Collateral
Agent;

 

(b)           second, to the payment to each Lender of the amount then owing or
unpaid on such Lender’s Subordinated Contingent Note, and in case such proceeds
shall be insufficient to pay in full the whole amount so due, owing or unpaid
upon such Subordinated Contingent Note, then its Pro Rata Share of the amount
remaining to be distributed (to be applied first to accrued interest and second
to outstanding principal); and

 

(c)           third, to the payment of the surplus, if any, to Borrower, its
successors and assigns, or to whomsoever may be lawfully entitled to receive the
same.

 

For purposes of this Security Agreement, the term “Pro Rata Share” shall mean,
when calculating a Lender’s portion of any distribution or amount, that
distribution or amount (expressed as a percentage) equal to a fraction (i) the
numerator of which is the outstanding principal amount of such Lender’s
Subordinated Contingent Note as set forth on Exhibit A hereto, and (ii) the
denominator of which is the aggregate outstanding principal amount of all
Subordinated Contingent Notes issued under the Stock Purchase Agreement as set
forth on Exhibit A hereto.  In the event that a Lender receives payments or
distributions in excess of its Pro Rata Share, then such Lender shall hold in
trust all such excess payments or distributions for the benefit of the other
Lenders and shall pay such amounts held in trust to such other Lenders upon
demand by such Lenders.

 

12.           Authorized Action by Collateral Agent.

 

(a)           Borrower, Parent and each of the Subsidiaries each hereby appoint
Collateral Agent as attorney-in-fact for each of Borrower, Parent and each
Subsidiary, respectively, with full authority in the place and stead of
Borrower, Parent and each Subsidiary, respectively, and in the name of Borrower,
Parent and each Subsidiary, as applicable, or otherwise, from time to time in
Collateral Agent’s discretion and to the full extent permitted by law to take
any action and to execute any instrument which Collateral Agent may deem
reasonably necessary or advisable to accomplish the purposes of this Security
Agreement in accordance with the terms and provisions hereof, including without
limitation, to receive, endorse and collect all instruments made payable to
Borrower, Parent or any Subsidiary representing any dividend, interest payment
or other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same.

 

(b)           This power of attorney is a power coupled with an interest and
shall be irrevocable.  The powers conferred on Collateral Agent hereunder are
solely to protect

 

6

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the Collateral Agent and Lenders’ interests in the Collateral and shall not
impose any duty upon Collateral Agent to exercise any such powers.  Collateral
Agent shall be accountable only for amounts that he actually receives as a
result of the exercise of such powers and in no event shall Collateral Agent or
any of his employees or agents be responsible to Borrower, Parent or any
Subsidiary for any act or failure to act, except for gross negligence or willful
misconduct.

 

13.           Collateral Agent.

 

13.1         Appointment.  The Lenders hereby appoint Charles S. Brand as
Collateral Agent for the Lenders under this Security Agreement (in such
capacity, the “Collateral Agent”) to serve from the date hereof until the
termination of this Security Agreement.

 

13.2         Powers and Duties of Collateral Agent, Indemnity by Lenders.

 

(a)           Each Lender hereby irrevocably authorizes the Collateral Agent to
take such action and to exercise such powers hereunder as provided herein,
together with such powers as are reasonably incidental thereto.  Collateral
Agent may execute any of his duties hereunder by or through agents or employees
at his discretion.

 

(b)           Upon the death or resignation of the Collateral Agent, the Lenders
shall appoint a successor collateral agent to act under the Subordinated
Contingent Notes and this Security Agreement. If no such successor collateral
agent shall have been so appointed by the Lenders and shall have accepted such
appointment within thirty (30) days after Collateral Agent’s death or giving of
notice of resignation as Collateral Agent, then Collateral Agent shall be deemed
to be Thomas P. M. Couse or his successor-in-interest to his Subordinated
Contingent Note.  Upon the acceptance of any appointment as successor collateral
agent hereunder by a successor collateral agent, such successor collateral agent
shall thereupon succeed to and become vested with all rights, powers,
privileges, duties and obligations of Collateral Agent hereunder, and the
Collateral Agent shall be discharged from his duties and obligations. After
Collateral Agent’s death or resignation hereunder as the Collateral Agent, the
provisions of this Section 13 shall continue in effect for his benefit in
respect of any actions taken or omitted to be taken by him while he was acting
as such Collateral Agent.

 

14.           Miscellaneous.

 

14.1         Notices.  Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
respective addresses of the parties as set forth on Exhibit A hereto or on the
register maintained by the Parent.  Any party hereto may by notice so given
change its address for future notice hereunder.  Notice shall conclusively be
deemed to have been given when received.

 

14.2         Nonwaiver.  No failure or delay on Borrower, Parent, a Subsidiary,
Collateral Agent or Lenders’ part in exercising any right hereunder shall
operate as a waiver

 

7

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thereof or of any other right nor shall any single or partial exercise of any
such right preclude any other further exercise thereof or of any other right.

 

14.3         Amendments and Waivers.  This Security Agreement may not be amended
or modified, nor may any of its terms be waived, except by written instruments
signed by Borrower, Parent, each Subsidiary and Collateral Agent.  Each waiver
or consent under any provision hereof shall be effective only in the specific
instances for the purpose for which given.

 

14.4         Assignments.  This Security Agreement shall be binding upon and
inure to the benefit of Lenders, Collateral Agent, Parent, Borrower and each
Subsidiary and their respective successors, assigns, heirs, beneficiaries and
legal representatives; provided, however, that none of Borrower, Parent and any
Subsidiary may assign their respective rights and duties hereunder without the
prior written consent of Collateral Agent.

 

14.5         Cumulative Rights, etc.  The rights, powers and remedies of Lenders
and Collateral Agent under this Security Agreement shall be in addition to all
rights, powers and remedies given to Lenders and Collateral Agent by virtue of
any applicable law, rule or regulation of any governmental authority, the Stock
Purchase Agreement, the Subordinated Contingent Notes, the Guaranty, the UK
Debentures, the XCEL Deeed, the Pascall Deed or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Collateral Agent’s rights
hereunder.  Each of Borrower, Parent and each Subsidiary waive any right to
require Collateral Agent or Lenders to proceed against any Person or to exhaust
any collateral or to pursue any remedy in Collateral Agent or Lenders’ power.

 

14.6         Partial Invalidity.  If at any time any provision of this Security
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Security Agreement nor the legality, validity
or enforceability of such provision under the law of any other jurisdiction
shall in any way be affected or impaired thereby.

 

14.7         Expenses.  Parent, Borrower and each Subsidiary, jointly and
severally, agree to pay on demand all reasonable fees and expenses, including
reasonable attorneys’ fees and expenses, incurred by Collateral Agent with
respect to any amendments or waivers hereof requested by Parent, Borrower or a
Subsidiary or in the enforcement or attempted enforcement of any of the
Obligations or in preserving any of Collateral Agent’s or Lenders’ rights and
remedies (including, without limitation, all such fees and expenses incurred in
connection with any “workout” or restructuring affecting this Security
Agreement, the Subordinated Contingent Notes, the Guaranty, the UK Debentures,
the XCEL Deeed, the Pascall Deed or the Obligations or any bankruptcy or similar
proceeding involving Parent, Borrower or any Subsidiary).

 

14.8         Governing Law; Jurisdiction.  This Security Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
without reference to conflicts of law rules (except to the extent governed by
the UCC).  Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Security Agreement, may be brought
against any party to this Security Agreement in the courts of the State of New
Jersey, Monmouth County, or, if it has or can acquire jurisdiction, the United
States

 

8

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District Court for the District of New Jersey, and each of the parties hereto
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein.  Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.

 

14.9         Jury Trial.  BORROWER, PARENT, EACH SUBSIDIARY, LENDERS AND
COLLATERAL AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties have caused this Security Agreement to be
executed as of the day and year first above written.

 

 

EMRISE ELECTRONICS CORPORATION,

 

a New Jersey corporation

 

 

 

 

By:

/s/ Carmine T. Oliva

 

Name:

Carmine T. Oliva

 

Its:

Chief Executive Officer

 

 

 

 

 

 

 

EMRISE CORPORATION,

 

a Delaware corporation

 

 

 

 

By:

/s/ Carmine T. Oliva

 

Name:

Carmine T. Oliva

 

Its:

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

CXR LARUS CORPORATION,

 

a Delaware corporation

 

 

 

 

By:

/s/ Carmine T. Oliva

 

Name:

Carmine T. Oliva

 

Its:

President

 

 

 

 

PASCALL ELECTRONICS LIMITED,

 

a United Kingdom corporation

 

 

 

 

By:

/s/ Graham Jefferies

 

Name:

Graham Jefferies

 

Its:

Director

 

 

 

 

XCEL POWER SYSTEMS, LTD.,

 

a United Kingdom corporation

 

 

 

 

By:

/s/ Graham Jefferies

 

Name:

Graham Jefferies

 

Its:

Director

 

 

 

 

/s/ Charles S. Brand

 

Charles S. Brand, as Collateral Agent

 

 

 

 

 

See Schedule of Lenders on Exhibit A for signatures of Lenders.

 

Amended and Restated Security Agreement

 

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EXHIBIT A

 

Schedule of Subsidiaries

 

·                                          CXR Larus Corporation, a Delaware
corporation

 

·                                          Pascall Electronics Limited, a United
Kingdom company

 

·                                          XCEL Power Systems, Ltd., a United
Kingdom company

 

Schedule of Lenders

 

Lender’s Name and Address

 

Principal Amount of
Note outstanding
on August 31, 2010

 

Lender’s Signature

 

 

 

 

 

 

 

Charles S. Brand

 

$

2,211,766.43

 

 

 

175 Boundary Road

 

 

 

/s/ Charles S. Brand

 

Colts Neck, NJ 07722

 

 

 

Charles S. Brand

 

 

 

 

 

 

 

Thomas P. M. Couse

 

$

332,720.81

 

 

 

1 Waltham Way

 

 

 

/s/ Charles S. Brand

 

Jackson, NJ 08527

 

 

 

Charles S. Brand, as attorney in fact for Thomas P.M. Couse

 

 

 

 

 

 

 

Joanne Couse

 

$

332,720.81

 

 

 

1 Waltham Way

 

 

 

/s/ Charles S. Brand

 

Jackson, NJ 08527

 

 

 

Charles S. Brand, as attorney in fact for Joanne Couse

 

 

 

 

 

 

 

Aggregate Principal Amount:

 

$

2,877,208.05

 

 

 

 

Amended and Restated Security Agreement

 

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