Document:

CERTIFICATE OF DESIGNATIONS,
                             PREFERENCES AND RIGHTS
                                       of
                      SERIES C CONVERTIBLE PREFERRED STOCK
                                       of
                              REMOTE DYNAMICS, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

      Remote Dynamics, Inc., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies that the Board of
Directors of the Corporation (the "Board of Directors" or the "Board"), pursuant
to authority of the Board of Directors as required by Section 151 of the
Delaware General Corporation Law, and in accordance with the provisions of its
Certificate of Incorporation and Bylaws, each as amended and restated through
the date hereof, has and hereby authorizes a series of the Corporation's
previously authorized Preferred Stock, par value $.01 per share (the "Preferred
Stock"), and hereby states the designation and number of shares, and fixes the
relative rights, preferences, privileges, powers and restrictions thereof, as
follows:

                            I. DESIGNATION AND AMOUNT

      The designation of this series, which consists of Ten Thousand (10,000)
shares of Preferred Stock, is the Series C Convertible Preferred Stock (the
"Series C Preferred Stock") and the face amount shall be One Thousand Dollars
($1,000.00) per share (the "Face Amount").

                             II. CERTAIN DEFINITIONS

      For purposes of this Certificate of Designation, in addition to the other
terms defined herein, the following terms shall have the following meanings:

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

      B. "Change of Control" means (i) any sale, transfer or other disposition
of all or substantially all of the assets of the Corporation, (ii) the adoption
of a plan relating to the liquidation or dissolution of the Corporation, (iii)
any consolidation or merger of the Corporation with any other entity (other than
a merger in which the Corporation is the surviving or continuing entity and its
capital stock is unchanged), (iv) any share exchange or other transaction
pursuant to which all of the outstanding shares of Common Stock are converted
into other securities or property, (v) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (vi) any sale or issuance, in one transaction or
a series of related transactions, by the Corporation or any of its stockholders
of any Common Stock or Convertible Securities (as defined in Article X.C, below)
to any person such that, following the consummation of such transaction(s), such
person (together with its affiliates) would own or have the right to acquire
greater than fifty percent (50%) of the outstanding shares of Common Stock
(calculated on a fully-diluted basis assuming the conversion or exercise of all
Convertible Securities), or to elect a majority of the Board, or (vii) the first
day on which the continuing directors (i.e., the current members of the Board,
or those members who are subsequently elected with the approval of a majority of
the then current members of the Board) cease to represent at least a majority of
the members of the Board then serving.

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

      D. "Conversion Date" means, for any Optional Conversion (as defined in
Article IV.A below), the date specified in the notice of conversion in the form
attached hereto (the "Notice of Conversion"), so long as such day is a trading
day and a copy of the Notice of Conversion is faxed (or delivered by other means
resulting in notice) to the Corporation before 4:00 p.m., New York City time, on
the Conversion Date indicated in the Notice of Conversion; provided, however,
that if the Notice of Conversion is not so faxed or otherwise delivered before
such time, then the Conversion Date shall be the next trading day after the date
the holder faxes or otherwise delivers the Notice of Conversion to the
Corporation.

      D. "Conversion Percentage" means Fifty-One Percent (51%), subject to
adjustment from time to time as set forth in Article V.A. and Article VI.A.

      E. "Default Cure Date" means, as applicable, (i) with respect to a
Conversion Default described in clause (i) of Article VI.A, the date the
Corporation effects the conversion of the full number of shares of Series C
Preferred Stock, or (ii) with respect to a Conversion Default described in
clause (ii) of Article VI.A, the date the Corporation issues freely tradable
shares of Common Stock in satisfaction of all conversions of Series C Preferred
Stock in accordance with Article IV.

      F. "Funding Condition" means Bounce Mobile Systems, Inc. shall have
purchased Notes and Warrants (as defined in the Note Purchase Agreement)
pursuant to Article I of the Note Purchase Agreement for an aggregate Purchase
Price (as defined in the Note Purchase Agreement) of at least Six Hundred
Thousand Dollars ($600,000).

      G. "Funding Default" means that Bounce Mobile Systems, Inc. shall have
defaulted in its obligation to purchase Notes and Warrants (as defined in the
Note Purchase Agreement) under Article I of the Note Purchase Agreement;
provided that all of the conditions applicable to such obligation shall have
been fulfilled.

      H. "Funding Default Percentage" means, with respect to any Funding
Default, the product of (i) the percentage of Bounce Mobile Systems, Inc.'s
total commitment to purchase Notes and Warrants (as defined in the Note Purchase
Agreement) under Article I of the Note Purchase Agreement which is in default as
a result of such Funding Default, multiplied by (ii) 1.5.

      I. "Issuance Date" means the date of the closing under the Share Exchange
Agreement, pursuant to which the Corporation issues, and such purchasers
purchase, shares of Series C Preferred Stock upon the terms and conditions
stated therein.

      J. "Note Purchase Agreement" means the Note and Warrant Purchase
Agreement, dated as of November 30, 2006, by and among the Corporation and the
Purchasers listed on Exhibit A thereto.

      K. "Number of Fully Diluted Shares" means, as of any date of calculation,
the sum of the following:

            (i) The number of shares of Common Stock outstanding as of the
      Issuance Date ("Issuance Date Common Stock"); plus

            (ii) The number of shares of Common Stock issued by the Corporation
      at any time from the Issuance Date through the date of calculation (or
      issuable as of the date of calculation):

            (x) upon the conversion, exercise or exchange of any Convertible
            Security or Purchase Right (in each case, as defined below)
            outstanding as of the Issuance Date, including (without limitation)
            (1) any and all securities issued pursuant to the Note and Warrant
            Purchase Agreement, dated February 23, 2006, by and among the
            Corporation and those purchasers named therein (the "Series A Note
            Purchase Agreement"), (2) any and all securities issued pursuant to
            the Note and Warrant Purchase Agreement, (3) the shares of the
            Corporation's Series B Preferred Stock, and (4) the shares of Series
            C Preferred Stock and other securities issued pursuant to the Share
            Exchange Agreement (collectively, "Issuance Date Convertible
            Securities") , plus

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<PAGE>

            (z) upon the conversion, exercise or exchange of any Convertible
            Security or Purchase Right issued subsequent to the Issuance Date
            (1) in conversion, exercise or exchange of Issuance Date Common
            Stock, Issuance Date Convertible Securities or Payment Securities
            (as defined below), (2) as a dividend, interest payment, liquidated
            damages, penalty, compromise, settlement or other payment (A) in the
            respect of Issuance Date Common Stock, Issuance Date Convertible
            Securities or Payment Securities or (B) pursuant to or in connection
            with any agreement, indebtedness or other obligation of the
            Corporation existing as of the Issuance Date, or with respect to any
            amendment, waiver or modification thereto or extension thereof,
            including (without limitation) the Series A Note Purchase Agreement,
            the Note Purchase Agreement and the agreements entered into in
            connection therewith (the securities referred to in the clauses (1)
            and (2), collectively "Exchanged Securities"), or (3) the
            conversion, exercise or exchange of Exchanged Securities (together
            with Exchanged Securities, "Subsequent Issued Securities"); plus

            (y) As a dividend, interest payment, liquidated damages, penalty,
            compromise, settlement or other payment (1) in the respect of
            Issuance Date Common Stock, Issuance Date Convertible Securities or
            Subsequent Issued Securities or (2) pursuant to or in connection
            with any agreement, indebtedness or other obligation of the
            Corporation existing as of the Issuance Date, or with respect to any
            amendment, waiver or modification thereto or extension thereof,
            including (without limitation) the Series A Note Purchase Agreement,
            the Note Purchase Agreement and the agreements entered into in
            connection therewith (collectively, "Payment Securities") , plus

            (iii) The number of shares of Common Stock authorized for issuance
      under the Corporation's 2006 Stock Plan, as amended from time to time, or
      any other equity incentive plan adopted by the Corporation after the
      Issuance Date.

The Number of Fully Diluted Shares will be appropriately adjusted to reflect any
stock split, combination, reclassification or other similar event with respect
to the Common Stock occurring subsequent to the Issuance Date.

      L. "Number of Initially Issued Series C Preferred Shares" means, as of any
date of calculation, Five Thousand (5,000), appropriately adjusted to reflect
any stock split, combination, reclassification or other similar event with
respect to the Series C Preferred Stock occurring subsequent to the Issuance
Date.

      M. "Series C Majority Holders" means the holders of a majority of the then
outstanding shares of Series C Preferred Stock.

      N. "Share Exchange Agreement" means the Share Exchange Agreement, dated as
of November 30, 2006, between the Corporation and Bounce Mobile Systems, Inc.

      O. "trading day" means any day on which the principal United States
securities exchange or trading market where the Common Stock is then listed or
traded, is open for trading.

                                 III. DIVIDENDS

      Dividends (the "Dividends") shall be payable cumulatively, at the rate of
eight percent (8%) per annum (calculated on the basis of a 365-day year). The
Dividends shall be payable quarterly on August 31, November 30, February 28 and
May 31 of each year, beginning February 28, 2007 and ending on the date such
share of Series C Preferred Stock is fully converted or fully redeemed. Payment
of the Dividends shall be made at the election of the holder of each share of
Series C Preferred Stock (i) in cash, or (ii) in such number of shares of Series
C Preferred Stock determined by dividing the amount of the Dividends by the Face
Amount.

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<PAGE>

                                 IV. CONVERSION

      A. Conversion at the Option of the Holder. Each holder of shares of Series
C Preferred Stock may, at any time and from time to time, convert (an "Optional
Conversion") each of its shares of Series C Preferred Stock into a number of
fully paid and nonassessable shares of Common Stock determined in accordance
with the following formula, calculated as of the date that the holder delivers a
fully executed Notice of Conversion to the Corporation (the "Conversion Rate"):

             Conversion Percentage X Number of Fully Diluted Shares
              Number of Initially Issued Series C Preferred Shares

      B. Mechanics of Conversion. In order to effect an Optional Conversion, a
holder shall: (x) fax (or otherwise deliver) a copy of the fully executed Notice
of Conversion to the Corporation (Attention: Secretary) and (y) surrender or
cause to be surrendered the original certificates representing the Series C
Preferred Stock being converted (the "Preferred Stock Certificates"), duly
endorsed, along with a copy of the Notice of Conversion as soon as practicable
thereafter to the Corporation. Upon receipt by the Corporation of a facsimile
copy of a Notice of Conversion from a holder, the Corporation shall promptly
send, via facsimile, a confirmation to such holder stating that the Notice of
Conversion has been received, the date upon which the Corporation expects to
deliver the Common Stock issuable upon such conversion and the name and
telephone number of a contact person at the Corporation regarding the
conversion. The Corporation shall not be obligated to issue shares of Common
Stock upon a conversion unless either the Preferred Stock Certificates are
delivered to the Corporation as provided above, or the holder notifies the
Corporation that such Preferred Stock Certificates have been lost, stolen or
destroyed and delivers the documentation to the Corporation required by Article
XV.B hereof.

      (i) Delivery of Common Stock Upon Conversion. Upon the surrender of
Preferred Stock Certificates accompanied by a Notice of Conversion, the
Corporation (itself, or through its transfer agent) shall, no later than the
later of (a) the second business day following the Conversion Date and (b) the
business day following the date of such surrender (or, in the case of lost,
stolen or destroyed certificates, after provision of indemnity pursuant to
Article XV.B) (the "Delivery Period"), issue and deliver (i.e., deposit with a
nationally recognized overnight courier service postage prepaid) to the holder
or its nominee (x) that number of shares of Common Stock issuable upon
conversion of such shares of Series C Preferred Stock being converted and (y) a
certificate representing the number of shares of Series C Preferred Stock not
being converted, if any. Notwithstanding the foregoing, if the Corporation's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, and so long as the certificates therefor
do not bear a legend (pursuant to the terms of the Share Exchange Agreement) and
the holder thereof is not then required to return such certificate for the
placement of a legend thereon (pursuant to the terms of the Share Exchange
Agreement), the Corporation shall cause its transfer agent to promptly
electronically transmit the Common Stock issuable upon conversion to the holder
by crediting the account of the holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Corporation
shall deliver as provided above to the holder physical certificates representing
the Common Stock issuable upon conversion. Further, a holder may instruct the
Corporation to deliver to the holder physical certificates representing the
Common Stock issuable upon conversion in lieu of delivering such shares by way
of DTC Transfer.

      (ii) Taxes. The Corporation shall pay any and all taxes that may be
imposed upon it with respect to the issuance and delivery of the shares of
Common Stock upon the conversion of the Series C Preferred Stock.

      (iii) No Fractional Shares. If any conversion of Series C Preferred Stock
would result in the issuance of a fractional share of Common Stock (aggregating
all shares of Series C Preferred Stock being converted pursuant to a given
Notice of Conversion), such fractional share shall be payable in cash based upon
the ten day average Closing Sales Price of the Common Stock at such time, and
the number of shares of Common Stock issuable upon conversion of the Series C
Preferred Stock shall be the next lower whole number of shares. If the
Corporation elects not to, or is unable to, make such a cash payment, the holder
shall be entitled to receive, in lieu of the final fraction of a share, one
whole share of Common Stock.

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<PAGE>

      (iv) Conversion Disputes. In the case of any dispute with respect to a
conversion, the Corporation shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with subparagraph (i) above. If such
dispute involves the calculation of the Conversion Rate, and such dispute is not
promptly resolved by discussion between the relevant holder and the Corporation,
the Corporation shall submit the disputed calculations to an independent outside
accountant (acceptable to the Series C Majority Holders) via facsimile within
three business days of receipt of the Notice of Conversion. The accountant, at
the Corporation's sole expense, shall promptly audit the calculations and notify
the Corporation and the holder of the results no later than three business days
from the date it receives the disputed calculations. The accountant's
calculation shall be deemed conclusive, absent manifest error. The Corporation
shall then issue the appropriate number of shares of Common Stock in accordance
with subparagraph (i) above.

      (v) Payment of Accrued Amounts. Upon conversion of any shares of Series C
Preferred Stock, all amounts then accrued or payable on such shares under this
Certificate of Designation (including, without limitation, all Dividends)
through and including the Conversion Date shall be paid in cash by the
Corporation or, in the case of any Dividend, in the manner described in Article
III.

                    V. RESERVATION OF SHARES OF COMMON STOCK

      A. Reserved Amount. On or prior to the earlier of (i) the date the Charter
Amendment (as defined in the Share Exchange Agreement) is filed and (ii) March
31, 2007 (the "Reservation Date"), the Corporation shall reserve a sufficient
number of shares of its authorized but unissued shares of Common Stock for
issuance upon full conversion of all Series C Preferred Stock (including any
Dividend payable thereon) outstanding and, thereafter, the number of authorized
but unissued shares of Common Stock so reserved (the "Reserved Amount") shall at
all times be sufficient to provide for the full conversion (including any
Dividend payable thereon) of all of the Series C Preferred Stock (including any
Dividend payable thereon) outstanding. The Reserved Amount shall be allocated
among the holders of Series C Preferred Stock as provided in Article XIV.C.

      B. Increases to Reserved Amount. If, after the Reservation Date, the
Reserved Amount for any three consecutive trading days (the last of such three
trading days being the "Authorization Trigger Date") shall be less than one
hundred percent (100%) of the number of shares of Common Stock issuable upon
full conversion (including any Dividend payable thereon) of the then outstanding
shares of Series C Preferred Stock, the Corporation shall immediately notify the
holders of Series C Preferred Stock of such occurrence and shall take immediate
action (including, if necessary, seeking stockholder approval to authorize the
issuance of additional shares of Common Stock) to increase the Reserved Amount
to one hundred percent (100%) of the number of shares of Common Stock then
issuable upon full conversion of all of the outstanding Series C Preferred
Stock. In the event the Corporation fails to so increase the Reserved Amount
within 90 days after an Authorization Trigger Date, then the Conversion
Percentage shall increase by one-tenth (0.1) of a percentage point for each
30-day period (or portion thereof) elapsed thereafter until the Corporation so
increases the Reserved Amount; provided that the Conversion Percentage shall not
be so increased if the Corporation's failure to increase the Reserved Amount is
due solely to the act, or failure to act, of the holders of Series C Preferred
Stock or the Series C Directors (as defined below).

                       VI. FAILURE TO SATISFY CONVERSIONS

      A. Conversion Defaults. If, at any time, (i) a holder of shares of Series
C Preferred Stock submits a Notice of Conversion and the Corporation fails for
any reason (other than because such issuance would exceed such holder's
allocated portion of the Reserved Amount, for which failures the holders shall
have the remedies set forth in Article V) to deliver, on or prior to the fifth
business day following the expiration of the Delivery Period for such
conversion, such number of shares of Common Stock to which such holder is
entitled upon such conversion, or (ii) the Corporation provides written notice
to any holder of Series C Preferred Stock (or makes a public announcement via
press release) at any time of its intention not to issue shares of Common Stock
upon exercise by any holder of its conversion rights in accordance with the
terms of this Certificate of Designation (other than because such issuance would
exceed such holder's allocated portion of the Reserved Amount) (each of (i) and
(ii) being a "Conversion Default"), then the Conversion Percentage shall
increase by one-tenth (0.1) of a percentage point for each 30-day period (or
portion thereof) elapsed from the date of the Conversion Default until the
Default Cure Date for such Conversion Default; provided that the Conversion
Percentage shall not be so increased if the occurrence of a Conversion Default
is due solely to the act, or failure to act, of the holders of Series C
Preferred Stock or the Series C Directors (as defined below).

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      B. Buy-In Cure. Unless the Corporation has notified the applicable holder
in writing prior to the delivery by such holder of a Notice of Conversion that
the Corporation is unable to honor conversions, if (i) (a) the Corporation fails
to promptly deliver during the Delivery Period shares of Common Stock to a
holder upon a conversion of shares of Series C Preferred Stock or (b) there
shall occur a Legend Removal Failure (as defined in Article VII.A(ii) below) and
(ii) thereafter, such holder purchases (in an open market transaction or
otherwise) shares of Common Stock to make delivery in satisfaction of a sale by
such holder of the unlegended shares of Common Stock (the "Sold Shares") which
such holder anticipated receiving upon such conversion (a "Buy-In"), the
Corporation shall pay such holder, in addition to any other remedies available
to the holder, the amount by which (x) such holder's total purchase price
(including brokerage commissions, if any) for the unlegended shares of Common
Stock so purchased exceeds (y) the net proceeds received by such holder from the
sale of the Sold Shares. For example, if a holder purchases unlegended shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to shares of Common Stock it sold for $10,000, the Corporation will be
required to pay the holder $1,000. A holder shall provide the Corporation
written notification and supporting documentation indicating any amounts payable
to such holder pursuant to this Article VI.B.

                      VII. REDEMPTION DUE TO CERTAIN EVENTS

      A. Redemption by Holder. In the event (each of the events described in
clauses (i)-(vii) below after expiration of the applicable cure period (if any)
being a "Redemption Event"):

            (i) the Common Stock (including any of the shares of Common Stock
      issuable upon conversion of the Series C Preferred Stock) is suspended
      from trading on any of, or is not listed (and authorized) for trading on
      at least one of, the New York Stock Exchange, the American Stock Exchange,
      the Nasdaq National Market, the Nasdaq SmallCap Market or the
      Over-the-Counter Bulletin Board , for an aggregate of ten or more trading
      days in any twelve month period;

            (ii) the Corporation fails to remove any restrictive legend on any
      certificate or any shares of Common Stock issued to the holders of Series
      C Preferred Stock upon conversion of the Series C Preferred Stock as and
      when required by this Certificate of Designation or the Share Exchange
      Agreement (a "Legend Removal Failure"), and any such failure continues
      uncured for five business days after the Corporation has been notified
      thereof in writing by the holder;

            (iii) the Corporation provides written notice (or otherwise
      indicates) to any holder of Series C Preferred Stock, or states by way of
      public announcement distributed via a press release, at any time, of its
      intention not to issue, or otherwise refuses to issue, shares of Common
      Stock to any holder of Series C Preferred Stock upon conversion in
      accordance with the terms of this Certificate of Designation;

            (iv) the Corporation or any subsidiary of the Corporation shall make
      an assignment for the benefit of creditors, or apply for or consent to the
      appointment of a receiver or trustee for it or for a substantial part of
      its property or business, or such a receiver or trustee shall otherwise be
      appointed;

            (v) bankruptcy, insolvency, reorganization or liquidation
      proceedings or other proceedings for the relief of debtors shall be
      instituted by or against the Corporation or any subsidiary of the
      Corporation and if instituted against the Corporation or any subsidiary of
      the Corporation by a third party, shall not be dismissed within 60 days of
      their initiation;

            (vi) the Corporation shall:

            (a) sell, convey or dispose of all or substantially all of its
      assets (the presentation of any such transaction for stockholder approval
      being conclusive evidence that such transaction involves the sale of all
      or substantially all of the assets of the Corporation);

            (b) merge or consolidate with or into, or engage in any other
      business combination with, any other person or entity, in any case which
      results in either (i) the holders of the voting securities of the
      Corporation immediately prior to such transaction holding or having the
      right to direct the voting of fifty percent (50%) or less of the total
      outstanding voting securities of the Corporation or such other surviving
      or acquiring person or entity immediately following such transaction or
      (ii) the members of the board of directors or other governing body of the
      Corporation comprising fifty percent (50%) of less of the members of the
      board of directors or other governing body of the Corporation or such
      other surviving or acquiring person or entity immediately following such
      transaction;

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<PAGE>

            (c) have fifty percent (50%) or more of the voting power of its
      capital stock owned beneficially by one person, entity or "group" (as such
      term is used under Section 13(d) of the Securities Exchange Act of 1934,
      as amended); or

            (d) experience any Change of Control not otherwise addressed in
      subparagraphs (a)-(d) above; or

            (vii) except with respect to matters covered by subparagraphs (i) -
      (vi) above, as to which such applicable subparagraphs shall apply, the
      Corporation otherwise shall breach any material term hereunder or under
      the Share Exchange Agreement or the Note Purchase Agreement (or any other
      agreement entered into in connection therewith), including, without
      limitation, the representations and warranties contained therein (i.e., in
      the event of a material breach as of the date such representation and
      warranty was made) and if such breach is curable, shall fail to cure such
      breach within ten business days after the Corporation has been notified
      thereof in writing by the holder;

then, upon the occurrence of any such Redemption Event, each holder of shares of
Series C Preferred Stock shall thereafter have the option, exercisable in whole
or in part at any time and from time to time by delivery of a written notice to
such effect (a "Redemption Notice") to the Corporation while such Redemption
Event continues, to require the Corporation to purchase for cash any or all of
the then outstanding shares of Series C Preferred Stock held by such holder for
an amount per share equal to the Redemption Amount (as defined in Paragraph B
below) in effect at the time of the redemption hereunder. For the avoidance of
doubt, the occurrence of any event described in clauses (i), (iii), (iv), (v)
and (vi) above shall immediately constitute a Redemption Event and there shall
be no cure period. Upon the Corporation's receipt of any Redemption Notice
hereunder (other than during the three trading day period following the
Corporation's delivery of a Redemption Announcement (as defined below) to all of
the holders in response to the Corporation's initial receipt of a Redemption
Notice from a holder of Series C Preferred Stock), the Corporation shall
immediately (and in any event within one business day following such receipt)
deliver a written notice (a "Redemption Announcement") to all holders of Series
C Preferred Stock stating the date upon which the Corporation received such
Redemption Notice and the amount of Series C Preferred Stock covered thereby.
The Corporation shall not redeem any shares of Series C Preferred Stock during
the three trading day period following the delivery of a required Redemption
Announcement hereunder. At any time and from time to time during such three
trading day period, each holder of Series C Preferred Stock may request (either
orally or in writing) information from the Corporation with respect to the
instant redemption (including, but not limited to, the aggregate number of
shares of Series C Preferred Stock covered by Redemption Notices received by the
Corporation) and the Corporation shall furnish (either orally or in writing) as
soon as practicable such requested information to such requesting holder.

      B. Definition of Redemption Amount. The "Redemption Amount" with respect
to a share of Series S Preferred Stock means an amount equal to the greater of
(i) the Face Amount thereof plus all accrued Dividends thereon through the date
of payment of the Redemption Amount and (ii) the number of shares of Common
Stock issuable upon conversion thereof, multiplied by M;

where "M" means (i) with respect to all redemptions other than redemptions
pursuant to subparagraph (a) or (b) of Article VII.A(vi) hereof, the highest
Closing Sales Price of the Corporation's Common Stock during the period
beginning 10 trading days prior to the date on which the Corporation receives
the Redemption Notice and ending on the date immediately preceding the date of
payment of the Redemption Amount and (ii) with respect to redemptions pursuant
to subparagraph (a) or (b) of Article VII.A(vi) hereof, the greater of (a) the
amount determined pursuant to clause (i) of this definition or (b) the fair
market value, as of the date on which the Corporation receives the Redemption
Notice, of the consideration payable to the holder of a share of Common Stock
pursuant to the transaction which triggers the redemption. For purposes of this
definition, "fair market value" shall be determined by the mutual agreement of
the Corporation and the Series C Majority Holders, or if such agreement cannot
be reached within five business days prior to the date of redemption, by an
investment banking firm selected by the Corporation and reasonably acceptable to
the Series C Majority Holders, with the costs of such appraisal to be borne by
the Corporation.

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      C. Redemption Defaults. If the Corporation fails to pay any holder the
Redemption Amount with respect to any share of Series C Preferred Stock within
five business days after its receipt of a Redemption Notice, then the holder of
Series C Preferred Stock entitled to redemption shall be entitled to interest on
the Redemption Amount at a per annum rate equal to the lower of eighteen percent
(18%) and the highest interest rate permitted by applicable law from the date on
which the Corporation receives the Redemption Notice until the date of payment
of the Redemption Amount hereunder. In the event the Corporation is not able to
redeem all of the shares of Series C Preferred Stock subject to Redemption
Notices delivered prior to the date upon which such redemption is to be
effected, the Corporation shall redeem shares of Series C Preferred Stock from
each holder pro rata, based on the total number of shares of Series C Preferred
Stock outstanding at the time of redemption included by such holder in all
Redemption Notices delivered prior to the date upon which such redemption is to
be effected relative to the total number of shares of Series C Preferred Stock
outstanding at the time of redemption included in all of the Redemption Notices
delivered prior to the date upon which such redemption is to be effected.

                                   VIII. RANK

      All shares of the Series C Preferred Stock shall rank (i) prior to the
Corporation's Common Stock and any class or series of capital stock of the
Corporation hereafter created (unless, with the consent of the Series C Majority
Holders obtained in accordance with Article XII hereof, such class or series of
capital stock specifically, by its terms, ranks senior to or pari passu with the
Series C Preferred Stock) (collectively with the Common Stock, "Junior
Securities"); (ii) pari passu with ( any class or series of capital stock of the
Corporation hereafter created (with the written consent of the Series C Majority
Holders obtained in accordance with Article XII hereof) specifically ranking, by
its terms, on parity with the Series C Preferred Stock (the "Pari Passu
Securities"); and (iii) junior to (a) the Corporation's Series B Convertible
Preferred Stock and (b) any class or series of capital stock of the Corporation
hereafter created (with the written consent of the Series C Majority Holders
obtained in accordance with Article XII hereof) specifically ranking, by its
terms, senior to the Series C Preferred Stock (collectively, the "Senior
Securities"), in each case as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary.

                           IX. LIQUIDATION PREFERENCE

      A. Priority in Liquidation. In the event that the Corporation shall
liquidate, dissolve or wind up its affairs (a "Liquidation Event"), no
distribution shall be made to the holders of any shares of capital stock of the
Corporation (other than Senior Securities pursuant to the rights, preferences
and privileges thereof) upon liquidation, dissolution or winding up unless prior
thereto the holders of shares of Series C Preferred Stock shall have received
the Liquidation Preference with respect to each share. If, upon the occurrence
of a Liquidation Event, the assets and funds available for distribution among
the holders of the Series C Preferred Stock and holders of Pari Passu
Securities, if any, shall be insufficient to permit the payment to such holders
of the preferential amounts payable thereon, then the entire assets and funds of
the Corporation legally available for distribution to the Series C Preferred
Stock and the Pari Passu Securities, if any, shall be distributed ratably among
such shares in proportion to the ratio that the Liquidation Preference payable
on each such share bears to the aggregate Liquidation Preference payable on all
such shares. If, upon the occurrence of a Liquidation Event, the assets and
funds available for distribution among the holders of Senior Securities, if any,
the holders of the Series C Preferred Stock and the holders of Pari Passu
Securities, if any, shall be sufficient to permit the payment to such holders of
the preferential amounts payable thereon, then after such payment shall be made
in full to the holders of Senior Securities, if any, the holders of the Series C
Preferred Stock and the holders of Pari Passu Securities, if any, the remaining
assets and funds available for distribution shall be distributed ratably among
the holders of shares of Series C Preferred Stock, the holders of any other
class or series of Preferred Stock entitled to participate with the Common Stock
in a liquidating distribution and the holders of the Common Stock, with the
holders of shares of Preferred Stock deemed to hold the number of shares of
Common Stock into which such shares of Preferred Stock are then convertible.

      B. Definition of Liquidation Preference. The "Liquidation Preference" with
respect to a share of Series C Preferred Stock means the greater of (i) an
amount equal to the Face Amount thereof, and (ii) the amount that would be
distributed in such Liquidation Event on the number of shares of Common Stock
into which a share of Series C Preferred Stock could be converted immediately
prior to such Liquidation Event, assuming all shares of Series C Preferred Stock
were so converted. The Liquidation Preference with respect to any Pari Passu
Securities, if any, shall be as set forth in the Certificate of Designation
filed in respect thereof.

                                        8
<PAGE>

                      X. ADJUSTMENTS TO THE CONVERSION RATE

      The Conversion Rate shall be subject to adjustment from time to time as
follows:

      A. Change of Control. If, at any time after the Issuance Date, there shall
be a Change of Control, then the holders of Series C Preferred Stock shall
thereafter have the right to receive upon conversion, in lieu of the shares of
Common Stock otherwise issuable, such shares of stock, securities and/or other
property as would have been issued or payable in such Change of Control with
respect to or in exchange for the number of shares of Common Stock which would
have been issuable upon conversion had such Change of Control not taken place,
and in any such case, appropriate provisions (in form and substance reasonably
satisfactory to the Series C Majority Holders) shall be made with respect to the
rights and interests of the holders of the Series C Preferred Stock to the end
that the economic value of the shares of Series C Preferred Stock are in no way
diminished by such Change of Control and that the provisions hereof (including,
without limitation, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is not the Corporation, an
immediate adjustment of the Conversion Rate so that the Conversion Rate
immediately after the Change of Control reflects the same relative value as
compared to the value of the surviving entity's common stock that existed
between the Conversion Rate and the value of the Corporation's Common Stock
immediately prior to such Change of Control) shall thereafter be applicable, as
nearly as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the conversion thereof. The Corporation shall not
effect any Change of Control unless (i) each holder of Series C Preferred Stock
has received written notice (the "Change of Control Notice") of such transaction
at least 30 days prior thereto, but in no event later than 10 days prior to the
record date for the determination of stockholders entitled to vote with respect
thereto, and (ii) the resulting successor or acquiring entity (if not the
Corporation) assumes by written instrument (in form and substance reasonable
satisfactory to the Series C Majority Holders) the obligations of this
Certificate of Designation (including, without limitation, the obligation to
make payments of Dividends accrued but unpaid through the date of such Change of
Control and accruing thereafter). The above provisions shall apply regardless of
whether or not there would have been a sufficient number of shares of Common
Stock authorized and available for issuance upon conversion of the shares of
Series C Preferred Stock outstanding as of the date of such transaction, and
shall similarly apply to successive reclassifications, consolidations, mergers,
sales, transfers or share exchanges.

      B. Distributions. If, at any time after the Issuance Date, the Corporation
shall declare or make any distribution of its assets (or rights to acquire its
assets) to holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise (including any dividend or distribution to the
Corporation's stockholders in cash or shares (or rights to acquire shares) of
capital stock of a subsidiary (i.e., a spin-off)) (a "Distribution"), then the
holders of Series C Preferred Stock shall be entitled, upon any conversion of
shares of Series C Preferred Stock after the date of record for determining
stockholders entitled to such Distribution (or if no such record is taken, the
date on which such Distribution is declared or made), to receive the amount of
such assets which would have been payable to the holder with respect to the
shares of Common Stock issuable upon such conversion had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such Distribution (or if no such record is taken,
the date on which such Distribution is declared or made).

      C Convertible Securities and Purchase Rights. If, at any time after the
Issuance Date, the Corporation issues any securities or other instruments which
are convertible into or exercisable or exchangeable for Common Stock
("Convertible Securities") or options, warrants or other rights to purchase or
subscribe for Common Stock or Convertible Securities ("Purchase Rights") pro
rata to the record holders of any class of Common Stock, whether or not such
Convertible Securities or Purchase Rights are immediately convertible,
exercisable or exchangeable, then the holders of Series C Preferred Stock shall
be entitled to acquire, upon the terms applicable to such Convertible Securities
or Purchase Rights, the aggregate number of Convertible Securities or Purchase
Rights which such holder could have acquired if such holder had held the number
of shares of Common Stock acquirable upon complete conversion of the Series C
Preferred Stock immediately before the date on which a record is taken for the
grant, issuance or sale of such Convertible Securities or Purchase Rights, or,
if no such record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such Convertible
Securities or Purchase Rights.

                                        9
<PAGE>

      D. Other Action Affecting Conversion Rate. If, at any time after the
Issuance Date, the Corporation takes any action affecting the Common Stock that
would be covered by Article X.A through C, but for the manner in which such
action is taken or structured, which would in any way diminish the value of the
Series C Preferred Stock, then the Conversion Rate shall be adjusted in such
manner as the Board of Directors of the Corporation shall in good faith
determine to be equitable under the circumstances.

      F. Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Rate pursuant to this Article X , or any change
in the number or type of stock, securities and/or other property issuable upon
conversion of the Series C Preferred Stock, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment or change and prepare and
furnish to each holder of Series C Preferred Stock a certificate setting forth
such adjustment or readjustment or change and showing in detail the facts upon
which such adjustment or readjustment or change is based. The Corporation shall,
upon the written request at any time of any holder of Series C Preferred Stock,
furnish to such holder a like certificate setting forth (i) such adjustment or
readjustment or change, (ii) the Conversion Rate at the time in effect and (iii)
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 conversion of a share of
Series C Preferred Stock.

                   XI. VOTING RIGHTS AND BOARD REPRESENTATION

      A. Voting Rights.

      (i) Except as otherwise expressly provided elsewhere in this Certificate
of Designation or as otherwise required by the Delaware General Corporation Law
(the "DGCL"), (a) each holder of Series C Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the stockholders of the Corporation
and shall be entitled to that number of votes equal to the number of shares of
Common Stock into which such holder's shares of Series C Preferred Stock could
then be converted (without regard to whether the Corporation then has sufficient
shares of its authorized but unissued shares of Common Stock to effect such
conversion) at the record date for the determination of stockholders entitled to
vote on such matters or, if no such record date is established, at the date such
vote is taken or any written consent of stockholders is solicited, and (b) the
holders of shares of Series C Preferred Stock and Common Stock shall vote
together (or tender written consents in lieu of a vote) as a single class on all
matters submitted to the stockholders of the Corporation. Fractional votes shall
not, however, be permitted and any fractional voting rights available on an
as-converted basis (after aggregating all shares of Common Stock into which
shares of Series C Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number.

      (ii) The Corporation shall provide each holder of Series C Preferred Stock
with prior notification of any meeting of the stockholders (and copies of proxy
materials and other information sent to stockholders). If the Corporation takes
a record of its stockholders for the purpose of determining stockholders
entitled to (a) receive payment of any dividend or other distribution, any right
to subscribe for, purchase or otherwise acquire (including by way of merger,
consolidation or recapitalization) any share of any class or any other
securities or property, or to receive any other right, or (b) to vote in
connection with any proposed sale, lease or conveyance of all or substantially
all of the assets of the Corporation, or any proposed merger, consolidation,
liquidation, dissolution or winding up of the Corporation, the Corporation shall
mail a notice to each holder of Series C Preferred Stock, at least 15 days prior
to the record date specified therein (or 45 days prior to the consummation of
the transaction or event, whichever is earlier, but in no event earlier than
public announcement of such proposed transaction), of the date on which any such
record is to be taken for the purpose of such vote, dividend, distribution,
right or other event, and a brief statement regarding the amount and character
of such vote, dividend, distribution, right or other event to the extent known
at such time.

      (iii) To the extent that under the DGCL the vote of the holders of the
Series C Preferred Stock, voting separately as a class or series, as applicable,
is required to authorize a given action of the Corporation, the affirmative vote
or consent of the holders of at least a majority of the then outstanding shares
of the Series C Preferred Stock represented at a duly held meeting at which a
quorum is present or by written consent of the Series C Majority Holders (except
as otherwise may be required under the DGCL) shall constitute the approval of
such action by the class.

                                       10
<PAGE>

      B. Board Representation. From and after the date that the Funding
Condition is first satisfied , the holders of Series C Preferred Stock,
exclusively and as a separate class, shall be entitled to elect: (i) as long as
no Company Redemption Date (as defined below) shall have occurred, a majority of
the members of the Corporation's Board of Directors and (ii) if a Company
Redemption Date shall have occurred, a number of members of the Corporation's
Board of Directors equal to the result (rounded down to the nearest whole
number) of (x) the aggregate Face Amount of the outstanding shares of Series C
Preferred Stock, divided by (y) $1,666,666 (the members of the Corporation's
Board of Directors so elected pursuant to clause (i) or (ii) being referred to
herein as "Series C Directors"). Any Series C Director may be removed without
cause by, and only by, the affirmative vote of the holders of Series C Preferred
Stock, given either at a special meeting of the holders of Series C Preferred
Stock duly called for that purpose, or by written consent of the holders of
Series C Preferred Stock. So long as any shares of Series C Preferred Stock are
outstanding, the Company shall not enter into any definitive agreement providing
for, or consummate any Change of Control transaction unless the holders of
Series C Preferred Stock, exclusively and as a separate class of securities,
shall be entitled to elect a majority of the members of the board of directors
(or equivalent board) of the acquirer or successor entity.

                           XII. PROTECTION PROVISIONS

      So long as any shares of Series C Preferred Stock are outstanding, the
Corporation shall not take any of the following corporate actions (whether by
merger, consolidation or otherwise) without first obtaining the approval (by
vote or written consent, as provided by the DGCL) of the Series C Majority
Holders:

            (i) alter or change the rights, preferences or privileges of the
      Series C Preferred Stock, or increase the authorized number of shares of
      Series C Preferred Stock;

            (ii) amend its certificate of incorporation or bylaws;

            (iii) issue any shares of Series C Preferred Stock other than
      pursuant to Share Exchange Agreement or as a Dividend (as described in
      Article III);

            (iv) redeem, repurchase or otherwise acquire, or declare or pay any
      cash dividend or distribution on, any Junior Securities;

            (v) increase the par value of the Common Stock;

            (vi) sell all or substantially all of its assets or stock, or
      consolidate or merge with another entity;

            (vii) enter into or permit to occur any Change of Control
      transaction;

            (viii) liquidate, dissolve, recapitalize or reorganize;

            (ix) change its principal business;

            (x) alter or change the rights, preferences or privileges of any
      capital stock of the Corporation so as to affect adversely the Series C
      Preferred Stock;

            (xi) create or issue any Senior Securities or Pari Passu Securities;

            (xii) enter into any agreement, commitment, understanding or other
      arrangement to take any of the foregoing actions; or

            (xiii) cause or authorize any subsidiary of the Corporation to
      engage in any of the foregoing actions.

                                       11
<PAGE>

Notwithstanding the foregoing, no corporate action pursuant to this Article XII
shall be effective to the extent that, by its terms, it applies to less than all
of the holders of shares of Series C Preferred Stock then outstanding.

                            XIII. COMPANY REDEMPTION

      A. If a Funding Default shall occur, then during the ten business day
period following the occurrence of such Funding Default, the Corporation shall
have the right to redeem a number of shares of Series C Preferred Stock equal to
the product of (i) the Funding Default Percentage, multiplied by (ii) the Number
of Initially Issued Series C Preferred Shares (the "Default Shares") at a
redemption price equal to One Dollar ($1.00) per share.

      B. Any redemption made by the Corporation pursuant to this Article XIII
(the "Company Redemption") shall be made by providing forty-five (45) days'
advance written notice (the "Company Redemption Notice") to the holders of
shares of Series C Preferred Stock. The Corporation may redeem all, but not less
than all, of the Default Shares pursuant to this Article XIII.

      C. The Corporation may not deliver to a holder a Company Redemption Notice
unless (a) a Company Redemption Notice is delivered to the holders of Series C
Preferred Stock within ten business days following the occurrence of the
associated Funding Default, and (ii) on or prior to the date of delivery of such
Company Redemption Notice, the Corporation shall have segregated on the books
and records of the Corporation an amount of cash sufficient to pay all amounts
to which the holders of shares of Series C Preferred Stock are entitled upon
such redemption pursuant to this Article XIII. Any Company Redemption Notice
delivered shall be irrevocable and shall be accompanied by a certificate
executed by a duly authorized officer of the Corporation stating that all
conditions to such Company Redemption have been satisfied.

      D. The price per share of Series C Preferred Stock required to be paid by
the Corporation pursuant to Article XIII.A (the "Company Redemption Amount")
shall be paid in cash to the holders whose Series C Preferred Stock is being
redeemed within five (5) business days of the effective date of the Company
Redemption (the "Company Redemption Date"); provided, however, that the
Corporation shall not be obligated to deliver any portion of the Company
Redemption Amount until either the Preferred Stock Certificates being redeemed
are delivered to the office of the Corporation or the holder notifies the
Corporation that such certificates have been lost, stolen or destroyed and
delivers the appropriate documentation in accordance with Article XV.B hereof.
Notwithstanding anything herein to the contrary, in the event that the Preferred
Stock Certificates representing the shares of Series C Preferred Stock being
redeemed are not delivered to the Corporation or the transfer agent or the
holder fails to notify the Corporation or the transfer agent that such
certificates have been lost, stolen or destroyed and fails to deliver the
appropriate documentation in accordance with Article XV.B hereof prior to the
fifth business day following the Company Redemption Date, then the redemption of
the Series C Preferred Stock pursuant to this Article XIII shall still be deemed
effective as of the Company Redemption Date, but the Company Redemption Amount
shall be paid in cash to the holder whose shares of Series C Preferred Stock are
being redeemed only within five (5) business days of the date the Preferred
Stock Certificates representing such shares are actually delivered to the
Corporation or the transfer agent or the holder notifies the Corporation that
such Preferred Stock Certificates have been lost, stolen or destroyed and
delivers the documentation to the Corporation required by Article XV.B hereof.

      E. From and after the delivery of a Company Redemption Notice, no holder
may convert any of its shares of Series C Preferred Stock subject to such
Company Redemption Notice into Common Stock pursuant to Article IV.

                            XIV. PARTICIPATION RIGHT

      Subject to the terms and conditions specified in this Article XIV, the
holders of Series C Preferred Stock shall have a right to participate with
respect to the issuance or possible issuance of (i) equity or equity-linked
securities, or (ii) debt that is convertible into equity or in which there is an
equity component ("Additional Securities") on the same terms and conditions as
offered by the Company to the other purchasers of such Additional Securities.
Each time the Company proposes to offer any Additional Securities, the Company
shall make an offering of such Additional Securities to each holder of Series C
Preferred in accordance with the following provisions:

                                       12
<PAGE>

            (i) the Company shall deliver a notice (the "Notice") to the holders
      of Series C Preferred Stock stating (A) its bona fide intention to offer
      such Additional Securities, (B) the number of such Additional Securities
      to be offered, (C) the price and terms, if any, upon which it proposes to
      offer such Additional Securities, and (D) the anticipated closing date of
      the sale of such Additional Securities;

            (ii) by written notification received by the Company within fifteen
      (15) trading days after giving of the Notice, any holder of Series C
      Preferred Stock may elect to purchase or obtain, at the price and on the
      terms specified in the Notice, up to that portion of such Additional
      Securities that have a total purchase price equal to the greater of (1)
      fifty-one percent (51%) of the aggregate amount of the Additional
      Securities to be offered and sold in such offering and (2) one hundred
      percent (100%) of the Face Amount of the Series C Preferred Stock then
      held by such holder (including any shares of Series C Preferred Stock that
      have been converted into Common Stock), plus any accrued and unpaid
      Dividends. The Company shall promptly, in writing, inform each holder of
      Series C Preferred Stock that elects to purchase all of the Additional
      Shares available to it ("Fully-Exercising Holder") of any other holder of
      Series C Preferred Stock's failure to do likewise. During the five (5)
      trading day period commencing after such information is given, each
      Fully-Exercising Holder shall be entitled to obtain that portion of the
      Additional Securities for which the holders of Series C Preferred Stock
      were entitled to subscribe but that were not subscribed for by the holders
      of Series C Preferred Stock that is equal to the proportion that the Face
      Amount of the Series C Preferred Stock held by such Fully-Exercising
      Holder (including any shares of Series C Preferred Stock that have been
      converted into Common Stock) bears to the total Face Amount of the Series
      C Preferred Stock held by all holders of Series C Preferred Stock
      (including any shares of Series C Preferred Stock that have been converted
      into Common Stock);

            (iii) if all Additional Securities which the holders of Series C
      Preferred Stock are entitled to obtain pursuant to Article XIV(ii) are not
      elected to be obtained as provided in subsection Article XIV(ii) hereof,
      the Company may, during the 75-day period following the expiration of the
      period provided in subsection Article XIV(ii) hereof, offer the remaining
      unsubscribed portion of such Additional Securities to any person or
      persons at a price not less than, and upon terms no more favorable to the
      offeree than, those specified in the Notice. If the Company does not
      consummate the sale of such Additional Securities within such period, the
      right provided hereunder shall be deemed to be revived and such Additional
      Securities shall not be offered or sold unless first reoffered to the
      holders of Series C Preferred Stock in accordance herewith;

            (iv) the participation rights in this Article XIV shall not be
      applicable to (A) the issuance or sale of shares of Common Stock (or
      options therefor) to employees, officers, directors, or consultants of the
      Company for the primary purpose of soliciting or retaining their
      employment or service pursuant to a stock option plan (or similar equity
      incentive plan) approved in good faith by the Board of Directors, or (B)
      any issuance of securities as to which the Series C Majority Holders shall
      have executed a written waiver of the rights contained in this Article
      XIV; and

            (v) the participation rights set forth in this Article XIV may not
      be assigned or transferred, except that such right is assignable by each
      holder of Series C Preferred Stock to any wholly-owned subsidiary or
      parent of, or to any corporation or entity that is, within the meaning of
      the Securities Act, controlling, controlled by or under common control
      with, any such holder of Series C Preferred Stock.

                                XV. MISCELLANEOUS

      A. Cancellation of Series C Preferred Stock. If any shares of Series C
Preferred Stock are converted pursuant to Article IV or redeemed or repurchased
by the Corporation, the shares so converted or redeemed shall be canceled, shall
return to the status of authorized, but unissued Preferred Stock of no
designated series, and shall not be issuable by the Corporation as Series C
Preferred Stock.

                                       13
<PAGE>

      B. Lost or Stolen Certificates. Upon receipt by the Corporation of (i)
evidence of the loss, theft, destruction or mutilation of any Preferred Stock
Certificate(s) and (ii) (y) in the case of loss, theft or destruction, indemnity
(without any bond or other security) reasonably satisfactory to the Corporation,
or (z) in the case of mutilation, the Preferred Stock Certificate(s)
(surrendered for cancellation), the Corporation shall execute and deliver new
Preferred Stock Certificate(s) of like tenor and date. However, the Corporation
shall not be obligated to reissue such lost, stolen, destroyed or mutilated
Preferred Stock Certificate(s) if the holder contemporaneously requests the
Corporation to convert such Series C Preferred Stock.

      C. Allocation of Reserved Amount. The initial Reserved Amount shall be
allocated pro rata among the holders of Series C Preferred Stock based on the
number of shares of Series C Preferred Stock issued to each such holder. Each
increase to the Reserved Amount shall be allocated pro rata among the holders of
Series C Preferred Stock based on the number of shares of Series C Preferred
Stock held by each holder at the time of the increase in the Reserved Amount. In
the event a holder shall sell or otherwise transfer any of such holder's shares
of Series C Preferred Stock, each transferee shall be allocated a pro rata
portion of such transferor's Reserved Amount. Any portion of the Reserved Amount
that remains allocated to any person or entity which does not hold any Series C
Preferred Stock shall be allocated to the remaining holders of shares of Series
C Preferred Stock, pro rata based on the number of shares of Series C Preferred
Stock then held by such holders.

      D. Quarterly Statements of Available Shares. For each calendar quarter,
for so long as any shares of Series C Preferred Stock are outstanding, the
Corporation shall deliver (or cause its transfer agent to deliver) to each
holder a written report notifying the holders of any reason why the Corporation
is prohibited from issuing Common Stock upon any conversion. The report shall
also specify (i) the total number of shares of Series C Preferred Stock
outstanding as of the end of such quarter, (ii) the total number of shares of
Common Stock issued upon all conversions of Series C Preferred Stock prior to
the end of such quarter, (iii) the total number of shares of Common Stock which
are reserved for issuance upon conversion of the Series C Preferred Stock as of
the end of such quarter and (iv) the total number of shares of Common Stock
which may thereafter be issued by the Corporation upon conversion of the Series
C Preferred Stock before the Corporation would exceed the Reserved Amount. The
Corporation (or its transfer agent) shall use commercially reasonable efforts to
deliver the report for each quarter to each holder prior to the tenth day of the
calendar month following the quarter to which such report relates. In addition,
the Corporation (or its transfer agent) shall provide, as promptly as
practicable following delivery to the Corporation of a written request by any
holder, any of the information enumerated in clauses (i) -- (iv) of this
Paragraph D as of the date of such request.

      E. Payment of Cash; Defaults. Whenever the Corporation is required to make
any cash payment to a holder under this Certificate of Designation (as payment
of any Dividend, upon redemption or otherwise), such cash payment shall be made
to the holder within five business days after delivery by such holder of a
notice specifying the method (e.g., by check, wire transfer) in which such
payment should be made and any supporting documentation reasonably requested by
the Corporation to substantiate the holder's claim to such cash payment and the
amount thereof. If such payment is not delivered within such five business day
period, such holder shall thereafter be entitled to interest on the unpaid
amount at a per annum rate equal to the lower of (i) eighteen percent (18%) and
(ii) the highest interest rate permitted by applicable law until such amount is
paid in full to the holder.

      F. Status as Stockholder. Upon submission of a Notice of Conversion by a
holder of Series C Preferred Stock, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed
such holder's allocated portion of the Reserved Amount) shall be deemed
converted into shares of Common Stock and (ii) the holder's rights as a holder
of such converted shares of Series C Preferred Stock shall cease and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity
to such holder because of a failure by the Corporation to comply with the terms
of this Certificate of Designation. Notwithstanding the foregoing, if a holder
has not received certificates for all shares of Common Stock prior to the sixth
business day after the expiration of the Delivery Period with respect to a
conversion of Series C Preferred Stock for any reason, then (unless the holder
otherwise elects to retain its status as a holder of Common Stock by so
notifying the Corporation within five business days after the expiration of such
six business day period after expiration of the Delivery Period) the holder
shall regain the rights of a holder of Series C Preferred Stock with respect to
such unconverted shares of Series C Preferred Stock and the Corporation shall,
as soon as practicable, return such unconverted shares to the holder. In all
cases, the holder shall retain all of its rights and remedies for the
Corporation's failure to convert Series C Preferred Stock.

                                       14
<PAGE>

      G. Remedies Cumulative. The remedies provided in this Certificate of
Designation shall be cumulative and in addition to all other remedies available
under this Certificate of Designation, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit a holder's right to pursue actual damages for any failure by the
Corporation to comply with the terms of this Certificate of Designation. The
Corporation acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holders of Series C Preferred Stock and that the
remedy at law for any such breach may be inadequate. The Corporation therefore
agrees, in the event of any such breach or threatened breach, that the holders
of Series C Preferred Stock shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

      H. Waiver. Notwithstanding any provision in this Certificate of
Designation to the contrary, any provision contained herein and any right of the
holders of Series C Preferred Stock granted hereunder may be waived as to all
shares of Series C Preferred Stock (and the holders thereof) upon the written
consent of the Series C Majority Holders, unless a higher percentage is required
by applicable law, in which case the written consent of the holders of not less
than such higher percentage of shares of Series C Preferred Stock shall be
required.

      I. Notices. Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt requested)
or delivered personally, by nationally recognized overnight carrier or by
confirmed facsimile transmission, and shall be effective five days after being
placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by nationally recognized overnight carrier or, subject
to Section II.D. hereof, upon confirmed facsimile transmission, in each case
addressed to a party. The addresses for such communications are (i) if to the
Corporation to Remote Dynamics, Inc., 1155 Kas Drive, Suite 100, Richardson,
Texas 75081-1999, Telephone: 972-301-2700, Facsimile: 972-301-2263, Attention:
Chief Financial Officer, and (ii) if to any holder of series C Preferred Stock
to the address set forth under such holder's name on the execution page to the
Share Exchange Agreement, or such other address as any party may be designated
in writing hereafter, in the same manner, by such person.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>

      IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation this 30th day of November, 2006.

                                                    REMOTE DYNAMICS, INC.

                                                    By:_________________________
                                                    Name:
                                                    Title:

                                       16
<PAGE>

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                in order to Convert the Series C Preferred Stock)

      The undersigned hereby irrevocably elects to convert ___shares of Series C
Preferred Stock (the "Conversion"), represented by Stock Certificate No(s).
___(the "Preferred Stock Certificates"), into shares of common stock ("Common
Stock") of Remote Dynamics, Inc. (the "Corporation") and cash in lieu of any
fractional share(s), if applicable, according to the conditions of the
Certificate of Designations, Preferences and Rights of Series C Convertible
Preferred Stock (the "Certificate of Designation"), as of the date written
below. If securities are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. No fee will be charged to the holder for any conversion, except for
transfer taxes, if any. Each Preferred Stock Certificate is attached hereto (or
evidence of loss, theft or destruction thereof).

      Except as may be provided below, the Corporation shall electronically
transmit the Common Stock issuable pursuant to this Notice of Conversion to the
account of the undersigned or its nominee (which is ___) with DTC through its
Deposit Withdrawal Agent Commission System ("DTC Transfer").

      In the event of partial exercise, please reissue a new stock certificate
for the number of shares of Series C Preferred Stock which shall not have been
converted.

      The undersigned acknowledges and agrees that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Series C Preferred Stock have been or will be made only pursuant to an effective
registration of the transfer of the Common Stock under the Securities Act of
1933, as amended (the "Act"), or pursuant to an exemption from registration
under the Act.

|_|   In lieu of receiving the shares of Common Stock issuable pursuant to this
      Notice of Conversion by way of DTC Transfer, the undersigned hereby
      requests that the Corporation issue and deliver to the undersigned
      physical certificates representing such shares of Common Stock.

                       Date of Conversion:           ___________________________

                       Applicable Conversion Rate:   ___________________________

                       Signature:                    ___________________________

                       Name:                         ___________________________

                       Address:                      ___________________________

                                       17REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is made and
entered into as of December 4, 2006, by and among Remote Dynamics, Inc., a
Delaware corporation (the "Company"), and Bounce Mobile Systems, Inc., a Nevada
corporation ("BMSI").

            This Agreement is being entered into pursuant to the Share Exchange
Agreement dated as of November 30, 2006 among the Company and BMSI (the "Share
Exchange Agreement").

            The Company and BMSI hereby agree as follows:

      1. Definitions.

            Capitalized terms used and not otherwise defined herein shall have
the meanings given such terms in the Share Exchange Agreement. As used in this
Agreement, the following terms shall have the following meanings:

            "Advice" shall have meaning set forth in Section 3(m).

            "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.

            "Board" shall have meaning set forth in Section 3(n).

            "Business Day" means 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 generally are authorized or required by law or other
government actions to close.

            "Closing Date" means the date of the Closing under the Share
Exchange Agreement.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the Company's Common Stock, par value $0.01 per
share.

            "Effectiveness Date" means with respect to the initial Registration
Statement the earlier of (A) the sixtieth (60th) day following the Filing Date
(or in the event the Registration Statement receives a "full review" by the
Commission, the one ninetieth (90th) day following the Filing Date) or (B) the
date which is within three (3) Business Days after the date on which the
Commission informs the Company that (i) the Commission will not review the
initial Registration Statement or (ii) the Company may request the acceleration
of the effectiveness of the initial Registration Statement and the Company makes
such request, and with respect to any additional Registration Statements which
may be required pursuant to Section 2, the earlier of (A) the ninetieth (90th)
day following the date on which the Company first knows, or reasonably should
have known, that such additional Registration Statement is required hereunder or
(B) the date which is within three (3) Business Days of the date on which the
Commission informs the Company that (i) the Commission will not review any such
additional Registration Statement or (ii) the Company may request the
acceleration of the effectiveness of the additional Registration Statement and
the Company makes such request; provided that, if the Effectiveness Date falls
on a Saturday, Sunday or any other day which shall be a legal holiday or a day
on which the Commission is authorized or required by law or other government
actions to close, the Effectiveness Date shall be the following Business Day.

<PAGE>

            "Effectiveness Period" shall have the meaning set forth in Section
2.

            "Event" shall have the meaning set forth in Section 7(d).

            "Event Date" shall have the meaning set forth in Section 7(d).

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Filing Date" means, with respect to the initial Registration
Statement required hereunder, the earlier of (A) the ninetieth (90th) day
following the Closing Date and (B) the thirtieth (30th) day following the date
the Company's stockholders approve the Reverse Split and the Share Increase and,
with respect to any additional Registration Statement which may be required
pursuant to Section 2, the twentieth (20th) calendar day following the date on
which the Company first knows, or reasonably should have known, that such
additional Registration Statement is required hereunder; provided that, if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the following
Business Day.

            "Holder" or "Holders" means the holder or holders, as the case may
be, from time to time of Registrable Securities.

            "Indemnified Party" shall have the meaning set forth in Section
5(c).

            "Indemnifying Party" shall have the meaning set forth in Section
5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "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.

                                        2
<PAGE>

            "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

            "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.

            "Registrable Securities" means (A) the shares of Common Stock
issuable upon conversion or repayment of the Notes and (B) the shares of Common
Stock issuable upon exercise of the Warrants; provided, however, that
Registrable Securities shall include (but not be limited to) a number of shares
of Common Stock equal to no less than 125% of the maximum shares of Common Stock
which would be issuable upon conversion or repayment of the Notes and upon
exercise of the Warrants, assuming such conversion or repayment and exercise
occurred on the Closing Date or the Filing Date, whichever date would result in
the greater number of Registrable Securities.

            "Registration Statement" means the registration statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such registration
statement.

            "Reverse Split" means the one-for-fifty (1-for-50) reverse stock
split of the Common Stock to be effected by the Company pursuant to Section
5.02(d)(xviii) of the Share Exchange Agreement.

            "Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

            "Rule 158" means Rule 158 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

            "Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                                        3
<PAGE>

            "Rule 424" means Rule 424 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Share Increase" means the increase in the number of the Company's
authorized shares of Common Stock to at least 575,000,000 to be effected by the
Company filing an amendment to its Certificate of Incorporation with the
Delaware Secretary of State pursuant to Section 5.02(d)(xviii) of the Share
Exchange Agreement.

            "Special Counsel" means such counsel as may be designated by BMSI,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

            "Warrant" means the warrants to purchase shares of Common Stock
issued to BMSI pursuant to the Share Exchange Agreement.

      2. Resale Registration.

            On or prior to the Filing Date the Company shall prepare and file
with the Commission a "resale" Registration Statement providing for the resale
of all Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form SB-2 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on another
appropriate form in accordance herewith and the Securities Act and the rules
promulgated thereunder). Such Registration Statement shall cover to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Company shall (i) not permit any
securities other than the Registrable Securities and the securities to be listed
on Schedule II hereto to be included in the Registration Statement and (ii) use
its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period"). The Company shall request that the effective time of the Registration
Statement is 4:00 p.m. Eastern Time on the effective date. If at any time and
for any reason, an additional Registration Statement is required to be filed
because at such time the actual number of shares of Common Stock into which the
Notes are convertible and the Warrants are exercisable exceeds the number of
shares of Registrable Securities remaining under the Registration Statement, the
Company shall have twenty (20) days to file such additional Registration
Statement, and the Company shall use its best efforts to cause such additional
Registration Statement to be declared effective by the Commission as soon as
possible, but in no event later than sixty (60) days after filing.
Notwithstanding anything to the contrary set forth in this Section 2, in the
event the Commission does not permit the Company to register all of the
Registrable Securities in the Registration Statement, the Company shall register
in the Registration Statement such number of Registrable Securities as is
permitted by the Commission, provided, however, that the number of Registrable
Securities to be included in such Registration Statement or any subsequent
registration statement shall be determined in the following order: (i) first,
the shares of Common Stock issuable upon conversion of the Notes shall be
registered on a pro rata basis among the holders of the Notes, and (ii) second,
the shares of Common Stock issuable upon exercise of the Warrants shall be
registered on a pro rata basis among the holders of the Warrants. In the event
the Commission does not permit the Company to register all of the Registrable
Securities in the Registration Statement, the Company shall use its best efforts
to register the Registrable Securities, subject to the foregoing sentence, that
were not registered in the Registration Statement as promptly as possible and in
a manner permitted by the Commission, whether by filing a subsequent
registration statement, providing demand registration rights, or otherwise.

                                        4
<PAGE>

      3. Registration Procedures.

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Prepare and file with the Commission on or prior to the Filing
Date, a Registration Statement on Form SB-2 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form SB-2 such
registration shall be on another appropriate form in accordance herewith and the
Securities Act and the rules promulgated thereunder) in accordance with the plan
of distribution as set forth on Exhibit A hereto and in accordance with
applicable law, and cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less than five
(5) Business Days prior to the filing of the Registration Statement or any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall (i)
furnish to the Holders and the Special Counsel, copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the review of such Holders and such Special
Counsel, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of Special Counsel, to conduct a reasonable review of
the documents. The Company shall not file the Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities or the Special Counsel shall reasonably
object in writing within three (3) Business Days of their receipt thereof.

            (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements as necessary in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; (iii) respond as promptly as possible, but in no event
later than ten (10) Business Days, to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and to
provide the Holders, within such ten (10) Business Day period, true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; (iv) file the final prospectus pursuant to Rule 424 of
the Securities Act no later than 9:00 a.m. Eastern Time on the Business Day
following the date the Registration Statement is declared effective by the
Commission; and (v) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
Effectiveness Period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so amended or in
such Prospectus as so supplemented.

                                        5
<PAGE>

            (c) Notify the Holders of Registrable Securities and the Special
Counsel as promptly as possible (and, in the case of (i)(A) below, not less than
three (3) Business Days prior to such filing, and in the case of (iii) below, on
the same day of receipt by the Company of such notice from the Commission) and
(if requested by any such Person) confirm such notice in writing no later than
one (1) Business Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is filed; (B) when the Commission notifies the Company whether there will be a
"review" of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement and (C) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation or
threatening of any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that makes
any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

            (d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, as promptly as possible, (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction.

            (e) If requested by the Holders of a majority in interest of the
Registrable Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.

                                        6
<PAGE>

            (f) Furnish to each Holder and the Special Counsel, without charge,
at least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.

            (g) Promptly deliver to each Holder and the Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and subject to the provisions of Sections 3(m) and 3(n), the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.

            (h) Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling Holders and
the Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.

            (i) Cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
pursuant to a Registration Statement, which certificates, to the extent
permitted by the Purchase Agreement and applicable federal and state securities
laws, shall be free of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
Holder may request in connection with any sale of Registrable Securities.

            (j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

                                        7
<PAGE>

            (k) Use its best efforts to cause all Registrable Securities
relating to the Registration Statement to be listed or quoted on the OTC
Bulletin Board or any other securities exchange, quotation system or market, if
any, on which similar securities issued by the Company are then listed or traded
as and when required pursuant to the Purchase Agreement.

            (l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders all documents filed or required to be filed with the Commission,
including, but not limited, to, earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 not later than 45 days after
the end of any 12-month period (or 90 days after the end of any 12-month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.

            (m) The Company may require each selling Holder to furnish to the
Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, Prospectus, or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who unreasonably fails to furnish such information within a reasonable time
after receiving such request.

            If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.

            Each Holder covenants and agrees that it will not sell any
Registrable Securities under the Registration Statement until the Company has
electronically filed the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that the Registration
Statement and any post-effective amendments thereto have become effective as
contemplated by Section 3(c).

            Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v),
3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.

            (n) At any time following the date that the Registration Statement
is declared effective by the Commission, if (i) there is material non-public
information regarding the Company which the Company's Board of Directors (the
"Board") determines not to be in the Company's best interest to disclose and
which the Company is not otherwise required to disclose, (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board determines not to be in the Company's best interest
to disclose, or (iii) the Company is required to file a post-effective amendment
to the Registration Statement to incorporate the Company's quarterly and annual
reports and audited financial statements on Forms 10-QSB and 10-KSB, then the
Company may (x) postpone or suspend filing of a registration statement for a
period not to exceed thirty (30) consecutive days or (y) postpone or suspend
effectiveness of a registration statement for a period not to exceed twenty (20)
consecutive days; provided that the Company may not postpone or suspend
effectiveness of a registration statement under this Section 3(n) for more than
forty-five (45) days in the aggregate during any three hundred sixty (360) day
period; provided, however, that no such postponement or suspension shall be
permitted for consecutive twenty (20) day periods arising out of the same set of
facts, circumstances or transactions.

                                        8
<PAGE>

      4. Registration Expenses.

            All fees and expenses incident to the performance of or compliance
with this Agreement by the Company, except as and to the extent specified in
this Section 4, shall be borne by the Company whether or not the Registration
Statement is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to the Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the OTC
Bulletin Board and each other securities exchange or market on which Registrable
Securities are required hereunder to be listed, if any, (B) with respect to
filing fees required to be paid to the National Association of Securities
Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance with state
securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
up to a maximum amount of $5,000, (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. For the avoidance
of doubt, all brokers and underwriters' fees and discounts relating to resale of
the Registrable Securities shall be expenses borne by each of the Holders and
not the Company.

                                        9
<PAGE>

      5. Indemnification.

            (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, managers, partners, members, shareholders
agents, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call
of Common Stock), investment advisors and employees of each of them, each Person
who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any statutory
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements or omissions are based solely upon information regarding
such Holder or such other Indemnified Party furnished in writing to the Company
by such Holder (or their counsel or Special Counsel) expressly for use therein
and (ii) that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, allegedly untrue statement,
omission or alleged omission made in any preliminary prospectus but eliminated
or remedied in the final prospectus (filed pursuant to Rule 424 of the
Securities Act), such indemnity agreement shall not inure to the benefit of any
Holder, underwriter, broker or other Person acting on behalf of holders of the
Registrable Securities, from whom the Person asserting any loss, claim, damage,
liability or expense purchased the Registrable Securities which are the subject
thereof, if a copy of such final prospectus had been made available to such
Person and such Holder, underwriter, broker or other Person acting on behalf of
holders of the Registrable Securities and such final prospectus was not
delivered to such Person with or prior to the written confirmation of the sale
of such Registrable Securities to such Person. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising solely out of or based solely upon
any untrue statement of a material fact contained in the Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such Holder
or other Indemnifying Party to the Company specifically for inclusion in the
Registration Statement or such Prospectus. Notwithstanding anything to the
contrary contained herein, each Holder shall be liable under this Section 5(b)
for only that amount as does not exceed the net proceeds to such Holder as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.

                                       10
<PAGE>

            (c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party) in writing, and the
Indemnifying Party shall be entitled to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such parties shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is a party
and indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnified Party shall reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

                                       11
<PAGE>

            (d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is due but unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other from the offering of the Notes and Warrants. If, but only if,
the allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault, as applicable, of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms. In no
event shall any selling Holder be required to contribute an amount under this
Section 5(d) in excess of the net proceeds received by such Holder upon sale of
such Holder's Registrable Securities pursuant to the Registration Statement
giving rise to such contribution obligation.

            The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. The indemnity and
contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
Notwithstanding anything to the contrary contained herein, the Holders shall be
liable under this Section 5(d) for only that amount as does not exceed the net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.

      6. Rule 144.

            As long as any Holder owns any Notes, Warrants or Registrable
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders with true
and complete copies of all such filings. As long as any Holder owns any Notes,
Warrants or Registrable Securities, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell the Conversion Shares and the Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including providing any legal opinions relating to such sale pursuant to Rule
144. Upon the request of any Holder, the Company shall deliver to such Holder a
written certification of a duly authorized officer as to whether it has complied
with such requirements.

                                       12
<PAGE>

      7. Miscellaneous.

            (a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, such Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.

            (b) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, as of the date hereof entered into and currently in effect,
nor shall the Company or any of its subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in Schedule
2.1(c) of the Purchase Agreement or Schedule II hereto, neither the Company nor
any of its subsidiaries has previously entered into any agreement currently in
effect granting any registration rights with respect to any of its securities to
any Person. Without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company, under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

            (c) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto or
as disclosed on Schedule 2.1(c) of the Purchase Agreement or Schedule II hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing such
right to any of its securityholders, unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict with the provisions of this Agreement.

                                       13
<PAGE>

            (d) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering (i) Conversion Shares or (ii) Warrant
Shares, the Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, the Company shall send to each holder of Registrable Securities written
notice of such determination and, if within thirty (30) days after receipt of
such notice, or within such shorter period of time as may be specified by the
Company in such written notice as may be necessary for the Company to comply
with its obligations with respect to the timing of the filing of such
registration statement, any such holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
the Purchasers), the Company will cause the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the holder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered, provided that if at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to such holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act. In the case of an underwritten
public offering, if the managing underwriter(s) or underwriter(s) should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).

                                       14
<PAGE>

            (e) Failure to File Registration Statement and Other Events. The
Company and BMSI agree that the Holders will suffer damages if the Registration
Statement is not filed on or prior to the Filing Date and not declared effective
by the Commission on or prior to the Effectiveness Date and maintained in the
manner contemplated herein during the Effectiveness Period or if certain other
events occur. The Company and the Holders further agree that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly, if
(A) a Registration Statement is not filed on or prior to the Filing Date, or (B)
a Registration Statement is not declared effective by the Commission on or prior
to the Effectiveness Date (or in the event an additional Registration Statement
is filed because the actual number of shares of Common Stock into which the
Notes are convertible and the Warrants are exercisable exceeds the number of
shares of Common Stock initially registered is not filed and declared effective
with the time periods set forth in Section 2), or (C) the Company fails to file
with the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within three (3) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or not subject
to further review, or (D) a Registration Statement is filed with and declared
effective by the Commission but thereafter ceases to be effective as to all
Registrable Securities at any time prior to the expiration of the Effectiveness
Period, without being succeeded promptly by a subsequent Registration Statement
filed with and declared effective by the Commission in accordance with Section 2
hereof, or (E) the Company has breached Section 3(n), or (F) trading in the
Common Stock shall be suspended or if the Common Stock is delisted from or no
longer quoted on the OTC Bulletin Board (or other principal exchange on which
the Common Stock is listed or traded) for any reason for more than three (3)
Business Days in the aggregate (any such failure or breach being referred to as
an "Event," and for purposes of clauses (A) and (B) the date on which such Event
occurs, or for purposes of clause (C) the date on which such three (3) Business
Day period is exceeded, or for purposes of clause (D) after more than fifteen
(15) Business Days, or for purposes of clause (F) the date on which such three
(3) Business Day period is exceeded, being referred to as "Event Date"), the
Company shall pay, at the option of the Holder, an amount in cash or shares of
Common Stock, as liquidated damages to each Holder equal to one and one-half
percent (1.5%) of the Holder's initial investment in the Notes for each calendar
month or portion thereof thereafter from the Event Date until the applicable
Event is cured; provided, however, that in no event shall the amount of
liquidated damages payable at any time and from time to time to any Holder
pursuant to this Section 7(e) exceed an aggregate of nine percent (9%) of the
amount of the Holder's initial investment in the Notes. Notwithstanding anything
to the contrary in this paragraph (e), if (i) any of the Events described in
clauses (A), (B), (C), (D) or (F) shall have occurred, (II) on or prior to the
applicable Event Date, the Company shall have exercised its rights under Section
3(n) hereof and (III) the postponement or suspension permitted pursuant to such
Section 3(n) shall remain effective as of such applicable Event Date, then the
applicable Event Date shall be deemed instead to occur on the second Business
Day following the termination of such postponement or suspension. Liquidated
damages payable by the Company pursuant to this Section 7(e) shall be payable on
the first (1st) Business Day of each thirty (30) day period following the Event
Date. Notwithstanding anything to the contrary contained herein, in no event
shall any liquidated damages be payable with respect to the Warrants or the
Warrant Shares.

                                       15
<PAGE>

            (f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of a majority of the Registrable Securities outstanding.

            (g) 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., New York
City time, on a Business Day, (ii) the Business 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., New York
City time, on any date and earlier than 11:59 p.m., New York City time, on such
date, (iii) the Business Day following the date of mailing, if sent by overnight
delivery by 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 BMSI at its address set forth
in the Share Exchange Agreement, or with respect to the Company, 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 Company) 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

or to such other address or addresses or facsimile number or numbers as any such
party or any other Holders may most recently have designated in writing to the
other parties hereto by such notice.

            (h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns
and shall inure to the benefit of each Holder and its successors and assigns.
The Company may not assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of each Holder. Each Purchaser may
assign its rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

                                       16
<PAGE>

            (i) Assignment of Registration Rights. The rights of each Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Person of all or a portion of the
Notes or Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Share Exchange Agreement. In addition, each Holder shall have the right to
assign its rights hereunder to any other Person with the prior written consent
of the Company, which consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.

            (j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other parties hereto, it being understood that all parties need
not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

            (k) Governing Law; Jurisdiction. This Agreement 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
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted. The Company and the Holders agree
that venue for any dispute arising under this Agreement 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 Company and the Holders
irrevocably consent to personal jurisdiction in the state and federal courts of
the state of New York. The Company and the Holders 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 Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 7(k) shall affect or limit any right to
serve process in any other manner permitted by law. The Company and the Holders
hereby agree that the prevailing party in any suit, action or proceeding arising
out of or relating to this Agreement or the Purchase 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.

                                       17
<PAGE>

            (l) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

            (m) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

            (n) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

            (o) Shares Held by the Company and its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.

                                                     REMOTE DYNAMICS, INC.

                                                     By:________________________
                                                        Name:
                                                        Title:

                                                     BOUNCE MOBILE SYSTEMS, INC.

                                                     By:________________________
                                                        Name:
                                                        Title:

                                       19
<PAGE>

                                   Schedule II
          Securities Permitted to be Included on Registration Statement

1.    Shares of Common Stock issuable upon conversion of notes and the exercise
      of warrants issued under the Note and Warrant Purchase Agreement, of even
      date herewith, among the Company and the Purchasers listed therein (the
      "Note Purchase Agreement")..

2.    Shares of Common Stock issuable upon the exercise of warrants issuable to
      the placement agent and its designees in connection with the transactions
      contemplated by the Note Purchase Agreement.

                                       20
<PAGE>

                                    Exhibit A
                              Plan of Distribution

      The selling security holders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock being offered under this prospectus on any stock
exchange, market or trading facility on which shares of our common stock are
traded or in private transactions. These sales may be at fixed or negotiated
prices. The selling security holders may use any one or more of the following
methods when disposing of shares:

      o     ordinary brokerage transactions and transactions in which the
            broker-dealer solicits purchasers;

      o     block trades in which the broker-dealer will attempt to sell the
            shares as agent but may position and resell a portion of the block
            as principal to facilitate the transaction;

      o     purchases by a broker-dealer as principal and resales by the
            broker-dealer for its account;

      o     an exchange distribution in accordance with the rules of the
            applicable exchange;

      o     privately negotiated transactions;

      o     to cover short sales made after the date that the registration
            statement of which this prospectus is a part is declared effective
            by the Commission;

      o     broker-dealers may agree with the selling security holders to sell a
            specified number of such shares at a stipulated price per share;

      o     a combination of any of these methods of sale; and

      o     any other method permitted pursuant to applicable law.

      The shares may also be sold under Rule 144 under the Securities Act of
1933, as amended ("Securities Act"), if available, rather than under this
prospectus. The selling security holders have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time.

      The selling security holders may pledge their shares to their brokers
under the margin provisions of customer agreements. If a selling security holder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged shares.

      Broker-dealers engaged by the selling security holders may arrange for
other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, which commissions as to a particular broker or dealer
may be in excess of customary commissions to the extent permitted by applicable
law.

                                       21
<PAGE>

      If sales of shares offered under this prospectus are made to
broker-dealers as principals, we would be required to file a post-effective
amendment to the registration statement of which this prospectus is a part. In
the post-effective amendment, we would be required to disclose the names of any
participating broker-dealers and the compensation arrangements relating to such
sales.

      The selling security holders and any broker-dealers or agents that are
involved in selling the shares offered under this prospectus may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with these
sales. Commissions received by these broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.

      The selling security holders and any other persons participating in the
sale or distribution of the shares offered under this prospectus will be subject
to applicable provisions of the Exchange Act, and the rules and regulations
under that act, including Regulation M. These provisions may restrict activities
of, and limit the timing of purchases and sales of any of the shares by, the
selling security holders or any other person. Furthermore, under Regulation M,
persons engaged in a distribution of securities are prohibited from
simultaneously engaging in market making and other activities with respect to
those securities for a specified period of time prior to the commencement of
such distributions, subject to specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.

      If any of the shares of common stock offered for sale pursuant to this
prospectus are transferred other than pursuant to a sale under this prospectus,
then subsequent holders could not use this prospectus until a post-effective
amendment or prospectus supplement is filed, naming such holders. We offer no
assurance as to whether any of the selling security holders will sell all or any
portion of the shares offered under this prospectus.

      We have agreed to pay all fees and expenses we incur incident to the
registration of the shares being offered under this prospectus. However, each
selling security holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.

      We and the selling security holders have agreed to indemnify one another
against certain losses, damages and liabilities arising in connection with this
prospectus, including liabilities under the Securities Act.

                                       22

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