Document:

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                                                                     EXHIBIT 4.2

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
October 1, 2004, is made by and among Remote Dynamics, Inc., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and the
undersigned (together with their affiliates, the "INITIAL INVESTORS").

                                   BACKGROUND

         A.       In connection with that certain Securities Purchase Agreement
of even date herewith by and among the Company and the Initial Investors (the
"SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors (i) shares of the Company's Series A Convertible Preferred Stock, with
a face amount of $1,000 per share (the "PREFERRED STOCK"), that are convertible
into shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK"), upon the terms and subject to the limitations and conditions
set forth in the Certificate of Designation, Rights and Preferences with respect
to such Preferred Stock (the "CERTIFICATE OF DESIGNATION"), (ii) structured
warrants (the "STRUCTURED WARRANTS") to acquire shares of Common Stock, and
(iii) incentive warrants (the "INCENTIVE WARRANTS") to acquire shares of Common
Stock. The Structured Warrants and the Incentive Warrants are together referred
to herein as the "WARRANTS"). The shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Preferred Stock are referred to
herein as the "CONVERSION SHARES" and the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the
"WARRANT SHARES."

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

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

1.       DEFINITIONS.

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

                  (i)      "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.

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

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

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

                  (v)      "REGISTRATION STATEMENT" means a registration
statement of the Company under the Securities Act.

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

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

2.       REGISTRATION.

         (a)      Mandatory Registration. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the date hereof (the "FILING DATE"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors) covering the resale of at least 5,000,000 Registrable
Securities. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Stock and exercise of the Warrants to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The Registrable Securities included on the Registration Statement shall be
allocated among the Investors as set forth in Section 11(k) hereof. The
Registration Statement shall contain the "Plan of Distribution" in the form
attached hereto as Exhibit A (the "PLAN OF DISTRIBUTION"), unless otherwise
directed by a majority of the Investors who provide a new legal Plan of
Distribution. The Registration Statement (and each amendment

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or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to (and subject to the reasonable review and, in the
case of the "Selling Security Holders" and "Plan of Distribution" sections of
the Registration Statement, the approval of) the Initial Investors and their
counsel prior to its filing or other submission.

         (b)      Payments by the Company. The Company shall use its best
efforts to cause the Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but in no event
later than the ninetieth (90th) day following the date hereof. At the time of
effectiveness, the Company shall ensure that such Registration Statement covers
all of the Registrable Securities issuable upon full conversion of the Preferred
Stock (without giving effect to any limitations on conversion contained in the
Certificate of Designation and exercise of the Warrants (without giving effect
to any limitations on exercise contained in the Warrants), including, if
necessary, by filing an amendment prior to the effective date of the
Registration Statement to increase the number of Registrable Securities covered
thereby. If (i) (A) the Registration Statement required to be filed pursuant to
Section 2(a) hereof is not filed with the SEC prior to the Filing Date or
declared effective by the SEC on or before the one hundred twentieth (120th) day
following the date hereof (the "REGISTRATION DEADLINE") or (B) any Registration
Statement required to be filed pursuant to Section 3(b) hereof is not declared
effective by the SEC on or before the sixtieth (60th) day following the
applicable Registration Trigger Date (as defined in Section 3(b) below), or (ii)
if, after any such Registration Statement has been declared effective by the
SEC, sales of any of the Registrable Securities required to be covered by such
Registration Statement (including any Registrable Securities required to be
registered pursuant to Section 3(b) hereof) cannot be made pursuant to such
Registration Statement (by reason of a stop order or the Company's failure to
update the Registration Statement or for any other reason outside the control of
the Investors) or (iii) the Common Stock is not listed or included for quotation
on the Nasdaq SmallCap Market (the "SMALLCAP Market"), the Nasdaq National
Market (the "NATIONAL MARKET"), the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX") at any time after the Registration Deadline
hereunder, then the Company will make payments to each Investor in such amounts
and at such times as shall be determined pursuant to this Section 2(b) as relief
for the damages to the Investors by reason of any such delay in or reduction of
their ability to sell the Registrable Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity). The Company
shall pay to each Investor an amount equal to the product of (i) the number of
shares of Preferred Stock then outstanding (including, for this purpose, any
shares of Preferred Stock that have been converted into Conversion Shares then
held by such Investor as if such shares of Preferred Stock had not been so
converted) multiplied by the per share purchase price, multiplied by (ii) three
hundredths (.03) for the 30 day period beginning the 90th day after the date
hereof and ending the 120th day after the date hereof, and fifteen thousandths
(.015) for each subsequent 30 day period (or portion thereof) (A) after the
Filing Date and prior to the date the Registration Statement is filed with the
SEC pursuant to Section 2(a), (B) after the Registration Deadline and prior to
the date the Registration Statement filed pursuant to Section 2(a) is declared
effective by the SEC, (C) after the sixtieth (60th) day following a Registration
Trigger Date and prior to the date the Registration Statement filed pursuant to
Section 3(b) hereof is declared effective by the SEC, and (D) during which sales
of any Registrable Securities cannot be made pursuant to any such Registration
Statement after the Registration Statement has been declared effective or the
Common Stock is not listed or included for quotation on the SmallCap Market, the
National Market, NYSE or AMEX; provided, however, that, for purpose

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of calculating the payment amount owed to any given Investor, there shall be
excluded from each such period any delays which are solely attributable to
changes required by such Investor in the Registration Statement with respect to
information relating to such Investor, including, without limitation, changes to
the Plan of Distribution (other than any corrections of Company mistakes with
respect to information previously provided by such Investor). All such amounts
required to be paid hereunder shall be paid in cash within five days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments shall be
made for each such 30 day period.

         (c)      Piggy-Back Registrations. If, at any time prior to the
expiration of the Registration Period (as defined in Section 3(a) below) the
Company shall file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the Securities Act of any of
its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor written notice of such filing, and if, within 15 days
after the date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered. Notwithstanding
the foregoing, in the event that, in connection with any underwritten public
offering, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit;
provided, however, that (i) the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders of which are not contractually entitled to inclusion of such securities
in such Registration Statement or are not contractually entitled to pro rata
inclusion with the holders of the Registrable Securities, (ii) after giving
effect to the immediately preceding proviso, any such exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities and the holders of other securities having the
contractual right to inclusion of their securities in such Registration
Statement by reason of demand registration rights, in proportion to the number
of Registrable Securities or other securities, as applicable, sought to be
included by each such Investor or other holder, and (iii) no such reduction
shall reduce the amount of Registrable Securities included in the registration
below twenty-five (25%) of the total amount of securities included in such
registration. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required under Section
2(a) hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(c) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.

         (d)      Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors of the

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Registrable Securities and the Company shall file all reports and statements
required to be filed by the Company with the SEC in a timely manner so as to
thereafter maintain such eligibility for the use of Form S-3.

3.       OBLIGATIONS OF THE COMPANY.

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

         (a)      The Company shall respond as soon as reasonably practicable to
any and all comments made by the staff of the SEC to any Registration Statement
required to be filed hereunder, and shall submit to the SEC, before the close of
business on the business day immediately following the business day on which the
Company learns (either by telephone or in writing) that no review of such
Registration Statement will be made by the SEC or that the staff of the SEC has
no further comments on such Registration Statement, as the case may be, a
request for acceleration of the effectiveness of such Registration Statement to
a time and date as soon as practicable. The Company shall keep such Registration
Statement effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration or restriction pursuant to
Rule 144(k) under the Securities Act or any successor provision (the
"REGISTRATION PERIOD"), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein and all documents
incorporated by reference therein) (A) shall comply in all material respects
with the requirements of the Securities Act and the rules and regulations of the
SEC promulgated thereunder and (B) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. The financial
statements of the Company included in any such Registration Statement or
incorporated by reference therein (x) shall comply as to form in all material
respects with the applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto, (y) shall be prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied during the periods involved (except as may be otherwise indicated in
such financial statements or the notes thereto or, in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed on summary statements) and (z) fairly present in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to immaterial year-end adjustments).

         (b)      The Company shall (i) prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
Registration Statement required to be filed hereunder and the prospectus used in
connection with any such Registration Statement as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and (ii) during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by any such Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the event the number of shares available under a
Registration

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Statement filed pursuant to this Agreement is, for any three (3) consecutive
trading days (the last of such three (3) trading days being the "REGISTRATION
TRIGGER DATE"), insufficient to cover all of the Registrable Securities then
issued or issuable upon conversion of the Preferred Stock (without giving effect
to any limitations on conversion contained in the Certificate of Designation)
and exercise of the Warrants (without giving effect to any limitations on
exercise contained in the Warrants), the Company shall provide each Investor
written notice of such Registration Trigger Date within three business days
thereafter and shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities issued or issuable upon
conversion of the Preferred Stock (without giving effect to any limitations on
conversion contained in the Certificate of Designation or exercise of the
Warrants (without giving effect to any limitations on exercise contained in the
Warrants) as of the Registration Trigger Date, in each case, as soon as
practicable, but in any event within 15 days after the Registration Trigger
Date. The Company shall cause such amendment(s) and/or new Registration
Statement(s) to become effective as soon as practicable following the filing
thereof. In the event the Company fails to obtain the effectiveness of any such
Registration Statement within 60 days after a Registration Trigger Date, each
Investor shall thereafter have the option, exercisable in whole or in part at
any time and from time to time by delivery of a written notice to the Company (a
"MANDATORY REDEMPTION NOTICE"), to require the Company to redeem for cash such
number of the Investor's shares of the Preferred Stock at a price per share of
Preferred Stock equal to $1,150, the total number of Registrable Securities
included on the Registration Statement for resale by such Investor is at least
equal to all of the Registrable Securities issued or issuable upon conversion of
such Investor's Preferred (without giving effect to any limitations on
conversion contained in the Certificate of Designation) and exercise of such
Investor's Warrants (without giving effect to any limitation on exercise
contained in the Warrants). If the Company fails to redeem any of such Preferred
Stock within five business days after its receipt of a Mandatory Redemption
Notice, then such Investor shall be entitled to the remedies provided in Article
VII.C of the Certificate of Designation.

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

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

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

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

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

         (h)      The Company shall make generally available to its security
holders as soon as practicable, but in no event later than 90 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.
The Company will be deemed to have complied with its obligations under this
Section 3(h) upon the Company's filing,

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on an appropriate form, the appropriate report of the Company as required by the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "EXCHANGE ACT").

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

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

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

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

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

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

         (o)      From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
to include any of their securities which are not Registrable Securities in the
Registration Statement required to be filed pursuant to Section 2(a) or 3(b)
hereof without the consent of the holders of a majority in interest of the
Registrable Securities.

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

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

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4.       OBLIGATIONS OF THE INVESTORS.

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

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

         (b)      Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement required to be filed hereunder, unless such Investor has
notified the Company in writing of such Investor's election to exclude all of
such Investor's Registrable Securities from such Registration Statement.

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

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

                                       10
<PAGE>

5.       EXPENSES OF REGISTRATION.

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

6.       INDEMNIFICATION.

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

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

                                       11
<PAGE>

inure to the benefit of any Investor Indemnified Person if the untrue statement
or omission of material fact contained in the prospectus was corrected on a
timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Investor Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Investor Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investor Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9 hereof.

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

         (c)      Promptly after receipt by any party entitled to
indemnification under this Section 6 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a Claim in
respect thereof is to made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to

                                       12
<PAGE>

assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the indemnified party; provided, however, that such
indemnifying party shall not be entitled to assume such defense and an
indemnified party shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the indemnified party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
indemnified party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and any
such indemnified party reasonably determines that there may be legal defenses
available to such indemnified party that are in conflict with those available to
such indemnifying party. The indemnifying party shall pay for only one separate
legal counsel for the indemnified parties, and such legal counsel shall be
selected by Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates (if
the parties entitled to indemnification hereunder are Investor Indemnified
Persons) or by the Company (if the parties entitled to indemnification hereunder
are Company Indemnified Persons). The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.

7.       CONTRIBUTION.

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

8.       REPORTS UNDER THE EXCHANGE ACT.

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

                                       13
<PAGE>

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

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

9.       ASSIGNMENT OF REGISTRATION RIGHTS.

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

10.      AMENDMENT OF REGISTRATION RIGHTS.

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

                                       14
<PAGE>

hereto must similarly affect each Investor. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company and their respective permitted successors and assigns.

11.      MISCELLANEOUS.

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

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

                  (i)      If to the Company:

                           Remote Dynamics, Inc.
                           1155 Kas Drive, Suite 100
                           Richardson, TX 75081-1999
                           Telephone: (972) 301-2733
                           Facsimile:  (972) 301-2263
                           Attention:  J. Raymond Bilbao, Esquire

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

                           Locke Liddell & Sapp LLP
                           2200 Ross Avenue, Suite 2200
                           Dallas, TX 75201-6776
                           Telephone: (214) 740-8570
                           Facsimile:  (214) 756-8570
                           Attention:  Stephen L. Sapp, Esquire

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

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

                                       15
<PAGE>

         (d)      This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in the State of Delaware. Each party irrevocably consents to
the jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, State of Delaware in any suit or proceeding
based on or arising under this Agreement and irrevocably agrees that all claims
in respect of such suit or proceeding may be determined in such courts. Each
party irrevocably waives the defense of an inconvenient forum to the maintenance
of such suit or proceeding. Each party further agrees that service of process
upon such party, mailed by first class mail shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding in
such forum. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. Each party agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.

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

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

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

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

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

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

         (k)      The initial number of Registrable Securities included on any
Registration Statement filed pursuant to Section 2(a) or 3(b), and each increase
to the number of Registrable

                                       16
<PAGE>

Securities included thereon, shall be allocated pro rata among the Investors
based on the number of Registrable Securities held by each Investor at the time
of such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such transferor.
Any shares of Common Stock included on a Registration Statement and which remain
allocated to any person or entity which does not hold any Registrable Securities
shall be allocated to the remaining Investors, pro rata based on the number of
shares of Registrable Securities then held by such Investors. For the avoidance
of doubt, the number of Registrable Securities held by any Investor shall be
determined as if all Preferred Stock and Warrants then outstanding were
converted into or exercised for Registrable Securities.

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

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

                                       17
<PAGE>

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

REMOTE DYNAMICS, INC.

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

INITIAL INVESTOR:

SDS CAPITAL GROUP SPC, LTD. for itself and on behalf of its Class A Segregated
portfolio, Class B Segregated portfolio, Class C Segregated portfolio and all
future Segregated portfolios created by it from time to time
------------------------------------------------------------
(Print or Type Name of Purchaser)

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

<PAGE>

                                                                       EXHIBIT B

[Date]

[Transfer Agent]

RE:      REMOTE DYNAMICS, INC.

Ladies and Gentlemen:

We are counsel to Remote Dynamics, Inc., a corporation organized under the laws
of the State of Delaware (the "COMPANY"), and we understand that [Name of
Investor] (the "HOLDER") has purchased from the Company (i) shares of Series A
Convertible Preferred Stock that are convertible into shares of the Company's
common stock, par value [$___] per share (the "COMMON STOCK"), and (ii) warrants
to acquire shares of Common Stock. Pursuant to a Registration Rights Agreement,
dated as of October 1, 2004, by and among the Company and the signatories
thereto (the "REGISTRATION RIGHTS AGREEMENT"), the Company agreed with the
Holder, among other things, to register the Registrable Securities (as that term
is defined in the Registration Rights Agreement) under the Securities Act of
1933, as amended (the "SECURITIES ACT"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's obligations
under the Registration Rights Agreement, on _____________ ___, ____, the Company
filed a Registration Statement on Form S-3 (File No. 333- _____________) (the
"REGISTRATION STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder. The Registration Statement was declared
effective by the SEC on _____________, ____.

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

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

Very truly yours,

[NAME OF COUNSEL]

cc:      [Name of Investor]<PAGE>

                                                                    EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of
October 1, 2004, is made by and among Remote Dynamics, Inc., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and the
purchaser or purchasers (individually, a "PURCHASER" and collectively the
"PURCHASERS") set forth on the execution pages hereof (each, an "EXECUTION PAGE"
and collectively the "EXECUTION PAGES").

                                   BACKGROUND

         A.       The Company and each Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("REGULATION D"), as promulgated by
the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT").

         B.       Upon the terms and conditions stated in this Agreement, the
Company desires to issue and sell to the Purchasers, and each Purchaser desires
to purchase, units (the "UNITS"), each Unit consisting of (i) one share of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share (the
"PREFERRED STOCK"), which Preferred Stock shall have the rights, preferences and
privileges set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A (the "CERTIFICATE OF DESIGNATION"), (ii) a
warrant, in the form attached hereto as Exhibit B (the "STRUCTURED WARRANTS"),
to acquire initially 200 shares of the Company's common stock, par value $0.01
per share (the "COMMON STOCK"), and (iii) a warrant, in the form attached hereto
as Exhibit C (the "INCENTIVE WARRANTS"), to acquire initially 125 shares of
Common Stock. The Structured Warrants and the Incentive Warrants are together
referred to herein as the "WARRANTS." The shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Preferred Stock are referred to
herein as the "CONVERSION SHARES" and the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the
"WARRANT SHARES." The Preferred Stock, the Warrants, the Conversion Shares and
the Warrant Shares are collectively referenced herein as the "SECURITIES" and
each of them may individually be referred to herein as a "SECURITY."

         C.       Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit D (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws. This Agreement,
the Certificate of Designation, the Warrants and the Registration Rights
Agreement are collectively referred to herein as the "TRANSACTION DOCUMENTS."

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

<PAGE>

1.       PURCHASE AND SALE OF SECURITIES.

         (a)      Purchase and Sale of Securities. Subject to the terms and
conditions hereof, at the Closing (as defined in Section 1(b) below), the
Company shall issue and sell to each Purchaser, and each Purchaser, severally
and not jointly, shall purchase from the Company, such number of Units as is set
forth on such Purchaser's Execution Page, for a purchase price (as to each
Purchaser, the "PURCHASE PRICE") per Unit equal to One Thousand Dollars
($1,000.00).

         (b)      The Closing. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the closing of the transactions
contemplated hereby (the "CLOSING") shall take place at the offices of Drinker
Biddle & Reath LLP at One Logan Square, 18th & Cherry Streets, Philadelphia,
Pennsylvania 19103 at 10:00 a.m., Philadelphia, Pennsylvania time, on the date
hereof, or such other time or place as the Company and the Purchasers may
mutually agree (the "CLOSING DATE").

2.       PURCHASER'S REPRESENTATIONS AND WARRANTIES.

         Each Purchaser severally, but not jointly, represents and warrants to
the Company as follows:

         (a)      Purchase for Own Account, Etc. Such Purchaser is purchasing
the Securities for such Purchaser's own account for investment purposes only and
not with a present view towards the public sale or distribution thereof, except
pursuant to sales that are exempt from the registration requirements of the
Securities Act and/or sales registered under the Securities Act. Such Purchaser
understands that such Purchaser must bear the economic risk of this investment
indefinitely, unless the Securities are registered pursuant to the Securities
Act and any applicable state securities or blue sky laws or an exemption from
such registration is available, and that the Company has no present intention of
registering the resale of any such Securities other than as contemplated by the
Registration Rights Agreement. Notwithstanding anything in this Section 2(a) to
the contrary, by making the representations herein, such Purchaser does not
agree to hold the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption from the registration
requirements under the Securities Act and applicable state securities laws.

         (b)      Accredited Investor Status. Such Purchaser is an "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D.

         (c)      Reliance on Exemptions. Such Purchaser understands that the
Securities are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

                                      -2-
<PAGE>

         (d)      Information. Such Purchaser and its counsel, if any, have been
furnished all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities that have
been specifically requested by such Purchaser or its counsel. Neither such
inquiries nor any other investigation conducted by such Purchaser or its counsel
or any of its representatives shall modify, amend or affect such Purchaser's
right to rely on the Company's representations and warranties contained in
Section 3 below. Such Purchaser understands that such Purchaser's investment in
the Securities involves a high degree of risk.

         (e)      Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

         (f)      Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Purchaser and are valid and binding agreements
of such Purchaser enforceable against such Purchaser in accordance with their
respective terms.

         (g)      Residency. Such Purchaser is a resident of the jurisdiction
set forth under such Purchaser's name on the Execution Page hereto executed by
such Purchaser.

         (h)      Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication, and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

         (i)      Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

         (j)      No Brokers. Other than the fee to North Consulting Corp.
referred to in Section 4(r), such Purchaser has taken no action that would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to this Agreement or the transactions
contemplated hereby.

         Each Purchaser's representations and warranties made in this Article 2
are made solely for the purpose of permitting the Company to make a
determination that the offer and sale of the Securities pursuant to this
Agreement comply with applicable U.S. federal and state securities laws and not
for any other purpose. Accordingly, the Company may not rely on such
representations and warranties for any other purpose. No Purchaser has made or
hereby makes any other representations or warranties, express or implied, to the
Company in connection with the transactions contemplated hereby.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         Except as set forth on a Disclosure Schedule executed and delivered by
the Company to each Purchaser (the "DISCLOSURE SCHEDULE"), the Company
represents and warrants to each Purchaser as follows:

                                      -3-
<PAGE>

         (a)      Organization and Qualification. The Company and each of its
direct and indirect subsidiaries (collectively, the "SUBSIDIARIES") is a
corporation duly organized and existing in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify or be in good standing would have
a Material Adverse Effect. For purposes of this Agreement, "MATERIAL ADVERSE
EFFECT" means any effect which, individually or in the aggregate with all other
effects, reasonably would be expected to be materially adverse to (i) the sale,
issuance or value of the Securities, (ii) the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents or (iii)
the business, operations, properties, prospects, financial condition or results
of operations of the Company and its Subsidiaries, taken as a whole; provided,
however, that any such effect resulting solely from changes affecting the
economy or financial markets generally shall not constitute a Material Adverse
Effect.

         (b)      Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and the other Transaction Documents, to issue and sell the Units
in accordance with the terms hereof, to issue the Conversion Shares upon
conversion of the Preferred Stock in accordance with the terms thereof and to
issue the Warrant Shares upon exercise of the Warrants in accordance with the
terms thereof; (ii) the execution, delivery and performance of this Agreement
and the other Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Units and the issuance and reservation for issuance of the
Conversion Shares and Warrant Shares) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or any committee of the Board of Directors is required, and
(iii) this Agreement constitutes, and, upon execution and delivery by the
Company of the other Transaction Documents, such Transaction Documents will
constitute, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms. Neither the execution, delivery or
performance by the Company of its obligations under this Agreement or the other
Transaction Documents, nor the consummation by it of the transactions
contemplated hereby or thereby (including, without limitation, the issuance of
the Units or the issuance or reservation for issuance of the Conversion Shares
or Warrant Shares) requires any consent or authorization of the Company's
stockholders.

         (c)      Capitalization. The capitalization of the Company as of the
date hereof, including the authorized capital stock, the number of shares issued
and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans (including the Company's Revised
Management Incentive Plan), the number of shares issuable and reserved for
issuance pursuant to the Company's Third Amended Joint Plan of Reorganization,
dated June 28, 2004 (the "PLAN OF REORGANIZATION"), the number of shares
issuable and reserved for issuance pursuant to securities (other than the
Preferred Stock and the Warrants) exercisable or exchangeable for,
or convertible into, any shares of capital stock and the number of shares to be
reserved for issuance upon conversion of the Preferred Stock and exercise of the
Warrants is set forth in Section 3(c) of the Disclosure Schedule. All of such
outstanding shares of capital stock have been, or upon issuance in accordance
with the terms of any such exercisable, exchangeable

                                      -4-
<PAGE>
or convertible securities will be, validly issued, fully paid and
non-assessable. No shares of capital stock of the Company (including the
Conversion Shares and the Warrant Shares) are subject to preemptive rights or
any other similar rights of the stockholders of the Company or any liens or
encumbrances. Except for the Securities and as set forth in Section 3(c) of the
Disclosure Schedule, (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries,
nor are any such issuances, contracts, commitments, understandings or
arrangements contemplated, (ii) there are no contracts, commitments,
understandings or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its or their securities
under the Securities Act (except the Registration Rights Agreement); (iii) there
are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem or otherwise acquire
any security of the Company or any of its Subsidiaries; and (iv) the Company
does not have any shareholder rights plan, "poison pill" or other anti-takeover
plans. Section 3(c) of the Disclosure Schedule sets forth all of the securities
or instruments issued by the Company or any of its Subsidiaries that contain
anti-dilution or similar provisions, and, except as and to the extent set forth
thereon, the sale and issuance of the Securities will not trigger any
anti-dilution adjustments to any such securities or instruments. The Company has
furnished to each Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof ("CERTIFICATE OF
INCORPORATION"), the Company's Bylaws as in effect on the date hereof (the
"BYLAWS"), and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for capital stock of the
Company, all of which instruments and agreements are set forth in Section 3(c)
of the Disclosure Schedule. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or any such Subsidiary.

         (d)      Issuance of Securities. The Units (and the securities
comprising the Units) are duly authorized and, upon issuance in accordance with
the terms of this Agreement, (i) will be validly issued, fully paid and
non-assessable and free from all taxes, liens, claims and encumbrances, (ii)
will not be subject to preemptive rights, rights of first refusal or other
similar rights of stockholders of the Company or any other person and (iii) will
not impose personal liability on the holder thereof. The Conversion Shares and
Warrant Shares are duly authorized and reserved for issuance, and, upon
conversion of the Preferred Stock and exercise of the Warrants in accordance
with the terms thereof, (x) will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and encumbrances, (y)
will not be subject to preemptive rights, rights of first refusal or other
similar rights of stockholders of the Company or any other person and (z) will
not impose personal liability upon the holder thereof.

         (e)      No Conflicts; Consents. The execution, delivery and
performance of this Agreement and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the

                                      -5-
<PAGE>

issuance of the Units and the issuance and reservation for issuance of the
Conversion Shares and Warrant Shares) will not (i) result in a violation of the
Certificate of Incorporation or Bylaws, (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment
(including, without limitation, the triggering of any anti-dilution provisions),
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
United States federal and state securities laws, rules and regulations and rules
and regulations of any self-regulatory organizations to which either the Company
or its securities are subject) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except, with respect to clauses (ii) and
(iii), for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not, individually or in the aggregate,
have a Material Adverse Effect). Except (w) as may be required under the
Securities Act in connection with the performance of the Company's obligations
under the Registration Rights Agreement, (x) for the filing of a Form D with the
SEC, (y) as may be required for compliance with applicable state securities or
"blue sky" laws, or (z) as otherwise set forth in Section 3(e) of the Disclosure
Schedule, the Company is not required to obtain any consent, approval,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency or other third
party (including, without limitation, pursuant to any Material Contract (as
defined in Section 3(g) below)) in order for it to execute and deliver this
Agreement or any of the other Transaction Documents or perform any of its
obligations hereunder or thereunder.

         (f)      Compliance. The Company is not in violation of its Certificate
of Incorporation, Bylaws or other organizational documents and no Subsidiary is
in violation of any of its organizational documents. Neither the Company nor any
of its Subsidiaries is in default (and no event has occurred that with notice or
lapse of time or both would put the Company or any of its Subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party (including, without limitation, the Material
Contracts), except for actual or possible violations, defaults or rights that
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any governmental entity, except
for possible violations the sanctions for which either individually or in the
aggregate have not had and would not have a Material Adverse Effect. Neither the
Company, nor any of its Subsidiaries, nor any director, officer, agent, employee
or other person acting on behalf of the Company or any Subsidiary has, in the
course of his actions for, or on behalf of, the Company or any Subsidiary, used
any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds, violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, provincial or foreign regulatory authorities that are material to the
conduct of its business, and neither the Company

                                      -6-
<PAGE>
nor any of its Subsidiaries has received any notice of proceeding relating to
the revocation or modification of any such certificate, authorization or permit.

         (g)      SEC Documents, Financial Statements. Since August 31, 2001,
the Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, the "SEC
DOCUMENTS"). The Company has delivered to each Purchaser true and complete
copies of the SEC Documents, or such documents are available on EDGAR. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act or the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings made prior
to the date hereof). As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP"), consistently applied, during the periods
involved (except as may be otherwise indicated in such financial statements or
the notes thereto or, in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, immaterial
year-end audit adjustments). Except as set forth in the financial statements of
the Company included in the Select SEC Documents (as defined below), the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under GAAP to be reflected in such
financial statements, which liabilities and obligations referred to in clauses
(i) and (ii), individually or in the aggregate, are not material to the
financial condition or operating results of the Company. Without limiting the
generality of the foregoing, the Company has either satisfied or has set aside
on its books and records provisions reasonably adequate for the satisfaction of
all Claims (as defined in the Plan of Reorganization) pursuant to the Plan of
Reorganization. To the extent required by the rules and regulations of the SEC
applicable thereto, the Select SEC Documents contain a complete and accurate
list of all material undischarged written or oral contracts, agreements, leases
or other instruments to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of the properties
or assets of the Company or any Subsidiary is subject (each, a "MATERIAL
CONTRACT"). Except as set forth in the Select SEC Documents, none of the
Company, its Subsidiaries or, to the best knowledge of the Company, any of the
other parties thereto is in breach or violation of any Material Contract, which
breach or violation

                                      -7-
<PAGE>

would have a Material Adverse Effect. For purposes of this Agreement, "SELECT
SEC DOCUMENTS" means the Company's (A) Proxy Statement relating to its 2003
Annual Meeting, (B) Annual Report on Form 10-K for the fiscal year ended August
31, 2003 (the "2003 ANNUAL REPORT"), (C) Quarterly Reports on Form 10-Q for the
fiscal quarters ended November 30, 2003, February 29, 2004 and May 31, 2004 and
(D) Current Reports on Form 8-K filed since August 31, 2003.

         (h)      Internal Accounting Controls. Although the Company has not
implemented, and is not yet required to implement, the requirements of Section
404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
thereunder, the Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosures controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
as the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of a
date within 90 days prior to the filing date of the 2003 Annual Report and the
Company's most recently filed Quarterly Report on Form 10-Q (each such date, an
"EVALUATION DATE"). The Company presented in the 2003 Annual Report and its most
recently filed Quarterly Report on Form 10-Q the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the respective Evaluation Date. Since the Evaluation
Date for the 2003 Annual Report, there have been no significant changes in the
Company's "internal controls" (as such term is defined in Item 307(b) of
Regulation S-K under the Exchange Act) or, to the Company's knowledge, in other
factors that could significantly affect the Company's internal controls.

         (i)      Absence of Certain Changes. Except as set forth in the Select
SEC Documents, since August 31, 2003, there has been no material adverse change
and no material adverse development in the business, properties, operations,
prospects, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole. The Company does not currently expect to take
any steps to seek protection pursuant to any bankruptcy or receivership law, nor
does the Company or any of its Subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy proceedings
with respect to the Company or any of its Subsidiaries.

         (j)      Transactions With Affiliates. Except as set forth in the
Select SEC Documents, none of the officers, directors, or employees of the
Company or any of its Subsidiaries is presently a party to any transaction with
the Company or any of its Subsidiaries (other than for ordinary course services
solely in their capacity as officers, directors or employees), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by,

                                      -8-
<PAGE>
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has an ownership interest of five percent or more or is an
officer, director, trustee or partner.

         (k)      Absence of Litigation. Except as disclosed in the Select SEC
Documents and as set forth in Section 3(k) of the Disclosure Schedule, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body
(including, without limitation, the SEC) pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
any of its Subsidiaries, or any of their respective directors or officers in
their capacities as such. There are no facts which, if known by a potential
claimant or governmental authority, could give rise to a claim or proceeding
which, if asserted or conducted with results unfavorable to the Company or any
of its Subsidiaries, could reasonably be expected to have a Material Adverse
Effect.

         (l)      Intellectual Property. Each of the Company and its
Subsidiaries owns or is duly licensed (and, in such event, has the unfettered
right to grant sublicenses) to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, inventions, discoveries, processes, scientific,
technical, engineering and marketing data, object and source codes, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "INTANGIBLES") necessary for the conduct of
its business as now being conducted and as presently contemplated to be
conducted in the future. Section 3(l) of the Disclosure Schedule sets forth a
list of all Intangibles owned and/or used by the Company in its business. To the
knowledge of the Company and its Subsidiaries, neither the Company nor any
Subsidiary of the Company infringes or is in conflict with any right of any
other person with respect to any third party Intangibles. Neither the Company
nor any of its Subsidiaries has received written notice of any pending conflict
with or infringement upon such third party Intangibles. Except as set forth on
Section 3(l) of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries has entered into any consent agreement, indemnification agreement,
forbearance to sue or settlement agreement with respect to the validity of the
Company's or its Subsidiaries' ownership of or right to use its Intangibles and
the Company has no knowledge of any reasonable basis for any such claim to be
successful. The Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is the
subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. The Company and its Subsidiaries have
complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the Company's knowledge, no person is infringing on or violating
the Intangibles owned or used by the Company or its Subsidiaries.

         (m)      Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and merchantable
title to all personal property owned by them that is material to the business of
the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property

                                      -9-
<PAGE>
by the Company and its Subsidiaries. Any real property and facilities held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.

         (n)      Tax Status. Except as set forth in the Select SEC Documents,
the Company and each of its Subsidiaries has made or filed all foreign, U.S.
federal, state, provincial and local income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. Except as set forth on Section 3(n) of the Disclosure
Schedule, there are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim. The Company has not executed a waiver with
respect to any statute of limitations relating to the assessment or collection
of any foreign, federal, state, provincial or local tax. None of the Company's
tax returns is presently being audited by any taxing authority.

         (o)      Key Employees. Each of the Company's directors and officers
and any Key Employee (as defined below) is currently serving the Company in the
capacity disclosed in the Select SEC Documents. No Key Employee is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its Subsidiaries to any material liability with respect to any
of the foregoing matters. Each Key Employee has entered into an employment
contract with the Company that provides for a term of employment as set forth on
Section 3(o) of the Disclosure Schedule. To the knowledge of the Company and its
Subsidiaries, no Key Employee has any intention to terminate or limit his
employment with, or services to, the Company or any of its Subsidiaries, nor is
any such Key Employee subject to any constraints which would cause such employee
to be unable to devote his full time and attention to such employment or
services. For purposes of this Agreement, "KEY EMPLOYEE" means the persons
listed in Section 3(o) of the Disclosure Schedule and any individual who assumes
or performs any of the duties of a Key Employee.

         (p)      Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any material union labor dispute nor, to the
knowledge of the Company or any of its Subsidiaries, is any such dispute
threatened. The Company and its Subsidiaries believe that their relations with
their employees are good. No executive officer (as defined in Rule 501(f) of the
Securities Act) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the Company. The
Company and its Subsidiaries are in compliance with all federal, state, local
and foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours, except where failure to
be in compliance would not, either individually or in the aggregate, result in a
Material Adverse Effect.

                                      -10-
<PAGE>

         (q)      Insurance. The Company and each of its Subsidiaries has in
force fire, casualty, product liability and other insurance policies, with
extended coverage, sufficient in amount to allow it to replace any of its
material properties or assets which might be damaged or destroyed or sufficient
to cover liabilities to which the Company may reasonably become subject, and
such types and amounts of other insurance with respect to its business and
properties, on both a per occurrence and an aggregate basis, as are customarily
carried by persons engaged in the same or similar business as the Company. No
default or event has occurred that could give rise to a default under any such
policy.

         (r)      Environmental Matters. There is no environmental litigation or
other environmental proceeding pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened by any governmental regulatory authority or
others with respect to the current or any former business of the Company or any
of its Subsidiaries or any partnership or joint venture currently or at any time
affiliated with the Company or any of its Subsidiaries. No state of facts exists
as to environmental matters or Hazardous Substances (as defined below) that
involves the reasonable likelihood of a material capital expenditure by the
Company or any of its Subsidiaries that may otherwise have a Material Adverse
Effect. To the Company's knowledge, no Hazardous Substances have been treated,
stored or disposed of, or otherwise deposited, in or on the properties owned or
leased by the Company or any of its Subsidiaries or by any partnership or joint
venture currently or at any time affiliated with the Company or any of its
Subsidiaries in violation of any applicable environmental laws. The
environmental compliance programs of the Company and each of its Subsidiaries
comply in all respects with all environmental laws, whether foreign, federal,
state, provincial or local, currently in effect. For purposes of this Agreement,
"HAZARDOUS SUBSTANCES" means any substance, waste, contaminant, pollutant or
material that has been determined by any governmental authority to be capable of
posing a risk of injury to health, safety, property or the environment.

         (s)      Solvency. Based on the financial condition of the Company as
of the Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).

         (t)      Listing. The Common Stock is currently listed for trading on
the Nasdaq SmallCap Market (the "SMALLCAP MARKET"). Except for the Nasdaq
Marketplace Rule 4450 requirement that the Company's common stock maintain a
minimum bid price per share of $1.00, the Company is not in violation of the
listing requirements of the SmallCap Market and does not presently reasonably
anticipate that the Common Stock will be delisted by the SmallCap Market during
the one-year period immediately following the Closing. The Company has not

                                      -11-
<PAGE>
received any notice regarding the possible delisting of the Common Stock from
the SmallCap Market. On or prior to the Closing, the Company will have secured
the listing of the Conversion Shares and Warrant Shares on the SmallCap Market
and on each other national securities exchange, automated quotation system or
over-the-counter market upon which shares of Common Stock are currently listed
(subject to official notice of issuance).

         (u)      Form S-3 Eligibility. The Company is eligible to register the
resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. There exist no facts or circumstances that would prohibit or
delay the preparation and filing of a registration statement on Form S-3 with
respect to the Registrable Securities (as defined in the Registration Rights
Agreement). The Company has no basis to believe that its past or present
independent public auditors will withhold their consent to the inclusion, or
incorporation by reference, of their audit opinion concerning the Company's
financial statements which are included in the Registration Statement required
to be filed pursuant to the Registration Rights Agreement.

         (v)      Anti-Takeover Provisions. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under its Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to any
Purchaser as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and any
and all Purchaser's ownership of the Securities.

         (w)      Acknowledgment Regarding Each Purchaser's Purchase of the
Securities. The Company acknowledges and agrees that each Purchaser is acting
solely in the capacity of arm's length purchaser with respect to this Agreement
and the other Transaction Documents and the transactions contemplated hereby and
thereby, and that, as of the date of this Agreement and as of Closing, no
Purchaser is (i) an officer or director of the Company, or (ii) an "affiliate"
of the Company (as defined in Rule 144 under the Securities Act (including any
successor rule, "RULE 144")). The Company further acknowledges that no Purchaser
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement or the other Transaction Documents and
the transactions contemplated hereby and thereby, and any advice given by a
Purchaser or any of its representatives or agents in connection with this
Agreement or the other Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Purchaser's purchase of the
Securities. The Company further represents to each Purchaser that the Company's
decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives.

         (x)      No General Solicitation or Integrated Offering. Neither the
Company nor any distributor participating on the Company's behalf in the
transactions contemplated hereby (if any) nor any person acting for the Company,
or any such distributor, has conducted any "general solicitation" (as such term
is defined in Regulation D) with respect to any of the Securities being offered
hereby. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would require registration of the Securities being offered hereby under the
Securities Act or cause this offering of Securities to be integrated

                                      -12-
<PAGE>
with any prior offering of securities of the Company for purposes of the
Securities Act, which result of such integration would require registration
under the Securities Act, or any applicable stockholder approval provisions.

         (y)      No Brokers. Other than the fee to North Consulting Corp.
referred to in Section 4(r), the Company has taken no action that would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby.

         (z)      Acknowledgment Regarding Securities. The number of Conversion
Shares issuable upon conversion of the Preferred Stock and the number of Warrant
Shares issuable upon exercise of the Warrants may increase in certain
circumstances. The Company's directors and executive officers have studied and
fully understand the nature of the Securities being sold hereunder. The Company
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Preferred Stock in accordance with the terms thereof and the Warrant Shares
upon the exercise of the Warrants in accordance with the terms thereof is
absolute and unconditional, regardless of the dilution that such issuance may
have on the ownership interests of other stockholders and the availability of
remedies provided for in any of the Transaction Documents relating to a failure
or refusal to issue Conversion Shares or Warrant Shares. Taking the foregoing
into account, the Company's Board of Directors has determined in its good faith
business judgment that the issuance of the Units hereunder and the consummation
of the other transactions contemplated hereby are in the best interests of the
Company and its stockholders.

         (aa)     Disclosure. All information relating to or concerning the
Company and/or any of its Subsidiaries set forth in this Agreement or provided
to the Purchasers pursuant to Section 2(d) hereof or otherwise in connection
with the transactions contemplated hereby is true and correct in all material
respects and the Company has not omitted to state any material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, prospects, operations
or financial conditions, which has not been publicly disclosed but, under
applicable law, rule or regulation, would be required to be disclosed by the
Company in an annual or quarterly report filed on the date hereof by the Company
under the Exchange Act.

4.       COVENANTS.

         (a)      Commercially Reasonable Efforts. The parties shall use their
respective commercially reasonable efforts timely to satisfy each of the
conditions described in Sections 6 and 7 of this Agreement.

         (b)      Form D; Blue Sky Laws. The Company shall file with the SEC a
Form D with respect to the Securities as required under Regulation D and provide
a copy thereof to each Purchaser promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to each Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser on or prior to the
Closing Date. Before the beginning

                                      -13-
<PAGE>
of the trading day immediately following the Closing Date, the Company shall
file a Form 8-K with the SEC concerning this Agreement and the transactions
contemplated hereby, which Form 8-K shall attach this Agreement and its Exhibits
as exhibits to such Form 8-K (the "8-K FILING"). As of the date of the 8-K
Filing, the Company hereby acknowledges that no Purchaser shall be in possession
of any material nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in the 8-K Filing. The Company shall not, and shall cause
each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents not to, provide any Purchaser with any material
nonpublic information regarding the Company or any of its Subsidiaries from and
after the 8-K Filing without the express written consent of such Purchaser;
provided, however, that a Purchaser that exercises its rights under Section 4(m)
hereof or Article XI.B, XI.C or XI.D of the Certificate of Designation shall be
deemed to have given such express written consent, but only with respect to the
information obtained as a direct result of the assertion of such rights. Subject
to the foregoing, neither the Company nor any Purchaser shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Purchaser shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release).

         (c)      Reporting Status. So long as any Purchasers (or any of their
respective affiliates) beneficially own any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the
Exchange Act, and the Company shall not terminate its status as an issuer that
files reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination. In addition, the Company
shall take all actions necessary to meet the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 or any successor
form thereto, to continue to be eligible to register the resale of its Common
Stock on a registration statement on Form S-3 under the Securities Act.

         (d)      Use of Proceeds. The Company shall use the proceeds from the
sale and issuance of the Units for general corporate purposes and working
capital. Such proceeds shall not be used to (i) pay dividends; (ii) pay for any
increase in executive compensation, pay any severance fee or similar payment, or
make any loan or other advance to any officer, employee, shareholder, director
or other affiliate of the Company, without the express approval of the Board of
Directors acting in accordance with past practice; (iii) purchase debt or equity
securities of any entity (including redeeming the Company's own securities),
except for (A) evidences of indebtedness issued or fully guaranteed by the
United States of America and having a maturity of not more than one year from
the date of acquisition, (B) certificates of deposit, notes, acceptances and
repurchase agreements having a maturity of not more than one year from the date
of acquisition issued by a bank organized in the United States having capital,
surplus and undivided profits of at least $500,000,000, (C) the highest-rated
commercial paper having a maturity of not more than one year from the date of
acquisition, and (D) "Money Market" fund shares, or money market accounts fully
insured by the Federal Deposit Insurance Corporation and sponsored by banks and
other financial institutions, provided that the investments consist principally
of the types of investments described in clauses (A), (B), or (C) above; (iv)
make any investment not directly

                                      -14-
<PAGE>
related to the current business of the Company; or (v) to satisfy any
obligations pursuant to the Plan of Reorganization, including the payment of any
Claims (as defined therein) pursuant thereto.

         (e)      Financial Information. So long as any Purchasers (or any of
their respective affiliates) beneficially own any of the Securities, the Company
shall send (via electronic transmission or otherwise) the following reports to
each such Purchaser: (i) within ten days after the filing with the SEC, a copy
of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, its proxy
statements and any Current Reports on Form 8-K; and (ii) within one day after
release, copies of all press releases issued by the Company or any of its
Subsidiaries.

         (f)      Reservation of Shares. The Company currently has authorized
and reserved for the purpose of issuance 5,000,000 shares of Common Stock to
provide for the full conversion of the Preferred Stock and issuance of the
Conversion Shares in connection therewith, the full exercise of the Warrants and
the issuance of the Warrant Shares in connection therewith and as otherwise
required by the Preferred Stock, the Warrants and the Registration Rights
Agreement (collectively, the "ISSUANCE OBLIGATIONS"). In the event such number
of shares becomes insufficient to satisfy the Issuance Obligations, the Company
shall take all necessary action to authorize and reserve such additional shares
of Common Stock necessary to satisfy the Issuance Obligations.

         (g)      Listing. So long as any Purchasers (or any of their respective
affiliates) beneficially own any of the Securities, the Company shall maintain
the listing of all Conversion Shares and Warrant Shares from time to time
issuable upon conversion of the Preferred Stock and exercise of the Warrants on
each national securities exchange, automated quotation system or electronic
bulletin board on which shares of Common Stock are currently listed. The Company
shall use commercially reasonable efforts to continue the listing and trading of
its Common Stock on the SmallCap Market or on the Nasdaq National Market (the
"NATIONAL MARKET"), the New York Stock Exchange (the "NYSE") or the American
Stock Exchange (the "AMEX") and shall comply in all respects with the reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers, Inc. (the "NASD"), such exchanges, or such
electronic system, as applicable. The Company shall promptly provide to each
Purchaser copies of any notices it receives regarding the continued eligibility
of the Common Stock for trading on any securities exchange or automated
quotation system on which securities of the same class or series issued by the
Company are then listed or quoted, if any.

         (h)      Corporate Existence. So long as any Purchasers (or any of
their respective affiliates) beneficially own any of the Securities, the Company
shall maintain its corporate existence, and in the event of a merger,
consolidation or sale of all or substantially all of the Company's assets, the
Company shall ensure that the surviving or successor entity in such transaction
(i) assumes the Company's obligations under this Agreement and the other
Transaction Documents and the agreements and instruments entered into in
connection herewith and therewith regardless of whether or not the Company would
have had a sufficient number of shares of Common Stock authorized and available
for issuance in order to effect the conversion of all the Preferred Stock and
exercise in full of all Warrants outstanding as of the date of such transaction
and (ii) except in the event of a merger, consolidation of the Company into any
other corporation, or the sale or conveyance of all or substantially all of the
assets of the Company

                                      -15-
<PAGE>
where the consideration consists solely of cash, the surviving or successor
entity is a publicly traded corporation whose common stock is listed for trading
on the SmallCap Market, the National Market, the NYSE or the AMEX.

         (i)      No Integrated Offerings. The Company shall not make any offers
or sales of any security (other than the Securities) under circumstances that
would require registration of the Securities being offered or sold hereunder
under the Securities Act or cause this offering of the Securities to be
integrated with any other offering of securities by the Company for purposes of
any stockholder approval provision applicable to the Company or its securities.

         (j)      Legal Compliance. The Company shall conduct its business and
the business of its Subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.

         (k)      Redemptions, Dividends and Repayments of Indebtedness. So long
as any Purchasers (or any of their respective affiliates) beneficially own any
of the Preferred Stock, the Company shall not, without first obtaining the
written approval of the holders of a majority of the shares of Preferred Stock
then outstanding (which approval may be given or withheld by such holders in
their sole and absolute discretion), repurchase, redeem or declare or pay any
cash dividend or distribution on any shares of capital stock of the Company or
repay or prepay any indebtedness of the Company other than as expressly required
pursuant to the terms of such indebtedness as in effect on the date hereof.

         (l)      Information. So long as any Purchasers (or any of their
respective affiliates) beneficially own any of the Securities, the Company shall
furnish to each such Purchaser:

                  (i)      concurrently with the filing with the SEC of its
annual reports on Form 10-K, a certificate of the President, a Vice President or
a senior financial officer of the Company stating that, based upon such
examination or investigation and review of this Agreement as in the opinion of
the signer is necessary to enable the signer to express an informed opinion with
respect thereto, neither the Company nor any of its Subsidiaries is or has
during such period been in default in the performance or observance of any of
the terms, covenants or conditions hereof, or, if the Company or any of its
Subsidiaries shall be or shall have been in default, specifying all such
defaults, and the nature and period of existence thereof, and what action the
Company or such Subsidiary has taken, is taking or proposes to take with respect
thereto; and

                  (ii)     the information the Company must deliver to any
holder or to any prospective transferee of Securities in order to permit the
sale or other transfer of such Securities pursuant to Rule 144A of the SEC or
any similar rule then in effect.

The Company shall keep at its principal executive office a true copy of this
Agreement (as at the time in effect), and cause the same to be available for
inspection at such office during normal business hours by any holder of
Securities or any prospective transferee of Securities designated by a holder
thereof.

                                      -16-
<PAGE>
         (m)      Inspection of Properties and Books. So long as any Purchasers
(or any of their respective affiliates) beneficially own any of the Securities,
each such Purchaser who then holds Securities and its representatives and agents
(collectively, the "INSPECTORS") shall have the right, at such Purchaser's
expense, to visit and inspect any of the properties of the Company and of its
Subsidiaries, to examine the books of account and records of the Company and of
its Subsidiaries, to make or be provided with copies and extracts therefrom, to
discuss the affairs, finances and accounts of the Company and of its
Subsidiaries with, and to be advised as to the same by, its and their officers,
employees and independent public accountants (and by this provision the Company
authorizes such accountants to discuss such affairs, finances and accounts,
whether or not a representative of the Company is present) all at such
reasonable times and intervals and to such reasonable extent as the Purchasers
may desire; provided, however, that each Inspector shall hold in confidence and
shall not make any disclosure (except to such Purchaser) of any such information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement filed pursuant to the Registration Rights Agreement (in
which case the Company shall immediately promptly (but in no event more than two
trading days after receiving notification from the Inspector) a Form 8-K with
the SEC disclosing such information), (ii) the release of such information is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or (iii) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. Each Purchaser agrees that it shall, upon learning that
disclosure of such information is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the information
deemed confidential.

         (n)      Shareholders Rights Plan. No claim shall be made or enforced
by the Company or any director, officer, employee, representative or other
person acting on behalf of the Company that any Purchaser is an "Acquiring
Person" under any shareholders rights plan or similar plan or arrangement in
effect or hereafter adopted by the Company, or that any Purchaser could be
deemed to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities under this Agreement or any other Transaction Documents or
under any other agreement between the Company and the Purchasers.

         (o)      Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged by any Purchaser in connection with a bona fide
margin agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Purchaser effecting a pledge
of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document. The Company shall execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Purchaser.

         (p)      Variable Securities. So long as any Purchasers (or any of
their respective affiliates) beneficially own any of the Securities, the Company
shall not, without first obtaining the written approval of the holders of a
majority of the shares of Preferred Stock then outstanding

                                      -17-
<PAGE>
(which approval may be given or withheld by such holders in their sole and
absolute discretion), issue or sell any rights, warrants or options to subscribe
for or purchase Common Stock, or any other securities directly or indirectly
convertible into or exchangeable or exercisable for Common Stock, at an
effective conversion, exchange or exercise price that varies or may vary with
the market price of the Common Stock, including by way of one or more reset(s)
to any fixed price.

         (q)      Participation Right. Subject to the terms and conditions
specified in this Section 4(q), for twelve months following the Closing Date,
the Purchasers shall have a right to participate with respect to the issuance or
possible issuance of (i) future equity or equity-linked securities, or (ii) debt
which is convertible into equity or in which there is an equity component
("ADDITIONAL SECURITIES") on the same terms and conditions as offered by the
Company to the other purchasers of such Additional Securities. Each time the
Company proposes to offer any Additional Securities, the Company shall make an
offering of such Additional Securities to each Purchaser in accordance with the
following provisions:

                  (i)      the Company shall deliver a notice (the "NOTICE") to
the Purchasers stating (i) its bona fide intention to offer such Additional
Securities, (ii) the number of such Additional Securities to be offered, (iii)
the price and terms, if any, upon which it proposes to offer such Additional
Securities, and (iv) the anticipated closing date of the sale of such Additional
Securities.

                  (ii)     by written notification received by the Company,
within fifteen (15) days after giving of the Notice, any Purchaser may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of such Additional Securities which equals one-half multiplied by
the proportion that the subscription amount of such Purchaser for the Units (as
set forth on such Purchaser's Execution Page) bears to the aggregate
subscription amount of all Purchasers for the Units, provided, however, that if
the terms set forth in the Notice contemplate consideration for such Additional
Securities to be paid in a form other than cash, any Purchaser may elect to
purchase or obtain such Additional Securities at a price equal to the fair
market value of the consideration set forth in the Notice, as reasonably
determined by the Board of Directors. The Company shall promptly, in writing,
inform each Purchaser that elects to purchase all of the Additional Securities
available to it ("FULLY-EXERCISING PURCHASER") of any other Purchaser's failure
to do likewise. During the five-day period commencing after such information is
given, each Fully-Exercising Purchaser shall be entitled to obtain that portion
of the Additional Securities for which the Purchasers were entitled to subscribe
but that were not subscribed for by the Purchasers that is equal to the
proportion that the number of shares of Common Stock that such Fully-Exercising
Purchaser would have the right to acquire (assuming the full conversion of such
Purchaser's shares of Preferred Stock into Conversion Shares) bears to the total
number of shares of Common Stock that all Fully-Exercising Purchasers who wish
to purchase some of the unsubscribed shares would have the right to acquire
(assuming the full conversion, without any limitations or restrictions, of such
Purchasers' shares of Preferred Stock into Conversion Shares);

                  (iii)    if all Additional Securities that the Purchasers are
entitled to obtain pursuant to subsection 4(q)(ii) are not elected to be
obtained as

                                      -18-
<PAGE>
provided in subsection 4(q)(ii) hereof, the Company may, during the 90-day
period following the expiration of the period provided in subsection 4(q)(ii)
hereof, offer the remaining unsubscribed portion of such Additional Securities
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than, those specified in the Notice. If the Company
does not consummate the sale of such Additional Securities within such period,
the right provided hereunder shall be deemed to be revived and such Additional
Securities shall not be offered or sold unless first reoffered to the Purchasers
in accordance herewith;

                  (iv)     the participation right in this Section 4(q) shall
not be applicable to (i) the issuance or sale of shares of Common Stock (or
options therefor) to employees, officers, directors, or consultants of the
Company for the primary purpose of soliciting or retaining their employment or
service pursuant to a stock option plan (or similar equity incentive plan)
approved by the Board of Directors and the stockholders, (ii) upon conversion of
any convertible securities outstanding as of Closing and as disclosed in Section
3(c) of the Disclosure Schedule, (iii) the issuance of securities in connection
with a bona fide public offering at an offering price per share (prior to
underwriter's commissions and discounts) of not less than the Conversion Price
(as such term is defined in the Certificate of Designation) (as adjusted to
reflect any stock dividends, distributions, combinations, reclassifications and
other similar transactions effected by the Corporation in respect to its Common
Stock) that is underwritten by a nationally recognized underwriting firm and
results in net proceeds to the Company of at least twenty-five million dollars
($25,000,000), (iv) the issuance or sale of the Preferred Stock, (v) the
issuance of securities in connection with mergers, acquisitions, 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, or (vi) any issuance of securities as to which the holders of a
majority of the then outstanding shares of Preferred Stock shall have executed a
written waiver of the rights contained in this Section 4(q).

                  (v)      the participation right set forth in this Section
4(q) may not be assigned or transferred, except that such right is assignable by
each Purchaser to any wholly-owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Securities Act,
controlling, controlled by or under common control with, any such Purchaser or
to any permitted transferee of the Preferred Stock.

         (r)      Expenses. At the Closing, the Company shall pay to each
Purchaser reimbursement for the out-of-pocket expenses reasonably incurred by
such Purchaser, its affiliates and its or their advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, each Purchaser's and their
respective affiliates' and advisors' reasonable due diligence and attorneys'
fees and expenses (the "EXPENSES"); provided, however, that each Purchaser shall
be permitted, in its discretion, to deduct all of its Expenses from the Purchase
Price payable by such Purchaser hereunder; and provided, further, that, unless
prior approval is obtained from the Company, the aggregate amount of the
Expenses payable to all Purchasers shall not exceed $99,000.00 (the "EXPENSE
CAP"), which Expense Cap shall be allocated, first, to SDS Capital Group SPC,
Ltd., and, second, any remaining amount within the Expense Cap shall be
allocated among the remaining Purchasers (other than SDS Capital Group SPC,
Ltd.) pro rata in accordance with their respective Purchase Price amounts. In
addition, from time to time thereafter, upon any Purchaser's written request,
the Company shall pay to such Purchaser such additional Expenses

                                      -19-
<PAGE>
(not to exceed, in the aggregate for all Purchasers, the Expense Cap), if any,
not covered by such payment, in each case to the extent reasonably incurred by
such Purchaser, its affiliates or its or their advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby. In addition to the foregoing, the Company shall pay North
Consulting Corp. a fee in the amount of $250,000.00, which SDS Capital Group
SPC, Ltd. shall be entitled to deduct from the Purchase Price payable by it
hereunder and pay directly to North Consulting Corp.

         (s)      Right of First Refusal. If the Company desires to contract
with or otherwise engage any unrelated third party to provide technical
recruiting, call center service, outsourced software engineering and integration
services, or any similar services (collectively, the "OUTSOURCED SERVICES"), the
Company shall give written notification (the "OUTSOURCING NOTIFICATION") of such
desire to SDS Capital Group SPC, Ltd. SDS Capital Group SPC, Ltd. shall have
fifteen (15) days from its receipt of the Outsourcing Notification in which to
advise the Company of its desire to appoint a designee (the "OUTSOURCING
DESIGNEE") to provide such Outsourced Services to the Company. The Outsourcing
Designee shall then have the exclusive right, during the thirty (30) day period
following the date on which the Company receives written notice of such
Outsourcing Designee's appointment, to develop and deliver to the Company a
formal proposal (the "PROPOSAL") for the provision of such Outsourced Services.
The Company shall accept such Proposal if the terms of the Proposal are
commercially reasonable. If an Outsourcing Designee is not appointed, or if the
Outsourcing Designee fails to deliver to the Company a Proposal in the manner
described above, the Company shall have the right to solicit and consider
alternative proposals to provide such Outsourced Services, provided, however,
that if a contract to provide such Outsourced Services is not executed within
ninety (90) days after the Outsourcing Notification, then the provisions of this
Section 4(s) will apply again to the Outsourced Services as if the initial
Outsourcing Notification had ever been provided.

5.       SECURITIES TRANSFER MATTERS.

         (a)      Conversion and Exercise. Upon conversion of the Preferred
Stock or exercise of the Warrants by any person, (i) if the DTC Transfer
Conditions (as defined below) are satisfied, the Company shall cause its
transfer agent to electronically transmit all Conversion Shares and Warrant
Shares by crediting the account of such person or its nominee with the
Depository Trust Company ("DTC") through its Deposit Withdrawal Agent Commission
system; or (ii) if the DTC Transfer Conditions are not satisfied, the Company
shall issue and deliver, or instruct its transfer agent to issue and deliver,
certificates (subject to the legend and other applicable provisions hereof and
the Certificate of Designation and Warrants), registered in the name of such
person its nominee, physical certificates representing the Conversion Shares and
Warrant Shares, as applicable. Even if the DTC Transfer Conditions are
satisfied, any person effecting a conversion of Preferred Stock or exercising
Warrants may instruct the Company to deliver to such person or its nominee
physical certificates representing the Conversion Shares and Warrant Shares, as
applicable, in lieu of delivering such shares by way of DTC Transfer. For
purposes of this Agreement, "DTC TRANSFER CONDITIONS" means that (A) the
Company's transfer agent is participating in the DTC Fast Automated Securities
Transfer program and (B) the certificates for the Conversion Shares or Warrant
Shares required to be delivered do not bear a legend and the

                                      -20-
<PAGE>
person effecting such conversion or exercise is not then required to return such
certificate for the placement of a legend thereon.

         (b)      Transfer or Resale. Each Purchaser understands that (i) except
as provided in the Registration Rights Agreement, the sale or resale of the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and the Securities may not be transferred unless
(A) the transfer is made pursuant to and as set forth in an effective
registration statement under the Securities Act covering the Securities; or (B)
such Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration under the Securities Act or any state securities laws; or (C) sold
under and in compliance with Rule 144; and (ii) neither the Company nor any
other person is under any obligation to register such Securities under the
Securities Act or any state securities laws (other than pursuant to the terms of
the Registration Rights Agreement). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged as
collateral in connection with a bona fide margin account or other lending
arrangement, provided such pledge is consistent with applicable laws, rules and
regulations.

         (c)      Legends. Each Purchaser understands that the Preferred Stock
and Warrants and, until such time as the Conversion Shares and Warrant Shares
have been registered under the Securities Act (including registration pursuant
to Rule 416 thereunder) as contemplated by the Registration Rights Agreement or
otherwise may be sold by such Purchaser under Rule 144, the certificates for the
Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form:

                  The securities represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, or
                  the securities laws of any state of the United States or in
                  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.

         The Company shall, immediately prior to a registration statement
covering the Securities (including, without limitation, the Registration
Statement contemplated by the Registration Rights Agreement) being declared
effective, deliver to its transfer agent an opinion letter of counsel, opining
that at any time such registration statement is effective, the transfer agent
shall issue, in connection with the issuance of the Conversion Shares and
Warrant Shares, certificates representing such Conversion Shares and Warrant
Shares without the restrictive legend above, provided such Conversion Shares and
Warrant Shares are to be sold pursuant to the prospectus contained in such
registration statement. Upon receipt of such opinion, the Company shall use
commercially reasonable efforts to cause the transfer agent to confirm, for the
benefit of the holders, that no further opinion of counsel is required at the
time of transfer in order to issue such shares without such restrictive legend.

                                      -21-
<PAGE>

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by state securities laws, (i) the sale of
such Security is registered under the Securities Act (including registration
pursuant to Rule 416 thereunder); (ii) such holder provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the Securities Act; or
(iii) such holder provides the Company with reasonable assurances that such
Security can be sold under Rule 144. In the event the above legend is removed
from any Security and thereafter the effectiveness of a registration statement
covering such Security is suspended or the Company determines that a supplement
or amendment thereto is required by applicable securities laws, then upon
reasonable advance written notice to such Purchaser the Company may require that
the above legend be placed on any such Security that cannot then be sold
pursuant to an effective registration statement or under Rule 144 and such
Purchaser shall cooperate in the replacement of such legend. Such legend shall
thereafter be removed when such Security may again be sold pursuant to an
effective registration statement or under Rule 144.

         (d)      Transfer Agent Instruction. Upon compliance by any Purchaser
with the provisions of this Section 5 with respect to the transfer of any
Securities, the Company shall permit the transfer of such Securities and, in the
case of the transfer of Conversion Shares or Warrant Shares, promptly instruct
its transfer agent to issue one or more certificates (or effect a DTC Transfer)
in such name and in such denominations as specified by such Purchaser. The
Company shall not give any instructions to its transfer agent with respect to
the Securities, other than any permissible or required instructions provided in
this Section 5, and the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement.

6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company hereunder to issue and sell the Units to
each Purchaser hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions as to such Purchaser, provided
that such conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:

         (a)      Execution of Transaction Documents. Each Purchaser shall have
executed such Purchaser's Execution Page to this Agreement and each other
Transaction Document to which such Purchaser is a party and delivered the same
to the Company.

         (b)      Payment of Purchase Price. Each Purchaser shall have delivered
the full amount of such Purchaser's Purchase Price to the Company by wire
transfer in accordance with the Company's written wiring instructions.

         (c)      Representations and Warranties True; Covenants Performed. The
representations and warranties of each Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct as of such date), and such Purchaser shall have performed, satisfied and
complied

                                      -22-
<PAGE>
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to the
Closing Date.

         (d)      No Legal Prohibition. No statute, rule, regulation, executive
order, decree, ruling, injunction, action or proceeding shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the consummation of
any of the transactions contemplated by this Agreement.

7.       CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.

         The obligation of each Purchaser hereunder to purchase the Units for
which it is subscribing from the Company hereunder is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that such conditions are for each Purchaser's individual
and sole benefit and may be waived by any Purchaser as to such Purchaser at any
time in such Purchaser's sole discretion:

         (a)      Execution of Transaction Documents. The Company shall have
executed such Purchaser's Execution Page to this Agreement and each other
Transaction Document to which the Company is a party and delivered executed
originals of the same to such Purchaser.

         (b)      Filing of Certificate of Designation. The Certificate of
Designation shall have been filed and accepted for filing with the Secretary of
State of the State of Delaware and a copy thereof certified by the Secretary of
State of the State of Delaware shall have been delivered to such Purchaser.

         (c)      Delivery of Securities. The Company shall have delivered to
such Purchaser duly executed certificates representing the Preferred Stock and
Warrants for the number of Units being purchased by such Purchaser (each in such
denominations as such Purchaser shall reasonably request), registered in such
Purchaser's name.

         (d)      Listing. The Common Stock shall be authorized for quotation
and listed on the SmallCap Market and trading in the Common Stock (or on the
SmallCap Market generally) shall not have been suspended by the SEC or the
SmallCap Market. The Nasdaq Stock Market, Inc. Listing Qualifications Department
(the "LISTING DEPARTMENT") shall have advised the Company in writing of the
Listing Department's concurrence that the issuance of the Securities does not
require stockholder approval.

         (e)      Representations and Warranties True; Covenants Performed. The
representations and warranties of the Company, to the extent qualified by
materiality or Material Adverse Effect, shall be true and correct as of the date
when made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date); the
representations and warranties of the Company, to the extent not qualified by
materiality or Material Adverse Effect, shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct in
all material

                                      -23-
<PAGE>
respects as of such date); and the Company shall have performed, satisfied and
complied with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Purchaser shall have received a certificate, executed
by the Chief Executive Officer of the Company after reasonable investigation,
dated as of the Closing Date to the foregoing effect and as to such other
matters as may reasonably be requested by such Purchaser.

         (f)      No Legal Prohibition. No statute, rule, regulation, executive
order, decree, ruling, injunction, action or proceeding shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the consummation
of, any of the transactions contemplated by this Agreement.

         (g)      Legal Opinion. Such Purchaser shall have received an opinion
of the Company's counsel, dated as of the Closing Date, in the form attached
hereto as Exhibit E.

         (h)      No Material Adverse Change. There shall have been no material
adverse changes and no material adverse developments in the business,
properties, operations, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, since the date hereof.

         (i)      Corporate Approvals. Such Purchaser shall have received a copy
of resolutions, duly adopted by the Board of Directors of the Company, which
shall be in full force and effect at the time of the Closing, authorizing the
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents and the consummation by the Company of the
transactions contemplated hereby and thereby, certified as such by the Secretary
or Assistant Secretary of the Company, and such other documents they reasonably
request in connection with the Closing.

8.       GOVERNING LAW; MISCELLANEOUS.

         (a)      Governing Law; Jurisdiction. 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. The Company and
each Purchaser irrevocably consent 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. The Company and each Purchaser irrevocably waive the
defense of an inconvenient forum to the maintenance of such suit or proceeding
in such forum. The Company and each Purchaser further agree 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 Company or any
Purchaser to serve process in any other manner permitted by law. The Company and
each Purchaser 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.

                                      -24-
<PAGE>

         (b)      Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed execution page(s)
hereof to be physically delivered to the other party within five days of the
execution hereof, provided that the failure to so deliver any manually executed
execution page shall not affect the validity or enforceability of this
Agreement.

         (c)      Construction. Whenever the context requires, the gender of any
word used in this Agreement 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 Agreement, 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 Agreement are inserted for
purposes of reference only, and shall not affect the meaning or construction of
any of the provisions hereof.

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

         (e)      Entire Agreement; Amendments. This Agreement and the other
Transaction Documents (including any schedules and exhibits hereto and thereto)
contain the entire understanding of the Purchasers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Purchasers make any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement, and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and each
Purchaser.

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

                  (i)      If to the Company:

                           Remote Dynamics, Inc.
                           1155 Kas Drive, Suite 100

                                      -25-
<PAGE>

                           Richardson, TX 75081
                           Telephone: (972) 301-2733
                           Facsimile:  (972) 301-2633
                           Attention:  J. Raymond Bilbao, Esquire

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

                           Locke Liddell & Sapp LLP
                           2200 Ross Avenue
                           Suite 2200
                           Dallas, TX 75201-6776
                           Telephone: (214) 740-8570
                           Facsimile:  (214) 756-8570
                           Attention:  Stephen L. Sapp, Esquire

                  (ii)     If to any Purchaser, to the address set forth under
such Purchaser's name on the Execution Page hereto executed by such Purchaser.

         (g)      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. Except
as provided herein, the Company shall not assign this Agreement or any rights or
obligations hereunder. Any Purchaser may assign or transfer the Securities
pursuant to the terms of this Agreement and of such Securities, or assign such
Purchaser's rights hereunder to any other person or entity in accordance with
applicable law.

         (h)      Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person; provided, however, that Section 4(r) may be enforced by
any Purchaser's affiliates and its or their advisors to the extent the same is
entitled to reimbursement of Expenses pursuant thereto.

         (i)      Survival. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 3, 4, 5 and 8 hereof
shall survive the Closing for a period of two years notwithstanding any due
diligence investigation conducted by or on behalf of any Purchaser. Moreover,
none of the representations and warranties made by the Company herein shall act
as a waiver of any rights or remedies any Purchaser may have under applicable
U.S. federal or state securities laws.

         (j)      Publicity. The Company and each Purchaser shall have the right
to approve before issuance any press releases, SEC or, to the extent applicable,
NASD filings, or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Purchasers, to make any press release or SEC
or, to the extent applicable, NASD filings with respect to such transactions as
is required by applicable law and regulations (although the Purchasers shall be
consulted by the Company in connection with any such press release and filing
prior to its release and shall be provided with a copy thereof and must provide
specific consent to the use of their name in

                                      -26-
<PAGE>
connection therewith, which consent shall not be withheld if Company counsel
advises the Company in writing that NASD rules or applicable law explicitly
require the use of the Purchasers' names).

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

         (l)      Indemnification. In consideration of each Purchaser's
execution and delivery of this Agreement and the other Transaction Documents and
purchase of the Securities hereunder, and in addition to all of the Company's
other obligations under this Agreement and the other Transaction Documents, from
and after the Closing, the Company shall defend, protect, indemnify and hold
harmless each Purchaser and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement, collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, any other Transaction Document or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, any other Transaction Document or any other certificate, instrument
or document contemplated hereby or thereby or (iii) any cause of action, suit,
claim, order, proceeding or process brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (A) the execution,
delivery, performance or enforcement of this Agreement, any other Transaction
Document or any other certificate, instrument or document contemplated hereby or
thereby, (B) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance and sale of the
Securities, or (C) the status of such Purchaser or holder of the Securities as
an investor in the Company. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 8(l) shall be the same as those set forth in
Section 6(c) of the Registration Rights Agreement.

         (m)      Payment Set Aside. To the extent that the Company makes a
payment or payments to any Purchaser hereunder or pursuant to any of the other
Transaction Documents or any Purchaser enforces or exercises its rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or

                                      -27-
<PAGE>

are required to be refunded, repaid or otherwise restored to the Company, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

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

         (o)      Remedies. No provision of this Agreement or any other
Transaction Document providing for any remedy to a Purchaser shall limit any
other remedy which would otherwise be available to such Purchaser at law, in
equity or otherwise. Nothing in this Agreement or any other Transaction Document
shall limit any rights any Purchaser may have under any applicable federal or
state securities laws with respect to the investment contemplated hereby. The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchasers by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations hereunder (including, but not
limited to, its obligations pursuant to Section 5 hereof) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Agreement (including, but not limited to, its obligations
pursuant to Section 5 hereof), that each Purchaser shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer of the Securities, without
the necessity of showing economic loss and without any bond or other security
being required.

         (p)      Knowledge. As used in this Agreement, the term "knowledge" of
any person or entity shall mean and include (i) actual knowledge and (ii) that
knowledge which a reasonably prudent business person could have obtained in the
management of his or her business affairs after making due inquiry and
exercising due diligence which a prudent business person should have made or
exercised, as applicable, with respect thereto.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

                                      -28-
<PAGE>
         IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.

REMOTE DYNAMICS, INC.

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

PURCHASER:

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

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

RESIDENCE: CAYMAN ISLANDS

ADDRESS: c/o SDS Management, LLC
         53 Forest Avenue, Second Floor
         Old Greenwich, CT 06870
         Telephone: (203) 967-5850
         Facsimile: (203) 967-5851
         Attention: Steven Derby

AGGREGATE SUBSCRIPTION AMOUNT:

Number of Units: 5,000
Purchase Price ($1,000 per Unit): $5,000,000.00

                [SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

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