8-K

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): January 13, 2004

NUMEREX CORP.
(Exact Name of Issuer as Specified in Charter)

Pennsylvania	0-22920	11-2948749
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer
of incorporation)		Identification No.)

1600 Parkwood Circle, Suite 200
Atlanta, Georgia

(Address of principal executive offices)

30339-2119

(Zip code)

(770) 693-5950

(Registrant’s telephone number, including area code)

Item 5. Other Events

     On January 13, 2004, Numerex Corp. (the “Company”) completed a private placement to Laurus Master Fund, Ltd. (“Laurus”) of (i) a Convertible Term Note in the principal amount of $4,500,000 (the “Company Note”), and (ii) a Common Stock Purchase Warrant (the “Warrant” and together with the Company Note, the “Securities”) to purchase up to 300,000 shares of the Company’s Class A common stock, no par value per share (“Common Stock”). The Company received net proceeds of approximately $4.27 million that will be used to retire the debt owed to BellSouth Personal Communications LLC and to provide additional working capital.

     The Company Note has a term of three years and is secured by substantially all of the assets of the Company and its U.S. subsidiaries. Each of the Company’s U.S. subsidiaries also has provided a guaranty to Laurus. The Company’s Australian subsidiary, DCX Systems Australia Pty Limited, was a signatory of the Guaranty and the Security Agreement, but has subsequently been released from its obligations under each of those agreements.

     Interest accrues on the Company Note at an annual rate of 8%, and interest and principal may be paid by the Company in either cash or in Common Stock. The Company may only use Common Stock to make such payment if the price per share of its Common Stock is greater than $5.02. However, the entire principal amount of the Company Note, and any accrued interest thereon, may be converted by Laurus into the Company’s Common Stock at a price equal to $4.56 per share (the “Fixed Conversion Price”), subject to the limitations in the paragraph below. If the amount due and payable is paid by the Company using Common Stock, the number of shares to be issued to Laurus by the Company will be determined based upon the Fixed Conversion Price. Otherwise, cash payments of interest and principal due on the Company Note must be paid at 102% of the amount then payable.

     During the six-month period following the effectiveness of a registration statement (as discussed below) and if no Event of Default (as defined in the terms of the Company Note) has occurred, Laurus may not voluntarily convert, on a monthly basis, a portion of the Company Note that exceeds 10% of that number of shares of the Company traded in the one-month period preceding a voluntary conversion by Laurus.

     The Warrant is exercisable by Laurus until January 13, 2011, and has three separate pricing tranches. The first pricing tranche is exercisable for up to 150,000 shares of Common Stock at a price of $4.75 per share. The second pricing tranche is exercisable for up to 100,000 shares of Common Stock at a price of $5.17 per share. The third pricing tranche is exercisable for up to 50,000 shares of Common Stock at a price of $5.99 per share.

     The Company has also agreed to register all of the Common Stock issuable to Laurus pursuant to the Securities, as set forth in a Registration Rights Agreement between the Company and Laurus.

     The information above summarizes, and does not provide a complete description of, the transactions consummating the issuance and sale of the Securities. The above summary is qualified in its entirely by reference to the full text of these documents, which are attached as exhibits hereto.

(c) Exhibits

4.1 Securities Purchase Agreement, dated January 13, 2004, by and between the Company and Laurus

4.2 Convertible Term Note, dated January 13, 2004, by and between the Company and Laurus

4.3 Common Stock Purchase Warrant, dated January 13, 2004, by and between the Company and Laurus

4.4 Security Agreement, dated January 13, 2004, by and among the Company, its U.S. subsidiaries, and Laurus

4.5 Guaranty, dated January 13, 2004, entered into by each of the Company’s U.S. Subsidiaries

4.6 Intercreditor Agreement, dated January 13, 2004, by and among Alethea Limited Partnership, Laurus, the Company and its U.S. subsidiaries

4.7 Registration Rights Agreement, dated January 13, 2004, by and between the Company and Laurus

4.8 Funds Escrow Agreement, dated January 13, 2004, by and among the Company, Laurus and Dechert LLP

99.1 Text of Press Release, dated January 14, 2004.

SIGNATURES

     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.

NUMEREX CORP.

    (Registrant)

    /s/ Stratton Nicolaides

Stratton Nicolaides

President and Chief Executive Officer

Date: January 13, 2004

EX-4.1 3 w93276exv4w1.txt EXHIBIT 4.1 EXHIBIT 4.1 SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into as of January 13, 2004, by and between NUMEREX CORP., a Pennsylvania corporation (the "COMPANY"), and LAURUS MASTER FUND, LTD., a Cayman Islands company (the "PURCHASER"). RECITALS WHEREAS, the Company has authorized the sale to the Purchaser of a Convertible Term Note in the aggregate principal amount of four million five hundred thousand dollars ($4,500,000) (the "NOTE"), which Note is convertible into shares of the Company's common stock, no par value per share (the "COMMON STOCK") at a fixed conversion price of $4.56 per share of Common Stock ("FIXED CONVERSION PRICE"); WHEREAS, the Company wishes to issue a warrant to the Purchaser to purchase up to 300,000 shares (subject to adjustment in accordance with the terms thereof) of the Company's Common Stock in connection with Purchaser's purchase of the Note; WHEREAS, Purchaser desires to purchase the Note and Warrant on the terms and conditions set forth herein; and WHEREAS, the Company desires to issue and sell the Note and Warrant to Purchaser on the terms and conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. Pursuant and subject to the terms and conditions set forth in this Agreement, on the Closing Date (as defined in Section 3), the Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company a Note in the amount of $4,500,000 convertible in accordance with the terms thereof into shares of the Company's Common Stock in accordance with the terms of the Note and this Agreement. The Note purchased on the Closing Date shall be known as the "OFFERING." A form of the Note is annexed hereto as Exhibit A. The Note will have a Maturity Date (as defined in the Note) thirty six (36) months from the date of issuance, subject to acceleration in accordance with the terms thereof. Collectively, the Note and Warrant (as defined in Section 2) and Common Stock issuable in payment of the Note, upon conversion of the Note and upon exercise of the Warrant are referred to as the "SECURITIES". 2. FEES AND WARRANT. On the Closing Date: (a) The Company will issue and deliver to the Purchaser a Warrant to purchase up to 300,000 shares (subject to increase in accordance with the terms thereof) of Common Stock in connection with the Offering (the "WARRANT") pursuant to Section 1 hereof. The Warrant must be delivered on the Closing Date. A form of Warrant is annexed hereto as Exhibit B. All the representations, covenants, warranties, undertakings, and indemnification, and other rights made or granted to or for the benefit of the Purchaser by the Company are hereby also made and granted in respect of the Warrant and shares of the Company's Common Stock issuable upon exercise of the Warrant (the "WARRANT SHARES"). (b) Upon execution and delivery of this Agreement by the Company and Purchaser, the Company shall pay to Laurus Capital Management, LLC, manager of Purchaser (i) a closing payment in an amount equal to three and one half percent (3.5%) of the aggregate principal amount of the Note. The foregoing fee is referred to herein as the "CLOSING PAYMENT". (c) The Company shall reimburse the Purchaser for its reasonable legal fees for services rendered to the Purchaser in preparation of this Agreement and the Related Agreements (as hereinafter defined), and expenses in connection with the Purchaser's due diligence review of the Company and relevant matters. Amounts required to be paid hereunder will be paid at the Closing and shall not exceed $35,000 for legal expenses and $7,500 for performing due diligence inquiries on the Company. (d) The Closing Payment, legal fees and due diligence fees (net of deposits previously paid by the Company) shall be paid at closing out of funds held pursuant to a Funds Escrow Agreement of even date herewith among the Company, Purchaser, and the escrow agent named therein (the "FUNDS ESCROW AGREEMENT") and a disbursement letter (the "DISBURSEMENT LETTER"). 3. CLOSING, DELIVERY AND PAYMENT. 3.1 CLOSING. Subject to the terms and conditions herein, the closing of the transactions contemplated hereby (the "CLOSING"), shall take place on the date hereof, at such time, place or manner as the Company and Purchaser may mutually agree (such date is hereinafter referred to as the "CLOSING DATE"). 3.2 DELIVERY. Pursuant to the Funds Escrow Agreement in the form attached hereto as Exhibit D, at the Closing on the Closing Date, the Company will deliver to the Purchaser, among other things, a Note in the form attached as Exhibit A representing the principal amount of $4,500,000 and a Warrant in the form attached as Exhibit B in the Purchaser's name representing 300,000 Warrant Shares and the Purchaser will deliver to the Company, among other things, the amounts set forth in the Disbursement Letter by wire transfer of immediately available funds. 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to the Purchaser as of the date of this Agreement as set forth below which disclosures are supplemented by, and subject to the Company's filings under the Securities Exchange Act of 1934 and any exhibits thereto (including without limitation any information furnished under cover of Form 8-K) (collectively, 2 the "EXCHANGE ACT FILINGS"). All references herein to the Company's "knowledge" shall refer to the actual knowledge of any officer of the Company. 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Company has the corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, and the Note and the Warrant to be issued in connection with this Agreement, the Security Agreement relating to the Note dated as of the date hereof between the Company and the Purchaser (the "SECURITY AGREEMENT"), the Registration Rights Agreement relating to the Securities dated as of the date hereof between the Company and the Purchaser (the "REGISTRATION RIGHTS AGREEMENT") and all other agreements referred to herein (as each of the same may be amended, modified and supplemented from time to time, collectively, the "RELATED AGREEMENTS"), to issue and sell the Note and the shares of Common Stock issuable upon conversion of the Note (the "NOTE SHARES"), to issue and sell the Warrant and the Warrant Shares, and to carry out the provisions of this Agreement and the Related Agreements and to carry on its business as presently conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would be reasonably expected not to have a material adverse effect on the Company, its Subsidiaries or their assets, condition (financial or otherwise), business or results of operations, taken as a whole (a "MATERIAL ADVERSE EFFECT"). 4.2 SUBSIDIARIES. The Company owns all of the issued and outstanding capital stock or other equity interests of the business entities listed on Schedule 4.2 (the "Subsidiaries"). The Company does not own or control any equity security or other interest of any other corporation, limited partnership or other business entity. 4.3 CAPITALIZATION; VOTING RIGHTS. (a) The authorized capital stock of the Company, as of the date hereof, consists of 38,000,000 shares, of which (i) 30,000,000 are shares of Class A Common Stock, no par value per share, 13,179,620 shares of which are issued and outstanding, (ii) 5,000,000 are shares of Class B Common Stock, no par value per share, none of which are issued and outstanding, and (iii) 3,000,000 are shares of preferred stock, no par value per share, none of which are issued and outstanding. (b) Except as disclosed on Schedule 4.3 or the Exchange Act Filings, other than (i) the shares reserved for issuance under the Company's stock option plans; and (ii) shares which may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Except as disclosed on Schedule 4.3 or the Exchange Act Filings, neither the offer, issuance or sale of any of the Note or Warrant, or the issuance of any of the Note Shares or Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the exercise or conversion price or 3 number of any securities of the Company outstanding pursuant to anti-dilution or other similar provisions binding upon the Company and contained in or affecting any such securities. (c) All issued and outstanding shares of the Common Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities, except where the failure to comply with state "blue sky" laws would not be reasonably expected to have a Material Adverse Effect. (d) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Company's Articles of Incorporation (the "CHARTER") and as provided under applicable law. The Note Shares and Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Company's Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 4.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part of the Company, its officers and directors necessary for the authorization of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder at the Closing and, the authorization, sale, issuance and delivery of the Note and Warrant has been taken or will be taken prior to the Closing. The Agreement and the Related Agreements, when executed and delivered and to the extent it is a party thereto, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, and (b) general principles of equity that restrict the availability of equitable or legal remedies. The sale of the Note and the subsequent conversion of the Note into Note Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. The issuance of the Warrant and the subsequent exercise of the Warrant for Warrant Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. 4.5 LIABILITIES. The Company, to its knowledge, has no material contingent liabilities, except current liabilities incurred in the ordinary course of business and liabilities disclosed in any Exchange Act Filings. 4.6 AGREEMENTS; ACTION. Except as set forth on Schedule 4.6 or as disclosed in any Exchange Act Filings: (a) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it is bound which may involve (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $150,000 (other than obligations of, or payments to, the Company arising from agreements entered into in the ordinary course of business), or (ii) the transfer or license of any patent, copyright, trade secret or other proprietary right to or from the 4 Company (other than licenses arising from the purchase of "off the shelf" or other standard products or licenses by the Company as licensor in the ordinary course of the Company's business consistent with past practices); (iii) provisions restricting the development, manufacture or distribution of the Company's products or services, or (iv) indemnification by the Company with respect to infringements of proprietary rights other than as incidental to licenses by the Company as licensor in the ordinary course of the Company's business consistent with past practices. (b) Except as disclosed in the Exchange Act Filings, since December 31, 2002, the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock or otherwise, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than ordinary course obligations) individually in excess of $150,000 or, in the case of indebtedness and/or liabilities individually less than $150,000, in excess of $250,000 in the aggregate, (iii) made any loans or advances to any person not in excess, individually or in the aggregate, of $150,000, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (c) For the purposes of subsections (a) and (b) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 4.7 OBLIGATIONS TO RELATED PARTIES. Except as set forth on Schedule 4.7, there are no obligations of the Company to officers, directors, or employees of the Company other than (a) for payment of salary for services rendered and for bonus payments, (b) reimbursement for reasonable expenses incurred on behalf of the Company, (c) for employee benefits made available to employees or groups of employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company) and (d) obligations listed in the Company's financial statements or disclosed in any of its Exchange Act Filings. Except as described above or set forth on Schedule 4.7, none of the officers, directors or, to the Company's knowledge, key employees of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $150,000 or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded companies (representing less than 1% of such company) which may compete with the Company. Except as described above, no officer or director, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated between the Company and any such person. Except as set forth on Schedule 4.7 or as disclosed in the Exchange Act Filings, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation other than guaranties of obligations of any of the Subsidiaries. 5 4.8 CHANGES. Since December 31, 2002, except as disclosed in any Exchange Act Filing, Schedule 4.8 or in any other Schedule to this Agreement or to any of the Related Agreements, there has not been. (a) Any change in the assets, liabilities, financial condition, prospects or operations of the Company, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or would reasonably be expected to have a Material Adverse Effect excluding (i) general market, economic or geopolitical conditions affecting the U.S. economy in general and (ii) any such effect resulting from consummation or announcement of the transactions contemplated by this Agreement or the Related Agreements or the Company's or its Subsidiaries' performance of their respective obligations hereunder or thereunder, as the case may be; (b) Any resignation or termination of any officer, key employee or groups of employees of the Company; (c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or other contractual arrangement; (d) Any damage, destruction or loss, whether or not covered by insurance, that has had or would reasonably be expected to have a Material Adverse Effect; (e) Any waiver by the Company of a material right or of a material debt owed to it; (f) Any material change in any compensation arrangement or agreement with any employee, officer or director other than routine annual increases in compensation or promotions or bonuses awarded in the ordinary course; (g) to the Company's knowledge, any labor organization activity related to the Company; (h) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; (i) Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets, other than the nonexclusive license by the Company of any such patents, trademarks, copyrights, trade secrets or other intangible assets to customers, suppliers or contract manufacturers in the ordinary course of the Company's business consistent with past practices; (j) Any change in any material agreement to which the Company is a party or by which it is bound which change has had or would reasonably be expected to have a Material Adverse Effect; 6 (k) Any other event or condition of any character that, either individually or cumulatively, has or would reasonably be expected to have a Material Adverse Effect; or (l) Any arrangement or commitment by the Company to do any of the acts described in subsection (a) through (l) above. 4.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set forth on Schedule 4.9 or as disclosed in the Exchange Act Filings, the Company has good and marketable title to its properties and assets, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, (c) those that have otherwise arisen in the ordinary course of business and (d) those that are to be released upon application of the proceeds of the sale of the Note pursuant to the Disbursement Letter. To the Company's knowledge, all facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. Except as set forth on Schedule 4.9 or as disclosed in the Exchange Act Filings, the Company is in compliance with all material terms of each lease to which it is a party or is otherwise bound. 4.10 INTELLECTUAL PROPERTY. Except as set forth in Schedule 4.10 or as disclosed in the Exchange Act Filings: (a) The Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted (the "INTELLECTUAL PROPERTY"), without, to the knowledge of the Company, any infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing Intellectual Property (other than for licenses of Intellectual Property under which the Company is the licensor in connection with the Company's agreements with suppliers, contract manufacturers, customers or clients in the ordinary course of the Company's business consistent with past practice) nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products. (b) The Company has not received any written communications alleging that the Company has violated any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity. (c) The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been rightfully assigned to the Company. 7 4.11 COMPLIANCE WITH OTHER INSTRUMENTS. Except as set forth on Schedule 4.11 or as disclosed in the Exchange Act Filings, the Company is not in violation or default of any term of its Charter or Bylaws, or of any material provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order or writ. Except as set forth on Schedule 4.11 or as disclosed in the Exchange Act Filings, the execution, delivery and performance of and compliance with this Agreement and the Related Agreements to which it is a party, and the issuance and sale of the Note by the Company and the other Securities by the Company each pursuant hereto, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term or provision, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 4.12 LITIGATION. Except as set forth on Schedule 4.12 hereto or as disclosed in the Exchange Act Filings, there is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company that prevents the Company to enter into this Agreement or the Related Agreements, or to consummate the transactions contemplated hereby or thereby, or which, if adversely determined, would reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 4.12 or as disclosed in the Exchange Act Filings, the Company is not a party or subject to the provisions of any material order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate, which if adversely determined, would reasonably be expected to have a Material Adverse Effect. 4.13 TAX RETURNS AND PAYMENTS. The Company has timely filed all material tax returns (federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns, any assessments imposed, and to the Company's knowledge all other taxes due and payable by the Company on or before the Closing, have been paid or will be paid prior to the time they become delinquent. Except as set forth on Schedule 4.13 or as disclosed in the Exchange Act Filings, the Company has not been advised (a) that any of its returns, federal, state or other, have been or are being audited as of the date hereof, or (b) of any material deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any material liability of any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. 4.14 EMPLOYEES. Except as set forth on Schedule 4.14, the Company has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company's knowledge, threatened with respect to the Company. Except as disclosed in the Exchange Act Filings or on Schedule 4.14, the Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement other than those entered into in the ordinary course. To the Company's knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any material term of any material employment 8 contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business conducted by the Company; and to the Company's knowledge the continued employment by the Company of its present employees, and the performance of the Company's contracts with its independent contractors, will not result in any such violation. To the Company's knowledge, none of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere in any material respect with their duties to the Company. The Company has not received any written notice alleging that any such violation has occurred. Except for employees who have a current effective employment agreement with the Company, no employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. Except as set forth on Schedule 4.14, the Company is not aware that any officer or key employee intends to terminate his, her or their employment with the Company. 4.15 REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, the Company is presently not under any obligation, and has not granted any rights, to register any of the Company's presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, to the Company's knowledge, no stockholder of the Company has entered into any agreement with respect to the voting of equity securities of the Company. 4.16 COMPLIANCE WITH LAWS; PERMITS. Except as set forth on Schedule 4.16, to its knowledge, the Company is not in violation in any material respect of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of any of the Securities, except such as has been duly and validly obtained or filed, or with respect to any filings that may be made after the Closing, as will be filed in a timely manner or except where failure to obtain any such order, permission, consent, approval, or authorization would be reasonably expected not to have a Material Adverse Effect. The Company has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which would materially and adversely affect the business, properties, prospects or financial condition of the Company. 4.17 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, except where the failure to so comply has not had and/or could not reasonably be expected to have a Material Adverse Effect, and to the Company's knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. Except as set forth on Schedule 4.17, no Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company or, to the Company's knowledge, 9 by any other person or entity, in a manner not materially compliant with any applicable statute, law or regulation relating to the environment or occupational health and safety of any property owned, leased or used by the Company. For the purposes of the preceding sentence, "Hazardous Materials" shall mean (a) materials which are listed or otherwise defined as "Hazardous Materials" or "toxic" under any applicable local, state or federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous substances, including building materials, or (b) any petroleum products or nuclear materials. 4.18 VALID OFFERING. Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, the offer, sale and issuance of the Securities will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws except where a failure to comply with state "blue sky" laws would be reasonably expected not to have a Material Adverse Effect. 4.19 FULL DISCLOSURE. The Company has provided the Purchaser with all information requested by the Purchaser in connection with its decision to purchase the Note and Warrant. Neither this Agreement, the exhibits and schedules hereto, the Related Agreements nor any other document delivered by the Company to Purchaser or its attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they are made, not misleading. Any financial projections and other estimates provided to the Purchaser by the Company were based on the Company's experience in the industry and on assumptions of fact and opinion as to future events which the Company, at the date of the issuance of such projections or estimates, believed to be reasonable. 4.20 INSURANCE. The Company has general commercial, product liability, fire and casualty insurance policies with coverages which the Company believes are customary for companies similarly situated to the Company in the same or similar business. 4.21 SEC REPORTS. Except as set forth on Schedule 4.21, the Company has filed all proxy statements, reports and other documents required to be filed by it under the Exchange Act. The Company has furnished the Purchaser with copies of (i) its Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and (ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2003, June 30, 2003 and September 30, 2003, and the Form 8-K filings which it has made during 2003 to date (collectively, the "SEC REPORTS"). Except as set forth on Schedule 4.21, each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 10 4.22 LISTING. The Company's Common Stock is listed for trading on the NASDAQ National Market System and satisfies the requirements for the continuation of such listing in all material respects. The Company has not received any written notice from the NASD or Nasdaq that its Common Stock will be delisted from the NASDAQ National Market System or that its Common Stock does not meet all requirements for listing. 4.23 NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings. 4.24 STOP TRANSFER. The Securities are restricted securities as of the date of this Agreement. The Company will not issue any stop transfer order or other order impeding the sale and delivery of any of the Note Shares or Warrant Shares at such time as they are registered for public sale or an exemption from registration is available, except as required by state and federal securities laws. 4.25 DILUTION. The Company specifically acknowledges that its obligation to issue the shares of Common Stock upon conversion of the Note and exercise of the Warrant is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Company as follows: 5.1 NO SHORTING. Neither the Purchaser nor any of its affiliates or investment partners has or has caused or advised any person or entity, directly or indirectly, to engage in "short sales" of the Company's Common Stock or any other hedging strategies involving the Company's publicly traded securities. 5.2 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and the Related Agreements and to carry out their provisions. All corporate action on Purchaser's part required for the lawful execution and delivery of this Agreement and the Related Agreements have been or will be effectively taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, and (b) as limited by general principles of equity that restrict the availability of equitable and legal remedies. 11 5.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser's representations contained in the Agreement, including, without limitation, that the Purchaser is an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). The Purchaser confirms that it has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Note and the Warrant to be purchased by it under this Agreement and the Note Shares and the Warrant Shares acquired by it upon the conversion of the Note and the exercise of the Warrant, respectively. The Purchaser further confirms that it has had an opportunity to ask questions and receive answers from the Company regarding the Company's business, management and financial affairs and the terms and conditions of the Offering, the Note, the Warrant and the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to the Purchaser or to which the Purchaser had access. 5.4 PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment until the Securities are sold pursuant to (i) an effective registration statement under the Securities Act, or (ii) an exemption from registration is available with respect to such sale. 5.5 ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Note and Warrant and the Note Shares and the Warrant Shares for Purchaser's own account for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution. 5.6 PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of its, or of its management's, business and financial experience, Purchaser has the capacity to evaluate the merits and risks of its investment in the Note, the Warrant and the Securities and to protect its own interests in connection with the transactions contemplated in this Agreement, and the Related Agreements. Further, Purchaser is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement or the Related Agreements. 5.7 ACCREDITED INVESTOR. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act. 5.8 LEGENDS (a) The Note shall bear substantially the following legend: "THIS NOTE AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES 12 LAWS. THIS NOTE AND THE CLASS A COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT REQUIRED." (b) The Note Shares and the Warrant Shares, if not issued by DWAC system (as hereinafter defined), shall bear a legend which shall be in substantially the following form until such shares are covered by an effective registration statement filed with the SEC: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT REQUIRED." (c) The Warrant shall bear substantially the following legend: "THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT REQUIRED." 6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the Purchaser that for so long as the Note is outstanding, the Company shall do as follows: 13 6.1 STOP-ORDERS. The Company will advise the Purchaser, promptly after it receives notice of issuance by the Securities and Exchange Commission (the "SEC"), any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose. 6.2 LISTING. The Company will use commercially reasonable efforts to maintain the listing of its Common Stock on the NASDAQ National Market System or other national securities exchange, and will comply in all material respects with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers ("NASD") and such exchanges, as applicable. 6.3 MARKET REGULATIONS. The Company shall notify the SEC, NASD and, if required under state securities laws, all applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to Purchaser and promptly provide following effectiveness thereof (except as otherwise provided in the Registration Rights Agreement) copies thereof to Purchaser. 6.4 REPORTING REQUIREMENTS. The Company will file with the SEC all reports required to be filed pursuant to the Exchange Act on a timely basis taking into account any and all extensions granted or permitted by the SEC, and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. 6.5 USE OF FUNDS. The Company agrees that it will use the proceeds of the sale of the Note and Warrant for retirement of debt and other obligations and for general corporate purposes only. 6.6 ACCESS TO FACILITIES. The Company will permit any representatives designated by the Purchaser (or any successor of the Purchaser), upon reasonable prior written notice and during normal business hours, at such person's expense and accompanied by a representative of the Company, to (a) visit and inspect any of the properties of the Company, (b) examine the corporate and financial records of the Company (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom and (c) discuss the affairs, finances and accounts of the Company with the officers of the Company. Notwithstanding the foregoing, the Company will not provide any material, non-public information to the Purchaser unless the Purchaser signs a confidentiality agreement and otherwise complies with Regulation FD, under the federal securities laws. 6.7 TAXES. The Company will promptly pay and discharge, or cause to be paid and discharged in all material respects, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if 14 the Company shall have set aside on its books adequate reserves with respect thereto, and provided, further, that the Company will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor. 6.8 INSURANCE. The Company will keep its and its Subsidiaries' assets which are of an insurable character insured by insurers believed by the Company to be financially sound and reputable against loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Company to the extent and in the manner which the Company reasonably believes is customary for companies in similar business similarly situated as the Company and to the extent available on commercially reasonable terms; and the Company will maintain, with insurers believed by the Company to be financially sound and reputable, insurance against other hazards and risks and liability to persons and property to the extent and in the manner which the Company reasonably believes is customary for companies in similar business similarly situated as the Company and to the extent available on commercially reasonable terms. 6.9 INTELLECTUAL PROPERTY. The Company shall maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed by it to be necessary to the conduct of its business. 6.10 PROPERTIES. The Company will use its commercially reasonable efforts to keep its properties in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and the Company will at all times comply in all material respects with each provision of all leases to which it is a party or under which it occupies property if the breach of such provision would reasonably be expected to have a Material Adverse Effect. 6.11 CONFIDENTIALITY. The Company agrees that it will not disclose, and will not include in any public announcement, the name of the Purchaser, unless expressly agreed to by the Purchaser or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. 6.12 REQUIRED APPROVALS. The Company, without the prior written consent of the Purchaser, shall not: (a) directly or indirectly declare or pay any dividends, other than dividends with respect to its preferred stock; (b) liquidate, dissolve or effect a material reorganization; (c) become subject to (including, without limitation, by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict the Company's right to perform the provisions of this Agreement or any of the agreements contemplated thereby; or 15 (d) materially alter or change the scope of the business of the Company. 6.13 REISSUANCE OF SECURITIES. The Company agrees to reissue certificates representing the Securities without the legends set forth in Section 5.7 above at such time as (a) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the Securities Act, or (b) upon resale subject to an effective registration statement after such Securities are registered under the Securities Act. The Company agrees to cooperate with the Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow such resales provided the Company and its counsel receive reasonably requested representations from the selling Purchaser and broker, if any. 6.14 OPINION. On the Closing Date, the Company will deliver to the Purchaser an opinion or opinions acceptable to the Purchaser from the Company's legal counsel. The Company will provide, at the Company's expense, such other legal opinions in the future as are reasonably necessary for the conversion of the Note and exercise of the Warrant. 7. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with the Company as follows: 7.1 CONFIDENTIALITY. The Company agrees that it will not disclose, and will not include in any public announcement, the name of the Purchaser, unless expressly agreed to by the Purchaser or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. 7.2 NON-PUBLIC INFORMATION. The Purchaser agrees not to effect any sales in the shares of the Company's Common Stock while in possession of material, non-public information regarding the Company if such sales would violate applicable securities law. 7.3 NO SHORTING. Neither the Purchaser nor any of its affiliates or investment partners shall or shall cause or advise any person or entity, directly or indirectly, to engage in "short sales" of the Company's Common Stock or any other hedging strategies involving the Company's publicly traded securities. 8. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION. 8.1 COMPANY INDEMNIFICATION. The Company agrees to indemnify, hold harmless, reimburse and defend Purchaser, each of Purchaser's officers, directors, agents, affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Purchaser which results, arises out of or is based upon (i) any misrepresentations by Company or any breach of representation or warranty by Company in this Agreement or in any exhibits or schedules attached hereto or any Related Agreement, or (ii) any breach or default in performance by Company of any covenant or undertaking to be performed by Company hereunder, or any other agreement entered into by the Company and Purchaser relating hereto. 16 8.2 PURCHASER'S INDEMNIFICATION. The Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company and each of the Company's officers, directors, agents, affiliates, control persons and principal shareholders, at all times against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon (i) any misrepresentation by Purchaser or any breach of any representation or warranty by Purchaser in this Agreement or in any exhibits or schedules attached hereto or any Related Agreement; or (ii) any breach or default in performance by Purchaser of any covenant or undertaking to be performed by Purchaser hereunder, or any other agreement entered into by the Company and Purchaser relating hereto. 8.3 PROCEDURES. The procedures and limitations set forth in Section 9.5(c) and (d) shall apply to the indemnifications set forth in Sections 8.1 and 8.2. 9. CONVERSION OF CONVERTIBLE NOTE. 9.1 MECHANICS OF CONVERSION. (a) Provided the Purchaser has notified the Company of the Purchaser's intention to sell the Note Shares and the Note Shares are included in an effective registration statement or are otherwise exempt from registration when sold: (i) Upon the conversion of the Note or part thereof, the Company shall, at its own cost and expense, take all necessary action (together with such other documents as the transfer agent shall request) to assure that the Company's transfer agent shall issue shares of the Company's Common Stock in the name of the Purchaser (or its nominee) or such other persons as designated by the Purchaser in accordance with Section 9.1(b) hereof and in such denominations to be specified representing the number of Note Shares issuable upon such conversion; and (ii) The Company warrants that no instructions other than these instructions have been or will be given to the transfer agent of the Company's Common Stock and that after the Effective Date (as hereinafter defined) the Note Shares issued will be freely transferable subject to the prospectus delivery requirements of the Securities Act and the provisions of this Agreement, and will not contain a legend restricting the resale or transferability of the Note Shares. (b) Purchaser will give notice of its decision to exercise its right to convert the Note or part thereof by telecopying or otherwise delivering an executed and completed notice of the number of shares to be converted to the Company (the "NOTICE OF CONVERSION"). The Purchaser will not be required to surrender the Note until the Purchaser receives a credit to the account of the Purchaser's prime broker through the DWAC system (as defined below), representing the Note Shares or until the Note has been fully satisfied. Each date on which a Notice of Conversion is telecopied or delivered to the Company in accordance with the provisions hereof shall be deemed a "CONVERSION DATE." Pursuant to the terms of the Notice of Conversion, the Borrower will issue instructions to the transfer agent accompanied by an opinion of counsel within one (1) business day of the date of the delivery to Borrower of the Notice of Conversion and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder by crediting the account of the Purchaser's prime broker with the Depository Trust Company ("DTC") through its Deposit Withdrawal Agent Commission 17 ("DWAC") system within three (3) business days after receipt by the Company of the Notice of Conversion (the "DELIVERY DATE"). (c) The Company understands that a delay in the delivery of the Note Shares in the form required pursuant to Section 9 hereof beyond the Delivery Date could result in economic loss to the Purchaser. In the event that the Company fails to direct its transfer agent to deliver the Note Shares to the Purchaser via the DWAC system within the time frame set forth in Section 9.1(b) above and the Note Shares are not delivered to the Purchaser by the Delivery Date, as compensation to the Purchaser for such loss, the Company agrees to pay late payments to the Purchaser for late issuance of the Note Shares in the form required pursuant to Section 9 hereof upon conversion of the Note in the amount equal to the greater of (i) $500 per business day after the Delivery Date or (ii) the Purchaser's actual damages from such delayed delivery. Notwithstanding the foregoing, the Company will not owe the Purchaser any late payments if the delay in the delivery of the Note Shares beyond the Delivery Date is out of the control of the Company and the Company is actively trying to cure the cause of the delay. The Company shall pay any payments incurred under this Section in immediately available funds within three (3) trading days of demand and, in the case of actual damages, the demand shall be accompanied by reasonable documentation of the amount of such damages. Such documentation shall show the number of shares of Common Stock the Purchaser is forced to purchase (in an open market transaction) which the Purchaser anticipated receiving upon such conversion, and shall be calculated as the amount by which (A) the Purchaser's total purchase price (including customary brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate principal and/or interest amount of the Note, for which such Conversion Notice was not timely honored. Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum amount permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to a Purchaser and thus refunded to the Company. 9.2 MAXIMUM CONVERSION. The Purchaser shall not be entitled to convert on a Conversion Date, nor shall the Company be permitted to require the Purchaser to accept, that amount of a Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock actually owned by the Purchaser on a Conversion Date, and (ii) the number of shares of Common Stock issuable upon the conversion of the Note and exercise of the Warrant with respect to which the determination of this proviso is being made on a Conversion Date, which would result in beneficial ownership by the Purchaser of more than 4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Purchaser may void the foregoing conversion limitation upon 75 days prior notice to the Company or without any notice requirement upon the occurrence of an Event of Default. 9.3 REGISTRATION RIGHTS. 18 9.4 REGISTRATION RIGHTS GRANTED. The Company hereby grants registration rights to the Purchaser pursuant to a Registration Rights Agreement dated as of even date herewith between the Company and the Purchaser. 9.5 INDEMNIFICATION. (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to the Registration Rights Agreement, the Company will indemnify and hold harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to the Registration Rights Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Purchaser, and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability (i) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of the Purchaser or any such person in writing specifically for use in any such document or (ii) is pursuant to such Purchaser's use of an outdated or defective prospectus after the Company has provided written notice to such Purchaser that the prospectus is outdated or defective. (b) In the event of a registration of the Registrable Securities under the Securities Act pursuant to the Registration Rights Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact which was furnished in writing by the Purchaser to the Company expressly for use in (and such information is contained in) the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to the Registration Rights Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue 19 statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of the Purchaser specifically for use in any such document. Notwithstanding the provisions of this paragraph, the Purchaser shall not be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by the Purchaser in respect of Registrable Securities in connection with any such registration under the Securities Act. (c) Promptly after receipt by a party entitled to claim indemnification hereunder (an "INDEMNIFIED PARTY") of notice of the commencement of any action, such Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an "INDEMNIFYING PARTY"), notify the Indemnifying Party in writing thereof, but the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 9(c) and shall only relieve it from any liability which it may have to such Indemnified Party under this Section 9(c) if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense, and, after notice from the Indemnifying Party to such Indemnified Party of its election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 9(c) for any legal expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; if the Indemnified Party retains its own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have concluded upon the written opinion of its counsel that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or that the interests of the Indemnified Party could reasonably be expected to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. (d) In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Purchaser, or any officer, director or controlling person of the Purchaser, makes a claim for indemnification pursuant to this Section 9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Purchaser or such officer, director or controlling person of the Purchaser in circumstances for which indemnification is provided under this Section 9; then, and in each such case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities covered by the Registration Statement bears to the public offering price of all securities covered by such Registration Statement, 20 provided, however, that, in any such case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 9.6 OFFERING RESTRICTIONS. Except as previously disclosed in the SEC Reports or in the Exchange Act Filings, or stock or stock options granted to employees or directors of the Company; or shares of preferred stock issued to pay dividends in respect of the Company's preferred stock; or equity or debt issued in connection with an acquisition of a business or assets by the Company; or the issuance by the Company of stock in connection with the establishment of a joint venture partnership or licensing arrangement (these exceptions hereinafter referred to as the "Excepted Issuances"), the Company will not for so long as the Note is outstanding issue any securities with a continuously variable/floating conversion feature which are or could be (by conversion or registration) free-trading securities (i.e. common stock subject to a registration statement) prior to the full repayment or conversion of the Note (the "Exclusion Period"). Nothing contained in this Section 9.6 shall prohibit any fixed-price offering of Company's Common Stock (including the offering of securities convertible into Common Stock at a fixed price); provided that (i) the fixed-price for such offering shall not be below the then current market price of the Common Stock and (ii) the entire proceeds from such offering shall be used to prepay all of the outstanding principal amount of the Note, plus any accrued and unpaid interest thereon and any other applicable penalties or fees as set forth in the Note. 10. MISCELLANEOUS. 10.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO PRECLUDE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE DEEMED TO PRECLUDE THE COMPANY FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN ANY SUCH ACTIONS. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF SUCH PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF SUCH PARTIES FURTHER CONSENT THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER OR THEREUNDER, MAY BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS 21 PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF SUCH PARTIES WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON OR THEREON IN THE SUPREME COURT FOR THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED IN EITHER SUCH COURT. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF ANY AGREEMENT. 10.2 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby to the extent provided therein. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of this Agreement or such other certificate or instrument. 10.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Securities from time to time, other than the holders of Common Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective registration statement. Purchaser may assign the Note (or any portion thereof) or the Warrant, provided that the assignees of the Note or the Warrant agree in writing to be bound by the terms of and perform all of Purchaser's obligations under this Agreement and the Related Agreements and such assignee provides evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, written certification from the assignee of its sophistication and status as an accredited investor under Regulation D of the Securities Act and a legal opinion from the transferor's counsel that such transfer is exempt from the registration requirements of applicable securities laws. Purchaser or any assignee may not assign any of its rights or remedies under the Security Agreement or the Guaranty to any person or entity other than a permitted assignee of the Note, and Purchaser may not assign any of its rights under the Registration Rights Agreement to any person or entity other than a permitted assignee of the Note or the Warrant. Purchaser or any assignee of the Note or Warrant may not assign its rights hereunder or thereunder to a Competitor (as defined herein) of the Company. A "Competitor" shall mean any business entity that (i) is primarily engaged in providing similar products or services as the Company and from which such products and services the Company derived material revenues for the prior twelve 22 (12) months, and (ii) does business in any U.S. state in which the Company has an established business. In the event there is more than one holder of the rights and obligations under the Note, then an agent for such holders shall be appointed by the then holder(s) of the majority principal amount outstanding under the Note for the sole purpose of dealing with the Company in connection with administrative matters relating to this Agreement and the Related Agreements, including in requesting waivers and consents. Unless such agent has authority from the holders to grant any such waiver, consent or to make any amendments to this Agreement, the Note, the Guaranty or the Security Agreement without the consent of the holders, all such grants of waivers, consents or amendments shall be made by such agent acting upon the consent of the holders of a majority in principal amount then outstanding except for (i) any modifications in the principal amount, rate of interest or fees payable under the Note or any Related Agreement, (ii) postponements in any fixed payment date, (iii) releases or discharges of the Company or any Subsidiary of any obligation or releases of any collateral except as provided in this Agreement or the Related Agreements or (iv) any amendment to this Section 10.3, which shall be approved by all holders affected thereby. 10.4 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules hereto, the Related Agreements and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 10.5 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 10.6 AMENDMENT AND WAIVER. (a) This Agreement may be amended or modified only upon the written consent of the Company and the Purchaser. (b) The obligations of the Company and the rights of the Purchaser under this Agreement may be waived only with the written consent of the Purchaser. (c) The obligations of the Purchaser and the rights of the Company under this Agreement may be waived only with the written consent of the Company. 10.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement or the Related Agreements, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement, the Note or the Related Agreements, by law or otherwise afforded to any party, shall be cumulative and not alternative. 10.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, 23 (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address as set forth on the signature page hereof with a copy in the case of the Company to Legal Counsel, Numerex Corp., 1600 Parkwood Circle SE, Suite 200, Atlanta, Georgia 30339, facsimile number (770) 693-5951 and to Richard Baltz, Esq., Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004, facsimile number (202) 942-5999, to the Purchaser at the address set forth on the signature page hereof for such Purchaser, with a copy in the case of the Purchaser to Scott J. Giordano, Esq., Loeb & Loeb LLP, 405 Park Avenue, New York, NY 10154, facsimile number (212) 407-4990, or at such other address as the Company or the Purchaser may designate by written notice to the other parties hereto given in accordance herewith. 10.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including, without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. In the event of a settlement, each party shall bear its own fees, costs and expenses unless otherwise directed by a court of competent jurisdiction. 10.10 TITLES AND SUBTITLES. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 10.11 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Any party delivering an executed counterpart of this Agreement by facsimile transmission shall deliver an original of such counterpart to the other party hereto within two (2) business days; provided, however, that the failure to so deliver any original counterpart shall not affect the validity or enforceability of this Agreement as against such party. 10.12 BROKER'S FEES. Except as set forth on Schedule 11.12 hereof, Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 11.12 being untrue. 10.13 CONSTRUCTION. Each party acknowledges that its legal counsel participated in the preparation of this Agreement and the Related Agreements and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against the other. 24 IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof. COMPANY: PURCHASER: NUMEREX CORP. LAURUS MASTER FUND, LTD. By: /s/ STRATTON J. NICOLAIDES By: /s/ DAVID GRIN -------------------------------- ------------------------------- Name: STRATTON J. NICOLAIDES Name: DAVID GRIN ------------------------------- ------------------------------ Title: CEO Title: ------------------------------ ----------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Address: c/o Ironshore Corporate Atlanta, Georgia 30039 Services Ltd. P.O. Box 1234 G.T., Attn: Chief Financial Officer Queensgate House, South Church Facsimile No.: (770) 693-5951 Street Grand Cayman, Cayman Islands 25 LIST OF EXHIBITS Form of Convertible Term Note Exhibit A Form of Warrant Exhibit B Form of Opinion Exhibit C Form of Escrow Agreement Exhibit D 26 EXHIBIT A FORM OF CONVERTIBLE NOTE A-1 EXHIBIT B FORM OF WARRANT B-1 EXHIBIT C FORM OF OPINION The legal opinions rendered by counsel to the Company shall be in form and substance reasonably acceptable to Purchaser. C-1 NUMEREX CORP. SECURITIES PURCHASE AGREEMENT JANUARY 13, 2004 TABLE OF CONTENTS

PAGE ---- 1. Agreement to Sell and Purchase........................................................................ 1 2. Fees and Warrant Fees and Warrants.................................................................... 1 3. Closing, Delivery and Payment. Closing, Delivery and Payment.......................................... 2 3.1 Closing...................................................................................... 2 3.2 Delivery..................................................................................... 2 4. Representations and Warranties of the Company......................................................... 2 4.1 Organization, Good Standing and Qualification................................................ 3 4.2 Subsidiaries................................................................................. 3 4.3 Capitalization; Voting Rights. Capitalization; Voting Rights................................. 3 4.4 Authorization; Binding Obligations........................................................... 4 4.5 Liabilities.................................................................................. 4 4.6 Agreements; Action........................................................................... 4 4.7 Obligations to Related Parties............................................................... 5 4.8 Changes...................................................................................... 6 4.9 Title to Properties and Assets; Liens, Etc................................................... 7 4.10 Intellectual Property........................................................................ 7 4.11 Compliance with Other Instruments............................................................ 8 4.12 Litigation................................................................................... 8 4.13 Tax Returns and Payments..................................................................... 8 4.14 Employees.................................................................................... 8 4.15 Registration Rights and Voting Rights........................................................ 9 4.16 Compliance with Laws; Permits................................................................ 9

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PAGE(S) ------- 4.17 Environmental and Safety Laws................................................................ 9 4.18 Valid Offering............................................................................... 10 4.19 Full Disclosure.............................................................................. 10 4.20 Insurance.................................................................................... 10 4.21 SEC Reports.................................................................................. 10 4.22 Listing...................................................................................... 11 4.23 No Integrated Offering....................................................................... 11 4.24 Stop Transfer................................................................................ 11 4.25 Dilution..................................................................................... 11 5. Representations and Warranties of the Purchaser....................................................... 11 5.1 No Shorting.................................................................................. 11 5.2 Requisite Power and Authority................................................................ 11 5.3 Investment Representations................................................................... 12 5.4 Purchaser Bears Economic Risk................................................................ 12 5.5 Acquisition for Own Account.................................................................. 12 5.6 Purchaser Can Protect Its Interest........................................................... 12 5.7 Accredited Investor.......................................................................... 12 5.8 Legends. Legends............................................................................. 12 6. Covenants of the Company.............................................................................. 13 6.1 Stop-Orders.................................................................................. 14 6.2 Listing...................................................................................... 14 6.3 Market Regulations........................................................................... 14 6.4 Reporting Requirements....................................................................... 14 6.5 Use of Funds................................................................................. 14

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PAGE(S) ------- 6.6 Access to Facilities......................................................................... 14 6.7 Taxes........................................................................................ 14 6.8 Insurance.................................................................................... 15 6.9 Intellectual Property........................................................................ 15 6.10 Properties................................................................................... 15 6.11 Confidentiality.............................................................................. 15 6.12 Required Approvals........................................................................... 15 6.13 Reissuance of Securities..................................................................... 16 6.14 Opinion...................................................................................... 16 7. Covenants of the Purchaser............................................................................ 16 7.1 Confidentiality.............................................................................. 16 7.2 Non-Public Information....................................................................... 16 7.3 No Shorting.................................................................................. 16 8. Covenants of the Company and Purchaser Regarding Indemnification...................................... 16 8.1 Company Indemnification...................................................................... 16 8.2 Purchaser's Indemnification.................................................................. 17 9. Conversion of Convertible Note........................................................................ 17 9.1 Mechanics of Conversion...................................................................... 17 9.2 Maximum Conversion........................................................................... 18 9.3 Registration Rights.......................................................................... 18 9.4 Registration Rights Granted.................................................................. 19 9.5 Indemnification.............................................................................. 19 9.6 OFFERING RESTRICTIONS........................................................................ 21 10. MISCELLANEOUS......................................................................................... 21

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PAGE(S) ------- 10.1 Governing Law................................................................................ 21 10.2 Survival..................................................................................... 22 10.3 Successors and Assigns....................................................................... 22 10.4 Entire Agreement............................................................................. 23 10.5 Severability................................................................................. 23 10.6 Amendment and Waiver......................................................................... 23 10.7 Delays or Omissions.......................................................................... 23 10.8 Notices...................................................................................... 23 10.9 Attorneys' Fees.............................................................................. 24 10.10 Titles and Subtitles......................................................................... 24 10.11 Facsimile Signatures; Counterparts........................................................... 24 10.12 Broker's Fees................................................................................ 24 10.13 Construction................................................................................. 24

iv EX-4.2 4 w93276exv4w2.txt EXHIBIT 4.2 EXHIBIT 4.2 THIS NOTE AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE CLASS A COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT REQUIRED. CONVERTIBLE TERM NOTE FOR VALUE RECEIVED, NUMEREX CORP., a Pennsylvania corporation (the "BORROWER"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the "HOLDER") or its registered assigns or successors in interest, on order, the sum of FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000), or such lesser principal amount as may be from time to time owing to the Holder hereunder, together with any accrued and unpaid interest hereon, on January 13, 2007 (the "MATURITY DATE") if not sooner paid. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of the date hereof between the Borrower and the Holder (the "PURCHASE AGREEMENT"). The following terms shall apply to this Note: ARTICLE I INTEREST & AMORTIZATION 1.1. Interest Rate and Payment. Subject to Article IV and Section 5.1 hereof, interest payable on this Note shall accrue at a rate per annum equal to eight percent (8%) (the "CONTRACT RATE"). Interest shall be payable monthly in arrears commencing on February 1, 2004, on the first day of each consecutive calendar month thereafter (each, a "REPAYMENT DATE"), and on the Maturity Date, whether by acceleration or otherwise. 1.2. Monthly Principal Payments. Amortizing payments of the aggregate principal amount outstanding under this Note at any time (the "PRINCIPAL AMOUNT") shall begin on July 1, 2004 and shall recur on the first calendar day of each succeeding month thereafter (each, an "AMORTIZATION DATE") until the Maturity Date. The Borrower shall make monthly payments to the Holder as follows: beginning on the first Amortization Date and ending on the Amortization Date of January 1, 2005, the Borrower shall pay to the Holder $78,000 per month on each Repayment Date; beginning on the Amortization Date of February 1, 2005 and ending on the Amortization Date of July 1, 2005, the Borrower shall pay to the Holder $120,000 per month on each Repayment Date; and beginning on the Amortization Date of August 1, 2005 and ending on the Maturity Date, the Borrower shall pay to the Holder one eighteenth (1/18th) of the remaining principal balance due under this Note in equal monthly installments on each Repayment Date; each of the aforementioned monthly payments shall be made together with any accrued and unpaid interest to date on such portion of the Principal Amount plus any and all other amounts which are then owing under this Note but have not been paid (collectively, the "MONTHLY AMOUNT"). ARTICLE II BORROWER PAYMENT OPTIONS 2.1. (a) Payment of Monthly Amount in Cash or Common Stock. Subject to the terms hereof, the Borrower shall have the sole option to determine whether to satisfy payment of the Monthly Amount on each Repayment Date either in cash or in shares of its Class A common stock, no par value per share (the "COMMON STOCK"), or a combination of both. Each month, ten (10) days prior to a Repayment Date, the Borrower shall deliver to the Holder a written irrevocable notice in the form of Exhibit B attached hereto electing to pay the Monthly Amount payable on the next Repayment Date in either cash or Common Stock, or a combination of both (each, a "REPAYMENT ELECTION NOTICE") (the date by which such notice is required to be given being hereinafter referred to as the "NOTICE DATE"). If a Repayment Election Notice is not delivered to the Holder by the applicable Notice Date for such Repayment Date, then the Monthly Amount due on such Repayment Date shall be paid in cash. Any portion of the Monthly Amount paid in cash on a Repayment Date, shall be paid to the Holder an amount equal to 102% of the cash portion of the Monthly Amount then payable in satisfaction of such obligation. If the Borrower repays all or a portion of the Monthly Amount in shares of Common Stock, the number of such shares to be issued for such Repayment Date shall be the number determined by dividing (x) the portion of the Monthly Amount to be paid in shares of Common Stock, by (y) the Fixed Conversion Price. For purposes hereof, the "FIXED CONVERSION PRICE" means $4.56; provided, however, that upon the occurrence of any stock split, stock dividend, combination of shares or reverse stock split pertaining to the Common Stock, the Fixed Conversion Price shall be proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Common Stock issued and outstanding as a result of such stock split, stock dividend, combination of shares or reverse stock split. (b) Monthly Amount Common Stock Payment Guidelines. Subject to Sections 2.1 and 2.2 hereof, if the Borrower has elected to pay all or a portion of the Monthly Amount due on such Repayment Date in shares of Common Stock and the closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market (as defined in Section 4.7 hereof) for the seven (7) trading days preceding a Repayment Date was less than 110% of the Fixed Conversion Price, then the Borrower shall pay the Monthly Amount in cash instead. Any part of the Monthly Amount due on such Repayment Date that the Borrower did not elect to pay in shares of Common Stock shall be paid by the Borrower in cash on such Repayment Date. Any part of the Monthly Amount due on such Repayment Date which the Borrower elected to pay in shares of Common Stock but which must be paid in cash (because the closing price of the Common Stock for the seven (7) trading days preceding the applicable Repayment Date was less than 110% of the Fixed Conversion Price) shall be paid within three (3) business days of the applicable Repayment Date. 2.2. No Effective Registration. Notwithstanding anything to the contrary herein, the Borrower shall not repay any part of its obligations to the Holder hereunder in shares of 2 Common Stock if (i) there fails to exist an effective current Registration Statement (as defined in the Registration Rights Agreement) covering resale of the shares of Common Stock to be issued in connection with such payment, or (ii) an Event of Default hereunder exists and is continuing, unless such Event of Default is cured within any applicable cure period or is otherwise waived in writing by the Holder in whole or in part at the Holder's option. 2.3. Optional Prepayments in Common Stock. Subject to Section 2.2 hereof, if the average closing price of the Common Stock on the Principal Market is greater than 110% of the Fixed Conversion Price for a period of at least five (5) consecutive trading days, then the Borrower may, at its sole option, provide the Holder written notice (a "PREPAYMENT CALL NOTICE") requiring the conversion at the then applicable Fixed Conversion Price of all or a portion of the outstanding principal, interest and fees outstanding under this Note (subject to compliance with this Section 2.3 and Section 3.2, together with accrued interest on the amount being prepaid, as of the date set forth in such Prepayment Call Notice (the "PREPAYMENT CALL DATE"). The Prepayment Call Date shall be at least ten (10) trading days following the date of the Prepayment Call Notice. On the Prepayment Call Date, the Borrower shall deliver to the Holder certificates evidencing the shares of Common Stock issued in satisfaction of the principal and interest being prepaid. Notwithstanding the foregoing, the Borrower's right to issue shares of Common Stock in satisfaction of its obligations under this Note shall be subject to the limitation that the market price of the Common Stock issued in connection with any Prepayment Call Notice shall exceed the Fixed Conversion Price as of the Prepayment Call Date and for the seven (7) trading days immediately preceding the Prepayment Call Date. If the price of the Common Stock falls below 110% of the Fixed Conversion Price as of, or during the seven (7) trading day period immediately preceding, the Prepayment Call Date, then the Prepayment Call Notice shall be null and void and no conversion shall be required hereunder. The Borrower shall not be permitted to give the Holder more than one Prepayment Call Notice under this Note during any 22-day period. Any principal amount of this Note which is prepaid pursuant to this Section 2.3 shall be deemed to constitute payments of outstanding principal applying to Monthly Amounts for the remaining Repayment Dates in chronological order. 2.4. Optional Redemption in Cash. (a) Subject to Section 2.4(b), the Borrower will not have the option of redeeming or prepaying in cash any Principal Amount during the twelve (12) months immediately following the date hereof. Thereafter, the Borrower will have the option of redeeming or prepaying any Principal Amount ("OPTIONAL REDEMPTION") by paying to the Holder a sum of money equal to: (i) 110% of the Principal Amount if such redemption or prepayment occurs after twelve (12) months from the date hereof and prior to the end of the eighteenth (18th) month from the date hereof; (ii) 105% of the Principal Amount if such redemption or prepayment occurs during the period commencing on the first day following the eighteenth (18th) month anniversary of the date hereof and prior to the end of the twenty-fourth (24th) month from the date hereof; and (iii) 103% of the Principal Amount if such redemption or prepayment occurs at any time thereafter but before the Maturity Date. Each such redemption or prepayment made pursuant to this Section 2.4 shall include all accrued but unpaid interest on that portion of the Principal Amount so prepaid or redeemed and any and all other sums due, accrued or payable to the Holder arising under this Note or the Purchase Agreement or any Related 3 Document (as defined in the Purchase Agreement) (the "REDEMPTION AMOUNT") outstanding on the day written notice of redemption (the "NOTICE OF REDEMPTION") is given to the Holder, which Notice of Redemption shall specify the date for such Optional Redemption (the "REDEMPTION PAYMENT DATE"). A Notice of Redemption shall not be effective with respect to any portion of this Note for which the Holder has a pending election to convert pursuant to Section 3.1 and the Redemption Amount shall be determined as if such election to convert had been completed immediately prior to the date of the Notice of Redemption. The Redemption Payment Date shall be not earlier than the day after the date of the Notice of Redemption and not later than seven (7) days after the date of the Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must be paid in good funds to the Holder. In the event the Borrower fails to pay the Redemption Amount by the Redemption Payment Date, then such Redemption Notice will be null and void. (b) Notwithstanding anything contained herein to the contrary, if during the period commencing on the date hereof and ending on January 13, 2005 the Borrower consummates any Permitted Non-Core Asset Sale (as hereinafter defined), then the Borrower shall prepay the Principal Amount then due under this Note in an amount equal to (i) fifty percent (50%) of the net proceeds of each such Non-Core Asset Sale (i.e., gross proceeds less the reasonable costs of such sales, which shall include, without limitation, reasonable fees, costs and expenses of legal, financial, investment banking, accounting or other professional advisors, broker commissions, closing costs, taxes, diligence fees and other costs of readying the Permitted Non-Core Assets for sale) plus (ii) the Premium, if any, with such prepayments to be made concurrently with the consummation of each Permitted Non-Core Asset Sale. For purposes hereof, (1) the term "PERMITTED NON-CORE ASSET SALE" shall mean a sale of any of the assets set forth on Annex A hereto so long as (a) the Holder shall have been provided not less than ten (10) business days prior written notice of each such sale, and (b) no Event of Default shall have occurred and be continuing at the time of each such sale; and (2) the term "PREMIUM" shall mean (a) zero percent (0%) in the event the aggregate net cash proceeds arising from all Permitted Non-Core Asset Sales equals an amount less than $1,500,000 and (b) ten percent (10%) of the Principal Amount in excess of $1,500,000 required to be paid by the terms of this Section 2.4(b) in the event the aggregate net cash proceeds arising from all Permitted Non-Core Asset Sales equals or exceeds $1,500,000. (c) If the Borrower consummates any Permitted Non-Core Asset Sale after January 13, 2005, then the Borrower shall prepay an amount equal to (i) fifty percent (50%) of the net proceeds of each such Non-Core Asset Sale (i.e., gross proceeds less the reasonable costs of such sales, which shall include, without limitation, reasonable fees, costs and expenses of legal, financial, investment banking, accounting or other professional advisors, broker commissions, closing costs, taxes, diligence fees and other costs of readying the Permitted Non-Core Assets for sale) plus (ii) the Adjusted Premium, with such prepayments to be made concurrently with the consummation of each Permitted Non-Core Asset Sale. For purposes hereof, the term "ADJUSTED PREMIUM" shall mean: (a) 110% of the Principal Amount if such prepayment occurs after twelve (12) months from the date hereof and prior to the end of the eighteenth (18th) month from the date hereof; (b) 105% of the Principal Amount if such prepayment occurs during the period commencing on the first day following the eighteenth (18th) month anniversary of the date hereof and prior to the end of the twenty-fourth (24th) month from the date hereof; and (c) 103% 4 of the Principal Amount if such prepayment occurs at any time thereafter but before the Maturity Date. 2.5. Mandatory Redemption Upon Failure to Cause an Effective Registration Statement to be Filed. If on or prior to January 13, 2005, the Borrower shall fail to file and cause to exist a current effective Registration Statement (as defined in the Registration Rights Agreement) covering resale of the shares of Common Stock underlying this Note and the Common Stock Purchase Warrant, dated as of the date hereof, granted by the Borrower to the Holder, then Holder shall have the right, upon six (6) month's prior written notice to the Borrower, to demand repayment in full of all amounts outstanding under this Note, including, but not limited to, any penalties set forth in this Article IV and all accrued and unpaid interest and fees thereon. ARTICLE III CONVERSION RIGHTS 3.1. Holder's Conversion Rights. (a) The Holder shall have the right, but not the obligation, to convert all or any portion of the then aggregate outstanding principal amount of this Note, together with interest and fees due hereon, into shares of Common Stock subject to the terms and conditions set forth in this Article III. (b) Notwithstanding anything contained herein to the contrary, during the six (6) month period following an effective current Registration Statement (as defined in the Registration Rights Agreement), so long as no Event of Default shall have occurred and be continuing, the Holder shall limit the number of shares of Common Stock to which it voluntarily converts a portion of this Note, on a monthly basis, to not greater than ten percent (10%) of the total number of shares of the Borrower's Common Stock that traded during the month immediately preceding such voluntary conversion by the Holder. In addition, so long as no Event of Default shall have occurred and be continuing, during the period commencing on the date hereof and ending on January 13, 2006, the Holder shall not sell the Borrower's Common Stock at a price per share less than the lower of (a) $3.80 per share or (b) the volume weighted average closing price (the "VWAP") of the Borrower's Common Stock for the three (3) trading days immediately preceding the date hereof (the "FLOOR PRICE"), unless, in each case, the VWAP of the Borrower's Common Stock remains below the Floor Price for any ninety (90) day period. 3.2. Conversion Limitation. Notwithstanding anything contained herein to the contrary, pursuant to the terms of this Note, the Holder shall not be entitled to convert on a Conversion Date (as defined in Section 3.3(b)) that number of shares of Common Stock which would be in excess of the sum (i) the number of shares of Common Stock actually owned by the Holder and its affiliates on a Conversion Date and (ii) the number of shares of Common Stock issuable upon the conversion of this Note and exercise of the warrants held by such Holder and its affiliates with respect to which the determination of this proviso is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Borrower on such date. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. The 5 Holder may void the limitation described in this Section 3.2 upon 75 days prior notice to the Borrower or without any notice requirement upon an Event of Default. 3.3. Procedures for Conversion. (a) In the event that the Holder elects to convert this Note into Common Stock, the Holder shall give written notice of such election by delivering to the Borrower an executed and completed notice of conversion (the "NOTICE OF CONVERSION"), such Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest and fees being converted. On each Conversion Date (as hereinafter defined) and in accordance with the Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount, accrued interest and fees as entered in its records and shall provide written notice thereof to the Borrower within two (2) business days after the Conversion Date. Each date on which a Notice of Conversion is delivered or telecopied to the Borrower in accordance with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE"). A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A. (b) Pursuant to the terms of the Notice of Conversion the Borrower will issue instructions to the transfer agent (together with such other documents as the transfer agent may request), within one (1) business day of the date of the delivery to Borrower of the Notice of Conversion. If the Registration Statement (as defined in the Registration Rights Agreement) is effective or the Conversion Shares are eligible for sale pursuant to Rule 144, Borrower shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder by crediting the account of the Holder's designated broker with the Depository Trust Corporation ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system within three (3) business days after receipt by the Borrower of the Notice of Conversion (the "DELIVERY DATE"). Upon delivery to Holder of such certificates through DWAC in accordance with this Section 3.3(b), Holder covenants to Borrower to (i) sell, transfer or dispose of all Conversion Shares pursuant to the Registration Statement in accordance with the plan of distribution described therein or the provisions of Rule 144, as applicable, and (ii) fulfill applicable prospectus delivery requirements imposed by applicable federal securities laws. In the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Borrower of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such Common Stock, unless the Holder provides the Borrower written instructions to the contrary. 3.4. Conversion Mechanics. (a) The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal and interest and fees to be converted, if any, by the Fixed Conversion Price. In the event of any conversions of outstanding principal amount under this Note in part pursuant to this Article III, such conversions shall be deemed to constitute conversions of outstanding principal amount applying to Monthly Amounts for the remaining Repayment Dates in chronological order. (b) No fractional shares of Common Stock shall be issued upon any conversion of this Note. In lieu of any fractional share to which Holder would otherwise be entitled, the Borrower shall pay Holder cash equal to the product of such fraction multiplied by the fair 6 market value as of the date of Conversion of a share of Common Stock, as determined in good faith by the Borrower's Board of Directors (or an authorized subcommittee thereof). ARTICLE IV EVENTS OF DEFAULT If an Event of Default (as defined below) occurs and is continuing, the Borrower's rights under Sections 2.1, 2.3 and 2.4 shall immediately cease and be of no further effect until such time as the Event of Default has been cured, or has been waived by the Holder. Upon the occurrence and continuance of an Event of Default beyond any applicable grace period, the Holder, at its sole and absolute discretion, may make all sums of principal, interest and other fees then remaining unpaid hereon and all other amounts payable hereunder due and payable within five (5) days after written notice from Holder to Borrower (each occurrence being a "DEFAULT NOTICE PERIOD"), provided, however, that such Default Notice Period shall not apply to Sections 4.3, 4.6 and 4.9 below. In the event of such an acceleration, the amount due and owing to the Holder shall be 115% of the Principal Amount (plus accrued and unpaid interest and fees, if any). If, with respect to any Event of Default other than a payment default described in Section 4.1 below, within the Default Notice Period the Borrower cures the Event of Default, the Event of Default will be deemed to no longer exist and any rights and remedies of Holder pertaining to such Event of Default will be of no further force or effect. The occurrence of any of the following events is an "EVENT OF DEFAULT": 4.1. Failure to Pay Principal, Interest or other Fees. The Borrower fails to pay when due any installment of principal, interest or other fees hereon in accordance herewith, or the Borrower fails to pay when due any amount due under any other promissory note issued by Borrower. 4.2. Breach of Covenant. The Borrower breaches any material covenant or other term or condition of this Note or the Purchase Agreement in any material respect and such breach, if subject to cure, continues for a period of thirty (30) days after the occurrence thereof. 4.3. Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, in the Purchase Agreement, or in any Related Document shall have been materially false or misleading when made and shall not be cured for a period of ten (10) days after written notice thereof is received by the Borrower from the Holder. 4.4. Receiver or Trustee. The Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed. 4.5. Judgments. Any money judgment, writ or similar final process shall be entered or filed against the Borrower or any of its property or other assets for more than $300,000, and shall remain unvacated, unbonded or unstayed for a period of ninety (90) days. 4.6. Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall 7 be instituted by or against the Borrower and, in the case of an involuntary case or proceeding, such case or proceeding is not dismissed within sixty (60) days following the commencement thereof. 4.7. Stop Trade. An SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a Principal Market, provided that the Borrower shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Principal Market within 60 days of such notice. The "PRINCIPAL MARKET" for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New York Stock Exchange, whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock, or any securities exchange or other securities market on which the Common Stock is then being listed or traded. 4.8. Default Under Security Agreement. An Event of Default shall have occurred under and as defined in the Security Agreement, which shall not have been cured during any applicable cure or grace period. ARTICLE V DEFAULT RELATED PROVISIONS 5.1. Payment Grace Period. The Borrower shall have a three (3) business day grace period to pay any monetary amounts due under this Note or the Purchase Agreement or any Related Document, after which grace period a default interest rate of five percent (5%) per annum above the then applicable interest rate hereunder shall apply to the monetary amounts due. 5.2. Conversion Privileges. The conversion privileges set forth in Article III shall remain in full force and effect immediately from the date hereof and until this Note is paid in full or until all of the then outstanding Principal Amount and interest and other fees payable hereunder shall have been converted into shares of Common Stock. ARTICLE VI MISCELLANEOUS 6.1. Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available. 6.2. Notices. Any notice herein required or permitted to be given shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (iii) five days after having been sent by registered or certified 8 mail, return receipt requested, postage prepaid, or (iv) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Borrower at the address provided in the Purchase Agreement executed in connection herewith, and to the Holder at the address provided in the Purchase Agreement for such Holder, with a copy to John E. Tucker, Esq., 825 Third Avenue , 14th Floor, New York, New York 10022, facsimile number (212) 541-4434, or at such other address as the Borrower or the Holder may designate by ten days advance written notice to the other parties hereto. A Notice of Conversion shall be deemed given when made to the Borrower pursuant to the Purchase Agreement. 6.3. Amendment Provision. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument issued pursuant to Section 3.5 hereof, as it may be amended or supplemented. 6.4. Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder only pursuant to the requirements of the Purchase Agreement and applicable federal and state securities laws. 6.5. Governing Law. (a) This Note cannot be changed or terminated orally, and shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in any state or federal court sitting in the Borough of Manhattan, City of New York; provided that nothing contained in this Note shall be deemed to preclude Holder from bringing suit or taking other legal action in any other court of competent jurisdiction and nothing shall be deemed to preclude the Borrower from asserting any defenses or counterclaims in any such actions. Both the Borrower and the individual executing this Note on behalf of the Borrower agree to submit to the jurisdiction of such courts and waive trial by jury. The Borrower and the individual executing this Note further consent that any summons, subpoena or other process or papers (including, without limitation, any notice or motion or other application to either of the aforementioned courts or a judge thereof) or any notice in connection with any proceedings hereunder, may be served by registered or certified mail, return receipt requested, or by personal service provided a reasonable time for appearance is permitted, or in such other manner as may be permissible under the rules of said courts. The Borrower and the individual executing this Note waive any objection to jurisdiction and venue of any action instituted hereon in the Supreme Court for the State of New York, County of New York or the United States District Court for the Southern District of New York and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens in any action brought in either such court. (b) The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs; provided, however, that if the parties hereto agree to settle any claim, action, proceeding or lawsuit brought by one party hereto against the other party hereto, then each of the parties shall bear its own costs in connection with such claim, action, proceeding or lawsuit, unless otherwise directed by a court of competent jurisdiction. 9 (c) In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. 6.6. Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower. 6.7. Security Interest. The holder of this Note has been granted a security interest in certain assets of the Borrower and of the guarantors of the Note, as more fully described in the Security Agreement. 6.8. Construction. Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other. [Balance of page intentionally left blank; signature page follows.] 10 IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note to be signed in its name effective as of this 13th day of January, 2004. NUMEREX CORP. By: /s/ STRATTON J. NICOLAIDES -------------------------------- Name: STRATTON J. NICOLAIDES ------------------------------ Title: CEO ----------------------------- WITNESS: PAMELA S. LESTER - -------------------------- 11 EXHIBIT A NOTICE OF CONVERSION (To be executed by the Holder in order to convert all or part of the Note into Common Stock [Name and Address of Holder] The Undersigned hereby elects to convert $_________ of the principal due on [specify applicable Repayment Date] under the Convertible Term Note issued by NUMEREX CORP. dated January __, 2004 by delivery of Shares of Common Stock of NUMEREX CORP. on and subject to the conditions set forth in Article III of such Note. 1. Date of Conversion _______________________ 2. Shares To Be Delivered: _______________________ The Undersigned represents and warrants that all offers and sales by the Undersigned of the securities issuable upon conversion of the within Note shall be made pursuant to registration of the Common Stock and prospectus delivery requirements under the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act. Date: ____________ By:_______________________________ Name:_____________________________ Title:____________________________ 12 EXHIBIT B REPAYMENT ELECTION NOTICE (To be executed by the Borrower in order to pay all or part of a Monthly Amount with Common Stock) [Name and Address of Holder] NUMEREX CORP. hereby elects to pay $_________ of the Monthly Amount due on [specify applicable Repayment Date] under the Convertible Term Note issued by it dated January __, 2004 by delivery of Shares of its Common Stock of on and subject to the conditions set forth in Article II of such Note. 1. Fixed Conversion Price: $_______________________ 2. Amount to be paid: $_______________________ 3. Shares To Be Delivered (2 divided by 1): __________________ Date: ____________ NUMEREX CORP. By:_______________________________ Name:_____________________________ Title:____________________________ 13 ANNEX A NON-CORE ASSETS Any assets owned by any one or more of the following entities as of the effective date of the Convertible Term Note to which this Annex A has been attached: 1. Digilog Inc. (a Pennsylvania corporation); 2. DCX Systems Inc. (a Pennsylvania corporation); 3. BNI Solutions LLC (a Delaware limited liability company); 4. DCX Systems Australia PTY Limited (an Australian company); and 5. Broadband Networks, Inc. (a Delaware corporation). 14 EX-4.3 5 w93276exv4w3.txt EXHIBIT 4.3 EXHIBIT 4.3 THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT REQUIRED. Right to Purchase Up To 300,000 Shares of Common Stock of Numerex Corp. (subject to adjustment as provided herein) COMMON STOCK PURCHASE WARRANT No. 36 Issue Date: January 13, 2004 NUMEREX CORP., a corporation organized under the laws of the State of Pennsylvania, hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or its assigns (the "HOLDER"), is entitled, subject to the terms set forth below, to purchase from the Company from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, on January 13, 2011 (the "EXPIRATION DATE"), up to 300,000 fully paid and nonassessable shares of Common Stock (as hereinafter defined), no par value per share, of the Company, at the Exercise Price (as hereinafter defined). The number and character of such shares of Common Stock are subject to adjustment as provided herein. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The term "COMPANY" shall include Numerex Corp. and any corporation which shall succeed or assume the obligations of Numerex Corp. hereunder. (b) The term "COMMON STOCK" includes (a) the Company's Class A Common Stock, no par value per share, and (b) any other securities into which or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. (c) The term "OTHER SECURITIES" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. (d) The term "EXERCISE PRICE" shall be as follows: (i) 150,000 shares at $4.75 per share; (ii) 100,000 shares at $5.17 per share; and (iii) 50,000 shares at $5.99 per share. (e) The term "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the date hereof, between the Company and the Holder as the same may be amended, modified and supplemented from time to time. (f) The term "PERSON" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture or an unincorporated organization. 1. EXERCISE OF WARRANT. 1.1 Number of Shares Issuable upon Exercise. From and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, by delivery of an original or fax copy of the exercise notice attached hereto as Exhibit A (the "EXERCISE NOTICE"), shares of Common Stock of the Company, subject to adjustment pursuant to Section 4. 1.2 Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean: (a) If the Company's Common Stock is traded on the American Stock Exchange or another national securities exchange or is quoted on the National or SmallCap Market of The Nasdaq Stock Market, Inc. ("NASDAQ"), then the closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date. (b) If the Company's Common Stock is not traded on the American Stock Exchange or another national stock exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board or the National Quotation Bureau's Pink Sheets, then the mean of the average of the closing bid and asked prices reported for the last business day immediately preceding the Determination Date. (c) Except as provided in clause (d) below, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree or in the absence of agreement by arbitration in accordance with the rules then in effect of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided. (d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, 2 assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of the Warrant are outstanding at the Determination Date. 1.3 Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the Holder of the Warrant pursuant to Subsection 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor Person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1. 2. PROCEDURE FOR EXERCISE. 2.1 Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise. The certificates for the number of shares of Common Stock (or Other Securities) shall bear a legend required or advisable under federal and state securities laws. The Holder agrees that if the Registration Statement (as defined in the Registration Rights Agreement) is then currently effective or if the shares of Common Stock are eligible for sale pursuant to Rule 144 under the Securities Act of 1933, as amended, the Holder shall (i) sell, transfer or dispose of the shares of Common Stock it receives as a result of the exercise of this Warrant pursuant to the Registration Statement in accordance with the plan of distribution described therein (such plan of distribution shall be substantially in the form attached hereto as Exhibit C) or the provisions of Rule 144, as applicable, and (ii) fulfill applicable prospectus delivery requirements imposed by applicable federal securities laws. 2.2 Exercise. (a) Payment may be made either in (i) cash or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, Common Stock and/or Common Stock receivable upon exercise of the Warrant in accordance with Section (b) below, or (iii) by a combination of any of the foregoing methods, for the number of shares of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the Holder shall 3 thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein. (b) Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Exercise Notice in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: X=Y (A-B) ----- A Where X = the number of shares of Common Stock to be issued to the Holder Y= the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) A= the Fair Market Value of one share of the Company's Common Stock (at the date of such calculation) B= Exercise Price (as adjusted to the date of such calculation) 3. EFFECT OF REORGANIZATION, ETC.; CONTINUATION OF TERMS. 3.1 Reorganization, Consolidation, Merger, etc. In case at any time or from time to time, the Company shall (a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, either (x) in the event of the consummation of a reorganization, consolidation or merger, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4, or (y) in the event of dissolution, cash equal to the then current value of this Warrant as determined in accordance with the Black Scholes option pricing formula. Upon the occurrence of any stock split, stock dividend, combination of shares or reverse stock split pertaining to the Common Stock, the Fixed Conversion Price shall be proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Common Stock issued and outstanding as a result of such stock split, stock dividend, combination of shares or reverse stock split. 4 3.2 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. 4. REGISTRATION RIGHTS; INCREASE IN NUMBER OF WARRANTS. In addition to the terms of Sections 2 and 3 of the Registration Rights Agreement, the Company hereby agrees with the Holder that by no later than August 13, 2004, the Company shall prepare, file with, and caused to be declared effective by the Securities and Exchange Commission (the "SEC"), a Registration Statement (as defined in the Registration Rights Agreement) under the Securities Act of 1933 (the "SECURITIES ACT") covering the resale of the Common Stock underlying this Warrant. In the event that the Registration Statement (as defined in the Registration Rights Agreement) has not been declared effective by the SEC by August 13, 2004, then on August 13, 2004, and for each thirty (30) day period thereafter (or portion thereof), the number of shares of Common Stock (or Other Securities) represented hereby shall be increased by 15,000 shares (at an exercise price of $5.99) (the "DELAYED REGISTRATION PENALTY"), until the earlier of (i) the day on which the Registration Statement is declared effective, and (ii) twelve (12) months from the date hereof. 5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant or following the exercise in part of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment. The Company will forthwith mail a copy of each such certificate to the holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 11 hereof); provided, however, that the failure of the Company to mail a copy of such certificate to the Holder of the Warrant and any Warrant Agent shall not affect the Delayed Registration Penalty and/or the number of shares of Common Stock (or Other Securities) represented hereby. 6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, or following the exercise in part of this Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. 7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with applicable federal and state securities laws and the Securities Purchase Agreement, dated of even date herewith, by and between the Company and the Holder (the "PURCHASE AGREEMENT"), this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "TRANSFEROR") with respect to any or all of the shares of Common Stock available for exercise hereunder. On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the "TRANSFEROR ENDORSEMENT FORM") and together with 5 evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor's counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "TRANSFEREE"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. In no event shall a Transferee be a Competitor (as such term is defined in the Purchase Agreement) of the Company. 8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like tenor. 9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted certain registration rights by the Company. These registration rights are set forth in a Registration Rights Agreement entered into by the Company and the purchaser of the Company's Convertible Note (the "NOTE") at or prior to the issue date of this Warrant. 10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock actually owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant and conversion of the Note with respect to which the determination of this proviso is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such date. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction described in this paragraph may be revoked upon 75 days prior notice from the Holder to the Company and is automatically null and void upon an Event of Default under the Note. 11. WARRANT AGENT. The Company may, by written notice to the each holder of the Warrant, appoint an agent for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 6 12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 13. NOTICES, ETC. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such Holder furnishes to the Company an address, then to, and at the address of, the last Holder of this Warrant who has so furnished an address to the Company. 14. NO SHORTING. Neither the Purchaser nor any of its affiliates or investment partners shall or shall cause any Person, directly or indirectly, to engage in "short sales" of the Company's Common Stock or any other hedging strategies involving the Company's publicly traded securities. 15. MISCELLANEOUS. (a) THIS WARRANT CANNOT BE CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. EXCEPT AS PROVIDED IN SECTION 1.2(C) HEREOF, ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS WARRANT SHALL BE DEEMED TO PRECLUDE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE DEEMED TO PRECLUDE THE COMPANY FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN ANY SUCH ACTIONS. BOTH THE COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. THE COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT FURTHER CONSENT THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON IN THE SUPREME COURT FOR THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR 7 BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED IN EITHER SUCH COURT. (b) The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs; provided, however, that if the parties hereto agree to settle any claim, action, proceeding or lawsuit brought by one party hereto against the other party hereto, then each of the parties shall bear its own costs in connection with such claim, action, proceeding or lawsuit, unless otherwise directed by a court of competent jurisdiction. (c) In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant. (d) The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. (e) The Company acknowledges that legal counsel participated in the preparation of this Warrant and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any party against the other party. [Balance of page intentionally left blank; signature page follows.] 8 IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of the date first written above. NUMEREX CORP. By: /s/ STRATTON J. NICOLAIDES -------------------------------- Name: STRATTON J. NICOLAIDES ------------------------------ Title: CEO ----------------------------- WITNESS: _______________________________ 9 EXHIBIT A FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO: NUMEREX CORP. The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box): ___ ________ shares of the Common Stock covered by such Warrant; or ___ the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $___________. Such payment takes the form of (check applicable box or boxes): ___ $__________ in lawful money of the United States; and/or ___ the cancellation of such portion of the attached Warrant as is exercisable for a total of _______ shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or ___ the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchaseable pursuant to the cashless exercise procedure set forth in Section 2. The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ____________________ whose address is ______________________________ _________________________________. The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock and prospectus delivery requirements under the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act. Dated:___________________ _______________________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ___________________________________ (Address) EXHIBIT B FORM OF TRANSFEROR ENDORSEMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of Numerex Corp. to which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of Numerex Corp. with full power of substitution in the premises.

Transferees Percentage Transferred Number Transferred - ----------- ---------------------- ------------------ - ----------- ---------------------- ------------------ - ----------- ---------------------- ------------------ - ----------- ---------------------- ------------------ - ----------- ---------------------- ------------------

Dated: ------------------------ -------------------------------------- (Signature must conform to name of holder as specified on the face of the Warrant) Signed in the presence of: - ------------------------------- -------------------------------- (Name) (address) ACCEPTED AND AGREED: [TRANSFEREE] -------------------------------- (address) - ------------------------------ (Name) EXHIBIT C PLAN OF DISTRIBUTION The Company shall include a "Plan of Distribution" section in the Registration Statement (as defined in the Registration Rights Agreement), which shall substantially state as follows: Plan of Distribution The shares of our common stock covered hereby may be offered and sold from time to time by the selling stockholder. The selling stockholder will act independently of us in making decisions with respect to the timing, manner and size of each sale of shares of common stock currently held by selling stockholder. Following conversion of the secured convertible note or exercise of warrants by the selling stockholder holding a secured promissory note or warrants, the selling stockholder will act independently of us in making decisions with respect to the timing, manner, and sale of shares of our common stock held by the selling stockholder who converts or exercises. The selling stockholder may use any one or more of the following methods when selling shares: - ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; - block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; - purchases by a broker-dealer as principal and resale by the broker-dealer for its account; - an exchange distribution in accordance with the rules of the applicable exchange; - privately negotiated transactions; - broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share; - a combination of any such methods of sale; and - any other method permitted pursuant to applicable law. The selling stockholder may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder. The selling stockholder does not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The selling stockholder may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under 12 Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholder under this prospectus. The selling stockholder also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholder and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The selling stockholder have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the selling stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended, may apply to sales of our common stock and activities of the selling stockholder. 13 EX-4.4 6 w93276exv4w4.txt EXHIBIT 4.4 EXHIBIT 4.4 SECURITY AGREEMENT To: Laurus Master Fund, Ltd. c/o Onshore Corporate Services, Ltd. P.O. Box 1234 G.T Queensgate House South Church Street Grand Cayman, Cayman Islands Gentlemen: 1. To secure the payment of all Obligations (as hereafter defined), we hereby grant to you a continuing security interest in all of the following property now owned or at any time hereafter acquired by us, or in which we now have or at any time in the future may acquire any right, title or interest (the "Collateral"): all accounts, inventory, equipment, goods, documents, instruments (including, without limitation, promissory notes), contract rights, general intangibles (including, without limitation, payment intangibles), chattel paper, supporting obligations, investment property, letter-of-credit rights, trademarks and tradestyles in which we now have or hereafter may acquire any right, title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefor. 2. The term "Obligations" as used herein shall mean and include all debts, liabilities and obligations owing by each of us to you under that certain Guaranty, dated as of the date hereof, as amended, modified and supplemented from time to time (as so amended, modified and supplemented, the "Guaranty") and all obligations owing by Numerex Corp. ("Company") to you under the Convertible Term Note dated as of the date hereof in the original principal amount of $4,500,000, as amended, modified and supplemented from time to time or otherwise (as so amended, modified and supplemented from time to time, the "Note"). 3. We hereby represent, warrant and covenant to you that: (a) each of us is a legal entity validly existing, in good standing and formed under the laws of the jurisdictions set forth below our names on the signature pages hereto with an organization identification number set forth below our names on the signature pages hereto and we will provide you thirty (30) days' prior written notice of any change in our state of formation; (b) our legal names are as set forth on the signature pages hereto and are identical to that which is set forth in our certificates or articles of incorporation or other constitutive documents, as amended through the date hereof; (c) we are the lawful owner of the Collateral and have the sole right to grant a security interest therein and will defend the Collateral against all claims and demands of all persons and entities; (d) we will keep the Collateral free and clear of all attachments, levies, taxes, liens, security interests and encumbrances of every kind and nature ("Encumbrances"), except to the extent said Encumbrance does not secure indebtedness in excess of $150,000 on a combined basis for each of us at any one time and such Encumbrance is removed or otherwise released within 10 business days of the creation thereof; (e) we will at our own cost and expense use commercially reasonable efforts to keep the Collateral in good state of repair (ordinary wear and tear excepted) and will use commercially reasonable efforts not to waste or destroy the same or any part thereof other than ordinary course discarding of items no longer used or useful in our business; (f) we will not without your prior written consent, sell, exchange, lease or otherwise dispose of the Collateral or any of our rights therein, whether by sale, lease or otherwise, except for (I) Permitted Non-Core Asset Sales (as defined in the Note), (II) the sale of inventory in the ordinary course of business and (III) the disposition or transfer in the ordinary course of business during any fiscal year of obsolete and worn-out equipment having an aggregate fair market value of not more than $37,500 and only to the extent that (i) the proceeds of any such equipment disposition are used to acquire replacement equipment which is subject to your first priority security interest or are used to repay Obligations or to pay general corporate expenses, or (ii) following the occurrence of an Event of Default which continues to exist the proceeds of which are remitted to you to be held as cash collateral for the Obligations; (g) we will name you as an additional insured and lender's loss payee under all of our policies of insurance which shall insure, without limitation, the Collateral against such losses, damages and hazards as you shall reasonably require and in amounts and under policies issued by insurers reasonably acceptable to you. If we fail to do so, you may procure such insurance and the cost thereof shall constitute Obligations; (h) we will at all reasonable times and upon reasonable advance notice (except that such notice shall not be required in the event you reasonably believe such access is necessary to preserve or protect the Collateral and/or during the continuance of an Event of Default) allow you or your representatives free access to and the right of inspection of the Collateral provided that you do not unreasonably interfere with our normal business operations; (i) we hereby indemnify and save you harmless from all loss, costs, damage, liability and/or expense, including reasonable attorneys' fees, that you may sustain or incur to enforce payment, performance or fulfillment of any of the Obligations and/or in the enforcement of this Agreement or in the prosecution or defense of any action or proceeding either against you or us concerning any matter growing out of or in connection with this Agreement, and/or any of the Obligations and/or any of the Collateral, except to the extent caused by your own gross negligence or willful misconduct; (j) with respect to all accounts arising out of contracts between us and the United States of America, or any state, or any department, agency or instrumentality of any of them (each, a "Government Contract"), we will, upon your request, comply with any governmental notice or approval requirements, including, without limitation, compliance with the Federal Assignment of Claims Act, and (k) each account shall conform to the following criteria: (i) shipment of the merchandise or rendition of services has been completed, (ii) merchandise or services shall not have been rejected or disputed by the account debtor and there shall not have been asserted any offset, defense or counterclaim (other than any such rejections, disputes, offsets, defenses or counterclaims which are asserted in the ordinary course of business), and (iii) each such account shall be a good and valid account representing an undisputed bona fide indebtedness (other than in connection with any such dispute arising in the ordinary course of business) incurred by the account debtor liable therefor, for a fixed sum as set forth in the invoice relating thereto with respect to an unconditional sale and delivery upon the stated terms of goods sold by us, or work, labor and/or services rendered by us, as applicable. You acknowledge that concurrent with each such sale, and your receipt in immediately available funds of all proceeds of such required to be paid to you pursuant to the Note, you shall promptly take all action 2 reasonably requested by us to release your security interest in those assets sold pursuant to a Permitted Non-Core Asset Sale. 4. Following the occurrence and during the continuance of an Event of Default, you shall have the right to instruct all of our account debtors to remit payments on all accounts in accordance with your express written instructions. If, despite such instructions, we shall receive any payments with respect to accounts, we shall receive such payments in trust for your benefit, shall segregate such payments from our other funds and shall deliver or cause to be delivered to you, in the same form as so received with all necessary endorsements, all such payments as soon as practicable, but in no event later than five (5) business days after our receipt thereof. Following the occurrence and during the continuation of an Event of Default, you shall have full power and authority to collect each account, through legal action or otherwise, and may settle, compromise, or assign (in whole or in part) the claim for any account, or otherwise exercise any other right now existing or hereafter arising with respect to any account if such action is commercially reasonable and will expedite collection. 5. We shall be in default under this Agreement upon the happening of any of the following events or conditions, each such event or condition being an "Event of Default" (a) the occurrence of any Event of Default under and as defined in the Note and/or Guaranty which is not cured within any applicable notice, cure, grace or similar period; (b) any warranty, representation or statement made or furnished to you by any of us or on our behalf was false in any material respect when made or furnished; (c) any of us shall breach in any material respect any provision of this Agreement, as the same may be amended, modified and supplemented from time to time, and such breach shall not have been cured during any applicable notice, cure, grace or similar period; (d) except to the extent otherwise expressly permitted hereunder, the loss, theft, damage, destruction, sale or encumbrance to or of any of the Collateral or the making of any levy, seizure or attachment thereof or thereon except to the extent (i) said levy, seizure or attachment does not secure indebtedness in excess of $100,000 and such levy, seizure or attachment has not been removed or otherwise released within 10 business days of the creation or the assertion thereof or (ii) (I) with respect to any loss, theft, destruction or damage to or of any of the Collateral (collectively, a "Loss") in an aggregate amount equal to $1,000,000 or more on a combined basis for all Collateral, you shall have received within ninety (90) days of the occurrence of such Loss insurance proceeds in an amount not less than ninety percent (90%) of the fair market value of the Collateral subject to such Loss and (II) with respect to any Loss in an aggregate amount less than $1,000,000 on a combined basis for all Collateral, you shall have repaired, replaced or otherwise restored the Collateral subject to such Loss within ninety (90) days of the occurrence of such Loss; (e) other than in connection with a Permitted Transaction, any of us shall become insolvent, cease operations, dissolve, terminate our business existence, make an assignment for the benefit of creditors, or suffer the appointment of a receiver, trustee, liquidator or custodian of all or any part of our property; (f) any proceedings under any bankruptcy or insolvency law shall be commenced by or against any of us and if commenced against us shall not be dismissed within 45 days; (g) any of us shall repudiate or purport to revoke any of our obligations under the Note or any guaranty agreement made by any of us in favor of you after expiration of applicable cure, notice, grace or similar period; or (h) if any Core Company shall at any time transfer in any manner whatsoever, including by way of merger, 3 consolidation or otherwise, any of its assets to a Non-Core Company. For purposes of subsection (e) above, the term "Permitted Transaction" shall mean a Permitted Non-Core Asset Sale or any winding-up, dissolution, merger or liquidation of any subsidiary of the Company following the sale of all or substantially all of its assets as a result of a Permitted Non-Core Asset Sale. For purposes of subsection (h) above, the following terms shall have the following meanings: (1) "Core Company" shall mean any one or more of the following companies: Numerex Corp. (a Pennsylvania corporation), Numerex Solutions, LLC (a Delaware limited liability company), Cellemetry LLC (a Delaware limited liability company), Numerex Investment Corp. (a Delaware corporation), Mobileguardian LLC (a Delaware limited liability company) and Uplink Security, Inc. (a Georgia corporation); and (2) "Non-Core Company" shall mean any one or more of the following companies: Digilog Inc. (a Pennsylvania corporation), DCX Systems Inc. (a Pennsylvania corporation), DCX Systems Australia PTY Limited (an Australian company), Broadband Networks Inc. (a Delaware corporation) and BNI Solutions LLC (a Delaware limited liability company). You hereby acknowledge that you will not unreasonably withhold your consent to any non-bankruptcy internal corporate reorganization or restructuring of the Company and/or any of its subsidiaries. 6. Upon the occurrence of any Event of Default and for so long as such Event of Default is continuing, you may declare all Obligations immediately due and payable and you shall have the remedies of a secured party provided in the Uniform Commercial Code as in effect in the State of New York, this Agreement and other applicable law. Upon the occurrence of any Event of Default and for so long as such Event of Default is continuing, you will have the right to take possession of the Collateral and to maintain such possession on our premises or to remove the Collateral or any part thereof to such other premises as you may desire. Upon your request (following the occurrence of an Event of Default for so long as such Event of Default is continuing), we shall assemble the Collateral and make it available to you at a place designated by you. If any notification of intended disposition of any Collateral is required by law, such notification, if mailed, shall be deemed properly and reasonably given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to us either at our address shown herein or at any other address for such notice as we may provide you from time to time in writing pursuant to Section 11 hereof. Any proceeds of any disposition of any of the Collateral shall be applied by you in the following order to the extent of any such proceeds: first, to the payment of all reasonable expenses in connection with the sale of the Collateral, including reasonable attorneys' fees and other legal expenses and disbursements and the reasonable expense of retaking, holding, preparing for sale, selling, and the like, second, toward the payment of the Obligations in such order of application as you may elect subject to the terms of the Note, and third, to us or as otherwise required by the Uniform Commercial Code or as a court of competent jurisdiction may direct. 7. If we default in the performance or fulfillment of any of the terms, conditions, promises, covenants, provisions or warranties on our part to be performed or fulfilled under or pursuant to this Agreement, you may, at your option without waiving your right to enforce this Agreement according to its terms, at any time after five (5) days' written notice to Numerex Corp., as our agent (provided that no such notice shall be required in the event prompt action is necessary to preserve or protect the Collateral), perform or fulfill the same or cause the 4 performance or fulfillment of the same for our account and at our sole cost and expense, and the reasonable out-of-pocket cost and expense thereof (including reasonable attorneys' fees) shall be added to the Obligations and shall be payable on demand with interest thereon at the highest interest rate under the Note. 8. We appoint you, any of your officers, employees or any other person or entity whom you may designate as our attorney, with power to execute such documents in our behalf and to supply any omitted information and correct patent errors in any documents executed by us or on our behalf; to file financing statements against us covering the Collateral; to sign our name on public records only if and to the extent necessary to evidence, perfect and/or preserve the security interest created pursuant to this Agreement; and to take all such other reasonable actions that are necessary to carry out this Agreement. We hereby ratify and approve all acts of the attorney and neither you nor the attorney will be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law other than gross negligence or willful misconduct. This power being coupled with an interest, is irrevocable so long as any Obligations remains unpaid. 9. No delay or failure on your part in exercising any right, privilege or option hereunder shall operate as a waiver of such or of any other right, privilege, remedy or option, and no waiver whatever shall be valid unless in writing, signed by you and then only to the extent therein set forth, and no waiver by you of any default shall operate as a waiver of any other default or of the same default on a future occasion. You shall have the right to enforce any one or more of the remedies available to you, successively, alternately or concurrently. We agree to join with you in executing financing statements or other instruments to the extent required by the Uniform Commercial Code in form satisfactory to you and in executing such other documents or instruments as may be reasonably required or deemed necessary by you for purposes of effecting or continuing your security interest in the Collateral. 10. This Agreement cannot be changed or terminated orally, and shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in any state or federal court sitting in the Borough of Manhattan, City of New York; provided that nothing contained in this Agreement shall be deemed to preclude you from bringing suit or taking other legal action in any other court of competent jurisdiction and nothing shall be deemed to preclude us from asserting any defenses or counterclaims in any such actions. You, we and the individuals executing this Agreement agree to submit to the jurisdiction of such courts and waive trial by jury. You, we and the individuals executing this Agreement further consent that any summons, subpoena or other process or papers (including, without limitation, any notice or motion or other application to either of the aforementioned courts or a judge thereof) or any notice in connection with any proceedings hereunder, may be served by registered or certified mail, return receipt requested, or by personal service provided a reasonable time for appearance is permitted, or in such other manner as may be permissible under the rules of said courts. You, we and the individuals executing this Agreement waive any objection to jurisdiction and venue of any action instituted hereon in the Supreme Court for the State of New York, County of New York or the United 5 States District Court for the Southern District of New York and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens in any action brought in either such court. 11. All notices from you to us shall be sufficiently given if mailed or delivered to us at our address set forth below unless you shall have received from us in writing another address for notices. Copies of all notices to us shall also be sent to: Legal Counsel, Numerex Corp., 1600 Parkwood Circle SE, Suite 200, Atlanta, Georgia 30339, facsimile: (770) 693-5951, and Richard Baltz, Esq., Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004, facsimile: (202) 942-5999. [SIGNATURE LINES ON FOLLOWING PAGE] 6 [SIGNATURE PAGE NO. 1 TO SECURITY AGREEMENT] Very truly yours, NUMEREX CORP. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Pennsylvania Org. ID#: PA2569500 NUMEREX SOLUTIONS LLC By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: MANAGER ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Delaware Org. ID#: DE3361359 CELLEMETRY LLC By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: MANAGER ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Delaware Org. ID#: DE2896495 [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE] 7 [SIGNATURE PAGE NO. 2 TO SECURITY AGREEMENT] NUMEREX INVESTMENT CORP. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Delaware Org. ID#: DE2429448 BROADBAND NETWORKS INC. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 2820 E. College Ave. Suite B State College, PA 16801-7548 State of Formation: Delaware Org. ID#: DE2280048 BNI SOLUTIONS LLC By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: MANAGER ------------------------------ Address: 2820 E. College Ave. Suite B State College, PA 16801-7548 State of Formation: Delaware Org. ID#: DE3410681 [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE] 8 [SIGNATURE PAGE NO. 3 TO SECURITY AGREEMENT] DIGILOG INC. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 2360 Maryland Road Willow Grove, PA 19090 State of Formation: Pennsylvania Org. ID#: PA2587972 DCX SYSTEMS INC. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 2360 Maryland Road Willow Grove, PA 19090 State of Formation: Pennsylvania Org. ID#: PA2608798 DCX SYSTEMS AUSTRALIA PTY LIMITED By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: DIRECTOR ------------------------------ Address: Lindfield Executive Centre 12 Tryon Rd. P.O. Box 42 Lindfield, NSW 2072, Australia State of Formation: Australia Org. ID#: 078013573 [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE] 9 [SIGNATURE PAGE NO. 4 TO SECURITY AGREEMENT] MOBILEGUARDIAN LLC By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: MANAGER ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Delaware Org. ID#: DE3597074 UPLINK SECURITY, INC. By: /s/ STRATTON J. NICOLAIDES ------------------------------- Its: CEO ------------------------------ Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 State of Formation: Georgia Org. ID#: GAK823623 Dated as of: January 13, 2004 ACKNOWLEDGED: LAURUS MASTER FUND, LTD. By: /s/ DAVID GRIN ---------------------------- Its: --------------------------- 10 STATE OF Georgia) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Numerex Corp., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the manager of Numerex Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the manager of Cellemetry, LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. Pamela S. Lester ----------------------- Notary Public 11 STATE OF Georgia) : ss.: COUNTY OF Cobb) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Numerex Investment Corp., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of BroadBand Networks Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) ________________________________ On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the manager of BNI Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. Pamela S. Lester ----------------------- Notary Public 12 STATE OF Georgia) : ss.: COUNTY OF Cobb) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Digilog Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of DCX Systems Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Director of DCX Systems Australia PTY Limited, the ______________ described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said __________________. Pamela S. Lester ----------------------- Notary Public 13 STATE OF Georgia) : ss.: COUNTY OF Cobb) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the manager of MobileGuardian LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. Pamela S. Lester ----------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Uplink Security, Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. Pamela S. Lester ----------------------- Notary Public 14 EX-4.5 7 w93276exv4w5.txt EXHIBIT 4.5 EXHIBIT 4.5 GUARANTY New York, New York January 13, 2004 FOR VALUE RECEIVED, and in consideration of loans made or to be made or credit otherwise extended or to be extended by LAURUS MASTER FUND, LTD. ("Laurus") to or for the account of NUMEREX CORP. ("Company") from time to time and at any time and for other good and valuable consideration and to induce Laurus, in its discretion, to make such loans or extensions of credit and to make or grant such renewals, extensions, releases of collateral or relinquishments of legal rights as Laurus may deem advisable, the undersigned (and each of them if more than one, the liability under this Guaranty being joint and several) (jointly and severally referred to as "Guarantor" or "the undersigned") unconditionally guaranties to Laurus, its successors, endorsees and assigns the prompt payment when due (whether by acceleration or otherwise) of all present and future obligations and liabilities of any and all kinds of Company to Laurus arising under, out of, or in connection with that certain Convertible Term Note dated as of the date hereof made by Company in favor of Laurus (as amended, modified, restated or supplemented from time to time, the "Note") and all other documents, agreements and instruments of any nature entered into in connection therewith (the Note and all such other documents, agreements and instruments, collectively, the "Documents") (all of which are herein collectively referred to as the "Obligations"), and irrespective of the genuineness, validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of the Obligations or of any security interest in and to any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any case commenced by or against Company under Title 11, United States Code, including, without limitation, obligations or indebtedness of Company for post-petition interest, fees, costs and charges that would have accrued or been added to the Obligations but for the commencement of such case. In furtherance of the foregoing, the undersigned hereby agrees as follows: 1. No Impairment. Laurus may at any time and from time to time, either before or after the maturity thereof, without notice to or further consent of the undersigned, extend the time of payment of, exchange or surrender any collateral for, renew or extend any of the Obligations or increase or decrease the interest rate thereon, and may also make any agreement with Company or with any other party to or person liable on any of the Obligations, or interested therein, for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between Laurus and Company or any such other party or person, or make any election of rights Laurus may deem desirable under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors' rights generally (any of the foregoing, an "Insolvency Law") without in any way impairing or affecting this Guaranty. This Guaranty shall be effective regardless of the subsequent incorporation, merger or consolidation of Company, or any change in the composition, nature, personnel or location of Company and shall extend to any successor entity to Company, including a debtor in possession or the like under any Insolvency Law. 2. Guaranty Absolute. The undersigned guarantees that the Obligations will be paid strictly in accordance with the terms of the Note and/or any other document, instrument or agreement creating or evidencing the Obligations, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Company with respect thereto. Guarantor hereby knowingly accepts the full range of risk encompassed within a contract of "continuing guaranty" which risk includes the possibility that Company will contract additional indebtedness for which Guarantor may be liable hereunder after Company's financial condition or ability to pay its lawful debts when they fall due has deteriorated, whether or not Company has properly authorized incurring such additional indebtedness. The undersigned acknowledges that (i) no oral representations, including any representations to extend credit or provide other financial accommodations to Company, have been made by Laurus to induce the undersigned to enter into this Guaranty and (ii) any extension of credit to the Company shall be governed solely by the provisions of the Note, the other Documents and applicable law. The liability of the undersigned under this Guaranty shall be absolute and unconditional, in accordance with its terms, and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including, without limitation: (a) any waiver, indulgence, renewal, extension, amendment or modification of or addition, consent or supplement to or deletion from or any other action or inaction under or in respect of the Documents or any other instruments or agreements relating to the Obligations or any assignment or transfer of any thereof, (b) any lack of validity or enforceability of any Document or other documents, instruments or agreements relating to the Obligations or any assignment or transfer of any thereof to an assignee of the Note permitted pursuant to the terms of the Note and the other Documents, (c) any furnishing of any additional security to Laurus or its assignees or any acceptance thereof or any release of any security by Laurus or its assignees, (d) any limitation on any party's liability or obligation under the Documents or any other documents, instruments or agreements relating to the Obligations or any assignment or transfer of any thereof to an assignee of the Note permitted pursuant to the terms of the Note and the other Documents, or any invalidity or unenforceability, in whole or in part, of any such document, instrument or agreement or any term thereof, (e) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Company, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding, whether or not the undersigned shall have notice or knowledge of any of the foregoing, (f) any exchange, release or nonperfection of any collateral, or any release, or amendment or waiver of or consent to departure from any guaranty or security, for all or any of the Obligations or (g) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned. Any amounts due from the undersigned to Laurus shall bear interest until such amounts are paid in full at the highest rate then applicable to the Obligations (but without duplication of any interest accrued or payable under the Note). Obligations include post-petition interest whether or not allowed or allowable. 3. Waivers. (a) This Guaranty is a guaranty of payment and not of collection. Laurus shall be under no obligation to institute suit, exercise rights or remedies or take any other action against Company or any other person liable with respect to any of the Obligations or resort to any collateral security held by it to secure any of the Obligations as a condition precedent to the undersigned being obligated to perform as agreed herein and Guarantor hereby waives to the 2 fullest extent permitted by applicable law any and all rights which it may have by statute or otherwise which would require Laurus to do any of the foregoing. Guarantor further consents and agrees that Laurus shall be under no obligation to marshal any assets in favor of Guarantor, or against or in payment of any or all of the Obligations. The undersigned hereby waives all suretyship defenses and any rights to interpose any defense, counterclaim or offset of any nature and description which the undersigned may have by virtue of its status as a guarantor or surety of the Obligations. (b) The undersigned further waives (i) notice of the acceptance of this Guaranty, of the making of any such loans or extensions of credit, and of all notices and demands of any kind to which the undersigned may be entitled, including, without limitation, notice of adverse change in Company's financial condition or of any other fact which might materially increase the risk of the undersigned and (ii) presentment to or demand of payment from anyone whomsoever liable upon any of the Obligations, protest, notices of presentment, non-payment or protest and notice of any sale of collateral security or any default of any sort, other than to the extent any such notice is required under the Note, the other Documents or applicable law. (c) Notwithstanding any payment or payments made by the undersigned hereunder, or any setoff or application of funds of the undersigned by Laurus, the undersigned shall not be entitled to be subrogated to any of the rights of Laurus against Company or against any collateral or guarantee or right of offset held by Laurus for the payment of the Obligations, nor shall the undersigned seek or be entitled to seek any contribution or reimbursement from Company in respect of payments made by the undersigned hereunder, in each case until all amounts owing to Laurus by Company on account of the Obligations are paid in full and the Note has been terminated. If, notwithstanding the foregoing, any amount shall be paid to the undersigned on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full and the Note shall not have been terminated, such amount shall be held by the undersigned in trust for Laurus, segregated from other funds of the undersigned, and shall forthwith upon, and in any event within two (2) business days of, receipt by the undersigned, be turned over to Laurus in the exact form received by the undersigned (duly endorsed by the undersigned to Laurus, if required), to be applied against the Obligations, whether matured or unmatured, in such order as Laurus may determine, subject to the provisions of the Note. Any and all present and future debts and obligations of Company to any of the undersigned are hereby waived and postponed in favor of, and subordinated to the full payment and performance of, all present and future debts and obligations of Company to Laurus. 4. Security. All sums at any time to the credit of the undersigned and any property of the undersigned in Laurus's possession or in the possession of any bank, financial institution or other entity that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, Laurus (each such entity, an "Affiliate") shall be deemed held by Laurus or such Affiliate, as the case may be, as security for any and all of the undersigned's obligations to Laurus and to any Affiliate of Laurus, no matter how or when arising and whether under this or any other instrument, agreement or otherwise. 5. Representations and Warranties. The undersigned hereby represent and warrant to Laurus (all of which representations and warranties (i) are made as of the date of this 3 Guaranty, (ii) are supplemented by and subject to the Exchange Act Filings (as defined in the Securities Purchase Agreement, dated as of the date hereof, by and between the Company and Laurus (as amended, modified and supplemented from time to time, the "Securities Purchase Agreement") and the representations and warranties made in the Securities Purchase Agreement or any schedule thereto and (iii) shall survive until all Obligations are indefeasibly satisfied in full and the Note has been irrevocably terminated), that: (a) Corporate Status. Each of the undersigned is duly organized, validly existing and in good standing under the laws of its state of formation as set forth under the undersigned's signature on the signature pages hereto and has full corporate or other organization power, authority and legal right to own its property and assets and to transact the business in which it is engaged. (b) Authority and Execution. Each of the undersigned has full corporate or other organizational power, authority and legal right to execute and deliver, and to perform its obligations under, this Guaranty and has taken all necessary corporate and legal action to authorize the execution, delivery and performance of this Guaranty. (c) Legal, Valid and Binding Character. This Guaranty constitutes the legal, valid and binding obligation of the undersigned enforceable in accordance with its terms, except as enforceability may be limited by applicable Insolvency Law or general principles of equity that restrict the availability of equitable or legal remedies. (d) Violations. Except as set forth on Schedule 5(d), the execution, delivery and performance of this Guaranty will not violate any requirement of law applicable to the undersigned or any material contract, agreement or instrument to which any of the undersigned is a party or by which any of the undersigned or any property of the undersigned is bound or result in the creation or imposition of any mortgage, lien or other encumbrance other than to Laurus on any of the property or assets of any of the undersigned pursuant to the provisions of any of the foregoing. (e) Consents or Approvals. Except as set forth on Schedule 5(e), no consent of any other person or entity (including, without limitation, any creditor of any of the undersigned) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty. (f) Litigation. Except as set forth on Schedule 4.12 to the Securities Purchase Agreement, no litigation, arbitration, investigation or administrative proceeding of or before any court, arbitrator or governmental authority, bureau or agency is currently pending or, to the actual knowledge of the officers of the undersigned, threatened (i) with respect to this Guaranty or any of the transactions contemplated by this Guaranty or (ii) against or affecting any of the undersigned, or any of the property or assets of any of the undersigned, which, if adversely determined, would have a Material Adverse Effect (as defined in the Securities Purchase Agreement). 4 (g) Financial Benefit. The undersigned have derived or expect to derive a financial or other advantage from each and every loan, advance or extension of credit made under the Note. 6. Acceleration. It shall be an "Event of Default" under this Guaranty if: (i) any Event of Default shall occur and be continuing under and as defined in the Note or the Security Agreement after expiration of any notice, cure, grace or similar period, (ii) any representation or warranty of any of the undersigned shall have been untrue in any material respect when made, (iii) any of the undersigned should at any time become insolvent, or make a general assignment, or if a proceeding in or under any Insolvency Law shall be filed or commenced by, or in respect of, any of the undersigned, which proceeding, if not commenced by the undersigned, shall not be dismissed within 60 days of its filing; (iv) a notice of any lien, levy, or assessment in excess of $100,000 (in the aggregate outstanding at any time for all of the undersigned on a combined basis) is filed of record with respect to any assets of any of the undersigned by the United States of America or any department, agency, or instrumentality thereof, or (v) the undersigned shall breach in the performance of any obligation under this Guaranty in any respect. Upon the occurrence of any Event of Default, any and all Obligations shall for purposes hereof, at Laurus' option, be deemed due and payable without notice notwithstanding that any such Obligation is not then due and payable by Company. 7. Payments from Guarantor. Laurus, in its sole and absolute discretion, with or without notice to the undersigned, may apply on account of the Obligations any payment from the undersigned or any other guarantor, or amounts realized from any security for the Obligations, or may deposit any and all such amounts realized in a non-interest bearing cash collateral deposit account to be maintained as security for the Obligations. 8. Costs. The undersigned shall pay on demand, all reasonable out of pockets costs, fees and expenses (including reasonable expenses for legal services of every kind) relating to the enforcement or protection of the rights of Laurus hereunder or under any of the Obligations. 9. No Termination. This is a continuing irrevocable guaranty and shall remain in full force and effect and be binding upon the undersigned, and the undersigned's successors and assigns, until all of the Obligations then outstanding on the date on which the Note is paid in full (whether by cash payment or by conversion of the Note to Common Stock (as defined in the Securities Purchase Agreement) pursuant to the terms of the Note) are paid in full, whereupon this Guaranty shall expire and terminate and be of no further force and effect. If any of the present or future Obligations are guarantied by persons, partnerships or corporations in addition to the undersigned, the death, release or discharge in whole or in part or the bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of one or more of them shall not discharge or affect the liabilities of the undersigned under this Guaranty. 10. Recapture. Anything in this Guaranty to the contrary notwithstanding, if Laurus receives any payment or payments on account of the liabilities guaranteed hereby, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver, or any other party under any Insolvency Law, common law or equitable doctrine, then to the extent of any sum not finally retained by Laurus, the undersigned's obligations to Laurus shall be reinstated and this 5 Guaranty shall remain in full force and effect (or be reinstated) until payment shall have been made to Laurus, which payment shall be due on demand. 11. No Waiver. No failure on the part of Laurus to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Laurus of any right, remedy or power hereunder preclude any other or future exercise of any other legal right, remedy or power. Each and every right, remedy and power hereby granted to Laurus or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by Laurus at any time and from time to time. 12. Waiver of Jury Trial. THE GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT ON BEHALF OF THE GUARANTOR DOES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LAURUS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. 13. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS INSTRUMENT SHALL BE BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS INSTRUMENT SHALL BE DEEMED TO PRECLUDE LAURUS FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE DEEMED TO PRECLUDE THE GUARANTOR FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN ANY SUCH ACTIONS. THE GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT ON BEHALF OF THE GUARANTOR AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. THE GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT FURTHER CONSENT THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON IN THE SUPREME COURT FOR THE STATE OF 6 NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED IN EITHER SUCH COURT. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ITS REASONABLE ATTORNEY'S FEES AND COSTS; PROVIDED, HOWEVER, THAT IF THE PARTIES HERETO AGREE TO SETTLE ANY CLAIM, ACTION, PROCEEDING OR LAWSUIT BROUGHT BY ONE PARTY HERETO AGAINST THE OTHER PARTY HERETO, THEN EACH OF THE PARTIES SHALL BEAR ITS OWN COSTS IN CONNECTION WITH SUCH CLAIM, ACTION, PROCEEDING OR LAWSUIT, UNLESS OTHERWISE DIRECTED BY A COURT OF COMPETENT JURISDICTION. 14. Severability. In the event that any provision of this Guaranty is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Guaranty. 15. Amendments, Waivers. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the undersigned therefrom shall in any event be effective unless the same shall be in writing executed by the undersigned and Laurus. 16. Notice. All notices, requests and demands to or upon the undersigned, shall be in writing and shall be deemed to have been duly given or made (a) when delivered, if by hand, (b) three (3) days after being sent, postage prepaid, if by registered or certified mail, (c) when confirmed electronically, if by facsimile, or (d) when delivered, if by a recognized overnight delivery service in each event, to the numbers and/or address set forth beneath the signature of the undersigned, with a copy to: Legal Counsel, Numerex Corp., 1600 Parkwood Circle SE, Suite 200, Atlanta, Georgia 30339, facsimile: (770) 693-5951, and Richard Baltz, Esq., Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004, facsimile: (202) 942-5999. 17. Successors. Laurus may, from time to time, without notice to the undersigned, sell, assign, transfer or otherwise dispose of all or any part of the Obligations and/or rights under this Guaranty to any assignee or transferee of the Note, but only to the extent such assignment is permitted by the Note or Securities Purchase Agreement. Without limiting the generality of the foregoing, Laurus may assign, or grant participations to, one or more banks, financial institutions or other entities all or any part of any of the Obligations who are assignees, transferees or participants in a corresponding portion of the Note. In each such event, Laurus and each and every immediate and successive purchaser, assignee, transferee or holder of all or any part of the Obligations shall, acting as a single, unified group, have the right to enforce this Guaranty, by legal action or otherwise, for their own benefit as fully as if such purchasers, assignees, transferees or holders were herein by name specifically given such right; provided, however, that the holders of the Obligations shall appoint an agent to act on their behalf and shall act and enforce rights and remedies through a single action. 7 18. Release. Nothing except payment in full of all Obligations then outstanding on the date all amounts due under the Note are paid in full (whether by cash payment or by conversion of the Note to Common Stock (as defined in the Securities Purchase Agreement) pursuant to the terms of the Note) shall release the undersigned from liability under this Guaranty. 8 IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this 13th day of January, 2004. NUMEREX SOLUTIONS, LLC By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: MANAGER -------------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware CELLEMETRY LLC By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: MANAGER -------------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware NUMEREX INVESTMENT CORP. By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: CEO -------------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware BROADBAND NETWORKS INC. By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: CEO -------------------------------- Address: 2820 E. College Ave. Suite B State College, PA 16801-7548 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware BNI SOLUTIONS LLC By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: MANAGER -------------------------------- Address: 2820 E. College Ave. Suite B State College, PA 16801-7548 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware DIGILOG INC. By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: CEO -------------------------------- Address: 2360 Maryland Road Willow Grove, PA 19090 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Pennsylvania 10 DCX SYSTEMS INC. By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: CEO -------------------------------- Address: 2360 Maryland Road Willow Grove, PA 19090 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Pennsylvania DCX SYSTEMS AUSTRALIA PTY LIMITED By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: DIRECTOR -------------------------------- Address: Lindfield Executive Centre 12 Tryon Rd. P.O. Box 42 Lindfield, NSW 2072, Australia Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Australia MOBILEGUARDIAN LLC By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: MANAGER -------------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Delaware UPLINK SECURITY, INC. By: /s/ STRATTON J. NICOLAIDES --------------------------------- Its: CEO -------------------------------- Address: 1600 Parkwood Circle SE, Suite 200 Atlanta, GA 30339 Telephone No.: (770) 485-2527 Facsimile No.: (770) 693-5951 State of Formation: Georgia 11 STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of Cellemetry, LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of Numerex Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Numerex Investment Corp., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of BroadBand Networks Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of BNI Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------------- Notary Public 13 STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Digilog Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of DCX Systems Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Director of DCX Systems Australia PTY Limited, the ______________ described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said __________________. /s/ Pamela S. Lester ------------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of MobileGuardian LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------------- Notary Public 14 STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Uplink Security, Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------------- Notary Public 15 EX-4.6 8 w93276exv4w6.txt EXHIBIT 4.6 EXHIBIT 4.6 INTERCREDITOR AGREEMENT FOR VALUE RECEIVED, and in order to induce LAURUS MASTER FUND, LTD. ("Laurus") now and from time to time hereafter to extend financial accommodations to, or otherwise extend or continue to extend credit to or for the benefit of NUMEREX CORP., NUMEREX SOLUTIONS LLC, CELLEMETRY LLC, NUMEREX INVESTMENT CORP., BROADBANK NETWORKS INC., BNI SOLUTIONS LLC, DIGILOG INC., DCX SYSTEMS INC., DCX SYSTEMS AUSTRALIA PTY LIMITED, MOBILEGUARDIAN LLC AND ANY SUBSIDIARIES FORMED AFTER THE DATE HEREOF (each a "Company" and, collectively, the "Companies"), the undersigned (the "Creditor") does hereby subordinate payment of all indebtedness of each Company to Creditor of every nature, howsoever evidenced, incurred or created (including, without limitation, under any guaranty agreement), and whether now or hereafter owing (collectively, the "Subordinated Indebtedness") to: (x) the Obligations (as defined in the Security Agreement among Laurus and each Company as the same may from time to time be or have been amended, restated, extended or supplemented, the "Security Agreement"), and (y) all other indebtedness of each Company to Laurus of every nature, howsoever evidenced, incurred or created, and whether now or hereafter owing ((x) and (y) collectively, the "Obligations"). Creditor further subordinates to Laurus any and all liens and security interests on the assets of each Company heretofore and from time to time hereafter received by Creditor to secure the payment of the Subordinated Indebtedness or as security for any other indebtedness of any Company to Creditor, howsoever evidenced, incurred or created, and whether now or hereafter owing ("Creditor's Liens"), and in connection therewith agrees that: (i) any and all liens and security interests upon the assets of each Company heretofore and from time to time hereafter received by Laurus as security for the Obligations shall be superior to and take priority over Creditor's Liens, regardless of the order of filing or perfection; (ii) Laurus shall not owe any duty to Creditor whatsoever as a result of or in connection with Creditor's Liens, and, without limiting the foregoing, Laurus shall not owe to Creditor any duty of notice, marshalling of assets or protection of the rights or interests of Creditor; and (iii) so long as this Intercreditor Agreement shall be in effect, Creditor will not take any action to foreclose or otherwise enforce any of Creditor's Liens. Laurus shall have the exclusive right to manage, perform and enforce the underlying terms of the Security Agreement relating to the assets of each Company and to exercise and enforce its rights according to its discretion. Creditor waives all rights to affect the method or challenge the appropriateness of any action taken by Laurus in connection with Laurus's enforcement of its rights under the Security Agreement and any and all documents, instruments and agreements entered into in connection therewith. Only Laurus shall have the right to restrict, permit, approve or disapprove the sale, transfer or other disposition of the assets of any Company; provided, however, that Laurus shall have no right to restrict, permit, approve or disapprove a Non-Core Asset Sale (as defined in the Security Agreement) so long as such Non-Core Asset Sale is permitted to be made in accordance with the terms of the Security Agreement. As between Laurus and Creditor, the terms of this Intercreditor Agreement shall govern even if all or part of Laurus's liens are avoided, disallowed, set aside or otherwise invalidated. Upon any distribution of the assets or readjustment of the indebtedness of any Company, whether by reason of liquidation, composition, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding involving the readjustment of all or any of the Subordinated Indebtedness, or the application of the assets of any Company to the payment or liquidation thereof, Laurus shall be entitled to receive payment in full of any and all Obligations then owing to it by each Company prior to the payment of all or any part of the Subordinated Indebtedness, and in order to enable Laurus to enforce its rights hereunder in any such action or proceeding, Laurus is hereby irrevocably authorized and empowered in its discretion as attorney in fact for Creditor to make and present for and on behalf of Creditor such proofs of claims against each Company on account of the Subordinated Indebtedness as Laurus may deem expedient or proper and to vote such proofs of claims in any such proceeding and to receive and collect any and all dividends or other payments or disbursements made thereon in whatever form the same may be paid or issued and to apply same on account of any Obligations owing to Laurus by each Company. Creditor will execute and deliver to Laurus from time to time such assignments or other instruments as may be required by Laurus in order to enable it to enforce any and all such claims and to collect any and all dividends or other payments or disbursements which may be made at any time on account of all or any part of the Subordinated Indebtedness. Creditor hereby acknowledges that the Subordinated Indebtedness is and shall be expressly subordinated in right of payment to the Obligations. Creditor will not now or hereafter directly or indirectly ask, demand, sue for, take or receive payment of all or any part of the Subordinated Indebtedness or any collateral therefor, and no Company will be obligated to make any such payment, and the failure of any Company so to do shall not constitute a default by such Company in respect of the Subordinated Indebtedness; provided, however, so long as no Event of Default (as defined in the Security Agreement) shall have occurred and be continuing or would occur after giving effect to such payment, Digilog Inc. may pay and Creditor may receive regularly scheduled payments of interest on the Subordinated Indebtedness as in effect on the date hereof. In the event Creditor shall receive any payment in respect of the Subordinated Indebtedness when Creditor is not permitted to receive such payment in accordance with the terms of this Intercreditor Agreement, then Creditor shall forthwith deliver, or cause to be delivered, the same to Laurus in precisely the form held by Creditor (except for any necessary endorsement) and until so delivered the same shall be held in trust by Creditor as the property of Laurus. Creditor will not at any time while this Intercreditor Agreement remains in effect, assign or transfer any right, claim or interest of any kind in or to any of the Subordinated Indebtedness or any collateral therefor without the prior written consent of Laurus. Creditor will, upon request of Laurus, deliver to Laurus any note or other agreement, instrument or document which evidences any Subordinated Indebtedness. Laurus may at any time, in its discretion, renew or extend the time of payment of all or any existing or future Obligations of any Company to Laurus or waive or release any collateral which may be held therefor at any time, and in connection therewith may make and enter into any such agreement or agreements as it may deem proper or desirable without notice to or the consent of Creditor and without in any manner impairing or affecting this Intercreditor Agreement or any of Laurus's rights hereunder. 1 Creditor warrants to Laurus that: (i) Creditor is the owner of the Subordinated Indebtedness; (ii) Creditor has the full right, power and authority to make, execute and deliver this Intercreditor Agreement; (iii) Creditor has not heretofore assigned, pledged or granted a security interest or other lien, right or interest in the Subordinated Indebtedness or any instrument or document evidencing the Subordinated indebtedness to any third party; (iv) this Intercreditor Agreement is valid and binding upon Creditor and is and will be enforceable by Laurus in accordance with its terms (except as limited by bankruptcy and other laws affecting the rights of creditors generally); and (v) no Company is now in default with respect to the Subordinated Indebtedness or any part thereof. This Intercreditor Agreement shall be effective as of the date hereof and shall continue in effect until all of the Obligations have been paid in cash, performed and satisfied in full. This Intercreditor Agreement shall be binding upon Creditor and Creditor's heirs, personal representatives, successors and assigns, as applicable, and shall inure to the benefit of Laurus and its successors and assigns. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO DO HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT. EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INTERCREDITOR AGREEMENT. EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT ACTION OR PROCEEDING BROUGHT IN SUCH A COURT, AFTER ALL APPROPRIATE APPEALS, SHALL BE CONCLUSIVE AND BINDING UPON IT. Dated: January __, 2004 CREDITOR: ALETHEA LIMITED PARTNERSHIP /s/ Stratton J. Nicolaides - --------------------------------------------------- By: Stratton J. Nicolaides Its: Chairman Address: c/o Salisbury & Ryan ------------------------------- 1325 Avenue of The Americas, New York, NY 10019 - ------------------------------------------------ Attention: Stratton J. Nicolaides/Andrew J. Ryan -------------------------------------- Telephone No.: 212-977-4660 ---------------------------------- Telefax No.: 212-977-4668 ------------------------------------ ACKNOWLEDGED AND ACCEPTED: LAURUS MASTER FUND, LTD. By: /s/ David Grin ---------------------------- Its: ---------------------------- Address: 825 Third Avenue New York, NY 10022 Attention: David Grin Telephone No.: (212) 541-5800 Telefax No.: (212) 541-4434 2 AGREEMENT NOT TO PAY SUBORDINATED INDEBTEDNESS The undersigned hereby acknowledge receipt of a copy of the above and foregoing Intercreditor Agreement and agree not to pay any of the Subordinated Indebtedness except as expressly permitted therein. NUMEREX CORP. By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Chairman and CEO --------------------------------------- NUMEREX SOLUTIONS LLC By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Manager --------------------------------------- CELLEMETRY LLC By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Manager --------------------------------------- NUMEREX INVESTMENT CORP.. By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: CEO --------------------------------------- BROADBANK NETWORKS INC. By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: CEO --------------------------------------- BNI SOLUTIONS LLC By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Manager --------------------------------------- DIGILOG INC. By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: CEO --------------------------------------- DCX SYSTEMS INC. By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: CEO --------------------------------------- DCX SYSTEMS AUSTRALIA PTY LIMITED By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Director --------------------------------------- MOBILEGUARDIAN LLC By: /s/ Stratton J. Nicolaides ---------------------------------------- Its: Manager --------------------------------------- 3 STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Chairman/CEO of Numerex Corp., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of Numerex Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Numerex Investment Corp., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of BroadBank Networks Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of BNI Solutions LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------- Notary Public 4 STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of Digilog Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the CEO of DCX Systems Inc., the corporation described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said corporation. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Director of DCX Systems Australia PTY Limited, the ______________ described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said __________________. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Chairman of Alethea Limited Partnership, the limited partnership described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited partnership. /s/ Pamela S. Lester ------------------------- Notary Public STATE OF Georgia ) : ss.: COUNTY OF Cobb ) On the 13th day of January, 2004, before me personally came Stratton J. Nicolaides to me known, who, being by me duly sworn did depose and say that s/he is the Manager of MobileGuardian LLC, the limited liability company described in and which executed the above instrument; and that s/he signed her/his name thereto by order of the board of directors of said limited liability company. /s/ Pamela S. Lester ------------------------- Notary Public 5 EX-4.7 9 w93276exv4w7.txt EXHIBIT 4.7 EXHIBIT 4.7 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of January 13, 2004, by and between Numerex Corp., a Pennsylvania corporation (the "COMPANY"), and Laurus Master Fund, Ltd. (the "PURCHASER"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and between the Company and the Purchaser (the "SECURITIES PURCHASE AGREEMENT"), and pursuant to the Note and the Warrant referred to therein. The Company and the Purchaser hereby agree as follows: 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein that are defined in the Securities Purchase Agreement shall have the meanings given such terms in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Common Stock" means shares of the Company's class A common stock, no par value per share. "Effectiveness Date" means August 13, 2004. "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any successor statute. "Filing Date" means, with respect to the Registration Statement required to be filed hereunder, a date no later than one hundred and twenty (120) days following the date upon which the principal amount of the Term Loan to the Company in original principal amount of $4,500,000 has been funded to the Company. "Holder" or "Holders" means the Purchaser or any of its affiliates or transferees to the extent any of them hold Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Note" has the meaning set forth in the Securities Purchase Agreement. "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Registrable Securities" means the shares of Common Stock issued upon the conversion of the Note and issuable upon exercise of the Warrant (including, without limitation, any additional shares of Common Stock received by the holder under the Note or Warrant as a result of any interest payments or any other payment or fee made thereunder by the Company in shares of Common Stock). "Registration Statement" means each registration statement required to be filed hereunder, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Securities Act" means the Securities Act of 1933, as amended, and any successor statute. "Trading Day" means each day the Trading Market on which the Common Stock is traded is open and available to trade securities. "Trading Market" means any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock Exchange or the New York Stock Exchange. "Warrant" means the Common Stock purchase warrant issued pursuant to the Security Agreement. 2. REGISTRATION. (a) On or prior to the Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the Registrable Securities for an offering to be 2 made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). The Company shall cause the Registration Statement to become effective and remain effective as provided herein. The Company shall use its reasonable commercial efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date. The Company shall use its reasonable commercial efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earlier date of when (i) all Registrable Securities have been sold or (ii) all Registrable Securities may be sold immediately without registration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "EFFECTIVENESS PERIOD"). (b) In addition to the terms of Section 4 of the Warrant, if: (i) after the Registration Statement is filed with and declared effective by the Commission, the Registration Statement ceases to be effective (by suspension or otherwise) as to all Registrable Securities to which it is required to relate at any time prior to the expiration of the Effectiveness Period (without being succeeded immediately by an additional registration statement filed and declared effective) other than during an "ALLOWABLE SUSPENSION PERIOD" (as defined below) for a period of time which shall exceed thirty (30) Trading Days in the aggregate per year (defined as a period of 365 days commencing on the date the Registration Statement is declared effective) or more than twenty (20) consecutive calendar days; (ii) the Common Stock is not listed or quoted, or is suspended from trading on any Trading Market for a period of three (3) consecutive Trading Days (provided the Company shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or within such period list the Common Stock on another Trading Market); or (iii) an Allowable Suspension Period shall have been exceeded; (any such failure or breach being referred to as an "EVENT," and for purposes of clause (i) or (iii) the date which such thirty (30) Trading Day or twenty (20) consecutive calendar day period (as the case may be) is exceeded, or for purposes of clause (ii) the date on which such three (3) Trading Day period is exceeded, being referred to as "EVENT DATE")), then until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1.0% for each thirty (30) day period (prorated for partial periods) on a daily basis of the original principal amount of the Note. While such Event continues, such liquidated damages shall be paid not less often than each thirty (30) days. Any unpaid liquidated damages as of the date when an Event has been cured by the Company shall be paid (prorated for partial periods) within three (3) days following the date on which such Event has been cured by the Company. (c) Notwithstanding anything in this Agreement to the contrary, the Company shall, by written notice to Purchaser, advise Purchaser that sales under the Registration Statement after the Effectiveness Date might be unlawful due to the fact that the Company is engaged in a material merger, acquisition or sale, or other pending material financing, corporate reorganization or other transaction or that an event shall have occurred as a result of which it is reasonably expected that the Company's financial statements will be restated or the Registration Statement contains or will contain a misstatement of a material fact or omit to make a statement 3 required to make the statements therein not misleading. Upon receipt of such notice, Purchaser shall immediately discontinue any sales of Registrable Securities pursuant to such Registration Statement until Purchaser has received copies of a supplemented or amended Prospectus or until Purchaser is advised in writing by the Company that the then-current Prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. Any period of not more than twenty (20) consecutive calendar days or more than thirty (30) Trading Days in any twelve month period commencing on the date the Registration Statement is declared effective during which Purchaser shall not sell or where use of the Registration Statement might be unlawful shall be referred to as an "ALLOWABLE SUSPENSION PERIOD", provided that at least two (2) Trading Days shall elapse between Allowable Suspension Periods. 3. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions hereof to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission the Registration Statement with respect to such Registrable Securities, respond as promptly as possible to any comments received from the Commission, and use its commercially reasonable efforts to cause the Registration Statement to become and remain effective for the Effectiveness Period with respect thereto, and promptly provide to the Purchaser copies of all filings and Commission letters of comment relating thereto; (b) prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement and to keep such Registration Statement effective until the expiration of the Effectiveness Period; (c) furnish to the Purchaser such number of copies of the Registration Statement and the Prospectus included therein (including each preliminary Prospectus) as the Purchaser reasonably may request to facilitate the public sale or disposition of the Registrable Securities covered by the Registration Statement; (d) use its commercially reasonable efforts to register or qualify the Purchaser's Registrable Securities covered by the Registration Statement under the securities or "blue sky" laws of such jurisdictions within the United States as the Purchaser may reasonably request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) list the Registrable Securities covered by the Registration Statement with any national securities exchange or the National or SmallCap Market of The Nasdaq Stock Market, Inc. or the NASD OTC Bulletin Board or the National Quotation Bureau's Pink Sheets on which the Common Stock of the Company is then listed; 4 (f) immediately notify the Purchaser at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the Prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and (g) make available for inspection by the Purchaser and any attorney, accountant or other agent retained by the Purchaser, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Purchaser. 4. REGISTRATION EXPENSES. All expenses relating to the Company's compliance with Sections 2 and 3 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars, fees of, and disbursements incurred by, one counsel for the Holders, are called "REGISTRATION EXPENSES". All selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Holders beyond those included in Registration Expenses, are called "SELLING EXPENSES." The Company shall only be responsible for all Registration Expenses. 5. INDEMNIFICATION. (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Purchaser, and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability (i) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of the Purchaser or any such person in writing specifically for use in any such document or (ii) is pursuant to such Purchaser's use of an outdated or defective prospectus after the Company has provided written notice to Purchaser that the prospectus is outdated or defective. 5 (b) In the event of a registration of the Registrable Securities under the Securities Act pursuant to this Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact which was furnished in writing by the Purchaser to the Company expressly for use in (and such information is contained in) the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of the Purchaser specifically for use in any such document. Notwithstanding the provisions of this paragraph, the Purchaser shall not be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by the Purchaser in respect of Registrable Securities in connection with any such registration under the Securities Act. (c) Promptly after receipt by a party entitled to claim indemnification hereunder (an "INDEMNIFIED PARTY") of notice of the commencement of any action, such Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an "INDEMNIFYING PARTY"), notify the Indemnifying Party in writing thereof, but the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 5(c) and shall only relieve it from any liability which it may have to such Indemnified Party under this Section 5(c) if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof, and, after notice from the Indemnifying Party to such Indemnified Party of its election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 5(c) for any legal expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; if the Indemnified Party retains its own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have concluded upon the written opinion of its counsel that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or that the interests of the Indemnified Party could reasonably be expected to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with 6 the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. (d) In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Purchaser, or any officer, director or controlling person of the Purchaser, makes a claim for indemnification pursuant to this Section 5 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 5 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Purchaser or such officer, director or controlling person of the Purchaser in circumstances for which indemnification is provided under this Section 5; then, and in each such case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities covered by the Registration Statement bears to the public offering price of all securities covered by such Registration Statement, provided, however, that, in any such case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 6. REPRESENTATIONS AND WARRANTIES. (a) The Common Stock of the Company is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except with respect to certain matters which the Company has disclosed to the Purchaser on Schedule 4.21 to the Securities Purchase Agreement, the Company has filed all proxy statements, reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act. The Company has filed (i) its Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and (ii) its Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 (collectively, the "SEC REPORTS"). Except as set forth on Schedule 4.21 to the Securities Purchase Agreement, each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed) and fairly present in all material respects the financial 7 condition, the results of operations and the cash flows of the Company and its subsidiaries, on a consolidated basis, as of, and for, the periods presented in each such SEC Report. (b) The Common Stock is listed for trading on the Nasdaq National Market System and satisfies the requirements for the continuation of such listing in all material respects. The Company has not received any notice from the NASD or Nasdaq that its Common Stock will be delisted from the Nasdaq National Market System or that its Common Stock does not meet all requirements for the continuation of such listing. (c) Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Registrable Securities pursuant to the Securities Purchase Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Common Stock pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Registrable Securities to be integrated with other offerings. (d) The Warrant, the Note and the shares of Common Stock which the Purchaser may acquire pursuant to the Warrant and the Note are all restricted securities under the Securities Act as of the date of this Agreement. The Company will not issue any stop transfer order or other order impeding the sale and delivery of any of the Registrable Securities at such time as such Registrable Securities are registered for public sale or an exemption from registration is available, except as required by federal or state securities laws. (e) The Company understands the nature of the Registrable Securities issuable upon the conversion of the Note and the exercise of the Warrant and recognizes that the issuance of such Registrable Securities may have a potential dilutive effect. The Company specifically acknowledges that its obligation to issue the Registrable Securities is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. (f) Except for agreements made in the ordinary course of business, there is no agreement that has not been filed with the Commission as an exhibit to a registration statement or to a form required to be filed by the Company under the Exchange Act, the breach of which could reasonably be expected to have a material and adverse effect on the Company and its subsidiaries, or would prohibit or otherwise interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement in any material respect. (g) The Company will at all times have authorized and reserved a sufficient number of shares of Common Stock for the full conversion of the Note and exercise of the Warrant. 7. MISCELLANEOUS. (a) REMEDIES. In the event of a breach by the Company or by a Holder, of any of their respective obligations under this Agreement, each Holder or the Company, as the case may 8 be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent specified in Schedule 7(e) hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right for inclusion of shares in the Registration Statement to any of its security holders. Except as and to the extent specified in Schedule 7(e) hereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been fully satisfied. (c) COMPLIANCE. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a Discontinuation Event (as hereinafter defined), such Holder will forthwith discontinue disposition of such Registrable Securities under the applicable Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "ADVICE") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. For purposes of this Section 7(d), a "DISCONTINUATION EVENT" shall mean (i) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the Commission or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and/or (v) the occurrence of any event or passage of time that makes the financial statements included in such Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 9 (e) PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered to the extent the Company may do so without violating registration rights of others which exist as of the date of this Agreement, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to obtaining any required the consent of any selling stockholder(s) to such inclusion under such registration statement. (f) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) NOTICES. Any notice or request hereunder may be given to the Company or the Purchaser at the respective addresses set forth below or as may hereafter be specified in a notice designated as a change of address under this Section 7(g). Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery, overnight mail or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any party to whom it is addressed, in the case of those by mail or overnight mail, deemed to have been given three (3) business days after the date when deposited in the mail or with the overnight mail carrier, and, in the case of a telecopy, when confirmed. The address for such notices and communications shall be as follows: If to the Company: Numerex Corp. 1600 Parkwood Circle, Suite 200 Atlanta, Georgia 30339-2119 Attention: Chief Financial Officer and Legal Counsel Facsimile: (770) 693-5951 With a copy to: Arnold & Porter 555 12th Street, N.W. Washington, D.C. 20004 10 Attention: Richard Baltz, Esq. Facsimile: (202) 942-5999 If to a Purchaser: To the address set forth under such Purchaser name on the signature pages hereto. If to any other Person who is then the registered Holder: To the address of such Holder as it appears in the stock transfer books of the Company or such other address as may be designated in writing hereafter in accordance with this Section 7(g) by such Person. (h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Notes and the Security Agreement with the prior written consent of the Company, which consent shall not be unreasonably withheld. (i) EXECUTION AND COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (j) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Any Proceeding brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in any state or federal court sitting in the Borough of Manhattan, City of New York; provided that nothing contained in this Agreement shall be deemed to preclude Holder from bringing a Proceeding or taking other legal action in any other court of competent jurisdiction and nothing shall be deemed to preclude the Company from asserting any defenses or counterclaims in any such Proceedings. Both parties and the individuals executing this Agreement on behalf of such parties agree to submit to the jurisdiction of such courts and waive trial by jury. Both parties and the individuals executing this Agreement on behalf of such parties further consent that any summons, subpoena or other process or papers (including, without limitation, any notice or motion or other application to either of the aforementioned courts or a judge thereof) or any notice in connection with any Proceedings hereunder, may be served by registered or certified mail, return receipt requested, or by personal 11 service provided a reasonable time for appearance is permitted, or in such other manner as may be permissible under the rules of said courts. Both parties and the individuals executing this Agreement on behalf of such parties waive any objection to jurisdiction and venue of any action instituted hereon in the Supreme Court for the State of New York, County of New York, or the United States District Court for the Southern District of New York and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens for any Proceeding filed in either such court. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs; provided, however, that if the parties hereto agree to settle any Proceeding brought by one party hereto against the other party hereto, then each of the parties shall bear its own costs in connection with such Proceeding, unless otherwise directed by a court of competent jurisdiction. (k) CUMULATIVE REMEDIES. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. [Balance of page intentionally left blank; signature page follows.] 12 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. NUMEREX CORP. By: /s/ Stratton J. Nicolaides ----------------------------------- Name: Stratton J. Nicolaides --------------------------------- Title: CEO -------------------------------- LAURUS MASTER FUND, LTD. By: /s/ David Grin ----------------------------------- Name: David Grin --------------------------------- Title: -------------------------------- Address for Notices: 825 Third Avenue, 14th Floor New York, New York 10022 Attention: David Grin Facsimile: 212-541-4434 13 EX-4.8 10 w93276exv4w8.txt EXHIBIT 4.8 EXHIBIT 4.8 FUNDS ESCROW AGREEMENT This Agreement is dated as of the 13th day of January, 2004 among NUMEREX CORP a Pennsylvania corporation (the "COMPANY") and Laurus Master Fund, Ltd. (the "PURCHASER"), and Dechert LLP (the "ESCROW AGENT"): W I T N E S S E T H: WHEREAS, the Company and the Purchaser have entered into a Securities Purchase Agreement ("PURCHASE AGREEMENT") for the sale by the Company to the Purchaser of a secured Term Note (as hereafter defined) and issuance of a Warrant (as hereafter defined) to the Purchaser in the aggregate principal amount and in the denomination set forth on Schedule A hereto; and WHEREAS, the parties hereto require the Company to deliver the Term Note against payment therefor, with such Term Note and payment to be delivered to the Escrow Agent to be held in escrow and released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the terms and conditions of this Agreement; NOW THEREFORE, the parties agree as follows: ARTICLE I INTERPRETATION 1.1. Definitions. Whenever used in this Agreement, the following terms shall have the meanings set forth below. Terms not otherwise defined herein shall have the meaning set forth in the Purchase Agreement. (a) "AGREEMENT" means this Agreement and all amendments made hereto and thereto by written agreement between the parties. (b) "COMPANY DOCUMENTS" means the Securities Purchase Agreement, the Term Note, the Security Agreement, Registration Rights Agreement, Warrant, the Charter Documents, the Legal Opinion, Unlimited Guarantee and the Closing Payment . (c) "CHARTER DOCUMENTS" means the certified copy of the certificate of incorporation of Numerex, Corp. and its bylaws. (d) "CLOSING PAYMENT" means the fees to be paid to Laurus Capital Management set forth on Schedule A hereto. (e) "DISBURSEMENT LETTER" means that certain letter delivered to the Escrow Agent by each of the Purchaser and the Company setting forth wire instructions and amounts to be funded at the Closing. (f) "SECURITY AGREEMENT" means that certain Security Agreement delivered by the Company and its subsidiaries pursuant to the Securities Purchase Agreement. (g) "ESCROWED PAYMENT" means $4,500,000. (h) "LEGAL OPINION" means, collectively, the original signed legal opinions of Arnold & Porter, Catania & Parker and Pamela Lester, Esq. (i) "PURCHASER DOCUMENTS" means the Escrowed Payment, the Securities Purchase Agreement, the Security Agreement, Registration Rights Agreement and the Disbursement Letter. (j) "REGISTRATION RIGHTS AGREEMENT" means that certain registration rights agreement executed and delivered pursuant to the Securities Purchase Agreement. (k) "TERM NOTE" means the convertible term note of the Company issued to the Purchaser in the amount of $4,500,000 in the form of Exhibit A annexed to the Securities Purchase Agreement. (l) "WARRANT" means the common stock purchase warrant of the Company to purchase up to 300,000 shares of the Company's common stock, issued to Purchaser in connection with the Term Note. (m) "UNLIMITED GUARANTEE" means that certain guarantee made by each of the following entities in favor of the Purchaser: Numerex Solutions, LLC, Cellemetry LLC, Numerex Investment Corp., Broadband Networks Inc., BNI Solutions LLC, Digilog Inc., DCX Systems Inc., DCX Systems Australia Pty Limited, MobileGuardian LLC and Uplink Security, Inc. 1.2. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contained herein and pertaining to the Company Documents and Purchaser Documents and supersedes all prior agreements, understandings, negotiations and discussions of the parties, whether oral or written. There are no warranties, representations and other agreements made by the parties in connection with the subject matter hereof except as specifically set forth in this Agreement. 1.3. Extended Meanings. In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word "person" includes an individual, body corporate, partnership, trustee or trust or unincorporated association, executor, administrator or legal representative. 1.4. Waivers and Amendments. This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party entitled 2 to the benefit thereof waiving compliance. Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or future exercise of any other right, power or privilege hereunder. 1.5. Headings. The division of this Agreement into articles, sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. 1.6. Law Governing this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by any party against any other party concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Each of the parties hereto and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. 1.7. Consent to Jurisdiction. Subject to Section 1.6 hereof, each of the Company, the Escrow Agent and the Purchaser hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law. 1.8. Construction. Each party acknowledges that its legal counsel participated in the preparation of this Agreement and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against any other. ARTICLE II DELIVERIES TO THE ESCROW AGENT 2.1. Delivery of Company Documents to Escrow Agent. On or about the date hereof, the Company shall deliver to the Escrow Agent the Company Documents executed by the Company to the extent it is a party thereto. 2.2. Delivery of Purchaser Documents to Escrow Agent. On or about the date hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser Documents executed by the Purchaser. 3 2.3. Intention to Create Escrow Over Company Documents and Purchaser Documents. The Purchaser, the Company intend that the Company Documents and Purchaser Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement for their benefit as set forth herein. 2.4. Escrow Agent to Deliver Company Documents and Purchaser Documents. The Escrow Agent shall hold and release the Company Documents and Purchaser Documents only in accordance with the terms and conditions of this Agreement. ARTICLE III RELEASE OF COMPANY DOCUMENTS AND PURCHASER DOCUMENTS 3.1. Release of Escrow. Subject to the provisions of Section 4.2, the Escrow Agent shall release the Company Documents and Purchaser Documents pursuant to (a), (b) or (c) below, as follows: (a) Upon receipt by the Escrow Agent of the Company Documents and the Purchaser Documents (including the Escrowed Payment), the Escrow Agent will simultaneously release the Company Documents to the Purchaser and release the corresponding Purchaser Documents to the Company except that (i) the Closing Payment will be delivered to the fund managers of Purchaser; and (ii) the reasonable legal fees for counsel to the Purchaser, which shall be paid pursuant to Section 2(c) of the Securities Purchase Agreement, will be released to the Purchaser. At the request of the Escrow Agent, the Company each will provide written facsimile or original instructions to the Escrow Agent as to the disposition of all funds releasable to the Company. (b) Upon receipt by the Escrow Agent of joint written instructions ("Joint Instructions") signed by the Company and the Purchaser, it shall deliver the Company Documents and Purchaser Documents in accordance with the terms of the Joint Instructions. (c) Upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree or award of a court of competent jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Company Documents and Purchaser Documents in accordance with the Court Order. Any Court Order shall be accompanied by an opinion of counsel for the party presenting the Court Order to the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction and that the Court Order is final and non-appealable. (d) If the Company Documents and Purchaser Documents (including the Escrowed Payment) have not been delivered to the Escrow Agent and distributed as provided in Section 3.1(a) on or before 5:00 p.m. (New York Time) on the business day following the date on which the Company has delivered all Company Documents (the "Outside Time"), the Escrow Agent shall, upon the written instructions of the Company, return the Company Documents to the Company or deliver the Company Documents to such other place as the Company shall instruct in such writing; provided, however, that nothing in this Section 3.1(d) shall prohibit the Escrow Agent from disbursing the Company Documents and Purchaser Documents (including 4 the Escrowed Payment) pursuant to Section 3.1(a) after the Outside Time except to the extent it has received written instructions from the Company as aforesaid. 3.2. Acknowledgement of Company and Purchaser; Disputes. The Company and the Purchaser acknowledge that the only terms and conditions upon which the Company Documents and Purchaser Documents are to be released are set forth in Articles 3 and 4 of this Agreement. The Company and the Purchaser reaffirm their agreement to abide by the terms and conditions of this Agreement with respect to the release of the Company Documents and Purchaser Documents. Any dispute with respect to the release of the Company Documents and Purchaser Documents shall be resolved pursuant to Section 4.2 or by agreement among the Company and Purchaser. ARTICLE IV CONCERNING THE ESCROW AGENT 4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's duties and responsibilities shall be subject to the following terms and conditions: (a) The Purchaser and the Company acknowledge and agree that the Escrow Agent (i) shall not be responsible for or bound by, and shall not be required to inquire into whether either the Purchaser or the Company is entitled to receipt of the Company Documents and Purchaser Documents pursuant to any other agreement or otherwise; (ii) shall be obligated only for the performance of such duties as are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be protected in acting or refraining from acting upon any written notice, instruction, instrument, statement, request or document furnished to it hereunder and believed by the Escrow Agent in good faith to be genuine and to have been signed or presented by the proper person or party, without being required to determine the authenticity or correctness of any fact stated therein or the propriety or validity or the service thereof; (iv) may assume that any person purporting to give notice or make any statement or execute any document in connection with the provisions hereof has been duly authorized to do so; (v) shall not be responsible for the identity, authority or rights of any person, firm or corporation executing or delivering or purporting to execute or deliver this Escrow Agreement or any document deposited hereunder or any endorsement thereon or assignment thereof; (vi) shall not be under any duty to give the property held by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its own similar property; and (vii) may consult counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and complete authorization and protection in respect of any action taken, suffered or omitted by Escrow Agent hereunder in good faith and in accordance with the opinion of such counsel. (b) The Purchaser and the Company acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and that the Escrow Agent shall not be liable for any action taken by Escrow Agent in good faith and believed by Escrow Agent to be authorized or within the rights or powers conferred upon Escrow Agent by this Agreement. The Purchaser and the Company, jointly and severally, agree to indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents and representatives for any action taken 5 or omitted to be taken by Escrow Agent or any of them hereunder, including the fees of outside counsel and other costs and expenses of defending itself against any claim or liability under this Agreement, except in the case of gross negligence or willful misconduct on Escrow Agent's part committed in its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a duty only to the Purchaser and Company under this Agreement and to no other person. (c) The Purchaser and the Company jointly and severally agree to reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including counsel fees) incurred in connection with the performance of its duties and responsibilities hereunder not to exceed $1,500. (d) The Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5) days prior written notice of resignation to the Purchaser and the Company. Prior to the effective date of the resignation as specified in such notice, the Purchaser and Company will issue to the Escrow Agent a Joint Instruction authorizing delivery of the Company Documents and Purchaser Documents to a substitute Escrow Agent selected by the Purchaser and the Company. If no successor Escrow Agent is named by the Purchaser and Company, the Escrow Agent may apply to a court of competent jurisdiction in the State of New York for appointment of a successor Escrow Agent, and to deposit the Company Documents and Purchaser Documents with the clerk of any such court. (e) The Escrow Agent does not have and will not have any interest in the Company Documents and Purchaser Documents, but is serving only as escrow agent, having only possession thereof. (f) The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and reasonably believed by it to be authorized hereby or within the rights or powers conferred upon it hereunder, nor for action taken or omitted by it in good faith, and in accordance with advice of counsel (which counsel may be of the Escrow Agent's own choosing), and shall not be liable for any mistake of fact or error of judgment or for any acts or omissions of any kind except for its own willful misconduct or gross negligence. (g) This Agreement sets forth exclusively the duties of the Escrow Agent with respect to any and all matters pertinent thereto and no implied duties or obligations shall be read into this Agreement. (h) The Escrow Agent shall be permitted to act as counsel for the Purchaser or the Company, as the case may be, in any dispute as to the disposition of the Company Documents and Purchaser Documents, in any other dispute among the Purchaser and the Company, whether or not the Escrow Agent is then holding the Company Documents and Purchaser Documents and continues to act as the Escrow Agent hereunder. (i) The provisions of this Section 4.1 shall survive the resignation of the Escrow Agent or the termination of this Agreement. 4.2. Dispute Resolution: Judgments. Resolution of disputes arising under this Agreement shall be subject to the following terms and conditions: 6 (a) If any dispute shall arise with respect to the delivery, ownership, right of possession or disposition of the Company Documents and Purchaser Documents, or if the Escrow Agent shall in good faith be uncertain as to its duties or rights hereunder, the Escrow Agent shall be authorized, without liability to anyone, to (i) refrain from taking any action other than to continue to hold the Company Documents and Purchaser Documents pending receipt of a Joint Instruction from the Purchaser and Company, or (ii) deposit the Company Documents and Purchaser Documents with any court of competent jurisdiction in the State of New York, in which event the Escrow Agent shall give written notice thereof to the Purchaser and the Company and shall thereupon be relieved and discharged from all further obligations pursuant to this Agreement. The Escrow Agent may, but shall be under no duty to, institute or defend any legal proceedings which relate to the Company Documents and Purchaser Documents. The Escrow Agent shall have the right to retain counsel if it becomes involved in any disagreement, dispute or litigation on account of this Agreement or otherwise determines that it is necessary to consult counsel. (b) The Escrow Agent is hereby expressly authorized to comply with and obey any Court Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow Agent shall not be liable to the Purchaser and Company or to any other person, firm, corporation or entity by reason of such compliance. ARTICLE V GENERAL MATTERS 5.1. Termination. This escrow shall terminate upon the release of all of the Company Documents and Purchaser Documents or at any time upon the agreement in writing of the Purchaser and Company. 5.2. Notices. All notices, request, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given one (1) day after being sent by telecopy (with copy delivered by overnight courier, regular or certified mail): (a) If to the Company, to: Numerex Corp. 1600 Parkwood Circle SE, Suite 200 Atlanta, Georgia 30339 Attention: Chief Financial Officer and Legal Counsel Facsimile: (770) 693-5951 with a copy to: Arnold & Porter 555 12th Street, N.W. Washington, D.C. 20004 Attention: Richard Baltz Facsimile: (202) 942-5999_ 7 (b) If to the Purchaser, to: Laurus Master Fund, Ltd. c/o Ironshore Corporate Services Ltd. P.O. Box 1234 G.T. Queensgate House, South Church Street Grand Cayman, Cayman Islands Facsimile: 345-949-9877 (c) If to the Escrow Agent, to: Dechert LLP 30 Rockefeller Plaza New York, NY 10112 Facsimile: 212-698-3599 or to such other address as any of them shall give to the others by notice made pursuant to this Section 5.2. 5.3. Interest. The Escrowed Payment shall not be held in an interest bearing account nor will interest be payable in connection therewith. 5.4. Assignment; Binding Agreement. Neither this Agreement nor any right or obligation hereunder shall be assignable by any party without the prior written consent of the other parties hereto. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors and assigns. 5.5. Invalidity. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 5.6. Counterparts/Execution. This Agreement may be executed in any number of counterparts and by different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission. 5.7. Agreement. Each of the undersigned states that he has read the foregoing Funds Escrow Agreement and understands and agrees to it. COMPANY: NUMEREX CORP. By: /s/ Stratton J. Nicolaides ------------------------------- Name: Stratton J. Nicolaides ------------------------------- Title: CEO ------------------------------- 8 PURCHASER: LAURUS MASTER FUND, LTD. By: /s/ David Grin -------------------------------- Name: David Grin -------------------------------- Title: -------------------------------- ESCROW AGENT: DECHERT LLP By: -------------------------------- Name: -------------------------------- Title: -------------------------------- 9 SCHEDULE A TO FUNDS ESCROW AGREEMENT PURCHASER PRINCIPAL NOTE AMOUNT LAURUS MASTER FUND, LTD., $4,500,000 Term Note c/o Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands Fax: 345-949-9877 TOTAL $4,500,000 FUND MANAGER CLOSING PAYMENT LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection 825 Third Avenue, 14th Floor with investment by Laurus Master New York, New York 10022 Fund, Ltd. for which Laurus Capital Fax: 212-541-4434 Management, L.L.C. is the Manager. TOTAL $157,500 WARRANTS WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING LAURUS MASTER FUND, LTD. 300,000 Warrants issuable in A Cayman Island corporation connection with investment by Laurus c/o Ironshore Corporate Services Ltd. Master Fund, Ltd. P.O. Box 1234 G.T. Queensgate House, South Church Street Grand Cayman, Cayman Islands Fax: 345-949-9877 TOTAL 300,000 WARRANTS Schl-1 EX-99.1 11 w93276exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 [NUMEREX LOGO] INVESTOR RELATIONS CONTACT: Alan B. Catherall Chief Financial Officer 770-485-2527 FOR IMMEDIATE RELEASE NUMEREX COMPLETES STRATEGIC $4.5 MILLION PRIVATE PLACEMENT WITH LAURUS FUNDS ATLANTA (JANUARY 14, 2004) -- Numerex Corp. (NASDAQ:NMRX) announced today that it has entered into a strategic financing agreement with Laurus Master Fund, Ltd ("Laurus Funds"), a financial institution that specializes in providing financing to small and mid-capitalization companies. Specifically, Numerex closed a private placement of a $4.5 million Term Note. The Term Note is convertible into shares of Numerex common stock at a conversion price of $4.56 per share. The Term Note bears a fixed interest rate of 8.0%. Principal repayments begin in July 2004 and graduate in two additional increments over the life of the note with the final payment due in January 2007. Both principal and interest are payable in cash or, subject to certain conditions, in Numerex common stock. The Term Note is secured by Numerex's assets. The net proceeds from the private placement will be used primarily for the repayment of $3.5 million of the Company's short-term debt to Cingular and to provide additional working capital. The Company also issued warrants to the Laurus Funds to purchase a total of 300,000 Numerex common shares. The warrants may be exercised on a cashless basis in three separate tranches with an average exercise price of $5.10. The Company has agreed to file a registration statement with the SEC within 120 days to permit resales of common stock received by the Laurus Funds in connection with the Term Note or upon exercise of the warrants. "We are very pleased with the confidence in Numerex shown by the Laurus Funds," said Stratton Nicolaides, chairman and chief executive officer of Numerex. "We believe that the structure of this transaction, with the conversion prices for both the Term Note and the warrants at an attractive premium to our recent stock price, is indicative of that confidence. The Term Note allows Numerex to fully repay it's $3.5 million short term obligation to Cingular, thereby repositioning it's balance sheet and increasing it's short term liquidity. We believe that our recent product launches coupled with a stronger business environment have improved the Company's long-term prospects. As a result, we selected this particular path of financing rather than relying on asset sales to meet our short term financial obligations." David Grin, Fund Manager of the Laurus Funds, stated, " We believe that Numerex has significant opportunities for growth with an experienced management team. We look forward to participating in that growth and anticipate a long-term, mutually beneficial relationship." -MORE- ABOUT NUMEREX Numerex is a technology company comprised of operating subsidiaries that develop and market a wide range of communications products and services. The Company's primary focus is wireless data communications utilizing proprietary network technologies. The Company offers products and services in wireless data communications through Cellemetry(R), Uplink(TM), MobileGuardian(TM) and VendView(TM); and digital multimedia through PowerPlay(TM) and IPContact(TM). These services enable customers around the globe to monitor and move information for a variety of applications from home and business security to distance learning. In addition, the Company offers wireline alarm security products and services, as well as telecommunications network operational support systems. Visit the Numerex Web site for additional information at: www.nmrx.com Statements contained in this press release concerning Numerex that are not historical fact are "forward-looking" statements and involve important risks and uncertainties. Such risks and uncertainties, which are detailed in Numerex's filings with the Securities and Exchange Commission, could cause Numerex's results to differ materially from current expectations as expressed in this press release. -END- -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     EXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of January 13, 2004, by and between NUMEREX CORP., a
Pennsylvania corporation (the "COMPANY"), and LAURUS MASTER FUND, LTD., a Cayman
Islands company (the "PURCHASER").

                                    RECITALS

         WHEREAS, the Company has authorized the sale to the Purchaser of a
Convertible Term Note in the aggregate principal amount of four million five
hundred thousand dollars ($4,500,000) (the "NOTE"), which Note is convertible
into shares of the Company's common stock, no par value per share (the "COMMON
STOCK") at a fixed conversion price of $4.56 per share of Common Stock ("FIXED
CONVERSION PRICE");

         WHEREAS, the Company wishes to issue a warrant to the Purchaser to
purchase up to 300,000 shares (subject to adjustment in accordance with the
terms thereof) of the Company's Common Stock in connection with Purchaser's
purchase of the Note;

         WHEREAS, Purchaser desires to purchase the Note and Warrant on the
terms and conditions set forth herein; and

         WHEREAS, the Company desires to issue and sell the Note and Warrant to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

         1.       AGREEMENT TO SELL AND PURCHASE. Pursuant and subject to the
terms and conditions set forth in this Agreement, on the Closing Date (as
defined in Section 3), the Company agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company a Note in the amount of
$4,500,000 convertible in accordance with the terms thereof into shares of the
Company's Common Stock in accordance with the terms of the Note and this
Agreement. The Note purchased on the Closing Date shall be known as the
"OFFERING." A form of the Note is annexed hereto as Exhibit A. The Note will
have a Maturity Date (as defined in the Note) thirty six (36) months from the
date of issuance, subject to acceleration in accordance with the terms thereof.
Collectively, the Note and Warrant (as defined in Section 2) and Common Stock
issuable in payment of the Note, upon conversion of the Note and upon exercise
of the Warrant are referred to as the "SECURITIES".

         2.       FEES AND WARRANT. On the Closing Date:



                      (a) The Company will issue and deliver to the Purchaser a
Warrant to purchase up to 300,000 shares (subject to increase in accordance with
the terms thereof) of Common Stock in connection with the Offering (the
"WARRANT") pursuant to Section 1 hereof. The Warrant must be delivered on the
Closing Date. A form of Warrant is annexed hereto as Exhibit B. All the
representations, covenants, warranties, undertakings, and indemnification, and
other rights made or granted to or for the benefit of the Purchaser by the
Company are hereby also made and granted in respect of the Warrant and shares of
the Company's Common Stock issuable upon exercise of the Warrant (the "WARRANT
SHARES").

                      (b) Upon execution and delivery of this Agreement by the
Company and Purchaser, the Company shall pay to Laurus Capital Management, LLC,
manager of Purchaser (i) a closing payment in an amount equal to three and one
half percent (3.5%) of the aggregate principal amount of the Note. The foregoing
fee is referred to herein as the "CLOSING PAYMENT".

                      (c) The Company shall reimburse the Purchaser for its
reasonable legal fees for services rendered to the Purchaser in preparation of
this Agreement and the Related Agreements (as hereinafter defined), and expenses
in connection with the Purchaser's due diligence review of the Company and
relevant matters. Amounts required to be paid hereunder will be paid at the
Closing and shall not exceed $35,000 for legal expenses and $7,500 for
performing due diligence inquiries on the Company.

                      (d) The Closing Payment, legal fees and due diligence fees
(net of deposits previously paid by the Company) shall be paid at closing out of
funds held pursuant to a Funds Escrow Agreement of even date herewith among the
Company, Purchaser, and the escrow agent named therein (the "FUNDS ESCROW
AGREEMENT") and a disbursement letter (the "DISBURSEMENT LETTER").

         3.       CLOSING, DELIVERY AND PAYMENT.

                  3.1      CLOSING. Subject to the terms and conditions herein,
the closing of the transactions contemplated hereby (the "CLOSING"), shall take
place on the date hereof, at such time, place or manner as the Company and
Purchaser may mutually agree (such date is hereinafter referred to as the
"CLOSING DATE").

                  3.2      DELIVERY. Pursuant to the Funds Escrow Agreement in
the form attached hereto as Exhibit D, at the Closing on the Closing Date, the
Company will deliver to the Purchaser, among other things, a Note in the form
attached as Exhibit A representing the principal amount of $4,500,000 and a
Warrant in the form attached as Exhibit B in the Purchaser's name representing
300,000 Warrant Shares and the Purchaser will deliver to the Company, among
other things, the amounts set forth in the Disbursement Letter by wire transfer
of immediately available funds.

         4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company hereby represents and warrants to the Purchaser as
of the date of this Agreement as set forth below which disclosures are
supplemented by, and subject to the Company's filings under the Securities
Exchange Act of 1934 and any exhibits thereto (including without limitation any
information furnished under cover of Form 8-K) (collectively,

                                        2


the "EXCHANGE ACT FILINGS"). All references herein to the Company's "knowledge"
shall refer to the actual knowledge of any officer of the Company.

                  4.1      ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania. The Company has the
corporate power and authority to own and operate its properties and assets, to
execute and deliver this Agreement, and the Note and the Warrant to be issued in
connection with this Agreement, the Security Agreement relating to the Note
dated as of the date hereof between the Company and the Purchaser (the "SECURITY
AGREEMENT"), the Registration Rights Agreement relating to the Securities dated
as of the date hereof between the Company and the Purchaser (the "REGISTRATION
RIGHTS AGREEMENT") and all other agreements referred to herein (as each of the
same may be amended, modified and supplemented from time to time, collectively,
the "RELATED AGREEMENTS"), to issue and sell the Note and the shares of Common
Stock issuable upon conversion of the Note (the "NOTE SHARES"), to issue and
sell the Warrant and the Warrant Shares, and to carry out the provisions of this
Agreement and the Related Agreements and to carry on its business as presently
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would be reasonably expected not to have a material adverse effect on the
Company, its Subsidiaries or their assets, condition (financial or otherwise),
business or results of operations, taken as a whole (a "MATERIAL ADVERSE
EFFECT").

                  4.2      SUBSIDIARIES. The Company owns all of the issued and
outstanding capital stock or other equity interests of the business entities
listed on Schedule 4.2 (the "Subsidiaries"). The Company does not own or control
any equity security or other interest of any other corporation, limited
partnership or other business entity.

                  4.3      CAPITALIZATION; VOTING RIGHTS.

                      (a) The authorized capital stock of the Company, as of the
date hereof, consists of 38,000,000 shares, of which (i) 30,000,000 are shares
of Class A Common Stock, no par value per share, 13,179,620 shares of which are
issued and outstanding, (ii) 5,000,000 are shares of Class B Common Stock, no
par value per share, none of which are issued and outstanding, and (iii)
3,000,000 are shares of preferred stock, no par value per share, none of which
are issued and outstanding.

                      (b) Except as disclosed on Schedule 4.3 or the Exchange
Act Filings, other than (i) the shares reserved for issuance under the Company's
stock option plans; and (ii) shares which may be granted pursuant to this
Agreement and the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or arrangements or agreements of any
kind for the purchase or acquisition from the Company of any of its securities.
Except as disclosed on Schedule 4.3 or the Exchange Act Filings, neither the
offer, issuance or sale of any of the Note or Warrant, or the issuance of any of
the Note Shares or Warrant Shares, nor the consummation of any transaction
contemplated hereby will result in a change in the exercise or conversion price
or

                                        3


number of any securities of the Company outstanding pursuant to anti-dilution or
other similar provisions binding upon the Company and contained in or affecting
any such securities.

                      (c) All issued and outstanding shares of the Common Stock
(i) have been duly authorized and validly issued and are fully paid and
nonassessable and (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities, except where the failure to
comply with state "blue sky" laws would not be reasonably expected to have a
Material Adverse Effect.

                      (d) The rights, preferences, privileges and restrictions
of the shares of the Common Stock are as stated in the Company's Articles of
Incorporation (the "CHARTER") and as provided under applicable law. The Note
Shares and Warrant Shares have been duly and validly reserved for issuance. When
issued in compliance with the provisions of this Agreement and the Company's
Charter, the Securities will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances; provided, however, that the
Securities may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.

                  4.4      AUTHORIZATION; BINDING OBLIGATIONS. All corporate
action on the part of the Company, its officers and directors necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder at the Closing and, the authorization,
sale, issuance and delivery of the Note and Warrant has been taken or will be
taken prior to the Closing. The Agreement and the Related Agreements, when
executed and delivered and to the extent it is a party thereto, will be valid
and binding obligations of the Company enforceable in accordance with their
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (b) general principles of equity that
restrict the availability of equitable or legal remedies. The sale of the Note
and the subsequent conversion of the Note into Note Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have not
been properly waived or complied with. The issuance of the Warrant and the
subsequent exercise of the Warrant for Warrant Shares are not and will not be
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with.

                  4.5      LIABILITIES. The Company, to its knowledge, has no
material contingent liabilities, except current liabilities incurred in the
ordinary course of business and liabilities disclosed in any Exchange Act
Filings.

                  4.6      AGREEMENTS; ACTION. Except as set forth on Schedule
4.6 or as disclosed in any Exchange Act Filings:

                      (a) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $150,000 (other than obligations of, or payments to, the
Company arising from agreements entered into in the ordinary course of
business), or (ii) the transfer or license of any patent, copyright, trade
secret or other proprietary right to or from the

                                        4


Company (other than licenses arising from the purchase of "off the shelf" or
other standard products or licenses by the Company as licensor in the ordinary
course of the Company's business consistent with past practices); (iii)
provisions restricting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights other than as incidental to
licenses by the Company as licensor in the ordinary course of the Company's
business consistent with past practices.

                      (b) Except as disclosed in the Exchange Act Filings, since
December 31, 2002, the Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock or otherwise, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than ordinary course obligations)
individually in excess of $150,000 or, in the case of indebtedness and/or
liabilities individually less than $150,000, in excess of $250,000 in the
aggregate, (iii) made any loans or advances to any person not in excess,
individually or in the aggregate, of $150,000, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.

                      (c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.

                  4.7      OBLIGATIONS TO RELATED PARTIES. Except as set forth
on Schedule 4.7, there are no obligations of the Company to officers, directors,
or employees of the Company other than (a) for payment of salary for services
rendered and for bonus payments, (b) reimbursement for reasonable expenses
incurred on behalf of the Company, (c) for employee benefits made available to
employees or groups of employees (including stock option agreements outstanding
under any stock option plan approved by the Board of Directors of the Company)
and (d) obligations listed in the Company's financial statements or disclosed in
any of its Exchange Act Filings. Except as described above or set forth on
Schedule 4.7, none of the officers, directors or, to the Company's knowledge,
key employees of the Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of $150,000
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than 1%
of such company) which may compete with the Company. Except as described above,
no officer or director, or any member of their immediate families, is, directly
or indirectly, interested in any material contract with the Company and no
agreements, understandings or proposed transactions are contemplated between the
Company and any such person. Except as set forth on Schedule 4.7 or as disclosed
in the Exchange Act Filings, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation other than guaranties of
obligations of any of the Subsidiaries.

                                        5


                  4.8      CHANGES. Since December 31, 2002, except as disclosed
in any Exchange Act Filing, Schedule 4.8 or in any other Schedule to this
Agreement or to any of the Related Agreements, there has not been.

                      (a) Any change in the assets, liabilities, financial
condition, prospects or operations of the Company, other than changes in the
ordinary course of business, none of which individually or in the aggregate has
had or would reasonably be expected to have a Material Adverse Effect excluding
(i) general market, economic or geopolitical conditions affecting the U.S.
economy in general and (ii) any such effect resulting from consummation or
announcement of the transactions contemplated by this Agreement or the Related
Agreements or the Company's or its Subsidiaries' performance of their respective
obligations hereunder or thereunder, as the case may be;

                      (b) Any resignation or termination of any officer, key
employee or groups of employees of the Company;

                      (c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or other contractual arrangement;

                      (d) Any damage, destruction or loss, whether or not
covered by insurance, that has had or would reasonably be expected to have a
Material Adverse Effect;

                      (e) Any waiver by the Company of a material right or of a
material debt owed to it;

                      (f) Any material change in any compensation arrangement or
agreement with any employee, officer or director other than routine annual
increases in compensation or promotions or bonuses awarded in the ordinary
course;

                      (g) to the Company's knowledge, any labor organization
activity related to the Company;

                      (h) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;

                      (i) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets, other than the
nonexclusive license by the Company of any such patents, trademarks, copyrights,
trade secrets or other intangible assets to customers, suppliers or contract
manufacturers in the ordinary course of the Company's business consistent with
past practices;

                      (j) Any change in any material agreement to which the
Company is a party or by which it is bound which change has had or would
reasonably be expected to have a Material Adverse Effect;

                                        6


                      (k) Any other event or condition of any character that,
either individually or cumulatively, has or would reasonably be expected to have
a Material Adverse Effect; or

                      (l) Any arrangement or commitment by the Company to do any
of the acts described in subsection (a) through (l) above.

                  4.9      TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as
set forth on Schedule 4.9 or as disclosed in the Exchange Act Filings, the
Company has good and marketable title to its properties and assets, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (a) those resulting from taxes
which have not yet become delinquent, (b) minor liens and encumbrances which do
not materially detract from the value of the property subject thereto or
materially impair the operations of the Company, (c) those that have otherwise
arisen in the ordinary course of business and (d) those that are to be released
upon application of the proceeds of the sale of the Note pursuant to the
Disbursement Letter. To the Company's knowledge, all facilities, machinery,
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company are in good operating condition and repair and are reasonably fit and
usable for the purposes for which they are being used. Except as set forth on
Schedule 4.9 or as disclosed in the Exchange Act Filings, the Company is in
compliance with all material terms of each lease to which it is a party or is
otherwise bound.

                  4.10     INTELLECTUAL PROPERTY. Except as set forth in
Schedule 4.10 or as disclosed in the Exchange Act Filings:

                      (a) The Company owns or possesses sufficient legal rights
to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information and other proprietary rights and processes
necessary for its business as now conducted (the "INTELLECTUAL PROPERTY"),
without, to the knowledge of the Company, any infringement of the rights of
others. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing Intellectual Property (other than for licenses of
Intellectual Property under which the Company is the licensor in connection with
the Company's agreements with suppliers, contract manufacturers, customers or
clients in the ordinary course of the Company's business consistent with past
practice) nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products.

                      (b) The Company has not received any written
communications alleging that the Company has violated any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity.

                      (c) The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been rightfully
assigned to the Company.

                                        7


                  4.11     COMPLIANCE WITH OTHER INSTRUMENTS. Except as set
forth on Schedule 4.11 or as disclosed in the Exchange Act Filings, the Company
is not in violation or default of any term of its Charter or Bylaws, or of any
material provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order or writ. Except as set forth on Schedule 4.11 or as disclosed in
the Exchange Act Filings, the execution, delivery and performance of and
compliance with this Agreement and the Related Agreements to which it is a
party, and the issuance and sale of the Note by the Company and the other
Securities by the Company each pursuant hereto, will not, with or without the
passage of time or giving of notice, result in any such material violation, or
be in conflict with or constitute a default under any such term or provision, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.

                  4.12     LITIGATION. Except as set forth on Schedule 4.12
hereto or as disclosed in the Exchange Act Filings, there is no action, suit,
proceeding or investigation pending or, to the Company's knowledge, currently
threatened against the Company that prevents the Company to enter into this
Agreement or the Related Agreements, or to consummate the transactions
contemplated hereby or thereby, or which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Schedule 4.12 or as disclosed in the Exchange Act Filings, the Company is not a
party or subject to the provisions of any material order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate, which if adversely determined, would
reasonably be expected to have a Material Adverse Effect.

                  4.13     TAX RETURNS AND PAYMENTS. The Company has timely
filed all material tax returns (federal, state and local) required to be filed
by it. All taxes shown to be due and payable on such returns, any assessments
imposed, and to the Company's knowledge all other taxes due and payable by the
Company on or before the Closing, have been paid or will be paid prior to the
time they become delinquent. Except as set forth on Schedule 4.13 or as
disclosed in the Exchange Act Filings, the Company has not been advised (a) that
any of its returns, federal, state or other, have been or are being audited as
of the date hereof, or (b) of any material deficiency in assessment or proposed
judgment to its federal, state or other taxes. The Company has no knowledge of
any material liability of any tax to be imposed upon its properties or assets as
of the date of this Agreement that is not adequately provided for.

                  4.14     EMPLOYEES. Except as set forth on Schedule 4.14, the
Company has no collective bargaining agreements with any of its employees. There
is no labor union organizing activity pending or, to the Company's knowledge,
threatened with respect to the Company. Except as disclosed in the Exchange Act
Filings or on Schedule 4.14, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement other than those entered into in the
ordinary course. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any material
term of any material employment

                                        8


contract, proprietary information agreement or any other agreement relating to
the right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business conducted by the Company; and to
the Company's knowledge the continued employment by the Company of its present
employees, and the performance of the Company's contracts with its independent
contractors, will not result in any such violation. To the Company's knowledge,
none of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere in any material respect with their duties to the Company. The Company
has not received any written notice alleging that any such violation has
occurred. Except for employees who have a current effective employment agreement
with the Company, no employee of the Company has been granted the right to
continued employment by the Company or to any material compensation following
termination of employment with the Company. Except as set forth on Schedule
4.14, the Company is not aware that any officer or key employee intends to
terminate his, her or their employment with the Company.

                  4.15     REGISTRATION RIGHTS AND VOTING RIGHTS. Except as set
forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, the
Company is presently not under any obligation, and has not granted any rights,
to register any of the Company's presently outstanding securities or any of its
securities that may hereafter be issued. Except as set forth on Schedule 4.15
and except as disclosed in Exchange Act Filings, to the Company's knowledge, no
stockholder of the Company has entered into any agreement with respect to the
voting of equity securities of the Company.

                  4.16     COMPLIANCE WITH LAWS; PERMITS. Except as set forth on
Schedule 4.16, to its knowledge, the Company is not in violation in any material
respect of any applicable statute, rule, regulation, order or restriction of any
domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement and the
issuance of any of the Securities, except such as has been duly and validly
obtained or filed, or with respect to any filings that may be made after the
Closing, as will be filed in a timely manner or except where failure to obtain
any such order, permission, consent, approval, or authorization would be
reasonably expected not to have a Material Adverse Effect. The Company has all
material franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which
would materially and adversely affect the business, properties, prospects or
financial condition of the Company.

                  4.17     ENVIRONMENTAL AND SAFETY LAWS. The Company is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, except where the failure to so
comply has not had and/or could not reasonably be expected to have a Material
Adverse Effect, and to the Company's knowledge, no material expenditures are or
will be required in order to comply with any such existing statute, law or
regulation. Except as set forth on Schedule 4.17, no Hazardous Materials (as
defined below) are used or have been used, stored, or disposed of by the Company
or, to the Company's knowledge,

                                        9


by any other person or entity, in a manner not materially compliant with any
applicable statute, law or regulation relating to the environment or
occupational health and safety of any property owned, leased or used by the
Company. For the purposes of the preceding sentence, "Hazardous Materials" shall
mean (a) materials which are listed or otherwise defined as "Hazardous
Materials" or "toxic" under any applicable local, state or federal and/or
foreign laws and regulations that govern the existence and/or remedy of
contamination on property, the protection of the environment from contamination,
the control of hazardous wastes, or other activities involving hazardous
substances, including building materials, or (b) any petroleum products or
nuclear materials.

                  4.18     VALID OFFERING. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement, the
offer, sale and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws except where a failure to comply with state
"blue sky" laws would be reasonably expected not to have a Material Adverse
Effect.

                  4.19     FULL DISCLOSURE. The Company has provided the
Purchaser with all information requested by the Purchaser in connection with its
decision to purchase the Note and Warrant. Neither this Agreement, the exhibits
and schedules hereto, the Related Agreements nor any other document delivered by
the Company to Purchaser or its attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial projections
and other estimates provided to the Purchaser by the Company were based on the
Company's experience in the industry and on assumptions of fact and opinion as
to future events which the Company, at the date of the issuance of such
projections or estimates, believed to be reasonable.

                  4.20     INSURANCE. The Company has general commercial,
product liability, fire and casualty insurance policies with coverages which the
Company believes are customary for companies similarly situated to the Company
in the same or similar business.

                  4.21     SEC REPORTS. Except as set forth on Schedule 4.21,
the Company has filed all proxy statements, reports and other documents required
to be filed by it under the Exchange Act. The Company has furnished the
Purchaser with copies of (i) its Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 and (ii) its Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 2003, June 30, 2003 and September 30, 2003, and
the Form 8-K filings which it has made during 2003 to date (collectively, the
"SEC REPORTS"). Except as set forth on Schedule 4.21, each SEC Report was, at
the time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

                                       10


                  4.22     LISTING. The Company's Common Stock is listed for
trading on the NASDAQ National Market System and satisfies the requirements for
the continuation of such listing in all material respects. The Company has not
received any written notice from the NASD or Nasdaq that its Common Stock will
be delisted from the NASDAQ National Market System or that its Common Stock does
not meet all requirements for listing.

                  4.23     NO INTEGRATED OFFERING. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act which would prevent the Company
from selling the Securities pursuant to Rule 506 under the Securities Act, or
any applicable exchange-related stockholder approval provisions, nor will the
Company or any of its affiliates or subsidiaries take any action or steps that
would cause the offering of the Securities to be integrated with other
offerings.

                  4.24     STOP TRANSFER. The Securities are restricted
securities as of the date of this Agreement. The Company will not issue any stop
transfer order or other order impeding the sale and delivery of any of the Note
Shares or Warrant Shares at such time as they are registered for public sale or
an exemption from registration is available, except as required by state and
federal securities laws.

                  4.25     DILUTION. The Company specifically acknowledges that
its obligation to issue the shares of Common Stock upon conversion of the Note
and exercise of the Warrant is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company.

         5.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

                  The Purchaser hereby represents and warrants to the Company as
follows:

                  5.1      NO SHORTING. Neither the Purchaser nor any of its
affiliates or investment partners has or has caused or advised any person or
entity, directly or indirectly, to engage in "short sales" of the Company's
Common Stock or any other hedging strategies involving the Company's publicly
traded securities.

                  5.2      REQUISITE POWER AND AUTHORITY. Purchaser has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and the Related Agreements and to carry out their
provisions. All corporate action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Related Agreements have been or
will be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement and the Related Agreements will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
and (b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.

                                       11


                  5.3      INVESTMENT REPRESENTATIONS. Purchaser understands
that the Securities are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Purchaser's
representations contained in the Agreement, including, without limitation, that
the Purchaser is an "accredited investor" within the meaning of Regulation D
under the Securities Act of 1933, as amended (the "Securities Act"). The
Purchaser confirms that it has received or has had full access to all the
information it considers necessary or appropriate to make an informed investment
decision with respect to the Note and the Warrant to be purchased by it under
this Agreement and the Note Shares and the Warrant Shares acquired by it upon
the conversion of the Note and the exercise of the Warrant, respectively. The
Purchaser further confirms that it has had an opportunity to ask questions and
receive answers from the Company regarding the Company's business, management
and financial affairs and the terms and conditions of the Offering, the Note,
the Warrant and the Securities and to obtain additional information (to the
extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to
the Purchaser or to which the Purchaser had access.

                  5.4      PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Purchaser must bear the economic
risk of this investment until the Securities are sold pursuant to (i) an
effective registration statement under the Securities Act, or (ii) an exemption
from registration is available with respect to such sale.

                  5.5      ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Note and Warrant and the Note Shares and the Warrant Shares for Purchaser's
own account for investment only, and not as a nominee or agent and not with a
view towards or for resale in connection with their distribution.

                  5.6      PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business and financial
experience, Purchaser has the capacity to evaluate the merits and risks of its
investment in the Note, the Warrant and the Securities and to protect its own
interests in connection with the transactions contemplated in this Agreement,
and the Related Agreements. Further, Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement
or the Related Agreements.

                  5.7      ACCREDITED INVESTOR. Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.

                  5.8      LEGENDS

                      (a) The Note shall bear substantially the following
legend:

                  "THIS NOTE AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE
                  UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
                  SECURITIES

                                       12


                  LAWS. THIS NOTE AND THE CLASS A COMMON STOCK ISSUABLE UPON
                  CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
                  PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
                  APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                      (b) The Note Shares and the Warrant Shares, if not issued
by DWAC system (as hereinafter defined), shall bear a legend which shall be in
substantially the following form until such shares are covered by an effective
registration statement filed with the SEC:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
                  SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
                  OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES
                  ACT AND ANY APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                      (c) The Warrant shall bear substantially the following
legend:

                  "THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE
                  UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
                  THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
                  SECURITIES LAWS. THIS WARRANT AND THE CLASS A COMMON STOCK
                  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
                  OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
                  EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
                  ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
                  COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

         6.       COVENANTS OF THE COMPANY.

                  The Company covenants and agrees with the Purchaser that for
so long as the Note is outstanding, the Company shall do as follows:

                                       13


                  6.1      STOP-ORDERS. The Company will advise the Purchaser,
promptly after it receives notice of issuance by the Securities and Exchange
Commission (the "SEC"), any state securities commission or any other regulatory
authority of any stop order or of any order preventing or suspending any
offering of any securities of the Company, or of the suspension of the
qualification of the Common Stock of the Company for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.

                  6.2      LISTING. The Company will use commercially reasonable
efforts to maintain the listing of its Common Stock on the NASDAQ National
Market System or other national securities exchange, and will comply in all
material respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the National Association of Securities Dealers
("NASD") and such exchanges, as applicable.

                  6.3      MARKET REGULATIONS. The Company shall notify the SEC,
NASD and, if required under state securities laws, all applicable state
authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Securities to Purchaser and
promptly provide following effectiveness thereof (except as otherwise provided
in the Registration Rights Agreement) copies thereof to Purchaser.

                  6.4      REPORTING REQUIREMENTS. The Company will file with
the SEC all reports required to be filed pursuant to the Exchange Act on a
timely basis taking into account any and all extensions granted or permitted by
the SEC, and refrain from terminating its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination.

                  6.5      USE OF FUNDS. The Company agrees that it will use the
proceeds of the sale of the Note and Warrant for retirement of debt and other
obligations and for general corporate purposes only.

                  6.6      ACCESS TO FACILITIES. The Company will permit any
representatives designated by the Purchaser (or any successor of the Purchaser),
upon reasonable prior written notice and during normal business hours, at such
person's expense and accompanied by a representative of the Company, to (a)
visit and inspect any of the properties of the Company, (b) examine the
corporate and financial records of the Company (unless such examination is not
permitted by federal, state or local law or by contract) and make copies thereof
or extracts therefrom and (c) discuss the affairs, finances and accounts of the
Company with the officers of the Company. Notwithstanding the foregoing, the
Company will not provide any material, non-public information to the Purchaser
unless the Purchaser signs a confidentiality agreement and otherwise complies
with Regulation FD, under the federal securities laws.

                  6.7      TAXES. The Company will promptly pay and discharge,
or cause to be paid and discharged in all material respects, when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if

                                       14


the Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.

                  6.8      INSURANCE. The Company will keep its and its
Subsidiaries' assets which are of an insurable character insured by insurers
believed by the Company to be financially sound and reputable against loss or
damage by fire, explosion and other risks customarily insured against by
companies in similar business similarly situated as the Company to the extent
and in the manner which the Company reasonably believes is customary for
companies in similar business similarly situated as the Company and to the
extent available on commercially reasonable terms; and the Company will
maintain, with insurers believed by the Company to be financially sound and
reputable, insurance against other hazards and risks and liability to persons
and property to the extent and in the manner which the Company reasonably
believes is customary for companies in similar business similarly situated as
the Company and to the extent available on commercially reasonable terms.

                  6.9      INTELLECTUAL PROPERTY. The Company shall maintain in
full force and effect its corporate existence, rights and franchises and all
licenses and other rights to use Intellectual Property owned or possessed by it
and reasonably deemed by it to be necessary to the conduct of its business.

                  6.10     PROPERTIES. The Company will use its commercially
reasonable efforts to keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company will at all times comply in all material respects with
each provision of all leases to which it is a party or under which it occupies
property if the breach of such provision would reasonably be expected to have a
Material Adverse Effect.

                  6.11     CONFIDENTIALITY. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchaser, unless expressly agreed to by the Purchaser or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

                  6.12     REQUIRED APPROVALS. The Company, without the prior
written consent of the Purchaser, shall not:

                      (a) directly or indirectly declare or pay any dividends,
other than dividends with respect to its preferred stock;

                      (b) liquidate, dissolve or effect a material
reorganization;

                      (c) become subject to (including, without limitation, by
way of amendment to or modification of) any agreement or instrument which by its
terms would (under any circumstances) restrict the Company's right to perform
the provisions of this Agreement or any of the agreements contemplated thereby;
or

                                       15


                      (d) materially alter or change the scope of the business
of the Company.

                  6.13     REISSUANCE OF SECURITIES. The Company agrees to
reissue certificates representing the Securities without the legends set forth
in Section 5.7 above at such time as (a) the holder thereof is permitted to
dispose of such Securities pursuant to Rule 144(k) under the Securities Act, or
(b) upon resale subject to an effective registration statement after such
Securities are registered under the Securities Act. The Company agrees to
cooperate with the Purchaser in connection with all resales pursuant to Rule
144(d) and Rule 144(k) and provide legal opinions necessary to allow such
resales provided the Company and its counsel receive reasonably requested
representations from the selling Purchaser and broker, if any.

                  6.14     OPINION. On the Closing Date, the Company will
deliver to the Purchaser an opinion or opinions acceptable to the Purchaser from
the Company's legal counsel. The Company will provide, at the Company's expense,
such other legal opinions in the future as are reasonably necessary for the
conversion of the Note and exercise of the Warrant.

         7.       COVENANTS OF THE PURCHASER.

                  The Purchaser covenants and agrees with the Company as
follows:

                  7.1      CONFIDENTIALITY. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchaser, unless expressly agreed to by the Purchaser or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

                  7.2      NON-PUBLIC INFORMATION. The Purchaser agrees not to
effect any sales in the shares of the Company's Common Stock while in possession
of material, non-public information regarding the Company if such sales would
violate applicable securities law.

                  7.3      NO SHORTING. Neither the Purchaser nor any of its
affiliates or investment partners shall or shall cause or advise any person or
entity, directly or indirectly, to engage in "short sales" of the Company's
Common Stock or any other hedging strategies involving the Company's publicly
traded securities.

         8.       COVENANTS OF THE COMPANY AND PURCHASER REGARDING
                  INDEMNIFICATION.

                  8.1      COMPANY INDEMNIFICATION. The Company agrees to
indemnify, hold harmless, reimburse and defend Purchaser, each of Purchaser's
officers, directors, agents, affiliates, control persons, and principal
shareholders, against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Purchaser which results, arises out of or is based upon (i) any
misrepresentations by Company or any breach of representation or warranty by
Company in this Agreement or in any exhibits or schedules attached hereto or any
Related Agreement, or (ii) any breach or default in performance by Company of
any covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Purchaser relating hereto.

                                       16


                  8.2      PURCHASER'S INDEMNIFICATION. The Purchaser agrees to
indemnify, hold harmless, reimburse and defend the Company and each of the
Company's officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company which results, arises out of or is based
upon (i) any misrepresentation by Purchaser or any breach of any representation
or warranty by Purchaser in this Agreement or in any exhibits or schedules
attached hereto or any Related Agreement; or (ii) any breach or default in
performance by Purchaser of any covenant or undertaking to be performed by
Purchaser hereunder, or any other agreement entered into by the Company and
Purchaser relating hereto.

                  8.3      PROCEDURES. The procedures and limitations set forth
in Section 9.5(c) and (d) shall apply to the indemnifications set forth in
Sections 8.1 and 8.2.

         9.       CONVERSION OF CONVERTIBLE NOTE.

                  9.1      MECHANICS OF CONVERSION.

                      (a) Provided the Purchaser has notified the Company of the
Purchaser's intention to sell the Note Shares and the Note Shares are included
in an effective registration statement or are otherwise exempt from registration
when sold: (i) Upon the conversion of the Note or part thereof, the Company
shall, at its own cost and expense, take all necessary action (together with
such other documents as the transfer agent shall request) to assure that the
Company's transfer agent shall issue shares of the Company's Common Stock in the
name of the Purchaser (or its nominee) or such other persons as designated by
the Purchaser in accordance with Section 9.1(b) hereof and in such denominations
to be specified representing the number of Note Shares issuable upon such
conversion; and (ii) The Company warrants that no instructions other than these
instructions have been or will be given to the transfer agent of the Company's
Common Stock and that after the Effective Date (as hereinafter defined) the Note
Shares issued will be freely transferable subject to the prospectus delivery
requirements of the Securities Act and the provisions of this Agreement, and
will not contain a legend restricting the resale or transferability of the Note
Shares.

                      (b) Purchaser will give notice of its decision to exercise
its right to convert the Note or part thereof by telecopying or otherwise
delivering an executed and completed notice of the number of shares to be
converted to the Company (the "NOTICE OF CONVERSION"). The Purchaser will not be
required to surrender the Note until the Purchaser receives a credit to the
account of the Purchaser's prime broker through the DWAC system (as defined
below), representing the Note Shares or until the Note has been fully satisfied.
Each date on which a Notice of Conversion is telecopied or delivered to the
Company in accordance with the provisions hereof shall be deemed a "CONVERSION
DATE." Pursuant to the terms of the Notice of Conversion, the Borrower will
issue instructions to the transfer agent accompanied by an opinion of counsel
within one (1) business day of the date of the delivery to Borrower of the
Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the
account of the Purchaser's prime broker with the Depository Trust Company
("DTC") through its Deposit Withdrawal Agent Commission

                                       17


("DWAC") system within three (3) business days after receipt by the Company of
the Notice of Conversion (the "DELIVERY DATE").

                      (c) The Company understands that a delay in the delivery
of the Note Shares in the form required pursuant to Section 9 hereof beyond the
Delivery Date could result in economic loss to the Purchaser. In the event that
the Company fails to direct its transfer agent to deliver the Note Shares to the
Purchaser via the DWAC system within the time frame set forth in Section 9.1(b)
above and the Note Shares are not delivered to the Purchaser by the Delivery
Date, as compensation to the Purchaser for such loss, the Company agrees to pay
late payments to the Purchaser for late issuance of the Note Shares in the form
required pursuant to Section 9 hereof upon conversion of the Note in the amount
equal to the greater of (i) $500 per business day after the Delivery Date or
(ii) the Purchaser's actual damages from such delayed delivery. Notwithstanding
the foregoing, the Company will not owe the Purchaser any late payments if the
delay in the delivery of the Note Shares beyond the Delivery Date is out of the
control of the Company and the Company is actively trying to cure the cause of
the delay. The Company shall pay any payments incurred under this Section in
immediately available funds within three (3) trading days of demand and, in the
case of actual damages, the demand shall be accompanied by reasonable
documentation of the amount of such damages. Such documentation shall show the
number of shares of Common Stock the Purchaser is forced to purchase (in an open
market transaction) which the Purchaser anticipated receiving upon such
conversion, and shall be calculated as the amount by which (A) the Purchaser's
total purchase price (including customary brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate principal and/or
interest amount of the Note, for which such Conversion Notice was not timely
honored.

                  Nothing contained herein or in any document referred to herein
or delivered in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest or dividends
required to be paid or other charges hereunder exceed the maximum amount
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to a Purchaser and thus refunded to the
Company.

                  9.2      MAXIMUM CONVERSION. The Purchaser shall not be
entitled to convert on a Conversion Date, nor shall the Company be permitted to
require the Purchaser to accept, that amount of a Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock actually owned by the Purchaser on a Conversion
Date, and (ii) the number of shares of Common Stock issuable upon the conversion
of the Note and exercise of the Warrant with respect to which the determination
of this proviso is being made on a Conversion Date, which would result in
beneficial ownership by the Purchaser of more than 4.99% of the outstanding
shares of Common Stock of the Company on such Conversion Date. For the purposes
of the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. The Purchaser may void the foregoing conversion limitation upon 75
days prior notice to the Company or without any notice requirement upon the
occurrence of an Event of Default.

                  9.3      REGISTRATION RIGHTS.

                                       18


                  9.4      REGISTRATION RIGHTS GRANTED. The Company hereby
grants registration rights to the Purchaser pursuant to a Registration Rights
Agreement dated as of even date herewith between the Company and the Purchaser.

                  9.5      INDEMNIFICATION.

                      (a) In the event of a registration of any Registrable
Securities under the Securities Act pursuant to the Registration Rights
Agreement, the Company will indemnify and hold harmless the Purchaser, and its
officers, directors and each other person, if any, who controls the Purchaser
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to the Registration
Rights Agreement, any preliminary Prospectus or final Prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Purchaser, and each such person for any reasonable legal
or other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability (i) arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by or on behalf of the Purchaser or any
such person in writing specifically for use in any such document or (ii) is
pursuant to such Purchaser's use of an outdated or defective prospectus after
the Company has provided written notice to such Purchaser that the prospectus is
outdated or defective.

                      (b) In the event of a registration of the Registrable
Securities under the Securities Act pursuant to the Registration Rights
Agreement, the Purchaser will indemnify and hold harmless the Company, and its
officers, directors and each other person, if any, who controls the Company
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact which
was furnished in writing by the Purchaser to the Company expressly for use in
(and such information is contained in) the Registration Statement under which
such Registrable Securities were registered under the Securities Act pursuant to
the Registration Rights Agreement, any preliminary Prospectus or final
Prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such person for
any reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that the Purchaser will be liable in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue

                                       19


statement or omission or alleged omission so made in conformity with information
furnished in writing to the Company by or on behalf of the Purchaser
specifically for use in any such document. Notwithstanding the provisions of
this paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any such
registration under the Securities Act.

                      (c) Promptly after receipt by a party entitled to claim
indemnification hereunder (an "INDEMNIFIED PARTY") of notice of the commencement
of any action, such Indemnified Party shall, if a claim for indemnification in
respect thereof is to be made against a party hereto obligated to indemnify such
Indemnified Party (an "INDEMNIFYING PARTY"), notify the Indemnifying Party in
writing thereof, but the omission so to notify the Indemnifying Party shall not
relieve it from any liability which it may have to such Indemnified Party other
than under this Section 9(c) and shall only relieve it from any liability which
it may have to such Indemnified Party under this Section 9(c) if and to the
extent the Indemnifying Party is prejudiced by such omission. In case any such
action shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense, and, after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume and undertake the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
under this Section 9(c) for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof; if the Indemnified
Party retains its own counsel, then the Indemnified Party shall pay all fees,
costs and expenses of such counsel, provided, however, that, if the defendants
in any such action include both the Indemnified Party and the Indemnifying Party
and the Indemnified Party shall have concluded upon the written opinion of its
counsel that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party or
that the interests of the Indemnified Party could reasonably be expected to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the Indemnifying Party as incurred.

                      (d) In order to provide for just and equitable
contribution in the event of joint liability under the Securities Act in any
case in which either (i) the Purchaser, or any officer, director or controlling
person of the Purchaser, makes a claim for indemnification pursuant to this
Section 9 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of the Purchaser or such officer, director or
controlling person of the Purchaser in circumstances for which indemnification
is provided under this Section 9; then, and in each such case, the Company and
the Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Purchaser is responsible only for the portion
represented by the percentage that the public offering price of its securities
covered by the Registration Statement bears to the public offering price of all
securities covered by such Registration Statement,

                                       20


provided, however, that, in any such case, (A) the Purchaser will not be
required to contribute any amount in excess of the public offering price of all
such securities offered by it pursuant to such Registration Statement; and (B)
no person or entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.

                  9.6      OFFERING RESTRICTIONS. Except as previously disclosed
in the SEC Reports or in the Exchange Act Filings, or stock or stock options
granted to employees or directors of the Company; or shares of preferred stock
issued to pay dividends in respect of the Company's preferred stock; or equity
or debt issued in connection with an acquisition of a business or assets by the
Company; or the issuance by the Company of stock in connection with the
establishment of a joint venture partnership or licensing arrangement (these
exceptions hereinafter referred to as the "Excepted Issuances"), the Company
will not for so long as the Note is outstanding issue any securities with a
continuously variable/floating conversion feature which are or could be (by
conversion or registration) free-trading securities (i.e. common stock subject
to a registration statement) prior to the full repayment or conversion of the
Note (the "Exclusion Period"). Nothing contained in this Section 9.6 shall
prohibit any fixed-price offering of Company's Common Stock (including the
offering of securities convertible into Common Stock at a fixed price); provided
that (i) the fixed-price for such offering shall not be below the then current
market price of the Common Stock and (ii) the entire proceeds from such offering
shall be used to prepay all of the outstanding principal amount of the Note,
plus any accrued and unpaid interest thereon and any other applicable penalties
or fees as set forth in the Note.

         10.      MISCELLANEOUS.

                  10.1     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY
AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
SHALL BE BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT
SHALL BE DEEMED TO PRECLUDE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE DEEMED
TO PRECLUDE THE COMPANY FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN ANY SUCH
ACTIONS. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS ON BEHALF OF SUCH PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF SUCH
COURTS AND WAIVE TRIAL BY JURY. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS
AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF SUCH PARTIES FURTHER CONSENT THAT
ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION,
ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS
OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER
OR THEREUNDER, MAY BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS

                                       21


PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID
COURTS. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER
AGREEMENTS ON BEHALF OF SUCH PARTIES WAIVE ANY OBJECTION TO JURISDICTION AND
VENUE OF ANY ACTION INSTITUTED HEREON OR THEREON IN THE SUPREME COURT FOR THE
STATE OF NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK
OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED
IN EITHER SUCH COURT. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE
UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED
INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED
MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH PROVISION WHICH
MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY
OR ENFORCEABILITY OF ANY OTHER PROVISION OF ANY AGREEMENT.

                  10.2     SURVIVAL. The representations, warranties, covenants
and agreements made herein shall survive any investigation made by the Purchaser
and the closing of the transactions contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
this Agreement or such other certificate or instrument.

                  10.3     SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, heirs, executors and administrators of the parties
hereto and shall inure to the benefit of and be enforceable by each person who
shall be a holder of the Securities from time to time, other than the holders of
Common Stock which has been sold by the Purchaser pursuant to Rule 144 or an
effective registration statement. Purchaser may assign the Note (or any portion
thereof) or the Warrant, provided that the assignees of the Note or the Warrant
agree in writing to be bound by the terms of and perform all of Purchaser's
obligations under this Agreement and the Related Agreements and such assignee
provides evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, which shall include, without
limitation, written certification from the assignee of its sophistication and
status as an accredited investor under Regulation D of the Securities Act and a
legal opinion from the transferor's counsel that such transfer is exempt from
the registration requirements of applicable securities laws. Purchaser or any
assignee may not assign any of its rights or remedies under the Security
Agreement or the Guaranty to any person or entity other than a permitted
assignee of the Note, and Purchaser may not assign any of its rights under the
Registration Rights Agreement to any person or entity other than a permitted
assignee of the Note or the Warrant. Purchaser or any assignee of the Note or
Warrant may not assign its rights hereunder or thereunder to a Competitor (as
defined herein) of the Company. A "Competitor" shall mean any business entity
that (i) is primarily engaged in providing similar products or services as the
Company and from which such products and services the Company derived material
revenues for the prior twelve

                                       22


(12) months, and (ii) does business in any U.S. state in which the Company has
an established business. In the event there is more than one holder of the
rights and obligations under the Note, then an agent for such holders shall be
appointed by the then holder(s) of the majority principal amount outstanding
under the Note for the sole purpose of dealing with the Company in connection
with administrative matters relating to this Agreement and the Related
Agreements, including in requesting waivers and consents. Unless such agent has
authority from the holders to grant any such waiver, consent or to make any
amendments to this Agreement, the Note, the Guaranty or the Security Agreement
without the consent of the holders, all such grants of waivers, consents or
amendments shall be made by such agent acting upon the consent of the holders of
a majority in principal amount then outstanding except for (i) any modifications
in the principal amount, rate of interest or fees payable under the Note or any
Related Agreement, (ii) postponements in any fixed payment date, (iii) releases
or discharges of the Company or any Subsidiary of any obligation or releases of
any collateral except as provided in this Agreement or the Related Agreements or
(iv) any amendment to this Section 10.3, which shall be approved by all holders
affected thereby.

                  10.4     ENTIRE AGREEMENT. This Agreement, the exhibits and
schedules hereto, the Related Agreements and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.

                  10.5     SEVERABILITY. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                  10.6     AMENDMENT AND WAIVER.

                      (a) This Agreement may be amended or modified only upon
the written consent of the Company and the Purchaser.

                      (b) The obligations of the Company and the rights of the
Purchaser under this Agreement may be waived only with the written consent of
the Purchaser.

                      (c) The obligations of the Purchaser and the rights of the
Company under this Agreement may be waived only with the written consent of the
Company.

                  10.7     DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or the
Related Agreements, shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, the Note or the
Related Agreements, by law or otherwise afforded to any party, shall be
cumulative and not alternative.

                  10.8     NOTICES. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified,

                                       23


(b) when sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) three (3) business days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the Company at the
address as set forth on the signature page hereof with a copy in the case of the
Company to Legal Counsel, Numerex Corp., 1600 Parkwood Circle SE, Suite 200,
Atlanta, Georgia 30339, facsimile number (770) 693-5951 and to Richard Baltz,
Esq., Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004, facsimile
number (202) 942-5999, to the Purchaser at the address set forth on the
signature page hereof for such Purchaser, with a copy in the case of the
Purchaser to Scott J. Giordano, Esq., Loeb & Loeb LLP, 405 Park Avenue, New
York, NY 10154, facsimile number (212) 407-4990, or at such other address as the
Company or the Purchaser may designate by written notice to the other parties
hereto given in accordance herewith.

                  10.9     ATTORNEYS' FEES. In the event that any suit or action
is instituted to enforce any provision in this Agreement, the prevailing party
in such dispute shall be entitled to recover from the losing party all fees,
costs and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals. In the event of a
settlement, each party shall bear its own fees, costs and expenses unless
otherwise directed by a court of competent jurisdiction.

                  10.10    TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

                  10.11    FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement
may be executed by facsimile signatures and in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument. Any party delivering an executed counterpart of this Agreement by
facsimile transmission shall deliver an original of such counterpart to the
other party hereto within two (2) business days; provided, however, that the
failure to so deliver any original counterpart shall not affect the validity or
enforceability of this Agreement as against such party.

                  10.12    BROKER'S FEES. Except as set forth on Schedule 11.12
hereof, Each party hereto represents and warrants that no agent, broker,
investment banker, person or firm acting on behalf of or under the authority of
such party hereto is or will be entitled to any broker's or finder's fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 11.12 being untrue.

                  10.13    CONSTRUCTION. Each party acknowledges that its legal
counsel participated in the preparation of this Agreement and the Related
Agreements and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Agreement to favor any party against the other.

                                       24


                  IN WITNESS WHEREOF, the parties hereto have executed the
SECURITIES PURCHASE AGREEMENT as of the date set forth in the first paragraph
hereof.

COMPANY:                                     PURCHASER:

NUMEREX CORP.                                LAURUS MASTER FUND, LTD.

By: /s/ STRATTON J. NICOLAIDES               By: /s/ DAVID GRIN
    --------------------------------             -------------------------------

Name: STRATTON J. NICOLAIDES                Name: DAVID GRIN
     -------------------------------              ------------------------------

Title:  CEO                                  Title:
      ------------------------------               -----------------------------

Address: 1600 Parkwood Circle SE, Suite 200  Address: c/o Ironshore Corporate
         Atlanta, Georgia 30039              Services Ltd. P.O. Box 1234 G.T.,
         Attn: Chief Financial Officer       Queensgate House, South Church
         Facsimile No.: (770) 693-5951       Street Grand Cayman, Cayman Islands

                                       25


                                LIST OF EXHIBITS

Form of  Convertible Term Note        Exhibit A

Form of Warrant                       Exhibit B

Form of Opinion                       Exhibit C

Form of Escrow Agreement              Exhibit D

                                       26


                                    EXHIBIT A

                            FORM OF CONVERTIBLE NOTE

                                       A-1


                                    EXHIBIT B

                                 FORM OF WARRANT

                                       B-1


                                    EXHIBIT C

                                 FORM OF OPINION

                  The legal opinions rendered by counsel to the Company shall be
in form and substance reasonably acceptable to Purchaser.

                                       C-1


                                  NUMEREX CORP.

                          SECURITIES PURCHASE AGREEMENT

                                JANUARY 13, 2004



                                TABLE OF CONTENTS



                                                                                                                    PAGE
                                                                                                                    ----
                                                                                                                 
1.       Agreement to Sell and Purchase........................................................................       1

2.       Fees and Warrant Fees and Warrants....................................................................       1

3.       Closing, Delivery and Payment. Closing, Delivery and Payment..........................................       2

         3.1      Closing......................................................................................       2

         3.2      Delivery.....................................................................................       2

4.       Representations and Warranties of the Company.........................................................       2

         4.1      Organization, Good Standing and Qualification................................................       3

         4.2      Subsidiaries.................................................................................       3

         4.3      Capitalization; Voting Rights. Capitalization; Voting Rights.................................       3

         4.4      Authorization; Binding Obligations...........................................................       4

         4.5      Liabilities..................................................................................       4

         4.6      Agreements; Action...........................................................................       4

         4.7      Obligations to Related Parties...............................................................       5

         4.8      Changes......................................................................................       6

         4.9      Title to Properties and Assets; Liens, Etc...................................................       7

         4.10     Intellectual Property........................................................................       7

         4.11     Compliance with Other Instruments............................................................       8

         4.12     Litigation...................................................................................       8

         4.13     Tax Returns and Payments.....................................................................       8

         4.14     Employees....................................................................................       8

         4.15     Registration Rights and Voting Rights........................................................       9

         4.16     Compliance with Laws; Permits................................................................       9


                                        i




                                                                                                                   PAGE(S)
                                                                                                                   -------
                                                                                                                
         4.17     Environmental and Safety Laws................................................................       9

         4.18     Valid Offering...............................................................................      10

         4.19     Full Disclosure..............................................................................      10

         4.20     Insurance....................................................................................      10

         4.21     SEC Reports..................................................................................      10

         4.22     Listing......................................................................................      11

         4.23     No Integrated Offering.......................................................................      11

         4.24     Stop Transfer................................................................................      11

         4.25     Dilution.....................................................................................      11

5.       Representations and Warranties of the Purchaser.......................................................      11

         5.1      No Shorting..................................................................................      11

         5.2      Requisite Power and Authority................................................................      11

         5.3      Investment Representations...................................................................      12

         5.4      Purchaser Bears Economic Risk................................................................      12

         5.5      Acquisition for Own Account..................................................................      12

         5.6      Purchaser Can Protect Its Interest...........................................................      12

         5.7      Accredited Investor..........................................................................      12

         5.8      Legends. Legends.............................................................................      12

6.       Covenants of the Company..............................................................................      13

         6.1      Stop-Orders..................................................................................      14

         6.2      Listing......................................................................................      14

         6.3      Market Regulations...........................................................................      14

         6.4      Reporting Requirements.......................................................................      14

         6.5      Use of Funds.................................................................................      14


                                       ii




                                                                                                                   PAGE(S)
                                                                                                                   -------
                                                                                                                
         6.6      Access to Facilities.........................................................................      14

         6.7      Taxes........................................................................................      14

         6.8      Insurance....................................................................................      15

         6.9      Intellectual Property........................................................................      15

         6.10     Properties...................................................................................      15

         6.11     Confidentiality..............................................................................      15

         6.12     Required Approvals...........................................................................      15

         6.13     Reissuance of Securities.....................................................................      16

         6.14     Opinion......................................................................................      16

7.       Covenants of the Purchaser............................................................................      16

         7.1      Confidentiality..............................................................................      16

         7.2      Non-Public Information.......................................................................      16

         7.3      No Shorting..................................................................................      16

8.       Covenants of the Company and Purchaser Regarding Indemnification......................................      16

         8.1      Company Indemnification......................................................................      16

         8.2      Purchaser's Indemnification..................................................................      17

9.       Conversion of Convertible Note........................................................................      17

         9.1      Mechanics of Conversion......................................................................      17

         9.2      Maximum Conversion...........................................................................      18

         9.3      Registration Rights..........................................................................      18

         9.4      Registration Rights Granted..................................................................      19

         9.5      Indemnification..............................................................................      19

         9.6      OFFERING RESTRICTIONS........................................................................      21

10.      MISCELLANEOUS.........................................................................................      21


                                       iii




                                                                                                                   PAGE(S)
                                                                                                                   -------
                                                                                                                
         10.1     Governing Law................................................................................      21

         10.2     Survival.....................................................................................      22

         10.3     Successors and Assigns.......................................................................      22

         10.4     Entire Agreement.............................................................................      23

         10.5     Severability.................................................................................      23

         10.6     Amendment and Waiver.........................................................................      23

         10.7     Delays or Omissions..........................................................................      23

         10.8     Notices......................................................................................      23

         10.9     Attorneys' Fees..............................................................................      24

         10.10    Titles and Subtitles.........................................................................      24

         10.11    Facsimile Signatures; Counterparts...........................................................      24

         10.12    Broker's Fees................................................................................      24

         10.13    Construction.................................................................................      24


                                       iv

EX-4.2

                                                                     EXHIBIT 4.2

THIS NOTE AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE CLASS A COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                              CONVERTIBLE TERM NOTE

         FOR VALUE RECEIVED, NUMEREX CORP., a Pennsylvania corporation (the
"BORROWER"), hereby promises to pay to LAURUS MASTER FUND, LTD., c/o Ironshore
Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church
Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the "HOLDER") or its
registered assigns or successors in interest, on order, the sum of FOUR MILLION
FIVE HUNDRED THOUSAND DOLLARS ($4,500,000), or such lesser principal amount as
may be from time to time owing to the Holder hereunder, together with any
accrued and unpaid interest hereon, on January 13, 2007 (the "MATURITY DATE") if
not sooner paid.

         Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that certain Securities Purchase Agreement
dated as of the date hereof between the Borrower and the Holder (the "PURCHASE
AGREEMENT").

         The following terms shall apply to this Note:

                                   ARTICLE I
                             INTEREST & AMORTIZATION

         1.1.     Interest Rate and Payment. Subject to Article IV and Section
5.1 hereof, interest payable on this Note shall accrue at a rate per annum equal
to eight percent (8%) (the "CONTRACT RATE"). Interest shall be payable monthly
in arrears commencing on February 1, 2004, on the first day of each consecutive
calendar month thereafter (each, a "REPAYMENT DATE"), and on the Maturity Date,
whether by acceleration or otherwise.

         1.2.     Monthly Principal Payments. Amortizing payments of the
aggregate principal amount outstanding under this Note at any time (the
"PRINCIPAL AMOUNT") shall begin on July 1, 2004 and shall recur on the first
calendar day of each succeeding month thereafter (each, an "AMORTIZATION DATE")
until the Maturity Date. The Borrower shall make monthly payments to the Holder
as follows: beginning on the first Amortization Date and ending on the
Amortization Date of January 1, 2005, the Borrower shall pay to the Holder
$78,000 per month on each Repayment Date; beginning on the Amortization Date of
February 1, 2005 and ending on the Amortization Date of July 1, 2005, the
Borrower shall pay to the Holder $120,000 per month on each Repayment Date; and
beginning on the Amortization Date of August 1, 2005 and ending on the Maturity
Date, the Borrower shall pay to the Holder one eighteenth (1/18th) of the
remaining principal balance due under this Note in equal monthly installments on
each Repayment Date;



each of the aforementioned monthly payments shall be made together with any
accrued and unpaid interest to date on such portion of the Principal Amount plus
any and all other amounts which are then owing under this Note but have not been
paid (collectively, the "MONTHLY AMOUNT").

                                   ARTICLE II
                            BORROWER PAYMENT OPTIONS

         2.1.     (a) Payment of Monthly Amount in Cash or Common Stock. Subject
to the terms hereof, the Borrower shall have the sole option to determine
whether to satisfy payment of the Monthly Amount on each Repayment Date either
in cash or in shares of its Class A common stock, no par value per share (the
"COMMON STOCK"), or a combination of both. Each month, ten (10) days prior to a
Repayment Date, the Borrower shall deliver to the Holder a written irrevocable
notice in the form of Exhibit B attached hereto electing to pay the Monthly
Amount payable on the next Repayment Date in either cash or Common Stock, or a
combination of both (each, a "REPAYMENT ELECTION NOTICE") (the date by which
such notice is required to be given being hereinafter referred to as the "NOTICE
DATE"). If a Repayment Election Notice is not delivered to the Holder by the
applicable Notice Date for such Repayment Date, then the Monthly Amount due on
such Repayment Date shall be paid in cash. Any portion of the Monthly Amount
paid in cash on a Repayment Date, shall be paid to the Holder an amount equal to
102% of the cash portion of the Monthly Amount then payable in satisfaction of
such obligation. If the Borrower repays all or a portion of the Monthly Amount
in shares of Common Stock, the number of such shares to be issued for such
Repayment Date shall be the number determined by dividing (x) the portion of the
Monthly Amount to be paid in shares of Common Stock, by (y) the Fixed Conversion
Price. For purposes hereof, the "FIXED CONVERSION PRICE" means $4.56; provided,
however, that upon the occurrence of any stock split, stock dividend,
combination of shares or reverse stock split pertaining to the Common Stock, the
Fixed Conversion Price shall be proportionately increased or decreased as
necessary to reflect the proportionate change in the shares of Common Stock
issued and outstanding as a result of such stock split, stock dividend,
combination of shares or reverse stock split.

         (b) Monthly Amount Common Stock Payment Guidelines. Subject to Sections
2.1 and 2.2 hereof, if the Borrower has elected to pay all or a portion of the
Monthly Amount due on such Repayment Date in shares of Common Stock and the
closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market (as defined in Section 4.7 hereof) for the seven (7) trading
days preceding a Repayment Date was less than 110% of the Fixed Conversion
Price, then the Borrower shall pay the Monthly Amount in cash instead. Any part
of the Monthly Amount due on such Repayment Date that the Borrower did not elect
to pay in shares of Common Stock shall be paid by the Borrower in cash on such
Repayment Date. Any part of the Monthly Amount due on such Repayment Date which
the Borrower elected to pay in shares of Common Stock but which must be paid in
cash (because the closing price of the Common Stock for the seven (7) trading
days preceding the applicable Repayment Date was less than 110% of the Fixed
Conversion Price) shall be paid within three (3) business days of the applicable
Repayment Date.

         2.2.     No Effective Registration. Notwithstanding anything to the
contrary herein, the Borrower shall not repay any part of its obligations to the
Holder hereunder in shares of

                                       2



Common Stock if (i) there fails to exist an effective current Registration
Statement (as defined in the Registration Rights Agreement) covering resale of
the shares of Common Stock to be issued in connection with such payment, or (ii)
an Event of Default hereunder exists and is continuing, unless such Event of
Default is cured within any applicable cure period or is otherwise waived in
writing by the Holder in whole or in part at the Holder's option.

         2.3.     Optional Prepayments in Common Stock. Subject to Section 2.2
hereof, if the average closing price of the Common Stock on the Principal Market
is greater than 110% of the Fixed Conversion Price for a period of at least five
(5) consecutive trading days, then the Borrower may, at its sole option, provide
the Holder written notice (a "PREPAYMENT CALL NOTICE") requiring the conversion
at the then applicable Fixed Conversion Price of all or a portion of the
outstanding principal, interest and fees outstanding under this Note (subject to
compliance with this Section 2.3 and Section 3.2, together with accrued interest
on the amount being prepaid, as of the date set forth in such Prepayment Call
Notice (the "PREPAYMENT CALL DATE"). The Prepayment Call Date shall be at least
ten (10) trading days following the date of the Prepayment Call Notice. On the
Prepayment Call Date, the Borrower shall deliver to the Holder certificates
evidencing the shares of Common Stock issued in satisfaction of the principal
and interest being prepaid. Notwithstanding the foregoing, the Borrower's right
to issue shares of Common Stock in satisfaction of its obligations under this
Note shall be subject to the limitation that the market price of the Common
Stock issued in connection with any Prepayment Call Notice shall exceed the
Fixed Conversion Price as of the Prepayment Call Date and for the seven (7)
trading days immediately preceding the Prepayment Call Date. If the price of the
Common Stock falls below 110% of the Fixed Conversion Price as of, or during the
seven (7) trading day period immediately preceding, the Prepayment Call Date,
then the Prepayment Call Notice shall be null and void and no conversion shall
be required hereunder.

         The Borrower shall not be permitted to give the Holder more than one
Prepayment Call Notice under this Note during any 22-day period.

         Any principal amount of this Note which is prepaid pursuant to this
Section 2.3 shall be deemed to constitute payments of outstanding principal
applying to Monthly Amounts for the remaining Repayment Dates in chronological
order.

         2.4.     Optional Redemption in Cash. (a) Subject to Section 2.4(b),
the Borrower will not have the option of redeeming or prepaying in cash any
Principal Amount during the twelve (12) months immediately following the date
hereof. Thereafter, the Borrower will have the option of redeeming or prepaying
any Principal Amount ("OPTIONAL REDEMPTION") by paying to the Holder a sum of
money equal to: (i) 110% of the Principal Amount if such redemption or
prepayment occurs after twelve (12) months from the date hereof and prior to the
end of the eighteenth (18th) month from the date hereof; (ii) 105% of the
Principal Amount if such redemption or prepayment occurs during the period
commencing on the first day following the eighteenth (18th) month anniversary of
the date hereof and prior to the end of the twenty-fourth (24th) month from the
date hereof; and (iii) 103% of the Principal Amount if such redemption or
prepayment occurs at any time thereafter but before the Maturity Date. Each such
redemption or prepayment made pursuant to this Section 2.4 shall include all
accrued but unpaid interest on that portion of the Principal Amount so prepaid
or redeemed and any and all other sums due, accrued or payable to the Holder
arising under this Note or the Purchase Agreement or any Related

                                       3


Document (as defined in the Purchase Agreement) (the "REDEMPTION AMOUNT")
outstanding on the day written notice of redemption (the "NOTICE OF REDEMPTION")
is given to the Holder, which Notice of Redemption shall specify the date for
such Optional Redemption (the "REDEMPTION PAYMENT DATE"). A Notice of Redemption
shall not be effective with respect to any portion of this Note for which the
Holder has a pending election to convert pursuant to Section 3.1 and the
Redemption Amount shall be determined as if such election to convert had been
completed immediately prior to the date of the Notice of Redemption. The
Redemption Payment Date shall be not earlier than the day after the date of the
Notice of Redemption and not later than seven (7) days after the date of the
Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must
be paid in good funds to the Holder. In the event the Borrower fails to pay the
Redemption Amount by the Redemption Payment Date, then such Redemption Notice
will be null and void.

         (b)      Notwithstanding anything contained herein to the contrary, if
during the period commencing on the date hereof and ending on January 13, 2005
the Borrower consummates any Permitted Non-Core Asset Sale (as hereinafter
defined), then the Borrower shall prepay the Principal Amount then due under
this Note in an amount equal to (i) fifty percent (50%) of the net proceeds of
each such Non-Core Asset Sale (i.e., gross proceeds less the reasonable costs of
such sales, which shall include, without limitation, reasonable fees, costs and
expenses of legal, financial, investment banking, accounting or other
professional advisors, broker commissions, closing costs, taxes, diligence fees
and other costs of readying the Permitted Non-Core Assets for sale) plus (ii)
the Premium, if any, with such prepayments to be made concurrently with the
consummation of each Permitted Non-Core Asset Sale. For purposes hereof, (1) the
term "PERMITTED NON-CORE ASSET SALE" shall mean a sale of any of the assets set
forth on Annex A hereto so long as (a) the Holder shall have been provided not
less than ten (10) business days prior written notice of each such sale, and (b)
no Event of Default shall have occurred and be continuing at the time of each
such sale; and (2) the term "PREMIUM" shall mean (a) zero percent (0%) in the
event the aggregate net cash proceeds arising from all Permitted Non-Core Asset
Sales equals an amount less than $1,500,000 and (b) ten percent (10%) of the
Principal Amount in excess of $1,500,000 required to be paid by the terms of
this Section 2.4(b) in the event the aggregate net cash proceeds arising from
all Permitted Non-Core Asset Sales equals or exceeds $1,500,000.

         (c)      If the Borrower consummates any Permitted Non-Core Asset Sale
after January 13, 2005, then the Borrower shall prepay an amount equal to (i)
fifty percent (50%) of the net proceeds of each such Non-Core Asset Sale (i.e.,
gross proceeds less the reasonable costs of such sales, which shall include,
without limitation, reasonable fees, costs and expenses of legal, financial,
investment banking, accounting or other professional advisors, broker
commissions, closing costs, taxes, diligence fees and other costs of readying
the Permitted Non-Core Assets for sale) plus (ii) the Adjusted Premium, with
such prepayments to be made concurrently with the consummation of each Permitted
Non-Core Asset Sale. For purposes hereof, the term "ADJUSTED PREMIUM" shall
mean: (a) 110% of the Principal Amount if such prepayment occurs after twelve
(12) months from the date hereof and prior to the end of the eighteenth (18th)
month from the date hereof; (b) 105% of the Principal Amount if such prepayment
occurs during the period commencing on the first day following the eighteenth
(18th) month anniversary of the date hereof and prior to the end of the
twenty-fourth (24th) month from the date hereof; and (c) 103%

                                       4


of the Principal Amount if such prepayment occurs at any time thereafter but
before the Maturity Date.

         2.5.     Mandatory Redemption Upon Failure to Cause an Effective
Registration Statement to be Filed. If on or prior to January 13, 2005, the
Borrower shall fail to file and cause to exist a current effective Registration
Statement (as defined in the Registration Rights Agreement) covering resale of
the shares of Common Stock underlying this Note and the Common Stock Purchase
Warrant, dated as of the date hereof, granted by the Borrower to the Holder,
then Holder shall have the right, upon six (6) month's prior written notice to
the Borrower, to demand repayment in full of all amounts outstanding under this
Note, including, but not limited to, any penalties set forth in this Article IV
and all accrued and unpaid interest and fees thereon.

                                  ARTICLE III
                                CONVERSION RIGHTS

         3.1.     Holder's Conversion Rights. (a) The Holder shall have the
right, but not the obligation, to convert all or any portion of the then
aggregate outstanding principal amount of this Note, together with interest and
fees due hereon, into shares of Common Stock subject to the terms and conditions
set forth in this Article III.

         (b)      Notwithstanding anything contained herein to the contrary,
during the six (6) month period following an effective current Registration
Statement (as defined in the Registration Rights Agreement), so long as no Event
of Default shall have occurred and be continuing, the Holder shall limit the
number of shares of Common Stock to which it voluntarily converts a portion of
this Note, on a monthly basis, to not greater than ten percent (10%) of the
total number of shares of the Borrower's Common Stock that traded during the
month immediately preceding such voluntary conversion by the Holder. In
addition, so long as no Event of Default shall have occurred and be continuing,
during the period commencing on the date hereof and ending on January 13, 2006,
the Holder shall not sell the Borrower's Common Stock at a price per share less
than the lower of (a) $3.80 per share or (b) the volume weighted average closing
price (the "VWAP") of the Borrower's Common Stock for the three (3) trading days
immediately preceding the date hereof (the "FLOOR PRICE"), unless, in each case,
the VWAP of the Borrower's Common Stock remains below the Floor Price for any
ninety (90) day period.

         3.2.     Conversion Limitation. Notwithstanding anything contained
herein to the contrary, pursuant to the terms of this Note, the Holder shall not
be entitled to convert on a Conversion Date (as defined in Section 3.3(b)) that
number of shares of Common Stock which would be in excess of the sum (i) the
number of shares of Common Stock actually owned by the Holder and its affiliates
on a Conversion Date and (ii) the number of shares of Common Stock issuable upon
the conversion of this Note and exercise of the warrants held by such Holder and
its affiliates with respect to which the determination of this proviso is being
made on a Conversion Date, which would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock of the Borrower on such date. For the purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. The

                                       5


Holder may void the limitation described in this Section 3.2 upon 75 days prior
notice to the Borrower or without any notice requirement upon an Event of
Default.

         3.3.     Procedures for Conversion. (a) In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give written
notice of such election by delivering to the Borrower an executed and completed
notice of conversion (the "NOTICE OF CONVERSION"), such Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees being converted. On each Conversion Date (as hereinafter
defined) and in accordance with the Notice of Conversion, the Holder shall make
the appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Borrower
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Borrower in accordance
with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION
DATE"). A form of Notice of Conversion to be employed by the Holder is annexed
hereto as Exhibit A.

         (b)      Pursuant to the terms of the Notice of Conversion the Borrower
will issue instructions to the transfer agent (together with such other
documents as the transfer agent may request), within one (1) business day of the
date of the delivery to Borrower of the Notice of Conversion. If the
Registration Statement (as defined in the Registration Rights Agreement) is
effective or the Conversion Shares are eligible for sale pursuant to Rule 144,
Borrower shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Borrower of the Notice of Conversion (the
"DELIVERY DATE"). Upon delivery to Holder of such certificates through DWAC in
accordance with this Section 3.3(b), Holder covenants to Borrower to (i) sell,
transfer or dispose of all Conversion Shares pursuant to the Registration
Statement in accordance with the plan of distribution described therein or the
provisions of Rule 144, as applicable, and (ii) fulfill applicable prospectus
delivery requirements imposed by applicable federal securities laws. In the case
of the exercise of the conversion rights set forth herein the conversion
privilege shall be deemed to have been exercised and the Conversion Shares
issuable upon such conversion shall be deemed to have been issued upon the date
of receipt by the Borrower of the Notice of Conversion. The Holder shall be
treated for all purposes as the record holder of such Common Stock, unless the
Holder provides the Borrower written instructions to the contrary.

         3.4.     Conversion Mechanics. (a) The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal and interest and fees to be converted, if any, by
the Fixed Conversion Price. In the event of any conversions of outstanding
principal amount under this Note in part pursuant to this Article III, such
conversions shall be deemed to constitute conversions of outstanding principal
amount applying to Monthly Amounts for the remaining Repayment Dates in
chronological order.

         (b)      No fractional shares of Common Stock shall be issued upon any
conversion of this Note. In lieu of any fractional share to which Holder would
otherwise be entitled, the Borrower shall pay Holder cash equal to the product
of such fraction multiplied by the fair

                                       6


market value as of the date of Conversion of a share of Common Stock, as
determined in good faith by the Borrower's Board of Directors (or an authorized
subcommittee thereof).

                                   ARTICLE IV
                                EVENTS OF DEFAULT

         If an Event of Default (as defined below) occurs and is continuing, the
Borrower's rights under Sections 2.1, 2.3 and 2.4 shall immediately cease and be
of no further effect until such time as the Event of Default has been cured, or
has been waived by the Holder. Upon the occurrence and continuance of an Event
of Default beyond any applicable grace period, the Holder, at its sole and
absolute discretion, may make all sums of principal, interest and other fees
then remaining unpaid hereon and all other amounts payable hereunder due and
payable within five (5) days after written notice from Holder to Borrower (each
occurrence being a "DEFAULT NOTICE PERIOD"), provided, however, that such
Default Notice Period shall not apply to Sections 4.3, 4.6 and 4.9 below. In the
event of such an acceleration, the amount due and owing to the Holder shall be
115% of the Principal Amount (plus accrued and unpaid interest and fees, if
any). If, with respect to any Event of Default other than a payment default
described in Section 4.1 below, within the Default Notice Period the Borrower
cures the Event of Default, the Event of Default will be deemed to no longer
exist and any rights and remedies of Holder pertaining to such Event of Default
will be of no further force or effect.

         The occurrence of any of the following events is an "EVENT OF DEFAULT":

         4.1.     Failure to Pay Principal, Interest or other Fees. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon in accordance herewith, or the Borrower fails to pay when due any amount
due under any other promissory note issued by Borrower.

         4.2.     Breach of Covenant. The Borrower breaches any material
covenant or other term or condition of this Note or the Purchase Agreement in
any material respect and such breach, if subject to cure, continues for a period
of thirty (30) days after the occurrence thereof.

         4.3.     Breach of Representations and Warranties. Any material
representation or warranty of the Borrower made herein, in the Purchase
Agreement, or in any Related Document shall have been materially false or
misleading when made and shall not be cured for a period of ten (10) days after
written notice thereof is received by the Borrower from the Holder.

         4.4.     Receiver or Trustee. The Borrower shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed.

         4.5.     Judgments. Any money judgment, writ or similar final process
shall be entered or filed against the Borrower or any of its property or other
assets for more than $300,000, and shall remain unvacated, unbonded or unstayed
for a period of ninety (90) days.

         4.6.     Bankruptcy. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall

                                       7


be instituted by or against the Borrower and, in the case of an involuntary case
or proceeding, such case or proceeding is not dismissed within sixty (60) days
following the commencement thereof.

         4.7.     Stop Trade. An SEC stop trade order or Principal Market
trading suspension of the Common Stock shall be in effect for five (5)
consecutive days or five (5) days during a period of ten (10) consecutive days,
excluding in all cases a suspension of all trading on a Principal Market,
provided that the Borrower shall not have been able to cure such trading
suspension within 30 days of the notice thereof or list the Common Stock on
another Principal Market within 60 days of such notice. The "PRINCIPAL MARKET"
for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market System, American Stock Exchange, or New York
Stock Exchange, whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock, or any securities exchange or other
securities market on which the Common Stock is then being listed or traded.

         4.8.     Default Under Security Agreement. An Event of Default shall
have occurred under and as defined in the Security Agreement, which shall not
have been cured during any applicable cure or grace period.

                                   ARTICLE V
                           DEFAULT RELATED PROVISIONS

         5.1.     Payment Grace Period. The Borrower shall have a three (3)
business day grace period to pay any monetary amounts due under this Note or the
Purchase Agreement or any Related Document, after which grace period a default
interest rate of five percent (5%) per annum above the then applicable interest
rate hereunder shall apply to the monetary amounts due.

         5.2.     Conversion Privileges. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof and until this Note is paid in full or until all of the then outstanding
Principal Amount and interest and other fees payable hereunder shall have been
converted into shares of Common Stock.

                                   ARTICLE VI
                                  MISCELLANEOUS

         6.1.     Failure or Indulgence Not Waiver. No failure or delay on the
part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

         6.2.     Notices. Any notice herein required or permitted to be given
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party notified, (ii) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the next
business day, (iii) five days after having been sent by registered or certified

                                       8


mail, return receipt requested, postage prepaid, or (iv) one (1) business day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the Borrower at the address provided in the Purchase Agreement executed
in connection herewith, and to the Holder at the address provided in the
Purchase Agreement for such Holder, with a copy to John E. Tucker, Esq., 825
Third Avenue , 14th Floor, New York, New York 10022, facsimile number (212)
541-4434, or at such other address as the Borrower or the Holder may designate
by ten days advance written notice to the other parties hereto. A Notice of
Conversion shall be deemed given when made to the Borrower pursuant to the
Purchase Agreement.

         6.3.     Amendment Provision. The term "Note" and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.

         6.4.     Assignability. This Note shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder and
its successors and assigns, and may be assigned by the Holder only pursuant to
the requirements of the Purchase Agreement and applicable federal and state
securities laws.

         6.5.     Governing Law. (a) This Note cannot be changed or terminated
orally, and shall be governed by and construed in accordance with the laws of
the State of New York, without regard to principles of conflicts of laws. Any
action brought by either party against the other concerning the transactions
contemplated by this Note shall be brought only in any state or federal court
sitting in the Borough of Manhattan, City of New York; provided that nothing
contained in this Note shall be deemed to preclude Holder from bringing suit or
taking other legal action in any other court of competent jurisdiction and
nothing shall be deemed to preclude the Borrower from asserting any defenses or
counterclaims in any such actions. Both the Borrower and the individual
executing this Note on behalf of the Borrower agree to submit to the
jurisdiction of such courts and waive trial by jury. The Borrower and the
individual executing this Note further consent that any summons, subpoena or
other process or papers (including, without limitation, any notice or motion or
other application to either of the aforementioned courts or a judge thereof) or
any notice in connection with any proceedings hereunder, may be served by
registered or certified mail, return receipt requested, or by personal service
provided a reasonable time for appearance is permitted, or in such other manner
as may be permissible under the rules of said courts. The Borrower and the
individual executing this Note waive any objection to jurisdiction and venue of
any action instituted hereon in the Supreme Court for the State of New York,
County of New York or the United States District Court for the Southern District
of New York and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens in any action brought in either such
court.

         (b)      The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs; provided, however, that if
the parties hereto agree to settle any claim, action, proceeding or lawsuit
brought by one party hereto against the other party hereto, then each of the
parties shall bear its own costs in connection with such claim, action,
proceeding or lawsuit, unless otherwise directed by a court of competent
jurisdiction.

                                       9


         (c)      In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or unenforceability of any other provision of this Note.

         6.6.     Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.

         6.7.     Security Interest. The holder of this Note has been granted a
security interest in certain assets of the Borrower and of the guarantors of the
Note, as more fully described in the Security Agreement.

         6.8.     Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

       [Balance of page intentionally left blank; signature page follows.]

                                       10


         IN WITNESS WHEREOF, the Borrower has caused this Convertible Term Note
to be signed in its name effective as of this 13th day of January, 2004.

                                             NUMEREX CORP.

                                             By: /s/ STRATTON J. NICOLAIDES
                                                --------------------------------
                                             Name: STRATTON J. NICOLAIDES
                                                  ------------------------------
                                             Title:         CEO
                                                   -----------------------------
WITNESS:

   PAMELA S. LESTER
- --------------------------

                                       11


                                    EXHIBIT A

                              NOTICE OF CONVERSION

(To be executed by the Holder in order to convert all or part of the Note into
Common Stock

[Name and Address of Holder]

The Undersigned hereby elects to convert $_________ of the principal due on
[specify applicable Repayment Date] under the Convertible Term Note issued by
NUMEREX CORP. dated January __, 2004 by delivery of Shares of Common Stock of
NUMEREX CORP. on and subject to the conditions set forth in Article III of such
Note.

1.       Date of Conversion      _______________________

2.       Shares To Be Delivered: _______________________

         The Undersigned represents and warrants that all offers and sales by
the Undersigned of the securities issuable upon conversion of the within Note
shall be made pursuant to registration of the Common Stock and prospectus
delivery requirements under the Securities Act of 1933, as amended (the
"Securities Act") or pursuant to an exemption from registration under the
Securities Act.

Date: ____________

                                          By:_______________________________
                                          Name:_____________________________
                                          Title:____________________________

                                       12


                                    EXHIBIT B

                            REPAYMENT ELECTION NOTICE

(To be executed by the Borrower in order to pay all or part of a Monthly Amount
with Common Stock)

[Name and Address of Holder]

NUMEREX CORP. hereby elects to pay $_________ of the Monthly Amount due on
[specify applicable Repayment Date] under the Convertible Term Note issued by it
dated January __, 2004 by delivery of Shares of its Common Stock of on and
subject to the conditions set forth in Article II of such Note.

1. Fixed Conversion Price: $_______________________

2. Amount to be paid:      $_______________________

3. Shares To Be Delivered (2 divided by 1): __________________

Date: ____________                           NUMEREX CORP.

                                             By:_______________________________
                                             Name:_____________________________
                                             Title:____________________________

                                       13


                                     ANNEX A

                                 NON-CORE ASSETS

Any assets owned by any one or more of the following entities as of the
effective date of the Convertible Term Note to which this Annex A has been
attached:

1. Digilog Inc. (a Pennsylvania corporation);

2. DCX Systems Inc. (a Pennsylvania corporation);

3. BNI Solutions LLC (a Delaware limited liability company);

4. DCX Systems Australia PTY Limited (an Australian company); and

5. Broadband Networks, Inc. (a Delaware corporation).

                                       14

EX-4.3

                                                                     EXHIBIT 4.3

THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE CLASS A COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO NUMEREX CORP. THAT SUCH
REGISTRATION IS NOT REQUIRED.

                                  Right to Purchase Up To 300,000 Shares of
                                  Common Stock of Numerex Corp. (subject to
                                  adjustment as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No. 36                                              Issue Date: January 13, 2004

                  NUMEREX CORP., a corporation organized under the laws of the
State of Pennsylvania, hereby certifies that, for value received, LAURUS MASTER
FUND, LTD., or its assigns (the "HOLDER"), is entitled, subject to the terms set
forth below, to purchase from the Company from and after the Issue Date of this
Warrant and at any time or from time to time before 5:00 p.m., New York time, on
January 13, 2011 (the "EXPIRATION DATE"), up to 300,000 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), no par value per
share, of the Company, at the Exercise Price (as hereinafter defined). The
number and character of such shares of Common Stock are subject to adjustment as
provided herein.

                  As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:

                  (a)      The term "COMPANY" shall include Numerex Corp. and
any corporation which shall succeed or assume the obligations of Numerex Corp.
hereunder.

                  (b)      The term "COMMON STOCK" includes (a) the Company's
Class A Common Stock, no par value per share, and (b) any other securities into
which or for which any of the securities described in (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.

                  (c)      The term "OTHER SECURITIES" refers to any stock
(other than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time shall
be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or otherwise.

                  (d)      The term "EXERCISE PRICE" shall be as follows:



                           (i)      150,000 shares at $4.75 per share;

                           (ii)     100,000 shares at $5.17 per share; and

                           (iii)    50,000 shares at $5.99 per share.

                  (e)      The term "REGISTRATION RIGHTS AGREEMENT" means the
Registration Rights Agreement, dated as of the date hereof, between the Company
and the Holder as the same may be amended, modified and supplemented from time
to time.

                  (f)      The term "PERSON" means an individual, a partnership,
a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture or an unincorporated organization.

         1.       EXERCISE OF WARRANT.

                  1.1      Number of Shares Issuable upon Exercise. From and
after the date hereof through and including the Expiration Date, the Holder
shall be entitled to receive, upon exercise of this Warrant in whole or in part,
by delivery of an original or fax copy of the exercise notice attached hereto as
Exhibit A (the "EXERCISE NOTICE"), shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

                  1.2      Fair Market Value. Fair Market Value of a share of
Common Stock as of a particular date (the "DETERMINATION DATE") shall mean:

                  (a)      If the Company's Common Stock is traded on the
American Stock Exchange or another national securities exchange or is quoted on
the National or SmallCap Market of The Nasdaq Stock Market, Inc. ("NASDAQ"),
then the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date.

                  (b)      If the Company's Common Stock is not traded on the
American Stock Exchange or another national stock exchange or on the Nasdaq but
is traded on the NASD OTC Bulletin Board or the National Quotation Bureau's Pink
Sheets, then the mean of the average of the closing bid and asked prices
reported for the last business day immediately preceding the Determination Date.

                  (c)      Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree or in the absence of agreement by arbitration in accordance with
the rules then in effect of the American Arbitration Association, before a
single arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided.

                  (d)      If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the charter in
the event of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation under the
charter,

                                       2



assuming for the purposes of this clause (d) that all of the shares of Common
Stock then issuable upon exercise of the Warrant are outstanding at the
Determination Date.

                  1.3      Trustee for Warrant Holders. In the event that a bank
or trust company shall have been appointed as trustee for the Holder of the
Warrant pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor Person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

         2.       PROCEDURE FOR EXERCISE.

                  2.1      Delivery of Stock Certificates, etc. on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise. The
certificates for the number of shares of Common Stock (or Other Securities)
shall bear a legend required or advisable under federal and state securities
laws. The Holder agrees that if the Registration Statement (as defined in the
Registration Rights Agreement) is then currently effective or if the shares of
Common Stock are eligible for sale pursuant to Rule 144 under the Securities Act
of 1933, as amended, the Holder shall (i) sell, transfer or dispose of the
shares of Common Stock it receives as a result of the exercise of this Warrant
pursuant to the Registration Statement in accordance with the plan of
distribution described therein (such plan of distribution shall be substantially
in the form attached hereto as Exhibit C) or the provisions of Rule 144, as
applicable, and (ii) fulfill applicable prospectus delivery requirements imposed
by applicable federal securities laws.

                  2.2      Exercise.

                           (a)      Payment may be made either in (i) cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, Common
Stock and/or Common Stock receivable upon exercise of the Warrant in accordance
with Section (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of shares of Common Stock specified in such form (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this
Warrant) and the Holder shall

                                       3


thereupon be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.

                           (b)      Notwithstanding any provisions herein to the
contrary, if the Fair Market Value of one share of Common Stock is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
exercised) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Exercise Notice in which event the Company
shall issue to the Holder a number of shares of Common Stock computed using the
following formula:

                  X=Y (A-B)
                      -----
                        A

                  Where X = the number of shares of Common Stock to be issued
                           to the Holder

                  Y=       the number of shares of Common Stock purchasable
                           under the Warrant or, if only a portion of the
                           Warrant is being exercised, the portion of the
                           Warrant being exercised (at the date of such
                           calculation)

                  A=       the Fair Market Value of one share of the Company's
                           Common Stock (at the date of such calculation)

                  B=       Exercise Price (as adjusted to the date of such
                           calculation)

         3.       EFFECT OF REORGANIZATION, ETC.; CONTINUATION OF TERMS.

                  3.1      Reorganization, Consolidation, Merger, etc. In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, either (x) in the event of the consummation
of a reorganization, consolidation or merger, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation if such Holder had so exercised this Warrant, immediately
prior thereto, all subject to further adjustment thereafter as provided in
Section 4, or (y) in the event of dissolution, cash equal to the then current
value of this Warrant as determined in accordance with the Black Scholes option
pricing formula. Upon the occurrence of any stock split, stock dividend,
combination of shares or reverse stock split pertaining to the Common Stock, the
Fixed Conversion Price shall be proportionately increased or decreased as
necessary to reflect the proportionate change in the shares of Common Stock
issued and outstanding as a result of such stock split, stock dividend,
combination of shares or reverse stock split.

                                       4


                  3.2      Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer referred to in this Section 3, this Warrant
shall continue in full force and effect and the terms hereof shall be applicable
to the shares of stock and other securities and property receivable on the
exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided in Section 4.

         4.       REGISTRATION RIGHTS; INCREASE IN NUMBER OF WARRANTS. In
addition to the terms of Sections 2 and 3 of the Registration Rights Agreement,
the Company hereby agrees with the Holder that by no later than August 13, 2004,
the Company shall prepare, file with, and caused to be declared effective by the
Securities and Exchange Commission (the "SEC"), a Registration Statement (as
defined in the Registration Rights Agreement) under the Securities Act of 1933
(the "SECURITIES ACT") covering the resale of the Common Stock underlying this
Warrant. In the event that the Registration Statement (as defined in the
Registration Rights Agreement) has not been declared effective by the SEC by
August 13, 2004, then on August 13, 2004, and for each thirty (30) day period
thereafter (or portion thereof), the number of shares of Common Stock (or Other
Securities) represented hereby shall be increased by 15,000 shares (at an
exercise price of $5.99) (the "DELAYED REGISTRATION PENALTY"), until the earlier
of (i) the day on which the Registration Statement is declared effective, and
(ii) twelve (12) months from the date hereof.

         5.       CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment
or readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrant or following the exercise in part of this Warrant,
the Company at its expense will promptly cause its Chief Financial Officer or
other appropriate designee to compute such adjustment or readjustment in
accordance with the terms of the Warrant and prepare a certificate setting forth
such adjustment or readjustment. The Company will forthwith mail a copy of each
such certificate to the holder of the Warrant and any Warrant agent of the
Company (appointed pursuant to Section 11 hereof); provided, however, that the
failure of the Company to mail a copy of such certificate to the Holder of the
Warrant and any Warrant Agent shall not affect the Delayed Registration Penalty
and/or the number of shares of Common Stock (or Other Securities) represented
hereby.

         6.       RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, or following the exercise in part
of this Warrant, shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant.

         7.       ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with
applicable federal and state securities laws and the Securities Purchase
Agreement, dated of even date herewith, by and between the Company and the
Holder (the "PURCHASE AGREEMENT"), this Warrant, and the rights evidenced
hereby, may be transferred by any registered holder hereof (a "TRANSFEROR") with
respect to any or all of the shares of Common Stock available for exercise
hereunder. On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "TRANSFEROR
ENDORSEMENT FORM") and together with

                                       5


evidence reasonably satisfactory to the Company demonstrating compliance with
applicable securities laws, which shall include, without limitation, a legal
opinion from the Transferor's counsel that such transfer is exempt from the
registration requirements of applicable securities laws, the Company at its
expense but with payment by the Transferor of any applicable transfer taxes)
will issue and deliver to or on the order of the Transferor thereof a new
Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a "TRANSFEREE"), calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the
Transferor. In no event shall a Transferee be a Competitor (as such term is
defined in the Purchase Agreement) of the Company.

         8.       REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

         9.       REGISTRATION RIGHTS. The Holder of this Warrant has been
granted certain registration rights by the Company. These registration rights
are set forth in a Registration Rights Agreement entered into by the Company and
the purchaser of the Company's Convertible Note (the "NOTE") at or prior to the
issue date of this Warrant.

         10.      MAXIMUM EXERCISE. The Holder shall not be entitled to exercise
this Warrant on an exercise date, in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of shares of
Common Stock actually owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the exercise
of this Warrant and conversion of the Note with respect to which the
determination of this proviso is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock of the Company on such date. For
the purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%. The restriction described in
this paragraph may be revoked upon 75 days prior notice from the Holder to the
Company and is automatically null and void upon an Event of Default under the
Note.

         11.      WARRANT AGENT. The Company may, by written notice to the each
holder of the Warrant, appoint an agent for the purpose of issuing Common Stock
(or Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.

                                       6


         12.      TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.

         13.      NOTICES, ETC. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid, at such address as may have been furnished
to the Company in writing by such holder or, until any such Holder furnishes to
the Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

         14.      NO SHORTING. Neither the Purchaser nor any of its affiliates
or investment partners shall or shall cause any Person, directly or indirectly,
to engage in "short sales" of the Company's Common Stock or any other hedging
strategies involving the Company's publicly traded securities.

         15.      MISCELLANEOUS.

                  (a)      THIS WARRANT CANNOT BE CHANGED OR TERMINATED ORALLY,
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. EXCEPT AS
PROVIDED IN SECTION 1.2(C) HEREOF, ANY ACTION BROUGHT BY EITHER PARTY AGAINST
THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE
BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN,
CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS WARRANT SHALL BE
DEEMED TO PRECLUDE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE DEEMED TO PRECLUDE
THE COMPANY FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN ANY SUCH ACTIONS.
BOTH THE COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT ON BEHALF OF THE
COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY
JURY. THE COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT FURTHER CONSENT THAT
ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION,
ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS
OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER,
MAY BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN
SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE
COMPANY AND THE INDIVIDUAL EXECUTING THIS WARRANT WAIVE ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON IN THE SUPREME COURT FOR
THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON
LACK OF JURISDICTION OR VENUE OR

                                       7


BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED IN EITHER SUCH COURT.

                  (b)      The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs; provided,
however, that if the parties hereto agree to settle any claim, action,
proceeding or lawsuit brought by one party hereto against the other party
hereto, then each of the parties shall bear its own costs in connection with
such claim, action, proceeding or lawsuit, unless otherwise directed by a court
of competent jurisdiction.

                  (c)      In the event that any provision of this Warrant is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Warrant.

                  (d)      The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
(e) The Company acknowledges that legal counsel participated in the preparation
of this Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Warrant to favor any party against the other
party.

       [Balance of page intentionally left blank; signature page follows.]

                                       8


                  IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.


                                             NUMEREX CORP.

                                             By: /s/ STRATTON J. NICOLAIDES
                                                --------------------------------
                                             Name: STRATTON J. NICOLAIDES
                                                  ------------------------------
                                             Title:         CEO
                                                   -----------------------------


WITNESS:

_______________________________

                                       9


                                                                       EXHIBIT A

                              FORM OF SUBSCRIPTION
                   (To be signed only on exercise of Warrant)

TO:      NUMEREX CORP.

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

___      ________ shares of the Common Stock covered by such Warrant; or

___ the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

___      $__________ in lawful money of the United States; and/or

___ the cancellation of such portion of the attached Warrant as is exercisable
for a total of _______ shares of Common Stock (using a Fair Market Value of
$_______ per share for purposes of this calculation); and/or

___ the cancellation of such number of shares of Common Stock as is necessary,
in accordance with the formula set forth in Section 2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchaseable
pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to ____________________ whose address is
______________________________ _________________________________.

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock and prospectus delivery
requirements under the Securities Act of 1933, as amended (the "Securities Act")
or pursuant to an exemption from registration under the Securities Act.

Dated:___________________                _______________________________________
                                         (Signature must conform to name of
                                         holder as specified on the face of the
                                         Warrant)

                                         ___________________________________
                                         (Address)



                                                                       EXHIBIT B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

                  For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of Numerex Corp. to which the within Warrant relates
specified under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of Numerex Corp.
with full power of substitution in the premises.



Transferees       Percentage Transferred                 Number Transferred
- -----------       ----------------------                 ------------------
                                                   

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

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

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

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


Dated:
      ------------------------            --------------------------------------
                                          (Signature must conform to name of
                                          holder as specified on the face of the
                                          Warrant)

Signed in the presence of:

- -------------------------------                 --------------------------------
           (Name)                                            (address)

ACCEPTED AND AGREED:
   [TRANSFEREE]                                 --------------------------------
                                                             (address)

- ------------------------------
         (Name)



                                                                       EXHIBIT C

                              PLAN OF DISTRIBUTION

The Company shall include a "Plan of Distribution" section in the Registration
Statement (as defined in the Registration Rights Agreement), which shall
substantially state as follows:

                              Plan of Distribution

         The shares of our common stock covered hereby may be offered and sold
from time to time by the selling stockholder. The selling stockholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale of shares of common stock currently held by selling
stockholder. Following conversion of the secured convertible note or exercise of
warrants by the selling stockholder holding a secured promissory note or
warrants, the selling stockholder will act independently of us in making
decisions with respect to the timing, manner, and sale of shares of our common
stock held by the selling stockholder who converts or exercises. The selling
stockholder may use any one or more of the following methods when selling
shares:

         -        ordinary brokerage transactions and transactions in which the
                  broker-dealer solicits purchasers;

         -        block trades in which the broker-dealer will attempt to sell
                  the shares as agent but may position and resell a portion of
                  the block as principal to facilitate the transaction;

         -        purchases by a broker-dealer as principal and resale by the
                  broker-dealer for its account;

         -        an exchange distribution in accordance with the rules of the
                  applicable exchange;

         -        privately negotiated transactions;

         -        broker-dealers may agree with the selling stockholder to sell
                  a specified number of such shares at a stipulated price per
                  share;

         -        a combination of any such methods of sale; and

         -        any other method permitted pursuant to applicable law.

         The selling stockholder may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

         Broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Discounts, concessions, commissions and similar selling expenses, if
any, attributable to the sale of shares will be borne by the selling
stockholder. The selling stockholder does not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         The selling stockholder may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by it and,
if it defaults in the performance of its secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
under this prospectus, or under an amendment to this prospectus under

                                       12



Rule 424(b)(3) or other applicable provision of the Securities Act amending the
list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholder under this prospectus.

         The selling stockholder also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.

         The selling stockholder and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling stockholder have
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.

         The Company is required to pay certain fees and expenses incurred by
the Company incident to the registration of the shares. The Company has agreed
to indemnify the selling stockholder against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

         The anti-manipulation rules of Regulation M under the Securities
Exchange Act of 1934, as amended, may apply to sales of our common stock and
activities of the selling stockholder.

                                       13

EX-4.4

                                                                     EXHIBIT 4.4

                               SECURITY AGREEMENT

To:               Laurus Master Fund, Ltd.
                  c/o Onshore Corporate Services, Ltd.
                  P.O. Box 1234 G.T
                  Queensgate House
                  South Church Street
                  Grand Cayman, Cayman Islands

Gentlemen:

         1.       To secure the payment of all Obligations (as hereafter
defined), we hereby grant to you a continuing security interest in all of the
following property now owned or at any time hereafter acquired by us, or in
which we now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all accounts, inventory, equipment, goods,
documents, instruments (including, without limitation, promissory notes),
contract rights, general intangibles (including, without limitation, payment
intangibles), chattel paper, supporting obligations, investment property,
letter-of-credit rights, trademarks and tradestyles in which we now have or
hereafter may acquire any right, title or interest, all proceeds and products
thereof (including, without limitation, proceeds of insurance) and all
additions, accessions and substitutions thereto or therefor.

         2.       The term "Obligations" as used herein shall mean and include
all debts, liabilities and obligations owing by each of us to you under that
certain Guaranty, dated as of the date hereof, as amended, modified and
supplemented from time to time (as so amended, modified and supplemented, the
"Guaranty") and all obligations owing by Numerex Corp. ("Company") to you under
the Convertible Term Note dated as of the date hereof in the original principal
amount of $4,500,000, as amended, modified and supplemented from time to time or
otherwise (as so amended, modified and supplemented from time to time, the
"Note").

         3.       We hereby represent, warrant and covenant to you that: (a)
each of us is a legal entity validly existing, in good standing and formed under
the laws of the jurisdictions set forth below our names on the signature pages
hereto with an organization identification number set forth below our names on
the signature pages hereto and we will provide you thirty (30) days' prior
written notice of any change in our state of formation; (b) our legal names are
as set forth on the signature pages hereto and are identical to that which is
set forth in our certificates or articles of incorporation or other constitutive
documents, as amended through the date hereof; (c) we are the lawful owner of
the Collateral and have the sole right to grant a security interest therein and
will defend the Collateral against all claims and demands of all persons and
entities; (d) we will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature ("Encumbrances"), except to the extent said Encumbrance does not secure
indebtedness in excess of $150,000 on a combined basis for each of us at any one
time and such Encumbrance is removed or otherwise released within 10 business
days of the creation thereof; (e) we will at our own cost and expense use
commercially



reasonable efforts to keep the Collateral in good state of repair (ordinary wear
and tear excepted) and will use commercially reasonable efforts not to waste or
destroy the same or any part thereof other than ordinary course discarding of
items no longer used or useful in our business; (f) we will not without your
prior written consent, sell, exchange, lease or otherwise dispose of the
Collateral or any of our rights therein, whether by sale, lease or otherwise,
except for (I) Permitted Non-Core Asset Sales (as defined in the Note), (II) the
sale of inventory in the ordinary course of business and (III) the disposition
or transfer in the ordinary course of business during any fiscal year of
obsolete and worn-out equipment having an aggregate fair market value of not
more than $37,500 and only to the extent that (i) the proceeds of any such
equipment disposition are used to acquire replacement equipment which is subject
to your first priority security interest or are used to repay Obligations or to
pay general corporate expenses, or (ii) following the occurrence of an Event of
Default which continues to exist the proceeds of which are remitted to you to be
held as cash collateral for the Obligations; (g) we will name you as an
additional insured and lender's loss payee under all of our policies of
insurance which shall insure, without limitation, the Collateral against such
losses, damages and hazards as you shall reasonably require and in amounts and
under policies issued by insurers reasonably acceptable to you. If we fail to do
so, you may procure such insurance and the cost thereof shall constitute
Obligations; (h) we will at all reasonable times and upon reasonable advance
notice (except that such notice shall not be required in the event you
reasonably believe such access is necessary to preserve or protect the
Collateral and/or during the continuance of an Event of Default) allow you or
your representatives free access to and the right of inspection of the
Collateral provided that you do not unreasonably interfere with our normal
business operations; (i) we hereby indemnify and save you harmless from all
loss, costs, damage, liability and/or expense, including reasonable attorneys'
fees, that you may sustain or incur to enforce payment, performance or
fulfillment of any of the Obligations and/or in the enforcement of this
Agreement or in the prosecution or defense of any action or proceeding either
against you or us concerning any matter growing out of or in connection with
this Agreement, and/or any of the Obligations and/or any of the Collateral,
except to the extent caused by your own gross negligence or willful misconduct;
(j) with respect to all accounts arising out of contracts between us and the
United States of America, or any state, or any department, agency or
instrumentality of any of them (each, a "Government Contract"), we will, upon
your request, comply with any governmental notice or approval requirements,
including, without limitation, compliance with the Federal Assignment of Claims
Act, and (k) each account shall conform to the following criteria: (i) shipment
of the merchandise or rendition of services has been completed, (ii) merchandise
or services shall not have been rejected or disputed by the account debtor and
there shall not have been asserted any offset, defense or counterclaim (other
than any such rejections, disputes, offsets, defenses or counterclaims which are
asserted in the ordinary course of business), and (iii) each such account shall
be a good and valid account representing an undisputed bona fide indebtedness
(other than in connection with any such dispute arising in the ordinary course
of business) incurred by the account debtor liable therefor, for a fixed sum as
set forth in the invoice relating thereto with respect to an unconditional sale
and delivery upon the stated terms of goods sold by us, or work, labor and/or
services rendered by us, as applicable. You acknowledge that concurrent with
each such sale, and your receipt in immediately available funds of all proceeds
of such required to be paid to you pursuant to the Note, you shall promptly take
all action

                                        2


reasonably requested by us to release your security interest in those assets
sold pursuant to a Permitted Non-Core Asset Sale.

         4.       Following the occurrence and during the continuance of an
Event of Default, you shall have the right to instruct all of our account
debtors to remit payments on all accounts in accordance with your express
written instructions. If, despite such instructions, we shall receive any
payments with respect to accounts, we shall receive such payments in trust for
your benefit, shall segregate such payments from our other funds and shall
deliver or cause to be delivered to you, in the same form as so received with
all necessary endorsements, all such payments as soon as practicable, but in no
event later than five (5) business days after our receipt thereof. Following the
occurrence and during the continuation of an Event of Default, you shall have
full power and authority to collect each account, through legal action or
otherwise, and may settle, compromise, or assign (in whole or in part) the claim
for any account, or otherwise exercise any other right now existing or hereafter
arising with respect to any account if such action is commercially reasonable
and will expedite collection.

         5.       We shall be in default under this Agreement upon the happening
of any of the following events or conditions, each such event or condition being
an "Event of Default" (a) the occurrence of any Event of Default under and as
defined in the Note and/or Guaranty which is not cured within any applicable
notice, cure, grace or similar period; (b) any warranty, representation or
statement made or furnished to you by any of us or on our behalf was false in
any material respect when made or furnished; (c) any of us shall breach in any
material respect any provision of this Agreement, as the same may be amended,
modified and supplemented from time to time, and such breach shall not have been
cured during any applicable notice, cure, grace or similar period; (d) except to
the extent otherwise expressly permitted hereunder, the loss, theft, damage,
destruction, sale or encumbrance to or of any of the Collateral or the making of
any levy, seizure or attachment thereof or thereon except to the extent (i) said
levy, seizure or attachment does not secure indebtedness in excess of $100,000
and such levy, seizure or attachment has not been removed or otherwise released
within 10 business days of the creation or the assertion thereof or (ii) (I)
with respect to any loss, theft, destruction or damage to or of any of the
Collateral (collectively, a "Loss") in an aggregate amount equal to $1,000,000
or more on a combined basis for all Collateral, you shall have received within
ninety (90) days of the occurrence of such Loss insurance proceeds in an amount
not less than ninety percent (90%) of the fair market value of the Collateral
subject to such Loss and (II) with respect to any Loss in an aggregate amount
less than $1,000,000 on a combined basis for all Collateral, you shall have
repaired, replaced or otherwise restored the Collateral subject to such Loss
within ninety (90) days of the occurrence of such Loss; (e) other than in
connection with a Permitted Transaction, any of us shall become insolvent, cease
operations, dissolve, terminate our business existence, make an assignment for
the benefit of creditors, or suffer the appointment of a receiver, trustee,
liquidator or custodian of all or any part of our property; (f) any proceedings
under any bankruptcy or insolvency law shall be commenced by or against any of
us and if commenced against us shall not be dismissed within 45 days; (g) any of
us shall repudiate or purport to revoke any of our obligations under the Note or
any guaranty agreement made by any of us in favor of you after expiration of
applicable cure, notice, grace or similar period; or (h) if any Core Company
shall at any time transfer in any manner whatsoever, including by way of merger,

                                        3


consolidation or otherwise, any of its assets to a Non-Core Company. For
purposes of subsection (e) above, the term "Permitted Transaction" shall mean a
Permitted Non-Core Asset Sale or any winding-up, dissolution, merger or
liquidation of any subsidiary of the Company following the sale of all or
substantially all of its assets as a result of a Permitted Non-Core Asset Sale.
For purposes of subsection (h) above, the following terms shall have the
following meanings: (1) "Core Company" shall mean any one or more of the
following companies: Numerex Corp. (a Pennsylvania corporation), Numerex
Solutions, LLC (a Delaware limited liability company), Cellemetry LLC (a
Delaware limited liability company), Numerex Investment Corp. (a Delaware
corporation), Mobileguardian LLC (a Delaware limited liability company) and
Uplink Security, Inc. (a Georgia corporation); and (2) "Non-Core Company" shall
mean any one or more of the following companies: Digilog Inc. (a Pennsylvania
corporation), DCX Systems Inc. (a Pennsylvania corporation), DCX Systems
Australia PTY Limited (an Australian company), Broadband Networks Inc. (a
Delaware corporation) and BNI Solutions LLC (a Delaware limited liability
company). You hereby acknowledge that you will not unreasonably withhold your
consent to any non-bankruptcy internal corporate reorganization or restructuring
of the Company and/or any of its subsidiaries.

         6.       Upon the occurrence of any Event of Default and for so long as
such Event of Default is continuing, you may declare all Obligations immediately
due and payable and you shall have the remedies of a secured party provided in
the Uniform Commercial Code as in effect in the State of New York, this
Agreement and other applicable law. Upon the occurrence of any Event of Default
and for so long as such Event of Default is continuing, you will have the right
to take possession of the Collateral and to maintain such possession on our
premises or to remove the Collateral or any part thereof to such other premises
as you may desire. Upon your request (following the occurrence of an Event of
Default for so long as such Event of Default is continuing), we shall assemble
the Collateral and make it available to you at a place designated by you. If any
notification of intended disposition of any Collateral is required by law, such
notification, if mailed, shall be deemed properly and reasonably given if mailed
at least ten (10) days before such disposition, postage prepaid, addressed to us
either at our address shown herein or at any other address for such notice as we
may provide you from time to time in writing pursuant to Section 11 hereof. Any
proceeds of any disposition of any of the Collateral shall be applied by you in
the following order to the extent of any such proceeds: first, to the payment of
all reasonable expenses in connection with the sale of the Collateral, including
reasonable attorneys' fees and other legal expenses and disbursements and the
reasonable expense of retaking, holding, preparing for sale, selling, and the
like, second, toward the payment of the Obligations in such order of application
as you may elect subject to the terms of the Note, and third, to us or as
otherwise required by the Uniform Commercial Code or as a court of competent
jurisdiction may direct.

         7.       If we default in the performance or fulfillment of any of the
terms, conditions, promises, covenants, provisions or warranties on our part to
be performed or fulfilled under or pursuant to this Agreement, you may, at your
option without waiving your right to enforce this Agreement according to its
terms, at any time after five (5) days' written notice to Numerex Corp., as our
agent (provided that no such notice shall be required in the event prompt action
is necessary to preserve or protect the Collateral), perform or fulfill the same
or cause the

                                        4


performance or fulfillment of the same for our account and at our sole cost and
expense, and the reasonable out-of-pocket cost and expense thereof (including
reasonable attorneys' fees) shall be added to the Obligations and shall be
payable on demand with interest thereon at the highest interest rate under the
Note.

         8.       We appoint you, any of your officers, employees or any other
person or entity whom you may designate as our attorney, with power to execute
such documents in our behalf and to supply any omitted information and correct
patent errors in any documents executed by us or on our behalf; to file
financing statements against us covering the Collateral; to sign our name on
public records only if and to the extent necessary to evidence, perfect and/or
preserve the security interest created pursuant to this Agreement; and to take
all such other reasonable actions that are necessary to carry out this
Agreement. We hereby ratify and approve all acts of the attorney and neither you
nor the attorney will be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law other than gross negligence or
willful misconduct. This power being coupled with an interest, is irrevocable so
long as any Obligations remains unpaid.

         9.       No delay or failure on your part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by you and then only to the extent therein set forth, and no
waiver by you of any default shall operate as a waiver of any other default or
of the same default on a future occasion. You shall have the right to enforce
any one or more of the remedies available to you, successively, alternately or
concurrently. We agree to join with you in executing financing statements or
other instruments to the extent required by the Uniform Commercial Code in form
satisfactory to you and in executing such other documents or instruments as may
be reasonably required or deemed necessary by you for purposes of effecting or
continuing your security interest in the Collateral.

         10.      This Agreement cannot be changed or terminated orally, and
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by
this Agreement shall be brought only in any state or federal court sitting in
the Borough of Manhattan, City of New York; provided that nothing contained in
this Agreement shall be deemed to preclude you from bringing suit or taking
other legal action in any other court of competent jurisdiction and nothing
shall be deemed to preclude us from asserting any defenses or counterclaims in
any such actions. You, we and the individuals executing this Agreement agree to
submit to the jurisdiction of such courts and waive trial by jury. You, we and
the individuals executing this Agreement further consent that any summons,
subpoena or other process or papers (including, without limitation, any notice
or motion or other application to either of the aforementioned courts or a judge
thereof) or any notice in connection with any proceedings hereunder, may be
served by registered or certified mail, return receipt requested, or by personal
service provided a reasonable time for appearance is permitted, or in such other
manner as may be permissible under the rules of said courts. You, we and the
individuals executing this Agreement waive any objection to jurisdiction and
venue of any action instituted hereon in the Supreme Court for the State of New
York, County of New York or the United

                                        5


States District Court for the Southern District of New York and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens in any action brought in either such court.

         11.      All notices from you to us shall be sufficiently given if
mailed or delivered to us at our address set forth below unless you shall have
received from us in writing another address for notices. Copies of all notices
to us shall also be sent to: Legal Counsel, Numerex Corp., 1600 Parkwood Circle
SE, Suite 200, Atlanta, Georgia 30339, facsimile: (770) 693-5951, and Richard
Baltz, Esq., Arnold & Porter, 555 12th Street, N.W., Washington, D.C. 20004,
facsimile: (202) 942-5999.

                       [SIGNATURE LINES ON FOLLOWING PAGE]

                                        6


                  [SIGNATURE PAGE NO. 1 TO SECURITY AGREEMENT]

                                     Very truly yours,

                                     NUMEREX CORP.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------
                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Pennsylvania
                                     Org. ID#: PA2569500

                                     NUMEREX SOLUTIONS LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: MANAGER
                                         ------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Delaware
                                     Org. ID#: DE3361359

                                     CELLEMETRY LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: MANAGER
                                         ------------------------------



                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Delaware
                                     Org. ID#: DE2896495

                  [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]

                                        7


                  [SIGNATURE PAGE NO. 2 TO SECURITY AGREEMENT]

                                     NUMEREX INVESTMENT CORP.


                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Delaware
                                     Org. ID#: DE2429448

                                     BROADBAND NETWORKS INC.


                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------

                                     Address: 2820 E. College Ave. Suite B
                                              State College, PA 16801-7548

                                     State of Formation: Delaware
                                     Org. ID#: DE2280048

                                     BNI SOLUTIONS LLC



                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its:  MANAGER
                                         ------------------------------

                                     Address: 2820 E. College Ave. Suite B
                                              State College, PA 16801-7548

                                     State of Formation: Delaware
                                     Org. ID#: DE3410681

                  [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]

                                        8


                  [SIGNATURE PAGE NO. 3 TO SECURITY AGREEMENT]

                                     DIGILOG INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------

                                     Address: 2360 Maryland Road
                                              Willow Grove, PA 19090

                                     State of Formation: Pennsylvania
                                     Org. ID#: PA2587972

                                     DCX SYSTEMS INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------

                                     Address: 2360 Maryland Road
                                              Willow Grove, PA 19090

                                     State of Formation: Pennsylvania
                                     Org. ID#: PA2608798

                                     DCX SYSTEMS AUSTRALIA PTY LIMITED


                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its:  DIRECTOR
                                         ------------------------------

                                     Address: Lindfield Executive Centre
                                              12 Tryon Rd.
                                              P.O. Box 42
                                              Lindfield, NSW 2072, Australia

                                     State of Formation: Australia
                                     Org. ID#: 078013573

                  [SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]

                                        9


                  [SIGNATURE PAGE NO. 4 TO SECURITY AGREEMENT]

                                     MOBILEGUARDIAN LLC


                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: MANAGER
                                         ------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Delaware
                                     Org. ID#: DE3597074

                                     UPLINK SECURITY, INC.


                                     By: /s/ STRATTON J. NICOLAIDES
                                        -------------------------------
                                     Its: CEO
                                         ------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339

                                     State of Formation: Georgia
                                     Org. ID#: GAK823623

                                     Dated as of: January 13, 2004

ACKNOWLEDGED:

LAURUS MASTER FUND, LTD.

By: /s/ DAVID GRIN
   ----------------------------
Its:
    ---------------------------
                                       10


STATE OF Georgia)
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Numerex Corp., the corporation described in and which executed the
above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.

                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the manager of Numerex Solutions LLC, the limited liability company described
in and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the manager of Cellemetry, LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.



                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public




                                       11


STATE OF Georgia)
     : ss.:
COUNTY OF Cobb)

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Numerex Investment Corp., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.

                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of BroadBand Networks Inc., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )
                                     ________________________________

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the manager of BNI Solutions LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.



                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public



                                       12


STATE OF Georgia)
     : ss.:
COUNTY OF Cobb)

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Digilog Inc., the corporation described in and which executed the
above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )


         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of DCX Systems Inc., the corporation described in and which executed
the above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )


         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Director of DCX Systems Australia PTY Limited, the ______________
described in and which executed the above instrument; and that s/he signed
her/his name thereto by order of the board of directors of said
__________________.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public


                                       13



STATE OF Georgia)
     : ss.:
COUNTY OF Cobb)

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the manager of MobileGuardian LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.


                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public

STATE OF Georgia    )
     : ss.:
COUNTY OF Cobb      )


         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Uplink Security, Inc., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.



                                     Pamela S. Lester
                                     -----------------------
                                     Notary Public


                                       14

EX-4.5

                                                                     EXHIBIT 4.5

                                    GUARANTY

New York, New York                                              January 13, 2004

         FOR VALUE RECEIVED, and in consideration of loans made or to be made or
credit otherwise extended or to be extended by LAURUS MASTER FUND, LTD.
("Laurus") to or for the account of NUMEREX CORP. ("Company") from time to time
and at any time and for other good and valuable consideration and to induce
Laurus, in its discretion, to make such loans or extensions of credit and to
make or grant such renewals, extensions, releases of collateral or
relinquishments of legal rights as Laurus may deem advisable, the undersigned
(and each of them if more than one, the liability under this Guaranty being
joint and several) (jointly and severally referred to as "Guarantor" or "the
undersigned") unconditionally guaranties to Laurus, its successors, endorsees
and assigns the prompt payment when due (whether by acceleration or otherwise)
of all present and future obligations and liabilities of any and all kinds of
Company to Laurus arising under, out of, or in connection with that certain
Convertible Term Note dated as of the date hereof made by Company in favor of
Laurus (as amended, modified, restated or supplemented from time to time, the
"Note") and all other documents, agreements and instruments of any nature
entered into in connection therewith (the Note and all such other documents,
agreements and instruments, collectively, the "Documents") (all of which are
herein collectively referred to as the "Obligations"), and irrespective of the
genuineness, validity, regularity or enforceability of such Obligations, or of
any instrument evidencing any of the Obligations or of any security interest in
and to any collateral therefor or of the existence or extent of such collateral,
and irrespective of the allowability, allowance or disallowance of any or all of
the Obligations in any case commenced by or against Company under Title 11,
United States Code, including, without limitation, obligations or indebtedness
of Company for post-petition interest, fees, costs and charges that would have
accrued or been added to the Obligations but for the commencement of such case.
In furtherance of the foregoing, the undersigned hereby agrees as follows:

         1.       No Impairment. Laurus may at any time and from time to time,
either before or after the maturity thereof, without notice to or further
consent of the undersigned, extend the time of payment of, exchange or surrender
any collateral for, renew or extend any of the Obligations or increase or
decrease the interest rate thereon, and may also make any agreement with Company
or with any other party to or person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise, discharge
or release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between Laurus and Company or any such other party
or person, or make any election of rights Laurus may deem desirable under the
United States Bankruptcy Code, as amended, or any other federal or state
bankruptcy, reorganization, moratorium or insolvency law relating to or
affecting the enforcement of creditors' rights generally (any of the foregoing,
an "Insolvency Law") without in any way impairing or affecting this Guaranty.
This Guaranty shall be effective regardless of the subsequent incorporation,
merger or consolidation of Company, or any change in the composition, nature,
personnel or location of Company and shall extend to any successor entity to
Company, including a debtor in possession or the like under any Insolvency Law.



         2.       Guaranty Absolute. The undersigned guarantees that the
Obligations will be paid strictly in accordance with the terms of the Note
and/or any other document, instrument or agreement creating or evidencing the
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Company
with respect thereto. Guarantor hereby knowingly accepts the full range of risk
encompassed within a contract of "continuing guaranty" which risk includes the
possibility that Company will contract additional indebtedness for which
Guarantor may be liable hereunder after Company's financial condition or ability
to pay its lawful debts when they fall due has deteriorated, whether or not
Company has properly authorized incurring such additional indebtedness. The
undersigned acknowledges that (i) no oral representations, including any
representations to extend credit or provide other financial accommodations to
Company, have been made by Laurus to induce the undersigned to enter into this
Guaranty and (ii) any extension of credit to the Company shall be governed
solely by the provisions of the Note, the other Documents and applicable law.
The liability of the undersigned under this Guaranty shall be absolute and
unconditional, in accordance with its terms, and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Documents or any
other instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof, (b) any lack of validity or enforceability of any
Document or other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof to an assignee of the
Note permitted pursuant to the terms of the Note and the other Documents, (c)
any furnishing of any additional security to Laurus or its assignees or any
acceptance thereof or any release of any security by Laurus or its assignees,
(d) any limitation on any party's liability or obligation under the Documents or
any other documents, instruments or agreements relating to the Obligations or
any assignment or transfer of any thereof to an assignee of the Note permitted
pursuant to the terms of the Note and the other Documents, or any invalidity or
unenforceability, in whole or in part, of any such document, instrument or
agreement or any term thereof, (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to Company, or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such proceeding, whether or not the
undersigned shall have notice or knowledge of any of the foregoing, (f) any
exchange, release or nonperfection of any collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the undersigned.
Any amounts due from the undersigned to Laurus shall bear interest until such
amounts are paid in full at the highest rate then applicable to the Obligations
(but without duplication of any interest accrued or payable under the Note).
Obligations include post-petition interest whether or not allowed or allowable.

         3.       Waivers. (a) This Guaranty is a guaranty of payment and not of
collection. Laurus shall be under no obligation to institute suit, exercise
rights or remedies or take any other action against Company or any other person
liable with respect to any of the Obligations or resort to any collateral
security held by it to secure any of the Obligations as a condition precedent to
the undersigned being obligated to perform as agreed herein and Guarantor hereby
waives to the

                                       2


fullest extent permitted by applicable law any and all rights which it may have
by statute or otherwise which would require Laurus to do any of the foregoing.
Guarantor further consents and agrees that Laurus shall be under no obligation
to marshal any assets in favor of Guarantor, or against or in payment of any or
all of the Obligations. The undersigned hereby waives all suretyship defenses
and any rights to interpose any defense, counterclaim or offset of any nature
and description which the undersigned may have by virtue of its status as a
guarantor or surety of the Obligations.

                  (b)      The undersigned further waives (i) notice of the
acceptance of this Guaranty, of the making of any such loans or extensions of
credit, and of all notices and demands of any kind to which the undersigned may
be entitled, including, without limitation, notice of adverse change in
Company's financial condition or of any other fact which might materially
increase the risk of the undersigned and (ii) presentment to or demand of
payment from anyone whomsoever liable upon any of the Obligations, protest,
notices of presentment, non-payment or protest and notice of any sale of
collateral security or any default of any sort, other than to the extent any
such notice is required under the Note, the other Documents or applicable law.

                  (c)      Notwithstanding any payment or payments made by the
undersigned hereunder, or any setoff or application of funds of the undersigned
by Laurus, the undersigned shall not be entitled to be subrogated to any of the
rights of Laurus against Company or against any collateral or guarantee or right
of offset held by Laurus for the payment of the Obligations, nor shall the
undersigned seek or be entitled to seek any contribution or reimbursement from
Company in respect of payments made by the undersigned hereunder, in each case
until all amounts owing to Laurus by Company on account of the Obligations are
paid in full and the Note has been terminated. If, notwithstanding the
foregoing, any amount shall be paid to the undersigned on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full and the Note shall not have been terminated, such amount shall be
held by the undersigned in trust for Laurus, segregated from other funds of the
undersigned, and shall forthwith upon, and in any event within two (2) business
days of, receipt by the undersigned, be turned over to Laurus in the exact form
received by the undersigned (duly endorsed by the undersigned to Laurus, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as Laurus may determine, subject to the provisions of the Note.
Any and all present and future debts and obligations of Company to any of the
undersigned are hereby waived and postponed in favor of, and subordinated to the
full payment and performance of, all present and future debts and obligations of
Company to Laurus.

         4.       Security. All sums at any time to the credit of the
undersigned and any property of the undersigned in Laurus's possession or in the
possession of any bank, financial institution or other entity that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, Laurus (each such entity, an "Affiliate") shall be
deemed held by Laurus or such Affiliate, as the case may be, as security for any
and all of the undersigned's obligations to Laurus and to any Affiliate of
Laurus, no matter how or when arising and whether under this or any other
instrument, agreement or otherwise.

         5.       Representations and Warranties. The undersigned hereby
represent and warrant to Laurus (all of which representations and warranties (i)
are made as of the date of this

                                        3


Guaranty, (ii) are supplemented by and subject to the Exchange Act Filings (as
defined in the Securities Purchase Agreement, dated as of the date hereof, by
and between the Company and Laurus (as amended, modified and supplemented from
time to time, the "Securities Purchase Agreement") and the representations and
warranties made in the Securities Purchase Agreement or any schedule thereto and
(iii) shall survive until all Obligations are indefeasibly satisfied in full and
the Note has been irrevocably terminated), that:

                  (a)      Corporate Status. Each of the undersigned is duly
organized, validly existing and in good standing under the laws of its state of
formation as set forth under the undersigned's signature on the signature pages
hereto and has full corporate or other organization power, authority and legal
right to own its property and assets and to transact the business in which it is
engaged.

                  (b)      Authority and Execution. Each of the undersigned has
full corporate or other organizational power, authority and legal right to
execute and deliver, and to perform its obligations under, this Guaranty and has
taken all necessary corporate and legal action to authorize the execution,
delivery and performance of this Guaranty.

                  (c)      Legal, Valid and Binding Character. This Guaranty
constitutes the legal, valid and binding obligation of the undersigned
enforceable in accordance with its terms, except as enforceability may be
limited by applicable Insolvency Law or general principles of equity that
restrict the availability of equitable or legal remedies.

                  (d)      Violations. Except as set forth on Schedule 5(d), the
execution, delivery and performance of this Guaranty will not violate any
requirement of law applicable to the undersigned or any material contract,
agreement or instrument to which any of the undersigned is a party or by which
any of the undersigned or any property of the undersigned is bound or result in
the creation or imposition of any mortgage, lien or other encumbrance other than
to Laurus on any of the property or assets of any of the undersigned pursuant to
the provisions of any of the foregoing.

                  (e)      Consents or Approvals. Except as set forth on
Schedule 5(e), no consent of any other person or entity (including, without
limitation, any creditor of any of the undersigned) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty.

                  (f)      Litigation. Except as set forth on Schedule 4.12 to
the Securities Purchase Agreement, no litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or governmental
authority, bureau or agency is currently pending or, to the actual knowledge of
the officers of the undersigned, threatened (i) with respect to this Guaranty or
any of the transactions contemplated by this Guaranty or (ii) against or
affecting any of the undersigned, or any of the property or assets of any of the
undersigned, which, if adversely determined, would have a Material Adverse
Effect (as defined in the Securities Purchase Agreement).

                                        4


                  (g)      Financial Benefit. The undersigned have derived or
expect to derive a financial or other advantage from each and every loan,
advance or extension of credit made under the Note.

         6.       Acceleration. It shall be an "Event of Default" under this
Guaranty if: (i) any Event of Default shall occur and be continuing under and as
defined in the Note or the Security Agreement after expiration of any notice,
cure, grace or similar period, (ii) any representation or warranty of any of the
undersigned shall have been untrue in any material respect when made, (iii) any
of the undersigned should at any time become insolvent, or make a general
assignment, or if a proceeding in or under any Insolvency Law shall be filed or
commenced by, or in respect of, any of the undersigned, which proceeding, if not
commenced by the undersigned, shall not be dismissed within 60 days of its
filing; (iv) a notice of any lien, levy, or assessment in excess of $100,000 (in
the aggregate outstanding at any time for all of the undersigned on a combined
basis) is filed of record with respect to any assets of any of the undersigned
by the United States of America or any department, agency, or instrumentality
thereof, or (v) the undersigned shall breach in the performance of any
obligation under this Guaranty in any respect. Upon the occurrence of any Event
of Default, any and all Obligations shall for purposes hereof, at Laurus'
option, be deemed due and payable without notice notwithstanding that any such
Obligation is not then due and payable by Company.

         7.       Payments from Guarantor. Laurus, in its sole and absolute
discretion, with or without notice to the undersigned, may apply on account of
the Obligations any payment from the undersigned or any other guarantor, or
amounts realized from any security for the Obligations, or may deposit any and
all such amounts realized in a non-interest bearing cash collateral deposit
account to be maintained as security for the Obligations.

         8.       Costs. The undersigned shall pay on demand, all reasonable out
of pockets costs, fees and expenses (including reasonable expenses for legal
services of every kind) relating to the enforcement or protection of the rights
of Laurus hereunder or under any of the Obligations.

         9.       No Termination. This is a continuing irrevocable guaranty and
shall remain in full force and effect and be binding upon the undersigned, and
the undersigned's successors and assigns, until all of the Obligations then
outstanding on the date on which the Note is paid in full (whether by cash
payment or by conversion of the Note to Common Stock (as defined in the
Securities Purchase Agreement) pursuant to the terms of the Note) are paid in
full, whereupon this Guaranty shall expire and terminate and be of no further
force and effect. If any of the present or future Obligations are guarantied by
persons, partnerships or corporations in addition to the undersigned, the death,
release or discharge in whole or in part or the bankruptcy, merger,
consolidation, incorporation, liquidation or dissolution of one or more of them
shall not discharge or affect the liabilities of the undersigned under this
Guaranty.

         10.      Recapture. Anything in this Guaranty to the contrary
notwithstanding, if Laurus receives any payment or payments on account of the
liabilities guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by Laurus, the undersigned's obligations to Laurus
shall be reinstated and this

                                        5


Guaranty shall remain in full force and effect (or be reinstated) until payment
shall have been made to Laurus, which payment shall be due on demand.

         11.      No Waiver. No failure on the part of Laurus to exercise, and
no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Laurus of any right,
remedy or power hereunder preclude any other or future exercise of any other
legal right, remedy or power. Each and every right, remedy and power hereby
granted to Laurus or allowed it by law or other agreement shall be cumulative
and not exclusive of any other, and may be exercised by Laurus at any time and
from time to time.

         12.      Waiver of Jury Trial. THE GUARANTOR AND THE INDIVIDUALS
EXECUTING THIS INSTRUMENT ON BEHALF OF THE GUARANTOR DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LAURUS HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

         13.      Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY
EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
INSTRUMENT SHALL BE BROUGHT ONLY IN ANY STATE OR FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN, CITY OF NEW YORK; PROVIDED THAT NOTHING CONTAINED IN THIS
INSTRUMENT SHALL BE DEEMED TO PRECLUDE LAURUS FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER COURT OF COMPETENT JURISDICTION AND NOTHING SHALL BE
DEEMED TO PRECLUDE THE GUARANTOR FROM ASSERTING ANY DEFENSES OR COUNTERCLAIMS IN
ANY SUCH ACTIONS. THE GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT ON
BEHALF OF THE GUARANTOR AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. THE
GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT FURTHER CONSENT THAT ANY
SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY
NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR
A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY
BE SERVED BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY
PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN
SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. THE
GUARANTOR AND THE INDIVIDUALS EXECUTING THIS INSTRUMENT WAIVE ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON IN THE SUPREME COURT FOR
THE STATE OF

                                        6


NEW YORK, COUNTY OF NEW YORK, OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS FOR ANY ACTION FILED IN
EITHER SUCH COURT. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE
OTHER PARTY ITS REASONABLE ATTORNEY'S FEES AND COSTS; PROVIDED, HOWEVER, THAT IF
THE PARTIES HERETO AGREE TO SETTLE ANY CLAIM, ACTION, PROCEEDING OR LAWSUIT
BROUGHT BY ONE PARTY HERETO AGAINST THE OTHER PARTY HERETO, THEN EACH OF THE
PARTIES SHALL BEAR ITS OWN COSTS IN CONNECTION WITH SUCH CLAIM, ACTION,
PROCEEDING OR LAWSUIT, UNLESS OTHERWISE DIRECTED BY A COURT OF COMPETENT
JURISDICTION.

         14.      Severability. In the event that any provision of this Guaranty
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or unenforceability of any other provision of this
Guaranty.

         15.      Amendments, Waivers. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by the undersigned therefrom shall
in any event be effective unless the same shall be in writing executed by the
undersigned and Laurus.

         16.      Notice. All notices, requests and demands to or upon the
undersigned, shall be in writing and shall be deemed to have been duly given or
made (a) when delivered, if by hand, (b) three (3) days after being sent,
postage prepaid, if by registered or certified mail, (c) when confirmed
electronically, if by facsimile, or (d) when delivered, if by a recognized
overnight delivery service in each event, to the numbers and/or address set
forth beneath the signature of the undersigned, with a copy to: Legal Counsel,
Numerex Corp., 1600 Parkwood Circle SE, Suite 200, Atlanta, Georgia 30339,
facsimile: (770) 693-5951, and Richard Baltz, Esq., Arnold & Porter, 555 12th
Street, N.W., Washington, D.C. 20004, facsimile: (202) 942-5999.

         17.      Successors. Laurus may, from time to time, without notice to
the undersigned, sell, assign, transfer or otherwise dispose of all or any part
of the Obligations and/or rights under this Guaranty to any assignee or
transferee of the Note, but only to the extent such assignment is permitted by
the Note or Securities Purchase Agreement. Without limiting the generality of
the foregoing, Laurus may assign, or grant participations to, one or more banks,
financial institutions or other entities all or any part of any of the
Obligations who are assignees, transferees or participants in a corresponding
portion of the Note. In each such event, Laurus and each and every immediate and
successive purchaser, assignee, transferee or holder of all or any part of the
Obligations shall, acting as a single, unified group, have the right to enforce
this Guaranty, by legal action or otherwise, for their own benefit as fully as
if such purchasers, assignees, transferees or holders were herein by name
specifically given such right; provided, however, that the holders of the
Obligations shall appoint an agent to act on their behalf and shall act and
enforce rights and remedies through a single action.

                                        7


         18.      Release. Nothing except payment in full of all Obligations
then outstanding on the date all amounts due under the Note are paid in full
(whether by cash payment or by conversion of the Note to Common Stock (as
defined in the Securities Purchase Agreement) pursuant to the terms of the Note)
shall release the undersigned from liability under this Guaranty.

                                        8


         IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned
this 13th day of January, 2004.

                                     NUMEREX SOLUTIONS, LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   MANAGER
                                         --------------------------------
                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware

                                     CELLEMETRY LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   MANAGER
                                         --------------------------------
                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware

                                     NUMEREX INVESTMENT CORP.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   CEO
                                         --------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware



                                     BROADBAND NETWORKS INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   CEO
                                         --------------------------------

                                     Address: 2820 E. College Ave. Suite B
                                              State College, PA 16801-7548
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware


                                     BNI SOLUTIONS LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   MANAGER
                                         --------------------------------

                                     Address: 2820 E. College Ave. Suite B
                                              State College, PA 16801-7548
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware

                                     DIGILOG INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   CEO
                                         --------------------------------

                                     Address: 2360 Maryland Road
                                              Willow Grove, PA 19090
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Pennsylvania

                                       10


                                     DCX SYSTEMS INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   CEO
                                         --------------------------------

                                     Address: 2360 Maryland Road
                                              Willow Grove, PA 19090
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Pennsylvania

                                     DCX SYSTEMS AUSTRALIA PTY LIMITED

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   DIRECTOR
                                         --------------------------------

                                     Address: Lindfield Executive Centre
                                              12 Tryon Rd.
                                              P.O. Box 42
                                              Lindfield, NSW 2072, Australia
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Australia

                                     MOBILEGUARDIAN LLC

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   MANAGER
                                         --------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Delaware

                                     UPLINK SECURITY, INC.

                                     By: /s/ STRATTON J. NICOLAIDES
                                        ---------------------------------
                                     Its:   CEO
                                         --------------------------------

                                     Address: 1600 Parkwood Circle SE, Suite 200
                                              Atlanta, GA 30339
                                     Telephone No.: (770) 485-2527
                                     Facsimile No.: (770) 693-5951

                                     State of Formation: Georgia

                                       11


STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of Cellemetry, LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of Numerex Solutions LLC, the limited liability company described
in and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public



STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Numerex Investment Corp., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of BroadBand Networks Inc., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of BNI Solutions LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

                                       13


STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Digilog Inc., the corporation described in and which executed the
above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of DCX Systems Inc., the corporation described in and which executed
the above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Director of DCX Systems Australia PTY Limited, the ______________
described in and which executed the above instrument; and that s/he signed
her/his name thereto by order of the board of directors of said
__________________.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of MobileGuardian LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

                                       14


STATE OF Georgia )
     : ss.:
COUNTY OF Cobb )

         On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Uplink Security, Inc., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.

                                     /s/ Pamela S. Lester
                                     -------------------------------
                                     Notary Public

                                       15

EX-4.6

                                                                     EXHIBIT 4.6

                             INTERCREDITOR AGREEMENT

FOR VALUE RECEIVED, and in order to induce LAURUS MASTER FUND, LTD. ("Laurus")
now and from time to time hereafter to extend financial accommodations to, or
otherwise extend or continue to extend credit to or for the benefit of NUMEREX
CORP., NUMEREX SOLUTIONS LLC, CELLEMETRY LLC, NUMEREX INVESTMENT CORP.,
BROADBANK NETWORKS INC., BNI SOLUTIONS LLC, DIGILOG INC., DCX SYSTEMS INC., DCX
SYSTEMS AUSTRALIA PTY LIMITED, MOBILEGUARDIAN LLC AND ANY SUBSIDIARIES FORMED
AFTER THE DATE HEREOF (each a "Company" and, collectively, the "Companies"), the
undersigned (the "Creditor") does hereby subordinate payment of all indebtedness
of each Company to Creditor of every nature, howsoever evidenced, incurred or
created (including, without limitation, under any guaranty agreement), and
whether now or hereafter owing (collectively, the "Subordinated Indebtedness")
to: (x) the Obligations (as defined in the Security Agreement among Laurus and
each Company as the same may from time to time be or have been amended,
restated, extended or supplemented, the "Security Agreement"), and (y) all other
indebtedness of each Company to Laurus of every nature, howsoever evidenced,
incurred or created, and whether now or hereafter owing ((x) and (y)
collectively, the "Obligations").

Creditor further subordinates to Laurus any and all liens and security interests
on the assets of each Company heretofore and from time to time hereafter
received by Creditor to secure the payment of the Subordinated Indebtedness or
as security for any other indebtedness of any Company to Creditor, howsoever
evidenced, incurred or created, and whether now or hereafter owing ("Creditor's
Liens"), and in connection therewith agrees that: (i) any and all liens and
security interests upon the assets of each Company heretofore and from time to
time hereafter received by Laurus as security for the Obligations shall be
superior to and take priority over Creditor's Liens, regardless of the order of
filing or perfection; (ii) Laurus shall not owe any duty to Creditor whatsoever
as a result of or in connection with Creditor's Liens, and, without limiting the
foregoing, Laurus shall not owe to Creditor any duty of notice, marshalling of
assets or protection of the rights or interests of Creditor; and (iii) so long
as this Intercreditor Agreement shall be in effect, Creditor will not take any
action to foreclose or otherwise enforce any of Creditor's Liens. Laurus shall
have the exclusive right to manage, perform and enforce the underlying terms of
the Security Agreement relating to the assets of each Company and to exercise
and enforce its rights according to its discretion. Creditor waives all rights
to affect the method or challenge the appropriateness of any action taken by
Laurus in connection with Laurus's enforcement of its rights under the Security
Agreement and any and all documents, instruments and agreements entered into in
connection therewith. Only Laurus shall have the right to restrict, permit,
approve or disapprove the sale, transfer or other disposition of the assets of
any Company; provided, however, that Laurus shall have no right to restrict,
permit, approve or disapprove a Non-Core Asset Sale (as defined in the Security
Agreement) so long as such Non-Core Asset Sale is permitted to be made in
accordance with the terms of the Security Agreement. As between Laurus and
Creditor, the terms of this Intercreditor Agreement shall govern even if all or
part of Laurus's liens are avoided, disallowed, set aside or otherwise
invalidated.

Upon any distribution of the assets or readjustment of the indebtedness of any
Company, whether by reason of liquidation, composition, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of all or any of the Subordinated
Indebtedness, or the application of the assets of any Company to the payment or
liquidation thereof, Laurus shall be entitled to receive payment in full of any
and all Obligations then owing to it by each Company prior to the payment of all
or any part of the Subordinated Indebtedness, and in order to enable Laurus to
enforce its rights hereunder in any such action or proceeding, Laurus is hereby
irrevocably authorized and empowered in its discretion as attorney in fact for
Creditor to make and present for and on behalf of Creditor such proofs of claims
against each Company on account of the Subordinated Indebtedness as Laurus may
deem expedient or proper and to vote such proofs of claims in any such
proceeding and to receive and collect any and all dividends or other payments or
disbursements made thereon in whatever form the same may be paid or issued and
to apply same on account of any Obligations owing to Laurus by each Company.

Creditor will execute and deliver to Laurus from time to time such assignments
or other instruments as may be required by Laurus in order to enable it to
enforce any and all such claims and to collect any and all dividends or other
payments or disbursements which may be made at any time on account of all or any
part of the Subordinated Indebtedness.

Creditor hereby acknowledges that the Subordinated Indebtedness is and shall be
expressly subordinated in right of payment to the Obligations. Creditor will not
now or hereafter directly or indirectly ask, demand, sue for, take or receive
payment of all or any part of the Subordinated Indebtedness or any collateral
therefor, and no Company will be obligated to make any such payment, and the
failure of any Company so to do shall not constitute a default by such Company
in respect of the Subordinated Indebtedness; provided, however, so long as no
Event of Default (as defined in the Security Agreement) shall have occurred and
be continuing or would occur after giving effect to such payment, Digilog Inc.
may pay and Creditor may receive regularly scheduled payments of interest on the
Subordinated Indebtedness as in effect on the date hereof. In the event Creditor
shall receive any payment in respect of the Subordinated Indebtedness when
Creditor is not permitted to receive such payment in accordance with the terms
of this Intercreditor Agreement, then Creditor shall forthwith deliver, or cause
to be delivered, the same to Laurus in precisely the form held by Creditor
(except for any necessary endorsement) and until so delivered the same shall be
held in trust by Creditor as the property of Laurus.

Creditor will not at any time while this Intercreditor Agreement remains in
effect, assign or transfer any right, claim or interest of any kind in or to any
of the Subordinated Indebtedness or any collateral therefor without the prior
written consent of Laurus. Creditor will, upon request of Laurus, deliver to
Laurus any note or other agreement, instrument or document which evidences any
Subordinated Indebtedness.

Laurus may at any time, in its discretion, renew or extend the time of payment
of all or any existing or future Obligations of any Company to Laurus or waive
or release any collateral which may be held therefor at any time, and in
connection therewith may make and enter into any such agreement or agreements as
it may deem proper or desirable without notice to or the consent of Creditor and
without in any manner impairing or affecting this Intercreditor Agreement or any
of Laurus's rights hereunder.

                                       1


Creditor warrants to Laurus that: (i) Creditor is the owner of the Subordinated
Indebtedness; (ii) Creditor has the full right, power and authority to make,
execute and deliver this Intercreditor Agreement; (iii) Creditor has not
heretofore assigned, pledged or granted a security interest or other lien, right
or interest in the Subordinated Indebtedness or any instrument or document
evidencing the Subordinated indebtedness to any third party; (iv) this
Intercreditor Agreement is valid and binding upon Creditor and is and will be
enforceable by Laurus in accordance with its terms (except as limited by
bankruptcy and other laws affecting the rights of creditors generally); and (v)
no Company is now in default with respect to the Subordinated Indebtedness or
any part thereof. This Intercreditor Agreement shall be effective as of the date
hereof and shall continue in effect until all of the Obligations have been paid
in cash, performed and satisfied in full.

This Intercreditor Agreement shall be binding upon Creditor and Creditor's
heirs, personal representatives, successors and assigns, as applicable, and
shall inure to the benefit of Laurus and its successors and assigns.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

THE PARTIES HERETO DO HEREBY WAIVE ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT. EACH PARTY HERETO
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INTERCREDITOR AGREEMENT. EACH
PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY SUCH SUIT ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT, AFTER ALL APPROPRIATE APPEALS, SHALL BE
CONCLUSIVE AND BINDING UPON IT.

Dated: January __, 2004

CREDITOR:

ALETHEA LIMITED PARTNERSHIP

/s/ Stratton J. Nicolaides
- ---------------------------------------------------
By:  Stratton J. Nicolaides
Its: Chairman

Address: c/o Salisbury & Ryan
        -------------------------------
1325 Avenue of The Americas, New York, NY 10019
- ------------------------------------------------
Attention: Stratton J. Nicolaides/Andrew J. Ryan
          --------------------------------------
Telephone No.: 212-977-4660
              ----------------------------------
Telefax No.: 212-977-4668
            ------------------------------------

ACKNOWLEDGED AND ACCEPTED:

LAURUS MASTER FUND, LTD.

By: /s/ David Grin
   ----------------------------
Its:
    ----------------------------

Address: 825 Third Avenue
         New York, NY 10022
Attention: David Grin
Telephone No.: (212) 541-5800
Telefax No.: (212) 541-4434

                                       2


                 AGREEMENT NOT TO PAY SUBORDINATED INDEBTEDNESS

The undersigned hereby acknowledge receipt of a copy of the above and foregoing
Intercreditor Agreement and agree not to pay any of the Subordinated
Indebtedness except as expressly permitted therein.

NUMEREX CORP.

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Chairman and CEO
    ---------------------------------------

NUMEREX SOLUTIONS LLC

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Manager
    ---------------------------------------

CELLEMETRY LLC

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Manager
    ---------------------------------------

NUMEREX INVESTMENT CORP..

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: CEO
    ---------------------------------------

BROADBANK NETWORKS INC.

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: CEO
    ---------------------------------------

BNI SOLUTIONS LLC

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Manager
    ---------------------------------------

DIGILOG INC.

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: CEO
    ---------------------------------------

DCX SYSTEMS INC.

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: CEO
    ---------------------------------------

DCX SYSTEMS AUSTRALIA PTY LIMITED

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Director
    ---------------------------------------

MOBILEGUARDIAN LLC

By: /s/ Stratton J. Nicolaides
   ----------------------------------------
Its: Manager
    ---------------------------------------

                                       3


STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )

On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Chairman/CEO of Numerex Corp., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of Numerex Solutions LLC, the limited liability company described
in and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Numerex Investment Corp., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of BroadBank Networks Inc., the corporation described in and which
executed the above instrument; and that s/he signed her/his name thereto by
order of the board of directors of said corporation.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of BNI Solutions LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.

                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public





                                       4


STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of Digilog Inc., the corporation described in and which executed the
above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the CEO of DCX Systems Inc., the corporation described in and which executed
the above instrument; and that s/he signed her/his name thereto by order of the
board of directors of said corporation.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Director of DCX Systems Australia PTY Limited, the ______________
described in and which executed the above instrument; and that s/he signed
her/his name thereto by order of the board of directors of said
__________________.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Chairman of Alethea Limited Partnership, the limited partnership
described in and which executed the above instrument; and that s/he signed
her/his name thereto by order of the board of directors of said limited
partnership.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public

STATE OF Georgia   )
         :  ss.:
COUNTY OF Cobb     )


On the 13th day of January, 2004, before me personally came Stratton J.
Nicolaides to me known, who, being by me duly sworn did depose and say that s/he
is the Manager of MobileGuardian LLC, the limited liability company described in
and which executed the above instrument; and that s/he signed her/his name
thereto by order of the board of directors of said limited liability company.


                                                     /s/ Pamela S. Lester
                                                     -------------------------
                                                     Notary Public


                                       5

EX-4.7

                                                                     EXHIBIT 4.7

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of January 13, 2004, by and between Numerex Corp., a
Pennsylvania corporation (the "COMPANY"), and Laurus Master Fund, Ltd. (the
"PURCHASER").

                  This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof, by and between the Company and the
Purchaser (the "SECURITIES PURCHASE AGREEMENT"), and pursuant to the Note and
the Warrant referred to therein. The Company and the Purchaser hereby agree as
follows:

         1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
that are defined in the Securities Purchase Agreement shall have the meanings
given such terms in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means shares of the Company's class A common
stock, no par value per share.

                  "Effectiveness Date" means August 13, 2004.

                  "Effectiveness Period" shall have the meaning set forth in
Section 2(a).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.

                  "Filing Date" means, with respect to the Registration
Statement required to be filed hereunder, a date no later than one hundred and
twenty (120) days following the date upon which the principal amount of the Term
Loan to the Company in original principal amount of $4,500,000 has been funded
to the Company.

                  "Holder" or "Holders" means the Purchaser or any of its
affiliates or transferees to the extent any of them hold Registrable Securities.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Note" has the meaning set forth in the Securities Purchase
Agreement.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted



from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

                  "Registrable Securities" means the shares of Common Stock
issued upon the conversion of the Note and issuable upon exercise of the Warrant
(including, without limitation, any additional shares of Common Stock received
by the holder under the Note or Warrant as a result of any interest payments or
any other payment or fee made thereunder by the Company in shares of Common
Stock).

                  "Registration Statement" means each registration statement
required to be filed hereunder, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.

                  "Trading Day" means each day the Trading Market on which the
Common Stock is traded is open and available to trade securities.

                  "Trading Market" means any of the NASD OTC Bulletin Board,
NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock Exchange
or the New York Stock Exchange.

                  "Warrant" means the Common Stock purchase warrant issued
pursuant to the Security Agreement.

         2. REGISTRATION.

                  (a) On or prior to the Filing Date, the Company shall prepare
and file with the Commission a Registration Statement covering the Registrable
Securities for an offering to be

                                       2


made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith). The Company shall
cause the Registration Statement to become effective and remain effective as
provided herein. The Company shall use its reasonable commercial efforts to
cause the Registration Statement to be declared effective under the Securities
Act as promptly as possible after the filing thereof, but in any event no later
than the Effectiveness Date. The Company shall use its reasonable commercial
efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is the earlier date of when (i) all
Registrable Securities have been sold or (ii) all Registrable Securities may be
sold immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders (the
"EFFECTIVENESS PERIOD").

                  (b) In addition to the terms of Section 4 of the Warrant, if:
(i) after the Registration Statement is filed with and declared effective by the
Commission, the Registration Statement ceases to be effective (by suspension or
otherwise) as to all Registrable Securities to which it is required to relate at
any time prior to the expiration of the Effectiveness Period (without being
succeeded immediately by an additional registration statement filed and declared
effective) other than during an "ALLOWABLE SUSPENSION PERIOD" (as defined below)
for a period of time which shall exceed thirty (30) Trading Days in the
aggregate per year (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective) or more than twenty (20)
consecutive calendar days; (ii) the Common Stock is not listed or quoted, or is
suspended from trading on any Trading Market for a period of three (3)
consecutive Trading Days (provided the Company shall not have been able to cure
such trading suspension within thirty (30) days of the notice thereof or within
such period list the Common Stock on another Trading Market); or (iii) an
Allowable Suspension Period shall have been exceeded; (any such failure or
breach being referred to as an "EVENT," and for purposes of clause (i) or (iii)
the date which such thirty (30) Trading Day or twenty (20) consecutive calendar
day period (as the case may be) is exceeded, or for purposes of clause (ii) the
date on which such three (3) Trading Day period is exceeded, being referred to
as "EVENT DATE")), then until the applicable Event is cured, the Company shall
pay to each Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1.0% for each thirty (30) day period (prorated for partial
periods) on a daily basis of the original principal amount of the Note. While
such Event continues, such liquidated damages shall be paid not less often than
each thirty (30) days. Any unpaid liquidated damages as of the date when an
Event has been cured by the Company shall be paid (prorated for partial periods)
within three (3) days following the date on which such Event has been cured by
the Company.

                  (c) Notwithstanding anything in this Agreement to the
contrary, the Company shall, by written notice to Purchaser, advise Purchaser
that sales under the Registration Statement after the Effectiveness Date might
be unlawful due to the fact that the Company is engaged in a material merger,
acquisition or sale, or other pending material financing, corporate
reorganization or other transaction or that an event shall have occurred as a
result of which it is reasonably expected that the Company's financial
statements will be restated or the Registration Statement contains or will
contain a misstatement of a material fact or omit to make a statement

                                       3


required to make the statements therein not misleading. Upon receipt of such
notice, Purchaser shall immediately discontinue any sales of Registrable
Securities pursuant to such Registration Statement until Purchaser has received
copies of a supplemented or amended Prospectus or until Purchaser is advised in
writing by the Company that the then-current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Any period of not more
than twenty (20) consecutive calendar days or more than thirty (30) Trading Days
in any twelve month period commencing on the date the Registration Statement is
declared effective during which Purchaser shall not sell or where use of the
Registration Statement might be unlawful shall be referred to as an "ALLOWABLE
SUSPENSION PERIOD", provided that at least two (2) Trading Days shall elapse
between Allowable Suspension Periods.

         3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable Securities
under the Securities Act, the Company will, as expeditiously as possible:

                  (a) prepare and file with the Commission the Registration
Statement with respect to such Registrable Securities, respond as promptly as
possible to any comments received from the Commission, and use its commercially
reasonable efforts to cause the Registration Statement to become and remain
effective for the Effectiveness Period with respect thereto, and promptly
provide to the Purchaser copies of all filings and Commission letters of comment
relating thereto;

                  (b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by the
Registration Statement and to keep such Registration Statement effective until
the expiration of the Effectiveness Period;

                  (c) furnish to the Purchaser such number of copies of the
Registration Statement and the Prospectus included therein (including each
preliminary Prospectus) as the Purchaser reasonably may request to facilitate
the public sale or disposition of the Registrable Securities covered by the
Registration Statement;

                  (d) use its commercially reasonable efforts to register or
qualify the Purchaser's Registrable Securities covered by the Registration
Statement under the securities or "blue sky" laws of such jurisdictions within
the United States as the Purchaser may reasonably request, provided, however,
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;

                  (e) list the Registrable Securities covered by the
Registration Statement with any national securities exchange or the National or
SmallCap Market of The Nasdaq Stock Market, Inc. or the NASD OTC Bulletin Board
or the National Quotation Bureau's Pink Sheets on which the Common Stock of the
Company is then listed;

                                       4


                  (f) immediately notify the Purchaser at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the Prospectus contained in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing; and

                  (g) make available for inspection by the Purchaser and any
attorney, accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the attorney, accountant or agent of the
Purchaser.

         4. REGISTRATION EXPENSES. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders, are called "REGISTRATION EXPENSES". All selling
commissions applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Holders beyond those included in
Registration Expenses, are called "SELLING EXPENSES." The Company shall only be
responsible for all Registration Expenses.

         5. INDEMNIFICATION.

                  (a) In the event of a registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Purchaser, and its officers, directors and each
other person, if any, who controls the Purchaser within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Purchaser, or such persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement under which such Registrable Securities were
registered under the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Purchaser, and
each such person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability (i) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of the Purchaser or any such person in
writing specifically for use in any such document or (ii) is pursuant to such
Purchaser's use of an outdated or defective prospectus after the Company has
provided written notice to Purchaser that the prospectus is outdated or
defective.

                                       5


                  (b) In the event of a registration of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Purchaser
will indemnify and hold harmless the Company, and its officers, directors and
each other person, if any, who controls the Company within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact which was
furnished in writing by the Purchaser to the Company expressly for use in (and
such information is contained in) the Registration Statement under which such
Registrable Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary Prospectus or final Prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action, provided, however, that the
Purchaser will be liable in any such case if and only to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing to the Company by or on behalf
of the Purchaser specifically for use in any such document. Notwithstanding the
provisions of this paragraph, the Purchaser shall not be required to indemnify
any person or entity in excess of the amount of the aggregate net proceeds
received by the Purchaser in respect of Registrable Securities in connection
with any such registration under the Securities Act.

                  (c) Promptly after receipt by a party entitled to claim
indemnification hereunder (an "INDEMNIFIED PARTY") of notice of the commencement
of any action, such Indemnified Party shall, if a claim for indemnification in
respect thereof is to be made against a party hereto obligated to indemnify such
Indemnified Party (an "INDEMNIFYING PARTY"), notify the Indemnifying Party in
writing thereof, but the omission so to notify the Indemnifying Party shall not
relieve it from any liability which it may have to such Indemnified Party other
than under this Section 5(c) and shall only relieve it from any liability which
it may have to such Indemnified Party under this Section 5(c) if and to the
extent the Indemnifying Party is prejudiced by such omission. In case any such
action shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof, and, after notice from the Indemnifying Party to
such Indemnified Party of its election so to assume and undertake the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
under this Section 5(c) for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof; if the Indemnified
Party retains its own counsel, then the Indemnified Party shall pay all fees,
costs and expenses of such counsel, provided, however, that, if the defendants
in any such action include both the Indemnified Party and the Indemnifying Party
and the Indemnified Party shall have concluded upon the written opinion of its
counsel that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party or
that the interests of the Indemnified Party could reasonably be expected to
conflict with the interests of the Indemnifying Party, the Indemnified Party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with

                                       6


the reasonable expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the Indemnifying Party as
incurred.

                  (d) In order to provide for just and equitable contribution in
the event of joint liability under the Securities Act in any case in which
either (i) the Purchaser, or any officer, director or controlling person of the
Purchaser, makes a claim for indemnification pursuant to this Section 5 but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be required on
the part of the Purchaser or such officer, director or controlling person of the
Purchaser in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and the Purchaser will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the percentage that
the public offering price of its securities covered by the Registration
Statement bears to the public offering price of all securities covered by such
Registration Statement, provided, however, that, in any such case, (A) the
Purchaser will not be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.

         6. REPRESENTATIONS AND WARRANTIES.

                  (a) The Common Stock of the Company is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and, except with respect to certain
matters which the Company has disclosed to the Purchaser on Schedule 4.21 to the
Securities Purchase Agreement, the Company has filed all proxy statements,
reports, schedules, forms, statements and other documents required to be filed
by it under the Exchange Act. The Company has filed (i) its Annual Report on
Form 10-K for the fiscal year ended December 31, 2002 and (ii) its Quarterly
Report on Form 10-Q for the fiscal quarters ended March 31, 2003, June 30, 2003
and September 30, 2003 (collectively, the "SEC REPORTS"). Except as set forth on
Schedule 4.21 to the Securities Purchase Agreement, each SEC Report was, at the
time of its filing, in substantial compliance with the requirements of its
respective form and none of the SEC Reports, nor the financial statements (and
the notes thereto) included in the SEC Reports, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed) and fairly present in all material
respects the financial

                                       7


condition, the results of operations and the cash flows of the Company and its
subsidiaries, on a consolidated basis, as of, and for, the periods presented in
each such SEC Report.

                  (b) The Common Stock is listed for trading on the Nasdaq
National Market System and satisfies the requirements for the continuation of
such listing in all material respects. The Company has not received any notice
from the NASD or Nasdaq that its Common Stock will be delisted from the Nasdaq
National Market System or that its Common Stock does not meet all requirements
for the continuation of such listing.

                  (c) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Registrable Securities
pursuant to the Securities Purchase Agreement to be integrated with prior
offerings by the Company for purposes of the Securities Act which would prevent
the Company from selling the Common Stock pursuant to Rule 506 under the
Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or subsidiaries take
any action or steps that would cause the offering of the Registrable Securities
to be integrated with other offerings.

                  (d) The Warrant, the Note and the shares of Common Stock which
the Purchaser may acquire pursuant to the Warrant and the Note are all
restricted securities under the Securities Act as of the date of this Agreement.
The Company will not issue any stop transfer order or other order impeding the
sale and delivery of any of the Registrable Securities at such time as such
Registrable Securities are registered for public sale or an exemption from
registration is available, except as required by federal or state securities
laws.

                  (e) The Company understands the nature of the Registrable
Securities issuable upon the conversion of the Note and the exercise of the
Warrant and recognizes that the issuance of such Registrable Securities may have
a potential dilutive effect. The Company specifically acknowledges that its
obligation to issue the Registrable Securities is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

                  (f) Except for agreements made in the ordinary course of
business, there is no agreement that has not been filed with the Commission as
an exhibit to a registration statement or to a form required to be filed by the
Company under the Exchange Act, the breach of which could reasonably be expected
to have a material and adverse effect on the Company and its subsidiaries, or
would prohibit or otherwise interfere with the ability of the Company to enter
into and perform any of its obligations under this Agreement in any material
respect.

                  (g) The Company will at all times have authorized and reserved
a sufficient number of shares of Common Stock for the full conversion of the
Note and exercise of the Warrant.

         7. MISCELLANEOUS.

                  (a) REMEDIES. In the event of a breach by the Company or by a
Holder, of any of their respective obligations under this Agreement, each Holder
or the Company, as the case may

                                       8


be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.

                  (b) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in Schedule 7(e) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 7(e) hereto, the Company has not previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been fully satisfied.

                  (c) COMPLIANCE. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (d) DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of a Discontinuation Event (as hereinafter
defined), such Holder will forthwith discontinue disposition of such Registrable
Securities under the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "ADVICE") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the
provisions of this paragraph. For purposes of this Section 7(d), a
"DISCONTINUATION EVENT" shall mean (i) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders); (ii) any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

                                       9


                  (e) PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen (15) days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered to the extent the Company may do so without
violating registration rights of others which exist as of the date of this
Agreement, subject to customary underwriter cutbacks applicable to all holders
of registration rights and subject to obtaining any required the consent of any
selling stockholder(s) to such inclusion under such registration statement.

                  (f) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.

                  (g) NOTICES. Any notice or request hereunder may be given to
the Company or the Purchaser at the respective addresses set forth below or as
may hereafter be specified in a notice designated as a change of address under
this Section 7(g). Any notice or request hereunder shall be given by registered
or certified mail, return receipt requested, hand delivery, overnight mail or
telecopy (confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any party to
whom it is addressed, in the case of those by mail or overnight mail, deemed to
have been given three (3) business days after the date when deposited in the
mail or with the overnight mail carrier, and, in the case of a telecopy, when
confirmed. The address for such notices and communications shall be as follows:

                  If to the Company:     Numerex Corp.
                                         1600 Parkwood Circle, Suite 200
                                         Atlanta, Georgia 30339-2119
                                         Attention: Chief Financial Officer and
                                                    Legal Counsel
                                         Facsimile: (770) 693-5951
                                         With a copy to: Arnold & Porter
                                         555 12th Street, N.W.
                                         Washington, D.C. 20004

                                       10


                                         Attention: Richard Baltz, Esq.
                                         Facsimile: (202) 942-5999

                  If to a Purchaser:     To the address set forth under
                                         such Purchaser name on the
                                         signature pages hereto.

                  If to any other Person who is then the registered Holder:

                                         To the address of such Holder as it
                                         appears in the stock transfer books
                                         of the Company

or such other address as may be designated in writing hereafter in accordance
with this Section 7(g) by such Person.

                  (h) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Notes and the Security
Agreement with the prior written consent of the Company, which consent shall not
be unreasonably withheld.

                  (i) EXECUTION AND COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

                  (j) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws. Any Proceeding brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in any state or federal court sitting in the Borough of
Manhattan, City of New York; provided that nothing contained in this Agreement
shall be deemed to preclude Holder from bringing a Proceeding or taking other
legal action in any other court of competent jurisdiction and nothing shall be
deemed to preclude the Company from asserting any defenses or counterclaims in
any such Proceedings. Both parties and the individuals executing this Agreement
on behalf of such parties agree to submit to the jurisdiction of such courts and
waive trial by jury. Both parties and the individuals executing this Agreement
on behalf of such parties further consent that any summons, subpoena or other
process or papers (including, without limitation, any notice or motion or other
application to either of the aforementioned courts or a judge thereof) or any
notice in connection with any Proceedings hereunder, may be served by registered
or certified mail, return receipt requested, or by personal

                                       11


service provided a reasonable time for appearance is permitted, or in such other
manner as may be permissible under the rules of said courts. Both parties and
the individuals executing this Agreement on behalf of such parties waive any
objection to jurisdiction and venue of any action instituted hereon in the
Supreme Court for the State of New York, County of New York, or the United
States District Court for the Southern District of New York and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens for any Proceeding filed in either such court. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs; provided, however, that if the parties hereto agree to settle any
Proceeding brought by one party hereto against the other party hereto, then each
of the parties shall bear its own costs in connection with such Proceeding,
unless otherwise directed by a court of competent jurisdiction.

                  (k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (l) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

                  (m) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

       [Balance of page intentionally left blank; signature page follows.]

                                       12


                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                        NUMEREX CORP.

                                        By: /s/ Stratton J. Nicolaides
                                           -----------------------------------
                                        Name: Stratton J. Nicolaides
                                             ---------------------------------
                                        Title: CEO
                                              --------------------------------

                                        LAURUS MASTER FUND, LTD.

                                        By: /s/ David Grin
                                           -----------------------------------
                                        Name: David Grin
                                             ---------------------------------
                                        Title:
                                              --------------------------------

                                        Address for Notices:

                                        825 Third Avenue, 14th Floor
                                        New York, New York 10022
                                        Attention: David Grin
                                        Facsimile:  212-541-4434

                                       13

EX-4.8

                                                                    EXHIBIT 4.8

                             FUNDS ESCROW AGREEMENT

         This Agreement is dated as of the 13th day of January, 2004 among
NUMEREX CORP a Pennsylvania corporation (the "COMPANY") and Laurus Master Fund,
Ltd. (the "PURCHASER"), and Dechert LLP (the "ESCROW AGENT"):

                              W I T N E S S E T H:

         WHEREAS, the Company and the Purchaser have entered into a Securities
Purchase Agreement ("PURCHASE AGREEMENT") for the sale by the Company to the
Purchaser of a secured Term Note (as hereafter defined) and issuance of a
Warrant (as hereafter defined) to the Purchaser in the aggregate principal
amount and in the denomination set forth on Schedule A hereto; and

         WHEREAS, the parties hereto require the Company to deliver the Term
Note against payment therefor, with such Term Note and payment to be delivered
to the Escrow Agent to be held in escrow and released by the Escrow Agent in
accordance with the terms and conditions of this Agreement; and

         WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;

         NOW THEREFORE, the parties agree as follows:

                                   ARTICLE I

                                 INTERPRETATION

         1.1.     Definitions. Whenever used in this Agreement, the following
terms shall have the meanings set forth below. Terms not otherwise defined
herein shall have the meaning set forth in the Purchase Agreement.

                  (a)      "AGREEMENT" means this Agreement and all amendments
made hereto and thereto by written agreement between the parties.

                  (b)      "COMPANY DOCUMENTS" means the Securities Purchase
Agreement, the Term Note, the Security Agreement, Registration Rights Agreement,
Warrant, the Charter Documents, the Legal Opinion, Unlimited Guarantee and the
Closing Payment .

                  (c)      "CHARTER DOCUMENTS" means the certified copy of the
certificate of incorporation of Numerex, Corp. and its bylaws.

                  (d)      "CLOSING PAYMENT" means the fees to be paid to Laurus
Capital Management set forth on Schedule A hereto.



                  (e)      "DISBURSEMENT LETTER" means that certain letter
delivered to the Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.

                  (f)      "SECURITY AGREEMENT" means that certain Security
Agreement delivered by the Company and its subsidiaries pursuant to the
Securities Purchase Agreement.

                  (g)      "ESCROWED PAYMENT" means $4,500,000.

                  (h)      "LEGAL OPINION" means, collectively, the original
signed legal opinions of Arnold & Porter, Catania & Parker and Pamela Lester,
Esq.

                  (i)      "PURCHASER DOCUMENTS" means the Escrowed Payment, the
Securities Purchase Agreement, the Security Agreement, Registration Rights
Agreement and the Disbursement Letter.

                  (j)      "REGISTRATION RIGHTS AGREEMENT" means that certain
registration rights agreement executed and delivered pursuant to the Securities
Purchase Agreement.

                  (k)      "TERM NOTE" means the convertible term note of the
Company issued to the Purchaser in the amount of $4,500,000 in the form of
Exhibit A annexed to the Securities Purchase Agreement.

                  (l)      "WARRANT" means the common stock purchase warrant of
the Company to purchase up to 300,000 shares of the Company's common stock,
issued to Purchaser in connection with the Term Note.

                  (m)      "UNLIMITED GUARANTEE" means that certain guarantee
made by each of the following entities in favor of the Purchaser: Numerex
Solutions, LLC, Cellemetry LLC, Numerex Investment Corp., Broadband Networks
Inc., BNI Solutions LLC, Digilog Inc., DCX Systems Inc., DCX Systems Australia
Pty Limited, MobileGuardian LLC and Uplink Security, Inc.

         1.2.     Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters contained
herein and pertaining to the Company Documents and Purchaser Documents and
supersedes all prior agreements, understandings, negotiations and discussions of
the parties, whether oral or written. There are no warranties, representations
and other agreements made by the parties in connection with the subject matter
hereof except as specifically set forth in this Agreement.

         1.3.     Extended Meanings. In this Agreement words importing the
singular number include the plural and vice versa; words importing the masculine
gender include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.

         1.4.     Waivers and Amendments. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by all
parties, or, in the case of a waiver, by the party entitled

                                       2


to the benefit thereof waiving compliance. Except as expressly stated herein, no
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any right, power or privilege hereunder preclude any other or
future exercise of any other right, power or privilege hereunder.

         1.5.     Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.

         1.6.     Law Governing this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by any party
against any other party concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Each of the parties hereto and
the individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.

         1.7.     Consent to Jurisdiction. Subject to Section 1.6 hereof, each
of the Company, the Escrow Agent and the Purchaser hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.

         1.8.     Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against any other.

                                   ARTICLE II

                         DELIVERIES TO THE ESCROW AGENT

         2.1.     Delivery of Company Documents to Escrow Agent. On or about the
date hereof, the Company shall deliver to the Escrow Agent the Company Documents
executed by the Company to the extent it is a party thereto.

         2.2.     Delivery of Purchaser Documents to Escrow Agent. On or about
the date hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser
Documents executed by the Purchaser.

                                       3


         2.3.     Intention to Create Escrow Over Company Documents and
Purchaser Documents. The Purchaser, the Company intend that the Company
Documents and Purchaser Documents shall be held in escrow by the Escrow Agent
pursuant to this Agreement for their benefit as set forth herein.

         2.4.     Escrow Agent to Deliver Company Documents and Purchaser
Documents. The Escrow Agent shall hold and release the Company Documents and
Purchaser Documents only in accordance with the terms and conditions of this
Agreement.

                                   ARTICLE III

              RELEASE OF COMPANY DOCUMENTS AND PURCHASER DOCUMENTS

         3.1.     Release of Escrow. Subject to the provisions of Section 4.2,
the Escrow Agent shall release the Company Documents and Purchaser Documents
pursuant to (a), (b) or (c) below, as follows:

                  (a)      Upon receipt by the Escrow Agent of the Company
Documents and the Purchaser Documents (including the Escrowed Payment), the
Escrow Agent will simultaneously release the Company Documents to the Purchaser
and release the corresponding Purchaser Documents to the Company except that (i)
the Closing Payment will be delivered to the fund managers of Purchaser; and
(ii) the reasonable legal fees for counsel to the Purchaser, which shall be paid
pursuant to Section 2(c) of the Securities Purchase Agreement, will be released
to the Purchaser. At the request of the Escrow Agent, the Company each will
provide written facsimile or original instructions to the Escrow Agent as to the
disposition of all funds releasable to the Company.

                  (b)      Upon receipt by the Escrow Agent of joint written
instructions ("Joint Instructions") signed by the Company and the Purchaser, it
shall deliver the Company Documents and Purchaser Documents in accordance with
the terms of the Joint Instructions.

                  (c)      Upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Company
Documents and Purchaser Documents in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order has competent
jurisdiction and that the Court Order is final and non-appealable.

                  (d)      If the Company Documents and Purchaser Documents
(including the Escrowed Payment) have not been delivered to the Escrow Agent and
distributed as provided in Section 3.1(a) on or before 5:00 p.m. (New York Time)
on the business day following the date on which the Company has delivered all
Company Documents (the "Outside Time"), the Escrow Agent shall, upon the written
instructions of the Company, return the Company Documents to the Company or
deliver the Company Documents to such other place as the Company shall instruct
in such writing; provided, however, that nothing in this Section 3.1(d) shall
prohibit the Escrow Agent from disbursing the Company Documents and Purchaser
Documents (including

                                       4


the Escrowed Payment) pursuant to Section 3.1(a) after the Outside Time except
to the extent it has received written instructions from the Company as
aforesaid.

         3.2.     Acknowledgement of Company and Purchaser; Disputes. The
Company and the Purchaser acknowledge that the only terms and conditions upon
which the Company Documents and Purchaser Documents are to be released are set
forth in Articles 3 and 4 of this Agreement. The Company and the Purchaser
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Company Documents and Purchaser Documents.
Any dispute with respect to the release of the Company Documents and Purchaser
Documents shall be resolved pursuant to Section 4.2 or by agreement among the
Company and Purchaser.

                                   ARTICLE IV

                           CONCERNING THE ESCROW AGENT

         4.1.     Duties and Responsibilities of the Escrow Agent. The Escrow
Agent's duties and responsibilities shall be subject to the following terms and
conditions:

                  (a)      The Purchaser and the Company acknowledge and agree
that the Escrow Agent (i) shall not be responsible for or bound by, and shall
not be required to inquire into whether either the Purchaser or the Company is
entitled to receipt of the Company Documents and Purchaser Documents pursuant to
any other agreement or otherwise; (ii) shall be obligated only for the
performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in acting
or refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented by
the proper person or party, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof; (iv) may assume that any person purporting to give notice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so; (v) shall not be responsible for the
identity, authority or rights of any person, firm or corporation executing or
delivering or purporting to execute or deliver this Escrow Agreement or any
document deposited hereunder or any endorsement thereon or assignment thereof;
(vi) shall not be under any duty to give the property held by Escrow Agent
hereunder any greater degree of care than Escrow Agent gives its own similar
property; and (vii) may consult counsel satisfactory to Escrow Agent, the
opinion of such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.

                  (b)      The Purchaser and the Company acknowledge that the
Escrow Agent is acting solely as a stakeholder at their request and that the
Escrow Agent shall not be liable for any action taken by Escrow Agent in good
faith and believed by Escrow Agent to be authorized or within the rights or
powers conferred upon Escrow Agent by this Agreement. The Purchaser and the
Company, jointly and severally, agree to indemnify and hold harmless the Escrow
Agent and any of Escrow Agent's partners, employees, agents and representatives
for any action taken

                                       5


or omitted to be taken by Escrow Agent or any of them hereunder, including the
fees of outside counsel and other costs and expenses of defending itself against
any claim or liability under this Agreement, except in the case of gross
negligence or willful misconduct on Escrow Agent's part committed in its
capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a duty
only to the Purchaser and Company under this Agreement and to no other person.

                  (c)      The Purchaser and the Company jointly and severally
agree to reimburse the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees) incurred in connection with the performance of its
duties and responsibilities hereunder not to exceed $1,500.

                  (d)      The Escrow Agent may at any time resign as Escrow
Agent hereunder by giving five (5) days prior written notice of resignation to
the Purchaser and the Company. Prior to the effective date of the resignation as
specified in such notice, the Purchaser and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of the Company Documents and
Purchaser Documents to a substitute Escrow Agent selected by the Purchaser and
the Company. If no successor Escrow Agent is named by the Purchaser and Company,
the Escrow Agent may apply to a court of competent jurisdiction in the State of
New York for appointment of a successor Escrow Agent, and to deposit the Company
Documents and Purchaser Documents with the clerk of any such court.

                  (e)      The Escrow Agent does not have and will not have any
interest in the Company Documents and Purchaser Documents, but is serving only
as escrow agent, having only possession thereof.

                  (f)      The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and reasonably believed by it to be
authorized hereby or within the rights or powers conferred upon it hereunder,
nor for action taken or omitted by it in good faith, and in accordance with
advice of counsel (which counsel may be of the Escrow Agent's own choosing), and
shall not be liable for any mistake of fact or error of judgment or for any acts
or omissions of any kind except for its own willful misconduct or gross
negligence.

                  (g)      This Agreement sets forth exclusively the duties of
the Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.

                  (h)      The Escrow Agent shall be permitted to act as counsel
for the Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Company Documents and Purchaser Documents, in any other
dispute among the Purchaser and the Company, whether or not the Escrow Agent is
then holding the Company Documents and Purchaser Documents and continues to act
as the Escrow Agent hereunder.

                  (i)      The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.

         4.2.     Dispute Resolution: Judgments. Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:

                                       6


                  (a)      If any dispute shall arise with respect to the
delivery, ownership, right of possession or disposition of the Company Documents
and Purchaser Documents, or if the Escrow Agent shall in good faith be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be authorized,
without liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Purchaser Documents pending receipt
of a Joint Instruction from the Purchaser and Company, or (ii) deposit the
Company Documents and Purchaser Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Purchaser and the Company and shall thereupon
be relieved and discharged from all further obligations pursuant to this
Agreement. The Escrow Agent may, but shall be under no duty to, institute or
defend any legal proceedings which relate to the Company Documents and Purchaser
Documents. The Escrow Agent shall have the right to retain counsel if it becomes
involved in any disagreement, dispute or litigation on account of this Agreement
or otherwise determines that it is necessary to consult counsel.

                  (b)      The Escrow Agent is hereby expressly authorized to
comply with and obey any Court Order. In case the Escrow Agent obeys or complies
with a Court Order, the Escrow Agent shall not be liable to the Purchaser and
Company or to any other person, firm, corporation or entity by reason of such
compliance.

                                    ARTICLE V

                                 GENERAL MATTERS

         5.1.     Termination. This escrow shall terminate upon the release of
all of the Company Documents and Purchaser Documents or at any time upon the
agreement in writing of the Purchaser and Company.

         5.2.     Notices. All notices, request, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given one (1) day after being sent by telecopy (with
copy delivered by overnight courier, regular or certified mail):

                  (a)   If to the Company, to: Numerex Corp.
                                               1600 Parkwood Circle SE,
                                               Suite 200
                                               Atlanta, Georgia 30339
                                               Attention: Chief Financial
                                                          Officer and Legal
                                                          Counsel
                                               Facsimile: (770) 693-5951

                        with a copy to:        Arnold & Porter
                                               555 12th Street, N.W.
                                               Washington, D.C. 20004
                                               Attention: Richard Baltz
                                               Facsimile: (202) 942-5999_

                                        7


                  (b)   If to the Purchaser, to:      Laurus Master Fund, Ltd.
                                                      c/o Ironshore Corporate
                                                      Services Ltd.
                                                      P.O. Box 1234 G.T.
                                                      Queensgate House, South
                                                      Church Street
                                                      Grand Cayman, Cayman
                                                      Islands
                                                      Facsimile: 345-949-9877

                  (c)   If to the Escrow Agent, to:   Dechert LLP
                                                      30 Rockefeller Plaza
                                                      New York, NY  10112
                                                      Facsimile: 212-698-3599

or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.

         5.3.     Interest. The Escrowed Payment shall not be held in an
interest bearing account nor will interest be payable in connection therewith.

         5.4.     Assignment; Binding Agreement. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.

         5.5.     Invalidity. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal, or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.

         5.6.     Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission.

         5.7.     Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.

                                         COMPANY:

                                         NUMEREX CORP.

                                         By:     /s/ Stratton J. Nicolaides
                                                -------------------------------
                                         Name:   Stratton J. Nicolaides
                                                -------------------------------
                                         Title:  CEO
                                                -------------------------------

                                       8


                                         PURCHASER:

                                         LAURUS MASTER FUND, LTD.

                                         By:     /s/ David Grin
                                                --------------------------------
                                         Name:   David Grin
                                                --------------------------------
                                         Title:
                                                --------------------------------


                                         ESCROW AGENT:

                                         DECHERT LLP

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

                                       9


                      SCHEDULE A TO FUNDS ESCROW AGREEMENT

PURCHASER                                  PRINCIPAL NOTE AMOUNT

LAURUS MASTER FUND, LTD.,                  $4,500,000 Term Note
c/o Ironshore Corporate Services Ltd.,
P.O. Box 1234 G.T., Queensgate House,
South Church Street, Grand Cayman,
Cayman Islands
Fax: 345-949-9877

TOTAL                                      $4,500,000

FUND MANAGER                               CLOSING PAYMENT

LAURUS CAPITAL MANAGEMENT, L.L.C.          Closing payment payable in connection
825 Third Avenue, 14th Floor               with investment by Laurus Master
New York, New York 10022                   Fund, Ltd. for which Laurus Capital
Fax: 212-541-4434                          Management, L.L.C. is the Manager.

TOTAL                                      $157,500

WARRANTS

WARRANT RECIPIENT                          WARRANTS IN CONNECTION WITH OFFERING

LAURUS MASTER FUND, LTD.                   300,000 Warrants issuable in
A Cayman Island corporation                connection with investment by Laurus
c/o Ironshore Corporate Services Ltd.      Master Fund, Ltd.
P.O. Box 1234 G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: 345-949-9877

TOTAL                                      300,000 WARRANTS

                                     Schl-1

EX-99.1

                                                                    EXHIBIT 99.1

[NUMEREX LOGO]

                                                     INVESTOR RELATIONS CONTACT:
                                                               Alan B. Catherall
                                                         Chief Financial Officer
                                                                    770-485-2527

FOR IMMEDIATE RELEASE

                           NUMEREX COMPLETES STRATEGIC
                $4.5 MILLION PRIVATE PLACEMENT WITH LAURUS FUNDS

ATLANTA (JANUARY 14, 2004) -- Numerex Corp. (NASDAQ:NMRX) announced today that
it has entered into a strategic financing agreement with Laurus Master Fund, Ltd
("Laurus Funds"), a financial institution that specializes in providing
financing to small and mid-capitalization companies. Specifically, Numerex
closed a private placement of a $4.5 million Term Note.

The Term Note is convertible into shares of Numerex common stock at a conversion
price of $4.56 per share. The Term Note bears a fixed interest rate of 8.0%.
Principal repayments begin in July 2004 and graduate in two additional
increments over the life of the note with the final payment due in January 2007.
Both principal and interest are payable in cash or, subject to certain
conditions, in Numerex common stock. The Term Note is secured by Numerex's
assets. The net proceeds from the private placement will be used primarily for
the repayment of $3.5 million of the Company's short-term debt to Cingular and
to provide additional working capital.

The Company also issued warrants to the Laurus Funds to purchase a total of
300,000 Numerex common shares. The warrants may be exercised on a cashless basis
in three separate tranches with an average exercise price of $5.10. The Company
has agreed to file a registration statement with the SEC within 120 days to
permit resales of common stock received by the Laurus Funds in connection with
the Term Note or upon exercise of the warrants.

"We are very pleased with the confidence in Numerex shown by the Laurus Funds,"
said Stratton Nicolaides, chairman and chief executive officer of Numerex. "We
believe that the structure of this transaction, with the conversion prices for
both the Term Note and the warrants at an attractive premium to our recent stock
price, is indicative of that confidence. The Term Note allows Numerex to fully
repay it's $3.5 million short term obligation to Cingular, thereby repositioning
it's balance sheet and increasing it's short term liquidity. We believe that our
recent product launches coupled with a stronger business environment have
improved the Company's long-term prospects. As a result, we selected this
particular path of financing rather than relying on asset sales to meet our
short term financial obligations."

David Grin, Fund Manager of the Laurus Funds, stated, " We believe that Numerex
has significant opportunities for growth with an experienced management team. We
look forward to participating in that growth and anticipate a long-term,
mutually beneficial relationship."

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ABOUT NUMEREX

Numerex is a technology company comprised of operating subsidiaries that develop
and market a wide range of communications products and services. The Company's
primary focus is wireless data communications utilizing proprietary network
technologies. The Company offers products and services in wireless data
communications through Cellemetry(R), Uplink(TM), MobileGuardian(TM) and
VendView(TM); and digital multimedia through PowerPlay(TM) and IPContact(TM).
These services enable customers around the globe to monitor and move information
for a variety of applications from home and business security to distance
learning. In addition, the Company offers wireline alarm security products and
services, as well as telecommunications network operational support systems.
Visit the Numerex Web site for additional information at: www.nmrx.com

Statements contained in this press release concerning Numerex that are not
historical fact are "forward-looking" statements and involve important risks and
uncertainties. Such risks and uncertainties, which are detailed in Numerex's
filings with the Securities and Exchange Commission, could cause Numerex's
results to differ materially from current expectations as expressed in this
press release.

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