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

 

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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

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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 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.
          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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