Document:

exv10w2

 

Exhibit 10.2

VOID AFTER 5:00 P.M., NEW YORK CITY

TIME, ON SEPTEMBER 2, 2010

UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

Right to
 Purchase 2,000,000 Shares of

 Common Stock, par value $.01 per share

Date: September 2, 2005

REMOTE DYNAMICS, INC.

STOCK PURCHASE WARRANT

THIS CERTIFIES THAT, for value received, SDS Capital Group SPC, Ltd., or its registered and
permitted assigns, is entitled to purchase from Remote Dynamics, Inc., a corporation organized
under the laws of the State of Delaware (the “Company”), at any time or from time to time during
the period specified in Section 2 hereof, Two Million (2,000,000) fully paid and nonassessable
shares (the “Warrant Shares”) of the Company’s common stock, par value $.01 per share (the “Common
Stock”), at an initial exercise price per share (the “Exercise Price”) equal to $1.75. The number
of Warrant Shares and the Exercise Price are subject to adjustment as provided in Section 4 hereof.
The term “Warrant” and all references thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as so amended or
supplemented, including all Warrants issued upon transfer or exchange of this Warrant as provided
herein, and the term “Warrants” means this Warrant and the other warrants of the Company issued
pursuant to the Securities Purchase Agreement dated as of May 31, 2005 by and among the Company and
the other signatories thereto (the “Securities Purchase Agreement”).

This Warrant is subject to the following terms, provisions and conditions:

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1. Exercise of Warrant.

     (a) Subject to the provisions hereof, including, without limitation, the limitations contained
in Section 10 hereof, this Warrant may be exercised by the holder hereof, in whole or in part, by
delivering (personally, by nationally recognized overnight carrier or by confirmed facsimile
transmission) a copy of this Warrant and a completed exercise notice in the form attached hereto
(the “Exercise Notice”), to the Company during normal business hours on any business day at the
Company’s principal executive offices (or such other office or agency of the Company as it may
designate by written notice to the holder hereof), and upon (i) payment to the Company in cash, by
certified or official bank check or by wire transfer for the account of the Company, of the
Exercise Price for the Warrant Shares specified in the Exercise Notice or (ii) if the holder is
effectuating a Cashless Exercise (as defined in Section 9 hereof) pursuant to Section 9 hereof,
delivery to the Company of a written notice of an election to effect a Cashless Exercise for the
Warrant Shares specified in the Exercise Notice. The holder shall surrender the Warrant to the
Company concurrently with the delivery of the Exercise Notice or promptly thereafter.

     (b) The Warrant Shares purchased upon exercise of this Warrant in accordance with this Section
1 shall be deemed to be issued to the holder hereof or the holder’s designee, as the record owner
of such shares, as of the close of business on the date on which a copy of this Warrant shall have
been delivered, the completed Exercise Notice shall have been delivered, and payment shall have
been made for such shares as set forth above or, if such date is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Notice, shall be delivered to the holder hereof or the holder’s
designee within a reasonable time, not exceeding two business days after the surrender of this
Warrant to the Company (the “Delivery Period”). If the Company’s transfer agent is participating
in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, and so long as
the certificates therefor do not bear a legend (pursuant to the terms of the Securities Purchase
Agreement) and the holder is not obligated to return such certificate for the placement of a legend
thereon (pursuant to the Securities Purchase Agreement), the Company shall cause its transfer agent
to electronically transmit the Warrant Shares so purchased to the holder or the holder’s designee
by crediting the account of the holder or the holder’s designee or its respective nominee with DTC
through its Deposit Withdrawal Agent Commission system (“DTC Transfer”). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the holder or the
holder’s designee physical certificates representing the Warrant Shares so purchased.
Notwithstanding the foregoing, the holder or the holder’s designee may instruct the Company to
deliver to the holder or such designee physical certificates representing the Warrant Shares so
purchased in lieu of delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder hereof or the holder’s
designee, shall be registered in the name of the holder or such other name as shall be designated
by the holder and, following the date on which the Warrant Shares have been registered under the
Securities Act pursuant to that certain Registration Rights Agreement, dated as of the initial
issuance date of the Company’s Series B Preferred Stock, by and among the Company and the other
signatories thereto (the “Registration Rights Agreement”) or otherwise may be sold by the holder
pursuant to Rule 144 promulgated under the Securities Act (or a successor rule), shall not bear any
restrictive legend. If this Warrant shall have been exercised only in part, then the Company
shall, at its expense, at the time of delivery of such certificates, deliver to the holder a

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new Warrant representing the number of shares with respect to which this Warrant shall not
then have been exercised.

     (c) If, at any time, a holder of this Warrant submits this Warrant, an Exercise Notice and
payment to the Company of the Exercise Price for each of the Warrant Shares specified in the
Exercise Notice (including pursuant to a Cashless Exercise), and the Company fails for any reason
(other than the reasons contemplated by Section 10 hereof) to deliver, on or prior to the fourth
business day following the expiration of the Delivery Period for such exercise, the number of
shares of Common Stock to which the holder is entitled upon such exercise (an “Exercise Default”),
then the Company shall pay to the holder payments (“Exercise Default Payments”) for an Exercise
Default in the amount of (i) (N/365), multiplied by (ii) the amount by which the Market Price (as
defined in Section 11 hereof) of the Common Stock on the date the Exercise Notice giving rise to
the Exercise Default is transmitted in accordance with this Section 1 (the “Exercise Default Date”)
exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (iii) the number of
shares of Common Stock the Company failed to so deliver in such Exercise Default, multiplied by
(iv) .18, where N equals the number of days from the Exercise Default Date to the date that the
Company effects the full exercise of this Warrant which gave rise to the Exercise Default. The
accrued Exercise Default Payment for each calendar month shall be paid in cash and shall be made to
the holder by the fifth day of the month following the month in which it has accrued. Nothing
herein shall limit the holder’s right to pursue actual damages for the Company’s failure to
maintain a sufficient number of authorized shares of Common Stock as required pursuant to the terms
of Section 3(b) hereof or to otherwise issue shares of Common Stock upon exercise of this Warrant
in accordance with the terms hereof, and the holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or injunctive
relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from time to time
during the period (the “Exercise Period”) commencing on the six-month anniversary of the date
hereof (the “Commencement Date”) and ending at 5:00 p.m., New York City time, on the fifth
anniversary of the initial issuance of this Warrant. The Exercise Period shall automatically be
extended by one day for each day on which (a) the Company does not have a number of shares of
Common Stock reserved for issuance upon exercise hereof at least equal to the number of shares of
Common Stock issuable upon exercise hereof or otherwise fails to deliver shares of Common Stock in
the names set forth in Section 1 hereof upon proper exercise hereof, or (b) the Warrant Shares are
not then otherwise registered for resale as required pursuant to the terms of the Registration
Rights Agreement.

3. Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

     (a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in accordance
with the terms of this Warrant, be validly issued, fully paid and non-assessable and free from all
taxes, liens, claims and encumbrances.

     (b) Reservation of Shares. During the Exercise Period, the Company shall at all times
have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a

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sufficient number of shares of Common Stock to provide for the exercise in full of this
Warrant (without giving effect to the limitations on exercise set forth in Section 10 hereof).

     (c) Listing. The Company shall use commercially reasonable efforts to promptly secure
the listing or quotation of the shares of Common Stock issuable upon exercise of this Warrant upon
each national securities exchange or automated or electronic quotation system, if any, upon which
shares of Common Stock are then listed or quoted or become listed or quoted (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed or quoted, such listing or quotation of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list
or apply for quotation on each national securities exchange or automated or electronic quotation
system, as the case may be, and shall maintain such listing or quotation of, any other shares of
capital stock of the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed or quoted on such national securities exchange or
automated or electronic quotation system.

     (d) Certain Actions Prohibited. The Company shall not, by amendment of its charter or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in order to protect the
economic benefit inuring to the holder hereof and the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.

     (e) Successors and Assigns. This Warrant shall be binding upon any entity succeeding
to the Company by merger, consolidation, or acquisition of all or substantially all of the
Company’s assets.

     (f) Dilutive Issuances. The Company shall not make a Dilutive Issuance, as defined in
the Certificate of Designation, Preferences and Rights of the Company’s Series B Preferred Stock)
without first obtaining the consent of the holder of this Warrant.

4. Antidilution Provisions. During the period beginning on the date of the Securities
Purchase Agreement and ending on the termination of the Exercise Period (the “Adjustment Period”),
the Exercise Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.

     (a) Stock Splits, Stock Dividends, Etc. If, at any time during the Adjustment Period,
the number of outstanding shares of Common Stock is increased by a stock split, stock dividend,
combination, reclassification or other similar event, the Exercise Price in effect immediately
prior to such increase shall be proportionately reduced, or if the number of outstanding shares of

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Common Stock is decreased by a reverse stock split, combination, reclassification or other
similar event, the Exercise Price in effect immediately prior to such decrease shall be
proportionately increased.

     (b) Merger,
Consolidation, Etc. If, at any time during the Adjustment Period, there
shall be (i) any reclassification or change of the outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the Company with any
other entity (other than a merger in which the Company is the surviving or continuing entity and
its capital stock is unchanged), (iii) any sale or transfer of all or substantially all of the
assets of the Company or (iv) any share exchange or other transaction pursuant to which all of the
outstanding shares of Common Stock are converted into other securities or property (each of (i) -
(iv) above being a “Corporate Change”), then the holder hereof shall thereafter have the right to
receive upon exercise of this Warrant, in lieu of the Warrant Shares otherwise issuable, such
shares of stock, securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of Warrant Shares which would have
been issuable upon exercise had such Corporate Change not taken place (without giving effect to the
limitations contained in Section 10), and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the holder hereof) shall be made with respect to the rights
and interests of the holder to the end that the economic value of this Warrant is in no way
diminished by such Corporate Change and that the provisions hereof (including, without limitation,
in the case of any such consolidation, merger or sale in which the successor entity or purchasing
entity is not the Company, an immediate adjustment of the Exercise Price and Warrant Shares so that
the Exercise Price and Warrant Shares immediately after the Corporate Change reflects the same
relative value as compared to the value of the surviving entity’s common stock that existed between
the Exercise Price and the Warrant Shares and the value of the Company’s Common Stock immediately
prior to such Corporate Change) shall thereafter be applicable, as nearly as may be practicable in
relation to any shares of stock or securities thereafter deliverable upon the exercise thereof.
The Company shall not effect any Corporate Change unless (A) the holder hereof has received written
notice of such transaction at least 30 days prior thereto, but in no event later than 15 days prior
to the record date for the determination of stockholders entitled to vote with respect thereto, and
(B) the resulting successor or acquiring entity (if not the Company) assumes by written instrument
(in form and substance reasonable satisfactory to the holder hereof) the obligations of the Company
under this Warrant. The above provisions shall apply regardless of whether or not there would have
been a sufficient number of shares of Common Stock authorized and available for issuance upon
exercise hereof as of the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

     (c) Distributions. If, at any time during the Adjustment Period, the Company shall
declare or make any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or otherwise (including
any dividend or distribution to the Company’s stockholders in cash or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the holder
hereof shall be entitled, upon any exercise of this Warrant after the date of record for
determining stockholders entitled to such Distribution (or if no such record is taken, the date on
which such Distribution is declared or made), to receive the amount of such assets which would

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have been payable to the holder with respect to the Warrant Shares issuable upon such exercise
(without giving effect to the limitations contained in Section 10) had the holder hereof been the
holder of such Warrant Shares on the record date for the determination of stockholders entitled to
such Distribution (or if no such record is taken, the date on which such Distribution is declared
or made).

     (d) Convertible Securities and Purchase Rights. If, at any time during the Adjustment
Period, the Company issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock (“Convertible Securities”) or options, warrants or
other rights to purchase or subscribe for Common Stock or Convertible Securities (“Purchase
Rights”) pro rata to the record holders of any class of Common Stock, whether or not such
Convertible Securities or Purchase Rights are immediately convertible, exercisable or exchangeable,
then the holder hereof shall be entitled, upon any exercise of this Warrant after the date of
record for determining stockholders entitled to receive such Convertible Securities or Purchase
Rights (or if no such record is taken, the date on which such Convertible Securities or Purchase
Rights are issued), to receive the aggregate number of Convertible Securities or Purchase Rights
which the holder would have received with respect to the Warrant Shares issuable upon such exercise
(without giving effect to the limitations contained in Section 10) had the holder hereof been the
holder of such Warrant Shares on the record date for the determination of stockholders entitled to
receive such Convertible Securities or Purchase Rights (or if no such record is taken, the date on
which such Convertible Securities or Purchase Rights were issued). If the right to exercise or
convert any such Convertible Securities or Purchase Rights would expire in accordance with their
terms prior to the exercise of this Warrant, then the terms of such Convertible Securities or
Purchase Rights shall provide that such exercise or convertibility right shall remain in effect
until 30 days after the date the holder receives such Convertible Securities or Purchase Rights
pursuant to the exercise hereof.

     (e) Other Action Affecting Exercise Price. If, at any time during the Adjustment
Period, the Company takes any action affecting the Common Stock that would be covered by Section
4(a) through (d), but for the manner in which such action is taken or structured, which would in
any way diminish the value of this Warrant, then the Exercise Price shall be adjusted in such
manner as the Board of Directors of the Company shall in good faith determine to be equitable under
the circumstances.

     (f) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 4, the number of shares of Common Stock issuable upon
exercise of this Warrant at each such Exercise Price shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares
of Common Stock issuable upon exercise of this Warrant at such Exercise Price immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise Price.

     (g) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of stock, securities
and/or other property issuable upon exercise of this Warrant, then, and in each such case, the
Company shall give notice thereof to the holder hereof, which notice shall state the Exercise Price
resulting from such adjustment or readjustment and any change in the number of type of

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stock, securities and/or other property issuable upon exercise of this Warrant, setting forth
in reasonable detail the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the Company.

     (h) No Fractional Shares. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the same fraction of the
Market Price of a share of Common Stock on the date of such exercise.

     (i) Other Notices. In case at any time:

          (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of
any class or make any other distribution (other than dividends or distributions payable in cash out
of retained earnings consistent with the Company’s past practices with respect to declaring
dividends and making distributions) to the holders of the Common Stock;

          (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any
additional shares of stock of any class or other rights;

          (iii) there shall be any capital reorganization of the Company, or reclassification of the
Common Stock, or consolidation or merger of the Company with or into, or sale of all or
substantially all of its assets to, another corporation or entity; or

          (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in each such case, the Company shall give to the holder of this Warrant (A) notice of the
date or estimated date on which the books of the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to vote in respect of
any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be
given at least thirty (30) days prior to the record date or the date on which the Company’s books
are closed in respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the substance of any notice
delivered hereunder prior to delivery of such notice to the holder hereof.

5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder of this Warrant or such shares for any

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issuance tax or other costs in respect thereof, provided that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than the holder of this Warrant.

6. No Rights or Liabilities as a Stockholder. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

7. Transfer, Exchange, Redemption and Replacement of Warrant.

     (a) Restriction on Transfer. This Warrant and the rights granted to the holder hereof
are transferable, in whole or in part, upon surrender of this Warrant, together with a properly
executed assignment in the form attached hereto, at the office or agency of the Company referred to
in Section 7(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 7(f) and 10 hereof and to the provisions of Section
5 of the Securities Purchase Agreement. Until due presentment for registration of transfer on the
books of the Company, the Company may treat the registered holder hereof as the owner and holder
hereof for all purposes, and the Company shall not be affected by any notice to the contrary.
Notwithstanding anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the Registration Rights
Agreement.

     (b) Warrant Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the holder hereof at the office or agency of the Company referred to
in Section 7(e) below, for new Warrants of like tenor of different denominations representing in
the aggregate the right to purchase the number of shares of Common Stock which may be purchased
hereunder, each of such new Warrants to represent the right to purchase such number of shares (at
the Exercise Price therefor) as shall be designated by the holder hereof at the time of such
surrender.

     (c) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.

     (d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this Section 7, this Warrant
shall be promptly canceled by the Company. The holder shall pay all taxes and all other expenses
(other than legal expenses, if any, incurred by the Company) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Section 7. The Company shall
indemnify and reimburse the holder of this Warrant for all losses and damages arising as a result
of or related to any breach of the terms of this Warrant, including

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costs and expenses (including legal fees) incurred by such holder in connection with the
enforcement of its rights hereunder.

     (e) Warrant Register. The Company shall maintain, at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to the holder hereof),
a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

     (f) Transfer or Exchange Without Registration. If, at the time of the surrender of
this Warrant in connection with any transfer or exchange of this Warrant, this Warrant (or, in the
case of any exercise, the Warrant Shares issuable hereunder) shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such transfer or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in comparable transactions)
to the effect that such transfer or exchange may be made without registration under the Securities
Act and under applicable state securities or blue sky laws (the cost of which shall be borne by the
Company if the Company’s counsel renders such an opinion, and up to $1,000 of such cost (subject to
a maximum aggregate cost of $10,000) shall be borne by the Company if the holder’s counsel is
required to render such opinion), (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company and (iii) that the
transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities
Act.

8. Registration Rights. The initial holder of this Warrant (and certain assignees thereof)
is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set
forth in the Registration Rights Agreement, including the right to assign such rights to certain
assignees, as set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time after the first
anniversary of the date hereof and during the remaining Exercise Period by presentation and
surrender of this Warrant to the Company at its principal executive offices with a written notice
of the holder’s intention to effect a cashless exercise, including a calculation of the number of
shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a
“Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the holder shall surrender this Warrant for that number of shares of Common Stock determined
by multiplying the number of Warrant Shares to which it would otherwise be entitled by a fraction,
the numerator of which shall be the difference between the then current Market Price of a share of
the Common Stock on the date of exercise and the Exercise Price, and the denominator of which shall
be the then current Market Price per share of Common Stock.

10. Restrictions on Exercise and Transfer. In no event shall the holder hereof have the
right to exercise any portion of this Warrant for shares of Common Stock or to dispose of any
portion of this Warrant to the extent that such right to effect such exercise or disposition would
result in the holder and its affiliates together beneficially owning more than 9.99% of the
outstanding shares of Common Stock. For purposes of this Section 10, beneficial ownership shall be

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determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder. The restriction contained in this Section 10 may not be altered,
amended, deleted or changed in any manner whatsoever unless the holders of a majority of the
outstanding shares of Common Stock and the holder hereof shall approve, in writing, such
alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized terms
shall have the respective meanings assigned to them:

     (a) “business day” means any day, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law, regulation or executive
order to close.

     (b) “Market Price” means, for any security as of any date, the last sales price of such
security on the principal trading market where such security is listed or traded as reported by
Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by
the Company and reasonably acceptable to the holder hereof if Bloomberg Financial Markets is not
then reporting closing sales prices of such security) (in any case, “Bloomberg”), or if the
foregoing does not apply, the last reported sales price of such security on a national exchange or
in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no such price is reported for such security by Bloomberg, the average of the bid
prices of all market makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc., in each case for such date or, if such date was not a trading day for such
security, on the next preceding date which was a trading day. If the Market Price cannot be
calculated for such security as of either of such dates on any of the foregoing bases, the Market
Price of such security on such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the holder hereof,
with the costs of such appraisal to be borne by the Company.

     (c) “trading day” means any day on which the SmallCap Market or, if the Common Stock is not
then traded on the SmallCap Market, the principal national securities exchange, automated quotation
system or other trading market where the Common Stock is then listed, quoted or traded, is open for
trading.

12. Miscellaneous.

     (a) Governing Law; Jurisdiction. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made and to be performed
in the State of Delaware. The Company irrevocably consents to the jurisdiction of the United
States federal courts and the state courts located in the County of New Castle, State of Delaware,
in any suit or proceeding based on or arising under this Warrant and irrevocably agrees that all
claims in respect of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding in such forum. The Company further agrees that service of process upon the Company
mailed by first class mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the right of the holder to
serve process in any other manner permitted by law. The Company agrees that a final

- 10 -

 

non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.

     (b) Construction. Whenever the context requires, the gender of any word used in this
Warrant includes the masculine, feminine or neuter, and the number of any word includes the
singular or plural. Unless the context otherwise requires, all references to articles and sections
refer to articles and sections of this Warrant, and all references to schedules are to schedules
attached hereto, each of which is made a part hereof for all purposes. The descriptive headings of
the several articles and sections of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.

     (c) Severability. If any provision of this Warrant shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Warrant or the validity or enforceability of this Warrant
in any other jurisdiction.

     (d) Entire Agreement; Amendments. This Warrant contains the entire understanding of
the Company and the holder hereof with respect to the matters covered herein. Subject to any
additional express provisions of this Warrant, no provision of this Warrant may be waived other
than by an instrument in writing signed by the party to be charged with enforcement, and no
provision of this Warrant may be amended other than by an instrument in writing signed by the
Company and the holder.

     (e) Notices. Any notices required or permitted to be given under the terms of this
Warrant shall be sent by certified or registered mail (return receipt requested) or delivered
personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and
shall be effective five days after being placed in the mail, if mailed, or upon receipt or refusal
of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party. The initial addresses for such
communications shall be as follows, and each party shall provide notice to the other parties of any
change in such party’s address:

          (i) If to the Company:

Remote Dynamics, Inc.

1155 Kas Drive, Suite 100

Richardson, TX 75081

Telephone: 972-301-2733

Facsimile: 972-301-2263

Attention: J. Raymond Bilbao, Esquire

with a copy simultaneously transmitted by like means (which transmittal

shall not constitute notice hereunder) to:

Locke Liddell & Sapp LLP

2200 Ross Avenue

Suite 2200

- 11 -

 

Dallas, TX 75201-6776

Telephone: 214-740-8570

Facsimile: 214-756-8570

Attention: Stephen L. Sapp. Esquire

          (ii) If to the holder, at such address as shall be set forth in the Warrant Register from time
to time.

     (f) Successors and Assigns. This Warrant shall be binding upon and inure to the
benefit of the Company, the holder and their respective permitted successors and assigns. Except
as provided herein, the Company shall not assign this Warrant or its obligations hereunder. The
holder hereof may assign or transfer this Warrant and such holders rights hereunder in accordance
with Section 7 hereof.

     (g) Equitable Relief. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holder by vitiating the intent and purpose of this
Warrant. Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Warrant, that the holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

- 12 -

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer.

	 	 	 
	 

	REMOTE DYNAMICS, INC.
	 
	 	 
	 

	By:	 /s/ W. Michael Smith
	 

	 	 
	 

	Name: 	W. Michael Smith
	 

	Title:	COO

[SIGNATURE PAGE TO STOCK PURCHASE WARRANT]

 

FORM OF EXERCISE NOTICE

(To be Executed by the Holder in order to Exercise the Warrant)

	 	 	 
	To:

	 	Remote Dynamics, Inc.
	 

	 	1155 Kas Drive, Suite 1000
	 

	 	Richardson, TX 75081
	 

	 	Facsimile: (972) 301-2263
	 

	 	Attention: Chief Executive Officer

     The
undersigned hereby irrevocably exercises the right to purchase ___ shares of the
Common Stock of Remote Dynamics, Inc., a corporation organized under the laws of the State of
Delaware (the “Company”), at the current Exercise Price of $___, evidenced by the attached
Warrant, and herewith [makes payment of the Exercise Price with respect to such shares in
full][elects to effect a Cashless Exercise (as defined in Section 9 of such Warrant)], all in
accordance with the conditions and provisions of said Warrant.

     The undersigned agrees not to offer, sell, transfer or otherwise dispose of any Common Stock
obtained on exercise of the Warrant, except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.

o The undersigned requests that the Company cause its transfer
agent to electronically transmit the Common Stock issuable pursuant
to this Exercise Notice to the account of the undersigned or its
nominee (which is ___) with DTC through its Deposit
Withdrawal Agent Commission System (“DTC Transfer”), provided that
such transfer agent participates in the DTC Fast Automated
Securities Transfer program.

o In lieu of receiving the shares of Common Stock issuable
pursuant to this Exercise Notice by way of DTC Transfer, the
undersigned hereby requests that the Company cause its transfer
agent to issue and deliver to the undersigned physical certificates
representing such shares of Common Stock.

The undersigned requests that a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant, in the name of the Holder and delivered to the undersigned at the address
set forth below:

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	     Signature of Holder
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	     Name of Holder (Print)
	 
	 	 	 	 
	 

	 	 	 	     Address:
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

- 14 -

 

FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, to:

	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares
	 

	 	 
	 	 

, and
hereby irrevocably constitutes and appoints ______ as agent
and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with
full power of substitution in the premises.

Dated:                                         ,                     

In the presence of

                    

	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 	 	Title of Signing Officer or Agent (if any):
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Note:
	 	The above signature should correspond
exactly with the name on the face of the
within Warrant.exv10w3

 

Exhibit
10.3

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of September 2, 2005, is made
by and among Remote Dynamics, Inc., a corporation organized under the laws of the State of Delaware
(the “Company”), and the undersigned (together with their affiliates, the “Initial Investors”).

BACKGROUND

     A. In connection with that certain Securities Purchase Agreement dated as of October 1, 2004
by and among the Company and the Initial Investors (the “October Securities Purchase Agreement”),
the Company issued and sold to the Initial Investors (i) shares of the Company’s Series A
Convertible Preferred Stock, with a face amount of $1,000 per share (the “Series A Preferred
Stock”), that are convertible into shares of the Company’s common stock, par value $0.01 per share
(the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the
Certificate of Designation, Rights and Preferences with respect to such Series A Preferred Stock
(the “Series A Certificate of Designation”), (ii) structured warrants (the “Structured Warrants”)
to acquire shares of Common Stock, and (iii) incentive warrants (the “Incentive Warrants”) to
acquire shares of Common Stock. The Structured Warrants and the Incentive Warrants are together
referred to herein as the “October Warrants.” The shares of Common Stock issuable upon conversion
of or otherwise pursuant to the Series A Preferred Stock are referred to herein as the “Series A
Conversion Shares” and the shares of Common Stock issuable upon exercise of or otherwise pursuant
to the October Warrants are referred to herein as the “October Warrant Shares.”

     B. Pursuant to the Registration Rights Agreement dated as of October 1, 2004, the Company
filed and caused to become effective a Registration Statement on Form S-3 (file no. 333-120760)
covering the Series A Conversion Shares and the October Warrant Shares (the “October Registration
Statement”).

     C. In connection with that certain Securities Purchase Agreement dated May 31, 2005 by and
among the Company and the Initial Investors (the “May Securities Purchase Agreement”), the Company
has agreed, upon the terms and subject to the conditions contained therein, (i) to issue and sell
to the Initial Investors a promissory note, with a principal amount of $1,750,000 (the “Note”),
that, if approved by the Company’s stockholders, will be exchanged for Series C-1 warrants to
purchase Common Stock (the “C-1 Warrants”) and Series C-2 warrants to purchase Common Stock (the
“C-2 Warrants,” which, together with the C-1 Warrants, are referred to herein as the “C Warrants”),
(ii) to exchange the issued and outstanding shares of Series A Preferred Stock issued in connection
with the October Purchase Agreement for shares of the Company’s Series B Convertible Preferred
Stock, with a face amount of $10,000 per share (the “Series B Preferred Stock”), that are
convertible into shares of Common Stock, upon the terms and subject to the limitations and
conditions set forth in the Certificate of Designation, Rights and Preferences with respect to such
Series B Preferred Stock (the “Series B Certificate of

 

 

Designation”), and (iii) to issue and sell to the Initial Investors warrants to acquire shares
of Common Stock in connection with the issuance of the Series B Preferred Stock (the “May
Warrants”). The shares of Common Stock issuable upon conversion of or otherwise pursuant to the
Series B Preferred Stock are referred to herein as the “Series B Conversion Shares,” the shares of
Common Stock issuable upon exercise of or otherwise pursuant to the May Warrants are referred to
herein as the “May Warrant Shares,” and the shares of Common Stock issuable upon exercise or
otherwise pursuant to the C Warrants are referred to herein as the “C Warrant Shares.” The October
Warrants, the May Warrants and the C Warrants are referred to collectively herein as the
“Warrants,” and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the
Warrants are referred to collectively herein as the “Warrant Shares.” The Series A Conversion
Shares and the Series B Conversion Shares are referred to collectively herein as the “Conversion
Shares.” The Series A Preferred Stock and the Series B Preferred Stock is referred to collectively
herein as the “Preferred Stock.”

     D. To induce the Initial Investors to execute and deliver the May Securities Purchase
Agreement, and to consummate the transactions contemplated thereby, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Initial Investors, intending to be legally bound, hereby agree as
follows:

1. DEFINITIONS.

     (a) As used in this Agreement, the following terms shall have the following meanings:

          (i) “Additional Registrable Securities” means (a) the C Warrant Shares, and (b) any shares of
capital stock issued or issuable, from time to time, as a distribution on or in exchange for or
otherwise with respect to the C Warrant Shares, whether as default payments, on account of
anti-dilution or other adjustments or otherwise.

          (ii) “business day” means any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law, regulation or executive
order to close.

          (iii) “Investor” means the Initial Investors and any permitted transferees or assignees who
agree to become bound by the provisions of this Agreement in accordance with Section 9 hereof.

          (iv) “October Registrable Securities” means (a) the Series A Conversion Shares, (b) the
October Warrant Shares, (c) additional shares of Common Stock issuable upon a Change of Control (as
defined in that certain Certificate of Designation, Preferences and Rights of Series A Preferred
Stock of the Company), and (d) any shares of capital stock issued or issuable,

2

 

from time to time, as a distribution on or in exchange for or otherwise with respect to any of
the foregoing (including the Series A Preferred Stock and the October Warrants), whether as default
payments, on account of anti-dilution or other adjustments or otherwise; provided, however, that
the October Registrable Securities shall not include any of the foregoing that have been exchanged
for May Registrable Securities or otherwise disposed of under the October Registration Statement.

          (v) “register,” “registered,” and “registration” refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of
such Registration Statement by the United States Securities and Exchange Commission (the “SEC”).

          (vi) “May Registrable Securities” means (a) the Series B Conversion Shares, (b) the May
Warrant Shares, (c) additional shares of Common Stock issuable upon a Change of Control (as defined
in that certain Certificate of Designation, Preferences and Rights of Series B Preferred Stock of
the Company), and (d) any shares of capital stock issued or issuable, from time to time, as a
distribution on or in exchange for or otherwise with respect to any of the foregoing (including the
Series B Preferred Stock and the May Warrants), whether as default payments, on account of
anti-dilution or other adjustments or otherwise.

          (vii) “Registrable Securities” means the Additional Registrable Securities, the May
Registrable Securities and October Registrable Securities, collectively.

          (viii) “Registration Statement” means a registration statement of the Company under the
Securities Act.

          (ix) “trading day” means any day on which the SmallCap Market or, if the Common Stock is not
then traded on the SmallCap Market, the principal national securities exchange, automated quotation
system or other trading market where the Common Stock is then listed, quoted or traded, is open for
trading.

     (b) Capitalized terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.

2. REGISTRATION.

     (a) Mandatory Registration.

     (i) The Company shall prepare promptly and file with the SEC as soon as practicable, but in no
event later than the thirtieth (30th) day following the date hereof (the “Initial
Filing Date”), a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on such
form of Registration Statement as is then available to effect a registration of all of the May
Registrable Securities and October Registrable Securities, subject to the consent of the Initial
Investors), which Registration Statement shall be filed pursuant to Rule 415 and Rule 429 of the
Securities Act and cover the resale of at least 10,000,000 Registrable Securities consisting of (A)
the October Registrable Securities and (B) the May Registrable Securities.

3

 

     (ii) The Company shall prepare promptly and file with the SEC as soon as practicable after the
issuance of the C Warrants, but in no event later than the thirtieth (30th) day
following the issuance of the C Warrants (the “Second Filing Date”), a Registration Statement on
Form S-3 (or, if Form S-3 is not then available, on such form of Registration Statement as is then
available to effect a registration of all of the Additional Registrable Securities, and to the
extent that there remain May Registrable Securities and October Registrable Securities for which
there is no registration statement on file with the SEC, then all of the remaining unregistered May
Registrable Securities and October Registrable Securities, subject to the consent of the Initial
Investors), which Registration Statement shall be filed pursuant to Rule 415 and Rule 429 of the
Securities Act and cover the resale of at least 10,000,000 Registrable Securities consisting of (A)
the October Registrable Securities, (B) the May Registrable Securities and (c) the Additional
Registrable Securities.

     (iii) Each Registration Statement filed hereunder, to the extent allowable under the
Securities Act and the Rules promulgated thereunder (including Rule 416), shall state that such
Registration Statement also covers such indeterminate number of additional shares of Common Stock
as may become issuable upon conversion of the Preferred Stock and exercise of the Warrants (as the
case may be) to prevent dilution resulting from stock splits, stock dividends or similar
transactions. The Registrable Securities included on each Registration Statement shall be
allocated among the Investors as set forth in Section 11(k) hereof. The Registration Statements
shall contain the “Plan of Distribution” in the form attached hereto as Exhibit A (the
“Plan of Distribution”), unless otherwise directed by a majority of the Investors who provide a new
legal Plan of Distribution. The Registration Statements (and each amendment or supplement thereto,
and each request for acceleration of effectiveness thereof) shall be provided to (and subject to
the reasonable review and, in the case of the “Selling Security Holders” and “Plan of Distribution”
sections of the Registration Statement, the approval of) the Initial Investors and their counsel
prior to its filing or other submission.

     (b) Payments by the Company. The Company shall use its best efforts to cause the
Registration Statements required to be filed pursuant to Section 2(a)(i) and (ii) hereof to become
effective as soon as practicable, but in no event later than the ninetieth (90th) day
following the date hereof and the date of issuance of the C Warrants, respectively. At the time of
effectiveness, the Company shall ensure that such Registration Statements cover all of the
Registrable Securities issuable upon full conversion of the all outstanding Preferred Stock
(without giving effect to any limitations on conversion contained in the Certificates of
Designation) and exercise of all outstanding Warrants (without giving effect to any limitations on
exercise contained in the Warrants), including, if necessary, by filing an amendment prior to the
effective date of any Registration Statement to increase the number of Registrable Securities
covered thereby. If (i) (A) the Registration Statement required to be filed pursuant to Section
2(a)(i) hereof is not filed with the SEC prior to the Initial Filing Date or declared effective by
the SEC on or before the one hundred twentieth (120th) day following the date hereof
(the “Initial Registration Deadline”), (B) the Registration Statement required to be filed pursuant
to Section 2(a)(ii) hereof is not filed with the SEC prior to the Second Filing Date or declared
effective by the SEC on or before the one hundred twentieth (120th) day following the
date of issuance of the C Warrants (the “Second Registration Deadline”), or (C) any Registration
Statement required to be filed pursuant to Section 3(b) hereof is not declared effective by the SEC
on or before the sixtieth (60th) day following the applicable Registration Trigger Date
(as defined in Section 3(b) below), or (ii) if, after any such Registration Statement has been
declared effective by the SEC,

4

 

sales of any of the Registrable Securities required to be covered by such Registration
Statement (including any Registrable Securities required to be registered pursuant to Section 3(b)
hereof) cannot be made pursuant to such Registration Statement (by reason of a stop order or the
Company’s failure to update the Registration Statement or for any other reason outside the control
of the Investors) or (iii) the Common Stock is not listed or included for quotation on the Nasdaq
SmallCap Market (the “SmallCap Market”), the Nasdaq National Market (the “National Market”), the
New York Stock Exchange (the “NYSE”) or the American Stock Exchange (the “AMEX”) at any time after
the Registration Deadline hereunder, then the Company will make payments to each Investor in such
amounts and at such times as shall be determined pursuant to this Section 2(b) as relief for the
damages to the Investors by reason of any such delay in or reduction of their ability to sell the
Registrable Securities (which remedy shall not be exclusive of any other remedies available at law
or in equity). The Company shall pay to each Investor an amount equal to the product of (i) the
number of shares of Preferred Stock then outstanding (including, for this purpose, any shares of
Preferred Stock that have been converted into Conversion Shares then held by such Investor as if
such shares of Preferred Stock had not been so converted) multiplied by the per share purchase
price, multiplied by (ii) three hundredths (.03) for the 30 day period beginning the
90th day after the date hereof and ending the 120th day after the date
hereof, and fifteen thousandths (.015) for each subsequent 30 day period (or portion thereof) (A)
after the Initial Filing Date and prior to the date the Initial Registration Statement is filed
with the SEC pursuant to Section 2(a)(i), (B) after the Second Filing Date and prior to the date
the Second Registration Statement is filed with the SEC pursuant to Section 2(a)(ii), (C) after the
Initial Registration Deadline and prior to the date the Initial Registration Statement filed
pursuant to Section 2(a)(i) is declared effective by the SEC, (D) after the Second Registration
Deadline and prior to the date the Second Registration Statement filed pursuant to Section 2(a)(i)
is declared effective by the SEC, (E) after the sixtieth (60th) day following a
Registration Trigger Date and prior to the date the Registration Statement filed pursuant to
Section 3(b) hereof is declared effective by the SEC, and (F) during which sales of any Registrable
Securities cannot be made pursuant to any such Registration Statement after the Registration
Statement has been declared effective or the Common Stock is not listed or included for quotation
on the SmallCap Market, the National Market, NYSE or AMEX; provided, however, that, for purpose of
calculating the payment amount owed to any given Investor, there shall be excluded from each such
period any delays which are solely attributable to changes required by such Investor in the
Registration Statement with respect to information relating to such Investor, including, without
limitation, changes to the Plan of Distribution (other than any corrections of Company mistakes
with respect to information previously provided by such Investor). All such amounts required to be
paid hereunder shall be paid in cash within five days after the end of each period that gives rise
to such obligation, provided that, if any such period extends for more than thirty (30) days,
interim payments shall be made for each such 30 day period.

     (c) Piggy-Back Registrations. If, at any time prior to the expiration of the
Registration Period (as defined in Section 3(a) below) the Company shall file with the SEC a
Registration Statement relating to an offering for its own account or the account of others under
the Securities Act of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with stock option
or other employee benefit plans), the Company shall send to each Investor written notice of such

5

 

filing, and if, within 15 days after the date of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered. Notwithstanding the foregoing, in
the event that, in connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock which may be included in
the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the Company shall be
obligated to include in such Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion hereunder as the underwriter
shall permit; provided, however, that (i) the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities, the holders of which are not
contractually entitled to inclusion of such securities in such Registration Statement or are not
contractually entitled to pro rata inclusion with the holders of the Registrable Securities, (ii)
after giving effect to the immediately preceding proviso, any such exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include Registrable Securities and
the holders of other securities having the contractual right to inclusion of their securities in
such Registration Statement by reason of demand registration rights, in proportion to the number of
Registrable Securities or other securities, as applicable, sought to be included by each such
Investor or other holder, and (iii) no such reduction shall reduce the amount of Registrable
Securities included in the registration below twenty-five (25%) of the total amount of securities
included in such registration. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required under Section 2(a) hereof. If
an offering in connection with which an Investor is entitled to registration under this Section
2(c) is an underwritten offering, then each Investor whose Registrable Securities are included in
such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or underwriters and,
subject to the provisions of this Agreement, on the same terms and conditions as other shares of
Common Stock included in such underwritten offering.

     (d) Eligibility for Form S-3. The Company represents and warrants that it meets the
requirements for the use of Form S-3 for registration of the sale by the Initial Investors of the
Registrable Securities and the Company shall file all reports and statements required to be filed
by the Company with the SEC in a timely manner so as to thereafter maintain such eligibility for
the use of Form S-3.

     3. OBLIGATIONS OF THE COMPANY.

     In connection with the registration of the Registrable Securities, the Company shall have the
following obligations:

     (a) The Company shall respond as soon as reasonably practicable to any and all comments made
by the staff of the SEC to any Registration Statement required to be filed hereunder, and shall
submit to the SEC, before the close of business on the business day immediately following the
business day on which the Company learns (either by telephone or in writing) that no review of such
Registration Statement will be made by the SEC or that the staff of the SEC has no further comments
on such Registration Statement, as the case may be, a request for acceleration of the effectiveness
of such Registration Statement to a time and date as

6

 

soon as practicable. The Company shall keep such Registration Statement effective pursuant to
Rule 415 at all times until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which all of the Registrable Securities
may be immediately sold to the public without registration or restriction pursuant to Rule 144(k)
under the Securities Act or any successor provision (the “Registration Period”), which Registration
Statement (including any amendments or supplements thereto and prospectuses contained therein and
all documents incorporated by reference therein) (A) shall comply in all material respects with the
requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder
and (B) shall not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not misleading. The
financial statements of the Company included in any such Registration Statement or incorporated by
reference therein (x) shall comply as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC applicable with respect
thereto, (y) shall be prepared in accordance with U.S. generally accepted accounting principles,
consistently applied during the periods involved (except as may be otherwise indicated in such
financial statements or the notes thereto or, in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed on summary statements) and (z) fairly
present in all material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to
immaterial year-end adjustments).

     (b) The Company shall (i) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to any Registration Statement required to be filed
hereunder and the prospectus used in connection with any such Registration Statement as may be
necessary to keep such Registration Statement effective at all times during the Registration
Period, and (ii) during the Registration Period, comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities of the Company covered by any such
Registration Statement until such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement. In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is, for any three (3) consecutive trading
days (the last of such three (3) trading days being the “Registration Trigger Date”), insufficient
to cover all of the Registrable Securities then issued or issuable upon conversion of the Preferred
Stock (without giving effect to any limitations on conversion contained in the Certificate of
Designation) and exercise of the Warrants (without giving effect to any limitations on exercise
contained in the Warrants), the Company shall provide each Investor written notice of such
Registration Trigger Date within three business days thereafter and shall amend the Registration
Statement, or file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities issued or issuable upon
conversion of the Preferred Stock (without giving effect to any limitations on conversion contained
in the Certificate of Designation) or exercise of the Warrants (without giving effect to any
limitations on exercise contained in the Warrants) as of the Registration Trigger Date, in each
case, as soon as practicable, but in any event within 15 days after the Registration Trigger Date.
The Company shall cause such amendment(s) and/or new Registration Statement(s) to become effective
as soon as practicable following the filing thereof. In the event the Company fails to obtain the
effectiveness of any such Registration Statement within 60 days after a

7

 

Registration Trigger Date, each Investor shall thereafter have the option, exercisable in
whole or in part at any time and from time to time by delivery of a written notice to the Company
(a “Mandatory Redemption Notice”), to require the Company to redeem for cash such number of the
Investor’s shares of the Preferred Stock at a price per share of Series A Preferred Stock equal to
$1,150 and at a price per share of Series B Preferred Stock equal to $11,500, the total number of
Registrable Securities included on the Registration Statement for resale by such Investor is at
least equal to all of the Registrable Securities issued or issuable upon conversion of such
Investor’s Preferred Stock (without giving effect to any limitations on conversion contained in the
Certificate of Designation) and exercise of such Investor’s Warrants (without giving effect to any
limitation on exercise contained in the Warrants). If the Company fails to redeem any of such
Preferred Stock within five business days after its receipt of a Mandatory Redemption Notice, then
such Investor shall be entitled to the remedies provided in Article VII.C of the Certificate of
Designation.

     (c) The Company shall furnish to each Investor whose Registrable Securities are included in a
Registration Statement and such Investor’s legal counsel (i) promptly after the same is prepared
and publicly distributed, filed with the SEC or received by the Company, as applicable, one copy of
the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus
and each amendment or supplement thereto, and, in the case of the Registration Statement required
to be filed pursuant to Section 2(a), each letter written by or on behalf of the Company to the SEC
or the staff of the SEC (including, without limitation, any request to accelerate the effectiveness
of the Registration Statement or amendment thereto), and each item of correspondence from the SEC
or the staff of the SEC, in each case relating to the Registration Statement (other than any
portion thereof that contains information for which the Company has sought confidential treatment),
(ii) on the date of effectiveness of the Registration Statement or any amendment thereto, a notice
stating that the Company has been orally advised by the SEC that the Registration Statement or
amendment has been declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, all amendments and supplements thereto and all such other documents as such
Investor may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

     (d) The Company shall use commercially reasonable efforts to (i) register and qualify the
Registrable Securities covered by any Registration Statement under such other securities or “blue
sky” laws of such jurisdictions in the United States as each Investor who holds Registrable
Securities being offered reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection therewith or as a condition
thereto to (A) qualify to do business in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company undue expense or burden, or (E) make any change in
its Certificate of Incorporation or Bylaws, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its stockholders.

8

 

     (e) As promptly as practicable after becoming aware of such event, the Company shall (i)
notify each Investor by telephone and facsimile of the happening of any event, as a result of which
the prospectus included in any Registration Statement that includes Registrable Securities, as then
in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading, and (ii)
promptly prepare a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.

     (f) The Company shall use its best efforts (i) to prevent the issuance of any stop order or
other suspension of effectiveness of any Registration Statement that includes Registrable
Securities, and, if such an order is issued, to obtain the withdrawal of such order at the earliest
practicable moment (including in each case by amending or supplementing such Registration
Statement), and (ii) to notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the issuance of such order and
the resolution thereof (and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such Investor may reasonably
request).

     (g) The Company shall permit a single firm of counsel designated by the Initial Investors to
review any Registration Statement required to be filed hereunder and all amendments and supplements
thereto a reasonable period of time prior to its filing with the SEC, and not file any document in
a form to which such counsel reasonably objects.

     (h) The Company shall make generally available to its security holders as soon as practicable,
but in no event later than 90 days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company’s fiscal quarter next
following the effective date of the Registration Statement. The Company will be deemed to have
complied with its obligations under this Section 3(h) upon the Company’s filing, on an appropriate
form, the appropriate report of the Company as required by the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “Exchange Act”).

     (i) The Company shall hold in confidence and not make any disclosure of information concerning
an Investor provided to the Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement that includes such
Investor’s Registrable Securities, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by disclosure in violation
of this or any other agreement, or (v) such Investor consents to the form and content of any such
disclosure; provided, however, that the Initial Investors expressly agree and consent to the filing
of this Agreement and related transaction documents as exhibits to the Company’s Exchange Act
reports. The Company shall, upon learning that disclosure of any information concerning an
Investor is sought in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Investor prior

9

 

to making such disclosure, and cooperate with the Investor, at the Investor’s expense, in
taking appropriate action to prevent disclosure of, or to obtain a protective order for, such
information.

     (j) The Company shall use commercially reasonable efforts to promptly cause all of the
Registrable Securities covered by any Registration Statement to be listed or designated for
quotation on the SmallCap Market, the National Market, the NYSE, the AMEX or any other national
securities exchange or automated quotation system and on each additional national securities
exchange or automated quotation system on which securities of the same class or series issued by
the Company are then listed or quoted, if any, if the listing or quotation of such Registrable
Securities is then permitted under the rules of such exchange or automated quotation system, and in
any event, without limiting the generality of the foregoing, to arrange for or maintain at least
two market makers to register with the National Association of Securities Dealers, Inc. (the
“NASD”) as such with respect to the Registrable Securities.

     (k) To the extent not already provided, the Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement required to be filed pursuant to Section 2(a) hereof.

     (l) The Company shall cooperate with any Investor who holds Registrable Securities being
offered and the managing underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to any Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, and registered in such names, as such
Investor or the managing underwriter or underwriters, if any, may reasonably request. Without
limiting the generality of the foregoing, within three business days after any Registration
Statement that includes Registrable Securities is declared effective by the SEC, the Company shall
cause legal counsel selected by the Company to deliver to the transfer agent for the Registrable
Securities (with copies to any Investor whose Registrable Securities are included in such
Registration Statement), an opinion of such counsel substantially in the form attached hereto as
Exhibit B.

     (m) At the reasonable request of any Investor, the Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to any Registration Statement
required to be filed hereunder and the prospectus used in connection with such Registration
Statement as may be necessary in order to change the plan of distribution set forth in such
Registration Statement; provided that such plan of distribution comports with applicable SEC and
NASD rules and requirements.

     (n) Notwithstanding anything to the contrary herein, the Company shall comply with all
applicable laws related to a Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act and the rules and regulations
thereunder promulgated by the SEC.)

     (o) From and after the date of this Agreement, the Company shall not, and shall not agree to,
allow the holders of any securities of the Company to include any of their securities which are not
Registrable Securities in the Registration Statement required to be filed pursuant to

10

 

Section 2(a) or 3(b) hereof without the consent of the holders of a majority in interest of
the Registrable Securities.

     (p) The Company shall make available for inspection by (i) each Investor, (ii) any underwriter
participating in any disposition pursuant to any Registration Statement, (iii) one firm of
attorneys and one firm of accountants or other agents retained by the Investors, and (iv) one firm
of attorneys retained by all such underwriters (collectively, the “Inspectors”) all pertinent
financial and other records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector to enable
such Inspector to exercise its due diligence responsibility, and cause the Company’s officers,
directors and employees to supply all information which any Inspector may reasonably request for
purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to an Investor) of any Record or other information which the
Company determines in good faith to be confidential, and of which determination the Inspectors are
so notified, unless (A) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (B) the release of such Records is ordered
pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or
(C) the information in such Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement. Nothing herein shall be deemed to limit
any Investor’s ability to sell Registrable Securities in a manner that is otherwise consistent with
applicable laws and regulations.

     (q) In the case of an underwritten public offering, at the request of any Investor, the
Company shall furnish, on the date of effectiveness of the Registration Statement (i) a copy of
each opinion from counsel representing the Company given to any underwriter in such underwritten
public offering and (ii) a copy of each letter from the Company’s independent certified public
accountants given to any underwriter in such underwritten public offering.

4. OBLIGATIONS OF THE INVESTORS.

     In connection with the registration of the Registrable Securities, each Investor shall have
the following obligations:

     (a) It shall be a condition precedent to the obligations of the Company to effect the
registration pursuant to this Agreement with respect to the Registrable Securities of a particular
Investor that such Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five trading days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor of the information the
Company requires from each such Investor.

     (b) Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement required to be filed hereunder, unless such

11

 

Investor has notified the Company in writing of such Investor’s election to exclude all of
such Investor’s Registrable Securities from such Registration Statement.

     (c) Upon receipt of any notice from the Company of the happening of any event of the kind
described in Section 3(e) or 3(f) with respect to any Registration Statement including Registrable
Securities, each Investor shall immediately discontinue disposition of Registrable Securities
pursuant to such Registration Statement until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) and 3(f), as applicable, and, if
so directed by the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such
Investor’s possession of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Notwithstanding the foregoing or anything to the contrary in this
Agreement, but subject to compliance with applicable laws, the Company shall cause the transfer
agent for the Registrable Securities to deliver unlegended shares of Common Stock to a transferee
of an Investor in accordance with the terms of the Preferred Stock, the Note and the Warrants in
connection with any sale of Registrable Securities with respect to which any such Investor has
entered into a contract for sale prior to receipt of such notice and for which any such Investor
has not yet settled.

     (d) No Investor may participate in any underwritten distribution hereunder unless such
Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any
underwriting arrangements in usual and customary form entered into by the Company, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements, (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions and any expenses in excess of
those payable by the Company pursuant to Section 5 below, and (iv) complies with all applicable
laws in connection therewith. Notwithstanding anything in this Section 4(d) to the contrary, this
Section 4(d) is not intended to limit any Investor’s rights under Sections 2(a) or 3(b) hereof.

5. EXPENSES OF REGISTRATION.

     All expenses incurred by the Company or the Investors in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3 above (including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, the fees and
disbursements of counsel for the Company and the fees and disbursements of one counsel selected by
the Investors holding a majority of the Registrable Securities (with a maximum reimbursable fee of
$7,500 unless otherwise approved by the Company, which approval shall not be withheld
unreasonably), and any underwriting discounts and commissions other than those relating to shares
of the Registrable Securities sold on behalf of the Investors in such offering, which shall be
borne solely by the Investors) shall be borne by the Company. In addition, the Company shall pay
each Investor’s costs and expenses (including legal fees) incurred in connection with the
enforcement of the rights of such Investor hereunder.

12

 

6. INDEMNIFICATION.

     In the event any Registrable Securities are included in a Registration Statement under this
Agreement:

     (a) To the extent permitted by law, the Company shall indemnify, hold harmless and defend (i)
each Investor who holds such Registrable Securities, and (ii) the directors, officers, partners,
members, employees and agents of each such Investor and each person, if any, who controls each such
Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(each, an “Investor Indemnified Person”), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or inquiries by any
regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof,
“Claims”) to which any of them may become subject insofar as such Claims arise out of or are based
upon: (A) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading, (B) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary prospectus if used prior
to the effective date of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, or (C) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act or any other law (including, without limitation, any state securities law),
rule or regulation relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (A) through (C), collectively, “Violations”). Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 6(a): (x) shall
not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such Investor Indemnified Person
(or their counsel on behalf of such Investor Indemnified Person) expressly for use in the
Registration Statement or any such amendment thereof or supplement thereto; (y) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld; and (z) with respect to
any prospectus, shall not inure to the benefit of any Investor Indemnified Person if the untrue
statement or omission of material fact contained in the prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made
available by the Company pursuant to Section 3(c) hereof, and the Investor Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Investor Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of the Investor Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9 hereof.

     (b) In connection with any Registration Statement in which an Investor is participating, (i)
each such Investor shall, severally and not jointly, indemnify, hold harmless and defend, to the
same extent and in the same manner set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement, its employees and each

13

 

person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who controls such
stockholder within the meaning of the Securities Act or the Exchange Act (each, a “Company
Indemnified Person”), against any Claims to which any of them may become subject insofar as such
Claims arise out of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor (or their counsel on their behalf) expressly for use in
connection with such Registration Statement; and (ii) subject to the restrictions set forth in
Section 6(c), such Investor shall reimburse the Company Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim; provided, however,
that the indemnification obligations contained in this Section 6(b) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; and provided, further, that the
Investor shall be liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the net proceeds actually received by such Investor as a result of
the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of such
Company Indemnified Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9 hereof. Notwithstanding anything to the contrary contained herein,
the indemnification obligations contained in this Section 6(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Company Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.

     (c) Promptly after receipt by any party entitled to indemnification under this Section 6 of
notice of the commencement of any action (including any governmental action), such indemnified
party shall, if a Claim in respect thereof is to made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed, to assume control of
the defense thereof with counsel mutually satisfactory to the indemnifying party and the
indemnified party; provided, however, that such indemnifying party shall not be entitled to assume
such defense and an indemnified party shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the indemnified party and
the indemnifying party would be inappropriate due to actual or potential conflicts of interest
between such indemnified party and any other party represented by such counsel in such proceeding
or the actual or potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and any such indemnified party reasonably determines
that there may be legal defenses available to such indemnified party that are in conflict with
those available to such indemnifying party. The indemnifying party shall pay for only one separate
legal counsel for the indemnified parties, and such legal counsel shall be selected by Investors
holding a majority in interest of the Registrable Securities included in the Registration Statement
to which the Claim relates (if the parties entitled to indemnification

14

 

hereunder are Investor Indemnified Persons) or by the Company (if the parties entitled to
indemnification hereunder are Company Indemnified Persons). The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the indemnified party under this Section 6,
except to the extent that the indemnifying party is actually prejudiced in its ability to defend
such action. The indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.

7. CONTRIBUTION.

     To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party shall make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by law as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, with respect to the Violation giving rise to the applicable Claim;
provided, however, that (a) no contribution shall be made under circumstances where the maker would
not have been liable for indemnification under the fault standards set forth in Section 6, (b) no
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (c) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.

8. REPORTS UNDER THE EXCHANGE ACT.

     With a view to making available to the Investors the benefits of Rule 144 promulgated under
the Securities Act or any other similar rule or regulation of the SEC that may at any time permit
the Investors to sell securities of the Company to the public without registration (“Rule 144”),
the Company agrees to:

     (a) file with the SEC in a timely manner and make and keep available all reports and other
documents required of the Company under the Securities Act and the Exchange Act so long as the
Company remains subject to such requirements and the filing and availability of such reports and
other documents is required for the applicable provisions of Rule 144; and

     (b) furnish to each Investor so long as such Investor holds Preferred Stock, the Note,
Warrants or Registrable Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit such Investor to sell such securities under Rule 144 without
registration (to the extent such Rule is available to the Investors).

15

 

9. ASSIGNMENT OF REGISTRATION RIGHTS.

     The rights of the Investors hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement, shall be automatically assignable by each
Investor to any transferee of all or any portion of the Preferred Stock, the Note, the Warrants or
the Registrable Securities if: (a) the Investor agrees in writing with the transferee or assignee
to assign such rights, and a copy of such agreement is furnished to the Company after such
assignment, (b) the Company is furnished with written notice of (i) the name and address of such
transferee or assignee, and (ii) the securities with respect to which such registration rights are
being transferred or assigned, (c) following such transfer or assignment, the further disposition
of such securities by the transferee or assignee is restricted under the Securities Act and
applicable state securities laws, (d) the transferee or assignee agrees in writing for the benefit
of the Company to be bound by all of the provisions contained herein, and (e) such transfer shall
have been made in accordance with the applicable requirements of (A) with respect to October
Warrants and October Warrant Shares, the October Securities Purchase Agreement and the October
Warrants, (B) with respect to Series B Preferred Stock and Series B Conversion Shares, the May
Securities Purchase Agreement and the Series B Certificate of Designation and (C) with respect to
the May Warrants and the May Warrant Shares, the May Securities Purchase Agreement and the May
Warrants and (D) with respect to the C Warrants and the C Warrant Shares, the May Securities
Purchase Agreement and the C Warrants, as applicable. In addition, and notwithstanding anything to
the contrary contained in this Agreement, the October Securities Purchase Agreement, the May
Securities Purchase Agreement, the Series A Certificate of Designation, the Series B Certificate of
Designation, or the Warrants, the Securities (as defined in each Securities Purchase Agreement) may
be pledged, and all rights of the Investor under this Agreement or any other agreement or document
related to the transactions contemplated hereby may be assigned, without further consent of the
Company, to a bona fide pledgee in connection with an Investor’s margin or brokerage account.

10. AMENDMENT OF REGISTRATION RIGHTS.

     Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with written
consent of the Company and the Investor(s) who hold a majority in interest of the Registrable
Securities or, in the case of a waiver, with the written consent of the party charged with the
enforcement of any such provision; provided, however, that (a) no amendment hereto which restricts
the ability of an Investor to elect not to participate in an underwritten offering shall be
effective against any Investor which does not consent in writing to such amendment; (b) no
consideration shall be paid to an Investor by the Company in connection with an amendment hereto
unless each Investor similarly affected by such amendment receives a pro rata amount of
consideration from the Company; and (c) unless an Investor otherwise agrees, each amendment hereto
must similarly affect each Investor. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company and their respective permitted
successors and assigns.

16

 

11. MISCELLANEOUS.

     (a) A person or entity is deemed to be a holder of Registrable Securities whenever such person
or entity owns of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.

     (b) Any notices required or permitted to be given under the terms of this Agreement shall be
in writing and sent by certified or registered mail (return receipt requested) or delivered
personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and
shall be effective five days after being placed in the mail, if mailed, or upon receipt or refusal
of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed
facsimile transmission, in each case addressed to a party as provided herein. The initial
addresses for such communications shall be as follows, and each party shall provide notice to the
other parties of any change in such party’s address:

(i) If to the Company:

Remote Dynamics, Inc.

1155 Kas Drive, Suite 100

Richardson, TX 75081-1999

Telephone: (972) 301-2733

Facsimile: (972) 301-2263

Attention: J. Raymond Bilbao, Esquire

with a copy simultaneously transmitted by like means (which transmittal shall not constitute notice hereunder) to:

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2200

Dallas, TX 75201-6776

Telephone: (214) 740-8570

Facsimile: (214) 756-8570

Attention: Stephen L. Sapp, Esquire

(ii) If to any Investor, to such address as such Investor shall have provided in writing to

the Company.

     (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

     (d) This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed in the State of Delaware. Each party
irrevocably consents to the jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, State of Delaware in any suit or

17

 

proceeding based on or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. Each party irrevocably waives
the defense of an inconvenient forum to the maintenance of such suit or proceeding. Each party
further agrees that service of process upon such party, mailed by first class mail shall be deemed
in every respect effective service of process upon such party in any such suit or proceeding in
such forum. Nothing herein shall affect any party’s right to serve process in any other manner
permitted by law. Each party agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.

     (e) This Agreement and the other Transaction Documents (including any schedules and exhibits
hereto and thereto) constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This Agreement and the
other Transaction Documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.

     (f) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto.

     (g) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

     (h) This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.

     (i) Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

     (j) Unless other expressly provided herein, all consents, approvals and other determinations
to be made by the Investors pursuant to this Agreement shall be made by the Investors holding a
majority in interest of the Registrable Securities (determined as if all Preferred Stock and
Warrants then outstanding had been converted into or exercised for Registrable Securities) held by
all Investors.

     (k) The initial number of Registrable Securities included on any Registration Statement filed
pursuant to Section 2(a) or 3(b), and each increase to the number of Registrable Securities
included thereon, shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time of such establishment or increase, as the
case may be. In the event an Investor shall sell or otherwise transfer any of such holder’s
Registrable Securities, each transferee shall be allocated a pro rata portion of the number of

18

 

Registrable Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated to any person or
entity which does not hold any Registrable Securities shall be allocated to the remaining
Investors, pro rata based on the number of shares of Registrable Securities then held by such
Investors. For the avoidance of doubt, the number of Registrable Securities held by any Investor
shall be determined as if all Preferred Stock and Warrants then outstanding (and, if applicable,
Warrants issuable upon exchange of the outstanding Note) were converted into or exercised for
Registrable Securities.

     (l) Each party to this Agreement has participated in the negotiation and drafting of this
Agreement. As such, the language used herein shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of strict construction will be applied
against any party to this Agreement.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

19

 

     IN WITNESS WHEREOF, the undersigned Initial Investor and the Company have caused this
Agreement to be duly executed as of the date first above written.

	 	 	 	 	 
	 	REMOTE DYNAMICS, INC.

 	 
	 	By:  	/s/ W. Michael Smith
 	 
	 	 	Name:  	W. Michael Smith
 	 
	 	 	Title:  	COO 	 
	 

INITIAL INVESTOR:

SDS CAPITAL GROUP SPC, LTD. for itself and on behalf of its Class A Segregated portfolio, Class
B Segregated portfolio, Class C Segregated portfolio and all future Segregated portfolios created
by it from time to time

(Print or Type Name of Purchaser)

	 	 	 	 	 
	By:

	 	/s/ Steve Derby
	 	 
	 	 	 	 	 
	Name: Steve Derby	 	 
	Title: Managing Member	 	 

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

 

 

EXHIBIT B

[Date]

[Transfer Agent]

RE: Remote Dynamics, Inc.

Ladies and Gentlemen:

We are counsel to Remote Dynamics, Inc., a corporation organized under the laws of the State of
Delaware (the “Company”), and we understand that [Name of Investor] (the “Holder”) has purchased
from the Company (i) a promissory note, with a principal amount of $1,750,000, that, if approved by
the Company’s stockholders, will be exchanged for Series C-1 warrants to purchase Common Stock and
Series C-2 warrants to purchase Common Stock, (ii) shares of the Company’s Series B Convertible
Preferred Stock, with a face amount of $10,000 per share, that are convertible into shares of
Common Stock, upon the terms and subject to the limitations and conditions set forth in the
Certificate of Designation, Rights and Preferences with respect to such Series B Preferred Stock,
and (iii) warrants to acquire shares of Common Stock. Pursuant to a Registration Rights Agreement,
dated as of September 1, 2005, by and among the Company and the signatories thereto (the
“Registration Rights Agreement”), the Company agreed with the Holder, among other things, to
register the Registrable Securities (as that term is defined in the Registration Rights Agreement)
under the Securities Act of 1933, as amended (the “Securities Act”), upon the terms provided in the
Registration Rights Agreement. In connection with the Company’s obligations under the Registration
Rights Agreement, on ___, ___, ___, the Company filed a Registration Statement on Form
S-3 (File No. 333- ___) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities, which names the Holder as a selling
stockholder thereunder. The Registration Statement was declared effective by the SEC on
___, ___.

In connection with the foregoing, we advise you that a member of the SEC’s staff has advised us by
telephone that the SEC has entered into an order declaring the Registration Statement effective
under the Securities Act at [time of effectiveness] on [date of effectiveness], and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending
its effectiveness has been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC.

Based on the foregoing, we are of the opinion that the Registrable Securities are available for
resale under the Securities Act pursuant to the Registration Statement.

Very truly yours,

[NAME OF COUNSEL]

cc: [Name of Investor]

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