emrisecorp8k_mar222015.htm

EXHIBIT C

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”), dated as of [˜], 2015, is entered into by and among DDC (United Kingdom) Ltd., a company incorporated under the laws of England (“Purchaser”), EMRISE Corporation, a Delaware corporation (“Seller”), and Wilmington Trust, N.A., as escrow agent (the “Escrow Agent” and, together with Purchaser and Seller, each a “Party” and collectively, the “Parties”). Capitalized terms not otherwise defined herein have the respective meanings given to them in the Purchase Agreement (as defined below). This Agreement shall become effective only at, and contingent upon, the Closing.

BACKGROUND

A. On [˜], 2015, Purchaser, Seller and EMRISE Electronics Ltd., a company incorporated under the laws of England (the “Company”), entered into a Stock Purchase Agreement (the “Purchase Agreement”).

B. Pursuant to the Purchase Agreement and as a condition to the consummation of the transactions contemplated thereby, (a) the Indemnity Escrow Account (as defined below) is being established to provide security for the indemnity obligations of Seller set forth in Article 10 of the Purchase Agreement and (b) the Working Capital Escrow Account (as defined below) is being established to provide security for a Shortfall in Closing Working Capital as described in Section 2.04(b)(vi) of the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, intending to be legally bound, the Parties hereby agree as follows:

1. Appointment of Escrow Agent. Purchaser and Seller hereby appoint and designate Wilmington Trust, N.A. as the escrow agent for the purposes set forth in this Agreement, and the Escrow Agent hereby accepts such appointment under the terms and subject to the conditions set forth in this Agreement. From and after the deposit of the Escrow Funds (as defined below) into the Escrow Accounts (as defined below) as set forth herein, the Escrow Agent will hold and safeguard the Escrow Amounts (as defined below), will treat the Escrow Amounts in accordance with the terms and conditions of this Agreement, and will hold, distribute and dispose of the Escrow Amounts only in accordance with the terms and conditions of this Agreement.

2. Establishment of Escrow Accounts.

(a) Purchaser has delivered to the Escrow Agent, pursuant to Section 2.02(b)(ii) of the Purchase Agreement, and the Escrow Agent acknowledges receipt of (i) $900,000 (the “Indemnity Escrow Fund”) and (ii) $400,000 (the “Working Capital Escrow Fund” and, together with the Indemnity Escrow Fund, the “Escrow Funds”) in immediately available funds. The Escrow Agent shall deposit the Indemnity Escrow Fund and the Working Capital Escrow Fund in separate and distinct escrow accounts (the “Indemnity Escrow Account” and the “Working Capital Escrow Account,” respectively, and, collectively, the “Escrow Accounts”) and hold the Indemnity Escrow Account and the Working Capital Escrow Account and any interest or earnings on each respective Escrow Fund (with respect to each such Escrow Fund, the “Earnings”), in the name of the Escrow Agent or in the name of its nominee, in accordance with this Agreement.

(b) The Indemnity Escrow Fund and Working Capital Escrow Fund shall be invested and reinvested in the M&T Bank Corporate Deposit Account, as fully described in the attached Annex B. The aggregate amount of the Indemnity Escrow Fund (including any subsequent Earnings thereon) remaining in the Indemnity Escrow Account at any given time is herein referred to as the “Indemnity Escrow Amount.” The aggregate amount of the Working Capital Escrow Fund (including any subsequent Earnings thereon) remaining in the Working Capital Escrow Account at any given time is herein referred to as the “Working Capital Escrow Amount.” Collectively, the Indemnity Escrow Amount and the Working Capital Escrow Amount are referred to herein as the “Escrow Amounts.”

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(c) Each of the Indemnity Escrow Amount and the Working Capital Escrow Amount shall be held separately as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any Party.

3. Distributions of Indemnity Escrow Amount; Expiration Date. On the date that is twelve months after the date of this Agreement, (the “Expiration Date”), and subject to Purchaser’s right to distributions of the Indemnity Escrow Amount pursuant to Section 7 of this Agreement, any then-remaining portion of the Indemnity Escrow Amount shall be distributed to Seller under the terms set forth in this Agreement and in the Purchase Agreement, within five Business Days; provided, however, that all or any portion of the then-existing Indemnity Escrow Amount equal to the aggregate amount of remaining, unsatisfied, bona fide claims under any Officer’s Claim Certificate properly delivered to Seller and the Escrow Agent in accordance with Section 10.04 of the Purchase Agreement prior to the Expiration Date shall remain in the Indemnity Escrow Account at and after the Expiration Date until the disposition of such amounts is finally determined in accordance with this Agreement.

4. Claims Against Indemnity Escrow Amount. In the event that:

(a) Purchaser and Seller deliver to the Escrow Agent a notice or memorandum jointly executed by Purchaser and Seller and specifying that Purchaser or another Indemnitee is entitled to recover funds from the Indemnity Escrow Account in accordance with Section 10.04(d) or 10.04(e) of the Purchase Agreement, or

(b) (i) Purchaser has delivered an Officer’s Claim Certificate to Seller (with a copy to the Escrow Agent) in accordance with Section 10.04(a) and 10.04(b) of the Purchase Agreement, (ii) Seller has not delivered a Claim Dispute Notice to Purchaser (with a copy to the Escrow Agent) within the 30-day period commencing upon receipt of the Officer’s Claim Certificate by Seller as set forth in Section 10.04(c) of the Purchase Agreement, (iii) Purchaser and Seller have not otherwise provided a notice or memorandum to the Escrow Agent as described in Section 4(a) hereof, and (iv) Purchaser has delivered a notice or memorandum to the Escrow Agent (with a copy to Seller) executed by Purchaser and stating that the events described in subsections “(i)”, “(ii)” and “(iii)” of this Section 4(b) have occurred,

then the Escrow Agent shall promptly (and in any event no later than five Business Days after receipt of such notice) deliver to Purchaser from the Escrow Account, by wire transfer of immediately available funds, an amount of cash equal to the amount of funds specified to be released from such account as set forth in such notice or memorandum.

(c) Pursuant to Section 6 hereof, if the Shortfall (if any), as finally determined pursuant to Section 2.04 of the Purchase Agreement, is greater than the amount in the Working Capital Escrow Fund, then the notice or memorandum jointly executed by Purchaser and Seller delivered to the Escrow Agent pursuant to Section 6 hereof shall include a direction to pay to Purchaser out of the Indemnity Escrow Fund the amount by which the Shortfall is greater than the amount in the Working Capital Escrow Fund; and, upon receipt thereof, the Escrow Agent shall, no later than two Business Days after receipt of such instructions, deliver to Purchaser from the Indemnity Escrow Account, by wire transfer of immediately available funds, an amount of cash equal to the amount of funds specified to be released from such account as set forth in such notice or memorandum.

5. Unresolved Claims Upon the Expiration Date.

(a) If the aggregate amount set forth in the Officer’s Claim Certificates properly delivered by Purchaser to Seller (with a copy to the Escrow Agent) is equal to or greater than the then-current aggregate Indemnity Escrow Fund, then no portion of the aggregate Indemnity Escrow Amount held in the Indemnity Escrow Account will be delivered or distributed to any Person and shall remain in the Indemnity Escrow Account until the disposition of such amounts is finally determined in accordance with the Purchase Agreement. If, at any time after the Expiration Date, the aggregate amount of claims set forth in the Officer’s Claim Certificates delivered by Purchaser is less than the then-current Indemnity Escrow Amount, then the portion of the Indemnity Escrow Amount in excess of the aggregate amount of claims set forth in the Officer’s Claim Certificates delivered by Purchaser shall be distributed in accordance with the procedures set forth in Section 3 of this Agreement.

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(b) For purposes of determining at any particular time the portion of the Indemnity Escrow Amount held in the Indemnity Escrow Account that is necessary or sufficient to satisfy and/or provide for all remaining, unsatisfied, bona fide claims set forth in the Officer’s Claim Certificates, Purchaser will be assumed to be entitled to the full amount set forth in the most recent Officer’s Claim Certificates delivered by Purchaser until the disposition of such amount is finally determined in accordance with the Purchase Agreement.

6. Distribution of Working Capital Escrow Fund. No later than two Business Days after the Escrow Agent’s receipt of a notice or memorandum jointly executed by Purchaser and Seller directing the Escrow Agent to distribute the amount of the Shortfall (if any), as finally determined in accordance with Section 2.04 of the Purchase Agreement, the Escrow Agent shall pay to Purchaser, by wire transfer of immediately available funds, an amount of cash equal to the amount of such Shortfall, as set forth in such a notice or memorandum, and any then-remaining portion of the Working Capital Escrow Amount shall be distributed to Seller by wire transfer of immediately available funds; provided, however, that if the Working Capital Escrow Fund is insufficient to pay the entire Shortfall, then Purchaser shall be entitled to the entire amount of the Working Capital Escrow Fund, and shall additionally be entitled to recover the remaining amount of the Shortfall from the Indemnity Escrow Fund as set forth in Section 4(c) hereof.

7. Tax Treatment and Allocation of Income on Indemnity Escrow Amount.

(a) The Parties agree that for all U.S. federal and state tax reporting purposes, (i) the Escrow Amounts will be treated as owned by Seller, in all cases to the extent not paid to Purchaser pursuant to this Agreement, and (ii) all interest or other income earned from the investment of the Escrow Amounts in any calendar year (the “Escrow Income”) shall be allocated to and shall be timely reported by the Escrow Agent to Seller on applicable IRS forms in accordance with applicable legal requirements. Not later than five Business Days after the end of each calendar quarter, upon Seller’s direction, the Escrow Agent shall distribute to Seller from the Indemnity Escrow Fund an amount equal to the product of (a) Escrow Income earned during such calendar quarter and (b) forty percent (40%) (a “Seller Tax Distribution”). Upon Seller’s direction, the Escrow Agent shall also make a Seller Tax Distribution immediately prior to any distribution of any portion of the Indemnity Escrow Amount to Purchaser with respect to the Escrow Income earned during the period since the last Seller Tax Distribution was made, provided, however, that no duplicate Seller Tax Distributions shall be made with respect to any Escrow Income.

(b) Prior to the date of the Closing, each of Purchaser and Seller shall use its commercially reasonable efforts to provide the Escrow Agent with certified taxpayer identification numbers by arranging for execution and return of IRS Forms W-9 to the Escrow Agent. The Parties acknowledge that in the event that the taxpayer identification number of Purchaser or Seller is not certified to the Escrow Agent and an appropriate exemption is not otherwise established, the Escrow Agent may be required to withhold a portion of any interest or other income earned from the investment of the Escrow Amounts or any distribution from the Escrow Amounts to Purchaser or Seller.

8. Termination. This Agreement shall terminate upon the final distribution of the last remaining portion of the latter of the Escrow Amounts remaining in accordance with this Agreement, provided that Sections ‎8, 12, 13, 14 and 15 shall survive termination of this Agreement.

9. Exculpatory Provisions. The Escrow Agent will be obligated only for the performance of such duties as are specifically set forth herein and may rely and will be protected in relying or refraining from acting on any instrument reasonably believed to be genuine and to have been signed or presented by the proper Party or Parties. Concurrent with the execution of this Agreement, Purchaser and Seller shall deliver to the Escrow Agent authorized signers’ forms in the form of Annex A-1 and Annex A-2 to this Agreement. The Escrow Agent will not be liable for forgeries or false impersonations. The Escrow Agent will not be liable for any act done or omitted hereunder as escrow agent except for its gross negligence or willful misconduct . The Escrow Agent will, in no case or event, be liable for punitive, incidental, special or consequential damages (including without limitation lost profits), even if the Escrow Agent has been advised of the possibility of such losses or damages and regardless of the form of action. The Escrow Agent shall have no liability for any investment losses, including without limitation any market loss on any investment liquidated prior to maturity in order to make a payment required hereunder.

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(a) Any act done or omitted pursuant to the advice or opinion of counsel will be conclusive evidence of the good faith of the Escrow Agent.

(b) The Escrow Agent is hereby expressly authorized to disregard any and all warnings given by any of the Parties or by any other Person, and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court or rulings of arbitrators. In case the Escrow Agent obeys or complies with any such order, judgment or decree of any court or arbitrator, the Escrow Agent will not be liable to any of the Parties or to any other Person by reason of such compliance, notwithstanding any such order, judgment, decree or arbitrators’ ruling being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

(c) The Escrow Agent will not be liable in any respect on account of the identity, authority or rights of the Parties executing or delivering or purporting to execute or deliver this Agreement or any documents or papers deposited or called for hereunder.

(d) The Escrow Agent will not be liable for the outlawing of any rights under any statute of limitations with respect to the Purchase Agreement, this Agreement or any documents deposited with the Escrow Agent.

10. Resignation and Removal of the Escrow Agent. The Escrow Agent may resign as escrow agent hereunder at any time with or without cause by giving at least 30 days’ prior written notice to each of Purchaser and Seller, such resignation to be effective 30 days following the date such notice is given. In addition, Purchaser and Seller may jointly remove the Escrow Agent as escrow agent at any time with or without cause, by an instrument executed by Purchaser and Seller (which may be executed in counterparts) given to the Escrow Agent, which instrument will designate the effective date of such removal, which date will not be less than 30 days from the date of such instrument. In the event of any such resignation or removal, a successor escrow agent which will be a bank or trust company organized under the laws of the United States of America having (or if such bank or trust company is a member of a bank company, its bank holding company has) a combined capital and surplus of not less than $100,000,000, will be appointed by Purchaser with the approval of Seller, which approval will not be unreasonably withheld, conditioned or delayed. If Purchaser fails to appoint a successor escrow agent within 15 days after receiving the Escrow Agent’s written notice, the Escrow Agent shall have the right to apply to a court of competent jurisdiction for the appointment of a successor escrow agent. Any such successor escrow agent will deliver to Purchaser and Seller a written instrument accepting such appointment, and thereupon it will succeed to all the rights and duties of the escrow agent hereunder and will be entitled to receive possession of the Escrow Funds.

11. Further Instruments. Purchaser and Seller shall execute and deliver such instruments and other documents as may be required in connection with, and otherwise assist and cooperate with the Escrow Agent in performing its duties under this Agreement.

12. Governing Law; Disputes; Waiver of Jury Trial.

(a) This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, as to all matters, including, without limitation, matters of validity, construction, effect, enforceability, performance and remedies.

(b) It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the Indemnity Escrow Amount or Working Capital Escrow Amount held by the Escrow Agent hereunder, the Escrow Agent shall not be required to determine the dispute or to take any action regarding it. The Escrow Agent may hold the Indemnity Escrow Amount or Working Capital Escrow Amount, as applicable, and may wait for settlement of any such dispute by final appropriate legal proceedings. In such event, the Escrow Agent shall not be liable for damages.

(c) The Parties agree that any proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal court located in the State of Delaware or any Delaware state court, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding in any such court or that any such proceeding brought in any such court has been brought in an inconvenient forum. Process in any such proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 15(b) shall be deemed effective service of process on such Party.

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(d) EACH OF THE PARTIES HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN RESOLVING ANY CLAIM OR COUNTERCLAIM RELATING TO OR ARISING OUT OF THIS AGREEMENT.

13. Escrow Fees and Expenses. Purchaser and Seller shall each pay one-half of the Escrow Agent’s reasonable compensation for its normal services hereunder in accordance with the fee schedule attached hereto as Annex C (which may be subject to change on an annual basis) and shall each reimburse the Escrow Agent hereunder for one-half all reasonable expenses, disbursements and advances incurred or made by the Escrow Agent in performance of its duties hereunder (including reasonable fees, expenses and disbursements of its counsel). The Escrow Agent shall have, and is hereby granted, the right to set off and deduct any unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights that have not been paid within 30 days from the date of the invoice in question, from the Escrow Amounts. In the event that the Escrow Agent exercises its right to set off in the immediately preceding sentence, the amount of such set off for which (i) the Purchaser is responsible shall be replenished by Purchaser into the Escrow Funds and (ii) the Seller is responsible shall be replenished by Seller into the Escrow Funds. The terms of this paragraph shall survive termination of this Agreement.

14. Indemnification. In consideration of the Escrow Agent’s acceptance of this appointment, each of Purchaser and Seller agrees to indemnify and hold harmless the Escrow Agent as to one-half of any liability incurred by it to any Person by reason of its having accepted such appointment or in carrying out the provisions of this Agreement, and to reimburse the Escrow Agent for one-half of all its costs and expenses (including, without limitation, legal counsel fees and expenses in an amount that shall not exceed the cash in the Escrow Funds to which they are entitled) reasonably incurred by reason of any matter as to which an indemnity is paid pursuant to this Section ‎14; provided, however, that no indemnity need be paid in case of the Escrow Agent’s gross negligence or willful misconduct.

15. Miscellaneous.

(a) This Agreement may not be amended, changed or modified, except by an agreement in writing executed by Purchaser, Seller and the Escrow Agent.

(b) All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally, one Business Day after having been dispatched by a nationally recognized overnight courier service or when sent via facsimile (with acknowledgement of complete transmission) to the Parties at the following addresses (or at such other address for a Party as is specified by like notice):

(i)

if to Purchaser, to:

Data Device Corporation

105 Wilbur Place

Bohemia, New York 11716

Attention: Vincent Buffa, President

Facsimilie No.: (631) 563-5204

with a copy (which will not constitute effective notice) to:

Latham & Watkins LLP

140 Scott Drive

Menlo Park, California 94025

Attention: Luke J. Bergstrom

Facsimile No.: (650) 463-2600

(ii) if to Seller, to:

Emrise Corporation

2530 Meridian Parkway

Durham, NC 27713

Attention: Carmine T. Oliva

Facsimile No.: (252) 330-2560

with a copy (which will not constitute effective notice) to:

Olshan Frome Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, NY 10022

Attention: Robert Friedman

Facsimile No.: (212) 451-2222

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(iii) if to the Escrow Agent, to:

Wilmington Trust, N.A.

50 South Sixth Street, Ste. 1290

Minneapolis, MN 55402

Attention: Aaron R. Soper

Facsimile No.: (612) 217-5651

(c) The headings and captions contained in this Agreement are for convenience of reference purposes only and shall not be used in the construction or interpretation of this Agreement.

(d) This Agreement may be executed in one or more counterparts (whether delivered by facsimile or otherwise), each of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties; it being understood that all Parties need not sign the same counterpart.

(e) This Agreement and the Purchase Agreement constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede (i) all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof, and (ii) any information provided by any Party to any other Party. This Agreement is not intended to confer upon any Person other than the Parties any rights or remedies hereunder.

(f) Except as provided in Section 10 with respect to the resignation or removal of the Escrow Agent, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of law or otherwise) without the prior written consent of the other Parties; provided, however, Purchaser may transfer or assign its rights and obligations under this Agreement without the consent of any other Party, in whole or from time to time in part, to one or more of its Affiliates at any time or to any other Person.

(g) If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

(h) To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity, a charity, a trust or other legal entity the Escrow Agent will ask for documentation to verify its formation and existence as a legal entity. The Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Each of Purchaser and Seller agree to provide all such information and documentation as to themselves as requested by Escrow Agent to ensure compliance with federal law.

(i) Time is of the essence with respect to the performance of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, Purchaser, Seller and the Escrow Agent have executed this Escrow Agreement as of the date first written above.

	DDC (UNITED KINGDOM) LTD. By: ___________________________ Name: Title:
	EMRISE CORPORATION By: ___________________________ Name: Title:
	WILMINGTON TRUST, N.A., as the Escrow Agent By: ___________________________ Name: Title:

Annex A-1

Certificate as to Authorized Signatures

The specimen signatures shown below are the specimen signatures of the individuals who have been designated as authorized representatives of Purchaser and are authorized to initiate and approve transactions of all types for the escrow account or accounts established under the Escrow Agreement to which this Annex A-1 is attached, on behalf of Purchaser.

Name / Title / Phone Number	Specimen Signature
______________________________ Name ______________________________ Title	_____________________________ Signature
______________________________ Phone Number
______________________________ Name ______________________________ Title	_____________________________ Signature

Annex A-2

Certificate as to Authorized Signatures

The specimen signatures shown below are the specimen signatures of the individuals who have been designated as authorized representatives of Seller and are authorized to initiate and approve transactions of all types for the escrow account or accounts established under the Escrow Agreement to which this Annex A-2 is attached, on behalf of Seller.

Name / Title / Phone Number	Specimen Signature
______________________________ Name ______________________________ Title	_____________________________ Signature
______________________________ Phone Number

Annex B

Agency and Custody Account Direction

For Cash Balances

Manufacturers & Traders Trust Company Deposit Accounts

Direction to use the following Manufacturers & Traders Trust Company (also known as M&T Bank) Deposit Account for Cash Balances for the escrow account or accounts (the “Accounts”) established under the Escrow Agreement to which this Annex B is attached.

You are hereby directed to deposit, as indicated below, all cash in the Accounts in the following deposit account of M&T Bank:

M&T Corporate Deposit Account

Purchaser and Seller acknowledge that amounts on deposit in the M&T Bank Deposit Account are insured, subject to the applicable rules and regulations of the Federal Deposit Insurance Corporation (FDIC), in the basic FDIC insurance amount of $250,000 per depositor, per issued bank. This includes principal and accrued interest up to a total of $250,000.

Escrow Agent understands that Purchaser and Seller may jointly instruct Escrow Agent to change this direction at any time and that it shall continue in effect until revoked or modified by written notice to Escrow Agent.

Annex C

Acceptance Fee:

WAIVED

Initial Fees as they relate to Wilmington Trust acting in the capacity of Escrow Agent – includes review of the Escrow Agreement; acceptance of the Escrow appointment; setting up of Escrow Account(s) and accounting records; and coordination of receipt of funds for deposit to the Escrow Account(s). Acceptance Fee payable at time of Escrow Agreement execution.

Escrow Agent Administration Fee:

$3,000

For ordinary administrative services by Escrow Agent – includes daily routine account management; investment transactions; cash transaction processing (including wire and check processing); monitoring claim notices pursuant to the agreement; disbursement of funds in accordance with the agreement; and mailing of trust account statements to all applicable parties.

Wilmington Trust’s bid is based on the following assumptions:

Number of Escrow Accounts to be established: Two (2)

Est. Term: 12 Months

Investment in M&T Deposit Products

Out-of-Pocket Expenses:

Billed At Cost

EXHIBIT D

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is made as of _____________, 2015 (the “Effective Date”), by Data Device Corporation, a Delaware corporation (“Service Provider”), and EMRISE Corporation, a Delaware corporation (“Seller”), pursuant to that certain Stock Purchase Agreement by and among Service Provider, EMRISE Electronics Ltd., a company incorporated under the laws of England, and Seller, dated as of ________, 2015 (the “Purchase Agreement”). Capitalized terms used but not expressly defined in this Agreement have the meanings ascribed to them in the Purchase Agreement.

R E C I T A L S

A. In further consideration of the Purchase Agreement and related transactions, Seller will require the Service Provider’s assistance with respect to certain operations of Seller’s business following the Closing Date.

B. The execution and delivery of this Agreement by Seller and the Service Provider is conditional to the consummation of the transactions contemplated by the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties to this Agreement, the parties agree as follows:

1. Services to be Performed.

(a) Services and Level of Services. During the Term (as defined in Section 3), the Service Provider agrees to use commercially reasonable efforts to provide the services described in Schedule 1 (each, a “Service” and collectively, the “Services”). During the Term, the parties will use commercially reasonable efforts to cooperate with each other in all matters relating to the provision and receipt of the Services.

(b) New Services. If Seller wishes to request a new service that is not a Service described in Schedule 1 (a “New Service”), it will submit to the Service Provider a written request for such New Service. The Service Provider will, within ten (10) Business Days of the date of such notice, provide Seller with a written response indicating whether (1) the Service Provider agrees to provide such New Service, and if such is the case, such response will include the pricing and an estimated timeline for implementation of such New Service, or (2) the Service Provider declines, in its sole discretion, to provide the New Service. Seller acknowledges and agrees that the Service Provider is not obligated to agree to provide any New Service. If the Service Provider does not provide a response within such ten (10) Business Day-period, such request for New Service shall be deemed rejected. If Seller accepts the terms offered by the Service Provider for the New Service and provides the Service Provider with written notice of such acceptance, such New Service will be implemented as mutually agreed in writing by the parties, and from the date of such notice and thereafter for the duration of the Term, such New Service will be deemed a “Service” hereunder and will be subject to the terms and conditions applicable of this Agreement.

(c) Selection of Employees. The Services shall be provided by the Employees set forth on Schedule 1. In the event such Employees are no longer available to perform the Services, the Service Provider shall designate, in its reasonable judgment, such other Employees or Persons to perform the Services, subject to the consent of Seller (which consent shall not be unreasonably withheld). If Seller reasonably determines that such Employees or other Persons are not performing the Services as specified by this Agreement, Seller may provide written notice to the Service Provider with a description of the underlying performance issues. In such event, the Service Provider agrees to use commercially reasonable efforts to substitute such Employees or other Persons with another Employee or other Person designated by the Service Provider and capable of providing the Services in accordance with this Agreement, subject to the consent of Seller (which consent shall not be unreasonably withheld). Whenever Service Provider utilizes its Employees to perform the Services, such Persons shall at all times remain subject to the sole direction, control and supervision of Service Provider and not of Seller. In addition, nothing in this Agreement shall be construed to give rise to an employment relationship between Seller and the Employees of Seller or any other Person performing the Services and Seller shall have no liability to such Employees or Persons for their wages, compensation, fringe benefits, legally required employer contributions or tax obligations by virtue of the relationships established under this Agreement.

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(d) Rights. Seller represents and warrants that it has all necessary rights and consents to permit Service Provider to undertake the Services, including without limitation any rights and consents necessary for Service Provider to access and use any systems, software, data, or information to which Seller provides access.

2. Consideration and Payment for Services.

(a) Invoices; Payment. For the Services, Seller will pay the Service Provider the fees and costs set forth in Schedule 1. The Service Provider will invoice Seller for Services promptly following the end of each fiscal month during the Term. Each invoice will include, to the extent any Service has not been terminated in accordance with this Agreement, the amount and corresponding cost, based on the fees and costs set forth in Schedule 1, of Services rendered during the prior fiscal month. Seller will pay all amounts set forth in an invoice, that are not reasonably in dispute, not later than thirty (30) days following Seller’s receipt of the invoice.

(b) Invoice Disputes. In the event that Seller reasonably disputes the amount of any invoice, Seller will pay the undisputed portion of such invoice and will send to the Service Provider along with such payment a written notice of such dispute. Within ten (10) Business Days of the Service Provider’s receipt of such notice, and for a period of ten (10) Business Days (or such longer period as mutually agreed by the parties), the Service Provider will, or will cause its Affiliates to, make available to Seller and its representatives, during normal business hours, documentation in the possession of the Service Provider or its Affiliates reasonably necessary to enable Seller to review the invoice, the data on which it was based and the methods by which amounts due were computed or determined. If, upon completion of such review, the Service Provider and Seller, each acting in good faith, are not in agreement as to the amount of the invoice, a representative from each of Seller and the Service Provider who, in each case, is knowledgeable about the costs or expenses in the applicable invoice, will for a period of thirty (30) days (a “Dispute Resolution Period”) enter into good faith discussions to reach mutual agreement as to the disputed amount of any such invoice. Seller will not be obligated to pay any disputed invoice amounts during a Dispute Resolution Period and such nonpayment is not a breach or violation of this Agreement. Service Provider shall continue performing the Services in accordance with this Agreement pending resolution of any disputed invoice.

(c) All fees set forth in Schedule 1 are exclusive of taxes and shall be paid without deduction or withholding for any tax. Seller shall pay all taxes, duties and levies imposed by all federal, state, local or other taxing authorities (including any sales, use, excise, and value-added taxes) based on the transactions or payments under this Agreement, other than taxes imposed or based on the Service Provider’s net income arising out of the Service Provider’s receipt of fees pursuant to Section 2(a).

3. Term and Termination.

(a) The term (the “Term”) of this Agreement will commence on the Effective Date and continue in effect until the date nine (9) months after the Effective Date, unless sooner terminated pursuant to Section 3(b).

(b) Notwithstanding anything to the contrary, this Agreement may be terminated, in whole or in part, at any time:

(i) by the mutual consent of Seller and the Service Provider;

(ii) by Seller upon at least ten (10) days’ advance written notice to Service Provider that Seller elects to terminate this Agreement effective as of the date set forth in such notice; or

(iii) by the Service Provider in the event of any material breach or default by Seller of any of Seller’s obligations under this Agreement and the failure of Seller to cure, or to take substantial steps towards the curing of, such breach or default within ten (10) days after receipt of notice from the Service Provider requesting that such breach or default be cured.

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In addition, with respect to individual Services, Seller may give at least ten (10) days’ prior notice in writing to the Service Provider at any time to terminate a particular Service and such Service will be terminated ten (10) days after the date of such notice or, if requested by Seller, as of the date set forth in such notice, provided that such date is at least ten (10) days after the date of such notice. Following any such termination, except for fees and costs related to Services rendered to Seller prior to the date of such termination, Seller will have no further obligation to pay the Service Provider the corresponding costs for any such terminated Services.

(c) Notwithstanding termination or expiration of this Agreement, Sections 2, 3(c), 4, 5 and 6 shall survive and continue in effect beyond such termination or expiration, in accordance with their respective terms and conditions.

4. Warranty Disclaimer.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES REGARDING THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OR IMPLIED WARRANTIES ARISING OUT OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE.

5. Limitation of Liability.

EXCEPT WITH RESPECT TO BREACHES OF SECTION 6(K), UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, OR FOR ANY CONSEQUENTIAL, SPECIAL, INDIRECT, OR INCIDENTAL DAMAGES WHATSOEVER ARISING OUT OF THIS AGREEMENT, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT WITH RESPECT TO BREACHES OF SECTION 6(K), IN NO EVENT SHALL THE AGGREGATE LIABILITY OF EITHER PARTY EXCEED THE AMOUNTS PAID BY SELLER TO THE SERVICE PROVIDER FOR THE APPLICABLE SERVICE DURING THE TWELVE (12) MONTHS PRECEDING THE DATE OF THE EVENT GIVING RISE TO THE CLAIM.

6. Miscellaneous.

(a) Interpretation. The parties acknowledge that each party and its counsel has reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any amendments or exhibits to this Agreement.

(b) Governing Law. This Agreement will be governed by the laws of the State of Delaware without regard to conflict of laws principles.

(c) Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original instrument, and all of which will constitute one and the same instrument. Facsimile signatures (including those in PDF format) will be treated as if they were originals.

(d) Assignments, Successors, and No Third-Party Rights. Neither party may assign any of its rights under this Agreement without the prior consent of the other parties, which will not be unreasonably withheld. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties hereto. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

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(e) Descriptive Headings. The descriptive headings of this Agreement are for convenience of reference only and do not control or affect the meaning or construction of any provision of this Agreement.

(f) Severability. If any term or provision of this Agreement will, in any jurisdiction, be invalid or unenforceable, such term or provision will be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable such term or provision in any other jurisdiction, or affecting any other provision of this Agreement, and a suitable and equitable provision will be substituted for such provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision.

(g) Non-Waiver. Except as may be expressly provided in this Agreement or in a writing signed by the parties, the failure of either party to insist in any instance on strict performance of any provision of this Agreement will not be construed as a waiver of any such provision or the relinquishment of any rights thereunder in the future.

(h) Independent Parties. The parties acknowledge and agree, that in providing Services hereunder, Service Provider is an independent contractor of Seller. Nothing contained in this Agreement will be deemed or construed for any purpose to establish, between either of the Service Provider and Seller, a partnership or joint venture, a principal-agent relationship, or any other relationship not specifically stated in this Agreement.

(i) Entire Agreement and Modification. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment.

(j) Notices. All notices required or permitted hereunder will be provided in accordance with Section 11.01 of the Purchase Agreement.

(k) Confidentiality. As used in this Agreement, “Confidential Information” means all confidential or proprietary information whether written or oral of a party that is disclosed or made available by such party (“Discloser”) to the other party (“Recipient”) in connection with the provision of the Services contemplated hereby. Confidential Information does not include information that (i) is or subsequently becomes generally available to the public other than as a result of or in connection with a breach of this Section 6(k) or (ii) is lawfully received by a party hereto on a non-confidential basis from a third party that is not bound by an obligation of confidentiality. From and after the date hereof, except as expressly authorized in writing by Discloser, (x) Recipient will hold in confidence all Confidential Information of the Discloser and will not disclose or otherwise make available any such Confidential Information to any third party, except in confidence to persons having a bona fide actual need to know in furtherance of Recipient’s exercise of its rights and performance of its obligations under this Agreement, and (y) Recipient will not use any Confidential Information of Discloser, except in furtherance of Recipient’s exercise of its rights and performance of its obligations under this Agreement. If Recipient is compelled to disclose any such information by judicial or administrative process or by other requirements of law, such party shall promptly notify Discloser in writing and shall disclose only that portion of such information which such party is advised by its counsel in writing is legally required to be disclosed; provided that such party shall exercise its reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Recipient will take the same degree of care to protect the Confidential Information of Discloser that it uses to protect its own confidential or proprietary information of a similar nature, which will be no less than a reasonable degree of care. Recipient shall, at the request of Discloser, promptly return or, at Recipient’s option, promptly destroy and certify the destruction of the Confidential Information of Discloser.

(l) Further Assurances. Each party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other party hereto to give effect to and carry out the transactions contemplated herein.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

SERVICE PROVIDER:

Data Device Corporation

By: ______________________

Name: ___________________

Its: ______________________

SELLER:

EMRISE Corporation

By: ______________________

Name: ____________________

Its: ______________________

[Signature page to Transition Services Agreement]

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SCHEDULE 1

SERVICES

Description of Services:	Below is a list of Service Provider personnel that may be utilized in connection with the Services, and a summary of expected Services to be provided by each person.
Fees and Costs:	Except to the extent such services are part of other Services to be rendered under this Agreement, the services of shared personnel will be billed hourly at the rates set forth below, which rates include applicable benefits, taxes and other employer related costs. The rates below don’t include commissions, expenses, travel, lodging, etc., which will be invoiced and payable as incurred.

Employee Name	Description of Services	Burdened Rate	Estimated hours per month (unless otherwise noted)
Glyn Higgins	General Accounting: includes preparation of Seller’s monthly management accounts and other related financial services	£90.00	15
Glyn Higgins	Post-Closing Support: includes bank reconciliations, separation of accounts, etc.	£90.00	100 hours during the first three months post-Closing
	2015 Year End Support: includes assistance with Seller’s Tax returns, SEC filings, financial statements and 1099 filings		100 hours during the first three months of 2016
Alison Law	Payables & Receivables: assist with payment and/or collection of Seller’s payables and receivables	£46.00	15
Kevin Rose	General Accounting: includes preparation of Seller’s monthly management accounts and other related financial services	£52.00	15
Graham Jefferies	General Business: includes assistance with Seller’s financial statements and SEC filings	£150.00	15
Emma Crabbe	HR & Payroll: assist with payroll and other human resource requirements for employees and independent contractors of Seller	£46.00	7.5
Emma Crabbe	2015 Year End Support relating to personnel returns (including W2s)	£46.00	30 hours during the first three months of 2016

Exhibit E

[SUBJECT TO CONTRACT]

Dated

XCEL POWER SYSTEMS LIMITED

and

RICHARD WELLER

CONSULTANCY AGREEMENT

London

99 Bishopsgate

London EC2M 3XF

(44) 020 7710 1000 (Tel)

(44) 020 7374 4460 (Fax)

www.lw.com

THIS AGREEMENT is made on

BETWEEN

(1)	XCEL POWER SYSTEMS LIMITED, a company registered in England with registered number 00575679 and having its registered office at Brunswick Road, Cobbs Wood, Ashford, Kent, TN23 1EB (the “Company”); and

(2)	RICHARD WELLER, residing at 43 Curtiswood, Park Road, Herne, Herne Bay, Kent, CT6 7TZ (the “Consultant”).

BACKGROUND

The Company wishes to benefit from the skills and abilities of the Consultant and the Consultant is an independent contractor who has agreed to provide his services to the Company, as his client upon the terms and subject to the conditions set out in this Agreement.

IT IS AGREED as follows:

1.	DEFINITIONS AND INTERPRETATION

1.1	Definitions

In this Agreement, unless the context otherwise requires:

“Agreement”	means this contract and the Schedule
“Appointment”	means the engagement of the Consultant under this Agreement, or, as the context requires, the duration of that engagement
“Board”	means the Board of directors of the Company from time to time or any duly authorised committee thereof
“Commencement Date”	means the date of closing of the Proposed Transaction;
“Confidential Information”	means all information which is identified or treated by the Company or any Group Company or any of the Group’s clients or customers as confidential or which by reason of its character or the circumstances or manner of its disclosure is evidently confidential including any information about the personal affairs of any of the directors (or their families) of the Company or any Group Company, business plans, proposals relating to the acquisition or disposal of a company or business or proposed expansion or contraction of activities, maturing new business opportunities, research and development projects, designs, secret processes, trade secrets, product or services development and formulae, know-how, inventions, sales statistics and forecasts, marketing strategies and plans, costs, profit and loss and other financial information (save to the extent published in audited accounts), prices and discount structures and the names, addresses and contact and other details of: (a) employees and their terms of employment; (b) customers and potential customers, their requirements and their terms of business with the Group; and (c) suppliers and potential suppliers and their terms of business (all whether or not recorded in writing or in electronic or other format)
“Group”	means the Company, any presently existing holding company or undertaking of the Company and subsidiaries and subsidiary undertakings of the Company or such holding company or undertaking

“Group Company”	means any company within the Group
“Intellectual Property Rights”	means any and all existing and future intellectual or industrial property rights in and to any Works (whether registered or unregistered) including all existing and future patents, copyrights, design rights, database rights, trade marks, semi-conductor topography rights, plant varieties rights, internet rights/domain names, know how and any and all applications for any of the foregoing and any and all rights to apply for any of the foregoing in and to any Works
“Proposed Transaction”	means the proposed acquisition of Emrise Electronics Limited and its subsidiaries by Data Device Corporation
“Schedule”	means the Schedule annexed
“Services”	means the services, work and other tasks to be provided on the Company’s request by the Consultant to the Company in accordance with this Agreement as described in Clause 3 and the Schedule
“Termination Date”	means the date of termination of the Appointment
“Works”	means any documents, materials, models, designs, drawings, processes, formulae, inventions, computer coding, methodologies know-how, Confidential Information or other work performed, made, created, devised, developed or discovered by the Consultant in the course of the Appointment either alone or with any other person in connection with or relating to the business of the Company or any Group Company or capable of being used or adapted for use therein or in connection therewith.

1.2	Interpretation and construction

Save to the extent that the context or the express provisions of this Agreement require otherwise, in this Agreement:

(a)

words importing the singular shall include the plural and vice versa;

(b)

words importing any gender shall include all other genders;

(c)

any reference to a Clause, the Schedule or Part of the Schedule is to the relevant Clause, Schedule or part of the Schedule of or to this Agreement unless otherwise specified;

(d)

references to this Agreement or to any other document shall be construed as references to this Agreement or to that other document as modified, amended, varied, supplemented, assigned, novated or replaced from time to time;

(e)

references to any statute or statutory provision (including any subordinate legislation) includes 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 or statutory provision;

(f)

references to a “person” includes any individual, firm, company, corporation, body corporate, government, state or agency of state, trust or foundation, or any association, partnership or unincorporated body (whether or not having separate legal personality) or two or more of the foregoing;

(g)

general words shall not be given a restrictive meaning because they are followed by words which are particular examples of the acts, matters or things covered by the general words and “including”, “include” and “in particular” shall be construed without limitation; and

(h)

the words “other” and “otherwise” shall not be construed eiusdem generis with any foregoing words where a wider construction is possible.

1.3

Headings

The table of contents and the headings in this Agreement are included for convenience only and shall be ignored in construing this Agreement.

TERM

2.1

Duration

(a)

The Appointment shall commence on the Commencement Date (subject to and conditional on the closing of the Proposed Transaction), and shall continue for a fixed period of one year, unless terminated by the Company on giving not less than three months’ prior written notice of termination. The Appointment may not be terminated by the Consultant during the first year of the Appointment. Following the first anniversary of the Commencement Date, the Appointment may be extended by mutual agreement for a further fixed period of one year. The Appointment may be terminated by mutual agreement. Should the parties not have agreed to an extension beyond the first anniversary of the Commencement Date, the Appointment will come to an end automatically on that date without the need for notice to be served by either party.

(b)

Should the parties agree to an extension beyond the first anniversary of the Commencement Date, the Appointment shall come to an end automatically on the second anniversary of the Commencement Date, unless earlier terminated by either party giving to the other not less than three months’ prior written notice of termination, subject to clause 2.1 (a) above.

(c)

Subject to clause 12.1(c) no fees shall accrue and be payable after the date of termination of the Appointment.

SERVICES

3.1	Provision of Services

(a)

With effect from the Commencement Date, the Consultant shall on request by the Company provide the Services together with such other services as the Company and the Consultant shall from time to time agree including, providing services to any Group Company. The specific terms of the Services to be provided are set out in Part I of the Schedule and the Services will be provided on the terms and conditions set out in this Agreement.

(b)

The Consultant will, if requested by the Company, provide the Services as follows:

(i)

during the first six months of the Appointment, a target of 2 Business Days per week;

(ii)

during the sixth to twelfth months of the Appointment, a target of 1 Business Day per week;

and thereafter, if applicable, at such times as may be agreed between the parties.

(c)

If the Company requires the Services to be provided on specific days (for example, for attendance at meetings) it will give the Consultant reasonable prior notice of those days. If the Company requires the Services for a greater amount of time then the Company will make such a request in writing to the Consultant, although the Consultant has no obligation to provide additional services.

(d)

There is no obligation on the Company to require the Consultant to provide any Services. The Company may at any time and from time to time require that the Consultant cease immediately to provide any or all of the Services.

(e)

The Consultant may engage another person to perform any administrative, clerical or secretarial functions that are reasonably incidental to the provision of the Services provided that the Consultant accepts all liability for the terms of engagement and shall indemnify the Company from and against any employment claims or liability arising from that engagement.

(f)

The Consultant will perform the Services in compliance with all applicable laws, rules and regulations and, in addition, the Consultant will comply with all internal policies and regulations of the Group as are identified to Consultant from time to time in writing.

3.2

Equipment

The Consultant will be responsible for providing any equipment necessary for the provision of the Services.

3.3	Hours and location of work

The Services shall be provided for those hours and at those places necessary for the proper performance of the Services.

FEES

4.1

Fee rate

In consideration of the Consultant providing the Services referred to in Clause 3.1 in accordance with this Agreement, the Company agrees to pay the Consultant a fee at the rate of £650 per day (a day consisting of at least 7 hours) during which the Services are provided exclusive of Value Added Tax (“VAT”) or other sales tax that is chargeable on the Services. It is the Consultant’s responsibility to determine whether VAT or other sales tax is chargeable.

4.2

Payment

The fee shall accrue from day to day (business days only to be included) during each month in which the Services are provided. The Consultant shall issue an invoice at the end of every month detailing the Services supplied (and the hours worked) and the expenses incurred (in terms of Clause 4.3) during that month. Payment of the fee shall only be made on production of an appropriate invoice (to include VAT where necessary) and the Company will make payment to the Consultant within 10 business days of receipt by it of each invoice.

4.3

Expenses

The Company shall reimburse to the Consultant (against receipts or other appropriate evidence as the Board may require) the amount of all expenses including travel expenses reasonably and properly incurred by him in the proper discharge of the Services.

4.4	Obligation to pay tax

The Consultant shall at all times pay any income tax, National Insurance contributions, VAT and other contributions required by law to be paid by or in respect of him in relation to the provision of the Services, or receipt by him of the fee, or both (including any interest or penalties imposed in respect of such payments).

4.5	Tax indemnity

The Consultant shall indemnify and keep indemnified the Company and each Group Company for all time on demand from and against any and all costs, claims, penalties, liabilities and expenses incurred by the Company and each Group Company in respect of income tax, National Insurance, VAT or other contributions due by the Consultant in relation to the provision of the Services. In the event that the Company receives a demand for income tax, National Insurance or VAT then it will notify the Consultant as soon as reasonably practicable and allow him to challenge it.

4.6	Deductions

Without prejudice to the indemnity in Clause 4.5, if for any reason, the Company or any Group Company shall become liable to pay, or shall pay, any taxes or other payments referred to in Clause 4.4, the Company shall be entitled to deduct from any amounts payable to the Consultant all amounts so paid or required to be paid by or in respect of it or any Group Company in that respect.

5.	NO EMPLOYMENT OR AGENCY

5.1	No employment, agency or partnership

The Consultant warrants and represents to the Company that he is an independent contractor. Nothing contained in this Agreement shall be construed or have effect as constituting any relationship of employer and employee, employer and worker, partnership or joint venture between the Company or any Group Company and the Consultant, nor shall it constitute the Consultant acting as an agent or a worker of the Company or any Group Company. The Consultant shall not have any right or power whatsoever to contract on behalf of any Group Company or bind any Group Company in any way in relation to third parties and will not hold himself out as having such authority unless specifically authorised to do so. The Consultant is supplying the Services to the Company and any Group Company as part of the Consultant’s business undertaking. The Company and any Group Company receiving the Services is/are the Consultant’s clients for these purposes.

6.	INDEMNITY AND INSURANCE

6.1	Consultant’s undertaking

The Consultant acknowledges that the Company will rely upon his skills and judgement in relation to the Services and undertakes that in providing the Services he will exercise all reasonable skill, care and attention in all matters.

6.2	Indemnification of the Company

The Consultant shall indemnify and keep indemnified the Company and each Group Company for all time on demand from any and all direct or indirect damages, loss, costs, claims, liabilities and expenses incurred in respect of the Consultant’s performance (or non-performance) of the Services including in respect of any act, neglect or default of the Consultant or any person authorised by the Consultant to act on his behalf.

7.	OTHER INTERESTS

7.1	Restrictions on other activities and interests

During the Appointment, the Consultant may accept and perform engagements from or be employed by other persons but only insofar as such engagements or employment does not (in the reasonable opinion of the Board) impinge upon his ability to provide the Services and provided that the Consultant shall not accept any employment or engagement which is in any way competitive with any of the businesses of the Company or any Group Company without the prior written consent of the Board.

7.2

Conflicts

The Consultant shall immediately disclose to the Company any conflict of interest that arises in relation to the provision of the Services as a result of any present or future appointment, employment or other interest of the Consultant.

8.	CONFIDENTIAL INFORMATION

8.1	Restrictions on disclosure/use of Confidential Information

The Consultant must not either during the Appointment (except in the proper performance of the Services) or at any time (without limit) after the Termination Date:

(a)

divulge or communicate to any person;

(b)

use for his own purposes or for any purposes other than those of the Company or any Group Company; or

(c)

through any failure to exercise due care and diligence, cause any unauthorised disclosure of;

any Confidential Information. The Consultant must at all times use his best endeavours to prevent publication or disclosure of any Confidential Information. These restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through the default of the Consultant.

8.2	Protection of Company documents and materials

All notes, records, lists of customers, suppliers and employees, correspondence, computer and other discs or tapes, data listings, codes, keys and passwords, designs, drawings and other documents or material whatsoever (whether made or created by the Consultant or otherwise and in whatever medium or format) relating to the business of the Company or any Group Company or any of its or their clients (and any copies of the same):

(a)

shall be and remain the property of the Company or the relevant Group Company or client; and

(b)

shall be handed over by the Consultant to the Company or relevant Group Company or client on demand and in any event on the termination of the Appointment.

9.	INVENTIONS AND OTHER WORKS

9.1	Creation of Works

The Consultant may make or create Works during the Appointment.

9.2	Disclosure and ownership of Works

The Consultant must immediately disclose to the Company all Works and all Intellectual Property Rights. Both the Works and the Intellectual Property Rights will (subject to sections 39 to 43 of the Patents Act 1977) belong to and be the absolute property of the Company or any other person the Company may nominate.

9.3	Protection, registration and vesting of Works

The Consultant shall immediately on request by the Company (whether during the Appointment or after the Termination Date) and at the expense of the Company:

(a)

apply or join with the Company or any Group Company in applying for any Intellectual Property Rights or other protection or registration (“Protection”) in the United Kingdom and in any other part of the world for, or in relation to, any Works;

(b)

execute all instruments and do all things necessary for vesting all Intellectual Property Rights or Protection when obtained and all right, title and interest to and in the same absolutely and as sole beneficial owner in the Company or such Group Company or other person as the Company may nominate; and

(c)

sign and execute any documents and do any acts reasonably required by the Company in connection with any proceedings in respect of any applications and any publication or application for revocation of any Intellectual Property Rights or Protection.

9.4	Waiver of rights by the Consultant

The Consultant hereby irrevocably and unconditionally waives all rights under Chapter IV Copyright, Designs and Patents Act 1988 and any other moral rights which he may have in the Works, in whatever part of the world such rights may be enforceable including:

(a)

the right conferred by section 77 of that Act to be identified as the author of any such Works; and

(b)

the right conferred by section 80 of that Act not to have any such Works subjected to derogatory treatment.

9.5	Power of attorney

The Consultant hereby irrevocably appoints the Company to be his attorney and in his name and on his behalf to execute any such act and to sign all deeds and documents and generally to use his name for the purpose of giving to the Company the full benefit of this Clause. The Consultant agrees that, with respect to any third parties, a certificate signed by any duly authorised officer of the Company that any act or deed or document falls within the authority hereby conferred shall be conclusive evidence that this is the case.

9.6	Statutory rights

Nothing in this Clause 9 shall be construed as restricting the rights of the Consultant or the Company under sections 39 to 43 Patents Act 1977.

10.	OBLIGATIONS OF THE COMPANY

During the Appointment, the Company shall provide the Consultant with access to its offices and the Company’s information, records and other relevant material reasonably required by the Consultant in order to provide the Services. Further, the Company shall:

(a)

make available reasonable working space and facilities at its offices to enable the Consultant to provide the Services; and

(b)

make available appropriate secretarial personnel to enable the Consultant to provide the Services.

11.	TERMINATION

11.1	Termination events

Notwithstanding the provisions of Clause 2.1, the Company shall be entitled, but not bound, to terminate the Appointment with immediate effect (and without giving any period of notice or pay in lieu of notice) by giving to the Consultant notice in writing at any time after the occurrence of any one or more of the following events:

(a)

if the Consultant commits any material or persistent but non material breach of this Agreement (in the case of a persistent but non material breach, having been given notice in writing of the breach and a reasonable opportunity to rectify the breach), or fails to perform the Services to the standard required by the Company; or

(b)

if the Consultant becomes insolvent or bankrupt or compounds with or grants a trust deed for the benefit of his creditors; or

(c)

if the Consultant’s behaviour (whether or not in breach of this Agreement) can reasonably be regarded as materially prejudicial to the interests of the Company or any Group Company, including if he is found guilty of any criminal offence punishable by imprisonment (whether or not such sentence is actually imposed); or

(d)

if the Consultant becomes of unsound mind; or

(e)

if the Consultant is unable properly to provide the Services by reason of ill-health, accident or other absence for a period or periods aggregating at least 120 working days in any 12 month period.

12.	RESTRICTIONS AFTER TERMINATION

12.1	Restrictions

(a)

In the course of the Appointment the Consultant will be exposed to Confidential Information and will acquire other proprietary knowledge relating to the Company’s or the Group’s current and planned operations. Therefore, subject to the terms of Clause 12.1(b) and 12.1(c), the Consultant will not during the period of the Appointment and for the periods set out below after the termination of the Appointment, either directly, or indirectly through any other person, firm or other organisation:

(i)

for a period of 12 months, solicit, entice or induce any person, firm or other organisation which at any time during the last year of the Appointment was a supplier of the Company or any Group Company (and with whom the Consultant was actively involved during that time) to reduce the level of business between the supplier and the Company or the Group Company and the Consultant will not approach any supplier for that purpose or authorise or approve the taking of such actions by any other person;

(ii)

for a period of six months, solicit business which is of the same or similar nature as the business with which the Consultant was involved in the course of the Services during the last 12 months of the Appointment (such business referred to as the “Business”) from any person, firm or other organisation which at any time during that period was a customer or client of the Company or any Group Company (and with whom the Consultant was actively involved during that time) and the Consultant will not approach any client or customer for that purpose or authorise or approve the taking of such actions by any other person. For the purposes of this restriction, the expression customer or client shall include all persons from whom the Company or any Group Company has received inquiries for the provision of goods or services where such inquiries have not been concluded;

(iii)

for a period of 12 months, employ or engage or otherwise solicit, entice or induce any person who is a senior employee of the Company or any Group Company to become employed or engaged by the Consultant or any other person, firm or other organisation and the Consultant will not approach any such employee for such purpose or authorise or approve the taking of such actions by any other person; and

(iv)

for a period of six months, within the United Kingdom be employed or engaged or otherwise interested in a business which is the same as or similar to the Business.

(b)

The restrictions contained in Clauses 12.1(a) will not apply if:

(i)

the Consultant has received the prior written consent of the Company to his activities; or

(ii)

the Consultant will not be in competition with the Business in carrying out those activities.

(c)

The Company will inform the Consultant on termination of the Appointment if it intends to enforce the restrictions in Clause 12.1(a) against the Consultant. If it does, it will pay the Consultant a fee of £1,300 per month for each month in which the Company intends to enforce the restrictions, subject always to a maximum of twelve months.

12.2	Further undertakings

The Consultant hereby undertakes with the Company that he will not at any time:

(a)

during the Appointment or after the Termination Date engage in any trade or business or be associated with any person engaged in any trade or business using the name(s) or incorporating the word(s) “Emrise”, “Xcel”, “Power Systems” and “Pascall”; and

(b)

after the Termination Date represent or otherwise indicate any continuing association or connection with the Company or any Group Company or for the purpose of carrying on or retaining any business represent or otherwise indicate any past association with the Company or any Group Company.

12.3

Severance

The restrictions in this Clause 12 (on which the Consultant has had the opportunity to take independent advice, as the Consultant hereby acknowledges) are separate and severable restrictions and are considered by the parties to be reasonable in all the circumstances. It is agreed that if any such restrictions, by themselves, or taken together, shall be adjudged to go beyond what is reasonable in all the circumstances for the protection of the legitimate interests of the Company or a Group Company but would be adjudged reasonable if some part of it were deleted, the relevant restriction or restrictions shall apply with such deletions as may be necessary to make it or them valid and enforceable.

13.	DATA PROTECTION

By signing this Statement, the Consultant acknowledges and agrees that the Company is permitted to hold and process personal (and sensitive) information and data about the Consultant as part of its personnel and other business records; and may use such information in the course of the Company’s business. The Consultant agrees that the Company may disclose such information to third parties, including where they are situated outside the European Economic Area, in the event that such disclosure is in the Company’s view required for the proper conduct of the Company’s business or that of any associated company. This Clause applies to information held, used or disclosed in any medium.

14.	AMENDMENTS, WAIVERS AND REMEDIES

14.1	Amendments

No amendment or variation of this Agreement or any of the documents referred to in it shall be effective unless it is in writing and signed by or on behalf of each of the parties.

14.2	Waivers and remedies cumulative

(a)

The rights of each party under this Agreement:

(i)

may be exercised as often as necessary;

(ii)

are cumulative and not exclusive of its rights under the general law; and

(iii)

may be waived only in writing and specifically.

(b)

Delay in exercising or non-exercise of any right is not a waiver of that right.

(c)

Any right of rescission conferred upon the Company by this Agreement shall be in addition to and without prejudice to all other rights and remedies available to it.

15.	ENTIRE AGREEMENT

(a)

This Agreement and the documents referred to in it constitute the entire agreement and understanding of the parties and supersede and extinguish all previous agreements, promises, assurances, warranties, representations and understandings between the parties, whether written or oral, relating to the subject matter of this Agreement.

(b)

Each party acknowledges that in entering into this Agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this Agreement.

(c)

Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this Agreement.

(d)

Nothing in this clause shall limit or exclude any liability for fraud.

16.	NO OUTSTANDING CLAIMS

The Consultant hereby acknowledges that he has no outstanding claims of any kind as at the date of this Agreement against the Company or any Group Company.

17.

SEVERANCE

If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

(a)

the legality, validity or enforceability in that jurisdiction of any other provisions of this Agreement; or

(b)

the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement.

18.

NOTICE

18.1	Notices and deemed receipt

Any notice hereunder shall be given by either party to the other either personally to the Consultant, or in the case of the Company its Company Secretary or sent to its registered office for the time being and, in the case of the Consultant, to his address last known to the Company. Any such notice shall be in writing and shall be given by letter delivered by hand or sent by first class prepaid recorded delivery or registered post or by facsimile transmission. Any such notice shall be deemed to have been received:

(a)

if delivered personally, at the time of delivery;

(b)

in the case of pre-paid recorded delivery or registered post, 48 hours from the date of posting;

(c)

in the case of registered airmail, five days from the date of posting; and

(d)

in the case of email, at the time of transmission;

provided that if deemed receipt occurs before 9am on a business day the notice shall be deemed to have been received at 9am on that day and if deemed receipt occurs after 5pm on a business day, or on a day which is not a business day, the notice shall be deemed to have been received at 9am on the next business day. For the purpose of this Clause, “business day” means any day which is not a Saturday, a Sunday or a public holiday in the place at or to which the notice is left or sent.

19.	THIRD PARTY RIGHTS

Nothing in this Agreement is intended to confer on any person any right to enforce any term of this Agreement which that person would not have had but for the Contracts (Rights of Third Parties) Act 1999. No right of any Party to agree any amendment, variation, waiver or settlement under or arising from or in respect of this Agreement, or to terminate this Agreement, shall be subject to the consent of any person who has rights under this Agreement by virtue of the Contracts (Rights of Third Parties) Act 1999.

20.	ASSIGNMENT

No Party may assign the benefit of its rights under this Agreement, whether absolutely or by way of security, or deal in any way with any interest it has under this Agreement.

21.	GOVERNING LAW AND JURISDICTION

21.1	Governing law

This Agreement shall is governed by and to be construed in accordance with English law.

21.2	Jurisdiction

Each party hereby submits to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of or in connection with this Agreement and its implementation and effect.

SCHEDULE 1

Part 1 - Services

The Consultant shall provide to the Company and any Group Company services as may be agreed from time to time between the Board and the Consultant, which shall include but not be limited to:

Customer sales support

Marketing support

Business development

Support the proposed consolidation of the two existing manufacturing locations into one

(together the “Services”)

In providing the Services, the Consultant shall:

(a)

diligently perform the Services, including where it is agreed that the Services involve the Consultant providing services to any Group Company or any of their clients;

(b)

use his best endeavours to promote and protect the interests of the Company and any Group Company; and

(c)

keep detailed records of all things done by him in relation to the provision of the Services and keep the Board promptly and fully informed (in writing if so requested) of his actions and conduct of business for the Company and any Group Company.

IN WITNESS of which this Agreement has been executed as a deed on the first date written above.

EXECUTED as a Deed

__________________________________

by XCEL POWER SYSTEMS LTD

acting by ●[Director]

Director

In the presence of:

Witness Signature

__________________________________

Full Name

_________________________________

Address:

__________________________________

EXECUTED as a Deed

by RICHARD WELLER

__________________________________

Director

In the presence of:

Witness Signature

__________________________________

Full Name

_________________________________

Address:

__________________________________

EMRISE CORPORATION
(Exact name of registrant as specified in its charter)


Delaware	001-10346	77-0226211
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2530 Meridian Parkway
Durham, North Carolina 27713
(Address of Principal Executive Offices)

(408) 200-3040
Registrant’s telephone number, including area code

Exhibit No.	Description
2.1	Stock Purchase Agreement, dated March 22, 2015, by and among DDC (United Kingdom) Limited, EMRISE Electronics Ltd. and EMRISE Corporation.*
2.2	Plan of Liquidation and Dissolution of EMRISE Corporation.
10.1	Form of Support Agreement
99.1	Press Release, dated March 23, 2015.

Exhibit No.	Description
2.1	Stock Purchase Agreement, dated March 22, 2015, by and among DDC (United Kingdom) Limited, EMRISE Electronics Ltd. and EMRISE Corporation.*
2.2	Plan of Liquidation and Dissolution of EMRISE Corporation.
10.1	Form of Support Agreement
99.1	Press Release, dated March 23, 2015.

ARTICLE 1.	Definitions	1

Section 1.01	Definitions	1
Section 1.02	Definitional and Interpretative Provisions	12

ARTICLE 2.	Description of the Transaction	13

Section 2.01	The Closing; Purchase and Sale of Subject Shares	13
Section 2.02	Closing Deliveries	13
Section 2.03	Withholding Rights	14
Section 2.04	Closing Working Capital Adjustment	14

ARTICLE 3.	Representations and Warranties of Seller	16

Section 3.01	Corporate Existence and Power	16
Section 3.02	Corporate Authorization	17
Section 3.03	Governmental Authorization	17
Section 3.04	Non-contravention	17
Section 3.05	Capitalization; Subsidiaries	18
Section 3.06	Financial Statements	18
Section 3.07	Absence of Certain Change	19
Section 3.08	No Undisclosed Liabilities	21
Section 3.09	Material Contracts	21
Section 3.10	Compliance with Applicable Laws	24
Section 3.11	Litigation	25
Section 3.12	Real Property	26
Section 3.13	Properties	26
Section 3.14	Intellectual Property	27
Section 3.15	Information Technology	30
Section 3.16	Insurance Coverage	30
Section 3.17	Licenses and Permits	30
Section 3.18	Tax Matters	31
Section 3.19	Employees and Employee Benefit Plans	32
Section 3.20	Environmental Matters	35
Section 3.21	Significant Customers and Suppliers	35
Section 3.22	Accounts Receivable	36
Section 3.23	Affiliate Transactions	37
Section 3.24	Finders’ Fees	37
Section 3.25	Fairness Opinion	37
Section 3.26	No Other Representations and Warranties	37

ARTICLE 4.	Representations and Warranties of Purchaser	37

Section 4.01	Corporate Existence and Power	37
Section 4.02	Corporate Authorization	38
Section 4.03	Governmental Authorization	38
Section 4.04	Non-contravention	38
Section 4.05	Finders’ Fees	38
Section 4.06	Financial Ability	38
Section 4.07	Litigation	38

ARTICLE 5.	Covenants of Seller and the Acquired Companies	38

Section 5.01	Conduct of the Acquired Companies	38
Section 5.02	Stockholder Meeting	41
Section 5.03	No Solicitation; Other Offers	42
Section 5.04	Access to Information	45
Section 5.05	Notice of Certain Events	45
Section 5.06	Payoff Letters; Invoices; and Lien Releases	46

ARTICLE 6.	Additional Covenants of the Parties	46

Section 6.01	Appropriate Action; Consents	46
Section 6.02	Proxy Statement	47
Section 6.03	Confidentiality; Public Announcements	48
Section 6.04	Indemnification of Officers and Directors	48
Section 6.05	Power of Attorney to Vote Company Common Stock	48
Section 6.06	Preservation of Records	49
Section 6.07	Leased Real Property	49
Section 6.08	Name Change	49


ARTICLE 7.	Tax Matters	49

Section 7.01	Tax Periods Ending on or before the Closing Date	49
Section 7.02	Straddle Periods	50
Section 7.03	Cooperation on Tax Matters	50
Section 7.04	Contest Provisions	51
Section 7.05	Characterization of Payments	51

ARTICLE 8.	Closing Conditions	51

Section 8.01	Conditions to the Obligations of Each Party	51
Section 8.02	Conditions to the Obligations of Purchaser	52
Section 8.03	Conditions to the Obligations of Seller	53

ARTICLE 9.	Termination	54

Section 9.01	Termination	54
Section 9.02	Effect of Termination	55
Section 9.03	Payment of Expenses	55

ARTICLE 10.	Indemnification	56

Section 10.01	Survival of Representations, Etc	56
Section 10.02	Indemnification	57
Section 10.03	Limitations	58
Section 10.04	Claims and Procedures	58
Section 10.05	Defense of Third-Party Claims	59
Section 10.06	No Contribution	60
Section 10.07	Exercise of Remedies by Indemnitees Other Than Purchaser	60

ARTICLE 11.	Miscellaneous	60

Section 11.01	Notices	60
Section 11.02	Remedies Cumulative; Specific Performance	61
Section 11.03	Amendments and Waivers	61
Section 11.04	Expenses	62
Section 11.05	Disclosure Schedule References	62
Section 11.06	Binding Effect; Benefit; Assignment	62
Section 11.07	Governing Law	62
Section 11.08	Jurisdiction	62
Section 11.09	Waiver of Jury Trial	63
Section 11.10	Counterparts; Effectiveness	63
Section 11.11	Entire Agreement	63
Section 11.12	Severability	63
Section 11.13	Time is of the Essence	63

	EMRISE CORPORATION


Dated: March 23, 2015	By:	/s/ Carmine T. Oliva
		Carmine T. Oliva
		Chief Executive Officer and Chairman of the Board

Exhibit A	Key Employees
Exhibit B	Form of Employment Agreement
Exhibit C	Escrow Agreement
Exhibit D	Transition Services Agreement
Exhibit E	Consulting Agreement

Schedule 1.02	SEC Documents
Schedule 2.04(a)	Specified Accounting Principles
Schedule 5.01	Permitted Activities
Schedule 5.02	Other Proposals
Schedule 6.04	Officers and Directors
Schedule 8.02(c)	Third Party Consents
Schedule 8.02(e)	Resignations

Term	Section
Adverse Recommendation Change Agreement	5.02(c) Preamble
Agreed Adjustments	2.04(b)(v)
Alternative Acquisition Agreement	5.03(e)
Anti-Corruption Law	3.10(c)(iii)
Business	Recitals
Claim	10.05
Claim Dispute Notice	10.04(c)
Closing	2.01(a)
Closing Balance Sheet	2.04(b)(i)
Closing Date	2.01(a)
Company	Preamble
Company Common Stock	Recitals
Company Real Property	3.13(a)
Confidentiality Agreement	6.03(a)
Consulting Agreement Current Backlog Deductible	Recitals 3.22(b) 10.03(a)
Designated Accounting Firm	2.04(b)(v)
Employment Agreement	Recitals
Employment Dispute	3.19(h)
End Date	9.01(b)
Escrow Agent	2.08(c)
Escrow Agreement	2.08(c)
Estimated Closing Working Capital	2.04(a)
Excess	2.04(b)(vi)
Expert Calculations	2.04(b)(v)
Export and Sanctions Laws	3.10(b)
Expiration Date	10.01(a)
Financial Statements	3.06(a)
Fundamental Representation	10.01(a)
Headwaters	3.24
Interim Period	5.01
Invoice	5.06
Intervening Event IT Systems	5.03(c) 3.15
Key Employees	Recitals
Leased Real Property	3.13(a)
Lien Release	5.06
Malicious Code	3.14(m)
Material Contract	3.09(a)
Notice Period	5.03(e)
OFAC	3.10(b)
Officer’s Claim Certificate	10.04(a)
Original Date	5.02(b)
Other Interested Party	5.03(c)
Owned Real Property	3.13(a)
Payoff Letter	5.06

Permits	3.17
Permitted Activity	5.01
Permitted Liens	3.13(a)(iv)
Pre-Closing Return	7.04
Purchaser	Preamble
Purchaser Closing Certificate	8.03(c)
Purchaser Closing Statement	2.04(b)(i)
Purchaser Cure Period	9.01(g)
Purchaser Working Capital Amount	2.04(b)(i)
Real Property Lease	3.12(a)
Related Person	3.23
Relevant Transfer	3.19(k)
Required Seller Stockholder Approval	3.02(c)
Review Period	2.04(b)(iii)
Seller Board of Directors	Recitals
Seller Board Recommendation	3.02(b)
Seller Closing Certificate	8.02(e)
Seller Cure Period	9.01(f)
Seller Financial Advisors	3.24
Seller Stockholder Meeting	5.02(a)
Seller Working Capital Amount	2.04(b)(iii)
Shortfall	2.04(b)(vi)
Specified Accounting Principles	2.04(a)
Stockholders	Preamble
Straddle Period Pre-Closing UK Corporation Tax Amount	7.02
Straddle Period UK Corporation Tax Payments	7.02
Tax Contest	7.04
Termination Fee	9.03(b)
Unaudited Year End Balance Sheet	3.06(a)
Working Capital Dispute Notice	2.04(b)(iii)

	DDC (UNITED KINGDOM) LIMITED
	By:	/s/ Vincent Buffa
		Name: Vincent Buffa
		Title: Director

	EMRISE CORPORATION
	By:	/s/ Carmine T. Oliva
		Name: Carmine T. Oliva
		Title: Chief Executive Officer and Chairman of the Board

	EMRISE ELECTRONICS LTD.
	By:	/s/ Carmine T. Oliva
		Name: Carmine T. Oliva
		Title: Director

		EMRISE CORPORATION


		By: _____________________________________
		Name: Carmine T. Oliva
		Title: Chief Executive Officer

		DDC (UNITED KINGDOM) LIMITED


		By: _____________________________________
		Name:
		Title:

	STOCKHOLDER


	By: _____________________________________
	Name:
	Address:

	Facsimile:
	E-mail:

Name of Stockholder		Number of Subject Shares as of the Date Hereof
Carmine T. Oliva		366,147
Georgeann Oliva		21,837
Samuel J. Oliva		280,076
Samuel G. & T. Michelle Oliva		279,220
Otis W. Baskin		54,787
Graham Jefferies		46,446
Frank P. Russomanno		54,987
Julie A. Abraham		50,000
Timothy J. Blades		25,000