Document:

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

                         SERIES E-7 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                              REMOTE DYNAMICS, INC.

                            Expires December 4, 2013

No.: W-E-7-06- __                                   Number of Shares: 30,937,500
Date of Issuance: December 4, 2006

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

         1. Term.  The term of this Warrant  shall  commence on December 4, 2006
and shall expire at 5:00 p.m.,  Eastern  Time,  on December 4, 2013 (such period
being the "Term").

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

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

                                      -1-
<PAGE>

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

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

                  X = Y - (A)(Y)
                            B

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

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

                  A =  the Warrant Price.

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

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

                                      -2-
<PAGE>

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

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

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

                                      -3-
<PAGE>

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

         (h) Compliance with Securities Laws.

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

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

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

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

                                      -4-
<PAGE>

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

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

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

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

                                      -5-
<PAGE>

percent  (120%) of the  number of shares of Common  Stock as shall  from time to
time be sufficient to provide for the exercise of this Warrant.

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

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

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

         (e) Payment of Taxes.  The Issuer will pay any documentary  stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon exercise
of this Warrant; provided,

                                      -6-
<PAGE>

however, that the Issuer shall not be required to pay any tax or taxes which may
be payable in respect of any  transfer  involved in the  issuance or delivery of
any  certificates  representing  Warrant  Stock in a name other than that of the
Holder in respect to which such shares are issued.

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

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

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

                                      -7-
<PAGE>

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

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

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

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

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

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

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

                                      -8-
<PAGE>

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

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

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

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

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

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

                                      -9-
<PAGE>

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

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

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

                                      -10-
<PAGE>

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

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

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

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

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

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

                                      -11-
<PAGE>

returned.

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

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

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

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

                                      -12-
<PAGE>

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

         8. Call.  Notwithstanding  anything herein to the contrary,  the Issuer
may at any time following the Original Issue Date call up to one hundred percent
(100%) of this Warrant then still  outstanding  by providing  the Holder of this
Warrant  written notice  pursuant to Section 13 (the "Call  Notice");  provided,
that,  in  connection  with any call by the Issuer under this Section 8, (A) the
Per Share Market Value of the Common Stock has been greater than $0.10 per share
for a period of ten (10) consecutive  Trading Days immediately prior to the date
of delivery of the Call Notice (a "Call Notice  Period")  and the average  daily
trading volume during the Call Notice Period exceeds  1,000,000 shares of Common
Stock;  (B) a registration  statement under the Securities Act providing for the
resale of the Warrant Stock (the "Registration Statement") is then in effect and
has been  effective,  without lapse or  suspension of any kind,  for a period of
twenty (20) consecutive calendar days, (C) trading in the Common Stock shall not
have  been  suspended  by the  Securities  and  Exchange  Commission  or the OTC
Bulletin  Board (or other  exchange  or  market  on which  the  Common  Stock is
trading), (D) the Issuer is in material compliance with the terms and conditions
of  this  Warrant  and (E)  the  Issuer  is not in  possession  of any  material
non-public information;  provided, further, that the Registration Statement must
be  effective  from the date of delivery of the Call Notice until the date which
is the later of (i) the date the Holder  exercises  the Warrant  pursuant to the
Call Notice and (ii) the 20th day after the Holder receives the Call Notice (the
"Early  Termination  Date").  The rights and privileges granted pursuant to this
Warrant with respect to the shares of Warrant  Stock  subject to the Call Notice
(the "Called Warrant Shares") shall expire on the Early Termination Date if this
Warrant is not  exercised  with respect to such Called  Warrant  Shares prior to
such Early  Termination  Date. In the event this Warrant is not  exercised  with
respect to the Called  Warrant  Shares,  the Issuer shall remit to the Holder of
this  Warrant  (i)  $.001  per  Called  Warrant  Share  and  (ii) a new  Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been  subject to the Call  Notice  upon the Holder  tendering  to the Issuer the
applicable Warrant certificate. Notwithstanding anything in the foregoing to the
contrary,  if the  Holder  may not  exercise  this  Warrant  as a result  of the
restrictions contained in Section 7 hereof, the Call Notice shall be deemed null
and void and shall not be deemed  effective  until the date that the  Holder may
exercise this Warrant in accordance with Section 7 hereof.

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

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

                                      -13-
<PAGE>

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

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

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

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

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

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

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

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

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

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

                  "Independent Appraiser" means a nationally recognized or major
         regional  investment  banking  firm or firm  of  independent  certified
         public accountants of

                                      -14-
<PAGE>

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

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

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

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

                  "Original Issue Date" means November 30, 2006.

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

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

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

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

                  "Per Share Market Value" means on any particular  date (a) the
         VWAP, or (b) if the Common Stock is not then  publicly  traded the fair
         market value of a share of Common Stock as determined by an Independent
         Appraiser  selected in good faith by the  Majority  Holders;  provided,
         however,  that the Issuer,  after receipt of the  determination by such
         Independent  Appraiser,  shall  have the right to select an  additional
         Independent  Appraiser,  in which case,  the fair market value shall be
         equal to the  average of the  determinations  by each such  Independent
         Appraiser;  and provided,  further that all  determinations  of the Per
         Share  Market  Value  shall be  appropriately  adjusted  for any  stock
         dividends,  stock  splits or other  similar  transactions  during  such
         period.  The  determination  of fair  market  value  by an  Independent
         Appraiser  shall be based  upon the  fair  market  value of the  Issuer
         determined  on a going  concern  basis as between a willing buyer and a
         willing   seller  and  taking  into   account  all   relevant   factors
         determinative of

                                      -15-
<PAGE>

                  value,  and  shall be final and  binding  on all  parties.  In
         determining  the fair market  value of any shares of Common  Stock,  no
         consideration  shall be given to any  restrictions  on  transfer of the
         Common Stock  imposed by  agreement  or by federal or state  securities
         laws, or to the existence or absence of, or any  limitations on, voting
         rights.

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

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

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

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

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

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

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

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

                  "VWAP"  means,  for any date,  (i) the daily  volume  weighted
         average  price of the  Common  Stock for such date on the OTC  Bulletin
         Board as reported by Bloomberg  Financial L.P.  (based on a Trading Day
         from 9:30 a.m.  Eastern Time to 4:02 p.m.  Eastern  Time);  (ii) if the
         Common Stock is not then listed or quoted on the OTC Bulletin Board and
         if prices for the Common Stock are then  reported in the "Pink  Sheets"
         published by the Pink Sheets, LLC (or a similar  organization or agency
         succeeding to its functions of

                                      -16-
<PAGE>

         reporting prices),  then the average of the "Pink Sheet" quotes for the
         five (5) Trading Days preceding the date of determination;  or (iii) in
         all other  cases,  the fair market  value of a share of Common Stock as
         determined by an  independent  appraiser  selected in good faith by the
         Holder and reasonably acceptable to the Maker.

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

                  "Warrant  Price"  initially  means $0.02, as such price may be
         adjusted  from  time to time  as  shall  result  from  the  adjustments
         specified in this Warrant, including Section 4 hereto.

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

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

         10. Other Notices. In case at any time:

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

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

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

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

                           (E)      there  shall  be any  (i)  consolidation  or
                                    merger  involving  the  Issuer or (ii) sale,
                                    transfer  or  other  disposition  of  all or
                                    substantially all of the Issuer's  property,
                                    assets or business (except a merger or other
                                    reorganization  in which the Issuer shall be
                                    the surviving  corporation and its shares of
                                    Capital   Stock   shall   continue   to   be
                                    outstanding   and  unchanged  and  except  a
                                    consolidation,  merger,  sale,  transfer  or
                                    other  disposition  involving a wholly-owned
                                    Subsidiary); or

                           (F)      there  shall be a voluntary  or  involuntary
                                    dissolution,  liquidation  or  winding-up of
                                    the Issuer or any partial

                                      -17-
<PAGE>

                                    liquidation of the Issuer or distribution to
                                    holders of Common Stock;

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

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

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

         13. Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective

                                      -18-
<PAGE>

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

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

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

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

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

         15.  Remedies.  The Issuer  stipulates  that the remedies at law of the
Holder of this Warrant in the event of any default or threatened  default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
may not be adequate and that, to the fullest extent permitted by law, such terms
may be  specifically  enforced by a decree for the specific  performance  of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.

         16.  Successors  and  Assigns.  This  Warrant and the rights  evidenced
hereby  shall inure to the  benefit of and be binding  upon the  successors  and
assigns of the Issuer, the Holder hereof

                                      -19-
<PAGE>

and (to the extent provided herein) the Holders of Warrant Stock issued pursuant
hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

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

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

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -20-
<PAGE>

         IN WITNESS WHEREOF,  the Issuer has executed this Series E-7 Warrant as
of the day and year first above written.

                                           REMOTE DYNAMICS, INC.

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

                                      -21-
<PAGE>

                                  EXERCISE FORM
                               SERIES E-7 WARRANT

                              REMOTE DYNAMICS, INC.

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

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

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

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

                  Cash Exercise_______

                  Cashless Exercise_______

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

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

         X = Y - (A)(Y)
                    B

Where:

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

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

The Warrant Price ______________ ("A").

                                      -22-
<PAGE>

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

                                   ASSIGNMENT

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

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

                               PARTIAL ASSIGNMENT

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

Dated: _________________            Signature        ___________________________

                          Address _____________________
                                  _____________________

                           FOR USE BY THE ISSUER ONLY:

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

                                      -23-EXHIBIT 10.16

                              AMENDED AND RESTATED
                           CERTIFICATE OF DESIGNATION,
                             PREFERENCES AND RIGHTS

                                       OF

                      SERIES B 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,  (a)  authorized  the  creation  of a  series  of the
Corporation's  previously  authorized  Preferred Stock, par value $.01 per share
(the "PREFERRED STOCK") designated as Series B Preferred Stock and a Certificate
of Designation, Preferences and Rights of the Series B Preferred Stock was filed
with the Delaware  Secretary of State on September 1, 2005 (the "ORIGINAL SERIES
B CERTIFICATE OF Designation") , (b) authorized the amendment and restatement of
the Original  Series B Certificate of  Designation as set forth herein,  and (c)
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 Six Hundred Fifty
(650) shares of Preferred  Stock,  is the Series B Convertible  Preferred  Stock
(the  "SERIES B  PREFERRED  STOCK") and the face  amount  shall be Ten  Thousand
Dollars ($10,000.00) 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

<PAGE>

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.D, 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.

         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  B  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 B 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.

                                      -2-
<PAGE>

         E. "CONVERSION PRICE" means $1.55 per share;  provided,  however,  that
the Conversion Price shall be subject to adjustment as provided herein.

         F.  "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 B
Preferred Stock,  (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 B Preferred Stock in
accordance with Article IV, or (iii) with respect to either type of a Conversion
Default,  the date on which the Corporation redeems shares of Series B Preferred
Stock held by such holder pursuant to Article VI.A and/or Article VII.A.

         G.  "ISSUANCE  DATE" means the date of the  closing  under the Series B
Securities  Purchase  Agreement,  pursuant to which the Corporation  issues, and
such purchasers purchase,  shares of Series B Preferred Stock upon the terms and
conditions stated therein.

         H.  "REGISTRATION  RIGHTS  AGREEMENT"  means  the  Registration  Rights
Agreement, to be dated as of the Issuance Date, by and among the Corporation and
the initial holders of Series B Preferred Stock.

         I. "SERIES B MAJORITY  HOLDERS"  means the holders of a majority of the
then outstanding shares of Series B Preferred Stock.

         J.  "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.

         K. "WARRANTS"  means (i) the warrants to acquire shares of Common Stock
issued to the purchaser of the Company's  Series A Preferred Stock in connection
with that  Securities  Purchase  Agreement  dated October 1, 2004 (the "SERIES A
SECURITIES PURCHASE  AGREEMENT"),  (ii) the warrants to acquire shares of Common
Stock to be issued to the purchaser(s) of Series B Preferred Stock in connection
with  the  issuance  thereof  pursuant  to  the  Series  B  Securities  Purchase
Agreement, and (iii) the warrants issued by the Corporation to the holder of the
promissory note (the "NOTE") issued pursuant to the Series B Securities Purchase
Agreement in  consideration  of the exchange of such Note in accordance with the
terms thereof.

                                 III. DIVIDENDS

         Dividends (the  "DIVIDENDS")  shall be payable quarterly at the rate of
three percent (3%) per annum (calculated on the basis of a 365-day year),  when,
as and if declared by the Board of Directors Dividends shall not be cumulative

                                 IV. CONVERSION

         A.  Conversion at the Option of the Holder.  Subject to the limitations
on  conversions  contained  in Article  XIV,  each  holder of shares of Series B
Preferred  Stock may, at any time and from time to time,  convert (an  "OPTIONAL
CONVERSION") each of its shares of Series B Preferred

                                      -3-
<PAGE>

Stock  into a number of fully  paid and  nonassessable  shares  of Common  Stock
determined in accordance with the following formula:

                                   FACE AMOUNT
                                CONVERSION PRICE

         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 B
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 B Preferred  Stock being converted and (y) a
certificate  representing  the number of shares of Series B 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 Series B Securities  Purchase
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
Series B  Securities  Purchase  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 B Preferred Stock.

                                      -4-
<PAGE>

                  (iii) No  Fractional  Shares.  If any  conversion  of Series B
Preferred  Stock would result in the  issuance of a  fractional  share of Common
Stock  (aggregating  all  shares of Series B  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 B 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.

                  (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  Price,  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 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 B Preferred  Stock, all amounts then accrued or payable on such shares
under this  Certificate  of  Designation  (including,  without  limitation,  all
Dividends)  or the  Registration  Rights  Agreement  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 March 31, 2007,  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 B
Preferred  Stock  (including  any  Dividend  payable  thereon)  outstanding  and
exercise of the Warrants 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 B Preferred Stock  (including any Dividend payable
thereon)  outstanding  at the then current  Conversion  Price  thereof  (without
giving effect to the limitations contained in Article XIV) and the full exercise
of all Warrants  outstanding at the then current exercise price thereof (without
giving effect to the  limitations on exercise set forth  therein).  The Reserved
Amount  shall be  allocated  among the  holders of Series B  Preferred  Stock as
provided in Article XVI.C.

         B. Increases to Reserved Amount. If, after March 31, 2007, 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 (i) full
conversion (including any Dividend payable thereon) of the then

                                      -5-
<PAGE>

outstanding  shares of Series B Preferred  Stock  (without  giving effect to the
limitations  contained  in Article  XIV) and (ii) full  exercise of all Warrants
outstanding at the then current exercise price thereof (without giving effect to
the  limitations  on  exercise  set  forth  therein),   the  Corporation   shall
immediately  notify the holders of Series B 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 (i) full  conversion  of all of the
outstanding  Series  B  Preferred  Stock at the then  current  Conversion  Price
(without  giving  effect to the  limitations  contained in Article XIV) and (ii)
full exercise of all Warrants  outstanding  at the then current  exercise  price
thereof  (without  giving  effect  to the  limitations  on  exercise  set  forth
therein).  In the event the Corporation fails to so increase the Reserved Amount
within 90 days after an  Authorization  Trigger  Date,  each  holder of Series B
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  Redemption  Notice to
the Corporation, to require the Corporation to redeem for cash, at an amount per
share equal to the Redemption  Amount (as defined in Article VII.B), a number of
the holder's shares of Series B Preferred  Stock such that,  after giving effect
to such redemption,  the then unissued portion of such holder's  Reserved Amount
is at least equal to one hundred percent (100%) of the total number of shares of
Common  Stock  issuable  upon  conversion  of such  holder's  shares of Series B
Preferred  Stock. If the  Corporation  fails to redeem any of such shares within
five business days after its receipt of such Redemption Notice, then such holder
shall be entitled to the remedies  provided in Article VII.C.  For the avoidance
of doubt, no holder of Series B Preferred Stock shall have the right to submit a
Redemption  Notice  pursuant to this  Article V.B at any time that the  Reserved
Amount equals one hundred percent (100%) of the number of shares of Common Stock
then issuable upon full conversion  (including any Dividend  payable thereon) of
all of the outstanding  Series B Preferred Stock at the then current  Conversion
Price (without giving effect to the limitations contained in Article XIV).

                       VI. FAILURE TO SATISFY CONVERSIONS

         A.  Conversion  Defaults.  If, at any  time,  (i) a holder of shares of
Series B 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 freely tradable 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 B  Preferred  Stock (or makes a public
announcement via press release) at any time of its intention not to issue freely
tradable  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
Cap  Amount  or  Reserved  Amount)  (each  of (i) and (ii)  being a  "CONVERSION
DEFAULT"), then the holder may elect, at any time and from time to time prior to
the Default Cure Date for such Conversion  Default,  by delivery of a Redemption
Notice  to the  Corporation,  to  have  all  or any  portion  of  such  holder's
outstanding  shares of Series B Preferred  Stock redeemed by the Corporation for
cash,  at an amount per share  equal to the  Redemption  Amount  (as  defined in
Article  VII.B).  If the  Corporation  fails to redeem any of such shares within
five business days after its

                                      -6-
<PAGE>

receipt of such  Redemption  Notice,  then such holder  shall be entitled to the
remedies provided in Article VII.C.

         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 B  Preferred  Stock or (b) there
shall occur a Legend Removal  Failure (as defined in Article  VII.A(iii)  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)-(viii) below after expiration of the applicable cure period (if any)
being a "REDEMPTION EVENT"):

                  (i) the Corporation fails to remove any restrictive  legend on
any  certificate or any shares of Common Stock issued to the holders of Series B
Preferred  Stock upon  conversion  of the Series B  Preferred  Stock as and when
required by this  Certificate of Designation,  the Series B Securities  Purchase
Agreement or the Registration Rights 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;

                  (ii) the  Corporation  provides  written  notice (or otherwise
indicates) to any holder of Series B 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 B Preferred  Stock upon  conversion in accordance  with the terms of this
Certificate of Designation;

                  (iii) 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;

                  (iv)  bankruptcy,  insolvency,  reorganization  or liquidation
proceedings or other  proceedings  for the relief of debtors shall be instituted
by or against the Corporation or any

                                      -7-
<PAGE>

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;

                  (v) the  Corporation  shall 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); or

                  (vi) except with respect to matters  covered by  subparagraphs
(i) - (v) above,  as to which such  applicable  subparagraphs  shall apply,  the
Corporation  otherwise  shall  breach any material  term  hereunder or under the
Series B Securities Purchase Agreement,  the Registration Rights Agreement,  the
Warrants  or the Note (in each case,  as the same may be  amended,  modified  or
waived from time to time) 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 B 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 B 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 (ii),  (iii),  (iv) 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 B 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 B Preferred Stock
stating the date upon which the Corporation  received such Redemption Notice and
the amount of Series B Preferred Stock covered  thereby.  The Corporation  shall
not redeem any shares of Series B 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 B  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 B
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 B  Preferred  Stock  means an amount  equal to the
greater of:

                  (i) V X M

                                      -8-
<PAGE>

                         CP
         and      (ii) V X R

where:

                  "V" means the Face Amount  thereof plus all accrued  Dividends
thereon through the date of payment of the Redemption Amount;

                  "CP" means the Conversion Price in effect on the date on which
the Corporation receives the Redemption Notice;

                  "M" means  (i) with  respect  to all  redemptions  other  than
redemptions  pursuant to subparagraph (a) or (b) of Article  VII.A(vii)  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(vii) 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 B 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 B Majority Holders,  with the costs of such
appraisal to be borne by the Corporation; and

                  "R" means 100%.  ,

         C. Redemption Defaults.  If the Corporation fails to pay any holder the
Redemption  Amount with respect to any share of Series B Preferred  Stock within
five business days after its receipt of a Redemption Notice,  then the holder of
Series B 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 B  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 B Preferred Stock from
each holder pro rata,  based on the total number of shares of Series B 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 B 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.

                                      -9-
<PAGE>

                                   VIII. RANK

         All shares of the Series B 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 B Majority
Holders obtained in accordance with Article XIII hereof, such class or series of
capital stock specifically, by its terms, ranks senior to or pari passu with the
Series  B  Preferred  Stock)   (collectively  with  the  Common  Stock,  "JUNIOR
SECURITIES");  (ii) pari passu with (a) the  Corporation's  Series A Convertible
Preferred  Stock and (b) any class or series of capital stock of the Corporation
hereafter  created  (with the written  consent of the Series B Majority  Holders
obtained in accordance  with Article XII hereof)  specifically  ranking,  by its
terms,   on  parity  with  the  Series  B  Preferred   Stock  (the  "PARI  PASSU
SECURITIES");  and (iii)  junior to any class or series of capital  stock of the
Corporation hereafter created (with the written consent of the Series B Majority
Holders obtained in accordance with Article XII hereof) specifically ranking, by
its terms,  senior to the Series B 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 B  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  B  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 B 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 B  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 B
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 B  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 B 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 B Preferred  Stock could be  converted  immediately
prior to such Liquidation Event, assuming all shares of Series B Preferred Stock
were so

                                      -10-
<PAGE>

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.

                     X. ADJUSTMENTS TO THE CONVERSION PRICE

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

         A. Stock Splits, Stock Dividends,  Etc. If, at any time on or after the
Issuance Date, the number of outstanding  shares of Common Stock is increased by
a stock split, stock dividend,  combination,  reclassification  or other similar
event, the Conversion Price shall be proportionately  reduced,  or if the number
of  outstanding  shares of Common Stock is  decreased by a reverse  stock split,
combination, reclassification or other similar event, the Conversion Price shall
be  proportionately  increased.  In such event, the Corporation shall notify the
Corporation's  transfer  agent of such  change on or before the  effective  date
thereof.

         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 B Preferred Stock shall be entitled,
upon any  conversion  of shares of Series B  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
(without  giving  effect to the  limitations  contained in Article XIV) 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 B 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 B
Preferred Stock (without  giving effect to the limitations  contained in Article
XIV)  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.

         D. Other Action Affecting  Conversion  Price. If, at any time after the
Issuance Date, the

                                      -11-
<PAGE>

Corporation takes any action affecting the Common Stock that would be covered by
Article  X.A  through  D, but for the  manner in which  such  action is taken or
structured,  which would in any way diminish the value of the Series B Preferred
Stock,  then the Conversion  Price 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.

         E. Notice of  Adjustments.  Upon the  occurrence of each  adjustment or
readjustment  of the Conversion  Price pursuant to this Article X amounting to a
more than one percent (1%) change in such Conversion Price, or any change in the
number  or type  of  stock,  securities  and/or  other  property  issuable  upon
conversion of the Series B 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 B 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 B Preferred  Stock,
furnish to such holder a like  certificate  setting forth (i) such adjustment or
readjustment  or  change,  (ii) the  Conversion  Price 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 B 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 B 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 B
Preferred Stock could then be converted (subject to the limitations set forth in
Article XIV) 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 B 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 B 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 B
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

                                      -12-
<PAGE>

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 B
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 B 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 B Preferred  Stock  represented at a duly held
meeting  at which a quorum is  present  or by  written  consent  of the Series B
Majority  Holders  (except as  otherwise  may be required  under the DGCL) shall
constitute the approval of such action by the class.

         B.  Board  Representation.  The  holders of Series B  Preferred  Stock,
exclusively  and as a separate  class,  shall be entitled to elect one member of
the Board  (the  "SERIES B  DIRECTOR").  The  director  elected  to the Board of
Directors by the Series A Convertible  Preferred  Stockholders  shall  initially
serve as the Series B  Director.  The Series B Director  may be removed  without
cause by, and only by, the affirmative vote of the holders of Series B Preferred
Stock,  given  either at a special  meeting of the holders of Series B Preferred
Stock duly  called for that  purpose,  or by written  consent of the  holders of
Series B Preferred  Stock. So long as any shares of Series B 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 B Preferred  Stock,  exclusively  and as a separate  class of securities,
shall be  entitled  to elect one or more  member of the board of  directors  (or
equivalent  board) of the  acquirer  or  successor  entity,  as the case may be,
holding at least the same proportional  voting power in respect of such board of
such entity as the Series B Director  held in respect of the Board of  Directors
immediately prior to the consummation of such Change of Control.

         C.  Board  Observation.  The  holders  of  Series  B  Preferred  Stock,
exclusively and as a separate class, shall be entitled to designate one observer
(an "OBSERVER") to attend all meetings of the Board and all committees  thereof.
The Board will give the Observer  reasonable  prior notice (it being agreed that
the same  prior  notice  given to the  Board  shall be deemed  reasonable  prior
notice)  in any  matter  permitted  by the  Corporation's  bylaws  for notice to
directors of the time and place of any proposed  meeting of the Board,  and such
notice in all cases  shall  include  true and  correct  copies of all  documents
furnished to any director in connection with such meeting.  The Observer will be
entitled  to be present in person as an  observer  to any such  meeting or, if a
meeting  is  held  by  telephone   conference  or  other  electronic  means,  to
participate  therein for the purpose of listening thereto.  The Corporation will
deliver to the Observer  copies of all documents  that may be  distributed  from
time to time to the  members  of the Board (in their  capacity  as such) at such
time as such papers are so distributed to them,  including copies of any written
consent.  The Observer  shall hold in confidence to the same extent  required by
law of the members of the Board all documents  furnished in connection  with any
meeting of the Board and any  committee  thereof  and all  information  received
through  oral  communication  in any  meeting  of the  Board  and any  committee
thereof.

                                      -13-
<PAGE>

                           XII. PROTECTION PROVISIONS

         So long as any shares of Series B 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 B Majority
Holders:

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

                  (ii) issue any shares of Series B  Preferred  Stock other than
pursuant to the Series B  Securities  Purchase  Agreement  or as a Dividend  (as
described in Article III);

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

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

                  (v) sell all or substantially all of its assets or stock;

                  (vi)  sell,  transfer  or  encumber  technology,   other  than
licenses granted in the ordinary course of business;

                  (vii) liquidate, dissolve, recapitalize or reorganize;

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

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

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

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 B Preferred Stock then outstanding.

                            XIII. OPTIONAL REDEMPTION

         A. If, at any time after the first anniversary of the Issuance Date and
before the fourth anniversary of the Issuance Date, on each trading day during a
period of at least twenty (20)  consecutive  trading days (a) the Closing  Sales
Price of the  Common  Stock is at least  200% of the  Conversion  Price  then in
effect and (b) the trading volume (as reported by Bloomberg) and Market Price of
the Common Stock  result in a value of at least  $350,000 of Common Stock traded
on each trading  day,  then the  Corporation  shall have the right to redeem all
shares of Series B Preferred Stock

                                      -14-
<PAGE>

then  outstanding  at price per share of Series B  Preferred  Stock equal to the
product of two  multiplied  by the sum of the Face  Amount  plus all accrued and
unpaid Dividends thereon through the closing date of such redemption.

         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 B Preferred Stock. The Corporation may redeem all, but not less
than all, of the outstanding shares of Series B Preferred Stock pursuant to this
Article XIII.

         C. The  Corporation  may not  deliver to a holder a Company  Redemption
Notice unless (a) the conditions to such Company  redemption have been satisfied
within the twenty (20)  trading day period  preceding  such  Company  Redemption
Notice,  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 B 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 B 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 B  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 XVI.B hereof.
Notwithstanding anything herein to the contrary, in the event that the Preferred
Stock  Certificates  representing  the shares of Series B 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 B 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 B 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 XVI.B hereof.

         E.  Notwithstanding  the  delivery of a Company  Redemption  Notice,  a
holder may convert

                                      -15-
<PAGE>

some or all of its shares of Series B Preferred  Stock  subject to such  Company
Redemption  Notice by the  delivery  at least  three  trading  days prior to the
Company  Redemption  Date of a  Notice  of  Conversion  to the  Corporation  and
otherwise  complying with all requirements set forth in Article IV. In the event
a holder would be  precluded  from  converting  any shares of Series B Preferred
Stock subject to a Company Redemption Notice due to the limitation  contained in
Article  XIV,  the  Company   Redemption  Date,  for  such  holder  only,  shall
automatically  be  extended  by that  number of days by which such  holder is so
precluded; provided, however, that in no event shall the Company Redemption Date
be extended by more than sixty (60) days.

              XIV. LIMITATIONS ON CERTAIN CONVERSIONS AND TRANSFERS

         In no event shall a holder of shares of Series B Preferred Stock of the
Corporation  have the right to convert  shares of Series B Preferred  Stock into
shares of Common  Stock or to dispose of any shares of Series B Preferred  Stock
to the extent that such right to effect such  conversion  or  disposition  would
result in the holder and its affiliates  together  beneficially owning or having
the power to vote more than 9.99% of the outstanding shares of Common Stock. For
purposes of this  Article  XIV,  beneficial  ownership  shall be  determined  in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended,  and Regulation  13D-G  thereunder.  The restriction  contained in this
Article  XIV may not be  altered,  amended,  deleted  or  changed  in any manner
whatsoever unless the holders of a majority of the outstanding  shares of Common
Stock  and the  Series B  Majority  Holders  shall  approve,  in  writing,  such
alteration, amendment, deletion or change.

                     XV. PARTICIPATION RIGHT; EXCHANGE RIGHT

         Subject to the terms and  conditions  specified in this Article XV, the
holders  of Series B  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  Purchaser  in
accordance with the following provisions:

                  (i) the Company shall  deliver a notice (the  "NOTICE") to the
holders of Series B 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) as long as any shares of Series B Preferred  Stock remain
outstanding, by written notification received by the Company within fifteen (15)
trading days after giving of the Notice,  any holder of Series B 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 twenty-five percent (25%) of the aggregate amount of the
Additional Securities to be offered and sold in such offering. The Company shall
promptly, in writing, inform

                                      -16-
<PAGE>

each  holder of Series B  Preferred  Stock that  elects to  purchase  all of the
Additional  Shares  available  to it  ("FULLY-EXERCISING  HOLDER")  of any other
holder of Series B 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 B  Preferred  Stock were
entitled to subscribe but that were not  subscribed for by the holders of Series
B Preferred  Stock that is equal to the  proportion  that the Face Amount of the
Series B Preferred  Stock held by such  Fully-Exercising  Holder  (including any
shares of Series B Preferred  Stock that have been  converted into Common Stock)
bears to the total  Face  Amount of the  Series B  Preferred  Stock  held by all
holders of Series B Preferred Stock  (including any shares of Series B Preferred
Stock that have been converted into Common Stock);

                  (iii) notwithstanding the provisions of Article XV(ii), at any
time after the Closing  Date,  by written  notification  received by the Company
within  five (5)  trading  days after  giving of the Notice  required by Article
XV(i)  above,  any holder of Series B  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 Face Amount of the Series B Preferred  Stock held by such holder  (including
any shares of Series B  Preferred  Stock that have been  converted  into  Common
Stock), plus accrued and unpaid Dividends; provided, however, that any holder of
Series B Preferred Stock who elects to purchase  Additional  Securities pursuant
to this Article  XV(iii) shall be required to surrender to the Company  Series B
Preferred  Stock (or Common  Stock  issued on the  conversion  of such  Series B
Preferred  Stock)  for  which  the Face  Amount  (plus all  accrued  but  unpaid
Dividends)  equals the total purchase  price of the Additional  Securities to be
acquired by such holder of Series B Preferred Stock under this paragraph  (iii),
and the Company  shall  accept such  Series B Preferred  Stock (or Common  Stock
issued on the  conversion  of such Series B Preferred  Stock) as payment in full
for such Additional Securities.  The provisions of this Article XV(iii) shall be
of no further force or effect upon the  consummation of any  transaction  (other
than  those  transactions  contemplated  by the  Series  B  Securities  Purchase
Agreement) resulting in the issuance of the Company's Common Stock in connection
with a bona fide public  offering at an offering  price per share  (prior to any
underwriter's  commissions and discounts) of not less than $3.10 (as adjusted to
reflect any stock dividends, distributions, combinations,  reclassifications and
other  similar  transactions  effected  by the  Company in respect to its Common
Stock)  that  results  in  total  net  proceeds  to  the  Company  of  at  least
$25,000,000;

                  (iv) if all Additional  Securities which the holders of Series
B Preferred  Stock are entitled to obtain  pursuant to Article XV(ii) or Article
XV(iii) are not elected to be obtained as provided in subsection  Article XV(ii)
or Article XV(iii) hereof,  the Company may, during the 75-day period  following
the  expiration of the period  provided in subsection  Article XV(ii) or Article
XV(iii)  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 B Preferred Stock in accordance herewith;

                  (v) the  participation  rights in this Article XV shall not be
applicable  to (A) the  issuance  or sale of shares of Common  Stock (or options
therefor) to employees,  officers,  directors, or

                                      -17-
<PAGE>

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,  (B) the
issuance of Common  Stock in  connection  with a bona fide  underwritten  public
offering at an offering price per share (prior to underwriter's  commissions and
discounts) of not less than 200% of the Conversion Price (as adjusted to reflect
any stock dividends,  distributions,  combinations,  reclassifications and other
similar  transactions  effected by the  Company in respect to its Common  Stock)
that results in total proceeds to the Company of at least  $25,000,000,  (C) the
issuance or sale of the Series B Preferred Stock, (D) the issuance of securities
in connection with mergers,  acquisitions,  strategic  business  partnerships or
joint  ventures  approved by the Board of Directors  and the primary  purpose of
which,  in the  reasonable  judgment of the Board of Directors,  is not to raise
additional  capital or (E) any issuance of  securities  as to which the Series B
Majority Holders shall have executed a written waiver of the rights contained in
this Article XV; and

                  (vi) the participation rights set forth in this Article XV may
not be assigned or  transferred,  except that such right is  assignable  by each
holder of Series B 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 B Preferred Stock.

                               XVI. MISCELLANEOUS

         A.  Cancellation of Series B Preferred Stock. If any shares of Series B
Preferred  Stock are  converted  pursuant to Article IV,  exchanged  pursuant to
Article  XV(iii) 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 B Preferred Stock.

         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 B Preferred Stock.

         C. Allocation of Reserved Amount.  The initial Reserved Amount shall be
allocated  pro rata among the holders of Series B  Preferred  Stock based on the
number of shares of Series B Preferred  Stock issued to each such  holder.  Each
increase to the Reserved Amount shall be allocated pro rata among the holders of
Series B  Preferred  Stock  based on the number of shares of Series B  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 B  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 B
Preferred Stock shall be allocated to the remaining  holders of shares of Series
B Preferred  Stock, pro

                                      -18-
<PAGE>

rata based on the number of shares of Series B Preferred Stock then held by such
holders.

         D. Quarterly  Statements of Available Shares. For each calendar quarter
beginning in the quarter in which the initial registration statement required to
be filed  pursuant  to Section  2(a) of the  Registration  Rights  Agreement  is
declared  effective  and  thereafter  for so  long as any  shares  of  Series  B
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 B 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 B
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 B 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 B Preferred Stock before the  Corporation  would exceed
the Cap Amount and 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 B 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 or Cap 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 B  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 B 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 B  Preferred
Stock with respect to such

                                      -19-
<PAGE>

unconverted  shares of Series B 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 B Preferred Stock.

         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 B 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 B  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 B Preferred  Stock  granted  hereunder may be waived as to all
shares of Series B Preferred  Stock (and the holders  thereof)  upon the written
consent of the Series B 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 B  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: 972-301-2733,  Facsimile: 972-301-2263,  Attention:
Chief  Financial  Officer,  and (ii) if to any holder to the  address  set forth
under  such  holder's  name on the  execution  page to the  Series B  Securities
Purchase  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]

                                      -20-
<PAGE>

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

                                    REMOTE DYNAMICS, INC.

                                    By:  /s/ Neil Read
                                    Name:  Neil Read
                                    Title: Chief Financial Officer, Secretary
                                           and Treasurer

                                      -21-
<PAGE>

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                in order to Convert the Series B Preferred Stock)

         The  undersigned  hereby  irrevocably  elects to  convert  ____________
shares of Series B  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 Designation, Preferences and Rights of Series B
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 B 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 B  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 Price:__________________________

                          Signature:____________________________________________

                          Name:_________________________________________________

                          Address:______________________________________________

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