Document:

exv10w1

 

Exhibit 10.1

INDEMNIFICATION AGREEMENT

     This Agreement, made and entered into this 30th day of May, 2006 (“Agreement”), by
and between Ameritrade Holding Corporation, a Delaware corporation (“Company”), and
                                         (“Indemnitee”):

     WHEREAS, in order to retain and attract qualified directors, on January 4, 2006 [(the
“Effective Date”)], the Board of Directors approved a form of this Indemnification Agreement for
all directors of the Company;

     WHEREAS, Indemnitee [began serving as a director of the Company on January 24, 2006 and is
currently continuing to serve as a director of the Company][was serving as a director of the
Company on the Effective Date and resigned as a director of the Company on                     ][was serving
as a director of the Company on the Effective Date and is currently continuing to serve as a
director of the Company]; and

     WHEREAS, this Agreement is a supplement to and in furtherance of the By-laws and Certificate
of Incorporation of the Company and any resolution adopted pursuant thereto, [and any employment
agreement between the Company and Indemnittee,] and shall not be deemed a substitute therefore, nor
to diminish or abrogate any rights of Indemnitee thereunder; and

     WHEREAS, each of Section 145 of the General Corporation Law of the State of Delaware and the
By-laws is nonexclusive, and therefore contemplates that contracts may be entered into with respect
to indemnification of directors, officers and employees; and

     WHEREAS, Indemnitee [continued to serve as a director of the Company following the Effective
Date][is willing to serve and to continue to serve as a director of the Company] on the condition
that he be so indemnified;

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree, effective for all purposes as of January 24,
2006, as follows:

     Section 1. Services by Indemnitee. Indemnitee agrees to serve as a director of the
Company. Indemnitee may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation of law), in which event the
Company shall have no obligation under this Agreement to continue Indemnitee in such position.
This Agreement shall not be deemed an employment contract between the Company and Indemnitee. The
foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to
serve as a director of the Company.

     Section 2. Indemnification – General. The Company shall indemnify, and advance
Expenses (as hereinafter defined) to, Indemnitee (a) as provided in this Agreement and

 

 

(b) (subject to the provisions of this Agreement) to the fullest extent permitted by applicable law
in effect on the date hereof and as amended from time to time.

     Section 3. Proceedings Other Than Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, he is,
or is threatened to be made, a party to or a participant in any threatened, pending, or completed
Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful.

     Section 4. Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 4 if he is, or is threatened to
be made, a party to or a participant in any threatened, pending or completed Proceeding brought by
or in the right of the Company to procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection with such Proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company; provided,
however, that, if applicable law so provides, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee
shall have been adjudged to be liable to the Company unless and to the extent that the Court of
Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or
is pending, shall determine that such indemnification may be made.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is a party to
(or a participant in) and is successful, on the merits or otherwise, in any Proceeding (including
dismissal without prejudice), he shall be indemnified to the maximum extent permitted by law
against all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully resolved claim, issue or
matter.

     Section 6. Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

     Section 7. Advancement of Expenses. Notwithstanding any provision of this Agreement
to the contrary, the Company shall advance all reasonable Expenses incurred by on behalf of
Indemnitee in connection with any Proceeding in which Indemnitee is involved within

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twenty days after the receipt by the Company of a statement or statements from Indemnitee
requesting such advance or advances from time to time, whether prior to or after final disposition
of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred
by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to the indemnified against such Expenses. Any advances and undertakings to repay
pursuant to this Section 7 shall be unsecured and interest free.

     Section 8. Procedure for Determination of Entitlement to Indemnification.

          (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a
written request, including therein or therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that Indemnitee has
requested indemnification.

          (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of
Section 8(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as hereinafter defined) in a written opinion
to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in
Control shall not have occurred, (A) by a majority vote of the Disinterested Directors (as
hereinafter defined), even though less than a quorum of the Board, or (B) if there are no such
Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a
written opinion to the board, a copy of which shall be delivered to Indemnitee or (C) if so
directed by the Board, by the stockholders of the company; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days
after such determination. Indemnitee shall cooperate with the person, persons or entity making
such determination with respect to Indemnitee’s entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination.

          (c) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel shall be selected as
provided in this Section 8(c). If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in
Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board of Directors, in which event the
preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising
it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within 10 days after such written notice of selection shall have
been given, deliver to the company or to Indemnitee, as the

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case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so selected does not meet
the requirements of “Independent Counsel” as defined in Section 17 of this Agreement, and the
objection shall set for with particularity the factual basis of such assertion. Absent a proper
and timely objection, the person so selected shall act as Independent Counsel. If such written
objection is so made and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court has determined that
such objection is without merit. If, within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall have been
selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution of any objection
which shall have been made by the Company or Indemnitee to the other’s selection of Independent
Counsel and/or for appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom all objections are
so resolved or the person so appointed shall act as Independent Counsel under Section 8(b) hereof.
Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a) of
this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility
in such capacity (subject to the applicable standards of professional contact then prevailing).

          (d) The Company shall not be required to obtain the consent of the Indemnitee to the
settlement of any Proceeding which the Company has undertaken to defend if the Company assumes full
and sole responsibility for such settlement and the settlement grants the Indemnitee a complete and
unqualified release in respect of the potential liability. The Company shall not be liable for any
amount paid by the Indemnitee in settlement of any Proceeding that is not defended by the Company,
unless the Company has consented to such settlement, which consent shall not be unreasonably
withheld.

     Section 9. Presumptions and Effect of Certain Proceedings.

          (a) Neither the failure of the Company (including by its directors or independent legal
counsel) to have made a determination prior to the commencement of any action pursuant to this
Agreement that indemnification is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Company (including by its
directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct.

          (b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee
did not act in good faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.

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          (c) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Organization shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.

     Section 10. Remedies of Indemnitee.

          (a) In the event that (i) a determination is made pursuant to Section 8 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is
not timely made pursuant to Section 7 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 8(b) of this Agreement within 120 days
after receipt by the Company of the request for indemnification, (iv) payment of indemnification
is not made pursuant to Section 5 or 6 of this Agreement within twenty (20) days after receipt by
the Company of a written request therefor, or (v) payment of indemnification pursuant to Section 3
or 4 of this Agreement is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification, Indemnitee shall be entitled to seek an adjudication by
the Court of Chancery of the State of Delaware of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Indemnitee shall commence such proceeding seeking an
adjudication or an award in arbitration within 180 days following the date on which Indemnitee
first has the right to commence such proceeding pursuant to this Section 10(a); provided,
however, that the foregoing clause shall not apply in respect of a proceeding brought by
Indemnitee to enforce his rights under Section 5 of this Agreement. The Company shall not oppose
Indemnitee’s right to seek any such adjudication or award in arbitration.

          (b) In the event that a determination shall have been made pursuant to Section 8(b) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a
de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced
by reason of that adverse determination.

          (c) If a determination shall have been made pursuant to Section 8(b) of this Agreement that
Indemnitee is entitled to indemnification, the company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.

          (d) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication
of or an award in arbitration to enforce his rights under, or to recover damages for breach of,
this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified
by the Company against, any and all expenses (of the types described in the definition of Expenses
in Section 17 of this Agreement) actually and reasonably incurred by him in such judicial
adjudication or arbitration, but only if (and only to the extent) he prevails therein. If it shall
be determined in said judicial adjudication or arbitration that

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Indemnitee is entitled to receive part but not all of the indemnification or advancement of
Expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication
or arbitration shall be appropriately prorated.

          (e) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are
not valid, binding and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.

     Section 11. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s By-laws,
any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any
rights of Indemnitee under this Agreement in respect of any action taken or omitted by such
Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in the General Corporation Law of the State of Delaware, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses than would be
afforded currently under the Company’s By-Laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy under this Agreement, the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which
such person serves at the request of the company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of the coverage available for
any such director, officer, employee or agent under such policy or policies. Nothwithstanding the
foregoing, for a period of six years after the date the Indemnitee ceases to be a director of the
Company (the “Termination Date”), the Company agrees either (i) to cause to be obtained “tail”
insurance policies with a claims period of at least six years from the Termination Date with
respect to officers’ and directors’ liability insurance at least as favorable (including in amount
and scope) as the Company’s existing policies for claims arising from facts or events that occurred
on or prior to the Termination Date or (ii) to maintain in effect its current policies of
directors’ and officers’ liability insurance for the benefit of Indemnitee (provided that the
Company may substitute therefore policies of at least the same coverage and amounts with
financially sound and responsible insurers containing terms and conditions which are not materially
less advantageous in the aggregate) with respect to claims arising from facts or events

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which occurred at or before the Termination Date; provided, however, that in each case the Company
shall not be obligated to make annual premium payments for such insurance to the extent such
premiums exceed 200% of the premiums being paid by the Company as of January 1, 2006 for such
insurance or reserved pursuant to a self-insurance program and if such premiums for such insurance
would at any time exceed 200% of such premium or reserves, then the Company shall cause to be
maintained policies of insurance which, in Boards’ good faith determination, provide the maximum
coverage available at an annual premium equal to 200% of such premium or reserves. The Company
further agrees that in the event the Company or any of its successors or assigns (i) consolidates
with or merges into any other corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any corporation or entity, then, and in each such
case, to the extent necessary, proper provision shall be made so that the successors and assigns of
the Company assume the obligations set forth in this Section 11.

          (c) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as re necessary to enable the Company to bring suit to enforce such rights.

          (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

          (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust employee benefit plan or other enterprise shall be
reduced by any amount Indemnitee has actually received as indemnification or advancement of
expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.

     Section 12. Duration of Agreement. This Agreement shall continue until and terminate
upon the later of: (a) six years after the date that Indemnitee shall have ceased to serve as a
director of the Company; or (b) the final termination of any Proceeding then pending in respect of
which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of
any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto.
This Agreement shall be binding upon the Company and its successors and assigns and shall inure to
the benefit of Indemnitee and his heirs, executors and administrators.

     Section 13. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including without limitation,
each portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid illegal or unenforceable) shall not in

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any way be affected or impaired thereby and shall remain enforceable to the fullest extent
permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary
to conform to applicable law and to give the maximum effect to the intent of the parties hereto;
and (c) to the fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such provision held to be
invalid illegal or unenforceable, that it not itself invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested thereby.

     Section 14. Exception to Right of Indemnification or Advancement of Expenses.
Notwithstanding any other provision of this Agreement, but subject to Section 10(d) hereof,
Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement
with respect to any Proceeding brought by Indemnitee, or any claim therein, unless the bringing of
such Proceeding or making of such claim shall have been approved by the Board of Directors.

     Section 15. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     Section 16. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.

     Section 17. Definitions. For purposes of this Agreement:

          (a) “Change in Control” means, and shall be deemed to have occurred if, (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary holding securities under an employee benefit plan of the
Company acting in such capacity or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock of the Company,
becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing more than fifty percent (50%) of the total voting power
represented by the Company’s then outstanding voting stock, (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of Directors or
nomination for election by the Company’s stockholders was approved by a vote of at least two thirds
(2/3) of the directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation other than a merger or consolidation
which would result in the voting stock of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into voting stock of
the surviving entity) at least fifty percent (50%) of the total voting power represented by the
voting stock of the Company or such

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surviving entity outstanding immediately after such merger or consolidation, or the stockholders of
the Company approve a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of related transactions) all or
substantially all of the Company’s assets.

          (b) “Corporate Status” describes the status of a person who is or was a director, officer,
employee or agent of the Company or of any other corporation, partnership, joint venture, trust
employee benefit plan or other enterprise which such person is or was serving at the request of the
Company.

          (c) “Disinterested Director” means a director of the Company who is not and as not a party to
the Proceeding in respect of which indemnification is sought by Indemnitee.

          (d) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding.

          (e) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past three years has been, retained
to represent: (i) the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or of other
indemnities under similar indemnification agreements), or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The
Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.

          (f) “Organization” shall mean the Company and any other corporation, partnership, joint
venture trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at
the express written request of the Company as a director, officer, employee, agent or fiduciary.

          (g) “Proceeding” includes any threatened, pending or completed action, suit, arbitration,
alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other
actual, threatened or completed proceeding, whether brought by or in the right of the Company or
otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is
or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was a
director of the Company, by reason of any action taken by

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him or of any inaction on his part while acting as director of the Company, or by reason of the
fact that he is or was serving at the request of the Company as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise, in each case
whether or not he is acting or serving in any such capacity at the time any liability or expense is
incurred for which indemnification or advancement of expenses can be provided under this Agreement;
except one initiated by an Indemnitee pursuant to Section 10 of this Agreement to enforce his
rights under this Agreement.

          (h) Reference to “other enterprise” shall include employee benefit plans; references to
“fines” shall include any excise tax assessed with respect to any employee benefit plan; references
to “serving at the request of the Company” shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, as participants or
beneficiaries; and a person who acted in good faith and in the manner he reasonably believed to be
in the interests of the participants and beneficiaries of an employee benefit plan shall not be
deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in
this Agreement.

     Section 18. Enforcement.

          (a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to continue to serve as
a director of the Company, and the Company acknowledges that the Indemnitee is relying upon this
Agreement in continuing to serve as a director of the Company.

          (b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof, except as set forth
in the Recitals to this Agreement.

     Section 19. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both or the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

     Section 20. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise, except to the extent the Company is materially prejudiced by such failure.

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     Section 21. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall have been directed,
or (ii) mailed by certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

	 	 	 	 	 
	 

	 	(a)
	 	If to Indemnitee, to the address set forth on
the signature page hereto
	 
	 	 	 	 
	 

	 	(b)
	 	If to the Company, to:
	 
	 	 	 	 
	 

	 	 	 	Ameritrade Holding Corporation
	 

	 	 	 	6940 Columbia Gateway Drive, Suite 200
	 

	 	 	 	Columbia, MD 21046
	 

	 	 	 	Attn: Ellen Koplow
	 

	 	 	 	Executive Vice President and General Counsel

or to such other address as may have been furnished to Indemnitee by the Company or to the Company
by Indemnitee, as the case may be.

     Section 22. Governing Law; Submission to Jurisdiction: Appointment of Agent for Service
of Process. This Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware, without regard to its
conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to
Section 10(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally
(i) agree that any action or proceeding arising out of or in connection with this Agreement shall
be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in
any other state or federal court in the United States of America or any court in any other country,
(ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the
extent such party is not a resident of the State of Delaware, irrevocably The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801 as its agent in the State of Delaware as
such party’s agent for acceptance of legal process in connection with any such action or proceeding
against such party with the same legal force and validity as if served upon such party personally
within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that
any such action or proceeding brought in the Delaware Court has been brought in an improper or
otherwise inconvenient forum.

     Section 23. Miscellaneous. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate.

11

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	TD AMERITRADE Holding Corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	Ellen L.S. Koplow	 	 	 	 
	 	 	Title:	 	Executive Vice President, General Counsel	 	 
	 

	 	 	 	and Secretary	 	 	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Indemnitee:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

12exv10w1

 

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is made and entered into as of May 30,
2006, by and between NUMEREX CORP., a Pennsylvania corporation (the “Company”), and LAURUS MASTER
FUND, LTD., a Cayman Islands company (the “Purchaser”).

Recitals

     Whereas, the Company has authorized the sale to the Purchaser of (i) a Secured Convertible
Term Note in the aggregate principal amount of Five Million Dollars ($5,000,000) (as amended,
restated, modified or supplemented from time to time, the “Convertible Note”), which Convertible
Note is convertible into shares of the Company’s Class A common stock, no par value per share (the
“Common Stock”) at a fixed conversion price of $7.91 per share of Common Stock (“Fixed Conversion
Price”) and (ii) a Secured Non-Convertible Term Note in the aggregate principal amount of Five
Million Dollars ($5,000,000) (as amended, restated, modified or supplemented from time to time, the
“Non-Convertible Note” and, together with the Convertible Note, the “Notes” and each, a “Note”);

     Whereas, the Company wishes to issue a warrant to the Purchaser to purchase up to 241,379
shares (subject to adjustment in accordance with the terms thereof) of the Company’s Common Stock
in connection with Purchaser’s purchase of the Notes (as amended, restated, modified or
supplemented from time to time, the “Warrant”);

     Whereas, Purchaser desires to purchase the Notes and Warrant on the terms and conditions set
forth herein; and

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

Agreement

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

     1. Agreement to Sell and Purchase. Pursuant and subject to the terms and conditions set forth
in this Agreement, on the Closing Date (as defined in Section 3), the Company agrees to sell to the
Purchaser, and the Purchaser hereby agrees to purchase from the Company the Notes in accordance
with the terms of the Notes and this Agreement. The Notes and the Warrant purchased on the Closing
Date shall be known as the “Offering.” A form of the Convertible Note is annexed hereto as
Exhibit A-1 and a form of the Non-Convertible Note is annexed hereto as Exhibit
A-2. Each Note will have a Maturity Date (as defined in the Note) forty eight (48) months from
the date of issuance, subject to acceleration in accordance with the terms thereof. Collectively,
the Notes, the Warrant and
Common Stock issuable in payment of

 

 

the Convertible Note, upon conversion of the Convertible
Note and upon exercise of the Warrant, are referred to as the “Securities”.

     2. Fees and Warrant. On the Closing Date:

               (a) The Company will issue and deliver to the Purchaser the Warrant. pursuant to Section 1
hereof. The Warrant must be delivered on the Closing Date. A form of Warrant is annexed hereto as
Exhibit B. All the representations, covenants, warranties, undertakings, and
indemnification, and other rights made or granted to or for the benefit of the Purchaser by the
Company are hereby also made and granted in respect of the Warrant and shares of the Company’s
Common Stock issuable upon exercise of the Warrant (the “Warrant Shares”).

               (b) Upon execution and delivery of this Agreement by the Company and Purchaser, the Company
shall pay to Laurus Capital Management, LLC (“LCM”), manager of Purchaser a servicing payment in
an amount equal to four percent (4.0%) of the aggregate principal amount of the Notes. The
foregoing payment is referred to herein as the “Servicing Payment”. The parties hereto acknowledge
that the Servicing Payment is a reasonable estimate of the expenses that LCM will incur in
monitoring and servicing the Notes, and the Servicing Payment is intended to enable LCM to defray
such expenses. Such Servicing Payment shall be deemed fully earned on the Closing Date and shall
not be subject to increase, rebate or proration for any reason.

               (c) The Company shall reimburse the Purchaser for its expenses (including reasonable legal
fees and expenses) incurred in connection with the entering into of this Agreement and the Related
Agreements, and expenses incurred in connection with the Purchaser’s due diligence review of the
Company and its Subsidiaries (as defined below) and all related matters. Amounts required to be
paid under this Section 2(c) will be paid on the Closing Date and shall be $25,000.00 for such
expenses referred to in this Section 2(c), plus up to an additional $10,000.00 for the actual and
reasonable cost of any required third-party appraisals and/or extraordinary diligence, subject to
the Company’s prior approval.

               (d) The Servicing Payment and the expenses referred to in the immediately preceding clause (c)
(net of deposits previously paid by the Company) shall be paid at Closing out of funds held
pursuant to a Funds Escrow Agreement of even date herewith among the Company, Purchaser, and the
escrow agent named therein (the “Funds Escrow Agreement”) and a disbursement letter (the
“Disbursement Letter”).

     3. Closing, Delivery and Payment.

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

          3.2 Delivery. Pursuant to the Funds Escrow Agreement in the form attached hereto as
Exhibit D, at the Closing on the Closing Date, the
Company will deliver to the Purchaser, among other things, the Notes and the Warrant and the
Purchaser will deliver to the

2

 

Company, among other things, the amounts set forth in the Funds
Escrow Agreement by wire transfer of immediately available funds.

     4. Representations and Warranties of the Company.

          The Company hereby represents and warrants to the Purchaser as of the date of this Agreement
as set forth below which disclosures are supplemented by, and subject to the Company’s filings
under the Securities Exchange Act of 1934 and any exhibits thereto (including without limitation
any information furnished under cover of Form 8-K) (collectively, the “Exchange Act Filings”). All
references herein to the Company’s “knowledge” shall refer to the actual knowledge of any officer
of the Company.

          4.1 Organization, Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Each of the Company and its Subsidiaries, as applicable, has the corporate or
limited liability company power and authority to own and operate its properties and assets, to
execute and deliver (i) this Agreement, (ii) the Notes and the Warrant to be issued in connection
with this Agreement, (iii) the Master Security Agreement relating to the Notes, dated as of the
date hereof, by and among the Company, certain Subsidiaries of the Company and the Purchaser (as
amended, restated, modified or supplemented from time to time, the “Master Security Agreement”),
(iv) the Registration Rights Agreement relating to the Securities, dated as of the date hereof,
between the Company and the Purchaser (the “Registration Rights Agreement”), (v) the Subsidiary
Guaranty made by certain Subsidiaries of the Company, dated as of the date hereof (as amended,
modified or supplemented from time to time, the “Subsidiary Guaranty”), (vi) the Pledge Agreement,
dated as of the date hereof, by and among the Company, certain Subsidiaries of the Company and the
Purchaser (as amended, modified or supplemented from time to time, the “Stock Pledge Agreement”),
(vii) the Escrow Agreement, and (viii) all other agreements expressly referred to herein and
expressly related to this Agreement (as each of the foregoing clauses (ii) through (viii),
inclusive, may be amended, restated, modified and/or supplemented from time to time, collectively,
the “Related Agreements”), to issue and sell the Notes and the shares of Common Stock issuable upon
conversion of the Convertible Note (the “Note Shares”), to issue and sell the Warrant and the
Warrant Shares, and to carry out the provisions of this Agreement and the Related Agreements and to
carry on its business as presently conducted. The Company is duly qualified and is authorized to
do business and is in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would be reasonably expected
not to have a material adverse effect on the Company, its Subsidiaries or their assets, condition
(financial or otherwise), business or results of operations, taken as a whole (a “Material Adverse
Effect”).

          4.2 Subsidiaries. The Company owns all of the issued and outstanding capital stock or other
equity interests of the business entities listed on Schedule 4.2 (the “Subsidiaries”).
Except as otherwise disclosed on the attached Schedule 4.2, the Company does not directly or indirectly own or control any equity security or
other interest of any other corporation, limited partnership or other business entity. In
addition, if and to the extent the Company or a Subsidiary acquires any stock or other equity
interest in a corporation or other

3

 

entity after the date of this Agreement, the term “Subsidiary”
shall mean and also include such corporation or other entity if (i) such shares of stock or other
ownership interests having ordinary voting power (other than stock or other ownership interests
having such power only by reason of the happening of a contingency) of such corporation or other
entity that are acquired by the Company or a Subsidiary have the power to elect a majority of the
directors of such corporation, or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or (ii) as a result
of such acquisition, the Company or a Subsidiary owns, directly or indirectly, more than fifty
percent (50%) of the shares or equity interests in such corporation or other entity at such time.

          4.3 Capitalization; Voting Rights.

               (a) The authorized capital stock of the Company, as of the date hereof, consists of 38,000,000
shares, of which (i) 30,000,000 are shares of Class A Common Stock, no par value per share,
12,5000,000 shares of which are issued and outstanding, (ii) 5,000,000 are shares of Class B Common
Stock, no par value per share, none of which are issued and outstanding, and (iii) 3,000,000 are
shares of preferred stock, no par value per share, none of which are issued and outstanding.

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

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

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

4

 

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

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

          4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed in any
Exchange Act Filings or in connection with the Airdesk Acquisition (as defined in Section 9.15
below):

               (a) There are no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or to its knowledge by which it
is bound which may involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $150,000 (other than obligations of, or payments to, the Company arising from
agreements entered into in the ordinary course of business), or (ii) the transfer or license of any
patent, copyright, trade secret or other proprietary right to or from the Company (other than
licenses arising from the purchase of “off the shelf” or other standard products or licenses by the
Company as licensor in the ordinary course of the Company’s business consistent with past
practices); (iii) provisions restricting the development, manufacture or distribution of the
Company’s products or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights other than as incidental to licenses by the Company as licensor
in the ordinary course of the Company’s business consistent with past practices.

               (b) Except as disclosed in the Exchange Act Filings, since December 31, 2005, the Company has
not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect
to any class or series of its capital stock or otherwise, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than ordinary course obligations) individually in excess
of $150,000 or, in the case of indebtedness and/or
liabilities individually less than $150,000, in excess of $250,000 in the aggregate, (iii)
made any loans or advances to any person not in excess, individually or in the aggregate, of
$150,000, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed

5

 

of any of its assets or rights, other than the sale of its inventory in the ordinary
course of business.

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

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

          4.8 Changes. Since December 31, 2005, except as disclosed in any Exchange Act Filing or on
Schedule 4.8 or in any other Schedule to this Agreement or to any of the Related Agreements
and except for the Airdesk Acquisition, there has not been:

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

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

6

 

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

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

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

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

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

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

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

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

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

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

          4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on Schedule 4.9 or
as disclosed in the Exchange Act Filings, the Company has good and marketable title to its
properties and assets, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes
which have not yet become delinquent, (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the operations of the
Company, (c) those that have otherwise arisen in the ordinary course of business and (d) those that
arise pursuant to the transactions described in this Agreement and the Related Agreements. To the
Company’s knowledge, all facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company are in good operating condition and repair and are reasonably
fit and usable for the purposes for which they

7

 

are being used. Except as set forth on Schedule
4.9 or as disclosed in the Exchange Act Filings, the Company is in compliance with all material
terms of each lease to which it is a party or is otherwise bound.

          4.10 Intellectual Property. Except as set forth in Schedule 4.10 or as disclosed in
the Exchange Act Filings:

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

               (b) Since December 31, 2005, the Company has not received any written communications alleging
that the Company has violated any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or entity.

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

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

8

 

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

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

          4.14 Employees. Except as set forth on Schedule 4.14, the Company has no collective
bargaining agreements with any of its employees. There is no labor union organizing activity
pending or, to the Company’s knowledge, threatened with respect to the Company. Except as
disclosed in the Exchange Act Filings or on Schedule 4.14 and except for any severance
and/or employment agreements to be entered into by the Company with Michael A. Marett and/or Alan
B. Catherall (any such agreement, a “Future Severance/Employment Agreement”), the Company is not a
party to or bound by any currently effective employment contract, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement other than those entered into in the ordinary course. To
the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any material term of any material employment contract, proprietary
information agreement or any other agreement relating to the right of any such individual to be
employed by, or to contract with, the Company because of the nature of the business conducted by
the Company; and to the Company’s knowledge the continued employment by the Company of its present
employees, and the performance of the Company’s contracts with its independent contractors, will
not result in any such violation. To the Company’s knowledge, none of its employees is obligated
under any contract (including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative agency, that would
interfere in any material respect with their duties to the Company. The Company has not
received any written notice alleging that any such violation has occurred. Except for
employees who have a current effective employment agreement with the Company and for any Future
Severance/Employment Agreements, no employee of the Company has been granted the right to continued
employment by the Company or to any material compensation following termination

9

 

of employment with
the Company. Except as set forth on Schedule 4.14, the Company is not aware that any
officer or key employee intends to terminate his, her or their employment with the Company.

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

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

          4.17 Environmental and Safety Laws. The Company is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health and safety, except
where the failure to so comply has not had and/or could not reasonably be expected to have a
Material Adverse Effect, and to the Company’s knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation. Except as set forth
on Schedule 4.17, no Hazardous Materials (as defined below) are used or have been used,
stored, or disposed of by the Company or, to the Company’s knowledge, by any other person or
entity, in a manner not materially compliant with any applicable statute, law or regulation
relating to the environment or occupational health and safety of any property owned, leased or used
by the Company. For the purposes of the preceding sentence, “Hazardous Materials” shall mean (a)
materials which are listed or otherwise defined as “Hazardous Materials” or “toxic” under any
applicable local, state or federal and/or foreign laws and regulations that govern the existence
and/or remedy of contamination on property, the protection of the environment from contamination,
the control of hazardous wastes, or other activities
involving hazardous substances, including building materials, or (b) any petroleum products or
nuclear materials.

          4.18 Valid Offering. Assuming the accuracy of the representations and warranties of the
Purchaser contained in this Agreement, the offer, sale and issuance of the

10

 

Securities will be
exempt from the registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of all applicable state
securities laws except where a failure to comply with state “blue sky” laws would be reasonably
expected not to have a Material Adverse Effect.

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

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

          4.21 SEC Reports. Except as set forth on Schedule 4.21, the Company has filed all
proxy statements, reports and other documents required to be filed by it under the Exchange Act.
The Company has furnished the Purchaser with copies of (i) its Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 and (ii) its Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 2006, and the Form 8-K filings which it has made during 2003 to date
(collectively, the “SEC Reports”). Except as set forth on Schedule 4.21, each SEC Report
was, at the time of its filing, in substantial compliance with the requirements of its respective
form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in
the SEC Reports, as of their respective filing dates, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.

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

          4.23 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or sales of any security
or solicited any offers to buy any security under circumstances that would cause the offering of
the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for
purposes of the Securities Act which would prevent the Company from selling the Securities pursuant
to Rule 506 under the Securities Act, or any applicable exchange-related

11

 

stockholder approval
provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps
that would cause the offering of the Securities to be integrated with other offerings.

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

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

     5. Representations and Warranties of the Purchaser.

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

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

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

          5.3 Investment Representations. Purchaser understands that the Securities are being offered
and sold pursuant to an exemption from registration contained in the Securities Act based in part
upon Purchaser’s representations contained in the Agreement, including, without limitation, that
the Purchaser is an “accredited investor” within the meaning of Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”). The Purchaser confirms that it has received or has
had full access to all the information it considers necessary or appropriate to make an informed
investment decision with respect to the Notes and the Warrant to be purchased by it under this
Agreement and the Note Shares and the Warrant Shares acquired by it upon the conversion of the
Convertible Note and the exercise of the Warrant, respectively. The Purchaser further confirms that
it has had an opportunity to ask questions and receive answers from the Company regarding the
Company’s business, management and financial affairs and the terms and conditions of the Offering,
the Notes, the

12

 

Warrant and the Securities and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Purchaser or to which the Purchaser had
access.

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

          5.5 Acquisition for Own Account. Purchaser is acquiring the Notes and Warrant and the Note
Shares and the Warrant Shares for Purchaser’s own account for investment only, and not as a nominee
or agent and not with a view towards or for resale in connection with their distribution.

          5.6 Purchaser Can Protect Its Interest. Purchaser represents that by reason of its, or of
its management’s, business and financial experience, Purchaser has the capacity to evaluate the
merits and risks of its investment in the Notes, the Warrant and the Securities and to protect its
own interests in connection with the transactions contemplated in this Agreement, and the Related
Agreements. Further, Purchaser is aware of no publication of any advertisement in connection with
the transactions contemplated in this Agreement or the Related Agreements.

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

          5.8 Legends

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

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

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

13

 

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

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

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

     6. Covenants of the Company.

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

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

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

14

 

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

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

          6.5 Use of Funds. The Company agrees that it will use the proceeds of the sale of the Notes
and Warrant for retirement of debt and other obligations and for general corporate purposes only.

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

          6.7 Taxes. The Company will promptly pay and discharge, or cause to be paid and discharged
in all material respects, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the income, profits,
property or business of the Company; provided, however, that any such tax, assessment, charge or
levy need not be paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such taxes, assessments,
charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may
have attached as security therefor.

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

15

 

and property to the extent and
in the manner which the Company reasonably believes is customary for companies in similar business
similarly situated as the Company and to the extent available on commercially reasonable terms.

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

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

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

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

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

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

               (c) become subject to (including, without limitation, by way of amendment to or modification
of) any agreement or instrument which by its terms would (under any circumstances) restrict the
Company’s right to perform the provisions of this Agreement or any Related Agreement to which the
Company is a party, or would restrict any Subsidiary from performing its obligations under the
Guaranty or any other Related Agreement to which such Subsidiary is a party;

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

16

 

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

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

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

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

     7. Covenants of the Purchaser.

          The Purchaser covenants and agrees with the Company as follows:

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

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

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

          7.4 Limitation on Acquisition of Common Stock of the Company. Notwithstanding anything to the
contrary contained in this Agreement, any Related Agreement,

17

 

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

     8. Covenants of the Company and Purchaser Regarding Indemnification.

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

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

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

          8.4 Offering Restrictions. Except as previously disclosed in the SEC Reports or in the
Exchange Act Filings, or stock or stock options granted to employees or directors of the Company;
or shares of preferred stock issued to pay dividends in respect of the Company’s preferred stock;
or equity or debt issued in connection with an acquisition of a business or assets by the Company;
or the issuance by the Company of stock in connection with the establishment of a joint venture
partnership or licensing arrangement (these exceptions

18

 

hereinafter referred to as the “Excepted
Issuances”), the Company will not for so long as the Convertible Note is outstanding issue any
securities with a continuously variable/floating conversion feature which are or could be (by
conversion or registration) free-trading securities (i.e. common stock subject to a registration
statement) prior to the full repayment or conversion of the Note (the “Exclusion Period”). Nothing
contained in this Section 8.4 shall prohibit any fixed-price offering of Company’s Common Stock
(including the offering of securities convertible into Common Stock at a fixed price).

     9. Miscellaneous.

          9.1 Except as previously disclosed in the SEC Reports or in the Exchange Act Filings, or stock
or stock options granted to employees or directors of the Company; or shares of preferred stock
issued to pay dividends in respect of the Company’s preferred stock; or equity or debt issued in
connection with an acquisition of a business or assets by the Company; or the issuance by the
Company of stock in connection with the establishment of a joint venture partnership or licensing
arrangement (these exceptions hereinafter referred to as the “Excepted Issuances”), the Company
will not for so long as the Notes are outstanding issue any securities with a continuously
variable/floating conversion feature which are or could be (by conversion or registration)
free-trading securities (i.e. common stock subject to a registration statement) prior to the full
repayment or conversion of the Notes (the “Exclusion Period”). Nothing contained in this Section
9.1 shall prohibit any fixed-price offering of Company’s Common Stock (including the offering of
securities convertible into Common Stock at a fixed price).

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

19

 

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

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

          9.4 Successors and Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, heirs, executors and
administrators of the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Securities from time to time, other than the holders of Common
Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective registration
statement. Purchaser may assign the Notes (or any portion thereof) or the Warrant, provided that
the assignees of either Note or the Warrant agree in writing to be bound by the terms of and
perform all of Purchaser’s obligations under this Agreement and the Related Agreements and such
assignee provides evidence reasonably satisfactory to the Company demonstrating compliance with
applicable securities laws, which shall include, without limitation, written certification from the
assignee of its sophistication and status as an accredited investor under Regulation D of the
Securities Act and a legal opinion from the transferor’s counsel that such transfer is exempt from
the registration requirements of applicable securities laws. Purchaser or any assignee may not
assign any of its rights or remedies under the Master Security Agreement, the Stock Pledge
Agreement or the Subsidiary Guaranty to any person or entity other than a permitted assignee of
either Note, and Purchaser may not assign any of its rights under the Registration Rights Agreement
to any person or entity other than a permitted assignee of either Note or the Warrant. Purchaser
or any assignee of either Note or the Warrant may not assign its rights hereunder or thereunder to
a Competitor (as defined herein) of the Company, unless an Event of Default (as defined in either
Note) has occurred and is continuing.

20

 

A “Competitor” shall mean any business entity that (i) is
primarily engaged in providing similar products or services as the Company and from which such
products and services the Company derived material revenues for the prior twelve (12) months, and
(ii) does business in any U.S. state in which the Company has an established business. In the
event there is more than one holder of the rights and obligations under the Note, then an agent for
such holders shall be appointed by the then holder(s) of the majority principal amount outstanding
under the Note for the sole purpose of dealing with the Company in connection with administrative
matters relating to this Agreement and the Related Agreements, including in requesting waivers and
consents. Unless such agent has authority from the holders to grant any such waiver, consent or to
make any amendments to this Agreement, the Notes, the Subsidiary Guaranty, the Stock Pledge
Agreement or the Master Security Agreement without the consent of the holders, all such grants of
waivers, consents or amendments shall be made by such agent acting upon the consent of the holders
of a majority in principal amount then outstanding except for (i) any modifications in the
principal amount, rate of interest or fees payable under the Notes or any Related Agreement, (ii)
postponements in any fixed payment date, (iii) releases or discharges of the Company or any
Subsidiary of any obligation or releases of any collateral except as provided in this Agreement or
the Related Agreements or (iv) any amendment to this Section 9.4, which shall be approved by all
holders affected thereby.

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

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

          9.7 Amendment and Waiver.

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

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

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

          9.8 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power
or remedy accruing to any party, upon any breach, default or noncompliance by another party under
this Agreement or the Related Agreements, shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter occurring. All
remedies, either under this Agreement, the Notes or the

21

 

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

          9.9 Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next
business day, (c) three (3) business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Company at the address as set forth on the signature page
hereof with a copy in the case of the Company to Legal Counsel, Numerex Corp., 1600 Parkwood Circle
SE, Suite 500, Atlanta, Georgia 30339, facsimile number (770) 693-5951 and to William Carmody,
Esq., Arnold & Porter LLP, 555 12th Street, N.W., Washington, D.C. 20004, facsimile
number (202) 942-5999, to the Purchaser at the address set forth on the signature page hereof for
such Purchaser, with a copy in the case of the Purchaser to Scott J. Giordano, Esq., Loeb & Loeb
LLP, 405 Park Avenue, New York, NY 10154, facsimile number (212) 407-4990, or at such other address
as the Company or the Purchaser may designate by written notice to the other parties hereto given
in accordance herewith.

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

          9.11 Titles and Subtitles. The titles of the sections and subsections of the Agreement are
for convenience of reference only and are not to be considered in construing this Agreement.

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

          9.13 Broker’s Fees. Except as set forth on Schedule 9.13 hereof, Each party hereto
represents and warrants that no agent, broker, investment banker, person or firm acting on behalf
of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s
fee or any other commission directly or indirectly in connection with the transactions contemplated
herein. Each party hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this Section 11.12 being
untrue.

22

 

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

          9.15 Definition of Airdesk Acquisition. For purposes of this Agreement, the term “Airdesk
Acquisition” means the acquisition of the assets of AIRDESK, Inc. by and through Airdesk, LLC, a
Georgia limited liability company and a wholly-owned subsidiary of the Company. The Airdesk
Acquisition is more particularly described in the press release attached to this Agreement as
Exhibit E. At closing of the Airdesk Acquisition, the Company also made a loan in the
amount of $250,000.00 to the former owner of AIRDESK, Inc.

23

 

          IN WITNESS WHEREOF, the parties hereto have executed the Securities Purchase Agreement as of
the date set forth in the first paragraph hereof.

	 	 	 	 	 	 	 	 	 	 	 
	COMPANY:	 	 	 	PURCHASER:
	 
	 	 	 	 	 	 	 	 	 	 
	NUMEREX CORP.	 	 	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Title:	 	 
	 

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

24

 

List of Schedules and Exhibits

	 	 	 
	Schedule 4.2

	 	Subsidiaries
	 
	 	 
	Schedule 4.3

	 	Options, Warrants, Etc.
	 
	 	 
	Schedule 4.6

	 	Agreements, Actions, Etc.
	 
	 	 
	Schedule 4.7

	 	Obligations to Related Parties
	 
	 	 
	Schedule 4.8

	 	Changes
	 
	 	 
	Schedule 4.9

	 	Title to Property
	 
	 	 
	Schedule 4.10

	 	Intellectual Property
	 
	 	 
	Schedule 4.11

	 	Defaults
	 
	 	 
	Schedule 4.12

	 	Litigation, Investigations, Etc.
	 
	 	 
	Schedule 4.13

	 	Taxes
	 
	 	 
	Schedule 4.14

	 	Employees
	 
	 	 
	Schedule 4.15

	 	Registration Rights and Voting Rights
	 
	 	 
	Schedule 4.16

	 	Compliance with Laws; Permits
	 
	 	 
	Schedule 4.17

	 	Environmental and Safety Laws
	 
	 	 
	Schedule 4.21

	 	SEC Reports
	 
	 	 
	Exhibit A-1

	 	Form of Convertible Term Note
	 
	 	 
	Exhibit A-2

	 	Form of Non-Convertible Term Note
	 
	 	 
	Exhibit B

	 	Form of Warrant
	 
	 	 
	Exhibit C

	 	Form of Opinion
	 
	 	 
	Exhibit D

	 	Form of Escrow Agreement
	 
	 	 
	Exhibit E

	 	Press Release for Airdesk Acquisition

25

 

EXHIBIT A-1

FORM OF CONVERTIBLE NOTE

A-1

 

EXHIBIT A-2

FORM OF NON-CONVERTIBLE NOTE

A-2

 

EXHIBIT B

FORM OF WARRANT

B-1

 

EXHIBIT C

FORM OF OPINION

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

C-1

 

EXHIBIT D

FORM OF ESCROW AGREEMENT

D-1

 

EXHIBIT E

PRESS RELEASE FOR AIRDESK ACQUISITION

E-1

 

NUMEREX CORP.

SECURITIES PURCHASE AGREEMENT

May 30, 2006

 

 

UPDATE TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page(s)	 
	1.	 	Agreement to Sell and Purchase.	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	Fees and Warrant Fees and Warrants	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	3.	 	Closing, Delivery and Payment. Closing, Delivery and Payment	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Closing	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.2	 	Delivery	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	4.	 	Representations and Warranties of the Company	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Organization, Good Standing and Qualification	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.2	 	Subsidiaries	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.3	 	Capitalization; Voting Rights.  Capitalization; Voting Rights	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.4	 	Authorization; Binding Obligations	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.5	 	Liabilities	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.6	 	Agreements; Action	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.7	 	Obligations to Related Parties	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.8	 	Changes	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.9	 	Title to Properties and Assets; Liens, Etc	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.10	 	Intellectual Property	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.11	 	Compliance with Other Instruments	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.12	 	Litigation	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.13	 	Tax Returns and Payments	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.14	 	Employees	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.15	 	Registration Rights and Voting Rights	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.16	 	Compliance with Laws; Permits	 	 	10	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page(s)	 
	 
	 	4.17	 	Environmental and Safety Laws	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.18	 	Valid Offering	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.19	 	Full Disclosure	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.20	 	Insurance	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.21	 	SEC Reports	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.22	 	Listing	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.23	 	No Integrated Offering	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.24	 	Stop Transfer	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.25	 	Dilution	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	5.	 	Representations and Warranties of the Purchaser	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	No Shorting	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.2	 	Requisite Power and Authority	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.3	 	Investment Representations	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.4	 	Purchaser Bears Economic Risk	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.5	 	Acquisition for Own Account	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.6	 	Purchaser Can Protect Its Interest	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.7	 	Accredited Investor	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.8	 	Legends.  Legends	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	6.	 	Covenants of the Company.	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Stop-Orders	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.2	 	Listing	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.3	 	Market Regulations	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.4	 	Reporting Requirements	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.5	 	Use of Funds	 	 	15	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page(s)	 
	 
	 	6.6	 	Access to Facilities	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.7	 	Taxes	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.8	 	Insurance	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.9	 	Intellectual Property	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.10	 	Properties	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.11	 	Confidentiality	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.12	 	Required Approvals	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.13	 	Reissuance of Securities	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.14	 	Opinion	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	7.	 	Covenants of the Purchaser	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Confidentiality	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.2	 	Non-Public Information	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.3	 	No Shorting	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	8.	 	Covenants of the Company and Purchaser Regarding Indemnification	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Company Indemnification	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.2	 	Purchaser's Indemnification	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	9.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	10.	 	Miscellaneous	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Offering Restrictions	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 	 	Governing Law	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.2	 	Survival	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.3	 	Successors and Assigns	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.4	 	Entire Agreement	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.5	 	Severability	 	 	21	 

iii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page(s)	 
	 
	 	10.6	 	Amendment and Waiver	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.7	 	Delays or Omissions	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.8	 	Notices	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.9	 	Attorneys' Fees	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.10	 	Titles and Subtitles	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.11	 	Facsimile Signatures; Counterparts	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.12	 	Broker's Fees	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.13	 	Construction	 	 	23	 

iv

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