Document:

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                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                               SECURITY AGREEMENT

      THIS SECURITY AGREEMENT (this "AGREEMENT") is made as of May 31, 2005, by
and among SDS CAPITAL GROUP SPC, LTD. ( "SECURED PARTY"), REMOTE DYNAMICS, INC.,
a Delaware corporation (together with its successors and permitted assigns,
"BORROWER"), HIGHWAY MASTER OF CANADA LLC, a Delaware limited liability company
("HIGHWAY"), and RD TECHNOLOGIES, INC., a Delaware corporation ("RD," and,
together with Highway and their respective successors and permitted assigns,
collectively and jointly and severally, the "SUBSIDIARIES", and together with
the Borrower, collectively and jointly and severally, the "GRANTORS").

                                   Background

      A. Borrower and Secured Party entered into that certain Securities
Purchase Agreement (as the same may be amended, restated, modified, supplemented
and/or replaced from time to time, the "PURCHASE AGREEMENT") pursuant to which
Borrower issued its 8% Convertible Secured Note in the original principal amount
of $1,750,000 to Secured Party (as the same may be amended, restated, modified,
supplemented and/or replaced from time to time, the "NOTE").

      B. In order to induce Secured Party to extend the loans evidenced by the
Note, each Grantor has agreed to execute and deliver to Secured Party this
Agreement and to grant Secured Party a perfected first priority security
interest in certain property of such Grantor to secure the prompt payment,
performance and discharge in full of all of Borrower's obligations under the
Note.

      Accordingly, each Grantor, intending to be legally bound, hereby agrees
with Secured Party as follows:

      1. DEFINITIONS. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Purchase Agreement. The
following terms, as used herein, shall have the following meanings:

            "ACCOUNT" shall be used herein as defined in the Uniform Commercial
Code.

            "ADDITIONAL GRANTOR" shall have the meaning ascribed to such term in
Section 4(q).

            "CHATTEL PAPER" shall be used herein as defined in the Uniform
Commercial Code.

            "COLLATERAL" shall have the meaning ascribed to such term in Section
2.

            "COMMERCIAL TORT CLAIMS" shall be used herein as defined in the
Uniform Commercial Code and shall include those claims listed (including
plaintiff, defendant and a description of the claim) on Schedule 5 attached
hereto.

            "DEPOSIT ACCOUNT" shall be used herein as defined in the Uniform
Commercial Code.

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            "DOCUMENT" shall be used herein as defined in the Uniform Commercial
Code.

            "EQUIPMENT" shall be used herein as defined in the Uniform
Commercial Code.

            "EVENT OF DEFAULT" shall be used herein as defined in the Note, but
in any event shall include, but not be limited to, the following:

                  (a) any payment default under, or any occurrence of an Event
of Default as defined in the Note, the other Transaction Documents or any
agreement, document or instrument incidental to or executed pursuant to any of
the foregoing, or as an amendment or modification to, or in substitution for,
any of the foregoing;

                  (b) if any representation or warranty made by any Grantor in
this Agreement or any document, certificate or statement furnished pursuant to
this Agreement or in connection herewith or therewith, shall be false or
misleading in any material respect; or

                  (c) an occurrence of a default in the due performance or
observance of any term, covenant or agreement required to be performed or
observed pursuant hereto.

            "FIXTURES" shall be used herein as defined in the Uniform Commercial
Code.

            "GENERAL INTANGIBLES" shall be used herein as defined in the Uniform
Commercial Code.

            "GOODS" shall be used herein as defined in the Uniform Commercial
Code.

            "INSTRUMENTS" shall be used herein as defined in the Uniform
Commercial Code.

            "INVENTORY" shall be used herein as defined in the Uniform
Commercial Code.

            "INVESTMENT PROPERTY" shall be used herein as defined in the Uniform
Commercial Code.

            "LETTER-OF-CREDIT RIGHT" shall be used herein as defined in the
Uniform Commercial Code.

            "ORGANIZATIONAL DOCUMENTS" mean, with respect to any Person other
than a natural person, the documents by which such Person was organized (such as
a certificate of incorporation, certificate of limited partnership or articles
of organization, and including, without limitation, any certificates of
designation for preferred stock or other forms of preferred equity) and which
relate to the internal governance of such Person (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).

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            "PERSON" means any individual, corporation, partnership, limited
liability company, trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or political subdivision
thereof.

            "PROCEEDS" shall be used herein as defined in the Uniform Commercial
Code.

            "SECURED OBLIGATIONS" means all of the Grantors' obligations under
this Agreement and the Note, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party as a preference, fraudulent transfer
or otherwise as such obligations may be amended, supplemented, converted,
extended or modified from time to time. Without limiting the generality of the
foregoing, the term "Secured Obligations" shall include, without limitation: (i)
principal of, and interest on the Note and the loans extended pursuant thereto;
(ii) any and all other fees, indemnities, costs, obligations and liabilities of
the Grantors from time to time under or in connection with this Agreement or the
Note; and (iii) all amounts (including but not limited to post-petition
interest) in respect of the foregoing that would be payable but for the fact
that the obligations to pay such amounts are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
any Grantor.

            "SUPPORTING OBLIGATIONS" shall be used herein as defined in the
Uniform Commercial Code.

            "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code in
effect on the date hereof and as amended from time to time, and as enacted in
the State of Delaware or in any state or states which, pursuant to the Uniform
Commercial Code as enacted in the State of Delaware, has jurisdiction with
respect to all, or any portion of, the Collateral or this Agreement, from time
to time. It is the intent of the parties that the definitions set forth above
should be construed in their broadest sense so that Collateral will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to
defined terms in the Uniform Commercial Code that broaden the definitions, they
are incorporated herein and if existing definitions in the Uniform Commercial
Code are broader than the amended definitions, the existing ones shall be
controlling.

      2. GRANT OF SECURITY INTEREST. As security for the payment and performance
of the Secured Obligations, each Grantor hereby pledges, hypothecates, delivers
and assigns to Secured Party, and creates in favor of Secured Party, a security
interest in and to, all of such Grantor's right, title and interest in and to
all the following property, in all its forms, in each case whether now or
hereafter existing, whether now owned or hereafter acquired, created or arising,
and wherever located (collectively, but without duplication, the "COLLATERAL"):

                  (a) All Goods, including, without limitation, all Equipment,
      Inventory and Fixtures;

                  (b) All Accounts;

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                  (c) All General Intangibles, including, without limitation,
      the patents and patent applications, the trademarks and trademark
      applications,the registered copyrights, the domain names, and the licenses
      for the use of any patents, trademarks, copyrights and domain names listed
      on Section 3(1) of the Disclosure Schedule to the Purchase Agreement;

                  (d) All Documents, Letter-of-Credit Rights, and Chattel Paper;

                  (e) All Deposit Accounts and all cash (whether or not
      deposited in such Deposit Accounts);

                  (f) All Instruments;

                  (g) All Investment Property;

                  (g) All Commercial Tort Claims;

                  (h) All Supporting Obligations; and

                  (i) All Proceeds of any and all of the foregoing.

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable Law or the assignment of which is otherwise prohibited
by applicable Law (in each case to the extent that such applicable Law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the Uniform Commercial Code
or other similar applicable Law); provided, however, that to the extent
permitted by applicable Law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable Law, this
Agreement shall create a valid security interest in the Proceeds of such asset.

      3. REPRESENTATIONS AND WARRANTIES OF GRANTOR. Each Grantor represents and
warrants to the Secured Party as follows. The following representations and
warranties shall survive execution of this Agreement and shall not be affected
or waived by any examination or inspection made by Secured Party:

            (a) Accuracy of Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of any Grantor with respect
to the Collateral is true and correct in all material respects.

            (b) Enforceability. This Agreement and the other Transaction
Documents constitute legal, valid and binding obligations of each Grantor,
enforceable against it in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable principles.

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            (c) Ownership and Liens. Except for tax liens for taxes not yet due
and payable, each Grantor has good and marketable title to the Collateral free
and clear of all liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement. No dispute, right of
setoff, counterclaim or defense exists with respect to all or any part of the
Collateral. No Grantor has executed any other security agreement currently
affecting the Collateral, and no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office except as may have been executed or filed in favor
of Secured Party.

            (d) Security Interest. Each Grantor has and will have at all times
full right, power and authority to grant a security interest in the Collateral
to Secured Party in the manner provided herein, free and clear of any lien,
security interest or other charge or encumbrance. This Agreement creates a
legal, valid and binding first priority security interest in favor of Secured
Party in the Collateral securing the Secured Obligations. Upon the filing of the
Uniform Commercial Code financing statements in the office of the Secretary of
State of the State of Delaware and the recordation of this Agreement (or a short
form hereof) at the U.S. Copyright Office, all security interests which may be
perfected by filing shall have been duly perfected. Except for the filings and
recordings referred to in the preceding sentence and the delivery of the
certificates referred to in paragraph (i) below, no action is necessary to
create, perfect or protect such security interest. Without limiting the
generality of the foregoing, except for such filings and recordings, no consent
of any third parties and no authorization, approval or other action by, and no
notice to or filing with any Governmental Authority or regulatory body is
required for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the security interest in the Collateral or (iii)
the enforcement of Secured Party's rights hereunder.

            (e) Status. Each Grantor is duly organized and validly existing as
the type of entity and in the state of formation set forth in the preamble
hereto.

            (f) Authority to Execute Agreement. Each Grantor has the corporate
or other power to execute, deliver and perform its obligations under this
Agreement and each Transaction Document to which it is, or is to be, a party and
has taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each Transaction Document to
which it is, or is to be, a party. This Agreement has been duly executed by each
Grantor.

            (g) Certificates. All certificates representing securities that are
included in the Collateral, together with all necessary endorsements, have been
delivered to the Secured Party.

            (h) Names Used by Grantor. The actual name of each Grantor is the
name set forth in the preamble above.

            (i) Absence of Conflicts with Other Agreements, Etc. Neither the
pledge of the Collateral hereunder nor any of the provisions hereof (including,
without limitation, the remedies provided hereunder) violates any of the
provisions of any Organizational Documents of any Grantor, or any other
agreement to which Grantor or any of its property is a party or is subject, or
any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to the same.

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            (j) Intellectual Property. All material patents and trademarks of
each Grantor have been duly recorded at the U.S. Patent and Trademark Office and
all material copyrights of each Grantor have been duly recorded at the U.S.
Copyright Office.

      4. COVENANTS OF GRANTOR. Each Grantor covenants that:

            (a) Ownership and Liens. Each Grantor will maintain good and
marketable title to all Collateral free and clear of all liens (except for tax
liens for taxes not yet due), security interests, encumbrances or adverse
claims, except for the security interest created by this Agreement and the
security interests and other encumbrances expressly permitted herein or by the
other Transaction Documents.

            (b) Inspection of Collateral. Each Grantor will keep adequate
records concerning the Collateral and will permit Secured Party and all
representatives and agents appointed by Secured Party to inspect any of the
Collateral and the books and records of or relating to the Collateral at any
time upon reasonable advance notice during normal business hours, to make and
take away photocopies, photographs and printouts thereof and to write down and
record any such information.

            (c) Payment of Taxes. Each Grantor (i) will timely pay all property
and other taxes, assessments and governmental charges or levies imposed upon the
Collateral or any part thereof, and (ii) will maintain appropriate accruals and
reserves for all such liabilities in a timely fashion in accordance with
generally accepted accounting principles. Each Grantor may, however, delay
paying or discharging any such taxes, assessments, charges, claims or
liabilities so long as the validity thereof is contested in good faith by proper
proceedings and provided such Grantor has set aside on such Grantor's books
adequate reserves therefor.

            (d) Accounts and General Intangibles. Each Grantor will collect, at
such Grantor's own expense, all amounts due or to become due under each of its
accounts and general intangibles. In connection with such collections, each
Grantor may take such action not otherwise forbidden hereby as such Grantor may
deem necessary or advisable to enforce collection or performance of each of its
accounts and general intangibles.

            (e) Chattel Paper, Documents and Instruments. Each Grantor will take
such action as may be requested by Secured Party in order to cause any chattel
paper, documents or instruments to be valid and enforceable.

            (f) Transfer or Encumbrance. No Grantor will, unless otherwise done
in the ordinary course of business, sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral. For purposes of this provision, "dispose of any Collateral" shall
include, without limitation, the creation of a security interest or other
encumbrance (whether voluntary or involuntary) on such Collateral.

            (g) Impairment of Security Interest. No Grantor will take or fail to
take any action which would in any manner materially impair the value or
enforceability of Secured Party's security interest in any Collateral.

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            (h) Possession of Collateral. No Grantor will cause or permit the
removal of any Collateral from its possession, control and risk of loss, nor
will any Grantor cause or permit the removal of any Collateral from 1155 Kas
Drive, Suite 100, Richardson, Texas 75081 other than (i) as permitted by
paragraph (f) above or (ii) in connection with the possession of any Collateral
by Secured Party or by its bailee.

            (i) Filing of Financing Statements and Preservation of Interests.
Immediately upon execution hereof, each Grantor shall cause to be duly filed in
the office of the Secretary of State of the State of Delaware Uniform Commercial
Code financing statements and all filings with the U.S. Copyright Office and the
U.S. Patent and Trademark Office, in each case in form and substance
satisfactory to Secured Party. Without limiting the obligation of the Grantors
set forth in the preceding sentence, each Grantor hereby authorizes Secured
Party, and appoints Secured Party as its attorney-in-fact, to file in such
office or offices as Secured Party deems necessary or desirable such financing
and continuation statements and amendments and supplements thereto (including,
without limitation, an "all assets" filing), and such other documents as Secured
Party may require to perfect, preserve and protect the security interests
granted herein and ratifies all such actions taken by Secured Party.

            (j) Notice of Changes in Representations. Each Grantor shall notify
Secured Party in advance of any event or condition which could cause any
representations set forth in Section 3 above applicable to such Grantor to fail
to be true, correct and complete. Without limiting the generality of the
foregoing:

                  (i) without providing at least five (5) days prior written
notice to Secured Party, no Grantor will change its name in any respect, its
place of business or, if more than one, chief executive office, or its mailing
address or organizational identification number (if it has one);

                  (ii) if any Grantor does not have an organizational
identification number and obtains one after the date of this Agreement, such
Grantor will forthwith notify Secured Party in writing of such organizational
identification number; and

                  (iii) no Grantor will change its type of organization,
jurisdiction of organization or other legal structure without providing at least
five (5) days prior written notice to Secured Party.

            (k) Insurance. Each Grantor shall maintain with financially sound
and reputable insurers, insurance with respect to the Collateral against loss or
damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in
such amounts as are customarily carried under similar circumstances by other
such Persons and otherwise as is prudent for Persons engaged in similar
businesses but in any event sufficient to cover the full replacement cost
thereof. Each Grantor shall cause each insurance policy issued in connection
herewith to provide, and the insurer issuing such policy to certify to Secured
Party that (a) Secured Party will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance be proposed to
be cancelled or materially changed for any reason whatsoever, such insurer will
promptly notify Secured Party and such cancellation or change shall not be
effective as to Secured Party

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for at least thirty (30) days after receipt by Secured Party of such notice,
unless the effect of such change is to extend or increase coverage under the
policy; and (c) Secured Party will have the right (but no obligation) at its
election to remedy any default in the payment of premiums within thirty (30)
days of notice from the insurer of such default. If no Event of Default exists
and if the proceeds arising out of any claim or series of related claims do not
exceed $100,000, loss payments in each instance will be applied by the
applicable Grantor to the repair and/or replacement of property with respect to
which the loss was incurred to the extent reasonably feasible, and any loss
payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the applicable Grantor, provided, however, that payments received
by such Grantor after an Event of Default occurs and is continuing or in excess
of $100,000 for any occurrence or series of related occurrences shall be paid to
Secured Party and, if received by Grantor, shall be held in trust for and
immediately paid over to Secured Party unless otherwise directed in writing by
Secured Party. Copies of such policies or the related certificates, in each
case, naming Secured Party as lender loss payee and additional insured shall be
delivered to Secured Party at least annually and at the time any new policy of
insurance is issued.

            (l) Additional Grantor. Each Grantor shall cause each Subsidiary of
such Grantor including any Person that shall at any time become a Subsidiary of
such Grantor to immediately become a party hereto (an "ADDITIONAL GRANTOR") or
to a similar security agreement, as appropriate, by executing and delivering an
Additional Grantor Joinder in substantially the form of Annex A attached hereto
and comply with the provisions hereof applicable to the Grantors or by signing a
similar security agreement. If the Additional Grantor becomes a party hereto,
concurrent therewith, the Additional Grantor shall deliver replacement schedules
for, or supplements to all other Schedules to (or referred to in) this
Agreement, as applicable, which replacement schedules shall supersede, or
supplements shall modify, the Schedules then in effect. The Additional Grantor
shall also deliver such opinions of counsel, authorizing resolutions, good
standing certificates incumbency certificates, organizational documents,
financing statements and other information and documentation as Secured Party
may reasonably request. Upon delivery of the foregoing to Secured Party, the
Additional Grantor shall be and become a party to this Agreement with the same
rights and obligations as the Grantors, for all purposes hereof as fully and to
the same extent as if it were an original signatory hereto and shall be deemed
to have made the representations, warranties and covenants set forth herein as
of the date of execution and delivery of such Additional Grantor Joinder and
thereafter at any time that such representations and covenants must be restated
pursuant to the terms of the Transaction Documents, and all references herein to
the "Grantors" shall be deemed to include each Additional Grantor.

            (m) Intellectual Property. Without limiting the generality of the
other obligations of the Grantors hereunder, each Grantor shall promptly (i)
cause the security interest contemplated hereby with respect to all other
Intangibles registered at the United States Copyright Office or United States
Patent and Trademark Office to be duly recorded at the applicable office, and
(ii) give Secured Party notice whenever it acquires (whether absolutely or by
license) or creates any additional material Intangibles.

            (n) Power of Attorney. Each Grantor has duly executed and delivered
to Secured Party a power of attorney (a "Power of Attorney") in substantially
the form attached hereto as Annex B. The power of attorney granted pursuant to
the Power of Attorney is a power

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coupled with an interest and shall be irrevocable until full and indefeasible
payment of the Secured Obligations. The powers conferred on Secured Party under
the Power of Attorney are solely to protect Secured Party's interests in the
Collateral and shall not impose any duty upon Secured Party to exercise any such
powers. Secured Party agrees that (i) except for the powers granted in clause
(i) of the Power of Attorney, it shall not exercise any power or authority
granted under the Power of Attorney unless an Event of Default has occurred and
is continuing, and (ii) Secured Party shall account for any moneys received by
Secured Party in respect of any foreclosure on or disposition of Collateral
pursuant to the Power of Attorney provided that Secured Party shall not have any
duty as to any Collateral, and Secured Party shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers.
NEITHER SECURED PARTY NOR ITS AFFILIATES, PARTNERS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY
ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN
RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR
ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

            (o) Further Assurances. Each Grantor will from time to time at its
expense promptly execute and deliver all further instruments and documents and
take all further action necessary or appropriate or that Secured Party may
reasonably request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the first priority of such
security interest, (ii) to enable Secured Party to exercise and enforce its
rights and remedies hereunder in respect of the Collateral, and (iii) to
otherwise effect the purposes of this Agreement, including, without limitation:
(A) filing such financing or continuation statements, or amendments thereto; and
(B) furnishing to Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral, all in reasonable detail satisfactory to Secured
Party.

      5. REMEDIES UPON DEFAULT.

            (a) Upon the occurrence and during the continuation of an Event of
Default, Secured Party may exercise, in addition to any other rights and
remedies provided herein, under other contracts and under law, all the rights
and remedies of a secured party under the Uniform Commercial Code. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuation of an Event of Default, (i) at the request of Secured Party, each
Grantor shall, at its cost and expense, assemble the Collateral owned or used by
it as directed by Secured Party; (ii) Secured Party shall have the right (but
not the obligation) to notify any account debtors and any obligors under
Instruments or Accounts to make payments directly to Secured Party and to
enforce each Grantor' rights against account debtors and obligors; (iii) Secured
Party may (but is not obligated to), without notice except as provided below,
sell the Collateral at public or private sale, on such terms as Secured Party
deems to be commercially reasonable; (iv) Secured Party may (but is not
obligated to) direct any financial intermediary or any other Person holding
Investment Property to transfer the same to Secured Party or its designee; and
(v) Secured Party may (but is not obligated to) transfer any or all Intellectual
Property registered in the name of any Grantor at the U.S. Patent and Trademark
Office and/or Copyright Office into the name of

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Secured Party or any designee or any purchaser of any Collateral. Each Grantor
agrees that ten (10) days notice of any sale referred to in clause (iii) above
shall constitute sufficient notice. Secured Party may purchase Collateral at any
such sale. The Grantors shall be liable to Secured Party for any deficiency
amount.

            (b) Secured Party may comply with any applicable Law in connection
with a disposition of Collateral and compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. Secured
Party may sell the Collateral without giving any warranties and may specifically
disclaim such warranties. If Secured Party sells any of the Collateral on
credit, the Borrower will only be credited with payments actually made by the
purchaser. Any Secured Party may purchase Collateral at any such sale. In
addition, each Grantor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of Secured Party's rights and
remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

            (c) For the purpose of enabling Secured Party to further exercise
rights and remedies under this Section 5 or elsewhere provided by agreement or
applicable Law, each Grantor hereby grants to Secured Party an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to any Grantor) to use, license or sublicense following an Event of
Default, any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.

            (d) The parties understand and agree that the security interest
granted to Secured Party with respect to the Intellectual Property, together
with the other Collateral, will and is intended to permit Secured Party and its
successors and assigns, during the continuance of an Event of Default as
provided herein, to take title to and make use of all rights to the Intellectual
Property in conjunction with the other Collateral, all of which will permit
Secured Party to manufacture and sell the products and/or provide the services
with which the Collateral is associated and maintain substantially the same
product specifications and quality and/or quality of services as maintained by
Grantor.

            (e) During the continuance of an Event of Default, Secured Party
shall have the right, but shall in no way be obligated, to bring suit in its own
or in any Grantor's name to enforce and protect rights to the Intellectual
Property in which event such Grantor shall, at the request of Secured Party, do
any and all lawful acts and execute any and all proper documents reasonably
required by Secured Party in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party for all reasonable
costs and expenses incurred by Secured Party in the exercise of its rights under
this subsection.

      6. OBLIGATIONS ABSOLUTE.

            (a) Change of Circumstance. THE RIGHTS OF THE AGENT HEREUNDER AND
THE OBLIGATIONS OF THE GRANTORS HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL,
SHALL NOT BE SUBJECT TO ANY

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COUNTERCLAIM, SETOFF, RECOUPMENT OR DEFENSE BASED UPON ANY CLAIM THAT ANY
GRANTOR OR ANY OTHER PERSON MAY HAVE AGAINST ANY SECURED PARTY AND SHALL REMAIN
IN FULL FORCE AND EFFECT UNTIL FULL AND INDEFEASIBLE SATISFACTION OF THE SECURED
OBLIGATIONS.

            (b) No Duty To Marshal Assets. Secured Party shall have no
obligation to marshal any assets in favor of any Grantor or any other Person or
against or in payment of any or all of the Secured Obligations.

            (c) Waiver of Right of Subrogation, Etc. Each Grantor hereby waives
any and all rights of subrogation, reimbursement, or indemnity whatsoever in
respect of such Grantor arising out of remedies exercised by Secured Party
hereunder until full and indefeasible payment of the Secured Obligations.

            (d) Other Waivers. Each Grantor hereby waives promptness, diligence
and notice of acceptance of this Agreement. In connection with any sale or other
disposition of Collateral, to the extent permitted by applicable Law, each
Grantor waives any right of redemption or equity of redemption in the
Collateral. Each Grantor further waives presentment and demand for payment of
any of the Secured Obligations, protest and notice of protest, dishonor and
notice of dishonor or notice of default or any other similar notice with respect
to any of the Secured Obligations, and all other similar notices to which such
Grantor might otherwise be entitled, except as otherwise expressly provided in
the Transaction Documents. Secured Party is under no obligation to pursue any
rights against third parties with respect to the Secured Obligations and each
Grantor hereby waives any right it may have to require otherwise. Each Grantor
(to the extent that it may lawfully do so) covenants that it shall not at any
time insist upon or plead, or in any manner claim or take the benefit of, any
stay, valuation, appraisal or redemption now or at any time hereafter in force
that, but for this waiver, might be applicable to any sale made under any
judgment, order or decree based on this Agreement; and each Grantor (to the
extent that it may lawfully do so) hereby expressly waives and relinquishes all
benefit of any and all such laws and hereby covenants that it will not hinder,
delay or impede the execution of any power in this Agreement delegated to
Secured Party, but that it will suffer and permit the execution of every such
power as though no such law or laws had been made or enacted.

            (e) Each Grantor further waives to the fullest extent permitted by
law any right it may have under the constitution of the State of Delaware (or
under the constitution of any other state in which any of the Collateral or
Grantor may be located), or under the Constitution of the United States of
America, to notice (except for notice specifically required hereby) or to a
judicial hearing prior to the exercise of any right or remedy provided by this
Agreement to Secured Party, and waives its rights, if any, to set aside or
invalidate any sale duly consummated in accordance with the foregoing provisions
hereof on the grounds (if such be the case) that the sale was consummated
without a prior judicial hearing.

            (f) EACH GRANTOR'S WAIVERS UNDER THIS SECTION 6 HAVE BEEN MADE
VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY AND AFTER SUCH GRANTOR HAS BEEN
APPRISED AND COUNSELED BY ITS ATTORNEY AS TO THE NATURE THEREOF AND ITS POSSIBLE
ALTERNATIVE RIGHTS.

                                      -11-
<PAGE>

      7. NO IMPLIED WAIVERS. No failure or delay on the part of Secured Party in
exercising any right, power or privilege under this Agreement or the other
Transaction Documents and no course of dealing between Grantor, on the one hand,
and Secured Party, on the other hand, shall operate as a waiver of any such
right, power or privilege. No single or partial exercise of any right, power or
privilege under this Agreement or the other Transaction Documents precludes any
other or further exercise of any such right, power or privilege or the exercise
of any other right, power or privilege. The rights and remedies expressly
provided in this Agreement and the other Transaction Documents are cumulative
and not exclusive of any rights or remedies which Secured Party would otherwise
have. No notice to or demand on Grantor in any case shall entitle Grantor to any
other or further notice or demand in similar or other circumstances or shall
constitute a waiver of the right of Secured Party to take any other or further
action in any circumstances without notice or demand. Any waiver that is given
shall be effective only if in writing and only for the limited purposes
expressly stated in the applicable waiver.

      8. STANDARD OF CARE.

            (a) In General. No act or omission of Secured Party (or agent or
employee of any thereof) shall give rise to any defense, counterclaim or offset
in favor of any Grantor or any claim or action against Secured Party (or agent
or employee thereof), in the absence of gross negligence or willful misconduct
of Secured Party (or agent or employee thereof) as determined in a final,
nonappealable judgment of a court of competent jurisdiction. Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Secured Party accords to other Collateral it
holds, it being understood that it has no duty to take any action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral or to preserve any rights of any parties and shall only be
liable for losses which are a result of it gross negligence or willful
misconduct as determined in a final, nonappealable judgment of a court of
competent jurisdiction.

            (b) No Duty to Preserve Rights. Without limiting the generality of
the foregoing, Secured Party has no duty (either before or after an Event of
Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral.

            (c) No Duty to Prepare for Sale. Without limiting the generality of
the foregoing, Secured Party has no obligation to clean-up or otherwise prepare
the Collateral for sale.

            (d) Duties Relative to Contracts. Without limiting the generality of
the foregoing, each Grantor shall remain obligated and liable under each
contract or agreement included in the Collateral to be observed or performed by
such Grantor thereunder. Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by Secured Party of any payment relating to any of
the Collateral, nor shall Secured Party be obligated in any manner to perform
any of the obligations of any Grantor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or

                                      -12-
<PAGE>

agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to Secured Party or to which Secured Party may be entitled at any time
or times.

            (e) Reliance on Advice of Counsel. In taking any action under this
Agreement or any other Transaction Document, Secured Party shall be entitled to
rely upon the advice of counsel of Secured Party's choice and shall be fully
protected in acting on such advice whether or not the advice rendered is
ultimately determined to have been accurate.

      9. MISCELLANEOUS.

            (a) Assignment. Secured Party may assign or transfer this Agreement
and any or all rights or obligations hereunder without the consent of any
Grantor and without prior notice to any party to which Secured Party may
transfer the Note or any portion thereof. No Grantor shall assign or transfer
this Agreement or any rights or obligations hereunder without the prior written
consent of Secured Party. Notwithstanding the foregoing, if there should be any
assignment of any rights or obligations by operation of law or in contravention
of the terms of this Agreement or otherwise then all covenants, agreements,
representations and warranties made herein or pursuant hereto by or on behalf of
Grantor shall bind the successors and assigns of Grantor, together with the
preexisting Grantor, whether or not such new or additional Persons execute a
joinder hereto or assumption hereof. The rights and privileges of Secured Party
under this Agreement shall inure to the benefit of its successors and assigns.

            (b) Joint and Several Liability. Each Grantor and any additional
Grantor shall jointly and severally be liable for the obligations of the
Grantors to Secured Party hereunder.

            (c) Notices. Any notice contemplated herein or required or permitted
to be given hereunder shall be made in the manner set forth in the Purchase
Agreement and delivered, in the case of Borrower and Secured Party, at the
addresses set forth on the signature pages to the Purchase Agreement, and, in
the case of the Subsidiary Guarantors, at the addresses set forth on the
signature pages to the Guaranty, or to such other address as any party hereto
may have last specified by written notice to the other party or parties.

            (d) Severability. Every provision of this Agreement is intended to
be severable. If any term or provision of this Agreement shall be invalid,
illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired
thereby. Any invalidity, illegality or unenforceability in any jurisdiction
shall not affect the validity, legality or enforceability of any such term or
provision in any other jurisdiction.

            (e) Costs and Expenses. Without limiting any other cost
reimbursement provisions in the Transaction Documents, upon demand, each Grantor
shall pay to Secured Party the amount of any and all reasonable expenses
incurred by Secured Party hereunder or in connection herewith, including,
without limitation those that may be incurred in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement

                                      -13-
<PAGE>

of any of the rights of Secured Party hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.

            (f) Indemnification by Grantor. Each Grantor shall indemnify,
reimburse and hold harmless Secured Party and its affiliates, and all of their
partners, members, shareholders, officers, directors, employees, agents and
advisors and any successors, assigns and participants thereof (each, an
"INDEMNITEE"), from and against any and all losses, claims, liabilities,
damages, penalties, suits, costs and expenses, of any kind or nature (including
fees relating to the cost of investigating and defending any of the foregoing)
imposed on, incurred by or asserted against such Indemnitee in any way related
to or arising from or alleged to arise from this Agreement or the Collateral,
except any such losses, claims, liabilities, damages, penalties, suits, costs
and expenses which result from the gross negligence or willful misconduct of the
Indemnitee as determined by a final nonappealable decision of a court of
competent jurisdiction. This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in any other
Transaction Document.

            (g) Counterparts; Integration. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Transaction
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Agreement.

            (h) Amendments and Waivers. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by
each Grantor and Secured Party.

            (i) Headings. Headings to this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

      10. SPECIFIC PERFORMANCE. Each Grantor hereby authorizes Secured Party to
demand specific performance of this Agreement at any time when any Grantor shall
have failed to comply with any provision hereof, and each Grantor hereby
irrevocably waives any defense based on the adequacy of a remedy at law which
might be asserted as a bar to the remedy of specific performance hereof in any
action brought therefor.

      11. TERMINATION. At such time as the principal amount of the Note and all
accrued interest thereon have been indefeasibly paid and performed in full, then
the security provided for herein shall terminate, provided, however, that all
indemnities of the Borrower and each other Grantor contained in this Agreement
or any other Transaction Document shall survive and remain operative and in full
force and effect regardless of the termination of this Agreement.

      12. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

                                      -14-
<PAGE>

            (a) Governing Law. 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.

            (b) Jurisdiction. Each Grantor irrevocably consents to the
jurisdiction of the United States federal courts and the state courts located in
the County of New Castle, Delaware, in any suit or proceeding based on or
arising under this Agreement and irrevocably agree that all claims in respect of
such suit or proceeding may be determined in such courts. Each Grantor
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding in such forum. Each Grantor further agrees that service
of process upon such Grantor mailed by first class mail shall be deemed in every
respect effective service of process upon such Grantor in any such suit or
proceeding. Nothing herein shall affect the right of the Secured Party to serve
process in any other manner permitted by law. The Grantors and Secured Party
agree 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.

            (c) Waiver of Venue. Each Grantor irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any objection that it
may now or hereafter have to the laying of venue of any action or proceeding
arising out of or relating to this Agreement or any other Transaction Document
in any court referred to in paragraph (b) above. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court. Each Grantor irrevocably waives, to the fullest
extent permitted by applicable law, any right to bring any action or proceeding
against Secured Party in any court outside the county of New Castle, Delaware.

            (d) Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

                                      -15-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in the name and on behalf of the parties hereto as of the date first
above written.

                                  GRANTORS

                                  REMOTE DYNAMICS, INC.

                                  By: /s/ W. Michael Smith
                                      ------------------------------------------
                                  Name: W. Michael Smith
                                  Title: Chief Operating Officer

                                  HIGHWAY MASTER OF CANADA LLC

                                  By: Remote Dynamics, Inc., as Sole Managing
                                      Director

                                  By: /s/ W. Michael Smith
                                      ------------------------------------------
                                  Name: W. Michael Smith
                                  Title: Chief Operating Officer

                                  RD TECHNOLOGIES, INC.,

                                  By: /s/ W. Michael Smith
                                      ------------------------------------------
                                  Name: W. Michael Smith
                                  Title: Chief Operating Officer

                                  SECURED PARTY

                                  SDS CAPITAL PARTNERS SPC, LTD.

                                  By: /s/ Kevin Johnson
                                      ------------------------------------------
                                  Name: Kevin Johnson
                                  Title: Managing Director

                     [Signature Page to Security Agreement]

<PAGE>

                                     ANNEX A

                       FORM OF ADDITIONAL GRANTOR JOINDER

               Security Agreement dated as of June ___2005 made by
                              Remote Dynamics, Inc.
        and its subsidiaries party thereto from time to time, as Grantors
                               to and in favor of
   SDS Capital Partners SPC, Ltd., as Secured Party (the "Security Agreement")

      Reference is made to the Security Agreement as defined above; capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to such terms in, or by reference in, the Security Agreement.

      The undersigned hereby agrees that upon delivery of this Additional
Grantor Joinder to Secured Party referred to above or its successor, the
undersigned shall (a) be an Additional Grantor under the Security Agreement, (b)
have all the rights and obligations of Grantor under the Security Agreement as
fully and to the same extent as if the undersigned was an original signatory
thereto and (c) be deemed to have made the representations and warranties set
forth in Section 3 therein as of the date of execution and delivery of this
Additional Grantor Joinder and at any future dates that such representations
must be restated pursuant to the terms of the Transaction Documents. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO
THE AGENT, FOR THE BENEFIT OF THE SECURED PARTY, A SECURITY INTEREST IN THE
COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES
AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.

      Attached hereto are supplemental and/or replacement Schedules to the
Security Agreement, as applicable.

      The undersigned hereby acknowledges receipt from Grantor of a correct and
complete copy of the Purchase Agreement and Note and consents to all of the
provisions of the Purchase Agreement and Note as in effect on the date hereof
and agrees that its consent is not required for any amendments, modifications,
restatements or waivers of it or any of the provisions thereof.

      An executed copy of this Joinder shall be delivered to Secured Party, and
Secured Party and Secured Party may rely on the matters set forth herein on or
after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of Secured Party.

<PAGE>

      IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed
in the name and on behalf of the undersigned.

                                         [Name of Additional Grantor]

                                         By: ___________________________________
                                         Name:
                                         Title:

                                         Address:

Dated: ____________________

                                     - 2 -
<PAGE>

                                     ANNEX B

                            FORM OF POWER OF ATTORNEY

      This Power of Attorney is executed and delivered by ___________________, a
______________________ ("Grantor"), to ______________ as Secured Party
("Attorney"). This Power of Attorney is delivered in connection with and
pursuant to a certain Note dated [as of even date herewith] (as the same may be
amended, modified, restated and/or supplemented from time to time, the "Note")
and that certain Security Agreement delivered in connection therewith (the
"Security Agreement"). Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement. No
person or entity to whom this Power of Attorney is presented, as authority for
Attorney to take any action or actions contemplated hereby, shall be required to
inquire into or seek confirmation from Grantor as to the authority of Attorney
to take any action described below, or as to the existence of or fulfillment of
any condition to this Power of Attorney, which is intended to grant to Attorney
unconditionally the authority to take and perform the actions contemplated
herein, and Grantor irrevocably waives any right to commence any suit or action,
in law or equity, against any person or entity which acts in reliance upon or
acknowledges the authority granted under this Power of Attorney. The power of
attorney granted hereby is coupled with an interest, and may not be revoked or
canceled by Grantor without Attorney' s written consent.

      Grantor hereby irrevocably constitutes and appoints Attorney (and all
officers, employees or agents designated by Attorney), with full power of
substitution, as Grantor's true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in its own name, from time to time in Attorney's discretion,
to take any and all appropriate action and to execute and deliver any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Note, the Security Agreement and any and all agreements,
documents and instruments executed, delivered or filed in connection therewith
from time to time (collectively, the "Transaction Documents") and, without
limiting the generality of the foregoing, Grantor hereby grants to Attorney the
power and right, on behalf of Grantor, without notice to or assent by Grantor,
and at any time, to do the following:

            (a) change the mailing address of Grantor, open a post office box on
behalf of Grantor, open mail for Grantor, and ask, demand, collect, give
acquittances and receipts for, take possession of, endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, and notices in connection with any property
of Grantor;

            (b) receive, endorse Grantor's name on, and collect, any checks,
notes, acceptances, money orders, drafts and any other forms of payment or
security payable to Grantor, and hold all amounts or proceeds so received or
collected as cash collateral in a restricted account for the benefit of Secured
Party, or apply such amounts or proceeds to the Secured Obligations in
accordance with the terms of the Note;

            (c) effect any repairs to any asset of Grantor, or continue or
obtain any insurance and pay all or any part of the premiums therefor and costs
thereof, and make, settle and

<PAGE>

adjust all claims under such policies of insurance, and make all determinations
and decisions with respect to such policies;

            (d) pay or discharge any taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against Grantor or its property;

            (e) defend any suit, action or proceeding brought against Grantor if
Grantor does not defend such suit, action or proceeding or if Attorney believes
that Grantor is not pursuing such defense in a manner that will maximize the
recovery to Attorney, and settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such discharges or
releases as Attorney may deem appropriate;

            (f) file or prosecute any claim, litigation, suit or proceeding in
any court of competent jurisdiction or before any arbitrator, or take any other
action otherwise deemed appropriate by Attorney for the purpose of collecting
any and all such moneys due to Grantor whenever payable and to enforce any other
right in respect of Grantor's property;

            (g) cause the certified public accountants then engaged by Grantor
to prepare and deliver to Attorney at any time and from time to time, promptly
upon Attorney's request, the following reports: (i) a reconciliation of all
accounts, (ii) an aging of all accounts, (iii) trial balances, (iv) test
verifications of such accounts as Attorney may request, and (v) the results of
each physical verification of inventory;

            (h) communicate in its own name with any party to any contract with
regard to the assignment of the right, title and interest of Grantor in and
under the contracts and other matters relating thereto;

            (i) to the extent that Grantor's authorization given in the Security
Agreement is not sufficient, to file such financing statements with respect to
the Security Agreement as Attorney may deem appropriate and to execute in
Grantor's name such financing statements and amendments thereto and continuation
statements which may require Grantor's signature;

            (j) to transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and

            (k) execute, deliver and/or record, as applicable, in connection
with any sale or other remedy provided for in any Transaction Document, any
endorsements, assignments or other applications for or instruments of conveyance
or transfer with respect to the Collateral and to otherwise direct such sale or
resale, all as though Attorney were the absolute owner of the property of
Grantor for all purposes, and to do, at Attorney's option and Grantor's expense,
at any time or from time to time, all acts and other things that Attorney
reasonably deems necessary to perfect, preserve, or realize upon Grantor's
property or assets and Attorney's liens thereon, all as fully and effectively as
Grantor might do. Grantor hereby ratifies, to the extent permitted by law, all
that Attorney shall lawfully do or cause to be done by virtue hereof. Without
limiting the generality of the foregoing, Attorney is specifically authorized to
execute and file any applications for or instruments of transfer and assignment
of any patents, trademarks, copyrights or other Intellectual Property with the
U.S. Patent and Trademark Office and the U.S. Copyright Office.

                                      -2-
<PAGE>

      IN WITNESS WHEREOF, this Power of Attorney is duly executed on behalf of
Grantor this ____ day of ____________, 20___.

                                  [_____________________________________]

                                  By: ___________________________________
                                  Name: _________________________________
                                  Title: ________________________________

                            NOTARY PUBLIC CERTIFICATE

On this _____ day of ____________, 20___, [officer's name] who is personally
known to me appeared before me in his/her capacity as the [title] of [name of
Grantor] ("Grantor") and executed on behalf of Grantor the Power of Attorney in
favor of _______________, as Secured Party, to which this Certificate is
attached.

                                        ________________________________________
                                        Notary Public

                                      -3-<PAGE>
                                                                    EXHIBIT 10.5

                                                             FORM OF C-1 WARRANT

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

      TIME, ON __________, 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 1,666,667 Shares of
                                          Common Stock, par value $.01 per share

Date: ____________, 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, One Million Six Hundred Sixty-Six Thousand Six Hundred
Sixty-Seven (1,666,667) fully paid and nonassessable shares (the "WARRANT
SHARES") of the Company's common stock, par value $.01 per share (the "COMMON
STOCK"), at an exercise price per share (the "EXERCISE PRICE") equal to $0.01.
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:

      1. Exercise of Warrant.

                                       -1-
<PAGE>

      (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 delivery of a completed exercise notice
in the form attached hereto (the "EXERCISE NOTICE"), which shall be followed
promptly by the surrender of this Warrant, 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.

      (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 this Warrant shall have been surrendered, 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 this Warrant shall have
been so exercised (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 June __,
2005, 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 new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised.

                                       -2-
<PAGE>

      (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 date of
initial issuance of this Warrant (the "ISSUE DATE") and ending at 5:00 p.m., New
York City time, on the fifth anniversary of the Issue Date. 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 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).

                                       -3-
<PAGE>

      (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.

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 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

                                       -4-
<PAGE>

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 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).

                                       -5-
<PAGE>

      (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 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

                                       -6-
<PAGE>

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 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

                                       -7-
<PAGE>

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 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

                                       -8-
<PAGE>

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 during the
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 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.

                                       -9-
<PAGE>

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 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

                                      -10-
<PAGE>

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
                        Dallas, TX 75201-6776
                        Telephone: 214-740-8570
                        Facsimile: 214-756-8570
                        Attention: Stephen L. Sapp. Esquire

                                      -11-
<PAGE>

            (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-
<PAGE>

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

                                            REMOTE DYNAMICS, INC.

                                            By:_________________________________
                                            Name:
                                            Title:

                   [SIGNATURE PAGE TO STOCK PURCHASE WARRANT]

<PAGE>

                             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.

            [ ] 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.

            [ ] 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-
<PAGE>

                               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:

<TABLE>
<CAPTION>
Name of Assignee               Address                            No. of Shares
----------------               -------                            -------------
<S>                            <C>                                <C>
</TABLE>

, 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.

                                       -1-
<PAGE>

                                                             FORM OF C-2 WARRANT

      VOID AFTER 5:00 P.M., NEW YORK CITY
      TIME, ON ____________, 2011
      (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 700,000 Shares of
                                         Common Stock, par value $.01 per share

Date: ____________, 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, Seven Hundred Thousand (700,000) 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:

1. Exercise of Warrant.

                                     - 1 -
<PAGE>

      (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 delivery of a completed exercise notice
in the form attached hereto (the "EXERCISE NOTICE"), which shall be followed
promptly by the surrender of this Warrant, 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.

      (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 this Warrant shall have been surrendered, 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 this Warrant shall have
been so exercised (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 June __,
2005, 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 new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised.

                                     - 2 -
<PAGE>

      (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 date of
initial issuance of this Warrant (the "ISSUE DATE") and ending at 5:00 p.m., New
York City time, on the fifth anniversary of the Issue Date. 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 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).

                                     - 3 -
<PAGE>

      (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.

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 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

                                     - 4 -
<PAGE>

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 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).

                                     - 5 -
<PAGE>

      (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) Dilutive Issuances.

            (i) Adjustment Upon Dilutive Issuance. If, at any time during the
Adjustment Period, the Company issues or sells, or in accordance with
subparagraph (ii) of this Section 4(e) is deemed to have issued or sold, any
shares of Common Stock for no consideration or for a consideration per share
less than the Exercise Price in effect on the date of issuance or sale (or
deemed issuance or sale) (a "DILUTIVE ISSUANCE"), then effective immediately
upon the Dilutive Issuance, the Exercise Price shall be adjusted in accordance
with the following formula:

            AEP = C x O+P/C
                      -----
                      CSDO
where:

      AEP = the adjusted Exercise Price;

      C = the Exercise Price on (a) for purposes of any private sale of
securities exempt from registration under Section 3(b) or 4(2) of the Securities
Act, the date that the Company enters into legally binding definitive agreements
for the issuance of such Common Stock, and (b) for purposes of any other such
issuance of Common Stock, the date of issuance thereof;

      O = the number of shares of Common Stock outstanding immediately prior to
the Dilutive Issuance;

                                     - 6 -
<PAGE>

      P = the aggregate consideration, calculated as set forth in Section
4(e)(ii) hereof, received by the Company upon such Dilutive Issuance; and

      CSDO = the total number of shares of Common Stock actually outstanding
(after giving effect to the Dilutive Issuance, and not including shares of
Common Stock held in the treasury of the Company), plus (a) in the case of any
adjustment required by this Section 4(e)(i) due to the issuance of Purchase
Rights, the maximum total number of shares of Common Stock issuable upon the
exercise of the Purchase Rights for which the adjustment is required (including
any Common Stock issuable upon the conversion of Convertible Securities issuable
upon the exercise of such Purchase Rights), and (y) in the case of any
adjustment required by this Section 4(e)(i) due to the issuance of Convertible
Securities, the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of the Convertible Securities for which the
adjustment is required, as of the date of issuance of such Convertible
Securities, if any.

Notwithstanding the foregoing, no adjustment shall be made to this Section 4 if
such adjustment would result in an increase in the Exercise Price.

            (ii) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under clause (i) of this Section 4(e),
the following will be applicable:

                  (1) Issuance of Purchase Rights. If the Company issues or
sells any Purchase Rights, whether or not immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of such Purchase
Rights (and the price of any conversion of Convertible Securities, if
applicable) is less than the Exercise Price in effect on the date of issuance or
sale of such Purchase Rights, then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Purchase Rights (assuming full
conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Purchase Rights, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon the exercise of such Purchase Rights" shall
be determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of all such Purchase
Rights, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Purchase Rights, plus, in
the case of Convertible Securities issuable upon the exercise of such Purchase
Rights, the minimum aggregate amount of additional consideration payable upon
the conversion, exercise or exchange thereof (determined in accordance with the
calculation method set forth in clause (ii)(2) of this Section 4(e)) at the time
such Convertible Securities first become convertible, exercisable or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Exercise Price shall be made upon the actual issuance of such
Common Stock upon the exercise of such Purchase Rights or upon the conversion,
exercise or exchange of Convertible Securities issuable upon exercise of such
Purchase Rights.

                  (2) Issuance of Convertible Securities. If the Company issues
or sells any Convertible Securities, whether or not immediately convertible,
exercisable or exchangeable,

                                     - 7 -
<PAGE>

and the price per share for which Common Stock is issuable upon such conversion,
exercise or exchange is less than the Exercise Price in effect on the date of
issuance or sale of such Convertible Securities, then the maximum total number
of shares of Common Stock issuable upon the conversion, exercise or exchange of
all such Convertible Securities shall, as of the date of the issuance or sale of
such Convertible Securities, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. If the Convertible Securities
so issued or sold do not have a fluctuating conversion or exercise price or
exchange ratio, then for the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion, exercise or
exchange" shall be determined by dividing (A) the total amount, if any, received
or receivable by the Company as consideration for the issuance or sale of all
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion, exercise or
exchange thereof (determined in accordance with the calculation method set forth
in this clause (ii)(2) of this Section 4(e)) at the time such Convertible
Securities first become convertible, exercisable or exchangeable, by (B) the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities. If the Convertible
Securities so issued or sold have a fluctuating conversion or exercise price or
exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then for purposes of
the next preceding sentence, the "price per share for which Common Stock is
issuable upon such conversion, exercise or exchange" shall be deemed to be the
lowest price per share which would be applicable (assuming all holding period
and other conditions to any discounts contained in such Variable Rate
Convertible Security have been satisfied) if the conversion price of such
Variable Rate Convertible Security on the date of issuance or sale thereof was
seventy-five percent (75%) of the actual conversion price on such date (the
"ASSUMED VARIABLE MARKET PRICE"), and, further, if the conversion price of such
Variable Rate Convertible Security at any time or times thereafter is less than
or equal to the Assumed Variable Market Price last used for making any
adjustment under this Section 4(e) with respect to any Variable Rate Convertible
Security, the Exercise Price in effect at such time shall be readjusted to equal
the Exercise Price which would have resulted if the Assumed Variable Market
Price at the time of issuance of the Variable Rate Convertible Security had been
seventy-five percent (75%) of the actual conversion price of such Variable Rate
Convertible Security existing at the time of the adjustment required by this
sentence. No further adjustment to the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion, exercise or exchange of
such Convertible Securities.

                  (3) Change in Option Price or Conversion Rate. If there is a
change at any time in (A) the amount of additional consideration payable to the
Company upon the exercise of any Purchase Rights; (B) the amount of additional
consideration, if any, payable to the Company upon the conversion, exercise or
exchange of any Convertible Securities; or (C) the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for Common Stock
(in each such case, other than under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect at the time of such
change shall be readjusted to the Exercise Price which would have been in effect
at such time had such Purchase Rights or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion, exercise or exchange rate, as the case may be, at the time initially
issued or sold.

                                     - 8 -
<PAGE>

                  (4) Calculation of Consideration Received. If any Common
Stock, Purchase Rights or Convertible Securities are issued or sold for cash,
the consideration received therefor will be the amount received by the Company
therefor, after deduction of all underwriting discounts or allowances in
connection with such issuance, grant or sale. In case any Common Stock, Purchase
Rights or Convertible Securities are issued or sold for a consideration part or
all of which shall be other than cash, including in the case of a strategic or
similar arrangement in which the other entity will provide services to the
Company, purchase services from the Company or otherwise provide intangible
consideration to the Company, the amount of the consideration other than cash
received by the Company (including the net present value of the consideration
expected by the Company for the provided or purchased services) shall be the
fair market value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company will be the Market Price thereof as of the date of receipt. In case
any Common Stock, Purchase Rights or Convertible Securities are issued in
connection with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Stock, Purchase
Rights or Convertible Securities, as the case may be. Notwithstanding anything
else herein to the contrary, if Common Stock, Purchase Rights or Convertible
Securities are issued or sold in conjunction with each other as part of a single
transaction or in a series of related transactions, the holder hereof may elect
to determine the amount of consideration deemed to be received by the Company
therefor by deducting the fair value of any type of securities (the "DISREGARDED
SECURITIES") issued or sold in such transaction or series of transactions. If
the holder makes an election pursuant to the immediately preceding sentence, no
adjustment to the Exercise Price shall be made pursuant to this Section 4(e) for
the issuance of the Disregarded Securities or upon any conversion, exercise or
exchange thereof. For example, if the Company were to issue convertible notes
having a face value of $1,000,000 and warrants to purchase shares of Common
Stock at an exercise price equal to the Market Price of the Common Stock on the
date of issuance of such warrants in exchange for $1,000,000 of consideration,
the fair value of the warrants would be subtracted from the $1,000,000 of
consideration received by the Company for the purposes of determining whether
the shares of Common Stock issuable upon conversion of the convertible notes
shall be deemed to be issued at a price per share below Exercise Price and, if
so, for purposes of determining any adjustment to the Exercise Price hereunder
as a result of the issuance of the convertible notes. The Company shall
calculate, using standard commercial valuation methods appropriate for valuing
such assets, the fair market value of any consideration other than cash or
securities; provided, however, that if the holder hereof does not agree to such
fair market value calculation within three business days after receipt thereof
from the Company, then such fair market value shall be determined in good faith
by an investment banker or other appropriate expert of national reputation
selected by the Company and reasonably acceptable to the holder, with the costs
of such appraisal to be borne by the Company.

                  (5) Issuances Pursuant to Existing Securities. If the Company
issues (or becomes obligated to issue) shares of Common Stock pursuant to any
antidilution or similar adjustments (other than as a result of stock splits,
stock dividends and the like) contained in any Convertible Securities or
Purchase Rights outstanding as of the date hereof but not included in Section
3(c) of the Disclosure Schedule to the Securities Purchase Agreement, then all
shares of Common Stock so issued shall be deemed to have been issued for no
consideration. If the

                                     - 9 -
<PAGE>

Company issues (or becomes obligated to issue) shares of Common Stock pursuant
to any antidilution or similar adjustments contained in any Convertible
Securities or Purchase Rights included in Section 3(c) of the Disclosure
Schedule to the Securities Purchase Agreement as a result of the issuance of the
Company's Series B Preferred Stock, the Note issued in connection with the
Securities Purchase Agreement (the "NOTE") or exchange thereof, or Warrants
issued pursuant to the Securities Purchase Agreement and the number of shares
that the Company issues (or is obligated to issue) as a result of such initial
issuance exceeds the amount specified in Section 3(c) of the Disclosure Schedule
to the Securities Purchase Agreement, such excess shares shall be deemed to have
been issued for no consideration.

                  (6) Exceptions to Adjustment of Exercise Price.
Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made
upon (A) this issuance of Common Stock upon the exercise or conversion of any
Convertible Securities or Purchase Rights outstanding on the date of the
Securities Purchase Agreement and described in [Section 3(c)] of the Disclosure
Schedule to the Securities Purchase Agreement in accordance with the terms of
such Convertible Securities and Purchase Rights as of such date; (B) the grant
of options to purchase Common Stock, with exercise prices not less than the
Market Price of the Common Stock on the date of grant, which are issued to
employees, officers, directors or consultants of the Company for the primary
purpose of soliciting or retaining their employment or service pursuant to any
equity compensation plan of the Company in effect on the date of the Securities
Purchase Agreement, and the issuance of shares of Common Stock upon the exercise
thereof; (C) conversion of the Company's Series A Preferred Stock or Series B
Preferred Stock, exercise of the Warrants, or (D) the issuance of securities in
connection with strategic business partnerships or joint ventures, the primary
purpose of which, in the reasonable judgment of the Board of Directors, is not
to raise additional capital.

      (f) 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 (e), 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.

      (g) 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.

      (h) 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 stock,
securities and/or other property issuable upon exercise of this Warrant, setting
forth in

                                     - 10 -
<PAGE>

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.

      (i) 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.

      (j) 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 issuance tax or other costs in respect thereof, provided
that the Company shall not be required to

                                     - 11 -
<PAGE>

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

                                     - 12 -
<PAGE>

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 during the
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

                                     - 13 -
<PAGE>

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

                                     - 14 -
<PAGE>

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

                                     - 15 -
<PAGE>

                        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]

                                     - 16 -
<PAGE>

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

                                                     REMOTE DYNAMICS, INC.

                                                     By:_______________________
                                                     Name:
                                                     Title:

                   [SIGNATURE PAGE TO STOCK PURCHASE WARRANT]

<PAGE>

                             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.

            [ ] 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.

            [ ] 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:
                                                       _________________________
                                                       _________________________
                                                       _________________________

                                     - 18 -
<PAGE>

                               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.

                                     - 1 -

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