Exhibit 10.1


 


EXECUTIVE EMPLOYMENT
AGREEMENT


 


THIS EXECUTIVE EMPLOYMENT
AGREEMENT (the “Agreement”) dated effective as of
November 1, 2007 (“Effective Date”),
is made and entered into by and between EMRISE CORPORATION, a Delaware
corporation (“Employer”), and CARMINE T.
OLIVA (“Executive”).


 


R E C I T A L S


 


Employer desires that
Executive enter into an employment relationship with Employer in order to
provide the necessary leadership and senior management skills that are
important to the success of Employer. Employer believes that obtaining
Executive’s services as an employee of Employer and the benefits of his
business experience are of material importance to Employer and Employer’s
stockholders.


 


NOW, THEREFORE, in
consideration of Executive’s employment by Employer and the mutual promises and
covenants contained herein, the receipt and sufficiency of which is hereby
acknowledged, Employer and Executive intend by this Agreement to specify the
terms and conditions of Executive’s employment relationship with Employer.


 


1.             General Duties of Employer and Executive.


 


(a)           Employer agrees to
employ Executive and Executive agrees to accept employment by Employer and to
serve Employer in an executive capacity upon the terms and conditions set forth
herein. Employer hereby employs Executive as President and Chief Executive
Officer of Employer as of the Effective Date, reporting to the Board of
Directors of Employer (the “Board”).
Executive will also serve as Chairman of the Board. Executive’s duties and
responsibilities shall be those normally assumed by the President and Chief
Executive Officer of a publicly-owned company similarly situated to Employer,
as well as such other or additional duties, as may from time-to-time be
assigned to Executive by the Board. Such other or additional duties shall be
consistent with the senior executive functions set forth above.


 


(b)           While employed
hereunder, Executive shall use his best efforts to obey the lawful directions
of the Board. Executive shall also use his best efforts to promote the
interests of Employer and to maintain and to promote the reputation of
Employer. While employed hereunder, Executive shall devote his full business
time, efforts, skills and attention to the affairs of Employer and faithfully
perform his duties and responsibilities hereunder.


 


(c)           While this Agreement is
in effect, Executive may from time to time engage in any activities that do not
compete directly with Employer, provided that such activities do not interfere
with his performance of his duties. Executive shall be permitted to (i) invest
his personal assets as a passive investor in such form or manner as Executive
may choose in his discretion, (ii) participate in various charitable efforts,
and (iii) serve as a member of the Board of Directors of other corporations
which are not competitors of Employer.


 





















 


2.             Compensation and Benefits.


 


(a)           As compensation for his
services to Employer, Employer shall pay to Executive an annual base salary of
$350,000, payable in equal semimonthly payments in accordance with Employer’s
regular payroll policy for salaried employees (the “Salary”).
The Compensation Committee of the Board (the “Compensation
Committee”) shall perform an annual review of Executive’s Salary
based on a review of Executive’s performance of his duties and Employer’s other
compensation policies. The Compensation Committee may, at its sole discretion,
increase (but not decrease) the Salary at any time, and from time to time.


 


(b)           In addition to the
foregoing Salary, Executive shall be eligible for an annual incentive bonus (“Incentive Bonus”) based on criteria determined by the
Compensation Committee, at its sole discretion. The Incentive Bonus shall be
payable annually in cash, following the date on which Employer’s Form 10-K for
the previous fiscal year is filed with the Securities and Exchange Commission,
but in no event later than the Short Term Deferral Date as defined in Section 3(a).


 


(c)           Upon Executive’s
furnishing to Employer customary and reasonable documentary support (such as
receipts or paid bills) evidencing costs and expenses incurred by him in the
performance of his services and duties hereunder (including, without
limitation, travel and entertainment, cellular telephone, computer and other
home office expenses) and containing sufficient information to establish the
amount, date, place and essential character of the expenditure, Executive shall
be reimbursed for such costs and expenses in accordance with Employer’s normal
expense reimbursement policy.


 


(d)           Executive shall 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 Employer’s policy for other senior executive officers
of Employer, with premiums for all such insurance for Executive and his
dependents to be paid by Employer, subject to customary employee contributions.
In addition, Employer shall purchase and maintain in effect a life insurance
policy on Executive’s life, in the amount of $1,000,000, payable to Executive’s
estate in the event of his death during the time Executive is employed by
Employer, or as provided for in Paragraph 7(c)(vi).


 


(e)           Executive shall have
the right to participate in any additional compensation, benefit, bonus,
pension, stock option, stock purchase, 401(k) or other plan or arrangement of
Employer now or hereafter existing for the benefit of other senior executive
officers of Employer, to the extent offered by Employer, and in amounts
consistent with the Employer’s policy.


 


(f)            Executive shall be
entitled to vacation (but in no event less than four (4) weeks per year),
holiday and other paid or unpaid leaves of absence consistent with Employer’s
normal policies for other senior executive officers of Employer or as otherwise
approved by the Board. Executive shall
be entitled to accrue vacation time for one (1) year. If Executive does not
take the accrued vacation during the following year, he shall be paid for the
unused vacation at his Salary rate then in effect.


 


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(g)           Executive shall be
provided a monthly car allowance in the amount of at least $750.00.


 


(h)           Executive shall be
entitled to the non-exclusive use of Employer’s corporate residence.


 


(i)            Employer shall
purchase and maintain in effect a directors’ and officers’ liability insurance
policy with a minimum limit of liability of $10,000,000 and shall enter into an
indemnification agreement with Executive upon terms and conditions mutually
acceptable to Employer and Executive.


 


(j)            Employer agrees, by
action of its Board, to nominate Executive as a Class III member of the Board
and seek stockholder approval of such nomination at the 2008 annual meeting of
the stockholders of Employer.


 


3.             Deferred Compensation.


 


(a)           This
Agreement is not intended to provide for any deferral of compensation payable
during Executive’s employment pursuant to Section 409A of the Internal
Revenue Code (the “Code”) and,
accordingly, any compensation paid to Executive pursuant to this Agreement
during Executive’s employment is intended to be paid not later than the later
of:  (i) the fifteenth (15th)
day of the third (3rd) month following the Executive’s first (1st)
taxable year in which such benefit is no longer subject to a substantial risk
of forfeiture, and (ii) the fifteenth (15th) day of the third (3rd)
month following the first (1st) taxable year of Employer in which
such benefit is no longer subject to a substantial risk of forfeiture, as
determined in accordance with Section 409A of the Code and any Treasury
Regulations and other guidance issued thereunder. The date determined under
this subsection is referred to as the “Short-Term Deferral Date.”  Notwithstanding anything to the contrary
herein, in the event that any compensation paid pursuant to this Agreement
during Executive’s employment is not actually or constructively received by
Executive on or before the Short-Term Deferral Date, to the extent such
compensation, or any portion thereof, constitutes a deferral of compensation
subject to Code Section 409A, then, subject to Section 3(b),
such benefit shall be paid upon Executive’s separation from service, with
respect to Employer and its affiliates within the meaning of Section 409A
of the Code.


 


(b)           In
the event that Executive is a “specified
employee,” as defined in Section 409A(a)(2)(B)(i) of the Code as of
the date of any separation from service with respect to Employer and its
affiliates, no payment of deferred compensation subject to Code
Section 409A may be made to Executive before the date that is six (6)
months after the date of separation from service (or, if earlier, the date of
death of the specified employee), and, in such case, any payments shall be
accumulated and paid on the first date of the seventh (7th) month
following separation from service; provided, however, that any
payment or portion thereof which is subject to an exemption for separation pay
to specified employees as provided under Treasury Regulation § 1.409A, or is
subject to any other exemption provided under Treasury Regulation § 1.409A
allowing for payment to a specified employee prior to the date that is six (6)
months after the date of separation from service, may be paid to Executive upon
separation from service.


 


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4.             Preservation of Business; Fiduciary Responsibility.


 


Executive shall use his
best efforts to preserve the business and organization of Employer and to
preserve the business relations of Employer. So long as the Executive is
employed by Employer, Executive shall observe and fulfill proper standards of
fiduciary responsibility attendant upon his service and office.


 


5.             No Specified Term; Employment at Will.


 


The employment
relationship between Employer and Executive pursuant to this Agreement is not
for any specific term, but may be terminated with or without cause, by Employer
or by Executive, at any time and for any reason, subject to the rights and
obligations of Employer and Executive as set forth in this Agreement. Any
modification to the nature of the at-will employment relationship between
Employer and Executive must be made in writing, and must be signed by Executive
and by Employer.


 


6.             Termination.


 


Employer or Executive may
terminate Executive’s employment under this Agreement at any time, but only on
the following terms:


 


(a)           Employer may terminate
Executive’s employment under this Agreement at any time for “Due Cause” (as
defined in Appendix I attached hereto and incorporated herein by
this reference) upon the good faith determination by the Board that Due Cause
exists for the termination of the employment relationship.


 


(b)           If Executive is
incapacitated by accident, sickness or otherwise so as to render Executive
either:  (i)  unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months; or (ii) by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months is receiving income replacement benefits for a period
of not less than three (3) months under an accident and health plan covering
employees of Employer; and such incapacity is confirmed by the U.S. Social
Security Administration or in accordance with a disability insurance program
maintained by Employer, Employer may terminate Executive’s employment under
this Agreement upon giving Executive or his legal representative written notice
at least 30 days prior to the termination date, subject to the provisions of Section 7(b).
Notwithstanding anything expressed or implied above to the contrary, Employer
will fully comply with its obligations under the Americans with Disabilities
Act as well as any other applicable federal, state, or local law, regulation,
or ordinance governing the protection of qualified individuals with
disabilities as well as Employer’s obligation to provide reasonable
accommodation thereunder.


 


(c)           This Agreement shall
terminate immediately upon Executive’s death, subject to the provisions of Section 7(b).


 


(d)           Subject to the
provisions of Section 7(c), Employer may terminate Executive’s
employment under this Agreement at any time for any reason whatsoever, even 


 


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without Due Cause, by
giving a written notice of termination to Executive, in which case the
employment relationship shall terminate immediately upon the giving of the
notice. If Employer terminates the employment of Executive other than (i)
pursuant to Section 6(a) for Due Cause, (ii) due to incapacity
pursuant to Section 6(b) or due to Executive’s death pursuant to Section 6(c),
or (iii) Executive’s retirement, then the action by Employer, unless consented
to in writing by Executive, shall be deemed to be a constructive termination by
Employer of Executive’s employment (a “Constructive Termination”),
and, in that event, Executive shall be entitled to receive the compensation set
forth in Section 7(c).


 


(e)           Executive may terminate
this Agreement at any time within ninety (90) days of the occurrence of any
event comprising “Good Reason” (as
defined in Appendix I attached hereto and incorporated herein by
this reference); provided, however, that Executive provides
Employer with written notice of the event or condition constituting Good Reason within thirty (30) days of
the initial existence of such event or condition, and that Employer shall have
a period of thirty (30) days to cure such event or condition and, in the event
that Employer fails to cure such event or condition, Executive shall be
entitled to receive the compensation set forth in Section 7(c).


 


7.             Effect of Termination.


 


(a)           If the employment
relationship is terminated (i) by Employer for Due Cause pursuant to Section 6(a),
(ii) by Executive breaching this Agreement by refusing to continue his
employment, or (iii) by Executive without Good Reason, then all compensation
and benefits shall cease as of the date of termination, other than:
(A) those benefits that are provided by retirement and benefit plans and
programs specifically adopted and approved by Employer for Executive that are
earned and vested by the date of termination; (B) Executive’s pro rata
annual Salary (as in effect as of the date of termination, payable in the
manner as prescribed in the first sentence of Section 2(a) through
the date of termination; (C) any stock options which have vested as of the
date of termination pursuant to the terms of the agreement granting the
options; and (D) accrued vacation as required by California law.


 


(b)           If Executive’s
employment relationship is terminated due to Executive’s incapacity pursuant to
Section 6(b) or due to Executive’s death pursuant to Section 6(c),
Executive or Executive’s estate or legal representative, shall, subject to Section 3
of this Agreement, be entitled to (i) those benefits that are provided by
retirement and benefits plans and programs specifically adopted and approved by
Employer for Executive that are earned and vested at the date of termination,
(ii) a prorated Incentive Bonus, payable in the manner as prescribed in the
second sentence of Section 2(b) (to the extent Executive would
otherwise be eligible) for the fiscal year in which incapacity or death occurs,
and (iii) a lump-sum cash payment, payable within ten (10) business days of
separation from service due to death or disability, but in any event, not later
than the Short-Term Deferral Date, in an amount equal to one (1) year of
Executive’s then current annual Salary as set forth in Section 2(a),
which amount shall be net of all then applicable federal, state and local taxes
payable by Executive relating to such payment (said payment taking into
consideration the full gross-up effect of additional taxes payable with respect
to tax payments).


 


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(c)           In the event of a
termination of this Agreement as a result of Constructive Termination, or by
Executive for Good Reason, then Employer shall, subject to Section 3
of this Agreement:


 


(i)            pay to Executive on
the date of termination his Salary in effect as of the date of termination
through the end of the month during which the termination occurs plus credit
for any vacation earned but not taken;


 


(ii)           pay to Executive on the
first business day following the expiration of the revocation period described
in Section 7(d) (provided Executive has not tendered his revocation),
but in any event, not later than the Short-Term Deferral Date, as severance pay
an amount equal to three (3) times Executive’s then current annual Salary,
which amount shall be net of all then applicable federal, state and local taxes
payable by Executive relating to such payment (said payment taking into consideration
the full gross-up effect of additional taxes payable with respect to tax
payments);


 


(iii)          pay to Executive the
prorated Incentive Bonus, to the extent Executive would otherwise be eligible
for any, for the fiscal year during which termination occurs, payable as
provided in Section 2(a); and


 


(iv)          maintain, at Employer’s
expense, in full force and effect, for Executive’s continued benefit, all
medical insurance to which Executive was entitled immediately prior to the date
of termination until the earliest of (i) eighteen (18) months or (ii) the date
or dates that Executive’s continued participation in Employer’s medical
insurance plan 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
medical insurance plan does not allow Executive’s continued participation in
the plan, then Employer will pay to Executive, in monthly installments, from
the date on which Executive’s participation in the medical insurance is prohibited
until the date that is eighteen (18) months after the date of termination, an
amount equal to the monthly premium or premiums for COBRA coverage with respect
to Executive for the discontinued medical insurance; and


 


(v)           pay to Executive on the
date of termination a lump-sum cash payment equal to eighteen (18) times the
estimated monthly COBRA premiums at the time of termination (taking into
account all known or anticipated premium increases) to be used by Executive to
maintain Executive’s continued medical insurance coverage for an additional
period of eighteen (18) months, pursuant to Cal-COBRA, following the expiration
of the COBRA reimbursement payments set forth in Section 7(c)(iv); and


 


(vi)          pay to Executive on the
date of termination a lump-sum cash payment equal to thirty-six (36) times the
estimated monthly life insurance premiums at the time of termination (taking
into account all known or anticipated premium increases) to be used by
Executive to maintain: (i) Executive’s existing group life insurance coverage
in force as of the date of separation; and (ii) the life 


 


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insurance policy on Executive’s life, in the amount of
$1,000,000, each as provided for in Section 2(f), for a period of
thirty-six (36) months after the date of termination.


 


(d)           Executive shall be
entitled to the payments and benefits described in subsections 7(c)(ii) and
(iv) only if Executive signs an appropriate separation agreement in a form
acceptable to Employer, which includes a release of all claims against Employer
to the fullest extent permitted by law, such agreement actually enters into
effect following any revocation period required by law, and Executive complies
fully with any continuing obligations under this Agreement.


 


(e)           Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor shall the amount
of any payment provided for under this Agreement be reduced by any compensation
earned by Executive as the result of employment by another Employer after the
date of termination, or otherwise.


 


(f)            In the event of a
termination of this Agreement for any reason, Employer shall return to
Executive all of Executive’s personal property located at Employer’s offices
and/or corporate residence and shall pay all costs associated with the return
of such property (including Executive’s automobile) to Executive’s principal
place of residence.


 


(g)           Except as expressly
provided herein, the provisions of this Agreement, and any payment or benefit
provided for hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish Executive’s existing rights, or rights which would accrue
solely as a result of the passage of time, under any Employer Benefit Plan,
employment agreement or other contract, plan or arrangement.


 


(h)           The amount of any
payment provided under this Agreement shall not be reduced by reason of any
present value calculation.


 


(i)            Upon termination of
this Agreement, compensation and benefits shall be paid to the Executive as set
forth in the applicable subsection of this Section 7 and stock
grants or options granted to Executive, if any, shall be governed by the
provisions of all stock grant or option agreements between Employer and
Executive. In the event of a termination of this Agreement by Executive for
Good Reason, all other rights and benefits Executive may have under the
employee and/or executive benefit plans and arrangements of Employer generally
shall be determined in accordance with the terms and conditions of those plans
and arrangements.


 


8.             Payment Upon Change in Control.


 


Immediately preceding the
occurrence of a “Change in Control” (as
defined in Appendix I attached hereto and incorporated herein by this
reference), Employer shall pay to Employee, in immediately available funds, an
amount equal to three (3) times Executive’s then current annual Salary, which
amount shall be net of all then applicable federal, state and local taxes
payable by Executive relating to such payment (said payment taking into
consideration the full gross-up effect of additional taxes payable with respect
to tax payments).


 


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9.             Covenants of Confidentiality, Nondisclosure and Noncompetition.


 


(a)           During the term of this
Agreement, Employer will provide to Executive certain confidential and
proprietary information owned by Employer as more fully described below.
Executive acknowledges that he occupies or will occupy a position of trust and
confidence with Employer, and that Employer would be irreparably damaged if
Executive were to breach the covenants set forth in this Section 9(a).
Accordingly, Executive agrees that he will not, without the prior written
consent of Employer, at any time during the term of this Agreement or any time
thereafter, except as may be required by competent legal authority or as
required by Employer to be disclosed in the course of performing Executive’s
duties under this Agreement for Employer, use or disclose to any person, firm
or other legal entity, any confidential records, secrets or information
obtained by Executive during his employment hereunder related to Employer or
any parent, subsidiary or affiliated person or entity (collectively, “Confidential Information”). Confidential Information shall
include, without limitation, information about Employer’s Inventions (as
defined in Section 10(a)), customer lists and product pricing,
data, know-how, formulae, processes, ideas, past, current and planned product
development, market studies, computer software and programs, database and
network technologies, strategic planning and risk management. Executive
acknowledges and agrees that all Confidential Information of Employer and/or
its affiliates will be received in confidence and as a fiduciary of Employer.
Executive will exercise utmost diligence to protect and guard the Confidential
Information.


 


(b)           Executive agrees that
he will not, without the express written consent of the Board, take with him
upon the termination of this Agreement, any document or paper, or any photocopy
or reproduction or duplication thereof, relating to any Confidential
Information.


 


(c)           Executive agrees that
he will, upon the termination of his employment, return all Employer’s property
including but not limited to vehicles leased or owned by Employer, mobile
telephone, fuel card, personal computer, all documents, working papers,
information whether stored on computer disc or otherwise, and all other records
relating to Employer and its business. Executive agrees that he will confirm in
writing that he has complied with this clause, if requested to do so by
Employer, within seven (7) days of receipt of such a request.


 


(d)           Executive agrees that,
while Executive is employed with Employer, he will not, either directly 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 of its
business activities or solicit individuals or other entities that are customers
or competitors of Employer. Executive further agrees that, for a period of
twenty-four (24) months after the date of termination of this Agreement (the “Restricted Period”), Executive shall not use Employer’s
trade secrets, either directly or indirectly, to compete in any way with the
business of Employer and will not solicit individuals or other entities that
are customers or competitors of Employer during the six-month period
immediately prior to the date of termination of this Agreement, to terminate or
change their contracts or business relations with Employer. Executive also
agrees that, for the Restricted Period, he will not, either directly or
indirectly, solicit any employee of Employer to terminate his employment with
Employer.


 


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(e)           For purposes of this Section 9,
“Employer” shall include any of its
parents, subsidiaries or any other entity in which it holds a 50% or greater
equity interest.


 


10.           Inventions.


 


(a)           Any and all inventions,
product, discoveries, improvements, processes, formulae, manufacturing methods
or techniques, designs or styles, software applications or 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’s employment with Employer
and for a period of two years thereafter that may be directly or indirectly
related to the business of, or tests being carried out by, Employer, or any of
its parents, subsidiaries, shall be promptly disclosed by Executive to Employer
and shall be Employer’s exclusive property. The following provisions of the
California Labor Code shall supplement this Section 10(a):


 


SECTION 2870
OF THE CALIFORNIA LABOR CODE


 


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


 


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


 


(1)             Relate at the time of
conception or reduction to practice of the invention to employer’s business, or
actual or demonstrably anticipated research or development of employer; or


 


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


 


(b)           To the extent a
provision in an employment agreement purports to require an employee to assign
an invention otherwise excluded from being required to be assigned under
subdivision (a), the provision is against the public policy of this state and
is unenforceable.


 


(b)           Executive will, upon
Employer’s request and without additional compensation, execute any documents
necessary or advisable in the opinion of Employer’s legal counsel to direct the
issuance of patents to Employer with respect to Inventions that are to be
Employer’s exclusive property under this Section 10 or to vest in
Employer title to the Inventions; the expense of securing any patent, however,
shall be borne by Employer.


 


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(c)           Executive will hold for
Employer’s sole benefit any Invention that is to be Employer’s exclusive
property under this Section 10 for which no patent is issued.


 


11.           No Violation.


 


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


 


12.           Injunctive Relief.


 


Executive acknowledges
that the breach, or threatened breach, by Executive of the provisions of this
Agreement shall cause irreparable harm to Employer, which harm cannot be fully
redressed by the payment of damages to Employer. Accordingly, Employer shall be
entitled, in addition to any other right or remedy it may have at law or in
equity, to seek an injunction or restraining Executive from any violation or
threatened violation of this Agreement.


 


13.           Dispute Resolution.


 


Subject to Section 12,
all claims, disputes and other matters in controversy (“dispute”)
arising, directly or indirectly out of or related to this Agreement, or the
breach thereof, whether contractual or noncontractual, and whether during the
term or after the termination of this Agreement, shall be resolved exclusively
according to the procedures set forth in this Section 13, and not
through resort to any judicial proceedings.


 


(a)           Neither party shall
commence an arbitration proceeding pursuant to the provisions of Section 13(b)
unless that party first gives a written notice (a “Dispute
Notice”) to the other party setting forth the nature of the dispute.
The parties shall attempt in good faith to resolve the dispute by mediation
under the American Arbitration Association Commercial Mediation Rules in effect
on the date of the Dispute Notice. If the parties cannot agree on the selection
of a mediator within twenty (20) days after delivery of the Dispute Notice, the
mediator will be selected by the American Arbitration Association. If the
dispute has not been resolved by mediation within sixty (60) days after
delivery of the Dispute Notice, then the dispute shall be determined by
arbitration in accordance with the provisions below.


 


(b)           Any dispute that is not
settled by mediation as provided in Section 13(a) shall be resolved
by arbitration in Orange County, California, before a single arbitrator
appointed by the American Arbitration Association or its successor. The
determination of the arbitrator shall be final and absolute. The arbitrator
shall be governed by the duly promulgated rules and regulations of the American
Arbitration Association or its successor then in effect, and the pertinent
provisions of the laws of the State of California relating to arbitration. The
decision of the arbitrator may be entered as a final judgment in any court of
the State of California or elsewhere. The prevailing party in any such
arbitration shall also be entitled to recover reasonable attorneys’,
accountants’ and experts’ fees and costs of suit in addition to any other
relief awarded the prevailing party.


 


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14.           Miscellaneous.


 


(a)           If any provisions
contained in this Agreement is for any reason held to be totally invalid or
unenforceable, such provision will be fully severable, and in lieu of such
invalid or unenforceable provision there will be added automatically as part of
this Agreement a provision as similar in terms as may be valid and enforceable.


 


(b)           All notices and other
communications required or permitted hereunder or necessary or convenience in
connection herewith shall be in writing and shall be deemed to have been given
when mailed by registered mail or certified mail, return receipt requested or
hand delivered, as follows (provided that notice of change of address shall be
deemed given only when received):


 


If to
Employer:                      EMRISE
Corporation

9485 Haven Avenue

Rancho Cucamonga, CA 91730

Attention: Board of Directors


 


If to
Executive:                      Carmine
T. Oliva

901 Little River Drive


P.O. Box 2006

Elizabeth City, NC 27906


 


or to such 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 in this Section 13(b).


 


(c)           This Agreement shall be
binding upon and inure to the benefit of Employer, its successors, 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 him and may
not be assigned without the express written consent of Employer. If Executive
should die while any amounts are due to him pursuant to this Agreement, all
such amounts shall be paid to Executive’s devisee, legatee or other designee,
or if there be no such designee, to Executive’s estate. Employer will require
any successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Employer, by Agreement in form and substance satisfactory to
Executive and his legal counsel, expressly, absolutely and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that Employer would be required to perform each of them if no such
succession or assignment had taken place. Any failure of Employer to obtain
such agreement prior to the effectiveness of any such succession or assignment
shall be a material breach of this Agreement and shall entitle Executive to
terminate Executive’s employment for Good Reason. As used in this Agreement, “Employer” means EMRISE Corporation and any successor or
assign to its business and/or assets which executes and delivers the Agreement
provided for in this Section or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law. If at any time
during the term of this Agreement Executive is employed by any company a
majority of the voting securities of which is then owned by Employer, “Employer” as used in this Agreement
shall in addition include that subsidiary company. In that event, Employer
agrees 


 


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that it shall pay or
shall cause the subsidiary company to pay any amounts owed to Executive
pursuant to this Agreement.


 


(d)           This Agreement replaces
and merges all previous agreements and discussions relating to the same or
similar subject matters between Executive and Employer with respect to the
subject matter of this Agreement (other than any option agreement dated prior
to the Effective Date between Executive and Employer), including without
limitation that certain Executive Employment dated effective as of January 1,
2006 between Employer and Executive. This Agreement may not be modified in any
respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of Employer or by any written agreement
unless signed by an officer of Employer who is expressly authorized by Employer
to execute that document.


 


(e)           The laws of the State
of California will govern the interpretation, validity and effect of this
Agreement without regard to principles of conflicts of law, the place of
execution or the place for performance thereof.


 


(f)            Executive and Employer
shall execute and deliver any and all additional instruments and agreements
that may be necessary or proper to carry out the purposes of this Agreement.


 


(g)           The descriptive
headings of the several sections of this Agreement are inserted for convenience
only and do not constitute a party of this Agreement.


 


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


 


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


 


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


 


	
   

  	
  EMRISE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: November 1, 2007

  	
  By:

  	
  /s/
  Otis W. Baskin

  
	
   

  	
   

  	
  Otis W. Baskin,

  
	
   

  	
   

  	
  Chairman of the
  Compensation Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: November 1, 2007

  	
   

  	
  /s/
  Carmine T. Oliva

  
	
   

  	
  CARMINE T. OLIVA

  



 


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APPENDIX I


 


Additional Definitions


 


For purposes of this
Agreement, the following additional capitalized terms shall have the respective
definitions set forth below:


 


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


 


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


 


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


 


(i)            an acquisition by a
trustee or other fiduciary holding securities under any employee benefit plan
(or related trust) sponsored or maintained by Employer or any person controlled
by Employer or by any employee benefit plan (or related trust) sponsored or
maintained by Employer or any person controlled by Employer, or


 


(ii)           an acquisition of
voting securities by Employer or a corporation owned, directly or indirectly,
by the stockholders of Employer in substantially the same proportions as their
ownership of the stock of Employer.


 


provided,
however, that notwithstanding the foregoing, an acquisition of Employer’s
securities by Employer that (x) causes Employer’s voting securities
beneficially owned by a person or group to represent 40% or more of the combined voting power of Employer’s then
outstanding voting securities or (y) cause Employer’s stock beneficially owned
by a person or group to represent 50% or more of the combined Fair Market Value
of Employer’s then outstanding stock shall not be considered an acquisition by
any person or group 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 voting
power of Employer’s then outstanding voting securities or 50% or more of the
combined Fair Market Value of Employer’s then outstanding stock by reason of
share acquisitions by Employer as described above and shall, after such share
acquisitions by Employer, become the beneficial owner of any additional
securities of Employer, then such acquisition shall constitute a Change in
Control;


 


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(b)           the date a majority of
members of the Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Board before the date of the appointment or election, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the Board;


 


(c)           the acquisition by any “person”
or “group” (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of
the Exchange Act and the rules thereunder), or combined acquisitions during the
12-month period ending on the date of the most recent acquisition by such
person or group, of ownership of assets from Employer that have a total gross
fair market value equal to or more than 40% of the total gross fair market
value of all of the assets of the corporation immediately before such
acquisition; and


 


(d)           stockholder approval of
a complete liquidation or dissolution of Employer.


 


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


 


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


 


(i)            a stockholder of
Employer (immediately before the asset transfer) in exchange for or with
respect to the stockholders’ stock;


 


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


 


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


 


(iv)          an entity, 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 following
events:


 


(a)           any intentional
misapplication by Executive of Employer’s funds or other material assets, or
any other act of dishonesty injurious to Employer committed by Executive; or


 


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


 


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


 


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


 


Notwithstanding anything
in the foregoing subsections (c) or (d) to the contrary, Employer shall not
terminate Executive under subsections (c) or (d) unless the Board first
provides Executive with a written memorandum describing in detail how his
performance hereunder is not satisfactory and Executive is given a reasonable
period of time (not less than thirty (30) days) to remedy the unsatisfactory
performance related by the Board to Executive in that memorandum. A
determination of whether Executive has satisfactorily remedied the unsatisfactory
performance shall be promptly made by a majority of the disinterested directors
of the Board at the end of the period provided to Executive for remedy and
their determination shall be final.


 


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


 


Fair
Market-Value. The term “Fair
Market Value” of a share of Employer’s common stock as of a given
date shall be: (a) if the common stock is listed or admitted for trading on any
United States national securities exchange and/or is quoted on a system of
automated dissemination of quotations of securities prices in common use, the
last reported sale price of a share of common stock on the principal exchange
or system on which shares of common stock are trading on such date (or if no
sale occurred on such date, then on the next preceding date on which a trade
occurred); provided, however, that if the common stock is not a
last sale reported security, then the Fair Market Value shall be the average of
the closing high bid and low asked quotations for a share of common stock on
such principal exchange or system on such date (or if bid and asked prices were
not both reported on such date, then on the next preceding date on which bid
and asked prices were both reported); provided  further, 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 other source as the Board
deems reliable; or (b) if the common stock is not listed or admitted for trading
on such an exchange or system on such date, the Fair Market Value of a share of
common stock as established by the Board acting in good faith, taking into
account all material information available with respect to the value of a share
of common stock, including, without limitation, the value of the tangible and
intangible assets of Employer, the present value of its anticipated future cash
flows, the market value of the stock or equity interests in other entities
engaged in substantially the same business, recent arm’s length transactions
involving the sale of common stock, and other relevant factors such as control
premiums or discounts for lack of marketability.


 


Good Reason.
The term “Good Reason” as used in this Agreement
shall mean any of the following which occur without Executive’s written consent
and provided that Executive notifies Employer’s Board  in writing of
the event or condition constituting “Good
Reason” within thirty (30) days of the initial existence of such event
or condition, that Executive 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 or condition within thirty (30) days after
receipt of such notice:


 


(a)           the material diminution
in Executive’s authority, duties, or responsibilities; a material diminution in
Executive’s titles or offices; any removal of Executive from 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)           a purported reduction
by Employer in Executive’s base salary amounting to a material 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 base salary in effect at the
time of the purported reduction; or


 


(c)           a failure by Employer
to comply with any material provision resulting in a material breach by
Employer of this Agreement which has not been cured within 30 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 not have been diligently
initiated by Employer within the 30 day period;


 


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


 


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