Document:

exv10w6

 

Exhibit 10.6

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

TIME, ON SEPTEMBER 2, 2010

UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

Right to Purchase 1,666,667 Shares of

Common Stock, par value $.01 per share

Date: September 2, 2005

REMOTE DYNAMICS, INC.

STOCK PURCHASE WARRANT

     THIS CERTIFIES THAT, for value received, SDS Capital Group SPC, Ltd., or its registered and
permitted assigns, is entitled to purchase from Remote Dynamics, Inc., a corporation organized
under the laws of the State of Delaware (the “Company”), at any time or from time to time during
the period specified in Section 2 hereof, One Million Six Hundred Sixty-Six Thousand Six Hundred
Sixty-Seven (1,666,667) fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s
common stock, par value $.01 per share (the “Common Stock”), at an exercise price per share (the
“Exercise Price”) equal to $0.01. The term “Warrant” and all references thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, including all Warrants issued upon transfer or
exchange of this Warrant as provided herein, and the term “Warrants” means this Warrant and the
other warrants of the Company issued pursuant to the Securities Purchase Agreement dated as of May
31, 2005 by and among the Company and the other signatories thereto (the “Securities Purchase
Agreement”).

     This Warrant is subject to the following terms, provisions and conditions:

1. Exercise of Warrant.

     (a) Subject to the provisions hereof, including, without limitation, the limitations contained
in Section 10 hereof, this Warrant may be exercised by the holder hereof, in whole or in part, by
delivery of a completed exercise notice in the form attached hereto (the “Exercise Notice”), which
shall be followed promptly by the surrender of this Warrant, to the Company

 

 

during normal business hours on any business day at the Company’s principal executive offices
(or such other office or agency of the Company as it may designate by written notice to the holder
hereof), and upon (i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Notice or (ii) if the holder is effectuating a Cashless Exercise (as
defined in Section 9 hereof) pursuant to Section 9 hereof, delivery to the Company of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares specified in the
Exercise Notice.

     (b) The Warrant Shares purchased upon exercise of this Warrant in accordance with this Section
1 shall be deemed to be issued to the holder hereof or the holder’s designee, as the record owner
of such shares, as of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Notice shall have been delivered, and payment shall have been
made for such shares as set forth above or, if such date is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Notice, shall be delivered to the holder hereof or the holder’s
designee within a reasonable time, not exceeding two business days, after this Warrant shall have
been so exercised (the “Delivery Period”). If the Company’s transfer agent is participating in the
Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, and so long as the
certificates therefor do not bear a legend (pursuant to the terms of the Securities Purchase
Agreement) and the holder is not obligated to return such certificate for the placement of a legend
thereon (pursuant to the Securities Purchase Agreement), the Company shall cause its transfer agent
to electronically transmit the Warrant Shares so purchased to the holder or the holder’s designee
by crediting the account of the holder or the holder’s designee or its respective nominee with DTC
through its Deposit Withdrawal Agent Commission system (“DTC Transfer”). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the holder or the
holder’s designee physical certificates representing the Warrant Shares so purchased.
Notwithstanding the foregoing, the holder or the holder’s designee may instruct the Company to
deliver to the holder or such designee physical certificates representing the Warrant Shares so
purchased in lieu of delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder hereof or the holder’s
designee, shall be registered in the name of the holder or such other name as shall be designated
by the holder and, following the date on which the Warrant Shares have been registered under the
Securities Act pursuant to that certain Registration Rights Agreement, dated as of June ___, 2005,
by and among the Company and the other signatories thereto (the “Registration Rights Agreement”) or
otherwise may be sold by the holder pursuant to Rule 144 promulgated under the Securities Act (or a
successor rule), shall not bear any restrictive legend. If this Warrant shall have been exercised
only in part, then the Company shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.

     (c) If, at any time, a holder of this Warrant submits this Warrant, an Exercise Notice and
payment to the Company of the Exercise Price for each of the Warrant Shares specified in the
Exercise Notice (including pursuant to a Cashless Exercise), and the Company fails for any reason
(other than the reasons contemplated by Section 10 hereof) to deliver, on or prior to the fourth
business day following the expiration of the Delivery Period for such exercise, the number

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of shares of Common Stock to which the holder is entitled upon such exercise (an “Exercise
Default”), then the Company shall pay to the holder payments (“Exercise Default Payments”) for an
Exercise Default in the amount of (i) (N/365), multiplied by (ii) the amount by which the Market
Price (as defined in Section 11 hereof) of the Common Stock on the date the Exercise Notice giving
rise to the Exercise Default is transmitted in accordance with this Section 1 (the “Exercise
Default Date”) exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (iii)
the number of shares of Common Stock the Company failed to so deliver in such Exercise Default,
multiplied by (iv) .18, where N equals the number of days from the Exercise Default Date to the
date that the Company effects the full exercise of this Warrant which gave rise to the Exercise
Default. The accrued Exercise Default Payment for each calendar month shall be paid in cash and
shall be made to the holder by the fifth day of the month following the month in which it has
accrued. Nothing herein shall limit the holder’s right to pursue actual damages for the Company’s
failure to maintain a sufficient number of authorized shares of Common Stock as required pursuant
to the terms of Section 3(b) hereof or to otherwise issue shares of Common Stock upon exercise of
this Warrant in accordance with the terms hereof, and the holder shall have the right to pursue all
remedies available at law or in equity (including a decree of specific performance and/or
injunctive relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from time to time
during the period (the “Exercise Period”) commencing on the date of initial issuance of this
Warrant (the “Issue Date”) and ending at 5:00 p.m., New York City time, on the fifth anniversary of
the Issue Date. The Exercise Period shall automatically be extended by one day for each day on
which (a) the Company does not have a number of shares of Common Stock reserved for issuance upon
exercise hereof at least equal to the number of shares of Common Stock issuable upon exercise
hereof or otherwise fails to deliver shares of Common Stock in the names set forth in Section 1
hereof upon proper exercise hereof, or (b) the Warrant Shares are not then otherwise registered for
resale as required pursuant to the terms of the Registration Rights Agreement.

3. Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

     (a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in accordance
with the terms of this Warrant, be validly issued, fully paid and non-assessable and free from all
taxes, liens, claims and encumbrances.

     (b) Reservation of Shares. During the Exercise Period, the Company shall at all times
have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise in full of this Warrant
(without giving effect to the limitations on exercise set forth in Section 10 hereof).

     (c) Listing. The Company shall use commercially reasonable efforts to promptly secure
the listing or quotation of the shares of Common Stock issuable upon exercise of this Warrant upon
each national securities exchange or automated or electronic quotation system, if any, upon which
shares of Common Stock are then listed or quoted or become listed or quoted (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed or quoted, such listing or quotation of all

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shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list or apply for quotation on each national securities exchange or automated or
electronic quotation system, as the case may be, and shall maintain such listing or quotation of,
any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and
so long as any shares of the same class shall be listed or quoted on such national securities
exchange or automated or electronic quotation system.

     (d) Certain Actions Prohibited. The Company shall not, by amendment of its charter or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in order to protect the
economic benefit inuring to the holder hereof and the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.

     (e) Successors and Assigns. This Warrant shall be binding upon any entity succeeding
to the Company by merger, consolidation, or acquisition of all or substantially all of the
Company’s assets.

4. Antidilution Provisions. During the period beginning on the date of the Securities
Purchase Agreement and ending on the termination of the Exercise Period (the “Adjustment Period”),
the Exercise Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.

     (a) Stock Splits, Stock Dividends, Etc. If, at any time during the Adjustment Period,
the number of outstanding shares of Common Stock is increased by a stock split, stock dividend,
combination, reclassification or other similar event, the Exercise Price in effect immediately
prior to such increase shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a reverse stock split, combination, reclassification or other similar
event, the Exercise Price in effect immediately prior to such decrease shall be proportionately
increased.

     (b) Merger, Consolidation, Etc. If, at any time during the Adjustment Period, there
shall be (i) any reclassification or change of the outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the Company with any
other entity (other than a merger in which the Company is the surviving or continuing entity and
its capital stock is unchanged), (iii) any sale or transfer of all or substantially all of the
assets of the Company or (iv) any share exchange or other transaction pursuant to which all of the
outstanding shares of Common Stock are converted into other securities or property (each of (i) -
(iv) above being a “Corporate Change”), then the holder hereof shall thereafter have the right to

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receive upon exercise of this Warrant, in lieu of the Warrant Shares otherwise issuable, such
shares of stock, securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of Warrant Shares which would have
been issuable upon exercise had such Corporate Change not taken place (without giving effect to the
limitations contained in Section 10), and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the holder hereof) shall be made with respect to the rights
and interests of the holder to the end that the economic value of this Warrant is in no way
diminished by such Corporate Change and that the provisions hereof (including, without limitation,
in the case of any such consolidation, merger or sale in which the successor entity or purchasing
entity is not the Company, an immediate adjustment of the Exercise Price and Warrant Shares so that
the Exercise Price and Warrant Shares immediately after the Corporate Change reflects the same
relative value as compared to the value of the surviving entity’s common stock that existed between
the Exercise Price and the Warrant Shares and the value of the Company’s Common Stock immediately
prior to such Corporate Change) shall thereafter be applicable, as nearly as may be practicable in
relation to any shares of stock or securities thereafter deliverable upon the exercise thereof.
The Company shall not effect any Corporate Change unless (A) the holder hereof has received written
notice of such transaction at least 30 days prior thereto, but in no event later than 15 days prior
to the record date for the determination of stockholders entitled to vote with respect thereto, and
(B) the resulting successor or acquiring entity (if not the Company) assumes by written instrument
(in form and substance reasonable satisfactory to the holder hereof) the obligations of the Company
under this Warrant. The above provisions shall apply regardless of whether or not there would have
been a sufficient number of shares of Common Stock authorized and available for issuance upon
exercise hereof as of the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

     (c) Distributions. If, at any time during the Adjustment Period, the Company shall
declare or make any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or otherwise (including
any dividend or distribution to the Company’s stockholders in cash or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the holder
hereof shall be entitled, upon any exercise of this Warrant after the date of record for
determining stockholders entitled to such Distribution (or if no such record is taken, the date on
which such Distribution is declared or made), to receive the amount of such assets which would have
been payable to the holder with respect to the Warrant Shares issuable upon such exercise (without
giving effect to the limitations contained in Section 10) had the holder hereof been the holder of
such Warrant Shares on the record date for the determination of stockholders entitled to such
Distribution (or if no such record is taken, the date on which such Distribution is declared or
made).

     (d) Convertible Securities and Purchase Rights. If, at any time during the Adjustment
Period, the Company issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock (“Convertible Securities”) or options, warrants or
other rights to purchase or subscribe for Common Stock or Convertible Securities (“Purchase
Rights”) pro rata to the record holders of any class of Common Stock, whether or not such
Convertible Securities or Purchase Rights are immediately convertible, exercisable or exchangeable,
then the holder hereof shall be entitled, upon any exercise of this Warrant after the

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date of record for determining stockholders entitled to receive such Convertible Securities or
Purchase Rights (or if no such record is taken, the date on which such Convertible Securities or
Purchase Rights are issued), to receive the aggregate number of Convertible Securities or Purchase
Rights which the holder would have received with respect to the Warrant Shares issuable upon such
exercise (without giving effect to the limitations contained in Section 10) had the holder hereof
been the holder of such Warrant Shares on the record date for the determination of stockholders
entitled to receive such Convertible Securities or Purchase Rights (or if no such record is taken,
the date on which such Convertible Securities or Purchase Rights were issued). If the right to
exercise or convert any such Convertible Securities or Purchase Rights would expire in accordance
with their terms prior to the exercise of this Warrant, then the terms of such Convertible
Securities or Purchase Rights shall provide that such exercise or convertibility right shall remain
in effect until 30 days after the date the holder receives such Convertible Securities or Purchase
Rights pursuant to the exercise hereof.

     (e) Other Action Affecting Exercise Price. If, at any time during the Adjustment
Period, the Company takes any action affecting the Common Stock that would be covered by Section
4(a) through (d), but for the manner in which such action is taken or structured, which would in
any way diminish the value of this Warrant, then the Exercise Price shall be adjusted in such
manner as the Board of Directors of the Company shall in good faith determine to be equitable under
the circumstances.

     (f) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 4, the number of shares of Common Stock issuable upon
exercise of this Warrant at each such Exercise Price shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares
of Common Stock issuable upon exercise of this Warrant at such Exercise Price immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise Price.

     (g) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of stock, securities
and/or other property issuable upon exercise of this Warrant, then, and in each such case, the
Company shall give notice thereof to the holder hereof, which notice shall state the Exercise Price
resulting from such adjustment or readjustment and any change in the number of type of stock,
securities and/or other property issuable upon exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the Company.

     (h) No Fractional Shares. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the same fraction of the
Market Price of a share of Common Stock on the date of such exercise.

     (i) Other Notices. In case at any time:

          (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of
any class or make any other distribution (other than dividends or

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distributions payable in cash out of retained earnings consistent with the Company’s past
practices with respect to declaring dividends and making distributions) to the holders of the
Common Stock;

          (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any
additional shares of stock of any class or other rights;

          (iii) there shall be any capital reorganization of the Company, or reclassification of the
Common Stock, or consolidation or merger of the Company with or into, or sale of all or
substantially all of its assets to, another corporation or entity; or

          (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in each such case, the Company shall give to the holder of this Warrant (A) notice of the
date or estimated date on which the books of the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to vote in respect of
any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be
given at least thirty (30) days prior to the record date or the date on which the Company’s books
are closed in respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the substance of any notice
delivered hereunder prior to delivery of such notice to the holder hereof.

5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder of this Warrant or such shares for any issuance
tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

6. No Rights or Liabilities as a Stockholder. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

7. Transfer, Exchange, Redemption and Replacement of Warrant.

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     (a) Restriction on Transfer. This Warrant and the rights granted to the holder hereof
are transferable, in whole or in part, upon surrender of this Warrant, together with a properly
executed assignment in the form attached hereto, at the office or agency of the Company referred to
in Section 7(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 7(f) and 10 hereof and to the provisions of
[Section 5] of the Securities Purchase Agreement. Until due presentment for registration of
transfer on the books of the Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be affected by any notice to
the contrary. Notwithstanding anything to the contrary contained herein, the registration rights
described in Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.

     (b) Warrant Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the holder hereof at the office or agency of the Company referred to
in Section 7(e) below, for new Warrants of like tenor of different denominations representing in
the aggregate the right to purchase the number of shares of Common Stock which may be purchased
hereunder, each of such new Warrants to represent the right to purchase such number of shares (at
the Exercise Price therefor) as shall be designated by the holder hereof at the time of such
surrender.

     (c) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.

     (d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this Section 7, this Warrant
shall be promptly canceled by the Company. The holder shall pay all taxes and all other expenses
(other than legal expenses, if any, incurred by the Company) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Section 7. The Company shall
indemnify and reimburse the holder of this Warrant for all losses and damages arising as a result
of or related to any breach of the terms of this Warrant, including costs and expenses (including
legal fees) incurred by such holder in connection with the enforcement of its rights hereunder.

     (e) Warrant Register. The Company shall maintain, at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to the holder hereof),
a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

     (f) Transfer or Exchange Without Registration. If, at the time of the surrender of
this Warrant in connection with any transfer or exchange of this Warrant, this Warrant (or, in the
case of any exercise, the Warrant Shares issuable hereunder) shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the Company may require,

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as a condition of allowing such transfer or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer or exchange may be made without registration under
the Securities Act and under applicable state securities or blue sky laws (the cost of which shall
be borne by the Company if the Company’s counsel renders such an opinion, and up to $1,000 of such
cost (subject to a maximum aggregate cost of $10,000) shall be borne by the Company if the holder’s
counsel is required to render such opinion), (ii) that the holder or transferee execute and deliver
to the Company an investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act.

8. Registration Rights. The initial holder of this Warrant (and certain assignees thereof)
is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set
forth in the Registration Rights Agreement, including the right to assign such rights to certain
assignees, as set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time during the Exercise Period
by presentation and surrender of this Warrant to the Company at its principal executive offices
with a written notice of the holder’s intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such exercise in accordance
with the terms hereof (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of
paying the Exercise Price in cash, the holder shall surrender this Warrant for that number of
shares of Common Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the difference between the
then current Market Price of a share of the Common Stock on the date of exercise and the Exercise
Price, and the denominator of which shall be the then current Market Price per share of Common
Stock.

10. Restrictions on Exercise and Transfer. In no event shall the holder hereof have the
right to exercise any portion of this Warrant for shares of Common Stock or to dispose of any
portion of this Warrant to the extent that such right to effect such exercise or disposition would
result in the holder and its affiliates together beneficially owning more than 9.99% of the
outstanding shares of Common Stock. For purposes of this Section 10, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder. The restriction contained in this Section 10 may not be altered,
amended, deleted or changed in any manner whatsoever unless the holders of a majority of the
outstanding shares of Common Stock and the holder hereof shall approve, in writing, such
alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized terms
shall have the respective meanings assigned to them:

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

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

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

12. Miscellaneous.

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

     (b) Construction. Whenever the context requires, the gender of any word used in this
Warrant includes the masculine, feminine or neuter, and the number of any word includes the
singular or plural. Unless the context otherwise requires, all references to articles and sections
refer to articles and sections of this Warrant, and all references to schedules are to schedules
attached hereto, each of which is made a part hereof for all purposes. The descriptive headings of
the several articles and sections of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.

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

- 10 -

 

of the remainder of this Warrant or the validity or enforceability of this Warrant in any
other jurisdiction.

     (d) Entire Agreement; Amendments. This Warrant contains the entire understanding of
the Company and the holder hereof with respect to the matters covered herein. Subject to any
additional express provisions of this Warrant, no provision of this Warrant may be waived other
than by an instrument in writing signed by the party to be charged with enforcement, and no
provision of this Warrant may be amended other than by an instrument in writing signed by the
Company and the holder.

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

	 	 	 
	(i)

	 	If to the Company:
	 
	 	 
	 

	 	Remote Dynamics, Inc.
	 

	 	1155 Kas Drive, Suite 100
	 

	 	Richardson, TX 75081
	 

	 	Telephone: 972-301-2733
	 

	 	Facsimile: 972-301-2263
	 

	 	Attention: J. Raymond Bilbao, Esquire
	 
	 	 
	 

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

	 	Locke Liddell & Sapp LLP
	 

	 	2200 Ross Avenue
	 

	 	Suite 2200
	 

	 	Dallas, TX 75201-6776
	 

	 	Telephone: 214-740-8570
	 

	 	Facsimile: 214-756-8570
	 

	 	Attention: Stephen L. Sapp. Esquire

(ii) If to the holder, at such address as shall be set forth in the Warrant Register from time
to time.

     (f) Successors and Assigns. This Warrant shall be binding upon and inure to the
benefit of the Company, the holder and their respective permitted successors and assigns. Except
as provided herein, the Company shall not assign this Warrant or its obligations hereunder. The
holder hereof may assign or transfer this Warrant and such holders rights hereunder in accordance
with Section 7 hereof.

- 11 -

 

     (g) Equitable Relief. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holder by vitiating the intent and purpose of this
Warrant. Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Warrant, that the holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

- 12 -

 

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

	 	 	 	 	 
	 	REMOTE DYNAMICS, INC.

 	 
	 	By:	 	/s/ W. Michael Smith
 	 
	 	Name: 	W. Michael Smith 	 
	 	Title:	COO 	 
	 

[SIGNATURE PAGE TO STOCK PURCHASE WARRANT]

 

 

FORM OF EXERCISE NOTICE

(To be Executed by the Holder in order to Exercise the Warrant)

	 	 	 
	To:

	 	Remote Dynamics, Inc.
	 

	 	1155 Kas Drive, Suite 1000
	 

	 	Richardson, TX 75081
	 

	 	Facsimile: (972) 301-2263
	 

	 	Attention: Chief Executive Officer

     The undersigned hereby irrevocably exercises the right to purchase ___shares of the
Common Stock of Remote Dynamics, Inc., a corporation organized under the laws of the State of
Delaware (the “Company”), at the current Exercise Price of $___, evidenced by the attached
Warrant, and herewith [makes payment of the Exercise Price with respect to such shares in
full][elects to effect a Cashless Exercise (as defined in Section 9 of such Warrant)], all in
accordance with the conditions and provisions of said Warrant.

     The undersigned agrees not to offer, sell, transfer or otherwise dispose of any Common Stock
obtained on exercise of the Warrant, except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.

o The undersigned requests that the Company cause its transfer
agent to electronically transmit the Common Stock issuable pursuant
to this Exercise Notice to the account of the undersigned or its
nominee (which is ___) with DTC through its Deposit
Withdrawal Agent Commission System (“DTC Transfer”), provided that
such transfer agent participates in the DTC Fast Automated
Securities Transfer program.

o In lieu of receiving the shares of Common Stock issuable
pursuant to this Exercise Notice by way of DTC Transfer, the
undersigned hereby requests that the Company cause its transfer
agent to issue and deliver to the undersigned physical certificates
representing such shares of Common Stock.

The undersigned requests that a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant, in the name of the Holder and delivered to the undersigned at the address
set forth below:

	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	                Signature of Holder
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	                Name of Holder (Print)
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	                Address:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

- 14 -

 

FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, to:

	 	 	 	 	 
	Name of Assignee

	 	Address
	 	No. of Shares
	 

	 	 
	 	 

, and hereby irrevocably constitutes and appoints ___as agent
and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with
full power of substitution in the premises.

Dated: _____________________, ____

In the presence of

__________________

	 	 	 
	Name:
	 	 
	 

	 	 
	 
	 	 
	Signature:
	 	 
	 

	 	 
	Title of Signing Officer or Agent (if any):
	 
	 	 
	 

	 	 
	 
	 	 
	Address:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

	 	 	 
	Note:

	 	The above signature should correspond exactly
with the name on the face of the within Warrant.

- 1 -exv10w7

 

Exhibit 10.7

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

TIME, ON SEPTEMBER 2, 2010

(UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

	 	 	 
	 

	 	Right to Purchase 700,000 Shares of
	 

	 	Common Stock, par value $.01 per share

Date: September 2, 2005

REMOTE DYNAMICS, INC.

STOCK PURCHASE WARRANT

     THIS CERTIFIES THAT, for value received, SDS Capital Group SPC, Ltd., or its registered and
permitted assigns, is entitled to purchase from Remote Dynamics, Inc., a corporation organized
under the laws of the State of Delaware (the “Company”), at any time or from time to time during
the period specified in Section 2 hereof, Seven Hundred Thousand (700,000) fully paid and
nonassessable shares (the “Warrant Shares”) of the Company’s common stock, par value $.01 per share
(the “Common Stock”), at an initial exercise price per share (the “Exercise Price”) equal to $1.75.
The number of Warrant Shares and the Exercise Price are subject to adjustment as provided in
Section 4 hereof. The term “Warrant” and all references thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later amended or supplemented,
then as so amended or supplemented, including all Warrants issued upon transfer or exchange of this
Warrant as provided herein, and the term “Warrants” means this Warrant and the other warrants of
the Company issued pursuant to the Securities Purchase Agreement dated as of May 31, 2005 by and
among the Company and the other signatories thereto (the “Securities Purchase Agreement”).

     This Warrant is subject to the following terms, provisions and conditions:

	1.	 	Exercise of Warrant.

     (a) Subject to the provisions hereof, including, without limitation, the limitations contained
in Section 10 hereof, this Warrant may be exercised by the holder hereof, in whole or in part, by
delivery of a completed exercise notice in the form attached hereto (the “Exercise

- 1 -

 

Notice”), which shall be followed promptly by the surrender of this Warrant, to the Company
during normal business hours on any business day at the Company’s principal executive offices (or
such other office or agency of the Company as it may designate by written notice to the holder
hereof), and upon (i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Notice or (ii) if the holder is effectuating a Cashless Exercise (as
defined in Section 9 hereof) pursuant to Section 9 hereof, delivery to the Company of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares specified in the
Exercise Notice.

     (b) The Warrant Shares purchased upon exercise of this Warrant in accordance with this Section
1 shall be deemed to be issued to the holder hereof or the holder’s designee, as the record owner
of such shares, as of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Notice shall have been delivered, and payment shall have been
made for such shares as set forth above or, if such date is not a business day, on the next
succeeding business day. The Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Notice, shall be delivered to the holder hereof or the holder’s
designee within a reasonable time, not exceeding two business days, after this Warrant shall have
been so exercised (the “Delivery Period”). If the Company’s transfer agent is participating in the
Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, and so long as the
certificates therefor do not bear a legend (pursuant to the terms of the Securities Purchase
Agreement) and the holder is not obligated to return such certificate for the placement of a legend
thereon (pursuant to the Securities Purchase Agreement), the Company shall cause its transfer agent
to electronically transmit the Warrant Shares so purchased to the holder or the holder’s designee
by crediting the account of the holder or the holder’s designee or its respective nominee with DTC
through its Deposit Withdrawal Agent Commission system (“DTC Transfer”). If the aforementioned
conditions to a DTC Transfer are not satisfied, the Company shall deliver to the holder or the
holder’s designee physical certificates representing the Warrant Shares so purchased.
Notwithstanding the foregoing, the holder or the holder’s designee may instruct the Company to
deliver to the holder or such designee physical certificates representing the Warrant Shares so
purchased in lieu of delivering such shares by way of DTC Transfer. Any certificates so delivered
shall be in such denominations as may be reasonably requested by the holder hereof or the holder’s
designee, shall be registered in the name of the holder or such other name as shall be designated
by the holder and, following the date on which the Warrant Shares have been registered under the
Securities Act pursuant to that certain Registration Rights Agreement, dated as of June ___, 2005,
by and among the Company and the other signatories thereto (the “Registration Rights Agreement”) or
otherwise may be sold by the holder pursuant to Rule 144 promulgated under the Securities Act (or a
successor rule), shall not bear any restrictive legend. If this Warrant shall have been exercised
only in part, then the Company shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.

     (c) If, at any time, a holder of this Warrant submits this Warrant, an Exercise Notice and
payment to the Company of the Exercise Price for each of the Warrant Shares specified in the
Exercise Notice (including pursuant to a Cashless Exercise), and the Company fails for any reason
(other than the reasons contemplated by Section 10 hereof) to deliver, on or prior to the

- 2 -

 

fourth business day following the expiration of the Delivery Period for such exercise, the
number of shares of Common Stock to which the holder is entitled upon such exercise (an “Exercise
Default”), then the Company shall pay to the holder payments (“Exercise Default Payments”) for an
Exercise Default in the amount of (i) (N/365), multiplied by (ii) the amount by which the Market
Price (as defined in Section 11 hereof) of the Common Stock on the date the Exercise Notice giving
rise to the Exercise Default is transmitted in accordance with this Section 1 (the “Exercise
Default Date”) exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (iii)
the number of shares of Common Stock the Company failed to so deliver in such Exercise Default,
multiplied by (iv) .18, where N equals the number of days from the Exercise Default Date to the
date that the Company effects the full exercise of this Warrant which gave rise to the Exercise
Default. The accrued Exercise Default Payment for each calendar month shall be paid in cash and
shall be made to the holder by the fifth day of the month following the month in which it has
accrued. Nothing herein shall limit the holder’s right to pursue actual damages for the Company’s
failure to maintain a sufficient number of authorized shares of Common Stock as required pursuant
to the terms of Section 3(b) hereof or to otherwise issue shares of Common Stock upon exercise of
this Warrant in accordance with the terms hereof, and the holder shall have the right to pursue all
remedies available at law or in equity (including a decree of specific performance and/or
injunctive relief).

2. Period of Exercise. This Warrant shall be exercisable at any time or from time to time
during the period (the “Exercise Period”) commencing on the date of initial issuance of this
Warrant (the “Issue Date”) and ending at 5:00 p.m., New York City time, on the fifth anniversary of
the Issue Date. The Exercise Period shall automatically be extended by one day for each day on
which (a) the Company does not have a number of shares of Common Stock reserved for issuance upon
exercise hereof at least equal to the number of shares of Common Stock issuable upon exercise
hereof or otherwise fails to deliver shares of Common Stock in the names set forth in Section 1
hereof upon proper exercise hereof, or (b) the Warrant Shares are not then otherwise registered for
resale as required pursuant to the terms of the Registration Rights Agreement.

3. Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

     (a) Shares to be Fully Paid. All Warrant Shares shall, upon issuance in accordance
with the terms of this Warrant, be validly issued, fully paid and non-assessable and free from all
taxes, liens, claims and encumbrances.

     (b) Reservation of Shares. During the Exercise Period, the Company shall at all times
have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise in full of this Warrant
(without giving effect to the limitations on exercise set forth in Section 10 hereof).

     (c) Listing. The Company shall use commercially reasonable efforts to promptly secure
the listing or quotation of the shares of Common Stock issuable upon exercise of this Warrant upon
each national securities exchange or automated or electronic quotation system, if any, upon which
shares of Common Stock are then listed or quoted or become listed or quoted (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long

- 3 -

 

as any other shares of Common Stock shall be so listed or quoted, such listing or quotation of
all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list or apply for quotation on each national securities exchange or automated or
electronic quotation system, as the case may be, and shall maintain such listing or quotation of,
any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and
so long as any shares of the same class shall be listed or quoted on such national securities
exchange or automated or electronic quotation system.

     (d) Certain Actions Prohibited. The Company shall not, by amendment of its charter or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this Warrant in order to protect the
economic benefit inuring to the holder hereof and the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and purpose of this
Warrant. Without limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.

     (e) Successors and Assigns. This Warrant shall be binding upon any entity succeeding
to the Company by merger, consolidation, or acquisition of all or substantially all of the
Company’s assets.

4. Antidilution Provisions. During the period beginning on the date of the Securities
Purchase Agreement and ending on the termination of the Exercise Period (the “Adjustment Period”),
the Exercise Price and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 4.

     (a) Stock Splits, Stock Dividends, Etc. If, at any time during the Adjustment Period,
the number of outstanding shares of Common Stock is increased by a stock split, stock dividend,
combination, reclassification or other similar event, the Exercise Price in effect immediately
prior to such increase shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a reverse stock split, combination, reclassification or other similar
event, the Exercise Price in effect immediately prior to such decrease shall be proportionately
increased.

     (b) Merger, Consolidation, Etc. If, at any time during the Adjustment Period, there
shall be (i) any reclassification or change of the outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the Company with any
other entity (other than a merger in which the Company is the surviving or continuing entity and
its capital stock is unchanged), (iii) any sale or transfer of all or substantially all of the
assets of the Company or (iv) any share exchange or other transaction pursuant to which all of the
outstanding shares of Common Stock are converted into other securities or property (each of (i) -

- 4 -

 

(iv) above being a “Corporate Change”), then the holder hereof shall thereafter have the right
to receive upon exercise of this Warrant, in lieu of the Warrant Shares otherwise issuable, such
shares of stock, securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of Warrant Shares which would have
been issuable upon exercise had such Corporate Change not taken place (without giving effect to the
limitations contained in Section 10), and in any such case, appropriate provisions (in form and
substance reasonably satisfactory to the holder hereof) shall be made with respect to the rights
and interests of the holder to the end that the economic value of this Warrant is in no way
diminished by such Corporate Change and that the provisions hereof (including, without limitation,
in the case of any such consolidation, merger or sale in which the successor entity or purchasing
entity is not the Company, an immediate adjustment of the Exercise Price and Warrant Shares so that
the Exercise Price and Warrant Shares immediately after the Corporate Change reflects the same
relative value as compared to the value of the surviving entity’s common stock that existed between
the Exercise Price and the Warrant Shares and the value of the Company’s Common Stock immediately
prior to such Corporate Change) shall thereafter be applicable, as nearly as may be practicable in
relation to any shares of stock or securities thereafter deliverable upon the exercise thereof.
The Company shall not effect any Corporate Change unless (A) the holder hereof has received written
notice of such transaction at least 30 days prior thereto, but in no event later than 15 days prior
to the record date for the determination of stockholders entitled to vote with respect thereto, and
(B) the resulting successor or acquiring entity (if not the Company) assumes by written instrument
(in form and substance reasonable satisfactory to the holder hereof) the obligations of the Company
under this Warrant. The above provisions shall apply regardless of whether or not there would have
been a sufficient number of shares of Common Stock authorized and available for issuance upon
exercise hereof as of the date of such transaction, and shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.

     (c) Distributions. If, at any time during the Adjustment Period, the Company shall
declare or make any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or otherwise (including
any dividend or distribution to the Company’s stockholders in cash or shares (or rights to acquire
shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the holder
hereof shall be entitled, upon any exercise of this Warrant after the date of record for
determining stockholders entitled to such Distribution (or if no such record is taken, the date on
which such Distribution is declared or made), to receive the amount of such assets which would have
been payable to the holder with respect to the Warrant Shares issuable upon such exercise (without
giving effect to the limitations contained in Section 10) had the holder hereof been the holder of
such Warrant Shares on the record date for the determination of stockholders entitled to such
Distribution (or if no such record is taken, the date on which such Distribution is declared or
made).

     (d) Convertible Securities and Purchase Rights. If, at any time during the Adjustment
Period, the Company issues any securities or other instruments which are convertible into or
exercisable or exchangeable for Common Stock (“Convertible Securities”) or options, warrants or
other rights to purchase or subscribe for Common Stock or Convertible Securities (“Purchase
Rights”) pro rata to the record holders of any class of Common Stock, whether or not such
Convertible Securities or Purchase Rights are immediately convertible, exercisable or

- 5 -

 

exchangeable, then the holder hereof shall be entitled, upon any exercise of this Warrant
after the date of record for determining stockholders entitled to receive such Convertible
Securities or Purchase Rights (or if no such record is taken, the date on which such Convertible
Securities or Purchase Rights are issued), to receive the aggregate number of Convertible
Securities or Purchase Rights which the holder would have received with respect to the Warrant
Shares issuable upon such exercise (without giving effect to the limitations contained in Section
10) had the holder hereof been the holder of such Warrant Shares on the record date for the
determination of stockholders entitled to receive such Convertible Securities or Purchase Rights
(or if no such record is taken, the date on which such Convertible Securities or Purchase Rights
were issued). If the right to exercise or convert any such Convertible Securities or Purchase
Rights would expire in accordance with their terms prior to the exercise of this Warrant, then the
terms of such Convertible Securities or Purchase Rights shall provide that such exercise or
convertibility right shall remain in effect until 30 days after the date the holder receives such
Convertible Securities or Purchase Rights pursuant to the exercise hereof.

     (e) Dilutive Issuances.

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

	 	 	 	 	 	 	 
	AEP=

	 	C x
	 	O+P/C
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	CSDO	 	 

where:

     AEP = the adjusted Exercise Price;

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

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

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

     CSDO = the total number of shares of Common Stock actually outstanding (after giving effect to
the Dilutive Issuance, and not including shares of Common Stock held in the treasury of the
Company), plus (a) in the case of any adjustment required by this Section 4(e)(i) due to the
issuance of Purchase Rights, the maximum total number of shares of Common Stock

- 6 -

 

issuable upon the exercise of the Purchase Rights for which the adjustment is required (including
any Common Stock issuable upon the conversion of Convertible Securities issuable upon the exercise
of such Purchase Rights), and (y) in the case of any adjustment required by this Section 4(e)(i)
due to the issuance of Convertible Securities, the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of the Convertible Securities for which the
adjustment is required, as of the date of issuance of such Convertible Securities, if any.

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

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

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

               (2) Issuance of Convertible Securities. If the Company issues or sells any
Convertible Securities, whether or not immediately convertible, exercisable or exchangeable, and
the price per share for which Common Stock is issuable upon such conversion, exercise or exchange
is less than the Exercise Price in effect on the date of issuance or sale of such Convertible
Securities, then the maximum total number of shares of Common Stock issuable upon the conversion,
exercise or exchange of all such Convertible Securities shall, as of the date of the issuance or
sale of such Convertible Securities, be deemed to be outstanding and to have been issued and sold
by the Company for such price per share. If the Convertible Securities so issued or sold do not
have a fluctuating conversion or exercise price or exchange ratio, then for

- 7 -

 

the purposes of the preceding sentence, the “price per share for which Common Stock is
issuable upon such conversion, exercise or exchange” shall be determined by dividing (A) the total
amount, if any, received or receivable by the Company as consideration for the issuance or sale of
all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion, exercise or exchange thereof (determined in
accordance with the calculation method set forth in this clause (ii)(2) of this Section 4(e)) at
the time such Convertible Securities first become convertible, exercisable or exchangeable, by (B)
the maximum total number of shares of Common Stock issuable upon the exercise, conversion or
exchange of all such Convertible Securities. If the Convertible Securities so issued or sold have
a fluctuating conversion or exercise price or exchange ratio (a “Variable Rate Convertible
Security”), then for purposes of the next preceding sentence, the “price per share for which Common
Stock is issuable upon such conversion, exercise or exchange” shall be deemed to be the lowest
price per share which would be applicable (assuming all holding period and other conditions to any
discounts contained in such Variable Rate Convertible Security have been satisfied) if the
conversion price of such Variable Rate Convertible Security on the date of issuance or sale thereof
was seventy-five percent (75%) of the actual conversion price on such date (the “Assumed Variable
Market Price”), and, further, if the conversion price of such Variable Rate Convertible Security at
any time or times thereafter is less than or equal to the Assumed Variable Market Price last used
for making any adjustment under this Section 4(e) with respect to any Variable Rate Convertible
Security, the Exercise Price in effect at such time shall be readjusted to equal the Exercise Price
which would have resulted if the Assumed Variable Market Price at the time of issuance of the
Variable Rate Convertible Security had been seventy-five percent (75%) of the actual conversion
price of such Variable Rate Convertible Security existing at the time of the adjustment required by
this sentence. No further adjustment to the Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion, exercise or exchange of such Convertible Securities.

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

               (4) Calculation of Consideration Received. If any Common Stock, Purchase Rights or
Convertible Securities are issued or sold for cash, the consideration received therefor will be the
amount received by the Company therefor, after deduction of all underwriting discounts or
allowances in connection with such issuance, grant or sale. In case any Common Stock, Purchase
Rights or Convertible Securities are issued or sold for a consideration part or all of which shall
be other than cash, including in the case of a strategic or similar arrangement in which the other
entity will provide services to the Company, purchase services from the Company or otherwise
provide intangible consideration to the Company, the

- 8 -

 

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

               (5) Issuances Pursuant to Existing Securities. If the Company issues (or becomes
obligated to issue) shares of Common Stock pursuant to any antidilution or similar adjustments
(other than as a result of stock splits, stock dividends and the like) contained in any Convertible
Securities or Purchase Rights outstanding as of the date hereof but not included in Section 3(c) of
the Disclosure Schedule to the Securities Purchase Agreement, then all shares of Common Stock so
issued shall be deemed to have been issued for no consideration. If the Company issues (or becomes
obligated to issue) shares of Common Stock pursuant to any antidilution or similar adjustments
contained in any Convertible Securities or Purchase Rights included in Section 3(c) of the
Disclosure Schedule to the Securities Purchase Agreement as a result of the issuance of the
Company’s Series B Preferred Stock, the Note issued in connection with the Securities Purchase
Agreement (the “Note”) or exchange thereof, or Warrants issued pursuant to the Securities Purchase
Agreement and the number of shares that the Company issues (or is obligated to issue) as a result
of such initial issuance exceeds the amount specified in

- 9 -

 

Section 3(c) of the Disclosure Schedule to the Securities Purchase Agreement, such excess
shares shall be deemed to have been issued for no consideration.

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

     (f) Other Action Affecting Exercise Price. If, at any time during the Adjustment
Period, the Company takes any action affecting the Common Stock that would be covered by Section
4(a) through (e), but for the manner in which such action is taken or structured, which would in
any way diminish the value of this Warrant, then the Exercise Price shall be adjusted in such
manner as the Board of Directors of the Company shall in good faith determine to be equitable under
the circumstances.

     (g) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 4, the number of shares of Common Stock issuable upon
exercise of this Warrant at each such Exercise Price shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares
of Common Stock issuable upon exercise of this Warrant at such Exercise Price immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise Price.

     (h) Notice of Adjustment. Upon the occurrence of any event which requires any
adjustment or readjustment of the Exercise Price or change in number or type of stock, securities
and/or other property issuable upon exercise of this Warrant, then, and in each such case, the
Company shall give notice thereof to the holder hereof, which notice shall state the Exercise Price
resulting from such adjustment or readjustment and any change in the number of type of stock,
securities and/or other property issuable upon exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the Company.

     (i) No Fractional Shares. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the same fraction of the
Market Price of a share of Common Stock on the date of such exercise.

- 10 -

 

     (j) Other Notices. In case at any time:

          (i) the Company shall declare any dividend upon the Common Stock payable in shares of stock of
any class or make any other distribution (other than dividends or distributions payable in cash out
of retained earnings consistent with the Company’s past practices with respect to declaring
dividends and making distributions) to the holders of the Common Stock;

          (ii) the Company shall offer for subscription pro rata to the holders of the Common Stock any
additional shares of stock of any class or other rights;

          (iii) there shall be any capital reorganization of the Company, or reclassification of the
Common Stock, or consolidation or merger of the Company with or into, or sale of all or
substantially all of its assets to, another corporation or entity; or

          (iv) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

then, in each such case, the Company shall give to the holder of this Warrant (A) notice of the
date or estimated date on which the books of the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to vote in respect of
any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (B) in the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be
given at least thirty (30) days prior to the record date or the date on which the Company’s books
are closed in respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company shall publicly disclose the substance of any notice
delivered hereunder prior to delivery of such notice to the holder hereof.

5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder of this Warrant or such shares for any issuance
tax or other costs in respect thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

6. No Rights or Liabilities as a Stockholder. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to

- 11 -

 

any liability of such holder for the Exercise Price or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.

7. Transfer, Exchange, Redemption and Replacement of Warrant.

     (a) Restriction on Transfer. This Warrant and the rights granted to the holder hereof
are transferable, in whole or in part, upon surrender of this Warrant, together with a properly
executed assignment in the form attached hereto, at the office or agency of the Company referred to
in Section 7(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 7(f) and 10 hereof and to the provisions of
[Section 5] of the Securities Purchase Agreement. Until due presentment for registration of
transfer on the books of the Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be affected by any notice to
the contrary. Notwithstanding anything to the contrary contained herein, the registration rights
described in Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.

     (b) Warrant Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the holder hereof at the office or agency of the Company referred to
in Section 7(e) below, for new Warrants of like tenor of different denominations representing in
the aggregate the right to purchase the number of shares of Common Stock which may be purchased
hereunder, each of such new Warrants to represent the right to purchase such number of shares (at
the Exercise Price therefor) as shall be designated by the holder hereof at the time of such
surrender.

     (c) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.

     (d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this Section 7, this Warrant
shall be promptly canceled by the Company. The holder shall pay all taxes and all other expenses
(other than legal expenses, if any, incurred by the Company) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Section 7. The Company shall
indemnify and reimburse the holder of this Warrant for all losses and damages arising as a result
of or related to any breach of the terms of this Warrant, including costs and expenses (including
legal fees) incurred by such holder in connection with the enforcement of its rights hereunder.

     (e) Warrant Register. The Company shall maintain, at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to the holder hereof),
a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.

- 12 -

 

     (f) Transfer or Exchange Without Registration. If, at the time of the surrender of
this Warrant in connection with any transfer or exchange of this Warrant, this Warrant (or, in the
case of any exercise, the Warrant Shares issuable hereunder) shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such transfer or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in comparable transactions)
to the effect that such transfer or exchange may be made without registration under the Securities
Act and under applicable state securities or blue sky laws (the cost of which shall be borne by the
Company if the Company’s counsel renders such an opinion, and up to $1,000 of such cost (subject to
a maximum aggregate cost of $10,000) shall be borne by the Company if the holder’s counsel is
required to render such opinion), (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company and (iii) that the
transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities
Act.

8. Registration Rights. The initial holder of this Warrant (and certain assignees thereof)
is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set
forth in the Registration Rights Agreement, including the right to assign such rights to certain
assignees, as set forth therein.

9. Cashless Exercise. This Warrant may be exercised at any time during the Exercise Period
by presentation and surrender of this Warrant to the Company at its principal executive offices
with a written notice of the holder’s intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such exercise in accordance
with the terms hereof (a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of
paying the Exercise Price in cash, the holder shall surrender this Warrant for that number of
shares of Common Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the difference between the
then current Market Price of a share of the Common Stock on the date of exercise and the Exercise
Price, and the denominator of which shall be the then current Market Price per share of Common
Stock.

10. Restrictions on Exercise and Transfer. In no event shall the holder hereof have the
right to exercise any portion of this Warrant for shares of Common Stock or to dispose of any
portion of this Warrant to the extent that such right to effect such exercise or disposition would
result in the holder and its affiliates together beneficially owning more than 9.99% of the
outstanding shares of Common Stock. For purposes of this Section 10, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder. The restriction contained in this Section 10 may not be altered,
amended, deleted or changed in any manner whatsoever unless the holders of a majority of the
outstanding shares of Common Stock and the holder hereof shall approve, in writing, such
alteration, amendment, deletion or change.

11. Certain Definitions. For purposes of this Warrant, the following capitalized terms
shall have the respective meanings assigned to them:

- 13 -

 

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

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

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

12. Miscellaneous.

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

     (b) Construction. Whenever the context requires, the gender of any word used in this
Warrant includes the masculine, feminine or neuter, and the number of any word includes the
singular or plural. Unless the context otherwise requires, all references to articles and sections
refer to articles and sections of this Warrant, and all references to schedules are to schedules
attached hereto, each of which is made a part hereof for all purposes. The descriptive headings

- 14 -

 

of the several articles and sections of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provisions hereof.

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

     (d) Entire Agreement; Amendments. This Warrant contains the entire understanding of
the Company and the holder hereof with respect to the matters covered herein. Subject to any
additional express provisions of this Warrant, no provision of this Warrant may be waived other
than by an instrument in writing signed by the party to be charged with enforcement, and no
provision of this Warrant may be amended other than by an instrument in writing signed by the
Company and the holder.

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

          (i) If to the Company:

Remote Dynamics, Inc.

1155 Kas Drive, Suite 100

Richardson, TX 75081

Telephone: 972-301-2733

Facsimile: 972-301-2263

Attention: J. Raymond Bilbao, Esquire

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

Locke Liddell & Sapp LLP

2200 Ross Avenue

Suite 2200

Dallas, TX 75201-6776

Telephone: 214-740-8570

Facsimile: 214-756-8570

Attention: Stephen L. Sapp. Esquire

          (ii) If to the holder, at such address as shall be set forth in the Warrant Register from time
to time.

- 15 -

 

     (f) Successors and Assigns. This Warrant shall be binding upon and inure to the
benefit of the Company, the holder and their respective permitted successors and assigns. Except
as provided herein, the Company shall not assign this Warrant or its obligations hereunder. The
holder hereof may assign or transfer this Warrant and such holders rights hereunder in accordance
with Section 7 hereof.

     (g) Equitable Relief. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holder by vitiating the intent and purpose of this
Warrant. Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Warrant, that the holder shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

- 16 -

 

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

	 	 	 	 	 
	 	 	REMOTE DYNAMICS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ W. Michael Smith
	 

	 	 	 	 
	 	 	Name: W. Michael Smith
	 	 	Title: COO

[SIGNATURE PAGE TO STOCK PURCHASE WARRANT]

 

 

FORM OF EXERCISE NOTICE

(To be Executed by the Holder in order to Exercise the Warrant)

	 	 	 
	To:

	 	Remote Dynamics, Inc.
	 

	 	1155 Kas Drive, Suite 1000
	 

	 	Richardson, TX 75081
	 

	 	Facsimile: (972) 301-2263
	 

	 	Attention: Chief Executive Officer

     The undersigned hereby irrevocably exercises the right to purchase                                         shares of the
Common Stock of Remote Dynamics, Inc., a corporation organized under the laws of the State of
Delaware (the “Company”), at the current Exercise Price of $                    , evidenced by the attached
Warrant, and herewith [makes payment of the Exercise Price with respect to such shares in
full][elects to effect a Cashless Exercise (as defined in Section 9 of such Warrant)], all in
accordance with the conditions and provisions of said Warrant.

     The undersigned agrees not to offer, sell, transfer or otherwise dispose of any Common Stock
obtained on exercise of the Warrant, except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any state securities laws.

o The undersigned requests that the Company cause its transfer
agent to electronically transmit the Common Stock issuable pursuant
to this Exercise Notice to the account of the undersigned or its
nominee (which is                                         ) with DTC through its Deposit
Withdrawal Agent Commission System (“DTC Transfer”), provided that
such transfer agent participates in the DTC Fast Automated
Securities Transfer program.

o In lieu of receiving the shares of Common Stock issuable
pursuant to this Exercise Notice by way of DTC Transfer, the
undersigned hereby requests that the Company cause its transfer
agent to issue and deliver to the undersigned physical certificates
representing such shares of Common Stock.

The undersigned requests that a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant, in the name of the Holder and delivered to the undersigned at the address
set forth below:

	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	          Signature of Holder
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	          Name of Holder (Print)
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	          Address:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

- 18 -

 

FORM OF ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, to:

	 	 	 	 	 
	Name of Assignee

	 	Address
	 	No. of Shares
	 

	 	 
	 	 

, and hereby irrevocably constitutes and appoints                                                           
                       as agent
and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with
full power of substitution in the premises.

	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	In the presence of	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Signature:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Title of Signing Officer or Agent (if any):
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Address:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Note:
	 	The above signature should correspond exactly with the name on the face of the within Warrant.

- 1 -

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