SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 2, 2005
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EMRISE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 001-10346 77-0226211
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9485 HAVEN AVENUE, SUITE 100, RANCHO CUCAMONGA, CALIFORNIA 91730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (909) 987-9220
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 2, 2005, Emrise Corporation ("Emrise") and XCEL Corporation
Limited, a wholly-owned subsidiary of Emrise ("XCEL"), entered into an agreement
("Purchase Agreement") relating to the acquisition of Pascall Electronic
(Holdings) Limited ("Pascall") by XCEL.
Pascall is a wholly-owned subsidiary of Intelek Properties Limited,
which itself is one of five operating subsidiaries of Intelek PLC, a London
Stock Exchange public limited company. Pascall and its wholly-owned subsidiary,
Pascall Electronics Limited, produce, design, develop, manufacture and sell
power supplies and radio frequency products for a broad range of applications,
including in-flight entertainment systems and military programs.
Under the Purchase Agreement, XCEL has agreed to purchase all of the
outstanding capital stock of Pascall. The initial purchase price is 3,100,000
British pounds sterling (approximately U.S. $5,952,000 based on the exchange
rate in effect on March 2, 2005). The purchase price is to be payable in cash
and is subject to upward or downward adjustment based upon the value of the net
assets of PEL, calculated as of the closing date, and based upon various other
payments that may be made to XCEL under indemnity, tax or warranty provisions of
the Purchase Agreement.
Closing of the transactions contemplated under the Purchase Agreement
is contingent upon approval by the shareholders of Intelek PLC, which is
expected to occur on or about March 18, 2005.
Emrise has agreed to lend to Pascall at the closing 1,600,000 British
pounds sterling (approximately U.S. $3,072,000 based on the exchange rate in
effect on March 2, 2005) in accordance with the terms of a loan agreement to be
entered into at the closing. The loaned funds are to be used by Pascall to
immediately repay its outstanding intercompany debt to Intelek Properties
Limited.
Emrise and Intelek PLC have agreed to guarantee payment when due of all
amounts payable by XCEL and Intelek Properties Limited, respectively, under the
Purchase Agreement. Intelek Properties Limited has agreed to various restrictive
covenants that will apply for various periods following the closing. The
covenants include non-competition with Pascall's business, non-interference with
Pascall's customers and suppliers, and non-solicitation of Pascall's employees.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 7, 2005 EMRISE CORPORATION
By: /S/ RANDOLPH D. FOOTE
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Randolph D. Foote, Chief Financial Officer
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