Exhibit 10.3
SECURED NON-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 Five Million Dollars
($5,000,000), together with any accrued and unpaid interest hereon, on May 30,
2010 (the “Maturity Date”) if not sooner paid.
          Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that certain Securities Purchase Agreement
dated as of the date hereof by and between the Company and the Holder (as
amended, modified and/or supplemented from time to time, the “Purchase
Agreement”).
          The following terms shall apply to this Secured Non-Convertible Term
Note (this “Note”):
ARTICLE I
CONTRACT RATE AND REPAYMENT
          1.1 Contract Rate. Subject to Sections 3.8 and 4.9, interest payable
on the outstanding principal amount of this Note (the “Principal Amount”) shall
accrue at a rate per annum equal to nine and three quarters percent (9.75%) (the
“Contract Rate”). Interest shall be (i) calculated on the basis of a 360 day
year, and (ii) payable monthly, in arrears, commencing on June 1, 2006 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 Repayment. 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 Purchase Agreement
and/or any other Related Agreement shall be due and payable on the Maturity
Date.
ARTICLE II
PREPAYMENT
          2.1 Prepayment. The Company will have the right to prepay this Note,
either in whole or in part, at any time upon not less than ten (10) days’ prior
written notice to the Holder, without premium or penalty of any kind or nature.
Any amounts received by the Holder in connection with any such prepayment shall
be applied in the following order: (i) first, against any and all amounts (other
than principal and interest) then due and owing under this Note, or under the
Purchase Agreement or any Related Agreement to the extent directly and
reasonably related to the loan that is evidenced by this Note; (ii) next,
against all accrued but unpaid interest due under this Note; and (iii) last,
against the outstanding principal balance of this Note.

 

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ARTICLE III
EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS
     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 under
this Note 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 3.1, 3.4
and 3.6 below. In addition, upon acceleration of this Note because of the
occurrence of an Event of Default described in either Section 3.1, Section 3.4
or Section 3.6 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 3.1 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 3.1
through 3.7, inclusive, below is an “Event of Default”:
     3.1 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).
     3.2 Breach of Covenant; Cross Default. (i) 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, or (ii) an “Event of Default” (as
defined in any Related Agreement) has occurred and is continuing.
     3.3 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.
     3.4 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.
     3.5 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

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assets for more than $400,000, and shall remain unvacated, unbonded or unstayed
for a period of ninety (90) days.
     3.6 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.
     3.7 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.
     3.8 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.
ARTICLE IV
MISCELLANEOUS
          4.1 Cumulative Remedies. The remedies under this Note shall be
cumulative.
          4.2 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.
          4.3 Notices. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (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 in the

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Purchase Agreement executed in connection herewith, with a copy to Arnold &
Porter LLP, 555 12th 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, 14th 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.
          4.4 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.
          4.5 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.
          4.6 Cost of Collection. In case of any Event of Default under this
Note, the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys’ fees.
          4.7 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 OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS NOTE OR ANY OF THE 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

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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 THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY
OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
          4.8 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.
          4.9 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.
          4.10 Security Interest and Guarantee. The Holder has been granted a
security interest (i) in certain assets of the Company and its Subsidiaries as
more fully described in the Master Security Agreement dated as of the date
hereof and (ii) in the equity interests of the Companies’ Subsidiaries 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.
          4.11 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that

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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.
          4.12 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
Non-Convertible Term Note to be signed in its name effective as of this 30th day
of May, 2006.

            NUMEREX CORP.
      By:           Name:           Title:        

WITNESS:
                                                            

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