**Exhibit 10.2**

 

**EXECUTIVE EMPLOYMENTAGREEMENT**

 

THISEXECUTIVE EMPLOYMENT AGREEMENT (the **“Agreement”**)dated effective as of November 1, 2007 (**“EffectiveDate”**), is made and entered into by and between EMRISE CORPORATION,a Delaware corporation (**“Employer”**),and GRAHAM JEFFERIES (**“Executive”**).

 

**R E C I T A L S**

 

Employerdesires that the Executive enter into an employment relationship with Employerin order to provide the necessary leadership and senior management skills thatare important to the success of Employer. Employer believes that obtaining theExecutive’s services as an employee of Employer and the benefits of hisbusiness experience are of material importance to Employer and Employer’sstockholders.

 

NOW,THEREFORE, in consideration of Executive’s employment by Employer and themutual promises and covenants contained herein, the receipt and sufficiency ofwhich is hereby acknowledged, Employer and Executive intend by this Agreementto specify the terms and conditions of Executive’s employment relationship withEmployer.

 

# 1.                                       **General Duties of Employer and Executive**.

 

## (a)                                  Employeragrees to employ Executive and Executive agrees to accept employment byEmployer and to serve Employer in an executive capacity upon the terms andconditions set forth herein. Employer hereby employs Executive as ExecutiveVice President and Chief Operating Officer of Employer as of the EffectiveDate, reporting to the President and Chief Executive Officer of Employer (the **“CEO”**). Executive’s duties andresponsibilities shall be those normally assumed by the Executive VicePresident and Chief Operating Officer of a publicly-owned company similarlysituated to Employer, as well as such other or additional duties, as may fromtime-to-time be assigned to Executive by the CEO. Such other or additionalduties shall be consistent with the senior executive functions set forth above.

 

## (b)                                 Whileemployed hereunder, Executive shall use his reasonable endeavors to obey thelawful directions of the CEO. Executive shall also use his reasonable endeavorsto promote the interests of Employer and to maintain and to promote thereputation of Employer. While employed hereunder, Executive shall devote hisfull business time, efforts, skills and attention to the affairs of Employerand faithfully perform his duties and responsibilities hereunder.

 

## (c)                                  Whilethis Agreement is in effect, Executive may from time to time engage in anyactivities that do not compete directly with Employer, provided that suchactivities do not interfere with his performance of his duties. Executive shallbe permitted to (i) invest his personal assets as a passive investor in suchform or manner as Executive may choose in his discretion, (ii) participate invarious charitable efforts, and (iii) serve as a member of the Board ofDirectors of other corporations which are not competitors of Employer.

 

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# 2.                                       **Compensation and Benefits**.

 

## (a)                                  Ascompensation for his services to Employer, Employer, through its wholly-ownedsubsidiary, Emrise Electronics, Ltd. (**“EmriseElectronics”**), shall pay to Executive an annual base salary of£152,800, payable in equal semimonthly payments in accordance with the Employer’sregular payroll policy for salaried employees (the **“Salary”**). The Compensation Committee (the **“Compensation Committee”**) of the Board ofDirectors of Employer (the **“Board”**)shall perform an annual review of Executive’s Salary based on a review ofExecutive’s performance of his duties prepared by Employer’s President and CEOand  Employer’s other compensationpolicies. The Compensation Committee may, at its sole discretion, increase (butnot decrease) the Salary at any time, and from time to time.

 

## (b)                                 Inaddition to the foregoing Salary, Executive shall be eligible for an annualincentive bonus (**“Incentive Bonus”**) based oncriteria determined by the Compensation Committee, at its sole discretion. TheIncentive Bonus shall be payable annually in cash, following the date on whichEmployer’s Form 10-K for the previous fiscal year is filed with the Securitiesand Exchange Commission.

 

## (c)                                  UponExecutive’s furnishing to Employer customary and reasonable documentary support(such as receipts or paid bills) evidencing costs and expenses incurred by himin the performance of his services and duties hereunder (including, withoutlimitation, travel and entertainment and cellular telephone expenses) andcontaining sufficient information to establish the amount, date, place andessential character of the expenditure, Executive shall be reimbursed for suchcosts and expenses in accordance with Employer’s normal expense reimbursementpolicy.

 

## (d)                                 Executiveshall be entitled to participate in the medical (including hospitalization),dental, life and disability insurance plans, to the extent offered by Employer,and in amounts consistent with the Employer’s policy, for other seniorexecutive officers of Employer, with premiums for all such insurance forExecutive and his dependents to be paid by Employer, subject to customaryemployee contributions.

 

## (e)                                  Executiveshall have the right to participate in any additional compensation, benefit,pension, stock option, stock purchase, 401(k) or other plan or arrangement ofEmployer now or hereafter existing for the benefit of other senior executiveofficers of Employer, to the extent offered by Employer, and in amountsconsistent with Employer’s policy in the U.K.

 

## (f)                                    Executiveshall be entitled to twenty-five (25) working days’ paid vacation in eachcalendar year in addition to public holidays in the United Kingdom. Executiveshall also be entitled to other paid or unpaid leaves of absence consistentwith Employer’s normal policies for other senior executive officers of Employeror as otherwise approved by the Board. Executive shall be entitled to accruevacation time for one year. If he does not take the accrued vacation during thenext year, he shall be paid for the unused vacation at his Salary rate then ineffect.

 

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## (g)                                 Executiveshall be provided a monthly car allowance in the amount of at least £460.

 

## (h)                                 Employershall purchase and maintain in effect a directors’ and officers’ liabilityinsurance policy with a minimum limit of liability of $10,000,000 and shallenter into an indemnification agreement with Executive upon terms andconditions mutually acceptable to Employer and Executive.

 

# 3.                                       **Preservation of Business; Fiduciary Responsibility**.

 

Executive shall use hisreasonable endeavors to preserve the business and organization of Employer andto preserve the business relations of Employer. So long as the Executive isemployed by Employer, Executive shall observe and fulfill proper standards offiduciary responsibility attendant upon his service and office.

 

# 4.                                       **No Specified Term; Employment at Will**.

 

The employmentrelationship between Employer and Executive pursuant to this Agreement is notfor any specific term, but may be terminated with or without cause, by Employeror by Executive, at any time and for any reason, subject to the rights andobligations of Employer and Executive as set forth in this Agreement. Anymodification to the nature of the at-will employment relationship betweenEmployer and Executive must be made in writing, and must be signed by Executiveand by Employer.

 

# 5.                                       **Termination**.

 

Employer or Executive mayterminate Executive’s employment under this Agreement at any time, but only onthe following terms:

 

## (a)                                  Employermay terminate Executive’s employment under this Agreement at any time for **“Due Cause”** (as defined in Appendix I attachedhereto and incorporated herein by this reference) upon the good faithdetermination by the Board that Due Cause exists for the termination of theemployment relationship.

 

## (b)                                 IfExecutive is incapacitated by accident, sickness or otherwise so as to renderExecutive mentally or physically incapable of performing the services requiredunder Section 1 of this Agreement for a period of 180 consecutivedays, this Agreement shall terminate immediately; provided, however,that Executive shall remain an employee of Emrise Electronics Ltd. and shall beentitled to remuneration in an amount equal to the amount paid under EmriseElectronics Ltd.’s permanent health scheme, subject to the provisions of  Section 6(b).

 

## (c)                                  ThisAgreement shall terminate immediately upon Executive’s death, subject to theprovisions of Section 6(b).

 

## (d)                                 Subjectto the provisions of Section 6(c), Employer may terminate Executive’semployment under this Agreement at any time for any reason whatsoever, evenwithout Due Cause, by giving a written notice of termination to Executive, inwhich case the employment relationship shall terminate immediately upon thegiving of the notice. If Employer

 

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## terminates theemployment of Executive other than (i) pursuant to Section 5(a) forDue Cause, (ii) due to incapacity pursuant to Section 5(b) or dueto Executive’s death pursuant to Section 5(c), or (iii) Executive’sretirement, then the action by Employer, unless consented to in writing byExecutive, shall be deemed to be a constructive termination by Employer ofExecutive’s employment (a **“Constructive Termination”**),and, in that event, Executive shall be entitled to receive the compensation setforth in Section 6(c).

 

## (e)                                  Executivemay terminate this Agreement at any time for **“GoodReason”** (as defined in Appendix I attached hereto andincorporated herein by this reference) within 30 days after Executive learns ofthe event or condition constituting “Good Reason” and, in that event, shall beentitled to receive the compensation set forth in Section 6(c).

 

# 6.                                       **Effect of Termination**.

 

## (a)                                  Ifthe employment relationship is terminated (i) by Employer for Due Causepursuant to Section 5(a), or (ii) by Executive breaching thisAgreement by refusing to continue his employment, or (iii) by Executive withoutGood Reason, then all compensation and benefits shall cease as of the date oftermination, other than: (A) those benefits that are provided by retirement andbenefit plans and programs specifically adopted and approved by Employer forExecutive that are earned and vested by the date of termination; (B) Executive’spro rata annual Salary (as in effect as of the date of termination, payable inthe manner as prescribed in the first sentence of Section 2(a))through the date of termination; (C) any stock options which have vested as ofthe date of termination pursuant to the terms of the agreement granting theoptions; and (D) accrued vacation as required by applicable law.

 

## (b)                                 IfExecutive’s employment relationship is terminated due to Executive’s incapacitypursuant to Section 5(b) or due to Executive’s death pursuant to Section 5(c),Executive or Executive’s estate or legal representative, shall be entitled to(i) those benefits that are provided by retirement and benefits plans andprograms specifically adopted and approved by Employer for Executive that areearned and vested at the date of termination, (ii) a prorated Incentive Bonus,payable in the manner as prescribed in the second sentence of Section 5(b)(to the extent Executive would otherwise be eligible) for the fiscal year inwhich incapacity or death occurs, and (iii) a lump-sum cash payment, payablewithin ten (10) business days of separation from service due to death ordisability in an amount equal to one (1) year of Executive’s then currentannual Salary as set forth in Section 2(a), which amount shall be net ofall then applicable federal, state and local taxes payable by Executiverelating to such payment (said payment taking into consideration the fullgross-up effect of additional taxes payable with respect to tax payments).

 

## (c)                                  Inthe event of a termination of this Agreement as a result of ConstructiveTermination, or by Executive for Good Reason, then Employer shall:

 

#### (i)                                     payto Executive on the date of termination his Salary in effect as of the date oftermination through the end of the month during which the termination occursplus credit for any vacation earned but not taken;

 

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#### (ii)                                  payto Executive on the first business day following the expiration of therevocation period described in Section 6(c)(iv) (provided Executive hasnot tendered his revocation) as severance pay an amount equal to two (2) timesExecutive’s then current annual Salary, which amount shall be net of all thenapplicable taxes payable by Executive relating to such payment (said paymenttaking into consideration the full gross-up effect of additional taxes payablewith respect to tax payments);

 

#### (iii)                               pay to Executive on thedate of termination the prorated Incentive Bonus, if any, for the fiscal yearduring which termination occurs; and

 

#### (iv)                              maintain,at Employer’s expense, in full force and effect, for Executive’s continuedbenefit, all medical and life insurance to which Executive was entitledimmediately prior to the date of termination (or at the election of Executivein the event of a Change in Control, immediately prior to the date of theChange in Control) until the earliest of (i) 2 years or (ii) the date or datesthat Executive’s continued participation in Employer’s medical and/or lifeinsurance plans, as applicable, is not possible under the terms of the plans(the earliest of (i) and (ii) is referred to herein as the **“Benefits Date”**). If Employer’s medicaland/or life insurance plans do not allow Executive’s continued participation inthe plan or plans, then Employer will pay to Executive, in monthlyinstallments, from the date on which Executive’s participation in the medicaland/or life insurance, as applicable, is prohibited until the date that istwenty-four (24) months after the date of termination, the monthly premium orpremiums which had been payable by Employer with respect to Executive for thediscontinued medical and/or life insurance, as applicable.

 

## (d)                                 Executiveshall be entitled to the payments and benefits described in subsections6(c)(ii) and (iv) only if Executive signs an appropriate separation agreementin a form acceptable to Employer, which includes a release of all claimsagainst Employer to the fullest extent permitted by law, such agreementactually enters into effect following any revocation period required by law,and Executive complies fully with any continuing obligations under thisAgreement.

 

## (e)                                  Executiveshall not be required to mitigate damages or the amount of any payment providedfor under this Agreement by seeking other employment or otherwise, nor shallthe amount of any payment provided for under this Agreement be reduced by anycompensation earned by Executive as the result of employment by anotherEmployer after the date of termination, or otherwise.

 

## (f)                                    Exceptas expressly provided herein, the provisions of this Agreement, and any paymentor benefit provided for hereunder, shall not reduce any amounts otherwisepayable, or in any way diminish Executive’s existing rights, or rights which wouldaccrue solely as a result of the passage of time, under any Employer BenefitPlan, employment agreement or other contract, plan or arrangement.

 

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## (g)                                 Theamount of any payment provided under this Agreement shall not be reduced byreason of any present value calculation.

 

## (h)                                 Upontermination of this Agreement, compensation and benefits shall be paid to theExecutive as set forth in the applicable subsection of this Section 6and stock options granted to Executive, if any, shall be governed by theprovisions of all stock option agreements between Employer and Executive. Inthe event of a termination of this Agreement by Executive for Good Reason, allother rights and benefits Executive may have under the employee and/orexecutive benefit plans and arrangements of Employer generally shall bedetermined in accordance with the terms and conditions of those plans andarrangements.

 

# 7.                                       **Payment Upon Change in Control**.

 

Immediately preceding theoccurrence of a **“Change in Control”**(asdefined in Appendix I attached hereto and incorporated herein bythis reference), Employer shall pay to Employee, in immediately availablefunds, an amount equal to two (2) times Executive’s then current annual Salary,which amount shall be net of all then applicable federal, state and local taxespayable by Executive relating to such payment (said payment taking intoconsideration the full gross-up effect of additional taxes payable with respectto tax payments).

 

# 8.                                       **Covenants of Confidentiality, Nondisclosure andNoncompetition**.

 

## (a)                                  Duringthe term of this Agreement, Employer will provide to Executive certainconfidential and proprietary information owned by Employer as more fullydescribed below. Executive acknowledges that he occupies or will occupy aposition of trust and confidence with Employer, and that Employer would beirreparably damaged if Executive were to breach the covenants set forth in thisSection 8(a). Accordingly, Executive agrees that he will not,without the prior written consent of Employer, at any time during the term ofthis Agreement or any time thereafter, except as may be required by competentlegal authority or as required by Employer to be disclosed in the course ofperforming Executive’s duties under this Agreement for Employer, use ordisclose to any person, firm or other legal entity, any confidential records,secrets or information obtained by Executive during his employment hereunderrelated to Employer or any parent, subsidiary or affiliated person or entity(collectively, **“Confidential Information”**).Confidential Information shall include, without limitation, information aboutEmployer’s Inventions (as defined in Section 9(a)), customer listsand product pricing, data, know-how, formulae, processes, ideas, past, currentand planned product development, market studies, computer software andprograms, database and network technologies, strategic planning and riskmanagement. Executive acknowledges and agrees that all Confidential Informationof Employer and/or its affiliates will be received in confidence and as afiduciary of Employer. Executive will exercise utmost diligence to protect andguard the Confidential Information.

 

## (b)                                 Executiveagrees that he will not, without the express written consent of the Board, takewith him upon the termination of this Agreement, any document or paper, or anyphotocopy or reproduction or duplication thereof, relating to any ConfidentialInformation.

 

## (c)                                  Executiveagrees that he will, upon the termination of his employment, return allEmployer’s property including but not limited to Employer leased or ownedvehicles,

 

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## mobile telephone,fuel card, personal computer, all documents, working papers, informationwhether stored on computer disc or otherwise, and all other records relating toEmployer and its business. Executive agrees that he will confirm in writingthat he has complied with this clause, if requested to do so by Employer,within seven (7) days of receipt of such a request.

 

## (d)                                 Executiveagrees that, while Executive is employed with Employer, he will not, eitherdirectly or indirectly, have an interest in any business (whether as manager,operator, licensor, licensee, partner, 5% or greater equity holder, employee,consultant, director, advisor or otherwise) competitive with Employer or any ofits business activities or solicit individuals or other entities that arecustomers or competitors of Employer. Executive further agrees that, for aperiod of twenty-four (24) months after the date of termination of thisAgreement (the **“Restricted Period”**), Executiveshall not use Employer’s trade secrets, either directly or indirectly, tocompete in any way with the business of Employer and will not solicitindividuals or other entities that are customers or competitors of Employerduring the six-month period immediately prior to the date of termination ofthis Agreement, to terminate or change their contracts or business relationswith Employer. Executive also agrees that, for the Restricted Period, he willnot, either directly or indirectly, solicit any employee of Employer toterminate his employment with Employer.

 

## (e)                                  Forpurposes of this Section 8, **“Employer”**shall include any of its subsidiaries or any other entity in which it holds a50% or greater equity interest.

 

# 9.                                       **Inventions**.

 

## (a)                                  Anyand all inventions, product, discoveries, improvements, processes, formulae,manufacturing methods or techniques, designs or styles, software applicationsor programs (collectively, **“Inventions”**)made, developed or created by Executive, alone or in conjunction with others,during regular hours of work or otherwise, during the term of Executive’semployment with Employer and for a period of two years thereafter that may bedirectly or indirectly related to the business of, or tests being carried outby, Employer, or any of its parents, subsidiaries, shall be promptly disclosedby Executive to Employer and shall be Employer’s exclusive property. Thefollowing provisions of the California Labor Code shall supplement this Section 9(a):

 

SECTION 2870 OF THECALIFORNIA LABOR CODE

 

Application of Provisions Providing that EmployeeShall Assign or Offer to Assign Rights in Invention to Employer.

 

(a)                                  Anyprovision in an employment agreement which provides that an employee shallassign, or offer to assign, any of his or her rights in an invention to his orher employer shall not apply to an invention that the employee developedentirely on his or her own time without using employer’s equipment, supplies,facilities, or trade secret information except for those inventions thateither:

 

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(1)                                  Relateat the time of conception or reduction to practice of the invention to employer’sbusiness, or actual or demonstrably anticipated research or development ofemployer; or

 

(2)                                  Resultfrom any work performed by the employee for employer.

 

(b)                                 Tothe extent a provision in an employment agreement purports to require anemployee to assign an invention otherwise excluded from being required to beassigned under subdivision (a), the provision is against the public policy ofthis state and is unenforceable.

 

## (b)                                 Executivewill, upon Employer’s request and without additional compensation, execute anydocuments necessary or advisable in the opinion of Employer’s legal counsel todirect the issuance of patents to Employer with respect to Inventions that areto be Employer’s exclusive property under this Section 9 or to vestin Employer title to the Inventions; the expense of securing any patent,however, shall be borne by Employer.

 

## (c)                                  Executivewill hold for Employer’s sole benefit any Invention that is to be Employer’sexclusive property under this Section 9 for which no patent isissued.

 

# 10.                                 **No Violation**.

 

Executive represents thathe is not bound by any Agreement with any former employer or other party thatwould be violated by Executive’s employment by Employer.

 

# 11.                                 **Injunctive Relief**.

 

Executive acknowledgesthat the breach, or threatened breach, by Executive of the provisions of thisAgreement shall cause irreparable harm to Employer, which harm cannot be fullyredressed by the payment of damages to Employer. Accordingly, Employer shall beentitled, in addition to any other right or remedy it may have at law or inequity, to seek an injunction or restraining Executive from any violation orthreatened violation of this Agreement.

 

# 12.                                 **Dispute Resolution**.

 

Subjectto Section 11, all claims, disputes and other matters incontroversy (**“dispute”**) arising,directly or indirectly out of or related to this Agreement, or the breachthereof, whether contractual or noncontractual, and whether during the term orafter the termination of this Agreement, shall be resolved exclusivelyaccording to the procedures set forth in this Section 12, and notthrough resort to any judicial proceedings.

 

## (a)                                  Neitherparty shall commence an arbitration proceeding pursuant to the provisions of Section 12(b)unless that party first gives a written notice (a **“Dispute Notice”**) to the other party setting forth the natureof the dispute. The parties shall attempt in good faith to resolve the disputeby mediation. If the dispute has not been resolved by mediation within 60

 

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## days afterdelivery of the Dispute Notice, then the dispute shall be determined byarbitration in accordance with Section 12(b).

 

## (b)                                 Anydispute that is not settled by mediation as provided in Section 12(a)shall be resolved by arbitration under the Rules of the Chartered Institute ofArbitrators (the **“Rules”**), whichRules are deemed to be incorporated herein by reference. The prevailing partyin any such arbitration shall also be entitled to recover reasonable solicitors’,accountants’ and experts’ fees and costs of suit in addition to any otherrelief awarded the prevailing party.

 

# 13.                                 **Miscellaneous**.

 

## (a)                                  Ifany provisions contained in this Agreement is for any reason held to be totallyinvalid or unenforceable, such provision will be fully severable, and in lieuof such invalid or unenforceable provision there will be added automatically aspart of this Agreement a provision as similar in terms as may be valid andenforceable.

 

## (b)                                 Allnotices and other communications required or permitted hereunder or necessaryor convenience in connection herewith shall be in writing and shall be deemedto have been given when mailed by registered mail or certified mail, returnreceipt requested or hand delivered, as follows (provided that notice of changeof address shall be deemed given only when received):

 
| If to Employer:  |   | EMRISE  Corporation                 |
|------------------|--------|-------------------------------------|
|             |   | 9485 Haven  Avenue                  |
|             |   | Rancho  Cucamonga, CA 91730         |
|             |   | Attention: Chief  Financial Officer |
|             |   |                                |
| If to Executive: |   | Graham Jefferies                    |
|             |   | 7 Shephers  Close, Fen Ditton       |
|             |   | Cambs, CB5 8XJ,  United Kingdom     |

 

or tosuch other names or addresses as Employer or Executive, as the case may be,shall designate by notice to the other party hereto in the manner specified inthis Section 13(b).

 

## (c)                                  ThisAgreement shall be binding upon and inure to the benefit of Employer, itssuccessors, legal representatives and assigns, and Executive, his heirs,executors, administrators, representatives, legatees and permitted assigns.Executive agrees that his rights and obligations hereunder are personal to himand may not be assigned without the express written consent of Employer. IfExecutive should die while any amounts are due to him pursuant to thisAgreement, all such amounts shall be paid to Executive’s devisee, legatee orother designee, or if there be no such designee, to Executive’s estate.Employer will require any successor or assign (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all ofthe business and/or assets of Employer, by agreement in form and substancesatisfactory to Executive and his legal counsel, expressly, absolutely andunconditionally to assume and agree to perform this Agreement in the samemanner and to the same extent that Employer would be required to perform eachof them if no such succession or assignment had taken place. Any failure ofEmployer to obtain such Agreement prior to the effectiveness of any suchsuccession or assignment shall be a material breach of this Agreement 

 

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## and shall entitleExecutive to terminate Executive’s employment for Good Reason. As used in thisAgreement, **“Employer”** means EMRISECorporation and any successor or assign to its business and/or assets whichexecutes and delivers the Agreement provided for in this Section or whichotherwise becomes bound by all the terms and provisions of this Agreement byoperation of law. If at any time during the term of this Agreement Executive isemployed by any company a majority of the voting securities of which is thenowned by Employer, **“Employer”** asused in this Agreement shall in addition include that subsidiary company. Inthat event, Employer agrees that it shall pay or shall cause the subsidiarycompany to pay any amounts owed to Executive pursuant to this Agreement.

 

## (d)                                 ThisAgreement replaces and merges all previous agreements and discussions relatingto the same or similar subject matters between Executive and Employer withrespect to the subject matter of this Agreement (other than any optionagreement dated prior to the Effective Date between Executive and Employer),including without limitation that certain Executive Employment Agreement datedeffective as of January 1, 2006 between Employer and Executive. This Agreementmay not be modified in any respect by any verbal statement, representation oragreement made by any employee, officer, or representative of Employer or byany written agreement unless signed by an officer of Employer who is expresslyauthorized by Employer to execute that document.

 

## (e)                                  Thelaws of the United Kingdom will govern the interpretation, validity and effectof this Agreement without regard to principles of conflicts of law, the placeof execution or the place for performance thereof. All disputes, claims orproceedings between the parties relating to the validity construction orperformance of this Agreement shall be subject to the non-exclusivejurisdiction of the Courts of England to which the parties irrevocably submit.

 

## (f)                                    Executiveand Employer shall execute and deliver any and all additional instruments andagreements that may be necessary or proper to carry out the purposes of thisAgreement.

 

## (g)                                 Thedescriptive headings of the several sections of this Agreement are inserted forconvenience only and do not constitute a party of this Agreement.

 

## (h)                                 ThisAgreement may be executed in one or more counterparts, all of which shall beconsidered one and the same Agreement.

 

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## (i)                                     Executiveacknowledges that Executive has had the opportunity to read this Agreement anddiscuss it with advisors and legal counsel, if Executive has so chosen.Executive also acknowledges the importance of this Agreement and that Employeris relying on this Agreement in entering into an employment relationship withExecutive.

 

The undersigned,intending to be legally bound, have executed this Agreement effective as of thedate first written above.

 
|                   | EMRISE CORPORATION |
|------------------------|--------------------|
|                   |               |
|                   |               |
| Date: November 1, 2007 | By:                | /s/ Carmine T. Oliva |
|                   |               | Carmine T. Oliva, |
|                   |               | President and Chief Executive Officer |
|                   |               |
| Date: November 1, 2007 |               | /s/ Graham Jeffries |
|                   |               | Graham Jefferies |

 

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APPENDIX I

 

**Additional Definitions**

 

Forpurposes of this Agreement, the following additional capitalized terms shallhave the respective definitions set forth below:

 

**Benefit Plan**. The term “BenefitPlan” means any benefit plan or arrangement (including, without limitation,Employer’s profit sharing or stock option plans, if any, and medical,disability and life insurance plans) in which Executive is participating (orany other plans providing Executive with substantially similar benefits).

 

**Change in Control**. The term **“Change in Control”** means the occurrence ofany of the following events:

 

(a)                                  theacquisition, directly or indirectly, by any “person” or “group” (as those termsare defined in Sections 3(a)(9), 13(d), and 14(d) of the Exchange Act and therules thereunder) of “beneficial ownership” (as determined pursuant to Rule13d-3 under the Exchange Act) of securities entitled to vote generally in theelection of directors (“voting securities”) of Employer that represent 40% or more of the combined votingpower of Employer’s then outstanding voting securities or 50% or more of thecombined Fair Market Value of Employer’s then outstanding stock, other than:

 

(i)                                     anacquisition by a trustee or other fiduciary holding securities under anyemployee benefit plan (or related trust) sponsored or maintained by Employer orany person controlled by Employer or by any employee benefit plan (or relatedtrust) sponsored or maintained by Employer or any person controlled byEmployer, or

 

(ii)                                  anacquisition of voting securities by Employer or a corporation owned, directlyor indirectly, by the stockholders of Employer in substantially the same proportionsas their ownership of the stock of Employer.

 

provided, however, thatnotwithstanding the foregoing, an acquisition of Employer’s securities byEmployer that (x) causes Employer’s voting securities beneficially owned by aperson or group to represent 40%or more of the combined voting power of Employer’s then outstanding votingsecurities or (y) cause Employer’s stock beneficially owned by a person orgroup to represent 50% or more of the combined Fair Market Value of Employer’sthen outstanding stock shall not be considered an acquisition by any person orgroup for purposes of this subsection (a); provided, however,that if a person or group shall become the beneficial owner of 40% or more of the combined votingpower of Employer’s then outstanding voting securities or 50% or more of thecombined Fair Market Value of Employer’s then outstanding stock by reason ofshare acquisitions by Employer as described above and shall, after such shareacquisitions by Employer, become the beneficial owner of any additionalsecurities of Employer, then such acquisition shall constitute a Change inControl;

 

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(b)                                 thedate a majority of members of the Board is replaced during any 12-month periodby directors whose appointment or election is not endorsed by a majority of themembers of the Board before the date of the appointment or election, butexcluding, for this purpose, any such individual whose initial assumption ofoffice occurs as a result of an actual or threatened election contest withrespect to the election or removal of directors or other actual or threatenedsolicitation of proxies or consents by or on behalf of a person other than theBoard;

 

(c)                                  theacquisition by any “person” or “group” (as those terms are defined in Sections3(a)(9), 13(d), and 14(d) of the Exchange Act and the rules thereunder), orcombined acquisitions during the 12-month period ending on the date of the mostrecent acquisition by such person or group, of ownership of assets from Employerthat have a total gross fair market value equal to or more than 40% of thetotal gross fair market value of all of the assets of the corporationimmediately before such acquisition; and

 

(d)                                 stockholderapproval of a complete liquidation or dissolution of Employer.

 

Forpurposes of subsection (a) above, the calculation of voting power shall be madeas if the date of the acquisition were a record date for a vote of Employer’sstockholders, and for purposes of subsection (c) above, the calculation of votingpower shall be made as if the date of the consummation of the transaction werea record date for a vote of Employer’s stockholders.

 

Notwithstandingthe foregoing, there is no Change in Control event when there is a transfer toan entity that is controlled by the stockholders of the Company immediatelyafter the transfer. A transfer of assets by Employer is not treated as a Changein Control if the assets are transferred to:

 

(i)                                     astockholder of Employer (immediately before the asset transfer) in exchange foror with respect to the stockholders’ stock;

 

(ii)                                  anentity, 50% or more of the total value or voting power of which is owned,directly or indirectly, by Employer;

 

(iii)                               a person or group thatowns, directly or indirectly, 50% or more of the total value or voting power ofall the outstanding stock of Employer; or

 

(iv)                              anentity, at least 50% of the total value or voting power of which is owned,directly or indirectly, by a person or group described in (iii) above.

 

**Due Cause**. The term **“Due Cause”** means any of the followingevents:

 

(a)                                  anyintentional misapplication by Executive of Employer’s funds or other materialassets, or any other act of dishonesty injurious to Employer committed byExecutive; or

 

(b)                                 Executive’sconviction of (i) a felony or (ii) a crime involving moral turpitude; or

 

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(c)                                  Executive’suse or possession of any controlled substance or chronic abuse of alcoholicbeverages, which use or possession the Board reasonably determines rendersExecutive unfit to serve in his capacity as a senior executive of Employer; or

 

(d)                                 Executive’sbreach, nonperformance or nonobservance of any of the terms of this Agreement,including but not limited to Executive’s failure to adequately perform hisduties or comply with the reasonable directions of the Board.

 

Notwithstandinganything in the foregoing subsections (c) or (d) to the contrary, Employershall not terminate Executive under subsections (c) or (d) unless the Boardfirst provides Executive with a written memorandum describing in detail how hisperformance hereunder is not satisfactory and Executive is given a reasonableperiod of time (not less than 90 days) to remedy the unsatisfactory performancerelated by the Board to Executive in that memorandum. A determination ofwhether Executive has satisfactorily remedied the unsatisfactory performanceshall be promptly made by a majority of the disinterested directors of theBoard at the end of the period provided to Executive for remedy and theirdetermination shall be final.

 

**Exchange Act**. The term “**Exchange Act**” means the Securities ExchangeAct of 1934, as amended.

 

**Fair Market-Value**. The term “**Fair Market Value**” of a share of Employer’scommon stock as of a given date shall be: (a) if the common stock is listed oradmitted for trading on any United States national securities exchange and/oris quoted on a system of automated dissemination of quotations of securitiesprices in common use, the last reported sale price of a share of common stockon the principal exchange or system on which shares of common stock are tradingon such date (or if no sale occurred on such date, then on the next precedingdate on which a trade occurred); provided, however, that if thecommon stock is not a last sale reported security, then the Fair Market Valueshall be the average of the closing high bid and low asked quotations for ashare of common stock on such principal exchange or system on such date (or ifbid and asked prices were not both reported on such date, then on the nextpreceding date on which bid and asked prices were both reported); providedfurther, that the sale, bid and asked prices referred to in this clause(a) shall be as reported in a newspaper of general circulation or by such othersource as the Board deems reliable; or (b) if the common stock is not listed oradmitted for trading on such an exchange or system on such date, the FairMarket Value of a share of common stock as established by the Board acting ingood faith, taking into account all material information available with respectto the value of a share of common stock, including, without limitation, thevalue of the tangible and intangible assets of Employer, the present value ofits anticipated future cash flows, the market value of the stock or equityinterests in other entities engaged in substantially the same business, recentarm’s length transactions involving the sale of common stock, and otherrelevant factors such as control premiums or discounts for lack ofmarketability.

 

**Good Reason**. The term **“Good Reason”** as used in this Agreement shall mean any ofthe following which occur without Executive’s written consent and providedthat Executive notifies Employer’s Board****in writing of the event orcondition constituting “Good Reason” withinthirty (30) days of the initial existence of such event or condition, thatExecutive intends

 

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to terminate his employment for such Good Reason,specifying the Good Reason, and Employer fails to remedy the specified event orcondition within thirty (30) days after receipt of such notice:

 

(a)                                  thematerial diminution in Executive’s authority, duties, or responsibilities; amaterial diminution in Executive’s titles or offices; any removal of Executivefrom or any failure to reelect Executive to any of his positions as an officer,except in connection with the termination of his employment for disability;Retirement; Executive’s death; or by Executive other than for Good Reason;

 

(b)                                 apurported reduction by Employer in Executive’s base salary amounting to amaterial diminution in such salary to an amount less than the greater of (i)the base salary as in effect on the date hereof or (ii) 10% below the basesalary in effect at the time of the purported reduction; or

 

(c)                                  afailure by Employer to comply with any material provision resulting in amaterial breach by Employer of this Agreement which has not been cured within30 days after notice of noncompliance has been given by Executive to Employer,or if the failure is not capable of being cured in that time, a cure shall nothave been diligently initiated by Employer within the 30 day period;

 

provided,however, that any of the foregoing actions shall not be considered to beGood Reason if the action is undertaken by Employer as a termination for DueCause.

 

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