Document:

THIS NOTE AND THE SHARES OF COMMON STOCK  ISSUABLE UPON  CONVERSION  HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED  OF IN THE ABSENCE OF SUCH  REGISTRATION  OR RECEIPT BY THE MAKER OF AN
OPINION OF COUNSEL IN THE FORM,  SUBSTANCE AND SCOPE REASONABLY  SATISFACTORY TO
THE MAKER THAT THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF MAY BE SOLD,  TRANSFERRED,  OR OTHERWISE  DISPOSED OF, UNDER AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

                              REMOTE DYNAMICS, INC.

        Original Issue Discount Series B Subordinated Secured Convertible
                      Promissory Note due December 4, 2009

No. ZCN-A-06-__                                                      $264,000.00
Dated: December 4, 2006

         For value received,  Remote Dynamics, Inc., a Delaware corporation (the
"Maker"),  hereby  promises to pay to the order of Bounce Mobile  Systems,  Inc.
(together  with its  successors,  representatives,  and permitted  assigns,  the
"Holder"),  in accordance  with the terms  hereinafter  provided,  the principal
amount of Two Hundred, Sixty-Four Thousand Dollars ($264,000.00),  together with
interest  thereon.  Concurrently  with the  issuance of this Note,  the Maker is
issuing separate series B subordinated secured convertible  promissory notes and
separate  original issue  discount  series B  subordinated  secured  convertible
promissory notes (the "Other Notes") to separate  purchasers  pursuant to a Note
and Warrant Purchase  Agreement,  dated as of November 30, 2006, among the Maker
and the Purchasers listed therein (the "Purchase Agreement").

         All  payments  under or  pursuant  to this Note shall be made in United
States  Dollars in immediately  available  funds to the Holder at the address of
the  Holder  first set forth  above or at such  other  place as the  Holder  may
designate from time to time in writing to the Maker or by wire transfer of funds
to the Holder's  account,  instructions for which are attached hereto as Exhibit
A. The  outstanding  principal  balance of this Note shall be due and payable on
December  4, 2009 (the  "Maturity  Date") or at such  earlier  time as  provided
herein.

                                    ARTICLE I

                  Section  1.1  Share  Exchange  Agreement.  This  Note has been
executed and  delivered  pursuant to the Share  Exchange  Agreement  dated as of
November 30, 2006 (the "Share Exchange  Agreement") by and between the Maker and
Bounce Mobile Systems, Inc.

<PAGE>

Capitalized  terms used and not otherwise defined herein shall have the meanings
set forth for such terms in the Share Exchange Agreement.

                  Section 1.2       Payment of Principal.

                  (a) Commencing on August 1, 2007, and continuing thereafter on
the  first  business  day of  each  three-month  period  or on such  other  date
specified by the Holder as provided in the penultimate  sentence of this Section
1.2(a) (a "Principal Payment Date"), the Maker shall pay an amount to the Holder
equal to one-ninth  (1/9th) of the original  principal  amount of this Note (the
"Principal Installment Amount");  provided, however, if on any Principal Payment
Date, the outstanding  principal  amount of this Note is less than the Principal
Installment  Amount,  then the Maker shall pay to the Holder such lesser amount.
The Maker may pay such Principal Installment Amount in cash or registered shares
of the Maker's common stock, par value $.01 per share (the "Common  Stock").  If
the Maker  elects to pay the  Principal  Installment  Amount in cash such amount
shall be wired in  immediately  available  funds on the Principal  Payment Date;
provided,  however,  that if the Holder has delivered a Conversion Notice to the
Maker or delivers a Conversion  Notice prior to the Principal  Payment Date, the
Holder shall indicate in such Conversion  Notice whether the principal amount of
this Note to be so  converted  shall be  applied  against  the  final  Principal
Installment Amount or some other Principal  Installment  Amount. The Maker shall
provide  irrevocable  written notice to the Holder of the form of payment of the
Principal  Installment Amount at least ten (10) days prior to the first business
day of each quarter for which a Principal  Installment  Amount is required to be
made by the  Maker.  Notwithstanding  the  terms of this  Section  1.2(a) to the
contrary, if the Maker provides notice to the Holder pursuant to the immediately
preceding sentence that the Maker elects to pay the Principal Installment Amount
in registered shares of Common Stock, the Holder shall respond to such notice in
writing (the "Holder  Notice") at least three (3) Trading Days prior to the date
in which the  Holder  elects to  receive  its  Principal  Installment  Amount in
registered  shares of Common  Stock,  as  specified  by the Holder in the Holder
Notice.  In addition,  the Holder may elect to defer any  Principal  Installment
Amount to a later Principal Payment Date.

                  (b) If the  Maker  elects  to pay  the  Principal  Installment
Amount in registered  shares of Common Stock, the number of registered shares of
Common  Stock to be issued to the Holder shall be an amount equal to the greater
of (i) $0.02,  subject to adjustment as provided in Section 3.6 hereof, and (ii)
an amount equal to the Principal  Installment  Amount  divided by ninety percent
(90%) of the average of the VWAP (as defined in Section  1.2(c)  hereof) for the
ten  (10)  Trading  Days  immediately  preceding  the  Principal  Payment  Date;
provided,  however,  that if the Holder has delivered a Conversion Notice to the
Maker or delivers a Conversion  Notice prior to the Principal  Payment Date, the
Holder shall indicate in such Conversion  Notice whether the principal amount of
this Note to be so  converted  shall be  applied  against  the  final  Principal
Installment Amount or some other Principal  Installment Amount.  Notwithstanding
the  foregoing  to the  contrary,  the  Maker  may  elect  to pay the  Principal
Installment Amount in registered shares of Common Stock on any Principal Payment
Date only if (A) the  registration  statement  providing  for the  resale of the
shares of Common Stock issuable upon conversion of this Note (the  "Registration
Statement") is effective and has been effective,  without lapse or suspension of
any kind, for a period of twenty (20) consecutive  calendar days, (B) trading in
the Common Stock shall not have been  suspended by the  Securities  and Exchange
Commission or

                                      -2-
<PAGE>

the OTC Bulletin Board (or other exchange or market on which the Common Stock is
trading),  (C) the Maker is in material compliance with the terms and conditions
of this Note and the other Transaction  Documents and no Event of Default exists
and is  continuing,  and (D) the  issuance  of  shares  of  Common  Stock on the
Principal Payment Date does not violate the provisions of Section 3.4 hereof.

                  (c) The term "VWAP" means,  for any date, (i) the daily volume
weighted  average  price of the Common  Stock for such date on the OTC  Bulletin
Board as reported by Bloomberg  Financial L.P. (based on a Trading Day from 9:30
a.m.  Eastern Time to 4:02 p.m.  Eastern Time);  (ii) if the Common Stock is not
then  listed or quoted on the OTC  Bulletin  Board and if prices  for the Common
Stock are then reported in the "Pink Sheets"  published by the Pink Sheets,  LLC
(or a similar  organization  or agency  succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported; or
(iii) in all other  cases,  the fair market  value of a share of Common Stock as
determined by an independent  appraiser selected in good faith by the Holder and
reasonably acceptable to the Maker.

                  Section 1.3 Security  Agreement.  The obligations of the Maker
hereunder are secured by a continuing security interest in certain assets of the
Maker pursuant to the terms of a security agreement dated as of December 4, 2006
by and between the Maker, on the one hand, and the Holder, on the other hand.

                  Section 1.4  Subordination.  All  payments due under this Note
shall be subordinated and made junior, in all respects to the payment in full of
all  principal,  all interest  accrued  thereon and all other amounts due on any
indebtedness  outstanding  under that  certain  Purchase  Agreement  dated as of
February  23,  2006 among the Maker and the  purchasers  named  therein  and the
Security Agreement dated as of February 23, 2006 among the Maker and the secured
parties named therein.

                  Section 1.5 Payment on Non-Business Days. Whenever any payment
to be made shall be due on a Saturday, Sunday or a public holiday under the laws
of the  State  of New  York,  such  payment  may be due on the  next  succeeding
business day.

                  Section 1.6 Transfer.  This Note may be  transferred  or sold,
subject to the provisions of Section 4.8 of this Note, or pledged,  hypothecated
or otherwise granted as security by the Holder.

                  Section  1.7  Replacement.  Upon  receipt of a duly  executed,
notarized and unsecured  written  statement  from the Holder with respect to the
loss,  theft or  destruction  of this  Note (or any  replacement  hereof)  and a
standard indemnity, or, in the case of a mutilation of this Note, upon surrender
and  cancellation  of such Note, the Maker shall issue a new Note, of like tenor
and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

                                      -3-
<PAGE>

                                   ARTICLE II

                           EVENTS OF DEFAULT; REMEDIES

                  Section 2.1 Events of Default.  The  occurrence  of any of the
following events shall be an "Event of Default" under this Note:

                  (a) the Maker  shall  fail to make the  Principal  Installment
Amount on a Principal  Payment  Date and such  default is not fully cured within
one (1) business day after the occurrence thereof; or

                  (b) the failure of the  Registration  Statement to be declared
effective  by the  Securities  and Exchange  Commission  on or prior to the date
which is one hundred eighty (180) days after the date of the initial issuance of
this Note (the "Issuance Date"); or

                  (c) the suspension from listing, without subsequent listing on
any one of, or the  failure of the Common  Stock to be listed on at least one of
the OTC Bulletin Board,  the American Stock Exchange,  the Nasdaq Global Market,
the Nasdaq Capital Market or The New York Stock  Exchange,  Inc. for a period of
five (5) consecutive Trading Days; or

                  (d) the  Maker's  notice to the  Holder,  including  by way of
public announcement,  at any time, of its inability to comply (including for any
of the reasons  described  in Section  3.8(a)  hereof) or its  intention  not to
comply with proper  requests for  conversion  of this Note into shares of Common
Stock; or

                  (e) the Maker  shall fail to (i) timely  deliver the shares of
Common Stock upon conversion of the Note, (ii) file the  Registration  Statement
in accordance with the terms of the Registration  Rights Agreement or (iii) make
the payment of any fees and/or  liquidated  damages  under this Note,  the Share
Exchange  Agreement or the Registration  Rights Agreement,  which failure in the
case of items (i) and (iii) of this Section  2.1(e) is not remedied  within five
(5) business days after the incurrence thereof; or

                  (f)  while  the  Registration  Statement  is  required  to  be
maintained effective pursuant to the terms of the Registration Rights Agreement,
the   effectiveness  of  the  Registration   Statement  lapses  for  any  reason
(including,  without limitation, the issuance of a stop order) or is unavailable
to the  Holder  for  sale  of the  Registrable  Securities  (as  defined  in the
Registration  Rights Agreement) in accordance with the terms of the Registration
Rights Agreement, and such lapse or unavailability continues for a period of ten
(10)  consecutive  Trading  Days,  provided that the Maker has not exercised its
rights  pursuant to Section 3(n) of the  Registration  Rights  Agreement  (which
exercise is not an Event of Default hereunder); or

                  (g) default shall be made in the  performance or observance of
(i) any material covenant,  condition or agreement contained in this Note (other
than as set forth in clause  (f) of this  Section  2.1) and such  default is not
fully cured within five (5) business days after the Maker  receives  notice from
the Holder of the occurrence thereof or (ii) any material covenant, condition or
agreement  contained  in the Share  Exchange  Agreement,  the Other  Notes,  the
Registration

                                      -4-
<PAGE>

Rights Agreement or any other  Transaction  Document which is not covered by any
other  provisions of this Section 2.1 and such default is not fully cured within
five (5) business  days after the Maker  receives  notice from the Holder of the
occurrence thereof; or

                  (h) any material  representation or warranty made by the Maker
herein or in the Share Exchange  Agreement,  the Registration  Rights Agreement,
the Other Notes or any other Transaction Document shall prove to have been false
or incorrect or breached in a material respect on the date as of which made; or

                  (i) the Maker  shall (A)  default in any payment of any amount
or amounts of  principal  of or  interest  on any  Indebtedness  (other than the
Indebtedness  hereunder) the aggregate principal amount of which Indebtedness is
in excess of $100,000 or (B) default in the  observance  or  performance  of any
other agreement or condition  relating to any Indebtedness in excess of $100,000
or contained in any  instrument  or agreement  evidencing,  securing or relating
thereto,  or any other event shall occur or condition exist, the effect of which
default  or other  event or  condition  is to cause,  or to permit the holder or
holders or beneficiary or beneficiaries  of such  Indebtedness to cause with the
giving of notice  if  required,  such  Indebtedness  to become  due prior to its
stated maturity; or

                  (j)  the  Maker   shall  (i)  apply  for  or  consent  to  the
appointment of, or the taking of possession by, a receiver,  custodian,  trustee
or  liquidator  of itself or of all or a  substantial  part of its  property  or
assets,  (ii) make a general assignment for the benefit of its creditors,  (iii)
commence a voluntary  case under the United  States  Bankruptcy  Code (as now or
hereafter in effect) or under the comparable laws of any  jurisdiction  (foreign
or domestic),  (iv) file a petition seeking to take advantage of any bankruptcy,
insolvency,  moratorium,  reorganization  or other  similar  law  affecting  the
enforcement  of creditors'  rights  generally  which is not dismissed  within 30
days,  (v)  acquiesce  in  writing  to  any  petition  filed  against  it  in an
involuntary  case under United  States  Bankruptcy  Code (as now or hereafter in
effect) or under the comparable laws of any  jurisdiction  (foreign or domestic)
which is not  dismissed  within 60 days,  (vi) issue a notice of  bankruptcy  or
winding down of its operations or issue a press release regarding same, or (vii)
take  any  action  under  the laws of any  jurisdiction  (foreign  or  domestic)
analogous to any of the foregoing; or

                  (k) a proceeding  or case shall be commenced in respect of the
Maker,   without  its  application  or  consent,   in  any  court  of  competent
jurisdiction,   seeking  (i)  the   liquidation,   reorganization,   moratorium,
dissolution,  winding up, or composition or readjustment of its debts,  (ii) the
appointment of a trustee, receiver,  custodian,  liquidator or the like of it or
of all or any substantial  part of its assets in connection with the liquidation
or  dissolution  of the Maker or (iii) similar relief in respect of it under any
law providing for the relief of debtors,  and such  proceeding or case described
in clause (i),  (ii) or (iii) shall  continue  undismissed,  or unstayed  and in
effect,  for a period of thirty  (30)  days or any  order  for  relief  shall be
entered in an involuntary  case under United States  Bankruptcy  Code (as now or
hereafter in effect) or under the comparable laws of any  jurisdiction  (foreign
or  domestic)  against  the Maker or action  under the laws of any  jurisdiction
(foreign or  domestic)  analogous  to any of the  foregoing  shall be taken with
respect to the Maker and shall continue  undismissed,  or unstayed and in effect
for a period of thirty (30) days; or

                                      -5-
<PAGE>

                  (l) the failure of the Maker to instruct its transfer agent to
remove any legends  from shares of Common  Stock  eligible to be sold under Rule
144 of the Securities Act and issue such  unlegended  certificates to the Holder
within three (3) business days of the Holder's request so long as the Holder has
complied with Section 2.02 of the Share Exchange Agreement; or

                  (m) the  failure  of the Maker to pay any  amounts  due to the
Holder  herein or in the Share  Exchange  Agreement or the  Registration  Rights
Agreement within three (3) business days of the date such payments are due; or

                  (n) the  occurrence  of an Event of  Default  under  the Other
Notes or the Series B Note.

                  Section 2.2 Remedies Upon An Event of Default.  If an Event of
Default shall have occurred and shall be continuing, the Holder of this Note may
at any time at its option,  (a) pursuant to Section 3.7(a)  hereof,  declare the
entire unpaid principal balance of this Note due and payable, and thereupon, the
same shall be accelerated and so due and payable,  without presentment,  demand,
protest,  or  notice,  all of which are  hereby  expressly  unconditionally  and
irrevocably waived by the Maker; provided,  however, that upon the occurrence of
an Event of Default  described in (i)  Sections 2.1 (j) or (k), the  outstanding
principal  balance  hereunder  shall be  automatically  due and payable and (ii)
Sections 2.1 (b)-(i) and (l)-(n),  the Holder may demand the  prepayment of this
Note  pursuant to Section 3.7 hereof,  (b) demand that the  principal  amount of
this Note then  outstanding  shall be converted into shares of Common Stock at a
Conversion  Price per share  calculated  pursuant to Sections 3.1 and 3.4 hereof
assuming that the date that the Event of Default occurs is the  Conversion  Date
(as defined in Section 3.1 hereof), or (c) exercise or otherwise enforce any one
or more of the Holder's rights, powers, privileges, remedies and interests under
this Note, the Share Exchange  Agreement,  the Registration  Rights Agreement or
applicable  law. Upon the occurrence of an Event of Default,  the Maker will pay
interest to the Holder,  payable on demand, on the outstanding principal balance
of the Note  from  the date of the  Event of the  Default  until  such  Event of
Default is cured at the rate equal to the  lesser of ten  percent  (10%) and the
maximum  applicable  legal rate per annum. No course of delay on the part of the
Holder shall operate as a waiver thereof or otherwise prejudice the right of the
Holder.  No remedy  conferred  hereby  shall be  exclusive  of any other  remedy
referred to herein or now or hereafter  available at law, in equity,  by statute
or otherwise.

                                   ARTICLE III

                      CONVERSION; ANTIDILUTION; PREPAYMENT

                   Section 3.1      Conversion Option.

                  (a) At any time on or  after  the date  that is  fifteen  (15)
months  following the Issuance Date, this Note shall be convertible (in whole or
in part),  at the  option of the Holder  (the  "Conversion  Option"),  into such
number of fully paid and non-assessable  shares of Common Stock (the "Conversion
Rate")  as is  determined  by  dividing  (x)  that  portion  of the  outstanding
principal  balance  under  this Note as of such date that the  Holder  elects to
convert by (y) the  Conversion  Price (as defined in Section 3.2(a) hereof) then
in effect on the date on which the

                                      -6-
<PAGE>

Holder faxes a notice of conversion (the "Conversion Notice"), duly executed, to
the Maker (facsimile number (972) 301-2263, Attn.: Chief Executive Officer) (the
"Voluntary Conversion Date"), provided, however, that the Conversion Price shall
be subject to  adjustment  as described  in Section 3.6 below.  The Holder shall
deliver this Note to the Maker at the address  designated in the Share  Exchange
Agreement  at such  time  that this Note is fully  converted.  With  respect  to
partial  conversions of this Note,  the Maker shall keep written  records of the
amount of this Note converted as of each Conversion Date.

                  (b) On the Mandatory  Conversion Date (as defined below),  the
Maker may cause the  principal  amount of this Note to convert  into a number of
fully paid and nonassessable shares of Common Stock equal to the quotient of (i)
the principal amount of this Note  outstanding on the Mandatory  Conversion Date
divided by (ii) the Conversion Price in effect on the Mandatory  Conversion Date
by  providing  five (5) business  days prior  written  notice of such  Mandatory
Conversion Date. As used herein,  a "Mandatory  Conversion Date" shall be a date
following the effective date of the Registration  Statement in which the Closing
Bid Price (as defined in Section 3.1(c) below) exceeds two hundred fifty percent
(250%) of the Conversion Price for a period of twelve (12)  consecutive  Trading
Days  and the  average  daily  trading  volume  for  each of  such  twelve  (12)
consecutive Trading Days exceeds 750,000 shares of Common Stock; provided,  that
(A) the  Registration  Statement is effective  and has been  effective,  without
lapse or  suspension  of any  kind,  for a period  of  thirty  (30)  consecutive
calendar days immediately  preceding the Mandatory  Conversion Date, (B) trading
in the Common Stock shall not have been suspended by the Securities and Exchange
Commission or the OTC Bulletin  Board (or other  exchange or market on which the
Common Stock is trading), (C) the Maker is in material compliance with the terms
and conditions of this Note and the other Transaction  Documents and no Event of
Default exists and is continuing,  (D) the issuance of shares of Common Stock on
the Mandatory  Conversion  Date pursuant to such mandatory  conversion  does not
violate  the  provisions  of  Section  3.4  hereof,  and (E) the Maker is not in
possession of any material non-public information. Notwithstanding the foregoing
to the contrary,  the Mandatory Conversion Date shall be extended for as long as
a Triggering Event (as defined in Section 3.7(f) hereof) shall have occurred and
be continuing.  The Mandatory  Conversion Date and the Voluntary Conversion Date
collectively are referred to in this Note as the "Conversion Date."

                  (c) The term "Closing Bid Price" shall mean, on any particular
date (i) the last  trading  price per share of the Common  Stock on such date on
the OTC Bulletin  Board or another  registered  national stock exchange on which
the Common Stock is then listed, or if there is no such price on such date, then
the last trading price on such exchange or quotation  system on the date nearest
preceding  such date,  or (ii) if the Common Stock is not listed then on the OTC
Bulletin Board or any registered national stock exchange, the last trading price
for a share of Common Stock in the  over-the-counter  market, as reported by the
OTC Bulletin Board or in the National  Quotation Bureau  Incorporated or similar
organization or agency  succeeding to its functions of reporting  prices) at the
close  of  business  on such  date,  or (iii)  if the  Common  Stock is not then
reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated
(or similar  organization  or agency  succeeding  to its  functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant conversion
period,  as determined in good faith by the Holder,  or (iv) if the Common Stock
is not then publicly traded the fair market value

                                      -7-
<PAGE>

of a share of Common Stock as determined by the Holder and reasonably acceptable
to the Maker.

                  Section 3.2       Conversion Price.

                  (a) The term "Conversion Price" shall mean $0.016,  subject to
adjustment under Sections 3.2(b) and 3.6 hereof.

                  (b) In the event  that the Maker  does not (i)  achieve  gross
revenues equal to at least  $1,750,000 as determined in accordance with GAAP for
the calendar  quarter ended June 30, 2007, or (ii) increase its subscriber units
by a minimum of 5,000 net additional REDIview subscriber units by June 30, 2007,
or (iii) achieve  positive cash flow based on the Maker's EBITDA  (determined in
accordance with GAAP) by June 30, 2007, or (iv) execute binding agreements for a
minimum of two (2) new accounts  (with each such  account  ordering in excess of
1,000 REDIview units) by June 30, 2007 or a minimum of one (1) new account (with
such account  ordering in excess of 2,500 REDIview units) by June 30, 2007 (each
of the  foregoing  events  described  in  subclauses  (i) through  (iv) shall be
defined  herein as a  "Milestone"),  then in each such case in which the Company
fails to achieve any Milestone, the Conversion Price shall be reduced by fifteen
percent  (15%),  up to a maximum  reduction of sixty  percent (60%) in the event
none of the Milestones is achieved.

                  (c) Notwithstanding  any of the foregoing to the contrary,  if
during any period (a "Black-out Period"), a Holder is unable to trade any Common
Stock issued or issuable  upon  conversion of this Note  immediately  due to the
postponement  of  filing  or  delay  or  suspension  of   effectiveness  of  the
Registration  Statement or because the Maker has otherwise  informed such Holder
that an existing  prospectus cannot be used at that time in the sale or transfer
of such Common Stock (provided that such postponement, delay, suspension or fact
that the  prospectus  cannot be used is not due to  factors  solely  within  the
control  of the  Holder of this Note or due to the Maker  exercising  its rights
under Section 3(n) of the Registration Rights Agreement), such Holder shall have
the option but not the obligation on any Conversion Date within ten (10) Trading
Days  following the  expiration of the Black-out  Period of using the Conversion
Price  applicable on such  Conversion  Date or any Conversion  Price selected by
such Holder that would have been applicable had such Conversion Date been at any
earlier  time during the  Black-out  Period or within the ten (10)  Trading Days
thereafter.  In no event  shall  the  Black-out  Period  have any  effect on the
Maturity Date of this Note.

                  Section 3.3       Mechanics of Conversion.

                  (a) Not later than three (3) Trading Days after any Conversion
Date, the Maker or its designated transfer agent, as applicable, shall issue and
deliver to the Depository  Trust Company  ("DTC") account on the Holder's behalf
via the Deposit  Withdrawal Agent Commission System ("DWAC") as specified in the
Conversion Notice, registered in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder  shall be entitled.  In the
alternative,  not later than three (3) Trading Days after any  Conversion  Date,
the  Maker  shall  deliver  to  the  applicable  Holder  by  express  courier  a
certificate  or  certificates  which  shall be free of  restrictive  legends and
trading restrictions (other than those required by

                                      -8-
<PAGE>

                  Section 2.02 of the Share Exchange Agreement) representing the
number of shares of Common Stock being acquired upon the conversion of this Note
(the "Delivery Date").  Notwithstanding the foregoing to the contrary, the Maker
or its transfer agent shall only be obligated to issue and deliver the shares to
the DTC on the Holder's  behalf via DWAC (or  certificates  free of  restrictive
legends)  if such  conversion  is in  connection  with a sale and the Holder has
complied with the applicable  prospectus delivery  requirements (as evidenced by
documentation  furnished to and reasonably satisfactory to the Maker). If in the
case of any Conversion Notice such certificate or certificates are not delivered
to or as directed by the  applicable  Holder by the  Delivery  Date,  the Holder
shall be  entitled  by written  notice to the Maker at any time on or before its
receipt  of  such  certificate  or  certificates  thereafter,  to  rescind  such
conversion, in which event the Maker shall immediately return this Note tendered
for  conversion,  whereupon  the Maker and the Holder  shall each be restored to
their respective  positions  immediately prior to the delivery of such notice of
revocation,  except that any amounts  described in Sections 3.3(b) and (c) shall
be payable through the date notice of rescission is given to the Maker.

                  (b) The Maker  understands that a delay in the delivery of the
shares of Common Stock upon  conversion  of this Note beyond the  Delivery  Date
could  result in economic  loss to the Holder.  If the Maker fails to deliver to
the Holder such shares via DWAC or a  certificate  or  certificates  pursuant to
this Section hereunder by the Delivery Date, the Maker shall pay to such Holder,
in cash,  an amount per Trading  Day for each  Trading Day until such shares are
delivered via DWAC or certificates are delivered, together with interest on such
amount at a rate of 10% per annum,  accruing  until such  amount and any accrued
interest  thereon  is paid in full,  equal to the  greater  of (A) (i) 1% of the
aggregate  principal amount of the Notes requested to be converted for the first
five (5)  Trading  Days  after the  Delivery  Date and (ii) 2% of the  aggregate
principal  amount of the Notes  requested to be  converted  for each Trading Day
thereafter  and (B)  $2,000 per day (which  amount  shall be paid as  liquidated
damages and not as a penalty).  Nothing  herein shall limit a Holder's  right to
pursue  actual  damages  for  the  Maker's   failure  to  deliver   certificates
representing  shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies  available to
it at law or in equity  (including,  without  limitation,  a decree of  specific
performance and/or injunctive relief).  Notwithstanding anything to the contrary
contained herein,  the Holder shall be entitled to withdraw a Conversion Notice,
and upon such withdrawal the Maker shall only be obligated to pay the liquidated
damages  accrued in  accordance  with this Section  3.3(b)  through the date the
Conversion Notice is withdrawn.

                  (c) In addition to any other  rights  available to the Holder,
if the Maker  fails to cause its  transfer  agent to  transmit  to the  Holder a
certificate  or  certificates  representing  the shares of Common Stock issuable
upon  conversion of this Note on or before the Delivery  Date, and if after such
date the  Holder is  required  by its  broker  to  purchase  (in an open  market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the shares of Common Stock  issuable  upon  conversion  of
this  Note  which  the  Holder  anticipated  receiving  upon  such  exercise  (a
"Buy-In"),  then the Maker  shall (1) pay in cash to the  Holder  the  amount by
which (x) the Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (A) the number of shares of Common Stock issuable upon conversion
of

                                      -9-
<PAGE>

this Note that the Maker was  required  to deliver  to the Holder in  connection
with the  conversion at issue times (B) the price at which the sell order giving
rise to such  purchase  obligation  was  executed,  and (2) at the option of the
Holder, either reinstate the portion of the Note and equivalent number of shares
of Common  Stock for which  such  conversion  was not  honored or deliver to the
Holder the number of shares of Common  Stock that would have been issued had the
Maker timely  complied with its conversion and delivery  obligations  hereunder.
For example,  if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted  conversion  of shares
of Common  Stock with an  aggregate  sale  price  giving  rise to such  purchase
obligation of $10,000,  under clause (1) of the immediately  preceding  sentence
the Maker shall be required to pay the Holder  $1,000.  The Holder shall provide
the Maker written notice indicating the amounts payable to the Holder in respect
of the  Buy-In,  together  with  applicable  confirmations  and  other  evidence
reasonably  requested by the Maker.  Nothing herein shall limit a Holder's right
to pursue any other  remedies  available  to it  hereunder,  at law or in equity
including,   without  limitation,   a  decree  of  specific  performance  and/or
injunctive  relief  with  respect  to the  Maker's  failure  to  timely  deliver
certificates representing shares of Common Stock upon conversion of this Note as
required pursuant to the terms hereof.

                  Section 3.4 Ownership Cap and Certain Conversion Restrictions.

                  (a)  Notwithstanding  anything  to the  contrary  set forth in
Section 3 of this Note,  at no time may the Holder  convert  all or a portion of
this Note if the number of shares of Common Stock to be issued  pursuant to such
conversion  would exceed,  when aggregated with all other shares of Common Stock
owned by the  Holder at such time  (including  pursuant  to the  Warrants),  the
number of shares of Common Stock which would  result in the Holder  beneficially
owning (as  determined in accordance  with Section 13(d) of the Exchange Act and
the rules  thereunder) more than 4.9% of all of the Common Stock  outstanding at
such time;  provided,  however,  that upon the Holder  providing  the Maker with
sixty-one  (61) days  notice  (pursuant  to Section  4.1  hereof)  (the  "Waiver
Notice") that the Holder would like to waive this Section  3.4(a) with regard to
any or all shares of Common Stock  issuable upon  conversion of this Note,  this
Section  3.4(a) will be of no force or effect with regard to all or a portion of
the Note referenced in the Waiver Notice.

                  (b)  Notwithstanding  anything  to the  contrary  set forth in
Section 3 of this Note,  at no time may the Holder  convert  all or a portion of
this Note if the number of shares of Common Stock to be issued  pursuant to such
conversion,  when  aggregated with all other shares of Common Stock owned by the
Holder  at such  time,  would  result  in the  Holder  beneficially  owning  (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
thereunder)  in  excess of 9.9% of the then  issued  and  outstanding  shares of
Common Stock  outstanding  at such time  (including  pursuant to the  Warrants);
provided, however, that upon the Holder providing the Maker with a Waiver Notice
that the Holder would like to waive  Section  3.4(b) of this Note with regard to
any or all shares of Common Stock  issuable upon  conversion of this Note,  this
Section 3.4(b) shall be of no force or effect with regard to all or a portion of
the Note referenced in the Waiver Notice.

                  Section 3.5       Intentionally Omitted.

                                      -10-
<PAGE>

                  Section 3.6       Adjustment of Conversion Price.

                  (a) The Conversion  Price shall be subject to adjustment  from
time to time as follows:

                           (i) Adjustments for Stock Splits and Combinations. If
the Maker shall at any time or from time to time after the Issuance Date, effect
a stock split of the outstanding  Common Stock, the applicable  Conversion Price
in  effect  immediately  prior  to the  stock  split  shall  be  proportionately
decreased.  If the  Maker  shall  at any  time or from  time to time  after  the
Issuance Date,  combine the outstanding  shares of Common Stock,  the applicable
Conversion  Price  in  effect  immediately  prior  to the  combination  shall be
proportionately increased. Any adjustments under this Section 3.6(a)(i) shall be
effective  at the close of business  on the date the stock split or  combination
occurs.

                           (ii)   Adjustments   for   Certain    Dividends   and
Distributions.  If the Maker  shall at any time or from  time to time  after the
Issuance  Date,  make or  issue or set a record  date for the  determination  of
holders of Common  Stock  entitled to receive a dividend  or other  distribution
payable in shares of Common  Stock,  then,  and in each  event,  the  applicable
Conversion Price in effect immediately prior to such event shall be decreased as
of the time of such  issuance  or, in the event such record date shall have been
fixed,  as of the close of business on such record  date,  by  multiplying,  the
applicable Conversion Price then in effect by a fraction:

                                    (1) the  numerator  of  which  shall  be the
total number of shares of Common Stock issued and outstanding  immediately prior
to the time of such issuance or the close of business on such record date; and

                                    (2) the  denominator  of which  shall be the
total number of shares of Common Stock issued and outstanding  immediately prior
to the time of such  issuance  or the close of business on such record date plus
the number of shares of Common  Stock  issuable  in payment of such  dividend or
distribution.

                           (iii)    Adjustment    for   Other    Dividends   and
Distributions.  If the Maker  shall at any time or from  time to time  after the
Issuance  Date,  make or  issue or set a record  date for the  determination  of
holders of Common  Stock  entitled to receive a dividend  or other  distribution
payable  in other than  shares of Common  Stock,  then,  and in each  event,  an
appropriate  revision  to the  applicable  Conversion  Price  shall  be made and
provision shall be made (by adjustments of the Conversion Price or otherwise) so
that the  holders  of this Note  shall  receive  upon  conversions  thereof,  in
addition to the number of shares of Common Stock receivable thereon,  the number
of  securities  of the Maker which they would have  received  had this Note been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and  including  the  Conversion  Date,
retained such securities (together with any distributions payable thereon during
such  period),  giving  application  to all  adjustments  called for during such
period under this Section  3.6(a)(iii) with respect to the rights of the holders
of this Note, the Series B Note and the Other Notes; provided,  however, that if
such record date shall have been fixed and such dividend is not fully paid or if
such  distribution is not fully made on the date fixed therefor,  the Conversion
Price shall be

                                      -11-
<PAGE>

adjusted  pursuant to this  paragraph  as of the time of actual  payment of such
dividends or distributions.

                           (iv)  Adjustments for  Reclassification,  Exchange or
Substitution.  If the Common Stock issuable upon  conversion of this Note at any
time or from time to time after the  Issuance  Date shall be changed to the same
or  different  number of shares of any class or  classes  of stock,  whether  by
reclassification,  exchange,  substitution or otherwise  (other than by way of a
stock split or combination of shares or stock dividends provided for in Sections
3.6(a)(i), (ii) and (iii), or a reorganization,  merger, consolidation,  or sale
of assets  provided  for in Section  3.6(a)(v)),  then,  and in each  event,  an
appropriate  revision to the Conversion Price shall be made and provisions shall
be made (by adjustments of the Conversion Price or otherwise) so that the Holder
shall have the right thereafter to convert this Note into the kind and amount of
shares of stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into  which  such Note  might  have  been  converted  immediately  prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.

                           (v)   Adjustments   for    Reorganization,    Merger,
Consolidation or Sales of Assets.  If at any time or from time to time after the
Issuance Date there shall be a capital  reorganization  of the Maker (other than
by way of a  stock  split  or  combination  of  shares  or  stock  dividends  or
distributions  provided  for  in  Section  3.6(a)(i),   (ii)  and  (iii),  or  a
reclassification,  exchange or  substitution  of shares  provided for in Section
3.6(a)(iv)),  or a merger or  consolidation  of the Maker  with or into  another
corporation  where the holders of outstanding  voting  securities  prior to such
merger or  consolidation  do not own over fifty percent (50%) of the outstanding
voting securities of the merged or consolidated  entity,  immediately after such
merger or consolidation,  or the sale of all or substantially all of the Maker's
properties or assets to any other person (an "Organic  Change"),  then as a part
of such Organic Change,  (A) if the surviving  entity in any such Organic Change
is a public company that is registered  pursuant to the Securities  Exchange Act
of 1934,  as  amended,  and its  common  stock is listed or quoted on a national
securities exchange or a national automated quotation system or the OTC Bulletin
Board,  an  appropriate  revision  to the  Conversion  Price  shall  be made and
provision shall be made (by adjustments of the Conversion Price or otherwise) so
that the Holder  shall have the right  thereafter  to convert such Note into the
kind and amount of shares of stock and other securities or property of the Maker
or any  successor  corporation  resulting  from Organic  Change,  and (B) if the
surviving  entity in any such  Organic  Change is not a public  company  that is
registered  pursuant to the Securities  Exchange Act of 1934, as amended, or its
common  stock is not listed or quoted on a  national  securities  exchange  or a
national automated  quotation system or the OTC Bulletin Board, the Holder shall
have the right to demand  prepayment  pursuant to Section 3.7(b) hereof.  In any
such  case,  appropriate  adjustment  shall  be made in the  application  of the
provisions  of this Section  3.6(a)(v)  with respect to the rights of the Holder
after  the  Organic  Change  to the end  that  the  provisions  of this  Section
3.6(a)(v)  (including any adjustment in the applicable  Conversion Price then in
effect and the number of shares of stock or other  securities  deliverable  upon
conversion  of this Note,  Series B Note and the Other  Notes)  shall be applied
after that event in as nearly an equivalent manner as may be practicable.

                                      -12-
<PAGE>

                           (vi) Adjustments for Issuance of Additional Shares of
Common Stock.  In the event the Maker,  shall,  at any time,  from time to time,
issue or sell any additional  shares of common stock (otherwise than as provided
in the foregoing  subsections (i) through (v) of this Section 3.6(a) or pursuant
to Common Stock Equivalents  (hereafter  defined) granted or issued prior to the
Issuance Date) ("Additional  Shares of Common Stock"), at a price per share less
than the  Conversion  Price  then in effect or without  consideration,  then the
Conversion  Price upon each such  issuance  shall be reduced to a price equal to
the consideration per share paid for such Additional Shares of Common Stock.

                           (vii)  Issuance  of  Common  Stock  Equivalents.  The
provisions of this Section 3.6(a)(vii) shall apply if (a) the Maker, at any time
after  the  Issuance  Date,  shall  issue  any  securities  convertible  into or
exchangeable   for,   directly  or   indirectly,   Common  Stock   ("Convertible
Securities"),  other than the Notes, or (b) any rights or warrants or options to
purchase  any such Common Stock or  Convertible  Securities  (collectively,  the
"Common Stock  Equivalents") shall be issued or sold. If the price per share for
which  Additional  Shares of Common  Stock may be issuable  pursuant to any such
Common Stock Equivalent shall be less than the applicable  Conversion Price then
in effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended  or  adjusted,  and such  price as so amended  shall be less than the
applicable  Conversion  Price  in  effect  at the  time  of  such  amendment  or
adjustment,  then the  applicable  Conversion  Price upon each such  issuance or
amendment shall be adjusted as provided in the first sentence of subsection (vi)
of this Section 3.6(a). No adjustment shall be made to the Conversion Price upon
the issuance of Common Stock pursuant to the exercise, conversion or exchange of
any Convertible  Security or Common Stock  Equivalent where an adjustment to the
Conversion  Price  was made as a  result  of the  issuance  or  purchase  of any
Convertible Security or Common Stock Equivalent.

                           (viii) Consideration for Stock. In case any shares of
Common Stock or any Common Stock Equivalents shall be issued or sold:

                                    (1)  in   connection   with  any  merger  or
consolidation  in which the Maker is the surviving  corporation  (other than any
consolidation  or merger in which the  previously  outstanding  shares of Common
Stock of the  Maker  shall be  changed  to or  exchanged  for the stock or other
securities of another corporation),  the amount of consideration  therefor shall
be, deemed to be the fair value,  as determined  reasonably and in good faith by
the Board of Directors of the Maker,  of such portion of the assets and business
of the  nonsurviving  corporation as such Board may determine to be attributable
to such shares of Common Stock,  Convertible  Securities,  rights or warrants or
options, as the case may be; or

                                    (2) in the  event  of any  consolidation  or
merger of the Maker in which the Maker is not the  surviving  corporation  or in
which the  previously  outstanding  shares of Common Stock of the Maker shall be
changed  into  or  exchanged  for the  stock  or  other  securities  of  another
corporation,  or in the  event  of any sale of all or  substantially  all of the
assets of the Maker for stock or other securities of any corporation,  the Maker
shall be deemed to have issued a number of shares of its Common  Stock for stock
or securities or other property of the other  corporation  computed on the basis
of the actual exchange ratio on which the transaction

                                      -13-
<PAGE>

was predicated,  and for a  consideration  equal to the fair market value on the
date of such  transaction  of all such stock or securities or other  property of
the other  corporation.  If any such  calculation  results in  adjustment of the
applicable  Conversion  Price,  or the number of shares of Common Stock issuable
upon conversion of the Notes,  the  determination  of the applicable  Conversion
Price or the number of shares of Common Stock  issuable  upon  conversion of the
Notes  immediately  prior to such merger,  consolidation  or sale, shall be made
after giving  effect to such  adjustment of the number of shares of Common Stock
issuable upon  conversion of the Notes. In the event Common Stock is issued with
other shares or securities or other assets of the Maker for consideration  which
covers both, the  consideration  computed as provided in this Section  3.6(viii)
shall be allocated  among such securities and assets as determined in good faith
by the Board of Directors of the Maker.

                  (b) Record  Date.  In case the Maker  shall take record of the
holders of its Common Stock for the purpose of entitling  them to subscribe  for
or purchase Common Stock or Convertible  Securities,  then the date of the issue
or sale of the shares of Common Stock shall be deemed to be such record date.

                  (c) Certain Issues  Excepted.  Anything herein to the contrary
notwithstanding,  the Maker shall not be required to make any  adjustment to the
Conversion Price in connection with (i) securities  issued (other than for cash)
in connection  with a merger,  acquisition,  or  consolidation,  (ii) securities
issued  pursuant to the  conversion or exercise of  convertible  or  exercisable
securities issued or outstanding on or prior to the date hereof or the Notes and
Warrants issued pursuant to the Purchase Agreement (so long as the conversion or
exercise  price in such  securities  are not amended to lower such price  and/or
adversely affect the Holders),  except for the securities issued pursuant to the
conversion or repayment of the series A senior  secured  convertible  promissory
notes issued by the Maker on February 23, 2006, (iii) the shares of Common Stock
issuable  upon the exercise of Warrants,  (iv)  securities  issued in connection
with strategic  license  agreements or other partnering  arrangements so long as
such  issuances  are not for the purpose of raising  capital,  (v) Common  Stock
issued or the issuance or grants of options to purchase Common Stock pursuant to
the Company's  stock option plans and employee  stock purchase plans as they now
exist on the date hereof,  (vi) any warrants  issued to the placement  agent and
its designees for the transactions contemplated by the Purchase Agreement, (vii)
Common Stock issued in connection  with  consulting or advisory  services not in
excess of 50,000,000  shares,  and (viii) the payment of any principal in shares
of Common Stock pursuant to this Note, the Series B Note or the Other Notes.

                  (d) No  Impairment.  The Maker shall not, by  amendment of its
Certificate of Incorporation or through any reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed  hereunder  by the Maker,  but will at all
times in good faith,  assist in the carrying out of all the  provisions  of this
Section  3.6  and in the  taking  of all  such  action  as may be  necessary  or
appropriate  in order to protect  the  Conversion  Rights of the Holder  against
impairment.  In the event a Holder  shall elect to convert any Notes as provided
herein,  the Maker cannot refuse  conversion based on any claim that such Holder
or any one  associated  or  affiliated  with such Holder has been engaged in any
violation  of law,  violation of an agreement to which such Holder is a party or
for any reason

                                      -14-
<PAGE>

whatsoever,  unless,  an injunction from a court, or notice,  restraining and or
adjoining  conversion  of all or of said Notes  shall have  issued and the Maker
posts a surety  bond for the  benefit of such  Holder in an amount  equal to one
hundred  thirty percent (130%) of the amount of the Notes the Holder has elected
to  convert,  which  bond  shall  remain  in  effect  until  the  completion  of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder (as liquidated damages) in the event it obtains judgment.

                  (e)  Certificates as to  Adjustments.  Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of shares of Common
Stock  issuable  upon  conversion of this Note pursuant to this Section 3.6, the
Maker at its expense shall promptly  compute such  adjustment or readjustment in
accordance with the terms hereof and furnish to the Holder a certificate setting
forth such adjustment and  readjustment,  showing in detail the facts upon which
such adjustment or readjustment is based. The Maker shall,  upon written request
of the Holder,  at any time,  furnish or cause to be  furnished  to the Holder a
like  certificate   setting  forth  such  adjustments  and  readjustments,   the
applicable  Conversion  Price in effect at the time, and the number of shares of
Common Stock and the amount,  if any, of other  securities or property  which at
the time would be received upon the conversion of this Note. Notwithstanding the
foregoing, the Maker shall not be obligated to deliver a certificate unless such
certificate  would  reflect an increase or decrease of at least one percent (1%)
of such adjusted amount.

                  (f) Issue  Taxes.  The  Maker  shall pay any and all issue and
other taxes, excluding federal, state or local income taxes, that may be payable
in respect of any issue or delivery of shares of Common Stock on  conversion  of
this Note  pursuant  thereto;  provided,  however,  that the Maker  shall not be
obligated to pay any transfer taxes resulting from any transfer requested by the
Holder in connection with any such conversion.

                  (g) Fractional  Shares.  No fractional  shares of Common Stock
shall be issued upon  conversion of this Note. In lieu of any fractional  shares
to which the Holder would otherwise be entitled,  the Maker shall pay cash equal
to the  product of such  fraction  multiplied  by the average of the Closing Bid
Prices of the Common Stock for the five (5) consecutive Trading Days immediately
preceding the Conversion Date.

                  (h) Reservation of Common Stock.  The Maker shall at all times
when this Note  shall be  outstanding,  reserve  and keep  available  out of its
authorized but unissued Common Stock, such number of authorized shares of Common
Stock that are not issued or  reserved  for  issuance as of the  Issuance  Date;
provided,  however,  upon the Maker filing the Charter  Amendment (as defined in
the Share Exchange Agreement), the Company shall take all action necessary to at
all times have  authorized,  and reserved  for the purpose of issuance,  free of
preemptive rights and other similar contractual rights of stockholders, a number
of shares of Common  Stock  equal to one  hundred  fifty  percent  (150%) of the
number of shares of Common  Stock as shall  from time to time be  sufficient  to
effect  the  conversion  of this  Note.  The Maker  shall,  from time to time in
accordance with the Delaware General  Corporation  Law,  increase the authorized
number  of  shares  of  Common  Stock  if at any  time the  unissued  number  of
authorized  shares shall not be  sufficient  to satisfy the Maker's  obligations
under this Section 3.6(h).

                                      -15-
<PAGE>

                  (i) Regulatory Compliance. If any shares of Common Stock to be
reserved  for the purpose of  conversion  of this Note require  registration  or
listing with or approval of any governmental authority,  stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Maker shall,
at its sole cost and expense,  in good faith and as  expeditiously  as possible,
endeavor to secure such registration, listing or approval, as the case may be.

                  Section 3.7       Prepayment.

                  (a)  Prepayment  Upon an  Event  of  Default.  Notwithstanding
anything to the contrary  contained  herein,  upon the occurrence of an Event of
Default  described  in Sections  2.1(b)-(k)  hereof,  the Holder  shall have the
right, at such Holder's option,  to require the Maker to prepay in cash all or a
portion of this Note at a price equal to one hundred  twenty  percent  (120%) of
the  aggregate  principal  amount  of this Note  applicable  at the time of such
request.  Nothing in this Section  3.7(a) shall limit the Holder's  rights under
Section 2.2 hereof.

                  (b) Prepayment Option Upon Major  Transaction.  In addition to
all  other  rights  of  the  Holder  contained  herein,  simultaneous  with  the
occurrence of a Major Transaction (as defined below),  the Holder shall have the
right, at the Holder's  option,  to require the Maker to prepay all or a portion
of the  Holder's  Notes at a price  equal to one hundred  percent  (100%) of the
aggregate  principal  amount  of this Note (the  "Major  Transaction  Prepayment
Price");  provided  that the Maker shall have the sole option to make payment of
the Major Transaction Prepayment Price in cash or shares of Common Stock. If the
Maker elects to make payment of the Major Transaction Prepayment Price in shares
of Common Stock,  the price per share shall be equal to eighty  percent (80%) of
the average of the Closing Bid Price for the ten (10) Trading  Days  immediately
preceding  the date of delivery of the Notice of  Prepayment at Option of Holder
Upon Major  Transaction (as hereafter  defined) and the Holder shall have demand
registration rights with respect to such shares.

                  (c) Prepayment  Option Upon  Triggering  Event. In addition to
all other rights of the Holder  contained  herein,  after a Triggering Event (as
defined  below),  the Holder shall have the right,  at the Holder's  option,  to
require  the  Maker to prepay  all or a portion  of this Note in cash at a price
equal  to the sum of (i) the  greater  of (A) one  hundred  twenty-five  percent
(125%) of the  aggregate  principal  amount of this Note and (B) in the event at
such time the Holder is unable to obtain the  benefit of its  conversion  rights
through  the  conversion  of this Note and resale of the shares of Common  Stock
issuable upon  conversion  hereof in accordance  with the terms of this Note and
the other  Transaction  Documents,  (a) the aggregate  principal  amount of this
Note,  divided by the Conversion  Price on (x) the date the Prepayment Price (as
defined below) is demanded or otherwise due or (y) the date the Prepayment Price
is paid in full,  whichever is less,  multiplied by (b) the VWAP on (x) the date
the  Prepayment  Price  is  demanded  or  otherwise  due,  and (y) the  date the
Prepayment  Price is paid in full,  whichever  is  greater,  and (ii) all  other
amounts,  costs, expenses and liquidated damages due in respect of this Note and
the other Transaction  Documents (the "Triggering Event Prepayment  Price," and,
collectively  with the  Major  Transaction  Prepayment  Price,  the  "Prepayment
Price").

                                      -16-
<PAGE>

                  (d)      Intentionally Omitted.

                  (e) "Major Transaction." A "Major Transaction" shall be deemed
to have occurred at such time as any of the following events:

                           (i)  the  consolidation,  merger  or  other  business
combination of the Maker with or into another Person (as defined in Section 4.13
hereof) (other than (A) pursuant to a migratory  merger  effected solely for the
purpose of changing  the  jurisdiction  of  incorporation  of the Maker or (B) a
consolidation,  merger or other  business  combination  in which  holders of the
Maker's voting power  immediately  prior to the  transaction  continue after the
transaction to hold,  directly or indirectly,  the voting power of the surviving
entity or entities  necessary to elect a majority of the members of the board of
directors (or their  equivalent if other than a  corporation)  of such entity or
entities).

                           (ii) the sale or transfer of more than fifty  percent
(50%) of the Maker's  assets  (based on the fair market value as  determined  in
good  faith by the  Maker's  Board of  Directors)  other than  inventory  in the
ordinary course of business in one or a related series of transactions; or

                           (iii) closing of a purchase, tender or exchange offer
made to the holders of more than fifty percent (50%) of the  outstanding  shares
of Common Stock in which more than fifty percent (50%) of the outstanding shares
of Common Stock were tendered and accepted.

                  (f) "Triggering  Event." A "Triggering  Event" shall be deemed
to have occurred at such time as any of the following events:

                          (i)  so  long  as  any  Notes  are  outstanding,   the
effectiveness of the Registration  Statement,  after it becomes  effective,  (i)
lapses for any reason  (including,  without  limitation,  the issuance of a stop
order) or (ii) is  unavailable  to the  Holder  for sale of the shares of Common
Stock at the time of any conversion  request,  and such lapse or  unavailability
continues for a period of twenty (20)  consecutive  Trading Days, and the shares
of Common Stock into which the Holder's Notes can be converted cannot be sold in
the public  securities  market pursuant to Rule 144(k) under the Securities Act,
provided  that the cause of such lapse or  unavailability  is not due to factors
primarily  within the control of the Holder of the Notes;  and provided  further
that a Triggering  Event shall not have  occurred if and to the extent the Maker
exercised  its  rights  set forth in  Section  3(n) of the  Registration  Rights
Agreement;

                          (ii) the suspension from listing,  without  subsequent
listing on any one of, or the  failure  of the  Common  Stock to be listed on at
least one of the OTC Bulletin  Board,  the American Stock  Exchange,  the Nasdaq
Global Market,  the Nasdaq Capital Market or The New York Stock Exchange,  Inc.,
for a period of five (5) consecutive Trading Days;

                          (iii) the  Maker's  notice to any holder of the Notes,
including by way of public announcement, at any time, of its inability to comply
(including for any of the reasons described in Section 3.8) or its intention not
to comply with proper requests for conversion of any Notes into shares of Common
Stock; or

                                      -17-
<PAGE>

                          (iv) the Maker's  failure to comply with a  Conversion
Notice  tendered in accordance  with the provisions of this Note within ten (10)
business days after the receipt by the Maker of the Conversion Notice; or

                          (v) the Maker  deregisters  its shares of Common Stock
and as a result such shares of Common Stock are no longer publicly traded; or

                          (vi)  the   Maker   consummates   a  "going   private"
transaction  and as a result  the  Common  Stock is no longer  registered  under
Sections 12(b) or 12(g) of the Exchange Act; or

                          (vii) the Maker breaches any representation, warranty,
covenant or other term or condition of the Share Exchange  Agreement,  this Note
or any other agreement,  document,  certificate or other instrument delivered in
connection with the transactions  contemplated thereby or hereby,  except to the
extent that such breach would not have a Material  Adverse Effect (as defined in
the Share  Exchange  Agreement)  of the Maker and its  Subsidiaries,  taken as a
whole, and except, in the case of a breach of a covenant which is curable,  only
if such breach continues for a period of a least ten (10) business days.

                  (g) Intentionally Omitted.

                  (h)  Mechanics  of  Prepayment  at Option of Holder Upon Major
Transaction. No sooner than fifteen (15) days nor later than ten (10) days prior
to the  consummation  of a  Major  Transaction,  but  not  prior  to the  public
announcement of such Major  Transaction,  the Maker shall deliver written notice
thereof via facsimile and overnight  courier ("Notice of Major  Transaction") to
the  Holder  of this  Note.  At any time  after  receipt  of a  Notice  of Major
Transaction (or, in the event a Notice of Major  Transaction is not delivered at
least ten (10) days prior to a Major  Transaction,  at any time  within ten (10)
days prior to a Major Transaction), any holder of the Notes then outstanding may
require the Maker to prepay,  effective immediately prior to the consummation of
such Major Transaction, all of the holder's Notes then outstanding by delivering
written  notice  thereof  via  facsimile  and  overnight   courier  ("Notice  of
Prepayment  at Option of Holder  Upon Major  Transaction")  to the Maker,  which
Notice of Prepayment at Option of Holder Upon Major  Transaction  shall indicate
(i) the  principal  amount of the Notes  that such  holder is  electing  to have
prepaid  and  (ii)  the  applicable  Major  Transaction   Prepayment  Price,  as
calculated pursuant to Section 3.7(b) above.

                  (i)   Mechanics  of   Prepayment  at  Option  of  Holder  Upon
Triggering  Event.  Within  one (1)  business  day  after  the  occurrence  of a
Triggering  Event,  the Maker shall deliver written notice thereof via facsimile
and  overnight  courier  ("Notice  of  Triggering  Event") to each holder of the
Notes.  At any time  after the  earlier  of a  holder's  receipt  of a Notice of
Triggering  Event and such holder  becoming  aware of a  Triggering  Event,  any
holder of this Note and the Other Notes then  outstanding  may require the Maker
to prepay  all of the Notes on a pro rata  basis by  delivering  written  notice
thereof via facsimile and overnight  courier ("Notice of Prepayment at Option of
Holder Upon  Triggering  Event") to the Maker,  which  Notice of  Prepayment  at
Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note
that such holder is electing to have prepaid and (ii) the applicable  Triggering
Event Prepayment

                                      -18-
<PAGE>

Price,  as calculated  pursuant to Section  3.7(c) above. A holder shall only be
permitted to require the Maker to prepay the Note pursuant to Section 3.7 hereof
for the  greater of a period of ten (10) days after  receipt by such holder of a
Notice  of  Triggering  Event  or  for so  long  as  such  Triggering  Event  is
continuing.

                  (j) Payment of Prepayment Price. Upon the Maker's receipt of a
Notice(s) of Prepayment at Option of Holder Upon Triggering Event or a Notice(s)
of Prepayment at Option of Holder Upon Major  Transaction from any holder of the
Notes, the Maker shall immediately  notify each holder of the Notes by facsimile
of the Maker's  receipt of such Notice(s) of Prepayment at Option of Holder Upon
Triggering  Event or  Notice(s)  of  Prepayment  at Option of Holder  Upon Major
Transaction  and each holder which has sent such a notice shall promptly  submit
to the Maker such holder's certificates representing the Notes which such holder
has elected to have prepaid.  The Maker shall deliver the applicable  Triggering
Event Prepayment Price, in the case of a prepayment  pursuant to Section 3.7(i),
to such holder  within  five (5)  business  days after the Maker's  receipt of a
Notice of Prepayment at Option of Holder Upon Triggering  Event and, in the case
of a  prepayment  pursuant  to  Section  3.7(h),  the Maker  shall  deliver  the
applicable  Major   Transaction   Prepayment  Price  immediately  prior  to  the
consummation of the Major  Transaction;  provided that a holder's  original Note
shall have been so delivered to the Maker; provided further that if the Maker is
unable  to prepay  all of the Notes to be  prepaid,  the Maker  shall  prepay an
amount  from each  holder  of the Notes  being  prepaid  equal to such  holder's
pro-rata  amount  (based on the number of Notes held by such holder  relative to
the number of Notes outstanding) of all Notes being prepaid.  If the Maker shall
fail to prepay all of the Notes submitted for prepayment (other than pursuant to
a dispute as to the arithmetic calculation of the Prepayment Price), in addition
to any  remedy  such  holder of the Notes may have under this Note and the Share
Exchange Agreement,  the applicable  Prepayment Price payable in respect of such
Notes not prepaid  shall bear interest at the rate of two percent (2%) per month
(prorated  for  partial  months)  until paid in full.  Until the Maker pays such
unpaid  applicable  Prepayment  Price in full to a holder of the Notes submitted
for prepayment, such holder shall have the option (the "Void Optional Prepayment
Option") to, in lieu of prepayment, require the Maker to promptly return to such
holder(s) all of the Notes that were  submitted for prepayment by such holder(s)
under this  Section 3.7 and for which the  applicable  Prepayment  Price has not
been paid, by sending  written  notice  thereof to the Maker via facsimile  (the
"Void  Optional  Prepayment  Notice").  Upon the  Maker's  receipt  of such Void
Optional  Prepayment  Notice(s)  and  prior to  payment  of the full  applicable
Prepayment  Price to such holder,  (i) the  Notice(s) of Prepayment at Option of
Holder Upon Triggering  Event or the Notice(s) of Prepayment at Option of Holder
Upon Major Transaction,  as the case may be, shall be null and void with respect
to those Notes submitted for prepayment and for which the applicable  Prepayment
Price has not been  paid,  (ii) the Maker  shall  immediately  return  any Notes
submitted to the Maker by each holder for  prepayment  under this Section 3.7(j)
and for which the  applicable  Prepayment  Price has not been paid and (iii) the
Conversion  Price of such returned  Notes shall be adjusted to the lesser of (A)
the  Conversion  Price  as in  effect  on the date on  which  the Void  Optional
Prepayment  Notice(s) is  delivered to the Maker and (B) the lowest  Closing Bid
Price  during  the  period  beginning  on the date on  which  the  Notice(s)  of
Prepayment  of Option of Holder  Upon  Major  Transaction  or the  Notice(s)  of
Prepayment  at Option of Holder Upon  Triggering  Event,  as the case may be, is
delivered  to the  Maker  and  ending  on the  date on which  the Void  Optional
Prepayment Notice(s) is delivered to the Maker; provided that no

                                      -19-
<PAGE>

adjustment  shall be made if such adjustment  would result in an increase of the
Conversion  Price  then  in  effect.  A  holder's  delivery  of a Void  Optional
Prepayment  Notice and  exercise of its rights  following  such notice shall not
effect the Maker's  obligations to make any payments which have accrued prior to
the date of such  notice.  Payments  provided for in this Section 3.7 shall have
priority  to  payments  to  other   stockholders  in  connection  with  a  Major
Transaction.

                  (k)      Intentionally Omitted.

                  Section 3.8       Inability to Fully Convert.

                  (a) Holder's  Option if Maker Cannot Fully  Convert.  If, upon
the Maker's  receipt of a  Conversion  Notice,  the Maker cannot issue shares of
Common Stock  registered  for resale under the  Registration  Statement  for any
reason,  including,  without  limitation,  because the Maker (w) does not have a
sufficient  number of shares of Common Stock  authorized and  available,  (x) is
otherwise  prohibited by applicable  law or by the rules or  regulations  of any
stock  exchange,   interdealer   quotation   system  or  other   self-regulatory
organization  with  jurisdiction  over the Maker or any of its  securities  from
issuing all of the Common Stock which is to be issued to the Holder  pursuant to
a Conversion Notice or (y) fails to have a sufficient number of shares of Common
Stock  registered for resale under the  Registration  Statement,  then the Maker
shall issue as many shares of Common Stock as it is able to issue in  accordance
with the Holder's Conversion Notice and, with respect to the unconverted portion
of this Note, the Holder, solely at Holder's option, can elect to:

                           (i) require the Maker to prepay that  portion of this
Note for which the Maker is unable to issue Common Stock in accordance  with the
Holder's  Conversion  Notice (the  "Mandatory  Prepayment") at a price per share
equal to the Triggering  Event  Prepayment Price as of such Conversion Date (the
"Mandatory Prepayment Price");

                           (ii) if the  Maker's  inability  to fully  convert is
pursuant  to Section  3.8(a)(x)  above,  require  the Maker to issue  restricted
shares of Common Stock in accordance with such holder's Conversion Notice;

                           (iii) void its  Conversion  Notice and retain or have
returned, as the case may be, this Note that was to be converted pursuant to the
Conversion  Notice  (provided that the Holder's  voiding its  Conversion  Notice
shall not effect the Maker's obligations to make any payments which have accrued
prior to the date of such notice);

                           (iv)  exercise its Buy-In  rights  pursuant to and in
accordance with the terms and provisions of Section 3.3(c) of this Note.

In the  event a Holder  shall  elect to  convert  any  portion  of its  Notes as
provided herein, the Maker cannot refuse conversion based on any claim that such
Holder or any one associated or affiliated  with such Holder has been engaged in
any violation of law,  violation of an agreement to which such Holder is a party
or for any reason  whatsoever,  unless,  an injunction  from a court, on notice,
restraining and or adjoining  conversion of all or of said Notes shall have been
issued and

                                      -20-
<PAGE>

the Maker posts a surety bond for the benefit of such Holder in an amount  equal
to 130% of the principal  amount of the Notes the Holder has elected to convert,
which bond shall remain in effect until the completion of arbitration/litigation
of the dispute and the  proceeds of which shall be payable to such Holder in the
event it obtains judgment.

                  (b) Mechanics of Fulfilling Holder's Election. The Maker shall
immediately  send via facsimile to the Holder,  upon receipt of a facsimile copy
of a  Conversion  Notice  from the Holder  which  cannot be fully  satisfied  as
described in Section  3.8(a) above,  a notice of the Maker's  inability to fully
satisfy the Conversion  Notice (the "Inability to Fully Convert  Notice").  Such
Inability to Fully Convert Notice shall indicate (i) the reason why the Maker is
unable to fully satisfy such holder's Conversion Notice, (ii) the amount of this
Note which cannot be converted  and (iii) the  applicable  Mandatory  Prepayment
Price.  The Holder shall  notify the Maker of its  election  pursuant to Section
3.8(a) above by delivering written notice via facsimile to the Maker ("Notice in
Response to Inability to Convert").

                  (c) Payment of Prepayment  Price. If the Holder shall elect to
have its Notes prepaid pursuant to Section  3.8(a)(i) above, the Maker shall pay
the  Mandatory  Prepayment  Price to the Holder  within  thirty (30) days of the
Maker's  receipt of the  Holder's  Notice in Response to  Inability  to Convert,
provided that prior to the Maker's receipt of the Holder's Notice in Response to
Inability to Convert the Maker has not delivered a notice to the Holder stating,
to the satisfaction of the Holder,  that the event or condition resulting in the
Mandatory  Prepayment has been cured and all Conversion  Shares  issuable to the
Holder can and will be delivered to the Holder in  accordance  with the terms of
this Note. If the Maker shall fail to pay the  applicable  Mandatory  Prepayment
Price to the  Holder  on the date that is one (1)  business  day  following  the
Maker's  receipt of the  Holder's  Notice in  Response to  Inability  to Convert
(other than  pursuant  to a dispute as to the  determination  of the  arithmetic
calculation of the Prepayment  Price),  in addition to any remedy the Holder may
have under this Note and the Share Exchange Agreement,  such unpaid amount shall
bear  interest at the rate of two percent (2%) per month  (prorated  for partial
months) until paid in full. Until the full Mandatory Prepayment Price is paid in
full to the  Holder,  the  Holder  may (i) void the  Mandatory  Prepayment  with
respect  to that  portion  of the Note for which the full  Mandatory  Prepayment
Price has not been paid, (ii) receive back such Note, and (iii) require that the
Conversion  Price of such  returned  Note be  adjusted  to the lesser of (A) the
Conversion  Price as in  effect  on the  date on which  the  Holder  voided  the
Mandatory  Prepayment  and (B) the lowest  Closing  Bid Price  during the period
beginning on the  Conversion  Date and ending on the date the Holder  voided the
Mandatory Prepayment.

                  (d) Pro-rata Conversion and Prepayment. In the event the Maker
receives a Conversion  Notice from more than one holder of the Notes on the same
day and the  Maker  can  convert  and  prepay  some,  but not all,  of the Notes
pursuant  to this  Section  3.8,  the Maker  shall  convert and prepay from each
holder of the Notes  electing  to have its Notes  converted  and prepaid at such
time an amount equal to such  holder's  pro-rata  amount (based on the principal
amount of the Notes held by such holder relative to the principal  amount of the
Notes outstanding) of all the Notes being converted and prepaid at such time.

                  Section 3.9 No Rights as  Shareholder.  Nothing  contained  in
this  Note  shall be  construed  as  conferring  upon the  Holder,  prior to the
conversion of this Note, the right to vote or

                                      -21-
<PAGE>

to receive  dividends  or to consent or to receive  notice as a  shareholder  in
respect of any meeting of  shareholders  for the  election of  directors  of the
Maker or of any other matter, or any other rights as a shareholder of the Maker.

                                   ARTICLE IV

                                  MISCELLANEOUS

                  Section 4.1 Notices. Any notice,  demand,  request,  waiver or
other  communication  required or  permitted to be given  hereunder  shall be in
writing and shall be effective (a) upon hand delivery,  telecopy or facsimile at
the address or number  designated in the Share Exchange  Agreement (if delivered
on a business  day  during  normal  business  hours  where such  notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received)  or (b) on the third  business  day  following  the date of mailing by
express  courier  service,  fully  prepaid,  addressed to such address,  or upon
actual receipt of such mailing, whichever shall first occur. The Maker will give
written  notice to the  Holder at least ten (10) days prior to the date on which
the Maker takes a record (x) with respect to any dividend or  distribution  upon
the Common Stock, (y) with respect to any pro rata subscription offer to holders
of  Common  Stock or (z) for  determining  rights to vote  with  respect  to any
Organic Change, dissolution, liquidation or winding-up provided, notwithstanding
the  foregoing in no event shall such notice be provided to such holder prior to
such  information  being  made  known to the  public.  The Maker  will also give
written  notice to the  Holder at least ten (10) days prior to the date on which
any Organic  Change,  dissolution,  liquidation  or  winding-up  will take place
provided,  notwithstanding  the  foregoing  in no event  shall  such  notice  be
provided to the Holder prior to such information being made known to the public.
The Maker shall  promptly  notify the Holder of this Note of any notices sent or
received, or any actions taken with respect to the Other Notes.

                  Section 4.2 Governing  Law. This Note shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the application of the substantive law of another jurisdiction.  This Note shall
not be interpreted or construed with any  presumption  against the party causing
this Note to be drafted.

                  Section 4.3  Headings.  Article  and section  headings in this
Note are included herein for purposes of convenience of reference only and shall
not constitute a part of this Note for any other purpose.

                  Section 4.4 Remedies,  Characterizations,  Other  Obligations,
Breaches and  Injunctive  Relief.  The  remedies  provided in this Note shall be
cumulative and in addition to all other remedies  available  under this Note, at
law  or  in  equity  (including,   without  limitation,  a  decree  of  specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing  herein shall limit a holder's  right to pursue  actual  damages for any
failure by the Maker to comply with the terms of this Note. Amounts set forth or
provided for herein with respect to payments,  conversion  and the like (and the
computation thereof) shall be the amounts to be

                                      -22-
<PAGE>

received  by the holder  thereof  and shall not,  except as  expressly  provided
herein,  be subject  to any other  obligation  of the Maker (or the  performance
thereof).  The  Maker  acknowledges  that  a  breach  by it of  its  obligations
hereunder  will cause  irreparable  and material harm to the Holder and that the
remedy at law for any such breach may be inadequate.  Therefore the Maker agrees
that, in the event of any such breach or threatened  breach, the Holder shall be
entitled,  in addition to all other available rights and remedies,  at law or in
equity, to seek and obtain such equitable  relief,  including but not limited to
an  injunction  restraining  any such breach or threatened  breach,  without the
necessity of showing  economic loss and without any bond or other security being
required.

                  Section 4.5 Enforcement Expenses.  The Maker agrees to pay all
costs and expenses of enforcement of this Note,  including,  without limitation,
reasonable attorneys' fees and expenses.

                  Section 4.6 Binding  Effect.  The obligations of the Maker and
the Holder set forth herein shall be binding upon the  successors and assigns of
each such party,  whether or not such successors or assigns are permitted by the
terms hereof.

                  Section  4.7  Amendments.  This  Note may not be  modified  or
amended in any manner except in writing executed by the Maker and the Holder.

                  Section 4.8  Compliance  with  Securities  Laws. The Holder of
this Note  acknowledges that this Note is being acquired solely for the Holder's
own account and not as a nominee for any other party,  and for  investment,  and
that the Holder shall not offer,  sell or otherwise  dispose of this Note.  This
Note and any Note  issued  in  substitution  or  replacement  therefor  shall be
stamped or imprinted with a legend in substantially the following form:

                  "THIS  NOTE AND THE  SHARES  OF  COMMON  STOCK  ISSUABLE  UPON
                  CONVERSION   HEREOF  HAVE  NOT  BEEN   REGISTERED   UNDER  THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),  OR APPLICABLE
                  STATE  SECURITIES  LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
                  THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE MAKER OF AN
                  OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY
                  SATISFACTORY  TO THE MAKER  THAT  THIS NOTE AND THE  SHARES OF
                  COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE MAY BE SOLD,
                  TRANSFERRED,  HYPOTHECATED OR OTHERWISE  DISPOSED OF, UNDER AN
                  EXEMPTION  FROM  REGISTRATION  UNDER  THE ACT AND  SUCH  STATE
                  SECURITIES LAWS."

                  Section 4.9 Consent to Jurisdiction. Each of the Maker and the
Holder  (i) hereby  irrevocably  submits to the  exclusive  jurisdiction  of the
United States  District  Court sitting in the Southern  District of New York and
the courts of the State of New York located in New

                                      -23-
<PAGE>

York county for the purposes of any suit, action or proceeding arising out of or
relating  to this Note and (ii) hereby  waives,  and agrees not to assert in any
such suit, action or proceeding,  any claim that it is not personally subject to
the jurisdiction of such court,  that the suit,  action or proceeding is brought
in an inconvenient  forum or that the venue of the suit, action or proceeding is
improper.  Each of the Maker and the Holder  consents to process being served in
any such suit,  action or  proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under the Share  Exchange  Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof.  Nothing in this Section 4.9 shall affect or limit any right
to serve process in any other manner permitted by law. Each of the Maker and the
Holder hereby agree that the prevailing party in any suit,  action or proceeding
arising out of or relating to this Note shall be entitled to  reimbursement  for
reasonable legal fees from the non-prevailing party.

                  Section 4.10  Parties in Interest.  This Note shall be binding
upon,  inure to the benefit of and be enforceable  by the Maker,  the Holder and
their respective successors and permitted assigns.

                  Section 4.11 Failure or Indulgence  Not Waiver.  No failure or
delay on the part of the Holder in the exercise of any power, right or privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise thereof or of any other right, power or privilege.

                  Section 4.12 Maker Waivers.  Except as otherwise  specifically
provided herein,  the Maker and all others that may become liable for all or any
part of the  obligations  evidenced  by this  Note,  hereby  waive  presentment,
demand,  notice of  nonpayment,  protest and all other  demands'  and notices in
connection  with the delivery,  acceptance,  performance and enforcement of this
Note,  and do hereby consent to any number of renewals of extensions of the time
or payment  hereof and agree that any such  renewals or  extensions  may be made
without notice to any such persons and without  affecting their liability herein
and do further  consent to the release of any person liable hereon,  all without
affecting  the  liability  of the other  persons,  firms or Maker liable for the
payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

                  (a) No  delay  or  omission  on the  part  of  the  Holder  in
exercising  its rights under this Note,  or course of conduct  relating  hereto,
shall  operate as a waiver of such rights or any other right of the Holder,  nor
shall any waiver by the  Holder of any such right or rights on any one  occasion
be deemed a waiver of the same right or rights on any future occasion.

                  (b) THE MAKER  ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
NOTE  IS A PART  IS A  COMMERCIAL  TRANSACTION,  AND TO THE  EXTENT  ALLOWED  BY
APPLICABLE  LAW,  HEREBY  WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO
ANY PREJUDGMENT  REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE
TO USE.

                  Section  4.13  Definitions.   For  the  purposes  hereof,  the
following terms shall have the following meanings:

                                      -24-
<PAGE>

                  "Person"  means an individual or a  corporation,  partnership,
trust,  incorporated  or  unincorporated  association,  joint  venture,  limited
liability  company,  joint stock company,  government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Trading  Day"  means (a) a day on which the  Common  Stock is
traded on the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on
the OTC  Bulletin  Board,  a day on which  the  Common  Stock is  quoted  in the
over-the-counter   market  as  reported  by  the   National   Quotation   Bureau
Incorporated (or any similar  organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a) or (b) hereof,  then  Trading Day shall
mean any day except Saturday,  Sunday and any day which shall be a legal holiday
or a day on which banking  institutions  in the State of New York are authorized
or required by law or other government action to close.

                                             REMOTE DYNAMICS, INC.

                                             By:  ______________________________
                                                  Name:
                                                  Title:

                                      -25-
<PAGE>

                                    EXHIBIT A

                                WIRE INSTRUCTIONS

Payee: ________________________________________________________

Bank:  ________________________________________________________

Address: ______________________________________________________

         ______________________________________________________

Bank No.: _____________________________________________________

Account No.:  _________________________________________________

Account Name: _________________________________________________

                                      -26-
<PAGE>

                                     FORM OF

                              NOTICE OF CONVERSION

     (To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby  irrevocably elects to convert $ ________________  of the
principal amount of the above Note No. ___ into shares of Common Stock of Remote
Dynamics,  Inc. (the "Maker") according to the conditions hereof, as of the date
written below.

Date of Conversion _____________________________________________________________

Applicable Conversion Price ____________________________________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the Date of Conversion: _________________________

Signature_______________________________________________________________________
         [Name]

Address:________________________________________________________________________

        ________________________________________________________________________

                                      -27-THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL  REASONABLY  SATISFACTORY  TO  THE  ISSUER  THAT  REGISTRATION  OF  SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

                         SERIES F-4 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                              REMOTE DYNAMICS, INC.

                            Expires December 4, 2010

No.: W-F-4-06- __                                   Number of Shares: 30,937,500
Date of Issuance: December 4, 2006

         FOR VALUE RECEIVED, the undersigned,  Remote Dynamics, Inc., a Delaware
corporation  (together with its successors  and assigns,  the "Issuer"),  hereby
certifies that Bounce Mobile Systems, Inc. or its registered assigns is entitled
to subscribe for and purchase,  during the Term (as hereinafter  defined), up to
Thirty Million,  Nine Hundred Thirty-Seven  Thousand,  Five Hundred (30,937,500)
shares (subject to adjustment as hereinafter  provided) of the duly  authorized,
validly issued, fully paid and non-assessable  Common Stock of the Issuer, at an
exercise  price per share  equal to the Warrant  Price then in effect,  subject,
however,  to the provisions and upon the terms and  conditions  hereinafter  set
forth.  Capitalized  terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 9 hereof.

         1. Term.  The term of this Warrant  shall  commence on December 4, 2006
and shall expire at 5:00 p.m.,  Eastern Time, on the date that is four (4) years
following the effective date of the  registration  statement (the  "Registration
Statement")  under the  Securities  Act  providing for the resale of the Warrant
Stock (such period being the "Term").

         2. Method of Exercise;  Payment;  Issuance of New Warrant; Transfer and
Exchange.

                                      -1-
<PAGE>

         (a) Time of Exercise.  The purchase rights  represented by this Warrant
         may be exercised in whole or in part during the Term.

         (b) Method of Exercise. The Holder hereof may exercise this Warrant, in
         whole or in part,  by the  surrender of this Warrant (with the exercise
         form  attached  hereto duly  executed) at the  principal  office of the
         Issuer,  and by the payment to the Issuer of an amount of consideration
         therefor  equal  to the  Warrant  Price in  effect  on the date of such
         exercise  multiplied  by the  number of shares of  Warrant  Stock  with
         respect to which this Warrant is then being exercised,  payable at such
         Holder's  election (i) by  certified or official  bank check or by wire
         transfer  to an account  designated  by the Issuer,  (ii) by  "cashless
         exercise" in accordance  with the  provisions of subsection (c) of this
         Section 2, but only when a registration  statement under the Securities
         Act  providing  for the  resale  of the  Warrant  Stock  is not then in
         effect,  or (iii) by a combination of the foregoing  methods of payment
         selected by the Holder of this Warrant.

         (c) Cashless  Exercise.  Notwithstanding  any provisions  herein to the
         contrary and  commencing one (1) year following the Original Issue Date
         if (i) the Per  Share  Market  Value of one  share of  Common  Stock is
         greater than the Warrant Price (at the date of calculation as set forth
         below)  and (ii) a  registration  statement  under the  Securities  Act
         providing  for the resale of the Warrant Stock is not then in effect by
         the date  such  registration  statement  is  required  to be  effective
         pursuant to the Registration  Rights Agreement (as defined in the Share
         Exchange   Agreement)   or  not   effective  at  any  time  during  the
         Effectiveness  Period (as defined in the Registration Rights Agreement)
         in accordance with the terms of the Registration  Rights Agreement,  in
         lieu of  exercising  this  Warrant by  payment of cash,  the Holder may
         exercise  this  Warrant by a cashless  exercise  and shall  receive the
         number  of shares of Common  Stock  equal to an amount  (as  determined
         below) by  surrender  of this  Warrant at the  principal  office of the
         Issuer together with the properly  endorsed Notice of Exercise in which
         event the Issuer shall issue to the Holder a number of shares of Common
         Stock computed using the following formula:

                  X = Y - (A)(Y)
                          -----
                            B

Where             X =   the number of shares of Common Stock to be issued to
                        the Holder.

                  Y =   the  number of shares of Common  Stock  purchasable
                        upon  exercise  of all of the  Warrant  or, if only a
                        portion  of  the  Warrant  is  being  exercised,  the
                        portion of the Warrant being exercised.

                  A =   the Warrant Price.

                  B =   the Per Share Market Value of one share of Common Stock.

         (d)  Issuance of Stock  Certificates.  In the event of any  exercise of
this Warrant in accordance with and subject to the terms and conditions  hereof,
(i) certificates for the shares of Warrant Stock so purchased shall be dated the
date of such  exercise and  delivered to the Holder  hereof  within a reasonable
time,  not exceeding  three (3) Trading Days after such exercise (the  "Delivery
Date") or, at the request of the Holder (provided that a registration  statement
under the  Securities  Act providing for the resale of the Warrant Stock is then
in effect), issued and

                                      -2-
<PAGE>

delivered to the Depository Trust Company ("DTC") account on the Holder's behalf
via the Deposit  Withdrawal Agent Commission System ("DWAC") within a reasonable
time, not exceeding  three (3) Trading Days after such exercise,  and the Holder
hereof  shall be deemed  for all  purposes  to be the  holder  of the  shares of
Warrant  Stock so purchased as of the date of such exercise and (ii) unless this
Warrant has expired, a new Warrant  representing the number of shares of Warrant
Stock,  if any,  with  respect  to which this  Warrant  shall not then have been
exercised  (less any amount thereof which shall have been canceled in payment or
partial  payment of the Warrant  Price as  hereinabove  provided)  shall also be
issued to the Holder hereof at the Issuer's expense within such time.

         (e) Compensation  for Buy-In on Failure to Timely Deliver  Certificates
Upon Exercise.  In addition to any other rights available to the Holder,  if the
Issuer fails to cause its transfer agent to transmit to the Holder a certificate
or  certificates  representing  the Warrant Stock  pursuant to an exercise on or
before the Delivery  Date,  and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) shares of Common
Stock to deliver in  satisfaction  of a sale by the Holder of the Warrant  Stock
which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the
Issuer  shall (1) pay in cash to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,  and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant  Stock for which such  exercise  was not  honored or
deliver to the Holder the number of shares of Common  Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder.  For  example,  if the Holder  purchases  Common Stock having a total
purchase  price of  $11,000  to  cover a Buy-In  with  respect  to an  attempted
exercise of shares of Common Stock with an  aggregate  sale price giving rise to
such  purchase  obligation  of  $10,000,  under  clause  (1) of the  immediately
preceding  sentence the Issuer shall be required to pay the Holder  $1,000.  The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable  confirmations and
other evidence reasonably requested by the Issuer.  Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive  relief  with  respect  to the  Issuer's  failure  to timely  deliver
certificates  representing  shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.

         (f)  Transferability of Warrant.  Subject to Section 2(h), this Warrant
may be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph,  this Warrant may be transferred on the books of the
Issuer by the  Holder  hereof in person  or by duly  authorized  attorney,  upon
surrender  of this  Warrant  at the  principal  office of the  Issuer,  properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental  charge imposed
upon such transfer.  This Warrant is exchangeable at the principal office of the
Issuer for Warrants to purchase the same  aggregate  number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of  Warrant  Stock as the  Holder  hereof  shall  designate  at the time of such
exchange. All Warrants issued on transfers or exchanges shall

                                      -3-
<PAGE>

be dated the Original Issue Date and shall be identical with this Warrant except
as to the number of shares of Warrant Stock issuable pursuant thereto.

         (g) Continuing Rights of Holder.  The Issuer will, at the time of or at
any time after each  exercise  of this  Warrant,  upon the request of the Holder
hereof,  acknowledge in writing the extent, if any, of its continuing obligation
to afford to such  Holder all rights to which such Holder  shall  continue to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

         (h) Compliance with Securities Laws.

                  (i)  The  Holder  of  this  Warrant,   by  acceptance  hereof,
         acknowledges  that this  Warrant and the shares of Warrant  Stock to be
         issued upon exercise  hereof are being acquired solely for the Holder's
         own  account  and  not as a  nominee  for  any  other  party,  and  for
         investment,  and that the  Holder  will not  offer,  sell or  otherwise
         dispose of this  Warrant  or any  shares of Warrant  Stock to be issued
         upon  exercise  hereof  except  pursuant to an  effective  registration
         statement, or an exemption from registration,  under the Securities Act
         and any applicable state securities laws.

                  (ii) Except as provided in paragraph (iii) below, this Warrant
         and all certificates  representing  shares of Warrant Stock issued upon
         exercise  hereof  shall  be  stamped  or  imprinted  with a  legend  in
         substantially the following form:

                  THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE  UPON
                  EXERCISE HEREOF HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES
                  ACT OF 1933,  AS AMENDED (THE  "SECURITIES  ACT") OR ANY STATE
                  SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED OR OTHERWISE
                  DISPOSED OF UNLESS  REGISTERED  UNDER THE  SECURITIES  ACT AND
                  UNDER  APPLICABLE  STATE  SECURITIES  LAWS OR THE ISSUER SHALL
                  HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
                  THE ISSUER  THAT  REGISTRATION  OF SUCH  SECURITIES  UNDER THE
                  SECURITIES  ACT AND UNDER THE  PROVISIONS OF APPLICABLE  STATE
                  SECURITIES LAWS IS NOT REQUIRED.

                  (iii)  The   Issuer   agrees  to  reissue   this   Warrant  or
         certificates  representing any of the Warrant Stock, without the legend
         set forth  above if at such time,  prior to making any  transfer of any
         such  securities,  the Holder shall give  written  notice to the Issuer
         describing  the  manner  and  terms  of such  transfer.  Such  proposed
         transfer  will not be  effected  until:  (a)  either (i) the Issuer has
         received an opinion of counsel  reasonably  satisfactory to the Issuer,
         to the  effect  that the  registration  of such  securities  under  the
         Securities  Act  is not  required  in  connection  with  such  proposed
         transfer, (ii) a registration

                                      -4-
<PAGE>

         statement  under the Securities Act covering such proposed  disposition
         has  been  filed  by  the  Issuer  with  the  Securities  and  Exchange
         Commission and has become effective under the Securities Act, (iii) the
         Issuer has  received  other  evidence  reasonably  satisfactory  to the
         Issuer that such  registration and  qualification  under the Securities
         Act and state  securities  laws are not required  (which may include an
         opinion of counsel provided by the Issuer), or (iv) the Holder provides
         the Issuer with  reasonable  assurances  that such security can be sold
         pursuant  to Rule 144 under the  Securities  Act (which may  include an
         opinion  of counsel  provided  by the  Issuer);  and (b) either (i) the
         Issuer has received an opinion of counsel  reasonably  satisfactory  to
         the Issuer, to the effect that registration or qualification  under the
         securities  or  "blue  sky"  laws  of  any  state  is not  required  in
         connection  with such proposed  disposition,  or (ii)  compliance  with
         applicable  state  securities or "blue sky" laws has been effected or a
         valid  exemption  exists  with  respect  thereto  (which may include an
         opinion of counsel provided by the Issuer).  The Issuer will respond to
         any such notice from a holder  within three (3) business  days.  In the
         case of any proposed  transfer under this Section 2(h), the Issuer will
         use  reasonable  efforts  to  comply  with  any such  applicable  state
         securities or "blue sky" laws,  but shall in no event be required,  (x)
         to qualify to do business in any state where it is not then  qualified,
         (y) to take any action  that would  subject it to tax or to the general
         service of process in any state where it is not then subject, or (z) to
         comply with state  securities or "blue sky" laws of any state for which
         registration  by  coordination  is  unavailable  to  the  Issuer.   The
         restrictions  on transfer  contained  in this  Section 2(h) shall be in
         addition to, and not by way of limitation of, any other restrictions on
         transfer  contained in any other  section of this  Warrant.  Whenever a
         certificate  representing the Warrant Stock is required to be issued to
         a  the  Holder  without  a  legend,  in  lieu  of  delivering  physical
         certificates  representing  the Warrant  Stock,  provided  the Issuer's
         transfer agent is  participating  in the DTC Fast Automated  Securities
         Transfer  program,  the Issuer shall use its reasonable best efforts to
         cause its transfer agent to  electronically  transmit the Warrant Stock
         to the Holder by  crediting  the account of the  Holder's  Prime Broker
         with DTC through its DWAC system (to the extent not  inconsistent  with
         any provisions of this Warrant or the Share Exchange Agreement).

         (i) Accredited  Investor  Status.  In no event may the Holder  exercise
this Warrant in whole or in part unless the Holder is an  "accredited  investor"
as defined in Regulation D under the Securities Act.

         3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

         (a) Stock Fully Paid. The Issuer  represents,  warrants,  covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and reserved for the purpose of the issuance  upon  exercise of this
Warrant  such  number of shares of Common  Stock that are not issued or reserved
for issuance as of the Original Issue Date; provided,  however,  upon the Issuer
filing the Charter Amendment (as defined in the Share Exchange  Agreement),  the
Issuer shall take all action necessary to at all times have authorized, and

                                      -5-
<PAGE>

reserved  for the  purpose  of  issuance,  free of  preemptive  rights and other
similar  contractual rights of stockholders,  a number of shares of Common Stock
equal to one  hundred  twenty  percent  (120%) of the number of shares of Common
Stock as shall from time to time be  sufficient  to provide for the  exercise of
this Warrant.

         (b) Reservation.  If any shares of Common Stock required to be reserved
for issuance  upon exercise of this Warrant or as otherwise  provided  hereunder
require registration or qualification with any Governmental  Authority under any
federal or state law before  such  shares may be so issued,  the Issuer will use
its reasonable best efforts as expeditiously as possible at its expense to cause
such shares to be duly  registered  or  qualified.  If the Issuer shall list any
shares of Common  Stock on any  securities  exchange  or market it will,  at its
expense,  list thereon,  maintain and increase when necessary such listing,  of,
all  shares of Warrant  Stock from time to time  issued  upon  exercise  of this
Warrant or as otherwise provided hereunder (provided that such Warrant Stock has
been  registered  pursuant to a registration  statement under the Securities Act
then in effect),  and, to the extent permissible under the applicable securities
exchange  rules,  all  unissued  shares of Warrant  Stock  which are at any time
issuable  hereunder,  so long as any shares of Common  Stock shall be so listed.
The Issuer will also so list on each  securities  exchange  or market,  and will
maintain such listing of, any other  securities which the Holder of this Warrant
shall be entitled to receive  upon the  exercise of this  Warrant if at the time
any securities of the same class shall be listed on such securities  exchange or
market by the Issuer.

         (c) Covenants.  The Issuer shall not by any action  including,  without
limitation,  amending the  Certificate  of  Incorporation  or the by-laws of the
Issuer,  or through  any  reorganization,  transfer  of  assets,  consolidation,
merger,  dissolution,  issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such  actions as may be  necessary  or  appropriate  to
protect  the  rights  of the  Holder  hereof  against  dilution  (to the  extent
specifically provided herein) or impairment.  Without limiting the generality of
the  foregoing,  the Issuer  will (i) not permit the par value,  if any,  of its
Common  Stock to exceed  the then  effective  Warrant  Price,  (ii) not amend or
modify any  provision  of the  Certificate  of  Incorporation  or by-laws of the
Issuer in any manner  that would  adversely  affect the rights of the Holders of
the Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may  validly  and  legally  issue  fully paid and  nonassessable
shares of Common Stock,  free and clear of any liens,  claims,  encumbrances and
restrictions  (other  than as  provided  herein)  created by the Issuer upon the
exercise of this Warrant, and (iv) use its reasonable best efforts to obtain all
such  authorizations,  exemptions  or consents from any public  regulatory  body
having jurisdiction  thereof as may be reasonably necessary to enable the Issuer
to perform its obligations under this Warrant.

         (d) Loss,  Theft,  Destruction  of  Warrants.  Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

                                      -6-
<PAGE>

         (e) Payment of Taxes.  The Issuer will pay any documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided, however, that the Issuer shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any  certificates  representing  Warrant Stock in a name
other than that of the Holder in respect to which such shares are issued.

         4.  Adjustment  of Warrant  Price.  The price at which  such  shares of
Warrant Stock may be purchased upon exercise of this Warrant shall be subject to
adjustment  from time to time as set forth in this  Section 4. The Issuer  shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with the notice provisions set forth in
Section 5.

         (a) Recapitalization,  Reorganization, Reclassification, Consolidation,
Merger or Sale.

                  (i) In case the Issuer after the Original  Issue Date shall do
         any of the following (each, a "Triggering  Event"):  (a) consolidate or
         merge with or into any other  Person  and the  Issuer  shall not be the
         continuing or surviving corporation of such consolidation or merger, or
         (b)  permit  any other  Person to  consolidate  with or merge  into the
         Issuer and the Issuer shall be the continuing or surviving  Person but,
         in connection with such  consolidation or merger,  any Capital Stock of
         the Issuer  shall be changed into or exchanged  for  Securities  of any
         other  Person or cash or any other  property,  or (c)  transfer  all or
         substantially  all of its properties or assets to any other Person,  or
         (d) effect a capital  reorganization or reclassification of its Capital
         Stock,  then,  and in the case of each such  Triggering  Event,  proper
         provision  shall be made so that,  upon the  basis and the terms and in
         the manner  provided in this Warrant,  the Holder of this Warrant shall
         be entitled upon the exercise hereof at any time after the consummation
         of such  Triggering  Event, to the extent this Warrant is not exercised
         prior to such  Triggering  Event,  to receive at the  Warrant  Price in
         effect  at the  time  immediately  prior  to the  consummation  of such
         Triggering  Event  in lieu  of the  Common  Stock  issuable  upon  such
         exercise  of  this  Warrant  prior  to  such  Triggering   Event,   the
         Securities,  cash and  property  to which such  Holder  would have been
         entitled upon the  consummation of such Triggering Event if such Holder
         had exercised the rights represented by this Warrant  immediately prior
         thereto  (including  the  right of a  shareholder  to elect the type of
         consideration  it will  receive upon a  Triggering  Event),  subject to
         adjustments  (subsequent to such corporate action) as nearly equivalent
         as possible to the  adjustments  provided for elsewhere in this Section
         4. Notwithstanding the foregoing to the contrary,  this Section 4(a)(i)
         shall  only  apply  if  the  surviving  entity  pursuant  to  any  such
         Triggering  Event  is a  company  has  a  class  of  equity  securities
         registered pursuant to the Securities Exchange Act of 1934, as amended,
         and its  common  stock is listed or  quoted  on a  national  securities
         exchange,  national  automated  quotation  system  or the OTC  Bulletin
         Board.  In the event that the  surviving  entity  pursuant  to any such
         Triggering Event is not a company that has a class of equity securities
         registered pursuant to the Securities Exchange Act of 1934, as amended,
         or its common  stock is not  listed or quoted on a national  securities
         exchange,  national  automated  quotation  system  or the OTC  Bulletin
         Board,  then the Holder  shall have the right to demand that the Issuer
         pay to the  Holder  an  amount  equal  to the  value  of  this  Warrant
         according to the Black-Scholes formula.

                                      -7-
<PAGE>

         (ii) Notwithstanding anything contained in this Warrant to the contrary
and so long as the  surviving  entity  pursuant  to any  Triggering  Event  is a
company  that  has a class  of  equity  securities  registered  pursuant  to the
Securities  Exchange Act of 1934, as amended,  and its common stock is listed or
quoted on a national securities exchange, national automated quotation system or
the OTC Bulletin Board, a Triggering  Event shall not be deemed to have occurred
if, prior to the consummation thereof, each Person (other than the Issuer) which
may be required to deliver any Securities, cash or property upon the exercise of
this Warrant as provided herein shall assume,  by written  instrument  delivered
to,  and  reasonably  satisfactory  to,  the  Holder  of this  Warrant,  (A) the
obligations  of the Issuer under this  Warrant (and if the Issuer shall  survive
the consummation of such Triggering  Event, such assumption shall be in addition
to, and shall not release the Issuer from,  any  continuing  obligations  of the
Issuer under this Warrant) and (B) the obligation to deliver to such Holder such
Securities,  cash or property as, in accordance with the foregoing provisions of
this subsection  (a), such Holder shall be entitled to receive,  and such Person
shall have  similarly  delivered  to such  Holder an opinion of counsel for such
Person, which counsel shall be reasonably satisfactory to such Holder, or in the
alternative,  a  written  acknowledgement  executed  by the  President  or Chief
Financial  Officer of the Issuer,  stating  that this Warrant  shall  thereafter
continue  in full  force and  effect and the terms  hereof  (including,  without
limitation, all of the provisions of this subsection (a)) shall be applicable to
the  Securities,  cash or property  which such Person may be required to deliver
upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

                  (b) Stock Dividends,  Subdivisions and Combinations. If at any
time the Issuer shall:

                           (i)  make  or  issue  or set a  record  date  for the
         holders  of the  Common  Stock for the  purpose  of  entitling  them to
         receive a dividend  payable  in, or other  distribution  of,  shares of
         Common Stock,

                           (ii) subdivide its outstanding shares of Common Stock
         into a larger number of shares of Common Stock, or

                           (iii) combine its outstanding  shares of Common Stock
         into a smaller number of shares of Common Stock,

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.

         (c) Certain Other  Distributions.  If at any time the Issuer shall make
or issue or set a  record  date for the  holders  of the  Common  Stock  for the
purpose of entitling them to receive any dividend or other distribution of:

                                      -8-
<PAGE>

                           (i) cash (other than a cash  dividend  payable out of
         earnings  or  earned  surplus  legally  available  for the  payment  of
         dividends under the laws of the  jurisdiction of  incorporation  of the
         Issuer),

                           (ii) any evidences of its indebtedness, any shares of
         stock of any class or any other  securities  or  property of any nature
         whatsoever  (other than cash,  Common Stock  Equivalents  or Additional
         Shares of Common Stock), or

                           (iii) any warrants or other  rights to subscribe  for
         or purchase any evidences of its  indebtedness,  any shares of stock of
         any class or any other securities or property of any nature  whatsoever
         (other than cash,  Common Stock  Equivalents  or  Additional  Shares of
         Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and  supported by an opinion  from an  investment  banking firm  mutually
agreed  upon by the Issuer  and the  Holder)  of any and all such  evidences  of
indebtedness, shares of stock, other securities or property or warrants or other
subscription or purchase rights so distributable, and (2) the Warrant Price then
in effect  shall be  adjusted  to equal  (A) the  Warrant  Price  then in effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.  A reclassification of the Common Stock (other than a change in
par value,  or from par value to no par value or from no par value to par value)
into  shares of Common  Stock and  shares of any other  class of stock  shall be
deemed a  distribution  by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4(c) and,
if the  outstanding  shares of Common  Stock  shall be changed  into a larger or
smaller  number of shares  of Common  Stock as a part of such  reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 4(b).

         (d) Issuance of  Additional  Shares of Common  Stock.  In the event the
Issuer shall at any time  following the Original Issue Date issue any Additional
Shares of Common Stock (otherwise than as provided in the foregoing  subsections
(b) through  (c) of this  Section 4), at a price per share less than the Warrant
Price then in effect or without consideration,  then the Warrant Price upon each
such  issuance  shall be adjusted to the price  equal to the  consideration  per
share paid for such Additional Shares of Common Stock.

         (e)  Issuance of Common  Stock  Equivalents.  If at any time the Issuer
shall  take a record of the  holders  of its  Common  Stock for the  purpose  of
entitling  them to receive a  distribution  of, or shall in any manner  (whether
directly  or by  assumption  in a merger  in which the  Issuer is the  surviving
corporation) issue or sell, any Common Stock Equivalents, whether or

                                      -9-
<PAGE>

not the rights to exchange or convert  thereunder are  immediately  exercisable,
and the price per share for which Common Stock is issuable upon such  conversion
or exchange shall be less than the Warrant Price in effect  immediately prior to
the time of such issue or sale,  or if, after any such  issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be  issuable  thereafter  is amended or  adjusted,  and such price as so amended
shall be less than the Warrant Price in effect at the time of such  amendment or
adjustment,  then the Warrant Price then in effect shall be adjusted as provided
in Section 4(d). No further  adjustments of the number of shares of Common Stock
for which this Warrant is exercisable and the Warrant Price then in effect shall
be made upon the actual issue of such Common Stock upon  conversion  or exchange
of such Common Stock Equivalents.

         (f) Other Provisions  applicable to Adjustments under this Section. The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

                  (i)  Computation  of  Consideration.  To the  extent  that any
Additional  Shares of  Common  Stock or any  Common  Stock  Equivalents  (or any
warrants or other rights therefor) shall be issued for cash  consideration,  the
consideration  received by the Issuer  therefor  shall be the amount of the cash
received by the Issuer therefor,  or, if such Additional  Shares of Common Stock
or Common  Stock  Equivalents  are offered by the Issuer for  subscription,  the
subscription  price,  or, if such  Additional  Shares of Common  Stock or Common
Stock  Equivalents  are sold to  underwriters  or dealers  for  public  offering
without a subscription  offering, the initial public offering price (in any such
case  subtracting any amounts paid or receivable for accrued interest or accrued
dividends  and  without  taking  into  account any  compensation,  discounts  or
expenses  paid or  incurred  by the  Issuer for and in the  underwriting  of, or
otherwise in connection  with,  the issuance  thereof).  In connection  with any
merger or consolidation in which the Issuer is the surviving  corporation (other
than any consolidation or merger in which the previously  outstanding  shares of
Common  Stock of the Issuer  shall be changed to or  exchanged  for the stock or
other securities of another corporation),  the amount of consideration therefore
shall be, deemed to be the fair value of such portion of the assets and business
of the nonsurviving corporation as the Board may determine to be attributable to
such shares of Common  Stock or Common  Stock  Equivalents,  as the case may be.
Such determination of the fair value of such  consideration  shall be made by an
Independent  Appraiser.  The  consideration  for any Additional Shares of Common
Stock issuable  pursuant to the terms of any Common Stock  Equivalents  shall be
the  consideration  received  by  the  Issuer  for  issuing  such  Common  Stock
Equivalents,  plus the additional  consideration,  if any, payable to the Issuer
upon the  exercise of the right of  conversion  or exchange in such Common Stock
Equivalents.  In the event of any consolidation or merger of the Issuer in which
the  Issuer  is  not  the  surviving  corporation  or in  which  the  previously
outstanding  shares of  Common  Stock of the  Issuer  shall be  changed  into or
exchanged for the stock or other  securities of another  corporation,  or in the
event of any sale of all or  substantially  all of the  assets of the Issuer for
stock or other securities of any corporation, the Issuer shall be deemed to have
issued a number of shares of its Common Stock for stock or  securities  or other
property of the other  corporation  computed on the basis of the actual exchange
ratio on which the transaction was predicated,  and for a consideration equal to
the  fair  market  value on the date of such  transaction  of all such  stock or
securities  or  other  property  of the  other  corporation.  In the  event  any
consideration  received  by the Issuer for any  securities  consists of property
other than

                                      -10-
<PAGE>

cash,  the fair market  value  thereof at the time of  issuance or as  otherwise
applicable  shall be as  determined  in good  faith by the  Board.  In the event
Common  Stock is issued with other shares or  securities  or other assets of the
Issuer for  consideration  which  covers  both,  the  consideration  computed as
provided in this Section  4(f)(i) shall be allocated  among such  securities and
assets as determined in good faith by the Board.

                  (ii) When Adjustments to Be Made. The adjustments  required by
this  Section  4 shall be made  whenever  and as often  as any  specified  event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common  Stock  for  which  this  Warrant  is  exercisable  that  would
otherwise be required may be postponed  (except in the case of a subdivision  or
combination  of shares of the Common Stock,  as provided for in Section 4(b)) up
to, but not beyond the date of exercise if such  adjustment  either by itself or
with other  adjustments  not  previously  made adds or  subtracts  less than one
percent (1%) of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment.  Any adjustment representing
a change  of less  than such  minimum  amount  (except  as  aforesaid)  which is
postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would
result in a minimum  adjustment  or on the date of exercise.  For the purpose of
any  adjustment,  any  specified  event shall be deemed to have  occurred at the
close of business on the date of its occurrence.

                  (iii) Fractional  Interests.  In computing  adjustments  under
this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest one one-hundredth (1/100th) of a share.

                  (iv) When Adjustment Not Required.  If the Issuer shall take a
record of the holders of its Common Stock for the purpose of  entitling  them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

         (g) Form of Warrant  after  Adjustments.  The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

         (h)  Escrow  of  Warrant   Stock.   If  after  any   property   becomes
distributable  pursuant to this  Section 4 by reason of the taking of any record
of the holders of Common  Stock,  but prior to the  occurrence  of the event for
which such record is taken, and the Holder exercises this Warrant, any shares of
Common Stock issuable upon exercise by reason of such adjustment shall be deemed
the  last  shares  of  Common   Stock  for  which  this   Warrant  is  exercised
(notwithstanding  any other provision to the contrary herein) and such shares or
other property shall be held in escrow for the Holder by the Issuer to be issued
to the Holder upon and to the extent that the event actually  takes place,  upon
payment of the current Warrant Price. Notwithstanding any other provision to the
contrary herein,  if the event for which such record was taken fails to occur or
is  rescinded,  then such  escrowed  shares shall be cancelled by the Issuer and
escrowed property

                                      -11-
<PAGE>

returned.

         5. Notice of  Adjustments.  Whenever the Warrant Price or Warrant Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the option of the Holder of this  Warrant be submitted to a national or regional
accounting  firm  reasonably  acceptable to the Issuer and the Holder,  provided
that the  Issuer  shall have ten (10) days  after  receipt  of notice  from such
Holder  of its  selection  of such firm to object  thereto,  in which  case such
Holder shall select another such firm and the Issuer shall have no such right of
objection.  The firm  selected by the Holder of this  Warrant as provided in the
preceding  sentence shall be instructed to deliver a written  opinion as to such
matters to the Issuer and such Holder within  thirty (30) days after  submission
to it of such  dispute.  Such opinion  shall be final and binding on the parties
hereto.  The costs and  expenses  of the initial  accounting  firm shall be paid
equally by the Issuer and the Holder  and,  in the case of an  objection  by the
Issuer,  the costs and expenses of the subsequent  accounting firm shall be paid
in full by the Issuer.

         6.  Fractional  Shares.  No fractional  shares of Warrant Stock will be
issued in connection  with any exercise  hereof,  but in lieu of such fractional
shares,  the Issuer shall round the number of shares to be issued upon  exercise
up to the nearest whole number of shares.

         7. Ownership Cap and Certain Exercise Restrictions. (a) Notwithstanding
anything to the contrary set forth in this  Warrant,  at no time may a Holder of
this Warrant exercise this Warrant if the number of shares of Common Stock to be
issued  pursuant to such exercise would exceed,  when  aggregated with all other
shares of Common  Stock owned by such Holder at such time,  the number of shares
of Common  Stock  which  would  result in such  Holder  beneficially  owning (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
thereunder)  in  excess of 4.9% of the then  issued  and  outstanding  shares of
Common Stock;  provided,  however,  that upon a holder of this Warrant providing
the Issuer with sixty-one (61) days notice  (pursuant to Section 13 hereof) (the
"Waiver  Notice")  that such Holder  would like to waive this  Section 7(a) with
regard to any or all  shares of Common  Stock  issuable  upon  exercise  of this
Warrant, this Section 7(a) will be of no force or effect with regard to all or a
portion of the Warrant referenced in the Waiver Notice; provided,  further, that
this provision  shall be of no further force or effect during the sixty-one (61)
days immediately preceding the expiration of the term of this Warrant.

                  (b) The Holder may not exercise  the Warrant  hereunder to the
extent  such  exercise  would  result  in the  Holder  beneficially  owning  (as
determined  in  accordance  with Section 13(d) of the Exchange Act and the rules
thereunder)  in  excess of 9.9% of the then  issued  and  outstanding  shares of
Common Stock, including shares issuable upon exercise of the Warrant held by the
Holder after application of this Section; provided, however, that upon a

                                      -12-
<PAGE>

holder of this  Warrant  providing  the Issuer  with a Waiver  Notice  that such
holder would like to waive this Section 7(b) with regard to any or all shares of
Common Stock issuable upon exercise of this Warrant,  this Section 7(b) shall be
of no force or effect with regard to those shares of Warrant Stock referenced in
the Waiver Notice; provided, further, that this provision shall be of no further
force or effect  during  the  sixty-one  (61)  days  immediately  preceding  the
expiration of the term of this Warrant.

         8. Call.  Notwithstanding  anything herein to the contrary,  the Issuer
may at any time following the Original Issue Date call up to one hundred percent
(100%) of this Warrant then still  outstanding  by providing  the Holder of this
Warrant  written notice  pursuant to Section 13 (the "Call  Notice");  provided,
that,  in  connection  with any call by the Issuer under this Section 8, (A) the
Per Share Market Value of the Common Stock has been greater than $0.20 per share
for a period of ten (10) consecutive  Trading Days immediately prior to the date
of delivery of the Call Notice (a "Call Notice  Period")  and the average  daily
trading volume during the Call Notice Period exceeds  1,500,000 shares of Common
Stock; (B) the Registration  Statement is then in effect and has been effective,
without lapse or suspension of any kind, for a period of twenty (20) consecutive
calendar  days, (C) trading in the Common Stock shall not have been suspended by
the  Securities  and Exchange  Commission  or the OTC  Bulletin  Board (or other
exchange or market on which the Common Stock is  trading),  (D) the Issuer is in
material  compliance  with the terms and  conditions of this Warrant and (E) the
Issuer is not in possession of any material  non-public  information;  provided,
further,  that the  Registration  Statement  must be effective  from the date of
delivery  of the Call  Notice  until the date which is the later of (i) the date
the Holder  exercises the Warrant  pursuant to the Call Notice and (ii) the 20th
day after the Holder  receives the Call Notice (the "Early  Termination  Date").
The rights and privileges  granted  pursuant to this Warrant with respect to the
shares of Warrant Stock subject to the Call Notice (the "Called Warrant Shares")
shall expire on the Early Termination Date if this Warrant is not exercised with
respect to such Called Warrant Shares prior to such Early  Termination  Date. In
the event  this  Warrant is not  exercised  with  respect to the Called  Warrant
Shares,  the  Issuer  shall  remit to the Holder of this  Warrant  (i) $.001 per
Called Warrant Share and (ii) a new Warrant representing the number of shares of
Warrant Stock, if any, which shall not have been subject to the Call Notice upon
the  Holder  tendering  to  the  Issuer  the  applicable  Warrant   certificate.
Notwithstanding anything in the foregoing to the contrary, if the Holder may not
exercise  this  Warrant as a result of the  restrictions  contained in Section 7
hereof,  the Call  Notice  shall be deemed null and void and shall not be deemed
effective until the date that the Holder may exercise this Warrant in accordance
with Section 7 hereof.

         9. Definitions.  For the purposes of this Warrant,  the following terms
have the following meanings:

                  "Additional Shares of Common Stock" means all shares of Common
         Stock  issued by the Issuer  after the  Original  Issue  Date,  and all
         shares of Other Common, if any, issued by the Issuer after the Original
         Issue Date,  except:  (i)  securities  issued  (other than for cash) in
         connection  with  a  merger,   acquisition,   or  consolidation,   (ii)
         securities issued pursuant to the conversion or exercise of convertible
         or exercisable securities issued or outstanding on or prior to the date
         hereof  or  issued  pursuant  to the  Purchase  Agreement  or the Share
         Exchange Agreement,  (iii) the Warrant Stock, (iv) securities issued in
         connection  with  bona  fide  strategic  license  agreements  or  other
         partnering arrangements

                                      -13-
<PAGE>

         so long as such  issuances are not for the purpose of raising  capital,
         (v)  Common  Stock  issued or the  issuance  or grants  of  options  to
         purchase  Common Stock  pursuant to the Issuer's stock option plans and
         employee  stock  purchase plans as they now exist on the Original Issue
         Date, (vi) any warrants issued to the placement agent and its designees
         for the  transactions  contemplated  by the Purchase  Agreement,  (vii)
         Common Stock issued in connection with consulting or advisory  services
         not in excess of  50,000,000  shares,  and  (viii)  the  payment of any
         principal  in  shares  of  Common  Stock  pursuant  to the Notes or the
         promissory notes issued pursuant to the Purchase Agreement.

                  "BMSI"   means   Bounce   Mobile   Systems,   Inc.,  a  Nevada
         corporation.

                  "Board" shall mean the Board of Directors of the Issuer.

                  "Capital  Stock"  means and  includes  (i) any and all shares,
         interests,  participations  or other  equivalents  of or  interests  in
         (however designated)  corporate stock,  including,  without limitation,
         shares of preferred or preference stock, (ii) all partnership interests
         (whether  general or  limited)  in any Person  which is a  partnership,
         (iii) all membership  interests or limited  liability company interests
         in any  limited  liability  company,  and (iv) all equity or  ownership
         interests in any Person of any other type.

                  "Certificate  of  Incorporation"   means  the  Certificate  of
         Incorporation  of the Issuer as in effect on the  Original  Issue Date,
         and as hereafter from time to time amended,  modified,  supplemented or
         restated in  accordance  with the terms hereof and thereof and pursuant
         to applicable law.

                  "Common  Stock"  means the  Common  Stock,  par value $.01 per
         share,  of the Issuer and any other Capital Stock into which such stock
         may hereafter be changed.

                  "Common Stock  Equivalent"  means any Convertible  Security or
         warrant,  option  or  other  right to  subscribe  for or  purchase  any
         Additional Shares of Common Stock or any Convertible Security.

                  "Convertible  Securities"  means  evidences  of  Indebtedness,
         shares of Capital Stock or other  Securities which are or may be at any
         time convertible  into or exchangeable for Additional  Shares of Common
         Stock.  The term  "Convertible  Security"  means one of the Convertible
         Securities.

                  "Governmental Authority" means any governmental, regulatory or
         self-regulatory   entity,   department,   body,  official,   authority,
         commission, board, agency or instrumentality, whether federal, state or
         local, and whether domestic or foreign.

                  "Holders" mean the Persons who shall from time to time own any
         Warrant. The term "Holder" means one of the Holders.

                  "Independent Appraiser" means a nationally recognized or major
         regional  investment  banking  firm or firm  of  independent  certified
         public  accountants of recognized  standing (which may be the firm that
         regularly examines the financial

                                      -14-
<PAGE>

         statements of the Issuer) that is regularly  engaged in the business of
         appraising  the  Capital  Stock  or  assets  of  corporations  or other
         entities as going concerns, and which is not affiliated with either the
         Issuer or the Holder of any Warrant.

                  "Issuer" means Remote Dynamics,  Inc., a Delaware corporation,
         and its successors.

                  "Majority  Holders"  means at any time the Holders of Warrants
         exercisable for a majority of the shares of Warrant Stock then issuable
         under the outstanding Warrants at that time.

                  "Notes" means the series B  subordinated  secured  convertible
         promissory  notes  issued by the Issuer to BMSI  pursuant  to the Share
         Exchange Agreement.

                  "Original Issue Date" means November 30, 2006.

                  "OTC  Bulletin  Board" means the  over-the-counter  electronic
bulletin board.

                  "Other  Common" means any other Capital Stock of the Issuer of
         any class which shall be  authorized at any time after the date of this
         Warrant (other than Common Stock), have the right to participate in the
         distribution of earnings and assets of the Issuer without limitation as
         to amount and are issuable upon conversion, exchange or exercise of any
         debt or equity securities of the Issuer.

                  "Outstanding  Common  Stock"  means,  at any given  time,  the
         aggregate amount of outstanding  shares of Common Stock,  assuming full
         exercise,  conversion  or  exchange  (as  applicable)  of all  options,
         warrants and other Securities which are convertible into or exercisable
         or  exchangeable  for, and any right to subscribe for, shares of Common
         Stock that are outstanding at such time.

                  "Outstanding  Common  Stock"  means,  at any given  time,  the
         aggregate amount of outstanding  shares of Common Stock,  assuming full
         exercise,  conversion  or  exchange  (as  applicable)  of all  options,
         warrants and other Securities which are convertible into or exercisable
         or  exchangeable  for, and any right to subscribe for, shares of Common
         Stock that are outstanding at such time.

                  "Person" means an individual,  corporation,  limited liability
         company,  partnership,   joint  stock  company,  trust,  unincorporated
         organization,  joint venture, Governmental Authority or other entity of
         whatever nature.

                  "Per Share Market Value" means on any particular  date (a) the
         VWAP, or (b) if the Common Stock is not then  publicly  traded the fair
         market value of a share of Common Stock as determined by an Independent
         Appraiser  selected in good faith by the  Majority  Holders;  provided,
         however,  that the Issuer,  after receipt of the  determination by such
         Independent  Appraiser,  shall  have the right to select an  additional
         Independent  Appraiser,  in which case,  the fair market value shall be
         equal to the  average of the  determinations  by each such  Independent
         Appraiser; and provided, further that all

                                      -15-
<PAGE>

         determinations  of the Per Share  Market  Value shall be  appropriately
         adjusted  for any  stock  dividends,  stock  splits  or  other  similar
         transactions during such period. The determination of fair market value
         by an Independent  Appraiser  shall be based upon the fair market value
         of the Issuer  determined on a going concern basis as between a willing
         buyer and a willing seller and taking into account all relevant factors
         determinative  of value, and shall be final and binding on all parties.
         In determining  the fair market value of any shares of Common Stock, no
         consideration  shall be given to any  restrictions  on  transfer of the
         Common Stock  imposed by  agreement  or by federal or state  securities
         laws, or to the existence or absence of, or any  limitations on, voting
         rights.

                  "Purchase  Agreement"  means  the  Note and  Warrant  Purchase
         Agreement  dated as of  November  30,  2006,  among the  Issuer and the
         Purchasers listed therein.

                  "Securities"  means  any  debt  or  equity  securities  of the
         Issuer, whether now or hereafter authorized, any instrument convertible
         into or  exchangeable  for  Securities  or a Security,  and any option,
         warrant or other right to purchase or acquire any Security.  "Security"
         means one of the Securities.

                  "Securities Act" means the Securities Act of 1933, as amended,
         or any similar federal statute then in effect.

                  "Share Exchange  Agreement" means the Share Exchange Agreement
         dated as of November 30, 2006, between the Issuer and BMSI.

                  "Subsidiary"  means  any  corporation  at  least  50% of whose
         outstanding  Voting  Stock  shall  at the  time be  owned  directly  or
         indirectly by the Issuer or by one or more of its  Subsidiaries,  or by
         the Issuer and one or more of its Subsidiaries.

                  "Term" has the meaning specified in Section 1 hereof.

                  "Trading  Day"  means (a) a day on which the  Common  Stock is
         traded on the OTC  Bulletin  Board,  or (b) if the Common  Stock is not
         traded on the OTC  Bulletin  Board,  a day on which the Common Stock is
         quoted in the over-the-counter  "pink sheets" market as reported by the
         National Quotation Bureau Incorporated (or any similar  organization or
         agency  succeeding  its  functions  of  reporting  prices);   provided,
         however,  that in the  event  that the  Common  Stock is not  listed or
         quoted as set forth in (a) or (b) hereof,  then  Trading Day shall mean
         any day  except  Saturday,  Sunday  and any day which  shall be a legal
         holiday or a day on which banking institutions in the State of New York
         are authorized or required by law or other government action to close.

                  "Voting  Stock" means,  as applied to the Capital Stock of any
         corporation, Capital Stock of any class or classes (however designated)
         having  ordinary  voting  power for the  election  of a majority of the
         members of the Board of  Directors  (or other  governing  body) of such
         corporation,  other than Capital Stock having such power only by reason
         of the happening of a contingency.

                                      -16-
<PAGE>

                  "VWAP"  means,  for any date,  (i) the daily  volume  weighted
         average  price of the  Common  Stock for such date on the OTC  Bulletin
         Board as reported by Bloomberg  Financial L.P.  (based on a Trading Day
         from 9:30 a.m.  Eastern Time to 4:02 p.m.  Eastern  Time);  (ii) if the
         Common Stock is not then listed or quoted on the OTC Bulletin Board and
         if prices for the Common Stock are then  reported in the "Pink  Sheets"
         published by the Pink Sheets, LLC (or a similar  organization or agency
         succeeding to its functions of reporting  prices),  then the average of
         the "Pink  Sheet"  quotes for the five (5) Trading Days  preceding  the
         date of  determination;  or (iii) in all other  cases,  the fair market
         value  of a share  of  Common  Stock as  determined  by an  independent
         appraiser   selected  in  good  faith  by  the  Holder  and  reasonably
         acceptable to the Maker.

                  "Warrants"  means the Warrants issued and sold pursuant to the
         Share Exchange Agreement,  including, without limitation, this Warrant,
         and any other warrants of like tenor issued in substitution or exchange
         for any thereof  pursuant to the  provisions of Section  2(c),  2(d) or
         2(e) hereof or of any of such other Warrants.

                  "Warrant  Price"  initially  means $0.03, as such price may be
         adjusted  from  time to time  as  shall  result  from  the  adjustments
         specified in this Warrant, including Section 4 hereto.

                  "Warrant Share Number" means at any time the aggregate  number
         of shares of Warrant  Stock  which may at such time be  purchased  upon
         exercise of this Warrant,  after giving effect to all prior adjustments
         and  increases  to such  number  made or  required to be made under the
         terms hereof.

                  "Warrant  Stock" means Common Stock  issuable upon exercise of
         any Warrant or Warrants or otherwise  issuable  pursuant to any Warrant
         or Warrants.

         10. Other Notices. In case at any time:

                           (A)      the Issuer shall make any  distributions  to
                                    the holders of Common Stock; or

                           (B)      the Issuer shall  authorize  the granting to
                                    all holders of its Common Stock of rights to
                                    subscribe  for or  purchase  any  shares  of
                                    Capital  Stock of any class or other rights;
                                    or

                           (C)      there shall be any  reclassification  of the
                                    Capital Stock of the Issuer; or

                           (D)      there shall be any capital reorganization by
                                    the Issuer; or

                           (E)      there  shall  be any  (i)  consolidation  or
                                    merger  involving  the  Issuer or (ii) sale,
                                    transfer  or  other  disposition  of  all or
                                    substantially all of the Issuer's  property,
                                    assets or business (except a merger or other
                                    reorganization  in which the Issuer shall be
                                    the surviving  corporation and its shares of
                                    Capital

                                      -17-
<PAGE>

Stock shall continue to be outstanding and unchanged and except a consolidation,
merger,   sale,   transfer  or  other   disposition   involving  a  wholly-owned
Subsidiary); or

                           (F)      there  shall be a voluntary  or  involuntary
                                    dissolution,  liquidation  or  winding-up of
                                    the Issuer or any partial liquidation of the
                                    Issuer or  distribution to holders of Common
                                    Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such  notice  shall be given no sooner than
fifteen  (15) days and not later than ten (10) days prior to the record  date or
the date on which the  Issuer's  transfer  books are closed in respect  thereto.
This Warrant  entitles the Holder to receive  copies of all  financial and other
information  distributed  or  required to be  distributed  to the holders of the
Common Stock.

         11. Amendment and Waiver. Any term, covenant, agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 11 without the consent of the Holder of this  Warrant.
No consideration shall be offered or paid to any person to amend or consent to a
waiver  or  modification  of any  provision  of this  Warrant  unless  the  same
consideration is also offered to all holders of the Warrants.

         12. Governing Law; Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the  application of the substantive  law of another  jurisdiction.  This Warrant
shall not be  interpreted or construed  with any  presumption  against the party
causing this  Warrant to be drafted.  The Issuer and the Holder agree that venue
for any dispute  arising under this Warrant will lie exclusively in the state or
federal courts located in New York County, New York, and the parties irrevocably
waive any right to raise forum non  conveniens  or any other  argument  that New
York is not the proper venue. The Issuer and the Holder  irrevocably  consent to
personal  jurisdiction in the state and federal courts of the state of New York.
The  Issuer and the Holder  consent  to process  being  served in any such suit,
action or  proceeding  by mailing a copy thereof to such party at the address in
effect for notices to it under this Warrant and agrees that such  service  shall
constitute good and sufficient service of process and notice thereof. Nothing in
this  Section 12 shall  affect or limit any right to serve  process in any other
manner  permitted  by law.  The  Issuer  and the  Holder  hereby  agree that the
prevailing

                                      -18-
<PAGE>

party in any suit,  action or  proceeding  arising  out of or  relating  to this
Warrant or the Share Exchange Agreement,  shall be entitled to reimbursement for
reasonable  legal fees from the  non-prevailing  party. The parties hereby waive
all rights to a trial by jury.

         13. Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of  mailing,  if sent by  overnight  delivery  by a  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                                    Remote Dynamics, Inc.
                                    1155 Kas Drive, Suite 100
                                    Richardson, Texas 75081
                                    Attention: Chief Executive Officer
                                    Tel. No.: (972) 301-2000
                                    Fax No.: (972) 301-2263

with copies (which copies
shall not constitute notice
to the Issuer) to:                  Richardson & Patel LLP
                                    405 Lexington Avenue, 26th Floor
                                    New York, New York 10174
                                    Attention:  Jody R. Samuels
                                    Tel. No.: (212) 907-6686
                                    Fax No.: (212) 907-6687

Any party  hereto may from time to time change its address for notices by giving
at least ten (10) days written notice of such changed address to the other party
hereto.

         14. Warrant Agent.  The Issuer may, by written notice to each Holder of
this  Warrant,  appoint an agent for the  purpose  of issuing  shares of Warrant
Stock on the exercise of this Warrant  pursuant to  subsection  (b) of Section 2
hereof,  exchanging this Warrant  pursuant to subsection (d) of Section 2 hereof
or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any
of the foregoing, and thereafter any such issuance,  exchange or replacement, as
the case may be, shall be made at such office by such agent.

         15.  Remedies.  The Issuer  stipulates  that the remedies at law of the
Holder of this Warrant in the event of any default or threatened  default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
may not be adequate and that, to the fullest

                                      -19-
<PAGE>

extent permitted by law, such terms may be specifically enforced by a decree for
the specific  performance of any agreement  contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

         16.  Successors  and  Assigns.  This  Warrant and the rights  evidenced
hereby  shall inure to the  benefit of and be binding  upon the  successors  and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.

         17.  Modification and Severability.  If, in any action before any court
or agency  legally  empowered to enforce any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

         18. Registration  Rights. The Holder of this Warrant is entitled to the
benefit of certain  registration  rights  with  respect to the shares of Warrant
Stock  issuable  upon the  exercise of this  Warrant  pursuant  to that  certain
Registration Rights Agreement, of even date herewith, by and between the Company
and BMSI (the "Registration  Rights Agreement") and the registration rights with
respect  to the shares of  Warrant  Stock  issuable  upon the  exercise  of this
Warrant by any  subsequent  Holder may only be assigned in  accordance  with the
terms and provisions of the Registrations Rights Agreement.

         19.  Headings.  The  headings of the  Sections of this  Warrant are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -20-
<PAGE>

         IN WITNESS WHEREOF,  the Issuer has executed this Series F-4 Warrant as
of the day and year first above written.

                                             REMOTE DYNAMICS, INC.

                                             By:
                                                --------------------------------
                                                Name:
                                                Title:

                                      -21-
<PAGE>

                                  EXERCISE FORM
                               SERIES F-4 WARRANT

                              REMOTE DYNAMICS, INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to  purchase  _____  shares  of Common  Stock of Remote
Dynamics, Inc. covered by the within Warrant.

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

The  undersigned  intends  that  payment of the  Warrant  Price shall be made as
(check one):

                  Cash Exercise_______

                  Cashless Exercise_______

If the  Holder has  elected a Cash  Exercise,  the  Holder  shall pay the sum of
$________  by  certified  or official  bank check (or via wire  transfer) to the
Issuer in accordance with the terms of the Warrant.

If the Holder has elected a Cashless Exercise,  a certificate shall be issued to
the  Holder for the number of shares  equal to the whole  number  portion of the
product of the  calculation set forth below,  which is ___________.  The Company
shall pay a cash adjustment in respect of the fractional  portion of the product
of the  calculation  set forth  below in an amount  equal to the  product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.

         X = Y - (A)(Y)
                  -----
                    B

Where:

The   number  of  shares   of   Common   Stock  to  be  issued  to  the   Holder
__________________("X").

The number of shares of Common  Stock  purchasable  upon  exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised,  the portion of
the Warrant being exercised ___________________________ ("Y").

The Warrant Price ______________ ("A").

                                      -22-
<PAGE>

The Per Share Market Value of one share of Common Stock  _______________________
("B").

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or  transferred or exchanged) this _____ day of
___________,  _____,  shares  of Common  Stock  issued  therefor  in the name of
_______________,  Warrant No.  W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                      -23-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]