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): December 29, 2006

NUMEREX CORP.

(Exact Name of Issuer as Specified in Charter)

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

1600 Parkwood Circle
Suite 500
Atlanta, Georgia

(Address of principal executive offices)

30339

(Zip code)

(770) 693-5950

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement.

Section 2 — Financial Information

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

     Effective as of December 29, 2006, Numerex Corp. (the “Company”) completed a private placement to Laurus Master Fund, Ltd. (“Laurus”) of (i) a Secured Convertible Term Note in the principal amount of $10,000,000 (“Note”) and (ii) a Common Stock Purchase Warrant (the “Warrant” and together with the Note, the “Securities”) to purchase up to 158,562 shares of the Company’s Class A common stock, no par value per share (“Common Stock”).

     The Note has a term of four years and interest accrues at an annual fixed rate of 9.5%. The Note is secured by substantially all of the assets of the Company and certain of its subsidiaries, as more fully described in the Master Security Agreement and the Pledge Agreement.

     Interest and principal under the Note may be paid by the Company in either cash or, subject to certain conditions, in Common Stock. If payments are made in cash, principal reductions will begin in July 2007 and will continue for the next 42 months with the final payment due in December 2010. The Company may only use Common Stock to make regularly scheduled installment payments of principal and interest on the Convertible Note if the price per share of its Common Stock is equal to or greater than $11.41 for the seven (7) trading days proceeding the due date of such installment. In such event, the fixed conversion price will equal $10.37 per share. In addition, Laurus may convert the entire principal amount of the Convertible Note, and any accrued interest thereon, into Common Stock at a fixed conversion price equal to $10.37 per share.

     The Company has the option of prepaying the Note in cash, either in whole or in part without penalty at any time by paying to the Holder a sum of cash equal to one hundred percent (100%) of the principal amount of the Note (and all accrued but unpaid interest thereon and all other sums then due, accrued and payable to the Holder arising under the Note, the Purchase Agreement or any Related Agreement).

     The Company has the option of prepaying the Note in Company Common Stock, either in whole or in part without penalty at any time by delivering to Holder written notice requiring the conversion at $10.37 per share all or a portion of the outstanding principal, interest and fees under the Note to be so prepaid. However, the maximum amount of principal, interest and other then due amounts that may be so prepaid in Common Stock during any 22-day trading period cannot exceed Two Million Five-Hundred Thousand dollars ($2,500,000) and the Company may not provide such written notice more than one time in any 22-day trading period. If the price of the Common Stock falls below $11.41 the Company may not pre-pay in Common Stock in that 22-day trading period.

     Upon the occurrence and continuance of an Event of Default (as defined in the Note), Laurus will have the option to accelerate the Note. In addition, if any of the following Events of Default occur, the amount owing to Laurus will be one hundred and fifteen percent (115%) of

the outstanding principal amount of the Note (plus applicable interest and fees): (i) a failure to pay when due any installments of principal, interest or other fees due under the Note or failure to pay when due any amount under any other promissory note or other indebtedness issued by the Company or certain of its subsidiaries that has a then current aggregate principal balance of more than $400,000.00, (ii) if the Company or any of its U.S. subsidiaries make a general assignment for the benefit of creditors, or applies for or consents 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 is appointed by a person other than the Company or a U.S. subsidiary, and such appointment is not dismissed or withdrawn within 60 days, or (iii) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors is instituted by or against the Company or any of its U.S. subsidiaries and, in the case of an involuntary case or proceeding, such case or proceeding is not dismissed within sixty (60) days following such case’s commencement.

     The Warrant is exercisable by Laurus until December 29, 2013. Subject to adjustments described in the Warrant, Laurus will be entitled to receive, upon exercise of the Warrant in whole or in part, shares of Common Stock at an exercise price of $10.13.

     The Company has agreed to register all of the shares of 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 terms of the Securities. The above summary is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, the Note, the Warrant, the Master Security Agreement, the Subsidiary Guaranty, the Registration Rights Agreement, and the other Related Documents.

Section 3 — Securities and Trading Markets

Item 3.02. Unregistered Shares of Equity Securities.

     The Company sold the Securities to Laurus effective as of December 29, 2006 in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The Company did not engage an underwriter or placement agent in connection with this transaction.

     The terms of the conversion and exercise of the Securities are set forth in Item 1.01 above and incorporated by reference herein.

Section 9 — Financial Statements and Exhibits

Item 9.01(c) Exhibits.

10.1	Securities Purchase Agreement, dated December 29, 2006, by and between the Company and Laurus Master Fund, Ltd.
10.2	Secured Convertible Term Note, dated December 29, 2006, by and between the Company and Laurus Master Fund, Ltd.
10.3	Common Stock Purchase Warrant, dated December 29, 2006, by and between the Company and Laurus Master Fund, Ltd.
10.4	Master Security Agreement, dated December 29, 2006, by and among the Company, its U.S. subsidiaries, and Laurus Master Fund, Ltd.
10.5	Subsidiary Guaranty, dated December 29, 2006, entered into by each of the Company’s U.S. subsidiaries.
10.6	Registration Rights Agreement, dated December 29, 2006, by and between the Company and Laurus Master Fund, Ltd.
10.7	Amended and Restated Grant of Security Interest in Patents and Trademarks, dated December 29, 2006, by and among the Company, Numerex Investment Corp., Numerex Solutions, LLC, Cellemetry LLC, Broadband Networks, Inc., Digilog Inc. and Laurus Master Fund, Ltd.
10.8	Pledge Agreement, dated December 29, 2006.
99.1	Text of Press Release, dated January 2, 2007.

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)
Date: January 5, 2007	/s/ Stratton J. Nicolaides
	Stratton J. Nicolaides
	Chairman and CEO

EX-10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is made and entered into as of December 29, 2006, 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 Secured Convertible Term Note in the aggregate principal amount of Ten Million Dollars ($10,000,000) (as amended, restated, modified or supplemented from time to time, the “Note”), which Note is convertible into shares of the Company’s Class A common stock, no par value per share (the “Common Stock”) at a fixed conversion price of $10.37 per share of Common Stock (“Fixed Conversion Price”);

     Whereas, the Company wishes to issue a warrant to the Purchaser to purchase up to 158,562 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 (as amended, restated, modified or supplemented from time to time, the “Warrant”);

     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 the Note in accordance with the terms of the Note and this Agreement. The Note and the Warrant 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) forty eight (48) months from the date of issuance, subject to acceleration in accordance with the terms thereof. Collectively, the Note, the Warrant 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 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 (“LCM”), manager of Purchaser, a non-refundable payment in an amount equal to four percent (4%) of the aggregate principal amount of the Note. The foregoing payment is referred to herein as the “LCM Payment.” Such payment shall be deemed fully earned on the Closing Date and shall not be subject to rebate or proration for any reason.

              (c) On the Closing Date, the Company shall reimburse the Purchaser in the amount of $35,000.00 for the following expenses: (i) expenses (including reasonable legal fees and expenses) incurred by the Purchaser in connection with the entering into of this Agreement and the Related Agreements, (ii) expenses incurred in connection with the Purchaser’s due diligence review of the Company and its Subsidiaries (as defined below) and all related matters and (iii) expenses incurred in connection with any required third-party appraisals and/or extraordinary diligence.

              (d) The LCM Payment and the expenses referred to in the immediately preceding clause (c) (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, the Note and the Warrant and the Purchaser will deliver to the Company, among other things, the amounts set forth in the Funds Escrow Agreement by wire transfer of immediately available funds. The Company hereby acknowledges and agrees that Purchaser’s obligation to purchase the Note from the Company, and to authorize the release of the proceeds of the Note, on the Closing Date shall be contingent upon the satisfaction (or waiver by the Purchaser in its sole discretion) of the items and matters set forth in the closing checklist provided by the Purchaser to the Company on or prior to the Closing Date.

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     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, 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. Each of the Company and its Subsidiaries, as applicable, has the corporate or limited liability company power and authority to own and operate its properties and assets, to execute and deliver (i) this Agreement, (ii) the Note and the Warrant to be issued in connection with this Agreement, (iii) the Master Security Agreement relating to the Note, dated as of the date hereof, by and among the Company, certain Subsidiaries of the Company and the Purchaser (as amended, restated, modified or supplemented from time to time, the “Master Security Agreement”), (iv) the Registration Rights Agreement relating to the Securities, dated as of the date hereof, between the Company and the Purchaser (the “Registration Rights Agreement”), (v) the Subsidiary Guaranty made by certain Subsidiaries of the Company, dated as of the date hereof (as amended, modified or supplemented from time to time, the “Subsidiary Guaranty”), (vi) the Pledge Agreement, dated as of the date hereof, by and among the Company, certain Subsidiaries of the Company and the Purchaser (as amended, modified or supplemented from time to time, the “Stock Pledge Agreement”), (vii) the Escrow Agreement, and (viii) all other agreements expressly referred to herein and expressly related to this Agreement (as each of the foregoing clauses (ii) through (viii), inclusive, may be amended, restated, modified and/or 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”). Except as otherwise disclosed on the attached Schedule 4.2, the Company does not directly or indirectly own or control any equity security or other interest of any other corporation, limited partnership or other business entity. In addition, if and to the extent the Company or a Subsidiary acquires any stock or other equity interest in a corporation or other entity after the date of this Agreement, the term “Subsidiary” shall mean and also include such corporation or other entity if (i) such shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of

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the happening of a contingency) of such corporation or other entity that are acquired by the Company or a Subsidiary have the power to elect a majority of the directors of such corporation, or other persons or entities performing similar functions for such person or entity, are owned, directly or indirectly, by such person or entity or (ii) as a result of such acquisition, the Company or a Subsidiary owns, directly or indirectly, more than fifty percent (50%) of the shares or equity interests in such corporation or other entity at such time.

          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, 12,5000,000 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 either 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 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, the Subsidiaries and their respective members, managers, officers and directors, as applicable, 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,

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sale, issuance and delivery of the Note and Warrant has been taken or will be taken prior to the Closing. This 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 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, 2005, 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.

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          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.

          4.8 Changes. Since December 31, 2005, except as disclosed in any Exchange Act Filing or on 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;

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             (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;

              (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 (k) 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 arise pursuant to the transactions described in this Agreement and the Related Agreements. 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:

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               (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) Since December 31, 2005, 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.

          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.

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          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 and except for any severance and/or employment agreements to be entered into by the Company with Michael A. Marett, Stratton Nicolaides and/or Alan B. Catherall (any such agreement, a “Severance Agreement”)], 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 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 and for any Severance Agreements, 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.

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          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, 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.

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          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 provided Purchaser with access to copies of (i) its Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and (ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, 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.

          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.

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          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.

          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.

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          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 this 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 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.”

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                    (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:

          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.

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          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/or 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 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.

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          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. Notwithstanding the foregoing, the Company may disclose the Purchaser’s identity and the terms of this Agreement and the Related Agreements to its current and prospective debt and equity financing sources. The Company acknowledges and agrees that the Purchaser shall be permitted to discuss, distribute or otherwise transfer non-public information of the Company and its Subsidiaries to potential or actual (i) direct or indirect investors in the Purchaser or any affiliated investment fund and (ii) third party assignees or transferees of all or a portion of the obligations of the Company and/or its Subsidiaries hereunder and under the Related Agreements, to the extent that such investor or assignee or transferee enters into a Confidentiality Agreement (as defined below) for the benefit of the Company and its Subsidiaries. For purposes of this Agreement, the term “Confidentiality Agreement” means, as to each actual or potential, direct or indirect investor in the Purchaser (or any affiliated investment fund) or third party assignee or transferee of all or any portion of the obligations of the Company and/or its Subsidiaries hereunder or under any Related Agreement (each, a “Recipient”), a confidentiality agreement in the form executed by the Company and the Purchaser in May 2006, signed by such Recipient and to the benefit and in favor of the Company and its Subsidiaries. The Purchaser shall deliver to the Company a Confidentiality Agreement from each Recipient at least two (2) business days prior to the date upon which the Purchaser discusses, distributes, delivers or otherwise transfers any non-public information of or about the Company and/or any Subsidiary to such Recipient and, at such time, shall notify the Company of the extent and type of non-public information being delivered to such Recipient.

          6.12 Required Approvals. The Company shall not and, without the prior written consent of the Purchaser, shall not permit any of its Subsidiaries to:

               (a) directly or indirectly declare or pay any dividends, other than (i) dividends with respect to its preferred stock, and (ii) as to the Subsidiaries only, dividends payable to the Company;

               (b) liquidate, dissolve or effect a material reorganization; provided, that as to any Subsidiary, such Subsidiary may liquidate, dissolve or effect a material reorganization without need of obtaining the prior written consent of the Purchaser if such Subsidiary shall transfer all of its assets and liabilities either to the Company or to another Subsidiary that is a party to the Master Security Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty; provided further that, notwithstanding the foregoing, a Core Subsidiary (as defined in the Master Security Agreement) shall not be permitted to transfer any of its assets to a Non-Core Subsidiary (as defined in the Master Security Agreement) without the consent of the Purchaser;

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               (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 Related Agreement to which the Company is a party, or would restrict any Subsidiary from performing its obligations under the Guaranty or any other Related Agreement to which such Subsidiary is a party;

               (d) materially alter or change the scope of the business of the Company and its Subsidiaries taken as a whole;

               (e) create or acquire, or permit any of its Subsidiaries to create or acquire, any Subsidiary after the date hereof unless such Subsidiary becomes a party to the Master Security Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty (either by executing a counterpart thereof or an assumption or joinder agreement in respect thereof) and, to the extent required by the Purchaser, satisfies each condition of this Agreement and the Related Agreements as if such Subsidiary were designated as a Subsidiary on the Closing Date; or

               (f) make investments in, make any loans or advances to, or transfer assets to, DCX Systems Australia Limited, Inc. (“DCX Australia”) or Bronzetech Limited (“Bronzetech”) or (ii) permit any Subsidiary to make investments in, make any loans or advances to, or transfer assets to, DCX Australia or Bronzetech, other than, in the case of each of the foregoing clauses (i) and (ii), immaterial investments, loans, advances and/or asset transfers made in the ordinary course of business.

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

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          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.

          7.4 Limitation on Acquisition of Common Stock of the Company. Notwithstanding anything to the contrary contained in this Agreement, any Related Agreement, any document, instrument or agreement entered into in connection with the transactions contemplated hereby or any document, instrument or agreement entered into in connection with any other transaction entered into by and between the Purchaser and the Company (and/or subsidiaries or affiliates of the Company), the Purchaser shall not acquire stock in the Company (including, without limitation, pursuant to a contract to purchase, by exercising an option or warrant, by converting any other security or instrument, by acquiring or exercising any other right to acquire, shares of stock or other security convertible into shares of stock in the Company, or otherwise, and such options, warrants, conversion or other rights shall not be exercisable) to the extent such stock acquisition would cause any interest (including any original issue discount) payable by the Company to the Purchaser not to qualify as portfolio interest, within the meaning of Section 881(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of Section 881(c)(3) of the Code, taking into account the constructive ownership rules under Section 871(h)(3)(C) of the Code.

     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.

          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.

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          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.

          8.4 [Intentionally Deleted]

     9. Miscellaneous.

          9.1 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 9.1 shall prohibit any fixed-price offering of Company’s Common Stock (including the offering of securities convertible into Common Stock at a fixed price).

          9.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. 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

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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 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.

          9.3 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.

          9.4 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 Master Security Agreement, the Stock Pledge Agreement or the Subsidiary 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 the Warrant may not assign its rights hereunder or thereunder to a Competitor (as defined herein) of the Company, unless an Event of Default (as defined in the Note) has occurred and is continuing. A

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“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 (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 Subsidiary Guaranty, the Stock Pledge Agreement or the Master 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 9.4, which shall be approved by all holders affected thereby.

          9.5 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.

          9.6 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.

          9.7 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.

          9.8 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 other Related Agreements, by law or otherwise afforded to any party, shall be cumulative and not alternative.

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          9.9 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, (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 500, Atlanta, Georgia 30339, facsimile number (770) 693-5951 and to William Carmody, Esq., Arnold & Porter LLP, 555 12^th 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.

          9.10 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.

          9.11 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.

          9.12 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.

          9.13 Broker’s Fees. Except as set forth on Schedule 9.13 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.

          9.14 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.

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          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: Chairman and CEO		Title:	Director
Address:	1600 Parkwood Circle SE, Suite 500 Atlanta, Georgia 30039 Attn: Chief Financial Officer Facsimile No.: (770) 693-5951	Address: c/o M&C Corporate Services Ltd., P.O. Box 309 G.T. Ugland House South Church Street George Town Grand Cayman, Cayman Islands

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List of Schedules and Exhibits

Schedule 4.2	Subsidiaries
Schedule 4.3	Options, Warrants, Etc.
Schedule 4.6	Agreements, Actions, Etc.
Schedule 4.7	Obligations to Related Parties
Schedule 4.8	Changes
Schedule 4.9	Title to Property
Schedule 4.10	Intellectual Property
Schedule 4.11	Defaults
Schedule 4.12	Litigation, Investigations, Etc.
Schedule 4.13	Taxes
Schedule 4.14	Employees
Schedule 4.15	Registration Rights and Voting Rights
Schedule 4.16	Compliance with Laws; Permits
Schedule 4.17	Environmental and Safety Laws
Schedule 4.21	SEC Reports
Schedule 9.13	Broker Fees
Exhibit A	Form of Note
Exhibit B	Form of Warrant
Exhibit C	Form of Opinion
Exhibit D	Form of Escrow Agreement

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EXHIBIT A

FORM OF 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

EXHIBIT D

FORM OF ESCROW AGREEMENT

D - 1

EX-10.2

Exhibit 10.2

THIS NOTE AND THE COMMON SHARES 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 COMMON SHARES 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.

SECURED CONVERTIBLE TERM NOTE

          FOR VALUE RECEIVED, NUMEREX CORP., a Pennsylvania corporation (the “Company”), promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”) or its registered assigns or successors in interest, the sum of Ten Million Dollars ($10,000,000), together with any accrued and unpaid interest hereon, on December 29, 2010 (the “Maturity Date”) if not sooner paid.

          Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Securities Purchase Agreement among the Company and the Holder dated as of the date hereof (as amended, restated, modified and/or supplemented from time to time, the “Purchase Agreement”).

          The following terms shall apply to this Secured Convertible Term Note (this “Note”):

ARTICLE I
CONTRACT RATE AND AMORTIZATION

          1.1 Contract Rate. Subject to Sections 4.8 and 5.10, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum equal to nine and one half percent (9.50%) (the “Contract Rate”). Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on February 1, 2007 on the first business day of each consecutive calendar month thereafter through and including the Maturity Date and on the Maturity Date, whether by acceleration or otherwise.

          1.2 Intentionally Deleted

          1.3 Principal Payments. Amortizing payments of the aggregate principal amount outstanding under this Note at any time (the “Principal Amount”) shall be made by the Company commencing on July 2, 2007 and on the first business day of each succeeding month thereafter through and including the Maturity Date (each, an “Amortization Date”). Subject to Article III below, commencing on the first Amortization Date, the Company shall make monthly payments of principal to the Holder on each Amortization Date, each such payment in the amount of $238,095 together with any accrued and unpaid interest on such portion of the

Principal Amount plus any and all other unpaid amounts which are then due and owing under this Note, the Purchase Agreement and/or any other Related Agreement (collectively, the “Monthly Amount”). Any outstanding Principal Amount together with any accrued and unpaid interest and any and all other unpaid amounts which are then owing by the Company to the Holder under this Note, the Purchaser Agreement and/or any Related Agreement shall be due and payable on the Maturity Date.

ARTICLE II
COMPANY PAYMENT OPTIONS

          2.1 (a) Payment of Monthly Amount in Cash or Common Stock. Subject to the terms hereof, the Company shall have the sole option to determine whether to satisfy payment of the Monthly Amount on each Amortization Date either in cash or in shares of the Company’s Class A common stock, no par value per share (the “Common Stock”), or a combination of both. Each month, ten (10) days prior to an Amortization Date, the Company may deliver to the Holder a written irrevocable notice in the form of Exhibit A attached hereto electing to pay the Monthly Amount payable on the next Amortization 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 Company by the applicable Notice Date for such Amortization Date, then the Monthly Amount due on such Amortization Date shall be paid in cash. If the Company elects to repay all or a portion of the Monthly Amount in shares of Common Stock, the number of such shares to be issued for such Amortization 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 (as defined below).

               (b) Monthly Amount Common Stock Payment Guidelines. Notwithstanding anything to the contrary contained herein, if the Company has elected to pay all or a portion of the Monthly Amount due on such Amortization Date in shares of Common Stock and the closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for the seven (7) trading days preceding a Amortization Date was less than 110% of the Fixed Conversion Price, then the Company shall pay the Monthly Amount in cash instead. Any part of the Monthly Amount due on such Amortization Date that the Company did not elect to pay in shares of Common Stock shall be paid by the Company in cash on such Amortization Date. Any part of the Monthly Amount due on such Amortization Date which the Company 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 Amortization Date was less than 110% of the Fixed Conversion Price) shall be paid on or prior to three (3) business days following the applicable Amortization Date.

          2.2 No Effective Registration. Notwithstanding anything to the contrary herein, the Company shall not be permitted to repay any part of its obligations to the Holder hereunder in shares of 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 prior to such payment being made or is otherwise waived in writing by the Holder in whole or in part at the Holder’s option.

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          2.3 Optional Prepayments in Common Stock. Subject to Sections 2.2 and 3.2 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 Company may, at its sole option, provide the Holder written notice (a “Stock Prepayment 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 Stock Prepayment Notice (the “Stock Prepayment Date”). The Stock Prepayment Date shall be at least seven (7) trading days following the date of the Stock Prepayment Notice. On the Stock Prepayment Date, the Company 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 Company’s right to issue shares of Common Stock in satisfaction of the Company’ obligations under this Note shall be subject to the limitation that the market price of the Common Stock issued in connection with any Stock Prepayment Notice shall exceed the Fixed Conversion Price as of the Stock Prepayment Date and for the seven (7) trading days immediately preceding the Stock Prepayment 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 Stock Prepayment Date, then the Stock Prepayment Notice shall be null and void and no conversion shall be required hereunder.

     The Company shall not be permitted to give the Holder more than one Stock Prepayment Notice under this Note during any 22-day trading day period, and the amount of principal to be converted under each such Stock Prepayment Notice pursuant to this Section 2.3 shall not exceed the amount of Two Million Five Hundred Thousand and 00/100ths Dollars ($2,500,000.00).

     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 the principal portion of the Monthly Amounts for the remaining Amortization Dates in chronological order.

          2.4 Optional Redemption in Cash. The Company will have the option of prepaying this Note, either in whole or in part, without premium or penalty of any kind or nature (an “Optional Cash Redemption”) by paying to the Holder a sum of cash equal to one hundred percent (100%) of the principal amount to be prepaid (together with all accrued but unpaid interest thereon and any and all other sums then due, accrued and payable to the Holder arising under this Note, the Purchase Agreement, or any Related Agreement) (each, a “Cash Redemption Amount”). The Company shall deliver to the Holder a written notice of cash redemption (each, a “Notice of Cash Redemption”) specifying the date for such Optional Cash Redemption (each, a “Cash Redemption Payment Date”), which date shall be ten (10) days after the date of the respective Notice of Cash Redemption (each, a “Cash Redemption Period”). A Notice of Cash Redemption shall not be effective with respect to any portion of this Note for which the Holder has previously delivered a Notice of Conversion (defined below) pursuant to Section 3.1, or for conversions are elected to be made by the Holder pursuant to Section 3.1 during the Cash Redemption Period. A Cash Redemption Amount shall be

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determined as if such Holder’s conversion elections had been completed immediately prior to the date of the respective Notice of Cash Redemption. On a Cash Redemption Payment Date, the respective Cash Redemption Amount (plus any additional interest and fees accruing on such Cash Redemption Amount during the Cash Redemption Period) must be irrevocably paid in full in immediately available funds to the Holder. In the event the Company fail to pay a Cash Redemption Amount on a Cash Redemption Payment Date, then the respective Cash Redemption Notice shall be null and void.

          2.5 Mandatory Redemption Upon Failure to Cause an Effective Registration Statement to be Filed. If on or prior to December 29, 2007, 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 AND FIXED CONVERSION PRICE

          3.1 Optional Conversion. Subject to the terms of this Article III, the Holder shall have the right, but not the obligation, at any time until the Maturity Date, or during an Event of Default (as defined in Article IV), and, subject to the limitations set forth in Section 3.2 hereof, to convert all or any portion of the outstanding Principal Amount and/or accrued interest and fees due and payable into fully paid and nonassessable shares of the Common Stock at the Fixed Conversion Price. For purposes hereof, subject to Section 3.6 hereof, the initial “Fixed Conversion Price” means $10.37. The shares of Common Stock to be issued upon such conversion are herein referred to as the “Conversion Shares.”

          3.2 Conversion Limitation. Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Note or the unexercised or unconverted portion of any other security of the Holder subject to a limitation on conversion analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its Affiliates of any amount greater than 9.99% of the then outstanding shares of Common Stock (whether or not, at the time of such exercise, the Holder and its Affiliates beneficially own more than 9.99% of the then outstanding shares of Common Stock). As used herein, the term “Affiliate” means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act. For purposes of the proviso to the second preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as

4

amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The limitations set forth herein (x) may be waived by the Holder upon provision of no less than sixty-one (61) days prior notice to the Company and (y) shall automatically become null and void (i) following notice to the Company upon the occurrence and during the continuance of an Event of Default (as defined below), or (ii) upon receipt by the Holder of a Notice of Cash Redemption, except that at no time shall the number of shares of Common Stock beneficially owned by the Holder exceed 19.99% of the outstanding shares of Common Stock. Notwithstanding anything contained herein to the contrary, the number of shares of Common Stock issuable by the Company and acquirable by the Holder at a price below $9.46 per share pursuant to the terms of this Note, the Purchase Agreement, any Related Agreement or otherwise, shall not exceed an aggregate of 2,529,934 shares of Common Stock (subject to appropriate adjustment for stock splits, stock dividends, or other similar recapitalizations affecting the Common Stock) (the “Maximum Common Stock Issuance”), unless the issuance of Common Shares hereunder in excess of the Maximum Common Stock Issuance shall first be approved by the Company’s shareholders. If at any point in time and from time to time the number of shares of Common Stock issued pursuant to the terms of this Note, the Purchase Agreement, any Related Agreement or otherwise, together with the number of shares of Common Stock that would then be issuable by the Company to the Holder in the event of a conversion pursuant to the terms of this Note, the Purchase Agreement, any Related Agreement or otherwise, would exceed the Maximum Common Stock Issuance but for this Section 3.2, the Company shall promptly call a shareholders meeting to solicit shareholder approval for the issuance of the shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.

          3.3 Mechanics of Holder’s Conversion. In the event that the Holder elects to convert this Note into Common Stock, the Holder shall give notice of such election by delivering an executed and completed notice of conversion in substantially the form of Exhibit B hereto (appropriately completed) (“Notice of Conversion”) to the Company and such Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest and fees that are being converted. On each Conversion Date (as hereinafter defined) and in accordance with its 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 Company within two (2) Business Days after the Conversion Date. Each date on which a Notice of Conversion is delivered or telecopied to the Company in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the Notice of Conversion, the Company will issue instructions to the transfer agent accompanied by an opinion of counsel within two (2) Business Day of the date of the delivery to the Company 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 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 Company of the Notice of Conversion (the “Delivery Date”). 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 Company of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of the Conversion Shares, unless the Holder provides the Company written instructions to the contrary.

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          3.4 Late Payments. The Company understands that a delay in the delivery of the Conversion Shares in the form required pursuant to this Article beyond the Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, in addition to all other rights and remedies which the Holder may have under this Note, applicable law or otherwise, the Company shall, jointly and severally, pay late payments to the Holder for any late issuance of Conversion Shares in the form required pursuant to this Article III upon conversion of this Note, in the amount equal to $150 per Business Day after the Delivery Date. The Company shall, jointly and severally, make any payments incurred under this Section in immediately available funds upon demand.

          3.5 Conversion Mechanics. 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 then applicable Fixed Conversion Price.

          3.6 Adjustment Provisions. The Fixed Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Section 3.1 shall be subject to adjustment from time to time upon the occurrence of certain events during the period that this conversion right remains outstanding, as follows:

               (a) Reclassification. If the Company at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Note, as to the unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock (i) immediately prior to or (ii) immediately after such reclassification or other change at the sole election of the Holder.

               (b) Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock or any preferred stock issued by the Company in shares of Common Stock, the Fixed Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

          3.7 Reservation of Shares. During the period the conversion right exists, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Conversion Shares upon the full conversion of this Note, the Secured Convertible Term Note and the Warrants. The Company represents that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Company agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for the Conversion Shares upon the conversion of this Note.

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          3.8 Registration Rights. The Holder has been granted registration rights with respect to the Conversion Shares as set forth in a Registration Rights Agreement.

          3.9 Issuance of New Note. Upon any partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Company to the Holder for the principal balance of this Note and interest which shall not have been converted or paid. Subject to the provisions of Article IV of this Note, the Company shall not pay any costs, fees or any other consideration to the Holder for the production and issuance of a new Note.

ARTICLE IV
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS

     If an Event of Default (as defined below) occurs and is continuing, the Company’s rights under Section 2.3 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 the Company (each occurrence being a “Default Notice Period”), provided, however, that such Default Notice Period shall not apply to Sections 4.1, 4.4 and 4.6 below. In addition, upon acceleration of this Note because of the occurrence of an Event of Default described in either Section 4.1, Section 4.4 or Section 4.6 below, the amount due and owing to the Holder shall be one hundred fifteen percent (115%) of the outstanding principal amount of this Note (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 set forth in Sections 4.1 through 4.8, inclusive, below is an “Event of Default”:

          4.1 Failure to Pay Principal, Interest or other Fees. The Company or any of its Subsidiaries (i) fails to pay when due any installment of principal, interest or other fees hereon in accordance herewith, or (ii) fails to pay when due any amount due under any other promissory note or other indebtedness issued by Company or any of its Subsidiaries that, in the aggregate for all such notes and indebtedness, has a then-current principal balance of more than Four Hundred Thousand and 00/100ths Dollars ($400,000.00).

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

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          4.3 Breach of Representations and Warranties. Any material representation or warranty of the Company or any of its Subsidiaries made herein, in the Purchase Agreement, or in any Related Agreement shall have been materially false or misleading when made.

          4.4 Receiver or Trustee. The Company or any of its Subsidiaries shall make a general 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 by a person other than the Company or a Subsidiary, and such appointment by a person other than the Company or a Subsidiary shall not have been dismissed or withdrawn within 60 days of such appointment.

          4.5 Judgments. Any money judgment, writ or similar final process shall be entered or filed against the Company, any of its Subsidiaries or any of their respective property or other assets for more than $400,000, 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 be instituted by or against the Company or any of its Subsidiaries 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 Company 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 Other Agreements. The occurrence and continuance of any Event of Default under, and as defined in (i) that certain Securities Purchase Agreement, dated as of May 30, 2006, by and between the Holder and the Borrower (as amended, modified or supplemented from time to time, the “May 2006 Purchase Agreement”) or (ii) any Related Agreement (as defined in the May 2006 Purchase Agreement).

          4.9 Payment Grace Period; Default Interest. The Company shall have a three (3) business day grace period to pay any monetary amounts due under this Note (which such three (3) business day grace period must expire before an Event of Default related thereto will exist or be deemed to exist hereunder), the Purchase Agreement or any Related Agreement, 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.

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ARTICLE V
MISCELLANEOUS

          5.1 Conversion Privileges. The conversion privileges set forth in Article III shall remain in full force and effect immediately from the date hereof until the date this Note is indefeasibly paid in full and irrevocably terminated.

          5.2 Cumulative Remedies. The remedies under this Note shall be cumulative.

          5.3 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.

          5.4 Notices. Any notice herein required or permitted to be given shall be in writing and shall be deemed effective: (a) upon personal delivery to the party notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five 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 provided for the Company in the Purchase Agreement executed in connection herewith, with a copy to Arnold & Porter LLP, 555 12^th Street, N.W., Washington, D.C. 20004-1206 Attn: William Carmody, 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, 14^th Floor, New York, New York 10022, facsimile number (212) 541-4434, or at such other address as the Company or the Holder may designate by ten days advance written notice to the other parties hereto.

          5.5 Amendment Provision. The term “Note” and all references 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 as such successor instrument may be amended or supplemented.

          5.6 Assignability. This Note shall be binding upon the Company 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 in accordance with the requirements of the Purchase Agreement. The Company may not assign any of its obligations under this Note without the prior written consent of the Holder, any such purported assignment without such consent being null and void.

          5.7 Cost of Collection. In case of any Event of Default under this Note, the Company shall, jointly and severally, pay the Holder’s reasonable costs of collection, including reasonable attorneys’ fees.

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          5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.

               (a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

               (b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE, THE PURCHASE AGREEMENT OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE PURCHASE AGREEMENT OR ANY OF THE OTHER RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

               (c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER, AND/OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE PURCHASE AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

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          5.9 Severability. 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 enforceability of any other provision of this Note.

          5.10 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 rate permitted by such law, any payments in excess of such maximum rate shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

          5.11 Security Interest and Guarantee. The Holder has been granted a security interest (i) in certain assets of the Company as more fully described in the Master Security Agreement dated as of the date hereof and (ii) pursuant to the Pledge Agreement dated as of the date hereof. The obligations of the Company under this Note are guaranteed by certain Subsidiaries of the Company pursuant to the Subsidiary Guaranty dated as of the date hereof.

          5.12 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.

          5.13 Registered Obligation. This Note is intended to be a registered obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall register this Note (and thereafter shall maintain such registration) as to both principal and any stated interest. Notwithstanding any document, instrument or agreement relating to this Note to the contrary, transfer of this Note (or the right to any payments of principal or stated interest thereunder) may only be effected by (i) surrender of this Note and either the reissuance by the Company of this Note to the new holder or the issuance by the Company of a new instrument to the new holder, or (ii) transfer through a book entry system maintained by the Company (or its agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

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

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          IN WITNESS WHEREOF, the Company has caused this Secured Convertible Term Note to be signed in its name effective as of this 29th day of December 2006.

NUMEREX CORP.
By:	/s/ Stratton J. Nicolaides
	Name:	Stratton J. Nicolaides
	Title:	Chairman and CEO

WITNESS:

/s/ Alan B. Catherall

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EXHIBIT A

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 Secured Convertible Term Note issued by it dated December 29, 2006 by delivery of Shares of its Common Stock on and subject to the conditions set forth in Article II of such Note.

1. Fixed Conversion Price: $

(1	)	Amount to be paid:
		$
(2	)	Shares To Be Delivered (2 divided by 1):

Date:	NUMEREX CORP.
	By:
	Name:
	Title:

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EXHIBIT B

NOTICE OF CONVERSION

(To be executed by the Holder in order to convert the
Secured Convertible Term Note)

     The undersigned hereby elects to convert $___ of the principal and $___ of the interest due on the Secured Convertible Term Note dated as of December 29, 2006 (the “Note”) issued by Numerex Corp. (the “Company”) into shares of Common Stock of the Company in accordance with the terms and conditions set forth in the Note, as of the date written below.

Date of Conversion:

Conversion Price:

Shares To Be Delivered:

Signature:

Print Name:

Address:

Holder DWAC instructions

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EX-10.3

Exhibit 10.3

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 158,562 shares of Class A Common Stock of Numerex Corp. (subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

No.                      Issue Date: December 29, 2006

          NUMEREX CORP., a corporation organized under the laws of the Commonwealth 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 December 29, 2013 (the “Expiration Date”), up to 158,562 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 $10.13.

          (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, 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.

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     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 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.

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               (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.

          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.

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     4. 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 number of shares of Common Stock (or Other Securities) represented hereby.

     5. 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.

     6. 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 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.

     7. 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.

     8. 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 Laurus Master Fund, Ltd., dated as of the date hereof.

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     9. Maximum Exercise. Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to exercise any portion of this Warrant in excess of that portion of this Warrant upon exercise of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrant or the unexercised or unconverted portion of any other security of the Holder subject to a limitation on conversion analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the exercise of the portion of this Warrant with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its Affiliates of any amount greater than 9.99% of the then outstanding shares of Common Stock (whether or not, at the time of such exercise, the Holder and its Affiliates beneficially own more than 9.99% of the then outstanding shares of Common Stock). As used herein, the term “Affiliate” means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act. For purposes of the proviso to the second preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The limitations set forth herein (x) may be waived by the Holder upon provision of no less than sixty-one (61) days prior notice to the Company and (y) shall automatically become null and void following notice to the Company upon the occurrence and during the continuance of an Event of Default (as defined in any Note referred to in that certain Securities Purchase Agreement dated as of the date hereof by and between the Holder and the Company (as amended, modified, restated and/or supplemented from time to time, the “Purchase Agreement”)), except that at no time shall the number of shares of Common Stock beneficially owned by the Holder exceed 19.99% of the outstanding shares of Common Stock. Notwithstanding anything contained herein to the contrary, the number of shares of Common Stock issuable by the Company and acquirable by the Holder at a price below $9.46 per share pursuant to the terms of this Warrant, the Purchase Agreement, any Related Agreement (as defined in the Purchase Agreement) or otherwise, shall not exceed an aggregate of 2,529,934 shares of Common Stock (subject to appropriate adjustment for stock splits, stock dividends, or other similar recapitalizations affecting the Common Stock) (the “Maximum Common Stock Issuance”), unless the issuance of Common Shares hereunder in excess of the Maximum Common Stock Issuance shall first be approved by the Company’s shareholders. If at any point in time and from time to time the number of shares of Common Stock issued pursuant to the terms of this Warrant, the Purchase Agreement, any Related Agreement (as defined in the Purchase Agreement) or otherwise, together with the number of shares of Common Stock that would then be issuable by the Company to the Holder in the event of a conversion pursuant to the terms of this Warrant, the Purchase Agreement, any Related Agreement (as defined in the Purchase Agreement) or otherwise, would exceed the Maximum Common Stock Issuance but for this Section 9, the Company shall promptly call a shareholders meeting to solicit shareholder approval for the issuance of the shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.

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     10. 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.

     11. 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.

     12. 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.

     13. 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.

     14. 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 GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. 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

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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 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.]

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          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:	Chairman and CEO

WITNESS:

/s/ Alan B. Catherall

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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)

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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 Transferrred

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)

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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 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.

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     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.

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EX-10.4

Exhibit 10.4

NUMEREX CORP. AND CERTAIN OF ITS SUBSIDIARIES
MASTER SECURITY AGREEMENT (this “Agreement”)

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

Dated as of December 29, 2006

Gentlemen:

     1. To secure the payment of all Obligations (as hereafter defined), Numerex Corp., a Pennsylvania corporation (the “Company”), and each of the other undersigned parties other than Laurus Master Fund, Ltd. and each other entity that is required to enter into this Master Security Agreement (each, an “Assignor” and, collectively, the “Assignors”, “we” and/or “us”) hereby assigns and grants to Laurus Master Fund, Ltd. (“Laurus” and/or “you”) a continuing security interest in all of the following property now owned or at any time hereafter acquired by such Assignor, or in which such Assignor now has or at any time in the future may acquire any right, title or interest (the “Collateral”): all cash, cash equivalents, accounts, accounts receivable, deposit accounts, inventory, equipment, goods, fixtures, documents, instruments (including, without limitation, promissory notes), contract rights, commercial tort claims set forth on Schedule A to this Agreement, general intangibles (including, without limitation, payment intangibles), chattel paper, supporting obligations, investment property (including, without limitation, all partnership interests, limited liability company membership interests and all other equity interests owned by any Assignor), letter-of-credit rights, trademarks, trademark applications, tradestyles, patents, patent applications, copyrights, copyright applications and other intellectual property in which such Assignor now has or hereafter may acquire any right, title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefore. Except as otherwise defined herein, all capitalized terms used herein shall have the meanings provided such terms in the Securities Purchase Agreement referred to below. All items of Collateral which are defined in the UCC shall have the meanings set forth in the UCC. For purposes hereof, the term “UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Laurus’ security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions; provided further, that to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.

     2. The term “Obligations” as used herein shall mean and include any and all debts, liabilities and obligations owing by each Assignor to Laurus arising under, out of, or in connection with: (i) that certain Securities Purchase Agreement dated as of the date hereof by and between the Company and Laurus (the “Securities Purchase Agreement”) and (ii) the Related Agreements referred to in the Securities Purchase Agreement (the Securities Purchase Agreement and each Related Agreement, as each may be amended, modified, restated or supplemented from time to time, collectively, the “Documents”), and in connection with any documents, instruments or agreements relating to or executed in connection with the Documents, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or otherwise, including, without limitation, obligations and liabilities of each Assignor for post-petition interest, fees, costs and charges that accrue after the commencement of any case by or against such Assignor under any bankruptcy, insolvency, reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in each case, irrespective of the genuineness, validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of the Obligations or of any collateral therefore 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 any Assignor under any Debtor Relief Law.

     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 and we will provide you thirty (30) days’ prior written notice of any change in any of our legal names; (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 (i) 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 or (ii) for those Encumbrances arising from the Documents; (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) the sale of inventory in the ordinary course of business and (II) the disposition or transfer in the ordinary course of

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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, (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, or (iii) the grant of nonexclusive licenses by the Company of any intellectual property right that is deemed to be an item of Collateral, including trademarks, trademark applications, tradestyles, patents, patent applications, copyrights, copyright applications and other intellectual property rights, to customers, suppliers or contract manufactures in the ordinary course of the Company’s business; (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, (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, (l) all commercial tort claims (as defined in the Uniform Commercial Code as in effect in the State of New York) held by any Assignor are set forth on Schedule A to this Agreement, and (m) each Assignor hereby agrees that it shall promptly, and in any event within five (5) Business Days after the same is acquired by it, notify Laurus of any commercial tort claim acquired by it and unless otherwise consented to in writing by Laurus, it shall enter into a supplement to this Agreement granting to Laurus a security interest in such commercial tort claim, securing the Obligations.

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     We hereby further covenant that each Assignor will (x) irrevocably direct all of its then present Account Debtors (as defined below) and other persons or entities obligated to make payments constituting Collateral to make such payments directly to the lockboxes maintained by such Assignor (the “Lockboxes”) with SunTrust Bank or such other financial institution accepted by Laurus in writing as may be selected by the Company (the “Lockbox Bank”) (each such direction pursuant to this clause (x), a “Direction Notice”) and (y) provide Laurus with copies of each Direction Notice, each of which shall be agreed to and acknowledged by the respective Account Debtor, and (ii) thereafter send a Direction Notice to each subsequent Account Debtor or other person or entity who or which is obligated to make payments constituting Collateral, and provide Laurus with copies of each such Direction Notice, each of which shall be agreed to and acknowledged by such future Account Debtor. The Lockbox Bank shall agree to deposit the proceeds of such payments immediately upon receipt thereof in that certain deposit account maintained at the Lockbox Bank, or such other deposit account accepted by Laurus in writing (the “Lockbox Deposit Account”). On or prior to thirty (30) days following the Closing Date, each Assignor shall and shall cause the Lockbox Bank to enter into documentation reasonably acceptable to Laurus pursuant to which the Lockbox Bank agrees to, following not less than five (5) nor more than ten (10) days notification by Laurus to the Lockbox Bank and each Assignor (which notification shall contain a sworn statement signed by a principal officer of Laurus, stating that an Event of Default has occurred under Section 4.1, Section 4.4 or Section 4.6 of the Note, and that because of such Event of Default, the Note has been accelerated), to comply only with the instructions or other directions of Laurus concerning the Lockbox and the Lockbox Deposit Account. Laurus shall only have the right to give such notification, and such notification shall only be effective, if an Event of Default has occurred under Section 4.1, Section 4.4 or Section 4.6 of the Note. All of each Assignor’s invoices, account statements and other written or oral communications directing, instructing, demanding or requesting payment of any Account (as hereinafter defined) of any such Assignor or any other amount constituting Collateral shall conspicuously direct that all payments be made to the Lockbox or such other address as Laurus may direct in writing. If, notwithstanding the instructions to Account Debtors, any Assignor receives any payments at any time during any period in which an Event of Default exists under Section 4.1, Section 4.4 or Section 4.6 of the Note, such Assignor shall immediately remit such payments to the Lockbox Deposit Account in their original form with all necessary endorsements. Until so remitted, the Assignors shall hold all such payments received by it during any period in which an Event of Default exists under Section 4.1, Section 4.4 or Section 4.6 of the Note in trust for and as the property of Laurus and shall not commingle such payments with any of its other funds or property. For the purpose of this Master Security Agreement, (1) “Accounts” shall mean all “accounts”, as such term is defined in the UCC as in effect in the State of New York on the date hereof, now owned or hereafter acquired by any Assignor and (2) “Account Debtor” shall mean any person or entity who is or may be obligated with respect to, or on account of, an Account.

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     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 any Document 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) 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 (provided, however, that as to the Subsidiaries and only in connection with any cessation of operations, dissolution, termination of our business existence or liquidation that, in each case, is not related to any bankruptcy or similar proceeding, in regard to such Subsidiary, any such cessation of operations, dissolution, termination of our business existence or liquidation shall neither be nor constitute an Event of Default hereunder if such Subsidiary shall transfer all of its assets and liabilities either to the Company or to another Subsidiary that is a party to this Master Security Agreement, the Stock Pledge Agreement and the Subsidiary Guaranty; provided further that, notwithstanding the foregoing, a Core Company shall not be permitted to transfer any of its assets to a Non-Core Company without the consent of the Purchaser); (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 60 days; (g) any of us shall repudiate or purport to revoke any of our obligations under any Document 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, consolidation or otherwise, any of its assets to

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a Non-Core Company. For purposes of this Section 5, 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), CellemetryXG Customer Services, LLC (a Georgia limited liability company), 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), Uplink Security, Inc. (a Georgia corporation), and Airdesk LLC (a Georgia limited liability company); 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), 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 (a) by and among Core Company on the one hand and another Core Company on the other hand and (b) by and among a Non-Core Company on the one hand and another Non-Core Company on the other hand.

     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 Documents, 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 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 Documents.

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     8. a. Notwithstanding anything to the contrary contained in this Master Security Agreement, any other Related Agreement or the Securities Purchase Agreement, and subject to the following provisions of this Section 8.a, any Non-Core Company may sell all or any part of its assets with the prior written consent of Laurus. So long as such Non-Core Company agrees to use all of such net sales proceeds received by it in connection with such sale to pay down the Obligations, then Laurus shall not, and shall not have the right to, unreasonably withhold, delay or condition its consent. In the event that a Non-Core Company that seeks to sell all or any part of its assets has delivered written request to Laurus seeking Laurus’ consent (and such notice contains a covenant that all of such net sales proceeds received by such Non-Core Company in connection with such sale shall be applied as described in the immediately preceding sentence of this Section 8.a), and Laurus has failed to respond to such written request within five (5) business days after receipt thereof, then Laurus’ consent shall be deemed to have been given. Such Non-Core Company shall deliver to Laurus the net sales proceeds received by such Non-Core Company in connection with such sale no later than three (3) business days after receipt thereof.

     b. Notwithstanding anything to the contrary contained in this Master Security Agreement, any other Related Agreement or the Securities Purchase Agreement, and subject to the following provisions of this Section 8.b, any Core Company may sell all or any part of its assets with the prior written consent of Laurus. So long as (a) such Core Company agrees to use all of such net sales proceeds received by it in connection with such sale to pay down the Obligations and (b) the net sales proceeds to be received by such Core Company in connection with such sale are sufficient to satisfy the Obligations in full, then Laurus shall not, and shall not have the right to, unreasonably withhold, delay or condition its consent. In the event that a Core Company that seeks to sell all or any part of its assets has delivered written request to Laurus seeking Laurus’ consent (and such notice contains a representation that the net sales proceeds to be received by such Core Company in connection with such sale are sufficient to satisfy the Obligations in full, and a covenant that all of such net sales proceeds shall be applied as described in the immediately preceding sentence of this Section 8.b), and Laurus has failed to respond to such written request within five (5) business days after receipt thereof, then Laurus’ consent shall be deemed to have been given and payments must still be made in such case. Such Core Company shall deliver to Laurus the net sales proceeds received by such Core Company in connection with such sale no later than three (3) business days after receipt thereof.

     9. 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.

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     10. 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.

     11. 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 giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.. 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 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.

     12. 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 500, Atlanta, Georgia 30339, facsimile: (770) 693-5951, and Richard Baltz, Esq., Arnold & Porter LLP, 555 12^th Street, N.W., Washington, D.C. 20004, facsimile: (202) 942-5999.

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[SIGNATURE LINES ON FOLLOWING PAGE]

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[SIGNATURE PAGE NO. 1 TO SECURITY AGREEMENT]

Very truly yours,
NUMEREX CORP.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
Chairman and CEO

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Pennsylvania
Org. ID#: PA2569500
NUMEREX SOLUTIONS, LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Delaware
Org. ID#: DE3361359
CELLEMETRY LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Delaware

Org. ID#: DE2896495

[SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]

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[SIGNATURE PAGE NO. 2 TO SECURITY AGREEMENT]

NUMEREX INVESTMENT CORP.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Delaware
Org. ID#: DE2429448
BROADBAND NETWORKS, INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
Chairman and 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
Stratton J. Nicolaides
Treasurer

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]

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[SIGNATURE PAGE NO. 3 TO SECURITY AGREEMENT]

DIGILOG INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	2360 Maryland Road
	Willow Grove, PA 19090

State of Formation: Pennsylvania
Org. ID#: PA2587972
DCX SYSTEMS INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
Chairman and Treasurer

Address:	2360 Maryland Road
	Willow Grove, PA 19090
State of Formation: Pennsylvania
Org. ID#: PA2608798

[SIGNATURE LINES CONTINUED ON FOLLOWING PAGE]

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[SIGNATURE PAGE NO. 4 TO SECURITY AGREEMENT]

MOBILE GUARDIAN LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Delaware
Org. ID#: DE3597074
UPLINK SECURITY, INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Georgia
Org. ID#: GAK823623
CELLEMETRYXG CUSTOMER SERVICES LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
CEO and Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Georgia

Org. ID#: GAK0506174

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[SIGNATURE PAGE NO. 5 TO SECURITY AGREEMENT]

AIRDESK LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides
Treasurer

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

State of Formation: Georgia

Org ID #: GAK0581744

ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By:	/s/ David Grin
Its:	Director

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SCHEDULE A

COMMERCIAL TORT CLAIMS

None.

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EX-10.5

Exhibit 10.5

SUBSIDIARY GUARANTY (this “Guaranty”)

New York, New York December 29, 2006

     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”), a Cayman Islands company, to or for the account of NUMEREX CORP. (“Company”), a Pennsylvania corporation, 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 (i) that certain Securities Purchase Agreement dated as of the date hereof by and between the Company and Laurus (the “Securities Purchase Agreement”) and (ii) each Related Agreement referred to in the Securities Purchase Agreement (the Securities Purchase Agreement and each Related Agreement, as each may be amended, modified, restated and/or supplemented from time to time, are collectively referred to herein as the “Documents”) or any documents, instruments or agreements relating to or executed in connection with the Documents, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or otherwise (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. Terms not otherwise defined herein shall have the meaning assigned such terms in the Securities Purchase Agreement. 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 Documents 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 Documents, 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 Documents permitted pursuant to the terms of the 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 Documents permitted pursuant to the terms of the 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 Documents). Obligations include post-petition interest whether or not allowed or allowable.

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     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 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 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 Documents have 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 Documents 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 Documents. 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.

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     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 Guaranty, (ii) are supplemented by and subject to the Exchange Act Filings 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 Documents have 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 or as disclosed in the Exchange Act Filings, 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.

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          (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 Documents.

     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 any Document 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 Obligations are paid in full (whether by cash payment or, where applicable, by conversion of the obligations under the Convertible Note to Common Stock pursuant to the terms of the Convertible 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 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.

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     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 GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. 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

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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 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 500, Atlanta, Georgia 30339, facsimile: (770) 693-5951, and Richard Baltz, Esq., Arnold & Porter LLP, 555 12^th 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 Obligations, but only to the extent such assignment is permitted by the Documents. 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 Obligations. 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.

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

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     IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this 29th day of December, 2006.

NUMEREX SOLUTIONS, LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Delaware

CELLEMETRY LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	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
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Delaware

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BROADBAND NETWORKS, INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

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
Stratton J. Nicolaides

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
Stratton J. Nicolaides

Address:	2360 Maryland Road
	Willow Grove, PA 19090

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Pennsylvania

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DCX SYSTEMS INC.
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	2360 Maryland Road
	Willow Grove, PA 19090

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Pennsylvania

MOBILE GUARDIAN LLC
By:	/s/ Stratton J. Nicolaides
	Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	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
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Georgia

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CELLEMETRYXG CUSTOMER SERVICES LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Georgia

AIRDESK LLC
By:	/s/ Stratton J. Nicolaides
Stratton J. Nicolaides

Address:	1600 Parkwood Circle SE, Suite 500
	Atlanta, GA 30339

Telephone No.: (770) 485-2527
Facsimile No.: (770) 693-5951

State of Formation: Georgia

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EX-10.6

Exhibit 10.6

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is made and entered into as of December 29, 2006, by and between Numerex Corp., a Pennsylvania corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”).

          This Agreement is made pursuant to the Purchase Agreement referred to below, 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, dated as of the date hereof, by and among the Purchaser, and the Company (as amended, modified or supplemented from time to time, the “Purchase Agreement”), and pursuant to the Note and Warrant referred to therein. 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.

          “Convertible Note” shall mean the Note as such term is defined in the Purchase Agreement.

          “Effectiveness Date” means, (i) with respect to the Registration Statement required to be filed in connection with the shares of Common Stock issuable upon conversion of the Convertible Note and exercise of the Warrants issued on the date hereof, a date no later than one hundred eighty (180) days following such date and (ii) with respect to each additional Registration Statement required to be filed hereunder (if any), a date no later than one hundred eighty (180) days following the applicable Filing Date.

          “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 (1) the Registration Statement required to be filed in connection with the shares of Common Stock issuable to the Purchaser upon conversion of the Convertible Note and upon exercise of a Warrant, the date which is sixty (60) days after the issuance of such Convertible Note and Warrants, and (2) the Registration Statement required to be filed in connection with the shares of Common Stock issuable to the Holder as a result of adjustments to the Fixed Conversion Price under the Convertible Note or to the Exercise Price under the Warrant or otherwise, thirty (30) days after the occurrence of such event or the date of such adjustment.

          “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).

          “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 Convertible Note and issuable upon exercise of the Warrant (including, without limitation, any additional shares of Common Stock received by the holder under the Convertible 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.

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          “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 Purchase 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 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) 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 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.

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     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;

          (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.

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     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.

          (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

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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 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. Notwithstanding the foregoing, the Company shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys for the Indemnified Parties.

          (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

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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 during the last 12 months, 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, 2005 and (ii) its Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 (collectively, the “SEC Reports”). Each SEC Report was, at the time of its filing, in compliance in all material respects 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 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.

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          (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 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 Convertible Note and the shares of Common Stock which the Purchaser may acquire pursuant to the Warrant and the Convertible 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 Convertible 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 Convertible Note and exercise of the Warrant.

          (h) The Company shall provide written notice to each Holder of (i) the occurrence of each Discontinuation Event (as defined below) and (i) the declaration of effectiveness by the SEC of each Registration Statement required to be filed hereunder within one (1) business day of the date of each such occurrence and/or declaration, as the case may be.

     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 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.

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          (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 7(b) 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 (other than Hayden Communications, Inc.). 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 (other than Hayden Communications, Inc.) 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.

          (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

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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 500
	Atlanta, Georgia 30339-2119
	Attention:	Chief Financial Officer and Legal Counsel
	Facsimile: (770) 693-5951
	With a copy to: Arnold & Porter LLP
	555 12th Street, N.W.
	Washington, D.C. 20004
	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.

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          (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 Purchase 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 giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. 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 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

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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.]

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          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: Chairman and CEO
LAURUS MASTER FUND, LTD.
By:	/s/ David Grin
Name:	David Grin
Title:	Director
Address for Notices:
825 Third Avenue, 14th Floor New York, New York 10022 Attention: David Grin Facsimile:   212-541-4434

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Schedule 7(b)

     1. Gwynedd Resources, Ltd. has piggy-back registration rights.

     2. Hayden Communications, Inc. has piggy-back registration rights.

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EX-10.7

Exhibit 10.7

AMENDED AND RESTATED GRANT OF SECURITY INTEREST
IN
PATENTS AND TRADEMARKS

     THIS AMENDED AND RESTATED GRANT OF SECURITY INTEREST (“Grant”), dated as of December 29, 2006 and effective as of May 30, 2006, is executed by Numerex Corp., Digilog Inc. and Broadband Networks Inc., all Pennsylvania corporations, Numerex Investment Corp., a Delaware corporation, as well as Cellemetry LLC and Numerex Solutions, LLC, both Delaware limited liability companies (each a “Grantor” and collectively, the “Grantors”), in favor of Laurus Master Fund, Ltd. (the “Secured Party”).

     A. Pursuant to a Master Security Agreement dated as of May 30, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “May 2006 Security Agreement”) among each Grantor, certain other Companies (as defined in the May 2006 Security Agreement) and the Secured Party, the terms and provisions of which are hereby incorporated herein as if fully set forth herein, each Grantor and the other Companies have granted a security interest to the Secured Party in consideration of the Secured Party’s agreement to provide financial accommodations to the Companies.

     B. Pursuant to a Master Security Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “December 2006 Security Agreement” and together with the May 2006 Security Agreement each a “Security Agreement” and collectively the “Security Agreements”) among each Grantor, certain other Companies (as defined in the December 2006 Security Agreement) and Secured Party, the terms of which are hereby incorporated herein as if fully set forth herein, each Grantor and the other Companies have granted a security interest to the Secured Party in consideration of the Secured Party’s agreement to provide financial accommodations to the Companies.

     C. Each Grantor (1) has adopted, used and is using the trademarks reflected in the trademark registrations and trademark applications in the United States Patent and Trademark Office more particularly described on Schedule 1 annexed hereto as part hereof (the “Trademarks”), and (2) has registered or applied for registration in the United States Patent and Trademark Office of the patents more particularly described on Schedule 2 annexed hereto as part hereof (the “Patents”).

     D. Each Grantor wishes to confirm its grant to the Secured Party of a security interest in all right, title and interest of each Grantor in and to the Trademarks and Patents (collectively, the “T&P Collateral”) and all proceeds thereto to secure the payment, performance and observance of the Obligations (as that term is defined in each Security Agreement).

     NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged:

     1. Each Grantor does hereby further grant to the Secured Party a security interest in the T&P Collateral to secure the full and prompt payment, performance and observance of the Obligations.

     2. Each Grantor agrees to perform, so long as any Security Agreement is in effect, all acts deemed necessary or desirable by the Secured Party to permit and assist it, at each Grantor’s expense, in obtaining and enforcing the Trademarks and Patents in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Each Grantor hereby appoints the Secured Party as each Grantor’s attorney-in-fact to execute and file any and all agreements, instruments, documents and papers as the Secured Party may determine to be necessary or desirable to evidence the Secured Party’s security interest in the Trademarks and Patents or any other element of the T&P Collateral, all acts of such attorney-in-fact being hereby ratified and confirmed.

     3. Each Grantor acknowledges and affirms that the rights and remedies of the Secured Party with respect to the security interest in the T&P Collateral granted hereby are more fully set forth in each Security Agreement and the rights and remedies set forth herein are without prejudice to, and are in addition to, those set forth in each Security Agreement. In the event that any provisions of this Grant are deemed to conflict with any Security Agreement, the provisions of the applicable Security Agreement shall govern.

     4. Each Grantor hereby authorizes the Secured Party to file all such financing statements or other instruments to the extent required by the Uniform Commercial Code and agrees to execute all such other documents, agreements and instruments as may be required or deemed necessary by the Secured Party, in each case for purposes of affecting or continuing Secured Party’s security interest in the T&P Collateral.

     5. As of the date of this Agreement, the terms, conditions, covenants, agreements, representations, warranties and schedules contained in the Grant of Security Interest in Patents and Trademarks effective as of May 30, 2006 by and among the Grantors and the Secured Party (the “Original Agreement”) shall be consolidated with and into and superseded by this Agreement; provided, however, nothing contained in this Agreement shall impair or affect the liens and security interests in the T&P Collateral heretofore pledged, granted and/or assigned by Grantors to the Secured Party under the Original Agreement.

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

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     IN WITNESS WHEREOF, each Grantor has caused this instrument to be executed as of the day and year first above written.

NUMEREX CORP.
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: Chairman and CEO
NUMEREX INVESTMENT CORP.
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: Director
NUMEREX SOLUTIONS, LLC
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: CEO and Treasurer
CELLEMETRY LLC
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: CEO and Treasurer
BROADBAND NETWORKS, INC.
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: Chairman and Treasurer
DIGILOG INC.
By:	/s/ Stratton J. Nicolaides
	Name: Stratton J. Nicolaides
	Title: CEO and Treasurer

3

LAURUS MASTER FUND, LTD.
By:	/s/ David Grin
	Name: David Grin
	Title: Director

4

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

          On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is Chairman and CEO of Numerex Corp., that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

5

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

          On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is Director of Numerex Investment Corporation, that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

6

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

     On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is CEO and Treasurer of Numerex Solutions, LLC, that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

7

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

     On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is CEO and Treasurer of Cellemetry, LLC, that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

8

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

     On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is Chairman and Treasurer of Broadband Networks, Inc., that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

9

STATE OF	GA	)
		)	ss.:
COUNTY OF	COBB	)

     On this 29 day of December, 2006, before me personally came Stratton J. Nicolaides who, being by me duly sworn, did state as follows: that he is CEO and Treasurer of Digilog, Inc., that he is authorized to execute the foregoing Grant on behalf of said corporation and that he did so by authority of the Board of Directors of said corporation.

/s/ Lisa M. Adams Notary Public

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EX-10.8

Exhibit 10.8

PLEDGE AGREEMENT

     This Pledge Agreement (this “Agreement”), dated as of December 29, 2006, among Laurus Master Fund, Ltd. (the “Pledgee”), Numerex Corp., a Pennsylvania corporation (the “Company”), and each of the other undersigned parties (other than the Pledgee) (the Company and each such other undersigned party, a “Pledgor” and collectively, the “Pledgors”).

BACKGROUND

     The Company and the Pledgee have entered into a Securities Purchase Agreement dated as of December 29, 2006 (as amended, modified, restated and/or supplemented from time to time, the “Purchase Agreement”), pursuant to which the Pledgee provides or will provide certain financial accommodations to the Company.

     In order to induce the Pledgee to provide or continue to provide the financial accommodations described in the Purchase Agreement, each Pledgor has agreed to pledge and grant a security interest in the collateral described herein to the Pledgee on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto agree as follows:

     1. Defined Terms. All capitalized terms used herein which are not defined shall have the meanings given to them in the Purchase Agreement.

     2. Pledge and Grant of Security Interest. To secure the full and punctual payment and performance of (the following clauses (a) and (b), collectively, the “Obligations”) (a) the obligations under the Purchase Agreement and the Related Agreements referred to in the Purchase Agreement (the Purchase Agreement and the Related Agreements, as each may be amended, restated, modified and/or supplemented from time to time, collectively, the “Documents”) and (b) in connection with any documents, instruments or agreements relating to or executed in connection with the Documents, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or otherwise (in each case, irrespective of the genuineness, validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of the Obligations or of any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of such in any case commenced by or against any Pledgor under Title 11, United States Code, including, without limitation, obligations of each Pledgor 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), each Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security interest to Pledgee in all of the following (the “Collateral”):

          (a) the shares of stock, partnership interests, limited liability company interests and other equity interests set forth on Schedule A annexed hereto and expressly made a

part hereof (together with any additional shares of stock, partnership interests, limited liability company interests, membership interests or other equity interests acquired by any Pledgor, the “Pledged Stock”), the certificates representing the Pledged Stock (if any) and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Stock;

          (b) all additional shares of stock, partnership interests, limited liability company interests, membership interests and other equity interests of any issuer (each, an “Issuer”) of the Pledged Stock from time to time acquired by any Pledgor in any manner, including, without limitation, stock dividends or a distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off (which shares shall be deemed to be part of the Collateral), and the certificates representing such additional shares or interests, as the case may be (if any), and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; and

          (c) all options and rights, whether as an addition to, in substitution of or in exchange for any shares of any Pledged Stock and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all such options and rights.

     3. Delivery of Collateral. With respect to any Pledged Stock that currently is evidenced by a certificate or certificates, all certificates representing or evidencing such Pledged Stock (i) shall be delivered to and held by or on behalf of Pledgee pursuant hereto and (ii) shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to Pledgee. With respect to any Pledgor whose Pledged Stock currently is evidenced by a certificate or certificates, each such Pledgor hereby authorizes the Issuer upon demand by the Pledgee to deliver any certificates and instruments issued in connection with the Collateral directly to the Pledgee, in each case to be held by the Pledgee subject to and in accordance with the terms of this Agreement. Upon the occurrence and during the continuance of an Event of Default (as defined below), the Pledgee shall have the right, during such time in its discretion and without notice to the Pledgor, to transfer to or to register in the name of the Pledgee or any of its nominees any or all of the Pledged Stock. In addition, upon the occurrence and during the continuance of an Event of Default and with respect to any Pledged Stock that currently is evidenced by a certificate or certificates, the Pledgee shall have the right at such time to exchange such certificate or certificates representing or evidencing such Pledged Stock for one or more certificates of smaller or larger (but , in the aggregate, equal) denominations.

     4. Representations and Warranties of each Pledgor. Each Pledgor jointly and severally represents and warrants to the Pledgee (which representations and warranties shall be deemed to continue to be made until all of the Obligations have been paid in full and each Document and each agreement and instrument entered into in connection therewith has been irrevocably terminated) that, except as may be disclosed in any Schedule to the Purchase Agreement:

          (a) the execution, delivery and performance by each Pledgor of this Agreement and the pledge of the Collateral hereunder do not and will not result in any violation

2

of any agreement, indenture, instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to such Pledgor;

          (b) this Agreement constitutes the legal, valid, and binding obligation of each Pledgor, and is enforceable against such Pledgor in accordance with its terms;

          (c) (i) all Pledged Stock owned by each Pledgor is set forth on Schedule A hereto, and (ii) each Pledgor is the direct and beneficial owner of each share of the Pledged Stock described next to its name on Schedule A hereto;

          (d) all of the shares of the Pledged Stock have been duly authorized, validly issued and are fully paid and nonassessable;

          (e) no consent or approval of any person, corporation, governmental body, regulatory authority or other entity, is or will be necessary for (i) the execution, delivery and performance of this Agreement, (ii) the exercise by the Pledgee of any rights with respect to the Collateral or (iii) the pledge and assignment of, and the grant of a security interest in, the Collateral hereunder;

          (f) there are no pending or, to the best of each Pledgor’s knowledge, threatened actions or proceedings before any court, judicial body, administrative agency or arbitrator which may materially adversely affect the Collateral;

          (g) each Pledgor has the requisite power and authority to enter into this Agreement and to pledge and assign the Collateral to the Pledgee in accordance with the terms of this Agreement;

          (h) each Pledgor owns each item of the Collateral and, except for the pledge and security interest granted to Pledgee hereunder, the Collateral shall be, immediately following the closing of the transactions contemplated by the Documents, free and clear of any other security interest, mortgage, pledge, claim, lien, charge, hypothecation, assignment, offset or encumbrance whatsoever (collectively, “Liens”);

          (i) there are no restrictions on transfer of the Pledged Stock contained in the certificate of incorporation or by-laws (or equivalent organizational documents) of the Issuer or otherwise which have not otherwise been enforceably and legally waived by the necessary parties;

          (j) none of the Pledged Stock has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject;

          (k) the pledge and assignment of the Collateral and the grant of a security interest under this Agreement vest in the Pledgee all rights of each Pledgor in the Collateral as contemplated by this Agreement;

          (l) The Pledged Stock of a particular Issuer constitutes one hundred percent (100%) of the issued and outstanding equity interests of such Issuer; and

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          (m) All of the membership interests that constitute Pledged Stock are uncertificated membership interests and are set forth on Schedule A hereto.

     5. Covenants. Each Pledgor jointly and severally covenants that, until the Obligations shall be indefeasibly satisfied in full and each Document and each agreement and instrument entered into in connection therewith is irrevocably terminated:

          (a) Except as may be permitted under the Purchase Agreement, no Pledgor will sell, assign, transfer, convey, or otherwise dispose of its rights in or to the Collateral or any interest therein; nor will any Pledgor create, incur or permit to exist any Lien whatsoever with respect to any of the Collateral or the proceeds thereof other than that created hereby.

          (b) Each Pledgor will, at its expense, defend Pledgee’s right, title and security interest in and to the Collateral against the claims of any other party.

          (c) Each Pledgor shall at any time, and from time to time, upon the written request of Pledgee, execute and deliver such further documents and do such further acts and things as Pledgee may reasonably request in order to effectuate the purposes of this Agreement including, but without limitation, delivering to Pledgee, upon the occurrence of an Event of Default, irrevocable proxies in respect of the Collateral in form satisfactory to Pledgee. Until receipt thereof, upon an Event of Default that has occurred and is continuing beyond any applicable grace period, this Agreement shall constitute Pledgor’s proxy to Pledgee or its nominee to vote all shares of Collateral then registered in each Pledgor’s name.

          (d) No Pledgor will consent to or approve the issuance of (i) any additional shares of any class of capital stock or other equity interests of the Issuer; or (ii) any securities convertible either voluntarily by the holder thereof or automatically upon the occurrence or nonoccurrence of any event or condition into, or any securities exchangeable for, any such shares, unless, in either case, such shares are pledged as Collateral pursuant to this Agreement.

          (e) If after the date hereof any stock, limited partnership interests, limited liability company membership interests or similar form of equity interest included in the Pledged Stock are certificated, then the Pledgor holding such stock, limited partnership interests, limited liability company membership interests or similar form of equity interest shall pledge the certificated stock, limited partnership interests, limited liability company membership interests or similar form of equity interest as Collateral pursuant to this Agreement and deliver to the Pledgee, within two (2) business days, the certificates evidencing such stock, limited partnership interests, limited liability company membership interests or similar form of equity interest, together with effective endorsements.

          (f) No Pledgor shall participate in any amendment to (x) any limited liability company agreement that is related to any Pledged Stock consisting of membership interests or (y) any certificate of formation of any Issuer that, in any case, (i) would extend any voting rights to any owner of any equity interest in an Issuer unless such equity interest is subject to the terms and provisions of this Pledge Agreement or such other pledge agreement as is reasonably acceptable to the Pledgee, (ii) would otherwise impair the Collateral or adversely affect in any material respect the rights, privileges, benefits and security interests provided to or intended to be

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provided to the Pledgee or (iii) would adversely affect the perfection of the security interest of Pledgee in the Collateral, including, without limitation, any amendment electing to treat any membership interest as a security under Section 8-103 of the Code, or any election to turn any previously uncertificated membership interest into a certificated membership interest.

          Notwithstanding anything to the contrary in this Agreement or elsewhere, (a) the foregoing Section 5(d) shall not apply or be deemed to apply to the issuance of any of the Company’s capital stock or equity interests, and (b) the foregoing Section 5(f)(y)(i) shall not apply or be deemed to apply to the Company.

     6. Voting Rights and Dividends. In addition to the Pledgee’s rights and remedies set forth in Section 8 hereof, in case an Event of Default shall have occurred and be continuing, beyond any applicable cure period, the Pledgee shall (i) be entitled to vote the Collateral, (ii) be entitled to give consents, waivers and ratifications in respect of the Collateral (each Pledgor hereby irrevocably constituting and appointing the Pledgee, with full power of substitution, the proxy and attorney-in-fact of each Pledgor for such purposes) and (iii) be entitled to collect and receive for its own use cash dividends paid on the Collateral. No Pledgor shall be permitted to exercise or refrain from exercising any voting rights or other powers if, in the reasonable judgment of the Pledgee, such action would have a material adverse effect on the value of the Collateral or any part thereof; and, provided, further, that each Pledgor shall give at least five (5) days’ written notice of the manner in which such Pledgor intends to exercise, or the reasons for refraining from exercising, any voting rights or other powers other than with respect to any election of directors and voting with respect to any incidental matters. Following the occurrence of an Event of Default, all dividends and all other distributions in respect of any of the Collateral, shall be delivered to the Pledgee to hold as Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Pledgee, be segregated from the other property or funds of any other Pledgor, and be forthwith delivered to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).

     7. Event of Default. An “Event of Default” under this Agreement shall occur upon the happening of any of the following events:

          (a) An “Event of Default” under any Document or any agreement or note related to any Document shall have occurred and be continuing beyond any applicable cure period;

          (b) Any Pledgor shall default in the performance of any of its obligations under any Document, including, without limitation, this Agreement, and such default shall not be cured during the cure period applicable thereto;

          (c) Any representation or warranty of any Pledgor made herein, in any Document or in any agreement, statement or certificate given in writing pursuant hereto or thereto or in connection herewith or therewith shall be false or misleading in any material respect;

          (d) Any portion of the Collateral is subjected to a levy of execution, attachment, distraint or other judicial process or any portion of the Collateral is the subject of a claim (other than by the Pledgee) of a Lien or other right or interest in or to the Collateral and

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such levy or claim shall not be cured, disputed or stayed within a period of sixty (60) days after the occurrence thereof; or

          (e) Any Pledgor shall (i) apply for, consent to, or suffer to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or other fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing.

     8. Remedies. In case an Event of Default shall have occurred and is continuing, the Pledgee may:

          (a) Transfer any or all of the Collateral into its name, or into the name of its nominee or nominees;

          (b) Exercise all corporate rights with respect to the Collateral including, without limitation, all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Collateral as if it were the absolute owner thereof, including, but without limitation, the right to exchange, at its discretion, any or all of the Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Issuer thereof, or upon the exercise by the Issuer of any right, privilege or option pertaining to any of the Collateral, and, in connection therewith, to deposit and deliver any and all of the Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, all without liability except to account for property actually received by it; and

          (c) Subject to any requirement of applicable law, sell, assign and deliver the whole or, from time to time, any part of the Collateral at the time held by the Pledgee, at any private sale or at public auction, with or without demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived, except such notice as is required by applicable law and cannot be waived), for cash or credit or for other property for immediate or future delivery, and for such price or prices and on such terms as the Pledgee in its sole discretion may determine, or as may be required by applicable law.

          Each Pledgor hereby waives and releases any and all right or equity of redemption, whether before or after sale hereunder. At any such sale, unless prohibited by applicable law, the Pledgee may bid for and purchase the whole or any part of the Collateral so sold free from any such right or equity of redemption. All moneys received by the Pledgee hereunder, whether upon sale of the Collateral or any part thereof or otherwise, shall be held by the Pledgee and applied by it as provided in Section 10 hereof. No failure or delay on the part of the Pledgee in exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single or partial exercise of any such rights preclude any other or future exercise thereof or the exercise of any other rights hereunder. The Pledgee shall have no duty as to the

6

collection or protection of the Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto, except to apply the funds in accordance with the requirements of Section 10 hereof. The Pledgee may exercise its rights with respect to property held hereunder without resort to other security for or sources of reimbursement for the Obligations. In addition to the foregoing, Pledgee shall have all of the rights, remedies and privileges of a secured party under the Uniform Commercial Code of New York (the “UCC”) regardless of the jurisdiction in which enforcement hereof is sought.

     9. Private Sale. Each Pledgor recognizes that the Pledgee may be unable to effect (or to do so only after delay which would adversely affect the value that might be realized from the Collateral) a public sale of all or part of the Collateral by reason of certain prohibitions contained in the Securities Act, and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor agrees that any such private sale may be at prices and on terms less favorable to the seller than if sold at public sales and that such private sales shall be deemed to have been made in a commercially reasonable manner. Each Pledgor agrees that the Pledgee has no obligation to delay sale of any Collateral for the period of time necessary to permit the Issuer to register the Collateral for public sale under the Securities Act.

     10. Proceeds of Sale. The proceeds of any collection, recovery, receipt, appropriation, realization or sale of the Collateral shall be applied by the Pledgee as follows:

          (a) First, to the payment of all costs, reasonable expenses and charges of the Pledgee and to the reimbursement of the Pledgee for the prior payment of such costs, reasonable expenses and charges incurred in connection with the care and safekeeping of the Collateral (including, without limitation, the reasonable expenses of any sale or any other disposition of any of the Collateral), attorneys’ fees and reasonable expenses, court costs, any other fees or expenses incurred or expenditures or advances made by Pledgee in the protection, enforcement or exercise of its rights, powers or remedies hereunder;

          (b) Second, to the payment of the Obligations, in whole or in part, in such order as the Pledgee may elect, whether or not such Obligations are then due;

          (c) Third, to such persons, firms, corporations or other entities as required by applicable law including, without limitation, Section 9-615(a)(3) of the UCC; and

          (d) Fourth, to the extent of any surplus to the Pledgors or as a court of competent jurisdiction may direct.

          In the event that the proceeds of any collection, recovery, receipt, appropriation, realization or sale are insufficient to satisfy the Obligations, each Pledgor shall be jointly and severally liable for the deficiency plus the costs and fees of any attorneys employed by Pledgee to collect such deficiency.

     11. Waiver of Marshaling. Each Pledgor hereby waives any right to compel any marshaling of any of the Collateral.

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     12. No Waiver. Any and all of the Pledgee’s rights with respect to the Liens granted under this Agreement shall continue unimpaired, and Pledgor shall be and remain obligated in accordance with the terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization of any Pledgor, (b) the release or substitution of any item of the Collateral at any time, or of any rights or interests therein, or (c) any delay, extension of time, renewal, compromise or other indulgence granted by the Pledgee in reference to any of the Obligations. Each Pledgor hereby waives all notice of any such delay, extension, release, substitution, renewal, compromise or other indulgence, and hereby consents to be bound hereby as fully and effectively as if such Pledgor had expressly agreed thereto in advance. No delay or extension of time by the Pledgee in exercising any power of sale, option or other right or remedy hereunder, and no failure by the Pledgee to give notice or make demand, shall constitute a waiver thereof, or limit, impair or prejudice the Pledgee’s right to take any action against any Pledgor or to exercise any other power of sale, option or any other right or remedy.

     13. Expenses. The Collateral shall secure, and each Pledgor shall pay to Pledgee on demand, from time to time, all reasonable costs and expenses, (including but not limited to, reasonable attorneys’ fees and costs, taxes, and all transfer, recording, filing and other charges) of, or incidental to, the custody, care, transfer, administration of the Collateral or any other collateral, or in any way relating to the enforcement, protection or preservation of the rights or remedies of the Pledgee under this Agreement or with respect to any of the Obligations.

     14. The Pledgee Appointed Attorney-In-Fact and Performance by the Pledgee. Upon the occurrence of an Event of Default, each Pledgor hereby irrevocably constitutes and appoints the Pledgee as such Pledgor’s true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge and deliver any instruments and to do in such Pledgor’s name, place and stead, all such acts, things and deeds for and on behalf of and in the name of such Pledgor, which such Pledgor could or might do or which the Pledgee may deem necessary, desirable or convenient to accomplish the purposes of this Agreement, including, without limitation, to execute such instruments of assignment or transfer or orders and to register, convey or otherwise transfer title to the Collateral into the Pledgee’s name. Each Pledgor hereby ratifies and confirms all that said attorney-in-fact may so do and hereby declares this power of attorney to be coupled with an interest and irrevocable. If any Pledgor fails to perform any agreement herein contained, the Pledgee may itself perform or cause performance thereof, and any costs and expenses of the Pledgee incurred in connection therewith shall be paid by the Pledgors as provided in Section 10 hereof.

     15. Waivers. THE PARTIES HERETO DESIRES THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN PLEDGEE, AND/OR ANY PLEDGOR ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEN IN CONNECTION WITH THIS AGREEMENT, ANY OTHER DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

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     16. Recapture. Notwithstanding anything to the contrary in this Agreement, if the Pledgee receives any payment or payments on account of the Obligations, 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 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, common law or equitable doctrine, then to the extent of any sum not finally retained by the Pledgee, each Pledgor’s obligations to the Pledgee shall be reinstated and this Agreement shall remain in full force and effect (or be reinstated) until payment shall have been made to Pledgee, which payment shall be due on demand.

     17. Captions. All captions in this Agreement are included herein for convenience of reference only and shall not constitute part of this Agreement for any other purpose.

     18. Miscellaneous.

          (a) This Agreement constitutes the entire and final agreement among the parties with respect to the subject matter hereof and may not be changed, terminated or otherwise varied except by a writing duly executed by the parties hereto.

          (b) No waiver of any term or condition of this Agreement, whether by delay, omission or otherwise, shall be effective unless in writing and signed by the party sought to be charged, and then such waiver shall be effective only in the specific instance and for the purpose for which given.

          (c) In the event that any provision of this Agreement or the application thereof to any Pledgor or any circumstance in any jurisdiction governing this Agreement shall, to any extent, be invalid or unenforceable under any applicable statute, regulation, or rule of law, such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute, regulation or rule of law, and the remainder of this Agreement and the application of any such invalid or unenforceable provision to parties, jurisdictions, or circumstances other than to whom or to which it is held invalid or unenforceable shall not be affected thereby, nor shall same affect the validity or enforceability of any other provision of this Agreement.

          (d) This Agreement shall be binding upon each Pledgor, and each Pledgor’s successors and assigns, and shall inure to the benefit of the Pledgee and its successors and assigns.

          (e) Any notice or other communication required or permitted pursuant to this Agreement shall be given in accordance with the Purchase Agreement.

          (f) THIS AGREEMENT AND THE OTHER DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW

9

YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

          (g) EACH PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR, ON THE ONE HAND, AND THE PLEDGEE, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS, PROVIDED, THAT EACH PLEDGOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PLEDGEE FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE INDEBTEDNESS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PLEDGEE. EACH PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PLEDGOR AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE SUCH PLEDGOR’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

          (h) It is understood and agreed that any person or entity that desires to become a Pledgor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of any Document, shall become a Pledgor hereunder by (x) executing a Joinder Agreement in form and substance satisfactory to the Pledgee, (y) delivering supplements to such exhibits and annexes to such Documents as the Pledgee shall reasonably request and/or set forth in such joinder agreement and (z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and with all documents and actions required above to be taken to the reasonable satisfaction of the Pledgee.

          (i) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed an original signature hereto.

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[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written above.

NUMEREX CORP.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Chairman and CEO
AIRDESK LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Treasurer
BNI SOLUTIONS LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Treasurer
BROADBAND NETWORKS, INC.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Chairman and Treasurer
CELLEMETRYXG CUSTOMER SERVICES LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer

12

DCX SYSTEMS INC.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Chairman and Treasurer
DIGILOG INC.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer
NUMEREX INVESTMENT CORP.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: Director
NUMEREX SOLUTIONS, LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer
MOBILE GUARDIAN LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer

CELLEMETRY LLC
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer
UPLINK SECURITY, INC.
By:	/s/ Stratton J. Nicolaides
Name: Stratton J. Nicolaides
Title: CEO and Treasurer
LAURUS MASTER FUND, LTD.
By:	/s/ David Grin
Name: David Grin
Title: Director

SCHEDULE A TO PLEDGE AGREEMENT

PLEDGED STOCK

		Class of	Stock Certificate		Number of
Pledgor	Issuer	Stock	Number	Par Value	Shares
Numerex Corp.	Numerex Corp.	Common	TBD*	TBD*	TBD*
Broadband Networks, Inc.	Broadband Networks, Inc.	Common	TBD*	TBD*	TBD*
DCX Systems Inc.	DCX Systems, Inc.	Common	TBD*	TBD*	TBD*
Digilog Inc.	Digilog, Inc.	Common	TBD*	TBD*	TBD*
Uplink Security, Inc.	Uplink Security, Inc.	Common	TBD*	TBD*	TBD*
Airdesk LLC**	N/A	N/A	N/A	N/A	N/A
BNI Solutions LLC**	N/A	N/A	N/A	N/A	N/A
Cellemetry LLC**	N/A	N/A	N/A	N/A	N/A
CellemetryXG Customer Services LLC**
Mobile Guardian LLC**	N/A	N/A	N/A	N/A	N/A
Numerex Solutions, LLC**	N/A	N/A	N/A	N/A	N/A

*	By agreement of the parties, each subsidiary’s existing stock certificate will be cancelled and a new stock certificate will be re-issued.
**	By agreement of the parties, a control acknowledgement substantially in the form of the template attached hereto as Exhibit 1 to Schedule A will be executed with respect to each subsidiary formed as a limited liability company.

EXHIBIT 1 TO SCHEDULE A

CONTROL ACKNOWLEDGMENT

ISSUER	MEMBERSHIP INTEREST OWNER:
[NAME OF SUBSIDIARY]	Numerex Corp.

     Reference is hereby made to each of (i) that certain Pledge Agreement, dated as of May 30, 2006 (as amended, restated, modified and/or supplemented from time to time, the “May 2006 Pledge Agreement”), among Numerex Corp., a Pennsylvania corporation (the “Pledgor”), certain other pledgors and Laurus Master Fund, Ltd., a Cayman Islands company (“Laurus”) and (ii) that certain Pledge Agreement, dated as of December 29, 2006 (as amended, restated, modified and/or supplemented from time to time, the “December 2006 Pledge Agreement” and, together with the May 2006 Pledge Agreement, the “Pledge Agreements” and each, a “Pledge Agreement”), among the Pledgor, certain other pledgors and Laurus. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the applicable Pledge Agreement.

     [NAME OF SUBSIDIARY], a [STATE OF INCORPORATION] limited liability company (the “Issuer”) is hereby instructed by the Pledgor that all of the Pledgor’s right, title and interest in and to all of the Pledgor’s rights in connection with any membership interests in the Issuer now and hereafter owned by the Pledgor are subject to a pledge and security interest in favor of Laurus. The Pledgor hereby instructs the Issuer to act upon any instruction delivered to it by the Laurus with respect to the Collateral without seeking further instruction from the Pledgor, and, by its execution hereof, the Issuer agrees to do so.

     The Issuer, by its written acknowledgment and acceptance hereof, hereby acknowledges receipt of a copy of the aforementioned Pledge Agreements and agrees promptly to note on its books the security interest granted under the Pledge Agreements. The Issuer also waives any rights or requirements at any time hereafter to receive a copy of either Pledge Agreement in connection with the registration of any Collateral in the name of the Laurus or its nominee or the exercise of voting rights by the Laurus or its nominee.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the Pledgor has caused this Control Acknowledgment to be duly signed and delivered by its officer duly authorized as of this 29th day of December 2006.

PLEDGOR.

NUMEREX CORP.

By: 

Name: 

Title: 

Acknowledged and accepted this
29th day of December 2006.

[NAME OF SUBSIDIARY]

By: 

Name: 

Title: 

17

EX-99.1

Exhibit 99.1

Investor Relations Contact:

	Alan B. Catherall
	770-485-2527

PRESS RELEASE

FOR IMMEDIATE RELEASE

Numerex Announces $10 Million Private Placement

Company Expects to Meet or Exceed Fourth Quarter 2006 Revenue Guidance

ATLANTA, January 2, 2007 — Numerex Corp. (NASDAQ: NMRX), a leader in wireless M2M (machine-to-machine) solutions, announced today that it has entered into a $10 million financing agreement with the Laurus Master Fund, Ltd (“Laurus”). The net proceeds from the transaction will be used primarily for strategic initiatives which may include joint ventures, co-marketing programs, and acquisition opportunities.

The financing provided is a $10 million Convertible Note, which has a term of four years, a fixed interest rate of 9.5% and is secured by Numerex’s assets. In addition, the Company issued warrants to Laurus to purchase a total of 158,562 Numerex common shares at a price of $10.13.

Both principal and interest of the Note are payable in cash or subject to certain conditions, Numerex common stock. If payments are made in cash, principal reductions in equal amounts will begin in July 2007 and continue for the next 42 months with the final payment due in December 2010. If payments are made in common stock, the amount of principal and interest repaid will be converted into equity at the fixed conversion price of $10.37, a 10% premium over the average NASDAQ closing prices for the past ten trading days. In addition, the Company has a put right to convert the Note into equity in tranches not to exceed $2.5 Million, should the market price of the common stock exceed $11.40 or 110% of the fixed conversion price for twelve consecutive trading days. The Convertible Note is repayable in full or part and contains no restrictions or penalties on prepayment. The Company has agreed to file a registration statement with the SEC to permit resale of the common stock received by Laurus in connection with the Convertible Term Note or upon exercise of the warrants.

     “As we close out the fourth quarter of 2006, we are pleased to report that we expect to meet or exceed our revenue guidance for the quarter and the full year of 2006,” said Stratton Nicolaides, chairman and chief executive officer of Numerex. “Accordingly, and with the goal of maintaining and strengthening our competitive position, we have bolstered our cash balances to improve structuring flexibility as we continue to evaluate a number of strategic opportunities that will help support and sustain our rate of growth. We are pleased with the confidence that Laurus continues to express in Numerex. This Note contains a number of attractive features including the ability to prepay all outstanding amounts at any time without restrictions or penalties. Outside of this note, all other convertible debt has been retired through either repayment in cash or conversion to equity.”

With this transaction, the Company will have $20 million in cash and cash equivalents with $15 million of debt.

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About Numerex

Numerex Corp. (NASDAQ: NMRX) is a leader in providing wireless fixed and mobile machine-to-machine (M2M) solutions, as well as a broad range of reliable, competitive network services and technology. A single-source provider for M2M requirements, Numerex enables real-time wireless data communications, monitoring, tracking, and service management tailored to the needs of each application, customer and industry, from vehicle location and tracking, to vending, to security and utilities. Wireless M2M network services and solutions are delivered through the Airdesk Wireless division. Wireless security solutions are delivered through the Uplink Security division. In addition to its core M2M business, Numerex markets proprietary digital multimedia and collaboration products to the educational and distance learning markets. It also provides networking and integration services to major telecommunications companies. Numerex primarily serves customers throughout the United States, Canada and Latin America. The company is headquartered in Atlanta, Georgia. Website www.nmrx.com

This press release contains, and other statements may contain, forward-looking statements with respect to Numerex future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities in the wireless data business. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “strategy,” “plan,” “outlook,” “outcome,” “continue,” “remain,” “trend,” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Numerex cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and Numerex assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the failure to realize improvements on our digital multimedia and networking business; variations in quarterly operating results, delays in the development, introduction, integration and marketing of new wireless products and services; customer acceptance of products and services; economic conditions; changes in financial and capital markets; the inability to attain revenue and earnings growth in our wireless data business; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the inability to realize revenue enhancements; and extent and timing of technological changes. Numerex SEC reports identify additional factors that can affect forward-looking statements.

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