SECURITY AND PLEDGE AGREEMENT



         This Security Agreement (this "Agreement"), dated as of March 28,

2003, is executed by Numerex Corp., a Pennsylvania corporation ("Numerex") and

Digilog, Inc., a Pennsylvania corporation ("Digilog" and together with Numerex,

the "Debtors") in favor of Alethea Limited Partnership, a Delaware limited

partnership (the "Secured Party").



         WHEREAS, Digilog has entered into that certain Line of Credit Agreement

dated as of the date hereof with the Secured Party (the "Line of Credit

Agreement"), pursuant to which the Secured Party has agreed to make advances to

Digilog in accordance with the terms thereof; and



         WHEREAS, Numerex has given the Secured Party that certain Guarantee

dated as of the date hereof, pursuant to which Numerex guarantees the prompt

payment and performance of all of Digilog's obligations under the Line of Credit

Agreement and the Term Promissory Note issued by Digilog in connection

therewith; and



         WHEREAS, it is a condition to the obligations of the Secured Party

under the Line of Credit Agreement that Digilog and Numerex execute and deliver

this Security and Pledge Agreement.



         NOW, THEREFORE, for good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, the Debtors hereby agree as

follows:



         Section 1.        Security Interest and Pledge.



                  A.       Grant of Security Interest. Digilog hereby grants,

assigns, transfers, pledges and conveys to the Secured Party a first priority

continuing security interest in and to all of the assets of Digilog, in each

case whether now owned or hereafter acquired, together with all parts,

substitutions, replacements, profits, products and proceeds thereof, as follows:



                          (i) all right, title and interest in and to all of the



     assets and properties of Digilog of every description whatsoever and

     wherever located, tangible and intangible, including without limitation (a)

     all inventory, equipment, machinery, moveable fixtures and goods held for

     sale or being processed for sale of Digilog, maintained in the conduct of

     business; (b) all accounts and funds on deposit of Digilog; (c) all

     receivables of Digilog and all other rights for goods sold or leased or for

     services rendered; (d) all chattel paper, instruments and documents of

     Digilog; (e) all general intangibles of Digilog; (f) all personal property

     of Digilog; and (g) all contract rights, leases and claims of Digilog,

     including without limitation, all rights under any license, sales, supplier

     or other agreements or contracts, and all cash and non-cash proceeds of all

     of the foregoing, including without limitation, all insurance and

     condemnation proceeds of every type or nature (collectively, the "Digilog

     Assets").



{PAGE}



                  B.       Pledge of Stock. Numerex hereby grants, assigns,

transfers, pledges and conveys to the Secured Party a first priority continuing

security interest in and to all of the stock of Digilog, whether now owned or

hereafter acquired, together with all substitutions, replacements, profits and

proceeds thereof, as follows:



                           (i)      all right, title and interest in and to all

         shares of the capital stock of Digilog, now or hereafter owned by

         Numerex and all proceeds (direct or indirect) of such shares, including

         without limitation any and all payments, stock rights, stock splits,

         subscription rights, dividends, distributions, profit allocations, new

         certificates, new securities, additions, renewals, replacements,

         amendments or other rights that are now or hereafter declared, issued,

         paid or distributed or that are now or hereafter payable or

         distributable with respect to such shares (the "Pledged Shares" and

         together with the "Digilog Assets", the "Collateral").



         Section 2.        Secured Liabilities.



                  A.       The security interest granted by Digilog hereunder

     secures the payment and performance of all obligations of Digilog to the

     Secured Party, whether now existing or hereafter arising however created,

     evidenced or arising, whether individually or jointly with others, and

     whether absolute or contingent, direct or indirect, as maker, endorser,

     guarantor, surety or otherwise, liquidated or unliquidated, matured or

     unmatured, whether or not secured by other collateral and including,

     without limitation, all obligations of Digilog to perform or forbear from

     performing any acts, and all costs of collection including attorneys' fees

     and costs, whether such collection occurs prior to, during, or after any

     bankruptcy proceedings are filed by or against Digilog, and further

     specifically includes all of the obligations arising under the Line of

     Credit Agreement, as such obligations are represented by the Note (all of

     which are hereinafter collectively referred to as the "Liabilities").



                  B.       The security interest granted by Numerex hereunder

     secures (i) the payment and performance of all of the Liabilities, and (ii)

     the payment and performance of all obligations of Numerex to the Secured

     Party pursuant to the Guarantee, whether such obligations are now existing

     or hereafter arising however created, evidenced or arising, whether

     individually or jointly with others, and whether absolute or contingent,

     direct or indirect, as maker, endorser, guarantor, surety or otherwise,

     liquidated or unliquidated, matured or unmatured, whether or not secured by

     other collateral and including, without limitation, all obligations of

     Numerex to perform or forbear from performing any acts, and all costs of

     collection including attorneys' fees and costs, whether such collection

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