Document:

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EXHIBIT 10.4

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.

                               EMRISE CORPORATION

                              PLACEMENT WARRANT

Placement
Warrant No. [  ]                              Original Issue Date: [     ], 2005

         Emrise Corporation, a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, [ ] or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of [ ] shares
of Common Stock (each such share, a "WARRANT SHARE" and all such shares, the
"WARRANT SHARES"), at any time and from time to time from and after the Original
Issue Date and through and including January [ ], 2010 (the "EXPIRATION DATE"),
and subject to the following terms and conditions:

         1. DEFINITIONS. As used in this Warrant, the following terms shall have
the respective definitions set forth in this Section 1. Capitalized terms that
are used and not defined in this Warrant that are defined in the Purchase
Agreement (as defined below) shall have the respective definitions set forth in
the Purchase Agreement.

         "BUSINESS DAY" means any day except Saturday, Sunday and any day that
is a federal legal holiday in the United States or a day on which banking
institutions in the State of New York or the State of California are authorized
or required by law or other government action to close.

         "CALL CONDITION PERIOD" has the meaning set forth in Section 4.

         "CALL DATE" has the meaning set forth in Section 4.

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         "CALL NOTICE" has the meaning set forth in Section 4.

         "COMMON STOCK" means the common stock of the Company, par value $.0033
per share, and any securities into which such common stock may hereafter be
reclassified.

         "EXERCISE PRICE" means $1.73, subject to adjustment in accordance with
Section 9.

         "FUNDAMENTAL TRANSACTION" means any of the following: (1) the Company
effects any merger or consolidation of the Company with or into another Person
pursuant to which the Company is not the surviving entity (other than a
migratory merger conducted for the purpose of changing the Company's state of
incorporation), (2) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (3) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (4) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property.

         "ORIGINAL ISSUE DATE" means the Original Issue Date first set forth on
the first page of this Warrant.

         "NEW YORK COURTS" means the state and federal courts sitting in the
City of New York, Borough of Manhattan.

         "PURCHASE AGREEMENT" means the Securities Purchase Agreement, dated
December 29, 2004, to which the Company and various investors are parties.

         "TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.

         "VWAP" means on any particular Trading Day or for any particular
period, the volume weighted average trading price per share of Common Stock on
such date or for such period as reported by the Bloomberg L.P., or by any
successor performing similar functions.

         2. REGISTRATION OF WARRANT. The Company shall register this Warrant
upon records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

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         3. REGISTRATION OF TRANSFERS. The Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a "NEW Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Warrant.

         4. EXERCISE AND DURATION OF WARRANTS.

                  (a) This Warrant shall be exercisable by the registered Holder
at any time and from time to time on or after the Original Issue Date through
and including the Expiration Date. At 6:30 p.m., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value.

                  (b) Subject to the provisions of this Section 4(b), if at any
time following the one year anniversary of the Original Issue Date: (i) the VWAP
of the Common Stock for each of 30 consecutive Trading Days following the one
year anniversary of the Original Issue Date is greater than $3.46 (subject to
adjustment in accordance with Section 9), (ii) the Warrant Shares are either
registered for resale pursuant to an effective registration statement naming the
Holder as a selling stockholder thereunder (and the prospectus thereunder is
available for use by the Holder as to all Warrant Shares) or freely transferable
without volume restrictions pursuant to Rule 144(k) promulgated under the
Securities Act, as determined by counsel to the Company pursuant to a written
opinion letter addressed and in form and substance reasonably acceptable to the
Holder and the transfer agent for the Common Stock, during the entire 30 Trading
Day period referenced in (i) above through the expiration of the Call Date as
set forth in the Company's notice pursuant to this Section (the "CALL CONDITION
PERIOD"), and (iii) the Company shall have complied in all material respects
with its obligations under this Warrant and the Transaction Documents and the
Common Stock shall at all times be listed or quoted on a Trading Market, then,
subject to the conditions set forth in this Section, the Company may, in its
sole discretion, elect to require the exercise of all (but not less than all) of
the then unexercised portion of this Warrant, on the date that is the 30th day
after written notice thereof (a "CALL NOTICE") is delivered by the Company (the
"CALL DATE") to the address last shown on the records of the Company for the
Holder or given by the Holder to the Company for the purpose of notice;
PROVIDED, that the conditions to giving such notice must be in effect at all
times during the Call Condition Period or any such Call Notice shall be null and
void. The Company and the Holder agree that, if and to the extent Section 11 of
this Warrant would restrict the ability of the Holder to exercise this Warrant
in the event of a delivery of a Call Notice, then notwithstanding anything to
the contrary set forth in the Call Notice, the Call Notice shall be deemed
automatically amended to apply only to such portion of this Warrant as may be
exercised by the Holder by the Call Date in accordance with such Sections as are
then in effect. The Holder will promptly (and, in any event, prior to the Call
Date) notify the Company in writing following receipt of a Call Notice if
Section 11 would restrict its exercise of the Warrant, specifying therein the
number of Warrant Shares so restricted. The Company covenants and agrees that it
will honor all Exercise Notices tendered through 6:30 p.m. (New York City time)
on the Call Date.

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         5. DELIVERY OF WARRANT SHARES.

                  (a) To effect exercises hereunder, the Holder shall not be
required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant is being exercised. Upon delivery of the
Exercise Notice (in the form attached hereto) to the Company (with the attached
Warrant Shares Exercise Log) at its address for notice set forth herein and upon
payment of the Exercise Price multiplied by the number of Warrant Shares that
the Holder intends to purchase hereunder, the Company shall promptly (but in no
event later than three Trading Days after the Date of Exercise (as defined
herein)) issue and deliver to the Holder, a certificate for the Warrant Shares
issuable upon such exercise, which, unless otherwise required by the Purchase
Agreement, shall be free of restrictive legends. The Company shall, upon request
of the Holder and subsequent to the date on which a registration statement
covering the resale of the Warrant Shares has been declared effective by the
Securities and Exchange Commission, use its reasonable best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust Corporation
or another established clearing corporation performing similar functions, if
available, PROVIDED, that, the Company may, but will not be required to change
its transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through the Depository Trust Corporation. A "DATE OF EXERCISE"
means the date on which the Holder shall have delivered to the Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price for
the number of Warrant Shares so indicated by the Holder to be purchased.

                  (b) If by the third Trading Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.

                  (c) If by the third Trading Day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior
to the receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "BUY-IN"), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue by (B) the closing sale price of the Common Stock at the time
of the obligation giving rise to such purchase obligation and (2) at the option
of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder.
The Holder shall provide the Company written notice and supporting documentation
indicating the amounts payable to the Holder in respect of the Buy-In.

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                  (d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. Nothing herein shall limit a Holder's right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates representing
Warrant Shares upon exercise of the Warrant as required pursuant to the terms
hereof.

         6. CHARGES, TAXES AND EXPENSES. Issuance and delivery of Warrant Shares
upon exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.

         7. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company's
obligation to issue the New Warrant.

         8. RESERVATION OF WARRANT SHARES. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of Persons other than the Holder (taking into
account the adjustments and restrictions of SECTION 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.

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         9. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this SECTION 9.

                  (a) STOCK DIVIDENDS AND SPLITS. If the Company, at any time
while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock
or otherwise makes a distribution on any class of capital stock that is payable
in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, or (iii) combines outstanding shares of Common
Stock into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the payment of the dividend
or the making of the distribution, and any adjustment pursuant to clause (ii) or
(iii) of this paragraph shall become effective immediately after the effective
date of such subdivision or combination.

                  (b) FUNDAMENTAL TRANSACTIONS. If, at any time while this
Warrant is outstanding there is a Fundamental Transaction, then the Holder shall
have the right thereafter to receive, upon exercise of this Warrant, the same
amount and kind of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of the number of
Warrant Shares then issuable upon exercise in full of this Warrant (the
"ALTERNATE CONSIDERATION"). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall, either (1) issue to the
Holder a new warrant substantially in the form of this Warrant and consistent
with the foregoing provisions and evidencing the Holder's right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (2) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (b) and insuring that the Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

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                  (c) NUMBER OF WARRANT SHARES. Simultaneously with any
adjustment to the Exercise Price pursuant to this Section 9, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant
Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.

                  (d) CALCULATIONS. All calculations under this SECTION 9 shall
be made to the nearest cent or the nearest 1/100th of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issue or sale of Common
Stock.

                  (e) NOTICE OF ADJUSTMENTS. Upon the occurrence of each
adjustment pursuant to this SECTION 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.

                  (f) NOTICE OF CORPORATE EVENTS. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction (but only to the extent
such disclosure would not result in the dissemination of material, non-public
information to the Holder) at least 10 calendar days prior to the applicable
record or effective date on which a Person would need to hold Common Stock in
order to participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure that the
Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice.

         10. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise Price in
one of the following manners:

                  (a) CASH EXERCISE. The Holder may deliver immediately
available funds; or

                  (b) CASHLESS EXERCISE. The Holder may notify the Company in an
Exercise Notice of its election to utilize cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:

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                                    X = Y [(A-B)/A]

                           where:

                                    X = the number of Warrant Shares to be
                                    issued to the Holder.

                                    Y = the number of Warrant Shares with
                                    respect to which this Warrant is being
                                    exercised.

                                    A = the average of the closing sale prices
                                    for the five Trading Days immediately prior
                                    to (but not including) the Exercise Date.

                                    B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.

         11. LIMITATIONS ON EXERCISE. Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to insure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder's for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number of
issued and outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. This
provision shall not restrict the number of shares of Common Stock which a Holder
may receive or beneficially own in order to determine the amount of securities
or other consideration that such Holder may receive in the event of a
Fundamental Transaction as contemplated in Section 9 of this Warrant. This
restriction may not be waived.

         12. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will
be issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing sale price of
one Warrant Share as reported by the applicable Trading Market on the date of
exercise.

         13. NOTICES. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Company, to Emrise Corporation, Attn: President, or to Facsimile No.: (909)

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987-9228 (or such other address as the Company shall indicate in writing in
accordance with this Section), or (ii) if to the Holder, to the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.

         14. WARRANT AGENT. The Company shall serve as warrant agent under this
Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.

         15. MISCELLANEOUS.

                  (a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. Subject to
the preceding sentence, nothing in this Warrant shall be construed to give to
any Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder and their successors and
assigns.

                  (b) All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York (except for matters governed by corporate law in the State of Delaware),
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of this Warrant and the transactions herein contemplated ("PROCEEDINGS")
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the New York Courts. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any New York Court, or that
such Proceeding has been commenced in an improper or inconvenient forum. Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

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                  (c) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                  (d) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  (e) Prior to exercise of this Warrant, the Holder hereof shall
not, by reason of by being a Holder, be entitled to any rights of a stockholder
with respect to the Warrant Shares.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

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         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                       EMRISE CORPORATION

                                       By:______________________________________
                                            Name:
                                            Title:

                                       11

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                                 EXERCISE NOTICE
                               EMRISE CORPORATION
                      PLACEMENT WARRANT DATED JANUARY [ ], 2005

The undersigned Holder hereby irrevocably elects to purchase _____________
shares of Common Stock pursuant to the above referenced Warrant. Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.

(1) The undersigned Holder hereby exercises its right to purchase ____________
Warrant Shares pursuant to the Warrant.

(2) The Holder intends that payment of the Exercise Price shall be made as
(check one):

                    ____  "Cash Exercise" under Section 10

                    ____  "Cashless Exercise" under Section 10

(3) If the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant.

(4) Pursuant to this Exercise Notice, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.

(5) By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11 of this Warrant to which
this notice relates.

(6) The undersigned represents that it has and will comply with the prospectus
delivery requirements of the Securities Act.

Dated: ____________ , ____          Name of Holder:

                                    (Print)_____________________________________

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________

                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)

                                       12

<PAGE>

<TABLE>
                                     PLACEMENT WARRANT SHARES EXERCISE LOG

----------------------------- ----------------------------- ---------------------------------- ---------------------------
Date                          Number of Warrant Shares      Number of Warrant Shares           Number of Warrant Shares
                              Available to be Exercised     Exercised                          Remaining to be Exercised
----------------------------- ----------------------------- ---------------------------------- ---------------------------
<S>     <C>

----------------------------- ----------------------------- ---------------------------------- ---------------------------
</TABLE>

                                                            13

<PAGE>

                               EMRISE CORPORATION
               PLACEMENT WARRANT ORIGINALLY ISSUED JANUARY [ ], 2005
                                 WARRANT NO. [ ]

                               FORM OF ASSIGNMENT

         [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
above-captioned Warrant to purchase ____________ shares of Common Stock to which
such Warrant relates and appoints ________________ attorney to transfer said
right on the books of the Company with full power of substitution in the
premises.

Dated:   _______________, ____

                                    ____________________________________________
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)

                                    ____________________________________________
                                    Address of Transferee

                                    ____________________________________________

                                    ____________________________________________

In the presence of:

________________________________

                                       14

<TABLE>
                                                WARRANT SHARES EXERCISE LOG

----------------------------- ----------------------------- ---------------------------------- ---------------------------
Date                          Number of Warrant Shares      Number of Warrant Shares           Number of Warrant Shares
                              Available to be Exercised     Exercised                          Remaining to be Exercised
----------------------------- ----------------------------- ---------------------------------- ---------------------------
<S>     <C>

----------------------------- ----------------------------- ---------------------------------- ---------------------------
</TABLE>

                                                            14

<PAGE>

                               EMRISE CORPORATION
                PLACEMENT WARRANT ORIGINALLY ISSUED JANUARY [ ], 2005
                                 WARRANT NO. [ ]

                               FORM OF ASSIGNMENT

         [To be completed and signed only upon transfer of Warrant]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
above-captioned Warrant to purchase ____________ shares of Common Stock to which
such Warrant relates and appoints ________________ attorney to transfer said
right on the books of the Company with full power of substitution in the
premises.

Dated:   _______________, ____

                                    ____________________________________________
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant)

                                    ____________________________________________
                                    Address of Transferee

                                    ____________________________________________

                                    ____________________________________________

In the presence of:

________________________________

                                       15Exhibit 10.1

                                  NETGURU, INC.
                               SECURITY AGREEMENT

To:      Laurus Master Fund, Ltd.
         c/o M&C Corporate Services Limited
         P.O. Box 309 GT
         Ugland House
         South Church Street
         George Town
         Grand Cayman, Cayman Islands

Date:    December 23, 2004

To Whom It May Concern:

         1. To secure the payment of all Obligations (as hereafter defined),
Netguru, Inc., a Delaware corporation (the "Assignor"), hereby assigns and
grants to Laurus a continuing security interest in all of the following property
now owned or at any time hereafter acquired by the Assignor, or in which the
Assignor now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all cash, cash equivalents, accounts, accounts
receivable, deposit accounts (including, without limitation, Lockbox Deposit
Account (defined below)), accounts receivable, inventory, equipment, goods,
documents, instruments (including, without limitation, promissory notes),
contract rights, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less favorable than
those currently in effect among our affiliates), chattel paper, supporting
obligations, investment property (including, without limitation, all equity
interests owned by the Assignor), letter-of-credit rights, trademarks, trademark
applications, tradestyles, patents, patent applications, copyrights and
copyright applications in which the Assignor now has or hereafter may acquire
any right, title or interest, all proceeds and products thereof (including,
without limitation, proceeds of insurance) and all additions, accessions and
substitutions thereto or therefore. In the event the Assignor wishes to finance
the acquisition of any hereafter acquired equipment and have obtained a
commitment from a financing source to finance such equipment from an unrelated
third party, Laurus agrees to release its security interest on such hereafter
acquired equipment so financed by such third party financing source. Except as
otherwise defined herein, all capitalized terms used herein shall have the
meaning provided such terms the Securities Purchase Agreement referred to below,
as applicable.

         2. The term "Obligations" as used herein shall mean and include all
debts, liabilities and obligations owing by the Assignor to Laurus arising
under, out of, or in connection with: (i) that certain Securities Purchase
Agreement dated as of the date hereof by and between the Company and Laurus (the
"Securities Purchase Agreement") (ii) the Related Agreements referred to in the
Securities Purchase Agreement and (iii) that certain Amended and Restated
Convertible Note of the Borrower in the original principal amount of $2,400,000
issued to the Holder effective as of December 4, 2003 (the "December 2003
Note"), (the Securities Purchase Agreement, each Related Agreement and the

<PAGE>

December 2003 Note, as each may be amended, modified, restated or supplemented
from time to time, are collectively referred to herein as the "Documents"), or
any documents, instruments or agreements relating to or executed in connection
with the Documents or any documents, instruments or agreements referred to
therein or otherwise, or any other indebtedness, obligations or liabilities of
the Assignor to Laurus, whether now existing or hereafter arising, direct or
indirect, liquidated or unliquidated, absolute or contingent, due or not due and
whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise, in each case, irrespective of the genuineness,
validity, regularity or enforceability of such Obligations, or of any instrument
evidencing any of the Obligations or of any collateral therefor or of the
existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of the Obligations in any case commenced
by or against the Assignor under Title 11, United States Code, including,
without limitation, obligations or indebtedness of the Assignor for
post-petition interest, fees, costs and charges that would have accrued or been
added to the Obligations but for the commencement of such case.

         3. The Assignor hereby represents, warrants and covenants to Laurus
that:

                  (a) it is a corporation, validly existing, in good standing
         and organized under the laws of the State of Delaware, and it will
         provide Laurus thirty (30) days' prior written notice of any change in
         its jurisdiction of organization;

                  (b) its legal name, as set forth in its Certificate of
         Incorporation (or equivalent organizational document) as amended
         through the date hereof, is Netguru, Inc. and it will provide Laurus
         thirty (30) days' prior written notice of any change in its legal name;

                  (c) its organizational identification number (if applicable)
         is 2612179, and it will provide Laurus thirty (30) days' prior written
         notice of any change in its organizational identification number;

                  (d) it is the lawful owner of the Collateral and it has the
         sole right to grant a security interest therein and will defend the
         Collateral against all claims and demands of all persons and entities;

                  (e) it will keep the Collateral owned by it free and clear of
         all attachments, levies, taxes, liens, security interests and
         encumbrances of every kind and nature ("Encumbrances"), except (i)
         Encumbrances securing the Obligations and (ii) to the extent said
         Encumbrance does not secure indebtedness in excess of $100,000 and such
         Encumbrance is removed or otherwise released within ten (10) days of
         the creation thereof;

                  (f) it will at its own cost and expense keep the Collateral in
         good state of repair (ordinary wear and tear excepted) and will not
         waste or destroy the same or any part thereof other than ordinary
         course discarding of items no longer used or useful in its business;

                  (g) it will not without Laurus' prior written consent, sell,
         exchange, lease or otherwise dispose of the Collateral, whether by
         sale, lease or otherwise, except for the sale of inventory in the
         ordinary course of business and for the disposition or transfer in the
         ordinary course of business during any fiscal year of obsolete and
         worn-out equipment or equipment no longer necessary for its ongoing
         needs, having an aggregate fair market value of not more than $25,000
         and only to the extent that:

                                       2
<PAGE>

                           (i) the proceeds of any such disposition are used to
                  acquire replacement Collateral which is subject to Laurus'
                  first priority perfected security interest or are used to
                  repay Obligations or to pay general corporate expenses; and

                           (ii) following the occurrence of an Event of Default
                  which continues to exist the proceeds of which are remitted to
                  Laurus to be held as cash collateral for the Obligations;

                  (h) it will insure the Collateral in Laurus' name as Loss
         Payee against loss or damage by fire, theft, burglary, pilferage, loss
         in transit and such other hazards under our current policies and all
         premiums thereon shall be paid by the Assignor and the policies
         delivered to Laurus and will deliver evidence of such Loss Payee
         endorsement within ten days of the date of the Securities Purchase
         Agreement.

                  (i) it will at all reasonable times allow Laurus or Laurus'
         representatives free access to and the right of inspection of the
         Collateral; and

                  (j) the Assignor hereby indemnifies and saves Laurus harmless
         from all loss, costs, damage, liability and/or expense, including
         reasonable attorneys' fees, that Laurus may sustain or incur to enforce
         payment, performance or fulfillment of any of the Obligations and/or in
         the enforcement of this Security Agreement or in the prosecution or
         defense of any action or proceeding either against the Assignor or
         Laurus concerning any matter growing out of or in connection with this
         Security Agreement, and/or any of the Obligations and/or any of the
         Collateral except to the extent caused by Laurus' own gross negligence
         or willful misconduct (as determined by a court of competent
         jurisdiction in a final and nonappealable decision); and

         4. The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Security Agreement:

                  (a) any covenant, warranty, representation or statement made
         or furnished to Laurus by the Assignor or on the Assignor's behalf was
         breached in any material respect or false in any material respect when
         made or furnished, as the case may be, and, in the case of a covenant,
         if subject to cure, shall not be cured for a period of thirty (30)
         days;

                  (b) the loss, theft, substantial damage, destruction, sale or
         encumbrance to or of any of the Collateral or the making of any levy,
         seizure or attachment thereof or thereon except to the extent:

                           (i) such loss is covered by insurance proceeds which
                  are used to replace the item or repay Laurus; or

                                       3
<PAGE>

                           (ii) said levy, seizure or attachment does not secure
                  indebtedness in excess of $100,000 and such levy, seizure or
                  attachment has not been removed or otherwise released within
                  ten (10) days of the creation or the assertion thereof;

                  (c) the Assignor shall become insolvent, cease operations,
         dissolve, terminate our business existence, make an assignment for the
         benefit of creditors, suffer the appointment of a receiver, trustee,
         liquidator or custodian of all or any part of the Assignor's property;

                  (d) any proceedings under any bankruptcy or insolvency law
         shall be commenced by or against the Assignor;

                  (e) the Assignor shall repudiate, purport to revoke or fail to
         perform any of its obligations under the Note (after passage of
         applicable cure period, if any); or

                  (f) an Event of Default (or similar term) shall have occurred
         under and as defined in the Securities Purchase Agreement or any other
         Document.

         5. Upon the occurrence of any Event of Default and at any time
thereafter, Laurus may declare all Obligations immediately due and payable and
Laurus shall have the remedies of a secured party provided in the Uniform
Commercial Code as in effect in the State of New York, this Master Security
Agreement and other applicable law. Upon the occurrence of any Event of Default
and at any time thereafter, Laurus will have the right to take possession of the
Collateral and to maintain such possession on the Assignor's premises or to
remove the Collateral or any part thereof to such other premises as Laurus may
desire. Upon Laurus' request, the Assignor shall assemble the Collateral and
make it available to Laurus at a place designated by Laurus. If any notification
of intended disposition of any Collateral is required by law, such notification,
if mailed, shall be deemed properly and reasonably given if mailed at least ten
(10) days before such disposition, postage prepaid, addressed to the Assignor
either at the Assignor's address shown herein or at any address appearing on
Laurus' records for the Assignor. Any proceeds of any disposition of any of the
Collateral shall be applied by Laurus to the payment of all expenses in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other legal expenses and disbursements and the reasonable expense of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Laurus toward the payment of the Obligations in
such order of application as Laurus may elect, and the Assignor shall be liable
for any deficiency.

         6. If the Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on the
Assignor's part to be performed or fulfilled under or pursuant to this Security
Agreement, Laurus may, at its option without waiving its right to enforce this
Security Agreement according to its terms, immediately or at any time thereafter
and without notice to the Assignor, perform or fulfill the same or cause the
performance or fulfillment of the same for the Assignor's account and at the
Assignor's cost and expense, and the cost and expense thereof (including
reasonable attorneys' fees) shall be added to the Obligations and shall be
payable on demand with interest thereon at the highest rate permitted by law.

                                       4
<PAGE>

         7. The Assignor hereby appoints Laurus, upon an Event of Default which
has not been cured within the applicable cure period, any of Laurus' officers,
employees or any other person or entity whom Laurus may designate as our
attorney, with power to execute such documents in our behalf and to supply any
omitted information and correct patent errors in any documents executed by the
Assignor or on our behalf; to file financing statements against the Assignor
covering the Collateral (and, in connection with the filing of any such
financing statements, describe the Collateral as "all assets and all personal
property, whether now owned and/or hereafter acquired" (or any substantially
similar variation thereof)); to sign the Assignor's name on public records; and
to do all other things Laurus deems necessary to carry out this Security
Agreement. The Assignor hereby ratifies and approve all acts of the attorney and
neither Laurus nor the attorney will be liable for any acts of commission or
omission, nor for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and non-appealable decision). This power being
coupled with an interest, is irrevocable so long as any Obligations remains
unpaid.

         8. No delay or failure on Laurus' part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by Laurus and then only to the extent therein set forth, and
no waiver by Laurus of any default shall operate as a waiver of any other
default or of the same default on a future occasion. Laurus' books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon the Assignor for the
purpose of establishing the items therein set forth and shall constitute prima
facie proof thereof. Laurus shall have the right to enforce any one or more of
the remedies available to Laurus, successively, alternately or concurrently. The
Assignor agrees to join with Laurus in executing financing statements or other
instruments to the extent required by the Uniform Commercial Code in form
satisfactory to Laurus and in executing such other documents or instruments as
may be required or deemed necessary by Laurus for purposes of affecting or
continuing Laurus' security interest in the Collateral.

         9. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of New York and cannot be terminated
orally. All of the rights, remedies, options, privileges and elections given to
Laurus hereunder shall inure to the benefit of Laurus' successors and assigns.
The term "Laurus" as herein used shall include Laurus, any parent of Laurus, any
of Laurus' subsidiaries and any co-subsidiaries of Laurus' parent, whether now
existing or hereafter created or acquired, and all of the terms, conditions,
promises, covenants, provisions and warranties of this Security Agreement shall
inure to the benefit of each of the foregoing, and shall bind the
representatives, successors and assigns of the Assignor. Each of Laurus and the
Assignor hereby (a) waives any and all right to trial by jury in litigation
relating to this Security Agreement and the transactions contemplated hereby and
the Assignor hereby agrees not to assert any counterclaim in such litigation,
(b) submit to the nonexclusive jurisdiction of any New York State court sitting
in the borough of Manhattan, the city of New York and (c) waive any objection
the Assignor or Laurus may have as to the bringing or maintaining of such action
with any such court.

                                       5
<PAGE>

         10. All notices from Laurus to the Assignor shall be sufficiently given
if mailed or delivered to the Assignor at its address set forth in the
Securities Purchase Agreement.

                                           Very truly yours,

                                           NETGURU, INC.

                                           By:
                                                     ---------------------------
                                           Name:
                                                     ---------------------------
                                           Title
                                                     ---------------------------

ACKNOWLEDGED:

LAURUS MASTER FUND, LTD.

By:
             ------------------------------------------
Name:
             ------------------------------------------
Title:
             ------------------------------------------

                                       6

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