EXHIBIT 4.8
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the 13th day of January, 2004 among
NUMEREX CORP a Pennsylvania corporation (the "COMPANY") and Laurus Master Fund,
Ltd. (the "PURCHASER"), and Dechert LLP (the "ESCROW AGENT"):
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser have entered into a Securities
Purchase Agreement ("PURCHASE AGREEMENT") for the sale by the Company to the
Purchaser of a secured Term Note (as hereafter defined) and issuance of a
Warrant (as hereafter defined) to the Purchaser in the aggregate principal
amount and in the denomination set forth on Schedule A hereto; and
WHEREAS, the parties hereto require the Company to deliver the Term
Note against payment therefor, with such Term Note and payment to be delivered
to the Escrow Agent to be held in escrow and released by the Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following
terms shall have the meanings set forth below. Terms not otherwise defined
herein shall have the meaning set forth in the Purchase Agreement.
(a) "AGREEMENT" means this Agreement and all amendments
made hereto and thereto by written agreement between the parties.
(b) "COMPANY DOCUMENTS" means the Securities Purchase
Agreement, the Term Note, the Security Agreement, Registration Rights Agreement,
Warrant, the Charter Documents, the Legal Opinion, Unlimited Guarantee and the
Closing Payment .
(c) "CHARTER DOCUMENTS" means the certified copy of the
certificate of incorporation of Numerex, Corp. and its bylaws.
(d) "CLOSING PAYMENT" means the fees to be paid to Laurus
Capital Management set forth on Schedule A hereto.
(e) "DISBURSEMENT LETTER" means that certain letter
delivered to the Escrow Agent by each of the Purchaser and the Company setting
forth wire instructions and amounts to be funded at the Closing.
(f) "SECURITY AGREEMENT" means that certain Security
Agreement delivered by the Company and its subsidiaries pursuant to the
Securities Purchase Agreement.
(g) "ESCROWED PAYMENT" means $4,500,000.
(h) "LEGAL OPINION" means, collectively, the original
signed legal opinions of Arnold & Porter, Catania & Parker and Pamela Lester,
Esq.
(i) "PURCHASER DOCUMENTS" means the Escrowed Payment, the
Securities Purchase Agreement, the Security Agreement, Registration Rights
Agreement and the Disbursement Letter.
(j) "REGISTRATION RIGHTS AGREEMENT" means that certain
registration rights agreement executed and delivered pursuant to the Securities
Purchase Agreement.
(k) "TERM NOTE" means the convertible term note of the
Company issued to the Purchaser in the amount of $4,500,000 in the form of
Exhibit A annexed to the Securities Purchase Agreement.
(l) "WARRANT" means the common stock purchase warrant of
the Company to purchase up to 300,000 shares of the Company's common stock,
issued to Purchaser in connection with the Term Note.
(m) "UNLIMITED GUARANTEE" means that certain guarantee
made by each of the following entities in favor of the Purchaser: Numerex
Solutions, LLC, Cellemetry LLC, Numerex Investment Corp., Broadband Networks
Inc., BNI Solutions LLC, Digilog Inc., DCX Systems Inc., DCX Systems Australia
Pty Limited, MobileGuardian LLC and Uplink Security, Inc.
1.2. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters contained
herein and pertaining to the Company Documents and Purchaser Documents and
supersedes all prior agreements, understandings, negotiations and discussions of
the parties, whether oral or written. There are no warranties, representations
and other agreements made by the parties in connection with the subject matter
hereof except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the
singular number include the plural and vice versa; words importing the masculine
gender include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by all
parties, or, in the case of a waiver, by the party entitled
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to the benefit thereof waiving compliance. Except as expressly stated herein, no
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any right, power or privilege hereunder preclude any other or
future exercise of any other right, power or privilege hereunder.
1.5. Headings. The division of this Agreement into articles,
sections, subsections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.6. Law Governing this Agreement. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by any party
against any other party concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Each of the parties hereto and
the individuals executing this Agreement and other agreements on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. 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.
1.7. Consent to Jurisdiction. Subject to Section 1.6 hereof, each
of the Company, the Escrow Agent and the Purchaser hereby waives, and agrees not
to assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.
1.8. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement 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 any other.
ARTICLE II
DELIVERIES TO THE ESCROW AGENT
2.1. Delivery of Company Documents to Escrow Agent. On or about the
date hereof, the Company shall deliver to the Escrow Agent the Company Documents
executed by the Company to the extent it is a party thereto.
2.2. Delivery of Purchaser Documents to Escrow Agent. On or about
the date hereof, the Purchaser shall deliver to the Escrow Agent the Purchaser
Documents executed by the Purchaser.
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2.3. Intention to Create Escrow Over Company Documents and
Purchaser Documents. The Purchaser, the Company intend that the Company
Documents and Purchaser Documents shall be held in escrow by the Escrow Agent
pursuant to this Agreement for their benefit as set forth herein.
2.4. Escrow Agent to Deliver Company Documents and Purchaser
Documents. The Escrow Agent shall hold and release the Company Documents and
Purchaser Documents only in accordance with the terms and conditions of this
Agreement.
ARTICLE III
RELEASE OF COMPANY DOCUMENTS AND PURCHASER DOCUMENTS
3.1. Release of Escrow. Subject to the provisions of Section 4.2,
the Escrow Agent shall release the Company Documents and Purchaser Documents
pursuant to (a), (b) or (c) below, as follows:
(a) Upon receipt by the Escrow Agent of the Company
Documents and the Purchaser Documents (including the Escrowed Payment), the
Escrow Agent will simultaneously release the Company Documents to the Purchaser
and release the corresponding Purchaser Documents to the Company except that (i)
the Closing Payment will be delivered to the fund managers of Purchaser; and
(ii) the reasonable legal fees for counsel to the Purchaser, which shall be paid
pursuant to Section 2(c) of the Securities Purchase Agreement, will be released
to the Purchaser. At the request of the Escrow Agent, the Company each will
provide written facsimile or original instructions to the Escrow Agent as to the
disposition of all funds releasable to the Company.
(b) Upon receipt by the Escrow Agent of joint written
instructions ("Joint Instructions") signed by the Company and the Purchaser, it
shall deliver the Company Documents and Purchaser Documents in accordance with
the terms of the Joint Instructions.
(c) Upon receipt by the Escrow Agent of a final and
non-appealable judgment, order, decree or award of a court of competent
jurisdiction (a "Court Order"), the Escrow Agent shall deliver the Company
Documents and Purchaser Documents in accordance with the Court Order. Any Court
Order shall be accompanied by an opinion of counsel for the party presenting the
Court Order to the Escrow Agent (which opinion shall be satisfactory to the
Escrow Agent) to the effect that the court issuing the Court Order has competent
jurisdiction and that the Court Order is final and non-appealable.
(d) If the Company Documents and Purchaser Documents
(including the Escrowed Payment) have not been delivered to the Escrow Agent and
distributed as provided in Section 3.1(a) on or before 5:00 p.m. (New York Time)
on the business day following the date on which the Company has delivered all
Company Documents (the "Outside Time"), the Escrow Agent shall, upon the written
instructions of the Company, return the Company Documents to the Company or
deliver the Company Documents to such other place as the Company shall instruct
in such writing; provided, however, that nothing in this Section 3.1(d) shall
prohibit the Escrow Agent from disbursing the Company Documents and Purchaser
Documents (including
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the Escrowed Payment) pursuant to Section 3.1(a) after the Outside Time except
to the extent it has received written instructions from the Company as
aforesaid.
3.2. Acknowledgement of Company and Purchaser; Disputes. The
Company and the Purchaser acknowledge that the only terms and conditions upon
which the Company Documents and Purchaser Documents are to be released are set
forth in Articles 3 and 4 of this Agreement. The Company and the Purchaser
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Company Documents and Purchaser Documents.
Any dispute with respect to the release of the Company Documents and Purchaser
Documents shall be resolved pursuant to Section 4.2 or by agreement among the
Company and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow
Agent's duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Company acknowledge and agree
that the Escrow Agent (i) shall not be responsible for or bound by, and shall
not be required to inquire into whether either the Purchaser or the Company is
entitled to receipt of the Company Documents and Purchaser Documents pursuant to
any other agreement or otherwise; (ii) shall be obligated only for the
performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in acting
or refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented by
the proper person or party, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof; (iv) may assume that any person purporting to give notice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so; (v) shall not be responsible for the
identity, authority or rights of any person, firm or corporation executing or
delivering or purporting to execute or deliver this Escrow Agreement or any
document deposited hereunder or any endorsement thereon or assignment thereof;
(vi) shall not be under any duty to give the property held by Escrow Agent
hereunder any greater degree of care than Escrow Agent gives its own similar
property; and (vii) may consult counsel satisfactory to Escrow Agent, the
opinion of such counsel to be full and complete authorization and protection in
respect of any action taken, suffered or omitted by Escrow Agent hereunder in
good faith and in accordance with the opinion of such counsel.
(b) The Purchaser and the Company acknowledge that the
Escrow Agent is acting solely as a stakeholder at their request and that the
Escrow Agent shall not be liable for any action taken by Escrow Agent in good
faith and believed by Escrow Agent to be authorized or within the rights or
powers conferred upon Escrow Agent by this Agreement. The Purchaser and the
Company, jointly and severally, agree to indemnify and hold harmless the Escrow
Agent and any of Escrow Agent's partners, employees, agents and representatives
for any action taken
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or omitted to be taken by Escrow Agent or any of them hereunder, including the
fees of outside counsel and other costs and expenses of defending itself against
any claim or liability under this Agreement, except in the case of gross
negligence or willful misconduct on Escrow Agent's part committed in its
capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a duty
only to the Purchaser and Company under this Agreement and to no other person.
(c) The Purchaser and the Company jointly and severally
agree to reimburse the Escrow Agent for its reasonable out-of-pocket expenses
(including counsel fees) incurred in connection with the performance of its
duties and responsibilities hereunder not to exceed $1,500.
(d) The Escrow Agent may at any time resign as Escrow
Agent hereunder by giving five (5) days prior written notice of resignation to
the Purchaser and the Company. Prior to the effective date of the resignation as
specified in such notice, the Purchaser and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of the Company Documents and
Purchaser Documents to a substitute Escrow Agent selected by the Purchaser and
the Company. If no successor Escrow Agent is named by the Purchaser and Company,
the Escrow Agent may apply to a court of competent jurisdiction in the State of
New York for appointment of a successor Escrow Agent, and to deposit the Company
Documents and Purchaser Documents with the clerk of any such court.
(e) The Escrow Agent does not have and will not have any
interest in the Company Documents and Purchaser Documents, but is serving only
as escrow agent, having only possession thereof.
(f) The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and reasonably believed by it to be
authorized hereby or within the rights or powers conferred upon it hereunder,
nor for action taken or omitted by it in good faith, and in accordance with
advice of counsel (which counsel may be of the Escrow Agent's own choosing), and
shall not be liable for any mistake of fact or error of judgment or for any acts
or omissions of any kind except for its own willful misconduct or gross
negligence.
(g) This Agreement sets forth exclusively the duties of
the Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel
for the Purchaser or the Company, as the case may be, in any dispute as to the
disposition of the Company Documents and Purchaser Documents, in any other
dispute among the Purchaser and the Company, whether or not the Escrow Agent is
then holding the Company Documents and Purchaser Documents and continues to act
as the Escrow Agent hereunder.
(i) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution: Judgments. Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:
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(a) If any dispute shall arise with respect to the
delivery, ownership, right of possession or disposition of the Company Documents
and Purchaser Documents, or if the Escrow Agent shall in good faith be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be authorized,
without liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Purchaser Documents pending receipt
of a Joint Instruction from the Purchaser and Company, or (ii) deposit the
Company Documents and Purchaser Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Purchaser and the Company and shall thereupon
be relieved and discharged from all further obligations pursuant to this
Agreement. The Escrow Agent may, but shall be under no duty to, institute or
defend any legal proceedings which relate to the Company Documents and Purchaser
Documents. The Escrow Agent shall have the right to retain counsel if it becomes
involved in any disagreement, dispute or litigation on account of this Agreement
or otherwise determines that it is necessary to consult counsel.
(b) The Escrow Agent is hereby expressly authorized to
comply with and obey any Court Order. In case the Escrow Agent obeys or complies
with a Court Order, the Escrow Agent shall not be liable to the Purchaser and
Company or to any other person, firm, corporation or entity by reason of such
compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon the release of
all of the Company Documents and Purchaser Documents or at any time upon the
agreement in writing of the Purchaser and Company.
5.2. Notices. All notices, request, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given one (1) day after being sent by telecopy (with
copy delivered by overnight courier, regular or certified mail):
(a) If to the Company, to: Numerex Corp.
1600 Parkwood Circle SE,
Suite 200
Atlanta, Georgia 30339
Attention: Chief Financial
Officer and Legal
Counsel
Facsimile: (770) 693-5951
with a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attention: Richard Baltz
Facsimile: (202) 942-5999_
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(b) If to the Purchaser, to: Laurus Master Fund, Ltd.
c/o Ironshore Corporate
Services Ltd.
P.O. Box 1234 G.T.
Queensgate House, South
Church Street
Grand Cayman, Cayman
Islands
Facsimile: 345-949-9877
(c) If to the Escrow Agent, to: Dechert LLP
30 Rockefeller Plaza
New York, NY 10112
Facsimile: 212-698-3599
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall not be held in an
interest bearing account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
5.5. Invalidity. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal, or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission.
5.7. Agreement. Each of the undersigned states that he has read the
foregoing Funds Escrow Agreement and understands and agrees to it.
COMPANY:
NUMEREX CORP.
By: /s/ Stratton J. Nicolaides
-------------------------------
Name: Stratton J. Nicolaides
-------------------------------
Title: CEO
-------------------------------
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PURCHASER:
LAURUS MASTER FUND, LTD.
By: /s/ David Grin
--------------------------------
Name: David Grin
--------------------------------
Title:
--------------------------------
ESCROW AGENT:
DECHERT LLP
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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SCHEDULE A TO FUNDS ESCROW AGREEMENT
PURCHASER PRINCIPAL NOTE AMOUNT
LAURUS MASTER FUND, LTD., $4,500,000 Term Note
c/o Ironshore Corporate Services Ltd.,
P.O. Box 1234 G.T., Queensgate House,
South Church Street, Grand Cayman,
Cayman Islands
Fax: 345-949-9877
TOTAL $4,500,000
FUND MANAGER CLOSING PAYMENT
LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection
825 Third Avenue, 14th Floor with investment by Laurus Master
New York, New York 10022 Fund, Ltd. for which Laurus Capital
Fax: 212-541-4434 Management, L.L.C. is the Manager.
TOTAL $157,500
WARRANTS
WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
LAURUS MASTER FUND, LTD. 300,000 Warrants issuable in
A Cayman Island corporation connection with investment by Laurus
c/o Ironshore Corporate Services Ltd. Master Fund, Ltd.
P.O. Box 1234 G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: 345-949-9877
TOTAL 300,000 WARRANTS
Schl-1