Exhibit 10.2


 


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 GRAHAM JEFFERIES (“Executive”).


 


R E C I T A L S


 


Employer
desires that the 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 the
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 Executive
Vice President and Chief Operating Officer of Employer as of the Effective
Date, reporting to the President and Chief Executive Officer of Employer (the “CEO”). Executive’s duties and
responsibilities shall be those normally assumed by the Executive Vice
President and Chief Operating 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 CEO. Such other or additional
duties shall be consistent with the senior executive functions set forth above.


 


(b)                                 While
employed hereunder, Executive shall use his reasonable endeavors to obey the
lawful directions of the CEO. Executive shall also use his reasonable endeavors
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, through its wholly-owned
subsidiary, Emrise Electronics, Ltd. (“Emrise
Electronics”), shall pay to Executive an annual base salary of
£152,800, payable in equal semimonthly payments in accordance with the Employer’s
regular payroll policy for salaried employees (the “Salary”). The Compensation Committee (the “Compensation Committee”) of the Board of
Directors of Employer (the “Board”)
shall perform an annual review of Executive’s Salary based on a review of
Executive’s performance of his duties prepared by Employer’s President and CEO
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.


 


(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 and cellular telephone 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 the 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.


 


(e)                                  Executive
shall have the right to participate in any additional compensation, benefit,
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 Employer’s policy in the U.K.


 


(f)                                    Executive
shall be entitled to twenty-five (25) working days’ paid vacation in each
calendar year in addition to public holidays in the United Kingdom. Executive
shall also be entitled to 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 year. If he does not take the accrued vacation during the
next 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 £460.


 


(h)                                 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.


 


3.                                       Preservation of Business; Fiduciary Responsibility.


 


Executive shall use his
reasonable endeavors 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.


 


4.                                       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.


 


5.                                       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 mentally or physically incapable of performing the services required
under Section 1 of this Agreement for a period of 180 consecutive
days, this Agreement shall terminate immediately; provided, however,
that Executive shall remain an employee of Emrise Electronics Ltd. and shall be
entitled to remuneration in an amount equal to the amount paid under Emrise
Electronics Ltd.’s permanent health scheme, subject to the provisions of  Section 6(b).


 


(c)                                  This
Agreement shall terminate immediately upon Executive’s death, subject to the
provisions of Section 6(b).


 


(d)                                 Subject
to the provisions of Section 6(c), Employer may terminate Executive’s
employment under this Agreement at any time for any reason whatsoever, even
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


 


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terminates the
employment of Executive other than (i) pursuant to Section 5(a) for
Due Cause, (ii) due to incapacity pursuant to Section 5(b) or due
to Executive’s death pursuant to Section 5(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 6(c).


 


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


 


6.                                       Effect of Termination.


 


(a)                                  If
the employment relationship is terminated (i) by Employer for Due Cause
pursuant to Section 5(a), or (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 applicable law.


 


(b)                                 If
Executive’s employment relationship is terminated due to Executive’s incapacity
pursuant 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 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 5(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 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).


 


(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:


 


(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;


 


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(ii)                                  pay
to Executive on the first business day following the expiration of the
revocation period described in Section 6(c)(iv) (provided Executive has
not tendered his revocation) as severance pay an amount equal to two (2) times
Executive’s then current annual Salary, which amount shall be net of all then
applicable 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 on the
date of termination the prorated Incentive Bonus, if any, for the fiscal year
during which termination occurs; and


 


(iv)                              maintain,
at Employer’s expense, in full force and effect, for Executive’s continued
benefit, all medical and life insurance to which Executive was entitled
immediately prior to the date of termination (or at the election of Executive
in the event of a Change in Control, immediately prior to the date of the
Change in Control) until the earliest of (i) 2 years or (ii) the date or dates
that Executive’s continued participation in Employer’s medical and/or life
insurance 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 medical
and/or life insurance plans do not allow Executive’s continued participation in
the plan or plans, then Employer will pay to Executive, in monthly
installments, from the date on which Executive’s participation in the medical
and/or life insurance, as applicable, is prohibited until the date that is
twenty-four (24) months after the date of termination, the monthly premium or
premiums which had been payable by Employer with respect to Executive for the
discontinued medical and/or life insurance, as applicable.


 


(d)                                 Executive
shall be entitled to the payments and benefits described in subsections
6(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)                                    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.


 


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


 


(h)                                 Upon
termination of this Agreement, compensation and benefits shall be paid to the
Executive as set forth in the applicable subsection of this Section 6
and stock options granted to Executive, if any, shall be governed by the
provisions of all stock 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.


 


7.                                       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 two (2) 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).


 


8.                                       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 8(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 9(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 Employer leased or owned
vehicles,


 


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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.


 


(e)                                  For
purposes of this Section 8, “Employer”
shall include any of its subsidiaries or any other entity in which it holds a
50% or greater equity interest.


 


9.                                       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 9(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:


 


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(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 9 or to vest
in Employer title to the Inventions; the expense of securing any patent,
however, shall be borne by Employer.


 


(c)                                  Executive
will hold for Employer’s sole benefit any Invention that is to be Employer’s
exclusive property under this Section 9 for which no patent is
issued.


 


10.                                 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.


 


11.                                 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.


 


12.                                 Dispute Resolution.


 


Subject
to Section 11, 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 12, and not
through resort to any judicial proceedings.


 


(a)                                  Neither
party 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 nature
of the dispute. The parties shall attempt in good faith to resolve the dispute
by mediation. If the dispute has not been resolved by mediation within 60


 


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days after
delivery of the Dispute Notice, then the dispute shall be determined by
arbitration in accordance with Section 12(b).


 


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


 


13.                                 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: Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
  If to Executive:

  	
   

  	
  Graham Jefferies

  
	
   

  	
   

  	
  7 Shephers
  Close, Fen Ditton

  
	
   

  	
   

  	
  Cambs, CB5 8XJ,
  United Kingdom

  



 


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 


 


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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 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 Agreement 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 United Kingdom 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. All disputes, claims or
proceedings between the parties relating to the validity construction or
performance of this Agreement shall be subject to the non-exclusive
jurisdiction of the Courts of England to which the parties irrevocably submit.


 


(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.


 


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(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/ 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


 


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 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 90 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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