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Loan Agreement - EMRISE CORP - 11-14-2005

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					EXHIBIT 10.10 LOAN AGREEMENT BETWEEN LLOYDS TSB COMMERCIAL FINANCE LIMITED AND XCEL POWER SYSTEMS LIMITED

LLOYDS TSB COMMERCIAL FINANCE LIMITED LOAN AGREEMENT A. DATE: B. PARTIES: LENDER: LLOYDS TSB COMMERCIAL FINANCE LIMITED
-----------A company incorporated in England and Wales with number 733011 whose registered office is at Boston House, The Little Green, Richmond, Surrey TW9 1QF.

Borrower: --------

XCEL POWER. SYSTEMS LIMITED a company incorporated in England and Wales with neither 00575679 whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB

C.

INTRODUCTION ------------

C.1 The Lender's Standard Terms and Conditions for revolving Loan Fealties (the "Conditions") are supplied with, and form an integral part of, this Loan Agreement (the "Agreement") and are signed (for identification) on behalf of the Lender and the Borrower.
C.2 Except where the context otherwise requires: C.2 1 all references in this Agreement to: C.2.1.1 the expression "Agreement" includes the Conditions; a clause means a clause in this Agreement and to a condition means a condition contained in the Conditions,

C.2.1.1

C.2.2

expressions defined in the Conditions bear the same meaning in this Agreement.

C.3 Where there is any conflict between a clause and a condition, their such clause shall prevail. D. LOAN AGREEMENT

LLOYDS TSB COMMERCIAL FINANCE LIMITED LOAN AGREEMENT A. DATE: B. PARTIES: LENDER: LLOYDS TSB COMMERCIAL FINANCE LIMITED
-----------A company incorporated in England and Wales with number 733011 whose registered office is at Boston House, The Little Green, Richmond, Surrey TW9 1QF.

Borrower: --------

XCEL POWER. SYSTEMS LIMITED a company incorporated in England and Wales with neither 00575679 whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB

C.

INTRODUCTION ------------

C.1 The Lender's Standard Terms and Conditions for revolving Loan Fealties (the "Conditions") are supplied with, and form an integral part of, this Loan Agreement (the "Agreement") and are signed (for identification) on behalf of the Lender and the Borrower.
C.2 Except where the context otherwise requires: C.2 1 all references in this Agreement to: C.2.1.1 the expression "Agreement" includes the Conditions; a clause means a clause in this Agreement and to a condition means a condition contained in the Conditions,

C.2.1.1

C.2.2

expressions defined in the Conditions bear the same meaning in this Agreement.

C.3 Where there is any conflict between a clause and a condition, their such clause shall prevail. D. LOAN AGREEMENT D.1 Subject to the terms of this Agreement, at the request of the Borrower the Lender has agreed to make Advances to the Borrower relative to Valuations of the Secured Collateral up to the Loan Facility Limit.

D.2 The Borrower has entered into this Agreement on the basis that it has read and understood all of its terms and also it has had the prior opportunity to take Independent legal advice as to its rights and obligations. E. PARTICULARS F.1 GENERAL DATE OF DEBT PURCHASE AGREEMENT: ADDITIONAL PRECONDITIONS:

D.2 The Borrower has entered into this Agreement on the basis that it has read and understood all of its terms and also it has had the prior opportunity to take Independent legal advice as to its rights and obligations. E. PARTICULARS F.1 GENERAL DATE OF DEBT PURCHASE AGREEMENT: ADDITIONAL PRECONDITIONS: ADDITIONAL SECURITY DOCUMENT: F.2 FINANCIAL
------------------------------------------------------- ------------------------------- ----------------DRAWDOWN FREQUENCY Stock in Trade: Not Applicable Plant & Machinery: Monthly

Property Not Applicable ------------------------------------------------------- ------------------------------- ----------------FIRST DRAWN DOWN DATE: When requested

------------------------------------------------------- ------------------------------------------------LENDER'S MAXIMUM AGGREGATE COMMITMENT: lesser of (pound)2,550,000 and 125% of the Notifi all Debts outstanding at the relevant time

------------------------------------------------------- -------------------------------------------------

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------------------------------------------------------- ------------------------------------------------STOCK IN TRADE ------------------------------------------------------STOCK IN TRADE ADVANCES LIMIT: FROM THE AMOUNT AVAILABLE FROM THE STOCK IN TRADE VALUE WE WILL DEDUCT ALL PREFERENTIAL CLAIMS AND OTHER RESERVES REQUIRED PRIOR TO ARRIVING AT AN AVAILABLE FUNDS FIGURE ------------------------------------------------------Not Applicable ------------------------------------------------the lesser of (pound)0 or the sum equal to 0% of Stock in Trade Value

-------------------------------------------------

STOCK IN TRADE INTEREST RATE 0% above Base Rate ------------------------------------------------------- ------------------------------------------------STOCK IN TRADE REPAYMENT TERMS ------------------------------------------------------- ------------------------------------------------PREPARED BY BORROWER: Prior to the first advance within 14 days of each calendar month. Prepared b Borrower a schedule of VAT and PAYE liability. ------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY The plant and machinery set out or otherwise desc in any schedules respectively to a document being Additional Security Document and/o the General Se Document (and in this Agreement reference to Plan Machinery shall be construed accordingly). VALUATIONS OF STOCK IN TRADE

------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY ADVANCES LIMIT the lesser of (pound)75,000 or the sum equal to 5 plant and Machinery Value ------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY INTEREST RATE 1.9% above Base Rate ------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- ------------------------------------------------STOCK IN TRADE ------------------------------------------------------STOCK IN TRADE ADVANCES LIMIT: FROM THE AMOUNT AVAILABLE FROM THE STOCK IN TRADE VALUE WE WILL DEDUCT ALL PREFERENTIAL CLAIMS AND OTHER RESERVES REQUIRED PRIOR TO ARRIVING AT AN AVAILABLE FUNDS FIGURE ------------------------------------------------------Not Applicable ------------------------------------------------the lesser of (pound)0 or the sum equal to 0% of Stock in Trade Value

-------------------------------------------------

STOCK IN TRADE INTEREST RATE 0% above Base Rate ------------------------------------------------------- ------------------------------------------------STOCK IN TRADE REPAYMENT TERMS ------------------------------------------------------- ------------------------------------------------PREPARED BY BORROWER: Prior to the first advance within 14 days of each calendar month. Prepared b Borrower a schedule of VAT and PAYE liability. ------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY The plant and machinery set out or otherwise desc in any schedules respectively to a document being Additional Security Document and/o the General Se Document (and in this Agreement reference to Plan Machinery shall be construed accordingly). VALUATIONS OF STOCK IN TRADE

------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY ADVANCES LIMIT the lesser of (pound)75,000 or the sum equal to 5 plant and Machinery Value ------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY INTEREST RATE 1.9% above Base Rate ------------------------------------------------------- ------------------------------------------------PLANT AND MACHINERY REPAYMENT TERMS (pound)2,083.00 ------------------------------------------------------- ------------------------------------------------VALUATIONS OR PLANT AND MACHINERY PREPARED BY INDEPENDENT VALUER. Prior to drawdown annually on the anniversary of this Agreement ------------------------------------------------------- ------------------------------------------------PROPERTY Not Applicable ------------------------------------------------------- ------------------------------------------------PROPERTY ADVANCES LIMIT the lesser of (pound)0 or the sum equal to 0% of Value ------------------------------------------------------- ------------------------------------------------PROPERTY ADVANCES INTEREST RATE 0% above Base Rate ------------------------------------------------------- ------------------------------------------------PROPERTY ADVANCE REPAYMENT TERMS ------------------------------------------------------- ------------------------------------------------PREPARED BE INDEPENDENT VALUER. Prior to drawdow VALUATIONS OF PROPERTY annually on the anniversary of this Agreement ------------------------------------------------------- -------------------------------------------------

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F. POWER OF ATTORNEY For the purposes of enabling the Lender to exercise more readily and beneficially the powers conferred on the Lender in this Agreement the Borrower hereby irrevocably and by way of security appoints the Lender (and any successor or assignee and its (arid their respective) directors and officers from time to time jointly and each of them severally to be the Attorney of the Borrower for the purpose of executing all such deeds and documents and performing all such acts and things in the name of the Borrower as may be expedient for the exercise by the Lender (any such successor or assignee) of any of its said powers or to secure the performance of any of the Borrowers obligations in this Agreement.

F. POWER OF ATTORNEY For the purposes of enabling the Lender to exercise more readily and beneficially the powers conferred on the Lender in this Agreement the Borrower hereby irrevocably and by way of security appoints the Lender (and any successor or assignee and its (arid their respective) directors and officers from time to time jointly and each of them severally to be the Attorney of the Borrower for the purpose of executing all such deeds and documents and performing all such acts and things in the name of the Borrower as may be expedient for the exercise by the Lender (any such successor or assignee) of any of its said powers or to secure the performance of any of the Borrowers obligations in this Agreement. G. SPECIAL TERMS (IF ANY) -4-

IN WITNESS whereof the Lender and the Borrower have each executed this Agreement as a deed on the above dare and in the manner appearing below: SIGNED and DELIVERED as a DEED on the 28th
) ) LLOYDS TSB COMMERCIAL FINANCE LIMITED ) ) by: 1.** ______________________________________) duly appointed attorney ) ) 2.** ______________________________________) duly appointed attorney ) day of june 2005 on behalf of

SIGNED and DELIVERED as a Deed BY XCEL POWER SYSTEMS LIMITED
acting by** Carmine T. Oliva ) ------------------------------ ) Director ) ) G.M.J. Jeffries ) ------------------------------ ) *Director/Company Secretary ) /S/ Carmine T. Oliva --------------------------Director /S/ G.M.J. Jeffries --------------------------*Director/Company Secretary

And**

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EXHIBIT 10.11 LLOYDS TSB BUSINESS LOAN AGREEMENT We LLOYDS TSB BANK PLC (the "Bank") of PO Box 18436, 39 Threadneedle Street, EC2R 8PT offer you XCEL CORPORATION LIMITED (company registered number (969006) of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB a loan on the following terms and conditions SPECIFIC TERMS AND CONDITIONS THE LOAN The maximum amount of the loan (excluding any amounts of interest that will be added to the loan) shall be (pound)500,000. This amount is to be used for working capital purposes. The loan shall be borrowed in one

IN WITNESS whereof the Lender and the Borrower have each executed this Agreement as a deed on the above dare and in the manner appearing below: SIGNED and DELIVERED as a DEED on the 28th
) ) LLOYDS TSB COMMERCIAL FINANCE LIMITED ) ) by: 1.** ______________________________________) duly appointed attorney ) ) 2.** ______________________________________) duly appointed attorney ) day of june 2005 on behalf of

SIGNED and DELIVERED as a Deed BY XCEL POWER SYSTEMS LIMITED
acting by** Carmine T. Oliva ) ------------------------------ ) Director ) ) G.M.J. Jeffries ) ------------------------------ ) *Director/Company Secretary ) /S/ Carmine T. Oliva --------------------------Director /S/ G.M.J. Jeffries --------------------------*Director/Company Secretary

And**

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EXHIBIT 10.11 LLOYDS TSB BUSINESS LOAN AGREEMENT We LLOYDS TSB BANK PLC (the "Bank") of PO Box 18436, 39 Threadneedle Street, EC2R 8PT offer you XCEL CORPORATION LIMITED (company registered number (969006) of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB a loan on the following terms and conditions SPECIFIC TERMS AND CONDITIONS THE LOAN The maximum amount of the loan (excluding any amounts of interest that will be added to the loan) shall be (pound)500,000. This amount is to be used for working capital purposes. The loan shall be borrowed in one amount on or before 31st August 2005 or such later date as the Bank may agree. You will not be entitled to borrow any amount that has not been borrowed by the agreed date. The proceeds of the loan will be credited to your current account no. 00450767. Unless the Bank agrees otherwise, the loan may not be borrowed until all the PRECONDITIONS set out below have been satisfied PRECONDITIONS Unless received by the Bank prior to the date on which this agreement is signed by the Bank, the Bank is to receive in form and substance acceptable to the Bank the security and other documents (if any) listed in the Security Schedule lo this agreement and the documents, evidence or other requirements of the preconditions (if any) set out in the Preconditions Schedule to this agreement. Any security received should be accompanied by such evidence as the Bank may reasonably require to confirm the value of such security and to confirm that such

EXHIBIT 10.11 LLOYDS TSB BUSINESS LOAN AGREEMENT We LLOYDS TSB BANK PLC (the "Bank") of PO Box 18436, 39 Threadneedle Street, EC2R 8PT offer you XCEL CORPORATION LIMITED (company registered number (969006) of Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB a loan on the following terms and conditions SPECIFIC TERMS AND CONDITIONS THE LOAN The maximum amount of the loan (excluding any amounts of interest that will be added to the loan) shall be (pound)500,000. This amount is to be used for working capital purposes. The loan shall be borrowed in one amount on or before 31st August 2005 or such later date as the Bank may agree. You will not be entitled to borrow any amount that has not been borrowed by the agreed date. The proceeds of the loan will be credited to your current account no. 00450767. Unless the Bank agrees otherwise, the loan may not be borrowed until all the PRECONDITIONS set out below have been satisfied PRECONDITIONS Unless received by the Bank prior to the date on which this agreement is signed by the Bank, the Bank is to receive in form and substance acceptable to the Bank the security and other documents (if any) listed in the Security Schedule lo this agreement and the documents, evidence or other requirements of the preconditions (if any) set out in the Preconditions Schedule to this agreement. Any security received should be accompanied by such evidence as the Bank may reasonably require to confirm the value of such security and to confirm that such security is fully effective. FEES AND COSTS You shall pay any costs and expenses incurred by the Bank in assessing the loan, in the preparation of this agreement and of any amendment, waiver or consent letter at any time entered into, in the preparation, valuation, taking or release of any guarantee or t security at any time given in connection with this agreement and in connection with the revaluation of any such security from time to time. In particular the following charges shall be paid by you on demand by the Bunk. These charges are to be paid even if the loan is not borrowed. Security Costs (pound)530 (estimated) Estimated charges have been calculated on the basis of the Bank's experience with similar transactions. The actual amount charged to you may be more or less than the estimated figure. An arrangement fee of (pound)10,000 is also payable. This fee shall be paid to the Bank by you on the date the loan is borrowed. -1-

As mentioned in clauses 3 & 6 of the GENERAL TERMS AND CONDITIONS, other costs may arise in connection with the loan or in connection with the repayment of the loan. INTEREST The rate of interest payable on the loan will be Base Rate plus 2.5% per annum, currently 7.25% per annum in total. Interest shall be added to the loan 1 month after the date of borrowing, at monthly intervals thereafter and on the

As mentioned in clauses 3 & 6 of the GENERAL TERMS AND CONDITIONS, other costs may arise in connection with the loan or in connection with the repayment of the loan. INTEREST The rate of interest payable on the loan will be Base Rate plus 2.5% per annum, currently 7.25% per annum in total. Interest shall be added to the loan 1 month after the date of borrowing, at monthly intervals thereafter and on the date of final repayment of the loan. Interest is calculated on a daily basis on the amount of the loan from time to time outstanding. Interest for any particular period is calculated on the number of days in that period and a year of 365 days. If you fail to pay any amount payable under this agreement when due the rate of interest may be increased in accordance with clause 6.3 of the GENERAL TERMS AND CONDITIONS. REPAYMENT The loan is repayable in 36 consecutive monthly installments representing principal and interest commencing on the date which is 1 month after the date the loan is borrowed. The amount of these instalments will vary with changes in the interest rate and the number of days in the charging period. EARLY REPAYMENT The loan may be repaid early in accordance with clause 2 of the GENERAL TERMS AND CONDITIONS. FINANCIAL COVENANTS For as long as any moneys are owing to the Bank under this agreement or the Bank is under any obligation under this agreement you shall comply with the financial covenants set out below. These covenants will be tested against each financial statement. Your consolidated profit before taxation and interest paid and payable is not at any time to be less than 500% of the consolidated interest paid and payable (whether to the Bank or to any other person) for the period covered by the accounts. Your consolidated profit before taxation, depreciation, amortisation of goodwill and of other intangibles and interest paid and payable (but after dividends paid and payable) is not at any time to be less than 300% of the aggregate of the consolidated principal repayments and the consolidated interest paid and payable (whether to the Bank or to any other person) for the period covered by the accounts. -2-

PERIOD OF OFFER This agreement shall come into effect only if the Bank receives from you and finds in order a signed copy of this agreement on or before 31st July 2005. GENERAL TERMS CONDITIONS USEFUL LOAN PROCEEDS 1.1 Unless the loan is only for working capital or general business purposes, the amount borrowed shall be held in trust for the Bank until used for the purpose stated in the SPECIFIC TERMS AND CONDITIONS.

PERIOD OF OFFER This agreement shall come into effect only if the Bank receives from you and finds in order a signed copy of this agreement on or before 31st July 2005. GENERAL TERMS CONDITIONS USEFUL LOAN PROCEEDS 1.1 Unless the loan is only for working capital or general business purposes, the amount borrowed shall be held in trust for the Bank until used for the purpose stated in the SPECIFIC TERMS AND CONDITIONS. REPAYMENT 2.1 You will repay the loan on the dates and in the manner set out in the REPAYMENT section of the SPECIFIC TERMS AND CONDITIONS. 2.2 You may at any time after giving at least 5 business days' notice to the Bank make early repayment of all or any part of the loan together (in either case) with interest accrued to the date of payment. Each early repayment of part of the loan must be of at least (pound)5,000 (excluding accrued interest) and no amount repaid early may be borrowed again. If the loan is to be repaid in more than one amount, the Bank will decide how to apply the early repayment, either (a) by reducing subsequent repayments proportionately or (b) by applying the early repayment to then latest scheduled repayment instalments so as to reduce the terms of the loan. INCREASED COSTS AND CHANGES IN CIRCUMSTANCES 3.1 In running its business the Bank and any holding company of the Bank each has to comply with certain regulations and requirements laid down by regulatory and other official organisations or bodies as well as the law generally. The rate of interest quoted in the SPECIFIC TERMS AND CONDITIONS has been set in the light of how this affects the cost (to the Bank and any such holding company) of the Bank funding, agreeing to make and of making the loan available at the time the Bank signed this agreement. If, as a result of any new laws, regulations or requirements or any changes in existing ones, such cost is increased, the Bank may increase the rate of interest charged on the loan to compensate for that extra cost. 3.2 If at any tine the currency in which the loan is denominated is due to be or has been converted into the euro or any other currency as a result of a change in law or by agreement between the Bank and you, then: (a) the Bank may in its sole discretion determine and shall notify you in writing of the currency or currency unit in which amounts payable under this agreement shall be paid. After the expiry of 7 days -3-

from the date of such notice all payments falling due under this agreement shall be made in such currency or currency unit, and (b) (i) the Bank may by giving you not less than 21 days' written notice change any of the terms applying to the loan but only to the extent that the Bank reasonably considers any such change necessary to take account of differences in market practice or to compensate for increases in costs to the Bank or to any holding company of the Bank arising from or related to such conversion or arising from or related to the introduction of or to the extension of monetary union within the European Union. Any such change shall amend the terms of this agreement upon expiry of such period of notice, and (ii) at any time within 21 days of receipt of the Bank's notice you may make early repayment of all (but not part) of the loan. Such repayment shall be in accordance with clauses 2 and 3.2(a) above. REPRESENTATIONS

from the date of such notice all payments falling due under this agreement shall be made in such currency or currency unit, and (b) (i) the Bank may by giving you not less than 21 days' written notice change any of the terms applying to the loan but only to the extent that the Bank reasonably considers any such change necessary to take account of differences in market practice or to compensate for increases in costs to the Bank or to any holding company of the Bank arising from or related to such conversion or arising from or related to the introduction of or to the extension of monetary union within the European Union. Any such change shall amend the terms of this agreement upon expiry of such period of notice, and (ii) at any time within 21 days of receipt of the Bank's notice you may make early repayment of all (but not part) of the loan. Such repayment shall be in accordance with clauses 2 and 3.2(a) above. REPRESENTATIONS 4.1 You represent that: (a) all action required or necessary to authorise the execution of this agreement and the performance of your obligations under and in connection with this agreement has been taken and neither the execution of this agreement nor the performance of your obligations will constitute or result in any breach of any agreement, law, requirement or regulation, (b) no material litigation, administrative or judicial proceedings are presently pending or threatened against you or any of your subsidiaries, (c) there has been no material adverse change in your financial condition or that of any of your subsidiaries since the date of the financial statement received by the Bank prior to the date on which this agreement is signed by the Bank, and (d) no Event of Default (as described in clause (6.1 below) has occurred and is continuing and no circumstance has occurred which, with the giving of notice or the passing of time, could become or cause an Event of Default. 4.2 You shall be deemed to repeat the above representations on each day (with reference to the facts and circumstances then existing) prior to borrowing the loan and thereafter until all amounts payable to the Bank under this agreement have been paid. UNDERTAKINGS Prior to borrowing the loan and thereafter until all amounts payable to the Bank under this agreement have been paid: -4-

5.1 neither you nor any of your subsidiaries shall: (a) without the Bank's consent create or allow to be in place any mortgage, charge or other security interest or encumbrance over the whole or any part of your or their business or any of the property, income or other assets of your or their business or enter into any transaction which in the Bank's opinion has a similar effect, or factor or assign any debits, (b) part with, sell, transfer, lease or otherwise dispose of (or attempt or agree to do any such thing) the whole or any material part or your or any of your Subsidiary's undertaking, property, revenue or assets (either by a single transaction or a number of transactions whether related or not) other than for full value on an arm's length basis (save that no such parting with, sale, transfer, lease or other disposal may be made or entered into (i) if it would breach the terms of any security document given lo the Bank, or (ii) in respect of any undertaking, property, revenue or asset over which the Bank then has a fixed charge or fixed security interest), or

5.1 neither you nor any of your subsidiaries shall: (a) without the Bank's consent create or allow to be in place any mortgage, charge or other security interest or encumbrance over the whole or any part of your or their business or any of the property, income or other assets of your or their business or enter into any transaction which in the Bank's opinion has a similar effect, or factor or assign any debits, (b) part with, sell, transfer, lease or otherwise dispose of (or attempt or agree to do any such thing) the whole or any material part or your or any of your Subsidiary's undertaking, property, revenue or assets (either by a single transaction or a number of transactions whether related or not) other than for full value on an arm's length basis (save that no such parting with, sale, transfer, lease or other disposal may be made or entered into (i) if it would breach the terms of any security document given lo the Bank, or (ii) in respect of any undertaking, property, revenue or asset over which the Bank then has a fixed charge or fixed security interest), or (c) change the nature or your or their business as it is now conducted, 5.2 you shall promptly provide the Bank with copies of any financial information that the Bank may from time to time reasonably request, including but not limited to: (a) copies of your financial statement within 270 days of the end of each financial year, and (b) copies of your periodic management accounts at such intervals as the Bank may require in a form acceptable to the Bank within 45 days of the end of the period to which they relate. The Bank may at its option require such management accounts to incorporate an age-analysis of debtors, a schedule of all tenancies (if any) of any properly held by the Bank as security at the date of the accounts, and/or a breakdown of stock in trade, 5.3 you and each or your subsidiaries shall maintain with reputable underwriters or insurance companies adequate insurance on and over your respective business and assets, such insurance to be against such risks and to the extent usual for persons carrying on a business such as that carried on by you or, as the case may be, by the relevant subsidiary and, from time to time upon the request of the Bank, you shall furnish the Bank with evidence of such insurance, 5.4 in respect of any pension policy or life policy held by or charged to the Bunk, you agree to ensure that the premiums are paid when due and, upon request from the Bank at any time, promptly to provide the Bank with evidence that payment has been made. In the case of any such pension policy you also agree: (a) upon request by the Bank at any time, promptly to provide the Bank with evidence that the commutation proceeds will be paid to the Bank, -5-

(b) except to the extent that you have and apply other funds in repayment of the loan, to take the maximum benefit of the pension policy by way of commutation and its apply that benefit in repayment of the loan when due, and (e) not to agree to any arrangement that would reduce the commutation amount of the pension policy nor arrange for any transfer to be made from the pension policy, 5.5 if the purpose of the loan (as stated in the SPECIFIC TERMS AND CONDITIONS) involves building works or works enabling building works affecting any properly, you agree that promptly upon request by the Blank at any time you shall: (a) provide the Bank with evidence in a form acceptable to the Bank that you have obtained all necessary permissions and approvals for the proposed works and have entered into (in a form of contract acceptable to the Bank) all contracts necessary for the due completion of the proposed works. You will at all times ensure that any other party to any such contract (whether or not such contract has been provided to the Bank) complies with the contract in accordance with its terms. You shall not, without the consent of the Bank, agree to any modification in

(b) except to the extent that you have and apply other funds in repayment of the loan, to take the maximum benefit of the pension policy by way of commutation and its apply that benefit in repayment of the loan when due, and (e) not to agree to any arrangement that would reduce the commutation amount of the pension policy nor arrange for any transfer to be made from the pension policy, 5.5 if the purpose of the loan (as stated in the SPECIFIC TERMS AND CONDITIONS) involves building works or works enabling building works affecting any properly, you agree that promptly upon request by the Blank at any time you shall: (a) provide the Bank with evidence in a form acceptable to the Bank that you have obtained all necessary permissions and approvals for the proposed works and have entered into (in a form of contract acceptable to the Bank) all contracts necessary for the due completion of the proposed works. You will at all times ensure that any other party to any such contract (whether or not such contract has been provided to the Bank) complies with the contract in accordance with its terms. You shall not, without the consent of the Bank, agree to any modification in the terms of any contract which has been provided to the Bank, or terminate any such contract or stop work on any proposed works prior to completion of the works, and (b) provide to the Bank confirmations (each in a form and from a party acceptable to the Bank) of all expenditure on the works. The Bank may refuse to permit the borrowing of the loan if the amount to be borrowed under this agreement in respect of the works exceeds the total expenditure detailed in the confirmations, and 5.6 you agree to reduce the loan (in accordance with clause 2 above) or to provide the Bank with additional security acceptable to the Bank if the ratio of the loan to the value of the security given to the Bank is at any time higher than that applicable on the date this agreement was signed by the Bank and agree to provide such evidence as the Bank may from time to time require to confirm the value of such security and to confirm that the security remains fully effective. If the loan is to be repaid in more than one amount, the Bank will decide how to apply any early repayment, either (a) by reducing subsequent repayments proportionately or (b) by applying the early repayment to the then latest scheduled repayment instalment(s) so as to reduce the term or the loan. DEFAULT AND TERMINATION 6.1 The events listed in (a) to (j) below are called "EVENTS OF DEFAULT". As soon as an Event of Default happens or at any time thereafter, by giving notice to you, the Bank may cancel any obligations it has to lend money to you and may also make -6-

the loan become repayable on demand. When the loan is repayable on demand, you must repay the loan to the Bank together with all interest which has accrued on the loan and any other amounts owing under this agreement as soon as the Bank requests you to pay these amounts. The Bank may do this at the time the loan becomes repayable on demand or at any later time. EVENTS OF DEFAULT (a) you fail to pay when due any indebtedness owed by you to the Bank or fail to comply with any other obligation or undertaking to the Bank, (b) you fail to pay when due any indebtedness owed by you to another creditor or any of your creditors changes (or obtains the right to change) the original date on which that indebtedness is or was due to be paid to an earlier date us a result of your failure to comply with obligations in connection with that indebtedness, (c) any representation or statement made by you to the Bank, whether or not in connection with this agreement, proves in have been incorrect or inaccurate when made or deemed made, (d) any person with a legal claim takes possession or a receiver, administrator, custodian, trustee, liquidator or

the loan become repayable on demand. When the loan is repayable on demand, you must repay the loan to the Bank together with all interest which has accrued on the loan and any other amounts owing under this agreement as soon as the Bank requests you to pay these amounts. The Bank may do this at the time the loan becomes repayable on demand or at any later time. EVENTS OF DEFAULT (a) you fail to pay when due any indebtedness owed by you to the Bank or fail to comply with any other obligation or undertaking to the Bank, (b) you fail to pay when due any indebtedness owed by you to another creditor or any of your creditors changes (or obtains the right to change) the original date on which that indebtedness is or was due to be paid to an earlier date us a result of your failure to comply with obligations in connection with that indebtedness, (c) any representation or statement made by you to the Bank, whether or not in connection with this agreement, proves in have been incorrect or inaccurate when made or deemed made, (d) any person with a legal claim takes possession or a receiver, administrator, custodian, trustee, liquidator or similar official is appointed of the whole or any part of your business or of any of the assets of your business or an administration application is presented or made for the making of an administration order or a notice of intention to appoint an administrator is issued by you or your directors or by the holder of a qualifying floating charge or notice of appointment of an administrator is filed by any person with the court or a judgment, decree or diligence is made or granted against you, (e) proceedings are commenced or a petition is presented or an order is made or a resolution is passed for your winding up or you are or become insolvent or you stop or threaten to stop payment of your debts generally or you are deemed by law unable to pay your debts or you or your directors convene or become obliged to convene a meeting of shareholders or creditors with a view to winding up or an application is made in connection with a moratorium or a proposal to creditors for a voluntary arrangement by you or you take any action (including entering negotiations) with a view to readjustment, rescheduling, forgiveness or deferral of any part of your indebtedness, (f) you cease or threaten to cease to carry on your business in the normal course or fail to maintain or breach any franchise, licence or right necessary to conduct your business or breach any legislation relating to your business, including but not limited to any applicable environmental protection laws, -7-

(g) the persons who now control you cease to have such control, (h) any guarantee, other security or other document or arrangement relied upon by the Bank in connection with the loan ceases to be continuing or ceases to remain fully effective or notice of discontinuance is received by the Bank or if the Bank reasonably believes that the effectiveness of any such document or arrangement . is in doubt or if any provision of such document or arrangement is not complied with for any reason or any favourable tax treatment afforded to any pension policy or to any life policy held by or charged to the Bank ceases to be available, (i) any of the above events occur in relation to any parent or subsidiary or any guarantor of or other provider of security for the loan or, in the case of any individual that provides any guarantee or other security for the loan, a petition is presented for a bankruptcy or sequestration order against any such individual or any such individual dies or becomes incapable of managing his or her affairs by reason of mental disorder, or any action is taken in any jurisdiction which is similar or analogous to any of the above events in respect of you or any of the above mentioned panties, or (j) you fail or have failed to disclose to the Bank any important information that is relevant to the loan or the security required or you undertake or are subject to any action or occurrence which the Bank reasonably believes could place at risk the payment of any amount owing to the Bank.

(g) the persons who now control you cease to have such control, (h) any guarantee, other security or other document or arrangement relied upon by the Bank in connection with the loan ceases to be continuing or ceases to remain fully effective or notice of discontinuance is received by the Bank or if the Bank reasonably believes that the effectiveness of any such document or arrangement . is in doubt or if any provision of such document or arrangement is not complied with for any reason or any favourable tax treatment afforded to any pension policy or to any life policy held by or charged to the Bank ceases to be available, (i) any of the above events occur in relation to any parent or subsidiary or any guarantor of or other provider of security for the loan or, in the case of any individual that provides any guarantee or other security for the loan, a petition is presented for a bankruptcy or sequestration order against any such individual or any such individual dies or becomes incapable of managing his or her affairs by reason of mental disorder, or any action is taken in any jurisdiction which is similar or analogous to any of the above events in respect of you or any of the above mentioned panties, or (j) you fail or have failed to disclose to the Bank any important information that is relevant to the loan or the security required or you undertake or are subject to any action or occurrence which the Bank reasonably believes could place at risk the payment of any amount owing to the Bank. 6.2 If any Event of Default happens or anything happens that might lead to an Event of Default, you shall inform the Bank immediately. 6.3 If any amount payable in respect of this agreement is not paid when due (including any amount payable under this clause 6, you shall pay interest on that amount at the default rate from the date on which the amount was due until it is paid to the Bank. Interest, if unpaid, shall be added to the amount in default at monthly intervals. The default rate shall be the rate determined by the Bank to be 3% per annum higher than the rate of interest specified in the SPECIFIC TERMS AND CONDITIONS that would normally apply. 6.4 You shall indemnify the Bank against any costs incurred or losses reasonably sustained by the Bank as the result of any Event of Default. 6.5 You shall also pay any costs and expenses reasonably incurred by the Bank in enforcing or perfecting any security for the loan and in enforcing or preserving its rights under this agreement. OTHER 7.1 This agreement shall be construed mind have effect in accordance with English law and is subject to the jurisdiction of the English Courts. The Bank may take action against you in any other jurisdiction where proceedings may be lawfully commenced. -8-

7.2 No delay or omission by the Bank in exercising any of its rights hereunder shall operate or be construed as a waiver, nor shall any single or partial exercise of any such right prevent any other or further exercise thereof or the exercise of any other right. 7.3 If the loan is to be borrowed, or if any payment becomes due from you, on a day which is not a business day then the amount concerned will be borrowed or, as the case may be, will become payable on the next business day. 7.4 The Bank may use any credit balance there may be on any of your accounts towards payment or any amounts owed by you to the Bank under this agreement without notifying you beforehand, whether such credit balances are in sterling or any other currency or are deposited for fixed or determinable periods. 7.5 Unless otherwise agreed by the Bank you shall at all times during the term of this agreement keep a current account (or other account for the purposes of meeting all payments due to the Bank under and in connection with

7.2 No delay or omission by the Bank in exercising any of its rights hereunder shall operate or be construed as a waiver, nor shall any single or partial exercise of any such right prevent any other or further exercise thereof or the exercise of any other right. 7.3 If the loan is to be borrowed, or if any payment becomes due from you, on a day which is not a business day then the amount concerned will be borrowed or, as the case may be, will become payable on the next business day. 7.4 The Bank may use any credit balance there may be on any of your accounts towards payment or any amounts owed by you to the Bank under this agreement without notifying you beforehand, whether such credit balances are in sterling or any other currency or are deposited for fixed or determinable periods. 7.5 Unless otherwise agreed by the Bank you shall at all times during the term of this agreement keep a current account (or other account for the purposes of meeting all payments due to the Bank under and in connection with this agreement) with the Bank and all amounts from time to time due lo the Bank under this agreement may be debited to that account. You shall keep enough money in the account (or ensure that there are sufficient funds available within any agreed overdraft.) to meet all such payments as they become due. 7.6 Any security given to the Bank (whether given before the date on which this agreement is signed by the Bank or at any time in the future and whether or not. specified in this agreement) shall, unless otherwise agreed by the Bank. be security not only for the loan but also for all other moneys and liabilities whether certain or contingent at any time due, owing or incurred by you to the Bunk. 7.7 Members of the Lloyds TSB group from time to time may transfer information regarding you among themselves, to their auditors for the time being and to any potential assignee or transferee of the loan. Information may not be transferred further or otherwise (including for marketing purposes) without prior written consent unless such information is in the public domain or unless the Bunk is required by law so to do. 7.8 This agreement and all communications from you to the Bank in connection with this agreement and the loan (all of which are to be sent in writing to the Bank at the address given at the heading of this agreement or to such other address as the Bank may from time to time advise) shall be signed on your behalf either in accordance with the mandate given by you to the Bank, or if requested by the Bank, in accordance with a specific resolution of your Board of Directors. All communications (whether given by you or by the Bank) relating to loan and any change to this agreement shall he in English. -9-

7.9 This agreement is for the benefit of the contracting parties only and shall not confer any benefit on or be enforceable by a third party. 7.10 Any change to this agreement that is not permitted in this agreement must be made in writing and be signed by the contracting parties. 7.12 The SPECIFIC TERMS AND CONDITIONS and GENERAL TERMS AND CONDITIONS shall be read and construed as one agreement. 7.12 References in this agreement to: THE BANK includes its successors and assigns. BANK RATE means the Bank's Base Rate from time to time. This rate will be displayed in branches of the Bank and may be varied (either up or down) by the Bunk at any time. a BUSINESS DAY means a day other than a Saturday or a Sunday on which banks are open for normal business in England and Wales. CONTROL shall have the meaning given to it in Section 840 of the Income and Corporation Taxes Act 1988 or

7.9 This agreement is for the benefit of the contracting parties only and shall not confer any benefit on or be enforceable by a third party. 7.10 Any change to this agreement that is not permitted in this agreement must be made in writing and be signed by the contracting parties. 7.12 The SPECIFIC TERMS AND CONDITIONS and GENERAL TERMS AND CONDITIONS shall be read and construed as one agreement. 7.12 References in this agreement to: THE BANK includes its successors and assigns. BANK RATE means the Bank's Base Rate from time to time. This rate will be displayed in branches of the Bank and may be varied (either up or down) by the Bunk at any time. a BUSINESS DAY means a day other than a Saturday or a Sunday on which banks are open for normal business in England and Wales. CONTROL shall have the meaning given to it in Section 840 of the Income and Corporation Taxes Act 1988 or any amendment to or restatement of that Act for the time being in force. FINANCIAL STATEMENT means any particular time the latest consolidated balance sheet and profit and loss account (being audited or signed by an independent accountant if so required by law or by the Bank at any time and being prepared on the some basis, containing a similar level of detail and in accordance with the same accounting principles as, and for an accounting reference period consistent with, the latest such balance sheet and profit and loss account received by the Bank prior to the date on which this agreement is signed by the Bank) of you and your subsidiaries together with the notes to both. LOAN means, at any particular time, the total amount which may he borrowed by you under this agreement or, it appropriate, the total amount which has been debited to the loan account and remains outstanding at such time. The loan may, at any time, include any interest, costs and charges added to the loon account in accordance with this agreement. MONTH means a calendar month. PARENT and SUBSIDIARY shall have respectively the meaning given to parent undertaking and subsidiary undertaking in Section 258 of the Companies Act l985 or any amendment to or restatement of that Act for the time being in force. During any period in which you do not have a SUBSIDIARY, all references to your subsidiaries shall be ignored and the relevant text read and construed accordingly. -10-

7.13 For the purposes of the financial covenants: PROFIT BEFORE TAXATION shall include items of an exceptional nature and shall exclude items of an extraordinary nature unless taken into account at the Bank's discretion for the purpose of any relevant calculation. PRECONDITIONS SCHEDULE No preconditions required. SECURITY SCHEDULE (1) an all moneys guarantee from Emrise Corporation for a principal amount of (pound)5000,000 plus interest and other costs as detailed in the guarantee and in respect of your debts and liabilities to the Bank,

7.13 For the purposes of the financial covenants: PROFIT BEFORE TAXATION shall include items of an exceptional nature and shall exclude items of an extraordinary nature unless taken into account at the Bank's discretion for the purpose of any relevant calculation. PRECONDITIONS SCHEDULE No preconditions required. SECURITY SCHEDULE (1) an all moneys guarantee from Emrise Corporation for a principal amount of (pound)5000,000 plus interest and other costs as detailed in the guarantee and in respect of your debts and liabilities to the Bank, (2) admission of Pascall Electronics Limited to the omnibus guarantee and letter of set off, (3) an unlimited debenture from Pascall Electronics Limited, (4) an assignment of the proceeds a life insurance policy of not less than (pound)500,000 which is to be taken out in respect of Graham Jefferies with assurers acceptable to the Bank, (5) a deed of postponement from Emrise Corporation in respect of a loan of US$5,000,000 to you, (6) an unlimited debenture dated 7th August 1986 from Xcel Corporation Limited, (7) an omnibus guarantee and set off agreement dated 4th April 2000 among the Bank, Xcel Corporation Limited, Xcel Power Systems Limited, Belix Wound Components Limited, (8) an unlimited all moneys guarantee dated 18th March 1998 from Xcel Power Systems Limited in respect of your debt, and liabilities to the Bank, and (9) a letter of comfort dated 14th December 1987 from XCEL Corporation Limited. -11-

You acknowledge having received, read and understood a copy of this agreement and, in consideration of the Bank agreeing to grant the loan, agree to the SPECIFIC TERMS AND CONDITIONS and to the GENERAL TERMS AND CONDITIONS set out above (together the "agreement"). You also acknowledge that this agreement comprises all the terms currently applicable to the loan and that no representation, warranty or undertaking has been made by the Bank in connection with the loan which is not set out in this agreement and, in deciding to enter into this agreement and to proceed with any transaction or project for which the loan has been sought, you recognise that the Bank has no duty to give you advice and you have not received or relied upon any advice given by the Bank. Signed for and on behalf of Xcel Corporation by
/S/ G.M.J. Jeffries (signature) -----------------------------------*Director/Authorised Signatory/ /S/ Carmine T. Oliva (signatu ---------------------------------------*Director/Authorised Signatory/Secretary

G.M.J. Jeffries (signature) -----------------------------------Pursuant to a Resolution of the Board dated

Carmine T. Oliva (signatu ---------------------------------------#

-------------------------------------------June 30, 2005 ---------------------Signed for and on behalf of the Bank by Date

You acknowledge having received, read and understood a copy of this agreement and, in consideration of the Bank agreeing to grant the loan, agree to the SPECIFIC TERMS AND CONDITIONS and to the GENERAL TERMS AND CONDITIONS set out above (together the "agreement"). You also acknowledge that this agreement comprises all the terms currently applicable to the loan and that no representation, warranty or undertaking has been made by the Bank in connection with the loan which is not set out in this agreement and, in deciding to enter into this agreement and to proceed with any transaction or project for which the loan has been sought, you recognise that the Bank has no duty to give you advice and you have not received or relied upon any advice given by the Bank. Signed for and on behalf of Xcel Corporation by
/S/ G.M.J. Jeffries (signature) -----------------------------------*Director/Authorised Signatory/ /S/ Carmine T. Oliva (signatu ---------------------------------------*Director/Authorised Signatory/Secretary

G.M.J. Jeffries (signature) -----------------------------------Pursuant to a Resolution of the Board dated

Carmine T. Oliva (signatu ---------------------------------------#

-------------------------------------------June 30, 2005 ---------------------Signed for and on behalf of the Bank by # -------------------------------------------Manager/Authorised Signatory/ Date June 30, 2005 --------------------------------------This will be either the date of the account mandate if an appropriate resolution is contained herein, or the date of a specific resolution passed in respect of this loan Delete as appropriate Date

*

IMPORTANT NOTE: --------------THIS AGREEMENT CREATES LEGAL OBLIGATIONS. BEFORE SIGNING YOU MAY WISH TO TAKE INDEPENDENT ADVICE. --------------------------------------------------------------------------------------------------

Lloyds TSB Bank plc Registered Office 25 Graham Street, London EC2V 7HN. Registered in England Number 2065 Authorized and regulated by the Financial Services Authority and a signatory to the Banking Codes.

-12-

EXHIBIT 10.12 GUARANTEE & INDEMNITY BETWEEN XCEL POWER SYSTEMS LIMITED PASCALL ELECTRONICS LIMITED PASCALL ELECTRONIC (HOLDINGS) LIMITED BELIX WOUND COMPONENTS LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

GUARANTEE AND INDEMNITY

EXHIBIT 10.12 GUARANTEE & INDEMNITY BETWEEN XCEL POWER SYSTEMS LIMITED PASCALL ELECTRONICS LIMITED PASCALL ELECTRONIC (HOLDINGS) LIMITED BELIX WOUND COMPONENTS LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

GUARANTEE AND INDEMNITY To LLOYDS TSB Commercial Finance Limited Boston House The Little Green Richmond Surrey TW9 1QE 1. We, the Guarantors and Indemnifiers, whose names appear in the schedule hereto have agreed to give you as contained in the succeeding clauses hereof, as many separate and independent guarantees and indemnities as there are parties hereto (other than you) whereby the liabilities to you of each and every one of us are guaranteed by the others of us and whereby each one of us indemnifies you against any losses (as defined herein) arising from transactions between you and any other of us. 2. Accordingly in this deed except where the context otherwise requires: (1) words implying the singular shall include the plural and words implying any of the three genders shall include either of the other two; (2) the expression "Principal" shall mean and apply to any one of us for whose liabilities any such guarantee is given and in respect of whose transactions with you any such indemnity is given; (3) the following expressions shall have the meanings assigned to them below: "Agreement" any agreement between the Principal and you for the factoring, discounting and/or financing of book debts and/or receivables, "Indulgence" any indulgence, agreement not to sue or release of any charge lien or other security or any part thereof, "Losses" losses, costs, damages, claims, interest and expenses and (4) any other expression used in the Agreement shall have the meaning attributed to it therein. 3. We hereby guarantee: (i) the due performance of all the obligations of the Principal under the Agreement and any other agreement and

(ii) upon your demand in writing the due payment of all amounts payable or which may at any time hereafter

GUARANTEE AND INDEMNITY To LLOYDS TSB Commercial Finance Limited Boston House The Little Green Richmond Surrey TW9 1QE 1. We, the Guarantors and Indemnifiers, whose names appear in the schedule hereto have agreed to give you as contained in the succeeding clauses hereof, as many separate and independent guarantees and indemnities as there are parties hereto (other than you) whereby the liabilities to you of each and every one of us are guaranteed by the others of us and whereby each one of us indemnifies you against any losses (as defined herein) arising from transactions between you and any other of us. 2. Accordingly in this deed except where the context otherwise requires: (1) words implying the singular shall include the plural and words implying any of the three genders shall include either of the other two; (2) the expression "Principal" shall mean and apply to any one of us for whose liabilities any such guarantee is given and in respect of whose transactions with you any such indemnity is given; (3) the following expressions shall have the meanings assigned to them below: "Agreement" any agreement between the Principal and you for the factoring, discounting and/or financing of book debts and/or receivables, "Indulgence" any indulgence, agreement not to sue or release of any charge lien or other security or any part thereof, "Losses" losses, costs, damages, claims, interest and expenses and (4) any other expression used in the Agreement shall have the meaning attributed to it therein. 3. We hereby guarantee: (i) the due performance of all the obligations of the Principal under the Agreement and any other agreement and

(ii) upon your demand in writing the due payment of all amounts payable or which may at any time hereafter become payable to you by the Principal whether arising under the Agreement or otherwise. 4. Without prejudice to the provisions of paragraph 3 hereof, we hereby agree to indemnify you and hold you harmless against all losses you may suffer or incur by reason of any failure of the Principal to comply with any term of the Agreement or of any other agreement between the Principal and you. 5. The guarantee given herein shall be a continuing guarantee, shall apply to the ultimate amount payable by the Principal and shall not be discharged by any intermediate payment or satisfaction by the Principal. 6. Our liability under this guarantee and indemnity shall not be affected by: (i) any time or indulgence granted by you to the Principal or any other person, (ii) any compromise made by you with the Principal or any other person, (iii) any variation in the Agreement or in any other agreement between the Principal and you (whether or not our liability to you may be increased thereby) or by any defect therein or in its execution, or

(ii) upon your demand in writing the due payment of all amounts payable or which may at any time hereafter become payable to you by the Principal whether arising under the Agreement or otherwise. 4. Without prejudice to the provisions of paragraph 3 hereof, we hereby agree to indemnify you and hold you harmless against all losses you may suffer or incur by reason of any failure of the Principal to comply with any term of the Agreement or of any other agreement between the Principal and you. 5. The guarantee given herein shall be a continuing guarantee, shall apply to the ultimate amount payable by the Principal and shall not be discharged by any intermediate payment or satisfaction by the Principal. 6. Our liability under this guarantee and indemnity shall not be affected by: (i) any time or indulgence granted by you to the Principal or any other person, (ii) any compromise made by you with the Principal or any other person, (iii) any variation in the Agreement or in any other agreement between the Principal and you (whether or not our liability to you may be increased thereby) or by any defect therein or in its execution, or (iv) any change in the constitution of the Principal. and we shall be liable hereunder in every respect as principal debtors. 7. For the purpose of determining our liability under this guarantee and indemnity, which shall be additional to and not in substitution for any other security taken or to be taken by you in respect of the Principal's obligations to you, we shall be bound by any acknowledgement or admission by the Principal and by any judgment in your favour against the Principal. For the purpose of determining the amount of any losses we shall accept and be bound by a certificate signed by your company secretary in arriving at the amount payable by the Principal to you you shall be entitled to take into account all liabilities (whether actual or contingent) and to make a reasonable estimate of any contingent liability. 8. Any notice or demand on any of us shall be validly given if handed to any one of its officials or if delivered to or sent by post to its address stated herein or its registered office or its address last known to you and if sent by post shall be deemed to be received within seventy-two hours of posting. 9. We shall be liable to pay you interest calculated from day to day and compounded monthly at a rate equivalent to the discount charge for which provision is made in the Agreement on all sums demanded by you hereunder from the date of your demand to the date when payment is received by you both before and after any judgment. -2-

10. Each one of us assigns to you, as security for the due performance of our obligations hereunder any right of proof, in consequence of any winding up of the Principal, in respect of any indebtedness of the Principal to that one of us; and each one of us irrevocably appoints you and your directors and secretary for the time being jointly and each one of you and them severally to be his attorney to execute in his name such documents and to do such other things as you may consider requisite to effect collection of any dividend or to vote at any meeting in respect of such right of proof. 11. Our liability hereunder shall be joint and several and you may release, grant indulgence to or compromise with any one of us without affecting the obligations of the other or others. The liability of any one of us hereunder shall not be affected by: (i) any defect in the execution of this deed by any other of us, (ii) any defect in any other guarantee or indemnity or other security held by you in respect of the Principal's obligations to you or in the execution thereof or

10. Each one of us assigns to you, as security for the due performance of our obligations hereunder any right of proof, in consequence of any winding up of the Principal, in respect of any indebtedness of the Principal to that one of us; and each one of us irrevocably appoints you and your directors and secretary for the time being jointly and each one of you and them severally to be his attorney to execute in his name such documents and to do such other things as you may consider requisite to effect collection of any dividend or to vote at any meeting in respect of such right of proof. 11. Our liability hereunder shall be joint and several and you may release, grant indulgence to or compromise with any one of us without affecting the obligations of the other or others. The liability of any one of us hereunder shall not be affected by: (i) any defect in the execution of this deed by any other of us, (ii) any defect in any other guarantee or indemnity or other security held by you in respect of the Principal's obligations to you or in the execution thereof or (iii) any notice of termination hereof by any other of us. You may at your discretion (but shall not be obliged to) treat any notice by any one of us as notice by all of us. 12. Any monies received by you by virtue of or in connection with this guarantee and indemnity may be placed by you to the credit of a suspense account with a view to your preserving your right to prove for the whole of your claim against the Principal in the event of its winding up. 13. This guarantee and indemnity shall remain in full force and effect until the termination of the Agreement and the discharge in full of all the Principal's obligations thereunder and after such full discharge until the expiry of not less than three months notice of termination delivered by any one of us to your registered office but such termination shall not affect our liability as regards any liability of the Principal existing or known to be contingent before the expiry of the period of the said notice with effect from the date of the receipt of' it by you. 14. This guarantee and indemnity shall be construed and take effect according to English law and we accept the non-exclusive jurisdiction of the English Courts. If any provision hereof shall he held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect. -3-

THE SCHEDULE
Guarantors and Indemnifiers: (1) Xcel Power Systems Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB England & Wales 00575679 Pascall Electronics Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales 01316674 Pascall Electronic (Holdings) Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales 01756274 Belix Wound Components Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales (name) (address) (country or registration) (number) (name) (address) (country of registration) (number) (name) (address) (country of registration) (number) (name) (address) (country of registration)

(2)

(3)

(4)

THE SCHEDULE
Guarantors and Indemnifiers: (1) Xcel Power Systems Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB England & Wales 00575679 Pascall Electronics Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales 01316674 Pascall Electronic (Holdings) Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales 01756274 Belix Wound Components Limited Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EH England & Wales 01537636 (name) (address) (country or registration) (number) (name) (address) (country of registration) (number) (name) (address) (country of registration) (number) (name) (address) (country of registration) (number)

(2)

(3)

(4)

This document has been executed as a deed by or on behalf of each of us to indicate our binding agreement to its terms. SIGNED and DELIVERED as a deed on ) 21st day of June 2005 by you ) XCEL POWER SYSTEMS LIMITED
acting by (a Director ) ) ) ) ) ) and Signature of Director

(a Director / its Company Secretary

Signature of Director/ Company Secretary

-4SIGNED and DELIVERED as a deed on day of PASCALL ELECTRONICS LIMITED acting by ) (a Director) and (a Director / its Company Secretary ) ) ) Signature of Director Signature of Director/ Company Secretary ) by you )

SIGNED and DELIVERED as a deed on ) 21st day of June 2005 by you ) PASCALL ELECTRONIC (HOLDINGS) LIMITED
acting by ) (a Director) and ) ) Signature of Director

(a Director / its Company Secretary

Signature of Director/

SIGNED and DELIVERED as a deed on day of PASCALL ELECTRONICS LIMITED acting by

) by you )

) (a Director) and (a Director / its Company Secretary ) ) ) Signature of Director Signature of Director/ Company Secretary

SIGNED and DELIVERED as a deed on ) 21st day of June 2005 by you ) PASCALL ELECTRONIC (HOLDINGS) LIMITED
acting by ) (a Director) and ) ) ) Signature of Director

(a Director / its Company Secretary

Signature of Director/ Company Secretary

SIGNED and DELIVERED us it deed on ) 21st day of June 2005 by you ) BELIX WOUND COMPONENTS LIMITED
acting by ) (a Director) and ) ) ) Signature of Director

(a Director /its Company Secretary

Signature of Director/ Company Secretary

-5-

EXHIBIT 10.13 DEED OF GUARANTEE AND INDEMNITY BETWEEN XCEL CORPORATION LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND

EXHIBIT 10.13 DEED OF GUARANTEE AND INDEMNITY BETWEEN XCEL CORPORATION LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving or time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of this guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor.

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving or time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of this guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity:

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity: (i) Shall be governed by English Law. (ii) Shall be binding upon the Guarantor's Executors or Administrators or upon any Committee Receiver or other person acting on the Guarantor's behalf. (iii) May be assigned by LTSBCF. (iv) Shall be in addition to and not in substitution for any other security taken by LTSBCF for the Supplier's obligation. (v) Shall not be discharged by any defect in the Agreement or any other guarantee or indemnity or in their respective executions. (vi) Shall remain binding notwithstanding any change in the constitution of the Supplier or the death or legal disability or any other guarantor to LTSBCF of the Suppliers' obligations. 6. ACCEPTS THAT any notice or demand by LTSBCF shall be deemed to be validly served or made if sent or delivered to the Guarantor's address stated below or to the registered office of the Guarantor (if applicable) or to any other address at which the Guarantor may carry out business and if sent by post shall be conclusively deemed to have been delivered to the Guarantor within 72 hours of the time of posting. 7. AGREES THAT monies received by LTSBCF by virtue of or in connection with the guarantee and indemnity may be placed to the credit of a suspense account with a view to preserving the right of LTSBCF to prove for the whole of its claim against the Supplier in any proceedings in or analogous to bankruptcy liquidation receivership composition or arrangement. -2-

8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule

8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule hereto. -3-

THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor Xcel Power Systems Limited Xcel Corporation Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01969006

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on 21 ( day of June 2005 by you XCEL CORPORATION LIMITED acting by **

) ) ) )

Signature of Director

(a Director) and **

) ) ) ) Signature of *Director/ Company Secretary

(a *Director / its Company Secretary

-4-

EXHIBIT 10.14 DEED OF GUARANTEE AND INDEMNITY BETWEEN PASCALL ELECTRONICS LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor Xcel Power Systems Limited Xcel Corporation Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01969006

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on 21 ( day of June 2005 by you XCEL CORPORATION LIMITED acting by **

) ) ) )

Signature of Director

(a Director) and **

) ) ) ) Signature of *Director/ Company Secretary

(a *Director / its Company Secretary

-4-

EXHIBIT 10.14 DEED OF GUARANTEE AND INDEMNITY BETWEEN PASCALL ELECTRONICS LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with

EXHIBIT 10.14 DEED OF GUARANTEE AND INDEMNITY BETWEEN PASCALL ELECTRONICS LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving of time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgment or admission by or any Judgment obtained by LTSBCF against the Supplier shall be binding on the Guarantor.

THIS DEED OF GUARANTEE AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving of time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgment or admission by or any Judgment obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity:

(iv) Any acknowledgment or admission by or any Judgment obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity: (i) Shall be governed by English Law. (ii) Shall be binding upon the Guarantor's Executors or Administrators or upon any Committee Receiver or other person acting on the Guarantor's behalf. (iii) May be assigned by LTSBCF. (iv) Shall not be discharged by any defect in the Agreement or any other guarantee or indemnity or in their respective executions. (vi) Shall remain binding notwithstanding any change in the constitution of the Supplier or the death or legal disability of any other guarantor to LTSBCF of the Supplier's obligations. 6. ACCEPTS THAT any notice or demand by LTSBCF shall be deemed to be validly served or made if sent or delivered to the Guarantor's address stated below or to the registered office of the Guarantor (if applicable) or to any other address at which the Guarantor may carry on business and if sent by post shall be conclusively deemed to have been delivered to the Guarantor within 72 hours of the time of posting. 7. AGREES THAT monies received by LTSBCF by virtue of or in connection with the guarantee and indemnity may be placed to the credit of a suspense account with a view to preserving the right of LTSBCF to provide for the whole or its claim against the Supplier on any proceedings in or analogous to bankruptcy liquidation receivership composition or arrangement. -2-

8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule hereto. -3-

8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule hereto. -3-

THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor

21, June 2005 Xcel Power Systems Limited Pascall Electronics Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01316674

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on 21 day of June 2005 by you Director Pascall Electronics Limited acting by **

) ) )

/S/ L.E. Down Signature of

(a Director) and ** (a *Director / its Company Secretary

) ) )

/S/ G.M.J. Jefferies Signature of Director/ Company Secretary

Key * Delete as Applicable ** Insert Full Names -4-

EXHIBIT 10.15 DEED OF GUARANTEE AND INDEMNITY BETWEEN XCEL CORPORATION LIMITED AND

THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor

21, June 2005 Xcel Power Systems Limited Pascall Electronics Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01316674

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on 21 day of June 2005 by you Director Pascall Electronics Limited acting by **

) ) )

/S/ L.E. Down Signature of

(a Director) and ** (a *Director / its Company Secretary

) ) )

/S/ G.M.J. Jefferies Signature of Director/ Company Secretary

Key * Delete as Applicable ** Insert Full Names -4-

EXHIBIT 10.15 DEED OF GUARANTEE AND INDEMNITY BETWEEN XCEL CORPORATION LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed

EXHIBIT 10.15 DEED OF GUARANTEE AND INDEMNITY BETWEEN XCEL CORPORATION LIMITED AND LLOYDS TSB COMMERCIAL FINANCE LIMITED

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving of time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of this guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor.

THIS DEED OF GUARANTEE; AND INDEMNITY is made on the date specified in the Schedule to this Deed BETWEEN: (1) "LTSBCF" Lloyds TSB Commercial Finance Limited, Boston House, The Little Green, Richmond, Surrey TW9 1QE AND (2) "THE GUARANTOR" The Corporation executing this Deed W I T N E S S that in consideration of LTSBCF at the request of the Guarantor entering into or continuing with an agreement with the Supplier named in the Schedule to this Deed for the Purchase of Debts ("the Agreement") and/or approving any Debt thereunder THE GUARANTOR jointly and severally with any other person who enters into a Guarantee and Indemnity with LTSBCF in respect of the Supplier's obligations hereby: 1. AGREES to pay LTSBCF on demand all sums now or at any future date due to LTSBCF from the Supplier. 2. GUARANTEES the due performance of all other obligations of the Supplier to LTSBCF however arising. 3. INDEMNIFIES LTSBCF against all actions claims demands liabilities losses costs interest and damages which LTSBCF may sustain or incur as a result of the insolvency of the Supplier or of any breach or non observance or non performance by the Supplier of any of its obligations to LTSBCF. 4. AGREES THAT: (i) Variations may from time to time be made to the Agreement without the consent of or notice to the Guarantor even though the Guarantor's liability to LTSBCF may be increased. (ii) The giving of time or the failure by LTSBCF to enforce any remedies against the Supplier or any customer or any other guarantor shall in no way affect the Guarantor's liability to LTSBCF. (iii) The terms of this guarantee and indemnity shall constitute a continuing security notwithstanding the fulfilment from time to time of any of the obligations of the Supplier to LTSBCF and shall remain in force despite any disability on the Guarantor's part until 12 months after payment is made by the Supplier of all sums from time to time due to LTSBCF however arising.

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity:

(iv) Any acknowledgement or admission by or any Judgement obtained by LTSBCF against the Supplier shall be binding on the Guarantor. (v) The Guarantor's obligations shall continue even though LTSBCF may at any time relinquish in whole or in part any charge lien or security taken from the Supplier or any customer or any other guarantor. (vi) Until all sums due hereunder have been paid to LTSBCF the Guarantor shall not be entitled to the benefit of nor claim to be subrogated to any charge lien or security held by LTSBCF for the due performance of the Supplier's obligations nor shall LTSBCF be under any obligation to enforce them for the Guarantor's benefit. (vii) Any sums due hereunder to LTSBCF shall from the due date for payment bear interest at the same rate as the Discount Charge referred to in the Agreement. (viii) In arriving at the amount due to LTSBCF by the Supplier LTSBCF shall be entitled to take into account all liabilities whether actual or contingent and to make a reasonable estimate thereof. 5. DECLARES THAT this Guarantee and Indemnity: (i) Shall be governed by English Law. (ii) Shall be binding upon the Guarantor's Executors or Administrators or upon any Committee Receiver or other person acting on the Guarantor's behalf. (iii) May be assigned by LTSBCF. (iv) Shall be in addition to and not in substitution for any other security taken by LTSBCF for the Supplier's obligation. (v) Shall not be discharged by any defect in the Agreement or any other guarantee or indemnity or in their respective executions. (vi) Shall remain binding notwithstanding any change in the constitution of the Supplier or the death or legal disability of any other guarantor to LTSBCF of the Suppliers' obligations. -2-

6. ACCEPTS THAT any notice or demand by LTSBCF shall be deemed to be validly served or made if sent or delivered to the Guarantor's address stated below or to the registered office of the Guarantor (if applicable) or to any other address at which the Guarantor may carry out business and if sent by post shall be conclusively deemed to have been delivered to the Guarantor within 72 hours of the time of posting. 7. AGREES THAT monies received by LTSBCF by virtue of or in connection with the guarantee and indemnity may be placed to the credit of a suspense account with a view to preserving the right of LTSBCF to prove for the whole of its claim against the Supplier in any proceedings in or analogous to bankruptcy liquidation receivership composition or arrangement. 8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. -3-

6. ACCEPTS THAT any notice or demand by LTSBCF shall be deemed to be validly served or made if sent or delivered to the Guarantor's address stated below or to the registered office of the Guarantor (if applicable) or to any other address at which the Guarantor may carry out business and if sent by post shall be conclusively deemed to have been delivered to the Guarantor within 72 hours of the time of posting. 7. AGREES THAT monies received by LTSBCF by virtue of or in connection with the guarantee and indemnity may be placed to the credit of a suspense account with a view to preserving the right of LTSBCF to prove for the whole of its claim against the Supplier in any proceedings in or analogous to bankruptcy liquidation receivership composition or arrangement. 8. CONFIRMS THAT if any provision hereof shall be held invalid or unenforceable it is hereby declared and confirmed that such event shall not effect any other provisions all of which shall remain in full force and effect. Where this Deed is executed by more than one Guarantor and such execution shall be defective this shall in no way affect the liability of the remaining parties. 9. AGREES THAT definitions used in the Agreement shall bear the same meaning in this Deed. 10. AGREES THAT this Guarantee and Indemnity shall be construed according to English Law and the Guarantor accepts the non exclusive jurisdiction of the English Court. -3-

IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule hereto. THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor 21 June 2005

Xcel Power Systems Limited Xcel Corporation Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01969006

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on (day of by you Director XCEL CORPORATION LIMITED acting by ** (a Director) and ** (a *Director / its Company Secretary

) ) )

/S/ Carmine T. Oliva Signature of

) ) )

/S/ G. M. J. Jefferies Signature of *Director/ Company Secretary

-4-

EXIBIT 10.16 DEED OF PRIORITIES

IN WITNESS thereof the Guarantor has caused this Deed to be sealed on the date specified in the Schedule hereto. THE SCHEDULE
Date of Execution of this Deed Name of Supplier Name of Guarantor Registered Offices of Guarantor 21 June 2005

Xcel Power Systems Limited Xcel Corporation Limited Brunswick Road Cobbs Wood Ashford Kent TN23 1EH 01969006

Company Registration Number in England & Wales of Guarantor

SIGNED and DELIVERED as a deed on (day of by you Director XCEL CORPORATION LIMITED acting by ** (a Director) and ** (a *Director / its Company Secretary

) ) )

/S/ Carmine T. Oliva Signature of

) ) )

/S/ G. M. J. Jefferies Signature of *Director/ Company Secretary

-4-

EXIBIT 10.16 DEED OF PRIORITIES BETWEEN LLOYDS TSB COMMERCIAL FINANCE LIMITED AND LLOYDS TSB BANK PLC AND PASCALL ELECTRONICS LIMITED

THIS DEED is made the 28th day of June 2005 BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate on Boston House, The Little Green, Richmond, Surry TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC24 8PT (the "Bank") and (3) PASCALL ELECTRONICS LIMITED whose registered office is at Brunswick Road, Cobbs Wood,

EXIBIT 10.16 DEED OF PRIORITIES BETWEEN LLOYDS TSB COMMERCIAL FINANCE LIMITED AND LLOYDS TSB BANK PLC AND PASCALL ELECTRONICS LIMITED

THIS DEED is made the 28th day of June 2005 BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate on Boston House, The Little Green, Richmond, Surry TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC24 8PT (the "Bank") and (3) PASCALL ELECTRONICS LIMITED whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB (the "Company") AND WITNESSES as follows: 1. Definitions and Interpretation 1.1 In this Deed, except where the contest otherwise requires, each of the expressions set out below shall have the following meanings: "Administrator" has the same meaning as in Schedule B1 to the Insolvency Act 1986 as introduced by the Enterprise Act 2002; "Bank's Security" means a debenture dated 28 June 2005 made between the Company and the Bank; "Debts" has the meaning ascribed to it by a Debt Purchase/Agreement (the "Financing Agreement") (as substituted, amended, varied or replaced) dated 28th June 2005 made between LTSBCF and the Company; "Financiers" means the Bank and LTSBCF and "Financer" shall mean either of them; "LTSBCF's Security" means a debenture dated 28th June 2005 made between the Company and LTSBCF; "Non Vesting Debts" means all or any Debts of the Company purchased or to be purchased by LTSBCF pursuant to the Financing Agreement which fail to vest absolutely in LTSBCF for any reason together with the Related Rights (as defined in the Financing Agreement) to such Debts; "Receiver" includes a liquidator, an Administrator, an administrative receiver and a receiver and manager; "Securities" means the Bank's Security and LTSBCF's Security and "Security" means either of them. 1.2 In this Deed, unless the context otherwise requires: (a) references to the parties shall be construed so as to include their respective successors and permitted assigns;

THIS DEED is made the 28th day of June 2005 BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate on Boston House, The Little Green, Richmond, Surry TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC24 8PT (the "Bank") and (3) PASCALL ELECTRONICS LIMITED whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB (the "Company") AND WITNESSES as follows: 1. Definitions and Interpretation 1.1 In this Deed, except where the contest otherwise requires, each of the expressions set out below shall have the following meanings: "Administrator" has the same meaning as in Schedule B1 to the Insolvency Act 1986 as introduced by the Enterprise Act 2002; "Bank's Security" means a debenture dated 28 June 2005 made between the Company and the Bank; "Debts" has the meaning ascribed to it by a Debt Purchase/Agreement (the "Financing Agreement") (as substituted, amended, varied or replaced) dated 28th June 2005 made between LTSBCF and the Company; "Financiers" means the Bank and LTSBCF and "Financer" shall mean either of them; "LTSBCF's Security" means a debenture dated 28th June 2005 made between the Company and LTSBCF; "Non Vesting Debts" means all or any Debts of the Company purchased or to be purchased by LTSBCF pursuant to the Financing Agreement which fail to vest absolutely in LTSBCF for any reason together with the Related Rights (as defined in the Financing Agreement) to such Debts; "Receiver" includes a liquidator, an Administrator, an administrative receiver and a receiver and manager; "Securities" means the Bank's Security and LTSBCF's Security and "Security" means either of them. 1.2 In this Deed, unless the context otherwise requires: (a) references to the parties shall be construed so as to include their respective successors and permitted assigns; -2-

(b) references to a "business day" shall be construed as a reference to a day (other than a Saturday or a Sunday) on which banks are generally open for the transaction of business in Pounds Sterling in London; (c) references to clauses are references to clauses of this Deed; (d) references to this Deed shall be to this Deed as amended, varied, supplemental or novated from time to time; (e) headings are inserted for ease of reference only and shall be ignored in the construction of this Deed; (f) references to any statute or law shall be to such statute or law as re-enacted, amended, extended or replaced from time to time; and

(b) references to a "business day" shall be construed as a reference to a day (other than a Saturday or a Sunday) on which banks are generally open for the transaction of business in Pounds Sterling in London; (c) references to clauses are references to clauses of this Deed; (d) references to this Deed shall be to this Deed as amended, varied, supplemental or novated from time to time; (e) headings are inserted for ease of reference only and shall be ignored in the construction of this Deed; (f) references to any statute or law shall be to such statute or law as re-enacted, amended, extended or replaced from time to time; and (g) the singular includes the plural and vice versa and any gender includes the other. 1.3 If there is any conflict or inconsistency between any provision of this Deed and any provision contained within a Security, the provisions of this Deed shall prevail. 2. Consents and Agreements 2.1 Insofar as consent is required under the terms of either of the Securities or otherwise the Bank hereby confirms to consent to the creation and continuance of LTSBCF's Security and LTSBCF hereby confirms its consent to the creation and continuance of the Bank's Security. 2.2 Notwithstanding anything to the contrary in the Financing Agreement or LTSBCF's Security, no Debt arising in respect of the sale of a capital asset or otherwise than in the ordinary course of trading shall vest in LTSBCF or constitute a Non Vesting Debt or be the subject of a sale and purchase under the Financing Agreement. 2.3 For the avoidance of doubt, the monies held by the Company with any bank shall be included within the definition of Debts and Non Vesting Debts. 3. Priorities 3.1 All receipts, recoveries and realisations ("realisations") pursuant to the enforcement of the Securities shall be applied in satisfying the monies, obligations and liabilities thereby secured as follows: (a) realisations of the Non-Vesting Debts shall be applied: FIRST to LTSBCF without limit SECOND to the Bank -3-

(b) realisations of all other assets of the Company shall be applied: FIRST to LTSBCF without limit SECOND to the Bank 3.2 The amount of any Receiver's remuneration and all outgoings, costs, charges, expenses, liabilities and payments ranking by statute for payment in priority to the amount secured by the Securities shall be deducted from all receipts and recoveries under the Security under which he is appointed prior to their application towards the discharge or satisfaction of the amount secured by the Securities. 3.3 Without prejudice to clause 3.1, for the purposes of the Insolvency Act 1986 (as amended by the Enterprise Act 2002) LTSBCF hereby confirms for the benefit of the Bank that any qualifying floating charge within the meaning of paragraph 14 of Schedule B1 to the Insolvency Act 1986 contained in the Bank's Security is to be

(b) realisations of all other assets of the Company shall be applied: FIRST to LTSBCF without limit SECOND to the Bank 3.2 The amount of any Receiver's remuneration and all outgoings, costs, charges, expenses, liabilities and payments ranking by statute for payment in priority to the amount secured by the Securities shall be deducted from all receipts and recoveries under the Security under which he is appointed prior to their application towards the discharge or satisfaction of the amount secured by the Securities. 3.3 Without prejudice to clause 3.1, for the purposes of the Insolvency Act 1986 (as amended by the Enterprise Act 2002) LTSBCF hereby confirms for the benefit of the Bank that any qualifying floating charge within the meaning of paragraph 14 of Schedule B1 to the Insolvency Act 1986 contained in the Bank's Security is to be treated as having priority over any qualifying floating charge continued in LTSBCF's Security notwithstanding the date of creation of such floating charges. 3.4 Without prejudice to the priority accorded to the Bank's Floating Charge by clause 3.3 of this Deed and insofar as LTSBCF's Floating Charge is a prior charge within the meaning of paragraph 15 of Schedule B1 to the Insolvency Act 1986 (such that the Bank is thereby obliged to notify LTSBCF of its intention to appoint an Administrator before so appointing) LTSBCF hereby irrevocably waives its right to receive such notice. In addition, and within the meaning of paragraph 15(1)(b) of Schedule B1 to the Insolvency Act 1986 LTSBCF irrevocably consents to the appointment of an Administrator by the Bank notwithstanding that no notice of intention to appoint an Administrator shall have been given to it. 3.5 For the avoidance of doubt, nothing contained within this Deed is intended to rank any floating charge contained within the Securities before any fixed charge contained within the Securities. 4. Continuing Security The Securities shall be continuing securities for repayment to the Finances of the money and liabilities thereby secured and the priority arrangements herein contained shall not be affected by any fluctuations in the amount from time to time due owing or incurred by the Company to either of the Financiers or by the existence at any tome of a credit or nil balance on any relevant account of the Company with either Financier. 5. Enforcement of Security 5.1 The Financiers shall consult and co-operate with each other to the extent (without any requirement) that: (a) the Securities shall so far as practicable be enforced by the same method and at the same time; -4-

(b) in the case of an appointment of a Receiver or Receivers by a Financier under its Security the same person(s) shall be appointed Receiver(s) by the other Financier (if that other Financier shall also make such an appointment). 5.2 The provisions of clause 5.1 shall not prevent either Financier from appointing a Receiver under its Security or from the exercise or enforcement of its Security without any consultation if it considers it expedient to do so, subject to the giving of any notices that may be required pursuant to the Insolvency Act 1986 (as amended by the Enterprise Act 2002). 5.3 If either Financier shall appoint a Receiver under its Security or shall otherwise enforce or exercise its Security it shall promptly give written notice thereof on the other Financier. 6. Information

(b) in the case of an appointment of a Receiver or Receivers by a Financier under its Security the same person(s) shall be appointed Receiver(s) by the other Financier (if that other Financier shall also make such an appointment). 5.2 The provisions of clause 5.1 shall not prevent either Financier from appointing a Receiver under its Security or from the exercise or enforcement of its Security without any consultation if it considers it expedient to do so, subject to the giving of any notices that may be required pursuant to the Insolvency Act 1986 (as amended by the Enterprise Act 2002). 5.3 If either Financier shall appoint a Receiver under its Security or shall otherwise enforce or exercise its Security it shall promptly give written notice thereof on the other Financier. 6. Information 6.1 Whilst this Deed subsists each Financier shall be at liberty from time to time to disclose to the other information concerning the Company and its affairs in such manner and to such extent as such Financier shall from time to time think fit. 6.2 Each Financier acknowledges the right of the other Financier to the production and delivery of copies of the documents comprising or referred to in its Security. 7. Compliance with Covenants 7.1 Provided that the Company shall observe and perform all the covenants in LTSBCF's Security and the Financing Agreement relating to its Debts and Non Vesting Debts and the proceeds of the same then the Company shall be deemed to have complied with all or any of the covenants in the Bank's Security relating to such debts and the proceeds of the same. 7.2 In the event of any monies being received under any insurance covering any of the property or assets charged under the Securities (excluding, for the avoidance of doubt, any credit insurance relating to any Debts) such monies shall (subject to the rights of prior encumbrances, if any) be applied in replacing, restoring or reinstating the property or assets destroyed, damaged or lost unless the Bank otherwise directs in writing. 8. Operation of Accounts 8.1 Noting in this Deed shall prevent the Bank operating the bank accounts of the Company in the ordinary course of banking business including, without limitation, collecting cheques and other payment orders and accepting monies for credit of the Company's bank accounts and allowing the Company to draw cheques and other payments and generally to withdraw funds form its bank accounts. 8.2 LTSBCF shall make no claim against the Bank in connection with any Debt the proceeds of which are credit to any account of the Company with the Bank (other than any account in the name of the Company designated as in trust for LTSBCF) unless: -5-

(a) prior to the Bank's receipt of such money the Bank has received notice in writing from LTSBCF that a specified sum of money belongs or will belong to LTSBCF. Such notice shall contain such information as the Bank may reasonably require to enable the Bank to indemnify such credit in the day to day operation of the relevant account of the Company in accordance with the Bank's normal practice; or (b) the Bank has procured the payment to the Bank of a sum which to the actual knowledge of the Bank should have been paid to LTSBCF.
In the circumstances set out in (a) and (b) above, such monies following payment into such account shall be held to the order of LTSBCF and paid to LTSBCF on demand subject to any law, regulation or court order but provided always that if the Bank requires an indemnity

(a) prior to the Bank's receipt of such money the Bank has received notice in writing from LTSBCF that a specified sum of money belongs or will belong to LTSBCF. Such notice shall contain such information as the Bank may reasonably require to enable the Bank to indemnify such credit in the day to day operation of the relevant account of the Company in accordance with the Bank's normal practice; or (b) the Bank has procured the payment to the Bank of a sum which to the actual knowledge of the Bank should have been paid to LTSBCF.
In the circumstances set out in (a) and (b) above, such monies following payment into such account shall be held to the order of LTSBCF and paid to LTSBCF on demand subject to any law, regulation or court order but provided always that if the Bank requires an indemnity from LTSBCF before any such payment to LTSBCF, then LTSBCF shall provide such an indemnity in a form acceptable to the Bank. 9. Termination. -----------This Deed shall cease to have effect when either of the Securities shall have been fully discharged. 10. The Company's Acknowledgment ---------------------------The Company acknowledges the priorities herein recorded and consents to the remaining terms hereof. The Company acknowledges that this Deed does not create any rights in its favour and that it shall not be entitled to rely upon or enforce any of the terms of this Deed against either Financier. Entire Agreement ---------------This Deed forms the entire agreement between the parties relating to the priority of their respective Securities and the application of the proceeds thereof and supersedes all earlier meanings, discussions, correspondence, e-mails, facsimile transmissions, telexes, letters and communications, understandings and arrangements of any kind so relating. 12. Waivers ------No forbearance or failure by any party to exercise or assert or claim any right or entitlement hereunder shall be construed (in the absence of a written agreement to waive or a written confirmation of a past waiver) as a waiver of that right or entitlement. No waiver of any breach of any term of this Deed shall (unless expressly agreed in writing by the waiving party) be construed as a waiver of a future breach of the same term or as authorising a continuation of the particular breach.

10.1

10.2

11.

12.1

12.2

-612.3 None of the terms of this Deed is enforceable by any person other than LTSBCF and the Bank and their respective successors in title pursuant to the Contracts (Rights of Third Parties) Act 1999. No purchaser dealing with either of the Financiers or any Administrator or Receiver shall be concerned in any way with the provisions of this Deed and shall assume that the Financiers or any such Administrator or Receiver is acting in accordance with the provisions of this Deed. Variations ---------Any variation of this Deed shall be binding only if it is recorded in a document signed by or on behalf of each Financier.

13.

13.1

12.3

None of the terms of this Deed is enforceable by any person other than LTSBCF and the Bank and their respective successors in title pursuant to the Contracts (Rights of Third Parties) Act 1999. No purchaser dealing with either of the Financiers or any Administrator or Receiver shall be concerned in any way with the provisions of this Deed and shall assume that the Financiers or any such Administrator or Receiver is acting in accordance with the provisions of this Deed. Variations ---------Any variation of this Deed shall be binding only if it is recorded in a document signed by or on behalf of each Financier. If any substitution, amendment, variation or replacement of the Financing Agreement or any other Agreement alters the definition of `Debts' after the date of execution of the Finance Agreement referred to in the definition of `Debt' in clause 1.1, LTSBCF will, as soon as reasonably practicable, inform the Bank in writing of any such alteration. Severability -----------The provisions of this Deed shall be severable and distinct from each other and if at any time any one or more of such provision is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of each of the remaining provisions of this Deed shall not in any way be affected, prejudiced or impaired thereby.

13.

13.1

13.2

14.

15.

Facilities ---------Nothing contained in this Deed shall bind either the Bank or LTSBCF to make any advance or repayment or to grant any credit or other facilities the Company.

16.

Time and Indulgence ------------------Each Financier shall be entitled to grant time or indulgence or to release or compound with the Company or otherwise deal with its Security without reference to the other except to the extent regulated by this Deed.

17.

Counterparts -----------This Deed may be executed in any number of documents or counterparts each in the like form, all of which taken together shall constitute one and the same documents.

18.

Notices ------Any notice or other communication given or made under or in connection with the matters contemplated by this Deed shall be in writing. Any such notice or other communication shall, subject to clause 18.3 be addressed to the relevant party at its address stated at the beginning of this Deed and, if so addressed, shall be deemed to have been duly

18.1

18.2

given or made as follows: -7(a) if sent by personal delivery, upon delivery at the address of the relevant party; if sent by first class pre-paid letter post, two client business days after the date of posting;

(b)

(a)

if sent by personal delivery, upon delivery at the address of the relevant party; if sent by first class pre-paid letter post, two client business days after the date of posting; if sent by facsimile transmission: (i) to the following number: for LTSBCF 0208 332 7761/2 or the Bank: (ii) to such other number (if any) as shall previously have been notified by the addressee to the sender for the purpose of the service of notices by facsimile transmission.

(b)

(c)

Any notice sent by facsimile in accordance with clause 18.2(c) shall be deemed to have been received by the addressee as soon as sent, save that if it is sent outside the address's normal business hours on a day which is not a working day in the place of receipt it shall be deemed to have been received at 10am on the next following working day. 18.3 A party may notify the other parties to this Deed of a change to its name or address for the purpose of clause 18.2 provided that such notification shall only be effective on: (a) the date specified in the notification as the date on which the change is to take place; or if no date is specified or the date specified is less than five clear business days after the date on which notice is given, the date falling five clear business days after notice of any such change has been given.

(b)

18.4

For the avoidance of doubt, the parties agree that the provisions of this clause shall not apply in relation to the service or any document by which any legal proceedings are commenced or continued or forming any part of such proceedings. Waiver -----For the avoidance of doubt it is hereby confirmed that the provisions of this Deed are additional to and not in substitution for any waiver given by the Bank in favour of LTSBCF in respect of Debts purchased by and vesting in LTSBCF.

19.

20.

Law and Jurisdiction -------------------This Deed is governed by, and shall be construed in accordance with, English law. The parties to this Deed irrevocably submit to the exclusive jurisdiction of the English courts to settle any disputes which may arise out of or in connection with this Deed.

20.1

20.2

-8-

IN WITNESS whereof the parties hereto have executed this Deed and have delivered it on the day and year first above written. SIGNED and DELIVERED as a Deed on 28th day of June 2005 on behalf of LLOYDS TSB COMMERCIAL FINANCE LIMITED

IN WITNESS whereof the parties hereto have executed this Deed and have delivered it on the day and year first above written. SIGNED and DELIVERED as a Deed on 28th day of June 2005 on behalf of LLOYDS TSB COMMERCIAL FINANCE LIMITED
by 1.** /S/ Kevin John Sullivan ----------------------------------duly appointed attorney ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

2.** -------------------------------duly appointed attorney In the presence of: Signature /S/Loraine Smith ----------------------------------

Attorney (s) for Lloyds TSB Commercial Finance Limited

Name**

Loraine Smith -----------------------------------

Witness (only required if one attorney signs)

Occupation:

Secretary ----------------------------------Lloyds TSB Commercial Finance Ltd Address: Boston House --------------------------------------The Little Green Richmond ----------------------------------Surrey TW9 1QE

Signed and Delivered as a Deed by Lloyds TSB Bank PLC
by /S/Paul Geoffrey Goodwin --------------------------------------duly appointed attorney ) ) ) ) )

Attorney for Lloyds TSB Bank PLC

In the presence of
Signature /S/ David Morgan ----------------------------------Name of Witness David Morgan ----------------------------------Address of Witness -----------------------------------

-9-

Signed as a Deed by

Signed as a Deed by PASCALL ELECTRONICS LIMITED
acting by** L.E. Down a director and *** G.M.J. Jefferies *director/the secretary Key ** * ) ) ) /S/ L.E. Down -----------------------------------/S/ G.M.J. Jefferies ------------------------------------

Insert full Names Delete as applicable

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EXHIBIT 10.17 DEED OF PRIORITIES BETWEEN LLOYDS TSB COMMERCIAL FINANCE LIMITED AND LLOYDS TSB BANK PLC AND XCEL POWER SYSTEMS LIMITED

THIS DEED is made the _____ day of _______________________ BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate at Boston House, The Little Green, Richmond, Surrey TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC2R 8PT (the "Bank") and (3) XCEL POWER SYSTEMS LIMITED whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB (the "Company") AND WITNESSES as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Deed, except where the context otherwise requires, each of the expressions set out below shall have the following meanings; "Administrator" has the same meaning as in Schedule B1 to the Insolvency Act 1986 as introduced by the Enterprise Act 2002; "Bank's Security" means a debenture dated [________________] made between the Company and the Bank;

EXHIBIT 10.17 DEED OF PRIORITIES BETWEEN LLOYDS TSB COMMERCIAL FINANCE LIMITED AND LLOYDS TSB BANK PLC AND XCEL POWER SYSTEMS LIMITED

THIS DEED is made the _____ day of _______________________ BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate at Boston House, The Little Green, Richmond, Surrey TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC2R 8PT (the "Bank") and (3) XCEL POWER SYSTEMS LIMITED whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB (the "Company") AND WITNESSES as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Deed, except where the context otherwise requires, each of the expressions set out below shall have the following meanings; "Administrator" has the same meaning as in Schedule B1 to the Insolvency Act 1986 as introduced by the Enterprise Act 2002; "Bank's Security" means a debenture dated [________________] made between the Company and the Bank; "Debts" has the meaning ascribed to it by a Debt Purchase/Factoring Agreement (the "Financing Agreement:") (as substituted, amended, varied or replaced) dated made between LTSBCF and the Company; "Financiers" means the Bank and LTSBCF and "Financier" shall mean either of them; "LTSBCF's Security" means a debenture dated [________________] made between the Company and LTSBCF; "Non Vesting Debts" means all or any Debts of the Company purchased or to be purchased by LTSBCF pursuant to the Financing Agreement which fail to vest absolutely in LTSBCF for any reason together with the Related Rights (as defined in the Financing Agreement) to such Debts; "Receiver" includes liquidator, an Administrator, an administrative receiver and a receiver and manager; "Securities" means the Bank's Security send LTSBCF's Security and "Security" means either of them.

THIS DEED is made the _____ day of _______________________ BETWEEN (1) LLOYDS TSB COMMERCIAL FINANCE LIMITED whose registered office is situate at Boston House, The Little Green, Richmond, Surrey TW9 1QE ("LTSBCF") (2) LLOYDS TSB BANK PLC whose address for the purposes of this Deed is at 39 Threadneedle Street, London EC2R 8PT (the "Bank") and (3) XCEL POWER SYSTEMS LIMITED whose registered office is at Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB (the "Company") AND WITNESSES as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Deed, except where the context otherwise requires, each of the expressions set out below shall have the following meanings; "Administrator" has the same meaning as in Schedule B1 to the Insolvency Act 1986 as introduced by the Enterprise Act 2002; "Bank's Security" means a debenture dated [________________] made between the Company and the Bank; "Debts" has the meaning ascribed to it by a Debt Purchase/Factoring Agreement (the "Financing Agreement:") (as substituted, amended, varied or replaced) dated made between LTSBCF and the Company; "Financiers" means the Bank and LTSBCF and "Financier" shall mean either of them; "LTSBCF's Security" means a debenture dated [________________] made between the Company and LTSBCF; "Non Vesting Debts" means all or any Debts of the Company purchased or to be purchased by LTSBCF pursuant to the Financing Agreement which fail to vest absolutely in LTSBCF for any reason together with the Related Rights (as defined in the Financing Agreement) to such Debts; "Receiver" includes liquidator, an Administrator, an administrative receiver and a receiver and manager; "Securities" means the Bank's Security send LTSBCF's Security and "Security" means either of them. 1.2 In this Deed, unless the context otherwise requires: (a) references to the parties shall be construed so as to include their respective successors and permitted assigns;

(b) references to a "business day" shall be construed as a. reference to a day (other than a Saturday or a Sunday) on which banks are generally open for the transaction of business in Pounds Sterling in London; (c) references to clauses are references to clauses of this Deed; (d) references to this Deed shall be to this Deed as amended, varied, supplemented or novated from time to time; (e) headings are inserted for ease of reference only and shall be ignored in the construction of this Deed; (f) references to any statute or law shall be to such statute or law as re-enacted, amended, extended or replaced from time to time; and

(b) references to a "business day" shall be construed as a. reference to a day (other than a Saturday or a Sunday) on which banks are generally open for the transaction of business in Pounds Sterling in London; (c) references to clauses are references to clauses of this Deed; (d) references to this Deed shall be to this Deed as amended, varied, supplemented or novated from time to time; (e) headings are inserted for ease of reference only and shall be ignored in the construction of this Deed; (f) references to any statute or law shall be to such statute or law as re-enacted, amended, extended or replaced from time to time; and (g) the singular includes the plural and vice versa and any gender includes the other. 1.3 If there is any conflict or inconsistency between any provision of this Deed and any provision contained within a Security, the provisions of this Deed shall prevail. 2. CONSENTS AND AGREEMENTS 2.1 Insofar as consent is required under the terms of either of the Securities or otherwise the Bank hereby confirms its consent to the creation and continuance of LTSBCF's Security and LTSBCF hereby confirm its consent to the creation and continuance of the Bank's Security. 2.2 Notwithstanding anything to the contrary in the Financing Agreement or LTSBCF's Security, no Debt arising in respect of the sale of all capital asset or otherwise than in the ordinary course of trading shall vest in LTSBCF or constitute a Non Vesting Debt or be the subject of a sale and purchase under the Financing Agreement. 2.3 For the avoidance of doubt, no monies held by the Company with any bank shall he included within the definition of Debts and Non Vesting Debra. 3. PRIORITIES 3.1 All receipts, recoveries and realisations ("realisations") pursuant to the enforcement of the Securities shall be applied in satisfying the monies, obligations and liabilities thereby secured as follows: (a) realisations of the Nun Vesting Debts shall be applied; FIRST - to LTSBCF without limit, SECOND - to the Bank -2(b) realisations of all other assets of the Company shall be applied: FIRST SECOND to the Bank without limit; to LTSBCF

3.2 The amount of any Receiver's remuneration and all outgoings, costs, charges, expenses, liabilities and payments ranking by statute for payment in priority to the amount secured by the Securities shall be deducted from all receipts and recoveries under the Security under which he is appointed prior to their application towards the discharge or satisfaction of the amount secured by the Securities. 3.3 Without prejudice to clause 3.1, for the purposes of the Insolvency Act 1986 (as amended by the Enterprise Act 2002) LTSBCF hereby confirms for the benefit of the Bank that any qualifying floating charge within the meaning of paragraph 14 of Schedule 1B to the Insolvency Act 1986 contained in the :Bank's Security is to be

(b)

realisations of all other assets of the Company shall be applied: FIRST SECOND to the Bank without limit; to LTSBCF

3.2 The amount of any Receiver's remuneration and all outgoings, costs, charges, expenses, liabilities and payments ranking by statute for payment in priority to the amount secured by the Securities shall be deducted from all receipts and recoveries under the Security under which he is appointed prior to their application towards the discharge or satisfaction of the amount secured by the Securities. 3.3 Without prejudice to clause 3.1, for the purposes of the Insolvency Act 1986 (as amended by the Enterprise Act 2002) LTSBCF hereby confirms for the benefit of the Bank that any qualifying floating charge within the meaning of paragraph 14 of Schedule 1B to the Insolvency Act 1986 contained in the :Bank's Security is to be treated as having priority over any qualifying floating charge contained in LTSBCF's Security notwithstanding the date of creation of such floating charges. 3.4 Without prejudice to the priority accorded to the Bank's Floating Charge by clause 3.3 of this Deed and insofar as LTSBCF's Floating Charge is a prior charge within the meaning of paragraph 15 of Schedule B1 to the Insolvency Act 1986 (such that the Bank is thereby obliged to notify LTSBCF of its intention to appoint an Administrator before so appointing) LTSBCF hereby irrevocably waives its right to receive such notice in addition, and within the meaning of paragraph 15(1)(b) of Schedule B1 to the Insolvency Act 1986 LTSBCF irrevocably consents to the appointment of an Administrator by the Bank notwithstanding that no notice of intention to appoint an Administrator shall have been given to it. 3.5 For the avoidance of doubt, nothing contained within this Deed is intended to rank any floating charge contained within the Securities before any fixed charge contained within the Securities. 4. CONTINUING SECURITY The Securities shall be continuing securities for repayment to the Financiers of the money and liabilities thereby secured and the priority arrangements herein contained shall nor be affected by any fluctuations in the amount from time to time due owing of incurred by the Company to either of the Financiers or by the existence at any time of a credit or bill balance on any relevant account of the Company with either Financier. 5. ENFORCEMENT OF SECURITY 5.1 The Financiers shall consult and co-operate with each other to the extent (without hour any requirement) that (a) the Securities shall so far as practicable be enforced the same method and at the same time; -3-

(b) in the case of an appointment of a Receiver or Receivers by a Financier under its Security the same person(s) shall be appointed Receiver(s) by the other Financier (if that other Financier shall also make such an appointment). 5.2 The provisions of clause 5.1 shall not prevent either Financier from appointing a Receiver under its Security or from the exercise or enforcement of its Security without any consultation if it considers it expedient to do so, subject to the giving of any notices that may be required pursuant to the Insolvency Act 1986 (as amended by the Enterprise Act: 2002). 5.3 If either Financier shall appoint a Receiver under its Security or shall otherwise enforce or exercise its Security it shall promptly give written notice thereof to the other Financier. 6. INFORMATION

(b) in the case of an appointment of a Receiver or Receivers by a Financier under its Security the same person(s) shall be appointed Receiver(s) by the other Financier (if that other Financier shall also make such an appointment). 5.2 The provisions of clause 5.1 shall not prevent either Financier from appointing a Receiver under its Security or from the exercise or enforcement of its Security without any consultation if it considers it expedient to do so, subject to the giving of any notices that may be required pursuant to the Insolvency Act 1986 (as amended by the Enterprise Act: 2002). 5.3 If either Financier shall appoint a Receiver under its Security or shall otherwise enforce or exercise its Security it shall promptly give written notice thereof to the other Financier. 6. INFORMATION 6.1 Whilst this Deed subsists each Financier shall be at liberty from time to time to disclose to the other information concerning the Company and its affairs in such manner and to such extent as such Financier shall from time to time think fit. 6.2 Each Financier acknowledges the right of the other Financier to the production and delivery of copies of the documents comprising or referred to in its Security. 7. COMPLIANCE WITH COVENANTS 7.1 Provided that the Company shall observe and perform all the covenants in LTSBCF's Security and the Financing Agreement relating to its Debts and Non Vesting Debts and the proceeds of the same then the Company shall be deemed to have complied with all or any of the covenants in the Bank's Security relating to such debts and die proceeds of the same. 7.2 In the event of any monies being received under any insurance covering any of the property or assets charged under the Securities (excluding, for the avoidance of doubt, any credit insurance relating to any Debts) such monies shall (subject to the rights of prior encumbrances, if any) be applied in replacing, restoring or reinstalling the property or assets destroyed, damaged or lost unless the .Bank otherwise directs in writing. 8. OPERATION OF ACCOUNTS 8.1 Nothing in this Deed shall prevent the Brink operating the bank accounts of the Company in the ordinary course of banking business including, without limitation, collecting cheques and other payment orders and accepting money for credit of the Company's bank accounts and allowing the Company to draw cheques and other payments and generally to withdraw funds from its bank accounts. 8.2 LTSBCF shall make no claim against the Bank in connection with any Debt the proceeds of which are credited to any account of the Company with the Bank (other than any account in the name of the Company designated as in trust for LTSBCF) unless: -4-

(a) prior to the Bank's receipt of such money the :Bank has received nonce in writing from LTSBCF that a specified sum of money belongs at will belong to LTSBCF. Such notice shall contain such information as the Bank may reasonably require to enable the Bank to identify such credit in the day to day operation of the relevant account of the Company in accordance with the Bank's normal practice; or (b) the Bank has procured the payment to the Bank of a sum which to the actual knowledge of the Bank should have been paid to LTSBCF. In the circumstances set out in (a) and (b) above, such monies following payment into such account shall be held to the order of LTSBCF and paid to LTSBCF on demand subject to any law, regulation or court order but provided always that if the Bank requires an indemnity from LTSBCF before any such payment to LTSBCF,

(a) prior to the Bank's receipt of such money the :Bank has received nonce in writing from LTSBCF that a specified sum of money belongs at will belong to LTSBCF. Such notice shall contain such information as the Bank may reasonably require to enable the Bank to identify such credit in the day to day operation of the relevant account of the Company in accordance with the Bank's normal practice; or (b) the Bank has procured the payment to the Bank of a sum which to the actual knowledge of the Bank should have been paid to LTSBCF. In the circumstances set out in (a) and (b) above, such monies following payment into such account shall be held to the order of LTSBCF and paid to LTSBCF on demand subject to any law, regulation or court order but provided always that if the Bank requires an indemnity from LTSBCF before any such payment to LTSBCF, then LTSBCF shall provide such an indemnity in a form acceptable to the Bank. 9. TERMINATION This Deed shall cease to have effect when either of the Securities shall have been fully discharged. 10. THE COMPANY'S ACKNOWLEDGEMENT
10.1 The Company acknowledges the priorities herein recorded and consents to the remaining terms hereof: The Company acknowledges that this Deed does not create any rights in its favour and that it shall not be entitled to rely upon or enforce any of the terms of this Deed against either Financier. ENTIRE AGREEMENT ---------------This Deed forms the entire agreement between the parties relating to the priority of their respective Securities and the application of the proceeds thereof and supersedes all earlier meetings, discussions, correspondence, e-mails, facsimile transmissions, telexes, letters and communications, understandings and arrangements of any kind so relating. 12. WAIVERS ------No forbearance or failure by any party to exercise or assert or claim any right of entitlement hereunder shall be construed (in the absence of a written agreement o waive or a written confirmation of a past waiver) as a waiver of that right or entitlement:. No waiver of any breach of any term of this Deed shall (unless expressly agreed in writing by the waiving party) be construed as a waiver of a future breach of the same term or as authorising a continuation of the particular breach.

10.2

11.

12.1

12.2

-512.3 None of the terms of this Deed is enforceable by any person other than LTSBCF and the Bank and their respective successors in title pursuant to tine. Contracts (Rights of Third Parties) Act 1999. No purchaser dealing with either of the financiers or any Administrator or Receiver shall be concerned any way with the provisions of this Deed and shall assume that the Financiers or any such Administrator or Receiver is acting in accordance with the provisions of this Deed. VARIATIONS ---------Any variation of this Deed shall be binding only if it is recorded in a document signed by or on behalf of each Financier. If any substitution, amendment, variation or replacement of the

13.

13.1

13.2

12.3

None of the terms of this Deed is enforceable by any person other than LTSBCF and the Bank and their respective successors in title pursuant to tine. Contracts (Rights of Third Parties) Act 1999. No purchaser dealing with either of the financiers or any Administrator or Receiver shall be concerned any way with the provisions of this Deed and shall assume that the Financiers or any such Administrator or Receiver is acting in accordance with the provisions of this Deed. VARIATIONS ---------Any variation of this Deed shall be binding only if it is recorded in a document signed by or on behalf of each Financier. If any substitution, amendment, variation or replacement of the Financing Agreement or any other Agreement alters the definition of `Debts' after the date of execution of the Finance Agreement referred to in the definition of "Debt' in clause 1.1, LTSBCF will, as soon as reasonably practicable, inform the Bank in writing of any such alteration. SEVERABILITY -----------The provisions of this Deed shall be severable and distinct from each other and if at any time any one or more of such provisions is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of each of the remaining provisions of this Deed shall not in any way be affected, prejudiced or impaired thereby.

13.

13.1

13.2

14.

15.

FACILITIES ---------Nothing curtained in this deed shall bind either the Bank or LTSBCF to make any advance or prepayment or to grant any credit or other facilities to the Company.

16.

TIME AND INDULGENCE ------------------Each Financier shall be entitled to grant time or indulgence or to release or compound with the Company or otherwise deal with its Security without reference to the other except to the extent regulated by this Deed.

17.

COUNTERPARTS -----------This Deed may be executed in any number of documents or counterparts each in the like form, all of which taken together shall constitute one and the same document.

18.

NOTICES ------Any notice or other communication given or made under or in connection with the matters contemplated by this Deed shall be in writing. Any such notice or other communication shall, subject to clause 18.3. be addressed to the relevant party at its address stated at the beginning of this Deed and, if so addressed, shall be deemed to have

18.1

18.2

been duly given or made as follows: -6(a) if sent by personal delivery, upon delivery at the address of the relevant party; if sent by first class pre-paid letter post, two clear business days after the date of posting;

(b)

(a)

if sent by personal delivery, upon delivery at the address of the relevant party; if sent by first class pre-paid letter post, two clear business days after the date of posting; if sent by facsimile transmission: (i) to the following number: for LTSBCF: 0208 332 7761/2 for the Bank: _______________________________; or (ii) to such other number. (if any) as shall previously have been notified by the addressee to the sender for the purpose of the service of notices by facsimile transmission.

(b)

(c)

Any notice sent by facsimile in accordance with clause 18.2(c) shall be deemed to have been received by the addressee as soon as sent, save that if it is sent outside the addressee's normal business hours on a day which is not a working day in the place of receipt it shall be deemed to have been received at 10am on the next following working day. 18.3 A party may notify the other parties to this Deed of a change to its name or address for the purposes of clause 18.2 provided that such notification shall only be effective on: (a) the date specified to the notification as the date on which the change is to take place; or if no date is specified or the date specified is less than five clear business days after the date on which notice is given, the date falling five clear business days after notice of any such change has been given.

(b)

18.4

For the avoidance of doubt, the parties agree that the provisions of this clause shall not apply to relation to the service of any document by which any legal proceedings are commenced or continued or forming any part of such proceedings. WAIVER For the avoidance of doubt it is hereby confirmed that the provisions of this Deed are additional to and not in substitution for any waiver given by the bank to favour of LTSBCF in respect of Debts purchased by and vesting in LTSBCF.

19.

20.

LAW AND JURISDICTION -------------------This Deed is governed by, and shall be construed in accordance with, English law. The parties to this Deed irrevocably submit to the exclusive jurisdiction or the English courts to settle any disputes which may arise out of or in connection with this Deed.

20.1

20.2

-7-

IN WITNESS whereof the parties hereto have executed this Deed and have delivered it on the day and year first above written. SIGNED and DELIVERED as a Deed on 28 day of June 2005 on behalf of
LLOYDS TSB COMMERCIAL FINANCE LIMITED )

IN WITNESS whereof the parties hereto have executed this Deed and have delivered it on the day and year first above written. SIGNED and DELIVERED as a Deed on 28 day of June 2005 on behalf of
LLOYDS TSB COMMERCIAL FINANCE LIMITED by: ) ______________________________________) duly appointed attorney ) ) ) 2.** ______________________________________) duly appointed attorney ) ) 1.** ) ) _______________________________________________________) ) _______________________________________________________) ) _______________________________________________________) ) _______________________________________________________) ) _______________________________________________________)

Attorney (s) for Lloyds TSB Commerical Finance Limited

In the presence of: Signature: Name:** Occupation: Address:

Witness (only required if one attorney signs)

SIGNED and DELIVERED as a Deed By LLOYDS TSB BANK PLC by: ______________________________________) duly appointed attorney ) )

Attorney for Lloyds TSB Bank PLC

In the presence of: Signature: Name of Witness _______________________________________________________) _____________________________________________________) _________________________________________________) _________________________________________________) _________________________________________________) Signed as a Deed by XCEL POWER SYSTEMS LIMITED acting by ** a director and** *director/the secretary Key ** * ) ) ) ) ) )

Address of Witness:

Insert full Names Delete as applicable

-8-

EXHIBIT 10.18

EXHIBIT 10.18 ALL ASSETS DEBENTURE GIVEN BY XCEL POWER SYSTEMS LIMITED REG. NO. 00575679 IN FAVOUR OF LLOYDS TSB COMMERCIAL FINANCE LIMITED

ORDER OF CLAUSES 1. Covenant to Pay 2. Charging Provisions 3. Company's Obligations 4. Additional Obligations of the Company 5. Further Assurance and Power of Attorney 6. Acts of Default 7. Power of Possession and Sale 8. Appointment of Receiver and his Powers 9. Additional Powers 10. Application of Monies 11. Protection of Third Parties 12. H M Land Registry 13. Continuing and Additional Security 14. Currency Indemnity 15. Discharge 16. Service of Notices and Process 17. Jurisdiction 18. Representations, Warranties and Undertakings by Company 19. Transfers and Disclosures 20. Miscellaneous

ORDER OF CLAUSES 1. Covenant to Pay 2. Charging Provisions 3. Company's Obligations 4. Additional Obligations of the Company 5. Further Assurance and Power of Attorney 6. Acts of Default 7. Power of Possession and Sale 8. Appointment of Receiver and his Powers 9. Additional Powers 10. Application of Monies 11. Protection of Third Parties 12. H M Land Registry 13. Continuing and Additional Security 14. Currency Indemnity 15. Discharge 16. Service of Notices and Process 17. Jurisdiction 18. Representations, Warranties and Undertakings by Company 19. Transfers and Disclosures 20. Miscellaneous 21. Definitions and Interpretation

THIS DEBENTURE IS MADE on the date referred to immediately after the Fifth Schedule hereto BY THE PARTY DESCRIBED IN THE FIRST SCHEDULE HERETO ("Company") of the one part in favour of LLOYDS TSB COMMERCIAL FINANCE LIMITED of Boston House, The Little Green, Richmond, Surrey, TW9 1QE registered in England and Wales with number 733011 ("Security Holder") of the other part. 1. COVENANT TO PAY
1.1 The Company agrees with the Security Holder: 1.1.1 to pay the Secured Monies, which are now or shall be due, owing and payable to the Security Holder, in accordance with the terms of the transaction, security, instrument or other obligation giving rise to the Company's indebtedness to the

THIS DEBENTURE IS MADE on the date referred to immediately after the Fifth Schedule hereto BY THE PARTY DESCRIBED IN THE FIRST SCHEDULE HERETO ("Company") of the one part in favour of LLOYDS TSB COMMERCIAL FINANCE LIMITED of Boston House, The Little Green, Richmond, Surrey, TW9 1QE registered in England and Wales with number 733011 ("Security Holder") of the other part. 1. COVENANT TO PAY
1.1 The Company agrees with the Security Holder: 1.1.1 to pay the Secured Monies, which are now or shall be due, owing and payable to the Security Holder, in accordance with the terms of the transaction, security, instrument or other obligation giving rise to the Company's indebtedness to the Security Holder, including those under the Financing Agreement; and to discharge all obligations and liabilities, whether actual, accruing or contingent, now or in future due, owing or incurred to the Security Holder by the Company, in whatever currency denominated and on whatever account and howsoever arising, whether alone or jointly and in whatever style, name or form and whether as principal or surety.

1.1.2

2. CHARGING PROVISIONS 2.1 As security for the payment of the Secured Monies, the Company with full title guarantee now gives the following mortgages and charges in favour of the Security Holder namely:
2.1.1 a FIXED CHARGE by way of legal mortgage on all freehold and leasehold property owned by the Company, including but not limited to land of which the Company is registered as proprietor at H. M. Land Registry (details of which are set out in the Third Schedule to this deed) a FIXED CHARGE on all of the following assets, whether now or in future belonging to the Company: (i) the freehold and leasehold properties of the Company not effectively mortgaged under clause 2.1.1 including such as may hereafter be acquired; all fixtures and fittings (including trade fixtures and fittings) and fixed plant and machinery in, on or attached to the property subject to the legal mortgage under clause 2.1.1 and all spare parts, replacements, modifications and additions for or to the same; any other freehold and leasehold property which the Company shall own together with all fixtures and fittings (including trade fixtures and fittings) and fixed plant and machinery in, on or attached to such property and all spare parts, replacements, modifications and additions for or to the same;

2.1.2

(ii)

(iii)

-2(iv) all plant and machinery and other equipment listed in the Fifth Schedule and all spare parts, replacements, modifications and additions for or to the same; all fixed plant and machinery, including all spare parts, replacements, modifications and additions for or to the same, not listed in the Fifth Schedule; all goodwill, unpaid and/or uncalled capital of the Company; (vii) all the Company's Intellectual Property; (viii) all the Company's Securities; all loan capital, indebtedness or liabilities on any account or in any manner owing to the Company from any Subsidiary of the Company or a member of the Company's Group;

(v)

(vi)

(ix)

(iv)

(v)

(vi)

(ix)

(x)

all plant and machinery and other equipment listed in the Fifth Schedule and all spare parts, replacements, modifications and additions for or to the same; all fixed plant and machinery, including all spare parts, replacements, modifications and additions for or to the same, not listed in the Fifth Schedule; all goodwill, unpaid and/or uncalled capital of the Company; (vii) all the Company's Intellectual Property; (viii) all the Company's Securities; all loan capital, indebtedness or liabilities on any account or in any manner owing to the Company from any Subsidiary of the Company or a member of the Company's Group; all amounts realised by an administrator or liquidator of the Company, upon enforcement or execution of any order of the Court under Part IV of the Insolvency Act 1986;

2.1.3

A FIXED CHARGE upon all or any of the following assets, whether now in existence or coming into existence in future: (i) all documents of title to any item of property which at any time and for any purpose has been or may be deposited with the Security Holder; the assets mentioned in the title documents referred to in the immediately preceding sub-paragraph; all monies in the bank account specified in clauses 3.1.6(i) and 3.1.7 including Remittances in respect of which instructions to the Company's bankers have been given under clause 3.1.6(iii); all Remittances in respect of the Company's Other Debts and Non-Vesting Debts which in accordance with clause 3.1.6(ii) shall be received by the person or at the address or post office box specified in that sub-clause; all other Remittances in respect of Other Debts and Non-Vesting Debts received by the Company pending their being dealt with in accordance with the terms of this deed or any instructions given in accordance with it; any account in the name of the Company under the control of or operated in accordance with the directions of the Security Holder.

(ii) (iii)

(iv)

(v)

(vi)

2.1.4 2.1.5

2.1.6

A FIXED CHARGE on all the Company's Other Debts and Non-Vesting .Debts, present and future; A FLOATING CHARGE on such of the moneys present and future which the Company may receive in respect of the Company's Other Debts and Non-Vesting Debts and which, until any direction from the Security Holder to the contrary, are paid into the bank account of the Company referred to in clause 3.1.8 and which upon such payment will he released from the fixed charge thereon; A FLOATING CHARGE on the remainder of the undertaking, property rights and assets of the Company whatsoever and wheresoever, both present and future, not subject to the above charges.

-3-

2.2 if the Security Holder shall enforce any of the above charges then the floating charges created by this deed shall immediately and without further formality become fixed charges. However, the Security Holder may also at any time give written notice to the Company immediately converting all or any of the floating charges into fixed charges in respect of the whole or any part of the Mortgaged Property subject to such floating charges.
2.3 Until the Security Holder shall: 2.3.1 2.3.2 enforce any of the above charges; or serve any notice under clause 2.2 on the Company, converting any of the floating charges into fixed charges; or

2.2 if the Security Holder shall enforce any of the above charges then the floating charges created by this deed shall immediately and without further formality become fixed charges. However, the Security Holder may also at any time give written notice to the Company immediately converting all or any of the floating charges into fixed charges in respect of the whole or any part of the Mortgaged Property subject to such floating charges.
2.3 Until the Security Holder shall: 2.3.1 2.3.2 2.3.3 enforce any of the above charges; or serve any notice under clause 2.2 on the Company, converting any of the floating charges into fixed charges; or give the directions referred to in any of clauses 3.1.4 and 3.1.6 to 3.1.9 inclusive; any Remittance which is paid into the Company's bank account under clause 3.1.8 shall, be released from the fixed charge created by clause 2.1.4 and shall immediately become subject to the floating charge created by clause 2.1.5. Such release shall not in any way affect the continuation of the fixed charge created by clause 2.1.4 on the remainder of the Company's Other Debts, outstanding from time to time.

2.4 This deed shall take effect subject to the provisions of the prior Encumbrances over the Company's assets detailed in the Fourth Schedule, except as otherwise varied by any separate deed. 2.5 The floating charges created by this deed shall, unless otherwise agreed by the Security Holder in writing, automatically and without notice be converted into fixed charges:
2.5.1 immediately preceding the coming into existence of any Encumbrance (except: as detailed in the Fourth Schedule) or any disposition or dealing prohibited by his deed; or after an Act of Default.

2.5.2

3. COMPANY'S OBLIGATIONS
3.1 3.1.1 The Company agrees with the Security Holder that, whilst this security exists, it: will deal with the Non-Vesting Debts and their Related Rights as if they were Debts and their Related Rights purchased by the Security Holder under the Financing Agreement and in particular will not bank or deal with Remittances in respect of them except by dealing with them in accordance with the Financing Agreement; will not sell, transfer, lease, licence or dispose of the Mortgaged .Property subject to the floating charges herein, except by way of sale at full value in the ordinary course of its business now being carried on; will not sell, transfer, lease, license or dispose of the Mortgaged Property subject to the fixed charges herein without the prior written consent of the Security Holder but such restriction shall not prohibit the disposal of an asset (other than freehold or leasehold property) for the purpose of its immediate replacement, modification, repair and/or maintenance;

3.1.2

3.1.3

-43.1.4 will deal with the Company's Other Debts outstanding and Remittances in accordance with the Security Holder's written directions; until such directions are given will only deal with the Company's Other Debts by way of getting in and realising the same in the ordinary course of its business; will execute an assignment of the Company's Other Debts in favour of the Security Holder in such form as the Security Holder requires, whenever the Security Holder so demands;

3.1.5

3.1.4

3.1.5

3.1.6

will deal with the Company's Other Debts outstanding and Remittances in accordance with the Security Holder's written directions; until such directions are given will only deal with the Company's Other Debts by way of getting in and realising the same in the ordinary course of its business; will execute an assignment of the Company's Other Debts in favour of the Security Holder in such form as the Security Holder requires, whenever the Security Holder so demands; give instructions in accordance with the directions of the Security Holder at any time (i) to debtors to pay Remittances in respect of the Company's Other Debts direct into such bank account under the control of the Security Holder (and whether in the name of the Company or the Security Holder) as the Security Holder may specify and whether or not this is an account opened under the terms hereof; and/or to debtors to pay Remittances in respect of the Company's Other Debts to such address, or post office box under the control of the Security Holder or to such person employed by or only accepting instructions from the Security Holder as the Security Holder may specify; and/or to the Company's bankers that all Remittances in respect of Other Debts, received by means of electronic funds transfers direct into a bank account of the Company, shall forthwith be transferred to such bank account as the Security Holder may specify (whether the specified bank account is in the name of the Company or the Security Holder and whether or not it is an account opened under the terms hereof) but in each case without affecting the right of the Security Holder under clause 3.1.4 to give other directions;

(ii)

(iii)

3.1.7

3.1.8

3.1.9

will, as directed by the Security Holder, open such bank accounts in the name of the Company with such mandates as the Security Holder may specify; such bank accounts can include separate designated accounts or trust accounts or accounts where the officers of the Security Holder are irrevocably appointed as the only persons able to operate the accounts; will thereafter pay into such bank accounts all Remittances which the Company may receive in respect of its Other Debts; will only deal with the monies in such account in accordance with the written directions of the Security Holder (subject only to such rights as the bank at which the account is held may have in respect thereof); until any contrary direction, demand or requirement by the Security Holder under this deed, will only pay Remittances, which the Company may receive in respect of the Company's Other Debts, into a bank account under the Company's control; will only pay or otherwise deal with the monies in any of the Company's bank account referred to in clause 3.1.5 in accordance with the written directions from time to time given by the Security Holder (subject to any rights which the bank at which the account is held has in respect thereof);

-53.1.10 will not, charge, sell, discount, factor, dispose of or, except in accordance with this deed, otherwise deal with its Other Debts or the relative Remittances unless it has the prior written consent of the Security Holder; after conversion of the floating charges created by clause 2.1.5 and/or 2.1.6 into fixed charges, will not, except as permitted by the Security Holder, withdraw any credit balance representing Remittances from any of the Company's bank accounts under control of the Company; will authorise its bankers from time to time to provide copy statements and full particulars of all the Company's accounts and Facilities with them whenever requested by the Security

3.1.11

3.1.12

3.1.10

3.1.11

3.1.12

3.1.13 3.1.14

3.1.15

3.1.16

3.1.17

3.1.18

3.1.19

3.1.20

will not, charge, sell, discount, factor, dispose of or, except in accordance with this deed, otherwise deal with its Other Debts or the relative Remittances unless it has the prior written consent of the Security Holder; after conversion of the floating charges created by clause 2.1.5 and/or 2.1.6 into fixed charges, will not, except as permitted by the Security Holder, withdraw any credit balance representing Remittances from any of the Company's bank accounts under control of the Company; will authorise its bankers from time to time to provide copy statements and full particulars of all the Company's accounts and Facilities with them whenever requested by the Security Holder; will provide such other information, as the Security Holder may reasonably request regarding the Company's affairs; will, immediately it becomes aware, provide the Security Holder with details of any present or future litigation, arbitration or administrative proceedings in progress, pending or, to the knowledge of the Company, threatened against it which might have a material adverse effect on the Company's ability to perform its obligations under this deed; will permit the Security Holder free access at all reasonable times to inspect and take copies or and extracts from the hooks, accounts and records of the Company and such other documents as the Security Holder may require and will provide the Security Holder with all information and facilities which it may require; will grant the Security Holder or its solicitors on request all reasonable facilities to enable it or them to carry out, at the Company's expense, such investigation of title to the Mortgaged Property and enquiries about it as would be carried out by a prudent mortgagee; will use its best endeavours to detect any infringement of its rights to the Intellectual Property; if aware of such infringement, will immediately give the Security Holder all information available to it about such infringement and will commence and diligently prosecute (or permit the Security Holder in the name but at the expense of the Company to commence and prosecute) all proceedings necessary to prevent such infringement or to recover damages; will do everything needed to ensure that the Intellectual Property, to which the Company is or may become entitled, is valid and subsisting and remains owned by the Company and will take all such actions and proceedings as are necessary to protect such Intellectual Property; if any such intellectual Property shall at any time lapse or become void, will do everything necessary to restore such Intellectual Property to the Company; will comply in all material respects with all laws concerning the Mortgaged Property and every notice, order, direction, licence, consent, permission lawfully made or given in respect of it and likewise with the requirements of any competent authority; will duly and promptly pay all monies which may become due in respect of any of the Securities; (it being acknowledged by the Company that the Security Holder shall not incur any liability whatsoever for such monies); -6-

3.1.21

3.1.22

forthwith upon the execution of this deed will deposit with the Security Holder all certificates or documents of title in respect of the Securities, together as appropriate with duly executed instruments of transfer or assignments thereof in blank; (it being acknowledged that the Security Holder shall at any time be entitled to have any of the Securities registered either in the name of the Security Holder or nominees selected by the Security Holder); will ensure the delivery or payment to the Security Holder of all stocks, shares, securities, rights, monies or other property accruing, offered or issued at any time by way of bonus, redemption, exchange, purchase, substitution, conversion, preference, option or otherwise in respect of any

3.1.21

3.1.22

forthwith upon the execution of this deed will deposit with the Security Holder all certificates or documents of title in respect of the Securities, together as appropriate with duly executed instruments of transfer or assignments thereof in blank; (it being acknowledged that the Security Holder shall at any time be entitled to have any of the Securities registered either in the name of the Security Holder or nominees selected by the Security Holder); will ensure the delivery or payment to the Security Holder of all stocks, shares, securities, rights, monies or other property accruing, offered or issued at any time by way of bonus, redemption, exchange, purchase, substitution, conversion, preference, option or otherwise in respect of any Securities or the certificates or other documents of title to or representing the same, together with executed instruments of transfer or assignments in blank; (it being acknowledged that the Security Holder may arrange for any of them to be registered either in the name of the Security Holder or nominees selected by the Security Holder).

4. ADDITIONAL OBLIGATIONS OF THE COMPANY 4.1 The Company agrees that, at all times during the continuance of this security, it:
4.1.1 will carry on the Company's business in a proper and efficient manner and will not make any material alteration to the Company's business, constituting as change from that carried on at the date hereof; will maintain proper and up to date books of account of its business; will keep such books of account and all other documents relating to the affairs of the Company at the Company's registered office or at such other place where the same ought to be kept and will promptly provide copies thereof to the Security Holder upon request; will deliver to the Security Holder the copies of its audited financial statements and any reports and notes accompanying them within 6 months of each year end; will punctually pay all its debts and liabilities becoming due and payable and which would, on the winding up of the Company, have priority over the charges created by this deed; will punctually pay all outgoings payable in respect of the Mortgaged Property and will promptly produce the receipts for them to the Security Holder upon request; will keep all the Company's freehold and leasehold property in good and substantial repair and will allow the Security Holder free access, at all reasonable times, to view the state and condition of any such property, but without the Security Holder becoming liable to account as a mortgagee possession; will observe and perform all the lessee's covenants in any lease under which any of the Mortgaged Property may be held and will take no action which might lead to such lease being surrendered or forfeited; will allow the Security Holder, at the expense of the Company, to carry out repairs or take any action which the Security Holder shall reasonably consider necessary should the Company fail to observe or perform its obligations as a lessee;

4.1.2

4.1.3

4.1.4

4.1.5

4.1.6

4.1.7

4.1.8

-74.1.9 will not exercise the powers of leasing or accepting, surrenders of leases, conferred on a mortgagee in possession by Sections 99 and 100 of the Law & Property Act 1925, or any other powers of leasing or accepting surrenders of leases, without the prior written consent of the Security Holder; will make sure that an order of the Court is obtained, under Section 38(4) of the Landlord and Tenant Act 1954, excluding the security of tenure provisions of that Act, before granting any lease; will insure and keep insured those parts of' the Mortgaged

4.1.10

4.1.11

4.1.9

4.1.10

4.1.11

4.1.12

4.1.13

4.1.14

4.1.15

4.1.16

4.1.17

will not exercise the powers of leasing or accepting, surrenders of leases, conferred on a mortgagee in possession by Sections 99 and 100 of the Law & Property Act 1925, or any other powers of leasing or accepting surrenders of leases, without the prior written consent of the Security Holder; will make sure that an order of the Court is obtained, under Section 38(4) of the Landlord and Tenant Act 1954, excluding the security of tenure provisions of that Act, before granting any lease; will insure and keep insured those parts of' the Mortgaged Property as are of an insurable nature against loss or damage by fire and other risks usually insured against and such other risks that the Security Holder shall reasonably require to their full insurable value with insurers approved by the Security Holder; will make sure that all the Company's insurance policies will be endorsed with notice of the interest of the Security Holder in them and will produce to the Security Holder the receipts for each current premium within fifteen days of its becoming due; failing such production the Security Holder may effect or renew any such insurance as the Security Holder shall think fit at the Company's expense; will observe and perform all restrictive and other covenants and stipulations for the time being affecting the Mortgaged Property or its use or enjoyment; will not do or allow anything to be done on the Company's freehold or leasehold property which shall be treated as a development or a change of use within the meaning of the Town and Country Planning Acts unless the prior written consent of the Security Holder has been obtained; will not infringe the Town and Country Planning Acts in any way which prejudices the Security Holder's security over the Mortgaged Property; will deposit with the Security Holder all deeds and documents of title; relating to the Company's freehold and leasehold property and the insurance policies relating to the same, (subject only to the requirements of any prior Encumbrance or of the Company's landlord); will not permit any person to become entitled to any proprietary right or interest which might affect the value of the assets subject to the fixed charges herein.

4.2 If the Company holds property as a tenant or lessee and shall be required by the landlord either to insure or to reimburse the Company's landlord for any insurance premium paid by him then the Company shall be treated as having complied with its insuring obligation under this deed if it duly and promptly complies with such requirements. However this shall not affect the right of the Security Holder to require the Company to produce satisfactory evidence that the Company has complied with the landlord's requirements. 5. FURTHER ASSURANCE AND POWER OF ATTORNEY 5.1 At the Security Holder's request, the Company will immediately sign, seal, execute, deliver and perfect all deeds and instruments and do all such other acts and things as the Security Holder or any Receiver appointed hereunder may require in order to perfect or enforce this security or to use the powers given to each of them in this deed or to enforce the obligations of the Company and/or the rights of the Security Holder under this deed. -8-

5.2 The Company will, if called upon by the Security Holder, execute a legal or equitable assignment of any part of the Mortgaged Property, in such terms as the Security Holder may require. The Company will then give notice of such assignment to such persons as the Security Holder may specify and take such other steps as the Security Holder may require to perfect such assignment. 5.3 The Company irrevocably appoints the Security Holder, any directors, officers or managers for the time being of the Security Holder and any other person authorised by the directors of the Security Holder and any Receiver appointed hereunder, jointly and each of them severally, to be the lawful attorneys of the Company.

5.2 The Company will, if called upon by the Security Holder, execute a legal or equitable assignment of any part of the Mortgaged Property, in such terms as the Security Holder may require. The Company will then give notice of such assignment to such persons as the Security Holder may specify and take such other steps as the Security Holder may require to perfect such assignment. 5.3 The Company irrevocably appoints the Security Holder, any directors, officers or managers for the time being of the Security Holder and any other person authorised by the directors of the Security Holder and any Receiver appointed hereunder, jointly and each of them severally, to be the lawful attorneys of the Company. Such appointment gives each attorney the power in the Company's name and on its behalf and as its act and deed to carry out all acts for the purposes set out in clauses 5.1 and 5.2. Each attorney so appointed may appoint substitute attorneys to carry out all or any of such purposes. The Company agrees to ratify and confirm any instrument, act or thing which any such attorney or substitute attorney may lawfully execute or do. 6. ACTS OF DEFAULT 6.1 The Secured Monies shall become payable and the charges in favour of the Security Holder shall immediately become enforceable, without notice or demand, by the Security Holder at any time after any of the following events occur:
6.1.1 if the Company shall breach any of its obligations under this deed or in the Financing Agreement or any other agreement with the Security Holder; if the Company shall default in paying any of the Secured Monies as and when they become due; 6.1.3 if the Company shall fail to give the Security Holder such information as may reasonably be requested as to the business, affairs or assets of the Company; if any representation, warranty or undertaking at any time made by the Company to the Security Holder is or was, in the reasonable opinion of the Security Holder, incorrect or misleading in any respect or, being on an undertaking, shall not be complied with by the Company; if the Company shall dispose or attempt to dispose of its principal undertaking or a substantial part of it, without the prior written approval of the Security Holder; if the Company shall be insolvent; if the Company suspends or threatens to suspend a substantial part of' its business or if the Security Holder receives information, from the Company or any responsible third party, whether orally or in writing, that the Company is contemplating or is likely to suspend a substantial part of its business; if the Company shall commence negotiations with any of its creditors with a view to the general readjustment or rescheduling of the Company's indebtedness; if the Company shall default under any of the following with

6.1.2

6.1.4

6.1.5

6.1.6 6.1.7

6.1.8

6.1.9

any party: -9(i) (iv) a trust deed; (ii) a loan agreement; (iii) an Encumbrance; any other agreement or obligation relating to borrowing or financing (including all liabilities in respect of accepting, endorsing or discounting any notes or bills and all liabilities under debt purchase, factoring, discounting and similar agreements); any guarantee or indemnity;

(v) 6.1.10

if any borrowing or any ether money payable by the Company: (i) becomes payable or is capable of being declared payable prior to its stated date of maturity; or

(i) (iv)

(v) 6.1.10

a trust deed; (ii) a loan agreement; (iii) an Encumbrance; any other agreement or obligation relating to borrowing or financing (including all liabilities in respect of accepting, endorsing or discounting any notes or bills and all liabilities under debt purchase, factoring, discounting and similar agreements); any guarantee or indemnity;

if any borrowing or any ether money payable by the Company: (i) (ii) becomes payable or is capable of being declared payable prior to its stated date of maturity; or is not paid when due;

6.1.11 6.1.12

6.1.13

6.1.14

6.1.15

6.1.16

6.1.17

if any Encumbrance created by the Company in favour of another party becomes enforceable; if any guarantee, indemnity or other security for any of the Secured Liabilities fails or ceases in any respect to have full force and effect or to be continuing or is terminated or disputed or is the opinion of the Security Holder in jeopardy, invalid or unenforceable; if any governmental authority permits, or procures, or threatens any reorganisation, transfer or appropriation (whether with or without compensation) of a substantial part of the business or assets of. the Company; if the Company shall, without the prior written consent of the Security Holder, change the nature of its business or trading in any way which the Security Holder considers prejudicial to this security; if it is unlawful for the Company to perform or comply with any of its obligations under this deed or under any other agreement between the Company and the Security Holder or such obligations or the Company are not or cease to be legally valid, binding and enforceable; if, after the date of this deed, control (as defined in Section 435 of the insolvency Act 1986) or the power to take control of the Company changes, without prior written consent of the Security Holder; or if, in the opinion of the Security Holder, a material adverse change occurs in the financial condition, results of operations or business of the Company.

6.2

At any time after any Act of Default: 6.2.1 the Security Holder shall cease to be under any further commitment to the Company and may at any time thereafter declare the Secured Monies (or such of them as the Security Holder may specify) either to be immediately due and payable or to be payable at any time thereafter immediately on demand, even if this conflicts with the terms of any other agreement or arrangement; and/or the Company shall immediately on demand provide cash cover for all of its contingent liabilities to the Security Holder (including under the Financing Agreement) and for all notes or bills accepted, endorsed or discounted and all guarantees or other instruments entered into by the Security Holder; and/or the Security Holder may retain: (i) any monies in any account referred to in clause 3.1.6; and/or

6.2.2

6.2.3

-10-

(ii) any monies in any account operated by the officers of the Security Holder under clause 3.1 .7; and/or (iii) any Remittance received in accordance with clause
3.1.6(ii)

(ii) any monies in any account operated by the officers of the Security Holder under clause 3.1 .7; and/or (iii) any Remittance received in accordance with clause
3.1.6(ii) for such period as the Security Holder reasonably considers necessary to ensure the Company's compliance with the terms of this deed; and/or 6.2.4 the Security Holder may exercise in the name or the Company any voting rights attached to the Securities and all powers given to trustees by Sections 10(3) and (4) of the Trustee Act 1925 (as amended by Section 9 of the Trustee Investments Act 1961) in respect of securities, property subject to a trust and any powers or rights exercisable by the registered holder of any of the Securities or by the bearer thereto. The Security Holder will not then need any consent or authority from the Company.

7. POWER OF POSSESSION AND SALE 7.1 At any time alter this security shall become enforceable, the Security Holder and/ or any Receiver appointed under this deed may, in their discretion, enter upon and take possession of the Mortgaged .Property or any part of it. They may also at their discretion, when exercising their powers given in this deed, sell, call in, collect and convert into monies the Mortgaged .Property or any part of it. By way of extension of these powers such sale, calling in and conversion may be done for such consideration as the Security Holder or any Receiver shall consider sufficient. It is irrelevant whether the consideration shall consist of cash, shares or debentures in some other company or any other property or partly of one and partly of some other type of consideration. Such consideration may be immediately payable or payable by instalments or deferred. Instalment or deferred payments may be with or without security and on such other terms as the Security Holder or the Receiver shall think fit. 8. APPOINTMENT OF RECEIVER AND HIS POWERS 8.1 Section 109 of the Law of Property Act 1925 (restricting the power to appoint a receiver) shall not apply to this deed. At any time after an Act of Default or after any other event, as a result of which this security shall become enforceable or, if the Company at any time so requests in writing, the Security Holder may without further notice to the Company appoint any person to be a Receiver. Their appointment shall extend to the whole or any part of the Mortgaged Property. The Security Holder may remove any Receiver (except an administrative receiver). In case of such removal or the retirement or death of any Receiver, the Security Holder may appoint another in his place. At the time of his appointment (or at any time afterwards) the Security Holder may fix the remuneration of the Receiver on such basis as the Security Holder shall determine. This may include a fixed fee or an hourly rate or a commission. 8.2 The Security folder may appoint more than one person to act as the Receiver. Where more than one person shall be appointed to act as Receiver, those so appointed shall carry out their duties, exercise their rights, and be subject to their obligations jointly as well as severally. References in this deed to the Receiver shall be to each and all of them as appropriate. -11-

8.3 Any appointment, or fixing of the remuneration of the Receiver or any such removal shall be made in writing and be signed by any director or authorised officer of the Security Holder. 8.4 Any Receiver appointed under this deed shall be the agent of the Company. He shall be in the same position as a Receiver appointed under the Law of Property Act 1925. The Company shall be solely responsible for his acts, omissions, losses, misconduct, defaults and remuneration. The Security Holder shall not in any way be liable or responsible either to the Company or to any other person for any of them.

8.3 Any appointment, or fixing of the remuneration of the Receiver or any such removal shall be made in writing and be signed by any director or authorised officer of the Security Holder. 8.4 Any Receiver appointed under this deed shall be the agent of the Company. He shall be in the same position as a Receiver appointed under the Law of Property Act 1925. The Company shall be solely responsible for his acts, omissions, losses, misconduct, defaults and remuneration. The Security Holder shall not in any way be liable or responsible either to the Company or to any other person for any of them. 8.5 The Receiver shall, without the need for any consent on the part of the Company, have all of the following powers, unless any shell specifically he excluded by the terms of his appointment. He may exercise these powers in such way, at such time and on such terms as he shall think necessary or expedient and whether in his name or the name of the Company. Any Receiver, whether appointed solely or jointly, shall have the powers granted to a receiver by the Law of Property Act 1925 and the Insolvency Act 1986. He shall also have all of the following powers:
8.5.1 to enter upon, take possession of, collect and get in the Mortgaged Property and for that purpose to have possession of all records, correspondence and other documents relating to the Mortgaged Property; to lease the Mortgaged Property, in the name of the Company or otherwise (whether or not the Receiver shall have taken possession thereof); to carry on or permit the carrying on or all or any part of the business of the Company and to manage, develop, reconstruct, amalgamate or diversify the Company's business, including purchasing supplies and materials; to do all acts which the Company might do for the protection or improvement of the Mortgaged Property or for obtaining income or returns from it; to raise or borrow any money, which may be needed from time to time for any of the purposes of the Receiver's appointment, whether in the name of the Company or otherwise; for such purpose the Receiver shall have power to secure any monies so borrowed by mortgage or charge over the Mortgaged Property, whether ranking in priority to or pari passu with or after any or all of the charges created by this deed. to sell or concur in selling the Mortgaged Property including by public or private treaty, by tender, for cash or on credit, in one lot or in parcels, with or without special conditions or stipulations as to title, time or mode of payment of purchase money or otherwise and whether forthwith upon his appointment or later; to allow the whole or any part of the sale monies of the Mortgaged Property to remain outstanding on mortgage of the property sold or on any other security or even without any security and without being responsible for any loss caused and with full power to buy in and rescind or vary any contract for sale and to resell without being responsible for loss;

8.5.2

8.5.3

8.5.4

8.5.5

8.5.6

8.5.7

-128.5.8 8.5.9 to let or let on hire, lease or surrender and accept surrenders of the Mortgaged Property; to execute assurances of the Mortgaged Property in the name and on behalf of the Company or otherwise and to do all other acts and things for completing the sale of the Mortgaged Property; to sever fixtures belonging to the Company and sell them separately from any other part of the Mortgaged Property; to make any arrangement or compromise with any person in respect of the Mortgaged Property; to repair, decorate, furnish, maintain, alter, improve, renew or add to any of the Mortgaged Property as he shall think fit and effect maintain, renew or increase indemnity insurance and other insurances and obtain bonds; to settle, arrange, compromise, and submit to arbitration any accounts, claims, questions or disputes whatsoever which may

8.5.10 8.5.11 8.5.12

8.5.13

8.5.8 8.5.9

8.5.10 8.5.11 8.5.12

8.5.13

8.5.14

8.5.15

8.5.16

8.5.17

8.5.18

8.5.19

8.5.20 8.5.21

8.5.22 8.5.23

8.5.24

to let or let on hire, lease or surrender and accept surrenders of the Mortgaged Property; to execute assurances of the Mortgaged Property in the name and on behalf of the Company or otherwise and to do all other acts and things for completing the sale of the Mortgaged Property; to sever fixtures belonging to the Company and sell them separately from any other part of the Mortgaged Property; to make any arrangement or compromise with any person in respect of the Mortgaged Property; to repair, decorate, furnish, maintain, alter, improve, renew or add to any of the Mortgaged Property as he shall think fit and effect maintain, renew or increase indemnity insurance and other insurances and obtain bonds; to settle, arrange, compromise, and submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with the business of the Company or any part of the Mortgaged Property or in any way relating to the security constituted by this deed and to bring, prosecute, defend, enforce, compromise, submit to and discontinue any actions, suits, arbitrations or proceedings whatsoever, whether civil or criminal; to enter into, complete, disclaim, abandon or disregard, determine or rectify any of the outstanding contracts or arrangements of the Company and allow time for payment of any debts, either with or without security; to exercise or permit the Company or any nominee of the Company to exercise any powers or rights incidental to the ownership of the Mortgaged Property, in such manner as he may think fit; to form a subsidiary of the Company and transfer, lease or licence to such subsidiary or any other person all or any part of the Mortgaged Property on such terms and conditions as he may think fit; to give complete discharges in respect of all monies and other assets which may come into the hands of the Receiver in the exercise of his powers; to carry out and enforce specific performance of or obtain the benefit of all the Company's contracts or those entered into in exercise of the powers or authorities conferred by this deed; to make, or require the directors of the Company to make, calls upon the shareholders of the Company in respect of any capital of the Company; to enforce payment, of any call so made by action (in the name of the Company or the Receiver) or in any other way; to exercise all or any of the powers and authorities conferred on the Receiver under the provisions of the Law of Property Act 1925 without any further consent by or notice to the Company; to demand and get in all rents and other income, whether accrued before or after the date or his appointment; to exercise the powers conferred on a landlord or a tenant under the Landlord and Tenant Acts 1927 and 1954 but without liability for powers so exercised; to do all things necessary to make sure that the Company performs or observes all of its obligations to the Security Holder;

-138.5.25 to delegate to any person, for such time as the Security Holder shall approve, any of the powers conferred upon the Receiver; to take legal proceedings for all or any of the purposes set out above; to employ and dismiss managers, solicitors, officers, agents, auctioneers, workmen and employees for the purpose of carrying out any of the powers and duties of the Receiver or the obligations of the Company at such salaries or remuneration and on such other terms of service as the Receiver in his discretion may think fit;

8.5.26 8.5.27

8.5.25

8.5.26 8.5.27

8.5.28

8.5.29

to delegate to any person, for such time as the Security Holder shall approve, any of the powers conferred upon the Receiver; to take legal proceedings for all or any of the purposes set out above; to employ and dismiss managers, solicitors, officers, agents, auctioneers, workmen and employees for the purpose of carrying out any of the powers and duties of the Receiver or the obligations of the Company at such salaries or remuneration and on such other terms of service as the Receiver in his discretion may think fit; to have access to and make use of the premises, plant, equipment and accounting and other records of the Company and the services of its staff in order to exercise his powers and duties; to do all such other acts and things without limitation, as the Receiver may consider to be incidental or conducive to the lawful exercise of his powers and duties.

8.6

The Security Holder may at any time give up possession of any part of the Mortgaged Property and/or withdraw from the receivership. Whether or not a Receiver shall be appointed under this deed, the Security Holder may at any time after this security shall have become enforceable and without giving notice, exercise all or any of the powers, authorities and discretions conferral on a Receiver as set out above. ADDITIONAL, POWERS In addition to the powers of leasing or accepting surrenders of' leases conferred on mortgagees by Sections 99 and 100 of the Law of Property Act 1925, it shall he lawful for the Security Holder or any Receiver without the restrictions contained in those Sections: 9.1.1 to grant any lease of the Mortgaged Property upon such terms as the Security Holder or the Receiver shall in its absolute and unfettered discretion think fit; and to accept a surrender of any lease of the Mortgaged Property on such terms as the Security Holder or the Receiver in its or his discretion shall think fit.

8.7

9 9.1

9.1.2

9.2

Section 103 of the Law of Property Act 1925 (restricting the power of sale) shall not apply. However the power or sale and the other powers conferred on mortgagees by that Act shall apply to this security but without the Act's restrictions as to giving notice or otherwise. Accordingly for the purposes of a sale or other exercise of any such powers the whole of the Secured Monies shall be treated as due and payable immediately upon the execution and delivery of this document. The restrictions on the right of consolidating mortgage securities, which are contained in Section 93 of the Law of Property Act, shall not apply to this security. The Security Holder may, at any time without discharging or in any other way affecting this security or any remedy that the Security Holder may have, grant to the Company (or to any other person) time or

9.3

9.4

-14-

indulgence or abstain from perfecting or enforcing any remedies, securities, guarantees or rights which the Security Holder may now or afterwards have from or against the Company or any other person. 9.5 If the Security Holder receives or is treated as having received notice of any subsequent mortgage or charge affecting any of the Mortgaged Property then the Security Holder may open a new account with the Company. If it does not open a new account, it shall nevertheless be treated as it had done so at the time when it received or was treated as having received such notice. From that time all payments made by the Company to the Security Holder shall be credited or be treated as having been credited to the new account. Such payments shall not operate to reduce the amount secured by this deed when the Security Holder received or was treated as having

indulgence or abstain from perfecting or enforcing any remedies, securities, guarantees or rights which the Security Holder may now or afterwards have from or against the Company or any other person. 9.5 If the Security Holder receives or is treated as having received notice of any subsequent mortgage or charge affecting any of the Mortgaged Property then the Security Holder may open a new account with the Company. If it does not open a new account, it shall nevertheless be treated as it had done so at the time when it received or was treated as having received such notice. From that time all payments made by the Company to the Security Holder shall be credited or be treated as having been credited to the new account. Such payments shall not operate to reduce the amount secured by this deed when the Security Holder received or was treated as having received such notice. 10. APPLICATION OF MONIES
10.1 All monies received by the Security Holder or by the Receiver under or by virtue of this deed shall be applied in the following order; 10.1.1 in the discharge of' all Liabilities having priority to the mortgages and charges hereby created or the matters referred to hereafter in this clause 10.1; in payment of all costs, charges and expenses incurred in or incidental to the exercise or performance (or attempted exercise or performance) of any of the powers or authorities conferred by or in any other way connected with this deed; AND THEN in payment to the Receiver of his remuneration fixed in accordance with clause 8.1 of this deed; AND THEN in payment to the Security Holder of the Secured Monies due to the Security Holder in such order as the Security Holder in its absolute discretion thinks lit; AND THEN in payment to the Company of any surplus.

10.1.2

10.1.3 10.1.4

10.1.5 10.2

Any surplus shall not carry interest. The Receiver or the Security Holder may pay any surplus into any of the Company's bank accounts including an account opened specifically for such purpose. The Security Holder shall then have no further liability for such surplus. Following the enforcement of this security, any monies received by the Security Holder may be appropriated by the Security Holder in its discretion in or towards the payment and discharge of any part of the Secured Monies. The Security Holder or the Receiver may credit any monies to a suspense account for so long and in such manner as the Security Holder may from time to time determine. The Receiver may retain the same for such period as the Receiver and the Security Holder consider expedient. All monies received by the Company under any insurance policy on the Mortgaged Property shall be treated as part of the Mortgaged Property subject only to any rights of third parties having priority and to the requirements of any lease of the Mortgaged Property. They shall be

10.3

10.4

10.5

-15-

applied at the discretion of the Security Holder either in reducing the Secured Monies or towards making good the loss or damage for which the monies became payable. Any monies received by the Company under any insurance on the Mortgaged Property shall be held on trust for payment to the Security Holder pending such application. 11. PROTECTION OF THIRD PARTIES
11.1 No person paying or handing over monies to the Receiver and obtaining a discharge shall have any responsibility or liability to see to their correct application.

applied at the discretion of the Security Holder either in reducing the Secured Monies or towards making good the loss or damage for which the monies became payable. Any monies received by the Company under any insurance on the Mortgaged Property shall be held on trust for payment to the Security Holder pending such application. 11. PROTECTION OF THIRD PARTIES
11.1 No person paying or handing over monies to the Receiver and obtaining a discharge shall have any responsibility or liability to see to their correct application. No person dealing with the Security Holder or the Receiver need enquire : 11.2.1 whether any event has happened giving either the Security Holder or the Receiver the right to exercise any of his powers; as to the propriety or regularity of any act purporting or intending to be an exercise of such powers; as to the validity or regularity of the appointment of any Receiver purporting to act or to have been appointed us such; or whether any money remains owing upon this security.

11.2

11.2.2 11.2.3

11.2.4 11.3

All the protection to purchasers contained in Sections 104 and 107 of the Law of Property Act 1925 shall apply to any person purchasing from or dealing with the Receiver or the Security Holder as if the Secured Monies had become due and the statutory power of sale and appointing a receiver in relation to the Mortgaged Property had arisen on the date of this deed. No person dealing with the Security Holder or the Receiver shall be affected by express notice that any act is unnecessary or improper. H.M. LAND REGISTRY The Company will notify the Security Holder of any freehold or leasehold property which it now owns or which it may own alter the date or this deed. The Company will, upon request and at its cost , join with the Security Holder in registering this security as a fixed charge against any of the freehold or leasehold property of which the Company is now registered or may in future apply to be registered as the proprietor at H.M. Land Registry. The Company hereby applies to the Chief Land Registrar for a restriction to be entered on the Company's title to any land in the following terms: "Except under an order of the .Registrar no disposition or dealing by the proprietor of the land is to be registered or noted without the consent of the proprietor for the time being

11.4

12. 12.1

12.2

of Charge No....................." -16-

13. CONTINUING AND ADDITIONAL SECURITY
13.1 This security is a continuing security. It shall apply to all the Secured Monies despite any interim settlement of account until a final discharge of this security shall be given by the Security Holder to the Company. This security is in addition to and shall not merge or otherwise prejudice or affect any other right or remedy of the Security Holder or any assignment, bill, note, guarantee, mortgage or other security now or in future in favour of the Security Holder or held by or available

13.2

13. CONTINUING AND ADDITIONAL SECURITY
13.1 This security is a continuing security. It shall apply to all the Secured Monies despite any interim settlement of account until a final discharge of this security shall be given by the Security Holder to the Company. This security is in addition to and shall not merge or otherwise prejudice or affect any other right or remedy of the Security Holder or any assignment, bill, note, guarantee, mortgage or other security now or in future in favour of the Security Holder or held by or available to the Security Holder, whether created by the Company or any third party. This security shall not in any way be prejudiced or affected by: 13.3.1 any guarantee, mortgage or other security now or in future held by or available to the Security Holder or by the invalidity of any of them or by the Security Holder now or afterwards dealing with, exchanging, releasing, modifying or abstaining from perfecting or enforcing any of then or any rights which it may now or afterwards have; or by the Security Holder giving time, the payment or indulgence or compounding with the Company or any other persons.

13.2

13.3

13.3.2

14. 14.1

CURRENCY INDEMNITY For the purpose of or pending the discharge of any of the Secured Liabilities secured by this deed the Security Holder or any Receiver appointed hereunder may convert any monies received, recovered or realised under this deed (including the proceeds of any previous conversion) from their existing currency into such other currency as the Security Holder or such Receiver may think fit. Any such conversion shall be effected at the then prevailing spot selling rate of exchange, of the Security Holder's bankers, for such other currency against the existing currency. The Company will indemnify the Security Holder against any shortfall between: 14.2.1 any amount received or recovered by the Security Holder in respect of any of the Secured Liabilities which is converted in accordance with clause 14.1 into the currency in which such liability was payable; and the amount payable to the Security Holder under this deed in the currency of such liability.

14.2

14.2.2

15. 15.1

DISCHARGE Upon payment and complete discharge and performance of all the Secured Liabilities and of all costs, charges and expenses incurred by the Security Holder under or in relation to this deed, the Security Holder shall, at the request and cost or the Company, duly discharge this security and any further security given in accordance with its terms. The Security Holder will also transfer to the Company any of' the Mortgaged Property which has been assigned or transferred to the Security Holder.

-1715.2 The right of the Security Holder to recover the Secured Monies or to enforce the terms of this deed shall not be affected by any payment or any act or thing which may be avoided or adjusted under the laws relating to bankruptcy or insolvency or under Part VI of the Insolvency Act 1986. Any release or discharge given or settlement made by the Security Holder relying on any such payment, act or thing shall be void and of no effect. SERVICE OF NOTICES AND PROCESS

16.

15.2

The right of the Security Holder to recover the Secured Monies or to enforce the terms of this deed shall not be affected by any payment or any act or thing which may be avoided or adjusted under the laws relating to bankruptcy or insolvency or under Part VI of the Insolvency Act 1986. Any release or discharge given or settlement made by the Security Holder relying on any such payment, act or thing shall be void and of no effect. SERVICE OF NOTICES AND PROCESS Except as stated to the contrary herein, any written notice from the Security Holder to the Company and any proceedings issued by the Security Holder requiring service on the Company may be given or served: 16.1.1 by delivering it at or posting it to the Company's registered office or to such other address of the Company advised to and acknowledged by the Security Holder as being effective for the purposes of this clause; or by delivering it at or posting it to any address last known to the Security Holder at which the Company carried on business; by handing it Company's officers; by a fax or e-mail to the Company's number or address advised to and acknowledged by the Security Holder as suitable for communication between the parties.

16. 16.1

16.1.2 16.1.3 16.1.4

16.2

Any such notice or process shall be considered served: 16.2.1 16.2.2 16.2.3 16.2.4 if if if if delivered - at the time of delivery; or sent by post - 48 hours from the time of posting; or sent by fax or e-mail - at the time of transmission; or handed over - at the time of handing over.

16.3

Any notice in writing by the Company to the Security Holder required hereunder shall take effect at the time it is received by the Security Holder at its registered office or at such other address the Security Holder may advise in writing to the Company for this purpose. JURISDICTION This deed shall be interpreted and shall be governed by the laws of England. The Company will accept the non-exclusive jurisdiction of the English Courts in connection with any matter arising under this deed. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS BY COMPANY The Company certifies that the execution of this deed has been duly authorised by a resolution of the Company's Board of Directors and that it does not break any of the provisions of the Company's Memorandum and Articles of Association or of any other Encumbrance, security or agreement entered into prior to the date of this deed or the laws of any jurisdiction applying to the Company.

17. 17.1

18. 18.1

-1818.2 The Company represents and warrants to the Security Holder that: 18.2.1 it is and will at all times be the sole beneficial owner with full title guarantee of all the Mortgaged Property and that no Encumbrances affect it except the Encumbrances (if any) set out in the Fourth Schedule and general liens in the ordinary course of business; it has and will at all times have the necessary power to enter into and perform its obligations under this deed; this deed constitutes its legal, valid, binding and enforceable obligations and is an effective security over all and every part of the Mortgaged Property in accordance with its terms; all necessary authorisations and consents to enable or entitle it to enter into this deed have been obtained and these will remain in full force and effect during the existence or this security;

18.2.2 18.2.3

18.2.4

18.2

The Company represents and warrants to the Security Holder that: 18.2.1 it is and will at all times be the sole beneficial owner with full title guarantee of all the Mortgaged Property and that no Encumbrances affect it except the Encumbrances (if any) set out in the Fourth Schedule and general liens in the ordinary course of business; it has and will at all times have the necessary power to enter into and perform its obligations under this deed; this deed constitutes its legal, valid, binding and enforceable obligations and is an effective security over all and every part of the Mortgaged Property in accordance with its terms; all necessary authorisations and consents to enable or entitle it to enter into this deed have been obtained and these will remain in full force and effect during the existence or this security; the Company has acquired, maintained and complied with all Environmental Licences (if any) needed for its use or occupation of the Mortgaged Property or for the conduct of its current business; the Company has complied with all other applicable Environmental Laws and has not done or permitted any act or omission whereby its Environmental Licences (if any) could be varied or revoked; so far as the Company is aware there has been no discharge, spillage, release or emission of any prescribed, dangerous, noxious or offensive substance or any controlled waste on, into or from any of the Mortgaged Property or any premises adjoining any part of it; and no such substances or any controlled waste have been stored or disposed of on or in any part of the Mortgaged Property or, so far as the Company is aware, in any adjoining premises except in accordance with the requirements of the applicable Environmental Laws; the Company is not in breach of and has not incurred or become subject to any civil or criminal liability under any Environmental Laws or the terms of any Environmental Licence; the Company has obtained and maintained all such insurance policies as would be maintained by prudent companies carrying on business of the type carried on by the Company at all relevant times and has complied in all material respects with the terms and conditions or such policies.

18.2.2 18.2.3

18.2.4

18.2.5

18.2.6

18.2.7

18.2.8

18.2.9

18.3

The Company undertakes that no Encumbrances (other than a general lien in the ordinary course of business) ranking in priority to or pari passu with the charges created by this deed will arise after the date of this deed over the Mortgaged Property. TRANSFERS AND DISCLOSURES This deed is freely transferable by the Security Holder. References in this deed to the Security Holder's shall include its successors, assignees and transferees. The Company may not assign or transfer any of its obligations under this deed. Nor may the Company enter into any transaction which would result in any such obligations passing to another person.

19. 19.1

19.2

-1919.3 The Security Holder may disclose any information about the Company and any member of the Company's Group and any other person connected or associated with it to any member of the Security Holder's Group and/or to any person to whom it: is proposing to transfer or assign or has transferred or assigned this deed. The Company represents and warrants that it has and (so far as permitted by law) will maintain any necessary authority by or on behalf or any such persons to agree to the provisions of this clause. MISCELLANEOUS No delay or omission on the part of the Security Holder in exercising

20. 20.1

19.3

The Security Holder may disclose any information about the Company and any member of the Company's Group and any other person connected or associated with it to any member of the Security Holder's Group and/or to any person to whom it: is proposing to transfer or assign or has transferred or assigned this deed. The Company represents and warrants that it has and (so far as permitted by law) will maintain any necessary authority by or on behalf or any such persons to agree to the provisions of this clause. MISCELLANEOUS No delay or omission on the part of the Security Holder in exercising any right or remedy under this deed shall impair that right or remedy or operate as or be taken to be a waiver of it. Any single, partial or defective exercise of any such right or remedy shall not prevent the further exercise of that or any other right or remedy. The Security Holder's rights under this deed are cumulative. They are not exclusive of any rights provided by law. They may be exercised from time to time and as often as the Security Holder sees fit. Any waiver by the Security Holder of any terms of this deed or any consent or approval given by the Security Holder under it shall only be effective if given in writing. Such consent and approval shall then only apply for the purpose stated and be subject to any written terms and conditions imposed by the Security Holder. If at any time any one or more of the provisions of this deed is or becomes illegal, invalid or enforceable in any respect under the laws of any jurisdiction then neither the legality, validity or enforceability of the remaining provisions of this deed nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall be in any way affected or impaired as a result. Any certificate signed by a director or authorised officer of the Security Holder us to the amount of the Secured Monies at the date of such certificate shall, in the absence of manifest error, be conclusive evidence of such amount and be binding on the Company. This deed may be executed in any number of counterparts. It will then be as effective as if all signatures on the counterparts were on a single copy or this deed. The paper on which this deed is written is, and will remain at all times, the property of the Security Holder, even after the discharge of this security. DEFINITIONS AND INTERPRETATION In this deed any words whose meaning is defined in the Financing Agreement shall have the same meaning. In this deed the following words shall have the meaning set out after each of them: "ACT OF DEFAULT" - in relation to the Company - any event set out in clause 6.1;

20. 20.1

20.2

20.3

20.4

20.5

20.6

20.7

21. 21.1

21.2

-20-

"DEBTS"; has the same meaning as in the Financing Agreement; "ENCUMBRANCE" - any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention, flawed asset agreement, preferential right, trust arrangement or other security arrangement, whether by law or agreement. "ENVIRONMENTAL LAW"; - all laws, directions and regulations and all codes of practice, circulars and guidance notes issued by any competent authority or agency (whether in the United Kingdom or elsewhere and

"DEBTS"; has the same meaning as in the Financing Agreement; "ENCUMBRANCE" - any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, title retention, flawed asset agreement, preferential right, trust arrangement or other security arrangement, whether by law or agreement. "ENVIRONMENTAL LAW"; - all laws, directions and regulations and all codes of practice, circulars and guidance notes issued by any competent authority or agency (whether in the United Kingdom or elsewhere and whether or not having the force of law) concerning the protection of the environment or human health, including without limitation the conservation of natural resources, the production, storage, transportation, treatment, recycling or disposal of any waste or any noxious, offensive or dangerous substance or the liability of any person, whether civil or criminal, for any damage to or pollution of the environment or the rectification thereof or any related mutters. "ENVIRONMENTAL LICENCE"; - any permit, licence, authorisation, consent or other approval required by any Environmental Law. "FINANCING AGREEMENT"; - the agreement (if any) for the sale and purchase or Debts and/or a conditional sale agreement and/or any other type of agreement between the Company and the Security Holder, details of which are set out in the Second Schedule and any amendments or alterations to it or them and any replacement of it which may he agreed between the parties. "GROUP"; - IN RELATION TO ANY COMPANY, that company, the company and its Subsidiaries, its holding company (as defined in Section 736 of the Companies Act 1985) and the Subsidiaries of that holding company. "INSOLVENT"; - the happening of any of the following events in relation to the Company: 1. a distress or execution being levied on or issued against any of the Mortgaged Property; 2. entering or seeking to enter into any formal scheme of arrangement of its affairs or composition in satisfaction of its debts with its creditors in accordance with the insolvency Act 1986; 3. taking any corporate action by the Company for its winding up, dissolution or re-organisation (otherwise than for the purposes of an amalgamation or reconstruction while solvent on terms previously approved in writing by the Security Holder) or for the appointment of a Receiver, administrator, trustee or similar officer to in respect of it all or any part of its revenue or assets; 4. a petition being presented or an order being made for the winding up of the Company; 5. an administration order being made or applied for; 6. a meeting of creditors being called for winding up the Company or for any other purpose referred to in the insolvency Act 1986; 7. a statutory demand under the Insolvency Act 1986 being served; -21-

8. an encumbrancer taking possession of any part of the undertaking or properly of the Company or a Receiver or being appointed over it; 9. entering into any informal arrangement or composition with or for the benefit of the Company's general body of creditors; 10. being unable to pay its debts as they become due; 11. being deemed insolvent under the insolvency Act 1986; 12. the appointment of an administrator by the holder all qualifying floating charge under Schedule B1 to Insolvency Act 1986 (introduced by the Enterprise Act 2002); and 13. taking any steps towards a moratorium under the Insolvency Act 2000. "INTELLECTUAL PROPERTY" - all patents (including applications, improvements, prolongations, extensions and right to apply therefor) designs (whether registered or unregistered) copyrights, design rights, trade marks and service marks (whether registered or unregistered) utility models, trade and business names, know-how, formulae, inventions, confidential information, trade secrets and computer software programs and systems

8. an encumbrancer taking possession of any part of the undertaking or properly of the Company or a Receiver or being appointed over it; 9. entering into any informal arrangement or composition with or for the benefit of the Company's general body of creditors; 10. being unable to pay its debts as they become due; 11. being deemed insolvent under the insolvency Act 1986; 12. the appointment of an administrator by the holder all qualifying floating charge under Schedule B1 to Insolvency Act 1986 (introduced by the Enterprise Act 2002); and 13. taking any steps towards a moratorium under the Insolvency Act 2000. "INTELLECTUAL PROPERTY" - all patents (including applications, improvements, prolongations, extensions and right to apply therefor) designs (whether registered or unregistered) copyrights, design rights, trade marks and service marks (whether registered or unregistered) utility models, trade and business names, know-how, formulae, inventions, confidential information, trade secrets and computer software programs and systems (including the benefit of any licences or consents relating to any of the above) and all fees, royalties or other rights derived therefrom or incidental thereto in any part or the world. "MORTGAGED PROPERTY"; - the subject matter of the mortgages and charges (or any or any part of them, if the context so allows) created by this deed and set out at clause 2. "NON VESTING DEBTS"; - all or any Debts of the Company to be purchased by the Security Holder pursuant to the Financing Agreement but which fail to vest absolutely and effectively in the Security Holder for any reason, together with the Related Rights to such Debts. "OTHER DEBTS"; - all sums due and owing or accruing due and owing to the Company whether or not on account of its trading both present and future except: 1. Non-Vesting Debts; and 2. any Debts whilst they remain absolutely and effectively vested in or held on trust for the Security Holder under the `Financing Agreement and whether such vesting results from a legal or equitable assignment. "RECEIVER"; - includes a receiver or a manager or a receiver and manager or an administrative receiver as defined in Section 29(2) of the Insolvency Act 1986 or a receiver of part only of the property of the Company or a receiver only of the income arising from such property or from part of it. - includes an administrator appointed or to be appointed by the Security Holder under Schedule B1 to the Insolvency Act 1986 (introduced by the Enterprise Act 2002) (where this deed constitutes a qualifying floating charge under that Act); "RELATED RIGHTS"; - has the same meaning as in the Financing Agreement. -22-

"REMITTANCES"; - cash, cheques, bills of exchange, negotiable and non-negotiable instruments, letters of credit, orders, drafts, promissory notes, electronic payments and any other instruments, methods or forms of payment or engagement. "SECURED LIABILITIES"; - both the Secured Monies and the obligations and liabilities in clause 1.1.2. "SECURED MONIES"; - all the monies which now or at any time to future may be owing due and/or payable (but remaining unpaid) by the Company to the Security Holder in any manner and for any reason on any account; Secured Monies include all such monies due by the Company, either alone or jointly with any other person or on any partnership account (even though the whole or any part of such monies is represented or secured by any mortgages, guarantees, trust receipts, bills of exchange, leasing, hire or conditional sale agreements, assignments, agreements for discounting or factoring of Debts or any other agreements or securities) and whether or not any or them have or has fallen due or become payable and whether or not default shall have been made in respect thereof, Secured Monies also means any or the following items, whether now or in the future:

"REMITTANCES"; - cash, cheques, bills of exchange, negotiable and non-negotiable instruments, letters of credit, orders, drafts, promissory notes, electronic payments and any other instruments, methods or forms of payment or engagement. "SECURED LIABILITIES"; - both the Secured Monies and the obligations and liabilities in clause 1.1.2. "SECURED MONIES"; - all the monies which now or at any time to future may be owing due and/or payable (but remaining unpaid) by the Company to the Security Holder in any manner and for any reason on any account; Secured Monies include all such monies due by the Company, either alone or jointly with any other person or on any partnership account (even though the whole or any part of such monies is represented or secured by any mortgages, guarantees, trust receipts, bills of exchange, leasing, hire or conditional sale agreements, assignments, agreements for discounting or factoring of Debts or any other agreements or securities) and whether or not any or them have or has fallen due or become payable and whether or not default shall have been made in respect thereof, Secured Monies also means any or the following items, whether now or in the future: 1. all monies due or payable under the Financing Agreement (if any) or by virtue of any guarantee or indemnity given by the Company to the Security Holder; 2. all advances which the Security Holder has made or shall make to the Company; 3. any indebtedness now or hereafter to be incurred by the Security Holder for or at the request of the Company, including all monies which the Security Holder shall pay or become liable to pay for or on account of the Company or any other person at the request or order of the Company or under its authority, either alone or jointly with any other person and whether or not by any of the following: 3.1 the Security Holder making direct advances; or 3.2 the Security Holder drawing, accepting, endorsing, paying or discounting any Remittance; or 3.3 the Security Holder entering into any bond, guarantee, indemnity or letter of credit; or 3.4 the Security Holder confirming orders; or 3.5 the Security Holder otherwise accepting any other liability for or on behalf of the Company; 4. all monies which the Security Holder can charge to the Company and all costs charges and expenses incurred by the Security Holder following default in payment of any such monies or of breach by the Company of any of the provisions of this deed. 5. the charges of surveyors and/or solicitors instructed by the Security Holder in connection with any part or the Mortgaged Property. 6. all costs and charges and expenses which the Security Holder may from time to time incur in: 6.1 stamping, perfecting, registering or enforcing this security; or -23-

6.2 the negotiations for the preparation and execution of this deed, and the Financing Agreement or any guarantee, indemnity, priority arrangement, waiver or consent in respect or them; or 6.3 obtaining payment or discharge of Secured Monies; or 6.4 paying any rent, rates, taxes or outgoings for the Mortgaged Property; or 6.5 insuring, repairing, maintaining, managing or realising any part of the Mortgaged Property; or 6.6 the preservation or exercise of any rights under or in connection with this deed or any attempt to do so; or 6.7 giving a discharge or release of this security; or 6.8 dealing with or obtaining advice about any other matter or question arising out of or in connection with this deed with the intention that the Security Holder shall be afforded a full complete and unlimited indemnity against all costs, charges and expenses paid or incurred by it and whether arising directly or indirectly in respect of this security or of any other security held by the Security Holder for the Secured Monies; 7. all monies expended by any attorney appointed under clause 5.3 in exercising his powers; 8. interest on all monies due and owing to the Security Holder at such rate as may from time to time be payable pursuant to any agreement or arrangement relating thereto. "SECURITIES"; - all stocks, shares, bonds and securities of any kind whatsoever and whether marketable or otherwise and all other interests (including but not limited to loan capital) both present and future held by the Company in any person and includes all allotments, rights, benefits and advantages whatsoever at any time

6.2 the negotiations for the preparation and execution of this deed, and the Financing Agreement or any guarantee, indemnity, priority arrangement, waiver or consent in respect or them; or 6.3 obtaining payment or discharge of Secured Monies; or 6.4 paying any rent, rates, taxes or outgoings for the Mortgaged Property; or 6.5 insuring, repairing, maintaining, managing or realising any part of the Mortgaged Property; or 6.6 the preservation or exercise of any rights under or in connection with this deed or any attempt to do so; or 6.7 giving a discharge or release of this security; or 6.8 dealing with or obtaining advice about any other matter or question arising out of or in connection with this deed with the intention that the Security Holder shall be afforded a full complete and unlimited indemnity against all costs, charges and expenses paid or incurred by it and whether arising directly or indirectly in respect of this security or of any other security held by the Security Holder for the Secured Monies; 7. all monies expended by any attorney appointed under clause 5.3 in exercising his powers; 8. interest on all monies due and owing to the Security Holder at such rate as may from time to time be payable pursuant to any agreement or arrangement relating thereto. "SECURITIES"; - all stocks, shares, bonds and securities of any kind whatsoever and whether marketable or otherwise and all other interests (including but not limited to loan capital) both present and future held by the Company in any person and includes all allotments, rights, benefits and advantages whatsoever at any time accruing, offered or arising in respect of or incidental to the same and all money or property offered at any time by way of dividend, conversion, redemption, bonus, preference, option or otherwise in respect thereof. "SECURITY HOLDER"; - where the context permits includes its officers, agents and representatives. "SUBSIDIARY"; 1. 2. a subsidiary within the meaning of Section 736 of the Companies Act 1985; and unless the context otherwise requires, a subsidiary undertaking within the meaning of Sections 258-260 of the Companies Act 1985 its substituted by Section 21 of the Companies Act 1989.

21.3

In the construction and interpretation of this deed: 21.3.1 the singular shall include the plural and vice versa; reference to one gender shall include a reference to any other genders;

-2421.3.2 references to persons shall be treated as including individuals, firms, partnerships, corporations, organs of government, whether local, national or supra national and any other entity recognised by law; references to any Act of Parliament shall be treated as including each Act as amended, modified or re-enacted from time to time and all rules, regulations, orders and subordinate legislation made in accordance with it; references to clauses and to schedules are to those in this deed; where the Company has an obligation to carry out an act then it shall be fully responsible for the costs and expenses or doing so; where the Security Holder acts in accordance with this deed the Company will indemnify the Security Holder against all costs and expenses incurred; where any discretion is vested in a Receiver or the Security Holder it shall be treated as an absolute discretion; each of the provisions of this deed shall be severable and distinct from one another; references to this deed and other documents referred

21.3.3

21.3.4 21.3.5

21.3.6

21.3.7

21.3.8 21.3.9

references to persons shall be treated as including individuals, firms, partnerships, corporations, organs of government, whether local, national or supra national and any other entity recognised by law; 21.3.3 references to any Act of Parliament shall be treated as including each Act as amended, modified or re-enacted from time to time and all rules, regulations, orders and subordinate legislation made in accordance with it; 21.3.4 references to clauses and to schedules are to those in this deed; 21.3.5 where the Company has an obligation to carry out an act then it shall be fully responsible for the costs and expenses or doing so; 21.3.6 where the Security Holder acts in accordance with this deed the Company will indemnify the Security Holder against all costs and expenses incurred; 21.3.7 where any discretion is vested in a Receiver or the Security Holder it shall be treated as an absolute discretion; 21.3.8 each of the provisions of this deed shall be severable and distinct from one another; 21.3.9 references to this deed and other documents referred to in it includes any supplemental or collateral document to each of them or which is entered into pursuant to each of them and any document varying, supplementing, novating or replacing the same from time to time; 21.3.10 references to charges shall be treated as references to mortgages and charges created by this deed; 21.3.11 references to this security shall be treated as reference to the security created by this deed; 2.1.3.12 any powers given in this deed to an administrator shall apply to the littlest extent permitted by the insolvency Act 1986; 21.3.13 headings to clauses are for reference only and shall not affect the interpretation of this deed; 21.3.14 the meaning of general words introduced by the word other or the word otherwise shall not be limited by reference to any preceding word or enumeration indicating a particular class of acts, matters or things.

21.3.2

-25-

FIRST SCHEDULE (Page 3 - The Parties) The Company Xcel Power Systems Limited, a Company registered in England and Wales with Companies Registry number 00575679 and whose registered office is at: Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB SECOND SCHEDULE (Clause 21 (Definition of "Financing Agreement"), Clauses 1.11 and 6.1.1) The Agreement for the purchase of Debts entered into between the Company and the Security Holder dated THIRD SCHEDULE (Clause 2.1.1) Land Registered at H.M. Land Registry None

FIRST SCHEDULE (Page 3 - The Parties) The Company Xcel Power Systems Limited, a Company registered in England and Wales with Companies Registry number 00575679 and whose registered office is at: Brunswick Road, Cobbs Wood, Ashford, Kent TN23 1EB SECOND SCHEDULE (Clause 21 (Definition of "Financing Agreement"), Clauses 1.11 and 6.1.1) The Agreement for the purchase of Debts entered into between the Company and the Security Holder dated THIRD SCHEDULE (Clause 2.1.1) Land Registered at H.M. Land Registry None London Borough/County and District Title Numbers and Description FOURTH SCHEDULE (Clauses 2.4 and 18.2.l) Encumbrances to which this security is subject. FIFTH SCHEDULE (Clause 2.1.2(iv)) (Plant and machinery subject to chattel mortgage hereunder) To be Advised -26-

IN WITNESS whereof the parties have executed this deed on the 28 day of June 2005 which is the date on which this deed becomes effective. THE COMPANY
EXECUTED AND DELIVERED AS A DEED BY XCEL POWER SYSTEMS LIMITED ) ) ) )

IN WITNESS whereof the parties have executed this deed on the 28 day of June 2005 which is the date on which this deed becomes effective. THE COMPANY
EXECUTED AND DELIVERED AS A DEED BY XCEL POWER SYSTEMS LIMITED ) ) ) ) ) ) ) ) ) )

and by ........................ (Director)**

Signature of Director

and** .........................

(* Director/Company Secretary ) Signature of *Director/Company ) Secretary THE SECURITY HOLDER
SIGNED and :DELIVERED as a Deed on day of LLOYDS TSB COMMERCIAL FINANCE LIMITED by 1.** duly appointed attorney 2.** duly appointed attorney

on behalf of ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Attorney (s) for Lloyds TSB Commercial Finance imited

In the presence of: Signature: .................................. Name:** Occupation: Address: .................................. .................................. .................................. ..................................

Witness (only required if one attorney signs)

Key ** insert full names * delete as applicable -27-

EXHIBIT 31 CERTIFICATIONS I, Carmine T. Oliva, certify that: 1. I have reviewed this Form 10-Q of Emrise Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of,

EXHIBIT 31 CERTIFICATIONS I, Carmine T. Oliva, certify that: 1. I have reviewed this Form 10-Q of Emrise Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted pursuant to SEC Release 34-47986] for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted pursuant to SEC Release 34-47986]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 14, 2005

/s/ CARMINE T. OLIVA ----------------------------------------------------Carmine T. Oliva Chief Executive Officer (principal executive officer)

I, Randolph D. Foote, certify that:

I, Randolph D. Foote, certify that: 1. I have reviewed this Form 10-Q of Emrise Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [language omitted pursuant to SEC Release 34-47986] for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted pursuant to SEC Release 34-47986]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 14, 2005

/s/ RANDOLPH D. FOOTE ----------------------------------------------------Randolph D. Foote Chief Financial Officer (principal financial officer)

EXHIBIT 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

EXHIBIT 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report on Form 10-Q of Emrise Corporation (the "Company") for the period ended September 30, 2005 (the "Report"), the undersigned hereby certify in their capacities as Chief Executive Officer and Chief Financial Officer of the Company, respectively, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 14, 2005 By: /s/ CARMINE T. OLIVA ----------------------------Carmine T. Oliva Chief Executive Officer (principal executive officer)

Dated: November 14, 2005

By: /s/ RANDOLPH D. FOOTE ----------------------------Randolph D. Foote Chief Financial Officer (principal financial officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.