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.

 

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     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 12th 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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