EXHIBIT 10.13


 


Dated 30 November 2007


 


(1) EMRISE ELECTRONICS CORPORATION

as Chargor


 


-and-


 


(2) GVEC RESOURCE IV INC.

as Collateral Agent


 


 










 


SHARE CHARGE


 










 





















 


TABLE OF CONTENTS


 


	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  	
  1

  
	
  2.

  	
  COVENANT TO PAY

  	
   

  	
  4

  
	
  3.

  	
  CHARGE

  	
   

  	
  4

  
	
  4.

  	
  COVENANTS BY THE CHARGOR

  	
   

  	
  4

  
	
  5.

  	
  DIVIDENDS AND VOTING RIGHTS

  	
   

  	
  6

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES
  BY THE CHARGOR

  	
   

  	
  6

  
	
  7.

  	
  FURTHER ASSURANCE

  	
   

  	
  7

  
	
  8.

  	
  POWERS OF THE COLLATERAL AGENT

  	
   

  	
  7

  
	
  9.

  	
  RECEIVER

  	
   

  	
  8

  
	
  10.

  	
  CONTINUING SECURITY AND PROTECTIVE
  PROVISIONS

  	
   

  	
  9

  
	
  11.

  	
  NEW ACCOUNTS, SUSPENSE ACCOUNTS,
  NON-MERGER

  	
   

  	
  10

  
	
  12.

  	
  POWER OF ATTORNEY

  	
   

  	
  11

  
	
  13.

  	
  DISCHARGE CONDITIONAL

  	
   

  	
  11

  
	
  14.

  	
  DISCHARGE OF SECURITY

  	
   

  	
  12

  
	
  15.

  	
  CURRENCY

  	
   

  	
  12

  
	
  16.

  	
  COSTS

  	
   

  	
  13

  
	
  17.

  	
  ASSIGNMENT

  	
   

  	
  13

  
	
  18.

  	
  NOTICES

  	
   

  	
  14

  
	
  19.

  	
  MISCELLANEOUS

  	
   

  	
  15

  
	
  20.

  	
  LAW AND JURISDICTION

  	
   

  	
  15

  
						



 


i





















 


THIS
SHARE CHARGE (such agreement, as the same may from
time to time be amended, supplemented, restated, replaced or otherwise modified
herein referred to as this “Share
Charge”) is made as a deed on 30 November 2007.


 


BY:


 


1.                                       EMRISE ELECTRONICS CORPORATION a company organized and
existing under the laws of the State of New Jersey (the “Chargor”)


 


IN FAVOUR OF


 


2.                                      GVEC RESOURCE IV INC., a company organized and existing
under the laws of the British Virgin Islands, acting as collateral agent (such
entity, acting in such capacity, together with it successors and assigns,
herein referred to as the “Collateral Agent”)
for the benefit of the Lenders that are from time to time parties to the Credit
Agreement (as defined below), the “Lenders”).


 


RECITALS


 


(A)                              On
or about the date hereof, a Credit Agreement has been entered into between
EMRISE Corporation, a company organized and existing under the laws of the
State of Delaware (the “Parent”),
each of the Parent’s Subsidiaries identified on the signature pages thereof
(such Subsidiaries, together with the Parent, herein collectively referred to
as the “Borrowers”), the Collateral
Agent and the Lenders (such agreement, as the same may from time to time be
amended, supplemented, restated, replaced or otherwise modified herein referred
to as the “Credit Agreement”).


 


(B)                                The
Chargor will derive substantial direct and indirect economic and other benefits
from the extensions of credit under the Credit Agreement. It is also a
condition precedent to the effectiveness of the Credit Agreement that the
Chargor shall have entered into this Share Charge.


 


NOW THIS
DEED WITNESSES as follows:


 


In
consideration of the execution, delivery and performance by the Lenders of the
agreements referred to above, the Chargor hereby agrees with the Collateral
Agent (acting for the benefit of itself and the Lenders in accordance with the
provisions of the Credit Agreement) as follows:


 


1.                                       DEFINITIONS
AND INTERPRETATION


 


1.1                                 Terms
Defined Above


 


Terms defined
above shall have their specified meanings.


 


1.2                                 References
to Collateral Agent


 


When
references are made herein to the Collateral Agent, unless otherwise indicated,
it is understood that such references refer to the Collateral Agent, acting as
agent for the


 


1





















 


benefit of
itself and the Lenders in accordance with the provisions of the Credit
Agreement.


 


1.3                                 Other
Defined Terms


 


Words and
expressions defined in the Credit Agreement shall, save as otherwise defined
herein, bear the same meanings in this Share Charge but so that, so far as the
context admits, the following expressions shall have the respective meanings
ascribed to them:


 


“Beneficiaries”
means the Collateral Agent and the Lenders and “Beneficiary” means each or any
of them;


 


“Business
Day” means a day on which banks are open in London for the transaction of
business;


 


“Company”
means EMRISE Electronics Ltd. (Company No. 1969006) having its registered office
at Brunswick Road, Coobs Wood, Ashford, Kent TN23 1EH, UK;


 


“Loan Documents”
has the meaning given to that expression in the Credit Agreement;


 


“Obligors”
means, collectively, (a) the Borrowers; (b) each other entity that is now or
may hereafter be a party to the UK Guaranty (as such term is defined in the
Credit Agreement) (c) each other entity that is now or may hereafter be a party
to the French Guaranty (as such term is defined in the Credit Agreement) and
(d) each other entity that is now or may hereafter be a party to the Japanese
Guaranty (as such term is defined in the Credit Agreement);


 


“Receiver”
means a receiver or receiver and manager of the Chargor appointed by the
Collateral Agent under this Share Charge.


 


“Secured
Obligations” means (a) all principal, interest, premium, fees,
reimbursements, indemnifications, and other amounts how or hereafter owed by
the Obligors under the Credit Agreement and the other Loan Documents and all
present and future obligations and liabilities of any kind (whether actual or
contingent and whether owed jointly or severally or in any other capacity
whatsoever); (b) all amounts, obligations, or liabilities of any kind now
or hereafter owed by the Chargor under this Share Charge and the other Loan Documents;
and (c) any increases, extensions, renewals, replacements, and
rearrangements of the foregoing obligations under any amendments, supplements,
restatements, replacements and other modifications of the agreements creating
the foregoing obligations, in each case, whether direct or indirect, absolute
or contingent.


 


“Securities”
means all stocks, shares, bonds and securities of any kind in the Company
(marketable or otherwise) negotiable instruments and warrants, whether
registered in the name of, or beneficially owned by, the Chargor:


 


(a)                                  which
are listed or described in the Schedule; or


 


2





















 


(b)                                 which
are registered in the name of or shall be transferred into the name of the
Collateral Agent (or any nominee or agent for the Collateral Agent) or held or
to be held to the order of the Collateral Agent (whether for safe custody,
collection, security or otherwise); or


 


(c)                                  which
may after the date hereof be registered in the name of, or beneficially owned
by, the Chargor


 


and in each
such case includes all dividends, interest or other distributions payable
thereon and all allotments, accretions, offers, rights, bonuses, benefits and
advantages whatsoever (whether by way of conversion, redemption, preference,
option or otherwise) which accrue, are offered or arise in respect thereof.


 


1.4                                 In
this Share Charge (unless otherwise provided):


 


(a)                                  references
to Clauses and the Schedule are to be construed as references to the Clauses
of, and the Schedule to, this Share Charge as amended or varied from time to
time and references to sub Clauses shall unless otherwise specifically stated
be construed as references to the sub Clauses of the Clause in which the
reference appears;


 


(b)                                 references
to the Credit Agreement, or to any other document or agreement are to be
construed as references to the Credit Agreement, or such other document or
agreement as is in force for the time being and as amended, varied, novated or
supplemented, as the case may be, from time to time;


 


(c)                                  words
importing the singular shall include the plural and vice versa;


 


(d)                                 references
to a person shall be construed so as to include that person’s assigns or
transferees or successors in title and shall be construed as including
references to an individual, firm, partnership, joint venture, company,
corporation, unincorporated body of persons or any state or any agency thereof;


 


(e)                                  references
to any statute or statutory provision include any statute or statutory
provision which amends; extends, consolidates or replaces the same; or which
has been amended, extended, consolidated or replaced by the same, and shall
include any orders, regulations, instruments or other subordinate legislation
made under the relevant statute;


 


(f)                                    references
to liability or liabilities are to be construed to include all liabilities and
obligations whether actual, contingent, present or future and whether incurred
solely or jointly or as principal or surety;


 


(g)                                 the
words “other” and “otherwise” shall not be construed ejusdem generis with any foregoing
words where a wider construction is possible; and


 


3





















 


(h)                                 the
words “including” and “in particular” shall be construed as being by way of
illustration or emphasis only and shall not be construed as, nor shall they
take effect as, limiting the generality of any foregoing words.


 


2.                                       COVENANT
TO PAY


 


The Chargor
covenants with the Collateral Agent (acting for the benefit of itself and the
Beneficiaries pursuant to the provisions of the Credit Agreement) that it will
on demand pay and discharge each of the Secured Obligations when due to the
Collateral Agent PROVIDED THAT the liability of the Chargor hereunder shall be
limited to the amount realised by the disposal of the Securities and other
amounts payable by the Chargor under this Share Charge.


 


3.                                       CHARGE


 


The Chargor
hereby charges with full title guarantee the Securities by way of first fixed
charge to the Collateral Agent (acting as agent for the benefit of itself and
the Beneficiaries pursuant to the provisions of the Credit Agreement) as a
continuing security to secure the payment and performance of the Secured
Obligations.


 


The Collateral
Agent is hereby authorised to arrange at any time during the occurrence and
continuance of an Event of Default under the Credit Agreement or any Loan
Document for any of the Securities to be registered in the name of the
Collateral Agent (or its nominee) and the Collateral Agent will use its best
endeavours to notify the Chargor of any such registration.


 


4.                                       COVENANTS
BY THE CHARGOR


 


4.1                                 The
Chargor hereby covenants with the Collateral Agent, for the benefit of itself
and the other Beneficiaries, that during the continuance of this security the
Chargor will:


 


(a)                                  deposit
with the Collateral Agent (unless the Collateral Agent shall otherwise agree)
only Securities which are fully paid and which it has a good right to deposit
and transfer free from any option, lien, charge or encumbrance of any kind and
in respect of which it shall lodge:


 


(i)                                     all
stock and share certificates and documents of title;


 


(ii)                                  executed
undated transfers of the Securities completed in blank or duly executed and
dated transfers in favour of the Collateral Agent (as agent and trustee for the
Beneficiaries) or its nominee or agent as the Collateral Agent may direct; and


 


(iii)                             such
other documents as the Collateral Agent may from time to time require for
perfecting the title of the Beneficiaries to the Securities including any bonus
or rights issue (duly executed by or signed on behalf of the registered holder)
or for vesting or enabling the Chargor to vest the same in the Collateral Agent
or its nominees or in any purchaser to the


 


4





















 


intent that the Collateral Agent may at any tune without notice present
them for registration;


 


(b)                                 duly
and promptly pay all calls, installments or other payments which may be made or
become due in respect of any of the Securities as and when the same from time
to time become due (and if the Chargor does not do so, the Collateral Agent may
make such payments on behalf of the Chargor, in which event any sums so paid
shall be reimbursed on demand by the Chargor to the Collateral Agent);


 


(c)                                  comply
promptly with any notice served on it under the Companies Act 1985 or 2006;


 


(d)                                 not
(without the prior consent in writing of the Collateral Agent or except as
provided herein):


 


(i)                                     permit
any person other than the Chargor or the Collateral Agent (or its nominee or
agent) to be registered as holder of the Securities or any part thereof; or


 


(ii)                                  create
or purport to create or permit to subsist any mortgage, charge, lien or
encumbrance (other than in favour of the Collateral Agent or as permitted under
the Credit Agreement) on or over the Securities or any part thereof or interest
therein; or


 


(iii)                             sell,
transfer, grant any option over or otherwise dispose of the Securities or any
part thereof or interest therein or attempt or-agree so to do;


 


(e)                                  not
do or cause or permit to be done anything which may in any way depreciate,
jeopardise or otherwise prejudice the value to the Beneficiaries of the
Securities.


 


4.2                                 The
Chargor hereby farther covenants and agrees with the Beneficiaries that:


 


(a)                                  the
Collateral Agent and its nominees at the discretion of the Collateral Agent may
exercise in the name of the Chargor or otherwise at any time whether before or
after demand for payment and without any further consent or authority on the
part of the Chargor in respect of the Securities any voting rights and any
powers or rights which may be exercisable by the person in whose name the
Securities are registered or by the bearer thereof; but such power shall be
exercised subject to the provisions of Clause 5;


 


(b)                                 the
Chargor will, if so requested by the Collateral Agent, transfer all or any of the
Securities to the Collateral Agent or to such nominees wheresoever situate or
agents as the Collateral Agent may select and that the Collateral Agent may hold
all or any of such Securities in any branch of the Collateral Agent or with any
correspondents or other agents whether in the United Kingdom or overseas;


 


5





















 


(c)                                  subject
to Clause 8.7 the Chargor shall provide to the Collateral Agent a copy of any
report, accounts, circular or notice received in respect of or in connection
with any of the Securities promptly following the receipt thereof by the
Chargor.


 


5.                                       DIVIDENDS
AND VOTING RIGHTS


 


Without
prejudice to any other provision in this Share Charge (other than Clause 4.2),
the Collateral Agent hereby agrees with the Chargor that until it shall have
made demand for payment on the Borrowers under the Credit Agreement for any of
the Secured Obligations or until the occurrence of an Event of Default has
occurred and which is continuing under the Credit Agreement or any of the Loan Documents:


 


(a)                                  the
Chargor will hold all dividends paid on and received by it in respect of the
Securities; and


 


(b)                                 the
Chargor will exercise all voting and other rights and powers attached to the
Securities.


 


6.                                       REPRESENTATIONS
AND WARRANTIES BY THE CHARGOR


 


The Chargor
represents and warrants to the Collateral Agent, for the benefit of itself and
the Beneficiaries, and undertakes that:


 


(a)                                  the
Company is duly incorporated and validly existing under the law of England and
Wales;


 


(b)                                 subject
to and as permitted by the Credit Agreement, the Chargor is the sole, absolute
and; beneficial owner of the Securities, that no person save the
Chargor has any right or interest of any sort whatsoever in or to the
Securities and that there are no agreements or arrangements (including any
restrictions on transfer) affecting the Securities in any way or which would or
might in any way fetter or otherwise prejudice the rights of the Chargor or any
mortgagee of the Securities;


 


(c)                                  the
Securities are duly authorised, validly issued and fully paid and are and will
at all times be free from any restriction on transfer and there are no moneys
or liabilities outstanding in respect of any of the Securities;


 


(d)                                 this
Share Charge constitutes its legal, valid, binding and enforceable obligations
and is a security over all and every part of the Securities effective in
accordance with its terms (subject to laws affecting the rights of creditors
generally);


 


(e)                                  this
Share Charge does not and will not conflict with or result in any breach or
constitute a default under any agreement, instrument or obligation to which the
Company or Chargor is a party or by which it is bound; and


 


(f)                                    all
necessary authorisations and consents to enable or entitle it to enter into
this Share Charge have been obtained and will remain in full force and effect
at all times during the subsistence of the security constituted by this Share
Charge.


 


6





















 


7.                                       FURTHER
ASSURANCE


 


The Chargor
shall at any time, if and when required by the Collateral Agent, execute such
further legal or other charges or assignments in favour of the Collateral Agent
as the Collateral Agent shall from time to time reasonably require over all or
any of the Securities and all rights relating thereto both present and future
(including any bonus or substituted securities) and such other transfers or
documents as the Collateral Agent may from time to time reasonably require for
perfecting its title to the same or for vesting or enabling it to vest the same
in itself or its nominees or in any purchaser as the Collateral Agent deems
necessary or desirable to secure the Secured Obligations or to facilitate the
realisation of the Securities or the exercise of the powers conferred on the
Collateral Agent; such further charges or assignments to be prepared by or on
behalf of the Collateral Agent at die cost of the Chargor and to contain an
immediate power of sale without notice, a clause excluding section 93 and the
restrictions contained in section 103 of the Law of Property Act 1925 and such
other clauses for the benefit of the Beneficiaries as the Collateral Agent may
reasonably require.


 


8.                                       POWERS
OF THE COLLATERAL AGENT


 


8.1                                 At
any time after the Collateral Agent shall have demanded payment of any of the
Secured Obligations in accordance with the terms of the Loan Documents:


 


(a)                                  the
Collateral Agent and any nominee of the Collateral Agent wheresoever situate
may without further notice and without the restrictions contained in section
103 of the Law of Property Act 1925 in respect of all or any of the Securities
exercise all the powers or rights (including voting rights) which may be
exercisable by the registered holder of the Securities and all other powers
conferred on mortgagees by the Law of Property Act 1925 as hereby varied or
extended; and


 


(b)                                 any
dividends, interest or other payments which may be received or receivable by
the Collateral Agent or by any nominee in respect of any of the Securities may
be applied by the Collateral Agent as though they were proceeds of sale.


 


8.2                                 Section
93 of the Law of Property Act 1925 shall not apply to this security or to any
security given to the Collateral Agent or the Beneficiaries pursuant hereto.


 


8.3                                 In
exercising the powers referred to in Clause 8.1, the Securities or any part
thereof may be sold or disposed of at such times in such manner and generally
on such terms and conditions and for such consideration as the Collateral Agent
may think fit. Any such sale or disposition may be for cash, debentures or
other obligations, shares, stock, securities or other valuable consideration
and be payable immediately or by installments spread over such period as the
Collateral Agent shall think fit. No purchaser or other person shall be bound or
concerned to see or enquire whether the right of the Collateral Agent to
exercise any of the powers hereby conferred has arisen or not or be concerned
with notice to the contrary or with the propriety of the exercise or purported
exercise of such powers.


 


7





















 


8.4                                 All
money received by the Collateral Agent in the exercise of any powers conferred
by this Share Charge shall be applied, after payment of all costs and expenses
incurred in the exercise of such power and after the discharge of all
liabilities having priority thereto, in or towards satisfaction of the Secured
Obligations in such order as the Collateral Agent in its absolute discretion
may from time to time determine.


 


8.5                                 The
Collateral Agent shall not be liable to account as mortgagee in possession in
respect of all or any of the Securities and shall not be liable for any loss
upon realisation or for any neglect or default to present any interest coupon
or any bond or stock drawn for repayment or for any failure to pay any call or installment
or to accept any offer or to notify the Chargor of any such matter or for any
negligence or default by its nominees, correspondents or agents or for any
other loss of any nature whatsoever in connection with me Securities other than
any caused by the Collateral Agent’s gross negligence or willful default.


 


8.6                                 The
Chargor hereby agrees fully to indemnify and hold harmless the Collateral Agent
and the other Beneficiaries from and against all losses, actions, claims,
expenses, demands and liabilities whether in contract, tort or otherwise:


 


(a)                                  in
respect of calls or other payments relating to the Securities now of hereafter
incurred by the Collateral Agent or any other Beneficiary (or any nominee or
agent of any of them) or by any officer or employee for whose liability, act or
omission it may be answerable; and


 


(b)                                 occasioned
by any breach by the Chargor of any of its covenants or other obligations to
the Collateral Agent or any other of the Beneficiaries under this Share Charge.


 


The Chargor
shall indemnify the Collateral Agent and the other Beneficiaries on demand and
shall pay interest on the sums demanded from the date of demand to the date of
actual payment at the Default Rate, as such term is defined in Section 2.6(b)
of the Credit Agreement (both before and after judgment).


 


8.7                                 Neither
the Collateral Agent nor any other Beneficiary shall have any liability or
responsibility to the Chargor for any action taken or omitted to be taken by
the Collateral Agent in relation to the Securities (including any Securities
which are at any time registered in the name of the Collateral Agent (or any
nominee or agent for the Collateral Agent)). In particular, the Collateral
Agent shall have no liability as a result of any failure to forward to the
Chargor any report, circular or other communication received by the Collateral
Agent in relation to any Securities or to accept or decline any offer made in
respect of any Securities or to make any payment in relation to any Securities.


 


9.                                       RECEIVER


 


9.1                                 At
any time after this security becomes enforceable the Collateral Agent may
without further notice appoint any one or more qualified persons to be a
receiver or receiver and manager (each a “Receiver”)
of all or any part of the Securities in like manner in every respect as if the
Collateral Agent had become entitled under the Law of Property Act


 


8





















 


1925 to exercise the power of sale thereby
conferred. In this Clause “qualified person” means a person who, under the
Insolvency Act 1986, is qualified to act as a receiver of the property of any
company with respect to which he is appointed.


 


9.2                                 Every
Receiver appointed in accordance with Clause 9.1 shall have and be entitled to
exercise all powers conferred by the Law of Property Act 1925 as if such
Receiver has been duly appointed thereunder together with all powers conferred
on receivers under the Insolvency Act 1986. Additionally, each Receiver shall
have power to do all such other acts and things as he may consider desirable or
necessary for realising the Securities or any part thereof or incidental or
conducive to any of the matters, powers or authorities conferred on a Receiver
under or by virtue of this Share Charge and to exercise in relation to the
Securities or any part thereof all such powers, authorities and things as he
would be capable of exercising if he were, the absolute beneficial owner of the
same and to use the name of the Chargor for all or any of the purposes
aforesaid.


 


9.3                                 Any
Receiver appointed pursuant to this Share Charge shall be the agent of the
Chargor (and notwithstanding the liquidation of such Chargor, any Receiver
shall not he the agent of the; Collateral Agent) and shall as such agent be
deemed to be in the same position as a receiver appointed by a mortgagee under
the Law of Property Act 1925. The Chargor shall be solely liable for such
Receiver’s costs, defaults and remuneration and shall be liable on any
contracts and engagements made or entered into by such Receiver, except the
Collateral Agent may from time to time remove any Receiver appointed by it and
may whenever it may deem it expedient appoint another qualified person as a new
receiver in the place of any Receiver whose appointment may for any reason have
terminated and may from time to time fix the remuneration of any Receiver
appointed by it.


 


9.4                                 All
or any of the powers, authorities and discretions which are conferred by this Share
Charge (either expressly or impliedly) upon a Receiver of the Securities may be
exercised after the security hereby created becomes enforceable by the Collateral
Agent in relation to the whole of the Securities or any part thereof without
first appointing a Receiver thereof or notwithstanding the appointment of a
Receiver thereof.


 


10.                                 CONTINUING
SECURITY AND PROTECTIVE PROVISIONS


 


10.1                           The
security constituted by this Share Charge shall be continuing and shall not be
considered as satisfied or discharged by any intermediate payment or settlement
of the whole or any part of the Secured Obligations or any other matter or
thing whatsoever and shall be binding until all the Secured Obligations have
been unconditionally and irrevocably paid and discharged in full. In particular
this Share Charge shall not be reduced, discharged or otherwise adversely
affected by:


 


(a)                                  any
variation, extension, compromise, discharge, dealing with, exchange or renewal
of any right or remedy which the Collateral Agent or any other Beneficiary may
now or hereafter have against the Obligors or any other person in respect of
the Secured Obligations;


 


9





















 


(b)                                 any
act or omission by the Collateral Agent or any other Beneficiary or any other
person in taking up, perfecting or enforcing or the non-enforcement of any
security or guarantee from or against the Obligors or any other person;


 


(c)                                  any
termination, amendment, variation, novation or supplement of or to any of the
Secured Obligations;


 


(d)                                 any
grant of time, indulgence, waiver or concession to the Obligors or any other
person;


 


(e)                                  any
change in the constitution, name and style of the Obligors or any other person;


 


(f)                                    any
invalidity, illegality, unenforceability, irregularity, frustration or
discharge by operation of law of any actual or purported liability of, or any
security held from, the Obligors or any other person in connection with the
Secured Obligations;


 


(g)                                 any
act or omission which would not have discharged or affected any of the liabilities
of the Chargor had it been a principal debtor or by anything done or omitted by
any person which, but for this provision, might operate to exonerate or
discharge the Chargor or otherwise reduce or extinguish any of its liabilities
under this Share Charge.


 


10.2                           The
Chargor shall not at any time (while any of the Secured Obligations are
outstanding) take any security or other right or benefit from or exercise any
right against the Obligors, a guarantor or any other person in connection with
the liability of, or any payment made by, the Chargor under or pursuant to this
Share Charge.


 


10.3                           If the
Chargor shall be in breach of Clause 10.2 any security or other right or
benefit obtained from any Borrower or any other person shall be held upon trust
to transfer or pay the same to the Collateral Agent to the extent necessary to
satisfy any liability of the Chargor hereunder.


 


11.                                 NEW
ACCOUNTS, SUSPENSE ACCOUNTS, NON-MERGER


 


11.1                           If the
Collateral Agent or any other Beneficiary receives notice (whether actual or
otherwise) of any subsequent mortgage or charge affecting all or any part of
the Securities the Collateral Agent may open a new account or accounts with the
Obligors and, if it does not open a new account, it shall nevertheless be
treated as if it had done so at the time when the Collateral Agent or the other
Beneficiary received or was deemed to have received notice and as from that
time all payments made by the Obligors to the Collateral Agent or other
Beneficiary shall be credited or be treated as having been credited to the new
account and shall not operate to reduce the amount secured by this Share Charge
at the time when the Collateral Agent or the other Beneficiary received or was
deemed to have received such notice.


 


11.2                           All
moneys received, recovered or realised by the Collateral Agent under this Share
Charge (including the proceeds of any conversion of currency) may in the
discretion of


 


10





















 


the Collateral Agent be credited to any
suspense or impersonal account held with the Collateral Agent and may be held
in such account for so long as the Collateral Agent may think fit. The Charger
shall not be concerned with, and shall have no right in respect of, the
application by the Collateral Agent of any sums received, recovered or realised
by the Collateral Agent under this Share Charge.


 


11.3                           This
Share Charge is in addition to and shall not merge with or otherwise prejudice
or affect any banker’s lien, right to combine and consolidate accounts, right
of set off or any other contractual or other right or remedy or any guarantee,
lien, pledge, bill, note, mortgage or other security now or hereafter held by
or available to the Beneficiaries.


 


12.                                 POWER
OF ATTORNEY


 


12.1                           The
Chargor hereby irrevocably appoints the following, namely:


 


(a)                                  the
Collateral Agent; and


 


(b)                                 each
and every person to whom the Collateral Agent shall from time to time have
delegated the exercise of the power of attorney conferred by this Clause 12;


 


jointly and
also severally to be its attorney or attorneys and in its name and otherwise on
its behalf to sign, seal, execute, deliver, perfect and do all deeds,
instruments, documents, acts and things which may be required (or which the
Collateral Agent shall consider requisite) for carrying out any obligation
imposed on the Chargor by or pursuant to this Share Charge, for carrying any
sale or other dealing by the Collateral Agent or any other Beneficiary into
effect, for getting in the Securities, and generally for enabling the
Collateral Agent to exercise the powers conferred on it by or pursuant to this
Share Charge or by law. The Collateral Agent shall have full power to delegate
the power conferred on it by this Clause 12.1, but no such delegation shall
preclude the subsequent exercise of such power by the Collateral Agent itself
or preclude the Collateral Agent from making a subsequent delegation thereof to
some other person and any such delegation may be revoked by the Collateral
Agent at any time.


 


12.2                           The
power of attorney hereby granted is as regards the Collateral Agent and its
delegates (and as the Chargor hereby acknowledges) granted irrevocably and for
value as part of the security constituted by this Share Charge to secure
proprietary interests in and the performance of obligations owed to the
respective donees within the meaning of the Powers of Attorney Act 1971.


 


12.3                           The
Chargor agrees to ratify and confirm anything such attorney shall lawfully and
properly do or purport to do by virtue of Clause 12.1 and all money expended by
any such attorney shall be deemed to be expenses incurred by the Collateral
Agent under this Share Charge.


 


13.                                 DISCHARGE
CONDITIONAL


 


13.1                           Any
release, discharge or settlement between the Chargor and the Collateral Agent
in relation to this Share Charge shall be conditional upon no disposition or
payment to the


 


11





















 


Collateral Agent or any other Beneficiary by
any Borrower or any other person being avoided, set aside or ordered to be
refunded pursuant to any law relating to insolvency or for any other reason.


 


13.2                           If any
such disposition or payment is avoided, set aside or ordered to be refunded,
the Collateral Agent shall be entitled to enforce this Share Charge against the
Chargor as if such release, discharge or settlement had not occurred and any
such disposition or payment had not been made.


 


14.                                 DISCHARGE
OF SECURITY


 


14.1                           Termination


 


This Share
Charge and the security interest created hereby shall terminate when all the
Secured Obligations have been indefeasibly paid in full in cash, at which time
the Beneficiaries shall direct the Collateral Agent to execute and deliver to
the Chargor or the Chargor’s designee, at the relevant Chargor’s expense, all
documents which such Chargor shall reasonably request from time to time to
evidence such termination. Any execution and delivery of termination documents
pursuant to this Clause 14 shall be without recourse to or warranty by the
Collateral Agent or the Beneficiaries.


 


14.2                           Release


 


If any of the
Securities shall be sold, transferred or otherwise disposed of by a Chargor in
a transaction permitted by the Loan Documents, the security interest created
hereby in any Securities that is so sold, transferred or otherwise disposed of
shall automatically terminate and be released upon the closing of such sale,
transfer or other disposition, and such Securities shall be sold free and clear
of the lien and security interest created hereby; provided, however, that such
security interest will continue to attach to all proceeds of such sales or
other dispositions. In connection with any of the foregoing, the Beneficiaries
shall direct the Collateral Agent to execute and deliver to the Chargor or the
Chargor’s designee, at the Chargor’s expense, all documents that the Chargor
shall reasonably request from time to time to evidence such termination. Any
execution and delivery of termination documents pursuant to this Clause 14
shall be without recourse to or warranty by the Collateral Agent or the
Beneficiaries.


 


14.3                           Upon
any release of the Securities neither the Collateral Agent nor any of the other
Beneficiaries nor their nominees or agents (as the case may be) shall be bound
to release or transfer to the Chargor the identical stocks, shares or
securities which were deposited with or transferred to it or them and the
Chargor shall accept shares and securities of the same class and denomination
or such other securities as then represent the Securities.


 


15.                                 CURRENCY


 


15.1                           All
moneys received or held by the Collateral Agent or any other Beneficiary under
this Share Charge may from time to time after demand has been made by the
Collateral Agent or ah Event of Default has occurred be converted into such
other currency as the Collateral Agent considers necessary or desirable to
cover the Secured Obligations in the


 


12





















 


currency thereof at the then prevailing spot
rate of exchange of the Collateral Agent (as reasonably determined by the
Collateral Agent) for purchasing that other currency with the existing
currency.


 


15.2                           No
payment to the Collateral Agent or any other Beneficiary (whether under any
judgment or court order or otherwise) shall discharge the obligation or
liability of the Chargor in respect of which it was made unless and until the
Collateral Agent or such other Beneficiary shall have received payment in full
in the currency in which such obligation or liability was incurred and, to the
extent that the amount of any such payment shall on actual conversion into such
currency fall short of such obligation or liability actual or contingent
expressed in that currency, the Collateral Agent or such other Beneficiary
shall have a further separate cause of action against the Chargor and shall be
entitled to enforce this Share Charge to recover the amount of the shortfall.


 


16.                                 COSTS


 


The Chargor
shall on demand pay to the Collateral Agent the amount of all reasonable costs
and expenses and other liabilities (including reasonable legal and out of
pocket expenses and any Value Added Tax on such costs and expenses) which the
Collateral Agent or any other Beneficiary incurs in connection with:


 


(a)                                  the
preparation, negotiation, execution and delivery of this Share Charge;


 


(b)                                 any
stamping or payment of stamp duty reserve tax or registration of this Share
Charge or any transfer of the Securities pursuant hereto;


 


(c)                                  any
actual or proposed amendment or waiver or consent under or in connection with
this Share Charge;


 


(d)                                 any
discharge or release of this Share Charge;


 


(e)                                  the
preservation or exercise (or attempted preservation or exercise) of any rights
under or in connection with and the enforcement (or attempted enforcement) of
this Share Charge; or


 


(f)                                    dealing
with or obtaining advice about any other matter or question arising out of or
in connection with this Share Charge;


 


together with
interest thereon at the Default Rate from the date of demand (or if earlier the
date of payment by the Collateral Agent or such other Beneficiary) until the
date of payment by the Chargor whether before or after judgment.


 


17.                                 ASSIGNMENT


 


The
Beneficiaries may assign or otherwise transfer the whole or any part of the
benefit of this Share Charge to any person to whom all or any part of its
rights, benefits and obligations under the Credit Agreement are assigned or
transferred in accordance with the provisions of the Credit Agreement and the
expression “the Beneficiaries” wherever used


 


13





















 


herein shall
be deemed to include the assignees and other successors, whether immediate or derivative,
of any Beneficiary, who shall be entitled to enforce and proceed upon this
Share Charge in the same manner as if named herein. The Beneficiaries shall be
entitled to disclose (on a confidential basis) any information concerning the Chargor
to any such assignee or other successor or any participant or proposed
assignee, successor or participant. The Chargor may not assign or transfer all
or any part of its rights and/or obligations under this Share Charge.


 


18.                                 NOTICES


 


18.1                           Without
prejudice to any other method of service of notices and communications provided
by law, a demand or notice under this Share Charge shall be in writing signed
by an officer or agent of the Collateral Agent and may be served on the Chargor
by hand, by post or by facsimile transmission. Any such notice or communication
shall be sent to the address or number of the Chargor as set out below:


 


EMRISE Electronics
Corporation

9654 Hermosa Avenue

Rancho Cucamonga, CA 91730

USA

Attn: D. John Donovan


 


With a copy to:


 


Rutan & Tucker, LLP

611 Anton Blvd., Suite 1400

Costa Mesa, CA 92626

Attn: Larry A. Cerutti, Esq.

Fax No.: (714) 546-9035


 


18.2                           Any
such notice or communication given by the Collateral Agent or any other
Beneficiary shall be deemed to have been received:


 


(a)                                  if
sent by facsimile transmission, with a confirmed receipt of transmission from
the receiving machine, on the Business Day on which transmitted or the
following Business Day if transmitted after the normal business hours of the
Chargor;


 


(b)                                 in
the case of a written notice lodged by hand, on the Business Day of actual
delivery or the following Business Day if delivered after the normal business
hours of the Chargor; and


 


(c)                                  if
posted, on the second Business Day following the day on which it was properly dispatched
by first class mail postage prepaid.


 


18.3                           Any
notice given to the Collateral Agent or any other Beneficiary shall be deemed
to have been given only on actual receipt.


 


14





















 


19.                                 MISCELLANEOUS


 


19.1                           All
sums payable by the Chargor under this Share Charge shall be paid without any
set off, counterclaim, withholding or deduction whatsoever unless required by
law in which event the Chargor will, simultaneously with making the relevant
payment under this Share Charge, pay to the Collateral Agent such additional
amount as will result in the receipt by the Collateral Agent of the full amount
which would otherwise have been receivable and will supply the Collateral Agent
promptly with evidence satisfactory to the Collateral Agent that the Chargor
has accounted to the relevant authority for the sum withheld or deducted.


 


19.2                           No
delay or omission on the part of the Collateral Agent in exercising any right
or remedy under this Share Charge shall impair that right or remedy or operate
as or be taken to be a waiver of it nor shall any single, partial or defective
exercise of any such right or remedy preclude any other or further exercise
under this Share Charge of that or any other right or remedy.


 


19.3                           The
rights of the Beneficiaries under this Share Charge are cumulative and not
exclusive of any rights provided by law and may be exercised from time to time
and as often as the Collateral Agent deems expedient.


 


19.4                           Any
waiver by the Collateral Agent or any other Beneficiary of any terms of this
Share Charge or any consent or approval given by any of them under it shall be
effective only if given in writing and then only for the purpose and upon the
terms and conditions (if any) on which it is given.


 


19.5                           If at
any time any one or more of the provisions of this Share Charge is or becomes
illegal, invalid or unenforceable in any respect under any law of any
jurisdiction neither the legality, validity or enforceability of the remaining
provisions of this Share Charge nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall be in any way
affected or impaired as a result.


 


19.6                           Any
statement, certificate or determination of the Collateral Agent as to the
amount of the Secured Obligations or (without limitation) any other matter
provided for in this Share Charge shall in the absence of manifest error be
conclusive and binding on the Chargor.


 


20.                                 LAW
AND JURISDICTION


 


20.1                           This
Share Charge is governed by and shall be construed in accordance with English
law.


 


20.2                           The
Chargor irrevocably agrees for the exclusive benefit of the Beneficiaries that
the courts of England shall have jurisdiction to hear and determine any suit,
action or proceeding and to settle any dispute which may arise out of or in
connection with this Share Charge and for such, purposes irrevocably submits to
the jurisdiction of such courts.


 


15





















 


20.3                           Nothing
contained in this Clause shall limit the right of the Collateral Agent or other
Beneficiary to take proceedings against the Chargor in any other court of
competent jurisdiction (including without limitation and for the avoidance of
doubt, in accordance with the terms of the Credit Agreement) nor shall the
taking of any such proceedings in one or more jurisdictions preclude the taking
of proceedings in any other jurisdiction whether concurrently or not (unless
precluded by applicable law).


 


20.4                           The
Chargor irrevocably waives any objection which it may have now or in the future
to the courts of England being nominated for the purpose of this Clause on the
ground of venue or otherwise and agrees not to claim that any such court is not
a convenient or appropriate forum.


 


20.5                           The
Chargor irrevocably and unconditionally authorises and appoints EMRISE Electronics
Ltd. of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH, United Kingdom (or
such other company with a registered office in England as it may from time to
time substitute by not less than fifteen days written notice to the Collateral
Agent) to accept service of all legal process arising out of or connected with
this Share Charge and service on such person (or substitute) shall be deemed to
be service on the Chargor. Except upon such a substitution the Chargor shall
not revoke any such authority or appointment and shall at all times maintain an
agent for service of process in England and if any such, agent ceases for any
reason to be an agent for this purpose shall forthwith appoint another agent
and advise the Collateral Agent accordingly.


 


IN WITNESS
whereof the Chargor has executed this Share Charge as a deed with the intention
that it be delivered on the day and year first before written.


 


16





















 


SCHEDULE


 


	
  Number of shares or

  amount of stock

  	
   

  	
  Description of stocks,

  shares, or other securities

  
	
   

  	
   

  	
   

  
	
  58,668

  	
   

  	
  Ordinary shares of £1 each in EMRISE Electronics Ltd. a company
  registered in England and Wales (Registered No. 1969006)

  



 


17





















 


IN WITNESS
WHEREOF the Chargor has executed this Share Charge as a deed with the intention
that it be delivered on the day and year first before written


 


	
  EXECUTED as a Deed on behalf of

  	
  )

  	
   

  
	
  EMRISE Electronics Corporation, a company

  	
  )

  	
   

  
	
  incorporated in the State of New Jersey by

  	
  )

  	
   

  
	
  Carmine Oliva being a person

  	
  )

  	
  /s/ Carmine Oliva

  
	
  who in accordance with the laws of that

  	
  )

  	
   

  
	
  territory, is acting under the authority

  	
  )

  	
   

  
	
  of President & Chief Executive Officer

  	
  )

  	
   

  



 





















 


	
   

  	
  )

  	
  /s/ Robert J. Anderson

  	
   

  
	
   

  	
   

  	
  Robert J. Anderson

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
  SIGNED for and on behalf of

  	
  )

  	
  /s/ Peter Paul Mendel

  	
   

  
	
  GVEC RESOURCE IV INC. in its capacity

  	
  )

  	
  Peter Paul Mendel

  
	
  as Collateral Agent

  	
  )

  	
  Authorized Signatory