SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 2005
NUMEREX CORP.
(Exact Name of Issuer as Specified in Charter)
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| Pennsylvania | | 0-22920 | | 11-2948749 |
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| (State or other jurisdiction | | (Commission File Number) | | (I.R.S. Employer |
| of incorporation) | | | | Identification No.) |
1600 Parkwood Circle
Suite 200
Atlanta, Georgia
(Address of principal executive offices)
30339
(Zip code)
(770) 693-5950
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 1 – Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
Effective as of January 28, 2005, Numerex Corp. (the “Company”) completed a private placement to Laurus Master Fund, Ltd. (“Laurus”) of (i) a Convertible Term Note in the principal amount of $1,500,000 (the “Company Note”), and (ii) a Common Stock Purchase Warrant (the “Warrant” and together with the Company Note, the “Securities”) to purchase up to 100,000 shares of the Company’s Class A common stock, no par value per share (“Common Stock”).
The Company Note has a term of three years and is secured by substantially all of the assets of the Company and its U.S. subsidiaries and guarantees by each of the Company’s U.S. subsidiaries. The same collateral secures the Convertible Term Note in the principal amount of $4,5000,000 sold to Laurus in January 2004.
Interest accrues on the Company Note at an annual rate of 8%, and interest and principal may be paid by the Company in either cash or in Common Stock. The Company may only use Common Stock to make such payment if the price per share of its Common Stock is greater than $5.84. However, the entire principal amount of the Company Note, and any accrued interest thereon, may be converted by Laurus into the Company’s Common Stock at a price equal to $5.31 per share (the “Fixed Conversion Price”), subject to the limitations in the paragraph below. If the amount due and payable is paid by the Company using Common Stock, the number of shares to be issued to Laurus by the Company will be determined based upon the Fixed Conversion Price. Otherwise, cash payments of interest and principal due on the Company Note must be paid at 102% of the amount then payable.
During the six-month period following the effectiveness of a registration statement (as discussed below) and if no Event of Default (as defined in the terms of the Company Note) has occurred, Laurus may not voluntarily convert, on a monthly basis, a portion of the Company Note that exceeds 10% of that number of shares of the Company traded in the one-month period preceding a voluntary conversion by Laurus.
The Warrant is exercisable by Laurus until January 28, 2012, and has two separate pricing tranches. The first pricing tranche is exercisable for up to 50,000 shares of Common Stock at a price of $5.51 per share. The second pricing tranche is exercisable for up to 50,000 shares of Common Stock at a price of $5.72 per share.
The Company has also agreed to register all of the Common Stock issuable to Laurus pursuant to the Securities, as set forth in a Registration Rights Agreement between the Company and Laurus.
The information above summarizes, and does not provide a complete description of, the transactions consummating the issuance and sale of the Securities. The above summary is qualified in its entirely by reference to the full text of these documents, which are attached as exhibits hereto.
Section 3 – Securities and Trading Markets
Item 3.02. Unregistered Shares of Equity Securities.
The Company sold the Securities to Laurus effective as of January 28, 2005 in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. The Company did not engage an underwriter or placement agent in connection with this transaction.
The terms of the conversion and exercise of the Securities are set forth in Item 1.01 above and incorporated by reference herein.
Section 9 — Financial Statements and Exhibits
Item 9.01(c) Exhibits.
| 4.1 | Securities Purchase Agreement, dated January 28, 2005, by and between the Company and Laurus |
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| 4.2 | Convertible Term Note, dated January 28, 2005, by and between the Company and Laurus |
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| 4.3 | Common Stock Purchase Warrant, dated January 28, 2005, by and between the Company and Laurus |
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| 4.4 | Security Agreement, dated January 28, 2005, by and among the Company, its U.S. subsidiaries, and Laurus |
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| 4.5 | Guaranty, dated January 28, 2005, entered into by each of the Company’s U.S. Subsidiaries |
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| 4.6 | Registration Rights Agreement, dated January 28, 2005, by and between the Company and Laurus |
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| 99.1 | Text of Press Release, dated February 2, 2005. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | NUMEREX CORP.
(Registrant)
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| Date: February 3, 2005 | /s/ Alan B. Catherall | |
| | Alan B. Catherall | |
| | Chief Financial Officer | |
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